CASH TRUST SERIES, 485BPOS, 1997-09-24

CASH TRUST SERIES
485BPOS, 1997-09-24

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1933 Act File No. 33-29838
1940 Act File No. 811-5843

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ___X__

Pre-Effective Amendment No.
------------------------

Post-Effective Amendment No. __16__ ___X__

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 ___X__

Amendment No. ___14___ ___X__

CASH TRUST SERIES, INC.

(Exact Name of Registrant as Specified in Charter)

Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779
(Address of Principal Executive Offices)

(412) 288-1900

(Registrant's Telephone Number)

John W. McGonigle, Esquire,
Federated Investors Tower,

Pittsburgh, Pennsylvania 15222-3779
(Name and Address of Agent for Service)

It is proposed that this filing will become effective:

immediately upon filing pursuant to paragraph (b)
X on SEPTEMBER 30, 1997 pursuant to paragraph (b)

60 days after filing pursuant to paragraph (a) (i) on pursuant to
paragraph (a) (i). 75 days after filing pursuant to paragraph
(a)(ii) on _________________ pursuant to paragraph (a)(ii) of Rule
485.

If appropriate, check the following box:

This post-effective amendment designates a new effective date for
a previously filed post-effective amendment.

<PAGE>

Registrant has filed with the Securities and Exchange Commission a
declaration pursuant to Rule 24f-2 under the Investment Company Act of
1940, and:

X filed the Notice required by that Rule on JULY 15, 1997; or
intends to file the Notice required by that Rule on or about
____________; or during the most recent fiscal year did not sell
any securities pursuant to Rule 24f-2 under the

Investment Company Act of 1940, and, pursuant to Rule 24f-2(b)(2),
need not file the Notice.

Copies to:

Matthew G. Maloney, Esquire
Dickstein, Shapiro & Morin, L.L.P.
2101 L Street, N.W. 20037

Washington, D.C. 20037

<PAGE>

CROSS-REFERENCE SHEET

This Amendment to the Registration Statement of CASH TRUST
SERIES, INC., which is comprised of four portfolios: (1) Government
Cash Series; (2) Municipal Cash Series: (3) Prime Cash Series; and (4)
Treasury Cash Series, is comprised of the following:
<TABLE>
<CAPTION>

PART A. INFORMATION REQUIRED IN A PROSPECTUS.

Prospectus Heading

(RULE 404(C) CROSS REFERENCE)

Item 1. Cover Page..................................(1-4) Cover Page.

Item 2. Synopsis (1-4) Summary of Fund Expenses.
Item 3. Condensed Financial

Information.................................(1-4) Performance Information; (1-4) Financial
Highlights.

Item 4. General Description of

Registrant..................................(1-4) General Information; (1-4) Investment
Information; (1-4) Investment Objective; (1-4)
Investment Policies; (1-4) Investment Limitations;
(2) Municipal Securities; (2,3) Investment Risks.

Item 5. Management of the Fund......................(1-4) Fund Information; (1-4) Management of the
Fund; (1-4) Distribution of Shares; (1-4)
Administration of the Fund.

Item 6. Capital Stock and Other

Securities..................................(1-4) Account and Share Information; (1-4)
Dividends; (1-4) Capital Gains; (1-4) Confirmations
and Account Statements; (1-4) Accounts with Low
Balances; (1-4) Voting Rights; (1-4) Tax
Information; (1-4) Federal Income Tax; (1-4) State

and Local Taxes.

Item 7. Purchase of Securities Being

Offered.....................................(1-4) Net Asset Value; (1-4) How to Purchase
Shares; (1-4) Purchasing Shares Through a Financial
Institution; (1-4) Purchasing Shares by Wire; (1-4)
Purchasing Shares by Check; (1-4) Special Purchase

Features.

Item 8. Redemption or Repurchase....................(1-4) How to Redeem Shares; (1-4) Redeeming Shares
Through a Financial Institution; (1-4) Redeeming
Shares by Telephone; (1-4) Redeeming Shares by
Mail; (1-4) Special Redemption Features.

Item 9. Pending Legal Proceedings None.

<PAGE>

PART B. INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION:

Item 10. Cover Page..................................(1-4) Cover Page.

Item 11. Table of Contents (1-4) Table of Contents.

Item 12. General Information and

History (1-4) About Federated Investors.

Item 13. Investment Objectives and

Policies....................................(1-4) Investment Policies; (1-4) Investment
Limitations.

Item 14. Management of the Fund......................(1-4) Cash Trust Series, Inc. Management.

Item 15. Control Persons and Principal

Holders of Securities Not Applicable.

Item 16. Investment Advisory and Other

Services....................................(1-4) Investment Advisory Services; (1-4) Other
Services.

Item 17. Brokerage Allocation. (1-4) Brokerage Transactions.

Item 18. Capital Stock and Other

Securities Not Applicable.

Item 19. Purchase, Redemption and
Pricing of Securities

Being Offered...............................(1-4) Determining Net Asset Value; (1-4) Redemption
in Kind.

Item 20. Tax Status (1-4) The Fund's Tax Status.

Item 21. Underwriters................................(1-4) Distribution Plan and Shareholder Services.

Item 22. Calculation of Performance

Data (1-4) Performance Information.

Item 23. Financial Statements........................Incorporated by reference to the Annual Reports to
Shareholders of the Funds dated May 31, 1997 (File
Nos. 33-29838 and 811-5843).

</TABLE>

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,
1997, 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).

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

CONTRARY IS A CRIMINAL OFFENSE.

Prospectus dated September 30, 1997

TABLE OF CONTENTS

Summary of Fund Expenses 1 Financial Highlights 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 6 How to Purchase Shares 6 Purchasing Shares through a
Financial Institution 6 Purchasing Shares by Wire 6 Purchasing Shares
by Check 7 Special Purchase Features 7 How to Redeem Shares 7
Redeeming Shares Through a Financial Institution 7 Redeeming Shares
by Telephone 7 Redeeming Shares by Mail 7 Special Redemption Features
8 Account and Share Information 8 Dividends 8 Capital Gains 8
Confirmations and Account Statements 8 Accounts with Low Balances 8
Voting Rights 8 Tax Information 9 Federal Income Tax 9 State and
Local Taxes 9 Performance Information 9

SUMMARY OF FUND EXPENSES

SHAREHOLDER TRANSACTION EXPENSES

<S> <C> 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
<CAPTION>

ANNUAL OPERATING EXPENSES

(As a percentage of average net assets)

<S> <C> <C>
Management Fee (after waiver)(1) 0.40%
12b-1 Fee(2) 0.10%
Total Other Expenses 0.49%

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%.

