-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, Jinf8gu1M49E1pxR0zHapFsKf+34/VGLDwlyoNUwPSkXHKNpkOZspaXuyoisOh3h CnLjF0ECl2b3099U04oPRg== 0000855108-95-000028.txt : 199506290000855108-95-000028.hdr.sgml : 19950629 ACCESSION NUMBER: 0000855108-95-000028 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950430 FILED AS OF DATE: 19950628 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FEDERATED MUNICIPAL TRUST CENTRAL INDEX KEY: 0000855108 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: MA FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-05911 FILM NUMBER: 95549802 BUSINESS ADDRESS: STREET 1: FEDERATED INVESTORS TOWER CITY: PITTSBURGH STATE: PA ZIP: 15222 BUSINESS PHONE: 4122887496 N-30D 1 CONNECTICUT MUNICIPAL CASH TRUST SEMI-ANNUAL REPORT TO SHAREHOLDERS APRIL 30, 1995 [LOGO] FEDERATED SECURITIES CORP. -------------------------- Distributor A subsidiary of Federated Investors FEDERATED INVESTORS TOWER PITTSBURGH, PA 15222-3779 314229105 0052406 (6/95) PRESIDENT'S MESSAGE - -------------------------------------------------------------------------------- Dear Shareholder: I am pleased to present the Semi-Annual Report to Shareholders of Connecticut Municipal Cash Trust, a portfolio of Federated Municipal Trust, for the six-month period ended April 30, 1995. We begin this report with our customary update from the fund's portfolio manager, Jeff A. Kozemchak, who will discuss market activity and changes in the fund's strategy relative to that activity. Jeff's report is followed by the fund's Portfolio of Investments and Financial Statements. Connecticut Municipal Cash Trust continues to seek relief for you and other tax-sensitive Connecticut residents, in the form of double tax-free* monthly income. The fund is able to pursue this income by maintaining a portfolio of Connecticut municipal securities, issued to fund projects as varied as education, health care, and housing. In this way, the fund helps you make the most of your short-term finances, while funding important municipal improvements in your home state. During the six-month period covered by the report, the fund paid nearly $3.6 million in total distributions to shareholders, and the fund's total net assets increased from $190.4 million to $209.4 million. As always, we strive to provide you with the highest level of professional service. We appreciate your continued support and welcome your comments or questions. Sincerely, Glen R. Johnson President June 15, 1995 *Income may be subject to the federal alternative minimum tax. INVESTMENT REVIEW - -------------------------------------------------------------------------------- Jeff A. Kozemchack, CFA, Vice President & Portfolio Manager Q Jeff, can you comment on the changes in money market rates during the reporting period? A In the face of resilient economic growth and the potential for this growth to create inflationary pressures, the Federal Reserve Board (the "Fed") continued to tighten monetary policy throughout 1994 and into early 1995. On November 15, 1994, the Fed hiked the federal funds target rate from 4.75% to 5.50%. The most recent move by the Fed, on February 1, 1995, increased the target rate by 50 basis points to the current 6.00% level. Short-term interest rates reflected the Fed's upward moves. The yield on the three-month Treasury bill rose from 5.22% at the beginning of the reporting period to 6.06% on February 1, 1995. The yield on the one-year Treasury bill rose from 6.25% at the beginning of the reporting period to a high of 7.32% in early January, 1995. February, March, and April, 1995, however, brought economic reports that pointed to slowing in sectors of the economy, an indication that the rate increases by the Fed that began in February, 1994, were starting to take hold. As a result, short-term interest rates declined over this period as market participants adjusted their expectations regarding the extent of future tightenings by the Fed. Reflecting this change in expectations, the three-month Treasury bill declined to 5.87% on April 30, 1995, while the one-year Treasury bill fell to 6.32%, a decline of 1.00% from the high in January, 1995. Q How have the municipal money markets and the fund's yield reacted to this interest rate environment? A Municipal money market rates were affected by the Fed tightenings early in the reporting period, as well as February's 180-degree change in market expectations regarding the potential for future Fed rate increases. In addition, municipal rates were also influenced by seasonal supply and demand imbalances throughout the reporting period. Yields on seven-day variable rate demand notes (VRDNs), the core component of a tax-free money market fund, rose from 3.22% at the beginning of the reporting period to 4.65% on April 30, 1995. Yield levels also moved upward for one-year fixed-rate notes, increasing from 4.19% in early November, 1994, to a high of 5.10% in early January, 1995, before steadily falling to 4.29% at the end of the reporting period. The divergence between short VRDN yields and one-year fixed-rate note levels resulted from market expectations that the Fed may have successfully engineered a growth slowdown, or a "soft landing." Also, tight municipal note supply conditions helped contribute to the decline in fixed note yields. The fund responded favorably to the overall increase in short-term interest rates over the reporting period. The seven-day net yield of the fund's Institutional Service Shares rose from 2.75% on November 1, 1994, to 3.76% on April 30, 1995.* Q Did you make any strategic changes to the fund's portfolio in this rate atmosphere? A We added to the fund's holdings of short maturity commercial paper (CP) and VRDNs in order to increase the responsiveness to changes in short-term interest rates. VRDNs adjust quickly to changes in Fed policy as well as supply and demand imbalances that are unique to the municipal money markets. The purchase of CP typically allows us to pick up an additional yield premium over VRDNs over time, while still retaining portfolio responsiveness to further rate increases. Also, the average maturity of the fund was targeted within a range of 40 to 55 days, with an emphasis on the shorter end of the target range. Q What is your overall outlook for rates in the near future? A Amid reports of a slightly slowing economy and restrained inflation, it appears that the Fed is nearing the end of its tightening cycle. We expect that Fed policy will continue to be neutral in the near term, as the Fed scrutinizes upcoming releases on the economy and inflation for signs that either one is stronger than expectations. Short-term interest rates should trade within a narrow range in the near future. Nevertheless, we expect the supply of fixed-rate notes in our market to increase significantly starting in mid-June, 1995, cheapening note levels. We plan, on average, to extend the average maturity of the fund during this period of heavy issuance, as yields on fixed-rate notes may become attractive versus comparable maturity taxable securities. * Past performance does not guarantee future results. Yield will vary. CONNECTICUT MUNICIPAL CASH TRUST PORTFOLIO OF INVESTMENTS APRIL 30, 1995 (UNAUDITED) - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ------------- --------------------------------------------------------------------- ----------- -------------- SHORT-TERM MUNICIPAL SECURITIES--100.9% - ------------------------------------------------------------------------------------ CONNECTICUT--97.1% --------------------------------------------------------------------- $ 3,750,000 Capitol Region Education Council, CT, 5.35% BANs (First National Bank of Boston LOC), 11/15/1995 P-1 $ 3,756,774 --------------------------------------------------------------------- 10,000,000 Clipper Connecticut Tax Exempt Trust, Weekly VRDNs (Series 1994-1) VMIG1 10,000,000 --------------------------------------------------------------------- 5,325,000 Connecticut Development Authority Weekly VRDNs (Jewish Community Center of Greater New Haven)/(Fleet National Bank LOC) P-1 5,325,000 --------------------------------------------------------------------- 1,539,400 Connecticut Development Authority Weekly VRDNs (RSA Corp.)/(Barclays Bank PLC LOC)/(Subject to AMT) P-1 1,539,400 --------------------------------------------------------------------- 12,000,000 Connecticut Development Authority Weekly VRDNs (Series 1985)/(Airport Hotel)/(RK Bradley Associates Ltd. Partnership)/(Daiwa Securities Ltd. and Royal Bank of Canada LOCs) A-2 12,000,000 --------------------------------------------------------------------- 5,000,000 Connecticut State Development Authority, Solid Waste Disposal Weekly VRDNs (Series 1993)/(Rand-Whitney Containerboard Ltd. Partnership)/(Chase Manhattan Bank N.A. LOC)/(Subject to AMT) A-1 5,000,000 --------------------------------------------------------------------- 11,000,000 Connecticut Development Authority Solid Waste Disposal Facility Weekly VRDNs (Series A)/(Exeter Energy)/ (Sanwa Bank Ltd. LOC)/(Subject to AMT) A-1+ 11,000,000 --------------------------------------------------------------------- 1,000,000 Connecticut Development Authority Solid Waste Disposal Facility Weekly VRDNs (Series B)/(Exeter Energy)/ (Sanwa Bank Ltd. LOC)/(Subject to AMT) A-1+ 1,000,000 --------------------------------------------------------------------- 7,499,000 Connecticut Development Authority Solid Waste Disposal Facility Weekly VRDNs (Series C)/(Exeter Energy)/ (Sanwa Bank Ltd. LOC)/(Subject to AMT) A-1+ 7,499,000 --------------------------------------------------------------------- 9,500,000 Connecticut State Development Authority PCR Weekly VRDNs (Series 1993A)/(Western Massachusetts Electric Co.)/(Union Bank of Switzerland LOC) A-1+ 9,500,000 ---------------------------------------------------------------------
CONNECTICUT MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ------------- --------------------------------------------------------------------- ----------- -------------- SHORT-TERM MUNICIPAL SECURITIES--CONTINUED - ------------------------------------------------------------------------------------ CONNECTICUT--CONTINUED --------------------------------------------------------------------- $ 1,500,000 Connecticut State Development Authority Solid Waste Disposal Facility, PCR Weekly VRDNs (Series 1993B)/ (Connecticut Light & Power Co.)/(Union Bank of Switzerland LOC)/(Subject to AMT) A-1+ $ 1,500,000 --------------------------------------------------------------------- 4,200,000 Connecticut Development Authority Weekly VRDNs (Capital District Energy Center)/(Canadian Imperial Bank of Commerce LOC)/(Subject to AMT) P-1 4,200,000 --------------------------------------------------------------------- 700,000 Connecticut Development Authority Weekly VRDNs (Capital District Energy Center)/(Canadian Imperial Bank of Commerce LOC)/(Subject to AMT) P-1 700,000 --------------------------------------------------------------------- 9,500,000 Connecticut State Development Health Care Facilities Weekly VRDNs (Independence Living, Inc.)/(Daiwa Bank Ltd. LOC) VMIG2 9,500,000 --------------------------------------------------------------------- 6,700,000 Connecticut Municipal Electric Energy Cooperative, Power Supply System Revenue Bonds, 3.95% CP (Series 1995A)/(Fleet National Bank LOC), Mandatory Tender 7/20/1995 A-1 6,700,000 --------------------------------------------------------------------- 2,880,000 Connecticut State Development Authority Weekly VRDNs (Banta Associates)/(Marine Midland Bank N.A. and Hong Kong ShangHai Banking Corp. LOCs)/(Subject to AMT) P-1 2,880,000 --------------------------------------------------------------------- 3,000,000 Connecticut State Economic Recovery Notes Weekly VRDNs A-1+ 3,000,000 --------------------------------------------------------------------- 1,700,000 Connecticut State HEFA Weekly VRDNs (Charlotte Hungerfield Hospital)/(Mitsubishi Bank Ltd. LOC) VMIG1 1,700,000 --------------------------------------------------------------------- 3,900,000 Connecticut State HEFA Weekly VRDNs (Series A)/ (Forman School Issue)/(National Westminster Bank PLC LOC) A-1+ 3,900,000 --------------------------------------------------------------------- 1,500,000 Connecticut State HEFA Weekly VRDNs (Series A)/(Kent School)/(Barclays Bank PLC LOC) A-1+ 1,500,000 --------------------------------------------------------------------- 1,000,000 Connecticut State HEFA Weekly VRDNs (Series A)/ (Pomfret School Issue)/(Credit Local de France LOC) VMIG1 1,000,000 ---------------------------------------------------------------------
CONNECTICUT MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ------------- --------------------------------------------------------------------- ----------- -------------- SHORT-TERM MUNICIPAL SECURITIES--CONTINUED - ------------------------------------------------------------------------------------ CONNECTICUT--CONTINUED --------------------------------------------------------------------- $ 5,500,000 Connecticut State HEFA Weekly VRDNs (Series B)/ (Bridgeport Hospital)/(Fuji Bank Ltd. LOC) A-1 $ 5,500,000 --------------------------------------------------------------------- 5,000,000 Connecticut State HEFA Weekly VRDNs (Series A)/(Kent School)/(Barclays Bank PLC LOC) A-1+ 5,000,000 --------------------------------------------------------------------- 3,875,000 Connecticut State HEFA, 3.90% CP (Series L)/(Yale University), Mandatory Tender 5/24/1995 A-1+ 3,875,000 --------------------------------------------------------------------- 4,300,000 Connecticut State HEFA, 4.20% CP (Series N)/(Yale University), Mandatory Tender 5/18/1995 A-1+ 4,300,000 --------------------------------------------------------------------- 1,900,000 Connecticut State HFA, 3.55% Annual TOBs (Series G-1)/ (Housing Mortgage Finance Program), Mandatory Tender 5/15/1995 A-1+ 1,900,000 --------------------------------------------------------------------- 3,735,000 Connecticut State HFA, 3.65% Annual TOBs (Series G-2)/ (Housing Mortgage Finance Program)/(Subject to AMT), Mandatory Tender 5/15/1995 A-1+ 3,735,000 --------------------------------------------------------------------- 4,750,000 Connecticut State HFA, 4.15% CP (Series 1990C)/(Subject to AMT), Mandatory Tender 7/19/1995 A-1+ 4,750,000 --------------------------------------------------------------------- 3,200,000 Connecticut State HFA, 4.15% CP (Series 1990D)/(Subject to AMT), Mandatory Tender 5/8/1995 A-1+ 3,200,000 --------------------------------------------------------------------- 3,245,000 Connecticut State HFA, 4.15% CP (Series 1990D)/(Subject to AMT), Mandatory Tender 7/21/1995 A-1+ 3,245,000 --------------------------------------------------------------------- 6,750,000 (a)Connecticut State HFA, 4.40% Annual TOBs (Series H-2), 9/1/1995 A-1+ 6,750,000 --------------------------------------------------------------------- 2,100,000 Connecticut State Resource Recovery Authority, 3.875% RANs (Fleet National Bank BPA), 6/22/1995 A 2,100,792 --------------------------------------------------------------------- 1,800,000 Connecticut State Transportation Infrastructure Authority Weekly VRDNs (Industrial Bank of Japan Ltd. LOC) A+ 1,800,000 --------------------------------------------------------------------- 2,000,000 (b)Connecticut State, GO Bonds Weekly VRDNs (PA-50) VMIG1 2,000,000 --------------------------------------------------------------------- 8,000,000 Connecticut State Special Assessment Unemployment Compensation, 3.85% Annual TOBs (Series 1993C)/(FGIC Insured), Mandatory Tender 7/1/1995 A-1+ 8,000,000 ---------------------------------------------------------------------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED - ------------------------------------------------------------------------------------ CONNECTICUT--CONTINUED --------------------------------------------------------------------- $ 4,815,000 East Lyme, CT, 4.25% BANs, 8/3/1995 NR(3) $ 4,818,443 --------------------------------------------------------------------- 4,325,000 Groton City, CT, 4.50% BANs, 11/15/1995 NR(3) 4,335,659 --------------------------------------------------------------------- 7,600,000 Hartford, CT, Redevelopment Authority Weekly VRDNs (Underwood Towers)/(FSA Insured) A-1+ 7,600,000 --------------------------------------------------------------------- 4,550,000 Meriden, CT, 4.50% BANs (Lot C), 8/16/1995 NR(3) 4,555,765 --------------------------------------------------------------------- 550,000 Middlebury, CT, 4.15% BANs (Lot A), 5/31/1995 NR(1) 550,068 --------------------------------------------------------------------- 1,480,000 Middlebury, CT, 5.00% BANs (Lot B), 2/8/1996 NR(1) 1,482,186 --------------------------------------------------------------------- 3,200,000 Milford, CT, 4.56% BANs, 11/15/1995 NR(2) 3,204,311 --------------------------------------------------------------------- 1,700,000 New Haven, CT, Weekly VRDNs (Starter Sportswear)/ (National Westminster Bank PLC LOC)/(Subject to AMT) P-1 1,700,000 --------------------------------------------------------------------- 2,500,000 Plainfield, CT, 4.60% TANs, 5/3/1995 NR 2,500,054 --------------------------------------------------------------------- 3,415,000 Rocky Hill, CT, 4.25% BANs, 12/15/1995 NR(3) 3,421,045 --------------------------------------------------------------------- 7,500,000 Stamford, CT, Housing Authority Weekly VRDNs (Series 1994)/(Morgan Street Project)/(Deutsche Bank Financial, Inc. LOC)/(Subject to AMT) VMIG1 7,500,000 --------------------------------------------------------------------- 2,250,000 Waterbury, CT, 5.625% BANs, 9/27/1995 NR(4) 2,253,303 --------------------------------------------------------------------- -------------- Total 203,276,800 --------------------------------------------------------------------- -------------- PUERTO RICO--1.7% --------------------------------------------------------------------- 3,500,000 Puerto Rico Industrial, Medical and Environmental PCA, 4.30% CP (Series 1988)/(Inter American University of Puerto Rico)/(Bank of Tokyo Ltd. LOC), Mandatory Tender 5/11/1995 A-1+ 3,500,000 --------------------------------------------------------------------- -------------- VIRGIN ISLANDS--2.1% --------------------------------------------------------------------- 4,500,000 Virgin Islands HFA, 5.00% Semi-Annual TOBs Home Mortgage Revenue Bonds (Series 1994B)/(FGIC Capital Markets Services Investment Agreement)/(Subject to AMT), Mandatory Tender 5/1/1995 SP-l+ 4,500,000 --------------------------------------------------------------------- -------------- TOTAL INVESTMENTS, AT AMORTIZED COST(C) $ 211,276,800 --------------------------------------------------------------------- --------------
(a) Denotes when-issued security. (b) Denotes restricted securities which are subject to resale under Federal Securities laws. These securities have been determined to be liquid under criteria established by the Board of Trustees. (c) Also represents cost for federal tax purposes. * See Notes to Portfolio of Investments on page 9. CONNECTICUT MUNICIPAL CASH TRUST - -------------------------------------------------------------------------------- Note: The categories of investments are shown as a percentage of net assets ($209,436,009) at April 30, 1995. The following abbreviation(s) are used throughout this portfolio: AMT--Alternative Minimum Tax BANs--Bond Anticipation Notes BPA--Bond Purchase Agreement CP--Commercial Paper FGIC-- Financial Guaranty Insurance Company FSA--Financial Security Assurance GO--General Obligation HEFA-- Health and Education Facilities Authority HFA--Housing Finance Authority LOC(s)--Letter(s) of Credit PCA--Pollution Control Authority PCR--Pollution Control Revenue PLC--Public Limited Company RANs--Revenue Anticipation Notes TANs--Tax Anticipation Notes TOBs--Tender Option Bonds VRDNs--Variable Rate Demand Notes (See Notes which are an integral Part of the Financial Statements) CONNECTICUT MUNICIPAL CASH TRUST NOTES TO PORTFOLIO OF INVESTMENTS (UNAUDITED) - -------------------------------------------------------------------------------- SHORT-TERM MUNICIPAL OBLIGATION RATINGS STANDARD & POOR'S RATINGS GROUP A S&P note rating reflects the liquidity concerns and market access risks unique to notes. SP-1 Very strong or strong capacity to pay principal and interest. Those issues determined to possess overwhelming safety characteristics will be given a plus (+) designation. SP-2 Satisfactory capacity to pay principal and interest. MOODY'S INVESTORS SERVICE, INC. Moody's short-term ratings are designated Moody's Investment Grade (MIG or VMIG (see below)). The purpose of the MIG or VMIG ratings is to provide investors with a simple system by which the relative investment qualities of short-term obligations may be evaluated. MIG1 This designation denotes best quality. There is present strong protection by established cash flows, superior liquidity support or demonstrated broad-based access to the market for refinancing. MIG2 This designation denotes high quality. Margins of protection are ample although not so large as in the preceding group. VARIABLE RATE DEMAND NOTES (VRDNS) AND TENDER OPTION BONDS (TOBS) RATINGS STANDARD & POOR'S RATINGS GROUP S&P assigns dual ratings to all long-term debt issues that have as part of their provisions a variable rate demand feature. The first rating (long-term rating) addresses the likelihood of repayment of principal and interest when due, and the second rating (short-term rating) describes the demand characteristics. Several examples are AAA/A-1+, AA/A-1+, A/A-1. (The definitions for the long- term and the short-term ratings are provided below.) MOODY'S INVESTORS SERVICE, INC. Short-term ratings on issues with demand features are differentiated by the use of the VMIG symbol to reflect such characteristics as payment upon periodic demand rather than fixed maturity dates and payment relying on external liquidity. In this case, two ratings are usually assigned, (for example, Aaa/VMIG-1); the first representing an evaluation of the degree of risk associated with scheduled principal and interest payments, and the second representing an evaluation of the degree of risk associated with the demand feature. The VMIG rating can be assigned a 1 or 2 designation using the same definitions described above for the MIG rating. COMMERCIAL PAPER (CP) RATINGS STANDARD & POOR'S RATINGS GROUP A S&P commercial paper rating is a current assessment of the likelihood of timely payment of debt having an original maturity of no more than 365 days. A-1 This highest category indicates that the degree of safety regarding timely payment is strong. Those issues determined to possess extremely strong safety characteristics are denoted with a plus (+) sign designation. A-2 Capacity for timely payment on issues with this designation is satisfactory. However, the relative degree of safety is not as high as for issues designated A-1. MOODY'S INVESTORS SERVICE, INC. P-1 Issuers rated PRIME-1 (or related supporting institutions) have a superior capacity for repayment of short-term promissory obligations. Prime-1 repayment capacity will normally be evidenced by the following characteristics: leading market positions in well established industries, high rates of return on funds employed, conservative capitalization structure with moderate reliance on debt and ample asset protection, broad margins in earning coverage of fixed financial charges and high internal cash generation, well-established access to a range of financial markets and assured sources of alternate liquidity. P-2 Issuers rated PRIME-2 (or related supporting institutions) have a strong capacity for repayment of short-term promissory obligations. This will normally be evidenced by many of the characteristics cited above, but to a lesser degree. Earnings trends and coverage ratios, while sound, will be more subject to variation. Capitalization characteristics, while still appropriate, may be more affected by external conditions. Ample alternate liquidity is maintained. LONG-TERM DEBT RATINGS STANDARD & POOR'S RATINGS GROUP AAA Debt rated "AAA" has the highest rating assigned by S&P. Capacity to pay interest and repay principal is extremely strong. AA Debt rated "AA" has a very strong capacity to pay interest and repay principal and differs from the highest rated issues only in small degree. A Debt rated "A" has a strong capacity to pay interest and repay principal although it is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than debt in higher rated categories. MOODY'S INVESTORS SERVICE, INC. AAA Bonds that are rated AAA are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as "gilt edged." Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues. AA Bonds that are rated AA are judged to be of high quality by all standards. Together with the AAA group, they comprise what are generally known as high grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in AAA securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long-term risks appear somewhat larger than in AAA securities. A Bonds that are rated A possess many favorable investment attributes and are to be considered as upper medium grade obligations. Factors giving security to principal and interest are considered adequate but elements may be present which suggest a susceptibility to impairment sometime in the future. NR indicates that both the bonds and the obligor or credit enhancer are not currently rated by S&P or Moody's with respect to short-term indebtedness. However, management considers them to be of comparable quality to securities rated A-1 or P-1. NR(1)The underlying issuer/obligor/guarantor has other outstanding debt rated "AAA" by S&P or "Aaa" by Moody's. NR(2)The underlying issuer/obligor/guarantor has other outstanding debt rated "AA" by S&P or "Aa" Moody's. NR(3)The underlying issuer/obligor/guarantor has other outstanding debt rated "A" by S&P or Moody's. CONNECTICUT MUNICIPAL CASH TRUST STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1995 (UNAUDITED) - -------------------------------------------------------------------------------- ASSETS: - ------------------------------------------------------------------------------------------------- Investments in securities, at amortized cost and value $ 211,276,800 - ------------------------------------------------------------------------------------------------- Cash 352,391 - ------------------------------------------------------------------------------------------------- Income receivable 1,757,813 - ------------------------------------------------------------------------------------------------- Receivable for shares sold 5,807 - ------------------------------------------------------------------------------------------------- -------------- Total assets 213,392,811 - ------------------------------------------------------------------------------------------------- LIABILITIES: - ------------------------------------------------------------------------------------------------- Payable for investments purchased $ 3,428,301 - ----------------------------------------------------------------------------------- Payable for shares redeemed 1,800 - ----------------------------------------------------------------------------------- Income distribution payable 464,825 - ----------------------------------------------------------------------------------- Accrued expenses 61,876 - ----------------------------------------------------------------------------------- ------------ Total liabilities 3,956,802 - ------------------------------------------------------------------------------------------------- -------------- NET ASSETS for 209,436,009 shares outstanding $ 209,436,009 - ------------------------------------------------------------------------------------------------- -------------- NET ASSET VALUE, Offering Price and Redemption Proceeds Per Share: ($209,436,009 / 209,436,009 shares outstanding) $1.00 - ------------------------------------------------------------------------------------------------- --------------
(See Notes which are an integral part of the Financial Statements) CONNECTICUT MUNICIPAL CASH TRUST STATEMENT OF OPERATIONS SIX MONTHS ENDED APRIL 30, 1995 (UNAUDITED) - -------------------------------------------------------------------------------- INVESTMENT INCOME: - ---------------------------------------------------------------------------------------------------- Interest $ 4,230,388 - ---------------------------------------------------------------------------------------------------- EXPENSES: - ---------------------------------------------------------------------------------------------------- Investment advisory fee $ 550,747 - ---------------------------------------------------------------------------------------- Administrative personnel and services fee 83,383 - ---------------------------------------------------------------------------------------- Custodian fees 14,319 - ---------------------------------------------------------------------------------------- Transfer agent and dividend disbursing agent fees and expenses 12,116 - ---------------------------------------------------------------------------------------- Directors'/Trustees' fees 1,810 - ---------------------------------------------------------------------------------------- Auditing fees 7,240 - ---------------------------------------------------------------------------------------- Legal fees 7,240 - ---------------------------------------------------------------------------------------- Portfolio accounting fees 22,030 - ---------------------------------------------------------------------------------------- Shareholder services fee 132,179 - ---------------------------------------------------------------------------------------- Share registration costs 11,403 - ---------------------------------------------------------------------------------------- Printing and postage 5,249 - ---------------------------------------------------------------------------------------- Insurance premiums 3,620 - ---------------------------------------------------------------------------------------- Taxes 905 - ---------------------------------------------------------------------------------------- Miscellaneous 2,355 - ---------------------------------------------------------------------------------------- ---------- Total expenses 854,596 - ---------------------------------------------------------------------------------------- Deduct--Waiver of investment advisory fee 201,094 - ---------------------------------------------------------------------------------------- ---------- Net expenses 653,502 - ---------------------------------------------------------------------------------------------------- ------------ Net investment income $ 3,576,886 - ---------------------------------------------------------------------------------------------------- ------------
(See Notes which are an integral part of the Financial Statements) CONNECTICUT MUNICIPAL CASH TRUST STATEMENT OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
SIX MONTHS ENDED APRIL 30, 1995 YEAR ENDED (UNAUDITED) OCTOBER 31, 1994 INCREASE (DECREASE) IN NET ASSETS: - -------------------------------------------------------------------- OPERATIONS-- - -------------------------------------------------------------------- Net investment income $ 3,576,886 $ 4,066,496 - -------------------------------------------------------------------- ---------------------- -------------------- DISTRIBUTIONS TO SHAREHOLDERS-- - -------------------------------------------------------------------- Distributions from net investment income (3,576,886) (4,066,496) - -------------------------------------------------------------------- ---------------------- -------------------- SHARE TRANSACTIONS-- - -------------------------------------------------------------------- Proceeds from sale of Shares 258,584,209 486,727,225 - -------------------------------------------------------------------- Net asset value of Shares issued to shareholders in payment of distributions declared 937,151 1,166,410 - -------------------------------------------------------------------- Cost of Shares redeemed (240,508,553) (437,916,644) - -------------------------------------------------------------------- ---------------------- -------------------- Change in net assets resulting from Share transactions 19,012,807 49,976,991 - -------------------------------------------------------------------- ---------------------- -------------------- Change in net assets 19,012,807 49,976,991 - -------------------------------------------------------------------- NET ASSETS: - -------------------------------------------------------------------- Beginning of period 190,423,202 140,446,211 - -------------------------------------------------------------------- ---------------------- -------------------- End of period $ 209,436,009 $ 190,423,202 - -------------------------------------------------------------------- ---------------------- --------------------
(See Notes which are an integral part of the Financial Statements) CONNECTICUT MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED APRIL 30, 1995 YEAR ENDED OCTOBER 31, 1994 (UNAUDITED) 1994 1993 1992 1991 1990(A) NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 - ---------------------------------------------- INCOME FROM INVESTMENT OPERATIONS - ---------------------------------------------- Net investment income 0.02 0.02 0.02 0.03 0.04 0.05 - ---------------------------------------------- ------ --------- --------- --------- --------- ----------- LESS DISTRIBUTIONS - ---------------------------------------------- Distributions from net investment income (0.02) (0.02) (0.02) (0.03) (0.04) (0.05) - ---------------------------------------------- ------ --------- --------- --------- --------- ----------- NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 - ---------------------------------------------- ------ --------- --------- --------- --------- ----------- TOTAL RETURN(B) 1.62% 2.12% 1.96% 2.68% 4.04% 5.54% - ---------------------------------------------- RATIOS TO AVERAGE NET ASSETS - ---------------------------------------------- Expenses 0.59%(c) 0.59% 0.57% 0.56% 0.56% 0.48%(c) - ---------------------------------------------- Net investment income 3.25%(c) 2.11% 1.95% 2.66% 3.94% 5.32%(c) - ---------------------------------------------- Expense waiver/reimbursement(d) 0.18%(c) 0.18% 0.25% 0.30% 0.21% 0.28%(c) - ---------------------------------------------- SUPPLEMENTAL DATA - ---------------------------------------------- Net assets, end of period (000 omitted) $209,436 $190,423 $140,446 $140,118 $140,113 $138,378 - ----------------------------------------------
(a) Reflects operations for the period from November 1, 1989 (date of initial public investment) to October 31, 1990. (b) Based on net asset value, which does not reflect the sales load or contingent deferred sales charge, if applicable. (c) Computed on an annualized basis. (d) This voluntary expense decrease is reflected in both the expense and net investment income ratios shown above. (See Notes which are an integral part of the Financial Statements) CONNECTICUT MUNICIPAL CASH TRUST NOTES TO FINANCIAL STATEMENTS APRIL 30, 1995 (UNAUDITED) - -------------------------------------------------------------------------------- (1) ORGANIZATION Federated Municipal Trust (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 thirteen non-diversified portfolios. The financial statements included herein present only those of Connecticut Municipal Cash Trust (the "Fund"). The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. (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. INVESTMENT VALUATIONS--The Fund's use of the amortized cost method to value its portfolio securities is in accordance with Rule 2a-7 under the Act. INVESTMENT INCOME, EXPENSES, AND DISTRIBUTIONS--Interest income and expenses are accrued daily. Bond premium and discount, if applicable, are amortized as required by the Internal Revenue Code, as amended (the "Code"). Distributions to shareholders are recorded on the ex-dividend date. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the Code applicable to regulated investment companies and to distribute to shareholders each year substantially all of its income. Accordingly, no provisions for federal tax are necessary. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in when-issued or delayed delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked to market daily and begin earning interest on the settlement date. CONCENTRATION OF CREDIT RISK--Since the Fund invests a substantial portion of its assets in issuers located in one state, it will be more susceptible to factors adversely affecting issuers of that state than would be a comparable tax-exempt mutual fund that invests nationally. In order to reduce the credit risk associated with such factors, at April 30, 1995, 64.0% of the securities in the portfolio of investments are backed by letters of credit or bond insurance of various financial institutions and financial guaranty assurance agencies. The value of investments insured by or supported (backed) by a letter of credit for any one institution or agency does not exceed 9.2% of total investments. 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. Additional information on each restricted security held at April 30, 1995 is as follows:
ACQUISITION ACQUISITION SECURITY DATE COST Connecticut State General Obligation Bonds, Weekly VRDNs 12/27/93 $ 2,000,000
OTHER--Investment transactions are accounted for on the trade date. (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 April 30, 1995, capital paid-in aggregated $209,436,009. Transactions in shares were as follows:
SIX MONTHS ENDED YEAR ENDED APRIL 30, 1995 OCTOBER 31, 1994 Shares sold 258,584,209 486,727,225 - -------------------------------------------------------------------- Shares issued to shareholders in payment of distributions declared 937,151 1,166,410 - -------------------------------------------------------------------- Shares redeemed (240,508,553) (437,916,644) - -------------------------------------------------------------------- ---------------------- -------------------- Net change resulting from share transactions 19,012,807 49,976,991 - -------------------------------------------------------------------- ---------------------- --------------------
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES INVESTMENT ADVISORY FEE--Federated Management, the Fund's investment adviser (the "Adviser"), receives for its services an annual investment advisory fee equal to .50 of 1% of the Fund's average daily net assets. The Adviser may voluntarily choose to waive a 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, provides the Fund with administrative personnel and services. The FAS fee is based on the level of average aggregate daily net assets of all funds advised by subsidiaries of Federated Investors for the period. The administrative fee received during the period of the Administrative Services Agreement shall be at least $125,000 per portfolio and $30,000 per each additional class of shares. SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to .25 of 1% of average daily net assets of the Fund for the period. This fee is to obtain certain services for shareholders and to maintain shareholder accounts. TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES--Federated Services Company ("FServ") serves as transfer and dividend disbursing agent for the Fund. This fee is based on the size, type, and number of accounts and transactions made by shareholders. PORTFOLIO ACCOUNTING FEES--FServ also maintains the Fund's accounting records for which it receives a fee. This fee is based on the level of the Fund's average daily net assets for the period, plus out-of-pocket expenses. INTERFUND TRANSACTIONS--During the six months ended April 30, 1995, the Fund engaged in purchase and sale transactions with funds that have a common investment adviser (or affiliated investment advisors), common Directors/Trustees, and/or common Officers. These transactions were made at current market value pursuant to Rule 17a-7 under the Act amounting to $106,235,000 and $131,535,000, respectively. GENERAL--Certain of the Officers and Trustees of the Trust are Officers and Directors or Trustees of the above companies. TRUSTEES OFFICERS - -------------------------------------------------------------------------------- John F. Donahue John F. Donahue Thomas G. Bigley CHAIRMAN John T. Conroy, Jr. Glen R. Johnson William J. Copeland PRESIDENT James E. Dowd J. Christopher Donahue Lawrence D. Ellis, M.D. VICE PRESIDENT Edward L. Flaherty, Jr. Richard B. Fisher Glen R. Johnson VICE PRESIDENT Peter E. Madden Edward C. Gonzales Gregor F. Meyer VICE PRESIDENT AND TREASURER John E. Murray, Jr. John W. McGonigle Wesley W. Posvar VICE PRESIDENT AND SECRETARY Marjorie P. Smuts David M. Taylor ASSISTANT TREASURER G. Andrew Bonnewell ASSISTANT SECRETARY
