PRESIDENT'S MESSAGE
Dear Shareholder:
I am pleased to present the Semi-Annual Report to shareholders for Government
Cash Series, a portfolio of Cash Trust Series, Inc., which covers the six-month
period ended November 30, 1997. The report begins with an investment review by
the fund's portfolio manager, which is followed by a complete listing of the
fund's investments and its financial statements.
During the reporting period, Government Cash Series paid a total of $0.02 in
dividends per share. In addition to income on their ready cash, shareholders
benefit from the fund's daily liquidity and stability of principal.*
At the end of the reporting period, the fund's net assets stood at $552.7
million, with 28% of net assets invested in securities issued by the United
States Treasury and various government agencies, including the Federal Farm
Credit Bank, Federal Home Loan Bank, Federal Home Loan Mortgage Association,
Federal National Mortgage Association, and Student Loan Marketing Association.
More than 74% of the fund's net assets was invested in repurchase agreements
backed by U.S. government and/or agency securities, because repurchase
agreements offered a yield advantage over many direct government obligations.
Thank you for choosing Government Cash Series as a convenient way to keep your
cash working every day through the relative safety of U.S. government money
market obligations. Please contact your investment representative if you have
any questions about the fund.
Sincerely,
[Graphic]
Richard B. Fisher
President
January 15, 1998
* Money market funds seek to maintain a stable net asset value of $1.00 per
share. There is no assurance that they will be able to do so. An investment
in this fund is not insured or guaranteed by the U.S. government.
INVESTMENT REVIEW
Government Cash Series is invested in direct U.S. Treasury and U.S. government
agency obligations and in repurchase agreements which have these securities as
collateral. The fund continues to invest in issues of the Federal National
Mortgage Association, Student Loan Marketing Association, Federal Farm Credit
Bank System, Federal Home Loan Bank System, and Federal Home Loan Mortgage
Corp., and maintains a small Treasury position for liquidity purposes.
Over the six months ended November 30, 1997, Federal Reserve Board's (the "Fed")
policy remained on hold with the federal funds target rate at 5.50%. Economic
fundamentals remained strong over the reporting period, but inflationary
pressures remained benign. On the heels of the 25 basis point tightening by the
Fed in late March, short-term interest rates gradually declined over the second
quarter as fears of another near-term Fed tightening receded notably in light of
little to no evidence of price pressures. The market then traded within a fairly
narrow range through the summer months, with few new developments to break it
out of its holding pattern. Fed tightening fears were rekindled in early
October, however, as comments by Fed officials indicated an internal debate over
whether tight labor markets and above-trend growth would eventually lead to
inflationary pressures, and many analysts expected a 25 basis point hike in the
Fed funds target rate at the Fed's November Federal Open Market Committee
meeting. Turmoil in the overseas markets in late October and into November,
particularly in the Asian equity markets, took pressure off of the Fed in the
near term, however, and put them back on the sidelines until the situation
stabilizes.
Very short-term Treasury bills were heavily influenced by technical factors over
the reporting period--namely, a reduction in the overall Treasury bill auction
sizes due to stronger than expected tax receipts and continued improvement in
the budget deficit. As a result, movements in the relatively longer 1-year
Treasury bill were the best barometer of the shifting market sentiment over the
reporting period. The yield on this security declined steadily from 5.75% in
early June to 5.50% in early July, then traded within a fairly narrow range
until early October. The yield then rose to 5.60% by the middle of the month as
Fed-tightening expectations resurfaced, plunged to 5.20% in the midst of the
Asian crisis as investors sought a safe haven in Treasury securities, and ended
the reporting period around 5.50% as the overseas markets found some tenuous
support.
Over the reporting period, the fund was targeted in a 35- to 45-day average
maturity range, representing a neutral stance. The average maturity of the fund
varied within that range according to relative value opportunities available in
the Treasury and U.S. government agency markets. Technical influences in
shorter-term Treasury securities resulted in wider spreads offered on agency
securities, and we emphasized purchases in this market. The fund remained
barbelled in structure, combining a significant position in overnight and term
repurchase agreements and floating-rate securities with purchases of Treasury
and agency securities with 6- to 12-month maturities. Although the economic
fundamentals still point to an economy with a decent head of steam, the
uncertainty about the recent developments in Asia is likely to keep the Fed on
hold for the time being, and the fund will likely maintain its current stance in
the near term.
PORTFOLIO OF INVESTMENTS
GOVERNMENT CASH SERIES
NOVEMBER 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM OBLIGATIONS--27.5%
$ 14,000,000 (a)Federal Farm Credit Bank Floating Rate Notes--2.5% 5.350%, $ 13,993,421
1/2/1998
33,200,000 (b)Federal Home Loan Bank System Discount Notes--5.9% 5.380% 32,640,468
- 5.510%, 12/10/1997 - 6/22/1998
11,000,000 (a)Federal Home Loan Bank System Floating Rate Notes--2.0%
10,999,087 5.509% - 5.529%, 12/4/1997 - 12/22/1997
18,900,000 Federal Home Loan Bank System Note--3.4% 5.460% - 6.025%, 18,894,849
12/12/1997 - 10/23/1998
8,000,000 (a)Federal Home Loan Mortgage Corp. Floating Rate Notes--1.4% 7,996,534
5.468%, 12/22/1997
5,000,000 Federal Home Loan Mortgage Corp. Note--0.9% 5.715% - 5.840%, 4,999,330
3/17/1998 - 4/8/1998
13,600,000 (b)Federal National Mortgage Association Discount
Notes--2.4% 13,324,972 5.400% - 5.530%, 12/30/1997 -
10/8/1998
11,000,000 (a)Federal National Mortgage Association Floating Rate 10,998,596
Notes--2.0% 5.590% - 5.788%, 12/2/1997
17,600,000 Federal National Mortgage Association Note--3.2% 5.630% - 17,617,541
7.000%, 3/25/1998 - 8/14/1998
7,000,000 (a)Student Loan Marketing Association Floating Rate 6,996,929
Notes--1.3% 5.783%, 12/2/1997
2,000,000 Student Loan Marketing Association Note--0.4% 5.880%, 2,000,000
12/10/1998
2,000,000 (b)United States Treasury Bills--0.4% 5.300%, 3/5/1998 1,972,322
UNITED STATES TREASURY NOTES--1.7%
5,500,000 United States Treasury Notes, 6.125%, 5/15/1998 5,504,444
4,000,000 United States Treasury Notes, 6.250%, 7/31/1998 4,014,114
&NBSP;&NBSP;&NBSP;&NBSP;TOTAL 9,518,558
&NBSP;&NBSP;&NBSP;&NBSP;TOTAL SHORT-TERM OBLIGATIONS 151,952,607
(C)REPURCHASE AGREEMENTS--74.4%
25,000,000 ABN AMRO Chicago Corp., 5.750%, dated 11/28/1997, due 25,000,000
12/1/1997
25,000,000 Bear, Stearns and Co., 5.760%, dated 11/28/1997, due 25,000,000
12/1/1997
20,000,000 (d)Chase Government Securities, Inc., 5.630%, dated 20,000,000
11/13/1997, due 1/12/1998
15,000,000 (d)Credit Suisse First Boston, Inc., 5.525%, dated 10/3/1997, 15,000,000
due 12/5/1997
21,000,000 (d)Credit Suisse First Boston, Inc., 5.550%, dated 21,000,000
11/13/1997, due 12/16/1997
7,000,000 (d)Credit Suisse First Boston, Inc., 5.590%, dated 10/2/1997, 7,000,000
due 1/5/1998
</TABLE>
GOVERNMENT CASH SERIES
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(C)REPURCHASE AGREEMENTS--CONTINUED
$ 9,000,000 (d)Deutsche Bank Government Securities, Inc., 7.450%, dated $ 9,000,000
11/24/1997, due 1/5/1998
15,000,000 Dresdner Securities (USA), Inc., 5.750%, dated 11/28/1997, 15,000,000
due 12/1/1997
50,000,000 Fuji Government Securities, Inc., 5.750%, dated 11/28/1997, 50,000,000
due 12/1/1997
11,000,000 (d)Goldman Sachs Group, LP, 5.600%, dated 10/28/1997, due 11,000,000
1/26/1998
16,000,000 (d)Goldman Sachs Group, LP, 5.620%, dated 11/5/1997, due 16,000,000
1/5/1998
25,000,000 HSBC Securities, Inc., 5.750%, dated 11/28/1997, due 25,000,000
12/1/1997
25,000,000 J.P. Morgan & Co., Inc., 5.740%, dated 11/28/1997, due 25,000,000
12/1/1997
13,000,000 (d)Morgan Stanley Group, Inc., 5.600%, dated 10/29/1997, due 13,000,000
1/27/1998
45,000,000 PaineWebber Group, Inc., 5.750%, dated 11/28/1997, due 45,000,000
12/1/1997
25,000,000 Prudential Securities, Inc., 5.750%, dated 11/28/1997, due 25,000,000
12/1/1997
18,000,000 (d)Swiss Bank Capital Markets, 5.600%, dated 10/20/1997, due 18,000,000
1/20/1998
9,100,000 Swiss Bank Capital Markets, 5.700%, dated 11/28/1997, due 9,100,000
12/1/1997
25,000,000 Toronto Dominion Securities (USA) Inc., 5.760%, dated 25,000,000
11/28/1997, due 12/1/1997
12,000,000 (d)UBS Securities, Inc., 5.630%, dated 11/13/1997, due 12,000,000
1/12/1998
TOTAL REPURCHASE AGREEMENTS 411,100,000
TOTAL INVESTMENTS (AT AMORTIZED COST)(E) $ 563,052,607
</TABLE>
(a) Denotes variable rate and floating rate obligations for which the current
rate is shown.
(b) Each issue shows the rate of discount at the time of purchase.
(c) The repurchase agreements are fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio. The
investments in the repurchase agreements are through participation in joint
accounts with other Federated funds.
(d) Although final maturity falls beyond seven days, a liquidity feature is
included in each transaction to permit termination of the repurchase agreement
within seven days.
(e) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($552,713,591) at November 30, 1997.
The following acronym is used throughout this portfolio:
LP --Limited Partnership
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF ASSETS AND LIABILITIES
GOVERNMENT CASH SERIES
NOVEMBER 30, 1997 (UNAUDITED)
<TABLE>
<S> <C> <C>
ASSETS:
Investments in repurchase agreements $ 411,100,000
Investments in securities 151,952,607
Total investments in securities, at amortized cost and value $ 563,052,607
Cash 227,257
Income receivable 1,891,629
Total assets 565,171,493
LIABILITIES:
Payable for investments purchased 11,000,000
Income distribution payable 1,279,735
Accrued expenses 178,167
Total liabilities 12,457,902
Net Assets for 552,713,591 shares outstanding $ 552,713,591
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION PROCEEDS PER SHARE:
$552,713,591 / 552,713,591 shares outstanding $1.00
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF OPERATIONS
GOVERNMENT CASH SERIES
SIX MONTHS ENDED NOVEMBER 30, 1997 (UNAUDITED)
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest $ 15,277,031
EXPENSES:
Investment advisory fee $ 1,358,300
Administrative personnel and services fee 205,103
Custodian fees 27,033
Transfer and dividend disbursing agent fees and expenses 231,610
Directors'/Trustees' fees 4,850
Auditing fees 6,589
Legal fees 3,477
Portfolio accounting fees 49,670
Distribution services fee 271,660
Shareholder services fee 679,150
Share registration costs 21,256
Printing and postage 38,064
Insurance premiums 3,660
Taxes 25,071
Miscellaneous 3,476
Total expenses 2,928,969
Waiver of investment advisory fee (203,242)
Net expenses 2,725,727
Net investment income $ 12,551,304
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF CHANGES IN NET ASSETS
GOVERNMENT CASH SERIES
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED)
NOVEMBER 30, YEAR ENDED
1997 MAY 31, 1997
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 12,551,304 $ 24,576,217
DISTRIBUTIONS TO SHAREHOLDERS--
Distributions from net investment income (12,551,304) (24,576,217)
SHARE TRANSACTIONS--
Proceeds from sale of shares 1,242,918,177 3,215,216,492
Net asset value of shares issued to shareholders in payment 10,586,080 21,740,385
of distributions declared
Cost of shares redeemed (1,231,157,724) (3,154,718,528)
Change in net assets resulting from share transactions 22,346,533 82,238,349
Change in net assets 22,346,533 82,238,349
NET ASSETS:
Beginning of period 530,367,058 448,128,709
End of period $ 552,713,591 $ 530,367,058
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED)
NOVEMBER 30, YEAR ENDED MAY 31,
1997 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM
INVESTMENT OPERATIONS
Net investment income 0.02 0.04 0.05 0.04 0.02 0.03
LESS DISTRIBUTIONS
Distributions from net
investment income (0.02) (0.04) (0.05) (0.04) (0.02) (0.03)
NET ASSET VALUE,
END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN(A) 2.34% 4.54% 4.85% 4.43% 2.45% 2.54%
RATIOS TO AVERAGE
NET ASSETS
Expenses 1.00%* 0.99% 0.99% 0.99% 0.99% 0.99%
Net investment income 4.62%* 4.45% 4.75% 4.35% 2.41% 2.53%
Expense waiver/
reimbursement(b) 0.07%* 0.10% 0.30% 0.08% 0.09% 0.06%
SUPPLEMENTAL DATA
Net assets,
end of period
(000 omitted) $552,714 $530,367 $448,129 $453,096 $401,334 $400,231
</TABLE>
* Computed on an annualized basis.
(a) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
NOTES TO FINANCIAL STATEMENTS
GOVERNMENT CASH SERIES
NOVEMBER 30, 1997 (UNAUDITED)
ORGANIZATION
Cash Trust Series, Inc. (the "Corporation") is registered under the Investment
Company Act of 1940, as amended (the "Act") as an open-end, management
investment company. The Corporation consists of four portfolios. The financial
statements included herein are only those of Government Cash Series (the
"Fund"). The financial statements of the other portfolios are presented
separately. The assets of each portfolio are segregated and a shareholder's
interest is limited to the portfolio in which shares are held. The investment
objective of the Fund is current income consistent with stability of principal
and liquidity.
SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS
The Fund uses the amortized cost method to value its portfolio securities in
accordance with Rule 2a-7 under the Act.
REPURCHASE AGREEMENTS
It is the policy of the Fund to require the custodian bank to take possession,
to have legally segregated in the Federal Reserve Book Entry System, or to have
segregated within the custodian bank's vault, all securities held as collateral
under repurchase agreement transactions. Additionally, procedures have been
established by the Fund to monitor, on a daily basis, the market value of each
repurchase agreement's collateral to ensure that the value of collateral at
least equals the repurchase price to be paid under the repurchase agreement
transaction.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/ dealers, which are deemed by
the Fund's adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Directors (the "Directors").
Risks may arise from the potential inability of counterparties to honor the
terms of the repurchase agreement. Accordingly, the Fund could receive less than
the repurchase price on the sale of collateral securities.
