United States
Securities and Exchange Commission
Washington, D.C. 20549
Amended
Form N-CSR
Certified Shareholder Report of Registered
Management Investment Companies
811-5843
(Investment Company Act File Number)
Cash Trust Series, Inc.
(Exact Name of Registrant as Specified in Charter)
Federated Investors Funds
4000 Ericsson Drive
Warrendale, PA 15086-7561
(Address of Principal Executive Offices)
(412) 288-1900
(Registrant’s Telephone Number)
John W. McGonigle, Esquire
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3779
(Name and Address of Agent for Service)
(Notices should be sent to the Agent for Service)
Date of Fiscal Year End: 5/31/10
Date of Reporting Period: Six months ended 11/30/09
| Item 1. | Reports to Stockholders |
Municipal Cash Series
A Portfolio of Cash Trust Series, Inc.
SEMI-ANNUAL SHAREHOLDER REPORTNovember 30, 2009
FINANCIAL HIGHLIGHTS
SHAREHOLDER EXPENSE EXAMPLE
PORTFOLIO OF INVESTMENTS SUMMARY TABLES
PORTFOLIO OF INVESTMENTS
STATEMENT OF ASSETS AND LIABILITIES
STATEMENT OF OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
NOTES TO FINANCIAL STATEMENTS
EVALUATION AND APPROVAL OF ADVISORY CONTRACT
VOTING PROXIES ON FUND PORTFOLIO SECURITIES
QUARTERLY PORTFOLIO SCHEDULE
Financial Highlights
(For a Share Outstanding Throughout Each Period)
| Six Months
Ended
(unaudited)
11/30/2009 | Year Ended May 31, |
| 2009 | 2008 | 2007 | 2006 1 | 2005 |
| 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 | 0.0002 | 0.010 | 0.023 | 0.027 | 0.020 | 0.008 |
| Net realized gain on investments | 0.0002 | 0.0002 | 0.0002 | 0.0002 | — | — |
TOTAL FROM
INVESTMENT
OPERATIONS | 0.000 | 0.010 | 0.023 | 0.027 | 0.020 | 0.008 |
| Less Distributions: | | | | | | |
| Distributions from net investment income | (0.000)2 | (0.010) | (0.023) | (0.027) | (0.020) | (0.008) |
| Distributions from net realized gain on investments | — | (0.000)2 | (0.000)2 | (0.000)2 | — | — |
| TOTAL DISTRIBUTIONS | (0.000) | (0.010) | (0.023) | (0.027) | (0.020) | (0.008) |
Net Asset Value,
End of Period | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 |
| Total Return3 | 0.03% | 1.03% | 2.36% | 2.72% | 1.98% | 0.76% |
Ratios to Average
Net Assets: | | | | | | |
| Net expenses | 0.93%4 | 1.08%5 | 1.05%5 | 1.05% | 1.05% | 1.05% |
| Net investment income | 0.06%4 | 1.00% | 2.26% | 2.69% | 1.92% | 0.81% |
| Expense waiver/reimbursement6 | 0.16%4 | 0.05% | 0.05% | 0.05% | 0.05% | 0.04% |
| Supplemental Data: | | | | | | |
| Net assets, end of period (000 omitted) | $518,448 | $512,018 | $476,382 | $342,760 | $334,001 | $400,545 |
| 1 | Beginning with the year ended May 31, 2006, the Fund was audited by Ernst & Young LLP. The previous year was audited by another independent registered public accounting firm. |
| 2 | Represents less than $0.001. |
| 3 | Based on net asset value. Total returns for periods of less than one year are not annualized. |
| 4 | Computed on an annualized basis. |
| 5 | The net expense ratio is calculated without reduction for expense offset arrangements. The net expense ratios were 1.08% and 1.05% for the years ended May 31, 2009 and 2008, respectively, after taking into account these expense reductions. |
| 6 | This expense decrease is reflected in both the net expense and the net investment income ratios shown above. |
See Notes which are an integral part of the Financial Statements
Semi-Annual Shareholder Report1
Shareholder Expense Example (unaudited)
As a shareholder of the Fund, you incur ongoing costs, including management fees and to the extent applicable, distribution (12b-1) fees and/or shareholder services fees and other Fund expenses. This Example is intended to help you to understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. It is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from June 1, 2009 to November 30, 2009.
ACTUAL EXPENSES
The first section of the table below provides information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you incurred over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled “Expenses Paid During Period” to estimate the expenses attributable to your investment during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second section of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. Thus, you should not use the hypothetical account values and expenses to estimate the actual ending account balance or your expenses for the period. Rather, these figures are required to be provided to enable you to compare the ongoing costs of investing in the Fund with other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only. Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
| Beginning
Account Value
6/1/2009 | Ending
Account Value
11/30/2009 | Expenses Paid
During Period1 |
| Actual | $1,000 | $1,000.30 | $4.66 |
Hypothetical (assuming a 5% return
before expenses) | $1,000 | $1,020.41 | $4.71 |
| 1 | Expenses are equal to the Fund's annualized net expense ratio of 0.93%, multiplied by the average account value over the period, multiplied by 183/365 (to reflect the one-half-year period). |
Semi-Annual Shareholder Report2
Portfolio of Investments Summary Tables (unaudited)
At November 30, 2009, the Fund's portfolio composition1 was as follows:
| Portfolio Composition | Percentage of
Total Net Assets |
| Variable Rate Demand Instruments | 86.9% |
| Municipal Notes | 11.4% |
| Commercial Paper | 2.0% |
| Other Assets and Liabilities — Net2 | (0.3)% |
| TOTAL | 100.0% |
At November 30, 2009, the Fund's effective maturity3 schedule was as follows:
| Securities with an Effective Maturity of: | Percentage of
Total Net Assets |
| 1-7 Days | 89.2% |
| 8-30 Days | 0.8% |
| 31-90 Days | 1.0% |
| 91-180 Days | 3.5% |
| 181 Days or more | 5.8% |
| Other Assets and Liabilities — Net2 | (0.3)% |
| TOTAL | 100.0% |
| 1 | See the Fund's Prospectus and Statement of Additional Information for a description of these investments. |
| 2 | Assets, other than investments in securities, less liabilities. See Statement of Assets and Liabilities. |
| 3 | Effective maturity is determined in accordance with the requirements of Rule 2a-7 under the Investment Company Act of 1940, which regulates money market mutual funds. |
Semi-Annual Shareholder Report3
Portfolio of Investments
November 30, 2009 (unaudited)
Principal
Amount | | | Value |
| | Short-Term Municipals – 100.3%;1,2 | |
| | Alabama – 0.9% | |
| $1,591,000 | | Birmingham, AL IDA, IDRBs (Series 1999) Weekly VRDNs (Glasforms, Inc.)/(Wells Fargo Bank, N.A. LOC), 0.310%, 12/3/2009 | 1,591,000 |
| 3,100,000 | | Piedmont, AL IDB Weekly VRDNs (Bostrom Seating, Inc.)/(Citibank NA, New York LOC), 0.440%, 12/3/2009 | 3,100,000 |
| | TOTAL | 4,691,000 |
| | Alaska – 4.8% | |
| 25,000,000 | | Alaska State Housing Finance Corp., (Series 2002 A) Weekly VRDNs (FSA INS)/(Dexia Credit Local LIQ), 0.400%, 12/3/2009 | 25,000,000 |
| | Arizona – 8.6% | |
| 1,385,000 | | Casa Grande, AZ IDA, (Series 2002A) Weekly VRDNs (Price Cos., Inc.)/(Bank of America N.A. LOC), 0.450%, 12/3/2009 | 1,385,000 |
| 2,200,000 | | Coconino County, AZ Pollution Control Corp., (Series 1998) Daily VRDNs (Arizona Public Service Co.)/(KBC Bank N.V. LOC), 0.300%, 12/1/2009 | 2,200,000 |
| 3,500,000 | | Maricopa County, AZ, IDA MFH, (Series 2008: Village at Sun Valley Apartments) Weekly VRDNs (Western Sun Valley, LP)/(FHLMC LOC), 0.410%, 12/3/2009 | 3,500,000 |
