United States
Securities and Exchange Commission
Washington, D.C. 20549
Form N-CSR
Certified Shareholder Report of Registered Management Investment Companies
811-6269
(Investment Company Act File Number)
Cash Trust Series II
_______________________________________________________________
(Exact Name of Registrant as Specified in Charter)
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7000
(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: 5/31/04
Date of Reporting Period: Six months ended 11/30/03
Item 1. Reports to Stockholders
Federated Investors
World-Class Investment Manager
Municipal Cash Series II
A Portfolio of Cash Trust Series II
SEMI-ANNUAL SHAREHOLDER REPORT
November 30, 2003
FINANCIAL HIGHLIGHTS
FINANCIAL STATEMENTS
VOTING PROXIES ON FUND PORTFOLIO SECURITIES
NOT FDIC INSURED * MAY LOSE VALUE * NO BANK GUARANTEE
Financial Highlights
(For a Share Outstanding Throughout Each Period)
| | Six Months
Ended
(unaudited) | | | Year Ended May 31, | |
| | 11/30/2003 | | | 2003 | | | 2002 | | | 2001 | | | 2000 | | | 1999 | |
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 | | 0.002 | | | 0.007 | | | 0.014 | | | 0.034 | | | 0.031 | | | 0.027 | |
Less Distributions: | | | | | | | | | | | | | | | | | | |
Distributions from net investment income | | (0.002 | ) | | (0.007 | ) | | (0.014 | ) | | (0.034 | ) | | (0.031 | ) | | (0.027 | ) |
|
Net Asset Value, End of Period | | $1.00 | | | $1.00 | | | $1.00 | | | $1.00 | | | $1.00 | | | $1.00 | |
|
Total Return1 | | 0.18 | % | | 0.75 | % | | 1.46 | % | | 3.44 | % | | 3.14 | % | | 2.76 | % |
|
| | | | | | | | | | | | | | | | | | |
Ratios to Average Net Assets: | | | | | | | | | | | | | | | | | | |
|
Expenses | | 0.81 | %2 | | 0.81 | % | | 0.81 | % | | 0.81 | % | | 0.81 | % | | 0.81 | % |
|
Net investment income | | 0.36 | %2 | | 0.74 | % | | 1.44 | % | | 3.35 | % | | 3.12 | % | | 2.72 | % |
|
Expense waiver/reimbursement3 | | 0.03 | %2 | | 0.03 | % | | 0.03 | % | | 0.04 | % | | 0.06 | % | | 0.07 | % |
|
Supplemental Data: | | | | | | | | | | | | | | | | | | |
|
Net assets, end of period (000 omitted) | | $433,063 | | $407,992 | | $451,767 | | $460,244 | | $364,467 | | $257,445 | |
|
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 the net investment income ratios shown above.
See Notes which are an integral part of the Financial Statements
Portfolio of Investments
November 30, 2003 (unaudited)
Principal
Amount | | | | Value |
| | | SHORT-TERM MUNICIPALS--99.0%1 | | | |
| | | Alabama--2.6% | | | |
$ | 285,000 | | Abbeville, AL, IDB, Monthly VRDNs (Great Southern Wood Preserving Inc.)/(SouthTrust Bank of Alabama, Birmingham LOC) | | $ | 285,000 |
| 2,620,000 | | Birmingham, AL, IDA, Weekly VRDNs (Mrs. Strattons Salads, Inc.)/(SouthTrust Bank of Alabama, Birmingham LOC) | | | 2,620,000 |
| 1,340,000 | | Birmingham, AL, IDA, (Series 1997), Weekly VRDNs (Millcraft, AL, Inc.)/(Regions Bank, Alabama LOC) | | | 1,340,000 |
| 4,500,000 | | Gadsden, AL, IDB, IDRBs (Series 1997), Weekly VRDNs (Chicago Steel, (Alabama) LLC)/(Marshall & Ilsley Bank, Milwaukee LOC) | | | 4,500,000 |
| 575,000 | | Huntsville, AL, IDB, Weekly VRDNs (Giles & Kendall, Inc.)/(SouthTrust Bank of Alabama, Birmingham LOC) | | | 575,000 |
| 2,120,000 | | Perry County, AL, IDB, (Series 2001), Weekly VRDNs (Alabama Catfish Feedmill LLC)/(Regions Bank, Alabama LOC) | | | 2,120,000 |
|
| | | TOTAL | | | 11,440,000 |
|
| | | Alaska--0.7% | | | |
| 3,000,000 | | Valdez, AK, Marine Terminal, (1994 Series A), 2.00% TOBs (Phillips Transportation Alaska, Inc.)/(ConocoPhillips GTD), Optional Tender 1/1/2004 | | | 3,001,248 |
|
| | | Arizona--6.1% | | | |
| 1,000,000 | | Apache County, AZ, IDA, (Series 1983B), Weekly VRDNs (Tucson Electric Power Co.)/(Bank of New York LOC) | | | 1,000,000 |
| 2,400,000 | | Casa Grande, AZ, IDA, (Series 2002A), Weekly VRDNs (Price Companies, Inc.)/(Bank of America N.A. LOC) | | | 2,400,000 |
| 1,974,000 | | Chandler, AZ, IDA, (Series 1999A), Weekly VRDNs (South Bay Circuits, Inc.)/(Comerica Bank - California LOC) | | | 1,974,000 |
| 700,000 | | Glendale, AZ, IDA, (Series 1999), Weekly VRDNs (Friendship Retirement Corp.)/(Wells Fargo Bank Minnesota N.A. LOC) | | | 700,000 |
| 1,400,000 | | Maricopa County, AZ, IDA, (Series 1999), Weekly VRDNs (Redman Homes, Inc.)/(Wachovia Bank N.A. LOC) | | | 1,400,000 |
| 250,000 | | Maricopa County, AZ, IDA, (Series 2000A), Weekly VRDNs (Las Gardenias Apartments, LP)/(FNMA LOC) | | | 250,000 |
| 1,290,000 | | Maricopa County, AZ, IDA, (Series 2000A), Weekly VRDNs (Gran Victoria Housing LLC)/(FNMA LOC) | | | 1,290,000 |
| 3,400,000 | | Maricopa County, AZ, IDA, MFH Revenue Bonds, (Series 2002), Weekly VRDNs (San Remo Apartments, LP)/(FNMA LOC) | | | 3,400,000 |
| 4,000,000 | | Maricopa County, AZ, IDA, San Fernando Apartments, (Series 2003), 1.20% TOBs (Transamerica Life Insurance and Annuity Co.) 6/14/2004 | | | 4,000,000 |
Principal
Amount | | | | Value |
| | | SHORT-TERM MUNICIPALS--continued1 | | | |
| | | Arizona--continued | | | |
$ | 1,205,000 | | Pima County, AZ, IDA, (Series 2000A), Weekly VRDNs (Broadway Proper Congregate)/(State Street Bank and Trust Co. LOC) | | $ | 1,205,000 |
| 2,200,000 | | Pima County, AZ, IDA, FR/RI-L21, (Series 2000), Weekly VRDNs (Tucson Electric Power Co.)/(FSA INS)/(Lehman Brothers, Inc. LIQ) | | | 2,200,000 |
| 1,004,000 | | Pima County, AZ, IDA, SFM (PA-159) Weekly VRDNs (GNMA COL)/ (Merrill Lynch & Co., Inc. LIQ) | | | 1,004,000 |
| 1,845,000 | | Sierra Vista, AZ, IDA, (Series 2001A: Mountain Steppes Apartments), Weekly VRDNs (Mountain Steppes Properties LLC)/(FNMA LOC) | | | 1,845,000 |
| 1,800,000 | | Tempe, AZ, IDA, (Series 2002C), Weekly VRDNs (Friendship Village of Tempe)/(Lasalle Bank, N.A. LOC) | | | 1,800,000 |
| 1,700,000 | | Tucson, AZ, IDA, (Series 1989), Weekly VRDNs (Lincoln Garden Tucson LP)/ (Federal Home Loan Mortgage Corp. LOC) | | | 1,700,000 |
|
| | | TOTAL | | | 26,168,000 |
|
| | | Arkansas--4.0% | | | |
| 4,100,000 | | Arkansas Development Finance Authority, (Series 1999A), Weekly VRDNs (Riceland Foods, Inc.)/(BNP Paribas SA LOC) | | | 4,100,000 |
| 1,225,000 | | Arkansas Development Finance Authority, (Series 2000A), Weekly VRDNs (Riceland Foods, Inc.)/(BNP Paribas SA LOC) | | | 1,225,000 |
| 6,500,000 | | Blytheville, AR, (Series 2002), Weekly VRDNs (Nucor Corp.) | | | 6,500,000 |
| 1,620,000 | | Clark County, AR, (Series 2003), Weekly VRDNs (Alcoa, Inc.) | | | 1,620,000 |
| 4,000,000 | | Nashville, AR, (Series 2000), Weekly VRDNs (Ox Bodies)/(Regions Bank, Alabama LOC) | | | 4,000,000 |
|
| | | TOTAL | | | 17,445,000 |
|
| | | California--6.1% | | | |
| 4,375,000 | | California State, (Series 2003 FR/RI-L19J), Weekly VRDNs (Lehman Brothers Holdings, Inc. LIQ) | | | 4,375,000 |