INVESTMENT INCOME, EXPENSES, AND DISTRIBUTIONS
Interest income and expenses are accrued daily. Bond premium and discount, if
applicable, are amortized as required by the Internal Revenue Code, as amended
(the "Code"). Distributions to shareholders are recorded on the ex-dividend
date.
FEDERAL TAXES
It is the Fund's policy to comply with the provisions of the Code applicable to
regulated investment companies and to distribute to shareholders each year
substantially all of its income. Accordingly, no provisions for federal tax are
necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Fund may engage in when-issued or delayed delivery transactions. The Fund
records when-issued securities on the trade date and maintains security
positions such that sufficient liquid assets will be available to make payment
for the securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts of assets, liabilities, expenses, and revenues reported in
the financial statements. Actual results could differ from those estimated.
OTHER
Investment transactions are accounted for on the trade date.
CAPITAL STOCK
At November 30, 1997, there were 12,500,000,000 shares ($0.001 par value per
share) authorized. At November 30, 1997, capital paid-in aggregated
$552,713,591. Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
NOVEMBER 30, 1997 MAY 31, 1997
<S> <C> <C>
Shares sold 1,242,918,177 3,215,216,492
Shares issued to shareholders in
payment of distributions declared 10,586,080 21,740,385
Shares redeemed (1,231,157,724) (3,154,718,528)
Net change resulting from share transactions 22,346,533 82,238,349
</TABLE>
INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE
Federated Advisers, the Fund's investment adviser (the "Adviser"), receives for
its services an annual investment advisory fee equal to 0.50% of the Fund's
average daily net assets. The Adviser may voluntarily choose to waive any
portion of its fee. The Adviser can modify or terminate this voluntary waiver at
any time at its sole discretion.
ADMINISTRATIVE FEE
Federated Services Company ("FServ"), under the Administrative Services
Agreement, provides the Fund with administrative personnel and services. The fee
paid to FServ is based on the level of average aggregate daily net assets of all
funds advised by subsidiaries of Federated Investors for the period. The
administrative fee received during the period of the Administrative Services
Agreement shall be at least $125,000 per portfolio and $30,000 per each
additional class of shares.
DISTRIBUTION SERVICES FEE
The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1
under the Act. Under the terms of the Plan, the Fund will reimburse Federated
Securities Corp. ("FSC"), the principal distributor, from the net assets of the
Fund to finance activities intended to result in the sale of the Fund's shares.
The Plan provides that the Fund may incur distribution expenses up to 0.35% of
the average daily net assets of the Fund shares, annually, to reimburse FSC.
SHAREHOLDER SERVICES FEE
Under the terms of a Shareholder Services Agreement with Federated Shareholder
Services ("FSS"), the Fund will pay FSS up to 0.25% of average daily net assets
of the Fund for the period. The fee paid to FSS is used to finance certain
services for shareholders and to maintain shareholder accounts.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES
FServ, through its subsidiary, Federated Shareholder Services Company ("FSSC")
serves as transfer and dividend disbursing agent for the Fund. The fee paid to
FSSC is based on the size, type, and number of accounts and transactions made by
shareholders.
PORTFOLIO ACCOUNTING FEES
FServ maintains the Fund's accounting records for which it receives a fee. The
fee is based on the level of the Fund's average daily net assets for the period,
plus out-of-pocket expenses.
GENERAL
Certain of the Officers and Directors of the Corporation are Officers and
Directors or Trustees of the above companies.
DIRECTORS
John F. Donahue
Thomas G. Bigley
John T. Conroy, Jr.
William J. Copeland
J. Christopher Donahue
James E. Dowd
Lawrence D. Ellis, M.D.
Edward L. Flaherty, Jr.
Peter E. Madden
John E. Murray, Jr.
Wesley W. Posvar
Marjorie P. Smuts
OFFICERS
John F. Donahue
Chairman
Richard B. Fisher
President
J. Christopher Donahue
Executive Vice President
Edward C. Gonzales
Executive Vice President
John W. McGonigle
Executive Vice President, Treasurer, and Secretary
J. Crilley Kelly
Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves risk, including possible
loss of principal. Although money market funds seek to maintain a stable net
asset value of $1.00 per share, there is no assurance that they will be able to
do so.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the fund's prospectus which contains facts concerning
its objective and policies, management fees, expenses, and other information.
[Graphic]
FEDERATED INVESTORS
GOVERNMENT CASH SERIES
Federated Securities Corp., Distributor
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
1-800-245-7400
WWW.FEDERATEDINVESTORS.COM
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
NOVEMBER 30, 1997
[Graphic]
Cusip 147551204
0122604 (1/98)
PRESIDENT'S MESSAGE
Dear Shareholder:
I am pleased to present the Semi-Annual Report to shareholders for Municipal
Cash Series, a portfolio of Cash Trust Series, Inc., which covers the six-month
period ended November 30, 1997. The report begins with an investment review by
the fund's portfolio manager, which is followed by a complete listing of the
fund's tax-free securities issued by municipalities nationwide, and its
financial statements.
During the reporting period, Municipal Cash Series paid a total of $0.01 in
tax-free dividends* per share. In addition to tax-free income on their ready
cash, shareholders benefit from the fund's daily liquidity and stability of
principal.** By the end of the reporting period, shareholders had invested a
total of $535 million in the fund's diversified portfolio of tax-free securities
issued by municipalities nationwide.
Thank you for choosing Municipal Cash Series as a convenient way to keep your
cash working every day through the relative safety of high-quality municipal
obligations. Please contact your investment representative if you have any
questions about the fund.
Sincerely,
[Graphic]
Richard B. Fisher
President
January 15, 1998
* Income may be subject to the federal alternative minimum tax and state and
local taxes.
** Money market funds seek to maintain a stable net asset value of $1.00 per
share. There is no assurance that they will be able to do so. An investment
in this fund is not insured or guaranteed by the U.S. government.
INVESTMENT REVIEW
Municipal Cash Series invests in high-quality, short-term, tax-exempt debt
securities and seeks to maintain a stable net asset value of $1.00 per share.
The seven-day net yield for the fund on November 30, 1997, was 3.04% compared to
3.05% six months earlier.* The latest yield was the equivalent of a 5.05%
taxable yield for investors in the highest federal tax bracket.
The economy remained robust over the reporting period, posting a rate of growth
of 3.30% for the second and third quarters and is expected to continue at this
above-trend pace in the fourth quarter of 1997. At the same time, however,
inflationary pressures have remained quite benign over the reporting period in
spite of impressive performance from the economy and historically low
unemployment figures. In the wake of the Federal Reserve Board's (the "Fed's")
25 basis point increase in the federal funds target rate on March 25, 1997,
short-term interest rates remained relatively high as market participants sought
to ascertain whether another move was soon to follow. As inflationary pressures
remained mild, however, fears of a near-term tightening by the Fed gradually
receded, and all but vanished by late June. The end of the reporting period
coincided with very disappointing economic news from the Pacific Rim and as a
consequence, an unsteady U.S. stock market. These overriding macro issues
eliminated any rate-tightening intentions the Fed may have had during the third
quarter. Short-term interest rates traded within a rather narrow range during
the reporting period. Movements in the 1-year Treasury bill over the reporting
period best reveal the market's shifting sentiment. The 1-year Treasury bill
traded as high as 5.75% in early June, but then fell to as low as 5.45% before
closing the period at 5.50%.
In addition to economic fundamentals, short-term municipal securities were
strongly influenced by technical factors over this reporting period, most
notably the summer note issuance season. Variable rate demand notes (VRDNs),
which comprise more than 50% of the fund's assets, started the reporting period
at a yield of 3.45% but spiked upward to as high as 4.15% in late June due to a
substantial supply of notes in the market. VRDN yields fell in August, but moved
sharply higher in September to above 4.00% as supply and demand imbalances
occurred once again. Yields then fell again in October before rising once again
to close the reporting period at 3.85%. Over the reporting period, VRDN yields
averaged 70% or more of taxable government and corporate securities with
comparable maturities making them attractive for investors at the 31% or higher
federal tax brackets.
The fund remained in a 45- to 50-day average maturity target range over the
reporting period, a neutral stance, and moved within that range according to
relative value opportunities. Early in the reporting period, fixed-rate notes,
as a percentage of treasuries, were fairly expensive. Accordingly, so we held
off on purchasing these notes and locking in those yields. As the market
cheapened in the third quarter, we began to take advantage of attractive buying
opportunities to maintain the fund's average maturity. We continue to emphasize
a barbelled structure for the portfolio, combining a significant position in
7-day VRDNs with purchases of longer-term securities with maturities between 6
and 12 months.
With one preemptive tightening under their belts, Fed officials now appear to be
debating, both publicly and privately, whether the conditions at hand--strong
growth yet little to no price inflation and overseas economic
implications--would indicate that the non-inflationary potential of the economy
is actually greater than previously thought. Growth of 2 to 21o2% has generally
been embraced as this non-inflationary potential. As the Fed continues to
analyze the situation, the front end of the taxable and tax-exempt municipal
markets are destined to be range-bound, absent any signs of upward pressures on
prices. We will continue to watch, with great interest, market developments in
order to best serve our municipal clients.
* Performance quoted represents past performance and is not indicative of
future results. Yield will vary.
PORTFOLIO OF INVESTMENTS
MUNICIPAL CASH SERIES
NOVEMBER 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--100.1%
ALABAMA--0.3%
$ 385,000 Hoover, AL, IDA Weekly VRDNs (Bud's Best Cookies, $ 385,000
Inc.)/(SouthTrust Bank of Alabama, Birmingham LOC)
395,000 Muscle Shoals, AL, IDB Weekly VRDNs (Whitesell 395,000
Manufacturing)/(SouthTrust Bank of Alabama, Birmingham LOC)
370,000 Muscle Shoals, AL, IDB Weekly VRDNs (Whitesell 370,000
Manufacturing)/(SouthTrust Bank of Alabama, Birmingham LOC)
345,000 Muscle Shoals, AL, IDB Weekly VRDNs (Whitesell 345,000
Manufacturing)/(SouthTrust Bank of Alabama, Birmingham LOC)
TOTAL 1,495,000
ARIZONA--3.2%
2,300,000 Cochise County, AZ Pollution Control Corp., (Pooled Series
2,300,000 1994A), 3.80% TOBs (Arizona Electric Power
Cooperative, Inc. Project)/(National Rural Utilities
Cooperative Finance Corp.
GTD), Optional Tender 3/1/1998
4,400,000 Eloy, AZ, IDA, (Series 1996) Weekly VRDNs (The Marley Cooling 4,400,000
Tower Co.)/(First Union National Bank, Charlotte, N.C. LOC)
5,500,000 Phoenix, AZ, IDA, (Series 1997) Weekly VRDNs (Interface Data 5,500,000
Systems, Inc.)/(Bank One, Arizona N.A. LOC)
4,700,000 Yuma County, AZ Airport Authority, Inc., (Series 1997A) 4,700,000
Weekly VRDNs (Bank One, Arizona N.A. LOC)
TOTAL 16,900,000
ARKANSAS--9.2%
9,000,000 Arkansas Development Finance Authority, (Series 1995) Weekly 9,000,000
VRDNs (Paco Steel & Engineering Corporation Project)/(Union
Bank of California LOC)
4,700,000 Arkansas Development Finance Authority, Single Family 4,700,000
Mortgage Revenue Bonds (1997 Series D), 4.05% TOBs, Mandatory
Tender 7/1/1998
8,000,000 Crossett, AR, (Series 1997) Weekly VRDNs (Bemis Co., Inc.) 8,000,000
11,000,000 Hope, AR, Solid Waste Disposal Revenue Bonds (Series 1994), 11,000,000
4.05% CP (Temple-Inland Forest Products Corp.