| 1,400,000 | | Maricopa County, AZ, IDA MFH, Revenue Bonds (Series 2002) Weekly VRDNs (San Remo Apartments LP)/(FNMA LOC), 0.320%, 12/3/2009 | 1,400,000 |
| 1,000,000 | | Maricopa County, AZ, IDA Solid Waste Disposal, (Series 2009) Weekly VRDNs (DC Paloma 2 LLC)/(CoBank, ACB LOC), 0.530%, 12/3/2009 | 1,000,000 |
| 3,000,000 | | Maricopa County, AZ, IDA, (Series 1999) Weekly VRDNs (Redman Homes, Inc.)/(Credit Suisse, Zurich LOC), 0.500%, 12/3/2009 | 3,000,000 |
| 2,055,000 | 3,4 | Mesa, AZ Utility System, Clipper Tax-Exempt Certificates Trust (Series 2009-33) Weekly VRDNs (State Street Bank and Trust Co. LIQ)/(State Street Bank and Trust Co. LOC), 0.220%, 12/3/2009 | 2,055,000 |
| 2,165,000 | | Phoenix, AZ IDA, (Series 2008) Weekly VRDNs (Southwestern College of Phoenix)/(Comerica Bank LOC), 0.310%, 12/3/2009 | 2,165,000 |
| 2,720,000 | | Pinal County, AZ IDA, (Series 2002) Weekly VRDNs (Milky Way Dairy LLC)/(Rabobank Nederland NV, Utrecht LOC), 0.540%, 12/3/2009 | 2,720,000 |
| 2,630,000 | | Pinal County, AZ IDA, (Series 2005) Weekly VRDNs (Three C Eloy LLC)/(Bank of America N.A. LOC), 0.420%, 12/3/2009 | 2,630,000 |
| 3,400,000 | | Pinal County, AZ IDA, (Series 2007) Weekly VRDNs (Artistic Paver Mfg. Phoenix, Inc.)/(SunTrust Bank LOC), 0.550%, 12/2/2009 | 3,400,000 |
| 8,635,000 | 3,4 | Salt River Project, AZ Agricultural Improvement & Power District, (ROCs-RR-II-R-12276) Weekly VRDNs (Citibank NA, New York LIQ), 0.250%, 12/3/2009 | 8,635,000 |
| $3,450,000 | | Scottsdale, AZ IDA, (Series 2006C) Weekly VRDNs (Scottsdale Healthcare Hospitals)/(FSA INS)/(Citibank NA, New York LIQ), 0.280%, 12/2/2009 | 3,450,000 |
Semi-Annual Shareholder Report4
Principal
Amount | | | Value |
| 4,000,000 | | Show Low, AZ IDA, (Series 2006) Weekly VRDNs (Snowflake White Mountain Power LLC)/(JPMorgan Chase Bank, N.A. LOC), 0.360%, 12/3/2009 | 4,000,000 |
| 45,000 | | Yavapai County, AZ IDA Hospital Facilities, (Series 2008B) Weekly VRDNs (Northern Arizona Healthcare System, Inc.)/(Banco Bilbao Vizcaya Argentaria SA LOC), 0.250%, 12/3/2009 | 45,000 |
| 3,000,000 | | Yavapai County, AZ IDA Solid Waste Disposal, (Series 2008A) Weekly VRDNs (Allied Waste North America, Inc.)/(Bank of America N.A. LOC), 0.310%, 12/3/2009 | 3,000,000 |
| | TOTAL | 44,585,000 |
| | California – 0.7% | |
| 1,335,000 | | California Infrastructure & Economic Development Bank, (Series 2008A) Weekly VRDNs (IWorks US, Inc.)/(City National Bank LOC), 2.280%, 12/3/2009 | 1,335,000 |
| 2,385,000 | | Oxnard, CA IDFA, (Series 2004) Weekly VRDNs (J. Harris Industrial Water Treatment, Inc.)/(City National Bank LOC), 2.500%, 12/3/2009 | 2,385,000 |
| | TOTAL | 3,720,000 |
| | Colorado – 1.4% | |
| 6,000,000 | | Centerra Metropolitan District No. 1, CO, (Series 2008) Weekly VRDNs (Compass Bank, Birmingham LOC), 0.750%, 12/2/2009 | 6,000,000 |
| 975,000 | | Colorado HFA, (Series 2000A) Weekly VRDNs (New Belgium Brewing Co., Inc.)/(Wells Fargo Bank, N.A. LOC), 0.440%, 12/3/2009 | 975,000 |
| 70,000 | | Colorado HFA, (Series 2000B) Weekly VRDNs (New Belgium Brewing Co., Inc.)/(Wells Fargo Bank, N.A. LOC), 0.440%, 12/3/2009 | 70,000 |
| | TOTAL | 7,045,000 |
| | Connecticut – 1.2% | |
| 6,000,000 | | New Haven, CT, (Series 2002A), 0.45% CP (GTD by Landesbank Hessen-Thueringen LOC), Mandatory Tender 12/1/2009 | 6,000,000 |
| | Delaware – 4.6% | |
| 24,000,000 | | Delaware Economic Development Authority IDRB, (Series D) Daily VRDNs (Motiva Enterprises LLC), 0.210%, 12/1/2009 | 24,000,000 |
| | Florida – 6.3% | |
| 1,695,000 | 3,4 | Clipper Tax-Exempt Certificates Trust (Florida AMT)/(Series 2009-75) Weekly VRDNs (GNMA COL)/(State Street Bank and Trust Co. LIQ), 0.390%, 12/3/2009 | 1,695,000 |
| 16,380,000 | | Florida State Municipal Power Agency, (Series 2008E) Daily VRDNs (SunTrust Bank LOC), 0.260%, 12/1/2009 | 16,380,000 |
| 3,760,000 | | Orlando & Orange County Expressway Authority, FL,
(Sub Series 2008B-2) Weekly VRDNs (SunTrust Bank LOC), 0.310%, 12/3/2009 | 3,760,000 |
Semi-Annual Shareholder Report5
Principal
Amount | | | Value |
| $10,580,000 | | Palm Beach County, FL Health Facilities Authority, (Series 2001) Daily VRDNs (Bethesda Healthcare System, Inc.)/(SunTrust Bank LOC), 0.260%, 12/1/2009 | 10,580,000 |
| | TOTAL | 32,415,000 |
| | Georgia – 9.9% | |
| 2,370,000 | | Albany-Dougherty County, GA Hospital Authority, (Series 2008A) Daily VRDNs (Phoebe Putney Memorial Hospital)/(SunTrust Bank LOC), 0.260%, 12/1/2009 | 2,370,000 |
| 1,600,000 | | Cobb County, GA Housing Authority, (Series 2002) Weekly VRDNs (Walton Reserve Apartments)/(FHLB of Atlanta LOC), 0.340%, 12/2/2009 | 1,600,000 |
| 340,000 | | DeKalb County, GA Development Authority, (Series 1999) Weekly VRDNs (Boy's and Girl's Clubs)/(SunTrust Bank LOC), 0.400%, 12/2/2009 | 340,000 |
| 19,350,000 | | Fulton County, GA Housing Authority, (Series 2008A) Weekly VRDNs (Walton Lakes LLC)/(FHLB of Atlanta LOC), 0.340%, 12/2/2009 | 19,350,000 |
| 15,210,000 | | Kennesaw, GA Development Authority, (Series 2004) Weekly VRDNs (Lakeside Vista Apartments)/(FNMA LOC), 0.370%, 12/3/2009 | 15,210,000 |
| 6,700,000 | | Kennesaw, GA Development Authority, (Series 2004) Weekly VRDNs (Walton Ridenour Apts)/(FHLB of Atlanta LOC), 0.340%, 12/2/2009 | 6,700,000 |
| 2,000,000 | | Macon-Bibb County, GA Industrial Authority, (Series 2007) Weekly VRDNs (Battle Lumber Co., Inc.)/(U.S. Bank, N.A. LOC), 0.370%, 12/3/2009 | 2,000,000 |
| 340,000 | | Private Colleges & Universities Facilities of GA, (Series 2005C-2) Weekly VRDNs (Emory University), 0.200%, 12/3/2009 | 340,000 |
| 3,500,000 | | Wayne County, GA Development Authority, (Series 2000) Weekly VRDNs (Republic Services of Georgia)/(Wells Fargo Bank, N.A. LOC), 0.450%, 12/2/2009 | 3,500,000 |
| | TOTAL | 51,410,000 |
| | Illinois – 6.1% | |
| 3,825,000 | | Chicago, IL MFH Revenue, (Series 2003) Weekly VRDNs (Churchview Supportive Living L.P.)/(Harris, N.A. LOC), 0.520%, 12/3/2009 | 3,825,000 |
| 1,630,000 | | Chicago, IL, (Series 2001) Weekly VRDNs (J.M.B. Moesle LLC)/(Harris, N.A. LOC), 0.650%, 12/3/2009 | 1,630,000 |
| 1,900,000 | | Elgin, IL, (Series 2001) Weekly VRDNs (Gemini Mouldings, Inc.)/(Bank of America N.A. LOC), 0.450%, 12/3/2009 | 1,900,000 |
| 3,375,000 | | Fulton, IL, (Series 1998) Weekly VRDNs (Drives, Inc.)/(Harris, N.A. LOC), 0.560%, 12/3/2009 | 3,375,000 |
| 1,595,000 | | Illinois Development Finance Authority IDB Weekly VRDNs (T&D Investments LLC)/(U.S. Bank, N.A. LOC), 0.430%, 12/3/2009 | 1,595,000 |
| 3,375,000 | | Illinois Development Finance Authority IDB, (Series 1997) Weekly VRDNs (Tempco Electric Heater Corp.)/(JPMorgan Chase Bank, N.A. LOC), 1.400%, 12/3/2009 | 3,375,000 |
Semi-Annual Shareholder Report6
Principal
Amount | | | Value |
| $1,000,000 | | Illinois Development Finance Authority IDB, (Series 2001) Weekly VRDNs (Apogee Enterprises, Inc.)/(Bank of New York LOC), 0.570%, 12/3/2009 | 1,000,000 |
| 2,630,000 | | Illinois Development Finance Authority IDB, Adjustable Rate IDRB (Series 1996A) Weekly VRDNs (Nimlok Co.)/(JPMorgan Chase Bank, N.A. LOC), 1.400%, 12/3/2009 | 2,630,000 |
| 3,000,000 | | Illinois Development Finance Authority, (Series 2002) Weekly VRDNs (Kasbergen Family Living Trust)/(Bank of the West, San Francisco, CA LOC), 0.590%, 12/3/2009 | 3,000,000 |