| 5,625,000 | 2 | California State, RAWs (Series 2003 FR/RI-F11J), 1.10% TOBs (Lehman Brothers Holdings, Inc. SWP), Optional Tender 12/16/2003 | | | 5,625,000 |
| 5,500,000 | | California State, Revenue Anticipation Warrants (Series 2003A), 2.00% RANs (Bank of America N.A., Citibank NA, New York, Goldman Sachs & Co. and Morgan Stanley & Co., Inc. LIQs), 6/16/2004 | | | 5,526,238 |
| 9,960,000 | | California Statewide Communities Development Authority (Series 2003C), Weekly VRDNs (Kaiser Permanente) | | | 9,960,000 |
| 1,001,138 | | Koch Floating Rate Trust (California Non-AMT) (Series 1998-1) Weekly VRDNs (AMBAC INS)/(State Street Bank and Trust Co. LIQ) | | | 1,001,138 |
|
| | | TOTAL | | | 26,487,376 |
|
Principal
Amount | | | | Value |
| | | SHORT-TERM MUNICIPALS--continued1 | | | |
| | | Colorado--0.8% | | | |
$ | 1,515,000 | | Colorado HFA, (Series 1996), Weekly VRDNs (Neppl-Springs Fabrication)/(U.S. Bank N.A., Cincinnati LOC) | | $ | 1,515,000 |
| 1,760,000 | | Colorado HFA, (Series 2000A), Weekly VRDNs (New Belgium Brewing Co., Inc.)/(Wells Fargo Bank, N.A. LOC) | | | 1,760,000 |
|
| | | TOTAL | | | 3,275,000 |
|
| | | District of Columbia--1.9% | | | |
| 3,300,000 | | District of Columbia HFA, Roaring Forks Certificates (Series 2000-23), Weekly VRDNs (GNMA COL)/(Bank of New York LIQ) | | | 3,300,000 |
| 5,000,000 | | District of Columbia, (Series 2002D), Weekly VRDNs (MBIA Insurance Corp. INS)/(Bank of America N.A. LIQ) | | | 5,000,000 |
|
| | | TOTAL | | | 8,300,000 |
|
| | | Florida--1.7% | | | |
| 4,000,000 | | Greater Orlando (FL) Aviation Authority Weekly VRDNs (Cessna Aircraft Co.)/ (Textron, Inc. GTD) | | | 4,000,000 |
| 3,250,000 | | Lee County, FL, Solid Waste System, (Series 2003 FR/RI-L24J), Weekly VRDNs (MBIA Insurance Corp. INS)/(Lehman Brothers Holdings, Inc. LIQ) | | | 3,250,000 |
|
| | | TOTAL | | | 7,250,000 |
|
| | | Georgia--4.5% | | | |
| 2,400,000 | | Fulton County, GA, IDA, (Series 1989), Weekly VRDNs (STO Corp.)/(Dresdner Bank AG, Frankfurt LOC) | | | 2,400,000 |
| 13,750,000 | | Savannah, GA, EDA, (Series 1995A), Weekly VRDNs (Home Depot, Inc.) | | | 13,750,000 |
| 3,500,000 | | Savannah, GA, EDA, (Series 2003C), Weekly VRDNs (Marshes of Skidaway Island)/(BNP Paribas SA LOC) | | | 3,500,000 |
|
| | | TOTAL | | | 19,650,000 |
|
| | | Idaho--0.9% | | | |
| 4,000,000 | | Minidoka County, ID, IDC, (Series 1998), Weekly VRDNs (Nature's Best Produce, Inc.)/(BNP Paribas SA LOC) | | | 4,000,000 |
|
| | | Illinois--3.1% | | | |
| 3,500,000 | | Aurora City, IL, (Series 2000), Weekly VRDNs (Cleveland Hardware & Forging Co.)/(Fifth Third Bank, Cincinnati LOC) | | | 3,500,000 |
| 6,180,000 | 2 | Chicago, IL, Board of Education, MERLOTS (Series 2001-A64), 1.25% TOBs (FGIC INS)/(Wachovia Bank N.A. LIQ), Optional Tender 11/10/2004 | | | 6,180,000 |
| 2,410,000 | 2 | Illinois Housing Development Authority, MERLOTS (Series 2000 UUU), 1.30% TOBs (Wachovia Bank N.A. LIQ), Optional Tender 11/10/2004 | | | 2,410,000 |
| 1,409,000 | | Peoria, IL, (Series 1996), Weekly VRDNs (J.T. Fennell Co., Inc. Project)/(Bank One N.A. (Chicago) LOC) | | | 1,409,000 |
|
| | | TOTAL | | | 13,499,000 |
|
Principal
Amount | | | | Value |
| | | SHORT-TERM MUNICIPALS--continued1 | | | |
| | | Indiana--3.3% | | | |
$ | 1,100,000 | | Carmel, IN, (Series 1996-A), Weekly VRDNs (Telamon Corp.)/(Lasalle Bank, N.A. LOC) | | $ | 1,100,000 |
| 2,418,000 | | Franklin, IN, Lakeview I Apartments (Series 1994), Weekly VRDNs (Pedcor Investments LP)/(Federal Home Loan Bank of Indianapolis LOC) | | | 2,418,000 |
| 1,500,000 | | Huntington, IN, (Series 1998), Weekly VRDNs (DK Enterprises LLC)/(Wells Fargo Bank Minnesota N.A. LOC) | | | 1,500,000 |
| 700,000 | | Indiana Development Finance Authority, Economic Development Revenue Refunding Bonds Weekly VRDNs (T. M. Morris Manufacturing Co., Inc. Project)/(Bank One N.A. (Chicago) LOC) | | | 700,000 |
| 1,865,000 | | Indianapolis, IN, (Series 1991), Weekly VRDNs (Cantor & Coleman II Project)/ (Bank One N.A. (Chicago) LOC) | | | 1,865,000 |
| 1,100,000 | | Tippecanoe County, IN, Economic Development Revenue Weekly VRDNs (Lafayette Venetian Blind)/(PNC Bank, N.A. LOC) | | | 1,100,000 |
| 585,000 | | Tipton, IN, (Series 1997), Weekly VRDNs (MCJS LLC)/(Bank One N.A. (Chicago) LOC) | | | 585,000 |
| 3,000,000 | | Valparaiso, IN, Community Schools, 2.25% TANs, 12/31/2003 | | | 3,002,066 |
| 1,770,000 | | Winamac, IN, (Series 1997), Weekly VRDNs (Pulaski Health Foundation, Inc.)/ (Key Bank, N.A. LOC) | | | 1,770,000 |
|
| | | TOTAL | | | 14,040,066 |
|
| | | Iowa--0.2% | | | |
| 1,050,000 | | Iowa Finance Authority, (Series 1998), Weekly VRDNs (Schumacher Elevator)/ (Wells Fargo Bank Minnesota N.A. LOC) | | | 1,050,000 |
|
| | | Kansas--0.2% | | | |
| 825,000 | | Olathe, KS, (Series 1998), Weekly VRDNs (Eskridge, Inc.)/(Commerce Bank, Kansas City, N.A. LOC) | | | 825,000 |
|
| | | Kentucky--2.3% | | | |
| 540,000 | | Boone County, KY, (Series 1996), Weekly VRDNs (Western States Envelope Co.)/(Bank One N.A. (Chicago) LOC) | | | 540,000 |
| 1,000,000 | | Boyd County, KY, (Series 2003), Weekly VRDNs (Air Products & Chemicals, Inc.) | | | 1,000,000 |
| 3,500,000 | | Graves County, KY, School Building Revenue Bonds (Series 1988), Weekly VRDNs (Seaboard Farms)/(Bank of New York LOC) | | | 3,500,000 |
| 120,000 | | Henderson City, KY, (Series 1998), Weekly VRDNs (Vincent Industrial Plastics, Inc.)/(SunTrust Bank LOC) | | | 120,000 |
| 725,000 | | Jefferson County, KY, Weekly VRDNs (Advanced Filtration, Inc.)/(Bank One N.A. (Chicago) LOC) | | | 725,000 |
| 3,193,000 | | Kenton County, KY, (Series 1999), Weekly VRDNs (Packaging Un-limited of Northern Kentucky, Inc.)/(National City Bank, Kentucky LOC) | | | 3,193,000 |
| 725,000 | | Muhlenberg County, KY, (Series 1997), Weekly VRDNs (Plastic Products Co. Project)/(Wells Fargo Bank Minnesota N.A. LOC) | | | 725,000 |
| 315,000 | | Muhlenberg County, KY, (Series A) Weekly VRDNs (Plastic Products Co. Project)/ (Wells Fargo Bank Minnesota N.A. LOC) | | | 315,000 |
|
| | | TOTAL | | | 10,118,000 |
|
Principal
Amount | | | | Value |
| | | SHORT-TERM MUNICIPALS--continued1 | | | |
| | | Louisiana--0.2% | | | |
$ | 800,000 | | Ouachita Parish, LA, IDB, (Series 1997), Weekly VRDNs (EPCO Carbondioxide Products, Inc.)/(Bank One N.A. (Chicago) LOC) | | $ | 800,000 |
|
| | | Maryland--1.2% | | | |
| 925,000 | | Maryland State Community Development Administration, (Series 1990A), Weekly VRDNs (College Estates)/(Manufacturers & Traders Trust Co., Buffalo, NY LOC) | | | 925,000 |
| 4,380,000 | | Maryland State Economic Development Corp., (Series 1999A), Weekly VRDNs (Victor Graphics, Inc.)/(Manufacturers & Traders Trust Co., Buffalo, NY LOC) | | | 4,380,000 |
|