Project)/(Temple-Inland, Inc. GTD), Mandatory Tender
1/22/1998
1,000,000 Sheridan, AR IDA, (Series B) Weekly VRDNs (H.H. Robertson 1,000,000
Co.)/(PNC Bank, N.A. LOC)
7,500,000 Siloam Springs, AR, IDRB (Series 1994) Weekly VRDNs (La-Z Boy 7,500,000
Chair Co.)/(NBD Bank, Michigan LOC)
8,000,000 Springdale, AR, IDA Weekly VRDNs (Newlywed Food)/(Mellon
Bank 8,000,000 NA, Pittsburgh LOC)
TOTAL 49,200,000
</TABLE>
Municipal Cash Series
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
COLORADO--1.3%
$ 4,250,000 Adams County, CO IDB, (Series 1993) Weekly VRDNs (Bace $ 4,250,000
Manufacturing, Inc.)/(Citibank N.A., New York LOC)
2,640,000 Colorado HFA, (Series 1996) Weekly VRDNs (Neppl-Springs 2,640,000
Fabrication)/(Bank One, Colorado LOC)
TOTAL 6,890,000
DELAWARE--1.9%
10,000,000 Delaware EDA, (Series 1997C) Weekly VRDNs (Star 10,000,000
Enterprise)/(Canadian Imperial Bank of Commerce, Toronto
LOC)
DISTRICT OF COLUMBIA--1.5%
4,000,000 District of Columbia Housing Finance Agency, (Series 1996C), 4,000,000
3.90% TOBs (Trinity Funding Company INV), Mandatory Tender
12/1/1997
4,200,000 District of Columbia Housing Finance Agency, (Series 1997C), 4,200,000
4.05% TOBs (AIG Funding, Inc. INV), Mandatory Tender 9/1/1998
TOTAL 8,200,000
FLORIDA--1.3%
7,000,000 Broward County, FL, (Series B), 3.85% CP (Bank of 7,000,000
Tokyo-Mitsubishi Ltd. LIQ), Mandatory Tender 1/28/1998
GEORGIA--3.2%
1,250,000 De Kalb County, GA Development Authority Weekly VRDNs 1,250,000
(Rock-Tenn Company, Inc. Project)/(SunTrust Bank, Atlanta
LOC)
4,000,000 De Kalb County, GA Multi-Family Housing Authority, 4,000,000
Multifamily Housing Revenue Bonds (Series 1996) Weekly VRDNs
(Bryton Hill Apartments)/(PNC Bank, Kentucky LOC)
1,000,000 Forsythe County, GA Development Authority, IDRB (Series 1995) 1,000,000
Weekly VRDNs (American BOA, Inc. Project)/(Dresdner Bank Ag,
Frankfurt LOC)
2,160,000 Fulton County, GA IDA, (Series 1996) Weekly VRDNs 2,160,000
(Peachtree-Broad Building, Ltd. Project)/ (SouthTrust Bank of
Georgia, Atlanta LOC)
2,260,000 Gainesville, GA Redevelopment Authority, IDRB (Series 1986) 2,260,000
Weekly VRDNs (Hotel of Gainesville Associates
Project)/(Regions Bank, Alabama LOC)
1,500,000 Hart County, GA IDA, Revenue Bonds (Series 1996) Weekly VRDNs 1,500,000
(Rock-Tenn Converting Co. Project)/(SunTrust Bank, Atlanta
LOC)
5,000,000 Summerville, GA Development Authority, (Series 1997) Weekly 5,000,000
VRDNs (Image Industries, Inc.)/ (First Union National Bank,
Charlotte, N.C. LOC)
TOTAL 17,170,000
HAWAII--0.8%
4,000,000 Hawaii St. Department of Budget & Finance, (Series 1988) 4,000,000
Weekly VRDNs (G. N. Wilcox Memorial Hospital)/(Fuji Bank,
Ltd., Tokyo LOC)
</TABLE>
Municipal Cash Series
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
IDAHO--1.7%
$ 9,115,000 Idaho Housing Agency, PA-115 (1994 Series F) Weekly VRDNs $ 9,115,000
(Merrill Lynch Capital Services, Inc. LIQ)
ILLINOIS--7.6%
7,400,000 Chicago, IL, Gas Supply Revenue Bonds (1993 Series B), 3.70% 7,400,000
TOBs (Peoples Gas Light & Coke Company), Optional Tender
12/1/1997
7,400,000 Illinois Development Finance Authority, (Series 1997) Weekly 7,400,000
VRDNs (Tempco Electric Heater Corp.)/(First National Bank of
Chicago LOC)
2,700,000 Illinois Development Finance Authority, Adjustable Rate IDRB 2,700,000
(Series 1996A) Weekly VRDNs (Nimlok Company)/(Bank One,
Illinois, N.A. LOC)
10,000,000 Illinois Housing Development Authority, (1997 Subseries B-2), 10,000,000
4.15% TOBs, Mandatory Tender 7/7/1998
9,400,000 Illinois Housing Development Authority, PT-82 (1994 Series B) 9,400,000
Weekly VRDNs (Rabobank Nederland, Utrecht LIQ)
3,870,000 Morton, IL, IDRB (Series 1996) Weekly VRDNs (Morton Welding 3,870,000
Co., Inc. Project)/(Bank One, Illinois, N.A. LOC)
TOTAL 40,770,000
INDIANA--7.0%
310,000 Avilla, IN, IDRB Weekly VRDNs (Group Dekko 310,000
International)/(Bank One, Indianapolis, N.A. LOC)
1,945,000 Crown Point, IN, IDA Weekly VRDNs (D & M 1,945,000
Manufacturing)/(National City Bank, Kentucky LOC)
2,600,000 Franklin, IN, Economic Development Revenue Refunding Bonds 2,600,000
(Series 1994) Weekly VRDNs (Pedcor Investments L.P.)/(Federal
Home Loan Bank of Indianapolis LOC)
2,275,000 Huntingburg, IN, (Series 1994) Weekly VRDNs (DMI Furniture, 2,275,000
Inc.)/(Bank One, Indianapolis, N.A. LOC)
2,230,000 Huntingburg, IN, EDRB (Series 1993) Weekly VRDNs (DMI 2,230,000
Furniture, Inc.)/(Bank One, Indianapolis, N.A. LOC)
1,870,000 Indiana Development Finance Authority, (Series 1996) Weekly 1,870,000
VRDNs (Meridian Group LLC Project)/(Bank One, Indianapolis,
N.A. LOC)
9,000,000 Indiana Development Finance Authority, Solid Waste Disposal 9,000,000
Revenue Bonds (Series 1990A), 3.85% CP (Pure Air on the Lake,
Limited Partnership)/(National Westminster Bank, PLC, London
LOC), Mandatory Tender 1/15/1998
700,000 Indiana Economic Development Commission, (Series 1989) Weekly 700,000
VRDNs (O'Neal Steel, Inc.)/ (SouthTrust Bank of Alabama,
Birmingham LOC)
2,690,000 Indianapolis, IN, (Series 1991) Weekly VRDNs (Cantor & 2,690,000
Coleman II Project)/(Bank One, Indianapolis, N.A. LOC)
1,840,000 Lebanon, IN IDA, (Series 1991) Weekly VRDNs (White Castle 1,840,000
System)/(Bank One, Ohio, N.A. LOC)
5,950,000 North Manchester, IN, (Series 1997) Weekly VRDNs (Eften, 5,950,000
Inc.)/(Comerica Bank, Detroit, MI LOC)
</TABLE>
Municipal Cash Series
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
INDIANA--CONTINUED
$ 2,400,000 Tippecanoe County, IN Economic Development Revenue Weekly $ 2,400,000
VRDNs (Lafayette Venetian Blind)/(PNC Bank, Ohio, N.A. LOC)
3,325,000 Westfield, IN IDR, (Series 1994) Weekly VRDNs (Standard 3,325,000
Locknut & Lockwasher, Inc.)/ (Bank One, Indianapolis, N.A.
LOC)
TOTAL 37,135,000
IOWA--0.4%
2,330,000 Iowa Finance Authority, IDRB Weekly VRDNs (V-T Industries, 2,330,000
Inc. Project)/(Norwest Bank Minnesota, Minneapolis LOC)
KENTUCKY--6.6%
490,000 Caldwell County, KY, (Series 1990) Weekly VRDNs (Thompson 490,000
Steel Pipe)/(Corestates Bank N.A., Philadelphia, PA LOC)
3,660,000 Glasgow, KY, (Series 1994) Weekly VRDNs (Ply Tech 3,660,000
Corp.)/(Bank One, Kentucky LOC)
1,900,000 Henderson County, KY, (Series 1996A) Weekly VRDNs (Gibbs Die 1,900,000
Casting Corporation)/(Harris Trust & Savings Bank, Chicago
LOC)
700,000 Jefferson County, KY Weekly VRDNs (Gateway Press, Inc.)/(PNC 700,000
Bank, Kentucky LOC)
10,000,000 Jefferson County, KY, (1997 Series A), 3.90% CP
(Louisville 10,000,000 Gas & Electric Company), Mandatory
Tender 1/21/1998
1,360,000 Jefferson County, KY, IDR (Series 1991) Weekly VRDNs (Findley 1,360,000
Adhesives)/(Bank One, Ohio, N.A. LOC)
2,000,000 Jefferson County, KY, IDR Weekly VRDNs (O'Neal Steel, 2,000,000
Inc.)/(SouthTrust Bank of Alabama, Birmingham LOC)
1,600,000 Kentucky Rural EDA, (Series 1990) Weekly VRDNs (Thompson 1,600,000
Steel Pipe)/(NBD Bank, Michigan LOC)
5,000,000 Louisville & Jefferson County, KY Regional Airport Authority, 5,000,000
(Series 1997 AA-1) Weekly VRDNs (National City Bank, Kentucky
LOC)
6,000,000 Scottsville, KY, 4.50% TOBs (Sumitomo Electric Wiring 6,000,000
Systems)/(Sumitomo Bank Ltd., Osaka LOC), Optional Tender
5/1/1998
2,800,000 Winchester, KY, (Series 1990) Weekly VRDNs (Walle 2,800,000
Corp.)/(Union Bank of Switzerland, Zurich LOC)
TOTAL 35,510,000
LOUISIANA--3.0%
8,000,000 Lake Charles, LA Harbor & Terminal District, Revenue Bonds 8,000,000
(Series 1995A) Weekly VRDNs (Polycom-Huntsman, Inc.
Project)/(National City, Pennsylvania LOC)
4,970,000 Louisiana HFA, Single Family Mortgage Revenue Bonds (Series 4,970,000
1997A-3), 3.75% TOBs (Trinity Funding Company INV), Mandatory
Tender 3/1/1998
1,170,000 Louisiana PFA, (Series 1997B), 4.40% TANs (Monroe City School 1,175,838
Board), 10/29/1998
</TABLE>
Municipal Cash Series
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
LOUISIANA--CONTINUED
$ 2,005,000 Louisiana PFA, (Series 1997C), 4.40% TANs (St. James Parish, $ 2,013,764
LA), 10/29/1998
TOTAL 16,159,602
MARYLAND--1.7%
2,250,000 Cecil County, MD, County Commissioners EDRB (Series 1988S) 2,250,000
Weekly VRDNs (Williams Mobile Offices, Inc.)/(First National
Bank of Maryland, Baltimore LOC)
1,000,000 Maryland State Community Development Administration, (Series 1,000,000
1990A) Weekly VRDNs (College Estates)/(First National Bank of
Maryland, Baltimore LOC)
2,800,000 Maryland State Community Development Administration, (Series 2,800,000
1990B) Weekly VRDNs (Cherry Hill Apartment
Ltd.)/(Nationsbank, N.A., Charlotte LOC)
1,000,000 Maryland State IDFA, Economic Development Revenue Bonds 1,000,000
(Series 1996) Weekly VRDNs (Townsend Culinary,
Inc.)/(SunTrust Bank, Atlanta LOC)
2,260,000 Wicomico County, MD, EDRB (Series 1994) Weekly VRDNs (Field 2,260,000
Container Co. L.P.)/ (Northern Trust Co., Chicago, IL LOC)
TOTAL 9,310,000
MICHIGAN--0.9%
3,300,000 Michigan Strategic Fund Weekly VRDNs (Tesco 3,300,000
Engineering)/(Bank of Tokyo-Mitsubishi Ltd. LOC)
1,215,000 Michigan Strategic Fund, (Series 1991) Weekly VRDNs (AGA Gas, 1,215,000
Inc.)/(Svenska Handelsbanken, Stockholm LOC)
TOTAL 4,515,000
MINNESOTA--3.5%
3,380,000 Coon Rapids, MN, (Series 1996) Weekly VRDNs (Medical 3,380,000
Enterprise Associates Project)/ (Norwest Bank Minnesota,
Minneapolis LOC)
5,775,000 (b) Dakota County & Washington County MN Housing & 5,775,000
Redevelopment Authority, MERLOTS (Series J), 4.15% TOBs
(United States Treasury COL)/(Corestates Bank N.A.,
Philadelphia, PA LIQ), Optional Tender 12/1/1997
700,000 Minnesota State Higher Education Coordinating Board, (Series 700,000
1992A) Weekly VRDNs (U.S. Bank, N.A., Minneapolis LIQ)
1,650,000 New Hope, MN, (Series 1997), 5.015% TOBs (Park Acres 1,650,000
Apartments)/(Bayerische Landesbank Girozentrale INV),
Mandatory Tender 3/1/1998
825,000 Plymouth, MN Weekly VRDNs (Nuaire, Inc.)/(Norwest Bank 825,000
Minnesota, Minneapolis LOC)
2,200,000 Robbinsdale, MN, (Series 1997), 5.015% TOBs (Bridgeway 2,200,000
Apartments)/(Bayerische Landesbank Girozentrale INV),
Mandatory Tender 3/1/1998
1,210,000 St. Paul, MN Port Authority Weekly VRDNs (H.M. Smyth Co., 1,210,000
Inc.)/(Norwest Bank Minnesota, Minneapolis LOC)
2,730,000 White Bear, MN Weekly VRDNs (Thermoform Plastic, 2,730,000
Inc.)/(Norwest Bank Minnesota, Minneapolis LOC)
TOTAL 18,470,000
</TABLE>
Municipal Cash Series
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
MISSISSIPPI--0.7%
$ 1,700,000 Mississippi Business Finance Corp. Weekly VRDNs (O'Neal $ 1,700,000
Steel, Inc.)/(SouthTrust Bank of Alabama, Birmingham LOC)
2,275,000 Mississippi Business Finance Corp., IDRB (Series 1994) Weekly 2,275,000
VRDNs (Flexsteel Industries, Inc.)/(Norwest Bank Minnesota,
Minneapolis LOC)
TOTAL 3,975,000
MISSOURI--1.4%
2,550,000 Missouri Development Finance Board, Industrial Development 2,550,000
Revenue Bonds (Series 1996) Weekly VRDNs (LaGrange Foundry
Inc. Project)/(Harris Trust & Savings Bank, Chicago LOC)
750,000 Missouri Export & Infrastructure Board Weekly VRDNs 750,000
(Ex-L-Tube, Inc.)/(Norwest Bank Minnesota, Minneapolis LOC)
4,150,000 Moberly, MO IDA, (Series 1996) Weekly VRDNs (Everlast Fitness 4,150,000
Manufacturing Corp.)/ (Chase Manhattan Bank N.A., New York
LOC)
TOTAL 7,450,000
MONTANA--0.7%
3,780,000 (b)Montana State Board of Housing, MERLOTS (Series F),
4.10% 3,780,000 TOBs (FHA INS)/(Corestates Bank N.A.,
Philadelphia, PA LIQ), Optional Tender 1/1/1998
NEBRASKA--2.6%
4,000,000 Douglas County, NE, (Series 1991) Weekly VRDNs (Malhove, 4,000,000
Inc.)/(Norwest Bank Minnesota, Minneapolis LOC)
10,000,000 Nebraska Investment Finance Authority, Single Family Housing 10,000,000
Revenue Bonds (1997 Series C), 3.90% TOBs, Mandatory Tender
7/1/1998
TOTAL 14,000,000
NEW HAMPSHIRE--1.5%
6,000,000 New Hampshire Business Finance Authority, PCR Bonds (Series 6,000,000
A), 3.80% CP (New England Power Co.), Mandatory Tender
1/27/1998
2,010,000 New Hampshire State IDA, (Series 1991), 4.10% TOBs 2,010,000
(International Paper Co.), Optional Tender 10/15/1998
TOTAL 8,010,000
NEW JERSEY--0.2%
1,143,927 Hopatcong, NJ, 4.20% BANs, 6/12/1998 1,145,377
NEW MEXICO--1.0%
1,500,000 New Mexico Mortgage Finance Authority, (Series D-2), 3.95% 1,500,000
TOBs (FGIC INV), Mandatory Tender 6/15/1998
4,000,000 New Mexico Mortgage Finance Authority, Single Family Mortgage 4,000,000
Program Bonds (1997 Issue 2), 3.90% TOBs (FGIC INV),
Mandatory Tender 10/15/1998
TOTAL 5,500,000
</TABLE>
Municipal Cash Series
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
NEW YORK--0.1%
$ 500,000 Niagara County, NY IDA, Solid Waste Disposal Facility Revenue $ 500,000
bonds (Series 1996D) Weekly VRDNs (American Ref-Fuel
Co.)/(Wachovia Bank of NC, NA, Winston-Salem LOC)
NORTH CAROLINA--2.4%
2,010,000 New Hanover County, NC PCFA Weekly VRDNs (Efson, 2,010,000
Inc.)/(Branch Banking & Trust Co, Wilson LOC)
7,000,000 Pender County, NC Industrial Facilities and Pollution Control 7,000,000
Financing Authority, (Series 1997) Weekly VRDNs
(Leslie-Locke, Inc.)/(Branch Banking & Trust Co, Wilson LOC)
3,500,000 Person County, NC Industrial Facilities & Pollution Control 3,500,000
Financing Authority Daily VRDNs (Carolina Power & Light
Co.)/(Fuji Bank, Ltd., Tokyo LOC)
TOTAL 12,510,000
OHIO--0.0%
60,000 Defiance County, OH, IDR Weekly VRDNs (Dietrich Industries, 60,000
Inc.)/(PNC Bank, N.A. LOC)
OKLAHOMA--5.0%
2,300,000 Adair County, OK IDA, (Series B) Weekly VRDNs (Baldor
2,300,000 Electric Co.)/(Wachovia Bank of NC, N.A.,
Winston-Salem LOC)
8,000,000 Broken Arrow, OK EDA Weekly VRDNs (Blue Bell 8,000,000
Creameries)/(Banque Nationale de Paris LOC)
4,700,000 Oklahoma Development Finance Authority, 3.70% TOBs (Simmons 4,700,000
Poultry Farms)/(Rabobank Nederland, Utrecht LOC), Optional
Tender 2/1/1998
3,860,000 (b)Oklahoma HFA, CDC Municipal Products, Inc. (Series 1996G) 3,860,000
Weekly VRDNs (GNMA COL)/ (CDC Municipal Products, Inc. LIQ)
8,000,000 Tulsa County, OK HFA, CDC Municipal Products, Inc. Class A 8,000,000
Certificates (Series 1996E) Weekly VRDNs (GNMA COL)/(CDC
Municipal Products, Inc. LIQ)
TOTAL 26,860,000
PENNSYLVANIA--4.1%
5,700,000 Carbon County, PA IDA, Solid Waste Disposal Revenue Notes 5,700,000
(Series 1996), 3.90% RANs (Horsehead Resource Development,
Inc.)/(Chase Manhattan Bank N.A., New York LOC), 12/3/1997
4,450,000 Clinton County, PA IDA, Solid Waste Disposal Revenue Bonds 4,450,000
(Series 1992A), 3.75% TOBs (International Paper Co.),
Optional Tender 1/15/1998
1,775,000 Pennsylvania EDFA Weekly VRDNs (Stone and Lime Co.)/(PNC 1,775,000
Bank, N.A. LOC)
900,000 Pennsylvania EDFA, (1995 Series D2) Weekly VRDNs (ARCO 900,000
Enterprises, Inc./Ronald L. Repasky, Sr. Project)/(PNC Bank,
N.A. LOC)
1,000,000 Pennsylvania EDFA, (1995 Series D9) Weekly VRDNs (North 1,000,000
American Communications, Inc. Project)/(PNC Bank, N.A. LOC)
8,100,000 Philadelphia, PA, GO (Series 1990), 4.10% CP (Fuji Bank, 8,100,000
Ltd., Tokyo LOC), Mandatory Tender 1/22/1998
TOTAL 21,925,000
</TABLE>
Municipal Cash Series
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
SOUTH CAROLINA--2.4%
$ 1,000,000 Berkeley County, SC, (Series 1996A) Weekly VRDNs (Nucor $ 1,000,000
Corporation)/(Nucor Corporation GTD)
4,000,000 Georgetown County, SC, Pollution Control Facilities 4,000,000
Adjustable Rate Bonds (Series A), 4.00% TOBs (International
Paper Co.), Optional Tender 9/1/1998
5,500,000 South Carolina Job Development Authority, (Series 1996)
5,500,000 Weekly VRDNs (PVC Container Corp.