| 2,880,000 | | Illinois Finance Authority, (Series 2004) Weekly VRDNs (ITT Research Institute)/(Fifth Third Bank, Cincinnati LOC), 0.690%, 12/3/2009 | 2,880,000 |
| 3,200,000 | | Illinois Finance Authority, (Series 2008) Weekly VRDNs (Jasper Meats, Inc.)/(Harris, N.A. LOC), 0.560%, 12/3/2009 | 3,200,000 |
| 3,300,000 | | Lockport, IL IDA, (Series 1990) Weekly VRDNs (Panduit Corp.)/(Fifth Third Bank, Cincinnati LOC), 0.940%, 12/2/2009 | 3,300,000 |
| 104,000 | | Peoria, IL, (Series 1996) Weekly VRDNs (J.T. Fennell Co., Inc.)/(JPMorgan Chase Bank, N.A. LOC), 2.900%, 12/3/2009 | 104,000 |
| | TOTAL | 31,814,000 |
| | Indiana – 2.9% | |
| 660,000 | | Carmel, IN, (Series 1999) Weekly VRDNs (Telamon Corp.)/(Bank of America N.A. LOC), 0.600%, 12/3/2009 | 660,000 |
| 1,500,000 | | Indiana Development Finance Authority, EDRB (Series 2002) Weekly VRDNs (Vreba-Hoff Dairy Leasing LLC)/(Wells Fargo Bank, N.A. LOC), 0.540%, 12/3/2009 | 1,500,000 |
| 12,900,000 | | Indianapolis, IN MFH, (Series 2007A: Forest Ridge Apartments) Weekly VRDNs (Pedcor Investments-2006-LXXXVIII LP)/(RBS Citizens Bank N.A. LOC), 0.630%, 12/3/2009 | 12,900,000 |
| | TOTAL | 15,060,000 |
| | Kansas – 1.4% | |
| 5,031,000 | 3,4 | Clipper Tax-Exempt Certificates Trust (Kansas-AMT)/(Series 2009-11) Weekly VRDNs (Sedgwick & Shawnee Counties, KS)/(GNMA COL)/(State Street Bank and Trust Co. LIQ), 0.390%, 12/3/2009 | 5,031,000 |
| 2,315,000 | | Wyandotte County, KS, (Series 1999) Weekly VRDNs (Shor-Line)/(U.S. Bank, N.A. LOC), 0.460%, 12/2/2009 | 2,315,000 |
| | TOTAL | 7,346,000 |
| | Kentucky – 0.5% | |
| 700,000 | | Henderson County, KY, (Series 1996A) Weekly VRDNs (Gibbs Die Casting Corp.)/(Fifth Third Bank, Cincinnati LOC), 3.440%, 12/3/2009 | 700,000 |
| 2,100,000 | | Kentucky Housing Corp. Weekly VRDNs (Arbors of Madisonville Apartments LP)/(U.S. Bank, N.A. LOC), 2.250%, 12/3/2009 | 2,100,000 |
| | TOTAL | 2,800,000 |
Semi-Annual Shareholder Report7
Principal
Amount | | | Value |
| | Louisiana – 0.6% | |
| $3,000,000 | | Port of New Orleans, LA, (Series 2000) Weekly VRDNs (New Orleans Steamboat Co.)/(FHLB of Dallas LOC), 0.440%, 12/3/2009 | 3,000,000 |
| | Maine – 1.3% | |
| 2,485,000 | | Dover-Foxcroft, ME, (Series 2005) Weekly VRDNs (Pleasant River Lumber Co.)/(Wachovia Bank N.A. LOC), 0.590%, 12/2/2009 | 2,485,000 |
| 4,000,000 | | Maine State Housing Authority, (Series 2008 I), 2.00% TOBs, Mandatory Tender 12/16/2009 | 4,000,000 |
| | TOTAL | 6,485,000 |
| | Massachusetts – 0.8% | |
| 4,000,000 | | Massachusetts IFA, (Series 1992B), 1.00% CP (New England
Power Co.), Mandatory Tender 12/4/2009 | 4,000,000 |
| | Michigan – 0.4% | |
| 2,000,000 | | Michigan Municipal Bond Authority, State Aid Revenue (Series 2009 C-1), 3.00% TANs, 8/20/2010 | 2,022,640 |
| | Minnesota – 0.0% | |
| 210,000 | | Plymouth, MN Weekly VRDNs (Nuaire, Inc.)/(Wells Fargo Bank, N.A. LOC), 0.640%, 12/3/2009 | 210,000 |
| | Missouri – 0.2% | |
| 920,000 | | Springfield, MO IDA, (Series 1999) Weekly VRDNs (Dabryan Coach Builders, Inc.)/(U.S. Bank, N.A. LOC), 0.390%, 12/3/2009 | 920,000 |
| | Multi-State – 4.6% | |
| 3,543,000 | 3,4 | Clipper Tax-Exempt Certificates Trust (Multi-State AMT)
(Series 2009-78) Weekly VRDNs (State Street Bank and Trust Co. LIQ), 0.420%, 12/3/2009 | 3,543,000 |
| 6,165,000 | 3,4 | Clipper Tax-Exempt Certificates Trust (Multi-State AMT)/(Series 2009-68) Weekly VRDNs (GNMA COL)/(State Street Bank and Trust Co. LIQ), 0.420%, 12/3/2009 | 6,165,000 |
| 6,700,000 | 3,4 | Nuveen Dividend Advantage Municipal Fund 2, (Series 1), Weekly VRDPs (Deutsche Bank AG LIQ), 0.330%, 12/3/2009 | 6,700,000 |
| 7,600,000 | 3,4 | Nuveen Insured Premium Income Municipal Fund 2, (Series 1) Weekly VRDPs (Deutsche Bank AG LIQ), 0.330%, 12/3/2009 | 7,600,000 |
| | TOTAL | 24,008,000 |
| | Nevada – 0.2% | |
| 1,000,000 | | Clark County, NV, (Series 2008A: Airport Bonds) Weekly VRDNs (Landesbank Baden-Wurttemberg LIQ), 0.350%, 12/2/2009 | 1,000,000 |
| | New Mexico – 0.7% | |
| 3,500,000 | | New Mexico Educational Assistance Foundation,
(Senior Series 2004A-1) Weekly VRDNs (Royal Bank of Canada, Montreal LOC), 0.320%, 12/2/2009 | 3,500,000 |
Semi-Annual Shareholder Report8
Principal
Amount | | | Value |
| | New York – 3.5% | |
| $1,235,000 | | Cattaraugus County, NY IDA, (Series 1999A) Weekly VRDNs (Gernatt Asphalt Products, Inc.)/(Manufacturers & Traders Trust Co., Buffalo, NY LOC), 0.420%, 12/3/2009 | 1,235,000 |
| 1,185,000 | | Cayuga County, NY IDA, (Series 1998) Weekly VRDNs (NFR Northeast, Inc.)/(Citizens Bank of Pennsylvania LOC), 0.900%, 12/2/2009 | 1,185,000 |
| 1,735,000 | | Erie County, NY IDA, IDRB (Series 1994) Weekly VRDNs (Servotronics, Inc.)/(Bank of America N.A. LOC), 0.470%, 12/3/2009 | 1,735,000 |
| 3,877,000 | | Johnstown, NY, 2.25% BANs, 10/1/2010 | 3,900,831 |
| 1,700,000 | | Madison County, NY IDA, (Series A) Weekly VRDNs (Owl Wire and Cable)/(Key Bank, N.A. LOC), 0.850%, 12/2/2009 | 1,700,000 |
| 3,000,000 | | New York City, NY IDA, (Series 2007) Weekly VRDNs (Tiago Holdings LLC)/(Lloyds TSB Bank PLC, London LOC), 0.270%, 12/3/2009 | 3,000,000 |
| 1,600,000 | | New York City, NY IDA, IDRBs (Series 2003) Weekly VRDNs (Novelty Crystal Corp.)/(Commerce Bank N.A., Cherry Hill, NJ LOC), 0.470%, 12/3/2009 | 1,600,000 |
| 1,700,000 | 3,4 | Nuveen Insured New York Dividend Advantage Municipal Fund, (Series 1), Weekly VRDPs (Deutsche Bank AG LIQ), 0.260%, 12/3/2009 | 1,700,000 |
| 2,250,000 | | Riverhead, NY IDA, IDRB (Series 1998) Weekly VRDNs (Altaire Pharmaceuticals, Inc.)/(Mellon Bank N.A. LOC), 0.550%, 12/3/2009 | 2,250,000 |
| | TOTAL | 18,305,831 |
| | Ohio – 19.0% | |
| 3,330,000 | | Ashtabula County, OH, 1.75% BANs, 5/28/2010 | 3,335,603 |
| 3,000,000 | | Butler County, OH, 1.25% BANs, 8/5/2010 | 3,011,074 |
| 2,000,000 | | Edgewood City, OH School District, 2.00% BANs, 12/1/2009 | 2,000,000 |
| 5,000,000 | | Hancock County, OH, (Series 2004) Weekly VRDNs (Blanchard Valley Regional Health Center)/(FSA INS)/(Fifth Third Bank, Cincinnati LIQ), 0.600%, 12/3/2009 | 5,000,000 |
| 3,000,000 | | Lakewood, OH, 3.00% BANs, 4/15/2010 | 3,014,735 |
| 3,400,000 | | Licking County, OH Career & Technology Educational Centers, 1.60% BANs, 9/2/2010 | 3,417,750 |
| 2,160,000 | | Lima, OH, 2.00% BANs, 5/27/2010 | 2,171,556 |
| 2,000,000 | | Monroe, OH, 2.00% BANs, 8/19/2010 | 2,007,041 |
| 19,000,000 | | Montgomery County, OH Hospital Authority, (Series 2008A) Weekly VRDNs (Kettering Health Network Obligated Group)/(FSA INS)/(Dexia Credit Local LIQ), 0.380%, 12/2/2009 | 19,000,000 |
| 3,150,000 | | Oakwood City, OH, 2.25% BANs, 3/11/2010 | 3,154,237 |
| 20,000,000 | | Ohio HFA, (Series I) Weekly VRDNs (GNMA COL)/(Citibank NA, New York LIQ), 0.270%, 12/2/2009 | 20,000,000 |
| 5,000,000 | | Ohio State Air Quality Development Authority, (Series 2006-A) Weekly VRDNs (FirstEnergy Solutions Corp.)/(Key Bank, N.A. LOC), 0.450%, 12/2/2009 | 5,000,000 |
Semi-Annual Shareholder Report9
Principal
Amount | | | Value |
| $2,250,000 | | Ohio State, Environmental Improvement Revenue Bonds (Series 1996) Weekly VRDNs (Newark Group Industries, Inc.)/(Wachovia Bank N.A. LOC), 0.350%, 12/3/2009 | 2,250,000 |
| 2,000,000 | | Oregon City, OH, 1.05% BANs, 9/8/2010 | 2,006,267 |
