SEMI-ANNUAL REPORT
President's Message
Dear Shareholder:
I am pleased to present the Semi-Annual Report for Municipal Cash Series II, a
portfolio of Cash Trust Series II, which covers the six-month reporting period
ended November 30, 1999. The report begins with an investment review by the
fund's portfolio manager, which is followed by a complete listing of the fund's
holdings in tax-free securities issued by municipalities nationwide, and its
financial statements.
During the reporting period, Municipal Cash Series II paid a total of $0.01 in
tax-free dividends per share. 1 In addition to tax-free income, this money
market fund also offers tax-sensitive shareholders the important advantages of
daily liquidity and stability of principal.2 By the end of the reporting period,
fund assets totaled $286.3 million.
Thank you for choosing Municipal Cash Series II as a convenient way to help your
ready cash earn daily, tax-free income. Please contact your investment
representative if you have any questions about the fund.
Sincerely,
[Graphic]
Richard B. Fisher
President
January 15, 2000
1 Income may be subject to the federal alternative minimum tax and state and
local taxes.
2 An investment in money market funds is neither insured nor guaranteed by the
Federal Deposit Insurance Corporation or any other government agency. Although
money market funds seek to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in the fund.
Investment Review
An interview with the fund's portfolio manager, Mary Jo Ochson, CFA, Senior Vice
President, Federated Investment Management Company.
WHAT ARE YOUR COMMENTS ON THE ECONOMY AND THE INTEREST RATE ENVIRONMENT DURING
THE REPORTING PERIOD?
The improvements in international economies, particularly in Asia and other calm
foreign markets, laid the foundation for the Federal Reserve Board (the "Fed")
to focus on the U.S. economy as a better indicator of the inflation picture.
During the course of the reporting period, the Fed became increasingly concerned
with inflationary pressures from tighter labor markets as well as rising equity
wealth. For the most part inflationary forces remained tame this year with
increases in some commodity prices, namely, oil. Nevertheless, the Fed, citing
tighter labor markets, shrinking gains in productivity and growth in demand,
began a series of three rate increases. The first came in late June and the
second in August-both 25 basis point moves. At its November meeting and for the
third time during 1999, the Fed voted to raise the Federal Funds target rate by
a quarter point.
In addition to economic fundamentals, short-term municipal securities were
influenced by technical factors over this reporting period, notably July coupon
payments and corporate tax payments. Variable rate demand notes (VRDNs), which
comprise more than 60% of the fund's assets, started the reporting period in the
3.00% range, but moved sharply higher in mid- June to the 3.60% level as supply
and demand imbalances occurred due to corporate tax payments. Yields then
declined in July, as coupon payments looked to reinvest. The same technical
pattern repeated in September. Yields began September in the 3.10% range and
moved 60 basis points higher by mid-September to the 3.70% level due to the
mid-September tax payments. Over the reporting period, VRDN yields averaged
roughly 72% of taxable rates. This was attractive by recent historical values in
large part due to the strong technical periods of June and September.
WHAT WERE YOUR STRATEGIES FOR FUND DURING THE REPORTING PERIOD?
The fund's average maturity at the beginning of the reporting period was
approximately 55 days. The fund remained in a 40- to 50-day average maturity
range over the reporting period, and moved within that range according to
relative value opportunities. We continued 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.
Once an average maturity range was targeted, the portfolio attempted to maximize
performance through ongoing relative value analysis. Relative value analysis
includes the comparison of the richness or cheapness of municipal securities to
one another as well as municipal securities to taxable instruments, such as
Treasury securities. This portfolio structure continued to provide a competitive
yield over time.
WHAT IS YOUR OUTLOOK GOING FORWARD?
The Fed, concerned by persistent above-trend growth in an environment where
labor markets are tight and productivity gains are narrowing, will likely
tighten monetary policy in the first quarter of the new year. In the near term,
the short-term municipal market will likely reflect technical as well as
fundamental factors. These supply/demand imbalances could very well present
attractive investment opportunities for the fund. We will continue to watch,
with great interest, market developments in order to best serve our municipal
clients.
Portfolio of Investments
NOVEMBER 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-99.3% 1
ALABAMA-3.5%
$ 585,000 Abbeville, AL, IDB Monthly
VRDNs (Great Southern Wood
Preserving
Co.)/(SouthTrust Bank of
Alabama, Birmingham LOC) $ 585,000
3,055,000 Birmingham, AL, IDA Weekly
VRDNs (Mrs. Strattons
Salads, Inc.)/(SouthTrust
Bank of Alabama,
Birmingham LOC) 3,055,000
925,000 Huntsville, AL, IDB Weekly
VRDNs (Giles & Kendall,
Inc.)/(SouthTrust Bank of
Alabama, Birmingham LOC) 925,000
5,500,000 Selma, AL, IDB, Solid Waste
Disposal Revenue Bonds
(Series A), 3.75% TOBs
(International Paper Co.),
Optional Tender 3/1/2000 5,500,000
TOTAL 10,065,000
ARIZONA-4.9%
1,900,000 Coconino County, AZ,
Pollution Control Corp.,
(Series 1998) Daily VRDNs
(Arizona Public Service
Co.)/(KBC Bank N.V. LOC) 1,900,000
715,000 Maricopa County, AZ, IDA,
3.85% CP (Citizens
Utilities Co.), Mandatory
Tender 12/17/1999 715,000
2,500,000 Maricopa County, AZ, IDA,
Las Villas Del Sol (Series
1999A), 5.115% TOBs
(Bayerische Landesbank
Girozentrale) 11/1/2000 2,500,000
1,629,000 Pima County, AZ, IDA,
Single Family Mortgage
(PA-159), TOBs
(GNMA COL)/(Merrill Lynch
Capital Services, Inc.