(3) The total operating expenses would have been 1.09% absent the
voluntary waiver of a portion of the management 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.

LONG-TERM SHAREHOLDERS MAY PAY MORE THAN THE ECONOMIC EQUIVALENT OF THE
MAXIMUM FRONT-END SALES CHARGES PERMITTED UNDER THE RULES OF THE NATIONAL

ASSOCIATION OF SECURITIES DEALERS, INC.

<TABLE>

EXAMPLE

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.

<S> <C>
1 Year $ 10
3 Years $ 32
5 Years $ 55
10 Years $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

(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 8, 1997, on the
Fund's Financial Statements for the year ended May 31, 1997, and on
the following table for each of the periods presented, is included in
the Fund's Annual Report, which is incorporated herein by reference.
This table should be read in conjunction with the Fund's Financial
Statements and notes thereto, contained in the Fund's Annual Report,
which may be obtained from the Fund.

YEAR ENDED MAY 31,

1997 1996 1995 1994 1993 1992 1991 1990(A)
<S> <C> <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 $ 1.00
INCOME FROM INVESTMENT

OPERATIONS

Net investment income 0.04 0.05 0.04 0.02 0.03 0.04 0.07 0.06
LESS DISTRIBUTIONS

Distributions from net

investment income (0.04) (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 $ 1.00
TOTAL RETURN(B) 4.54% 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% 0.99% 0.98% 0.94% 0.73%*
Net investment income 4.45% 4.75% 4.35% 2.41% 2.53% 4.25% 6.48% 7.74%*
Expense waiver/
reimbursement(c) 0.10% 0.30% 0.08% 0.09% 0.06% 0.06% 0.13% 0.32%*
SUPPLEMENTAL DATA
Net assets, end of
period (000 omitted) $530,367 $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, 1997, 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;

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

* notes, bonds, and discount notes of other U.S. government
instrumentalities supported only by the credit of the

instrumentalities.

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

AGENCY MASTER DEMAND NOTES

The Fund may enter into master demand notes with various federal
agencies and instrumentalities. Under a master demand note, the Fund
has the right to increase or decrease the amount of the note on a
daily basis within specified maximum and minimum amounts. Master
demand notes also normally provide for full or partial repayment upon
seven or more days notice by either the Fund or the borrower and bear
interest at a variable rate. The Fund relies on master demand notes,
in part, to provide daily liquidity. To the extent that the Fund
cannot obtain liquidity through master demand notes, it may be
required to maintain a larger cash position, invest more assets in
securities with current maturities or dispose of assets at a gain or
loss to maintain sufficient liquidity. 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. 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 0.50% of the
Fund's average daily net assets. 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

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.

DISTRIBUTION PLAN AND SHAREHOLDER SERVICES

Under a distribution plan adopted in accordance with Rule 12b-1 under
the Investment Company Act of 1940 (the "Plan"), the distributor may
select financial institutions such as banks, fiduciaries, custodians
for public funds, investment advisers and broker/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 0.35% 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 0.35%. 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
0.25% of the average daily net asset value of its shares to obtain
certain personal services for shareholders and to maintain shareholder
accounts. Under the Shareholder Services Agreement, Federated
Shareholder Services will either perform shareholder services directly
or will select financial institutions to perform shareholder services.
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 and Shareholder Services Agreement,
Federated Securities Corp. and Federated Shareholder Services, from
their 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 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 which relates to the average aggregate daily net
assets of all funds advised by affiliates of Federated Investors
specified below: <TABLE> <CAPTION>

MAXIMUM AVERAGE AGGREGATE
FEE DAILY NET ASSETS

<C> <S>

0.150% on the first $250 million
0.125% on the next $250 million
0.100% on the next $250 million
0.075% on assets in excess of $750 million

</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

The Fund attempts to stabilize the net asset value of its shares at
$1.00 by valuing the portfolio securities using the amortized cost
method. The net asset value per share is determined by subtracting
total liabilities from total assets and dividing the remainder by the
number of shares outstanding. The Fund cannot guarantee that its net
asset value will always remain at $1.00 per share. The net asset
value is determined at 12:00 noon, 3:00 p.m. (Central 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,
Martin Luther King 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 from the Fund, with a minimum initial investment of $10,000
or more or additional investments of as little as $500. The minimum
initial investment 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

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

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

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, other than
retirement accounts subject to required minimum distributions, 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. Shares
purchased by wire before 3:00 p.m. (Eastern time) begin earning
dividends that day. Shares purchased by check begin earning dividends
the day after the check is converted into federal funds.

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.

CONFIRMATIONS AND ACCOUNT STATEMENTS

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

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.

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

[Graphic]

GOVERNMENT CASH SERIES

(A Portfolio of Cash Trust Series, Inc.)

PROSPECTUS

SEPTEMBER 30, 1997

An Open-End Management Investment Company

Federated Securities Corp., Distributor

Cusip 147551204

9080103A (9/97)

[Graphic]

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, 1997. 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, 1997

[Graphic]

Cusip 147551204

9080103B (9/97)

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 1 Selling Short and Buying on Margin 1 Issuing Senior
Securities and Borrowing Money 2 Pledging Assets 2 Lending Cash or
Securities 2 Investing in Commodities 2 Investing in Real Estate 2
Underwriting 2 Concentration of Investments 2 Diversification of
Investments 2 Investing in Restricted Securities 2 Investing in
Illiquid Securities 2 Investing in Securities of Other Investment
Companies 3 Investing in Control 3 Investing in Options 3 Regulatory
Compliance 3 CASH TRUST SERIES, INC. MANAGEMENT 4 Share Ownership 7
Director Compensation 8 Director Liability 8 INVESTMENT ADVISORY
SERVICES 9 Investment Adviser 9 Advisory Fees 9 BROKERAGE
TRANSACTIONS 9 OTHER SERVICES 9 Fund Administration 9 Custodian and
Portfolio Accountant 9 Transfer Agent 10 Independent Public
Accountants 10 Distribution Plan and Shareholder Services 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 11 Performance Comparisons 12 Economic and Market
Information 12 ABOUT FEDERATED INVESTORS 12 Mutual Fund Market 13
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 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 ensure
completion of the reverse repurchase agreements. PLEDGING ASSETS
The Fund will not mortgage, pledge, or hypothecate any assets
except as necessary to secure permitted borrowings. In these cases, it
may pledge assets having a market value not exceeding the lesser of
the dollar amounts borrowed or 10% of the value of total assets at the
time of the 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

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 including repurchase agreements providing for
settlement in more than seven days after notice. INVESTING IN
SECURITIES OF OTHER INVESTMENT COMPANIES The Fund will not
purchase securities of other investment companies, except as part of a
merger, consolidation, or other acquisition.