| 5,000,000 | | Richland County, OH, 3.50% BANs, 1/12/2010 | 5,004,194 |
| 2,825,000 | | Summit County, OH Port Authority, (Series 2007) Weekly VRDNs (American Original Building Products LLC)/(FirstMerit Bank, N.A. LOC), 1.400%, 12/3/2009 | 2,825,000 |
| 2,780,000 | | Trotwood, OH, 2.25% BANs, 3/18/2010 | 2,786,097 |
| 2,990,000 | | Trumbull County, OH Sewer District, (Series B), 2.50% BANs, 3/23/2010 | 2,993,588 |
| 2,000,000 | | Vermilion, OH, 1.50% BANs, 10/27/2010 | 2,008,047 |
| 4,750,000 | | Wadsworth, OH School District, 2.25% BANs, 9/22/2010 | 4,811,002 |
| 2,500,000 | | Williams County, OH, (Series 2008) Weekly VRDNs (Community Hospital and Wellness Centers)/(Fifth Third Bank, Cincinnati LOC), 0.690%, 12/4/2009 | 2,500,000 |
| | TOTAL | 98,296,191 |
| | Oklahoma – 0.4% | |
| 2,000,000 | | Broken Arrow, OK EDA Weekly VRDNs (Blue Bell Creameries)/(JPMorgan Chase Bank, N.A. LOC), 0.400%, 12/3/2009 | 2,000,000 |
| | Pennsylvania – 1.3% | |
| 675,000 | | McKean County, PA IDA, (Series 1997) Weekly VRDNs (Keystone Powdered Metal Co.)/(PNC Bank, N.A. LOC), 0.700%, 12/3/2009 | 675,000 |
| 6,000,000 | | Philadelphia, PA, (Series B), 2.50% TRANs, 6/30/2010 | 6,061,430 |
| | TOTAL | 6,736,430 |
| | South Dakota – 0.6% | |
| 3,000,000 | | South Dakota Value Added Finance Authority, (Series 2004) Weekly VRDNs (Prairie Gold Dairy LLC)/(CoBank, ACB LOC), 0.590%, 12/3/2009 | 3,000,000 |
| | Tennessee – 2.1% | |
| 10,000,000 | | Metropolitan Government Nashville & Davidson County, TN IDB, (Series 2006) Weekly VRDNs (The Fountains Apartments, LLC)/(Fifth Third Bank, Cincinnati LOC), 1.220%, 12/3/2009 | 10,000,000 |
| 1,000,000 | | Metropolitan Nashville, TN Airport Authority, (Series 2003) Weekly VRDNs (SunTrust Bank LOC), 0.550%, 12/2/2009 | 1,000,000 |
| | TOTAL | 11,000,000 |
| | Texas – 1.3% | |
| 1,940,000 | | Houston, TX Higher Education Finance Corp., (Series 2003A: Tierwester Oaks and Richfield Manor) Weekly VRDNs (Houston Student Housing LLC)/(Bank of New York LOC), 1.180%, 12/1/2009 | 1,940,000 |
Semi-Annual Shareholder Report10
Principal
Amount | | | Value |
| $4,150,000 | 3,4 | Texas State Department of Housing & Community Affairs, (PT-4594) Weekly VRDNs (Tranquility Housing Ltd.)/(FHLMC COL)/(FHLMC LIQ), 0.570%, 12/3/2009 | 4,150,000 |
| 720,000 | 3,4 | Texas State Department of Housing & Community Affairs, MERLOTS (Series 2001-A109) Weekly VRDNs (GNMA COL)/(Wachovia Bank N.A. LIQ), 0.330%, 12/2/2009 | 720,000 |
| | TOTAL | 6,810,000 |
| | Vermont – 1.4% | |
| 3,325,000 | | Vermont Educational and Health Buildings Financing Agency, Revenue Bonds (Series 2006 A) Daily VRDNs (Gifford Medical Center)/(Key Bank, N.A. LOC), 0.300%, 12/1/2009 | 3,325,000 |
| 4,000,000 | | Vermont HFA, (Series 24A) Weekly VRDNs (Vermont HFA SFM)/(FSA INS)/(TD Banknorth N.A. LIQ), 0.400%, 12/2/2009 | 4,000,000 |
| | TOTAL | 7,325,000 |
| | Virginia – 7.8% | |
| 45,000 | | Caroline County, VA IDA, (Series 2007G) Weekly VRDNs (Meadow Event Park)/(Regions Bank, Alabama LOC), 0.320%, 12/3/2009 | 45,000 |
| 12,000,000 | | Charles City County, VA EDA, (Series 2004A) Weekly VRDNs (Waste Management, Inc.)/(JPMorgan Chase Bank, N.A. LOC), 0.320%, 12/3/2009 | 12,000,000 |
| 5,400,000 | | Fairfax County, VA IDA, (Series 2005C-1) Weekly VRDNs (Inova Health System)/(JPMorgan Chase Bank, N.A. LIQ), 0.200%, 12/1/2009 | 5,400,000 |
| 7,000,000 | | Harrisonburg, VA Redevelopment & Housing Authority, (Series 2001A: Huntington Village Apartments) Weekly VRDNs (Richfield Place Associates LP)/(FNMA LOC), 0.330%, 12/3/2009 | 7,000,000 |
| 3,400,000 | | James City County, VA IDA, (Series 1997) Weekly VRDNs (Riverside Health Systems), 0.400%, 12/2/2009 | 3,400,000 |
| 3,000,000 | | Loudoun County, VA IDA, (Series 2003C) Weekly VRDNs (Howard Hughes Medical Institute), 0.200%, 12/2/2009 | 3,000,000 |
| 8,500,000 | | Peninsula Port Authority, VA, (Series 2004) Weekly VRDNs (Riverside Health Systems), 0.450%, 12/2/2009 | 8,500,000 |
| 1,320,000 | | Virginia Small Business Financing Authority, (Series 2000) Weekly VRDNs (International Parkway Associates LLC)/(RBC Bank (USA) LOC), 0.470%, 12/3/2009 | 1,320,000 |
| | TOTAL | 40,665,000 |
| | Washington – 1.1% | |
| 625,000 | | Washington State EDFA, (Series 2005B) Weekly VRDNs (Harold LeMay Enterprises, Inc.)/(Bank of America N.A. LOC), 0.380%, 12/2/2009 | 625,000 |
| 3,000,000 | | Washington State Housing Finance Commission, (Series 2008) Weekly VRDNs (Panorama)/(Key Bank, N.A. LOC), 0.240%, 12/3/2009 | 3,000,000 |
Semi-Annual Shareholder Report11
Principal
Amount | | | Value |
| $2,250,000 | | Washington State Housing Finance Commission: MFH, (Series 1998A: Oxford Square Apartments) Weekly VRDNs (Oxford Housing LP)/(U.S. Bank, N.A. LOC), 0.560%, 12/3/2009 | 2,250,000 |
| | TOTAL | 5,875,000 |
| | Wisconsin – 3.7% | |
| 2,000,000 | | Combined Locks, WI, Development Revenue Bonds, (Series 1997) Weekly VRDNs (Appleton Papers)/(Bank of America N.A. LOC), 0.520%, 12/3/2009 | 2,000,000 |
| 3,160,000 | | Menomonee Falls Village, WI, (Series 2006) Weekly VRDNs
(AJ Die-Namics, LP)/(Marshall & Ilsley Bank, Milwaukee LOC), 2.570%, 12/3/2009 | 3,160,000 |
| 1,625,000 | | Mukwonago, WI, (Series 1999) Weekly VRDNs (Empire Level)/(Marshall & Ilsley Bank, Milwaukee LOC), 2.570%, 12/3/2009 | 1,625,000 |
| 6,500,000 | | Rothschild Village, WI, (Series 2007) Weekly VRDNs (Schuette, Inc.)/(Marshall & Ilsley Bank, Milwaukee LOC), 2.570%, 12/3/2009 | 6,500,000 |
| 3,935,000 | | Wausau, WI Community Development Authority, (Series 2008A) Weekly VRDNs (Clover Industries, Inc.)/(Marshall & Ilsley Bank, Milwaukee LOC), 2.570%, 12/3/2009 | 3,935,000 |
| 1,870,000 | | Wisconsin Housing & EDA, Home Ownership Revenue Bonds (Series 2005C) Weekly VRDNs (Lloyds TSB Bank PLC, London LIQ), 0.350%, 12/2/2009 | 1,870,000 |
| | TOTAL | 19,090,000 |
| | TOTAL INVESTMENTS — 100.3%
(AT AMORTIZED COST)5 | 520,135,092 |
| | OTHER ASSETS AND LIABILITIES - NET — (0.3)%6 | (1,687,579) |
| | TOTAL NET ASSETS — 100% | $518,447,513 |
Securities that are subject to the federal alternative minimum tax (AMT) represent 63.9% of the portfolio as calculated based upon total 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 Ratings, 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. |
Semi-Annual Shareholder Report12
At November 30, 2009, the portfolio securities were rated as follows:Tier Rating Percentages Based on Total Market Value
| First Tier | Second Tier |
| 98.5% | 1.5% |
| 2 | Current rate and next reset date shown for Variable Rate Demand Notes. |
| 3 | Denotes a restricted security that either: (a) cannot be offered for public sale without first being registered, or being able to take advantage of an exemption from registration, under the Securities Act of 1933; or (b) is subject to a contractual restriction on public sales. At November 30, 2009, these restricted securities amounted to $47,994,000, which represented 9.3% of total net assets. |
| 4 | Denotes a restricted security that may be resold without restriction to “qualified institutional buyers” as defined in Rule 144A under the Securities Act of 1933 and that the Fund has determined to be liquid under criteria established by the Fund's Board of Directors (the “Directors”). At November 30, 2009, these liquid restricted securities amounted to $47,994,000, which represented 9.3% of total net assets. |