Project)/(Fleet Bank. N.A.
LOC)
2,385,000 South Carolina Job Development Authority, EDRB (Series 1994) 2,385,000
Weekly VRDNs (Carolina Cotton Works, Inc. Project)/(Branch
Banking & Trust Co., Wilson LOC)
TOTAL 12,885,000
SOUTH DAKOTA--4.6%
5,500,000 South Dakota Housing Development Authority, (Series G), 3.95% 5,500,000
TOBs, Mandatory Tender 8/13/1998
19,000,000 South Dakota Housing Development Authority, Homeownership 19,000,000
Mortgage Bonds (1997 Series E) Weekly VRDNs
TOTAL 24,500,000
TENNESSEE--2.1%
1,940,000 Benton County TN IDB, (Series 1996) Weekly VRDNs (Jones 1,940,000
Plastic and Engineering Corp.)/ (National City Bank, Kentucky
LOC)
1,000,000 Greenfield, TN IDB, (Series 1995) Weekly VRDNs (Plastic 1,000,000
Products Co. Project)/(Norwest Bank Minnesota, Minneapolis
LOC)
1,100,000 Hawkins County, TN IDB, (Series 1995) Weekly VRDNs (Sekisui 1,100,000
Ta Industries, Inc. Project)/ (Bank of Tokyo-Mitsubishi Ltd.
LOC)
1,000,000 Jackson, TN IDB, Solid Waste Facility Bonds (Series 1995) 1,000,000
Weekly VRDNs (Florida Steel Corp.)/(Nationsbank, N.A.,
Charlotte LOC)
3,400,000 McMinn County, TN IDB, Industrial Development Bonds (Series 3,400,000
1995) Weekly VRDNs (Creative Fabrication Corp.)/(NBD Bank,
Michigan LOC)
1,800,000 Oak Ridge, TN IDB, Solid Waste Facility Bonds (Series 1996) 1,800,000
Weekly VRDNs (M4 Environmental L.P. Project)/(SunTrust Bank,
Atlanta LOC)
1,000,000 Union City, TN IDB, (Series 1995) Weekly VRDNs (Kohler 1,000,000
Co.)/(Wachovia Bank of Georgia N.A., Atlanta LOC)
TOTAL 11,240,000
TEXAS--5.8%
5,000,000 Angelina and Neches River Authority, Texas, Solid Waste 5,000,000
Disposal Revenue Bonds (Series 1993), 4.00% CP (Temple-Eastex
Inc. Project)/(Temple-Inland, Inc. GTD), Mandatory Tender
12/5/1997
9,000,000 Angelina and Neches River Authority, Texas, Solid Waste 9,000,000
Disposal Revenue Bonds (Series 1993), 4.05% CP (Temple-Eastex
Inc. Project)/(Temple-Inland, Inc. GTD), Mandatory Tender
1/20/1998
</TABLE>
Municipal Cash Series
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
TEXAS--CONTINUED
$ 3,250,000 Brazos Harbor, TX Industrial Development Corp., (Series 1991) $ 3,250,000
Weekly VRDNs (Rangen, Inc. Project)/(Norwest Bank Minnesota,
Minneapolis LOC)
8,250,000 Greater TX Student Loan Corporation, 3.70% TOBs (Student Loan 8,250,000
Marketing Association LOC), Mandatory Tender 3/1/1998
5,000,000 San Antonio, TX, Special Facilities Airport Revenue Bonds 5,000,000
(Series 1995) Weekly VRDNs (Cessna Aircraft Company
Project)/(Nationsbank of Texas, N.A. LOC)
500,000 Tarrant County, TX IDC, (Series 1997) Weekly VRDNs (Lear 500,000
Operations Corp.)/(Chase Manhattan Bank N.A., New York LOC)
TOTAL 31,000,000
VIRGINIA--3.2%
5,000,000 Campbell County, VA IDA, Solid Waste Disposal Facilities 5,000,000
Revenue ACES Weekly VRDNs (Georgia-Pacific Corp.)/(Industrial
Bank of Japan Ltd., Tokyo LOC)
1,000,000 Carroll County, VA IDA, IDRB (Series 1995) Weekly VRDNs 1,000,000
(Kentucky Derby Hosiery Co., Inc. Project)/(Bank One,
Kentucky LOC)
4,500,000 Richmond, VA Redevelopment & Housing Authority, (Series B-1) 4,500,000
Weekly VRDNs (Richmond, VA Red Tobacco Row)/(Bayerische
Landesbank Girozentrale LOC)
100,000 Richmond, VA Redevelopment & Housing Authority, (Series B-10) 100,000
Weekly VRDNs (Richmond, VA Red Tobacco Row)/(Bayerische
Landesbank Girozentrale LOC)
2,000,000 Richmond, VA Redevelopment & Housing Authority, (Series B-9) 2,000,000
Weekly VRDNs (Richmond, VA Red Tobacco Row)/(Bayerische
Landesbank Girozentrale LOC)
4,700,000 Virginia Peninsula Port Authority Daily VRDNs (Kinyo 4,700,000
Virginia, Inc.)/(Industrial Bank of Japan Ltd., Tokyo LOC)
TOTAL 17,300,000
WASHINGTON--1.5%
8,000,000 Pierce County, WA Economic Development Corp., (Series 1995) 8,000,000
Weekly VRDNs (Simpson- Tacoma Kraft Company Project)/(Bank of
America, Northwest LOC)
WEST VIRGINIA--0.7%
1,900,000 Marshall County, WV, PCR (Series 1992) Weekly VRDNs (PPG 1,900,000
Industries, Inc.)
1,750,000 West Virginia Public Energy Authority, Energy Revenue Bonds 1,750,000
(1989 Series A), 3.90% CP (Morgantown Energy
Associates)/(Swiss Bank Corp., Basle LOC), Mandatory Tender
1/15/1998
TOTAL 3,650,000
WISCONSIN--5.0%
2,550,000 Germantown, WI, IDA Weekly VRDNs (Zenith Sintered Products, 2,550,000
Inc.)/(Bank One, Wisconsin, N.A. LOC)
2,060,000 Marshfield, WI, IDR (Series 1993) Weekly VRDNs (Building 2,060,000
Systems, Inc.)/(Bank One, Wisconsin, N.A. LOC)
1,450,000 Plover, WI Weekly VRDNs (Sirco Manufacturing, Inc.)/(Norwest 1,450,000
Bank Minnesota, Minneapolis LOC)
</TABLE>
Municipal Cash Series
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
WISCONSIN--CONTINUED
$ 3,425,000 Port Washington-Saukville, WI School District, 4.10% TRANs, $ 3,428,294
10/30/1998
3,500,000 Prentice Village, WI, Limited Obligation Revenue Refunding 3,500,000
Bonds (Series A) Weekly VRDNs (Biewer-Wisconsin Sawmill, Inc.
Project)/(Michigan National Bank, Farmington Hills LOC)
750,000 Shell Lake, WI Weekly VRDNs (Doboy Packaging)/(Union Bank of 750,000
Switzerland, Zurich LOC)
3,200,000 Slinger, WI School District, 4.10% TRANs, 9/29/1998 3,202,525
2,000,000 Tomah, WI Area School District, 4.10% TRANs, 9/23/1998 2,001,545
1,760,000 Waukesha, WI, IDRB (Series 1995) Weekly VRDNs (Weldall 1,760,000
Manufacturing Inc. Project)/(Bank One, Wisconsin, N.A. LOC)
1,450,000 (b)Wisconsin Housing & Economic Development Authority, 1,450,000
(Series B), 4.15% TOBs (FSA INS)/ (Corestates Bank N.A.,
Philadelphia, PA LIQ), Optional Tender 12/1/1997
4,710,000 Wisconsin Housing & Economic Development Authority, PT-90 4,710,000
(Series 1996F) Weekly VRDNs (Banque Nationale de Paris LIQ)
TOTAL 26,862,364
TOTAL INVESTMENTS (AT AMORTIZED COST)(C) $ 535,322,343
</TABLE>
At November 30, 1997, 94.0% of the total investments at market value were
subject to federal alternative minimum tax.
(a) The fund may only invest in securities rated in one of the two highest
short-term rating categories by one or more nationally recognized
statistical rating organizations ("NRSROs") or unrated securities of
comparable quality. 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, MIG-1, or
MIG-2 by Moody's Investors Service, Inc., or F-1+, F-1, and F-2 by Fitch
Investors Service, Inc. are all considered rated in one of the two highest
short-term rating categories.
Securities rated in the highest short-term rating category (and unrated
securities of comparable quality) are identified as First Tier securities.
Securities rated in the second highest short-term rating category (and
unrated securities of comparable quality) are identified as Second Tier
securities. The fund follows applicable regulations in determining whether a
security is rated and whether a security rated by multiple NRSROs in
different rating categories should be identified as a First or Second Tier
security.
At November 30, 1997, the portfolio securities were rated as follows:
Tier Rating Percent Based on Total Market Value
FIRST TIER SECOND TIER
93.4% 6.6%
(b) Denotes a restricted security which is subject to restrictions on resale
under Federal Securities laws. At November 30, 1997, these securities
amounted to $14,865,000 which represents 2.8% of net assets.
(c) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($535,006,786) at November 30, 1997.
The following acronyms are used throughout this portfolio:
ACES --Adjustable Convertible Extendable Securities BANs --Bond Anticipation
Notes COL --Collateralized CP --Commercial Paper EDA --Economic Development
Authority EDFA --Economic Development Financing Authority EDRB --Economic
Development Revenue Bonds FGIC --Financial Guaranty Insurance Company FHA
- --Federal Housing Administration FSA --Financial Security Assurance GNMA
- --Government National Mortgage Association GO --General Obligation GTD
- --Guaranty HFA --Housing Finance Authority IDA --Industrial Development
Authority IDB --Industrial Development Bond IDC --Industrial Development
Corporation IDR --Industrial Development Revenue IDRB --Industrial Development
Revenue Bond IDFA --Industrial Development Finance Authority INS --Insured INV
- --Investment Agreement LIQ --Liquidity Agreement LLC --Limited Liability
Corporation LOC --Letter of Credit PCR --Pollution Control Revenue PCFA
- --Pollution Control Finance Authority PFA --Public Facility Authority PLC
- --Public Limited Company RANs --Revenue Anticipation Notes TANs --Tax
Anticipation Notes TOBs --Tender Option Bonds TRANs --Tax and Revenue
Anticipation Notes VRDNs --Variable Rate Demand Notes
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF ASSETS AND LIABILITIES
MUNICIPAL CASH SERIES
NOVEMBER 30, 1997 (UNAUDITED)
<TABLE>
<S> <C> <C>
ASSETS:
Total investments in securities, at amortized cost and value $ 535,322,343
Cash 4,154,409
Income receivable 3,842,826
Total assets 543,319,578
LIABILITIES:
Payable for investments purchased $ 7,210,198
Income distribution payable 907,574
Accrued expenses 195,020
Total liabilities 8,312,792
Net Assets for 535,006,786 shares outstanding $ 535,006,786
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION PROCEEDS PER SHARE:
$535,006,786 / 535,006,786 shares outstanding $1.00
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF OPERATIONS
MUNICIPAL CASH SERIES
SIX MONTHS ENDED NOVEMBER 30, 1997 (UNAUDITED)
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest $ 10,568,567
EXPENSES:
Investment advisory fee $ 1,351,590
Administrative personnel and services fee 204,090
Custodian fees 25,308
Transfer and dividend disbursing agent fees and expenses 292,390
Directors'/Trustees' fees 3,827
Auditing fees 6,934
Legal fees 2,797
Portfolio accounting fees 52,771
Distribution services fee 270,318
Shareholder services fee 675,795
Share registration costs 19,365
Printing and postage 25,199
Insurance premiums 3,675
Taxes 27,473
Miscellaneous 7,536
Total expenses 2,969,068
Waiver of investment advisory fee (234,312)
Net expenses 2,734,756
Net investment income $ 7,833,811
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF CHANGES IN NET ASSETS
MUNICIPAL CASH SERIES
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED) YEAR ENDED
NOVEMBER 30, 1997 MAY 31, 1997
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 7,833,811 $ 15,321,345
DISTRIBUTIONS TO SHAREHOLDERS--
Distributions from net investment income (7,833,811) (15,321,345)
SHARE TRANSACTIONS--
Proceeds from sale of shares 996,419,320 2,221,134,502
Net asset value of shares issued to shareholders in payment 6,950,396 14,397,804
of distributions declared
Cost of shares redeemed (983,422,603) (2,199,077,184)
Change in net assets resulting from share transactions 19,947,113 36,455,122
Change in net assets 19,947,113 36,455,122
NET ASSETS:
Beginning of period 515,059,673 478,604,551
End of period $ 535,006,786 $ 515,059,673
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED)
NOVEMBER 30, YEAR ENDED MAY 31,
1997 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.01 0.03 0.03 0.03 0.02 0.03
LESS DISTRIBUTIONS
Distributions from net investment income (0.01) (0.03) (0.03) (0.03) (0.02) (0.03)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN(A) 1.46% 2.80% 3.04% 2.84% 1.83% 2.11%
RATIOS TO AVERAGE NET ASSETS
Expenses 1.01%* 0.99% 0.99% 0.99% 0.99% 0.99%
Net investment income 2.90%* 2.75% 2.99% 2.76% 1.81% 2.10%
Expense waiver/reimbursement(b) 0.09%* 0.09% 0.33% 0.05% 0.06% 0.03%
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $535,007 $515,060 $478,605 $445,164 $574,801 $456,205
</TABLE>
* Computed on an annualized basis.