Mutual funds are not bank deposits or obligations, are not guaranteed by any bank, and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other government agency. Investment in mutual funds involves investment risk, including 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. PENNSYLVANIA MUNICIPAL CASH TRUST SEMI-ANNUAL REPORT TO SHAREHOLDERS APRIL 30, 1995 [LOGO] FEDERATED SECURITIES CORP. -------------------------- Distributor A subsidiary of Federated Investors FEDERATED INVESTORS TOWER PITTSBURGH, PA 15222-3779 314229881 314229204 0052405 (6/95) PRESIDENT'S MESSAGE - -------------------------------------------------------------------------------- Dear Shareholder: I am pleased to present the Semi-Annual Report to Shareholders of Pennsylvania Municipal Cash Trust, a portfolio of Federated Municipal Trust, for the six-month period ended April 30, 1995. The fund consists of two classes of shares known as Institutional Service Shares and Cash Series Shares. We begin this report with our customary update from the fund's portfolio manager, Jeff A. Kozemchak, who will discuss market activity and changes in the fund's strategy relative to that activity. Jeff's report is followed by the fund's Portfolio of Investments and Financial Statements. In addition, Financial Highlights tables have been included for Institutional Service Shares and Cash Series Shares. Pennsylvania Municipal Cash Trust continues to seek relief for you and other tax-sensitive Pennsylvania residents, in the form of double tax-free* monthly income. The fund is able to pursue this income by maintaining a portfolio of Pennsylvania municipal securities, issued to fund projects as varied as education, health care, and housing. In this way, the fund helps you make the most of your short-term finances, while funding important municipal improvements in your home state. During the six-month period covered by the report, the fund paid nearly $4.4 million in total distributions to shareholders. As of this report, the fund's total net assets are $261.3 million. As always, we strive to provide you with the highest level of professional service. We appreciate your continued support and welcome your comments or questions. Sincerely, Glen R. Johnson President June 15, 1995 * Income may be subject to the federal alternative minimum tax. Shares of the fund are exempt from Pennsylvania's intangibles tax on personal property. INVESTMENT REVIEW - -------------------------------------------------------------------------------- An Interview with Fund Portfolio Manager Jeff A. Kozemchak Q Jeff, can you comment on the changes in money market rates during the reporting period? A In the face of resilient economic growth and the potential for this growth to create inflationary pressures, the Federal Reserve Board (the "Fed") continued to tighten monetary policy throughout 1994 and into early 1995. On November 15, 1994, the Fed hiked the federal funds target rate from 4.75% to 5.50%. The most recent move by the Fed, on February 1, 1995, increased the target rate by 50 basis points to the current 6.00% level. Short-term interest rates reflected the Fed's upward moves. The yield on the three-month Treasury bill rose from 5.22% at the beginning of the reporting period to 6.06% on February 1, 1995. The yield on the one-year Treasury bill rose from 6.25% at the beginning of the reporting period to a high of 7.32% in early January, 1995. February, March, and April, 1995, however, brought economic reports that pointed to slowing in sectors of the economy, an indication that the rate increases by the Fed that began in February, 1994, were starting to take hold. As a result, short-term interest rates declined over this period as market participants adjusted their expectations regarding the extent of future tightenings by the Fed. Reflecting this change in expectations, the three-month Treasury bill declined to 5.87% on April 30, 1995, while the one-year Treasury bill fell to 6.32%, a decline of 1.00% from the high in January, 1995. Q How have the municipal money markets and the fund's yield reacted to this interest rate environment? A Municipal money market rates were affected by the Fed tightenings early in the reporting period, as well as February's 180-degree change in market expectations regarding the potential for future Fed rate increases. In addition, municipal rates were also influenced by seasonal supply and demand imbalances throughout the reporting period. Yields on seven-day variable rate demand notes (VRDNs), the core component of a tax-free money market fund, rose from 3.22% at the beginning of the reporting period to 4.65% on April 30, 1995. Yield levels also moved upward for one-year fixed-rate notes, increasing from 4.19% in early November, 1994, to a high of 5.10% in early January, 1995, before steadily falling to 4.29% at the end of the reporting period. The divergence between short VRDN yields and one-year fixed-rate note levels resulted from market expectations that the Fed may have successfully engineered a growth slowdown, or a "soft landing." Also, tight municipal note supply conditions helped contribute to the decline in fixed note yields. - -------------------------------------------------------------------------------- The fund responded favorably to the overall increase in short-term interest rates over the reporting period. The seven-day net yield of the fund's Institutional Service Shares rose from 2.90% on November 1, 1994, to 3.86% on April 30, 1995.* For the Cash Series Shares, the seven-day net yield rose from 2.50% on November 1, 1994, to 3.46% on April 30, 1995.* Q Did you make any strategic changes to the fund's portfolio in this rate atmosphere? A We continued to fully utilize and add to our positions of short maturity commercial paper (CP) and VRDNs in order to maintain the responsiveness of the portfolio to changes in short-term interest rates. VRDNs adjust quickly to changes in Fed policy as well as supply and demand imbalances that are unique to the municipal money markets. The purchase of CP typically allows us to pick up an additional yield premium over VRDNs over time, while still retaining portfolio responsiveness to further rate increases. Also, because of tight fixed-rate note supply conditions, the average maturity of the fund was targeted within a broader range of 45 to 60 days, with an emphasis on the shorter end of the target range. Q What is your overall outlook for rates in the near future? A Amid reports of a slightly slowing economy and restrained inflation, it appears that the Fed is nearing the end of its tightening cycle. We expect that Fed policy will continue to be neutral in the near term, as the Fed scrutinizes upcoming releases on the economy and inflation for signs that either one is stronger than expectations. Short-term interest rates should trade within a narrow range in the near future. Nevertheless, we expect the supply of fixed-rate notes in our market to increase significantly starting in mid-June, 1995, cheapening note levels. We plan, on average, to extend the average maturity of the fund during this period of heavy issuance, as yields on fixed-rate notes may become attractive versus comparable maturity taxable securities. * Past performance does not guarantee future results. Yield will vary. PENNSYLVANIA MUNICIPAL CASH TRUST PORTFOLIO OF INVESTMENTS APRIL 30, 1995 (UNAUDITED) - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ---------- -------------------------------------------------------- ------- ------------ SHORT-TERM MUNICIPAL SECURITIES--100.4% - -------------------------------------------------------------------------- PENNSYLVANIA--100.4% -------------------------------------------------------- $1,700,000 Allegheny County, PA, IDA Weekly VRDNs (Series 1991B)/(Shandon, Inc.)/(PNC Bank N.A. LOC)/ (Subject to AMT) P-1 $ 1,700,000 -------------------------------------------------------- 5,000,000 Allegheny County, PA, IDA PCR, 3.45% TOBs (Series 1992A)/(Duquesne Light Power Co.)/(Canadian Imperial Bank of Commerce LOC), Mandatory Tender 10/17/1995 P-1 5,000,000 -------------------------------------------------------- 1,000,000 Allegheny County, PA, IDA Weekly VRDNs (Series 1991)/ (Mine Safety Appliances Co.)/(Sanwa Bank Ltd. LOC) P-1 1,000,000 -------------------------------------------------------- 3,175,000 Allegheny County, PA, IDA Weekly VRDNs, Adjustable Rate Commercial Development Revenue Bonds (Series 1992)/(Eleven Parkway Center Associates)/ (Mellon Bank N.A. LOC) A-1 3,175,000 -------------------------------------------------------- 6,500,000 Allegheny County, PA, IDA, 4.75% CP (Duquesne Light Power Co.)/(Barclays Bank PLC LOC), Mandatory Tender 12/7/1995 A-1+ 6,500,000 -------------------------------------------------------- 3,000,000 Beaver County, PA, PCR IDA, 4.20% CP (Series 1992E)/ (Toledo Edison Co.)/(Toronto Dominion Bank LOC), Mandatory Tender 5/3/1995 P-1 3,000,000 -------------------------------------------------------- 2,000,000 Berks County, PA, 5.20% TRANs (Series 1995), 12/31/1995 NR(3) 2,000,000 -------------------------------------------------------- 1,580,000 Berks County, PA, IDA Weekly VRDNs (Beacon Container)/(Corestates Bank NA, Philadelphia LOC)/ (Subject to AMT) P-1 1,580,000 -------------------------------------------------------- 1,320,000 Berks County, PA, IDA Weekly VRDNs (Quaker Maid Meats, Inc.)/(Meridian Bank LOC)/(Subject to AMT) VMIG1 1,320,000 -------------------------------------------------------- 2,000,000 Berks County, PA, IDA Weekly VRDNs (Series 1988)/ (Arrow International, Inc.)/(Corestates Bank N.A., Philadelphia LOC)/(Subject to AMT) P-1 2,000,000 --------------------------------------------------------
PENNSYLVANIA MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ---------- -------------------------------------------------------- ------- ------------ SHORT-TERM MUNICIPAL SECURITIES--CONTINUED - -------------------------------------------------------------------------- PENNSYLVANIA--CONTINUED -------------------------------------------------------- $2,960,000 Bucks County, PA, IDA Weekly VRDNs (Pennsylvania Associates)/(Meridian Bank LOC) P-1 $ 2,960,000 -------------------------------------------------------- 1,000,000 Bucks County, PA, IDA Weekly VRDNs (Series 1986)/ (Winks Lane, Inc.)/(Mellon Bank N.A. LOC) P-1 1,000,000 -------------------------------------------------------- 5,090,000 Bucks County, PA, IDA Weekly VRDNs (Series 1991)/ (Cabot Medical Corp.)/(Meridian Bank LOC)/ (Subject to AMT) VMIG1 5,090,000 -------------------------------------------------------- 2,445,000 Bucks County, PA, IDA Weekly VRDNs (Series 1993)/ (Double Plastics, Inc.)/(Meridian Bank LOC)/ (Subject to AMT) VMIG1 2,445,000 -------------------------------------------------------- 1,000,000 Butler County, PA, IDA Weekly VRDNs (Mine Safety Appliances Co.)/(Sanwa Bank Ltd. LOC) P-1 1,000,000 -------------------------------------------------------- 3,000,000 Butler County, PA, IDA Weekly VRDNs (Mine Safety Appliances Co.)/(Sanwa Bank Ltd. LOC)/ (Subject to AMT) P-1 3,000,000 -------------------------------------------------------- 1,000,000 Butler County, PA, IDA Weekly VRDNs (Series 1992B)/ (Mine Safety Appliances Co.)/(Sanwa Bank Ltd. LOC)/ (Subject to AMT) P-1 1,000,000 -------------------------------------------------------- 2,435,000 Butler County, PA, IDA Weekly VRDNs (Series 1994)/ (Lue-Rich Holding Co., Inc.)/(ABN AMRO Bank N.V. LOC) A-1+ 2,435,000 -------------------------------------------------------- 700,000 Cambria County, PA, IDA Weekly VRDNs (Cambria Cogeneration Corp.)/(Fuji Bank Ltd. LOC)/ (Subject to AMT) A-1 700,000 -------------------------------------------------------- 1,900,000 Carbon County, PA, IDA Weekly VRDNs (Summit Management & Utilities, Inc.)/(PNC Bank, N.A. LOC)/ (Subject to AMT) A-1 1,900,000 -------------------------------------------------------- 5,000,000 Carbon County, PA, IDA, 4.30% CP (Panther Creek)/ (National Westminster Bank, PLC LOC)/(Subject to AMT), Mandatory Tender 5/15/1995 A-1+ 5,000,000 --------------------------------------------------------
PENNSYLVANIA MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ---------- -------------------------------------------------------- ------- ------------ SHORT-TERM MUNICIPAL SECURITIES--CONTINUED - -------------------------------------------------------------------------- PENNSYLVANIA--CONTINUED -------------------------------------------------------- $1,545,000 Carbon County, PA, IDA, 4.30% CP (Panther Creek)/ (National Westminster Bank, PLC LOC)/(Subject to AMT), Mandatory Tender 6/13/1995 A-1+ $ 1,545,000 -------------------------------------------------------- 2,000,000 Carbon County, PA, IDA, 4.30% CP (Series A)/(Panther Creek)/(National Westminster Bank, PLC LOC)/(Subject to AMT), Mandatory Tender 7/20/1995 A-1+ 2,000,000 -------------------------------------------------------- 1,620,000 Carbon County, PA, IDR Resource Recovery Bonds, 4.35% CP (Panther Creek)/(National Westminster Bank PLC LOC)/(Subject to AMT), Mandatory Tender 5/15/1995 A-1+ 1,620,000 -------------------------------------------------------- 2,510,000 Carlisle, PA, Area Hospital Authority, 7.45% (Cumberland Crossing)/(Prerefunded), 8/1/1995 (@100) Aaa 2,527,662 -------------------------------------------------------- 7,300,000 Clearfield County, PA, IDA Weekly VRDNs (Penn Traffic Co.)/(ABN AMRO Bank N.V. LOC)/(Subject to AMT) P-1 7,300,000 -------------------------------------------------------- 3,000,000 Clinton County, PA, IDA Weekly VRDNs (Armstrong World Industries, Inc.)/(Mellon Bank N.A. LOC) P-1 3,000,000 -------------------------------------------------------- 3,505,000 Clinton County, PA, Municipal Authority Weekly VRDNs (Series A)/(Lock Haven Hospital)/(Mellon Bank N.A. LOC) P-1 3,505,000 -------------------------------------------------------- 1,600,000 Cumberland County, PA, IDA Weekly VRDNs (Series 1994)/(Lane Enterprises, Inc.)/(Meridian Bank LOC)/(Subject to AMT) P-1 1,600,000 -------------------------------------------------------- 1,500,000 Delaware County, PA, PCR, 3.95% CP (Philadelphia Electric Co.)/(FGIC Insured), Mandatory Tender 5/31/1995 A-1+ 1,500,000 -------------------------------------------------------- 1,200,000 Delaware County, PA, PCR, 4.30% CP (Philadelphia Electric Co.)/(FGIC Insured), Mandatory Tender 7/20/1995 A-1+ 1,200,000 -------------------------------------------------------- 5,000,000 Downington, PA, Area School District, 4.50% TRANs (Series 1994), 6/30/1995 NR(2) 5,007,137 -------------------------------------------------------- 1,900,000 East Hempfield Township, PA, IDA Weekly VRDNs (Series 1985)/(Yellow Freight System, Inc.)/(Wachovia Bank & Trust Co. N.A. LOC) A-1 1,900,000 --------------------------------------------------------
PENNSYLVANIA MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ---------- -------------------------------------------------------- ------- ------------ SHORT-TERM MUNICIPAL SECURITIES--CONTINUED - -------------------------------------------------------------------------- PENNSYLVANIA--CONTINUED -------------------------------------------------------- $5,300,000 Erie County, PA, Hospital Authority Weekly VRDNs (St. Vincent Health System)/(Fuji Bank Ltd. LOC) A-1 $ 5,300,000 -------------------------------------------------------- 500,000 Erie County, PA, IDA Weekly VRDNs (P.H.B., Inc.)/ (PNC Bank N.A. LOC)/(Subject to AMT) P-1 500,000 -------------------------------------------------------- 525,000 Erie County, PA, IDA Weekly VRDNs (R. P.C. Valve, Inc.)/ (PNC Bank N.A. LOC)/(Subject to AMT) P-1 525,000 -------------------------------------------------------- 600,000 Erie County, PA, IDA Weekly VRDNs (Series B)/(P.H.B., Inc.)/(PNC Bank N.A. LOC)/(Subject to AMT) P-1 600,000 -------------------------------------------------------- 1,725,000 Erie County, PA, IDA Weekly VRDNs Multi-Mode Revenue Reference Bonds (Corry Manor, Inc.)/(PNC Bank N.A. LOC) A-1 1,725,000 -------------------------------------------------------- 600,000 Forest County, PA, IDA Weekly VRDNs (Industrial Timber & Land Co.)/(National City Bank LOC) P-1 600,000 -------------------------------------------------------- 1,405,000 Forest County, PA, IDA Weekly VRDNs (Marienville Healthcare Facility)/(PNC Bank N.A. LOC) P-1 1,405,000 -------------------------------------------------------- 2,000,000 Franklin County, PA, IDR Weekly VRDNs (Guarriello Limited Partnership)/(PNC Bank N.A. LOC)/ (Subject to AMT) P-1 2,000,000 -------------------------------------------------------- 2,000,000 Governor Mifflin School District, 3.85% TRANs (Series 1994), 6/30/1995 NR(3) 2,000,316 -------------------------------------------------------- 2,900,000 Lackawanna County, PA, IDA Weekly VRDNs (Series 1992)/(HEM Project)/(Corestates Bank N.A. LOC)/ (Subject to AMT) P-1 2,900,000 -------------------------------------------------------- 2,000,000 Lancaster (City of), PA, 4.35% TRANs (Series 1995), 5/10/1995 NR(3) 2,000,000 -------------------------------------------------------- 2,350,000 Lancaster, PA, Higher Education Authority Weekly VRDNs (Series 1995)/(Franklin and Marshall College) VMIG1 2,350,000 -------------------------------------------------------- 2,856,092 Lawrence County, PA, IDA Weekly VRDNs (Series 1989A)/ (Ellwood Uddeholm Steel Co.)/(Society National Bank LOC) P-1 2,856,092 --------------------------------------------------------
PENNSYLVANIA MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ---------- -------------------------------------------------------- ------- ------------ SHORT-TERM MUNICIPAL SECURITIES--CONTINUED - -------------------------------------------------------------------------- PENNSYLVANIA--CONTINUED -------------------------------------------------------- $3,300,000 Lehigh County, PA, IDA Weekly VRDNs (Cedar Crest College)/(PNC Bank N.A. LOC) A-1 $ 3,300,000 -------------------------------------------------------- 3,100,000 Lehigh County, PA, IDA Weekly VRDNs (Series 1989A)/ (Hershey Pizza Co., Inc.)/(PNC Bank N.A. LOC)/(Subject to AMT) A-1 3,100,000 -------------------------------------------------------- 1,005,000 McKean County, PA, IDA Weekly VRDNs Multi-Mode Revenue Reference Bonds (Bradford Manor, Inc.)/(Marine Bank LOC) A-1 1,005,000 -------------------------------------------------------- 3,300,000 Monroe County, PA, IDA PCR Weekly VRDNs (Cooper Industries)/(Sanwa Bank Ltd. LOC) A-1+ 3,300,000 -------------------------------------------------------- 2,600,000 Montgomery County, PA, IDA Weekly VRDNs (Series 1984)/(General Signal Corp.)/(Morgan Guaranty Trust Co. LOC) P-1 2,600,000 -------------------------------------------------------- 1,400,000 Montgomery County, PA, IDA Weekly VRDNs (Series 1992)/(RJI Limited Partnership)/(Meridian Bank LOC)/(Subject to AMT) VMIG1 1,400,000 -------------------------------------------------------- 4,480,000 Montgomery County, PA, IDA Weekly VRDNs Commercial Development Revenue Bonds (Series 1992)/(Hickory Pointe)/(First Fidelity Bank, N.A. LOC) P-1 4,480,000 -------------------------------------------------------- 3,500,000 Montgomery County, PA, IDR Weekly VRDNs (Series 84)/ (Seton Co.)/(Banque Paribas LOC) A-1 3,500,000 -------------------------------------------------------- 2,625,000 Moon Township, PA, IDA Weekly VRDNs (Airport Hotel Associates)/(ABN-AMRO Bank N.V., Amsterdam LOC) A-1+ 2,625,000 -------------------------------------------------------- 2,000,000 Northampton County, PA, IDA, 4.30% CP (Citizens Utilities Co.)/(Subject to AMT), Mandatory Tender 5/11/1995 A-1+ 2,000,000 -------------------------------------------------------- 9,000,000 Northampton County, PA, IDA, 4.40% CP (Citizens Utilities Co.)/(Subject to AMT), Mandatory Tender 5/8/1995 A-1+ 9,000,000 -------------------------------------------------------- 4,000,000 Pennsylvania Authority for Improvements in Municipalities Weekly VRDNs (Pooled Hospital Equipment & Leasing Program)/(MBIA Insured)/(Swiss Bank Corporation PTC) VMIG1 4,000,000 --------------------------------------------------------
PENNSYLVANIA MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ---------- -------------------------------------------------------- ------- ------------ SHORT-TERM MUNICIPAL SECURITIES--CONTINUED - -------------------------------------------------------------------------- PENNSYLVANIA--CONTINUED -------------------------------------------------------- $1,875,000 Pennsylvania EDA Revenue Bonds Weekly VRDNs (Cyrogenics, Inc.)/(PNC Bank N.A. LOC)/(Subject to AMT) Aa3 $ 1,875,000 -------------------------------------------------------- 325,000 Pennsylvania EDA Revenue Bonds Weekly VRDNs (D.D.I., Inc.)/(PNC Bank N.A. LOC)/(Subject to AMT) Aa3 325,000 -------------------------------------------------------- 625,000 Pennsylvania EDA Revenue Bonds Weekly VRDNs (Ram Forest Products)/(PNC Bank N.A. LOC)/(Subject to AMT) Aa3 625,000 -------------------------------------------------------- 1,300,000 Pennsylvania EDA Revenue Bonds Weekly VRDNs (Series G4)/(Matamura Products, Inc.)/(PNC Bank N.A. LOC)/(Subject to AMT) Aa3 1,300,000 -------------------------------------------------------- 3,300,000 Pennsylvania EDA Weekly VRDNs (Industrial Scientific Corp.)/(Mellon Bank N.A. LOC)/(Subject to AMT) P-1 3,300,000 -------------------------------------------------------- 1,300,000 Pennsylvania EDA Weekly VRDNs (Joseph J. Brunner, Inc.)/(PNC Bank N.A. LOC)/(Subject to AMT) A-1+ 1,300,000 -------------------------------------------------------- 750,000 Pennsylvania EDA Weekly VRDNs (PNC Bank N.A. LOC) P-1 750,000 -------------------------------------------------------- 750,000 Pennsylvania EDA Weekly VRDNs (Pioneer Fluid)/ (PNC Bank N.A. LOC)/(Subject to AMT) Aa3 750,000 -------------------------------------------------------- 900,000 Pennsylvania EDA Weekly VRDNs (Reale Associates)/ (PNC Bank N.A. LOC)/(Subject to AMT) Aa3 900,000 -------------------------------------------------------- 550,000 Pennsylvania EDA Weekly VRDNs (Series B8)/(Payne Printing Co.)/(PNC Bank N.A. LOC)/(Subject to AMT) Aa3 550,000 -------------------------------------------------------- 975,000 Pennsylvania EDA Weekly VRDNs (Walnut & Craig Street Associates)/(PNC Bank N.A. LOC)/(Subject to AMT) P-1 975,000 -------------------------------------------------------- 7,300,000 Pennsylvania HFA, 4.35% TOBs (First National Bank, Chicago LOC), Optional Tender 10/1/1995 NR(2) 7,300,000 -------------------------------------------------------- 2,660,000 Pennsylvania HFA, 4.875% TOBs SFH (Series O)/(Meridian Bank LOC)/(Subject to AMT), Optional Tender 4/1/1996 NR(2) 2,660,000 -------------------------------------------------------- 995,000 Pennsylvania HFA, Section 8 Assisted Residential Development Refunding Bonds Weekly VRDNs (Series 1992A)/(Capital Guaranty Insured, Citibank N.A. BPA) NR(1) 995,000 --------------------------------------------------------
PENNSYLVANIA MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ---------- -------------------------------------------------------- ------- ------------ SHORT-TERM MUNICIPAL SECURITIES--CONTINUED - -------------------------------------------------------------------------- PENNSYLVANIA--CONTINUED -------------------------------------------------------- $3,000,000 Pennsylvania Higher Education Assistance Agency Weekly VRDNs (Fuju Bank Ltd. LOC)/(Subject to AMT) VMIG1 $ 3,000,000 -------------------------------------------------------- 1,100,000 Pennsylvania Higher Education Facilities Authority Weekly VRDNs (Carnegie-Mellon University Guaranty) A+ 1,100,000 -------------------------------------------------------- 9,405,000 Pennsylvania State Higher Education Facilities Authority, 4.20% Annual TOBs (Carnegie-Mellon University), Optional Tender 11/1/1995 A-1 9,405,000 -------------------------------------------------------- 3,190,000 Pennsylvania State Higher Education Facilities Authority, 4.50% (Carnegie-Mellon University), 5/1/1996 A-1 3,190,000 -------------------------------------------------------- 1,945,000 Pennsylvania State Higher Education Facilities Authority, College & University Revenues, 7.70% (Drexel University)/ (Prerefunded), 11/1/1995 (@102) AAA 2,016,236 -------------------------------------------------------- 3,100,000 Pennsylvania State University, 5.25%, 4/5/1996 MIG1 3,123,448 -------------------------------------------------------- 3,000,000 Pennsylvania State University, 4.00% BANs (Series 1994), 5/4/1995 NR(2) 3,000,119 -------------------------------------------------------- 1,000,000 Philadelphia, PA, 4.75% TRANs (Series B)/(Corestates Bank N.A. LOC), 6/15/1995 SP-1 1,001,010 -------------------------------------------------------- 2,200,000 Philadelphia, PA, 4.375% GO CP (Series 1990)/(Fuji Bank Ltd. LOC), Mandatory Tender 7/20/1995 A-1 2,200,000 -------------------------------------------------------- 5,000,000 Philadelphia, PA, 4.75% TRANs (Series A)/(Canadian Imperial Bank of Commerce LOC), 6/15/1995 SP-1+ 5,005,051 -------------------------------------------------------- 1,700,000 Philadelphia, PA, IDA Commercial Development Revenue Bonds, 3.95% Annual TOBs (Series B)/(Economy Inn)/ (First National Bank of Boston LOC), Optional Tender 7/1/1995 P-1 1,700,000 -------------------------------------------------------- 3,750,000 Philadelphia, PA, IDA Commercial Development Revenue Bonds, 3.95% Annual TOBs (Series A)/(Economy Inn)/ (First National Bank of Boston LOC), Optional Tender 7/1/1995 P-1 3,750,000 --------------------------------------------------------
PENNSYLVANIA MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ---------- -------------------------------------------------------- ------- ------------ SHORT-TERM MUNICIPAL SECURITIES--CONTINUED - -------------------------------------------------------------------------- PENNSYLVANIA--CONTINUED -------------------------------------------------------- $7,000,000 Philadelphia, PA, IDA, 4.00% Annual TOBs (Suite Hotel)/ (First National Bank of Boston LOC), Optional Tender 6/1/1995 P-1 $ 7,000,000 -------------------------------------------------------- 9,000,000 Philadelphia, PA, Redevelopment Authority Weekly VRDNs (Series 1985)/(Franklin Town Towers)/(Marine Midland Bank N.A. LOC) A-2 9,000,000 -------------------------------------------------------- 1,750,000 Phoenixville, PA, School District, 4.50% TRANs (Series 1994), 6/30/1995 NR(3) 1,752,077 -------------------------------------------------------- 1,700,000 Sayre, PA, Health Care Facilities Authority Weekly VRDNs (VHA of Pennsylvania Capital Asset Finance Program)/ (AMBAC Insured) A-1+ 1,700,000 -------------------------------------------------------- 620,000 Sayre, PA, Health Care Facilities Authority Weekly VRDNs (VHA of Pennsylvania Capital Asset Program)/(AMBAC Insured) A-1+ 620,000 -------------------------------------------------------- 2,500,000 Temple University Commonwealth System of Higher Education, 4.50% BANs (Series 1994), 5/24/1995 SP-1+ 2,500,986 -------------------------------------------------------- 5,900,000 Venango, PA, IDA, 4.20% CP (Series A)/(Scrubgrass Power Corp.)/(National Westminster Bank, PLC LOC)/(Subject to AMT), Mandatory Tender 7/18/1995 A-1+ 5,900,000 -------------------------------------------------------- 3,785,000 Venango, PA, IDA, 4.25% CP (Series A)/(Scrubgrass Power Corp.)/(National Westminster Bank, PLC LOC)/(Subject to AMT), Mandatory Tender 7/19/1995 A-1+ 3,785,000 -------------------------------------------------------- 2,100,000 Venango, PA, IDA, 4.30% CP (Series 1993)/(Scrubgrass Power Corp.)/(National Westminster Bank, PLC LOC)/ (Subject to AMT), 5/18/1995 A-1+ 2,100,000 -------------------------------------------------------- 4,000,000 Venango, PA, IDA, 4.35% CP (Series 1993)/(Scrubgrass Power Corp.)/(National Westminster Bank, PLC LOC)/ (Subject to AMT), Mandatory Tender 5/16/1995 A-1+ 4,000,000 -------------------------------------------------------- 1,045,000 Washington County, PA, IDA Weekly VRDNs (Series 1990)/(Mac Plastics, Inc.)/(National City Bank LOC)/(Subject to AMT) AA 1,045,000 --------------------------------------------------------
PENNSYLVANIA MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ---------- -------------------------------------------------------- ------- ------------ SHORT-TERM MUNICIPAL SECURITIES--CONTINUED - -------------------------------------------------------------------------- PENNSYLVANIA--CONTINUED -------------------------------------------------------- $1,350,000 Washington County, PA, IDA Weekly VRDNs (Series 1988)/(Cameron Coca-Cola, Inc.)/(Mellon Bank N.A. LOC) P-1 $ 1,350,000 -------------------------------------------------------- 3,700,000 Washington County, PA, Weekly VRDNs (Series 1985A)/ (Pooled Equipment Lease)/(Sanwa Bank Ltd. LOC) VMIG1 3,700,000 -------------------------------------------------------- 1,100,000 West Cornwall Township, PA, Municipal Authority Weekly VRDNs (Series 1995)/(Lebanon Valley Brethern Home)/ (Meridian Bank LOC) P-1 1,100,000 -------------------------------------------------------- 3,000,000 York County, PA, IDA Weekly VRDNs (West Manchester Inn Associates)/(Mellon Bank N.A. LOC) P-1 3,000,000 -------------------------------------------------------- ------------ TOTAL INVESTMENTS, AT AMORTIZED COST (A) $262,230,134 -------------------------------------------------------- ------------
(a) Also represents cost for federal tax purposes. * See Notes to Portfolio of Investments on page 14. Note: The categories of investments are shown as a percentage of net assets ($261,250,783) at April 30, 1995. PENNSYLVANIA MUNICIPAL CASH TRUST - -------------------------------------------------------------------------------- The following abbreviation(s) are used throughout this portfolio: AMBAC -- American Municipal Bond Assurance Corporation AMT -- Alternative Minimum Tax BANs -- Bond Anticipation Notes BPA -- Bond Purchase Agreement CP -- Commercial Paper EDA -- Economic Development Authority FGIC -- Financial Guaranty Insurance Company GO -- General Obligation HFA -- Housing Finance Authority IDA -- Industrial Development Authority IDR -- Industrial Development Revenue LOC -- Letter of Credit MBIA -- Municipal Bond Investors Assurance PCR -- Pollution Control Revenue PLC -- Public Limited Company PTC -- Pass Through Certificates SFH -- Single Family Housing TOBs -- Tender Option Bonds TRANs -- Tax and Revenue Anticipation Notes VHA -- Veterans Housing Administration VRDNs -- Variable Rate Demand Notes
(See Notes which are an integral part of the Financial Statements) PENNSYLVANIA MUNICIPAL CASH TRUST NOTES TO PORTFOLIO OF INVESTMENTS (UNAUDITED) - -------------------------------------------------------------------------------- SHORT-TERM MUNICIPAL OBLIGATION RATINGS STANDARD & POOR'S RATINGS GROUP A S&P note rating reflects the liquidity concerns and market access risks unique to notes. SP-1Very strong or strong capacity to pay principal and interest. Those issues determined to possess overwhelming safety characteristics will be given a plus (+) designation. SP-2 Satisfactory capacity to pay principal and interest. MOODY'S INVESTORS SERVICE, INC. Moody's short-term ratings are designated Moody's Investment Grade (MIG or VMIG (see below)). The purpose of the MIG or VMIG ratings is to provide investors with a simple system by which the relative investment qualities of short-term obligations may be evaluated. MIG1This designation denotes best quality. There is present strong protection by established cash flows, superior liquidity support or demonstrated broad-based access to the market for refinancing. MIG2This designation denotes high quality. Margins of protection are ample although not so large as in the preceding group. VARIABLE RATE DEMAND NOTES (VRDNS) AND TENDER OPTION BONDS (TOBS) RATINGS STANDARD & POOR'S RATINGS GROUP S&P assigns dual ratings to all long-term debt issues that have as part of their provisions a variable rate demand feature. The first rating (long-term rating) addresses the likelihood of repayment of principal and interest when due, and the second rating (short-term rating) describes the demand characteristics. Several examples are AAA/A-1+, AA/A-1+, A/A-1. (The definitions for the long-term and the short-term ratings are provided below.) MOODY'S INVESTORS SERVICE, INC. Short-term ratings on issues with demand features are differentiated by the use of the VMIG symbol to reflect such characteristics as payment upon periodic demand rather than fixed maturity dates and payment relying on external liquidity. - -------------------------------------------------------------------------------- In this case, two ratings are usually assigned, (for example, Aaa/VMIG-1); the first representing an evaluation of the degree of risk associated with scheduled principal and interest payments, and the second representing an evaluation of the degree of risk associated with the demand feature. The VMIG rating can be assigned a 1 or 2 designation using the same definitions described above for the MIG rating. COMMERCIAL PAPER (CP) RATINGS STANDARD & POOR'S RATINGS GROUP A S&P commercial paper rating is a current assessment of the likelihood of timely payment of debt having an original maturity of no more than 365 days. A-1This highest category indicates that the degree of safety regarding timely payment is strong. Those issues determined to possess extremely strong safety characteristics are denoted with a plus (+) sign designation. A-2Capacity for timely payment on issues with this designation is satisfactory. However, the relative degree of safety is not as high as for issues designated A-1. MOODY'S INVESTORS SERVICE, INC. P-1 Issuers rated PRIME-1 (or related supporting institutions) have a superior capacity for repayment of short-term promissory obligations. Prime-1 repayment capacity will normally be evidenced by the following characteristics: leading market positions in well established industries, high rates of return on funds employed, conservative capitalization structure with moderate reliance on debt and ample asset protection, broad margins in earning coverage of fixed financial charges and high internal cash generation, well-established access to a range of financial markets and assured sources of alternate liquidity. P-2 Issuers rated PRIME-2 (or related supporting institutions) have a strong capacity for repayment of short-term promissory obligations. This will normally be evidenced by many of the characteristics cited above, but to a lesser degree. Earnings trends and coverage ratios, while sound, will be more subject to variation. Capitalization characteristics, while still appropriate, may be more affected by external conditions. Ample alternate liquidity is maintained. LONG-TERM DEBT RATINGS STANDARD & POOR'S RATINGS GROUP AAA Debt rated "AAA" has the highest rating assigned by S&P. Capacity to pay interest and repay principal is extremely strong. AA Debt rated "AA" has a very strong capacity to pay interest and repay principal and differs from the highest rated issues only in small degree. - -------------------------------------------------------------------------------- A Debt rated "A" has a strong capacity to pay interest and repay principal although it is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than debt in higher rated categories. MOODY'S INVESTORS SERVICE, INC. AAABonds that are rated AAA are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as "gilt edged." Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues. AA Bonds that are rated AA are judged to be of high quality by all standards. Together with the AAA group, they comprise what are generally known as high grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in AAA securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long-term risks appear somewhat larger than in AAA securities. A Bonds that are rated A possess many favorable investment attributes and are to be considered as upper medium grade obligations. Factors giving security to principal and interest are considered adequate but elements may be present which suggest a susceptibility to impairment sometime in the future. NR indicates that both the bonds and the obligor or credit enhancer are not currently rated by S&P or Moody's with respect to short-term indebtedness. However, management considers them to be of comparable quality to securities rated A-1 or P-1. NR(1) The underlying issuer/obligor/guarantor has other outstanding debt rated "AAA" by S&P or "Aaa" by Moody's. NR(2) The underlying issuer/obligor/guarantor has other outstanding debt rated "AA" by S&P or "Aa" by Moody's. NR(3) The underlying issuer/obligor/guarantor has other outstanding debt rated "A" by S&P or Moody's. PENNSYLVANIA MUNICIPAL CASH TRUST STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1995 (UNAUDITED) - -------------------------------------------------------------------------------- ASSETS: - -------------------------------------------------------------------------------- Investments in securities, at amortized cost and value $262,230,134 - -------------------------------------------------------------------------------- Cash 381,918 - -------------------------------------------------------------------------------- Income receivable 2,487,966 - -------------------------------------------------------------------------------- Receivable for shares sold 1,185 - -------------------------------------------------------------------------------- ------------ Total assets 265,101,203 - -------------------------------------------------------------------------------- LIABILITIES: - -------------------------------------------------------------------------------- Payable for investments purchased $3,190,000 - ------------------------------------------------------------------- Payable for shares redeemed 7,581 - ------------------------------------------------------------------- Income distribution payable 649,633 - ------------------------------------------------------------------- Accrued expenses 3,206 - ------------------------------------------------------------------- ---------- Total liabilities 3,850,420 - -------------------------------------------------------------------------------- ------------ NET ASSETS for 261,250,783 shares outstanding $261,250,783 - -------------------------------------------------------------------------------- ------------ NET ASSET VALUE, Offering Price and Redemption Proceeds Per Share: - -------------------------------------------------------------------------------- Institutional Service Shares: ($240,310,071 / 240,310,071 shares outstanding) $1.00 - -------------------------------------------------------------------------------- ------------ Cash Series Shares: ($20,940,712 / 20,940,712 shares outstanding) $1.00 - -------------------------------------------------------------------------------- ------------
(See Notes which are an integral part of the Financial Statements) PENNSYLVANIA MUNICIPAL CASH TRUST STATEMENT OF OPERATIONS SIX MONTHS ENDED APRIL 30, 1995 (UNAUDITED) - -------------------------------------------------------------------------------- INVESTMENT INCOME: - ------------------------------------------------------------------------------------ Interest $5,298,651 - ------------------------------------------------------------------------------------ EXPENSES: - ------------------------------------------------------------------------------------ Investment advisory fee $ 661,900 - ---------------------------------------------------------------------- Administrative personnel and services fee 100,212 - ---------------------------------------------------------------------- Custodian fees 26,476 - ---------------------------------------------------------------------- Transfer agent and dividend disbursing agent fees and expenses 5,295 - ---------------------------------------------------------------------- Directors'/Trustees' fees 2,648 - ---------------------------------------------------------------------- Auditing fees 3,972 - ---------------------------------------------------------------------- Legal fees 3,972 - ---------------------------------------------------------------------- Portfolio accounting fees 25,152 - ---------------------------------------------------------------------- Distribution services fee-Cash Series Shares 48,749 - ---------------------------------------------------------------------- Shareholder services fee-Cash Series Shares 29,249 - ---------------------------------------------------------------------- Share registration costs 18,534 - ---------------------------------------------------------------------- Printing and postage 9,267 - ---------------------------------------------------------------------- Insurance premiums 3,972 - ---------------------------------------------------------------------- Miscellaneous 1,320 - ---------------------------------------------------------------------- ---------- Total expenses 940,718 - ---------------------------------------------------------------------- Deduct-- - ---------------------------------------------------------------------- Waiver of investment advisory fee $ 2,250 - ----------------------------------------------------------- Waiver of distribution services fee--Cash Series Shares 29,249 31,499 - ----------------------------------------------------------- -------- ---------- Net expenses 909,219 - ------------------------------------------------------------------------------------ ---------- Net investment income $4,389,432 - ------------------------------------------------------------------------------------ ----------
(See Notes which are an integral part of the Financial Statements) PENNSYLVANIA MUNICIPAL CASH TRUST STATEMENT OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