LIQ) 2/10/2000 1,629,000
5,000,000 Pima County, AZ, IDA,
Single Family Mortgages,
(Series 1999-6) Weekly
VRDNs (Roaring Fork
Municipal Products,
LLC)/(GNMA COL)/(Bank of
New York, New York LIQ) 5,000,000
1,000,000 Yavapai, AZ, IDA, (Series
1997B) Weekly VRDNs
(Yavapai Regional Medical
Center)/(FSA INS)/(Credit
Local de France LIQ) 1,000,000
1,250,000 Yuma County, AZ, Airport
Authority, Inc., (Series
1997A) Weekly VRDNs (Bank
One, Arizona N.A. LOC) 1,250,000
TOTAL 13,994,000
ARKANSAS-1.0%
3,000,000 Springdale, AR, IDA Weekly
VRDNs (Newlywed
Food)/(Mellon Bank N.A.,
Pittsburgh LOC) 3,000,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
COLORADO-1.4%
$ 2,300,000 Colorado HFA, (Series
1996) Weekly VRDNs (Neppl-
Springs Fabrication)/
(U.S. Bank, N.A.,
Minneapolis LOC) $ 2,300,000
1,720,000 2 Colorado HFA, MERLOTS
(Series C), 3.60% TOBs
(First Union National
Bank, Charlotte, NC LIQ),
Optional Tender 2/1/2000 1,720,000
TOTAL 4,020,000
CONNECTICUT-1.0%
3,000,000 Bridgeport, CT, 3.95%
BANs, 1/18/2000 3,000,000
GEORGIA-4.1%
5,000,000 Clayton County, GA,
Development Authority,
(Series 1994) Weekly VRDNs
(Lear Seating
Corp.)/(Chase Manhattan
Bank N.A., New York LOC) 5,000,000
2,000,000 Crisp County, GA,
Development Authority,
(Series B), 4.35% TOBs
(Masonite Corp.)/(Internat
ional Paper Co. GTD),
Optional Tender 9/1/2000 2,000,000
3,300,000 Marietta, GA, Housing
Authority, Multifamily
Housing Revenue Bonds
(Series 1995) Weekly VRDNs
(Chalet Apartments
Project)/(General Electric
Capital Corp. LOC) 3,300,000
1,500,000 Savannah, GA, EDA, (Series
1995A) Weekly VRDNs (Home
Depot, Inc.) 1,500,000
TOTAL 11,800,000
HAWAII-1.7%
4,995,000 2 Hawaii State Airport
System, (Second Series
1991) PT-163, 3.10% TOBs
(AMBAC Finacial Group,
Inc. INS)/(Banque
Nationale de Paris LIQ),
Optional Tender 1/13/2000 4,995,000
ILLINOIS-4.6%
4,000,000 2 Chicago, IL, Single Family
Mortgage, PT-290, 3.90%
TOBs (GNMA
COL)/(Landesbank Hessen-
Thueringen, Frankfurt
LIQ), Optional Tender
10/5/2000 4,000,000
6,000,000 Chicago, IL, Gas Supply
Revenue Bonds (1993 Series
B), 3.20% TOBs (Peoples Gas
Light & Coke Co.), Optional
Tender 12/1/1999 6,000,000
1,190,000 Illinois Development
Finance Authority Weekly
VRDNs (Olympic Steel,
Inc.)/(National City Bank,
Ohio LOC) 1,190,000
2,109,000 Peoria, IL, (Series 1996)
Weekly VRDNs (J.T. Fennell
Company, Inc.
Project)/(Bank One,
Illinois, N.A. LOC) 2,109,000
TOTAL 13,299,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
INDIANA-5.0%
$ 1,500,000 Huntington, IN, (Series
1998) Weekly VRDNs (DK
Enterprises LLC)/(Norwest
Bank Minnesota, N.A. LOC) $ 1,500,000
2,000,000 Huntington, IN, (Series
1998) Weekly VRDNs
(Huesing Industries,
Inc.)/(Norwest Bank
Minnesota, N.A. LOC) 2,000,000
1,225,000 Indiana Development
Finance Authority,
Economic Development
Revenue Refunding Bonds
Weekly VRDNs (T. M. Morris
Manufacturing Co., Inc.
Project)/(Bank One,
Indiana, N.A. LOC) 1,225,000
1,000,000 Indiana EDC, Revenue Bonds
(Series 1989) Weekly VRDNs
(O'Neal Steel,
Inc.)/(SouthTrust Bank of
Alabama, Birmingham LOC) 1,000,000
2,445,000 Indianapolis, IN, (Series
1991) Weekly VRDNs (Cantor
& Coleman II
Project)/(Bank One,
Indiana, N.A. LOC) 2,445,000
1,085,000 Tipton, IN, (Series 1997)
Weekly VRDNs (MCJS,
LLC)/(Bank One, Indiana,
N.A. LOC) 1,085,000
3,000,000 Wayne Township, IN, Metro
School District, 3.55%
TANs, 12/31/1999 3,000,598
2,000,000 Whitley County, IN,
Consolidated Schools,
3.55% TANs, 12/31/1999 2,000,643
TOTAL 14,256,241
IOWA-0.4%
1,265,000 Iowa Finance Authority,
(Series 1998) Weekly VRDNs
(Schumacher
Elevator)/(Norwest Bank
Minnesota, N.A. LOC) 1,265,000
KANSAS-4.0%
1,435,000 Olathe, KS, (Series 1998)
Weekly VRDNs (Eskridge,
Inc.)/(Commerce Bank,
Kansas City, N.A. LOC) 1,435,000
10,000,000 Sedgwick & Shawnee
Counties, KS, Variable
Rate Certificates (Series
1999W) Weekly VRDNs (GNMA
COL)/(Bank of America,
N.A. LIQ) 10,000,000
TOTAL 11,435,000
KENTUCKY-9.0%
6,000,000 Berea, KY, (Series 1997)
Weekly VRDNs (Tokico
(USA), Inc.)/(Bank of
Tokyo-Mitsubishi Ltd. LOC) 6,000,000
1,260,000 Boone County, KY, (Series
1996) Weekly VRDNs
(Western States Envelope
Co.)/(Bank One, Wisconsin,
N.A. LOC) 1,260,000
3,500,000 Henderson City, KY,
(Series 1998) Weekly VRDNs
(Vincent Industrial
Plastics, Inc.)/(SunTrust
Bank, Nashville LOC) 3,500,000
1,095,000 Jefferson County, KY,
Weekly VRDNs (Advanced
Filtration, Inc.)/(Bank
One, Kentucky LOC) 1,095,000
2,000,000 Kenton County, KY, (Series
1999) Weekly VRDNs
(Packaging Un-limited of
Northern Kentucky,
Inc.)/(National City Bank,
Kentucky LOC) 2,000,000
2,000,000 Kentucky Housing Corp.,
(Series C), 3.20% TOBs
12/31/1999 2,000,000
5,995,000 2 Kentucky Housing Corp.,
Variable Rate Certificates
(Series 1998 O), 3.78% TOBs
(Bank of America, N.A.