| 5 | Also represents cost for federal tax purposes. |
| 6 | Assets, other than investments in securities, less liabilities. See Statement of Assets and Liabilities. |
Note: The categories of investments are shown as a percentage of total net assets at November 30, 2009.
Various inputs are used in determining the value of the Fund's investments. These inputs are summarized in the three broad levels listed below:
Level 1 — quoted prices in active markets for identical securities
Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)
Level 3 — significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments)
The inputs or methodology used for valuing securities are not an indication of the risk associated with investing in those securities.
The following is a summary of the inputs used, as of November 30, 2009, in valuing the Fund's assets carried at fair value:
| Valuation Inputs | | | | |
| Level 1 -
Quoted
Prices and
Investments in
Mutual Funds | Level 2 -
Other
Significant
Observable
Inputs | Level 3 -
Significant
Unobservable
Inputs | Total |
| Debt Securities: | | | | |
| Short-Term Municipals | $ — | $520,135,092 | $ — | $520,135,092 |
Semi-Annual Shareholder Report13
The following acronyms are used throughout this portfolio:| AMT | — Alternative Minimum Tax |
| BANs | — Bond Anticipation Notes |
| COL | — Collateralized |
| CP | — Commercial Paper |
| EDA | — Economic Development Authority |
| EDFA | — Economic Development Financing Authority |
| EDRB | — Economic Development Revenue Bond |
| FHLB | — Federal Home Loan Bank |
| FHLMC | — Federal Home Loan Mortgage Corporation |
| FNMA | — Federal National Mortgage Association |
| FSA | — Financial Security Assurance |
| GNMA | — Government National Mortgage Association |
| GTD | — Guaranteed |
| HFA | — Housing Finance Authority |
| IDA | — Industrial Development Authority |
| IDB | — Industrial Development Bond |
| IDFA | — Industrial Development Finance Authority |
| IDRB(s) | — Industrial Development Revenue Bond(s) |
| IFA | — Industrial Finance Authority |
| INS | — Insured |
| LIQ | — Liquidity Agreement |
| LOC | — Letter of Credit |
| MERLOTS | — Municipal Exempt Receipts-Liquidity Optional Tender Series |
| MFH | — Multi-Family Housing |
| ROCs | — Reset Option Certificates |
| SFM | — Single Family Mortgage |
| TANs | — Tax Anticipation Notes |
| TOBs | — Tender Option Bonds |
| TRANs | — Tax and Revenue Anticipation Notes |
| VRDNs | — Variable Rate Demand Notes |
| VRDPs | — Variable Rate Demand Preferreds |
See Notes which are an integral part of the Financial Statements
Semi-Annual Shareholder Report14
Statement of Assets and Liabilities
November 30, 2009 (unaudited)
| Assets: | | |
| Total investments in securities, at amortized cost and value | | $520,135,092 |
| Income receivable | | 828,288 |
| Receivable for shares sold | | 7,018 |
| TOTAL ASSETS | | 520,970,398 |
| Liabilities: | | |
| Payable for investments purchased | $2,171,556 | |
| Payable for shares redeemed | 21,479 | |
| Bank overdraft | 262,052 | |
| Payable for investment adviser fee (Note 4) | 35,727 | |
| Payable for distribution services fee (Note 4) | 119 | |
| Accrued expenses | 31,952 | |
| TOTAL LIABILITIES | | 2,522,885 |
| Net assets for 518,453,231 shares outstanding | | $518,447,513 |
| Net Assets Consist of: | | |
| Paid-in capital | | $518,450,935 |
| Accumulated net realized gain on investments | | 43 |
| Distributions in excess of net investment income | | (3,465) |
| TOTAL NET ASSETS | | $518,447,513 |
| Net Asset Value, Offering Price and Redemption Proceeds Per Share: | | |
| $518,447,513 ÷ 518,453,231 shares outstanding, $0.001 par value, $12,500,000,000 shares authorized | | $1.00 |
See Notes which are an integral part of the Financial Statements
Semi-Annual Shareholder Report15
Statement of Operations
Six Months Ended November 30, 2009 (unaudited)
| Investment Income: | | | |
| Interest | | | $2,920,159 |
| Expenses: | | | |
| Investment adviser fee (Note 4) | | $1,480,245 | |
| Administrative personnel and services fee (Note 4) | | 229,678 | |
| Custodian fees | | 11,510 | |
| Transfer and dividend disbursing agent fees and expenses | | 272,312 | |
| Directors'/Trustees' fees | | 2,094 | |
| Auditing fees | | 9,274 | |
| Legal fees | | 4,204 | |
| Portfolio accounting fees | | 47,509 | |
| Distribution services fee (Note 4) | | 296,049 | |
| Shareholder services fee (Note 4) | | 739,438 | |
| Account administration fee | | 592 | |
| Share registration costs | | 49,632 | |
| Printing and postage | | 13,421 | |
| Insurance premiums | | 2,718 | |
| Taxes | | 21,166 | |
| Miscellaneous | | 54,880 | |
| TOTAL EXPENSES | | 3,234,722 | |
| Waivers and Reimbursement (Note 4): | | | |
| Waiver of investment adviser fee | $(79,694) | | |
| Waiver of administrative personnel and services fee | (4,385) | | |
| Waiver of distribution services fee | (73,849) | | |
| Waiver of shareholder services fee | (320,451) | | |
| Reimbursement of shareholder services fee | (6,990) | | |
| TOTAL WAIVERS AND REIMBURSEMENT | | (485,369) | |
| Net expenses | | | 2,749,353 |
| Net investment income | | | 170,806 |
| Net realized gain on investments | | | 43 |
| Change in net assets resulting from operations | | | $170,849 |
See Notes which are an integral part of the Financial Statements
Semi-Annual Shareholder Report16
Statement of Changes in Net Assets
| Six Months
Ended
(unaudited)
11/30/2009 | Year
Ended
5/31/2009 |
| Increase (Decrease) in Net Assets | | |
| Operations: | | |
| Net investment income | $170,806 | $4,701,224 |
| Net realized gain on investments | 43 | 351 |
| CHANGE IN NET ASSETS RESULTING FROM OPERATIONS | 170,849 | 4,701,575 |
| Distributions to Shareholders: | | |
| Distributions from net investment income | (169,985) | (4,705,446) |
| Distributions from net realized gain on investments | — | (73,748) |
| CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS | (169,985) | (4,779,194) |
| Share Transactions: | | |
| Proceeds from sale of shares | 733,937,068 | 1,437,187,268 |
| Net asset value of shares issued to shareholders in payment of distributions declared | 182,830 | 4,870,545 |
| Cost of shares redeemed | (727,691,032) | (1,406,344,774) |
| CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS | 6,428,866 | 35,713,039 |
| Change in net assets | 6,429,730 | 35,635,420 |
| Net Assets: | | |
| Beginning of period | 512,017,783 | 476,382,363 |
| End of period (including distributions in excess of net investment income of $(3,465) and $(4,286), respectively) | $518,447,513 | $512,017,783 |
See Notes which are an integral part of the Financial Statements
Semi-Annual Shareholder Report17
Notes to Financial Statements
November 30, 2009 (unaudited)
1. 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”), 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. Each portfolio pays its own expenses. The investment objective of the Fund is to provide current income exempt from federal regular income tax consistent with stability of principal. Interest income from the Fund's investments may be subject to the federal AMT for individuals and corporations and state and local taxes.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with U.S. generally accepted accounting principles (GAAP).