INVESTING FOR CONTROL

The Fund will not invest in securities of a company for the purpose of
exercising control or management.

INVESTING IN OPTIONS

The Fund will not invest in puts, calls, straddles, spreads, or any
combination of them.

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

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. Mr. Donahue is the father of J. Christopher Donahue, Executive Vice

President and Director of the Company.

Thomas G. Bigley

15 Old Timber Trail

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.; Director, Member
of Executive Committee, 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 or
Trustee 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

One Royal Palm Way
100 Royal Palm Way
Palm Beach, FL

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

203 Kensington Ct.

Pittsburgh, PA

Birthdate: October 6, 1926

Director

Chairman, Meritcare, Inc.; Director, Eat'N Park Restaurants, Inc.; Retired
from the law firm of Miller, Ament, Henny & Kochuba; 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; 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 and U.S. Space Foundation;
President Emeritus, University of Pittsburgh; Founding Chairman, National
Advisory Council for Environmental Policy and Technology, Federal Emergency
Management Advisory Board and Czech Management Center, Prague; Director or
Trustee of the Funds.

Marjorie P. Smuts

4905 Bayard Street
Pittsburgh, PA

Birthdate: June 21, 1935

Director

Public Relations/Marketing/Conference Planning; 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" includes
the following investment companies:

111 Corcoran Funds; 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 Investment Portfolios;
Federated Investment Trust; 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.; 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 Obligations Trust II; Money Market
Trust; Municipal Securities Income Trust; Newpoint Funds; RIMCO
Monument Funds; Targeted Duration Trust; Tax-Free Instruments Trust;
The Planters Funds; 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;
Wesmark Funds; and World Investment Series, Inc.

SHARE OWNERSHIP

Officers and Directors as a group own less than 1% of the Fund. As
of September 5, 1997, the following shareholder(s) of record owned 5%
or more of the outstanding shares of the Fund: Scott & Stringfellow,
Inc., Richmond, Virginia, owned approximately 32,939,305 shares
(5.85%); Kirpet Co., Omaha, Nebraska, owned approximately 52,854,585
shares (9.40%); Bank of America NT & SA, Los Angeles, California,
owned approximately 53,069,262 shares (9.43%); and BHC Securities,
Inc., Philadelphia, Pennsylvania owned approximately 54,414,873 shares
(9.67%). DIRECTOR COMPENSATION <TABLE> <CAPTION>

AGGREGATE

NAME, COMPENSATION

POSITION WITH FROM TOTAL COMPENSATION PAID
FUND FUND*# FROM FUND COMPLEX+

John F. Donahue $0 $0 for the Fund and
Chairman and Director 56 other investment companies in the Fund Complex

Thomas G. Bigley $4,068.51 $108,725 for the Fund and
Director 56 other investment companies in the Fund Complex

John T. Conroy, Jr. $4,476.02 $119,615 for the Fund and
Director 56 other investment companies in the Fund Complex

William J. Copeland $4,476.02 $119,615 for the Fund and
Director 56 other investment companies in the Fund Complex

J. Christopher Donahue $0 $0 for the Fund and
Director 18 other investment companies in the Fund Complex

James E. Dowd $4,476.02 $119,615 for the Fund and
Director 56 other investment companies in the Fund Complex

Lawrence D. Ellis $4,068.51 $108,725 for the Fund and
Director 56 other investment companies in the Fund Complex

Edward L. Flaherty, Jr. $4,476.02 $119,615 for the Fund and
Director 56 other investment companies in the Fund Complex

Peter E. Madden $4,068.51 $108,725 for the Fund and
Director 56 other investment companies in the Fund Complex

Gregor F. Meyer $4,068.51 $108,725 for the Fund and
Director 56 other investment companies in the Fund Complex

John E. Murray, Jr. $4,068.51 $108,725 for the Fund and
Director 56 other investment companies in the Fund Complex

Wesley W. Posvar $4,068.51 $108,725 for the Fund and
Director 56 other investment companies in the Fund Complex

Marjorie P. Smuts $4,068.51 $108,725 for the Fund and
Director 56 other investment companies in the Fund Complex
</TABLE>

* Information is furnished for the fiscal year ended May 31, 1997.

# The aggregate compensation is provided for the Company which is
comprised of four portfolios.

+ The information is provided for the last calendar year.

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, 1997, 1996, and 1995 the adviser earned
$2,761,277, $2,411,464, and $2,041,481, respectively, of which
$533,592, $234,663, and $311,977, respectively, were waived.
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, 1997, 1996 and 1995,
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

CUSTODIAN AND PORTFOLIO ACCOUNTANT

State Street Bank and Trust Company, Boston, Massachusetts, is
custodian for the securities and cash of the Fund. Federated Services
Company, Pittsburgh, Pennsylvania, 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 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, Pennsylvania.

DISTRIBUTION PLAN AND SHAREHOLDER SERVICES

By adopting the 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 seeking to achieve its investment
objectives. By identifying potential investors whose needs are served
by the Fund's objectives, and properly servicing these accounts, the
Fund may be able to curb sharp fluctuations in rates of redemptions
and sales.

Other benefits, 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, 1997, payments in the amount of $552,256
were made pursuant to the Plan, all of which was paid to financial
institutions. In addition, for the fiscal year, the Fund paid shareholder
service fees in the amount of $1,380,639.

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 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

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, 1997, was
4.58%. 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, 1997, was
4.69%.

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, 1997, and for the period from August
23, 1989, (date of initial public investment) through May 31, 1997,
were 4.54%, 3.76% and 4.67%, 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:

* Lipper Analytical Services, Inc., ranks funds in various fund
categories based on total return, which assumes the reinvestment
of all income dividends and capital gains distributions, if any.

* IBC/Donoghue's Money Fund Report publishes annualized yields of
money market funds weekly. Donoghue's Money Market Insight
publication reports monthly and 12-month-to-date investment
results for the same money funds.

* Money, 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 portfolio managers and their views
and analysis on how such developments could affect the funds. 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, 1996,
Federated Investors managed more than $50.3 billion in assets across
50 money market funds, including 18 government, 11 prime and 21
municipal with assets approximating $28.0 billion, $12.8 billion and
$9.5 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 and global portfolios.

MUTUAL FUND MARKET

Thirty-seven percent of American households are pursuing their
financial goals through mutual funds. These investors, as well as
businesses and institutions, have entrusted over $3.5 trillion to the
more than 6,000 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 advisors. The marketing effort to these institutional
clients is headed by John B. Fisher, President, Institutional Sales
Division.