LIQ), Optional Tender
8/3/2000 5,995,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
KENTUCKY-CONTINUED
$ 2,325,000 Muhlenberg County, KY,
(Series 1997) Weekly VRDNs
(Plastic Products Co.
Project)/(Norwest Bank
Minnesota, N.A. LOC) $ 2,325,000
1,575,000 Muhlenberg County, KY,
(Series A) Weekly VRDNs
(Plastic Products Co.
Project)/(Norwest Bank
Minnesota, N.A. LOC) 1,575,000
TOTAL 25,750,000
MARYLAND-6.6%
2,775,000 Anne Arundel County, MD,
Economic Development
Revenue Bonds (Series
1996) Weekly VRDNs (Atlas
Container Corp.
Project)/(Mellon Bank
N.A., Pittsburgh LOC) 2,775,000
5,570,000 Maryland Economic
Development Corp., (Series
1999A) Weekly VRDNs
(Victor Graphics,
Inc.)/(Allfirst LOC) 5,570,000
3,655,000 Maryland State Community
Development
Administration, (Series
1990 C) Weekly VRDNs
(Cherry Hill Apartment
Ltd.)/(Bank of America,
N.A. LOC) 3,655,000
985,000 Maryland State Community
Development
Administration, (Series
1990A) Weekly VRDNs
(College
Estates)/(Allfirst LOC) 985,000
5,900,000 Maryland State Community
Development
Administration, (Series
1990B) Weekly VRDNs
(Cherry Hill Apartment
Ltd.)/(Bank of America,
N.A. LOC) 5,900,000
TOTAL 18,885,000
MASSACHUSETTS-1.7%
4,775,000 Massachusetts IFA Weekly
VRDNs (Commonwealth Laurel
Lake Realty)/
(KeyBank, N.A. LOC) 4,775,000
MINNESOTA-5.6%
835,000 Byron, MN Weekly VRDNs
(Schmidt
Printing)/(Norwest Bank
Minnesota, N.A. LOC) 835,000
5,000,000 2 Dakota County, Washington
County & Anoka City, MN, Housing & Redevelopment Authority,
MERLOTS (Series H), 3.80% TOBs (United States Treasury
COL)/(First Union National Bank, Charlotte, NC LIQ),
Optional Tender 12/1/1999 5,000,000
5,500,000 St. Michael, MN, (Series
1999) Weekly VRDNs
(TC/American Monorail,
Inc.)/(Norwest Bank
Minnesota, N.A. LOC) 5,500,000
2,700,000 Thief River Falls, MN,
Northland Village
Apartments (Series 1999),
4.93% TOBs (Bank of
America, N.A.), Mandatory
Tender 5/1/2000 2,700,000
2,000,000 White Bear Lake, MN,
Century Townhomes (Series
1997), 4.547% TOBs
(Westdeutsche Landesbank
Girozentrale), Optional
Tender 5/1/2000 2,000,000
TOTAL 16,035,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
MISSISSIPPI-0.4%
$ 1,200,000 Senatobia, MS Weekly VRDNs
(Deltona Lighting
Products,
Inc.)/(Southtrust Bank of
West Florida, St.
Petersburg LOC) $ 1,200,000
MISSOURI-0.2%
500,000 Springfield, MO, 5.50%
Bonds, 3/1/2000 501,087
MULTI STATE-10.7%
1,000,000 Charter Mac Floater
Certificates Trust I,
(First Tranche) Weekly
VRDNs (MBIA
INS)/(Bayerische
Landesbank Girozentrale,
Commerzbank AG, Frankfurt
and Credit Communal de
Belgique, Brussles LIQs) 1,000,000
21,500,000 Charter Mac Floater
Certificates Trust I,
(Second Tranche) Weekly
VRDNs (MBIA
INS)/(Bayerische
Landesbank Girozentrale,
Commerzbank AG, Frankfurt
and Credit Communal de
Belgique, Brussles LIQs) 21,500,000
3,000,000 Charter Mac Floater
Certificates Trust I,
(Third Tranche) Weekly
VRDNs (MBIA
INS)/(Bayerische
Landesbank Girozentrale,
Commerzbank AG, Frankfurt
and Credit Communal de
Belgique, Brussles LIQs) 3,000,000
5,000,000 Clipper Tax-Exempt Trust
(AMT MultiState), (Series
B) Weekly VRDNs (State
Street Bank and Trust Co.
LIQ) 5,000,000
TOTAL 30,500,000
NEW HAMPSHIRE-1.1%
1,275,000 New Hampshire Business
Finance Authority, IDRB
(Series A) Weekly VRDNs
(Upper Valley
Press)/(KeyBank, N.A. LOC) 1,275,000
2,000,000 New Hampshire State IDA,
(Series 1991), 4.75% TOBs
(International Paper Co.),
Optional Tender 10/15/2000 2,000,000
TOTAL 3,275,000
NEW JERSEY-0.9%
2,500,000 2 New Jersey Housing &
Mortgage Financing
Authority, (PT-285), 3.80%
TOBs (MBIA
INS)/(Landesbank Hessen-
Thueringen, Frankfurt
LIQ), Optional Tender
8/10/2000 2,500,000
NORTH DAKOTA-0.3%
910,000 Fargo, ND, IDRB (Series
1994) Weekly VRDNs (Pan-O-
Gold Baking Co.