(a) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
NOTES TO FINANCIAL STATEMENTS
MUNICIPAL CASH SERIES
NOVEMBER 30, 1997 (UNAUDITED)
ORGANIZATION
Cash Trust Series, Inc. (the "Corporation") is registered under the Investment
Company Act of 1940, as amended (the "Act") as an open-end, management
investment company. The Corporation consists of four portfolios. The financial
statements included herein are only those of Municipal Cash Series (the "Fund").
The financial statements of the other portfolios are presented separately. The
assets of each portfolio are segregated and a shareholder's interest is limited
to the portfolio in which shares are held. The investment objective of the Fund
is current income exempt from federal regular income tax consistent with
stability of principal.
SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS
The Fund uses the amortized cost method to value its portfolio securities in
accordance with Rule 2a-7 under the Act.
INVESTMENT INCOME, EXPENSES, AND DISTRIBUTIONS
Interest income and expenses are accrued daily. Bond premium and discount, if
applicable, are amortized as required by the Internal Revenue Code, as amended
(the "Code"). Distributions to shareholders are recorded on the ex-dividend
date.
FEDERAL TAXES
It is the Fund's policy to comply with the provisions of the Code applicable to
regulated investment companies and to distribute to shareholders each year
substantially all of its income. Accordingly, no provisions for federal tax are
necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Fund may engage in when-issued or delayed delivery transactions. The Fund
records when-issued securities on the trade date and maintains security
positions such that sufficient liquid assets will be available to make payment
for the securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
RESTRICTED SECURITIES
Restricted securities are securities that may only be resold upon registration
under federal securities laws or in transactions exempt from such registration.
Many restricted securities may be resold in the secondary market in transactions
exempt from registration. In some cases, the restricted securities may be resold
without registration upon exercise of a demand feature. Such restricted
securities may be determined to be liquid under criteria established by the
Board of Directors (the "Directors"). The Fund will not incur any registration
costs upon such resales. Restricted securities are valued at amortized cost in
accordance with Rule 2a-7 under the Act.
Additional information on each restricted security held at November 30, 1997, is
as follows:
<TABLE>
<CAPTION>
SECURITY ACQUISITION DATE ACQUISITION COST
<S> <C> <C>
Dakota County & Washington County MN Housing & Redevelopment Authority 8/28/1997 $5,775,000
Montana State Board of Housing 10/1/1997 3,780,000
Oklahoma HFA 12/12/1996 3,860,000
Wisconsin Housing & Economic Development Authority (Series B) 8/28/1997 1,450,000
</TABLE>
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts of assets, liabilities, expenses, and revenues reported in
the financial statements. Actual results could differ from those estimated.
OTHER
Investment transactions are accounted for on the trade date.
CAPITAL STOCK
At November 30, 1997, there were 12,500,000,000 shares ($0.001 par value per
share) authorized. At November 30, 1997, capital paid-in aggregated
$535,006,786. Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
NOVEMBER 30, YEAR ENDED
1997 MAY 31, 1997
<S> <C> <C>
Shares sold 996,419,320 2,221,134,502
Shares issued to shareholders in payment of distributions declared 6,950,396 14,397,804
Shares redeemed (983,422,603) (2,199,077,184)
Net change resulting from share transactions 19,947,113 36,455,122
</TABLE>
INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE
Federated Advisers, the Fund's investment adviser (the "Adviser"), receives for
its services an annual investment advisory fee equal to 0.50% of the Fund's
average daily net assets. The Adviser may voluntarily choose to waive any
portion of its fee. The Adviser can modify or terminate this voluntary waiver at
any time at its sole discretion.
ADMINISTRATIVE FEE
Federated Services Company ("FServ"), under the Administrative Services
Agreement, provides the Fund with administrative personnel and services. The fee
paid to FServ is based on the level of average aggregate daily net assets of all
funds advised by subsidiaries of Federated Investors for the period. The
administrative fee received during the period of the Administrative Services
Agreement shall be at least $125,000 per portfolio and $30,000 per each
additional class of shares.
DISTRIBUTION SERVICES FEE
The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1
under the Act. Under the terms of the Plan, the Fund will reimburse Federated
Securities Corp. ("FSC"), the principal distributor, from the net assets of the
Fund to finance activities intended to result in the sale of the Fund's shares.
The Plan provides that the Fund may incur distribution expenses up to 0.35% of
the average daily net assets of the Fund shares, annually, to reimburse FSC.
SHAREHOLDER SERVICES FEE
Under the terms of a Shareholder Services Agreement with Federated Shareholder
Services ("FSS"), the Fund will pay FSS up to 0.25% of average daily net assets
of the Fund for the period. The fee paid to FSS is used to finance certain
services for shareholders and to maintain shareholder accounts.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES
FServ, through its subsidiary, Federated Shareholder Services Company ("FSSC")
serves as transfer and dividend disbursing agent for the Fund. The fee paid to
FSSC is based on the size, type, and number of accounts and transactions made by
shareholders.
PORTFOLIO ACCOUNTING FEES
FServ maintains the Fund's accounting records for which it receives a fee. The
fee is based on the level of the Fund's average daily net assets for the period,
plus out-of-pocket expenses.
INTERFUND TRANSACTIONS
During the period ended November 30, 1997, the Fund engaged in purchase and sale
transactions with funds that have a common investment adviser (or affiliated
investment advisers), common Directors/Trustees, and/or common Officers. These
purchase and sale transactions were made at current market value pursuant to
Rule 17a-7 under the Act amounting to $395,330,000 and $331,890,000,
respectively.
GENERAL
Certain of the Officers and Directors of the Corporation are Officers and
Directors or Trustees of the above companies.
DIRECTORS
John F. Donahue
Thomas G. Bigley
John T. Conroy, Jr.
William J. Copeland
J. Christopher Donahue
James E. Dowd
Lawrence D. Ellis, M.D.
Edward L. Flaherty, Jr.
Peter E. Madden
John E. Murray, Jr.
Wesley W. Posvar
Marjorie P. Smuts
OFFICERS
John F. Donahue
Chairman
Richard B. Fisher
President
J. Christopher Donahue
Executive Vice President
Edward C. Gonzales
Executive Vice President
John W. McGonigle
Executive Vice President, Treasurer, and Secretary
J. Crilley Kelly
Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves risk, including possible
loss of principal. Although money market funds seek to maintain a stable net
asset value of $1.00 per share, there is no assurance that they will be able to
do so.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the fund's prospectus which contains facts concerning
its objective and policies, management fees, expenses, and other information.
NOTES
[Graphic]Federated Investors
Municipal Cash Series
SEMI-ANNUAL REPORT TO SHAREHOLDERS
NOVEMBER 30, 1997
Federated Securities Corp., Distributor
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
1-800-341-7400
www.federatedinvestors.com
Cusip 147551303
0122605 (1/98)
[Graphic]
PRESIDENT'S MESSAGE
Dear Shareholder:
I am pleased to present the Semi-Annual Report to shareholders for Prime Cash
Series, a portfolio of Cash Trust Series, Inc., which covers the six-month
period ended November 30, 1997. The report begins with an investment review by
the fund's portfolio manager, which is followed by a complete listing of the
fund's investments and its financial statements.
During the reporting period, Prime Cash Series paid a total of $0.02 in
dividends per share. In addition to income on their ready cash, shareholders
benefit from the fund's daily liquidity and stability of principal.* Assets
continued to soar, reaching $3 billion at the reporting period's end.
At the end of the reporting period, the fund was invested across a diversified,
high-quality portfolio of money market securities that included asset-backed
securities (5.4%), commercial paper (33.9%), variable rate notes (19.0%),
repurchase agreements (17.7%), time deposits (14.5%), certificates of deposit
(9.2%), short-term notes (3.1%), and a loan participation note (0.3%).
Thank you for choosing Prime Cash Series as a convenient way to keep your cash
working every day through the relative safety of high-quality money market
obligations. Please contact your investment representative if you have any
questions about the fund.
Sincerely,
[Graphic]
Richard B. Fisher
President
January 15, 1998
* Money market funds seek to maintain a stable net asset value of $1.00 per
share. There is no assurance that they will be able to do so. An investment
in this fund is not insured or guaranteed by the U.S. government.
INVESTMENT REVIEW
Prime Cash Series invests in money market instruments maturing in thirteen
months or less. The average maturity of these securities, computed on a
dollar-weighted basis, is restricted to 90 days or less. Portfolio securities
must be rated in one of the two highest short-term rating categories by one or
more of the nationally recognized statistical rating organizations or be of
comparable quality to securities having such ratings. Typical security types
include, but are not limited to, commercial paper, certificates of deposit, time
deposits, variable rate instruments, and repurchase agreements.
During the past six months the U.S. economy continued to march ahead without
signs of higher inflation. The unemployment rate fell to a quarter-century low
of 4.60%. Consumer spending, which accounts for two-thirds of the U.S. economy,
was on the rise, fueled in part by gains in income. Despite strong indicators on
the domestic side, economic turmoil in Asia should help to slow U.S. growth next
year. The slowdown in Asia is coming as things are heating up in the U.S. This
combination should lead to the slow steady growth that the Federal Reserve Board
(the "Fed") likes to see.
The money market yield curve was flat throughout the reporting period. On
November 28, 1997, the one-month commercial paper rate was 5.54% while the
six-month rate was 5.57%. Thirty-day commercial paper started the reporting
period at 5.56% on June 1, 1997, and declined modestly to end the reporting
period at 5.54%. The six-month commercial paper rate declined by one basis point
over six months. This lack of movement reflects the 5.25% federal funds target
maintained by the Fed for the entire six-month reporting period.
The target average maturity range for the fund remained in the 35- to 45-day
range throughout the reporting period. In structuring the fund, there is
continued emphasis placed on positioning 30-35% of the fund's core assets in
variable rate demand notes and accomplishing a modest barbell structure.
During the six-month reporting period ended November 28, 1997, the net assets of
the fund increased from $2.3 billion to $3.1 billion while the 7-day net yield
increased from 4.73% to 4.74%.* The effective average maturity of the fund on
November 28, 1997, was 42 days.
* Performance quoted represents past performance and is not indicative of
future results. Yield will vary.