| | | TOTAL | | | 5,305,000 |
|
| | | Massachusetts--0.8% | | | |
| 3,500,000 | | Fitchburg, MA, 2.00% BANs, 10/22/2004 | | | 3,524,701 |
|
| | | Michigan--0.6% | | | |
| 2,500,000 | | Detroit, MI, Economic Development Corp., Resource Recovery MERLOTS (Series 2000-A90), Weekly VRDNs (AMBAC INS)/(Wachovia Bank N.A. LIQ) | | | 2,500,000 |
|
| | | Minnesota--0.1% | | | |
| 445,000 | | Byron, MN, Weekly VRDNs (Schmidt Printing)/(Wells Fargo Bank Minnesota N.A., LOC) | | | 445,000 |
|
| | | Mississippi--1.3% | | | |
| 2,420,000 | | Mississippi Business Finance Corp., (Series 2000A), Weekly VRDNs (TT&W Farm Products, Inc.)/(Amsouth Bank N.A., Birmingham LOC) | | | 2,420,000 |
| 2,435,000 | 2 | Mississippi Home Corp., Roaring Forks Certificates (Series 2001-14), 1.35% TOBs (GNMA COL)/(Bank of New York LIQ), Optional Tender 2/25/2004 | | | 2,435,000 |
| 800,000 | | Senatobia, MS Weekly VRDNs (Deltona Lighting Products, Inc.)/(SouthTrust Bank of Alabama, Birmingham LOC) | | | 800,000 |
|
| | | TOTAL | | | 5,655,000 |
|
| | | Multi State--13.7% | | | |
| 3,076,000 | | BNY Municipal Certificates Trust (Series 2002-BNY1), Weekly VRDNs (Bank of New York LIQ)/(Bank of New York LOC) | | | 3,076,000 |
| 3,000,000 | | BNY Municipal Certificates Trust (Series 2002-BNY5), Weekly VRDNs (Bank of New York LIQ)/(Bank of New York LOC) | | | 3,000,000 |
| 1,000,000 | | Charter Mac Floater Certificates Trust I, (Nat-2 Series), Weekly VRDNs (MBIA Insurance Corp. INS)/(Bayerische Landesbank Girozentrale, Dexia Bank, Belgium, Fleet National Bank, Landesbank Baden-Wuerttemberg and State Street Bank and Trust Co. LIQs) | | | 1,000,000 |
Principal
Amount | | | | Value |
| | | SHORT-TERM MUNICIPALS--continued1 | | | |
| | | Multi State--continued | | | |
$ | 7,000,000 | | Charter Mac Floater Certificates Trust I, (Nat-4 Series), Weekly VRDNs (MBIA Insurance Corp. INS)/(Bayerische Landesbank Girozentrale, Dexia Bank, Belgium, Fleet National Bank, Landesbank Baden-Wuerttemberg and State Street Bank and Trust Co. LIQs) | | $ | 7,000,000 |
| 12,794,000 | | Clipper Tax-Exempt Certificates Trust (AMT MultiState)/(Series 1999-3), Weekly VRDNs (State Street Bank and Trust Co. LIQ) | | | 12,794,000 |
| 16,675,000 | | Clipper Tax-Exempt Certificates Trust (AMT Multistate)/(Series 2002-09), Weekly VRDNs (AMBAC, FGIC, FSA, MBIA Insurance Corp. INS)/(State Street Bank and Trust Co. LIQs) | | | 16,675,000 |
| 3,080,000 | | Clipper Tax-Exempt Certificates Trust (Multistate-AMT)/(Series 2003-01), Weekly VRDNs (Merrill Lynch & Co., Inc. LIQ) | | | 3,080,000 |
| 3,205,000 | | Clipper Tax-Exempt Certificates Trust (Multistate-AMT)/(Series 2003-03), Weekly VRDNs (GNMA COL)/(Merrill Lynch & Co., Inc. LIQ) | | | 3,205,000 |
| 2,870,000 | | Clipper Tax-Exempt Certificates Trust (Multistate-AMT)/(Series 2003-10), Weekly VRDNs (GNMA COL)/(State Street Bank and Trust Co. LIQ) | | | 2,870,000 |
| 975,000 | 2 | Palm Beach County, FL, HFA, MERLOTS (Series 2001 A-71), 1.30% TOBs (GNMA COL)/(Wachovia Bank N.A. LIQ), Optional Tender 10/10/2004 | | | 975,000 |
| 5,830,000 | | Roaring Fork Municipal Products LLC (Series 2000-12), Weekly VRDNs (Bank of New York LIQ) | | | 5,830,000 |
|
| | | TOTAL | | | 59,505,000 |
|
| | | Nevada--0.7% | | | |
| 3,140,000 | | Clark County, NV, (Series 1997A), 1.15% TOBs (Signature Flight Support Corp.)/(Bayerische Landesbank Girozentrale LOC), Optional Tender 12/1/2003 | | | 3,140,000 |
|
| | | New Hampshire--0.2% | | | |
| 688,000 | | New Hampshire Business Finance Authority (Series A), Weekly VRDNs (Upper Valley Press)/(Key Bank, N.A. LOC) | | | 688,000 |
|
| | | New Jersey--0.6% | | | |
| 2,766,500 | | Beachwood, NJ, 1.75% BANs, 9/1/2004 | | | 2,779,453 |
|
| | | New York--4.1% | | | |
| 3,650,000 | | New York City, NY, (1995 Series A), 7.00% Bonds, 8/1/2004 | | | 3,787,844 |
| 14,000,000 | | Triborough Bridge & Tunnel Authority, NY, Subordinate Revenue Bonds (Series 2000A), Weekly VRDNs (FSA INS)/(J.P. Morgan Chase Bank LIQ) | | | 14,000,000 |
|
| | | TOTAL | | | 17,787,844 |
|
| | | North Carolina--0.8% | | | |
| 3,500,000 | | Montgomery County, NC, Industrial Facilities and Pollution Control Financing Authority, (Series 2000), Daily VRDNs (Republic Services, Inc.)/(SunTrust Bank LOC) | | | 3,500,000 |
|
Principal
Amount | | | | Value |
| | | SHORT-TERM MUNICIPALS--continued1 | | | |
| | | Ohio--14.5% | | | |
$ | 1,875,000 | | Barberton, OH, 2.00% BANs, 12/4/2003 | | $ | 1,875,084 |
| 1,500,000 | | Belmont County, OH, (Third Series), 1.40% BANs, 3/17/2004 | | | 1,501,124 |
| 2,500,000 | | Clark County, OH, (Series 2002), Weekly VRDNs (Ohio Masonic Home)/ (AMBAC INS)/(J.P. Morgan Chase Bank LIQ) | | | 2,500,000 |
| 5,000,000 | | Cuyahoga County, OH, Health Care Facilities, (Series 2001), Weekly VRDNs (Gardens of McGregor & Amasa Stone)/(Key Bank, N.A. LOC) | | | 5,000,000 |
| 500,000 | | Cuyahoga County, OH, Hospital Authority, (Series 2000), Weekly VRDNs (The Sisters of Charity of St. Augustine Health System, Inc.)/(National City Bank, Ohio LOC) | | | 500,000 |
| 4,000,000 | | Dublin, OH, Industrial Development Refunding Revenue Bonds (Series 1997), Weekly VRDNs (Witco Corp.)/(Fleet National Bank LOC) | | | 4,000,000 |
| 7,000,000 | | Franklin County, OH, Hospital Revenue Bonds (Series 1995), Weekly VRDNs (Trinity Healthcare Credit Group)/(J.P. Morgan Chase Bank LIQ) | | | 7,000,000 |
| 2,500,000 | | Garfield Heights, OH, City School District, 1.85% BANs, 1/22/2004 | | | 2,501,225 |
| 400,000 | | Hamilton Ohio Multifamily, (Series 2003B), Weekly VRDNs (Knollwood Crossing II Apartments)/(Federal Home Loan Bank of Indianapolis LOC) | | | 400,000 |
| 2,000,000 | | Huber Heights, OH, IDR (Series 1999), Weekly VRDNs (Paxar Corp.)/ (SunTrust Bank LOC) | | | 2,000,000 |
| 3,500,000 | | Lake County, OH, Weekly VRDNs (Lake County, OH Hospital System, Inc.)/ (Radian Asset Assurance INS)/(Fleet National Bank LIQ) | | | 3,500,000 |
| 3,000,000 | | Lakewood, OH, City School District, 1.50% BANs, 3/16/2004 | | | 3,003,871 |
| 3,000,000 | | Mansfield, OH, Justice Center (Series 2003), 1.70% BANs, 3/4/2004 | | | 3,004,030 |
| 1,500,000 | | Maple Heights, OH, City School District, 1.35% BANs, 4/30/2004 | | | 1,500,546 |
| 2,000,000 | | Mason, OH, Road Improvements, 1.39% BANs, 5/27/2004 | | | 2,002,396 |
| 750,000 | | Medina County, OH, (Series 1998), Weekly VRDNs (Mack Industries, Inc.)/ (Huntington National Bank, Columbus, OH LOC) | | | 750,000 |
| 5,300,000 | | Ohio Waste Development Authority Solid Waste, Refunding (Series 2002), Daily VRDNs (BP Products North America, Inc.)/(BP Amoco PLC GTD) | | | 5,300,000 |
| 1,720,000 | | Perrysburg, OH, 1.50% BANs, 6/17/2004 | | | 1,723,695 |
| 1,325,000 | | Ross County, OH, 1.40% BANs, 6/3/2004 | | | 1,326,785 |