Project)/(Norwest Bank
Minnesota, N.A. LOC) 910,000
OHIO-9.7%
4,505,000 Clermont County, OH,
Variable Rate IDRB's
(Series 1997) Weekly VRDNs
(Buriot International,
Inc.)/(KeyBank, N.A. LOC) 4,505,000
1,485,000 Cuyahoga County, OH, IDA,
IDRB (Series 1995) Weekly
VRDNs (Avalon Precision
Casting Co.
Project)/(KeyBank, N.A. LOC) 1,485,000
6,500,000 Huber Heights, OH, IDR
(Series 1999) Weekly VRDNs
(Paxar Corp.)/(SunTrust
Bank, Atlanta LOC) 6,500,000
5,000,000 Mahoning County, OH, IDA,
(Series 1999) Weekly VRDNs
(Modern Builders Supply,
Inc.)/(PNC Bank, N.A. LOC) 5,000,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
OHIO-CONTINUED
$ 1,400,000 Medina County, OH, Solid
Waste Disposal Revenue
Bonds (Series 1995) Weekly
VRDNs (Valley City Steel
Company Project)/(KeyBank,
N.A. LOC) $ 1,400,000
2,610,000 Ohio HFA, PT-122 Weekly
VRDNs (GNMA COL)/(Banco
Santander Central Hispano,
S.A. LIQ) 2,610,000
2,700,000 South Euclid-Lyndhurst,
OH, City School District,
3.40% BANs, 2/10/2000 2,701,527
3,500,000 Summit County, OH, IDR,
(Series 1994) Weekly VRDNs
(Harry London
Candies, Inc.)/(KeyBank,
N.A. LOC) 3,500,000
TOTAL 27,701,527
OREGON-0.8%
2,200,000 Oregon State Economic and
Community Development
Commission, (Series 191)
Weekly VRDNs (Western
Oregon Door, LLC)/(Norwest
Bank Minnesota, N.A. LOC) 2,200,000
PENNSYLVANIA-0.3%
400,000 Pennsylvania EDFA, (Series
F) Weekly VRDNs
(Respironics, Inc.)/(PNC
Bank, N.A. LOC) 400,000
400,000 Pennsylvania EDFA, (Series
1998A) Weekly VRDNs
(Fourth Generation Realty,
LLC)/(PNC Bank, N.A. LOC) 400,000
TOTAL 800,000
SOUTH CAROLINA-1.2%
3,325,000 ABN AMRO MuniTOPS
Certificates Trust
(Multistate AMT) Series
1998-7 Weekly VRDNs (South
Carolina State Ports
Authority)/(FSA INS)/(ABN
AMRO Bank N.V., Amsterdam
LIQ) 3,325,000
SOUTH DAKOTA-1.7%
4,000,000 South Dakota Housing
Development Authority,
(Series 1999-H), 3.85%
BANs, 9/28/2000 4,000,000
765,000 South Dakota Housing
Development Authority,
Homeownership Mortgage
Bonds (1997 Series E)
Weekly VRDNs 765,000
TOTAL 4,765,000
TENNESSEE-4.6%
2,480,000 Hamilton County, TN, IDB
Weekly VRDNs (Pavestone
Co.)/(Bank One, Texas
N.A. LOC) 2,480,000
1,600,000 Jackson, TN, IDB, Solid
Waste Facility Bonds
(Series 1995) Weekly VRDNs
(Florida Steel
Corp.)/(Bank of America,
N.A. LOC) 1,600,000
1,500,000 Memphis, TN, 4.50% Bonds,
10/1/2000 1,507,240
1,500,000 Metropolitan Government
Nashville & Davidson
County, TN, GO UT Refunding
Bonds, 4.625% Bonds,
5/15/2000 1,509,457
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
TENNESSEE-CONTINUED
$ 3,000,000 Morristown, TN, IDB,
(Series 1999) Weekly VRDNs
(Tuff Torq Corp.)/(Bank of
Tokyo-Mitsubishi Ltd. LOC) $ 3,000,000
2,000,000 Sevier County, TN, Public
Building Authority, Local
Government Improvement
Bonds, (Series II-G-2)
Weekly VRDNs (Knoxville,
TN)/(AMBAC Financial
Group, Inc. INS)/(KBC
Bancassurance Holding LIQ) 2,000,000
1,000,000 Sevier County, TN, Public
Building Authority, Local
Government Public
Improvement Bonds, (Series
II-G-3) Weekly VRDNs
(Maryville, TN)/(AMBAC
Financial Group, Inc.
INS)/(KBC Banassurance
Holding LIQ) 1,000,000
TOTAL 13,096,697
TEXAS-2.9%
2,000,000 Angelina and Neches River
Authority, Texas, Solid
Waste Disposal Revenue
Bonds (Series 1993), 4.40%
CP (Temple-Eastex,
Inc.)/(Temple-Inland, Inc.