PORTFOLIO OF INVESTMENTS
PRIME CASH SERIES
NOVEMBER 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
ASSET-BACKED SECURITIES--5.4%
FINANCE - AUTOMOTIVE--2.3%
$ 8,034,915 Arcadia Automobile Receivables Trust 1997-C, Class A-1, $ 8,034,915
5.650%, 9/15/1998
2,894,224 Banc One Auto Trust 1995-A, 7.050%, Class A-5, 8/15/1998 2,903,213
4,108,597 Chase Manhattan Auto Owner Trust 1997-B, Class A-1, 4,108,597
5.744%, 7/10/1998
4,701,526 Chase Manhattan RV Owner Trust 1997-A, Class A-1, 5.598%, 4,701,526
10/15/1998
34,677,761 Ford Credit Auto Owner Trust 1997-B, Class A-1, 5.748%, 34,677,761
10/15/1998
18,153,056 MMCA Auto Owner Trust 1997-1, Class A-1, 5.630%, 18,149,297
11/15/1998
TOTAL 72,575,309
FINANCE - EQUIPMENT--2.6%
56,500,000 Capita Equipment Receivables Trust 1997-1, Class A-1, 56,488,700
5.80%, 12/15/1998
20,500,000 Caterpillar Financial Asset Trust 1997-B, Class A-1, 20,500,000
5.805%, 11/25/1998
5,530,161 Copelco Capital Funding Corp. X 1997-A, Class A-1, 5.809%, 5,530,161
7/20/1998
TOTAL 82,518,861
INSURANCE--0.5%
15,500,000 WFS Financial 1997-C Owner Trust, Class A-1, 5.710%, 15,500,000
9/20/1998
TOTAL ASSET-BACKED SECURITIES 170,594,170
CERTIFICATE OF DEPOSIT--9.2%
BANKING--9.2%
20,000,000 Bankers Trust Co., New York, 5.910%, 10/13/1998 19,994,391
10,000,000 Crestar Bank of Virginia, Richmond, 5.720%, 2/23/1998 10,000,454
20,000,000 MBNA America Bank, NA, 5.670%, 12/2/1997 20,000,000
86,000,000 Sanwa Bank Ltd., Osaka, 6.180% - 6.300%, 1/20/1998 - 86,001,190
1/23/1998
103,500,000 Societe Generale, Paris, 5.720% - 5.970%, 1/7/1998 - 103,472,310
10/15/1998
5,000,000 Standard Federal Bank, 5.750%, 12/5/1997 5,000,000
30,000,000 Sumitomo Bank Ltd., Osaka, 6.170%, 1/20/1998 30,000,412
15,000,000 Sumitomo Bank Ltd., Osaka, 6.450%, 1/23/1998 14,985,238
TOTAL CERTIFICATE OF DEPOSIT 289,453,995
(A)COMMERCIAL PAPER--33.9%
BANKING--7.7%
42,000,000 ABN AMRO Bank N.V., Amsterdam, 5.687% - 5.793%, 1/5/1998 - 41,676,814
2/5/1998
14,000,000 AI Credit Corp., (AIG SA), 5.683%, 1/15/1998 13,903,050
</TABLE>
PRIME CASH SERIES
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)COMMERCIAL PAPER--CONTINUED
BANKING--CONTINUED
$ 30,000,000 Abbey National N.A. Corp., (Guaranteed by Abbey National $ 29,588,375
Bank PLC, London), 5.708% - 5.709%, 2/25/1998 - 3/3/1998
20,000,000 Commonwealth Bank of Australia, Sydney, 5.704% - 5.710%, 19,614,583
4/1/1998 - 4/9/1998
22,000,000 Cregem North America, Inc., (Guaranteed by Credit Communal 21,722,311
de Belgique, Brussles), 5.762%, 2/19/1998
18,000,000 Den Danske Corp., Inc., (Guaranteed by Den Danske Bank 17,755,580
A/S), 5.716%, 2/27/1998
15,000,000 Glencore Finance (Bermuda) Ltd., (ABN AMRO Bank N.V., 14,990,767
Amsterdam LOC), 5.609%, 12/5/1997
17,544,000 Lloyds Bank PLC, London, 5.709% - 5.773%, 12/29/1997 - 17,369,250
3/3/1998
55,000,000 Svenska Handelsbanken, Inc., (Guaranteed by Svenska 54,475,844
Handelsbanken, Stockholm), 5.681% - 5.857%, 12/2/1997 -
3/13/1998
12,000,000 Toronto Dominion Holdings (USA), Inc., (Guaranteed by 11,970,293
Toronto-Dominion Bank), 5.730%, 12/17/1997
TOTAL 243,066,867
FINANCE - AUTOMOTIVE--1.8%
56,000,000 Ford Motor Credit Corp., 5.650%, 1/16/1998 55,600,720
FINANCE - COMMERCIAL--12.2%
28,000,000 Alpha Finance Corp., Ltd., 5.742% - 5.779%, 2/13/1998 - 27,612,858
3/12/1998
10,000,000 Asset Securitization Cooperative Corp., 5.825%, 12/9/1997 9,987,422
67,000,000 Beta Finance, Inc., 5.681% - 5.825%, 12/2/1997 - 2/17/1998 66,343,204
15,000,000 CIT Group Holdings, Inc., 5.654%, 4/3/1998 14,718,125
55,000,000 CXC, Inc., 5.615% - 5.768%, 1/13/1998 - 2/10/1998 54,545,513
41,320,000 Falcon Asset Securitization Corp., 5.687% - 5.705%, 40,899,350
1/23/1998 - 2/18/1998
75,000,000 General Electric Capital Corp., 5.709% - 5.743%, 1/15/1998 73,963,442
- 4/6/1998
55,465,000 Greenwich Funding Corp., 5.608% - 5.805%, 12/10/1997 - 55,055,122
2/25/1998
26,702,000 Receivables Capital Corp., 5.775% - 5.776%, 2/10/1998 - 26,396,125
2/12/1998
14,000,000 Sheffield Receivables Corp., 5.807%, 1/20/1998 13,888,194
TOTAL 383,409,355
FINANCE - RETAIL--9.2%
155,000,000 Associates Corp. of North America, 5.584% - 5.753%, 155,000,000
12/1/1997
100,000,000 Household Finance Corp., 5.803%, 12/1/1997 100,000,000
36,000,000 New Center Asset Trust, A1+/P1 Series, 5.642% - 5.716%, 35,402,226
2/27/1998 - 4/3/1998
TOTAL 290,402,226
MACHINERY, EQUIPMENT, AUTO--0.9%
28,000,000 Eaton Corp., 5.709%, 2/2/1998 27,728,050
</TABLE>
PRIME CASH SERIES
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)COMMERCIAL PAPER--CONTINUED
OIL & OIL FINANCE--1.4%
$ 15,000,000 Chevron Transport Corp., (Guaranteed by Chevron Corp.), $ 14,868,867
5.704%, 1/26/1998
30,000,000 Koch Industries, Inc., 5.624%, 12/1/1997 30,000,000
TOTAL 44,868,867
TRANSPORTATION--0.7%
22,242,000 BAA PLC, 5.647% - 5.710%, 1/6/1998 - 2/4/1998 22,062,969
TOTAL COMMERCIAL PAPER 1,067,139,054
SHORT-TERM NOTES--3.1%
BANKING--1.9%
25,000,000 SALTS II Cayman Islands Corp., (Bankers Trust 25,000,000
International, PLC Swap Agreement), 5.769%, 12/18/1997
25,000,000 SALTS III Cayman Island Corp., (Bankers Trust 25,000,000
International, PLC Swap Agreement), 5.944%, 1/23/1998
9,000,000 SALTS III Cayman Island Corp., (Bankers Trust 9,000,000
International, PLC Swap Agreement), 6.065%, 12/18/1997
TOTAL 59,000,000
BROKERAGE--0.9%
30,000,000 Goldman Sachs & Co., 5.781%, 1/26/1998 30,000,000
FINANCE - COMMERCIAL--0.3%
10,000,000 (c)Triangle Funding Ltd., 5.750%, 11/16/1998 10,000,000
TOTAL CORPORATE NOTES 99,000,000
LOAN PARTICIPATION--0.3%
FINANCE - EQUIPMENT--0.3%
10,000,000 Pitney Bowes Credit Corp., 5.700%, 12/10/1997 9,985,750
(B)NOTES - VARIABLE--19.0%
BANKING--10.5%
4,385,000 Aurora City, IL, (Series 1995), (First of America Bank - 4,385,000
Illinois LOC), 5.938%, 12/4/1997
875,000 Avalon Hotel Associates, (Corestates Bank N.A., 875,000
Philadelphia, PA LOC), 5.760%, 12/4/1997
3,400,000 Blackwell Investments, Inc., (Bank One, Louisiana LOC), 3,400,000
5.880%, 12/4/1997
1,810,000 Boozer Lumber Co., (SouthTrust Bank of Alabama, Birmingham 1,810,000
LOC), 6.020%, 12/5/1997
6,655,000 Cliffbreakers, LLC Project, Series 1997, (First of
America 6,655,000 Bank - Illinois LOC), 5.800%, 12/4/1997
11,665,000 Congregate Care Corp., (Union Bank of California LOC), 11,665,000
5.890%, 12/3/1997
1,430,000 Denver Urban Renewal Authority, (Series 1992-B), (Banque 1,430,000
Paribas, Paris LOC), 5.900%, 12/4/1997
6,100,000 Dewberry III, L.P., (First National Bank of Maryland, 6,100,000
Baltimore LOC), 5.913%, 12/4/1997
</TABLE>
PRIME CASH SERIES
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(B)NOTES - VARIABLE--CONTINUED
BANKING--CONTINUED
$ 1,500,000 Edgefield County, SC, Series 1997 (Bondex Inc. Project), $ 1,500,000
(Marine Midland Bank N.A., Buffalo, NY LOC), 5.875%,
12/4/1997
7,100,000 Euclid Superior Parking, (KeyBank, N.A. LOC), 5.840%, 7,100,000
12/5/1997
2,435,000 Gahanna, OH, City of, Franklin Steel Co. Project, (Star 2,435,000
Bank, N.A., Cincinnati LOC), 5.680%, 12/4/1997
11,005,000 HJH Associates of Alabama, Hilton Hotel, Huntsville, 11,005,000
(SouthTrust Bank of Alabama, Birmingham LOC), 5.860%,
12/4/1997
5,200,000 Kenny, Donald R. and Cheryl A., Series 1996-C, (Star Bank, 5,200,000
N.A., Cincinnati LOC), 5.850%, 12/4/1997
2,000,000 La-Man Corp., (SouthTrust Bank of Alabama, Birmingham 2,000,000
LOC), 5.850%, 12/5/1997
2,290,000 Lake Sherwood Senior Living Center, LLC, (Union Planters 2,290,000
NB, Memphis, TN LOC), 5.880%, 12/4/1997
51,000,000 (c)Liquid Asset Backed Securities Trust, Series 1996-3, 51,000,000
(Westdeutsche Landesbank Girozentrale Swap Agreement),
5.645%, 12/15/1997
43,132,323 (c) Liquid Asset Backed Securities Trust, Series 1997-1, 43,132,323
(Westdeutsche Landesbank Girozentrale Swap Agreement),
5.625%, 12/15/1997
10,000,000 Long Lane Master Trust III, Series 1997-C, (Bank Boston, 10,000,000
N.A., Swap Agreement), 5.780%, 12/5/1997
3,845,000 Maryland State IDFA, (Genetic Therapy, Inc.), (First 3,845,000
National Bank of Maryland, Baltimore LOC), 5.730%,
12/1/1997
5,800,000 Maryland State IDFA, (Kelly Springfield Tire), (First 5,800,000
National Bank of Maryland, Baltimore LOC), 5.830%,
12/1/1997
2,834,000 Maryland State IDFA, Human Genome, Series1994, (First 2,834,000
National Bank of Maryland, Baltimore LOC), 5.850%,
12/1/1997
9,000,000 Mississippi Business Finance Corp., Howard Industries, 9,000,000
Inc. Series 1997, (First American National Bank,
Nashville, TN LOC), 6.025%, 12/4/1997
18,000,000 National Funding Corp., Series 1994-A, (American National 18,000,000
Bank, Chicago LOC), 5.830%, 12/4/1997
655,000 New Jersey EDA, Series 1992 K-3, (Banque Nationale de 655,000
Paris LOC), 5.974%, 12/1/1997
3,745,000 New Jersey EDA, Series 1992-H, (Banque Nationale de Paris 3,745,000
LOC), 5.849%, 12/1/1997
5,875,000 Pelham City, IDB, (Columbus Bank and Trust Co., GA LOC), 5,875,000
5.980%, 12/4/1997
2,000,000 Pelham City, IDB, (Columbus Bank and Trust Co., GA LOC), 2,000,000
5.980%, 12/4/1997
5,700,000 Pennsylvania EDFA, (Series 1993-C), (Barclays Bank PLC, 5,700,000
London LOC), 5.680%, 12/3/1997
46,771,668 (c)Rabobank Optional Redemption Trust, Series 1997-101, 46,771,668
5.754%, 12/15/1997
2,200,000 Saegertown Manufacturing Corp., (PNC Bank, N.A. LOC), 2,200,000
5.658%, 12/1/1997
4,930,000 Southeast Regional Holdings, LLC, Series 1995-A,
(Columbus 4,930,000 Bank and Trust Co., GA LOC), 5.830%,
12/4/1997
5,400,000 Sun Valley, Inc., (SouthTrust Bank of Georgia, Atlanta 5,400,000
LOC), 6.020%, 12/5/1997
</TABLE>
PRIME CASH SERIES
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(B)NOTES - VARIABLE--CONTINUED
BANKING--CONTINUED
$ 3,620,000 (c)Toledo Medical Building I L.P., (Huntington National $ 3,620,000
Bank, Columbus, OH LOC), 6.270%, 5/1/1998
19,125,000 Union Development Co., (Bank of America NT and SA, San 19,125,000
Francisco LOC), 5.650%, 12/4/1997
4,375,000 United Jewish Federation of Greater Pittsburgh VRDB, 4,375,000
Series 1995A, (PNC Bank, N.A. LOC), 5.700%, 12/4/1997
6,520,000 Van Dyne Crotty Co., (Huntington National Bank, Columbus, 6,520,000
OH LOC), 5.830%, 12/4/1997
5,760,000 Woodbury Business Forms, Inc./Carribean Business Forms, 5,760,000
Series 1996 Taxable Revenue Bonds, (Columbus Bank and
Trust Co., GA LOC), 5.980%, 12/4/1997
TOTAL 328,137,991
FINANCE - EQUIPMENT--0.9%
29,400,000 Comdisco, Inc., 5.819%, 8/26/1998 29,400,000
FINANCE - RETAIL--1.4%
21,000,000 AFS Insurance Premium Receivables Trust, (Series 1994-A), 21,000,000
6.181%, 12/15/1997
23,000,000 Carco Auto Loan Master Trust 1993-2, (Series 1993-2 Class
23,000,000 A1), 5.615%, 12/15/1997
TOTAL 44,000,000
INSURANCE--6.2%
60,000,000 General American Life Insurance Co., 5.852%, 12/22/1997 60,000,000
66,126,271 (c)Liquid Asset Backed Securities Trust, Series 1997-3 Senior 66,126,271
Notes, (Guaranteed by AMBAC), 5.626%, 12/27/1997
25,000,000 SunAmerica Life Insurance Company, 5.756%, 12/1/1997 25,000,000
15,000,000 SunAmerica Life Insurance Company, 5.756%, 12/1/1997 15,000,000
30,000,000 Transamerica Occidental Life Insurance Company, 5.719%, 30,000,000
2/6/1998
TOTAL 196,126,271
TOTAL NOTES - VARIABLE 597,664,262
TIME DEPOSITS--14.5%
BANKING--14.5%
100,000,000 Bank of Tokyo-Mitsubishi Ltd., 5.750% - 12.000%, 12/1/1997 100,000,000
- 1/2/1998
100,000,000 Canadian Imperial Bank of Commerce, Toronto, 5.750%, 100,000,000
12/1/1997
25,000,000 Canadian Imperial Bank of Commerce, Toronto, 8.000%, 25,000,000
1/2/1998
106,000,000 Chase Manhattan Bank (USA) N.A., Wilmington, 5.750%, 106,000,000
12/1/1997
125,000,000 Royal Bank of Canada, Montreal, 5.750%, 12/1/1997 125,000,000
TOTAL TIME DEPOSITS 456,000,000
(D)REPURCHASE AGREEMENTS--17.7%
47,000,000 Bear, Stearns and Co., 5.760%, dated 11/28/1997, due 47,000,000
12/1/1997
50,000,000 Chase Government Securities, Inc., 5.760%, dated 50,000,000
11/28/1997, due 12/1/1997
</TABLE>
PRIME CASH SERIES
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(D)REPURCHASE AGREEMENTS--CONTINUED
$ 80,000,000 Fuji Government Securities, Inc., 5.730%, dated $ 80,000,000
11/28/1997, due 12/1/1997
18,800,000 HSBC Securities, Inc., 5.750%, dated 11/28/1997, due 18,800,000
12/1/1997
24,000,000 J.P. Morgan & Co., Inc., 5.700%, dated 11/28/1997, due 24,000,000
12/1/1997
100,000,000 J.P. Morgan & Co., Inc., 5.740%, dated 11/28/1997, due 100,000,000
12/1/1997
125,000,000 Merrill Lynch, Pierce, Fenner and Smith, 5.720%, dated 125,000,000
11/28/1997, due 12/1/1997
28,404,000 PaineWebber Group, Inc., 5.720%, dated 11/28/1997, due 28,404,000
12/1/1997
20,100,000 Societe Generale, New York, 5.700%, dated 11/28/1997, due 20,100,000
12/1/1997
63,000,000 UBS Securities, Inc., 5.750%, dated 11/28/1997, due 63,000,000
12/1/1997
TOTAL REPURCHASE AGREEMENTS 556,304,000
TOTAL INVESTMENTS (AT AMORTIZED COST)(E) $ 3,246,141,231
</TABLE>
(a) Each issue shows the rate of discount at time of purchase for discount
issues, or the coupon for the interest bearing issues.