| 8,790,000 | | Trumbull County, OH, 1.37% BANs, 4/8/2004 | | | 8,795,188 |
| 1,850,000 | | Wood County, OH, (Series 1998), Weekly VRDNs (IMCO Carbide Tool, Inc.)/ (Huntington National Bank, Columbus, OH LOC) | | | 1,850,000 |
| 2,740,000 | | Youngstown, OH, (Series 1996A), Weekly VRDNs (Cantar/Polyair Corp./ Performa Corp.)/(HSBC Bank USA LOC) | | | 2,740,000 |
|
| | | TOTAL | | | 62,773,944 |
|
Principal
Amount | | | | Value |
| | | SHORT-TERM MUNICIPALS--continued1 | | | |
| | | Oregon--0.6% | | | |
$ | 1,040,000 | | Oregon State Economic & Community Development Commission, (Series 191), Weekly VRDNs (Western Oregon Door LLC)/(Wells Fargo Bank Minnesota N.A. LOC) | | $ | 1,040,000 |
| 1,500,000 | | Port of Morrow, OR, (Series 2001A), Weekly VRDNs (Threemile Canyon Farms LLC)/(Key Bank, N.A. LOC) | | | 1,500,000 |
|
| | | TOTAL | | | 2,540,000 |
|
| | | Pennsylvania--0.8% | | | |
| 3,025,000 | | Montgomery County, PA, IDA, (Series 2000), Weekly VRDNs (American Foodservice Corp.)/(Wachovia Bank N.A. LOC) | | | 3,025,000 |
| 100,000 | | Pennsylvania EDFA, Weekly VRDNs (Respironics, Inc.)/(PNC Bank, N.A. LOC) | | | 100,000 |
| 370,000 | | Pennsylvania EDFA, (Series 1998A), Weekly VRDNs (Fourth Generation Realty LLC)/(PNC Bank, N.A. LOC) | | | 370,000 |
|
| | | TOTAL | | | 3,495,000 |
|
| | | Rhode Island--0.7% | | | |
| 2,955,000 | | Warwick, RI, Housing Authority, (Series 2001), Daily VRDNs (Trafalgar East Apartments)/(Fleet National Bank LOC) | | | 2,955,000 |
|
| | | South Carolina--2.7% | | | |
| 1,000,000 | | Berkeley County, SC, IDB, (Series 1996A), Weekly VRDNs (Nucor Corp.) | | | 1,000,000 |
| 8,000,000 | | Berkeley County, SC, IDB, (Series 1998), Weekly VRDNs (Nucor Corp.) | | | 8,000,000 |
| 2,500,000 | | York County, SC, School District No. 003, 3.00% Bonds, 3/1/2004 | | | 2,511,969 |
|
| | | TOTAL | | | 11,511,969 |
|
| | | Tennessee--2.2% | | | |
| 475,000 | | Benton County TN, IDB, (Series 1996), Weekly VRDNs (Jones Plastic and Engineering Corp.)/(National City Bank, Kentucky LOC) | | | 475,000 |
| 800,000 | | Chattanooga, TN, IDB, Industrial Development Variable Rate Demand Revenue Bonds (Series 1997), Weekly VRDNs (JRB Co., Inc.)/(National City Bank, Ohio LOC) | | | 800,000 |
| 1,075,000 | | Chattanooga, TN, IDB, Revenue Bonds (Series 1997), Weekly VRDNs (TB Wood's Inc. Project)/(PNC Bank, N.A. LOC) | | | 1,075,000 |
| 2,895,000 | | Hamilton County, TN, IDB Weekly VRDNs (Pavestone Co.)/(Bank One N.A. (Chicago) LOC) | | | 2,895,000 |
| 3,100,000 | | Union City, TN, IDB, (Series 1995), Weekly VRDNs (Kohler Co.)/(Wachovia Bank N.A. LOC) | | | 3,100,000 |
| 1,000,000 | | Union County, TN, IDB, (Series 1995), Weekly VRDNs (Cooper Container Corporation Project)/(SunTrust Bank LOC) | | | 1,000,000 |
|
| | | TOTAL | | | 9,345,000 |
|
Principal
Amount | | | | Value |
| | | SHORT-TERM MUNICIPALS--continued1 | | | |
| | | Texas--7.4% | | | |
$ | 2,000,000 | 2 | Austin, TX, MERLOTS (Series 2000-A26), 1.30% TOBs (MBIA Insurance Corp. INS)/(Wachovia Bank N.A. LIQ), Optional Tender 11/10/2004 | | $ | 2,000,000 |
| 1,000,000 | | Brazos Harbor, TX, Industrial Development Corp., (Series 2003), 1.375% TOBs (ConocoPhillips), Mandatory Tender 8/1/2004 | | | 1,000,000 |
| 3,000,000 | | Harris County, TX, HFDC, (Series 2002), Daily VRDNs (Methodist Hospital, Harris County, TX) | | | 3,000,000 |
| 2,104,000 | | Harris County, TX, HFDC, Roaring Forks Certificates (Series 2001-13), Weekly VRDNs (GNMA COL)/(Bank of New York LIQ) | | | 2,104,000 |
| 3,000,000 | 2 | Sabine River Authority, TX, Clippers (Series 2001-2), 1.20% TOBs (Southwestern Electric Power Co.)/(MBIA Insurance Corp. INS)/(State Street Bank and Trust Co. LIQ), Optional Tender 3/11/2004 | | | 3,000,000 |
| 4,000,000 | 2 | San Antonio, TX, Electric & Gas System, MERLOTS (Series 2002-A53), 1.07% TOBs (FSA INS)/(Wachovia Bank N.A. LIQ), Optional Tender 7/21/2004 | | | 4,000,000 |
| 1,465,000 | | Tarrant County, TX, IDC Weekly VRDNs (Holden Business Forms)/(Lasalle Bank, N.A. LOC) | | | 1,465,000 |
| 4,975,000 | 2 | Texas State Department of Housing & Community Affairs, Clippers (Series 2001-1), 1.25% TOBs (GNMA COL)/(State Street Bank and Trust Co. LIQ), Optional Tender 3/11/2004 | | | 4,975,000 |
| 2,600,000 | 2 | Texas State Department of Housing & Community Affairs, MERLOTS (Series 2001-A109), 1.30% TOBs (GNMA COL)/(Wachovia Bank N.A. LIQ), Optional Tender 11/18/2004 | | | 2,600,000 |
| 8,000,000 | | Texas State, 2.00% TRANs, 8/31/2004 | | | 8,050,645 |
|
| | | TOTAL | | | 32,194,645 |
|
| | | Virginia--4.7% | | | |
| 4,500,000 | | Alexandria, VA, Redevelopment and Housing Authority, PT-1444 Weekly VRDNs (Park at Landmark)/(Merrill Lynch & Co., Inc. LIQ)/(Merrill Lynch & Co., Inc. LOC) | | | 4,500,000 |
| 750,000 | | Campbell County, VA, IDA Weekly VRDNs (Georgia-Pacific Corp.)/(Bank of America N.A. LOC) | | | 750,000 |
| 3,000,000 | | Fairfax County, VA, EDA, (Series 2003), Weekly VRDNs (George Mason University Foundation, Inc.)/(SunTrust Bank LOC) | | | 3,000,000 |
| 1,000,000 | | Fredericksburg, VA, IDA, (Series 2001 A-1), Weekly VRDNs (Forest Village Apartments)/(SunTrust Bank LOC) | | | 1,000,000 |
| 4,000,000 | | Halifax, VA, IDA, MMMs, PCR (Series 1992), 1.21% CP (Virginia Electric & Power Co.), Mandatory Tender 2/12/2004 | | | 4,000,000 |
| 5,000,000 | | Henrico County, VA, EDA, (Series 2003), Weekly VRDNs (Lewis Ginter Botanical Garden, Inc.)/(SunTrust Bank LOC) | | | 5,000,000 |
| 2,000,000 | | Newport News, VA, Redevelopment & Housing Authority, (Series 2001), Weekly VRDNs (Newport-Oxford Associates LLP)/(Federal Home Loan Mortgage Corp. LOC) | | | 2,000,000 |
|
| | | TOTAL | | | 20,250,000 |
|
Principal
Amount | | | | Value |
| | | SHORT-TERM MUNICIPALS--continued1 | | | |
| | | Washington--1.2% | | | |
$ | 5,000,000 | 2 | Clark County, WA, Public Utilities District No. 001, MERLOTS (Series 2001-A116), 1.25% TOBs (FSA INS)/(Wachovia Bank N.A. LIQ), Optional Tender 11/10/2004 | | $ | 5,000,000 |
|
| | | West Virginia--0.9% | | | |
| 3,760,000 | | Ritchie County, WV, IDRB (Series 1996), Weekly VRDNs (Simonton Building Products, Inc.)/(PNC Bank, N.A. LOC) | | | 3,760,000 |
|
| | | Wisconsin--0.6% | | | |
| 1,700,000 | | Combined Locks, WI, Development Revenue Bonds, (Series 1997), Weekly VRDNs (Appleton Papers)/(Toronto Dominion Bank LOC) | | | 1,700,000 |
| 1,030,000 | | Wisconsin Housing & EDA, Business Development Revenue Bonds (Series 1995), Weekly VRDNs (Carlson Tool & Manufacturing Corp.)/ (U.S. Bank N.A., Cincinnati LOC) | | | 1,030,000 |
|
| | | TOTAL | | | 2,730,000 |
|
| | | TOTAL INVESTMENTS--99.0%
(AT AMORTIZED COST)3 | | | 428,734,246 |
|
| | | OTHER ASSETS AND LIABILITIES -- NET--1.0% | | | 4,328,721 |
|
| | | TOTAL NET ASSETS--100% | | $ | 433,062,967 |