GTD), Mandatory Tender
12/6/1999 2,000,000
2,500,000 Brazos River Authority,
TX, (Series 1996B) Daily
VRDNs (Texas Utilities
Electric Co.)/(AMBAC
Financial Group, Inc. INS)
/(Bank of New York, New
York LIQ) 2,500,000
2,830,000 Tarrant County, TX IDC
Weekly VRDNs (Holden
Business Forms)/(Norwest
Bank Minnesota, N.A. LOC) 2,830,000
1,000,000 Tarrant County, TX, IDC,
(Series 1997) Weekly VRDNs
(Lear Operations
Corp.)/(Chase Manhattan
Bank N.A., New York LOC) 1,000,000
TOTAL 8,330,000
VIRGINIA-4.5%
6,000,000 2 Fairfax County, VA, EDA,
Trust Receipt FR/RI-A15
(Series 1999A), 3.95% TOBs
(AMBAC Financial Group,
Inc. INS)/(National
Westminster Bank, PLC,
London LIQ), Optional
Tender 2/1/2000 6,000,000
2,500,000 Halifax, VA, IDA, MMMs,
PCR, 3.85% CP (Virginia
Electric Power Co.),
Mandatory Tender 3/10/2000 2,500,000
4,500,000 Richmond, VA,
Redevelopment & Housing
Authority, (Series B-1)
Weekly VRDNs (Richmond, VA
Red Tobacco Row)/(Credit
Suisse First Boston LOC) 4,500,000
TOTAL 13,000,000
WASHINGTON-1.2%
3,500,000 Pierce County, WA,
Economic Development
Corp., (Series 1995)
Weekly VRDNs (Simpson-
Tacoma Kraft Company
Project)/(Bank of America,
N.A. LOC) 3,500,000
WISCONSIN-2.4%
1,700,000 Combined Locks, WI,
Development Revenue Bonds,
(Series 1997) Weekly VRDNs
(Appleton Papers)/(Bank of
Nova Scotia, Toronto LOC) 1,700,000
1,200,000 Milwaukee, WI, Weekly
VRDNs (Pelton Casteel,
Inc.)/(Norwest Bank
Minnesota, N.A. LOC) 1,200,000
2,000,000 Plymouth, WI, IDB Weekly
VRDNs (Great Lakes
Cheese)/(Rabobank
Nederland, Utrecht LOC) 2,000,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
WISCONSIN-CONTINUED
$ 1,825,000 Wisconsin Housing &
Economic Development
Authority, Business
Development Revenue Bonds
(Series 1995) Weekly VRDNs
(Carlson Tool &
Manufacturing
Corp.)/(Firstar Bank,
Milwaukee LOC) $ 1,825,000
TOTAL 6,725,000
WYOMING-1.9%
5,510,000 2 Wyoming Community
Development Authority, PT-
195, 3.35% TOBs (Banco
Santander Central Hispano,
S.A. LIQ) 5/1/2000 5,510,000
TOTAL INVESTMENTS (AT
AMORTIZED COST) 3 $ 284,413,552
</TABLE>
Securities that are subject to the alternative minimum tax represent 93.6% of
the portfolio as calculated based upon total portfolio market value.
1 The fund may only invest in securities rated in one of the two highest
short-term rating categories by 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, MIG-1 or MIG-2 by Moody's Investors Service or F-1+, F-1 or F-2 by Fitch
IBCA, 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, 1999,
the portfolio securities were rated as follows:
Tier Rating Based on Total Market Value (Unaudited)
<TABLE>
<CAPTION>
FIRST TIER SECOND TIER
<S> <C>
95.07% 4.93%
</TABLE>
2 Denotes a restricted security which is subject to restrictions on resale under
federal securities laws. These securities have been deemed liquid based upon
criteria approved by the fund's Board of Directors. At November 30,1999, these
securities amounted to $35,720,000 which represents 12.5% of net assets.
3 Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($286,329,525) at November 30, 1999.
The following acronyms are used throughout this portfolio:
AMBAC -American Municipal Bond Assurance Corporation AMT -Alternative Minimum
Tax BANs -Bond Anticipation Notes COL -Collateralized CP -Commercial Paper EDA
- -Economic Development Authority EDC -Economic Development Commission
EDFA -Economic Development Financing Authority 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 IFA
- -Industrial Finance Authority INS -Insured LIQ -Liquidity Agreement LLC -Limited
Liability Corporation LOC -Letter of Credit MBIA -Municipal Bond Investors
Assurance
MERLOTS -Municipal Exempt Receipts - Liquidity Optional Tender Series MMMs
- -Money Market Municipals PCR -Pollution Control Revenue PLC -Public Limited
Company TANs -Tax Anticipation Notes TOBs -Tender Option Bonds UT -Unlimited Tax
VRDNs -Variable Rate Demand Notes
See Notes which are an integral part of the Financial Statements
Statement of Assets and Liabilities
NOVEMBER 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Total investments in
securities, at amortized
cost and value $ 284,413,552
Cash 484,868
Income receivable 1,771,176
TOTAL ASSETS 286,669,596
LIABILITIES:
Income distribution
payable $ 301,899
Accrued expenses 38,172
TOTAL LIABILITIES 340,071
Net assets for 286,329,525
shares outstanding $ 286,329,525
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PROCEEDS PER SHARE:
$286,329,525 / 286,329,525
shares outstanding $1.00
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Operations
SIX MONTHS ENDED NOVEMBER 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME:
Interest $ 4,652,965
EXPENSES:
Investment adviser fee $ 643,554
Administrative personnel
and services fee 97,048
Custodian fees 7,107
Transfer and dividend
disbursing agent fees and
expenses 26,816
Directors'/Trustees' fees 4,163
Auditing fees 6,434
Legal fees 11,418
Portfolio accounting fees 29,683
Distribution services fee 257,421
Share registration costs 11,894
Printing and postage 11,852
Insurance premiums 9,115
Miscellaneous 2,803
TOTAL EXPENSES 1,119,308
WAIVER:
Waiver of investment
adviser fee (71,088)
Net expenses 1,048,220
Net investment income $ 3,604,745
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(unaudited) YEAR ENDED
NOVEMBER 30, MAY 31,
1999 1999
<S> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net investment income $ 3,604,745 $ 7,364,551
DISTRIBUTIONS TO
SHAREHOLDERS:
Distributions from net
investment income (3,604,745) (7,364,551)
SHARE TRANSACTIONS:
Proceeds from sale of
shares 569,969,589 1,184,015,170
Net asset value of shares
issued to shareholders in
payment of
distributions declared 3,236,269 6,774,275
Cost of shares redeemed (544,321,539) (1,199,420,167)
CHANGE IN NET ASSETS
RESULTING FROM SHARE
TRANSACTIONS 28,884,319 (8,630,722)
Change in net assets 28,884,319 (8,630,722)
NET ASSETS:
Beginning of period 257,445,206 266,075,928
End of period $ 286,329,525 $ 257,445,206
</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,
1999 1999 1998 1997
1996 1995
<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
0.03 0.03
LESS DISTRIBUTIONS:
Distributions from net investment income (0.01) (0.03) (0.03) (0.03) (0.03)
(0.03)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
$ 1.00
TOTAL RETURN 1 1.41% 2.76% 3.09% 2.96%
3.22% 3.02%
RATIOS TO AVERAGE NET ASSETS:
Expenses 0.81% 2 0.81% 0.81% 0.79%
0.79% 0.79%
Net investment income 2.80% 2 2.72% 3.03% 2.93%
3.17% 2.91%
Expense waiver/reimbursement 3 0.06% 2 0.07% 0.04% 0.16%
0.31% 0.23%
SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $286,330 $257,445 $266,076 $253,106 $59,888