SIX MONTHS ENDED APRIL 30, YEAR ENDED 1995 OCTOBER 31, (UNAUDITED) 1994 ------------- ------------- INCREASE (DECREASE) IN NET ASSETS: - -------------------------------------------------------------- OPERATIONS-- - -------------------------------------------------------------- Net investment income $ 4,389,432 $ 6,997,846 - -------------------------------------------------------------- ------------- ------------- DISTRIBUTIONS TO SHAREHOLDERS-- - -------------------------------------------------------------- Distributions from net investment income: - -------------------------------------------------------------- Institutional Service Shares (4,029,883) (6,625,711) - -------------------------------------------------------------- Cash Series Shares (359,549) (372,135) - -------------------------------------------------------------- ------------- ------------- Change in net assets resulting from distributions to shareholders (4,389,432) (6,997,846) - -------------------------------------------------------------- ------------- ------------- SHARE TRANSACTIONS-- - -------------------------------------------------------------- Proceeds from sale of Shares 469,328,125 800,515,592 - -------------------------------------------------------------- Net asset value of Shares issued to shareholders in payment of distributions declared 1,005,108 1,321,124 - -------------------------------------------------------------- Cost of Shares redeemed (456,594,861) (891,403,705) - -------------------------------------------------------------- ------------- ------------- Change in net assets resulting from Share transactions 13,738,372 (89,566,989) - -------------------------------------------------------------- ------------- ------------- Change in net assets 13,738,372 (89,566,989) - -------------------------------------------------------------- NET ASSETS: - -------------------------------------------------------------- Beginning of period 247,512,411 337,079,400 - -------------------------------------------------------------- ------------- ------------- End of period $ 261,250,783 $ 247,512,411 - -------------------------------------------------------------- ------------- -------------
(See Notes which are an integral part of the Financial Statements) PENNSYLVANIA MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS--INSTITUTIONAL SERVICE SHARES - -------------------------------------------------------------------------------- (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED APRIL 30, YEAR ENDED OCTOBER 31, 1995 ------------------------------------------------ (UNAUDITED) 1994 1993 1992 1991 1990(A) ----------- -------- -------- -------- -------- -------- NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 - ------------------------------------ INCOME FROM INVESTMENT OPERATIONS - ------------------------------------ Net investment income 0.02 0.02 0.02 0.03 0.05 0.05 - ------------------------------------ -------- ------ ------ ------ ------ ------ LESS DISTRIBUTIONS - ------------------------------------ Distributions from net investment income (0.02) (0.02) (0.02) (0.03) (0.05) (0.05) - ------------------------------------ -------- ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD $1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 - ------------------------------------ -------- ------ ------ ------ ------ ------ TOTAL RETURN (B) 1.67% 2.25% 2.24% 3.08% 4.64% 5.78% - ------------------------------------ RATIOS TO AVERAGE NET ASSETS - ------------------------------------ Expenses 0.65%(c) 0.64% 0.57% 0.56% 0.55% 0.50%(c) - ------------------------------------ Net investment income 3.35%(c) 2.19% 2.21% 3.04% 4.53% 5.56%(c) - ------------------------------------ Expense waiver/reimbursement (d) 0.00%(c) 0.02% 0.12% 0.12% 0.11% 0.18%(c) - ------------------------------------ SUPPLEMENTAL DATA - ------------------------------------ Net assets, end of period (000 omitted) $240,310 $229,160 $318,518 $308,200 $317,165 $275,882 - ------------------------------------
(a) Reflects operations for the period from November 21, 1989 (date of initial public investment) to October 31, 1990. (b) Based on net asset value, which does not reflect the sales load or contingent deferred sales charge, if applicable. (c) Computed on an annualized basis. (d) This voluntary expense decrease is reflected in both the expense and net investment income ratios shown above. (See Notes which are an integral part of the Financial Statements) PENNSYLVANIA MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS--CASH SERIES SHARES - -------------------------------------------------------------------------------- (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED APRIL YEAR ENDED OCTOBER 31, 30, 1995 ----------------------------------------- (UNAUDITED) 1994 1993 1992 1991(A) ----------- -------- -------- -------- -------- NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 - -------------------------------------- INCOME FROM INVESTMENT OPERATIONS - -------------------------------------- Net investment income 0.01 0.02 0.02 0.03 0.03 - -------------------------------------- -------- ------ ------ ------ ------ LESS DISTRIBUTIONS - -------------------------------------- Distributions from net investment income (0.01) (0.02) (0.02) (0.03) (0.03) - -------------------------------------- -------- ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD $1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 - -------------------------------------- -------- ------ ------ ------ ------ TOTAL RETURN (B) 1.47% 1.84% 1.83% 2.67% 3.55% - -------------------------------------- RATIOS TO AVERAGE NET ASSETS - -------------------------------------- Expenses 1.05%(c) 1.04% 0.97% 0.96% 0.78%(c) - -------------------------------------- Net investment income 2.95%(c) 1.73% 1.88% 2.64% 3.92%(c) - -------------------------------------- Expense waiver/reimbursement (d) 0.24%(c) 0.18% 0.12% 0.12% 0.28%(c) - -------------------------------------- SUPPLEMENTAL DATA - -------------------------------------- Net assets, end of period (000 omitted) $20,941 $18,352 $18,561 $24,694 $19,846 - --------------------------------------
(a) Reflects operations for the period from January 25, 1991 (date of initial public investment) to October 31, 1991. (b) Based on net asset value, which does not reflect the sales load or contingent deferred sales charge, if applicable. (c) Computed on an annualized basis. (d) This voluntary expense decrease is reflected in both the expense and net investment income ratios shown above. (See Notes which are an integral part of the Financial Statements) PENNSYLVANIA MUNICIPAL CASH TRUST NOTES TO FINANCIAL STATEMENTS APRIL 30, 1995 (UNAUDITED) - -------------------------------------------------------------------------------- (1) ORGANIZATION Federated Municipal Trust (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 thirteen non-diversified portfolios. The financial statements included herein present only those of Pennsylvania Municipal Cash Trust (the "Fund"). The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. The Fund offers two classes of shares: Institutional Service and Cash Series. (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. INVESTMENT VALUATIONS--The Fund's use of the amortized cost method to value its portfolio securities is in accordance with Rule 2a-7 under the Act. INVESTMENT INCOME, EXPENSES, AND DISTRIBUTIONS--Interest income and expenses are accrued daily. Bond premium and discount, if applicable, are amortized as required by the Internal Revenue Code, as amended (the "Code"). Distributions to shareholders are recorded on the ex-dividend date. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the Code applicable to regulated investment companies and to distribute to shareholders each year substantially all of its income. Accordingly, no provisions for federal tax are necessary. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in when-issued or delayed delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked to market daily and begin earning interest on the settlement date. CONCENTRATION OF CREDIT RISK--Since the Fund invests a substantial portion of its assets in issuers located in one state, it will be more susceptible to factors adversely affecting issuers of that state than would be a comparable tax-exempt mutual fund that invests nationally. In order to reduce the credit risk associated with such factors, at April 30, 1995, 79.8% of the securities in the portfolio of investments are backed by letters of credit or bond insurance of various financial institutions and financial guaranty assurance agencies. The value of investments insured by or supported (backed) by a letter of credit for any one institution or agency does not exceed 9.9% of total investments. PENNSYLVANIA MUNICIPAL CASH TRUST - -------------------------------------------------------------------------------- OTHER--Investment transactions are accounted for on the trade date. (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 April 30, 1995, capital paid-in aggregated $261,250,783. Transactions in shares were as follows:
SIX MONTHS YEAR ENDED ENDED APRIL OCTOBER 31, 30, 1995 1994 ------------ ------------ INSTITUTIONAL SERVICE SHARES - ---------------------------------------------------------------- Shares sold 428,431,008 749,671,233 - ---------------------------------------------------------------- Shares issued to shareholders in payment of distributions declared 650,216 937,173 - ---------------------------------------------------------------- Shares redeemed (417,931,409) (839,966,777) - ---------------------------------------------------------------- ------------ ------------ Net change resulting from Institutional Service Shares transactions 11,149,815 (89,358,371) - ---------------------------------------------------------------- ------------ ------------ CASH SERIES SHARES - ---------------------------------------------------------------- Shares sold 40,897,117 50,844,359 - ---------------------------------------------------------------- Shares issued to shareholders in payment of distributions declared 354,892 383,951 - ---------------------------------------------------------------- Shares redeemed (38,663,452) (51,436,928) - ---------------------------------------------------------------- ------------ ------------ Net change resulting from Cash Series Shares transactions 2,588,557 (208,618) - ---------------------------------------------------------------- ------------ ------------ Net change resulting from share transactions 13,738,372 (89,566,989) - ---------------------------------------------------------------- ------------ ------------
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES INVESTMENT ADVISORY FEE--Federated Management, the Fund's investment adviser (the "Adviser"), receives for its services an annual investment advisory fee equal to .50 of 1% of the Fund's average daily net assets. The Adviser may voluntarily choose to waive a 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, provides the Fund with administrative personnel and services. The FAS fee is based on the level of average aggregate daily net assets of all funds advised by subsidiaries of Federated Investors for the period. The administrative fee received during the period of the Administrative Services Agreement shall be at least $125,000 per portfolio and $30,000 per each additional class of shares. PENNSYLVANIA MUNICIPAL CASH TRUST - -------------------------------------------------------------------------------- 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 compensate 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 the Fund's Cash Series Shares. The Plan provides that the Fund may incur distribution expenses up to .40 of 1% of the average daily net assets of the Cash Series Shares, annually, to compensate FSC. The distributor may voluntarily choose to waive a portion of its fee. The distributor can modify or terminate this voluntary waiver at any time at its sole discretion. SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to .25 of 1% of average daily net assets of the Cash Series Shares for the period. This fee is to obtain certain services for shareholders and to maintain the shareholder accounts. For the six months ended April 30, 1995, Institutional Service Shares did not incur a Shareholder Services fee. TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES--Federated Services Company ("FServ") serves as transfer and dividend disbursing agent for the Fund. This fee is based on the size, type, and number of accounts and transactions made by shareholders. PORTFOLIO ACCOUNTING FEES--FServ also maintains the Fund's accounting records for which it receives a fee. This fee is based on the level of the Fund's average daily net assets for the period, plus out-of-pocket expenses. INTERFUND TRANSACTIONS--During the six months ended April 30, 1995, 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 transactions were made at current market value pursuant to Rule 17a-7 under the Act amounting to $195,900,000 and $195,067,500, respectively. GENERAL--Certain of the Officers and Trustees of the Trust are Officers and Directors or Trustees of the above companies. TRUSTEES OFFICERS - ----------------------------------------------------------------------------- John F. Donahue John F. Donahue Thomas G. Bigley Chairman John T. Conroy, Jr. Glen R. Johnson William J. Copeland President James E. Dowd J. Christopher Donahue Lawrence D. Ellis, M.D. Vice President Edward L. Flaherty, Jr. Richard B. Fisher Glen R. Johnson Vice President Peter E. Madden Edward C. Gonzales Gregor F. Meyer Vice President and Treasurer John E. Murray, Jr. John W. McGonigle Wesley W. Posvar Vice President and Secretary Marjorie P. Smuts David M. Taylor Assistant Treasurer G. Andrew Bonnewell Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any bank, and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other government agency. Investment in mutual funds involves investment risk, including 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 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. - -------------------------------------------------------------------------------- MINNESOTA - -------------------------------------------------------------------------------- MUNICIPAL - -------------------------------------------------------------------------------- CASH - -------------------------------------------------------------------------------- TRUST - -------------------------------------------------------------------------------- SEMI-ANNUAL REPORT TO SHAREHOLDERS APRIL 30, 1995 FEDERATED SECURITIES CORP. (LOGO) - --------------------------------------------- Distributor A subsidiary of FEDERATED INVESTORS FEDERATED INVESTORS TOWER PITTSBURGH, PA 15222-3779 314229873 314229402 1052807 (6/95) PRESIDENT'S MESSAGE - -------------------------------------------------------------------------------- Dear Shareholder: I am pleased to present the Semi-Annual Report to Shareholders of Minnesota Municipal Cash Trust, a portfolio of Federated Municipal Trust, for the six-month period ended April 30, 1995. The fund consists of two classes of shares known as Institutional Shares and Cash Series Shares. We begin this report with our customary update from the fund's portfolio manager, Mary Jo Ochson, who will discuss market activity and changes in the fund's strategy relative to that activity. Mary Jo's report is followed by the fund's Portfolio of Investments and Financial Statements. In addition, Financial Highlights tables have been included for Institutional Shares and Cash Series Shares. Minnesota Municipal Cash Trust continues to seek relief for you and other tax-sensitive Minnesota residents, in the form of double tax-free* monthly income. The fund is able to pursue this income by maintaining a portfolio of Minnesota municipal securities, issued to fund projects as varied as education, health care, and housing. In this way, the fund helps you make the most of your short-term finances, while funding important municipal improvements in your home state. During the six-month period covered by the report, the fund paid more than $5.7 million in total distributions to shareholders. As of this report, the fund's total net assets are $326.0 million. As always, we strive to provide you with the highest level of professional service. We appreciate your continued support and welcome your comments or questions. Sincerely, Glen R. Johnson President June 15, 1995 * Income may be subject to the federal alternative minimum tax. INVESTMENT REVIEW - -------------------------------------------------------------------------------- An Interview with Fund Portfolio Manager, Mary Jo Ochson Q Mary Jo, can you comment on the changes in money market rates during the reporting period? A In the face of resilient economic growth and the potential for this growth to create inflationary pressures, the Federal Reserve Board (the "Fed") continued to tighten monetary policy throughout 1994 and into early 1995. On November 15, 1994, the Fed hiked the federal funds target rate from 4.75% to 5.50%. The most recent move by the Fed, on February 1, 1995, increased the target rate by 50 basis points to the current 6.00% level. Short-term interest rates reflected the Fed's upward moves. The yield on the three-month Treasury bill rose from 5.22% at the beginning of the reporting period to 6.06% on February 1, 1995. The yield on the one-year Treasury bill rose from 6.25% at the beginning of the period to a high of 7.32% in early January, 1995. February, March, and April, 1995, however, brought economic reports that pointed to slowing in sectors of the economy, an indication that the rate increases by the Fed that began in February, 1994, were starting to take hold. As a result, short-term interest rates declined over this period, as market participants adjusted their expectations regarding the extent of future tightenings by the Fed. Reflecting this change in expectations, the three-month Treasury bill declined to 5.87% on April 30, 1995, while the one-year Treasury bill fell to 6.32%, a decline of 1.00% from the high in January, 1995. Q How have the municipal money markets and the fund's yield reacted to this interest rate environment? A Municipal money market rates were affected by the Fed tightenings early in the reporting period, as well as February's 180-degree change in market expectations regarding the potential for future Fed rate increases. In addition, municipal rates were also influenced by seasonal supply and demand imbalances throughout the reporting period. Yields on seven-day variable rate demand notes (VRDNs), the core component of a tax-free money market fund, rose from 3.22% at the beginning of the reporting period to 4.65% on April 30, 1995. Yield levels also moved upward for one-year fixed-rate notes, increasing from 4.19% in early November, 1994, to a high of 5.10% in early January, 1995, before steadily falling to 4.29% at the end of the reporting period. The divergence between short VRDN yields and one-year fixed-rate note levels resulted from market expectations that the Fed may have successfully engineered a growth slowdown, or a "soft landing." Also, tight municipal note supply conditions helped contribute to the decline in fixed note yields. The portfolio of the fund responded favorably to the overall increase in short-term interest rates over the reporting period. The seven-day net yield* of the fund's Institutional Shares rose from 3.09% at the beginning of the reporting period to 4.29% on April 30, 1995. For the fund's Cash Series Shares, the seven-day net yield* rose from 2.65% at the beginning of the period to 3.89% on April 30, 1995. * Past performance does not guarantee future results. Yield will vary. - -------------------------------------------------------------------------------- Q What is your overall outlook for rates in the near future? A Amid reports of a slightly slowing economy and restrained inflation, it appears that the Fed is nearing the end of its tightening cycle. We would expect that Fed policy will be neutral in the near term, as the Fed scrutinizes upcoming releases on the economy and inflation for signs that either one is stronger than expectations. As such, short-term interest rates should trade within a range in the near future. Nevertheless, we expect the supply of fixed-rate notes in our market to increase significantly in mid-June, 1995, cheapening note levels. We plan on average to extend our maturities during that period of heavy issuance as yields on fixed-rate notes may become attractive versus comparable maturity taxable securities. Q What was your strategy during the period? A The fund's average maturity was targeted within a range of 45-55 days, with an emphasis on the longer end of our target. Early in the reporting period, the yields on fixed-rate notes and longer term commercial paper were very attractive versus both comparable taxable securities and variable rate paper. The yield advantage reflected market expectations of several more rate hikes in short-term interest rates by the Fed. Since early 1995, note yields have declined, although still very attractive versus taxables. Our strategy throughout the reporting period was to maintain our average maturity band with selective purchases of fixed-rate notes and commercial paper. Q The last time we were updated on Minnesota, the outlook was very positive and included several rating agency upgrades. Is the current outlook still positive? A The overall outlook is still quite strong for the state of Minnesota, and the ratings for the state have not changed since our last report (Fitch Investors Service, Inc. AAA, Moody's Investors Service, Inc. Aa1, and Standard and Poor's Ratings Group AA+).** Minnesota came through the last recession with very strong economic statistics. For instance, employment (excluding farming) grew at nearly three times the national average over the 1990-1994 time period; over 66,000 new jobs were created over the past year alone. The largest recent job increases were in retail trade and business services. In manufacturing, the biggest gains were in industrial machinery and equipment, printing and publishing, and wood products. In 1994, unemployment in Minnesota (3.8%) was also lower than the national average (6.2%). Income levels and employment continue to grow faster than the national averages and are predicted to do so for the next few years. These strong economic indicators, as well as Minnesota's continuing conservative debt management, spending discipline, and budgetary reform bode well for the future success of the state and the fund. ** Ratings are subject to change. MINNESOTA MUNICIPAL CASH TRUST PORTFOLIO OF INVESTMENTS APRIL 30, 1995 (UNAUDITED) - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ---------- ------------------------------------------------------- ------- ------------ SHORT-TERM MUNICIPAL SECURITIES--100.8% - -------------------------------------------------------------------------- MINNESOTA--100.0% ------------------------------------------------------- $6,000,000 Anoka City, MN, 4.15% CP Solid Waste Disposal Authority (United Power Associates)/(NRUCFC Guaranty)/(Subject to AMT), Mandatory Tender 7/14/95 A-1+ $ 6,000,000 ------------------------------------------------------- 5,000,000 Bass Brook, MN, PCR, 4.55% CP (Minnesota Power And Light Company Guaranty), Mandatory Tender 5/17/95 P-2 5,000,000 ------------------------------------------------------- 2,950,000 Baudette, MN, IDR Weekly VRDNs (Series 1989)/ (Reid Rowell, Inc.)/(NationsBank of Georgia, N.A. LOC)/(Subject to AMT) P-1 2,950,000 ------------------------------------------------------- 8,400,000 Becker, MN, PCR, 4.10% CP (Series 1992A)/(Northern States Power Co. Guaranty), Mandatory Tender 6/15/95 A-1+ 8,400,000 ------------------------------------------------------- 4,000,000 Becker, MN, PCR, 4.15% CP (Series 1993A & B)/(Northern States Power Co. Guaranty), Mandatory Tender 8/18/95 A-1+ 4,000,000 ------------------------------------------------------- 2,000,000 Becker, MN, PCR, 4.15% CP (Series 1993B)/(Northern States Power Co. Guaranty), Mandatory Tender 7/26/95 A-1+ 2,000,000 ------------------------------------------------------- 5,000,000 Becker, MN, PCR, 4.15% CP (Series 1993B)/(Northern States Power Co. Guaranty), Mandatory Tender 7/18/95 A-1+ 5,000,000 ------------------------------------------------------- 5,000,000 Becker, MN, PCR, 4.40% CP (Series 1993A & B)/(Northern States Power Co. Guaranty), Mandatory Tender 7/21/95 A-1+ 5,000,000 ------------------------------------------------------- 1,200,000 Beltrami & Clearwater Counties, MN, ISD #38, 4.08% RANs GO Aid Anticipation Certificates of Indebtedness (Series 1994)/(State of Minnesota Guaranty), 9/14/95 NR(2) 1,200,126 ------------------------------------------------------- 5,000,000 Bloomington, MN, Multi-Family Housing Weekly VRDNs (Crow/Bloomington Apartments)/(Citibank N.A. LOC) P-1 5,000,000 ------------------------------------------------------- 3,490,000 Brooklyn Center, MN, ISD #286, 4.70% TANs (State of Minnesota Guaranty), 3/27/96 NR(2) 3,492,998 ------------------------------------------------------- 8,175,000 Burnsville, MN, Multi-Family Housing Weekly VRDNs (Berkshire of Burnsville)/(Sumitomo Bank Ltd. LOC) A-1 8,175,000 ------------------------------------------------------- 760,000 Byron, MN, IDB Weekly VRDNs (Schmidt Printing, Inc.)/(Norwest Bank Minnesota LOC)/(Subject to AMT) A-1+ 760,000 -------------------------------------------------------
MINNESOTA MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ---------- ------------------------------------------------------- ------- ------------ SHORT-TERM MUNICIPAL SECURITIES--CONTINUED - -------------------------------------------------------------------------- MINNESOTA--CONTINUED ------------------------------------------------------- $1,250,000 Center Hospital, MN, 5.05% Revenue Bonds (Hennepin County Guaranty), 6/1/95 NR(2) $ 1,250,885 ------------------------------------------------------- 1,325,000 Chaska, MN, IDA Weekly VRDNs (Aeration Industries)/ (Norwest Bank Minnesota LOC)/(Subject to AMT) A-1+ 1,325,000 ------------------------------------------------------- 1,500,000 Coleraine, MN, IDS #316, 4.30% RANs GO Aid Anticipation Certificates of Indebtedness (Series 1994)/ (State of Minnesota Guaranty), 9/28/95 NR(2) 1,500,000 ------------------------------------------------------- 2,000,000 Coon Rapids, MN, Hospital Authority Weekly VRDNs (Series 1985)/(The Health Central System)/(First Bank N.A. Minneapolis LOC) A-1 2,000,000 ------------------------------------------------------- 1,065,000 Crosby-Ironton, MN, ISD #182, 4.75% GO TANs (Series 1995A)/(State of Minnesota Guaranty), 3/22/96 NR(2) 1,065,446 ------------------------------------------------------- 5,200,000 Crystal, MN, IDA Weekly VRDNs (Crystal Gallery Mall)/(Citibank N.A. LOC) P-1 5,200,000 ------------------------------------------------------- 1,935,000 Dakota County, MN, Housing & Redevelopment Authority, 5.10% TOBs (Custodial Receipts)/(GNMA Collateralized)/ (Meridian Bank BPA), Optional Tender 3/1/96 NR(1) 1,935,000 ------------------------------------------------------- 3,000,000 Dakota County, Washington County & Anoka City, MN, Housing & Redevelopment Authority, 4.50% TOBs (Custodial Receipts)/(Series 1988)/(Escrowed in Treasuries)/(Meridian Bank BPA)/(Subject to AMT), Optional Tender 5/1/95 NR(1) 3,000,000 ------------------------------------------------------- 3,000,000 Dakota County, Washington County & Anoka City, MN, Housing & Redevelopment Authority, 4.625% TOBs (Custodial Receipts)/(Series 1988)/(Escrowed in Treasuries)/(Meridian Bank BPA)/(Subject to AMT), Optional Tender 6/1/95 NR(1) 3,000,000 ------------------------------------------------------- 4,785,000 Duluth, MN, 5.00% GO TANs (Series 1995), 12/29/95 NR(3) 4,788,645 ------------------------------------------------------- 3,000,000 Eagan, MN, Multi-Family Housing Weekly VRDNs (Series 1992A)/(Cinnamon Ridge)/(Mellon Bank N.A. LOC) VMIG1 3,000,000 -------------------------------------------------------
MINNESOTA MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ---------- ------------------------------------------------------- ------- ------------ SHORT-TERM MUNICIPAL SECURITIES--CONTINUED - -------------------------------------------------------------------------- MINNESOTA--CONTINUED ------------------------------------------------------- $ 184,368 Eden Prairie, MN, IDA Weekly VRDNs (Series 1987)/ (Minnesota Supply Company)/(Norwest Bank Minnesota LOC) P-1 $ 184,368 ------------------------------------------------------- 870,000 Eden Prairie, MN, IDR #S-93 Weekly VRDNs (Richard W. Cohen)/(Norwest Bank Minnesota LOC) P-1 870,000 ------------------------------------------------------- 1,300,000 Elk River, MN, Weekly VRDNs (Tescom Corp. Project)/ (Norwest Bank Minnesota LOC)/(Subject to AMT) P-1 1,300,000 ------------------------------------------------------- 5,000,000 Fairbault, MN, IDA Weekly VRDNs (Series 1988)/(Jerome Foods, Inc.)/(Norwest Bank Minnesota LOC) P-1 5,000,000 ------------------------------------------------------- 2,000,000 Hoyt Lakes, MN, PCR Refunding Bonds, 5.15% CP (Series 1986)/(Minnesota Power and Light Company Guaranty), Mandatory Tender 5/4/95 P-2 2,000,000 ------------------------------------------------------- 2,500,000 Hubbard County, MN, Solid Waste Disposal Weekly VRDNs (Series 1990)/(Potlatch Corp.)/(Credit Suisse LOC)/(Subject to AMT) A-1+ 2,500,000 ------------------------------------------------------- 4,000,000 Maple Grove, MN, IDA Weekly VRDNs (Series 1991A)/ (Eagle Ridge Apartments)/(Sumitomo Bank Ltd. LOC) A-1 4,000,000 ------------------------------------------------------- 3,000,000 Maple Grove, MN, Weekly VRDNs (Series 1991B)/(Eagle Ridge Apartments)/(First Bank N.A. Minneapolis LOC) A-1 3,000,000 ------------------------------------------------------- 2,025,000 Maplewood, MN, Multi-Family Housing Weekly VRDNs (Series 1993)/(Silver Ridge)/(Federal Home Loan Bank of Chicago LOC) A-1+ 2,025,000 ------------------------------------------------------- 2,640,000 Mendota Heights, MN, Multi-Family Revenue Bonds Weekly VRDNs (Lexington Heights Apartments)/ (Sumitomo Bank Ltd. LOC) A-1 2,640,000 ------------------------------------------------------- 1,000,000 Metropolitan Council, MN, 5.50% Bond (Series B)/ (Minneapolis-St. Paul Metropolitan Area), 12/1/95 NR(1) 1,005,933 ------------------------------------------------------- 1,276,000 Minneapolis & St. Paul, MN, Housing Finance Board, 4.625% TOBs SFM Revenue Bonds (GNMA Collateralized)/(Meridian Bank BPA)/(Subject to AMT), Optional Tender 11/1/95 NR(1) 1,276,000 -------------------------------------------------------
MINNESOTA MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ---------- ------------------------------------------------------- ------- ------------ SHORT-TERM MUNICIPAL SECURITIES--CONTINUED - -------------------------------------------------------------------------- MINNESOTA--CONTINUED ------------------------------------------------------- $5,050,000 Minneapolis & St. Paul, MN, Housing Finance Board, 4.80% TOBs Revenue Bonds (Series 1988A)/(GNMA Collateralized)/(Meridian Bank BPA)/(Subject to AMT), Optional Tender 8/1/95 NR(1) $ 5,050,000 ------------------------------------------------------- 3,870,000 Minneapolis, MN, 5.40% Annual TOBs Rental Housing (Series 1994A)/(Driftwood Apartments)/(First Bank N.A. Minneapolis LOC)/(Subject to AMT), Mandatory Tender 11/1/95 A-1 3,870,000 ------------------------------------------------------- 3,000,000 Minneapolis, MN, GO Bonds Weekly VRDNs (Series 1995)/(Arena Acquisition Project) A-1+ 3,000,000 ------------------------------------------------------- 3,100,000 Minneapolis, MN, Hospital Revenue Daily VRDNs (Minneapolis Children's Medical Center)/(Morgan Guaranty Trust Co. LOC) A-1+ 3,100,000 ------------------------------------------------------- 730,000 Minneapolis, MN, IDA Weekly VRDNs (JTJ Company)/ (First Bank N.A. Minneapolis LOC) P-1 730,000 ------------------------------------------------------- 5,000,000 Minneapolis, MN, Special School District #1, 5.75% GO TANs, 1/25/96 SP-1+ 5,022,773 ------------------------------------------------------- 1,450,000 Minneapolis, MN, Weekly VRDNs (Series 1989)/ (MT. Sinai Medical Building Association)/(Norwest Bank Minnesota LOC) A-1+ 1,450,000 ------------------------------------------------------- 2,410,000 Minnesota State Aid Anticipation Pooled Borrowing Program, 4.05% RANs GO Aid Anticipation Certificates (Series 1994H)/(State of Minnesota Guaranty), 9/22/95 NR(2) 2,410,000 ------------------------------------------------------- 8,000,000 Minnesota State Commissioner of Iron Range Resources & Rehabilitation Weekly VRDNs (Series 1991)/(Louisiana- Pacific Corp.)/(Wachovia Bank & Trust Co. LOC) P-1 8,000,000 ------------------------------------------------------- 5,000,000 Minnesota State, HFA SFM Bonds, 4.95% TOBs (Series V)/ (Bayerische Landesbank Girozentrale LOC)/(Subject to AMT), Mandatory Tender 12/14/95 A-1+ 5,000,000 -------------------------------------------------------
MINNESOTA MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ---------- ------------------------------------------------------- ------- ------------ SHORT-TERM MUNICIPAL SECURITIES--CONTINUED - -------------------------------------------------------------------------- MINNESOTA--CONTINUED ------------------------------------------------------- $3,800,000 Minnesota State Higher Education Coordinating Board Weekly VRDNs (Series 1992A)/(Supplemental Student Loan Program)/(First Bank N.A. Minneapolis BPA)/ (Subject to AMT) VMIG1 $ 3,800,000 ------------------------------------------------------- 7,000,000 Minnesota State Higher Education Coordinating Board Weekly VRDNs (Series 1992B)/(Student Loan Program)/ (First Bank N.A. Minneapolis BPA)/(Subject to AMT) VMIG1 7,000,000 ------------------------------------------------------- 6,500,000 Minnesota State Higher Education Coordinating Board Weekly VRDNs (Series 1992C)/(Student Loan Program)/ (First Bank N.A. Minneapolis BPA)/(Subject to AMT) VMIG1 6,500,000 ------------------------------------------------------- 12,700,000 Minnesota State Higher Education Coordinating Board Weekly VRDNs (Series 1993)/(Supplemental Student Loan Program)/(First Bank N.,A. Minneapolis BPA)/(Subject to AMT) VMIG1 12,700,000 ------------------------------------------------------- 4,300,000 Minnesota State Higher Education Facility Authority Weekly VRDNs (Carlton College)/(Swiss Bank Corp., New York LOC) VMIG1 4,300,000 ------------------------------------------------------- 740,000 (a) Minnesota State Weekly VRDNs P-Floats (Merrill Lynch Capital Services Co. BPA) VMIG1 740,000 ------------------------------------------------------- 1,000,000 Minnesota State, 6.60% Bonds, 8/1/95 NR(2) 1,005,631 ------------------------------------------------------- 4,000,000 Minnesota State, 8.20% GO Bonds (Prerefunded), 8/1/95 NR(1) 4,039,728 ------------------------------------------------------- 1,000,000 Minnesota State, 8.25% GO Bonds (Prerefunded), 8/1/95 NR(1) 1,009,937 ------------------------------------------------------- 9,800,000 Minnetonka, MN, Multi-Family Housing Revenue Bonds Weekly VRDNs (Cliffs at Ridgedale)/(Citibank N.A. LOC) A-1 9,800,000 ------------------------------------------------------- 5,900,000 Minnetonka, MN, Multi-Family Housing Revenue Bonds Weekly VRDNs (Series 1995)/(Southampton Apartments)/(National Bank of Canada LOC) P-1 5,900,000 ------------------------------------------------------- 1,300,000 New Brighton, MN, IDR Weekly VRDNs (Unicare Homes, Inc.)/(Banque Paribas LOC) A-1 1,300,000 -------------------------------------------------------
MINNESOTA MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ---------- ------------------------------------------------------- ------- ------------ SHORT-TERM MUNICIPAL SECURITIES--CONTINUED - -------------------------------------------------------------------------- MINNESOTA--CONTINUED ------------------------------------------------------- $1,000,000 New Hope, MN, IDRB Weekly VRDNs (Series 1994)/ (Gaines & Hanson Printing Company, Inc.)/(Norwest Bank Minnesota LOC)/(Subject to AMT) A-1+ $ 1,000,000 ------------------------------------------------------- 4,000,000 New Hope, MN, Weekly VRDNs (Paddock Labs)/ (Norwest Bank Minnesota LOC)/(Subject to AMT) P-1 4,000,000 ------------------------------------------------------- 3,300,000 Perham, MN, IDA Weekly VRDNs (Land O' Lakes, Inc.)/ (Rabobank Nederland LOC)/(Subject to AMT) A-1+ 3,300,000 ------------------------------------------------------- 5,000,000 Plymouth, MN, IDR Weekly VRDNs (Series 1994)/ (Olympic Steel)/(National City Bank, Cleveland, LOC)/ (Subject to AMT) P-1 5,000,000 ------------------------------------------------------- 1,420,000 Plymouth, MN, Weekly VRDNs (Nuaire, Inc.)/(Norwest Bank Minnesota LOC)/(Subject to AMT) P-1 1,420,000 ------------------------------------------------------- 1,690,000 Port of Austin, MN, Weekly VRDNs (Mower House Color Co.)/(Norwest Bank Minnesota LOC)/(Subject to AMT) P-1 1,690,000 ------------------------------------------------------- 8,000,000 Rochester, MN, Health Care Facility Authority Weekly VRDNs (Mayo Clinic Foundation Guaranty) VMIG1 8,000,000 ------------------------------------------------------- 1,000,000 Rochester, MN, Health Care Facility Authority, 4.10% CP (Series C)/(Mayo Clinic Foundation Guaranty), Mandatory Tender 7/19/95 A-1+ 1,000,000 ------------------------------------------------------- 2,000,000 Rochester, MN, Health Care Facility Authority, 4.15% CP (Series C)/(Mayo Clinic Foundation Guaranty), Mandatory Tender 5/8/95 A-1+ 2,000,000 ------------------------------------------------------- 5,200,000 Rochester, MN, Health Care Facility Authority, 4.20% CP (Series C)/(Mayo Clinic Foundation Guaranty), Mandatory Tender 5/12/95 A-1+ 5,200,000 ------------------------------------------------------- 5,920,000 Rochester, MN, ISD #535, 4.125% GO RANs, 9/7/95 NR(1) 5,921,506 ------------------------------------------------------- 2,975,000 Rogers, MN, IDA Weekly VRDNs (DAC Development, LLC)/(Norwest Bank Minnesota LOC)/(Subject to AMT) A-1+ 2,975,000 ------------------------------------------------------- 1,250,000 Rogers, MN, IDA Weekly VRDNs (Metal Sales Manufacturing Corp.)/(Union Bank of Switzerland LOC)/ (Subject to AMT) P-1 1,250,000 -------------------------------------------------------
MINNESOTA MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ---------- ------------------------------------------------------- ------- ------------ SHORT-TERM MUNICIPAL SECURITIES--CONTINUED - -------------------------------------------------------------------------- MINNESOTA--CONTINUED ------------------------------------------------------- $7,100,000 Rosemount, MN, PCR Weekly VRDNs (Series 1984)/ (Koch Refining Company Guaranty) A-1+ $ 7,100,000 ------------------------------------------------------- 7,000,000 Saint Cloud, MN, Hospital Facility Authority Weekly VRDNs (Series 1990A)/(St. Cloud Hospital)/(Kredietbank N.V. LOC) A-1+ 7,000,000 ------------------------------------------------------- 1,825,000 Saint Cloud, MN, Housing and Redevelopment Authority Revenue Refunding Weekly VRDNs (Series 1994A)/ (Coborn's, Inc.)/(Norwest Bank Minnesota LOC) A-1+ 1,825,000 ------------------------------------------------------- 3,110,000 Saint Cloud, MN, Housing and Redevelopment Authority Revenue Refunding Weekly VRDNs (Series 1994B)/ (Coborn's, Inc.)/(Norwest Bank Minnesota LOC)/(Subject to AMT) A-1+ 3,110,000 ------------------------------------------------------- 250,000 Saint Louis Park, MN, GO Weekly VRDNs (Series 1987C) VMIG1 250,000 ------------------------------------------------------- 4,600,000 Saint Paul Port Authority, MN, Tax Increment Weekly VRDNs (Series 1991)/(First Bank N.A. Minneapolis LOC) A-1 4,600,000 ------------------------------------------------------- 5,000,000 Saint Paul, MN, Housing & Redevelopment Authority Weekly VRDNs (District Cooling, Inc.)/(Credit Local de France LOC)/(Subject to AMT) A-1+ 5,000,000 ------------------------------------------------------- 2,850,000 Saint Paul, MN, Housing & Redevelopment Authority Weekly VRDNs (Series 1994)/(Minnesota Children's Museum)/(First Bank N.A. Minneapolis LOC) A-1 2,850,000 ------------------------------------------------------- 500,000 Saint Paul, MN, Housing & Redevelopment Authority Weekly VRDNs (United Way)/(First Bank N.A. Minneapolis LOC) A-1 500,000 ------------------------------------------------------- 4,000,000 Saint Paul, MN, ISD #625, 5.375% TANs (Series A), 3/28/96 MIG1 4,027,716 ------------------------------------------------------- 2,800,000 Shakopee, MN, Hospital Finance Authority Weekly VRDNs (St. Francis Regional Medical Center)/(Citibank N.A. LOC) A-1 2,800,000 ------------------------------------------------------- 3,000,000 Southern Minnesota Municipal Power Agency, 4.20% CP, Mandatory Tender 5/17/95 A-1 3,000,000 -------------------------------------------------------
MINNESOTA MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ---------- ------------------------------------------------------- ------- ------------ SHORT-TERM MUNICIPAL SECURITIES--CONTINUED - -------------------------------------------------------------------------- MINNESOTA--CONTINUED ------------------------------------------------------- $2,000,000 Southern Minnesota Municipal Power Agency, 9.50% Bond (Prerefunded), 1/1/96 NR(1) $ 2,102,377 ------------------------------------------------------- 1,000,000 Steele County, MN, IDRB Weekly VRDNs (Series 1994)/ (Blount, Inc.)/(NationsBank of Georgia, N.A. LOC)/ (Subject to AMT) A-1 1,000,000 ------------------------------------------------------- 5,000,000 University of Minnesota, 4.30% CP (Series H)/(Regents of University of Minnesota), Mandatory Tender 7/19/95 A-1+ 5,000,000 ------------------------------------------------------- 6,500,000 University of Minnesota, 4.50% TOBs (Series F), Optional Tender 8/1/95 VMIG1 6,500,000 ------------------------------------------------------- 6,015,000 Washington County, MN, Housing & Redevelopment Authority Weekly VRDNs (Series 90)/(Granada Pond Apartments)/(Sumitomo Bank Ltd. LOC) A-1 6,015,000 ------------------------------------------------------- 1,490,000 Wells, MN, IDA, 5.00% TOBs (Stokely USA, Inc.)/ (National Bank of Detroit, N.A. LOC)/(Subject to AMT), Optional Tender 6/1/95 P-1 1,490,000 ------------------------------------------------------- 3,000,000 White Bear Lake, MN, Weekly VRDNs (Series 1993)/ (Taylor Corp.)/(Norwest Bank Minnesota LOC)/(Subject to AMT) A-1+ 3,000,000 ------------------------------------------------------- 5,180,000 White Bear, MN, Weekly VRDNs (Thermoform Plastics, Inc.)/(Norwest Bank Minnesota LOC)/(Subject to AMT) A-1+ 5,180,000 ------------------------------------------------------- 2,500,000 Willmar, MN, ISD #347, 4.12% RANs GO Aid Anticipation Certificates of Indebtedness (Series 1994B)/(State of Minnesota Guaranty), 9/28/95 NR(2) 2,500,196 ------------------------------------------------------- 2,000,000 Winsted, MN, IDA Weekly VRDNs (Sterner Lighting Systems)/(Fleet National Bank LOC)/(Subject to AMT) A-1 2,000,000 ------------------------------------------------------- ------------ Total 326,179,265 ------------------------------------------------------- ------------