|
Securities that are subject to the federal alternative minimum tax (AMT) represent 58.6% 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 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.
At November 30, 2003, the portfolio securities were rated as follows:
Tier Rating Based on Total Market Value
First Tier | | Second Tier |
96.8% | | 3.2% |
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 Trustees. At November 30, 2003, these securities amounted to $39,200,000 which represents 9.1% of total net assets.
3 Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of total net assets at November 30, 2003.
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 |
EDFA | - --Economic Development Financing Authority |
FGIC | - --Financial Guaranty Insurance Company |
FNMA | - --Federal National Mortgage Association |
FSA | - --Financial Security Assurance |
GNMA | - --Government National Mortgage Association |
GTD | - --Guaranteed |
HFA | - --Housing Finance Authority |
HFDC | - --Health Facility Development Corporation |
IDA | - --Industrial Development Authority |
IDB | - --Industrial Development Bond |
IDC | - --Industrial Development Corporation |
IDR | - --Industrial Development Revenue |
IDRBs | - --Industrial Development Revenue Bonds |
INS | - --Insured |
LIQ(s) | - --Liquidity Agreement(s) |
LOC | - --Letter of Credit |
MERLOTS | - --Municipal Exempt Receipts -- Liquidity Optional Tender Series |
MFH | - --Multi Family Housing |
MMMs | - --Money Market Municipals |
PCR | - --Pollution Control Revenue |
RANs | - --Revenue Anticipation Notes |
RAWs | - -- Revenue Anticipation Warrants |
SFM | - --Single Family Mortgage |
SWP | - --Swap Agreement |
TANs | - --Tax Anticipation Notes |
TOBs | - --Tender Option Bonds |
TRANs | - --Tax and Revenue Anticipation Notes |
VRDNs | - --Variable Rate Demand Notes |
See Notes which are an integral part of the Financial Statements
Statement of Assets and Liabilities
November 30, 2003 (unaudited)
Assets: | | | | | | | |
Total investments in securities, at amortized cost and value | | | | | $ | 428,734,246 | |
Cash | | | | | | 3,206,717 | |
Income receivable | | | | | | 1,280,413 | |
Receivable for shares sold | | | | | | 332 | |
|
TOTAL ASSETS | | | | | | 433,221,708 | |
|
Liabilities: | | | | | | | |
Income distribution payable | | $ | 51,087 | | | | |
Payable for transfer and dividend disbursing agent fees and expenses (Note 5) | | | 15,672 | | | | |
Payable for Directors'/Trustees' fees | | | 254 | | | | |
Payable for portfolio accounting fees (Note 5) | | | 6,589 | | | | |
Payable for distribution services fee (Note 5) | | | 70,804 | | | | |
Payable for share registration costs | | | 6,177 | | | | |
Payable for printing and postage | | | 5,797 | | | | |
Accrued expenses | | | 2,361 | | | | |
|
TOTAL LIABILITIES | | | | | | 158,741 | |
|
Net assets for 433,066,604 shares outstanding | | | | | $ | 433,062,967 | |
|
Net Assets Consist of: | | | | | | | |
Paid in capital | | | | | $ | 433,063,803 | |
Accumulated net realized loss on investments | | | | | | (769 | ) |
Distributions in excess of net investment income | | | | | | (67 | ) |
|
TOTAL NET ASSETS | | | | | $ | 433,062,967 | |
|
Net Asset Value, Offering Price and Redemption Proceeds Per Share: | | | | | | | |
$433,062,967 ÷ 433,066,604 shares outstanding | | | | | | $1.00 | |
|
See Notes which are an integral part of the Financial Statements
Statement of Operations
Six Months Ended November 30, 2003 (unaudited)
Investment Income: | | | | | | | | | | | | |
Interest | | | | | | | | | | $ | 2,533,357 | |
|
Expenses: | | | | | | | | | | | | |
Investment adviser fee (Note 5) | | | | | | $ | 1,078,376 | | | | | |
Administrative personnel and services fee (Note 5) | | | | | | | 163,852 | | | | | |
Custodian fees | | | | | | | 10,334 | | | | | |
Transfer and dividend disbursing agent fees and expenses (Note 5) | | | | | | | 53,068 | | | | | |
Directors'/Trustees' fees | | | | | | | 3,817 | | | | | |
Auditing fees | | | | | | | 5,595 | | | | | |
Legal fees | | | | | | | 3,744 | | | | | |
Portfolio accounting fees (Note 5) | | | | | | | 40,610 | | | | | |
Distribution services fee (Note 5) | | | | | | | 431,351 | | | | | |
Share registration costs | | | | | | | 8,618 | | | | | |
Printing and postage | | | | | | | 9,219 | | | | | |
Insurance premiums | | | | | | | 948 | | | | | |
Miscellaneous | | | | | | | 2,339 | | | | | |
|
TOTAL EXPENSES | | | | | | | 1,811,871 | | | | | |
|
Waivers (Note 5): | | | | | | | | | | | | |
Waiver of investment adviser fee | | $ | (47,548 | ) | | | | | | | | |
Waiver of administrative personnel and services fee | | | (1,310 | ) | | | | | | | | |
Waiver of transfer and dividend disbursing agent fees and expenses | | | (5,475 | ) | | | | | | | | |
|
TOTAL WAIVERS | | | | | | | (54,333 | ) | | | | |
|
Net expenses | | | | | | | | | | | 1,757,538 | |
|
Net investment income | | | | | | | | | | | 775,819 | |
|
Net realized loss on investments | | | | | | | | | | | (2,662 | ) |
|
Change in net assets resulting from operations | | | | | | | | | | $ | 773,157 | |
|
See Notes which are an integral part of the Financial Statements
Statement of Changes in Net Assets
| | | Six Months
Ended
(unaudited)
11/30/2003 | | | | Year Ended
5/30/2003 | |
Increase (Decrease) in Net Assets | | | | | | | | |
Operations: | | | | | | | | |
Net investment income | | $ | 775,819 | | | $ | 3,233,984 | |
Net realized gain (loss) on investments | | | (2,662 | ) | | | 1,893 | |
|
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS | | | 773,157 | | | | 3,235,877 | |
|
Distributions to Shareholders: | | | | | | | | |
Distributions from net investment income | | | (776,305 | ) | | | (3,233,565 | ) |
|
Share Transactions: | | | | | | | | |
Proceeds from sale of shares | | | 908,852,434 | | | | 1,836,612,431 | |
Net asset value of shares issued to shareholders in payment of distributions declared | | | 812,286 | | | | 3,209,493 | |
Cost of shares redeemed | | | (884,590,736 | ) | | | (1,883,599,282 | ) |
|
CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS | | | 25,073,984 | | | | (43,777,358 | ) |
|
Change in net assets | | | 25,070,836 | | | | (43,775,046 | ) |
|
Net Assets: | | | | | | | | |
Beginning of period | | | 407,992,131 | | | | 451,767,177 | |
|
End of period (including distributions in excess of net investment income and undistributed net investment income of $(67) and $419, respectively) | | $ | 433,062,967 | | | $ | 407,992,131 | |
|
See Notes which are an integral part of the Financial Statements
Notes to Financial Statements
November 30, 2003 (unaudited)
1. 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 portfolio 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.