BANK MARKETING

Other institutional clients include close relationships with more than
1,600 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 Timothy C. Pillion, Senior Vice President, Bank Marketing &
Sales.

BROKER/DEALERS AND BANK BROKER/DEALER SUBSIDIARIES

Federated funds are available to consumers through major brokerage
firms nationwide--we have over 2,200 broker/dealer and bank
broker/dealer relationships across the country--supported by more
wholesalers than any other mutual fund distributor. Federated's
service to financial professionals and institutions has earned it high
ratings in several surveys performed by DALBAR, Inc. DALBAR is
recognized as the industry benchmark for service quality measurement.
The marketing effort to these firms is headed by James F. Getz,
President, Federated Securities Corp.

FINANCIAL STATEMENTS

The financial statements for Government Cash Series for the fiscal
year ended May 31, 1997, are incorporated herein by reference to the
Annual Report to Shareholders of Government Cash Series dated May 31,
1997.

* Source: Investment Company Institute

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.

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, 1997, 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).

CONTRARY IS A CRIMINAL OFFENSE.

Prospectus dated September 30, 1997

TABLE OF CONTENTS

Summary of Fund Expenses 1 Financial Highlights 2 General Information
3 Investment Information 3 Investment Objective 3 Investment Policies
3 Municipal Securities 5 Investment Risks 5 Investment Limitations 5
Fund Information 5 Management of the Fund 5 Distribution of Shares 6
Administration of the Fund 7 Net Asset Value 7 How to Purchase Shares
7 Purchasing Shares Through a Financial Institution 7 Purchasing
Shares by Wire 8 Purchasing Shares by Check 8 Special Purchase
Features 8 How to Redeem Shares 8 Redeeming Shares Through a
Financial Institution 8 Redeeming Shares by Telephone 8 Redeeming
Shares by Mail 9 Special RedemptionFeatures 9 Account and Share
Information 9 Dividends 9 Capital Gains 9 Confirmations and Account
Statements 9 Accounts with Low Balances 9 Voting Rights 10 Tax
Information 10 Federal Income Tax 10 State and Local Taxes 10
Performance Information 11

SUMMARY OF FUND EXPENSES

SHAREHOLDER TRANSACTION EXPENSES

<S> <C>
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
<CAPTION>
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)

<S> <C> <C>
Management Fee (after waiver)(1) 0.41%
12b-1 Fee(2) 0.10%
Total Other Expenses 0.48%

Shareholder Services Fee 0.25%
Total Operating Expenses(3) 0.99%
</TABLE>

(2) The maximum 12b-1 fee is 0.35%.

(3) The total Fund operating expenses were 1.08% absent the voluntary
waiver of a portion of the management fee.

LONG-TERM SHAREHOLDERS MAY PAY MORE THAN THE ECONOMIC EQUIVALENT OF THE
MAXIMUM FRONT-END SALES CHARGES PERMITTED UNDER THE RULES OF THE NATIONAL

ASSOCIATION OF SECURITIES DEALERS, INC.
<TABLE>

EXAMPLE

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.

<S> <C>
1 Year $ 10
3 Years $ 32
5 Years $ 55
10 Years $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

(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

YEAR ENDED MAY 31,

1997 1996 1995 1994 1993 1992 1991 1990(A)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
OF PERIOD
INCOME FROM INVESTMENT

OPERATIONS

Net investment income 0.03 0.03 0.03 0.02 0.03 0.04 0.05 0.04
LESS DISTRIBUTIONS

Distributions from net (0.03) (0.03) (0.03) (0.02) (0.03) (0.04) (0.05) (0.04)
investment income
NET ASSET VALUE, END OF $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
PERIOD

TOTAL RETURN(B) 2.80% 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% 0.99% 0.98% 0.94% 0.73%*
Net investment income 2.75% 2.99% 2.76% 1.81% 2.10% 3.42% 5.02% 5.76%*
Expense 0.09% 0.33% 0.05% 0.06% 0.03% 0.03% 0.17% 0.45%*
waiver/reimbursement(c)
SUPPLEMENTAL DATA

Net assets, end of period $515,060 $478,605 $445,164 $574,801 $456,205 $516,814$403,151 $195,897
(000 omitted)
</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, 1997, 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 or the
federal 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 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.

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS

RESTRICTED AND ILLIQUID SECURITIES

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. However, the interest from
certain Municipal Securities is subject to the federal alternative
minimum tax.

MUNICIPAL SECURITIES

Municipal Securities are generally issued to finance public works,
such as airports, bridges, highways, housing, hospitals, mass
transportation projects, schools, streets, and water and sewer works.
They are also issued to repay outstanding obligations, to raise funds
for general operating expenses, and to make loans to other public
institutions and facilities.

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

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

INVESTMENT RISKS

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. The Fund's concentration in Municipal Securities
may entail a greater level of risk than other types of money market
funds.

INVESTMENT LIMITATIONS

The above investment limitations cannot be changed without shareholder
approval.

FUND INFORMATION

MANAGEMENT OF THE FUND

BOARD OF DIRECTORS

INVESTMENT ADVISER

ADVISORY FEES

ADVISER'S BACKGROUND

Federated Advisers, a Delaware business trust, organized on April 11,
1989, is a registered investment adviser under the Investment Advisers
Act of 1940. It is a subsidiary of Federated Investors. All of the
Class A (voting) shares of Federated Investors are owned by a trust,
the trustees of which are John F. Donahue, Chairman and Trustee of
Federated Investors, Mr. Donahue's wife, and Mr. Donahue's son, J.
Christopher Donahue, who is President and Trustee of Federated
Investors. Federated Advisers and other subsidiaries of Federated
Investors serve as investment advisers to a number of investment
companies and private accounts. Certain other subsidiaries also
provide administrative services to a number of investment companies.
With over $110 billion invested across over 300 funds under management
and/or administration by its subsidiaries, as of December 31, 1996,
Federated Investors is one of the largest mutual fund investment
managers in the United States. With more than 2,000 employees,
Federated continues to be led by the management who founded the
company in 1955. Federated funds are presently at work in and through
4,500 financial institutions nationwide. 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

DISTRIBUTION PLAN AND SHAREHOLDER SERVICES

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 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 0.35% 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 0.35%. Any fees paid by the distributor under the Plan will be
reimbursed from the assets of the Fund.