$67,611
</TABLE>
1 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
2 Computed on an annualized basis.
3 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
NOVEMBER 30, 1999 (UNAUDITED)
ORGANIZATION
Cash Trust Series II (the "Trust") is registered under the Investment Company
Act of 1940, as amended (the "Act") as an open-end, management investment
company. The Trust consists of two portfolios. The financial statements included
herein are only those of Municipal Cash Series II (the "Fund"), a diversified
portfolio. The financial statements of the other portfolios are presented
separately. The assets of each portfolio are segregated and a shareholder's
interest is limited to the portfolio in which shares are held. The investment
objective of the Fund is to provide 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. Non-cash dividends included in dividend income, if any are recorded at
fair value.
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 is
necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Fund may engage in when-issued or delayed delivery transactions. The Fund
records when-issued securities on the trade date and maintains security
positions such that sufficient liquid assets will be available to make payment
for the securities purchased. Securities purchased on a when- issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date. Losses may occur on these transactions due to changes in market
conditions or the failure of counterparties to perform under contract.
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 Trustees (the "Trustees"). 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.
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 a trade date basis.
SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value).
Transactions in shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
NOVEMBER 30, MAY 31,
1999 1999
<S> <C> <C>
Shares sold 569,969,589 1,184,015,170
Shares issued to
shareholders in payment of
distributions declared 3,236,269 6,774,275
Shares redeemed (544,321,539) (1,199,420,167)
NET CHANGE RESULTING FROM
SHARE TRANSACTIONS 28,884,319 (8,630,722)
</TABLE>
INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISER FEE
Federated Investment Management Company, the Fund's investment adviser (the
"Adviser"), receives for its services an annual investment adviser 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 a scale that ranges from 0.15% to 0.075% of average
aggregate daily net assets of all funds advised by subsidiaries of Federated
Investors, Inc., subject to a $125,000 minimum per portfolio and $30,000 per
each additional class.
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 0.20% of
the average daily net assets of the Fund shares, annually, to reimburse FSC.
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, 1999, 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 complied with Rule 17a-7 under the Act amounting
to $304,500,000 and $356,930,200 respectively.
GENERAL
Certain of the Officers and Trustees of the Trust are Officers and Directors or
Trustees of the above companies.
Trustees
JOHN F. DONAHUE
THOMAS G. BIGLEY
JOHN T. CONROY, JR.
NICHOLAS P. CONSTANTAKIS
JOHN F. CUNNINGHAM
J. CHRISTOPHER DONAHUE
LAWRENCE D. ELLIS, M.D.
PETER E. MADDEN
CHARLES F. MANSFIELD, JR.
JOHN E. MURRAY, JR., J.D., S.J.D.
MARJORIE P. SMUTS
JOHN S. WALSH
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 and Secretary
RICHARD J. THOMAS
Treasurer
LESLIE K. ROSS
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 investment risk,
including the possible loss of principal.
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
World-Class Investment Manager
SEMI-ANNUAL REPORT
Municipal Cash Series II
SEMI-ANNUAL REPORT TO SHAREHOLDERS
NOVEMBER 30, 1999
[Graphic]
Federated
Municipal Cash Series II
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
1-800-341-7400
WWW.FEDERATEDINVESTORS.COM
Federated Securities Corp., Distributor
Cusip 147552103
1121604 (1/00)
[Graphic]
SEMI-ANNUAL REPORT
President's Message
Dear Shareholder:
I am pleased to present the Semi-Annual Report for Treasury Cash Series II, a
portfolio of Cash Trust Series II, which covers the six-month reporting period
ended November 30, 1999. The report begins with an investment review by the
fund's portfolio manager, which is followed by a complete listing of the fund's
investments and its financial statements.
During the reporting period, Treasury Cash Series II paid a total of $0.02 in
dividends per share. In addition to income on shareholders' ready cash, this
highly conservative money market fund also offers shareholders the important
advantages of daily liquidity and stability of principal. 1 Assets totaled
$278.9 million at the reporting period's end.
At the end of the reporting period, most of the fund's assets were invested in
repurchase agreements backed by U.S. government securities since these
securities offered a yield advantage over many direct government securities. The
remainder of the fund's assets were invested in direct U.S. Treasury bills and
notes.
Thank you for choosing Treasury Cash Series II as a convenient, conservative way
to keep your cash working through the relative safety of U.S. Treasury
obligations. Please contact your investment representative if you have any
questions about your investment.
Sincerely,
[Graphic]
Richard B. Fisher
President
January 15, 2000
1 An investment in money market funds is neither insured nor guaranteed by the
Federal Deposit Insurance Corporation or any other government agency. Although
money market funds seek to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in the fund.
Investment Review
Treasury Cash Series II is invested in direct obligations of the U.S. Treasury,
either in the form of notes and bills or as collateral for repurchase
agreements. The fund is rated AAAm by Standard & Poor's (S&P) 1 and Aaa by
Moody's Investors Service (Moody's).2
The Federal Reserve Board (the "Fed") tightened monetary policy on three
separate occasions over the semi-annual reporting period, raising the Federal
Funds target rate 75 basis points higher to its present level of 5.5%. The three
25 basis point policy adjustments completely removed the degree of liquidity
that the Fed had infused into the fixed income markets at the height of the
global economic crisis in the fourth quarter of 1998. Vigorous economic growth
spurred onward by robust consumer spending forced the Fed's hand in spite of
generally well-contained inflationary pressures.
Short-term interest rates rose steadily over the reporting period. By the time
of the first 25 basis point tightening at the end of June, the front end of the
yield curve had fully anticipated the action to be taken by the Fed, a pattern
that repeated itself for the subsequent moves in mid- August and mid-November.