(b) Current rate and next reset date shown.
(c) Denotes a restricted security which is subject to restrictions on resale
under Federal Securities laws. At November 30, 1997, these securities
amounted to $220,650,262 which represents 7.0% of net assets.
(d) The repurchase agreements are fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio. The
investments in the repurchase agreements are through participation in joint
accounts with other Federated funds.
(e) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($3,148,493,688) at November 30, 1997.
The following acronyms are used throughout this portfolio:
AMBAC --American Municipal Bond Assurance Corporation EDA --Economic Development
Authority EDFA --Economic Development Financing Authority IDB --Industrial
Development Bond IDFA --Industrial Development Finance Authority LLC --Limited
Liability Corporation LOC --Letter of Credit PLC --Public Limited Company SA
- --Support Agreement
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF ASSETS AND LIABILITIES
PRIME CASH SERIES
NOVEMBER 30, 1997 (UNAUDITED)
<TABLE>
<S> <C> <C>
ASSETS:
Investments in repurchase agreements $ 556,304,000
Investments in securities 2,689,837,231
Total investments in securities, at amortized cost and value $ 3,246,141,231
Cash 31,458,249
Income receivable 9,104,232
Receivable for shares sold 25,353
Total assets 3,286,729,065
LIABILITIES:
Payable for investments purchased 131,488,700
Income distribution payable 5,805,973
Accrued expenses 940,704
Total liabilities 138,235,377
Net Assets for 3,148,493,688 shares outstanding $ 3,148,493,688
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION PROCEEDS PER
SHARE:
$3,148,493,688 / 3,148,493,688 shares outstanding $1.00
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF OPERATIONS
PRIME CASH SERIES
SIX MONTHS ENDED NOVEMBER 30, 1997 (UNAUDITED)
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest $ 79,877,018
EXPENSES:
Investment advisory fee $ 6,973,393
Administrative personnel and services fee 1,052,982
Custodian fees 126,189
Transfer and dividend disbursing agent fees and expenses 3,052,928
Directors'/Trustees' fees 11,016
Auditing fees 6,681
Legal fees 4,575
Portfolio accounting fees 74,774
Distribution services fee 1,394,679
Shareholder services fee 3,486,696
Share registration costs 225,200
Printing and postage 175,355
Insurance premiums 9,516
Taxes 53,208
Miscellaneous 8,516
Total expenses 16,655,708
Waiver of investment advisory fee (2,659,867)
Net expenses 13,995,841
Net investment income $ 65,881,177
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF CHANGES IN NET ASSETS
PRIME CASH SERIES
<TABLE>
<CAPTION>
SIX MONTHS ENDED
(UNAUDITED) YEAR ENDED
NOVEMBER 30, 1997 MAY 31, 1997
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 65,881,177 $ 96,413,512
DISTRIBUTIONS TO SHAREHOLDERS--
Distributions from net investment income (65,881,177) (96,413,512)
SHARE TRANSACTIONS--
Proceeds from sale of shares 5,630,204,312 9,031,450,524
Net asset value of shares issued to shareholders in payment 61,757,380 90,848,174
of distributions declared
Cost of shares redeemed (4,906,849,884) (8,298,152,325)
Change in net assets resulting from share transactions 785,111,808 824,146,373
Change in net assets 785,111,808 824,146,373
NET ASSETS:
Beginning of period 2,363,381,880 1,539,235,507
End of period $ 3,148,493,688 $ 2,363,381,880
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED)
NOVEMBER 30, YEAR ENDED MAY 31,
1997 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.02 0.05 0.05 0.05 0.02 0.03
LESS DISTRIBUTIONS
Distributions from net investment income (0.02) (0.05) (0.05) (0.05) (0.02) (0.03)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN(A) 2.39% 4.64% 4.90% 4.60% 2.48% 2.61%
RATIOS TO AVERAGE NET ASSETS
Expenses 1.00%* 0.99% 0.99% 0.99% 0.99% 0.99%
Net investment income 4.72%* 4.55% 4.78% 4.57% 2.45% 2.58%
Expense waiver/reimbursement(b) 0.19%* 0.20% 0.38% 0.20% 0.18% 0.15%
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $3,148,494 $2,363,382 $1,539,235 $1,027,083 $791,147 $796,832
</TABLE>
* Computed on an annualized basis.
(a) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
NOTES TO FINANCIAL STATEMENTS
PRIME CASH SERIES
NOVEMBER 30, 1997 (UNAUDITED)
ORGANIZATION
Cash Series Trust, Inc. (the "Corporation") is registered under the Investment
Company Act of 1940, as amended (the "Act") as an open-end, management
investment company. The Corporation consists of four portfolios. The financial
statements included herein are only those of Prime Cash Series (the "Fund"). The
financial statements of the other portfolios are presented separately. The
assets of each portfolio are segregated and a shareholder's interest is limited
to the portfolio in which shares are held. The investment objective of the Fund
is current income consistent with stability of principal and liquidity.
SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS
The Fund uses the amortized cost method to value its portfolio securities in
accordance with Rule 2a-7 under the Act.
REPURCHASE AGREEMENTS
It is the policy of the Fund to require the custodian bank to take possession,
to have legally segregated in the Federal Reserve Book Entry System, or to have
segregated within the custodian bank's vault, all securities held as collateral
under repurchase agreement transactions. Additionally, procedures have been
established by the Fund to monitor, on a daily basis, the market value of each
repurchase agreement's collateral to ensure that the value of collateral at
least equals the repurchase price to be paid under the repurchase agreement
transaction.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed by
the Fund's adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Directors (the "Directors").
Risks may arise from the potential inability of counterparties to honor the
terms of the repurchase agreement. Accordingly, the Fund could receive less than
the repurchase price on the sale of collateral securities.
INVESTMENT INCOME, EXPENSES, AND DISTRIBUTIONS
Interest income and expenses are accrued daily. Bond premium and discount, if
applicable, are amortized as required by the Internal Revenue Code, as amended
(the "Code"). Distributions to shareholders are recorded on the ex-dividend
date.
FEDERAL TAXES
It is the Fund's policy to comply with the provisions of the Code applicable to
regulated investment companies and to distribute to shareholders each year
substantially all of its income. Accordingly, no provisions for federal tax are
necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Fund may engage in when-issued or delayed delivery transactions. The Fund
records when-issued securities on the trade date and maintains security
positions such that sufficient liquid assets will be available to make payment
for the securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
RESTRICTED SECURITIES
Restricted securities are securities that may only be resold upon registration
under federal securities laws or in transactions exempt from such registration.
In some cases, the issuer of restricted securities has agreed to register such
securities for resale, at the issuer's expense, either upon demand by the Fund
or in connection with another registered offering of the securities. Many
restricted securities may be resold in the secondary market in transactions
exempt from registration. Such restricted securities may be determined to be
liquid under criteria established by the Directors. The Fund will not incur any
registration costs upon such resales. The Fund's restricted securities are
valued at the price provided by dealers in the secondary market or, if no market
prices are available, at the fair value as determined by the Fund's pricing
committee.
Additional information on each restricted security held at November 30, 1997, is
as follows:
<TABLE>
<CAPTION>
SECURITY ACQUISITION DATE ACQUISITION COST
<S> <C> <C>
Liquid Asset Backed Securities Trust, Series 1997-1 2/19/1997 $43,132,323
Liquid Asset Backed Securities Trust, Series 1996-3 8/15/1996 51,000,000
Liquid Asset Backed Securities Trust, Series 1997-3 6/27/1997 66,126,271
Rabobank Optional Redemption Trust, Series 1997-101 7/17/1997 46,771,668
Toledo Medical Building (Huntington National Bank LOC) 11/2/1992 3,620,000
Triangle Funding LTD., Series 1997-1, Class 1 10/10/1997 10,000,000
</TABLE>
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts of assets, liabilities, expenses, and revenues reported in
the financial statements. Actual results could differ from those estimated.
OTHER
Investment transactions are accounted for on the trade date.
CAPITAL STOCK
At November 30, 1997, there were 12,500,000,000 shares ($0.001 par value per
share) authorized. At November 30, 1997, capital paid-in aggregated
$3,148,493,688. Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
NOVEMBER 30, 1997 MAY 31,1997
<S> <C> <C>
Shares sold 5,630,204,312 9,031,450,524
Shares issued to shareholders in payment of distributions declared 61,757,380 90,848,174
Shares redeemed (4,906,849,884) (8,298,152,325)
Net change resulting from share transactions 785,111,808 824,146,373
</TABLE>
INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE
Federated Advisers, the Fund's investment adviser (the "Adviser"), receives for
its services an annual investment advisory fee equal to 0.50% of the Fund's
average daily net assets. The Adviser may voluntarily choose to waive any
portion of its fee. The Adviser can modify or terminate this voluntary waiver at
any time at its sole discretion.
ADMINISTRATIVE FEE
Federated Services Company ("FServ"), under the Administrative Services
Agreement, provides the Fund with administrative personnel and services. The fee
paid to FServ is based on the level of average aggregate daily net assets of all
funds advised by subsidiaries of Federated Investors for the period. The
administrative fee received during the period of the Administrative Services
Agreement shall be at least $125,000 per portfolio and $30,000 per each
additional class of shares.
DISTRIBUTION SERVICES FEE
The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1
under the Act. Under the terms of the Plan, the Fund will reimburse Federated
Securities Corp., ("FSC"), the principal distributor, from the net assets of the
Fund to finance activities intended to result in the sale of the Fund's shares.
The Plan provides that the Fund may incur distribution expenses up to 0.35% of
the average daily net assets of the Fund shares, annually, to reimburse FSC.
SHAREHOLDER SERVICES FEE
Under the terms of a Shareholder Services Agreement with Federated Shareholder
Services ("FSS"), the Fund will pay FSS up to 0.25% of average daily net assets
of the Fund for the period. The fee paid to FSS is used to finance certain
services for shareholders and to maintain shareholder accounts.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES
FServ, through its subsidiary, Federated Shareholder Services Company ("FSSC"),
serves as transfer and dividend disbursing agent for the Fund. The fee paid to
FSSC is based on the size, type, and number of accounts and transactions made by
shareholders.
PORTFOLIO ACCOUNTING FEES
FServ maintains the Fund's accounting records for which it receives a fee. The
fee is based on the level of the Fund's average daily net assets for the period,
plus out-of-pocket expenses.
GENERAL
Certain of the Officers and Directors of the Corporation are Officers and
Directors or Trustees of the above companies.
DIRECTORS
John F. Donahue
Thomas G. Bigley
John T. Conroy, Jr.
William J. Copeland
J. Christopher Donahue
James E. Dowd
Lawrence D. Ellis, M.D.
Edward L. Flaherty, Jr.
Peter E. Madden
John E. Murray, Jr.
Wesley W. Posvar
Marjorie P. Smuts
OFFICERS
John F. Donahue
Chairman
Richard B. Fisher
President
J. Christopher Donahue
Executive Vice President
Edward C. Gonzales
Executive Vice President
John W. McGonigle
Executive Vice President, Treasurer, and Secretary
J. Crilley Kelly
Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves risk, including possible
loss of principal. Although money market funds seek to maintain a stable net
asset value of $1.00 per share, there is no assurance that they will be able to
do so.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the fund's prospectus which contains facts concerning
its objective and policies, management fees, expenses, and other information.
NOTES
NOTES
[Graphic]Federated Investors
Prime Cash Series
SEMI-ANNUAL REPORT TO SHAREHOLDERS
NOVEMBER 30, 1997
Federated Securities Corp., Distributor
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
1-800-341-7400
www.federatedinvestors.com
Cusip 147551105
0122606 (1/98)
[Graphic]
PRESIDENT'S MESSAGE
Dear Shareholder:
I am pleased to present the Semi-Annual Report to shareholders for Treasury Cash
Series, a portfolio of Cash Trust Series, Inc., which covers the six-month
period ended November 30, 1997. The report begins with an investment review by
the fund's portfolio manager, which is followed by a complete listing of the
fund's investments and its financial statements.
During the reporting period, Treasury Cash Series paid a total of $0.02 in
dividends per share. In addition to income on their ready cash, shareholders
benefit from the fund's daily liquidity and stability of principal.*
At the end of the reporting period, 86.1% of the fund's $885 million net assets
was invested in repurchase agreements backed by U.S. government securities,
because these securities offered yield advantages over many direct government
securities. The remainder of the fund's assets was invested in direct U.S.
Treasury bills and notes.
Thank you for choosing Treasury Cash Series as a convenient way to keep your
cash working every day through the relative safety of U.S. Treasury money market
obligations. Please contact your investment representative if you have any
questions about your investment.
Sincerely,
[Graphic]
Richard B. Fisher
President
January 15, 1998
* Money market funds seek to maintain a stable net asset value of $1.00 per
share. There is no assurance that they will be able to do so. An investment
in this fund is not insured or guaranteed by the U.S. government.
INVESTMENT REVIEW
Treasury Cash Series is invested in direct obligations of the U.S. Treasury,
either in the form of notes and bills or as collateral for repurchase
agreements. The fund is rated AAAm by Standard & Poor's Ratings Group
("S&P") and Aaa by Moody's Investors Service, Inc. ("Moody's").*
Over the six months ended November 30, 1997, Federal Reserve Board (the "Fed")
policy remained on hold with the federal funds target rate at 5.50%. Economic
fundamentals remained strong over the reporting period, but inflationary
pressures remained benign. On the heels of the 25 basis point tightening by the
Fed in late March, short-term interest rates gradually declined over the second
quarter as fears of another near-term Fed tightening receded notably in light of
little to no evidence of price pressures. The market then traded within a fairly
narrow range through the summer months, with few new developments to break it
out of its holding pattern. Fed tightening fears were rekindled in early
October, however, as comments by Fed officials indicated an internal debate over
whether tight labor markets and above-trend growth would eventually lead to
inflationary pressures, and many analysts expected a 25 basis point hike in the
federal funds target rate at the Fed's November Federal Open Market Committee
meeting. Turmoil in the overseas markets in late October and into November,
particularly in the Asian equity markets, took pressure off of the Fed in the
near term, however, and put them back on the sidelines until the situation
stabilizes.