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 generally accepted accounting principles ("GAAP") in the United States of America.
Investment Valuation
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. Distributions to shareholders are recorded on the ex-dividend date.
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 (the "Code") and to distribute to shareholders each year substantially all of its income. Accordingly, no provision 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 the 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 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.
Other
Investment transactions are accounted for on a trade date basis.
3. 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). At November 30, 2003, capital paid-in aggregated $433,063,803.
Transactions in capital stock were as follows:
| | Six Months Ended
11/30/2003 | | Year Ended
5/31/2003 |
| | Shares | | | | Amount | | | Shares | | | | Amount | |
Shares sold | | 908,852,434 | | | $ | 908,852,434 | | | 1,836,612,431 | | | $ | 1,836,612,431 | |
Shares issued to shareholders in payment of distributions declared | | 812,286 | | | | 812,286 | | | 3,209,493 | | | | 3,209,493 | |
Shares redeemed | | (884,590,736 | ) | | | (884,590,736 | ) | | (1,883,596,481 | ) | | | (1,883,599,282 | ) |
|
NET CHANGE RESULTING FROM SHARE TRANSACTIONS | | 25,073,984 | | | $ | 25,073,984 | | | (43,774,557 | ) | | $ | (43,777,358 | ) |
|
4. FEDERAL TAX INFORMATION
At May 31, 2003, the Fund had a capital loss carryforward of $908, which will reduce the Fund's taxable income arising from future net realized gain on investments, if any, to the extent permitted by the Code, and thus will reduce the amount of the distributions to shareholders which would otherwise by necessary to relieve the Fund of any liability for federal tax. Pursuant to the Code, such capital loss carryforward will expire in 2008.
5. 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 Administrative Services ("FAS"), under the Administrative Services Agreement ("Agreement"), provides the Fund with administrative personnel and services. The fee paid to FAS is based on the aggregate daily net assets of all Federated funds as specified below:
Maximum 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.
Prior to November 1, 2003, Federated Services Company ("FServ") provided the Fund with administrative personnel and services. The fee paid to FServ was based on the average aggregate daily net assets of all Federated funds as specified below:
Maximum Administrative Fee | | Average Aggregate Daily Net
Assets of the Federated Funds |
0.150% | | on the first $250 million |
0.125% | | on the next $250 million |
0.100% | | on the next $250 million |
0.075% | | on assets in excess of $750 million |
The administrative fee received during any fiscal year was at least $125,000 per portfolio and $40,000 per each additional class of Shares.
For the six months ended November 30, 2003, the fees paid to FAS and FServ were $26,977 and $135,565, respectively, after voluntary waiver, if applicable.
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. 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.
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. 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.
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. FServ may voluntarily choose to waive any portion of its fee. FServ can modify or terminate this voluntary waiver at any time at its sole discretion.
Interfund Transactions
During the six months ended November 30, 2003, 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 $536,648,000 and $675,570,000, respectively.
General
Certain of the Officers and Trustees of the Trust are Officers and Directors or Trustees of the above companies.
6. LEGAL PROCEEDINGS
In October, 2003, Federated Investors, Inc. and various subsidiaries thereof (collectively, "Federated"), along with various investment companies sponsored by Federated ("Funds") were named as defendants in several class action lawsuits filed in the United States District Court for the Western District of Pennsylvania seeking damages of unspecified amounts. 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. The Board of the Funds has retained the law firm of Dickstein Shapiro Morin & Oshinsky LLP to represent the Funds in these lawsuits. Federated and the Funds, and their respective counsel, are reviewing the allegations and will respond appropriately. Additional lawsuits based upon similar allegations may be filed in the future. Although Federated does not believe that these lawsuits will have a material adverse effect on the Funds, there can be no assurance that these suits, the ongoing adverse publicity and/or other developments resulting from related regulatory investigations will not result in increased Fund redemptions, reduced sales of Fund shares, or other adverse consequences for the Funds.
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.
VOTING PROXIES ON FUND PORTFOLIO SECURITIES
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to securities held in the Fund's portfolio is available, without charge and upon request, by calling 1-800-341-7400. This information is also available from the EDGAR database on the SEC's Internet site at http://www.sec.gov.
IMPORTANT NOTICE ABOUT FUND DOCUMENT DELIVERY
In 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.
Federated Investors
World-Class Investment Manager
Municipal Cash Series II
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
www.federatedinvestors.com
Contact us at 1-800-341-7400 or
www.federatedinvestors.com/contact
Federated Securities Corp., Distributor
Cusip 147552103
Federated is a registered mark of Federated Investors, Inc. 2004 ©Federated Investors, Inc.
1121604 (1/04)
Federated Investors
World-Class Investment Manager
Treasury Cash Series II
A Portfolio of Cash Trust Series II
SEMI-ANNUAL SHAREHOLDER REPORT
November 30, 2003
FINANCIAL HIGHLIGHTS
FINANCIAL STATEMENTS
VOTING PROXIES ON FUND PORTFOLIO SECURITIES
NOT FDIC INSURED * MAY LOSE VALUE * NO BANK GUARANTEE
Financial Highlights
(For a Share Outstanding Throughout Each Period)
| | Six Months
Ended
(unaudited) | | | Year Ended May 31, |
| | 11/30/2003 | | | 2003 | | | 2002 | | | 2001 | | | 2000 | | | 1999 | |
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 | | 0.001 | | | 0.007 | | | 0.018 | | | 0.051 | | | 0.046 | | | 0.043 | |
Net realized and unrealized gain (loss) on investments | | 0.000 | 1 | | 0.001 | | | 0.000 | 1 | | -- | | | -- | | | -- | |
|
TOTAL FROM INVESTMENT OPERATIONS | | 0.001 | | | 0.008 | | | 0.018 | | | 0.051 | | | 0.046 | | | 0.043 | |
|
Less Distributions: | | | | | | | | | | | | | | | | | | |
Distributions from net investment income | | (0.001 | ) | | (0.007 | ) | | (0.018 | ) | | (0.051 | ) | | (0.046 | ) | | (0.043 | ) |
Distributions from net realized gain on investments | | (0.000 | )1 | | (0.001 | ) | | (0.000 | )1 | | -- | | | -- | | | -- | |
|
TOTAL DISTRIBUTIONS | | (0.001 | ) | | (0.008 | ) | | (0.018 | ) | | (0.051 | ) | | (0.046 | ) | | (0.043 | ) |
|
Net Asset Value, End of Period | | $1.00 | | | $1.00 | | | $1.00 | | | $1.00 | | | $1.00 | | | $1.00 | |
|
Total Return2 | | 0.13 | % | | 0.78 | % | | 1.79 | % | | 5.27 | % | | 4.66 | % | | 4.39 | % |
|
| | | | | | | | | | | | | | | | | | |
Ratios to Average Net Assets: | | | | | | | | | | | | | | | | | | |
|
Expenses | | 0.83 | %3 | | 0.83 | % | | 0.83 | % | | 0.83 | % | | 0.83 | % | | 0.83 | % |
|
Net investment income | | 0.23 | %3 | | 0.74 | % | | 1.49 | % | | 5.18 | % | | 4.60 | % | | 4.28 | % |
|
Expense waiver/reimbursement4 | | 0.02 | %3 | | 0.01 | % | | 0.01 | % | | 0.04 | % | | 0.04 | % | | 0.04 | % |
|
Supplemental Data: | | | | | | | | | | | | | | | | | | |
|
Net assets, end of period (000 omitted) | | $302,904 | | $381,494 | | $437,078 | | $153,744 | | $309,959 | | $233,037 | |
|
1 Represents less than $0.001.
2 Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable.