Investment Valuation
Securities are valued at amortized cost. Under the amortized cost valuation method, an investment is valued initially at its cost as determined in accordance with GAAP. The Fund then adjusts the amount of interest income accrued each day over the term of the investment to account for any difference between the initial cost of the investment and the amount payable at its maturity. If amortized cost is determined not to approximate market value, the fair value of the portfolio securities will be determined under procedures established by and under the general supervision of the Directors.
Investment Income, Expenses and Distributions
Investment transactions are accounted for on a trade-date basis. Realized gains and losses from investment transactions are recorded on an identified-cost basis. Interest income and expenses are accrued daily. Distributions to shareholders are recorded on the ex-dividend date. Distributions of net investment income are declared daily and paid monthly.
Premium and Discount Amortization
All premiums and discounts are amortized/accreted.
Federal Taxes
It is the Fund's policy to comply with the Subchapter M provision of the Internal Revenue Code and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal income tax is necessary. As of and during the six months ended November 30, 2009, the Fund did not have a liability for any uncertain tax positions. The Fund recognizes interest and penalties, if any, related to tax liabilities as income tax expense in the Statement of Operations. As of November 30, 2009, tax years 2006 through 2009 remain subject to examination by the Fund's major tax jurisdictions, which include the United States of America, the state of Maryland and the Commonwealth of Pennsylvania.
Semi-Annual Shareholder Report18
Other TaxesAs an open-end management investment company incorporated in the state of Maryland but domiciled in the Commonwealth of Pennsylvania, the Fund is subject to the Pennsylvania Franchise Tax. This franchise tax is assessed annually on the value of the Fund, as represented by average net assets for the tax year.
When-Issued and Delayed Delivery Transactions
The Fund may engage in when-issued or delayed delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked to market daily and begin earning interest on the settlement date. Losses may occur on these transactions due to changes in market conditions or the failure of counterparties to perform under the contract.
Restricted Securities
The Fund may purchase securities which are considered restricted. Restricted securities are securities that either: (a) cannot be offered for public sale without first being registered, or being able to take advantage of an exemption from registration, under the Securities Act of 1933; or (b) are subject to contractual restrictions on public sales. In some cases, when a security cannot be offered for public sale without first being registered, the issuer of the restricted security 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 such restricted securities may be resold in the secondary market in transactions exempt from registration. 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. Restricted securities are valued at amortized cost in accordance with Rule 2a-7 under the Act.
Temporary Guarantee Program
The Fund participated in the Temporary Guarantee Program for Money Market Funds (the “Program”) offered by the U.S. Treasury Department through its expiration on September 18, 2009. The fee for the Program was recognized ratably over the period of participation and is included in miscellaneous expense on the Fund's Statement of Operations.
Other
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ from those estimated.
3. CAPITAL STOCK
The following table summarizes capital stock activity:
| Six Months
Ended
11/30/2009 | Year
Ended
5/31/2009 |
| Shares sold | 733,937,068 | 1,437,187,268 |
| Shares issued to shareholders in payment of distributions declared | 182,830 | 4,870,545 |
| Shares redeemed | (727,691,032) | (1,406,344,774) |
| NET CHANGE RESULTING FROM FUND SHARE TRANSACTIONS | 6,428,866 | 35,713,039 |
Semi-Annual Shareholder Report19
4. INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Investment Adviser Fee
Federated Investment Management Company is the Fund's investment adviser (the “Adviser”). The advisory agreement between the Fund and the Adviser provides for an annual 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. For the six months ended November 30, 2009, the Adviser voluntarily waived $79,694 of its fee.
Administrative Fee
Federated Administrative Services (FAS), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. The fee paid to FAS is based on the average aggregate daily net assets of certain Federated funds as specified below:
| Administrative Fee | Average Aggregate Daily Net Assets
of the Federated Funds |
| 0.150% | on the first $5 billion |
| 0.125% | on the next $5 billion |
| 0.100% | on the next $10 billion |
| 0.075% | on assets in excess of $20 billion |
The administrative fee received during any fiscal year shall be at least $150,000 per portfolio and $40,000 per each additional class of Shares. FAS may voluntarily choose to waive any portion of its fee. FAS can modify or terminate this voluntary waiver at any time at its sole discretion. For the six months ended November 30, 2009, the net fee paid to FAS was 0.076% of average daily net assets of the Fund. FAS waived $4,385 of its fee.
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 daily net assets of the Fund to finance activities intended to result in the sale of these shares. The Plan provides that the Fund may incur distribution expenses of up to 0.35% of average daily net assets, annually, to reimburse FSC. FSC may voluntarily choose to waive any portion of its fee. FSC can modify or terminate this voluntary waiver at any time at its sole discretion. For the six months ended November 30, 2009, FSC voluntarily waived $73,849 of its fee. When FSC receives fees, it may pay some or all of them to financial intermediaries whose customers purchase shares. For the six months ended November 30, 2009, FSC did not retain any fees paid by the Fund.
Shareholder Services Fee
The Fund may pay fees (Service Fees) up to 0.25% of the average daily net assets of the Fund's Shares to financial intermediaries or to Federated Shareholder Services Company (FSSC) for providing services to shareholders and maintaining shareholder accounts. FSSC may voluntarily reimburse the Fund for shareholder services fees. This voluntary reimbursement can be modified or terminated at any time. For the six months ended November 30, 2009, Semi-Annual Shareholder Report20
FSSC voluntarily reimbursed $6,990 of shareholder services fees. For the six months ended November 30, 2009, FSSC did not receive any fees paid by the Fund. In addition, for the six months ended November 30, 2009, unaffiliated third-party financial intermediaries waived $320,451 of Service Fees. This waiver can be modified or terminated at any time.Interfund Transactions
During the six months ended November 30, 2009, 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 and amounted to $865,920,000 and $927,485,000, respectively.