SUPPLEMENTAL PAYMENTS TO FINANCIAL INSTITUTIONS

In addition to payments made pursuant to the Distribution Plan and
Shareholder Services Agreement, Federated Securities Corp. and
Federated Shareholder Services, from their 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 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

MAXIMUM AVERAGE AGGREGATE
FEE DAILY NET ASSETS

0.150% on the first $250 million
0.125% on the next $250 million
0.100% on the next $250 million
0.075% on assets in excess of $750 million

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. 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

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

SYSTEMATIC INVESTMENT PROGRAM

HOW TO REDEEM SHARES

REDEEMING SHARES THROUGH A FINANCIAL INSTITUTION

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. 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. 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

CHECK WRITING

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

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. Shares purchased by wire
before 3:00 p.m. (Eastern time) begin earning dividends that day. Shares
purchased by check begin earning dividends the day after the check is
converted into federal funds.

CAPITAL GAINS

CONFIRMATIONS AND ACCOUNT STATEMENTS

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.

VOTING RIGHTS

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 5, 1997,
McDonald & Co. Securities, Inc., Cincinnati, Ohio, owned 32.59% 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.

NOTES

[Graphic]

Municipal Cash Series

(A Portfolio of Cash Trust Series, Inc.)

PROSPECTUS

SEPTEMBER 30, 1997

An Open-End Management Investment Company

MUNICIPAL 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

Federated Securities Corp., Distributor

Cusip 147551303
9080102A (9/97)

[Graphic]

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, 1997. 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, 1997

[Graphic]

Federated Investors
Federated Securities Corp., Distributor

Cusip 147551303
9080102B (9/97)

[Graphic]

TABLE OF CONTENTS

INVESTMENT POLICIES 1 Acceptable Investments 1 Participation
Interests 1 Municipal leases 1 Ratings 1 When-Issued and Delayed
Delivery Transactions 1 Repurchase Agreements 2 Reverse Repurchase
Agreements 2 Credit Enhancement 2 INVESTMENT LIMITATIONS 2 Selling
Short and Buying on Margin 2 Issuing Senior Securities and Borrowing
Money 2 Pledging Assets 2 Lending Cash or Securities 3 Investing in
Commodities 3 Investing in Real Estate 3 Underwriting 3 Concentration
on Investments 3 Diversification of Investments 3 Investing in
Restricted Securities 3 Investing in Illiquid Securities 3 Investing
in Securities of Other Investment Companies 3 Investing for Control 3
Investing in Options 4 Regulatory Compliance 4 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 9 Fund
Administration 9 Custodian and Portfolio Accountant 10 Transfer Agent
10 Independent Public Accountants 10 DISTRIBUTION PLAN AND
SHAREHOLDER SERVICES 10 DETERMINING NET ASSET VALUE 10 REDEMPTION IN
KIND 11 THE FUND'S TAX STATUS 11 PERFORMANCE INFORMATION 11 Yield 11
Effective Yield 11 Tax-Equivalent Yield 11 Tax-Equivalency Table 12
Total Return 12 Performance Comparisons 13 Economic and Market
Information 13 ABOUT FEDERATED INVESTORS 13 Mutual Fund Market 14
Institutional Clients 14 Bank Marketing 14 Broker/Dealers and Bank
Broker/Dealer Subsidiaries 14 FINANCIAL STATEMENTS 14 APPENDIX 15

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

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

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 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

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 governmental subdivision,
including states and the District of Columbia, territories,
possessions of the United States, or their political subdivisions,
agencies, authorities, instrumentalities, or similar entities, will be
considered a separate issuer if its assets and revenues are separate
from those of the governmental body creating it and the security is
backed only by its own assets and revenues.

Industrial development bonds backed only by the assets and revenues of
a nongovernmental user are considered to be issued solely by that
user. If in the case of an industrial development bond or
governmental-issued security, a governmental or some other entity
guarantees the security, such guarantee would be considered a separate
security issued by the guarantor as well as the other issuer, subject
to limited exclusions allowed by the Investment Company Act of 1940.

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 Securities Act of 1933.

INVESTING IN ILLIQUID SECURITIES

The Fund will not invest more than 10% of the value of its net assets
in illiquid securities, including non-negotiable time deposits.

INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES

The Fund will not purchase securities of other investment companies,
except as part of a merger, consolidation, or other acquisition.

INVESTING FOR CONTROL

The Fund will not invest in securities of a company for the purpose of
exercising control or management.

INVESTING IN OPTIONS

The Fund will not invest in puts, calls, straddles, spreads, or any
combination of them.

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

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

President and Director of the Company.

Thomas G. Bigley
15 Old Timber Trail
Pittsburgh, PA

Birthdate: February 3, 1934

Director

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

Trustee of the Funds.

William J. Copeland
One PNC Plaza--23rd Floor

Pittsburgh, PA

Birthdate: July 4, 1918

Director

J. Christopher Donahue*
Federated Investors Tower

Pittsburgh, PA

Birthdate: April 11, 1949

Executive Vice President and Director

James E. Dowd
571 Hayward Mill Road

Concord, MA

Birthdate: May 18, 1922

Director

Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director or
Trustee 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
One Royal Palm Way
100 Royal Palm Way
Palm Beach, FL

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
203 Kensington Ct.
Pittsburgh, PA

Birthdate: October 6, 1926

Director

Chairman, Meritcare, Inc.; Director, Eat'N Park Restaurants, Inc.; Retired
from the law firm of Miller, Ament, Henny & Kochuba; 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; Director or Trustee of the Funds.

Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh

Pittsburgh, PA

Birthdate: September 14, 1925

Director

Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA

Birthdate: June 21, 1935

Director

Public Relations/Marketing/Conference Planning; 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

John W. McGonigle
Federated Investors Tower

Pittsburgh, PA

Birthdate: October 26, 1938

Executive Vice President, Secretary, and Treasurer

* 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" includes
the following investment companies: 111 Corcoran Funds; 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 Investment Portfolios; Federated Investment Trust;
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.; 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
Obligations Trust II; Money Market Trust; Municipal Securities Income
Trust; Newpoint Funds; RIMCO Monument Funds; Targeted Duration Trust;
Tax-Free Instruments Trust; The Planters Funds; 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; WesMark Funds; and World Investment Series, Inc.
SHARE OWNERSHIP

Officers and Directors as a group own less than 1% of the Fund.

As of September 5, 1997, the following shareholders of record owned 5%
or more of the outstanding shares of the Fund: BHC Securities, Inc.,
Philadelphia, PA, owned approximately 35,212,819 shares (6.55%) and
McDonald & Co. Securities, Inc., Cincinnati, OH, owned approximately
175,230,603 shares (32.59%).