3 Computed on an annualized basis.
4 This voluntary expense decrease is reflected in both the expense and the net investment income ratios shown above.
See Notes which are an integral part of the Financial Statements
Portfolio of Investments
November 30, 2003 (unaudited)
Principal
Amount | | | | | Value |
| | | U.S. TREASURY--27.5% | | | |
| | | U.S. Treasury Bills--3.5%1 | | | |
$ | 10,500,000 | | 0.830% - 0.950%, 12/26/2003 -- 1/22/2004 | | $ | 10,488,632 |
|
| | | U.S. Treasury Notes--24.0% | | | |
| 72,292,000 | | 1.875% - 4.750%, 1/31/2004 -- 11/30/2004 | | | 72,758,862 |
|
| | | TOTAL U.S. TREASURY | | | 83,247,494 |
|
| | | REPURCHASE AGREEMENTS--71.1% | | | |
| 10,000,000 | | Interest in $450,000,000 joint repurchase agreement with ABN AMRO Bank NV, New York, 1.030%, dated 11/28/2003, to be repurchased at $10,000,858 on 12/1/2003, collateralized by U.S. Treasury Obligations with various maturities to 5/27/2004 | | | 10,000,000 |
| 10,000,000 | | Interest in $650,000,000 joint repurchase agreement with BNP Paribas Securities Corp., 1.040%, dated 11/28/2003, to be repurchased at $10,000,867 on 12/1/2003, collateralized by U.S. Treasury Obligations with various maturities to 4/15/2032 | | | 10,000,000 |
| 10,000,000 | | Interest in $600,000,000 joint repurchase agreement with Banc One Capital Markets, Inc., 1.040%, dated 11/28/2003, to be repurchased at $10,000,867 on 12/1/2003, collateralized by U.S. Treasury Obligations with various maturities to 12/26/2003 | | | 10,000,000 |
| 10,000,000 | | Interest in $750,000,000 joint repurchase agreement with Banc of America LLC, 1.020%, dated 11/28/2003, to be repurchased at $10,000,850 on 12/1/2003, collateralized by U.S. Treasury Obligations with various maturities to 2/15/2031 | | | 10,000,000 |
| 10,000,000 | | Interest in $200,000,000 joint repurchase agreement with Bank of Nova Scotia, Toronto, 1.000%, dated 11/28/2003, to be repurchased at $10,000,833 on 12/1/2003, collateralized by a U.S. Treasury Note maturing 11/15/2006 | | | 10,000,000 |
| 59,486,000 | | Interest in $1,410,000,000 joint repurchase agreement with Barclays Capital, Inc., 1.030%, dated 11/28/2003, to be repurchased at $59,491,106 on 12/1/2003, collateralized by U.S. Treasury Obligations with various maturities to 4/15/2029 | | | 59,486,000 |
| 10,000,000 | | Interest in $300,000,000 joint repurchase agreement with CIBC World Markets Corp, 1.030%, dated 11/28/2003, to be repurchased at $10,000,858 on 12/1/2003, collateralized by U.S. Treasury Obligations with various maturities to 8/15/2011 | | | 10,000,000 |
| 10,000,000 | | Interest in $650,000,000 joint repurchase agreement with Credit Suisse First Boston Corp., 1.030%, dated 11/28/2003, to be repurchased at $10,000,858 on 12/1/2003, collateralized by U.S. Treasury Obligations with various maturities to 1/15/2010 | | | 10,000,000 |
| 23,000,000 | 2 | Interest in $1,000,000,000 joint repurchase agreement with Deutsche Bank Securities, Inc., 0.980%, dated 10/23/2003, to be repurchased at $23,043,202 on 12/31/2003, collateralized by U.S. Treasury Obligations with various maturities to 11/15/2028 | | | 23,000,000 |
| 10,000,000 | | Interest in $500,000,000 joint repurchase agreement with Greenwich Capital Markets, Inc., 1.030%, dated 11/28/2003, to be repurchased at $10,000,858 on 12/1/2003, collateralized by U.S. Treasury Obligations with various maturities to 8/15/2027 | | | 10,000,000 |
Principal
Amount | | | | | Value |
| | | REPURCHASE AGREEMENTS--continued | | | |
$ | 10,000,000 | | Interest in $650,000,0000 joint repurchase agreement with J.P. Morgan Securities, Inc., 1.030%, dated 11/28/2003, to be repurchased at $10,000,858 on 12/1/2003, collateralized by U.S. Treasury Obligations with various maturities to 1/1/2008 | | $ | 10,000,000 |
| 10,000,000 | | Interest in $550,000,000 joint repurchase agreement with Societe Generale, London, 1.030%, dated 11/28/2003, to be repurchased at $10,000,858 on 12/1/2003, collateralized by U.S. Treasury Obligations with various maturities to 8/15/2023 | | | 10,000,000 |
| 3,000,000 | 2 | Interest in $150,000,000 joint repurchase agreement with UBS Warburg LLC, 0.990%, dated 10/3/2003, to be repurchased at $3,007,508 on 1/5/2004, collateralized by U.S. Treasury Obligations with various maturities to 2/19/2004 | | | 3,000,000 |
| 5,000,000 | 2 | Interest in $300,000,000 joint repurchase agreement with UBS Warburg LLC, 0.990%, dated 9/24/2003, to be repurchased at $5,013,063 on 12/29/2003, collateralized by U.S. Treasury Obligations with various maturities to 11/15/2008 | | | 5,000,000 |
| 15,000,000 | | Interest in $500,000,000 joint repurchase agreement with UBS Warburg LLC, 0.990%, dated 11/28/2003, to be repurchased at $15,001,238 on 12/1/2003, collateralized by U.S. Treasury Obligations with various maturities to 2/15/2012 | | | 15,000,000 |
| 10,000,000 | | Interest in $650,000,000 joint repurchase agreement with Westdeutsche Landesbank Girozentrale, New York, 1.040%, dated 11/28/2003, to be repurchased at $10,000,867 on 12/1/2003, collateralized by U.S. Treasury Obligations with various maturities to 8/15/2023 | | | 10,000,000 |
|
| | | TOTAL REPURCHASE AGREEMENTS | | | 215,486,000 |
|
| | | TOTAL INVESTMENTS--98.6%
(AT AMORTIZED COST)3 | | | 298,733,494 |
|
| | | OTHER ASSETS AND LIABILITIES - NET--1.4% | | | 4,170,611 |
|
| | | TOTAL NET ASSETS--100% | | $ | 302,904,105 |
|
1 Each issue shows the rate of discount at the time of purchase.
2 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.
3 Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of total net assets at November 30, 2003.
See Notes which are an integral part of the Financial Statements
Statement of Assets and Liabilities
November 30, 2003 (unaudited)
Assets: | | | | | | |
Investments in repurchase agreements | | $ | 215,486,000 | | | |
Investments in securities | | | 83,247,494 | | | |
|
Total investments in securities, at amortized cost and value | | | | | $ | 298,733,494 |
Income receivable | | | | | | 801,589 |
Receivable for investments sold | | | | | | 3,500,000 |
Receivable for shares sold | | | | | | 14,313 |
|
TOTAL ASSETS | | | | | | 303,049,396 |
|
Liabilities: | | | | | | |
Income distribution payable | | | 48,297 | | | |
Payable to bank | | | 7,735 | | | |
Payable for transfer and dividend disbursing agent fees and expenses (Note 4) | | | 28,989 | | | |
Payable for portfolio accounting fees (Note 4) | | | 2,793 | | | |
Payable for distribution services fee (Note 4) | | | 50,921 | | | |
Accrued expenses | | | 6,556 | | | |
|
TOTAL LIABILITIES | | | | | | 145,291 |
|
Net assets for 302,901,380 shares outstanding | | | | | $ | 302,904,105 |
|
Net Assets Consist of: | | | | | | |
Paid in capital | | | | | $ | 302,901,380 |
Undistributed net investment income | | | | | | 2,725 |
|
TOTAL NET ASSETS | | | | | $ | 302,904,105 |
|
Net Asset Value, Offering Price and Redemption Proceeds Per Share: | | | | | | |
$302,904,105 ÷ 302,901,380 shares outstanding | | | | | | $1.00 |
|
See Notes which are an integral part of the Financial Statements
Statement of Operations
Six Months Ended November 30, 2003 (unaudited)
Investment Income: | | | | | | | | | | |
Interest | | | | | | | | | $ | 1,752,850 |
|
Expenses: | | | | | | | | | | |
Investment adviser fee (Note 4) | | | | | $ | 825,545 | | | | |
Administrative personnel and services fee (Note 4) | | | | | | 125,402 | | | | |
Custodian fees | | | | | | 19,004 | | | | |
Transfer and dividend disbursing agent fees and expenses (Note 4) | | | | | | 51,165 | | | | |
Directors'/Trustees' fees | | | | | | 3,787 | | | | |
Auditing fees | | | | | | 6,017 | | | | |
Legal fees | | | | | | 2,431 | | | | |
Portfolio accounting fees (Note 4) | | | | | | 39,649 | | | | |
Distribution services fee (Note 4) | | | | | | 318,660 | | | | |
Share registration costs | | | | | | 11,989 | | | | |
Printing and postage | | | | | | 5,576 | | | | |
Insurance premiums | | | | | | 929 | | | | |
Miscellaneous | | | | | | 9,182 | | | | |
|
TOTAL EXPENSES | | | | | | 1,419,336 | | | | |
|
Waivers (Note 4): | | | | | | | | | | |
Waiver of investment adviser fee | | $ | (39,865 | ) | | | | | | |
Waiver of administrative personnel and services fee | | | (976 | ) | | | | | | |
|
TOTAL WAIVERS | | | | | | (40,841 | ) | | | |
|
Net expenses | | | | | | | | | | 1,378,495 |
|
Net investment income | | | | | | | | | | 374,355 |
|
Net realized gain on investments | | | | | | | | | | 40,561 |
|
Change in net assets resulting from operations | | | | | | | | | $ | 414,916 |
|
See Notes which are an integral part of the Financial Statements
Statement of Changes in Net Assets
| | Six Months
Ended
(unaudited)
11/30/2003 | | | Year Ended
5/31/2003 | |
Increase (Decrease) in Net Assets | | | | | | | | |
Operations: | | | | | | | | |
Net investment income | | $ | 374,355 | | | $ | 2,865,986 | |
Net realized gain on investments | | | 40,561 | | | | 218,855 | |
|
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS | | | 414,916 | | | | 3,084,841 | |
|
Distributions to Shareholders: | | | | | | | | |
Distributions from net investment income | | | (400,106 | ) | | | (2,837,510 | ) |
Distributions from net realized gain on investments | | | (40,561 | ) | | | (218,855 | ) |
|
CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS | | | (440,667 | ) | | | (3,056,365 | ) |
|
Share Transactions: | | | | | | | | |
Proceeds from sale of shares | | | 912,659,628 | | | | 1,809,944,342 | |
Net asset value of shares issued to shareholders in payment of distributions declared | | | 88,225 | | | | 651,754 | |
Cost of shares redeemed | | | (991,311,509 | ) | | | (1,866,209,056 | ) |
|
CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS | | | (78,563,656 | ) | | | (55,612,960 | ) |
|
Change in net assets | | | (78,589,407 | ) | | | (55,584,484 | ) |
|
Net Assets: | | | | | | | | |
Beginning of period | | | 381,493,512 | | | | 437,077,996 | |
|
End of period (including undistributed net investment income of $2,725 and $28,476, respectively) | | $ | 302,904,105 | | | $ | 381,493,512 | |
|
See Notes which are an integral part of the Financial Statements
Notes to Financial Statements
November 30, 2003 (unaudited)
1. 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 portfolio 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.