Very short-term Treasury bills were heavily influenced by technical factors over
the reporting period--namely, a reduction in the overall Treasury bill auction
sizes due to stronger than expected tax receipts and continued improvement in
the budget deficit. As a result, movements in the relatively longer 1-year
Treasury bill were the best barometer of the shifting market sentiment over the
reporting period. The yield on this security declined steadily from 5.75% in
early June to 5.50% in early July, then traded within a fairly narrow range
until early October. The yield then rose to 5.60% by the middle of the month as
Fed tightening expectations resurfaced, plunged to 5.20% in the midst of the
Asian crisis as investors sought a safe haven in Treasury securities, and ended
the reporting period around 5.50% as the overseas markets found some tenuous
support.
Over the reporting period, the fund was targeted in a 35- to 45-day average
maturity range, representing a neutral stance. The average maturity of the fund
varied within that range according to relative value opportunities available in
the Treasury market. Technical influences in shorter-term Treasury securities
offered opportunities to sell out of these securities and reinvest farther out
the curve. The fund remained barbelled in structure, combining a significant
position in overnight and term repurchase agreements with purchases of Treasury
bills and notes with 6- to 12-month maturities. Although the economic
fundamentals still point to an economy with a decent head of steam, the
uncertainty about the recent developments in Asia is likely to keep the Fed on
hold for the time being, and the fund will likely maintain its current stance in
the near term.
* These ratings are obtained after S&P evaluates a number of factors, including
credit quality, market price exposure, and management. S&P monitors the
portfolio weekly for developments that could cause changes in the ratings.
Money market funds and bond funds rated Aaa by Moody's are judged to be of an
investment quality similar to Aaa-rated, fixed-income obligations, that is,
they are judged to be of the best quality. Ratings are subject to change and
do not remove market risks.
PORTFOLIO OF INVESTMENTS
TREASURY CASH SERIES
NOVEMBER 30, 1997
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM U.S. TREASURY OBLIGATIONS--18.8%
(A)U. S. TREASURY BILLS --4.4%
$ 39,000,000 5.300% - 5.625%, 12/16/1997 - 6/25/1998 $ 38,702,428
U.S. TREASURY NOTES --14.4%
127,000,000 4.750% - 8.250%, 2/15/1998 - 10/31/1998 127,339,703
Total Short-Term U.S. Treasury Obligations 166,042,131
(B)REPURCHASE AGREEMENTS--86.1%
71,800,000 Swiss Bank Capital Markets, 5.700%, dated 11/28/1997, due 71,800,000
12/1/1997
40,000,000 Toronto Dominion Securities (USA) Inc., 5.720%, dated 40,000,000
11/28/1997, due 12/1/1997
40,000,000 Societe Generale, New York, 5.700%, dated 11/28/1997, due 40,000,000
12/1/1997
40,000,000 Morgan Stanley Group, Inc., 5.720%, dated 11/28/1997, due 40,000,000
12/1/1997
40,000,000 Merrill Lynch, Pierce, Fenner and Smith, 5.720%, dated 40,000,000
11/28/1997, due 12/1/1997
40,000,000 J.P. Morgan & Co., Inc., 5.700%, dated 11/28/1997, due 40,000,000
12/1/1997
40,000,000 Harris Government Securities, Inc., 5.720%, dated 40,000,000
11/28/1997, due 12/1/1997
40,000,000 Greenwich Capital Markets, Inc., 5.720%, dated 11/28/1997, 40,000,000
due 12/1/1997
40,000,000 First Union Capital Markets, 5.700%, dated 11/28/1997, due 40,000,000
12/1/1997
40,000,000 Donaldson, Lufkin and Jenrette Securities Corp., 5.700%, 40,000,000
dated 11/28/1997, due 12/1/1997
40,000,000 CIBC Wood Gundy Securities Corp., 5.700%, dated 11/28/1997, 40,000,000
due 12/1/1997
40,000,000 Bank of Tokyo-Mitsubishi Ltd., 5.720%, dated 11/28/1997, due 40,000,000
12/1/1997
35,000,000 UBS Securities, Inc., 5.730%, dated 11/28/1997, due 35,000,000
12/1/1997
35,000,000 Deutsche Bank Government Securities, Inc., 5.720%, dated 35,000,000
11/28/1997, due 12/1/1997
35,000,000 Barclays de Zoete Wedd Securities, Inc., 5.720%, dated 35,000,000
11/28/1997, due 12/1/1997
35,000,000 BT Securities Corp., 5.730%, dated 11/28/1997, due 12/1/1997 35,000,000
22,000,000 (c)Goldman Sachs Group, LP, 5.540%, dated 10/28/1997, due 22,000,000
1/26/1998
21,000,000 (c)Swiss Bank Capital Markets, 5.540%, dated 10/2/1997, due 21,000,000
1/2/1998
21,000,000 (c)Morgan Stanley Group, Inc., 5.560%, dated 10/15/1997, due 21,000,000
1/12/1998
20,000,000 (c)Morgan Stanley Group, Inc., 5.560%, dated 10/29/1997, due 20,000,000
1/27/1998
11,000,000 (c)Deutsche Bank Government Securities, Inc., 7.300%, dated 11,000,000
11/24/1997, due 1/5/1998
8,000,000 (c)Swiss Bank Capital Markets, 5.620%, dated 11/20/1997, due 8,000,000
1/20/1998
5,000,000 (c)Credit Suisse First Boston, Inc., 5.540%, dated 5,000,000
10/28/1997, due 1/15/1998
2,000,000 (c)Credit Suisse First Boston, Inc., 5.490%, dated 2,000,000
10/28/1997, due 12/31/1997
Total Repurchase Agreements 761,800,000
Total Investments (at amortized cost)(d) $ 927,842,131
</TABLE>
(a) The issue shows the rate of discount at time of purchase.
(b) The repurchase agreements are fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio. The
investments in the repurchase agreements are through participation in joint
accounts with other Federated funds.
(c) Although final maturity falls beyond seven days, a liquidity feature is
included in each transaction to permit termination of the repurchase
agreement within seven days.
(d) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($884,535,860) at November 30, 1997.
The following acronym is used throughout this portfolio:
LP --Limited Partnership
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF ASSETS AND LIABILITIES
TREASURY CASH SERIES
NOVEMBER 30, 1997 (UNAUDITED)
<TABLE>
<S> <C> <C>
ASSETS:
Investments in repurchase agreements $ 761,800,000
Investments in securities 166,042,131
Total investments in securities, at amortized cost and value $ 927,842,131
Cash 372,201
Income receivable 2,818,909
Total assets 931,033,241
LIABILITIES:
Payable for investments purchased 44,138,651
Income distribution payable 2,222,239
Accrued expenses 136,491
Total liabilities 46,497,381
Net Assets for 884,535,860 shares outstanding $ 884,535,860
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION PROCEEDS PER SHARE:
$884,535,860 / 884,535,860 shares outstanding $1.00
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF OPERATIONS
TREASURY CASH SERIES
SIX MONTHS ENDED NOVEMBER 30, 1997 (UNAUDITED)
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 22,998,928
EXPENSES:
Investment advisory fee $ 2,048,802
Administrative personnel and services fee 309,369
Custodian fees 44,954
Transfer and dividend disbursing agent fees and expenses 194,551
Directors'/Trustees' fees 6,036
Auditing fees 6,589
Legal fees 2,470
Portfolio accounting fees 59,852
Distribution services fee 409,760
Shareholder services fee 1,024,401
Share registration costs 17,671
Printing and postage 22,509
Insurance premiums 3,660
Taxes 30,103
Miscellaneous 11,163
Total expenses 4,191,890
Waivers --
Waiver of investment advisory fee (80,293)
Net expenses 4,111,597
Net investment income $ 18,887,331
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF CHANGES IN NET ASSETS
TREASURY CASH SERIES
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED) YEAR ENDED
NOVEMBER 30, MAY 31,
1997 1997
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 18,887,331 $ 31,059,670
DISTRIBUTIONS TO SHAREHOLDERS--
Distributions from net investment income (18,887,331) (31,059,670)
SHARE TRANSACTIONS--
Proceeds from sale of shares 1,766,743,758 3,450,893,937
Net asset value of shares issued to shareholders in payment 15,135,592 24,708,694
of distributions declared
Cost of shares redeemed (1,668,507,312) (3,298,168,881)
Change in net assets resulting from share transactions 113,372,038 177,433,750
Change in net assets 113,372,038 177,433,750
NET ASSETS:
Beginning of period 771,163,822 593,730,072
End of period $ 884,535,860 $ 771,163,822
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED)
NOVEMBER 30, YEAR ENDED MAY 31,
1997 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.02 0.04 0.05 0.04 0.02 0.02
LESS DISTRIBUTIONS
Distributions from net investment income (0.02) (0.04) (0.05) (0.04) (0.02) (0.02)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN(A) 2.33% 4.50% 4.83% 4.34% 2.37% 2.47%
RATIOS TO AVERAGE NET ASSETS
Expenses 1.00%* 0.99% 0.99% 0.99% 0.99% 0.99%
Net investment income 4.61%* 4.41% 4.70% 4.26% 2.33% 2.46%
Expense waiver/reimbursement(b) 0.02%* 0.03% 0.29% 0.08% 0.10% 0.04%
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $884,536 $771,164 $593,730 $424,091 $427,005 $532,334
</TABLE>
* Computed on an annualized basis.
(a) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
NOTES TO FINANCIAL STATEMENTS
TREASURY CASH SERIES
NOVEMBER 30, 1997 (UNAUDITED)
ORGANIZATION
Cash Series Trust, Inc. (the "Corporation") is registered under the Investment
Company Act of 1940, as amended (the "Act"), as an open-end, management
investment company. The Corporation consists of four portfolios. The financial
statements included herein are only those of Treasury Cash Series (the "Fund").
The financial statements of the other portfolios are presented separately. The
assets of each portfolio are segregated and a shareholder's interest is limited
to the portfolio in which shares are held. The investment objective of the Fund
is current income consistent with stability of principal and liquidity.
SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS
The Fund's use of the amortized cost method to value its portfolio securities is
in accordance with Rule 2a-7 under the Act.
REPURCHASE AGREEMENTS
It is the policy of the Fund to require the custodian bank to take possession,
to have legally segregated in the Federal Reserve Book Entry System, or to have
segregated within the custodian bank's vault, all securities held as collateral
under repurchase agreement transactions. Additionally, procedures have been
established by the Fund to monitor, on a daily basis, the market value of each
repurchase agreement's collateral to ensure that the value of collateral at
least equals the repurchase price to be paid under the repurchase agreement
transaction.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed by
the Fund's adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Directors (the "Directors").
Risks may arise from the potential inability of counterparties to honor the
terms of the repurchase agreement. Accordingly, the Fund could receive less than
the repurchase price on the sale of collateral securities.
INVESTMENT INCOME, EXPENSES, AND DISTRIBUTIONS
Interest income and expenses are accrued daily. Bond premium and discount, if
applicable, are amortized as required by the Internal Revenue Code, as amended
(the "Code"). Distributions to shareholders are recorded on the ex-dividend
date.
FEDERAL TAXES
It is the Fund's policy to comply with the provisions of the Code applicable to
regulated investment companies and to distribute to shareholders each year
substantially all of its income. Accordingly, no provisions for federal tax are
necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Fund may engage in when-issued or delayed delivery transactions. The Fund
records when-issued securities on the trade date and maintains security
positions such that sufficient liquid assets will be available to make payment
for the securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts of assets, liabilities, expenses, and revenues reported in
the financial statements. Actual results could differ from those estimated.
OTHER
Investment transactions are accounted for on the trade date.
CAPITAL STOCK
At November 30, 1997, there were 12,500,000,000 shares ($0.001 par value per
share) authorized. At November 30, 1997, capital paid-in aggregated
$884,535,860. Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
NOVEMBER 30, NOVEMBER 30,
1997 1997
<S> <C> <C>
Shares sold 1,766,743,758 3,450,893,937
Shares issued to shareholders in payment of distributions declared 15,135,592 24,708,694
Shares redeemed (1,668,507,312) (3,298,168,881)
Net change resulting from share transactions 113,372,038 177,433,750
</TABLE>
INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE
Federated Advisers, the Fund's investment adviser (the "Adviser"), receives for
its services an annual investment advisory fee equal to 0.50% of the Fund's
average daily net assets. The Adviser may voluntarily choose to waive any
portion of its fee. The Adviser can modify or terminate this voluntary waiver at
any time at its sole discretion.
ADMINISTRATIVE FEE
Federated Services Company ("FServ"), under the Administrative Services
Agreement, provides the Fund with administrative personnel and services. The fee
paid to FServ is based on the level of average aggregate daily net assets of all
funds advised by subsidiaries of Federated Investors for the period. The
administrative fee received during the period of the Administrative Services
Agreement shall be at least $125,000 per portfolio and $30,000 per each
additional class of shares.
DISTRIBUTION SERVICES FEE
The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1
under the Act. Under the terms of the Plan, the Fund will reimburse Federated
Securities Corp., ("FSC"), the principal distributor, from the net assets of the
Fund to finance activities intended to result in the sale of the Fund's shares.
The Plan provides that the Fund may incur distribution expenses up to 0.35% of
the average daily net assets of the Fund shares, annually, to reimburse FSC.
SHAREHOLDER SERVICES FEE
Under the terms of a Shareholder Services Agreement with Federated Shareholder
Services ("FSS"), the Fund will pay FSS up to 0.25% of average daily net assets
of the Fund for the period. The fee paid to FSS is used to finance certain
services for shareholders and to maintain shareholder accounts.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES
FServ, through its subsidiary, Federated Shareholder Services Company ("FSSC"),
serves as transfer and dividend disbursing agent for the Fund. The fee paid to
FSSC is based on the size, type, and number of accounts and transactions made by
shareholders.
PORTFOLIO ACCOUNTING FEES
FServ maintains the Fund's accounting records for which it receives a fee. The
fee is based on the level of the Fund's average daily net assets for the period,
plus out-of-pocket expenses.
GENERAL
Certain of the Officers and Directors of the Corporation are Officers and
Directors or Trustees of the above companies.
DIRECTORS
John F. Donahue
Thomas G. Bigley
John T. Conroy, Jr.
William J. Copeland
J. Christopher Donahue
James E. Dowd
Lawrence D. Ellis, M.D.
Edward L. Flaherty, Jr.
Peter E. Madden
John E. Murray, Jr.
Wesley W. Posvar
Marjorie P. Smuts
OFFICERS
John F. Donahue
Chairman
Richard B. Fisher
President
J. Christopher Donahue
Executive Vice President
Edward C. Gonzales
Executive Vice President
John W. McGonigle
Executive Vice President, Treasurer, and Secretary
J. Crilley Kelly
Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves risk, including possible
loss of principal. Although money market funds seek to maintain a stable net
asset value of $1.00 per share, there is no assurance that they will be able to
do so.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the fund's prospectus which contains facts concerning
its objective and policies, management fees, expenses, and other information.
[Graphic]
Treasury Cash Series
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
NOVEMBER 30, 1997
Federated Securities Corp., Distributor
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
1-800-341-7400
www.federatedinvestors.com
Cusip 147551402
0122607 (1/98)