MINNESOTA MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ---------- ------------------------------------------------------- ------- ------------ SHORT-TERM MUNICIPAL SECURITIES--CONTINUED - -------------------------------------------------------------------------- PUERTO RICO--0.8% ------------------------------------------------------- $2,500,000 Puerto Rico Government Development Bank, Weekly VRDNs (Credit Suisse and Sumitomo Bank Ltd. LOCs) A-1 $ 2,500,000 ------------------------------------------------------- ------------ TOTAL INVESTMENTS, AT AMORTIZED COST (B) $328,679,265 ------------------------------------------------------- ------------
(a) Denotes restricted securities which are subject to resale under Federal Securities laws. This security has been determined to be liquid under criteria established by the Board of Trustees. (b) Also represents cost for federal tax purposes. * See Notes to Portfolio of Investments on page 13. Note: The categories of investments are shown as a percentage of net assets ($326,028,984) at April 30, 1995. The following abbreviations are used throughout this portfolio: AMT -- Alternative Minimum Tax BPA -- Bond Purchase Agreement CP -- Commercial Paper GNMA -- Government National Mortgage Association GO -- General Obligation HFA -- Housing Finance Authority IDA -- Industrial Development Authority IDB -- Industrial Development Bond IDR -- Industrial Development Revenue IDRB -- Industrial Development Revenue Bonds ISD -- Independent School District LOCs -- Letter(s) of Credit LOC -- Letter of Credit NRUCFC -- National Rural Utilities Cooperative Finance Corporation PCR -- Pollution Control Revenue RANs -- Revenue Anticipation Notes SFM -- Single Family Mortgage TANs -- Tax Anticipation Notes TOBs -- Tender Option Bonds VRDNs -- Variable Rate Demand Notes
(See Notes which are an integral part of the Financial Statements) MINNESOTA MUNICIPAL CASH TRUST NOTES TO PORTFOLIO OF INVESTMENTS (UNAUDITED) - -------------------------------------------------------------------------------- SHORT-TERM MUNICIPAL OBLIGATION RATINGS STANDARD & POOR'S RATINGS GROUP A S&P note rating reflects the liquidity concerns and market access risks unique to notes. SP-1Very strong or strong capacity to pay principal and interest. Those issues determined to possess overwhelming safety characteristics will be given a plus (+) designation. SP-2 Satisfactory capacity to pay principal and interest. MOODY'S INVESTORS SERVICE, INC. Moody's short-term ratings are designated Moody's Investment Grade (MIG or VMIG (see below)). The purpose of the MIG or VMIG ratings is to provide investors with a simple system by which the relative investment qualities of short-term obligations may be evaluated. MIG1This designation denotes best quality. There is present strong protection by established cash flows, superior liquidity support or demonstrated broad-based access to the market for refinancing. MIG2This designation denotes high quality. Margins of protection are ample although not so large as in the preceding group. VARIABLE RATE DEMAND NOTES (VRDNS) AND TENDER OPTION BONDS (TOBS) RATINGS STANDARD & POOR'S RATINGS GROUP S&P assigns dual ratings to all long-term debt issues that have as part of their provisions a variable rate demand feature. The first rating (long-term rating) addresses the likelihood of repayment of principal and interest when due, and the second rating (short-term rating) describes the demand characteristics. Several examples are AAA/A-1+, AA/A-1+, A/A-1. (The definitions for the long-term and the short-term ratings are provided below.) MOODY'S INVESTORS SERVICE, INC. Short-term ratings on issues with demand features are differentiated by the use of the VMIG symbol to reflect such characteristics as payment upon periodic demand rather than fixed maturity dates and payment relying on external liquidity. In this case, two ratings are usually assigned, (for example, Aaa/VMIG-1); the first representing an evaluation of the degree of risk associated with scheduled principal and interest payments, and the - -------------------------------------------------------------------------------- second representing an evaluation of the degree of risk associated with the demand feature. The VMIG rating can be assigned a 1 or 2 designation using the same definitions described above for the MIG rating. COMMERCIAL PAPER (CP) RATINGS STANDARD & POOR'S RATINGS GROUP A S&P commercial paper rating is a current assessment of the likelihood of timely payment of debt having an original maturity of no more than 365 days. A-1This highest category indicates that the degree of safety regarding timely payment is strong. Those issues determined to possess extremely strong safety characteristics are denoted with a plus (+) sign designation. A-2Capacity for timely payment on issues with this designation is satisfactory. However, the relative degree of safety is not as high as for issues designated A-1. MOODY'S INVESTORS SERVICE, INC. P-1 Issuers rated PRIME-1 (or related supporting institutions) have a superior capacity for repayment of short-term promissory obligations. Prime-1 repayment capacity will normally be evidenced by the following characteristics: leading market positions in well established industries, high rates of return on funds employed, conservative capitalization structure with moderate reliance on debt and ample asset protection, broad margins in earning coverage of fixed financial charges and high internal cash generation, well-established access to a range of financial markets and assured sources of alternate liquidity. P-2 Issuers rated PRIME-2 (or related supporting institutions) have a strong capacity for repayment of short-term promissory obligations. This will normally be evidenced by many of the characteristics cited above, but to a lesser degree. Earnings trends and coverage ratios, while sound, will be more subject to variation. Capitalization characteristics, while still appropriate, may be more affected by external conditions. Ample alternate liquidity is maintained. LONG-TERM DEBT RATINGS STANDARD & POOR'S RATINGS GROUP AAA Debt rated "AAA" has the highest rating assigned by S&P. Capacity to pay interest and repay principal is extremely strong. AA Debt rated "AA" has a very strong capacity to pay interest and repay principal and differs from the highest rated issues only in small degree. A Debt rated "A" has a strong capacity to pay interest and repay principal although it is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than debt in higher rated categories. - -------------------------------------------------------------------------------- MOODY'S INVESTORS SERVICE, INC. AAABonds that are rated AAA are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as "gilt edged." Interest payments are protected by a large or by exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes is can be visualized are most unlikely to impair the fundamentally strong position of such issues. AA Bonds that are rated AA are judged to be of high quality by all standards. Together with the AAA group, they comprise what are generally known as high grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in AAA securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long-term risks appear somewhat larger than in AAA securities. A Bonds that are rated A possess many favorable investment attributes and are to be considered as upper medium grade obligations. Factors giving security to principal and interest are considered adequate but elements may be present which suggest a susceptibility to impairment sometime in the future. NR indicates that both the bonds and the obligor or credit enhancer are not currently rated by S&P or Moody's with respect to short-term indebtedness. However, management considers them to be of comparable quality to securities rated A-1 or P-1. NR(1) The underlying issuer/obligor/guarantor has other outstanding debt rated "AAA" by S&P or "Aaa" by Moody's. NR(2) The underlying issuer/obligor/guarantor has other outstanding debt rated "AA" by S&P or "Aa" Moody's. NR(3) The underlying issuer/obligor/guarantor has other outstanding debt rated "A" by S&P or Moody's. MINNESOTA MUNICIPAL CASH TRUST STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1995 (UNAUDITED) - -------------------------------------------------------------------------------- ASSETS: - -------------------------------------------------------------------------------- Total investments in securities, at amortized cost and value $328,679,265 - -------------------------------------------------------------------------------- Cash 121,957 - -------------------------------------------------------------------------------- Income receivable 2,484,995 - -------------------------------------------------------------------------------- Deferred expenses 2,452 - -------------------------------------------------------------------------------- ------------ Total assets 331,288,669 - -------------------------------------------------------------------------------- LIABILITIES: - -------------------------------------------------------------------------------- Payable for investments purchased $4,298,500 - ------------------------------------------------------------------- Payable for shares redeemed 130,399 - ------------------------------------------------------------------- Income distribution payable 684,198 - ------------------------------------------------------------------- Accrued expenses 146,588 - ------------------------------------------------------------------- ---------- Total liabilities 5,259,685 - -------------------------------------------------------------------------------- ------------ NET ASSETS for 326,028,984 shares outstanding $326,028,984 - -------------------------------------------------------------------------------- ------------ NET ASSET VALUE, Offering Price, and Redemption Proceeds Per Share: - -------------------------------------------------------------------------------- Institutional Shares ($212,433,809 / 212,433,809 shares outstanding) $1.00 - -------------------------------------------------------------------------------- ------------ Cash Series Shares ($113,595,175 / 113,595,175 shares outstanding) $1.00 - -------------------------------------------------------------------------------- ------------
(See Notes which are an integral part of the Financial Statements) MINNESOTA MUNICIPAL CASH TRUST STATEMENT OF OPERATIONS SIX MONTHS ENDED APRIL 30, 1995 (UNAUDITED) - -------------------------------------------------------------------------------- INVESTMENT INCOME: - ------------------------------------------------------------------------------------ Interest $6,446,516 - ------------------------------------------------------------------------------------ EXPENSES: - ------------------------------------------------------------------------------------ Investment advisory fee $ 637,144 - ---------------------------------------------------------------------- Administrative personnel and services fee 120,580 - ---------------------------------------------------------------------- Custodian fees 25,535 - ---------------------------------------------------------------------- Transfer agent and dividend disbursing agent fees and expenses 47,253 - ---------------------------------------------------------------------- Directors'/Trustees' fees 2,219 - ---------------------------------------------------------------------- Auditing fees 7,490 - ---------------------------------------------------------------------- Legal fees 6,262 - ---------------------------------------------------------------------- Portfolio accounting fees 44,008 - ---------------------------------------------------------------------- Distribution services fee--Cash Series Shares 280,882 - ---------------------------------------------------------------------- Shareholder services fee--Cash Series Shares 140,441 - ---------------------------------------------------------------------- Share registration costs 75,629 - ---------------------------------------------------------------------- Printing and postage 14,554 - ---------------------------------------------------------------------- Insurance premiums 5,353 - ---------------------------------------------------------------------- Miscellaneous 1,788 - ---------------------------------------------------------------------- ---------- Total expenses 1,409,138 - ---------------------------------------------------------------------- Deduct-- - ---------------------------------------------------------------------- Waiver of investment advisory fee $504,604 - ----------------------------------------------------------- Waiver of distribution services fee--Cash Series Shares 188,748 - ----------------------------------------------------------- Waiver of shareholder services fee--Cash Series Shares 7,869 $ 701,221 - ----------------------------------------------------------- -------- ---------- Net expenses 707,917 - ------------------------------------------------------------------------------------ ---------- Net investment income $5,738,599 - ------------------------------------------------------------------------------------ ----------
(See Notes which are an integral part of the Financial Statements) MINNESOTA MUNICIPAL CASH TRUST STATEMENT OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
SIX MONTHS ENDED APRIL 30, 1995 YEAR ENDED (UNAUDITED) OCTOBER 31, 1994 ---------------- ---------------- INCREASE (DECREASE) IN NET ASSETS: - ------------------------------------------------------ OPERATIONS-- - ------------------------------------------------------ Net investment income $ 5,738,599 $ 6,226,990 - ------------------------------------------------------ ---------------- ---------------- DISTRIBUTIONS TO SHAREHOLDERS-- - ------------------------------------------------------ Distributions from net investment income: - ------------------------------------------------------ Institutional Shares (3,865,130) (4,475,720) - ------------------------------------------------------ Cash Series Shares (1,873,469) (1,751,270) - ------------------------------------------------------ ---------------- ---------------- Change in net assets resulting from distributions to shareholders (5,738,599) (6,226,990) - ------------------------------------------------------ ---------------- ---------------- SHARE TRANSACTIONS-- - ------------------------------------------------------ Proceeds from sale of shares 532,755,942 931,933,710 - ------------------------------------------------------ Net asset value of shares issued to shareholders in payment of distributions declared 2,075,618 1,945,475 - ------------------------------------------------------ Cost of shares redeemed (462,841,255) (913,227,051) - ------------------------------------------------------ ---------------- ---------------- Change in net assets resulting from Share transactions 71,990,305 20,652,134 - ------------------------------------------------------ ---------------- ---------------- Change in net assets 71,990,305 20,652,134 - ------------------------------------------------------ NET ASSETS: - ------------------------------------------------------ Beginning of period 254,038,679 233,386,545 - ------------------------------------------------------ ---------------- ---------------- End of period $ 326,028,984 $ 254,038,679 - ------------------------------------------------------ ---------------- ----------------
(See Notes which are an integral part of the Financial Statements) MINNESOTA MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES - -------------------------------------------------------------------------------- (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED APRIL 30, YEAR ENDED OCTOBER 31, 1995 --------------------------------------------- (UNAUDITED) 1994 1993 1992 1991 1990(A) ----------- ----- ----- ----- ----- ----- NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 - ------------------------------------------- INCOME FROM INVESTMENT OPERATIONS - ------------------------------------------- Net investment income 0.02 0.03 0.02 0.03 0.05 0.01 - ------------------------------------------- LESS DISTRIBUTIONS - ------------------------------------------- Distributions from net investment income (0.02) (0.03) (0.02) (0.03) (0.05) (0.01) - ------------------------------------------- -------- ----- ----- ----- ----- ----- NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 - ------------------------------------------- -------- ----- ----- ----- ----- ----- TOTAL RETURN (B) 1.86% 2.58% 2.43% 3.19% 4.89% 0.90% - ------------------------------------------- RATIOS TO AVERAGE NET ASSETS - ------------------------------------------- Expenses 0.30%(c) 0.31% 0.31% 0.31% 0.30% 0.01%(c) - ------------------------------------------- Net investment income 3.75%(c) 2.55% 2.40% 3.10% 4.73% 6.45%(c) - ------------------------------------------- Expense waiver/reimbursement (d) 0.32%(c) 0.34% 0.34% 0.33% 0.43% 0.69%(c) - ------------------------------------------- SUPPLEMENTAL DATA - ------------------------------------------- Net assets, end of period (000 omitted) $212,434 $159,704 $165,865 $245,168 $124,603 $75,904 - -------------------------------------------
(a) Reflects operations for the period from September 10, 1990 (date of initial public investment) to October 31, 1990. (b) Based on net asset value, which does not reflect the sales load or contingent deferred sales charge, if applicable. (c) Computed on an annualized basis. (d) This voluntary expense decrease is reflected in both the expense and net investment income ratios shown above. (See Notes which are an integral part of the Financial Statements) MINNESOTA MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS--CASH SERIES SHARES - -------------------------------------------------------------------------------- (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED APRIL 30, YEAR ENDED OCTOBER 31, 1995 ----------------------------------- (UNAUDITED) 1994 1993 1992 1991(A) ----------- ----- ----- ----- ----- NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 - --------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS - --------------------------------------------------- Net investment income 0.02 0.02 0.02 0.03 0.04 - --------------------------------------------------- LESS DISTRIBUTIONS - --------------------------------------------------- Distributions from net investment income (0.02) (0.02) (0.02) (0.03) (0.04) - --------------------------------------------------- -------- ----- ----- ----- ----- NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 - --------------------------------------------------- -------- ----- ----- ----- ----- TOTAL RETURN (B) 1.66% 2.17% 2.02% 2.78% 3.60% - --------------------------------------------------- RATIOS TO AVERAGE NET ASSETS - --------------------------------------------------- Expenses 0.70%(c) 0.71% 0.71% 0.71% 0.64%(c) - --------------------------------------------------- Net investment income 3.33%(c) 2.15% 2.01% 2.75% 4.11%(c) - --------------------------------------------------- Expense waiver/reimbursement (d) 0.66%(c) 0.61% 0.44% 0.44% 0.59%(c) - --------------------------------------------------- SUPPLEMENTAL DATA - --------------------------------------------------- Net assets, end of period (000 omitted) $113,595 $94,335 $67,521 $75,044 $69,747 - ---------------------------------------------------
(a) Reflects operations for the period from January 7, 1991 (date of initial public investment) to October 31, 1991. (b) Based on net asset value, which does not reflect the sales load or contingent deferred sales charge, if applicable. (c) Computed on an annualized basis. (d) This voluntary expense decrease is reflected in both the expense and net investment income ratios shown above. (See Notes which are an integral part of the Financial Statements) MINNESOTA MUNICIPAL CASH TRUST NOTES TO FINANCIAL STATEMENTS APRIL 30, 1995 (UNAUDITED) - -------------------------------------------------------------------------------- (1) ORGANIZATION Federated Municipal Trust (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 thirteen non-diversified portfolios. The financial statements included herein present only those of Minnesota Municipal Cash Trust (the "Fund"). The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. The Fund offers two classes of shares, Institutional Shares and Cash Series Shares. (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. INVESTMENT VALUATIONS--The Fund's use of the amortized cost method to value its portfolio securities is in accordance with Rule 2a-7 under the Act. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses are accrued daily. Bond premium and discount, if applicable, are amortized as required by the Internal Revenue Code, as amended (the "Code"). Distributions to shareholders are recorded on the ex-dividend date. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the Code applicable to regulated investment companies and to distribute to shareholders each year substantially all of its income. Accordingly, no provisions for federal tax are necessary. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in when-issued or delayed delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked to market daily and begin earning interest on the settlement date. CONCENTRATION OF CREDIT RISK--Since the Fund invests a substantial portion of its assets in issuers located in one state, it will be more susceptible to factors adversely affecting issuers of that state than would be a comparable tax-exempt mutual fund that invests nationally. In order to reduce the credit risk associated with such factors, at April 30, 1995, 87.4% of the securities in the portfolio of investments are backed by letters of credit or bond insurance of various financial institutions and financial guaranty assurance agencies. The value of investments insured by or supported (backed) by a letter of credit for any one institution or agency does not exceed 14.5% of total investments. MINNESOTA MUNICIPAL CASH TRUST - -------------------------------------------------------------------------------- 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. Additional information on each restricted security held at April 30, 1995 is as follows:
ACQUISITION ACQUISITION SECURITY DATE COST ------------------------------------------------------- ------------- ------------ Minnesota State Weekly VRDNs P-Floats (Merrill Lynch Co.) 10/4/93 $ 740,000
DEFERRED EXPENSES--The costs incurred by the Fund with respect to registration of its shares in its first fiscal year, excluding the initial expense of registering the shares, have been deferred and are being amortized using the straight-line method not to exceed a period of five years from the Fund's commencement date. OTHER--Investment transactions are accounted for on the trade date. (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) for each class of shares. At April 30, 1995, capital paid-in aggregated $326,028,984. Transactions in shares were as follows:
SIX MONTHS ENDED YEAR ENDED INSTITUTIONAL SHARES APRIL 30, 1995 OCTOBER 31, 1994 - ----------------------------------------------------- ---------------- ---------------- Shares sold 289,721,877 554,305,186 - ----------------------------------------------------- Shares issued to shareholders in payment of dividends declared 237,106 266,557 - ----------------------------------------------------- Shares redeemed (237,229,120) (560,732,943) - ----------------------------------------------------- --------------- --------------- Net change resulting from Institutional Shares transactions 52,729,863 (6,161,200) - ----------------------------------------------------- --------------- ---------------
MINNESOTA MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED CASH SERIES SHARES APRIL 30, 1995 OCTOBER 31, 1994 - ----------------------------------------------------- ---------------- ---------------- Shares sold 243,034,065 377,628,524 - ----------------------------------------------------- Shares issued to shareholders in payment of dividends declared 1,838,512 1,678,918 - ----------------------------------------------------- Shares redeemed (225,612,135) (352,494,108) - ----------------------------------------------------- --------------- --------------- Net change resulting from Cash Series Shares transactions 19,260,442 26,813,334 - ----------------------------------------------------- --------------- --------------- Net change resulting from Fund Share transactions 71,990,305 20,652,134 - ----------------------------------------------------- --------------- ---------------
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES INVESTMENT ADVISORY FEE--Federated Management, the Fund's investment adviser (the "Adviser"), receives for its services an annual investment advisory fee equal to .40 of 1% 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 provides the Fund with administrative personnel and services. The FAS fee is based on the level of average aggregate daily net assets of all funds advised by subsidiaries of Federated Investors for the period. The administrative fee received during the period of the Administrative Services Agreement shall be at least $125,000 per portfolio and $30,000 per each additional class of shares. DISTRIBUTION SERVICES FEE--The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund will compensate 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 the Fund's Cash Series class of shares. The Plan provides that the Fund may incur distribution expenses up to .50 of 1% of the average daily net assets of the Cash Series Shares, annually, to compensate FSC. SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to .25 of 1% of average daily net assets of Cash Series for the period. This fee is to obtain certain services for shareholders and to maintain the shareholder accounts. TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated Services Company, ("FServ"), serves as transfer and dividend disbursing agent for the Fund. This fee is based on the size, type, and number of accounts and transactions made by shareholders. PORTFOLIO ACCOUNTING FEES--FServ also 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. MINNESOTA MUNICIPAL CASH TRUST - -------------------------------------------------------------------------------- ORGANIZATIONAL EXPENSES--Organizational expenses of $40,733 were borne initially by the Adviser. The Fund has agreed to reimburse the Adviser for the organizational expenses during the five year period following August 31, 1994 (the date Fund became effective). For the period ended April 30, 1995, the Fund paid $0 pursuant to this agreement. INTERFUND TRANSACTIONS--During the six months ended April 30, 1995, the Fund engaged in purchase and sale transactions at current market value with funds that have a common investment adviser (or affiliated investment advisers), common Directors/Trustees, and/or common Officers. These transactions were made at current market value pursuant to Rule 17a-7 under the Act amounting to $206,590,000 and $178,250,000, respectively. GENERAL--Certain of the Officers and Trustees of the Trust are Officers and Directors or Trustees of the above companies. TRUSTEES OFFICERS - --------------------------------------------------------------------------------------------- John F. Donahue John F. Donahue Thomas G. Bigley Chairman John T. Conroy, Jr. Glen R. Johnson William J. Copeland President James E. Dowd J. Christopher Donahue Lawrence D. Ellis, M.D. Vice President Edward L. Flaherty, Jr. Richard B. Fisher Glen R. Johnson Vice President Peter E. Madden Edward C. Gonzales Gregor F. Meyer Vice President and Treasurer John E. Murray, Jr. John W. McGonigle Wesley W. Posvar Vice President and Secretary Marjorie P. Smuts David M. Taylor Assistant Treasurer G. Andrew Bonnewell Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any bank, and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other government agency. Investment in mutual funds involves investment risk, including 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. - -------------------------------------------------------------------------------- NEW JERSEY - -------------------------------------------------------------------------------- MUNICIPAL - -------------------------------------------------------------------------------- CASH - -------------------------------------------------------------------------------- TRUST - -------------------------------------------------------------------------------- SEMI-ANNUAL REPORT TO SHAREHOLDERS April 30, 1995 FEDERATED SECURITIES CORP. (LOGO) - --------------------------------------------- Distributor A subsidiary of FEDERATED INVESTORS FEDERATED INVESTORS TOWER PITTSBURGH, PA 15222-3779 314229600 314229709 2052902 (6/95) PRESIDENT'S MESSAGE - -------------------------------------------------------------------------------- Dear Shareholder: I am pleased to present the Semi-Annual Report to Shareholders of New Jersey Municipal Cash Trust, a portfolio of Federated Municipal Trust, for the six-month period ended April 30, 1995. The fund consists of two classes of shares known as Institutional Shares and Institutional Service Shares. We begin this report with our customary update from the fund's portfolio manager, Jeff A. Kozemchak, who will discuss market activity and changes in the fund's strategy relative to that activity. Jeff's report is followed by the fund's Portfolio of Investments and Financial Statements. In addition, Financial Highlights tables have been included for Institutional Shares and Institutional Service Shares. New Jersey Municipal Cash Trust continues to seek relief for you and other tax-sensitive New Jersey residents, in the form of double tax-free* monthly income. The fund is able to pursue this income by maintaining a portfolio of New Jersey municipal securities, issued to fund projects as varied as education, health care, and housing. In this way, the fund helps you make the most of your short-term finances, while funding important municipal improvements in your home state. During the six-month period covered by the report, the fund paid nearly $1.7 million in total distributions to shareholders. As of this report, the fund's total net assets are $98.5 million. As always, we strive to provide you with the highest level of professional service. We appreciate your continued support and welcome your comments or questions. Sincerely, Glen R. Johnson President June 15, 1995 * Income may be subject to the federal alternative minimum tax. INVESTMENT REVIEW - -------------------------------------------------------------------------------- An Interview with Fund Portfolio Manager, Jeff A. Kozemchak Q Jeff, can you comment on the changes in money market rates during the reporting period? A In the face of resilient economic growth and the potential for this growth to create inflationary pressures, the Federal Reserve Board (the "Fed") continued to tighten monetary policy throughout 1994 and into early 1995. On November 15, 1994, the Fed hiked the federal funds target rate from 4.75% to 5.50%. The most recent move by the Fed, on February 1, 1995, increased the target rate by 50 basis points to the current 6.00% level. Short-term interest rates reflected the Fed's upward moves. The yield on the three-month Treasury bill rose from 5.22% at the beginning of the reporting period to 6.06% on February 1, 1995. The yield on the one-year Treasury bill rose from 6.25% at the beginning of the reporting period to a high of 7.32% in early January, 1995. February, March, and April, 1995, however, brought economic reports that pointed to slowing in sectors of the economy, an indication that the rate increases by the Fed that began in February, 1994, were starting to take hold. As a result, short-term interest rates declined over this period as market participants adjusted their expectations regarding the extent of future tightenings by the Fed. Reflecting this change in expectations, the three-month Treasury bill declined to 5.87% on April 30, 1995, while the one-year Treasury bill fell to 6.32%, a decline of 1.00% from the high in January, 1995. Q How have the municipal money markets and the fund's yield reacted to this interest rate environment? A Municipal money market rates were affected by the Fed tightenings early in the reporting period, as well as February's 180-degree change in market expectations regarding the potential for future Fed rate increases. In addition, municipal rates were also influenced by seasonal supply and demand imbalances throughout the reporting period. Yields on seven-day variable rate demand notes (VRDNs), the core component of a tax-free money market fund, rose from 3.22% at the beginning of the reporting period to 4.65% on April 30, 1995. Yield levels also moved upward for one-year fixed-rate notes, increasing from 4.19% in early November, 1994, to a high of 5.10% in early January, 1995, before steadily falling to 4.29% at the end of the reporting period. The divergence between short VRDN yields and one-year fixed-rate note levels resulted from market expectations that the Fed may have successfully engineered a growth slowdown, or a "soft landing." Also, tight municipal note supply conditions helped contribute to the decline in fixed note yields. The fund responded favorably to the overall increase in short-term interest rates over the period. The seven-day net yield* of the fund's Institutional Shares rose from 2.87% on November 1, 1994, to 3.89% on April 30, 1995. For the Institutional Service Shares, the seven-day net yield* rose from 2.77% at the beginning of the period to 3.79% at April 30, 1995. * Past performance does not guarantee future results. Yield will vary. - -------------------------------------------------------------------------------- Q Did you make any strategic changes to the fund's portfolio in this rate atmosphere? A For the first three months of the reporting period, we slowly added to our positions of short maturity commercial paper (CP) and VRDNs in order to maintain the responsiveness of the portfolio to changes in short-term interest rates. VRDNs adjust quickly to changes in Fed policy as well as supply and demand imbalances that are unique to the municipal money markets. The purchase of CP typically allows us to pick up an additional yield premium over VRDNs over time, while still retaining portfolio responsiveness to further rate increases. As market expectations regarding the potential for further Fed tightenings changed in February and March, 1995, we began shifting more of the portfolio into more attractive longer-term fixed-rate notes so as to lock-in the available after-tax yield advantage. At the end of the reporting period, the average maturity of the fund was at 57 days. Q What is your overall outlook for rates in the near future? A Amid reports of a slightly slowing economy and restrained inflation, it appears that the Fed is nearing the end of its tightening cycle. We expect that Fed policy will continue to be neutral in the near term, as the Fed scrutinizes upcoming releases on the economy and inflation for signs that either one is stronger than expectations. Short-term interest rates should trade within a narrow range in the near future. Nevertheless, we expect the supply of fixed-rate notes in our market to increase significantly starting in mid-June, 1995, cheapening note levels. We plan, on average, to extend the average maturity of the fund during this period of heavy issuance, as yields on fixed-rate notes may be attractive versus comparable maturity taxable securities. NEW JERSEY MUNICIPAL CASH TRUST PORTFOLIO OF INVESTMENTS APRIL 30, 1995 (UNAUDITED) - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ----------- ------------------------------------------------------- -------- ----------- SHORT-TERM MUNICIPAL SECURITIES--99.1% - -------------------------------------------------------------------------- $ 700,000 Atlantic County, NJ, Improvement Authority Weekly VRDNs (Marine Midland Bank N.A. LOC) VMIG1 $ 700,000 ------------------------------------------------------- 1,801,896 Atlantic Highlands, NJ, 5.125% BANs, 11/17/1995 NR 1,805,895 ------------------------------------------------------- 1,300,000 Berlin Township, NJ, 5.25% BANs, 6/1/1995 NR(4) 1,300,592 ------------------------------------------------------- 1,750,000 Bordentown, NJ, Regional School District Board of Education, 4.35% RANs, 6/30/1995 NR(3) 1,750,828 ------------------------------------------------------- 1,000,000 Florence Township, NJ, 5.25% BANs, 2/15/1996 NR 1,002,831 ------------------------------------------------------- 4,500,000 Galloway Township, NJ, 5.25% BANs, 3/14/1996 NR 4,513,958 ------------------------------------------------------- 3,148,239 Haddonfield, NJ, 4.12% BANs, 6/9/1995 NR 3,148,951 ------------------------------------------------------- 463,307 Haddonfield, NJ, 4.16% BANs, 6/9/1995 NR 463,431 ------------------------------------------------------- 2,000,000 Hudson County, NJ, 4.55% BANs, 10/11/1995 NR(4) 2,001,281 ------------------------------------------------------- 2,500,000 Mercer County, NJ, 5.50% BANs, 9/20/1995 NR(3) 2,505,612 ------------------------------------------------------- 1,000,000 Mercer County, NJ, Improvement Authority Weekly VRDNs (Pooled Governmental Loan)/(Credit Suisse LOC) A-1+ 1,000,000 ------------------------------------------------------- 1,500,000 Middlesex County, NJ, Pollution Control Finance Authority Weekly VRDNs (FMC Corporation)/ (Wachovia Bank & Trust Co. N.A. LOC) P-1 1,500,000 ------------------------------------------------------- 2,815,000 New Jersey EDA Weekly VRDNs (Atlantic States Cast Iron Pipe Company)/(Amsouth Bank N.A. LOC) VMIG1 2,815,000 ------------------------------------------------------- 5,000,000 New Jersey EDA Weekly VRDNs (Centu-For-Aging-- Applewood Estates)/(Banque Paribas LOC) A-1 5,000,000 ------------------------------------------------------- 2,400,000 New Jersey EDA Weekly VRDNs (Church & Dwight, Inc.)/(Bank of Nova Scotia LOC) P-1 2,400,000 ------------------------------------------------------- 2,500,000 New Jersey EDA Weekly VRDNs (Franciscan Oaks)/ (Bank of Scotland LOC) A-1+ 2,500,000 ------------------------------------------------------- 5,628,000 New Jersey EDA Weekly VRDNs (Meridian Healthcare)/(First National Bank of Maryland LOC)/ (Subject to AMT) P-1 5,628,000 -------------------------------------------------------
NEW JERSEY MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ----------- ------------------------------------------------------- -------- ----------- SHORT-TERM MUNICIPAL SECURITIES--CONTINUED - -------------------------------------------------------------------------- $ 4,323,000 New Jersey EDA Weekly VRDNs (Mulins Machines)/ (Sovran Bank N.A. LOC) P-1 $ 4,323,000 ------------------------------------------------------- 1,445,000 New Jersey EDA Weekly VRDNs (Nash Group)/ (Chemical Bank LOC)/(Subject to AMT) A-1 1,445,000 ------------------------------------------------------- 4,200,000 New Jersey EDA Weekly VRDNs (Series 1986)/ (Ridgefield Associates)/(Bank of Tokyo Ltd. LOC)/ (Subject to AMT) P-1 4,200,000 ------------------------------------------------------- 350,000 New Jersey EDA Weekly VRDNs (Series 1987G)/ (W.Y. Urban Renewal)/(National Westminster Bank PLC LOC)/(Subject to AMT) VMIG1 350,000 ------------------------------------------------------- 2,400,000 New Jersey EDA Weekly VRDNs (Series 1988F)/ (Lamington Corners Assoc.)/ (First Fidelity Bank LOC)/(Subject to AMT) VMIG1 2,400,000 ------------------------------------------------------- 1,310,000 New Jersey EDA Weekly VRDNs (Series 1992Q)/ (Physical Acoustics, Inc.)/(Banque Nationale de Paris LOC)/(Subject to AMT) VMIG1 1,310,000 ------------------------------------------------------- 1,300,000 New Jersey EDA Weekly VRDNs (Series 1992Z)/ (West-Ward Pharmaceuticals)/(Banque Nationale de Paris LOC)/(Subject to AMT) VMIG1 1,300,000 ------------------------------------------------------- 1,115,000 New Jersey EDA Weekly VRDNs (Series 1992D-1)/ (Danlin Corp.)/(Banque Nationale de Paris LOC)/ (Subject to AMT) VMIG1 1,115,000 ------------------------------------------------------- 2,465,000 New Jersey EDA Weekly VRDNs (Series 1992I-1)/ (Geshem Realty)/(Banque Nationale de Paris LOC)/ (Subject to AMT) VMIG1 2,465,000 ------------------------------------------------------- 3,185,000 New Jersey EDA Weekly VRDNs (Series 1992L)/(Kent Place School)/(Banque Nationale de Paris LOC) VMIG1 3,185,000 ------------------------------------------------------- 1,250,000 New Jersey EDA Weekly VRDNs (Series 1993I)/(Holt Hauling and Warehousing Systems)/(Meridian Bank LOC)/(Subject to AMT) P-1 1,250,000 ------------------------------------------------------- 1,500,000 New Jersey EDA Weekly VRDNs (United Jewish Community Center of Bergen County)/(Bank of New York LOC) P-1 1,500,000 -------------------------------------------------------