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 generally accepted accounting principles ("GAAP") in the United States of America.
Investment Valuation
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.
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. Distributions to shareholders are recorded on the ex-dividend date.
Premium and Discount Amortization
All premiums and discounts are accreted/amortized.
Federal Taxes
It is the Fund's policy to comply with the Subchapter M provision of the Internal Revenue Code (the "Code") and to distribute to shareholders each year substantially all of its income. Accordingly, no provision 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 the contract.
Use of Estimates
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.
Other
Investment transactions are accounted for on a trade date basis.
3. 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). At November 30, 2003, capital paid-in aggregated $302,901,380. Transactions in capital stock were as follows:
| | Six Months
Ended
11/30/2003 | | | Year Ended
5/31/2003 | |
Shares sold | | 912,659,628 | | | 1,809,944,342 | |
Shares issued to shareholders in payment of distributions declared | | 88,225 | | | 651,754 | |
Shares redeemed | | (991,311,509 | ) | | (1,866,209,056 | ) |
|
NET CHANGE RESULTING FROM SHARE TRANSACTIONS | | (78,563,656 | ) | | (55,612,960 | ) |
|
4. 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 Administrative Services ("FAS"), under the Administrative Services Agreement ("Agreement"), provides the Fund with administrative personnel and services. The fee paid to FAS is based on the aggregate daily net assets of all Federated funds as specified below:
Maximum 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.
Prior to November 1, 2003, Federated Service Company ("FServ") provided the Fund with administrative personnel and services. The fee paid to FServ was based on the average aggregate daily net assets of all Federated funds as specified below:
Maximum Administrative Fee | | Average Aggregate Daily Net
Assets of the Federated Funds |
0.150% | | on the first $250 million |
0.125% | | on the next $250 million |
0.100% | | on the next $250 million |
0.075% | | on assets in excess of $750 million |
The administrative fee received during any fiscal year was at least $125,000 per portfolio and $30,000 per each additional class of Shares.
For the six months ended November 1, 2003, the fees paid to FAS and FServ were $20,105 and $104,321, respectively, after voluntary waiver, if applicable.
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, 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.
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. 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.
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. FServ may voluntarily choose to waive any portion of its fee. FServ can modify or terminate this voluntary waiver at any time at its sole discretion.
General
Certain of the Officers and Trustees of the Trust are Officers and Directors or Trustees of the above companies.
5. LEGAL PROCEEDINGS
In October, 2003, Federated Investors, Inc. and various subsidiaries thereof (collectively, "Federated"), along with various investment companies sponsored by Federated ("Funds") were named as defendants in several class action lawsuits filed in the United States District Court for the Western District of Pennsylvania seeking damages of unspecified amounts. 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. The Board of the Funds has retained the law firm of Dickstein Shapiro Morin & Oshinsky LLP to represent the Funds in these lawsuits. Federated and the Funds, and their respective counsel, are reviewing the allegations and will respond appropriately. Additional lawsuits based upon similar allegations may be filed in the future. Although Federated does not believe that these lawsuits will have a material adverse effect on the Funds, there can be no assurance that these suits, the ongoing adverse publicity and/or other developments resulting from related regulatory investigations will not result in increased Fund redemptions, reduced sales of Fund shares, or other adverse consequences for the Funds.
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.
VOTING PROXIES ON FUND PORTFOLIO SECURITIES
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to securities held in the Fund's portfolio is available, without charge and upon request, by calling 1-800-341-7400. This information is also available from the EDGAR database on the SEC's Internet site at http://www.sec.gov.
IMPORTANT NOTICE ABOUT FUND DOCUMENT DELIVERY
In 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.
Federated Investors
World-Class Investment Manager
Treasury Cash Series II
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
www.federatedinvestors.com
Contact us at 1-800-341-7400 or
www.federatedinvestors.com/contact
Federated Securities Corp., Distributor
Cusip 147552301
Federated is a registered mark of Federated Investors, Inc. 2004 ©Federated Investors, Inc.
1121606 (1/04)
Item 2. Code of Ethics
As of the end of the period covered by this report, the registrant has adopted a
code of ethics (the "Section 406 Standards for Investment Companies - Ethical
Standards for Principal Executive and Financial Officers") that applies to the
registrant's Principal Executive Officer and Principal Financial Officer; the
registrant's Principal Financial Officer also serves as the Principal Accounting
Officer.
The registrant hereby undertakes to provide any person, without charge, upon
request, a copy of the code of ethics. To request a copy of the code of ethics,
contact the registrant at 1-800-341-7400, and ask for a copy of the Section 406
Standards for Investment Companies - Ethical Standards for Principal Executive
and Financial Officers.
Item 3. Audit Committee Financial Expert
The registrant's Board has determined that each member of the Board's Audit
Committee is an "audit committee financial expert," and that each such member is
"independent," for purposes of this Item. The Audit Committee consists of the
following Board members: Thomas G. Bigley, John T. Conroy, Jr., Nicholas P.
Constantakis and Charles F. Mansfield, Jr.
Item 4. Principal Accountant Fees and Services
Not Applicable
Item 5 Audit Committee of Listed Registrants
Not Applicable
Item 6 [Reserved]
Item 7. Disclosure of Proxy Voting Policies and Procedures for
Closed-End Management Investment Companies
Not Applicable
Item 8. Purchases of Equity Securities by Closed-End Management
Investment Company and Affiliated Purchasers
Not Applicable
Item 9. Submission of Matters to a Vote of Security Holders
Not Applicable
Item 10. Controls and Procedures
(a) The registrant's President and Treasurer have concluded that the
registrant's disclosure controls and procedures (as defined in rule
30a-3(c) under the Act) are effective in design and operation and are
sufficient to form the basis of the certifications required by Rule 30a-(2)
under the Act, based on their evaluation of these disclosure controls and
procedures within 90 days of the filing date of this report on Form N-CSR.
(b) There were no changes in the registrant's internal control over financial
reporting (as defined in rule 30a-3(d) under the Act), or the internal
control over financial reporting of its service providers during the last
fiscal half year (the registrant's second half year in the case of an
annual report) that have materially affected, or are reasonably likely to
materially affect, the registrant's internal control over financial
reporting.
Item 11. Exhibits
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.
Registrant Cash Trust Series II
By /S/ Richard J. Thomas, Principal Financial Officer
(insert name and title)
Date January 27, 2004
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.
By /S/ J. Christopher Donahue, Principal Executive Officer
Date January 27, 2004
By /S/ Richard J. Thomas, Principal Financial Officer
Date January 27, 2004