General
Certain Officers and Directors of the Fund are Officers and Directors or Trustees of the above companies.
5. LINE OF CREDIT
The Fund participates in a $100,000,000 unsecured, uncommitted revolving line of credit (LOC) agreement with PNC Bank. The LOC was made available for extraordinary or emergency purposes, primarily for financing redemption payments. Borrowings are charged interest at a rate offered to the Fund by PNC Bank at the time of the borrowing. As of November 30, 2009, there were no outstanding loans. During the six months ended November 30, 2009, the Fund did not utilize the LOC.
6. INTERFUND LENDING
Pursuant to an Exemptive Order issued by the Securities and Exchange Commission (SEC), the Fund, along with other funds advised by subsidiaries of Federated Investors, Inc., may participate in an interfund lending program. This program provides an alternative credit facility allowing the Fund to borrow from other participating affiliated funds. As of November 30, 2009, there were no outstanding loans. During the six months ended November 30, 2009, the program was not utilized.
7. Legal Proceedings
Since October 2003, Federated Investors, Inc. and related entities (collectively, “Federated”), and various Federated funds (Federated Funds) have been named as defendants in several class action lawsuits now pending in the United States District Court for the District of Maryland. The lawsuits were purportedly filed on behalf of people who purchased, owned and/or redeemed shares of Federated-sponsored mutual funds during specified periods beginning November 1, 1998. The suits are generally similar in alleging that Federated engaged in illegal and improper trading practices including market timing and late trading in concert with certain institutional traders, which allegedly caused financial injury to the mutual fund shareholders. These lawsuits began to be filed shortly after Federated's first public announcement that it had received requests for information on shareholder trading activities in the Federated Funds from the SEC, the Office of the New York State Attorney General (NYAG) and other authorities. In that regard, on November 28, 2005, Federated announced that it had reached final settlements with the SEC and the NYAG with respect to those matters. As Federated previously reported in 2004, it has already paid approximately $8.0 million to certain funds as determined by an independent consultant. As part of these settlements, Federated agreed to pay for the benefit of fund shareholders additional disgorgement and a civil money penalty in the aggregate amount of an additional $72 million. Federated entities Semi-Annual Shareholder Report21
have also been named as defendants in several additional lawsuits that are now pending in the United States District Court for the Western District of Pennsylvania, alleging, among other things, excessive advisory and Rule 12b-1 fees. The Board of the Federated Funds retained the law firm of Dickstein Shapiro LLP to represent the Federated Funds in these lawsuits. Federated and the Federated Funds and their respective counsel have been defending this litigation, and none of the Federated Funds remains a defendant in any of the lawsuits (though some could potentially receive any recoveries as nominal defendants). Additional lawsuits based upon similar allegations may be filed in the future. The potential impact of these lawsuits, all of which seek unquantified damages, attorneys' fees and expenses, and future potential similar suits is uncertain. Although we do not believe that these lawsuits will have a material adverse effect on the Federated Funds, there can be no assurance that these suits, the ongoing adverse publicity and/or other developments resulting from the regulatory investigations will not result in increased Federated Fund redemptions, reduced sales of Federated Fund shares or other adverse consequences for the Federated Funds.8. Subsequent events
Management has evaluated subsequent events through January 22, 2010, the date the financial statements were issued, and determined that no events have occurred that require additional disclosure.
Semi-Annual Shareholder Report22
Evaluation and Approval of Advisory Contract - May 2009
Municipal Cash Series (the “Fund”)
The Fund's Board reviewed the Fund's investment advisory contract at meetings held in May 2009. The Board's decision regarding the contract reflects the exercise of its business judgment on whether to continue the existing arrangements.
In this connection, the Federated funds' Board had previously appointed a Senior Officer, whose duties include specified responsibilities relating to the process by which advisory fees are to be charged to a Federated fund. The Senior Officer has the authority to retain consultants, experts, or staff as may be reasonably necessary to assist in the performance of his duties, reports directly to the Board, and may be terminated only with the approval of a majority of the independent members of the Board. The Senior Officer prepared and furnished to the Board an independent, written evaluation that covered topics discussed below. The Board considered that evaluation, along with other information, in deciding to approve the advisory contract.
During its review of the contract, the Board considered compensation and benefits received by the Adviser. This included the fees received for services provided to the Fund by other entities in the Federated organization and research services received by the Adviser from brokers that execute Federated fund trades, as well as advisory fees. The Board is also familiar with and considered judicial decisions concerning allegedly excessive investment advisory fees, which have indicated that the following factors may be relevant to an Adviser's fiduciary duty with respect to its receipt of compensation from a fund: the nature and quality of the services provided by the Adviser, including the performance of the fund; the Adviser's cost of providing the services; the extent to which the Adviser may realize “economies of scale” as a fund grows larger; any indirect benefits that may accrue to the Adviser and its affiliates as a result of the Adviser's relationship with a fund; performance and expenses of comparable funds; and the extent to which the independent Board members are fully informed about all facts the Board deems relevant bearing on the Adviser's services and fees. The Board further considered management fees (including any components thereof) charged to institutional and other clients of the Adviser for what might be viewed as like services, and the cost to the Adviser and its affiliates of supplying services pursuant to the management fee agreements, excluding any intra-corporate profit and profit margins of the Adviser and its affiliates for supplying such services. The Board was aware of these factors and was guided by them in its review of the Fund's advisory contract to the extent it considered them to be appropriate and relevant, as discussed further below.
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The Board considered and weighed these circumstances in light of its substantial accumulated experience in governing the Fund and working with Federated on matters relating to the Federated funds, and was assisted in its deliberations by independent legal counsel. Throughout the year, the Board has requested and received substantial and detailed information about the Fund and the Federated organization that was in addition to the extensive materials that comprise and accompany the Senior Officer's evaluation. Federated provided much of this information at each regular meeting of the Board, and furnished additional reports in connection with the particular meeting at which the Board's formal review of the advisory contract occurred. Between regularly scheduled meetings, the Board also received information on particular matters as the need arose. Thus, the Board's consideration of the advisory contract included review of the Senior Officer's evaluation, accompanying data and additional reports covering such matters as: the Adviser's investment philosophy, revenue, profitability, personnel and processes; investment and operating strategies; the Fund's short- and long-term performance (in absolute terms, both on a gross basis and net of expenses, as well as in relationship to its particular investment program and certain competitor or “peer group” funds and/or other benchmarks, as appropriate), and comments on the reasons for performance; the Fund's investment objectives; the Fund's expenses (including the advisory fee itself and the overall expense structure of the Fund, both in absolute terms and relative to similar and/or competing funds, with due regard for contractual or voluntary expense limitations); the use and allocation of brokerage commissions derived from trading the Fund's portfolio securities (if any); and the nature, quality and extent of the advisory and other services provided to the Fund by the Adviser and its affiliates. The Board also considered the preferences and expectations of Fund shareholders and their relative sophistication; the continuing state of competition in the mutual fund industry and market practices; the range of comparable fees for similar funds in the mutual fund industry; the Fund's relationship to the Federated family of funds which include a comprehensive array of funds with different investment objectives, policies and strategies which are available for exchange without the incurrence of additional sales charges; compliance and audit reports concerning the Federated funds and the Federated companies that service them (including communications from regulatory agencies), as well as Federated's responses to any issues raised therein; and relevant developments in the mutual fund industry and how the Federated funds and/or Federated are responding to them. The Board's evaluation process is evolutionary. The criteria considered and the emphasis placed on relevant criteria change in recognition of changing circumstances in the mutual fund marketplace. With respect to the Fund's performance and expenses in particular, the Board has found the use of comparisons to other mutual funds with comparable investment programs to be particularly useful, given the high degree of competition in the mutual fund business. The Board focused on comparisons Semi-Annual Shareholder Report24
with other similar mutual funds more heavily than non-mutual fund products or services because it is believed that they are more relevant. For example, other mutual funds are the products most like the Fund, they are readily available to Fund shareholders as alternative investment vehicles, and they are the type of investment vehicle in fact chosen and maintained by the Fund's investors. The range of their fees and expenses therefore appears to be a generally reliable indication of what consumers have found to be reasonable in the precise marketplace in which the Fund competes. The Fund's ability to deliver competitive performance when compared to its peer group was a useful indicator of how the Adviser is executing the Fund's investment program, which in turn assisted the Board in reaching a conclusion that the nature, extent, and quality of the Adviser's investment management services were such as to warrant continuation of the advisory contract. In this regard, the Senior Officer has reviewed Federated's fees for providing advisory services to products outside the Federated family of funds (e.g., institutional and separate accounts). He concluded that mutual funds and institutional accounts are inherently different products. Those differences include, but are not limited to, different types of targeted investors; being subject to different laws and regulations; different legal structures; different average account sizes; different associated costs; different portfolio management techniques made necessary by different cash flows; and portfolio manager time spent in review of securities pricing. The Senior Officer did not consider these fee schedules to be determinative in judging the appropriateness of mutual fund advisory contracts.The Senior Officer reviewed reports compiled by Federated, using data supplied by independent fund ranking organizations, regarding the performance of, and fees charged by, other mutual funds, noting his view that comparisons to fund peer groups are highly important in judging the reasonableness of proposed fees.