DIRECTOR COMPENSATION

AGGREGATE

NAME, COMPENSATION

POSITION WITH FROM TOTAL COMPENSATION PAID
COMPANY COMPANY*# FROM FUND COMPLEX+

<S> <C> <S>
John F. Donahue, $0 $0 for the Fund and
Chairman and Director 56 other investment companies in the Fund Complex

Thomas G. Bigley, $4,068.51 $108,725 for the Fund and
Director 56 other investment companies in the Fund Complex

John T. Conroy, Jr., $4,476.02 $119,615 for the Fund and
Director 56 other investment companies in the Fund Complex

William J. Copeland, $4,476.02 $119,615 for the Fund and
Director 56 other investment companies in the Fund Complex

J. Christopher Donahue, $0 $0 for the Fund and
Director 18 other investment companies in the Fund Complex

James E. Dowd, $4,476.02 $119,615 for the Fund and
Director 56 other investment companies in the Fund Complex

Lawrence D. Ellis, M.D., $4,068.51 $108,725 for the Fund and
Director 56 other investment companies in the Fund Complex

Edward L. Flaherty, Jr., $4,476.02 $119,615 for the Fund and
Director 56 other investment companies in the Fund Complex

Peter E. Madden, $4,068.51 $108,725 for the Fund and
Director 56 other investment companies in the Fund Complex

Gregor F. Meyer, $4,068.51 $108,725 for the Fund and
Director 56 other investment companies in the Fund Complex

John E. Murray, Jr., $4,068.51 $108,725 for the Fund and
Director 56 other investment companies in the Fund Complex

Wesley W. Posvar, $4,068.51 $108,725 for the Fund and
Director 56 other investment companies in the Fund Complex

Marjorie P. Smuts, $4,068.51 $108,725 for the Fund and
Director 56 other investment companies in the Fund Complex
</TABLE>

* Information is furnished for the fiscal year ended May 31, 1997.

# The aggregate compensation is provided for the Company which is
comprised of four portfolios.

+ The information is provided for the last calendar year.

DIRECTOR LIABILITY

INVESTMENT ADVISORY SERVICES

INVESTMENT ADVISER

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, 1997, 1996, and 1995, the adviser earned
$2,782,055, $2,478,141, and $2,619,462, respectively, of which
$497,998, $390,103, and $264,144, respectively, were waived.

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, 1997, 1996,
and 1995, 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

CUSTODIAN AND PORTFOLIO ACCOUNTANT

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, Pennsylvania.

DISTRIBUTION PLAN AND SHAREHOLDER SERVICES

For the fiscal year ended May 31, 1997, payments in the amount of $556,411
were made pursuant to the Plan, all of which was paid to financial
institutions. In addition, for the fiscal year, the Fund paid shareholder
service fees in the amount of $1,391,027.

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% 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'S TAX STATUS

PERFORMANCE INFORMATION

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, 1997, was
3.10%.

TAX-EQUIVALENT YIELD

The tax-equivalent yield of the Fund is calculated similarly to the
yield but is adjusted to reflect the taxable yield that the Fund would
have had to earn to equal its actual yield, assuming 39.60% tax rate
(the maximum effective federal rate for individuals) and assuming that
the income is 100% tax exempt. The Fund's tax-equivalent yield for
the seven-day period ended May 31, 1997, was 5.13%.
TAX-EQUIVALENCY TABLE

A tax-equivalency table may be used in advertising and sales
literature. The interest earned by the municipal securities in the
Fund's portfolio generally remains free from federal regular income
tax,* and is often free from state and local taxes as well. As the
table below indicates, a "tax-free" investment can be an attractive
choice for investors, particularly in times of narrow spreads between
tax-free and taxable yields.

TAXABLE YIELD EQUIVALENT FOR 1997
MULTISTATE MUNICIPAL FUNDS
FEDERAL INCOME TAX BRACKET:

15.00% 28.00% 31.00% 36.00% 39.60%
JOINT $1- $41,201- $99,601- $151,751- OVER
RETURN 41,200 99,600 151,750 271,050 $271,050
SINGLE $1- $24,651- $59,751- $124,651- OVER
RETURN 24,650 59,750 124,650 271,050 $271,050

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 the Fund.

* Some portion of the Fund's income may be subject to the federal

alternative minimum tax and state and local 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, 1997, and for the period from August
25, 1989 (date of initial public investment) through May 31, 1997,
were 2.80%, 2.52% and 3.34%, respectively. PERFORMANCE
COMPARISONS

* Lipper Analytical Services, Inc., ranks funds in various fund
categories based on total return, which assumes the reinvestment
of all income dividends and capital gains distributions, if any.

* Money, a monthly magazine, regularly ranks money market funds in
various categories based on the latest available seven-day
effective yield.

ECONOMIC AND MARKET INFORMATION

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.

MUTUAL FUND MARKET

INSTITUTIONAL CLIENTS

BANK MARKETING

BROKER/DEALERS AND BANK BROKER/DEALER SUBSIDIARIES

FINANCIAL STATEMENTS

The financial statements for Municipal Cash Series for the fiscal year
ended May 31, 1997, are incorporated herein by reference to the Annual
Report to Shareholders of Municipal Cash Series dated May 31, 1997.

* Source: Investment Company Institute

APPENDIX

STANDARD & POOR'S RATINGS GROUP

SHORT-TERM MUNICIPAL OBLIGATIONS 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 as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.

Aa--Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group, they comprise what are
generally known as high grade bonds. They are rated lower than the
best bonds because margins of protection may not be as large as in Aaa
securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the
long-term risks appear somewhat larger than in Aaa securities.

A--Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper medium grade obligations.
Factors giving security to principal and interest are considered
adequate but elements may be present which suggest a susceptibility to
impairment sometime in the future. 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 securities
rated A-1 or P-1. 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 RATINGS 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.)

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.

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

CONTRARY IS A CRIMINAL OFFENSE.

Prospectus dated September 30, 1997

TABLE OF CONTENTS

Summary of Fund Expenses 1 Financial Highlights 2 General Information
3 Investment Information 3 Investment Objective 3 Investment Policies
3 Investment Risks 5 Investment Limitations 5 Fund Information 5
Management of the Fund 5 Distribution of Shares 6 Administration of
the Fund 7 Net Asset Value 7 How to Purchase Shares 7 Purchasing
Shares Through a Financial Institution 7 Purchasing Shares by Wire 8
Purchasing Shares by Check 8 Special Purchase Features 8 How to
Redeem Shares 8 Redeeming Shares Through a Financial Institution 8
Redeeming Shares by Telephone 8 Redeeming Shares byMail 9 Special
Redemtion Features 9 Account and Share Information 9 Dividends 9
Capital Gains 9 Confirmation and Account Statements 9 Accounts with
Low Balances 9 Voting Rights 10 Tax Information 10 Federal Income Tax
10 State and Local Taxes 10 Performance Information 10

SUMMARY OF FUND EXPENSES

(As a percentage of average net assets)
<TABLE>

SHAREHOLDER TRANSACTION EXPENSES

<S> <C>
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
<CAPTION>
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)

<S> <C> <C>
Management Fee (after waiver)(1) 0.30%
12b-1 Fee(2) 0.10%
Total Other Expenses 0.59%

Shareholder Services Fee 0.25%
Total Operating Expenses(3) 0.99%
</TABLE>

(2) The maximum 12b-1 fee is 0.35%.