NEW JERSEY MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ----------- ------------------------------------------------------- -------- ----------- SHORT-TERM MUNICIPAL SECURITIES--CONTINUED - -------------------------------------------------------------------------- $ 4,350,000 New Jersey EDA Weekly VRDNs (YA-YWHA of Bergen County)/(Bank of New York LOC) VMIG1 $ 4,350,000 ------------------------------------------------------- 1,500,000 New Jersey EDA, 4.15% CP (Series 1991)/(Chambers Cogeneration LP)/(Swiss Bank Corp. LOC)/(Subject to AMT), Mandatory Tender 6/20/1995 A-1+ 1,500,000 ------------------------------------------------------- 2,865,000 New Jersey State HFA, 4.00% Semi-Annual TOBs Custody Receipts (Series 1992A), Optional Tender 5/1/1995 NR(2) 2,865,000 ------------------------------------------------------- 780,000 New Jersey State Housing & Mortgage Finance Agency, 4.35% TOBs (MBIA Insured), Optional Tender 10/1/1995 NR(2) 780,000 ------------------------------------------------------- 3,055,000 New Jersey State Housing & Mortgage Finance Agency, 4.45% TOBs (Series 1989D)/(MBIA Insured)/(Subject to AMT), Optional Tender 10/1/1995 NR(2) 3,055,000 ------------------------------------------------------- 3,000,000 New Jersey State, 4.20% TRANs CP (Series Fiscal 1995D), Mandatory Tender 5/15/1995 A-1+ 3,000,000 ------------------------------------------------------- 1,275,000 Oradell Borough, NJ, 4.24% BANs (Series 1994B), 8/17/1995 NR 1,275,322 ------------------------------------------------------- 1,000,000 Port Authority of New York and New Jersey Weekly VRDNs (Series 3)/(KIAC Partners)/(Deutsche Bank AG LOC)/(Subject to AMT) A-1+ 1,000,000 ------------------------------------------------------- 10,000,000 Port Authority of New York and New Jersey Weekly VRDNs (Series 1991-4)/(Subject to AMT) P-1 10,000,000 ------------------------------------------------------- 1,000,000 Salem County, NJ, PCA, 4.00% CP (Series 1988A)/(Philadelphia Electric Co.)/(FGIC Insured), Mandatory Tender 5/12/1995 A-1+ 1,000,000 ------------------------------------------------------- 3,200,421 West Milford Township, NJ, 5.50% BANs, 1/26/1996 NR 3,204,895 ------------------------------------------------------- 750,000 Woodbury, NJ, 5.20% BANs, 4/12/1996 NR 752,710 ------------------------------------------------------- ----------- TOTAL INVESTMENTS, AT AMORTIZED COST (A) $97,662,306 ------------------------------------------------------- -----------
(a) Also represents cost for federal tax purposes. * See Notes to Portfolio of Investments on page 8. Note: The categories of investments are shown as a percentage of net assets ($98,513,706) at April 30, 1995. NEW JERSEY MUNICIPAL CASH TRUST - -------------------------------------------------------------------------------- The following abbreviations are used throughout this portfolio: AMT -- Alternative Minimum Tax BANs -- Bond Anticipation Notes CP -- Commercial Paper EDA -- Economic Development Authority FGIC -- Financial Guaranty Insurance Company HFA -- Housing Finance Authority LOC -- Letter of Credit MBIA -- Municipal Bond Investors Assurance PCA -- Pollution Control Authority RANs -- Revenue 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) NEW JERSEY MUNICIPAL CASH TRUST NOTES TO PORTFOLIO OF INVESTMENTS (UNAUDITED) - -------------------------------------------------------------------------------- SHORT-TERM MUNICIPAL OBLIGATION RATINGS STANDARD & POOR'S RATINGS GROUP A S&P note rating reflects the liquidity concerns and market access risks unique to notes. SP-1 Very strong or strong capacity to pay principal and interest. Those issues determined to possess overwhelming safety characteristics will be given a plus (+) designation. SP-2 Satisfactory capacity to pay principal and interest. MOODY'S INVESTORS SERVICE, INC. Moody's short-term ratings are designated Moody's Investment Grade (MIG or VMIG (see below)). The purpose of the MIG or VMIG ratings is to provide investors with a simple system by which the relative investment qualities of short-term obligations may be evaluated. MIG1 This designation denotes best quality. There is present strong protection by established cash flows, superior liquidity support or demonstrated broad-based access to the market for refinancing. MIG2 This designation denotes high quality. Margins of protection are ample although not so large as in the preceding group. VARIABLE RATE DEMAND NOTES (VRDNS) AND TENDER OPTION BONDS (TOBS) RATINGS STANDARD & POOR'S RATINGS GROUP S&P assigns dual ratings to all long-term debt issues that have as part of their provisions a variable rate demand feature. The first rating (long-term rating) addresses the likelihood of repayment of principal and interest when due, and the second rating (short-term rating) describes the demand characteristics. Several examples are AAA/A-1+, AA/A-1+, A/A-1. (The definitions for the long-term and the short-term ratings are provided below.) MOODY'S INVESTORS SERVICE, INC. Short-term ratings on issues with demand features are differentiated by the use of the VMIG symbol to reflect such characteristics as payment upon periodic demand rather than fixed maturity dates and payment relying on external liquidity. - -------------------------------------------------------------------------------- In this case, two ratings are usually assigned, (for example, Aaa/VMIG-1); the first representing an evaluation of the degree of risk associated with scheduled principal and interest payments, and the second representing an evaluation of the degree of risk associated with the demand feature. The VMIG rating can be assigned a 1 or 2 designation using the same definitions described above for the MIG rating. COMMERCIAL PAPER (CP) RATINGS STANDARD & POOR'S RATINGS GROUP A S&P commercial paper rating is a current assessment of the likelihood of timely payment of debt having an original maturity of no more than 365 days. A-1 This highest category indicates that the degree of safety regarding timely payment is strong. Those issues determined to possess extremely strong safety characteristics are denoted with a plus (+) sign designation. A-2 Capacity for timely payment on issues with this designation is satisfactory. However, the relative degree of safety is not as high as for issues designated A-1. MOODY'S INVESTORS SERVICE, INC. P-1 Issuers rated PRIME-1 (or related supporting institutions) have a superior capacity for repayment of short-term promissory obligations. Prime-1 repayment capacity will normally be evidenced by the following characteristics: leading market positions in well established industries, high rates of return on funds employed, conservative capitalization structure with moderate reliance on debt and ample asset protection, broad margins in earning coverage of fixed financial charges and high internal cash generation, well-established access to a range of financial markets and assured sources of alternate liquidity. P-2 Issuers rated PRIME-2 (or related supporting institutions) have a strong capacity for repayment of short-term promissory obligations. This will normally be evidenced by many of the characteristics, cited above, but to a lesser degree. Earnings trends and coverage ratios, while sound, will be more subject to variation. Capitalization characteristics, while still appropriate, may be more affected by external conditions. Ample alternate liquidity is maintained. LONG-TERM DEBT RATINGS STANDARD & POOR'S RATINGS GROUP AAA Debt rated "AAA" has the highest rating assigned by S&P. Capacity to pay interest and repay principal is extremely strong. AA Debt rated "AA" has a very strong capacity to pay interest and repay principal and differs from the highest rated issues only in small degree. - -------------------------------------------------------------------------------- A Debt rated "A" has a strong capacity to pay interest and repay principal although it is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than debt in higher rated categories. MOODY'S INVESTORS SERVICE, INC. AAA Bonds that are rated AAA are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as "gilt edged." Interest payments are protected by a large or by an exception ally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues. AA Bonds that are rated AA are judged to be of high quality by all standards. Together with the AAA group; they comprise what are generally known as high grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in AAA securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long-term risks appear somewhat larger than in AAA securities. A Bonds that are rated A possess many favorable investment attributes and are to be considered as upper medium grade obligations. Factors giving security to principal and interest are considered adequate but elements may be present which suggest a susceptibility to impairment sometime in the future. NR indicates that both the bonds and the obligor or credit enhancer are not currently rated by S&P or Moody's with respect to short-term indebtedness. However, management considers them to be of comparable quality to securities rated A-1 or P-1. NR(1) The underlying issuer/obligor/guarantor has other outstanding debt rated "AAA" by S&P or "Aaa" by Moody's. NR(2) The underlying issuer/obligor/guarantor has other outstanding debt rated "AA" by S&P or "Aa" Moody's. NR(3) The underlying issuer/obligor/guarantor has other outstanding debt rated "A" by S&P or Moody's. NEW JERSEY MUNICIPAL CASH TRUST STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1995 (UNAUDITED) - -------------------------------------------------------------------------------- ASSETS: - -------------------------------------------------------------------------------- Investments in securities, at amortized cost and value $97,662,306 - -------------------------------------------------------------------------------- Cash 310,088 - -------------------------------------------------------------------------------- Income receivable 844,992 - -------------------------------------------------------------------------------- Deferred expenses 8,729 - -------------------------------------------------------------------------------- ----------- Total assets 98,826,115 - -------------------------------------------------------------------------------- LIABILITIES: - -------------------------------------------------------------------------------- Payable for shares redeemed $ 531 - --------------------------------------------------------------------- Income distribution payable 263,462 - --------------------------------------------------------------------- Accrued expenses 48,416 - --------------------------------------------------------------------- -------- Total liabilities 312,409 - -------------------------------------------------------------------------------- ----------- NET ASSETS for 98,513,706 shares outstanding $98,513,706 - -------------------------------------------------------------------------------- ----------- NET ASSET VALUE, Offering Price, and Redemption Proceeds Per Share: - -------------------------------------------------------------------------------- Institutional Shares ($79,318,062 / 79,318,062 shares outstanding) $1.00 - -------------------------------------------------------------------------------- ----------- Institutional Service Shares ($19,195,644 / 19,195,644 shares outstanding) $1.00 - -------------------------------------------------------------------------------- -----------
(See Notes which are an integral part of the Financial Statements) NEW JERSEY MUNICIPAL CASH TRUST STATEMENT OF OPERATIONS SIX MONTHS ENDED APRIL 30, 1995 (UNAUDITED) - -------------------------------------------------------------------------------- INVESTMENT INCOME: - ----------------------------------------------------------------------------------- Interest $1,972,929 - ----------------------------------------------------------------------------------- EXPENSES: - ----------------------------------------------------------------------------------- Investment advisory fee $200,561 - ----------------------------------------------------------------------- Administrative personnel and services fee 76,863 - ----------------------------------------------------------------------- Custodian fees 6,707 - ----------------------------------------------------------------------- Transfer agent and dividend disbursing agent fees and expenses 34,757 - ----------------------------------------------------------------------- Directors'/Trustees' fees 1,145 - ----------------------------------------------------------------------- Auditing fees 8,204 - ----------------------------------------------------------------------- Legal fees 5,361 - ----------------------------------------------------------------------- Portfolio accounting fees 29,124 - ----------------------------------------------------------------------- Distribution services fee--Institutional Service Shares 13,720 - ----------------------------------------------------------------------- Shareholder services fee--Institutional Shares 89,504 - ----------------------------------------------------------------------- Shareholder services fee--Institutional Service Shares 34,300 - ----------------------------------------------------------------------- Share registration costs 16,408 - ----------------------------------------------------------------------- Printing and postage 9,522 - ----------------------------------------------------------------------- Insurance premiums 935 - ----------------------------------------------------------------------- Taxes 1,263 - ----------------------------------------------------------------------- Miscellaneous 3,022 - ----------------------------------------------------------------------- -------- Total expenses 531,396 - ----------------------------------------------------------------------- Deduct-- - ----------------------------------------------------------------------- Waiver of investment advisory fee $145,581 - ------------------------------------------------------------ Waiver of distribution services fee--Institutional Service Shares 13,720 - ------------------------------------------------------------ Waiver of shareholder services fee--Institutional Shares 69,748 - ------------------------------------------------------------ Waiver of shareholder services fee--Institutional Service Shares 12,856 241,905 - ------------------------------------------------------------ -------- -------- Net expenses 289,491 - ----------------------------------------------------------------------------------- ---------- Net investment income $1,683,438 - ----------------------------------------------------------------------------------- ----------
(See Notes which are an integral part of the Financial Statements) NEW JERSEY MUNICIPAL CASH TRUST STATEMENT OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
SIX MONTHS ENDED APRIL 30, 1995 YEAR ENDED (UNAUDITED) OCTOBER 31, 1994 ---------------- ---------------- INCREASE (DECREASE) IN NET ASSETS: - ------------------------------------------------------ OPERATIONS-- - ------------------------------------------------------ Net investment income $ 1,683,438 $ 2,157,116 - ------------------------------------------------------ ---------------- ---------------- DISTRIBUTIONS TO SHAREHOLDERS-- - ------------------------------------------------------ Distributions from net investment income: - ------------------------------------------------------ Institutional Shares (1,237,932) (1,478,776) - ------------------------------------------------------ Institutional Service Shares (445,506) (678,340) - ------------------------------------------------------ ---------------- ---------------- Change in net assets resulting from distributions to shareholders (1,683,438) (2,157,116) - ------------------------------------------------------ ---------------- ---------------- SHARE TRANSACTIONS-- - ------------------------------------------------------ Proceeds from sale of Shares 208,968,240 344,046,340 - ------------------------------------------------------ Net asset value of Shares issued to shareholders in payment of distributions declared 255,982 426,614 - ------------------------------------------------------ Cost of Shares redeemed (210,398,658) (332,135,904) - ------------------------------------------------------ ---------------- ---------------- Change in net assets resulting from Share transactions (1,174,436) 12,337,050 - ------------------------------------------------------ ---------------- ---------------- Change in net assets (1,174,436) 12,337,050 - ------------------------------------------------------ NET ASSETS: - ------------------------------------------------------ Beginning of period 99,688,142 87,351,092 - ------------------------------------------------------ ---------------- ---------------- End of period $ 98,513,706 $ 99,688,142 - ------------------------------------------------------ ---------------- ----------------
(See Notes which are an integral part of the Financial Statements) NEW JERSEY MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES - -------------------------------------------------------------------------------- (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED YEAR ENDED OCTOBER 31, APRIL 30, 1995 ------------------------------------- (UNAUDITED) 1994 1993 1992 1991(A) ---------------- ----- ----- ----- ------- NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $1.00 $1.00 $1.00 $1.00 - ----------------------------------- INCOME FROM INVESTMENT OPERATIONS - ----------------------------------- Net investment income 0.02 0.02 0.02 0.03 0.04 - ----------------------------------- ---------- ----- ----- ----- ------ LESS DISTRIBUTIONS - ----------------------------------- Dividends from net investment income (0.02) (0.02) (0.02) (0.03) (0.04) - ----------------------------------- ---------- ----- ----- ----- ------ NET ASSET VALUE, END OF PERIOD $ 1.00 $1.00 $1.00 $1.00 $1.00 - ----------------------------------- ---------- ----- ----- ----- ------ TOTAL RETURN (B) 1.69% 2.26% 2.22% 2.96% 3.87% - ----------------------------------- RATIOS TO AVERAGE NET ASSETS - ----------------------------------- Expenses 0.55%(c) 0.54% 0.46% 0.45% 0.27%(c) - ----------------------------------- Net investment income 3.40%(c) 2.22% 2.19% 2.86% 4.19%(c) - ----------------------------------- Expense waiver/reimbursement (d) 0.48%(c) 0.39% 0.45% 0.51% 0.67%(c) - ----------------------------------- SUPPLEMENTAL DATA - ----------------------------------- Net assets, end of period (000 omitted) $79,318 $62,984 $66,346 $57,657 $39,423 - -----------------------------------
(a) Reflects operations for the period from December 13, 1990 (date of initial public investment) to October 31, 1991. (b) Based on net asset value, which does not reflect the sales load or contingent deferred sales charge, if applicable. (c) Computed on an annualized basis. (d) This voluntary expense decrease is reflected in both the expense and net investment income ratios shown above. (See Notes which are an integral part of the Financial Statements) NEW JERSEY MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS--INSTITUTIONAL SERVICE SHARES - -------------------------------------------------------------------------------- (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED YEAR ENDED OCTOBER 31, APRIL 30, 1995 ------------------------------------- (UNAUDITED) 1994 1993 1992 1991(A) ---------------- ----- ----- ----- ------- NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $1.00 $1.00 $1.00 $1.00 - ----------------------------------- INCOME FROM INVESTMENT OPERATIONS - ----------------------------------- Net investment income 0.02 0.02 0.02 0.03 0.04 - ----------------------------------- ---------- ----- ----- ----- ------ LESS DISTRIBUTIONS - ----------------------------------- Distributions from net investment income (0.02) (0.02) (0.02) (0.03) (0.04) - ----------------------------------- ---------- ----- ----- ----- ------ NET ASSET VALUE, END OF PERIOD $ 1.00 $1.00 $1.00 $1.00 $1.00 - ----------------------------------- ---------- ----- ----- ----- ------ TOTAL RETURN (B) 1.64% 2.16% 2.12% 2.86% 3.82% - ----------------------------------- RATIOS TO AVERAGE NET ASSETS - ----------------------------------- Expenses 0.65%(c) 0.65% 0.56% 0.55% 0.35%(c) - ----------------------------------- Net investment income 3.25%(c) 2.19% 2.08% 2.69% 4.11%(c) - ----------------------------------- Expense waiver/reimbursement (d) 0.49%(c) 0.41% 0.45% 0.51% 0.69%(c) - ----------------------------------- SUPPLEMENTAL DATA - ----------------------------------- Net assets, end of period (000 omitted) $19,196 $36,704 $21,005 $26,844 $17,709 - -----------------------------------
(a) Reflects operations for the period from December 13, 1990 (date of initial public investment) to October 31, 1991. (b) Based on net asset value, which does not reflect the sales load or contingent deferred sales charge, if applicable. (c) Computed on an annualized basis. (d) This voluntary expense decrease is reflected in both the expense and net investment income ratios shown above. (See Notes which are an integral part of the Financial Statements) NEW JERSEY MUNICIPAL CASH TRUST NOTES TO FINANCIAL STATEMENTS APRIL 30, 1995 (UNAUDITED) - -------------------------------------------------------------------------------- (1) ORGANIZATION Federated Municipal Trust (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 thirteen non-diversified portfolios. The financial statements included herein present only those of New Jersey Municipal Cash Trust (the "Fund"). The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. The Fund offers two classes of shares: Institutional Shares and Institutional Service Shares. (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. INVESTMENT VALUATIONS--The Fund's use of the amortized cost method to value its portfolio securities is in accordance with Rule 2a-7 under the Act. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses are accrued daily. Bond premium and discount, if applicable, are amortized as required by the Internal Revenue Code, as amended (the "Code"). Distributions to shareholders are recorded on the ex-dividend date. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the Code applicable to regulated investment companies and to distribute to shareholders each year substantially all of its income. Accordingly, no provisions for federal tax are necessary. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in when-issued or delayed delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked to market daily and begin earning interest on the settlement date. CONCENTRATION OF CREDIT RISK--Since the Fund invests a substantial portion of its assets in issuers located in one state, it will be more susceptible to factors adversely affecting issuers of that state than would be a comparable tax-exempt mutual fund that invests nationally. In order to reduce the credit risk associated with such factors, at April 30, 1995, 58.4% of the securities in the portfolio of investments are backed by letters of credit or bond insurance of various financial institutions and financial guaranty assurance agencies. The value of investments insured by or supported (backed) by a letter of credit for any one institution or agency does not exceed 9.6% of total investments. NEW JERSEY MUNICIPAL CASH TRUST - -------------------------------------------------------------------------------- DEFERRED EXPENSES--The costs incurred by the Fund with respect to registration of its shares in its first fiscal year, excluding the initial expense of registering the shares, have been deferred and are being amortized using the straight-line method not to exceed a period of five years from the Fund's commencement date. OTHER--Investment transactions are accounted for on the trade date. (3) SHARES OF BENEFICIAL INTEREST The Declaration of Trust permits the Board of Trustees to issue an unlimited number of full and fractional shares of beneficial interest (without par value) for each class of shares. At April 30, 1995, capital paid-in aggregated $98,513,706. Transactions in shares were as follows:
SIX MONTHS ENDED YEAR ENDED APRIL 30, 1995 OCTOBER 31, 1994 ---------------- ---------------- INSTITUTIONAL SHARES - ----------------------------------------------------- Shares sold 164,804,764 240,111,228 - ----------------------------------------------------- Shares issued to shareholders in payment of distributions declared 7,643 2,995 - ----------------------------------------------------- Shares redeemed (148,478,009) (243,476,200) - ----------------------------------------------------- --------------- --------------- Net change resulting from Institutional Shares transactions 16,334,398 (3,361,977) - ----------------------------------------------------- --------------- ---------------
SIX MONTHS ENDED YEAR ENDED APRIL 30, 1995 OCTOBER 31, 1994 ---------------- ---------------- INSTITUTIONAL SERVICE SHARES - ----------------------------------------------------- Shares sold 44,163,476 103,935,112 - ----------------------------------------------------- Shares issued to shareholders in payment of distributions declared 248,339 423,619 - ----------------------------------------------------- Shares redeemed (61,920,649) (88,659,704) - ----------------------------------------------------- ---------- ------------ Net change resulting from Institutional Service Shares transactions (17,508,834) 15,699,027 - ----------------------------------------------------- ---------- ------------ Net change resulting from share transactions (1,174,436) 12,337,050 - ----------------------------------------------------- ---------- ------------
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES INVESTMENT ADVISORY FEE--Federated Management, the Fund's investment adviser (the "Adviser"), receives for its services an annual investment advisory fee equal to .40 of 1% of the Fund's average daily NEW JERSEY MUNICIPAL CASH TRUST - -------------------------------------------------------------------------------- net assets. The Adviser may voluntarily choose to waive a 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, provides the Fund with administrative personnel and services. The FAS fee is based on the level of average aggregate daily net assets of all funds advised by subsidiaries of Federated Investors for the period. The administrative fee received during the period of the Administrative Services Agreement shall be at least $125,000 per portfolio and $30,000 per each additional class of shares. DISTRIBUTION SERVICES FEE--The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund will compensate 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 the Fund's Institutional Service Shares. The Plan provides that the Fund may incur distribution expenses up to .10 of 1% of the average daily net assets of the Institutional Service Shares, annually, to compensate FSC. The distributor may voluntarily choose to waive its fee. The distributor can modify or terminate this voluntary waiver at any time at its sole discretion. SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to .25 of 1% of average daily net assets of the Fund for the period. This fee is to obtain certain services for shareholders and to maintain shareholder accounts. TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated Services Company ("FServ") serves as transfer and dividend disbursing agent for the Fund. This fee is based on the size, type, and number of accounts and transactions made by shareholders. PORTFOLIO ACCOUNTING FEES--FServ also maintains the Fund's accounting records. This fee is based on the level of the Fund's average daily net assets for the period, plus out-of-pocket expenses. ORGANIZATIONAL EXPENSES--Organizational expenses ($61,531) were borne initially by the Adviser. The Fund has agreed to reimburse the Adviser at an annual rate of .005 of 1% of average daily net assets and .01 of 1% of average daily net assets for the organizational expenses until expenses initially borne by the Adviser are fully reimbursed or the expiration of five years after December 10, 1990 (date the Fund became effective), whichever occurs earlier. For the six months ended April 30, 1995, the Fund paid $2,537 pursuant to this agreement. INTERFUND TRANSACTIONS--During the six months ended April 30, 1995, 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 transactions were made at current market value pursuant to Rule 17a-7 under the Act amounting to $76,230,000 and $71,685,000, respectively. GENERAL--Certain of the Officers and Trustees of the Trust are Officers and Directors or Trustees of the above companies. TRUSTEES OFFICERS - --------------------------------------------------------------------------------------------- John F. Donahue John F. Donahue Thomas G. Bigley Chairman John T. Conroy, Jr. Glen R. Johnson William J. Copeland President James E. Dowd J. Christopher Donahue Lawrence D. Ellis, M.D. Vice President Edward L. Flaherty, Jr. Richard B. Fisher Glen R. Johnson Vice President Peter E. Madden Edward C. Gonzales Gregor F. Meyer Vice President and Treasurer John E. Murray, Jr. John W. McGonigle Wesley W. Posvar Vice President and Secretary Marjorie P. Smuts David M. Taylor Assistant Treasurer G. Andrew Bonnewell Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any bank, and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other government agency. Investment in mutual funds involves investment risk, including 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. - -------------------------------------------------------------------------------- OHIO - -------------------------------------------------------------------------------- MUNICIPAL - -------------------------------------------------------------------------------- CASH - -------------------------------------------------------------------------------- TRUST - -------------------------------------------------------------------------------- SEMI-ANNUAL REPORT TO SHAREHOLDERS APRIL 30, 1995 FEDERATED SECURITIES CORP. (LOGO) - --------------------------------------------- Distributor A subsidiary of FEDERATED INVESTORS FEDERATED INVESTORS TOWER PITTSBURGH, PA 15222-3779 314229840 314229857 G00829-01 (6/95) PRESIDENT'S MESSAGE - -------------------------------------------------------------------------------- Dear Shareholder: I am pleased to present the Semi-Annual Report to Shareholders of Ohio Municipal Cash Trust, a portfolio of Federated Municipal Trust, for the six-month period ended April 30, 1995. The fund consists of two classes of shares known as Institutional Shares and Cash II Shares. We begin this report with our customary update from the fund's portfolio manager, Jeff A. Kozemchak, who will discuss market activity and changes in the fund's strategy relative to that activity. Jeff's report is followed by the fund's Portfolio of Investments and Financial Statements. In addition, Financial Highlights tables have been included for Institutional Shares and Cash II Shares. Ohio Municipal Cash Trust continues to seek relief for you and other tax-sensitive Ohio residents, in the form of double tax-free* monthly income. The fund is able to pursue this income by maintaining a portfolio of Ohio municipal securities, issued to fund projects as varied as education, health care, and housing. In this way, the fund helps you make the most of your short-term finances, while funding important municipal improvements in your home state. During the six-month period covered by the report, the fund paid nearly $3.7 million in total distributions to shareholders. As of this report, the fund's total net assets are $213.8 million. As always, we strive to provide you with the highest level of professional service. We appreciate your continued support and welcome your comments or questions. Sincerely, Glen R. Johnson President June 15, 1995 * Income may be subject to the federal alternative minimum tax. INVESTMENT REVIEW - -------------------------------------------------------------------------------- An Interview with the Fund's Portfolio Manager, Jeff A. Kozemchak Q Jeff, can you comment on the changes in money market rates during the reporting period? A In the face of resilient economic growth and the potential for this growth to create inflationary pressures, the Federal Reserve Board (the "Fed") continued to tighten monetary policy throughout 1994 and into early 1995. On November 15, 1994, the Fed hiked the federal funds target rate from 4.75% to 5.50%. The most recent move by the Fed, on February 1, 1995, increased the target rate by 50 basis points to the current 6.00% level. Short-term interest rates reflected the Fed's upward moves. The yield on the three-month Treasury bill rose from 5.22% at the beginning of the reporting period to 6.06% on February 1, 1995. The yield on the one-year Treasury bill rose from 6.25% at the beginning of the reporting period to a high of 7.32% in early January, 1995. February, March, and April, 1995, however, brought economic reports that pointed to slowing in sectors of the economy, an indication that the rate increases by the Fed that began in February, 1994, were starting to take hold. As a result, short-term interest rates declined over this period as market participants adjusted their expectations regarding the extent of future tightenings by the Fed. Reflecting this change in expectations, the three-month Treasury bill declined to 5.87% on April 30, 1995, while the one-year Treasury bill fell to 6.32%, a decline of 1.00% from the high in January, 1995. Q How have the municipal money markets and the fund's yield reacted to this interest rate environment? A Municipal money market rates were affected by the Fed tightenings early in the period, as well as February's 180-degree change in market expectations regarding the potential for future Fed rate increases. In addition, municipal rates were also influenced by seasonal supply and demand imbalances throughout the reporting period. Yields on seven-day variable rate demand notes (VRDNs), the core component of a tax-free money market fund, rose from 3.22% at the beginning of the reporting period to 4.65% on April 30, 1995. Yield levels also moved upward for one-year fixed-rate notes, increasing from 4.19% in early November, 1994, to a high of 5.10% in early January, 1995, before steadily falling to 4.29% at the end of the reporting period. The divergence between short VRDN yields and one-year fixed-rate note levels resulted from market expectations that the Fed may have successfully engineered a growth slowdown, or a "soft landing." Also, tight municipal note supply conditions helped contribute to the decline in fixed note yields. - -------------------------------------------------------------------------------- The fund responded favorably to the overall increase in short-term interest rates over the reporting period. The seven-day net yield* of the fund's Institutional Shares rose from 2.97% on November 1, 1994, to 4.01% on April 30, 1995. For the Cash II Shares, the seven-day net yield* rose from 2.67% at the beginning of the period to 3.71% at April 30, 1995. Q Did you make any strategic changes to the fund's portfolio in this rate atmosphere? A Early in the reporting period, we added to our positions VRDNs in order to maintain the responsiveness of the portfolio to changes in short-term interest rates. VRDNs adjust quickly to changes in Fed policy as well as supply and demand imbalances that are unique to the municipal money markets. However, throughout the period we took advantage of the steady supply of attractively priced fixed-rate notes in Ohio, so as to lock-in the positive yield advantage relative to VRDNs. As a result, the average maturity of the fund ranged predominantly in the 50-60 day range, with an emphasis on the shorter end of this range. Q What is your overall outlook for rates in the near future? A Amid reports of a slightly slowing economy and restrained inflation, it appears that the Fed is nearing the end of its tightening cycle. We expect that Fed policy will continue to be neutral in the near term, as the Fed scrutinizes upcoming releases on the economy and inflation for signs that either one is stronger than expectations. Short-term interest rates should trade within a narrow range in the near future. Nevertheless, we expect the supply of fixed-rate notes in our market to increase significantly starting in mid-June, 1995, cheapening note levels. We plan to slightly extend the average maturity of the fund during this period of heavy issuance, as yields on fixed-rate notes may be attractive versus comparable maturity taxable securities. * Past performance does not guarantee future results. Yield will vary. OHIO MUNICIPAL CASH TRUST PORTFOLIO OF INVESTMENTS APRIL 30, 1995 (UNAUDITED) - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ----------- -------------------------------------------------------- ------- ------------ SHORT-TERM MUNICIPAL SECURITIES--99.1% - -------------------------------------------------------------------------- $ 200,000 Allen County, OH, IDR Weekly VRDNs (Nickles Bakery of Ohio, Inc.)/(Society National Bank, Cleveland LOC)/ (Subject to AMT) P-1 $ 200,000 -------------------------------------------------------- 2,300,000 Belmont County, OH, 4.55% County Jail Improvement BANs (Third Series), 9/1/1995 NR 2,302,585 -------------------------------------------------------- 5,875,000 Belmont County, OH, Weekly VRDNs (Lesco, Inc.)/ (PNC Bank N.A. LOC)/(Subject to AMT) A-1 5,875,000 -------------------------------------------------------- 3,000,000 Brecksville-Broadview Heights City School District, OH, 5.71% GO UT School Improvement BANs, 1/18/1996 NR(3) 3,002,240 -------------------------------------------------------- 1,175,000 Butler County, OH, 5.07% Ltd. GO BANs, 3/15/1996 NR(3) 1,179,598 -------------------------------------------------------- 2,000,000 Cincinnati City School District, OH, 5.80% TANs, 12/29/1995 NR(3) 2,005,047 -------------------------------------------------------- 200,000 Cleveland, OH, IDA Weekly VRDNs (Garland Company)/ (Society National Bank, Cleveland LOC) P-1 200,000 -------------------------------------------------------- 1,000,000 Cleveland-Cuyahoga County, OH, Port Authority Weekly VRDNs (Series 1993)/(Rock and Roll Hall of Fame & Museum)/(Credit Local de France LOC) A-1+ 1,000,000 -------------------------------------------------------- 1,800,000 Clinton County, OH, Hospital Authority Weekly VRDNs (Clinton Memorial Hospital)/(BancOhio National Bank LOC) P-1 1,800,000 -------------------------------------------------------- 2,000,000 Columbiana County, OH, Adjustable Rate IDRB Weekly VRDNs (C & S Land Company)/(Bank One, Youngstown N.A. LOC)/(Subject to AMT) P-1 2,000,000 -------------------------------------------------------- 1,185,000 Crawford County, OH, IDA, 4.65% TOBs (United Photographic Industries)/(Bank One, Columbus N.A. LOC), Optional Tender 9/1/1995 P-1 1,185,000 -------------------------------------------------------- 800,000 Cuyahoga County, OH, IDA Weekly VRDNs (Animal Protection League)/(Society National Bank, Cleveland LOC) P-1 800,000 --------------------------------------------------------
OHIO MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ----------- -------------------------------------------------------- ------- ------------ SHORT-TERM MUNICIPAL SECURITIES--CONTINUED - -------------------------------------------------------------------------- $ 715,000 Cuyahoga County, OH, IDA Weekly VRDNs (Parma-Commerce Parkway-West)/(Society National Bank, Cleveland LOC) P-1 $ 715,000 -------------------------------------------------------- 1,200,000 Cuyahoga County, OH, IDA Weekly VRDNs (Premier Manufacturing)/(First National Bank, Louisville LOC)/ (Subject to AMT) P-1 1,200,000 -------------------------------------------------------- 1,800,000 Cuyahoga County, OH, IDR Weekly VRDNs (East Park Retirement Community, Inc.)/(Society National Bank, Cleveland LOC)/(Subject to AMT) P-1 1,800,000 -------------------------------------------------------- 655,000 Cuyahoga County, OH, IDR Weekly VRDNs (Interstate Diesel Service, Inc.)/(Huntington National Bank LOC)/ (Subject to AMT) P-1 655,000 -------------------------------------------------------- 3,000,000 Dayton, OH, Weekly VRDNs (Series 1993E)/(Emery Air Freight Corp.)/(Mellon Bank N.A. LOC) VMIG1 3,000,000 -------------------------------------------------------- 2,000,000 Euclid City School District, OH, 4.83% RANs, 12/15/1995 NR(3) 2,002,156 -------------------------------------------------------- 3,160,000 Franklin County, OH, IDA Weekly VRDNs (Unicorn Leasing Co.)/(Fifth Third Bank LOC)/(Subject to AMT) P-1 3,160,000 -------------------------------------------------------- 4,500,000 Franklin County, OH, IDR Weekly VRDNs (Heekin Can, Inc.)/(PNC Bank N.A. LOC) P-1 4,500,000 -------------------------------------------------------- 2,000,000 Franklin County, OH, IDRB Weekly VRDNs (Tigerpoly Manufacturing, Inc.)/(Mitsubishi Bank Ltd. LOC)/ (Subject to AMT) P-1 2,000,000 -------------------------------------------------------- 3,000,000 Greene County, OH, 4.25% GO BANs (Series B), 7/19/1995 NR(3) 3,001,241 -------------------------------------------------------- 3,000,000 Greene County, OH, 4.32% Variable Purpose Water & Sewer BANs, 7/19/1995 NR(3) 3,001,379 -------------------------------------------------------- 950,000 Hamilton County, OH, Health Care System Weekly VRDNs (West Park Retirement Community, Inc.)/ (Fifth Third Bank LOC) VMIG1 950,000 -------------------------------------------------------- 1,680,000 (a) Hamilton County, OH, Sewer System Improvement and Revenue Bonds Weekly VRDNs P-FLOATS (FGIC Insured)/(Merrill Lynch Capital Services Inc., LIQ.) VMIG1 1,680,000 --------------------------------------------------------