Overall, the yield on the one year Treasury bill, which began the reporting
period in June at 5.0%, rose to 5.7% by the end of November. After the Fed's
mid-November move, the market correctly interpreted that the Fed would be on the
sidelines for the remainder of the year, in order to avoid additional
uncertainty of the century date change at the end of the year.
The fund maintained a 40 to 50-day average maturity target range over the
reporting period, moving within that range according to relative value
opportunities. The tendency of the market to anticipate the policy changes from
the Fed allowed us to continue to maintain our maturity stance in spite of the
expectation of rising interest rates. The fund's structure remained barbelled,
combining a significant portion in repurchase agreements with purchases of
securities with 6 to 13 month maturities. Toward the end of the reporting
period, with the Fed temporarily on hold and expectations of lower short-term
interest rate-- particularly on repurchase agreements--as a result of Y2K, we
reduced our overnight repurchase agreement position in favor of term repurchase
agreements with longer maturities.
Looking forward, with the aftermath of Y2K being relatively minor and fourth
quarter Gross Domestic Product growth expected to have exceeded 5.0%, we expect
the Fed to resume its tightening trend in the first quarter of 2000.
1 This rating is 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. Ratings are
subject to change and do not remove market risks.
2 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
NOVEMBER 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM U.S. TREASURY
OBLIGATIONS--20.3%
U.S. TREASURY BILLS--0.7% 1
$ 2,000,000 4.470%-5.210%, 3/30/2000-
11/9/2000 $ 1,917,873
U.S. TREASURY NOTES--19.6%
54,500,000 4.000%-7.750%, 12/31/1999-
8/15/2000 54,571,005
TOTAL U.S. TREASURY
OBLIGATIONS 56,488,878
REPURCHASE AGREEMENTS--
79.8% 2
10,000,000 ABN AMRO, Inc., 5.670%,
dated 11/30/1999, due
12/1/1999 10,000,000
10,000,000 Banc One Capital Markets,
5.680%, dated 11/30/1999,
due 12/1/1999 10,000,000
10,000,000 Barclays de Zoete Wedd
Securities, Inc., 5.700%,
dated 11/30/1999, due
12/1/1999 10,000,000
10,000,000 Bear, Stearns and Co.,
5.690%, dated 11/30/1999,
due 12/1/1999 10,000,000
10,000,000 CIBC Wood Gundy Securities
Corp., 5.650%, dated
11/30/1999, due 12/1/1999 10,000,000
10,000,000 CIBC Wood Gundy Securities
Corp., 5.680%, dated
11/30/1999, due 12/1/1999 10,000,000
8,000,000 3 Credit Suisse First
Boston, Inc., 5.430%,
dated 11/18/1999, due
1/18/2000 8,000,000
38,500,000 Deutsche Bank Financial,
Inc., 5.680%, dated
11/30/1999, due 12/1/1999 38,500,000
10,000,000 Donaldson, Lufkin and
Jenrette Securities Corp.,
5.680%, dated 11/30/1999,
due 12/1/1999 10,000,000
10,000,000 First Union Capital
Markets, 5.680%, dated
11/30/1999, due 12/1/1999 10,000,000
10,000,000 Greenwich Capital Markets,
Inc., 5.690%, dated
11/30/1999, due 12/1/1999 10,000,000
10,000,000 3 Lehman Brothers, Inc.,
5.430%, dated 11/19/1999,
due 1/18/2000 10,000,000
10,000,000 Paribas Corp., 5.700%,
dated 11/30/1999, due
12/1/1999 10,000,000
10,000,000 Salomon Brothers, Inc.,
5.700%, dated 11/30/1999,
due 12/1/1999 10,000,000
10,000,000 Societe Generale
Securities Corp., 5.680%,
dated 11/30/1999, due
12/1/1999 10,000,000
10,000,000 Toronto Dominion
Securities (USA) Inc.,
5.680%, dated 11/30/1999,
due 12/1/1999 10,000,000
4,000,000 3 Warburg Dillon Reed LLC,
5.340%, dated 8/18/1999,
due 2/14/2000 4,000,000
5,000,000 3 Warburg Dillon Reed LLC,
5.450%, dated 11/22/1999,
due 1/24/2000 5,000,000
7,000,000 3 Warburg Dillon Reed LLC,
5.460%, dated 11/17/1999,
due 1/18/2000 7,000,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
REPURCHASE AGREEMENTS--
continued 2
$ 10,000,000 Warburg Dillon Reed LLC,
5.690%, dated 11/30/1999,
due 12/1/1999 $ 10,000,000
10,000,000 Westdeutsche Landesbank
Girozentrale, 5.670%,
dated 11/30/1999, due
12/1/1999 10,000,000
TOTAL REPURCHASE
AGREEMENTS 222,500,000
TOTAL INVESTMENTS (AT
AMORTIZED COST) 4 $ 278,988,878
</TABLE>
1 Each issue shows the rate of discount at the time of purchase.
2 The repurchase agreements are fully collateralized by U.S. Treasury
obligations based on market prices at the date of the portfolio. The investments
in the repurchase agreements are through participation in joint accounts with
other Federated funds.
3 Although final maturity falls beyond seven days, a liquidity feature is
included in each transaction to permit termination of the repurchase agreement
within seven days.
4 Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($278,932,826) at November 30, 1999.