(3) The total operating expenses would have been 1.19% absent the
voluntary waiver of a portion of the management fee.

LONG-TERM SHAREHOLDERS MAY PAY MORE THAN THE ECONOMIC EQUIVALENT OF THE
MAXIMUM FRONT-END SALES CHARGES PERMITTED UNDER THE RULES OF THE NATIONAL

ASSOCIATION OF SECURITIES DEALERS, INC.

<TABLE>

EXAMPLE

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.

<S> <C>
1 year $ 10
3 years $ 32
5 years $ 55
10 years $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

(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

YEAR ENDED MAY 31,

1997 1996 1995 1994 1993 1992 1991 1990(A)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
BEGINNING OF PERIOD
INCOME FROM INVESTMENT

OPERATIONS

Net investment income 0.05 0.05 0.05 0.02 0.03 0.04 0.07 0.06
LESS DISTRIBUTIONS

Distributions from net (0.05) (0.05) (0.05) (0.02) (0.03) (0.04) (0.07) (0.06)
investment income
NET ASSET VALUE, END OF $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $1.00
PERIOD

TOTAL RETURN(B) 4.64% 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% 0.99% 0.98% 0.94% 0.73%*
Net investment income 4.55% 4.78% 4.57% 2.45% 2.58% 4.21% 6.50% 7.82%*
Expense 0.20% 0.38% 0.20% 0.18% 0.15% 0.22% 0.44% 0.46%*
waiver/reimbursement(c)

SUPPLEMENTAL DATA

Net assets, end of $2,363,382 $1,539,235 $1,027,083 $791,147 $796,832 $750,016 $562,465 $189,254
period (000 omitted)
</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, 1997, 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. 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 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 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 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 or the Savings
Association Insurance Fund. 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.

REPURCHASE AGREEMENTS

CREDIT ENHANCEMENT

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS

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.

RESTRICTED AND ILLIQUID SECURITIES

As a matter of fundamental investment policy, which cannot be changed
without shareholder approval, the Fund may invest no more than 10% of
its net assets in restricted securities except Secion 4(2) commercial
paper. 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. As a
matter of non-fundamental investment policy, the Fund will not invest
more than 10% of its net assets in illiquid securities, including
non-negotiable time deposits, restricted securities other than Section
4(2) commercial paper, and repurchase agreements providing for
settlement in more than seven days after notice. CONCENTRATION OF
INVESTMENTS As a matter of policy which cannot be changed without
shareholder approval, the Fund will 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

MANAGEMENT OF THE FUND

BOARD OF DIRECTORS

INVESTMENT ADVISER

ADVISORY FEES

ADVISER'S BACKGROUND

DISTRIBUTION OF SHARES

DISTRIBUTION PLAN AND SHAREHOLDER SERVICES

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
0.25% of the average daily net asset value of its shares to obtain
certain personal services for shareholders and to maintain shareholder
accounts. Under the Shareholder Services Agreement, Federated
Shareholder Services will either perform shareholder services directly
or will select financial institutions to perform shareholder services.
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 and Shareholder Services Agreement,
Federated Securities Corp. and Federated Shareholder Services, from
their 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

MAXIMUM AVERAGE AGGREGATE
FEE DAILY NET ASSETS

0.150% on the first $250 million
0.125% on the next $250 million
0.100% on the next $250 million
0.075% on assets in excess of $750 million

NET ASSET VALUE

The Fund attempts to stabilize the net asset value of its shares at
$1.00 by valuing the portfolio securities using the amortized cost
method. The net asset value per share is determined by subtracting
total liabilities from total assets and dividing the remainder by the
number of shares outstanding. The Fund cannot guarantee that its net
asset value will always remain at $1.00 per share. The net asset
value is determined at 12:00 noon, 3:00 p.m. (Eastern time), and as of
the close of trading (normally 4:00 p.m., Eastern time) on the New
York Stock Exchange, Monday through Friday, except on New Year's Day,
Martin Luther King 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 from the Fund, with a minimum initial investment of $10,000
or more or additional investments of as little as $500. The minimum
initial investment and subsequent investment 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

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

SYSTEMATIC INVESTMENT PROGRAM

HOW TO REDEEM SHARES

REDEEMING SHARES THROUGH A FINANCIAL INSTITUTION

REDEEMING SHARES BY TELEPHONE

REDEEMING SHARES BY MAIL

CHECK WRITING

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

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. Shares purchased by wire
before 3:00 p.m. (Eastern time) begin earning dividends that day. Shares
purchased by check begin earning dividends the day after the check is
converted into federal funds.

CAPITAL GAINS

CONFIRMATIONS AND ACCOUNT STATEMENTS

ACCOUNTS WITH LOW BALANCES

VOTING RIGHTS

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.

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.

[Graphic]
Federated Investors

Prime Cash Series

(A Portfolio of Cash Trust Series,Inc.)

Prospectus
September 30, 1997

An Open-End Management Investment Company

PRIME 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

Federated Securities Corp., Distributor

Cusip 147551105
9080101A (9/97)

[Graphic]

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, 1997. 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, 1997 [Graphic]Federated Investors Federated
Securities Corp., Distributor

Cusip 147551105

9080101B (9/97)

[Graphic]

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 Restricted and
Illiquid Securities 2 Reverse Repurchase Agreements 2 Credit
Enhancements 2 Lending of Portfolio Securities 2 INVESTMENT
LIMITATIONS 2 Selling Short and Buying on Margin 2 Issuing Senior
Securities and Borrowing Money 2 Pledging Assets 3 Lending Cash or
Securities 3 Investing in Commodities 3 Investing in Real Estate 3
Underwriting 3 Concentration of Investments 3 Diversification of
Investments 3 Investing on Restricted Securities 3 Investing in
Illiquid Securities 3 Investing in Securities of Other Investment
Companies 4 Investing for Control 4 Investing in Options 4 Regulatory
Compliance 4 CASH TRUST SERIES, INC. MANAGEMENT 4 Share Ownership 8
Director Compensation 8 Directory Liability 9 INVESTMENT ADVISORY
SERVICES 9 Investment Advisory 9 Advisory Fees 9 BROKERAGE
TRANSATIONS 9 OTHER SERVICES 9 Fund Administration 9 Custodian and
Portfolio Accoutant 10 Transfer Agent 10 Independent Public
Accountants 10 Distribution Plan and Shareholder Services 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 11 Performance Comparisons 12 Economic and Market
Information 12 ABOUT FEDERATED INVESTORS 12 Mutual Fund Market 13
Institutional Clients 13 Bank Marketing 13 Broker/Dealer and Bank
Broker/Dealer Subsidiaries 13 FINANCIAL STATEMENTS 13