OHIO MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ----------- -------------------------------------------------------- ------- ------------ SHORT-TERM MUNICIPAL SECURITIES--CONTINUED - -------------------------------------------------------------------------- $ 2,375,000 Hamilton, OH, Municipal Golf Course Improvement Notes, 3.79% GO BANs (Series D), 5/12/1995 NR(3) $ 2,375,027 -------------------------------------------------------- 520,000 Hillsboro, OH, IDR Weekly VRDNs (Series 1987)/ (TD Manufacturing Ltd.)/(Sanwa Bank Ltd. LOC)/ (Subject to AMT) VMIG1 520,000 -------------------------------------------------------- 2,000,000 Holmes County, OH, IDA Weekly VRDNs (Poultry Processing, Inc.)/(Rabobank Nederland LOC)/ (Subject to AMT) A-1+ 2,000,000 -------------------------------------------------------- 1,250,000 Huber Heights, OH, IDRB Weekly VRDNs (Series 1994)/ (Lasermike, Inc.)/(Society National Bank, Cleveland LOC)/ (Subject to AMT) P-1 1,250,000 -------------------------------------------------------- 300,000 Kettering, OH, IDA Weekly VRDNs (Center-Plex Venture, Inc.)/(Society National Bank, Cleveland LOC) P-1 300,000 -------------------------------------------------------- 6,500,000 Kings Local School District, OH, 5.45% School Improvement BANs Voted UT GOs, 6/21/1995 NR 6,504,881 -------------------------------------------------------- 4,565,000 Lorain, OH, Port Authority Weekly VRDNs (Series 1994)/ (Spitzer Great Lakes Ltd., Inc.)/(Bank One, Cleveland LOC)/(Subject to AMT) P-1 4,565,000 -------------------------------------------------------- 3,500,000 Lucas County, OH, 5.75% BANs, 11/30/1995 NR(4) 3,514,583 -------------------------------------------------------- 300,000 Lucas County, OH, Health Care Improvement Weekly VRDNs (Sunshine Children's Home)/(National City Bank, Cleveland LOC) P-1 300,000 -------------------------------------------------------- 3,000,000 Lucas County, OH, HFA Weekly VRDNs (Riverside Hospital)/(Huntington National Bank LOC) P-1 3,000,000 -------------------------------------------------------- 2,030,000 Lucas County, OH, Hospital Facility Improvement Revenue Bonds Weekly VRDNs (Series 93)/(Lott Industries, Inc.)/(National City Bank LOC) P-1 2,030,000 -------------------------------------------------------- 1,600,000 Lucas County, OH, IDA Weekly VRDNs (Kuhlman Corp.)/ (Society National Bank, Cleveland LOC) P-1 1,600,000 -------------------------------------------------------- 40,000 Mahoning County, OH, IDR Weekly VRDNs (Tru-Cut Die Corp.)/(PNC Bank, Ohio N.A. LOC)/(Subject to AMT) P-1 40,000 --------------------------------------------------------
OHIO MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ----------- -------------------------------------------------------- ------- ------------ SHORT-TERM MUNICIPAL SECURITIES--CONTINUED - -------------------------------------------------------------------------- $ 5,325,000 Mahoning County, OH, Multi-Family HFA Weekly VRDNs (International Towers, Inc.)/(PNC Bank N.A. LOC)/ (Subject to AMT) A-1 $ 5,325,000 -------------------------------------------------------- 1,255,000 Mansfield, OH, IDR Weekly VRDNs (Designed Metal Products, Inc.)/(Bank One, Indianapolis LOC)/ (Subject to AMT) P-1 1,255,000 -------------------------------------------------------- 1,750,000 Massillon, OH, 4.84% BANs, 10/5/1995 NR(3) 1,753,530 -------------------------------------------------------- 1,250,000 Medina County, OH, 5.19% General LT County Facilities Improvement BANs (Series 1995), 10/12/1995 NR(3) 1,251,578 -------------------------------------------------------- 350,000 Medina, OH, IDA Weekly VRDNs (National Metal Abrasive, Inc.)/(Society National Bank, Cleveland LOC) P-1 350,000 -------------------------------------------------------- 490,000 Medina County, OH, IDR, 4.85% TOBs (Bopco)/(Bank One, Akron N.A. LOC), Optional Tender 9/1/1995 P-1 490,000 -------------------------------------------------------- 7,000,000 Montgomery County, OH, 5.00% GO BANs (Series 1995A), 4/26/1996 NR(2) 7,046,317 -------------------------------------------------------- 2,010,000 Montgomery, OH, IDA Weekly VRDNs (Bethesda Two Limited Partnership)/(Huntington National Bank LOC) A-1 2,010,000 -------------------------------------------------------- 500,000 Muskingham County, OH, Hospital Facilities Authority Weekly VRDNs (Bethesda Care System)/ (National City Bank, Columbus LOC) VMIG1 500,000 -------------------------------------------------------- 3,350,000 North Olmsted, OH, 4.20% GO BANs (Series 1994C), 6/22/1995 NR(3) 3,351,375 -------------------------------------------------------- 370,000 North Olmsted, OH, IDA Weekly VRDNs (Bryant & Stratton Corp.)/(Society National Bank, Cleveland LOC)/ (Subject to AMT) P-1 370,000 -------------------------------------------------------- 775,000 North Olmsted, OH, IDA, 5.00% Semi-Annual TOBs (Therm-All)/(National City Bank, Cleveland LOC)/ (Subject to AMT), Optional Tender 8/1/1995 P-1 775,000 -------------------------------------------------------- 5,680,000 (a) Ohio HFA SFM Weekly VRDNs (Series PT-8)/ (GNMA Collateralized)/(Dai-Ichi Kangyo Bank LIQ.) (Subject to AMT) A-1+ 5,680,000 --------------------------------------------------------
OHIO MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ----------- -------------------------------------------------------- ------- ------------ SHORT-TERM MUNICIPAL SECURITIES--CONTINUED - -------------------------------------------------------------------------- $ 2,135,000 Ohio HFA Weekly VRDNs (Westchester Village)/(Society National Bank, Cleveland LOC) P-1 $ 2,135,000 -------------------------------------------------------- 7,405,000 Ohio HFA, 3.95% TOBs (Comerica, Inc. LOC), Optional Tender 5/1/1995 P-1 7,405,000 -------------------------------------------------------- 2,000,000 Ohio State Air Quality Development Authority Weekly VRDNs (Series 1998A)/(PPG Industries, Inc. Guaranty) P-1 2,000,000 -------------------------------------------------------- 3,000,000 Ohio State Air Quality Development Authority, 4.15% CP (Cincinnati Gas and Electric Company)/(Morgan Bank, Delaware LOC), Mandatory Tender 5/15/1995 A-1+ 3,000,000 -------------------------------------------------------- 1,520,000 Ohio State IDR Weekly VRDNs (Series 1991)/ (Standby Screw, Inc.)/(BancOhio National Bank LOC)/ (Subject to AMT) A-1+ 1,520,000 -------------------------------------------------------- 1,500,000 Ohio State IDR Weekly VRDNs (Series 1994)/ (Anomatic Corporate)/(National City Bank LOC)/ (Subject to AMT) P-1 1,500,000 -------------------------------------------------------- 5,000,000 Ohio State Water Development Authority PCR Weekly VRDNs (Series 1989)/(Duquesne Light Power Company)/ (Barclays Bank PLC LOC)/(Subject to AMT) A-1+ 5,000,000 -------------------------------------------------------- 840,000 (a) Ohio State Water Development Authority Pure Water Refunding & Improvement Bonds Weekly VRDNs (Series PA-56)/(AMBAC Insured)/(Merrill Lynch Capital Services Inc., LIQ.) VMIG1 840,000 -------------------------------------------------------- 5,000,000 Ohio State Water Development Authority, 4.05% CP (Series A)/(Cleveland Electric Illuminating Co.)/ (FGIC Insured), Mandatory Tender 6/13/1995 A-1+ 5,000,000 -------------------------------------------------------- 1,750,000 Ohio State Water Development PCR, 4.25% TOBs (Series 1998B)/(Ohio Edison Co.)/(Barclays Bank PLC LOC)/(Subject to AMT), Optional Tender 9/1/1995 A-1+ 1,750,000 -------------------------------------------------------- 1,000,000 Ohio State Water PCR Bonds Weekly VRDNs (PPG Industries, Inc.) P-1 1,000,000 -------------------------------------------------------- 700,000 Ohio State Weekly VRDNs (John Carroll University)/ (PNC Bank N.A. LOC) P-1 700,000 --------------------------------------------------------
OHIO MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ----------- -------------------------------------------------------- ------- ------------ SHORT-TERM MUNICIPAL SECURITIES--CONTINUED - -------------------------------------------------------------------------- $ 3,000,000 Olmsted Falls, OH, City School District, 5.00% Classroom Facilities Improvement GO BANs, 5/31/1995 NR(3) $ 3,001,865 -------------------------------------------------------- 1,500,000 Orrville, OH, IDA Weekly VRDNs (O.S. Associates)/ (National City Bank LOC)/(Subject to AMT) A-1 1,500,000 -------------------------------------------------------- 1,000,000 Pickaway County, OH, IDA Weekly VRDNs (PPG Industries, Inc.) P-1 1,000,000 -------------------------------------------------------- 1,000,000 Portage County, OH, IDA Adjustable Rate Industries Revenue Bonds Weekly VRDNs (Lovejoy Industries)/ (Star Bank N.A. LOC)/(Subject to AMT) P-1 1,000,000 -------------------------------------------------------- 310,000 Portage County, OH, IDA Weekly VRDNs (D & W Associates)/(Society National Bank, Cleveland LOC) P-1 310,000 -------------------------------------------------------- 430,000 Portage County, OH, IDR, 4.90% TOBs (Neidlinger)/ (Society National Bank, Cleveland LOC)/(Subject to AMT), Optional Tender 9/1/1995 P-1 430,000 -------------------------------------------------------- 1,600,000 Sharonville, OH, IDR Weekly VRDNs (Xtek, Inc.)/ (Fifth Third Bank LOC)/(Subject to AMT) VMIG1 1,600,000 -------------------------------------------------------- 880,000 Solon, OH, IDR Weekly VRDNs (Graphic Laminating, Inc.)/(Society National Bank, Cleveland LOC) P-1 880,000 -------------------------------------------------------- 1,400,000 Stark County, OH, IDR Weekly VRDNs (Sancap Abrasives)/(Society National Bank, Cleveland LOC) P-1 1,400,000 -------------------------------------------------------- 2,685,000 Stark County, OH, IDR, Sewer District Improvements Notes, 5.00% BANs (Series 1995-1), 4/3/1996 NR(3) 2,694,475 -------------------------------------------------------- 2,000,000 Stark County, OH, IDR, Various Purpose Notes, 5.00% BANs (Series 1995-1), 4/3/1996 NR(3) 2,007,058 -------------------------------------------------------- 2,450,000 Stark County, OH, IDR, Weekly VRDNs (Series 1994)/ (Wilkof Morris)/(Society Bank & Trust Co. LOC)/ (Subject to AMT) P-1 2,450,000 -------------------------------------------------------- 1,350,000 Strongsville, OH, IDR, Adjustable Rate Demand Weekly VRDNs (Series 1994)/(Nutro Machinery Corporation)/ (Huntington National Bank LOC)/(Subject to AMT) A-1 1,350,000 -------------------------------------------------------- 2,000,000 Summit County, OH, 5.00% BANs, 3/7/1996 NR(3) 2,005,675 --------------------------------------------------------
OHIO MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ----------- -------------------------------------------------------- ------- ------------ SHORT-TERM MUNICIPAL SECURITIES--CONTINUED - -------------------------------------------------------------------------- $ 1,000,000 Summit County, OH, IDB Weekly VRDNs (Series 1994)/ (Austin Printing Co., Inc.)/(Bank One, Akron N.A. LOC)/ (Subject to AMT) P-1 $ 1,000,000 -------------------------------------------------------- 4,500,000 Summit County, OH, IDB Weekly VRDNs (Series 1994)/ (Harry London Candies, Inc. )/(Bank One, Akron N.A. LOC)/(Subject to AMT) P-1 4,500,000 -------------------------------------------------------- 2,900,000 Summit County, OH, IDR Weekly VRDNs (Maison Aine Limited Partnership)/(Union Bank of Switzerland LOC)/ (Subject to AMT) P-1 2,900,000 -------------------------------------------------------- 1,115,000 Summit County, OH, IDR, 3.40% Semi-Annual TOBs (Rogers Industrial Products, Inc.)/(Bank One, Akron N.A. LOC)/(Subject to AMT), Optional Tender 5/1/1995 P-1 1,115,000 -------------------------------------------------------- 795,000 Summit County, OH, IDR, 4.70% Semi-Annual TOBs (Bechmer-Boyce)/(Society National Bank, Cleveland LOC)/ (Subject to AMT), Optional Tender 7/16/1995 P-1 795,000 -------------------------------------------------------- 950,000 Summit County, OH, IDR, 4.85% Semi-Annual TOBs (S.D. Meyers, Inc.)/(Bank One, Akron N.A. LOC)/ (Subject to AMT), Optional Tender 8/15/1995 P-1 950,000 -------------------------------------------------------- 410,000 Summit County, OH, IDR, 4.85% TOBs (Keltec Industries)/ (Bank One, Akron N.A. LOC)/(Subject to AMT), Optional Tender 9/1/1995 P-1 410,000 -------------------------------------------------------- 825,000 Summit County, OH, IDR, 4.85% TOBs (Universal Rack)/ (National City Bank, Cleveland LOC)/(Subject to AMT), Optional Tender 9/1/1995 P-1 825,000 -------------------------------------------------------- 1,345,000 Summit County, OH, IDR, 4.95% Semi-Annual TOBs (Matech Machine Tool Company)/(Bank One, Akron N.A. LOC), Optional Tender 8/1/1995 P-1 1,345,000 -------------------------------------------------------- 1,000,000 Summit County, OH, IDR, Weekly VRDNs (Series 1995)/ (Cardtech Project)/(Society National Bank LOC)/ (Subject to AMT) P-1 1,000,000 -------------------------------------------------------- 2,890,000 Summit County, OH, IDRB Weekly VRDNs (Series 1994B)/(Harry London Candies, Inc. )/ (Bank One, Akron N.A. LOC)/(Subject to AMT) P-1 2,890,000 --------------------------------------------------------
OHIO MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ----------- -------------------------------------------------------- ------- ------------ SHORT-TERM MUNICIPAL SECURITIES--CONTINUED - -------------------------------------------------------------------------- $ 1,740,000 Toledo, OH, City Services Special Assessment Notes, 4.15% BANs, 6/1/1995 MIG1 $ 1,740,278 -------------------------------------------------------- 3,000,000 Toledo, OH, City Services Special Assessment Notes, 4.80% RANs (Services 1994)/(Canadian Imperial Bank of Commerce LOC), 7/27/1995 MIG1 3,003,498 -------------------------------------------------------- 1,000,000 Toledo-Lucas County, OH, Port Authority IDA Weekly VRDNs (Medusa Corporation)/(Bayerische Vereinsbank AG LOC)/(Subject to AMT) AAA 1,000,000 -------------------------------------------------------- 2,000,000 Toledo-Lucas County, OH, Port Authority, IDA, 4.05% CP (CSX Corp.)/(Bank of Nova Scotia, Toronto LOC), Mandatory Tender 6/13/1995 A-1+ 2,000,000 -------------------------------------------------------- 3,000,000 Trumbull County, OH, Correctional Facilities 4.83% BANs (Series 1995), 4/11/1996 NR(4) 3,003,509 -------------------------------------------------------- 3,000,000 Trumbull County, OH, IDA Weekly VRDNs (Series 1989)/ (McDonald Steel, Inc.)/(PNC Bank N.A. LOC)/ (Subject to AMT) A-1 3,000,000 -------------------------------------------------------- 1,380,000 Trumbull County, OH, IDA Weekly VRDNs (Series 1994)/ (Churchill Downs, Inc.)/(Bank One, Columbus N.A. LOC)/ (Subject to AMT) P-1 1,380,000 -------------------------------------------------------- 3,000,000 University of Cincinnati, OH, 4.75% BANs (Series T), 8/30/1995 A-1 3,006,700 -------------------------------------------------------- 2,200,000 West Clermont, OH, Local School District, 5.25% School Improvement UT GO BANs, 8/9/1995 NR 2,203,257 -------------------------------------------------------- 4,100,000 Westlake, OH, IDR Weekly VRDNs (Kahal Limited Partnership)/(Society National Bank, Cleveland LOC)/ (Subject to AMT) P-1 4,100,000 -------------------------------------------------------- 1,600,000 Wood County, OH, Weekly VRDNs (Principle Business Enterprises)/(National City Bank LOC)/(Subject to AMT) P-1 1,600,000 -------------------------------------------------------- 1,700,000 Wooster City, OH, 5.00% LT Water System Improvement BANS, 10/4/1995 NR(3) 1,703,844 --------------------------------------------------------
OHIO MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ----------- -------------------------------------------------------- ------- ------------ SHORT-TERM MUNICIPAL SECURITIES--CONTINUED - -------------------------------------------------------------------------- $ 5,500,000 (a) Youngstown City School District, OH, Municipal Installment Trust Receipts Weekly VRDNs (Series 1994A)/ (Internationale Nederlanden Bank, N.V. LOC)/ (Subject to AMT) A-1+ $ 5,500,000 -------------------------------------------------------- ------------ TOTAL INVESTMENTS, AT AMORTIZED COST(B) $211,821,696 -------------------------------------------------------- ------------
(a) Denotes restricted securities which are subject to resale under Federal Securities laws. These securities have been determined to be liquid under criteria established by the Board of Trustees. (b) Also represents cost for federal tax purposes. * See notes to Portfolio of Investments on page 14. Note: The categories of investments are shown as a percentage of net assets ($213,814,162) at April 30, 1995. OHIO MUNICIPAL CASH TRUST - -------------------------------------------------------------------------------- The following abbreviations are used throughout this portfolio: AMBAC -- American Municipal Bond Assurance Corporation AMT -- Alternative Minimum Tax BANs -- Bond Anticipation Notes CP -- Commercial Paper FGIC -- Financial Guaranty Insurance Company GNMA -- Government National Mortgage Association GO -- General Obligation HFA -- Housing Finance Authority IDA -- Industrial Development Authority IDB -- Industrial Development Bond IDR -- Industrial Development Revenue IDRB -- Industrial Development Revenue Bonds LIQ -- Liquidity Agreement LOC -- Letter of Credit LT -- Limited Tax PCR -- Pollution Control Revenue PLC -- Public Limited Company RANs -- Revenue Anticipation Notes SFM -- Single Family Mortgage TANs -- Tax Anticipation Notes TOBs -- Tender Option Bonds UT -- Unlimited Tax VRDNs -- Variable Rate Demand Notes
(See Notes which are an integral part of the Financial Statements.) OHIO MUNICIPAL CASH TRUST NOTES TO PORTFOLIO OF INVESTMENTS (UNAUDITED) - -------------------------------------------------------------------------------- SHORT-TERM MUNICIPAL OBLIGATION RATINGS STANDARD & POOR'S RATINGS GROUP A S&P note rating reflects the liquidity concerns and market access risks unique to notes. SP-1 Very strong or strong capacity to pay principal and interest. Those issues determined to possess overwhelming safety characteristics will be given a plus (+) designation. SP-2 Satisfactory capacity to pay principal and interest. MOODY'S INVESTORS SERVICE, INC. Moody's short-term ratings are designated Moody's Investment Grade (MIG or VMIG (see below)). The purpose of the MIG or VMIG ratings is to provide investors with a simple system by which the relative investment qualities of short-term obligations may be evaluated. MIG1This designation denotes best quality. There is present strong protection by established cash flows, superior liquidity support or demonstrated broad-based access to the market for refinancing. MIG2 This designation denotes high quality. Margins of protection are ample although not so large as in the preceding group. VARIABLE RATE DEMAND NOTES (VRDNS) AND TENDER OPTION BONDS (TOBS) RATINGS STANDARD & POOR'S RATINGS GROUP S&P assigns dual ratings to all long-term debt issues that have as part of their provisions a variable rate demand feature. The first rating (long-term rating) addresses the likelihood of repayment of principal and interest when due, and the second rating (short-term rating) describes the demand characteristics. Several examples are AAA/A-1+, AA/A-1+, A/A-1. (The definitions for the long-term and the short-term ratings are provided below.) MOODY'S INVESTORS SERVICE Short-term ratings on issues with demand features are differentiated by the use of the VMIG symbol to reflect such characteristics as payment upon periodic demand rather than fixed maturity dates and payment relying on external liquidity. In this case, two ratings are usually assigned, (for example, Aaa/VMIG-1); the first representing an evaluation of the degree of risk associated with scheduled principal and interest payments, and the - -------------------------------------------------------------------------------- second representing an evaluation of the degree of risk associated with the demand feature. The VMIG rating can be assigned a 1 or 2 designation using the same definitions described above for the MIG rating. COMMERCIAL PAPER (CP) RATINGS STANDARD & POOR'S RATINGS GROUP A S&P commercial paper rating is a current assessment of the likelihood of timely payment of debt having an original maturity of no more than 365 days. A-1 This highest category indicates that the degree of safety regarding timely payment is strong. Those issues determined to possess extremely strong safety characteristics are denoted with a plus (+) sign designation. A-2 Capacity for timely payment on issues with this designation is satisfactory. However, the relative degree of safety is not as high as for issues designated A-1. MOODY'S INVESTORS SERVICE, INC. P-1 Issuers rated PRIME-1 (or related supporting institutions) have a superior capacity for repayment of short-term promissory obligations. Prime-1 repayment capacity will normally be evidenced by the following characteristics: leading market positions in well established industries, high rates of return on funds employed, conservative capitalization structure with moderate reliance on debt and ample asset protection, broad margins in earning coverage of fixed financial charges and high internal cash generation, well-established access to a range of financial markets and assured sources of alternate liquidity. P-2 Issuers rated PRIME-2 (or related supporting institutions) have a strong capacity for repayment of short-term promissory obligations. This will normally be evidenced by many of the characteristics cited above, but to a lesser degree. Earnings trends and coverage ratios, while sound, will be more subject to variation. Capitalization characteristics, while still appropriate, may be more affected by external conditions. Ample alternate liquidity is maintained. LONG-TERM DEBT RATINGS STANDARD & POOR'S RATINGS GROUP AAA Debt rated "AAA" has the highest rating assigned by S&P. Capacity to pay interest and repay principal is extremely strong. AA Debt rated "AA" has a very strong capacity to pay interest and repay principal and differs from the highest rated issues only in small degree. A Debt rated "A" has a strong capacity to pay interest and repay principal although it is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than debt in higher rated categories. - -------------------------------------------------------------------------------- MOODY'S INVESTORS SERVICE, INC. AAA Bonds that are rated AAA are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as "gilt edged." Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues. AA Bonds that are rated AA are judged to be of high quality by all standards. Together with the AAA group; they comprise what are generally known as high grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in AAA securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long-term risks appear somewhat larger than in AAA securities. A Bonds that are rated A possess many favorable investment attributes and are to be considered as upper medium grade obligations. Factors giving security to principal and interest are considered adequate but elements may be present which suggest a susceptibility to impairment sometime in the future. NR indicates that both the bonds and the obligor or credit enhancer are not currently rated by S&P or Moody's with respect to short-term indebtedness. However, management considers them to be of comparable quality to securities rated A-1 or P-1. NR(1) The underlying issuer/obligor/guarantor has other outstanding debt rated "AAA" by S&P or "Aaa" by Moody's. NR(2) The underlying issuer/obligor/guarantor has other outstanding debt rated "AA" by S&P or "Aa" by Moody's. NR(3) The underlying issuer/obligor/guarantor has other outstanding debt rated "A" by S&P or Moody's. NR(4) The underlying issuer/obligor/guarantor has other outstanding debt rated "BBB" by S&P or "Baa" by Moody's. OHIO MUNICIPAL CASH TRUST STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1995 (UNAUDITED) - -------------------------------------------------------------------------------- ASSETS: - ------------------------------------------------------------------------------- Investments in securities, at amortized cost and value $211,821,696 - ------------------------------------------------------------------------------- Cash 130,589 - ------------------------------------------------------------------------------- Income receivable 2,057,190 - ------------------------------------------------------------------------------- Receivable for investments sold 40,000 - ------------------------------------------------------------------------------- Receivable for shares sold 20,000 - ------------------------------------------------------------------------------- Deferred expenses 18,130 - ------------------------------------------------------------------------------- ------------ Total assets 214,087,605 - ------------------------------------------------------------------------------- LIABILITIES: - ------------------------------------------------------------------------------- Income distribution payable $205,968 - -------------------------------------------------------------------- Accrued expenses 67,475 - -------------------------------------------------------------------- -------- Total liabilities 273,443 - ------------------------------------------------------------------------------- ------------ NET ASSETS for 213,814,162 shares outstanding $213,814,162 - ------------------------------------------------------------------------------- ------------ NET ASSET VALUE, Offering Price and Redemption Proceeds Per Share: - ------------------------------------------------------------------------------- Institutional Shares ($64,568,551 / 64,568,551 shares outstanding) $1.00 - ------------------------------------------------------------------------------- ------------ Cash II Shares ($149,245,611 / 149,245,611 shares outstanding) $1.00 - ------------------------------------------------------------------------------- ------------
(See Notes which are an integral part of the Financial Statements) OHIO MUNICIPAL CASH TRUST STATEMENT OF OPERATIONS SIX MONTHS ENDED APRIL 30, 1995 (UNAUDITED) - -------------------------------------------------------------------------------- INVESTMENT INCOME: - ------------------------------------------------------------------------------------ Interest $4,565,643 - ------------------------------------------------------------------------------------ EXPENSES: - ------------------------------------------------------------------------------------ Investment advisory fee $ 447,092 - ---------------------------------------------------------------------- Administrative personnel and services fee 84,612 - ---------------------------------------------------------------------- Custodian fees 30,090 - ---------------------------------------------------------------------- Transfer agent and dividend disbursing agent fees and expenses 32,293 - ---------------------------------------------------------------------- Directors'/Trustees' fees 1,418 - ---------------------------------------------------------------------- Auditing fees 7,634 - ---------------------------------------------------------------------- Legal fees 5,280 - ---------------------------------------------------------------------- Portfolio accounting fees 25,461 - ---------------------------------------------------------------------- Distribution services fee-Cash II Shares 230,425 - ---------------------------------------------------------------------- Shareholder services fee-Cash II Shares 192,021 - ---------------------------------------------------------------------- Share registration costs 22,112 - ---------------------------------------------------------------------- Printing and postage 9,925 - ---------------------------------------------------------------------- Insurance premiums 2,623 - ---------------------------------------------------------------------- Miscellaneous 6,395 - ---------------------------------------------------------------------- ---------- Total expenses 1,097,381 - ---------------------------------------------------------------------- Deduct-- - ---------------------------------------------------------------------- Waiver of investment advisory fee $ 37,829 - ----------------------------------------------------------- Waiver of distribution services fee 192,021 229,850 - ----------------------------------------------------------- -------- ---------- Net expenses 867,531 - ------------------------------------------------------------------------------------ ---------- Net investment income $3,698,112 - ------------------------------------------------------------------------------------ ----------
(See Notes which are an integral part of the Financial Statements) OHIO MUNICIPAL CASH TRUST STATEMENT OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
SIX MONTHS ENDED APRIL 30, YEAR ENDED 1995 OCTOBER 31, (UNAUDITED) 1994 ------------- ------------- INCREASE (DECREASE) IN NET ASSETS: - -------------------------------------------------------------- OPERATIONS-- - -------------------------------------------------------------- Net investment income $ 3,698,112 $ 4,456,860 - -------------------------------------------------------------- ------------- ------------- DISTRIBUTIONS TO SHAREHOLDERS-- - -------------------------------------------------------------- Distributions from net investment income: - -------------------------------------------------------------- Institutional Shares (1,231,907) (1,561,810) - -------------------------------------------------------------- Cash II Shares (2,466,205) (2,895,050) - -------------------------------------------------------------- ------------- ------------- Change in net assets resulting from distributions to shareholders (3,698,112) (4,456,860) - -------------------------------------------------------------- ------------- ------------- SHARE TRANSACTIONS-- - -------------------------------------------------------------- Proceeds from sale of Shares 651,163,900 809,574,268 - -------------------------------------------------------------- Net asset value of Shares issued to shareholders in payment of distributions declared 2,533,161 2,932,696 - -------------------------------------------------------------- Cost of Shares redeemed (658,432,371) (802,723,017) - -------------------------------------------------------------- ------------- ------------- Change in net assets resulting from Share transactions (4,735,310) 9,783,947 - -------------------------------------------------------------- ------------- ------------- Change in net assets (4,735,310) 9,783,947 - -------------------------------------------------------------- NET ASSETS: - -------------------------------------------------------------- Beginning of period 218,549,472 208,765,525 - -------------------------------------------------------------- ------------- ------------- End of period $ 213,814,162 $ 218,549,472 - -------------------------------------------------------------- ------------- -------------
(See Notes which are an integral part of the Financial Statements) OHIO MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES - -------------------------------------------------------------------------------- (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED APRIL 30, YEAR ENDED OCTOBER 31, 1995 ------------------------------------ (UNAUDITED) 1994 1993 1992 1991(A) ----------- ------ ------ ------ ------ NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 - ----------------------------------------- INCOME FROM INVESTMENT OPERATIONS - ----------------------------------------- Net investment income 0.02 0.02 0.02 0.03 0.02 - ----------------------------------------- -------- ------ ------ ------ ------ LESS DISTRIBUTIONS - ----------------------------------------- Distributions to shareholders from net investment income (0.02) (0.02 ) (0.02 ) (0.03 ) (0.02 ) - ----------------------------------------- -------- ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 - ----------------------------------------- -------- ------ ------ ------ ------ TOTAL RETURN(B) 1.75% 2.41 % 2.33 % 3.21 % 2.40 % - ----------------------------------------- RATIOS TO AVERAGE NET ASSETS - ----------------------------------------- Expenses 0.57%(c) 0.55 % 0.48 % 0.46 % 0.35 %(c) - ----------------------------------------- Net investment income 3.52%(c) 2.36 % 2.30 % 3.10 % 4.46 %(c) - ----------------------------------------- Expense waiver/reimbursement(d) 0.03%(c) 0.07 % 0.19 % 0.25 % 0.32 %(c) - ----------------------------------------- SUPPLEMENTAL DATA - ----------------------------------------- Net assets, end of period (000 omitted) $64,569 $62,499 $81,748 $74,342 $44,771 - -----------------------------------------
(a) Reflects operations for the period from April 22, 1991 (date of initial public investment) to October 31, 1991. (b) Based on net asset value, which does not reflect the sales load or contingent deferred sales charge, if applicable. (c) Computed on an annualized basis. (d) This voluntary expense decrease is reflected in both the expense and net investment income ratios shown above. (See Notes which are an integral part of the Financial Statements) OHIO MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS--CASH II SHARES - -------------------------------------------------------------------------------- (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED APRIL 30, YEAR ENDED OCTOBER 31, 1995 ------------------------------------ (UNAUDITED) 1994 1993 1992 1991(A) ------------- ------- ------- ------- ------ NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 - ----------------------------------------- INCOME FROM INVESTMENT OPERATIONS - ----------------------------------------- Net investment income 0.02 0.02 0.02 0.03 0.02 - ----------------------------------------- --------- ------ ------ ------ ------ LESS DISTRIBUTIONS - ----------------------------------------- Distributions from net investment income (0.02) (0.02) (0.02) (0.03) (0.02 ) - ----------------------------------------- --------- ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 - ----------------------------------------- --------- ------ ------ ------ ------ TOTAL RETURN (B) 1.60% 2.10% 2.02% 2.90% 2.27 % - ----------------------------------------- RATIOS TO AVERAGE NET ASSETS - ----------------------------------------- Expenses 0.87%(c) 0.85% 0.78% 0.76% 0.63 %(c) - ----------------------------------------- Net investment income 3.21%(c) 2.09% 2.01% 2.86% 4.18 %(c) - ----------------------------------------- Expense waiver/reimbursement (d) 0.28%(c) 0.24% 0.19% 0.25% 0.34 %(c) - ----------------------------------------- SUPPLEMENTAL DATA - ----------------------------------------- Net assets, end of period (000 omitted) $149,246 $156,051 $127,017 $133,877 $94,081 - -----------------------------------------
(a) Reflects operations for the period from April 22, 1991 (date of initial public investment) to October 31, 1991. (b) Based on net asset value, which does not reflect the sales load or contingent deferred sales charge, if applicable. (c) Computed on an annualized basis. (d) This voluntary expense decrease is reflected in both the expense and net investment income ratios shown above. (See Notes which are an integral part of the Financial Statements) OHIO MUNICIPAL CASH TRUST NOTES TO FINANCIAL STATEMENTS APRIL 30, 1995 (UNAUDITED) - -------------------------------------------------------------------------------- (1) ORGANIZATION Federated Municipal Trust (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 thirteen non-diversified portfolios. The financial statements included herein present only those of Ohio Municipal Cash Trust (the "Fund"). The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. The Fund offers two classes of shares: Institutional Shares and Cash II Shares. (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. INVESTMENT VALUATIONS--The Fund's use of the amortized cost method to value its portfolio securities is in accordance with Rule 2a-7 under the Act. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses are accrued daily. Bond premium and discount, if applicable, are amortized as required by the Internal Revenue Code, as amended (the "Code"). Distributions to shareholders are recorded on the ex-dividend date. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the Code applicable to regulated investment companies and to distribute to shareholders each year substantially all of its income. Accordingly, no provisions for federal tax are necessary. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in when-issued or delayed delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked to market daily and begin earning interest on the settlement date. CONCENTRATION OF CREDIT RISK--Since the Fund invests a substantial portion of its assets in issuers located in one state, it will be more susceptible to factors adversely affecting issuers of that state than would be a comparable tax-exempt mutual fund that invests nationally. In order to reduce the credit risk associated with such factors, at April 30, 1995, 65% of the securities in the portfolio of investments are backed by letters of credit or bond insurance of various financial institutions and financial guaranty assurance agencies. The value of investments insured by or supported (backed) by a letter of credit for any one institution or agency does not exceed 11% of total investments. OHIO MUNICIPAL CASH TRUST - -------------------------------------------------------------------------------- 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. Additional information on each restricted security held at April 30, 1995 is as follows:
ACQUISITION ACQUISITION SECURITY DATE COST ------------------------------------------------------------ ------------- ------------ Hamilton County, OH, Sewer System Improvement and Revenue Bonds Weekly VRDNs 7/1/93 $2,260,000 Ohio HFA SFM Weekly VRDNs 3/1/94 6,430,000 Ohio State Water Development Authority Pure Water Refunding & Improvement Bonds Weekly VRDNs 12/22/93 1,260,000 Youngstown City School District, OH, Municipal Installment Trust Receipts Weekly VRDNs 1/4/94 5,500,000
DEFERRED EXPENSES--The costs incurred by the Fund with respect to registration of its shares in its first fiscal year, excluding the initial expense of registering its shares, have been deferred and are being amortized using the straight-line method not to exceed a period of five years from the Fund's commencement date. OTHER--Investment transactions are accounted for on the trade date. OHIO MUNICIPAL CASH TRUST - -------------------------------------------------------------------------------- (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 April 30, 1995, capital paid-in aggregated $213,814,162. Transactions in shares were as follows:
SIX MONTHS ENDED YEAR ENDED APRIL 30, OCTOBER 31, 1995 1994 ------------ ------------ INSTITUTIONAL SHARES - ---------------------------------------------------------------- Shares sold 271,515,067 275,545,260 - ---------------------------------------------------------------- Shares issued to shareholders in payment of distributions declared 131,167 99,198 - ---------------------------------------------------------------- Shares redeemed (269,576,564) (294,893,757) - ---------------------------------------------------------------- ------------ ------------ Net change resulting from Institutional Shares transactions 2,069,670 (19,249,299) - ---------------------------------------------------------------- ------------ ------------ CASH II SHARES - ---------------------------------------------------------------- Shares sold 379,648,833 534,029,008 - ---------------------------------------------------------------- Shares issued to shareholders in payment of distributions declared 2,401,994 2,833,498 - ---------------------------------------------------------------- Shares redeemed (388,855,807) (507,829,260) - ---------------------------------------------------------------- ------------ ------------ Net change resulting from Cash II Shares transactions (6,804,980) 29,033,246 - ---------------------------------------------------------------- ------------ ------------ Net change resulting from share transactions (4,735,310) 9,783,947 - ---------------------------------------------------------------- ------------ ------------