The Fund's performance fell below the median of the relevant peer group for the one-year period covered by the report. The Board discussed the Fund's performance with the Adviser and recognized the efforts being undertaken by the Adviser. The Board will continue to monitor these efforts and the performance of the Fund.
The Board also received financial information about Federated, including reports on the compensation and benefits Federated derived from its relationships with the Federated funds. These reports covered not only the fees under the advisory contracts, but also fees received by Federated's subsidiaries for providing other services to the Federated funds under separate contracts (e.g., for serving as the Federated funds' administrator). The reports also discussed any indirect benefit Federated may derive from its receipt of research services from brokers who execute Federated fund trades. In addition, the Board considered the fact that, in order for a fund to be competitive in the marketplace, Federated and its affiliates frequently waived fees and/or Semi-Annual Shareholder Report25
reimbursed expenses and have disclosed to fund investors and/or indicated to the Board their intention to do so in the future, where appropriate. Moreover, the Board receives regular reports regarding the institution or elimination of these voluntary waivers.Federated furnished reports, requested by the Senior Officer, that reported revenues on a fund-by-fund basis and made estimates of the allocation of expenses on a fund-by-fund basis, using allocation methodologies specified by the Senior Officer. The Senior Officer noted that, although they may apply consistent allocation processes, the inherent difficulties in allocating costs (and the unavoidable arbitrary aspects of that exercise) and the lack of consensus on how to allocate those costs may render such allocation reports unreliable. The allocation reports were considered in the analysis by the Board but were determined to be of limited use.
The Board and the Senior Officer also reviewed a report compiled by Federated comparing profitability information for Federated to other publicly held fund management companies. In this regard, the Senior Officer noted the limited availability of such information, but nonetheless concluded that Federated's profit margins did not appear to be excessive and the Board agreed.
The Senior Officer's evaluation also discussed the notion of possible realization of “economies of scale” as a fund grows larger. The Board considered in this regard that the Adviser has made significant and long-term investments in areas that support all of the Federated funds, such as personnel and processes for the portfolio management, compliance, and risk management functions; and systems technology; and that the benefits of these efforts (as well as any economies, should they exist) were likely to be enjoyed by the fund complex as a whole. Finally, the Board also noted the absence of any applicable regulatory or industry guidelines on this subject, which (as discussed in the Senior Officer's evaluation) is compounded by the lack of any common industry practice or general pattern with respect to structuring fund advisory fees with “breakpoints” that serve to reduce the fee as the fund attains a certain size. The Senior Officer did not recommend institution of breakpoints in pricing Federated's fund advisory services at this time.
It was noted in the materials for the Board meeting that for the period covered by the report, the Fund's investment advisory fee, after waivers and expense reimbursements, if any, was above the median of the relevant peer group. The Board reviewed the fees and other expenses of the Fund with the Adviser and was satisfied that the overall expense structure of the Fund remained competitive. The Board will continue to monitor advisory fees and other expenses borne by the Fund.
The Senior Officer's evaluation noted his belief that the information and observations contained in his evaluation supported a finding that the proposed management fees are reasonable, and that Federated appeared to provide appropriate administrative services to the Fund for the fees paid. Under these Semi-Annual Shareholder Report26
circumstances, no changes were recommended to, and no objection was raised to, the continuation of the Fund's advisory contract. The Board concluded that the nature, quality and scope of services provided the Fund by the Adviser and its affiliates were satisfactory.In its decision to continue an existing investment advisory contract, the Board was mindful of the potential disruptions of the Fund's operations and various risks, uncertainties and other effects that could occur as a result of a decision to terminate or not renew an advisory contract. In particular, the Board recognized that many shareholders have invested in the Fund on the strength of the Adviser's industry standing and reputation and with the expectation that the Adviser will have a continuing role in providing advisory services to the Fund. Thus, the Board's approval of the advisory contract reflected the fact that it is the shareholders who have effectively selected the Adviser by virtue of having invested in the Fund.
The Board based its decision to approve the advisory contract on the totality of the circumstances and relevant factors and with a view to past and future long-term considerations. Not all of the factors and considerations identified above were necessarily relevant to the Fund, nor did the Board consider any one of them to be determinative. With respect to the factors that were relevant, the Board's decision to approve the contract reflects its determination that Federated's performance and actions provided a satisfactory basis to support the decision to continue the existing arrangements.
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Voting Proxies on Fund Portfolio Securities
A description of the policies and procedures that the Fund uses to determine how to vote proxies, if any, relating to securities held in the Fund's portfolio is available, without charge and upon request, by calling 1-800-341-7400. A report on “Form N-PX” of how the Fund voted any such proxies during the most recent 12-month period ended June 30 is available from Federated's Web site at FederatedInvestors.com. To access this information from the “Products” section of the Web site, click on the “Prospectuses and Regulatory Reports” link under “Related Information,” then select the appropriate link opposite the name of the Fund; or select the name of the Fund and from the Fund's page, click on the “Prospectuses and Regulatory Reports” link. Form N-PX filings are also available at the SEC's Web site at www.sec.gov.
Quarterly Portfolio Schedule
The Fund files with the SEC a complete schedule of its portfolio holdings, as of the close of the first and third quarters of its fiscal year, on “Form N-Q.” These filings are available on the SEC's Web site at www.sec.gov and may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. (Call 1-800-SEC-0330 for information on the operation of the Public Reference Room.) You may also access this information from the “Products” section of Federated's Web site at FederatedInvestors.com by clicking on “Portfolio Holdings” under “Related Information,” then selecting the appropriate link opposite the name of the Fund; or select the name of the Fund and from the Fund's page, click on the “Portfolio Holdings” link.
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Mutual funds are not bank deposits or obligations, are not guaranteed by any bank and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other government agency. Investment in mutual funds involves investment risk, including the possible loss of principal. Although money market funds seek to maintain a stable net asset value of $1.00 per share, there is no assurance that they will be able to do so.This Report is authorized for distribution to prospective investors only when preceded or accompanied by the Fund's Prospectus, which contains facts concerning its objective and policies, management fees, expenses and other information.
IMPORTANT NOTICE ABOUT FUND DOCUMENT DELIVERYIn an effort to reduce costs and avoid duplicate mailings, the Fund(s) intend to deliver a single copy of certain documents to each household in which more than one shareholder of the Fund(s) resides (so-called “householding”), as permitted by applicable rules. The Fund's “householding” program covers its/their Prospectus and Statement of Additional Information, and supplements to each, as well as Semi-Annual and Annual Shareholder Reports and any Proxies or information statements. Shareholders must give their written consent to participate in the “householding” program. The Fund is also permitted to treat a shareholder as having given consent (“implied consent”) if (i) shareholders with the same last name, or believed to be members of the same family, reside at the same street address or receive mail at the same post office box, (ii) the Fund gives notice of its intent to “household” at least sixty (60) days before it begins “householding” and (iii) none of the shareholders in the household have notified the Fund(s) or their agent of the desire to “opt out” of “householding.” Shareholders who have granted written consent, or have been deemed to have granted implied consent, can revoke that consent and opt out of “householding” at any time: shareholders who purchased shares through an intermediary should contact their representative; other shareholders may call the Fund at 1-800-341-7400.
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Notes
30
Federated Securities Corp., Distributor
Cusip 147551303
0122605 (1/10)
Federated is a registered mark of Federated Investors, Inc.
2010 © Federated Investors, Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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| Registrant Cash Trust Series, Inc. |
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| By | | /S/ RICHARD A. NOVAK |
| | Richard A. Novak |
| | Principal Financial Officer |
Date June 22, 2010
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
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| By | | /S/ J. CHRISTOPHER DONAHUE |
| | J. Christopher Donahue |
| | Principal Executive Officer |
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| Date June 22, 2010 |
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| By | | /S/ RICHARD A. NOVAK |
| | Richard A. Novak |
| | Principal Financial Officer |
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| Date June 22, 2010 |