INVESTMENT POLICIES

ACCEPTABLE INVESTMENTS

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:

* the full faith and credit of the U.S. Treasury;

* the issuer's right to borrow from the U.S. Treasury;

* the discretionary authority of the U.S. government to purchase certain
obligations of agencies or instrumentalities; or

* the 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 or the Savings Association
Insurance Fund, 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 A nationally recognized statistical rating
organization's ("NRSRO") two highest rating categories are determined
without regard for sub-categories and gradations. For example,
securities rated A-1+, A-1, or A-2 by Standard & Poor's Ratings Group
("S&P"), Prime-1 or Prime-2 by Moody's Investors Service, Inc.
("Moody's"), or F-1 (+ or -) or F-2 (+ or -) by Fitch Investors
Service, Inc. ("Fitch") are all considered rated in one of the two
highest short-term rating categories. The Fund will limit its
investments in securities rated in the second highest short-term
rating category e.g., A-2 by S&P, Prime-2 by Moody's, or F-2 (+ or -)
by Fitch, to not more than 5% of its total assets, with not more than
1% invested in the securities of any one issuer. 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." An NRSRO's highest rating category is
determined without regard for sub-categories and gradations. For
example, securities rated A-1 or A-1+ by Standard & Poor's Ratings
Group ("S&P"), Prime-1 by Moody's Investors Service, Inc. ("Moody's"),
or F-1 (+ or -) by Fitch Investors Service, Inc. ("Fitch") are all
considered rated in the highest short-term rating category. The Fund
will follow applicable regulations in determining whether a security
rated by more than one NRSRO can be treated as being in the highest
short-term rating category; currently, such securities must be rated
by two NRSROs in their highest rating category. See "Regulatory
Compliance." WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS

REPURCHASE AGREEMENTS

RESTRICTED AND ILLIQUID SECURITIES

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.

REVERSE REPURCHASE AGREEMENTS

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

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 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
as necessary to secure permitted borrowings. In these cases, it may
pledge assets having market value not exceeding the lesser of the
dollar or 10% of the value of total assets at the time of the pledge.

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 reverse repurchase agreements and variable
amount demand 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

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 commercial paper issued by finance
companies.

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.

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. INVESTING ON RESTRICTED SECURITIES The Fund will not
invest more than 10% of its net assets in securities subject to
restrictions on resale under federal securities law, 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 including non-negotiable time deposits,
restricted securities other than Section 4(2) commercial paper, and
repurchase agreements providing for settlement in more than seven days
after notice.

INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES

The Fund will not purchase securities of other investment companies,
except as part of a merger, consolidation, or other acquisition.

INVESTING FOR CONTROL

The Fund will not invest in securities of a company for the purpose of
exercising control or management.

INVESTING IN OPTIONS

The Fund will not invest in puts, calls, straddles, spreads, or any
combination of them.

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.

John F. Donahue@*
Federated Investors Tower

Pittsburgh, PA

Birthdate: July 28, 1924

Chairman and Director

President and Director of the Company.

Thomas G. Bigley
15 Old Timber Trail
Pittsburgh, PA

Birthdate: February 3, 1934

Director

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

Trustee of the Funds.

William J. Copeland
One PNC Plaza--23rd Floor

Pittsburgh, PA

Birthdate: July 4, 1918

Director

J. Christopher Donahue*
Federated Investors Tower

Pittsburgh, PA

Birthdate: April 11, 1949

Executive Vice President and Director

James E. Dowd
571 Hayward Mill Road

Concord, MA

Birthdate: May 18, 1922

Director

Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director or
Trustee of the Funds.

Lawrence D. Ellis, M.D.*
3471 Fifth Avenue, Suite 1111

Pittsburgh, PA

Birthdate: October 11, 1932

Director

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
One Royal Palm Way
100 Royal Palm Way
Palm Beach, FL

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
203 Kensington Ct.
Pittsburgh, PA

Birthdate: October 6, 1926

Director

Chairman, Meritcare, Inc.; Director, Eat'N Park Restaurants, Inc.; Retired
from the law firm of Miller, Ament, Henny & Kochuba; 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; Director or Trustee of the Funds.

Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh

Pittsburgh, PA

Birthdate: September 14, 1925

Director

Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA

Birthdate: June 21, 1935

Director

Public Relations/Marketing/Conference Planning; 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

John W. McGonigle
Federated Investors Tower

Pittsburgh, PA

Birthdate: October 26, 1938

Executive Vice President, Secretary, and Treasurer

* 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" includes
the following investment companies: 111 Corcoran Funds; 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 Investment Portfolios; Federated Investment Trust;
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.; 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
Obligations Trust II; Money Market Trust; Municipal Securities Income
Trust; Newpoint Funds; RIMCO Monument Funds; Targeted Duration Trust;
Tax-Free Instruments Trust; The Planters Funds; 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; Wesmark Funds; and World Investment Series, Inc.
SHARE OWNERSHIP Officers and Directors as a group own less
than 1% of the Fund.

As of September 5, 1997, the following shareholder(s) of record owned 5% or
more of the outstanding shares of the Fund: Primevest Financial Services,
St. Cloud, MN, owned approximately 271,158,333 shares (8.97%) and BHC
Securities, Inc., Philadelphia, PA, owned approximately 285,625,632 shares
(9.45%).

DIRECTOR COMPENSATION

AGGREGATE

NAME, COMPENSATION

POSITION WITH FROM TOTAL COMPENSATION PAID
FUND FUND*# FROM FUND COMPLEX+

<S> <C> <S>
John F. Donahue $0 $0 for the Fund and
Chairman and Director 56 other investment companies in the Fund Complex

Thomas G. Bigley $4,068.51 $108,725 for the Fund and
Director 56 other investment companies in the Fund Complex

John T. Conroy, Jr. $4,476.02 $119,615 for the Fund
and Director 56 other investment companies in the Fund Complex