See Notes which are an integral part of the Financial Statements
Statement of Assets and Liabilities
NOVEMBER 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Investment in repurchase
agreements $ 222,500,000
Investments in securities 56,488,878
TOTAL INVESTMENTS IN
SECURITIES, AT AMORTIZED
COST AND VALUE $ 278,988,878
Cash 83,272
Income receivable 749,402
TOTAL ASSETS 279,821,552
LIABILITIES:
Income distribution
payable 846,969
Accrued expenses 41,757
TOTAL LIABILITIES 888,726
Net assets for 278,932,826
shares outstanding $ 278,932,826
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PROCEEDS PER SHARE:
$278,932,826 / 278,932,826
shares outstanding $1.00
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Operations
SIX MONTHS ENDED NOVEMBER 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME:
Interest $ 5,954,401
EXPENSES:
Investment adviser fee $ 583,240
Administrative personnel
and services fee 87,953
Custodian fees 21,610
Transfer and dividend
disbursing agent fees and
expenses 27,548
Directors'/Trustees' fees 3,709
Auditing fees 6,601
Legal fees 3,010
Portfolio accounting fees 31,584
Distribution services fee 225,130
Share registration costs 9,769
Printing and postage 6,530
Insurance premiums 990
Miscellaneous 4,783
TOTAL EXPENSES 1,012,457
WAIVER:
Waiver of investment
adviser fee (44,278)
Net expenses 968,179
Net investment income $ 4,986,222
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(unaudited) YEAR ENDED
NOVEMBER 30, MAY 31,
1999 1999
<S> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net investment income $ 4,986,222 $ 8,831,616
DISTRIBUTIONS TO
SHAREHOLDERS:
Distributions from net
investment income (4,986,222) (8,831,616)
SHARE TRANSACTIONS:
Proceeds from sale of
shares 615,810,084 952,869,243
Net asset value of shares
issued to shareholders in
payment of
distributions declared 2,078,433 4,568,351
Cost of shares redeemed (571,992,545) (951,067,767)
CHANGE IN NET ASSETS
RESULTING FROM SHARE
TRANSACTIONS 45,895,972 6,369,827
Change in net assets 45,895,972 6,369,827
NET ASSETS:
Beginning of period 233,036,854 226,667,027
End of period $ 278,932,826 $ 233,036,854
</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,
1999 1999 1997 1998 1996 1995
<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 0.05 0.05 0.04
LESS DISTRIBUTIONS:
Distributions from
net investment income (0.02) (0.04) (0.05) (0.05) (0.05) (0.04)
NET ASSET VALUE,
END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN 1 2.15% 4.39% 4.88% 4.65% 4.97% 4.47%
RATIOS TO AVERAGE
NET ASSETS:
Expenses 0.83% 2 0.83% 0.83% 0.85% 0.86% 0.88%
Net investment income 4.27% 2 4.28% 4.76% 4.55% 4.83% 4.40%
Expense waiver/
reimbursement 3 0.04% 2 0.04% 0.02% 0.01% 0.01% --
SUPPLEMENTAL DATA:
Net assets,
end of period (000 omitted) $278,933 $233,037 $226,667 $343,071 $402,378 $243,651
</TABLE>
1 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
2 Computed on an annualized basis.
3 This voluntary expense decrease is reflected in both the expense and net
investment ratios shown above.
See Notes which are an integral part of the Financial Statements
Notes to Financial Statements
NOVEMBER 30, 1999 (UNAUDITED)
ORGANIZATION
Cash Trust Series II (the "Trust") is registered under the Investment Company
Act of 1940, as amended (the "Act") as an open-end, management investment
company. The Trust consists of two portfolios. The financial statements included
herein are only those of Treasury Cash Series II (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 to
provide 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 Trustees (the "Trustees").
Risks may arise from the potential inability of counterparties to honor the
terms of the repurchase agreement. Accordingly, the Fund could receive less than
the repurchase price on the sale of collateral securities. The Fund, along with
other affiliated investment companies, may utilize a joint trading account for
the purpose of entering into one or more repurchase agreements.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS
Interest income and expenses are accrued daily. Bond premium and discount, if
applicable, are amortized as required by the Internal Revenue Code, as amended
(the "Code"). Dividend income and distributions to shareholders are recorded on
the ex-dividend date. Non-cash dividends included in dividend income, if any,
are recorded at fair value.
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 taxes
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 a trade date basis.
SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and financial fractional shares of beneficial interest (without par value).
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
NOVEMBER 30, MAY 31,
1999 1999
<S> <C> <C>
Shares sold 615,810,084 952,869,243
Shares issued to
shareholders in payment of
distributions declared 2,078,433 4,568,351
Shares redeemed (571,992,545) (951,067,767)
NET CHANGE RESULTING FROM
SHARE TRANSACTIONS 45,895,972 6,369,827
</TABLE>
INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISER FEE
Federated Investment Management Company, the Fund's investment adviser (the
"Adviser"), receives for its services an annual investment adviser 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 a scale that from 0.15% to 0.075% of the average
aggregate daily net assets of all funds advised by subsidiaries of the Federated
Investors, Inc., subject to a $125,000 minimum per portfolio and $30,000 per
each additional class.
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 0.20% 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 Company ("FSSC"), the Fund will pay FSSC up to 0.25% of average daily
net assets of the Fund shares for the period. The fee paid to FSSC is used to
finance certain services for shareholders and to maintain shareholder accounts.
For the period ended November 30, 1999, the Fund shares did not incur a
shareholder services fee. FSSC may voluntarily choose to waive any portion of
its fee. FSSC can modify or terminate this voluntary waiver at any time at its
sole discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES
FServ, through its subsidiary 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 Trustees of the Trust are Officers and Directors or
Trustees of the above companies.
Trustees
JOHN F. DONAHUE
THOMAS G. BIGLEY
JOHN T. CONROY, JR.
NICHOLAS P. CONSTANTAKIS
JOHN F. CUNNINGHAM
J. CHRISTOPHER DONAHUE
LAWRENCE D. ELLIS, M.D.
PETER E. MADDEN
CHARLES F. MANSFIELD, JR.
JOHN E. MURRAY, JR., J.D., S.J.D.
MARJORIE P. SMUTS
JOHN S. WALSH
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 and Secretary
RICHARD J. THOMAS
Treasurer
LESLIE K. ROSS
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 investment risk,
including the possible loss of principal.
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
World-Class Investment Manager
Treasury Cash Series II
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
SEMI-ANNUAL REPORT
NOVEMBER 30, 1999
[Graphic]
Federated
Treasury Cash Series II
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
1-800-341-7400
WWW.FEDERATEDINVESTORS.COM
Federated Securities Corp., Distributor
Cusip 147552301
1121606 (1/00)
[Graphic]