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES INVESTMENT ADVISORY FEE--Federated Management, the Fund's investment adviser (the "Adviser"), receives for its services an annual investment advisory fee equal to .40 of 1% of the Fund's average daily net assets. The Adviser may voluntarily choose to waive 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, provides the Fund with administrative personnel and services. The FAS fee is based on the level of average aggregate daily net assets of all funds advised by subsidiaries of Federated Investors for the period. The administrative fee received during the period of the Administrative Services Agreement shall be at least $125,000 per portfolio and $30,000 per each additional class of shares. DISTRIBUTION SERVICES FEE--The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund will compensate 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 the Fund's Cash II Shares. The Plan provides that the Fund may incur distribution expenses up to .30 of 1% of the average daily net assets of the Cash II shares, annually, to OHIO MUNICIPAL CASH TRUST - -------------------------------------------------------------------------------- compensate FSC. The distributor may voluntarily choose to waive any portion of its fee. The distributor can modify or terminate this voluntary waiver at any time at its sole discretion. SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement with Federated Shareholder Services, ("FSS") the Fund will pay FSS up to .25 of 1% of average daily net assets of the Fund's Cash II shares for the period. This fee is to obtain certain services for shareholders and to maintain the shareholder accounts. TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated Services Company, ("FServ") serves as transfer and dividend disbursing agent for the Fund. This fee is based on the size, type, and number of accounts and transactions made by shareholders. PORTFOLIO ACCOUNTING FEES--FServ also maintains the Fund's accounting records for which it receives a fee. This fee is based on the level of the Fund's average daily net assets for the period, plus out-of-pocket expenses. ORGANIZATIONAL EXPENSES--Organizational expenses of $37,324 were borne initially by the Adviser. The Fund has agreed to reimburse the Adviser at an annual rate of .005 of 1% of average daily net assets until expenses initially borne by Adviser are fully reimbursed or the expiration of five years after April 24, 1991 (date the Fund became effective), whichever occurs earlier. For the six months ended April 30, 1995, the Fund paid $5,566 pursuant to this agreement. INTERFUND TRANSACTIONS--During the six months ended April 30, 1995, the Fund engaged in purchase and sale transactions value with funds that have a common investment adviser (or affiliated investment advisers), common Directors/Trustees, and/or common Officers. These transactions were made at current market value pursuant to Rule 17a-7 under the Act amounting to $215,230,000 and $252,965,000 respectively. GENERAL--Certain of the Officers and Trustees of the Trust are Officers and Directors or Trustees of the above companies. TRUSTEES OFFICERS - ----------------------------------------------------------------------------- John F. Donahue John F. Donahue Thomas G. Bigley Chairman John T. Conroy, Jr. Glen R. Johnson William J. Copeland President James E. Dowd J. Christopher Donahue Lawrence D. Ellis, M.D. Vice President Edward L. Flaherty, Jr. Richard B. Fisher Glen R. Johnson Vice President Peter E. Madden Edward C. Gonzales Gregor F. Meyer Vice President and Treasurer John E. Murray, Jr. John W. McGonigle Wesley W. Posvar Vice President and Secretary Marjorie P. Smuts David M. Taylor Assistant Treasurer G. Andrew Bonnewell Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any bank, and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other government agency. Investment in mutual funds involves investment risk, including 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 prospectuses which contain facts concerning its objective and policies, management fees, expenses and other information. PRESIDENT'S MESSAGE - -------------------------------------------------------------------------------- Dear Shareholder: I am pleased to present the Semi-Annual Report to Shareholders of Virginia Municipal Cash Trust, a portfolio of Federated Municipal Trust, for the six-month period ended April 30, 1995. The fund consists of two classes of shares known as Institutional Shares and Institutional Service Shares. We begin this report with our customary update from the fund's portfolio manager, Jeff A. Kozemchak, who will discuss market activity and changes in the fund's strategy relative to that activity. Jeff's report is followed by the fund's Portfolio of Investments and Financial Statements. In addition, Financial Highlights tables have been included for Institutional Shares and Institutional Service Shares. Virginia Municipal Cash Trust continues to seek relief for you and other tax-sensitive Virginia residents, in the form of double tax-free* monthly income. The fund is able to pursue this income by maintaining a portfolio of Virginia municipal securities, issued to fund projects as varied as education, health care, and housing. In this way, the fund helps you make the most of your short-term finances, while funding important municipal improvements in your home state. During the six-month period covered by the report, the fund paid nearly $2 million in total distributions to shareholders. As of this report, the fund's total net assets are $116.1 million. As always, we strive to provide you with the highest level of professional service. We appreciate your continued support and welcome your comments or questions. Sincerely, Glen R. Johnson President June 15, 1995 * INCOME MAY BE SUBJECT TO THE FEDERAL ALTERNATIVE MINIMUM TAX. 1 INVESTMENT REVIEW - -------------------------------------------------------------------------------- AN INTERVIEW WITH THE FUND'S PORTFOLIO MANAGER, JEFF A. KOZEMCHAK Q Jeff, can you comment on the changes in money market rates during the reporting period? A In the face of resilient economic growth and the potential for this growth to create inflationary pressures, the Federal Reserve Board (the "Fed") continued to tighten monetary policy throughout 1994 and into early 1995. On November 15, 1994, the Fed hiked the federal funds target rate from 4.75% to 5.50%. The most recent move by the Fed, on February 1, 1995, increased the target rate by 50 basis points to the current 6.00% level. Short-term interest rates reflected the Fed's upward moves. The yield on the three-month Treasury bill rose from 5.22% at the beginning of the reporting period to 6.06% on February 1, 1995. The yield on the one-year Treasury bill rose from 6.25% at the beginning of the reporting period to a high of 7.32% in early January, 1995. February, March, and April, 1995, however, brought economic reports that pointed to slowing in sectors of the economy, an indication that the rate increases by the Fed that began in February, 1994, were starting to take hold. As a result, short-term interest rates declined over this period as market participants adjusted their expectations regarding the extent of future tightenings by the Fed. Reflecting this change in expectations, the three-month Treasury bill declined to 5.87% on April 30, 1995, while the one-year Treasury bill fell to 6.32%, a decline of 1.00% from the high in January, 1995. Q How have the municipal money markets and the fund's yield reacted to this interest rate environment? A Municipal money market rates were affected by the Fed tightenings early in the reporting period, as well as February's 180-degree change in market expectations regarding the potential for future Fed rate increases. In addition, municipal rates were also influenced by seasonal supply and demand imbalances throughout the reporting period. Yields on seven-day variable rate demand notes (VRDNs), the core component of a tax-free money market fund, rose from 3.22% at the beginning of the reporting period to 4.65% on April 30, 1995. Yield levels also moved upward for one-year fixed-rate notes, increasing from 4.19% in early November, 1994, to a high of 5.10% in early January, 1995, before steadily falling to 4.29% at the end of the reporting period. The divergence between short VRDN yields and one-year fixed-rate note levels resulted from market expectations that the Fed may have successfully engineered a growth slowdown, or a "soft landing." Also, tight municipal note supply conditions helped to contribute to the decline in fixed note yields. The fund responded favorably to the overall increase in short-term interest rates over the reporting period. The seven-day net yield* of the fund's Institutional Shares rose from 3.01% on November 1, 1994 to 3.93% on April 30, 1995. For the Institutional Service Shares, the seven-day net yield* rose from 2.91% at the beginning of the period to 3.83% at April 30, 1995. * PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. YIELD WILL VARY. 2 - -------------------------------------------------------------------------------- Q Did you make any strategic changes to the fund's portfolio in this rate atmosphere? A We continued to add to our positions of short maturity commercial paper (CP) and fully utilized VRDNs in order to maintain the responsiveness of the portfolio to changes in short-term interest rates. VRDNs adjust quickly to changes in Fed policy as well as supply and demand imbalances that are unique to the municipal money markets. The purchase of CP typically allows us to pick up an additional yield premium over VRDNs over time, while still retaining portfolio responsiveness to further rate increases. As a result of these actions and a lack of supply of attractive fixed-rate notes and bonds in Virginia, the average maturity of the fund moved from 56 days at the beginning of the reporting period to 30 days at the end. Q What is your overall outlook for rates in the near future? A Amid reports of a slightly slowing economy and restrained inflation, it appears that the Fed is nearing the end of its tightening cycle. We expect that Fed policy will continue to be neutral in the near term, as the Fed scrutinizes upcoming releases on the economy and inflation for signs that either one is stronger than expectations. Short-term interest rates should trade within a narrow range in the near future. Nevertheless, we expect the supply of fixed-rate notes in our market to increase significantly in starting mid-June, 1995, cheapening note levels. We plan, on average, to extend the average maturity of the fund during this period of heavy issuance, as yields on fixed-rate notes may become very attractive versus comparable maturity taxable securities. 3 VIRGINIA MUNICIPAL CASH TRUST PORTFOLIO OF INVESTMENTS APRIL 30, 1995 (UNAUDITED) - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ---------- ------------------------------------------------------------ ------- ------------ SHORT-TERM MUNICIPAL SECURITIES--98.9% - ------------------------------------------------------------------------ VIRGINIA--95.5% ------------------------------------------------------------ $1,000,000 Alexandria, VA, IDA Weekly VRDNs (American Red Cross)/ (Sanwa Bank Ltd. LOC) A-1+ $ 1,000,000 ------------------------------------------------------------ 5,000,000 Alexandria, VA, Redevelopment and Housing Authority Weekly VRDNs (Crystal City Apartments)/(Safeco Insurance Co. of America Insured)/(Sumitomo Bank Ltd. BPA)/(Subject to AMT) A-1 5,000,000 ------------------------------------------------------------ 2,200,000 Amelia County, VA, IDA Weekly VRDNs (Series 1991)/ (Chambers Waste Systems)/(NationsBank of North Carolina N.A. LOC)/(Subject to AMT) VMIG1 2,200,000 ------------------------------------------------------------ 4,000,000 Arlington County, VA, Weekly VRDNs (Ballston Public Parking)/(Citibank N.A. LOC) A-1 4,000,000 ------------------------------------------------------------ 5,500,000 Campbell County, VA, IDA Solid Waste Disposal Facility Revenue Bonds, 4.75% CP (Series 1994)/(Georgia-Pacific Corp.)/ (Industrial Bank of Japan Ltd. LOC)/(Subject to AMT), Mandatory Tender 5/30/1995 A-1 5,500,000 ------------------------------------------------------------ 4,625,000 Carroll County, VA, IDA, IDRB Weekly VRDNs (Series 1995)/ (Kentucky Derby Hosiery Co., Inc.)/(Liberty National Bank & Trust Co. LOC)/(Subject to AMT) A-1+ 4,625,000 ------------------------------------------------------------ 2,000,000 Chesapeake, VA, IDA Weekly VRDNs (Series 1988)/(Sumitomo Machinery Corp. of America)/(Sumitomo Bank Ltd. LOC)/ (Subject to AMT) VMIG1 2,000,000 ------------------------------------------------------------ 2,025,000 Dinwiddie County, VA, IDA Weekly VRDNs (Tindall Concrete VA, Inc. Project)/(First Union National Bank, Charlotte LOC)/ (Subject to AMT) P-1 2,025,000 ------------------------------------------------------------ 3,515,000 Dinwiddie County, VA, IDA, IDRB Weekly VRDNs (Series 1991)/(Maclin-Zimmer-McGill Tobacco Co., Inc.)/(Wachovia Bank & Trust Co. N.A. LOC)/(Subject to AMT) P-1 3,515,000 ------------------------------------------------------------ 1,050,000 Fairfax County, VA, EDA Weekly VRDNs (William Byrd Press)/ (NationsBank of Virginia N.A. LOC) VMIG1 1,050,000 ------------------------------------------------------------
4 VIRGINIA MUNICIPAL CASH TRUST - ---------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ---------- ------------------------------------------------------------ ------- ------------ SHORT-TERM MUNICIPAL SECURITIES--CONTINUED - ------------------------------------------------------------------------ VIRGINIA--CONTINUED ------------------------------------------------------------ $5,000,000 Fairfax County, VA, IDA, 4.30% CP (Series 1993B)/(Inova Health System), Mandatory Tender 5/23/1995 A-1 $ 5,000,000 ------------------------------------------------------------ 1,000,000 Fairfax County, VA, Redevelopment and Housing Finance Authority Weekly VRDNs (Chase Commons Associates)/ (Bankers Trust Co. LOC) P-1 1,000,000 ------------------------------------------------------------ 6,100,000 Falls Church, VA, IDA, 3.90% Semi-Annual TOBs (Series 1985)/ (Kaiser Permanente Health Care System), Optional Tender 5/1/1995 A-1+ 6,100,000 ------------------------------------------------------------ 600,000 Fauquier County, VA, IDA Weekly VRDNs (Warrenton Development Co.)/(NationsBank of Maryland N.A. LOC) P-1 600,000 ------------------------------------------------------------ 7,113,000 Fluvanna County, VA, IDA Weekly VRDNs (Series 1986)/ (Thomasville Furniture Industries)/(Union Bank of Switzerland LOC)/(Subject to AMT) P-1 7,113,000 ------------------------------------------------------------ 1,070,000 Grayson County, VA, IDA Weekly VRDNs (Series 1987)/ (Robertshaw Controls Company)/(NationsBank of Virginia N.A. LOC)/(Subject to AMT) P-1 1,070,000 ------------------------------------------------------------ 4,000,000 Halifax County, VA, IDA, MMMs, PCR, 4.20% CP (Virginia Electric Power Co.)/(Subject to AMT), Mandatory Tender 7/17/1995 A-1 4,000,000 ------------------------------------------------------------ 4,000,000 Halifax County, VA, IDA, MMMs, PCR, 4.20% CP (Virginia Electric Power Co.)/(Subject to AMT), Mandatory Tender 7/20/1995 A-1 4,000,000 ------------------------------------------------------------ 3,500,000 Halifax County, VA, IDA, MMMs, PCR, 4.25% CP (Virginia Electric Power Co.)/(Subject to AMT), Mandatory Tender 7/19/1995 A-1 3,500,000 ------------------------------------------------------------ 2,582,000 Harrisonburg, VA, Redevelopment & Housing Authority Weekly VRDNs (Series 1989)/(Potomac Hills Apartments)/ (NationsBank of Virginia N.A. LOC)/(Subject to AMT) P-1 2,582,000 ------------------------------------------------------------ 3,740,000 Newport News, VA, 4.10% UT GO Refunding Bonds (Series 1922B), 7/1/1995 Aa 3,741,150 ------------------------------------------------------------
5 VIRGINIA MUNICIPAL CASH TRUST - ---------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ---------- ------------------------------------------------------------ ------- ------------ SHORT-TERM MUNICIPAL SECURITIES--CONTINUED - ------------------------------------------------------------------------ VIRGINIA--CONTINUED ------------------------------------------------------------ $2,200,000 Peninsula Port Authority of Virginia, Coal Terminal Revenue Refunding Bonds, 4.20% CP (Series 1987A)/(Dominion Terminal Associates)/(National Westminster Bank PLC LOC), Mandatory Tender 5/30/1995 P-1 $ 2,200,000 ------------------------------------------------------------ 5,044,000 Peninsula Port Authority of Virginia, IDRB Weekly VRDNs (Series 1986)/(Eeco, Inc.)/(NationsBank of Virginia N.A. LOC)/ (Subject to AMT) P-1 5,044,000 ------------------------------------------------------------ 3,500,000 Peninsula Port Authority of Virginia, Facility Revenue Refunding Bonds, 4.10% CP (Series 1992)/(CSX Corp.)/(Bank of Nova Scotia LOC), Mandatory Tender 5/18/1995 A-1+ 3,500,000 ------------------------------------------------------------ 4,000,000 Peninsula Port Authority of Virginia, Facility Revenue Refunding Bonds, 4.20% CP (Series 1992)/(CSX Corp.)/(Bank of Nova Scotia LOC), Mandatory Tender 5/15/1995 A-1+ 4,000,000 ------------------------------------------------------------ 1,500,000 Peninsula Port Authority of Virginia, Facility Revenue Refunding Bonds, 4.05% CP (Series 1992)/(CSX Corp.)/(Bank of Nova Scotia LOC), Mandatory Tender 7/17/1995 A-1+ 1,500,000 ------------------------------------------------------------ 1,060,000 Richmond, VA, IDA Revenue Refunding Bonds, 4.50% Semi-Annual TOBs (Series 1987B)/(Crow-Klein-Macfarlane)/(First Union National Bank of Virginia LOC)/(Subject to AMT), Optional Tender 5/15/1995 P-1 1,060,000 ------------------------------------------------------------ 1,000,000 Richmond, VA, Redevelopment and Housing Authority Weekly VRDNs (Series B-9)/Red Tobacco Row)/(Bayerische Landesbank LOC)/(Subject to AMT) VMIG1 1,000,000 ------------------------------------------------------------ 2,900,000 South Hill, VA, IDA Weekly VRDNs (Series 1987)/(South Hill Veneers, Inc.)/(Bank One, Columbus N.A. LOC)/(Subject to AMT) P-1 2,900,000 ------------------------------------------------------------ 2,590,000 Tazewell County, VA, IDA Weekly VRDNs (Series 1993)/(Seville Properties Bluefield L.P.)/(Huntington National Bank, Columbus LOC) P-1 2,590,000 ------------------------------------------------------------ 3,500,000 Virginia Education Loan Authority, 4.10% Annual TOBs (Escrowed in Treasuries), 8/24/1995 AAA 3,500,000 ------------------------------------------------------------
6 VIRGINIA MUNICIPAL CASH TRUST - ---------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ---------- ------------------------------------------------------------ ------- ------------ SHORT-TERM MUNICIPAL SECURITIES--CONTINUED - ------------------------------------------------------------------------ VIRGINIA--CONTINUED ------------------------------------------------------------ $1,500,000 Virginia State Housing Development Authority Weekly VRDNs (Series 1987A)/(AHC Service Center, Inc.)/(Mitsubishi Bank Ltd. LOC) P-1 $ 1,500,000 ------------------------------------------------------------ 5,000,000 Virginia State, HDA, 3.90% Annual TOBs (Series F), Mandatory Tender 5/10/1995 A-1+ 5,000,000 ------------------------------------------------------------ 6,000,000 Virginia State, HDA, 4.20% Semi-Annual TOBs (Series 1993)/ (Subject to AMT), Mandatory Tender 5/11/1995 A-1+ 6,000,000 ------------------------------------------------------------ 1,507,000 Williamsburg, VA, IDA Weekly VRDNs (Series 1988)/(Colonial Williamsburg Foundation Museum)/(Sanwa Bank Ltd. LOC) P-1 1,507,000 ------------------------------------------------------------ ------------ Total 110,922,150 ------------------------------------------------------------ ------------ PUERTO RICO--1.2% ------------------------------------------------------------ 1,400,000 Puerto Rico Government Development Bank, Weekly VRDNs (Credit Suisse and Sumitomo Bank Ltd. LOCs) A-1+ 1,400,000 ------------------------------------------------------------ ------------ VIRGIN ISLANDS--2.2% ------------------------------------------------------------ 2,500,000 Virgin Islands, HFA, SFM Revenue Bonds, 4.375% Annual TOBs (Series 1995B)/(FGIC Insured)/(Subject to AMT), Optional Tender 2/1/1996 A-1+ 2,500,000 ------------------------------------------------------------ ------------ TOTAL INVESTMENTS, AT AMORTIZED COST (a) $114,822,150 ------------------------------------------------------------ ------------ ------------ (a) Also represents cost for federal tax purposes. * See Notes to Portfolio of Investments on page 9. Note: The categories of investments are shown as a percentage of net assets ($116,109,106) at April 30, 1995.
7 VIRGINIA MUNICIPAL CASH TRUST - --------------------------------------------------------- The following abbreviations are used throughout this portfolio: AMT --Alternative Minimum Tax BPA --Bond Purchase Agreement CP --Commercial Paper EDA --Economic Development Authority FGIC --Financial Guaranty Insurance Company GO --General Obligation HDA --Hospital Development Authority HFA --Housing Finance Authority/Agency IDA --Industrial Development Authority IDRB --Industrial Development Revenue Bonds LOCs --Letter(s) of Credit LOC --Letter of Credit MMMs --Money Market Municipals PCR --Pollution Control Revenue PLC --Public Limited Company SFM --Single Family Mortgage TOBs --Tender Option Bonds UT --Unlimited Tax VA --Virginia/Veterans Administration VRDNs --Variable Rate Demand Notes
(See Notes which are an integral part of the Financial Statements) 8 VIRGINIA MUNICIPAL CASH TRUST NOTES TO PORTFOLIO OF INVESTMENTS (UNAUDITED) - -------------------------------------------------------------------------------- SHORT-TERM MUNICIPAL OBLIGATION RATINGS STANDARD & POOR'S RATINGS GROUP A S&P note rating reflects the liquidity concerns and market access risks unique to notes. SP-1--Very strong or strong capacity to pay principal and interest. Those issues determined to possess overwhelming safety characteristics will be given a plus (+) designation. SP-2--Satisfactory capacity to pay principal and interest. MOODY'S INVESTORS SERVICE, INC. Moody's short-term ratings are designated Moody's Investment Grade (MIG or VMIG (see below)). The purpose of the MIG or VMIG ratings is to provide investors with a simple system by which the relative investment qualities of short-term obligations may be evaluated. MIG1--This designation denotes best quality. There is present strong protection by established cash flows, superior liquidity support or demonstrated broad-based access to the market for refinancing. MIG2--This designation denotes high quality. Margins of protection are ample although not so large as in the preceding group. VARIABLE RATE DEMAND NOTES (VRDNS) AND TENDER OPTION BONDS (TOBS) RATINGS STANDARD & POOR'S RATINGS GROUP S&P assigns dual ratings to all long-term debt issues that have as part of their provisions a variable rate demand feature. The first rating (long-term rating) addresses the likelihood of repayment of principal and interest when due, and the second rating (short-term rating) describes the demand characteristics. Several examples are AAA/A-1+, AA/A-1+, A/A-1. (The definitions for the long-term and the short-term ratings are provided below.) MOODY'S INVESTORS SERVICE, INC. Short-term ratings on issues with demand features are differentiated by the use of the VMIG symbol to reflect such characteristics as payment upon periodic demand rather than fixed maturity dates and payment relying on external liquidity. In this case, two ratings are usually assigned, (for example, Aaa/VMIG-1); the first representing an evaluation of the degree of risk associated with scheduled principal and interest payments, and the 9 VIRGINIA MUNICIPAL CASH TRUST - --------------------------------------------------------- second representing an evaluation of the degree of risk associated with the demand feature. The VMIG rating can be assigned a 1 or 2 designation using the same definitions described above for the MIG rating. COMMERCIAL PAPER (CP) RATINGS STANDARD & POOR'S RATINGS GROUP A S&P commercial paper rating is a current assessment of the likelihood of timely payment of debt having an original maturity of no more than 365 days. A-1--This highest category designation indicates that the degree of safety regarding timely payment is strong. Those issues determined to possess extremely strong safety characteristics are denoted with a plus (+) sign designation. A-2--Capacity for timely payment on issues with this designation is satisfactory. However, the relative degree of safety is not as high as for issues designated A-1. MOODY'S INVESTORS SERVICE, INC. P-1--Issuers rated Prime-1 (or related supporting institutions) have a superior capacity for repayment of short-term promissory obligations. Prime-1 repayment capacity will normally be evidenced by the following characteristics: leading market positions in well established industries, high rates of return on funds employed, conservative capitalization structure with moderate reliance on debt and ample asset protection, broad margins in earning coverage of fixed financial charges and high internal cash generation, well-established access to a range of financial markets and assured sources of alternate liquidity. P-2--Issuers rated Prime-2 (or related supporting institutions) have a strong capacity for repayment of short-term promissory obligations. This will normally be evidenced by many of the characteristics cited above, but to a lesser degree. Earnings trends and coverage ratios, while sound, will be more subject to variation. Capitalization characteristics, while still appropriate, may be more affected by external conditions. Ample alternate liquidity is maintained. 10 VIRGINIA MUNICIPAL CASH TRUST - --------------------------------------------------------- LONG-TERM DEBT RATINGS STANDARD & POOR'S RATINGS GROUP AAA--Debt rated "AAA" has the highest rating assigned by S&P. Capacity to pay interest and repay principal is extremely strong. AA--Debt rated "AA" has a very strong capacity to pay interest and repay principal and differs from the highest rated issues only in small degree. A--Debt rated "A" has a strong capacity to pay interest and repay principal although it is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than debt in higher rated categories. MOODY'S INVESTORS SERVICE, INC. Aaa--Bonds that are rated Aaa are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as "gilt edged." Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues. Aa--Bonds that are rated Aa are judged to be of high quality by all standards. Together with the Aaa group; they comprise what are generally known as high grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in Aaa securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long-term risks appear somewhat larger than in Aaa securities. A--Bonds that are rated A possess many favorable investment attributes and are to be considered as upper medium grade obligations. Factors giving security to principal and interest are considered adequate but elements may be present which suggest a susceptibility to impairment sometime in the future. NR--indicates that both the bonds and the obligor or credit enhancer are not currently rated by S&P or Moody's with respect to short-term indebtedness. However, management considers them to be of comparable quality to securities rated A-1 or P-1. NR(1)--The underlying issuer/obligor/guarantor has other outstanding debt rated "AAA" by S&P or "Aaa" by Moody's. NR(2)--The underlying issuer/obligor/guarantor has other outstanding debt rated "AA" by S&P or "Aa" Moody's. NR(3)--The underlying issuer/obligor/guarantor has other outstanding debt rated "A" by S&P or Moody's. 11 VIRGINIA MUNICIPAL CASH TRUST STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1995 (UNAUDITED) - -------------------------------------------------------------------------------- ASSETS: - --------------------------------------------------------------------------------------------- Investments in securities, at amortized cost and value (identified and tax cost $114,822,150) $114,822,150 - --------------------------------------------------------------------------------------------- Cash 446,229 - --------------------------------------------------------------------------------------------- Income receivable 1,011,905 - --------------------------------------------------------------------------------------------- Receivable for shares sold 313 - --------------------------------------------------------------------------------------------- Deferred expenses 26,332 - --------------------------------------------------------------------------------------------- ------------ Total assets 116,306,929 - --------------------------------------------------------------------------------------------- LIABILITIES: - --------------------------------------------------------------------------------------------- Payable for shares redeemed $ 49,093 - -------------------------------------------------------------------------------- Income distribution payable 111,890 - -------------------------------------------------------------------------------- Accrued expenses 36,840 - -------------------------------------------------------------------------------- ---------- Total liabilities 197,823 - --------------------------------------------------------------------------------------------- ------------ NET ASSETS for 116,109,106 shares outstanding $116,109,106 - --------------------------------------------------------------------------------------------- ------------ ------------ NET ASSET VALUE, Offering Price and Redemption Proceeds Per Share: - --------------------------------------------------------------------------------------------- INSTITUTIONAL SHARES: ($25,389,788 DIVIDED BY 25,389,788 shares outstanding) $ 1.00 - --------------------------------------------------------------------------------------------- ------------ ------------ INSTITUTIONAL SERVICE SHARES: ($90,719,318 DIVIDED BY 90,719,318 shares outstanding) $ 1.00 - --------------------------------------------------------------------------------------------- ------------ ------------
(See Notes which are an integral part of the Financial Statements) 12 VIRGINIA MUNICIPAL CASH TRUST STATEMENT OF OPERATIONS SIX MONTHS ENDED APRIL 30, 1995 (UNAUDITED) - -------------------------------------------------------------------------------- INVESTMENT INCOME: - -------------------------------------------------------------------------------------------------- Interest $2,308,970 - -------------------------------------------------------------------------------------------------- EXPENSES: - -------------------------------------------------------------------------------------------------- Investment advisory fee $232,883 - -------------------------------------------------------------------------------------- Administrative personnel and services fee 76,863 - -------------------------------------------------------------------------------------- Custodian fees 17,614 - -------------------------------------------------------------------------------------- Transfer agent and dividend disbursing agent fees and expenses 18,452 - -------------------------------------------------------------------------------------- Directors'/Trustees' fees 3,071 - -------------------------------------------------------------------------------------- Auditing fees 7,331 - -------------------------------------------------------------------------------------- Legal fees 8,599 - -------------------------------------------------------------------------------------- Portfolio accounting fees 25,737 - -------------------------------------------------------------------------------------- Shareholder services fee--Institutional Service Shares 114,886 - -------------------------------------------------------------------------------------- Share registration costs 16,168 - -------------------------------------------------------------------------------------- Printing and postage 10,047 - -------------------------------------------------------------------------------------- Insurance premiums 3,379 - -------------------------------------------------------------------------------------- Miscellaneous 4,013 - -------------------------------------------------------------------------------------- -------- Total expenses 539,043 - -------------------------------------------------------------------------------------- Deduct-- - --------------------------------------------------------------------------- Waiver of investment advisory fee $138,873 - --------------------------------------------------------------------------- Waiver of shareholder services fee 68,932 207,805 - --------------------------------------------------------------------------- -------- -------- Net expenses 331,238 - -------------------------------------------------------------------------------------------------- ---------- Net investment income $1,977,732 - -------------------------------------------------------------------------------------------------- ---------- ----------
(See Notes which are an integral part of the Financial Statements) 13 VIRGINIA MUNICIPAL CASH TRUST STATEMENT OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
SIX MONTHS ENDED APRIL 30, 1995 YEAR ENDED (UNAUDITED) OCTOBER 31, 1994 -------------- ---------------- INCREASE (DECREASE) IN NET ASSETS: - --------------------------------------------------------------------------- OPERATIONS-- - --------------------------------------------------------------------------- Net investment income $ 1,977,732 $ 2,874,102 - --------------------------------------------------------------------------- -------------- ---------------- DISTRIBUTIONS TO SHAREHOLDERS-- - --------------------------------------------------------------------------- Distributions from net investment income: - --------------------------------------------------------------------------- Institutional Shares (429,412) (394,677) - --------------------------------------------------------------------------- Institutional Service Shares (1,548,320) (2,479,425) - --------------------------------------------------------------------------- -------------- ---------------- Change in net assets resulting from distributions to shareholders (1,977,732) (2,874,102) - --------------------------------------------------------------------------- -------------- ---------------- SHARE TRANSACTIONS-- - --------------------------------------------------------------------------- Proceeds from sale of Shares 481,856,443 1,227,739,774 - --------------------------------------------------------------------------- Net asset value of Shares issued to shareholders in payment of distributions declared 1,256,021 2,081,737 - --------------------------------------------------------------------------- Cost of Shares redeemed (487,447,591) (1,162,235,549) - --------------------------------------------------------------------------- -------------- ---------------- Change in net assets resulting from Share transactions (4,335,127) 67,585,962 - --------------------------------------------------------------------------- -------------- ---------------- Change in net assets (4,335,127) 67,585,962 - --------------------------------------------------------------------------- NET ASSETS: - --------------------------------------------------------------------------- Beginning of period 120,444,233 52,858,271 - --------------------------------------------------------------------------- -------------- ---------------- End of period $ 116,109,106 $ 120,444,233 - --------------------------------------------------------------------------- -------------- ---------------- -------------- ----------------
(See Notes which are an integral part of the Financial Statements) 14 VIRGINIA MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES - -------------------------------------------------------------------------------- (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
YEAR ENDED OCTOBER SIX MONTHS ENDED 31, APRIL 30, 1995 -------------------- (UNAUDITED) 1994 1993(a) ---------------- -------- --------- NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 - ---------------------------------------- INCOME FROM INVESTMENT OPERATIONS - ---------------------------------------- Net investment income 0.02 0.03 0.0003 - ---------------------------------------- ------- -------- --------- LESS DISTRIBUTIONS - ---------------------------------------- Distributions from net investment income (0.02) (0.03) (0.0003) - ---------------------------------------- ------- -------- --------- NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 - ---------------------------------------- ------- -------- --------- ------- -------- --------- TOTAL RETURN (b) 1.75% 2.57% 0.35% - ---------------------------------------- RATIOS TO AVERAGE NET ASSETS - ---------------------------------------- Expenses 0.49%(c) 0.33% 0.09%(c) - ---------------------------------------- Net investment income 3.50%(c) 2.56% 2.68%(c) - ---------------------------------------- Expense waiver/reimbursement (d) 0.24%(c) 0.37% 1.04%(c) - ---------------------------------------- SUPPLEMENTAL DATA - ---------------------------------------- Net assets, end of period (000 omitted) $25,389 $20,360 $ 7,210 - ---------------------------------------- (a) Reflects operations for the period from September 16, 1993 (date of initial public investment) to October 31, 1993. (b) Based on net asset value, which does not reflect the sales load or contingent deferred sales charge, if applicable. (c) Computed on an annualized basis. (d) This voluntary expense decrease is reflected in both the expense and net investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements) 15 VIRGINIA MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS--INSTITUTIONAL SERVICE SHARES - -------------------------------------------------------------------------------- (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
YEAR ENDED OCTOBER SIX MONTHS ENDED 31, APRIL 30, 1995 -------------------- (UNAUDITED) 1994 1993(a) ---------------- --------- -------- NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 - --------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS - --------------------------------------------------- Net investment income 0.02 0.02 0.0003 - --------------------------------------------------- ------- --------- -------- LESS DISTRIBUTIONS - --------------------------------------------------- Distributions from net investment income (0.02) (0.02) (0.0003) - --------------------------------------------------- ------- --------- -------- NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 - --------------------------------------------------- ------- --------- -------- ------- --------- -------- TOTAL RETURN (b) 1.70% 2.44% 0.34% - --------------------------------------------------- RATIOS TO AVERAGE NET ASSETS - --------------------------------------------------- Expenses 0.59%(c) 0.40% 0.19%(c) - --------------------------------------------------- Net investment income 3.37%(c) 2.42% 2.67%(c) - --------------------------------------------------- Expense waiver/reimbursement (d) 0.39%(c) 0.37% 1.04%(c) - --------------------------------------------------- SUPPLEMENTAL DATA - --------------------------------------------------- Net assets, end of period (000 omitted) $90,719 $100,084 $45,648 - --------------------------------------------------- (a) Reflects operations for the period from September 16, 1993 (date of initial public investment) to October 31, 1993. (b) Based on net asset value, which does not reflect the sales load or contingent deferred sales charge, if applicable. (c) Computed on an annualized basis. (d) This voluntary expense decrease is reflected in both the expense and net investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements) 16 VIRGINIA MUNICIPAL CASH TRUST NOTES TO FINANCIAL STATEMENTS APRIL 30, 1995 (UNAUDITED) - -------------------------------------------------------------------------------- 1. ORGANIZATION Federated Municipal Trust (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 thirteen non-diversified portfolios. The financial statements included herein present only those of Virginia Municipal Cash Trust (the "Fund"). The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. The Fund offers two classes of shares: Institutional Shares and Institutional Service Shares. 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. INVESTMENT VALUATIONS--The Fund's use of the amortized cost method to value its portfolio securities is in accordance with Rule 2a-7 under the Act. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses are accrued daily. Bond premium and discount, if applicable, are amortized as required by the Internal Revenue Code, as amended (the "Code"). Distributions to shareholders are recorded on the ex-dividend date. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the Code applicable to regulated investment companies and to distribute to shareholders each year substantially all of its income. Accordingly, no provisions for federal tax are necessary. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in when- issued or delayed delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked to market daily and begin earning interest on the settlement date. CONCENTRATION OF CREDIT RISK--Since the Fund invests a substantial portion of its assets in issuers located in one state, it will be more susceptible to factors adversely affecting issuers of that state than would be a comparable tax-exempt mutual fund that invests nationally. In order to reduce the credit risk associated with such factors, at April 30, 1995, 56.9% of the securities in the portfolio of investments are backed by letters of credit or bond insurance of various financial institutions and financial guaranty assurance agencies. The value of investments insured by or 17 VIRGINIA MUNICIPAL CASH TRUST - --------------------------------------------------------- supported (backed) by a letter of credit for any one institution or agency does not exceed 7.8% of total investments. DEFERRED EXPENSES--The costs incurred by the Fund with respect to registration of its shares in its first fiscal year, excluding the initial expense of registering its shares, have been deferred and are being amortized using the straight-line method not to exceed a period of five years from the Fund's commencement date. OTHER--Investment transactions are accounted for on the trade date. 3. SHARES OF BENEFICIAL INTEREST The Declaration of Trust permits the Board of Trustees to issue an unlimited number of full and fractional shares of beneficial interest (without par value) for each class of shares. At April 30, 1995, capital paid-in aggregated $116,109,106. Transactions in shares were as follows:
SIX MONTHS ENDED APRIL PERIOD ENDED 30, 1995 OCTOBER 31, 1994 ------------- ---------------- INSTITUTIONAL SHARES SHARES SHARES - ----------------------------------------------------------- ------------- ---------------- Shares sold 47,825,916 66,227,881 - ----------------------------------------------------------- Shares issued to shareholders in payment of distributions declared 11,748 28,365 - ----------------------------------------------------------- Shares redeemed (42,808,082) (53,106,542) - ----------------------------------------------------------- ------------- ---------------- Net change resulting from Institutional Shares transactions 5,029,582 13,149,704 - ----------------------------------------------------------- ------------- ---------------- ------------- ----------------
SIX MONTHS ENDED APRIL PERIOD ENDED 30, 1995 OCTOBER 31, 1994 ------------- ---------------- INSTITUTIONAL SERVICE SHARES SHARES SHARES - --------------------------------------------------------- ------------- ---------------- Shares sold 434,030,527 1,161,511,893 - --------------------------------------------------------- Shares issued to shareholders in payment of distributions declared 1,244,273 2,053,372 - --------------------------------------------------------- Shares redeemed (444,639,509) (1,109,129,007) - --------------------------------------------------------- ------------- ---------------- Net change resulting from Institutional Service Shares transactions (9,364,709) 54,436,258 - --------------------------------------------------------- ------------- ---------------- Net change resulting from share transactions (4,335,127) 67,585,962 - --------------------------------------------------------- ------------- ---------------- ------------- ----------------
18 VIRGINIA MUNICIPAL CASH TRUST - --------------------------------------------------------- 4. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES INVESTMENT ADVISORY FEE--Federated Management, the Fund's investment adviser (the "Adviser"), receives for its services an annual investment advisory fee equal to .40 of 1% 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, provides the Fund with administrative personnel and services. The FAS fee is based on the level of average aggregate daily net assets of all funds advised by subsidiaries of Federated Investors for the period. The administrative fee received during the period of the Administrative Services Agreement shall be at least $125,000 per portfolio and $30,000 per each additional class of shares. SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to .25 of 1% of average daily net assets of the Institutional Service Shares. This fee is to obtain certain services for shareholders and to maintain the shareholder accounts. TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated Services Company ("FServ") serves as transfer and dividend disbursing agent for the Fund. This fee is based on the size, type, and number of accounts and transactions made by shareholders. PORTFOLIO ACCOUNTING FEES--FServ also maintains the Fund's accounting records for which it receives a fee. This fee is based on the level of the Fund's average daily net assets for the period, plus out-of-pocket expenses. ORGANIZATIONAL EXPENSES--Organizational expenses of $33,493 were borne initially by the Adviser. The Fund has agreed to reimburse the Adviser for the organizational expenses during the five year period following August 30, 1993 (date the Fund first became effective). For the period ended April 30, 1995, the Fund paid $4,466 pursuant to this agreement. INTERFUND TRANSACTIONS--During the six months ended April 30, 1995, the Fund engaged in purchase and sale transactions with funds that have a common investment adviser (or affiliated investment adviser), common Directors or Trustees, and common Officers. These transactions were made at current market value pursuant to Rule 17a-7 under the Act amounting to $31,800,000 and $59,600,000, respectively. GENERAL--Certain of the Officers and Trustees of the Trust are Officers and Directors or Trustees of the above companies. 19
TRUSTEES OFFICERS - --------------------------------------------------------- John F. Donahue John F. Donahue Thomas G. Bigley CHAIRMAN John T. Conroy, Jr. Glen R. Johnson William J. Copeland PRESIDENT James E. Dowd J. Christopher Donahue Lawrence D. Ellis, M.D. VICE PRESIDENT Edward L. Flaherty, Jr. Richard B. Fisher Glen R. Johnson VICE PRESIDENT Peter E. Madden Edward C. Gonzales Gregor F. Meyer VICE PRESIDENT AND TREASURER John E. Murray, Jr. John W. McGonigle Wesley W. Posvar VICE PRESIDENT AND SECRETARY Marjorie P. Smuts David M. Taylor ASSISTANT TREASURER G. Andrew Bonnewell ASSISTANT SECRETARY
Mutual funds are not bank deposits or obligations, are not guaranteed by any bank, and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other government agency. Investment in mutual funds involves investment risk, including 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. 20 - -------------------------------------------------------------------------------- VIRGINIA - -------------------------------------------------------------------------------- MUNICIPAL - -------------------------------------------------------------------------------- CASH - -------------------------------------------------------------------------------- TRUST - -------------------------------------------------------------------------------- SEMI-ANNUAL REPORT TO SHAREHOLDERS APRIL 30, 1995 [LOGO] ---------------------------------------- Distributor A subsidiary of FEDERATED INVESTORS ----------------------------------- FEDERATED INVESTORS TOWER PITTSBURGH, PA 15222-3779 ----------------------------------- [LOGO] RECYCLED PAPER 314229816 314229824 G00133-01 (6/95) ----------------------------------- PRESIDENT'S MESSAGE - -------------------------------------------------------------------------------- Dear Shareholder: I am pleased to present the Semi-Annual Report to Shareholders of Alabama Municipal Cash Trust, a portfolio of Federated Municipal Trust, for the six-month period ended April 30, 1995. We begin this report with our customary update from the fund's portfolio manager, Jeff A. Kozemchak, who will discuss market activity and changes in the fund's strategy relative to that activity. Jeff's report is followed by the fund's Portfolio of Investments and Financial Statements. Alabama Municipal Cash Trust continues to seek relief for you and other tax-sensitive Alabama residents, in the form of double tax-free* monthly income. The fund is able to pursue this income by maintaining a portfolio of Alabama municipal securities, issued to fund projects as varied as education, health care, and housing. In this way, the fund helps you make the most of your short-term finances, while funding important municipal improvements in your home state. During the six-month period covered by the report, the fund paid more than $2.6 million in total distributions to shareholders. As of this report, the fund's total net assets are $142.6 million. As always, we strive to provide you with the highest level of professional service. We appreciate your continued support and welcome your comments or questions. Sincerely, Glen R. Johnson President June 15, 1995 * INCOME MAY BE SUBJECT TO THE FEDERAL ALTERNATIVE MINIMUM TAX. 1 INVESTMENT REVIEW - -------------------------------------------------------------------------------- JEFF A. KOZEMCHAK, CFA, VICE PRESIDENT & PORTFOLIO MANAGER Q Jeff, can you comment on the changes in money market rates during the reporting period? A In the face of resilient economic growth and the potential for this growth to create inflationary pressures, the Federal Reserve Board (the "Fed") continued to tighten monetary policy throughout 1994 and into early 1995. On November 15, 1994, the Fed hiked the federal funds target rate from 4.75% to 5.50%. The most recent move by the Fed, on February 1, 1995, increased the target rate by 50 basis points to the current 6.00% level. Short-term interest rates reflected the Fed's upward moves. The yield on the three-month Treasury bill rose from 5.22% at the beginning of the reporting period to 6.06% on February 1, 1995. The yield on the one-year Treasury bill rose from 6.25% at the beginning of the reporting period to a high of 7.32% in early January, 1995. February, March, and April, 1995, however, brought economic reports that pointed to slowing in sectors of the economy, an indication that the rate increases by the Fed that began in February, 1994, were starting to take hold. As a result, short-term interest rates declined over this period as market participants adjusted their expectations regarding the extent of future tightenings by the Fed. Reflecting this change in expectations, the three-month Treasury bill declined to 5.87% on April 30, 1995, while the one-year Treasury bill fell to 6.32%, a decline of 1.00% from the high in January, 1995. Q How have the municipal money markets and the fund's yield reacted to this interest rate environment? A Municipal money market rates were affected by the Fed tightenings early in the reporting period, as well as February's 180-degree change in market expectations regarding the potential for future Fed rate increases. In addition, municipal rates were also influenced by seasonal supply and demand imbalances throughout the reporting period. Yields on seven-day variable rate demand notes (VRDNs), the core component of a tax-free money market fund, rose from 3.22% at the beginning of the reporting period to 4.65% on April 30, 1995. Yield levels also moved upward for one-year fixed-rate notes, increasing from 4.19% in early November, 1994, to a high of 5.10% in early January, 1995, before steadily falling to 4.29% at the end of the reporting period. The divergence between short VRDN yields and one-year fixed-rate note levels resulted from market expectations that the Fed may have successfully engineered a growth slowdown, or a "soft landing." Also, tight municipal note supply conditions helped contribute to the decline in fixed note yields. The fund responded favorably to the overall increase in short-term interest rates over the reporting period. The seven-day net yield of the fund rose from 3.16% on November 1, 1994, to 4.21% on April 30, 1995*. * PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. YIELD WILL VARY. 2 - -------------------------------------------------------------------------------- Q Did you make any strategic changes to the fund's portfolio in this rate atmosphere? A We added to the fund's holdings of short maturity commercial paper (CP) and VRDNs in order to increase the responsiveness to changes in short-term interest rates. VRDNs adjust quickly to changes in Fed policy as well as supply and demand imbalances that are unique to the municipal money markets. The purchase of CP typically allows us to pick up an additional yield premium over VRDNs over time, while still retaining portfolio responsiveness to further rate increases. Also, the average maturity of the fund was targeted within a range of 35 to 50 days, with an emphasis on the shorter end of the target range. Q What is your overall outlook for rates in the near future? A Amid reports of a slightly slowing economy and restrained inflation, it appears that the Fed is nearing the end of its tightening cycle. We expect that Fed policy will continue to be neutral in the near term, as the Fed scrutinizes upcoming releases on the economy and inflation for signs that either one is stronger than expectations. Short-term interest rates should trade within a narrow range in the near future. Nevertheless, we expect the supply of fixed-rate notes in our market to increase significantly starting in mid-June, 1995, cheapening note levels. We plan, on average, to extend the average maturity of the fund during this period of heavy issuance, as yields on fixed-rate notes may become attractive versus comparable maturity taxable securities. 3 ALABAMA MUNICIPAL CASH TRUST PORTFOLIO OF INVESTMENTS APRIL 30, 1995 (UNAUDITED) - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ----------- ------------------------------------------------------------ ------- ------------ SHORT-TERM MUNICIPAL SECURITIES--99.1% - ------------------------------------------------------------------------- ALABAMA--94.9% ------------------------------------------------------------ $ 2,500,000 Alabama Special Care Facilities, 3.90% Annual TOBs (Series 1984A)/(Montgomery Hospital)/(AMBAC Insured), Optional Tender 7/1/1995 A-1 $ 2,500,000 ------------------------------------------------------------ 2,000,000 Alabama State IDA Revenue Bonds Weekly VRDNs (Monarch Tile, Inc.)/(NationsBank of Texas N.A. LOC)/(Subject to AMT) P-1 2,000,000 ------------------------------------------------------------ 2,500,000 Alabama State Public School And College Authority, 5.20% SB (Escrowed to Maturity), 7/1/1995 Aaa 2,503,931 ------------------------------------------------------------ 1,000,000 Alabama State Public School And College Authority, 6.50% SB (Pre-Refunded)/(Callable on 11/1/1995) Aaa 1,024,660 ------------------------------------------------------------ 1,000,000 Alabama State Public School And College Authority, 6.70% SB (Pre-Refunded)/(Callable on 11/1/1995) Aaa 1,025,633 ------------------------------------------------------------ 1,000,000 Alabama State Public School And College Authority, 6.75% SB (Pre-Refunded)/(Callable on 11/1/1995) Aaa 1,025,624 ------------------------------------------------------------ 4,750,000 Alabama State Weekly VRDNs (Pine City Fiber Co.)/(Barclays Bank PLC LOC) VMIG1 4,750,000 ------------------------------------------------------------ 1,700,000 Alabama State, IDA Revenue Bonds Weekly VRDNs (Southern Bag Corp. Ltd.)/(SouthTrust Bank of Alabama LOC)/(Subject to AMT) P-1 1,700,000 ------------------------------------------------------------ 4,000,000 Alabama State, IDA Weekly VRDNs (Series 1994)/(Decatur Aluminum Corp.)/(Star Bank N.A. LOC)/(Subject to AMT) P-1 4,000,000 ------------------------------------------------------------ 1,000,000 Arab, AL, IDB Revenue Refunding Bonds Weekly VRDNs (Series 1989)/(SCI Manufacturing, Inc.)/(Bank of Tokyo Ltd. LOC) A-1 1,000,000 ------------------------------------------------------------ 1,100,000 Arab, AL, IDB Revenue Refunding Bonds Weekly VRDNs (Series 1989)/(SCI Manufacturing, Inc.)/(Bank of Tokyo Ltd. LOC) A-1 1,100,000 ------------------------------------------------------------ 2,400,000 Auburn, AL, IDB Weekly VRDNs (Series A)/(Au Hotel Limited)/(Lloyds Bank PLC, London LOC)/(Subject to AMT) P-1 2,400,000 ------------------------------------------------------------ 6,000,000 Birmingham, AL, 5.625% GO BANs (Series 1995A), 1/5/1996 NR(2) 6,008,473 ------------------------------------------------------------
4 ALABAMA MUNICIPAL CASH TRUST - ---------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ----------- ------------------------------------------------------------ ------- ------------ SHORT-TERM MUNICIPAL SECURITIES--CONTINUED - ------------------------------------------------------------------------- ALABAMA--CONTINUED ------------------------------------------------------------ $ 2,000,000 Birmingham, AL, IDA Weekly VRDNs (Altel Industries)/ (Wachovia Bank of Georgia NA, Atlanta LOC)/(Subject to AMT) P-1 $ 2,000,000 ------------------------------------------------------------ 1,900,000 Birmingham, AL, IDB Weekly VRDNs (Glasforms, Inc.)/(First Alabama Bank LOC)/(Subject to AMT) P-1 1,900,000 ------------------------------------------------------------ 4,590,000 Birmingham, AL, Special Care Facilities Financing Authority, 10.00% Revenue Bonds (Health Care Facilities-Medical Center East)/(Prerefunded), 7/1/1995 (@102) AAA 4,725,682 ------------------------------------------------------------ 2,000,000 Bon Air, AL, IDB Weekly VRDNs (Avondale Mills, Inc.)/(Trust Company Bank LOC) AA- 2,000,000 ------------------------------------------------------------ 1,880,000 Calhoun County, AL, Economic Development Council Weekly VRDNs (Series 1990)/(Food Ingredients Technology Co.)/ (NationsBank of North Carolina N.A. LOC)/(Subject to AMT) P-1 1,880,000 ------------------------------------------------------------ 3,085,000 Chatom, AL, 4.60% Semi-Annual TOBs (Series 1984M)/ (Alabama Electric Co-op., Inc.)/(NRUCFC Guaranty), Optional Tender 8/15/1995 A-1+ 3,085,000 ------------------------------------------------------------ 3,000,000 Decatur, AL, IDB Weekly VRDNs Revenue Refunding Bonds (Series 1993)/(Allied Signal, Inc. Guaranty) A-1 3,000,000 ------------------------------------------------------------ 3,500,000 Eutaw, AL, IDB Weekly VRDNs (Mississippi Power Company Guaranty) VMIG1 3,500,000 ------------------------------------------------------------ 1,865,000 Fort Payne, AL, IDB Weekly VRDNs (Ovalstrapping, Inc.)/ (U.S. Bank of Washington N.A. LOC)/(Subject to AMT) P-1 1,865,000 ------------------------------------------------------------ 670,000 Homewood, AL, 3.40% GO Refunding Warrants SB, 5/1/1995 NR(2) 670,000 ------------------------------------------------------------ 3,000,000 Homewood, AL, IDA Weekly VRDNs (Mountain Brook Inn)/ (SouthTrust Bank of Alabama LOC) P-1 3,000,000 ------------------------------------------------------------ 4,315,000 Hoover, AL, IDA Weekly VRDNs (Bud's Best Cookies, Inc.)/ (SouthTrust Bank of Alabama LOC)/(Subject to AMT) P-1 4,315,000 ------------------------------------------------------------ 330,000 Huntsville, AL, IDA Weekly FRDNs (Parkway)/(First Alabama Bank LOC) A-1+ 330,000 ------------------------------------------------------------ 1,875,000 Ider, AL, IDB Weekly VRDNs (Galbreath, Inc.)/(National Bank of Canada LOC)/(Subject to AMT) P-1 1,875,000 ------------------------------------------------------------
5 ALABAMA MUNICIPAL CASH TRUST - ---------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ----------- ------------------------------------------------------------ ------- ------------ SHORT-TERM MUNICIPAL SECURITIES--CONTINUED - ------------------------------------------------------------------------- ALABAMA--CONTINUED ------------------------------------------------------------ $ 1,000,000 Jefferson County, AL, Weekly VRDNs (Special Obligation Warrants)/(Series 1992)/(Board of Education)/(Columbus Bank & Trust Co. LOC) A-1 $ 1,000,000 ------------------------------------------------------------ 1,875,000 Madison, AL, IDA Weekly VRDNs (Series A)/(Executive Inn)/ (AmSouth Bank N.A. LOC) A-1 1,875,000 ------------------------------------------------------------ 2,700,000 McIntosh, AL, IDB Weekly VRDNs (Ciba Geigy Corp.)/(Union Bank of Switzerland LOC)/(Subject to AMT) A-1+ 2,700,000 ------------------------------------------------------------ 1,350,000 Mobile, AL, Capital Appreciation Warrant, Zero Coupon Bond (4.15% Yield)/(Prerefunded U.S. Treasury), 8/15/1995 AAA 938,660 ------------------------------------------------------------ 2,595,000 Mobile, AL, Downtown Redevelopment Authority Weekly VRDNs (Series 1992)/(Mitchell Project)/(Trust Company Bank LOC)/(Subject to AMT) P-1 2,595,000 ------------------------------------------------------------ 2,500,000 Mobile, AL, IDA Weekly VRDNs (McRae's, Inc.)/(NationsBank of North Carolina N.A. LOC) A-1 2,500,000 ------------------------------------------------------------ 4,100,000 Mobile, AL, IDB Weekly VRDNs (Series 1989)/(Newark Group Industries, Inc.)/(First Fidelity Bank N.A. LOC)/(Subject to AMT) VMIG1 4,100,000 ------------------------------------------------------------ 12,000,000 Mobile, AL, IDB, 4.50% Semi-Annual TOBs (International Paper Co.), Optional Tender 10/15/1995 A-2 12,000,000 ------------------------------------------------------------ 2,000,000 Mobile, AL, IDB, PCR Weekly VRDNs (Series 1993B)/ (Alabama Power Co. Guaranty) A-1 2,000,000 ------------------------------------------------------------ 3,075,000 Mobile, AL, Port City Medical Clinic Board, 4.30% CP (Series 1992A)/(Infirmiary Association)/(Fuji Bank Ltd. and Mitsubishi Bank Ltd. LOCs), Mandatory Tender 6/9/1995 A-1 3,075,000 ------------------------------------------------------------ 4,030,000 Montgomery, AL, IDB Pollution Control & Solid Disposal Revenue, 4.10% CP (General Electric Company), Mandatory Tender 5/12/1995 A-1+ 4,030,000 ------------------------------------------------------------ 2,000,000 Montgomery, AL, IDB Pollution Control & Solid Disposal Revenue, 4.10% CP (General Electric Company), Mandatory Tender 7/18/1995 A-1+ 2,000,000 ------------------------------------------------------------ 1,200,000 Montgomery, AL, IDB Weekly VRDNs (Series 1988A)/(Smith Industries)/(Trust Company Bank LOC) A-1 1,200,000 ------------------------------------------------------------
6 ALABAMA MUNICIPAL CASH TRUST - ---------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ----------- ------------------------------------------------------------ ------- ------------ SHORT-TERM MUNICIPAL SECURITIES--CONTINUED - ------------------------------------------------------------------------- ALABAMA--CONTINUED ------------------------------------------------------------ $ 2,865,000 Montgomery, AL, IDB Weekly VRDNs (Series 1990A)/ (Industrial Partners, Inc.)/(Wachovia Bank of Georgia N.A. LOC)/(Subject to AMT) Aa2 $ 2,865,000 ------------------------------------------------------------ 435,000 Opelika, AL, 3.60% GO Warrants (Series 1994A)/(AMBAC Insured), 7/1/1995 AAA 435,000 ------------------------------------------------------------ 3,000,000 Phoenix City, AL, IDB, 4.20% CP (Series 1988)/(Mead Coated Board)/(ABN AMRO Bank N.V., Amsterdam LOC)/(Subject to AMT), Mandatory Tender 5/31/1995 P-1 3,000,000 ------------------------------------------------------------ 3,800,000 Phoenix City, AL, IDB, 4.20% CP (Series 1988)/(Mead Coated Board)/(ABN AMRO Bank N.V., Amsterdam LOC)/(Subject to AMT), Mandatory Tender 7/26/1995 P-1 3,800,000 ------------------------------------------------------------ 1,200,000 Phoenix City, AL, IDB, 4.25% CP (Series 1988)/(Mead Coated Board)/(ABN AMRO Bank N.V., Amsterdam LOC)/(Subject to AMT), Mandatory Tender 5/1/1995 P-1 1,200,000 ------------------------------------------------------------ 2,500,000 Phoenix City, AL, IDB, 4.25% CP (Series 1988)/(Mead Coated Board)/(ABN AMRO Bank N.V., Amsterdam LOC)/(Subject to AMT), Mandatory Tender 7/24/1995 P-1 2,500,000 ------------------------------------------------------------ 930,000 Piedmont, AL, IDB Weekly VRDNs (Industrial Partners)/(First National Bank of Atlanta LOC)/(Subject to AMT) P-1 930,000 ------------------------------------------------------------ 1,750,000 Scottsboro, AL, Adjusted/Fixed Rate IDRB Weekly VRDNs (Series 1991)/(Maples Industries, Inc.)/(AmSouth Bank N.A. LOC)/(Subject to AMT) P-1 1,750,000 ------------------------------------------------------------ 4,050,000 Scottsboro, AL, IDB Weekly VRDNs (Series 1994)/(Maples Industries, Inc.)/(AmSouth Bank N.A. LOC)/(Subject to AMT) P-1 4,050,000 ------------------------------------------------------------ 2,000,000 St. Clair County, AL, IDB Weekly VRDNs (Series 1993)/ (EBSCO Industries, Inc.)/(National Australia Bank Ltd. LOC)/ (Subject to AMT) A-1+ 2,000,000 ------------------------------------------------------------ 850,000 Sylacuaga, AL, IDB, IDRB Daily VRDNs (Series 1991)/(Parker Fertilizer)/(SouthTrust Bank of Alabama LOC)/(Subject to AMT) P-1 850,000 ------------------------------------------------------------ 2,000,000 Tuskegee, AL, IDB Weekly VRDNs (Series 1995)/(The Concrete Company)/(Columbus Bank and Trust Co. LOC)/(Subject to AMT) P-1 2,000,000 ------------------------------------------------------------
7 ALABAMA MUNICIPAL CASH TRUST - ---------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ----------- ------------------------------------------------------------ ------- ------------ SHORT-TERM MUNICIPAL SECURITIES--CONTINUED - ------------------------------------------------------------------------- ALABAMA--CONTINUED ------------------------------------------------------------ $ 2,065,000 Vincent, AL, IDA Weekly VRDNs (Headquarters Partnership)/ (National Australia Bank Ltd. LOC) P-1 $ 2,065,000 ------------------------------------------------------------ 2,690,000 Vincent, AL, IDB Weekly VRDNs (Series 1993)/(EBSCO Industries, Inc.)/(National Australia Bank Ltd. LOC)/(Subject to AMT) A-1+ 2,690,000 ------------------------------------------------------------ ------------ Total 135,332,663 ------------------------------------------------------------ ------------ PUERTO RICO--0.7% ------------------------------------------------------------ 1,000,000 Puerto Rico Industrial, Medical & Environmental PCA, 4.00% Annual TOBs (Series 1983A)/(Reynolds Metals Co.)/(ABN AMRO Bank N.A. LOC), Optional Tender 9/1/1995 VMIG1 1,000,327 ------------------------------------------------------------ ------------ VIRGIN ISLANDS--3.5% ------------------------------------------------------------ 5,000,000 Virgin Islands HFA, 5.00% Semi-Annual TOBs Home Mortgage Revenue Bonds (Series 1994B)/(FGIC Capital Markets Services Investment Agreement)/(Subject to AMT), Mandatory Tender 5/1/1995 SP-1+ 5,000,000 ------------------------------------------------------------ ------------ TOTAL INVESTMENTS, AT AMORTIZED COST (a) $141,332,990 ------------------------------------------------------------ ------------ ------------ (a) Also represents cost for federal tax purposes. * See Notes to Portfolio of Investments on page 10. Note: The categories of investments are shown as a percentage of net assets ($142,643,887) at April 30, 1995.
8 ALABAMA MUNICIPAL CASH TRUST - --------------------------------------------------------- The following abbreviations are used throughout this portfolio: AMBAC --American Municipal Bond Assurance Corporation AMT --Alternative Minimum Tax BANs --Bond Anticipation Notes CP --Commercial Paper FGIC --Financial Guaranty Insurance Company FRDNs --Floating Rate Demand Note GO --General Obligation HFA --Housing Finance Authority/Agency IDA --Industrial Development Authority IDB --Industrial Development Bond IDRB --Industrial Development Revenue Bonds LOCs --Letter(s) of Credit LOC --Letter of Credit NRUCFC --National Rural Utilities Cooperative Finance Corporation PCA --Pollution Control Authority PCR --Pollution Control Revenue PLC --Public Limited Company SB --Serial Bond TOBs --Tender Option Bonds VRDNs --Variable Rate Demand Notes (See Notes which are an integral part of the Financial Statements.) 9 ALABAMA MUNICIPAL CASH TRUST NOTES TO PORTFOLIO OF INVESTMENTS (UNAUDITED) - -------------------------------------------------------------------------------- SHORT-TERM MUNICIPAL OBLIGATION RATINGS STANDARD & POOR'S RATINGS GROUP A S&P note rating reflects the liquidity concerns and market access risks unique to notes. SP-1--Very strong or strong capacity to pay principal and interest. Those issues determined to possess overwhelming safety characteristics will be given a plus (+) designation. SP-2--Satisfactory capacity to pay principal and interest. MOODY'S INVESTORS SERVICE, INC. Moody's short-term ratings are designated Moody's Investment Grade (MIG or VMIG (see below)). The purpose of the MIG or VMIG ratings is to provide investors with a simple system by which the relative investment qualities of short-term obligations may be evaluated. MIG1--This designation denotes best quality. There is present strong protection by established cash flows, superior liquidity support or demonstrated broad-based access to the market for refinancing. MIG2--This designation denotes high quality. Margins of protection are ample although not so large as in the preceding group. VARIABLE RATE DEMAND NOTES (VRDNS) AND TENDER OPTION BONDS (TOBS) RATINGS STANDARD & POOR'S RATINGS GROUP S&P assigns dual ratings to all long-term debt issues that have as part of their provisions a variable rate demand feature. The first rating (long-term rating) addresses the likelihood of repayment of principal and interest when due, and the second rating (short-term rating) describes the demand characteristics. Several examples are AAA/A-1+, AA/A-1+, A/A-1. (The definitions for the long-term and the short-term ratings are provided below.) MOODY'S INVESTORS SERVICE, INC. Short-term ratings on issues with demand features are differentiated by the use of the VMIG symbol to reflect such characteristics as payment upon periodic demand rather than fixed maturity dates and payment relying on external liquidity. In this case, two ratings are usually assigned, (for example, Aaa/VMIG-1); the first representing an evaluation of the degree of risk associated with scheduled principal and interest payments, and the 10 ALABAMA MUNICIPAL CASH TRUST - --------------------------------------------------------- second representing an evaluation of the degree of risk associated with the demand feature. The VMIG rating can be assigned a 1 or 2 designation using the same definitions described above for the MIG rating. COMMERCIAL PAPER (CP) RATINGS STANDARD & POOR'S RATINGS GROUP A S&P commercial paper rating is a current assessment of the likelihood of timely payment of debt having an original maturity of no more than 365 days. A-1--This highest category designation indicates that the degree of safety regarding timely payment is strong. Those issues determined to possess extremely strong safety characteristics are denoted with a plus (+) sign designation. A-2--Capacity for timely payment on issues with this designation is satisfactory. However, the relative degree of safety is not as high as for issues designated A-1. MOODY'S INVESTORS SERVICE, INC. P-1--Issuers rated Prime-1 (or related supporting institutions) have a superior capacity for repayment of short-term promissory obligations. Prime-1 repayment capacity will normally be evidenced by the following characteristics: leading market positions in well established industries, high rates of return on funds employed, conservative capitalization structure with moderate reliance on debt and ample asset protection, broad margins in earning coverage of fixed financial charges and high internal cash generation, well-established access to a range of financial markets and assured sources of alternate liquidity. P-2--Issuers rated Prime-2 (or related supporting institutions) have a strong capacity for repayment of short-term promissory obligations. This will normally be evidenced by many of the characteristics cited above, but to a lesser degree. Earnings trends and coverage ratios, while sound, will be more subject to variation. Capitalization characteristics, while still appropriate, may be more affected by external conditions. Ample alternate liquidity is maintained. 11 ALABAMA MUNICIPAL CASH TRUST - --------------------------------------------------------- LONG-TERM DEBT RATINGS STANDARD & POOR'S RATINGS GROUP AAA--Debt rated "AAA" has the highest rating assigned by S&P. Capacity to pay interest and repay principal is extremely strong. AA--Debt rated "AA" has a very strong capacity to pay interest and repay principal and differs from the highest rated issues only in small degree. A--Debt rated "A" has a strong capacity to pay interest and repay principal although it is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than debt in higher rated categories. MOODY'S INVESTORS SERVICE, INC. Aaa--Bonds that are rated Aaa are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as "gilt edged." Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues. Aa--Bonds that are rated Aa are judged to be of high quality by all standards. Together with the Aaa group; they comprise what are generally known as high grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in Aaa securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long-term risks appear somewhat larger than in Aaa securities. A--Bonds that are rated A possess many favorable investment attributes and are to be considered as upper medium grade obligations. Factors giving security to principal and interest are considered adequate but elements may be present which suggest a susceptibility to impairment sometime in the future. NR--indicates that both the bonds and the obligor or credit enhancer are not currently rated by S&P or Moody's with respect to short-term indebtedness. However, management considers them to be of comparable quality to securities rated A-1 or P-1. NR(1)--The underlying issuer/obligor/guarantor has other outstanding debt rated "AAA" by S&P or "Aaa" by Moody's. NR(2)--The underlying issuer/obligor/guarantor has other outstanding debt rated "AA" by S&P or "Aa" Moody's. NR(3)--The underlying issuer/obligor/guarantor has other outstanding debt rated "A" by S&P or Moody's. 12 ALABAMA MUNICIPAL CASH TRUST STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1995 (UNAUDITED) - -------------------------------------------------------------------------------- ASSETS: - ------------------------------------------------------------------------------------------- Investments in securities, at amortized cost and value $141,332,990 - ------------------------------------------------------------------------------------------- Cash 626,585 - ------------------------------------------------------------------------------------------- Income receivable 1,109,935 - ------------------------------------------------------------------------------------------- Deferred expenses 17,606 - ------------------------------------------------------------------------------------------- ------------ Total assets 143,087,116 - ------------------------------------------------------------------------------------------- LIABILITIES: - ------------------------------------------------------------------------------------------- Income distribution payable $352,766 - -------------------------------------------------------------------------------- Accrued expenses 90,463 - -------------------------------------------------------------------------------- -------- Total liabilities 443,229 - ------------------------------------------------------------------------------------------- ------------ NET ASSETS for 142,643,887 shares outstanding $142,643,887 - ------------------------------------------------------------------------------------------- ------------ ------------ NET ASSET VALUE, Offering Price and Redemption Proceeds Per Share: ($142,643,887 DIVIDED BY 142,643,887 shares outstanding) $ 1.00 - ------------------------------------------------------------------------------------------- ------------ ------------
(See Notes which are an integral part of the Financial Statements) 13 ALABAMA MUNICIPAL CASH TRUST STATEMENT OF OPERATIONS SIX MONTHS ENDED APRIL 30, 1995 (UNAUDITED) - -------------------------------------------------------------------------------- INVESTMENT INCOME: - ----------------------------------------------------------------------- Interest $2,965,320 - ----------------------------------------------------------------------- EXPENSES: - ----------------------------------------------------------------------- Investment advisory fee $362,540 - ------------------------------------------------------------ Administrative personnel and services fee 62,021 - ------------------------------------------------------------ Custodian fees 13,777 - ------------------------------------------------------------ Transfer agent and dividend disbursing agent fees and expenses 7,251 - ------------------------------------------------------------ Directors'/Trustees' fees 1,267 - ------------------------------------------------------------ Auditing fees 7,964 - ------------------------------------------------------------ Legal fees 3,439 - ------------------------------------------------------------ Portfolio accounting fees 15,952 - ------------------------------------------------------------ Shareholder services fee 174,019 - ------------------------------------------------------------ Share registration costs 17,376 - ------------------------------------------------------------ Printing and postage 8,869 - ------------------------------------------------------------ Insurance premiums 3,258 - ------------------------------------------------------------ Miscellaneous 4,706 - ------------------------------------------------------------ -------- Total expenses 682,439 - ------------------------------------------------------------ Deduct--Waiver of investment advisory fee 342,299 - ------------------------------------------------------------ -------- Net expenses 340,140 - ----------------------------------------------------------------------- ---------- Net investment income $2,625,180 - ----------------------------------------------------------------------- ---------- ----------
(See Notes which are an integral part of the Financial Statements) 14 ALABAMA MUNICIPAL CASH TRUST STATEMENT OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
SIX MONTHS ENDED APRIL 30, 1995 PERIOD ENDED (UNAUDITED) OCTOBER 31, 1994(a) ---------------- ------------------- INCREASE (DECREASE) IN NET ASSETS: - -------------------------------------------------- OPERATIONS-- - -------------------------------------------------- Net investment income $ 2,625,180 $ 1,301,466 - -------------------------------------------------- ---------------- ------------------- DISTRIBUTIONS TO SHAREHOLDERS-- - -------------------------------------------------- Distributions from net investment income (2,625,180) (1,301,466) - -------------------------------------------------- ---------------- ------------------- SHARE TRANSACTIONS-- - -------------------------------------------------- Proceeds from sale of Shares 312,979,575 478,251,901 - -------------------------------------------------- Net asset value of Shares issued to shareholders in payment of distributions declared 619,607 606,720 - -------------------------------------------------- Cost of Shares redeemed (313,759,156) (336,054,760) - -------------------------------------------------- ---------------- ------------------- Change in net assets resulting from Share transactions (159,974) 142,803,861 - -------------------------------------------------- ---------------- ------------------- Change in net assets (159,974) 142,803,861 - -------------------------------------------------- NET ASSETS: - -------------------------------------------------- Beginning of period 142,803,861 -- - -------------------------------------------------- ---------------- ------------------- End of period $ 142,643,887 $ 142,803,861 - -------------------------------------------------- ---------------- ------------------- ---------------- ------------------- (a) For the period from November 29, 1993 (start of business) to October 31, 1994.
(See Notes which are an integral part of the Financial Statements) 15 ALABAMA MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED APRIL 30, 1995 PERIOD ENDED (UNAUDITED) OCTOBER 31, 1994(a) ---------------- ------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 - ----------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS - ----------------------------------------------------- Net investment income 0.02 0.02 - ----------------------------------------------------- -------- -------- LESS DISTRIBUTIONS - ----------------------------------------------------- Distributions from net investment income (0.02) (0.02) - ----------------------------------------------------- -------- -------- NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 - ----------------------------------------------------- -------- -------- -------- -------- TOTAL RETURN (b) 1.80% 2.31% - ----------------------------------------------------- RATIOS TO AVERAGE NET ASSETS - ----------------------------------------------------- Expenses 0.47%(c) 0.36%(c) - ----------------------------------------------------- Net investment income 3.62%(c) 2.67%(c) - ----------------------------------------------------- Expense waiver/reimbursement (d) 0.47%(c) 0.62%(c) - ----------------------------------------------------- SUPPLEMENTAL DATA - ----------------------------------------------------- Net assets, end of period (000 omitted) $142,644 $142,804 - ----------------------------------------------------- (a) Reflects operations for the period from December 3, 1993 (date of initial public investment) to October 31, 1994. For the period from November 29, 1993 (start of business) to December 3, 1993 the Fund had no investment activity. (b) Based on net asset value, which does not reflect the sales load or contingent deferred sales charge, if applicable. (c) Computed on an annualized basis. (d) This voluntary expense decrease is reflected in both the expense and net investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements) 16 ALABAMA MUNICIPAL CASH TRUST NOTES TO FINANCIAL STATEMENTS APRIL 30, 1995 (UNAUDITED) - -------------------------------------------------------------------------------- 1. ORGANIZATION Federated Municipal Trust (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 thirteen non-diversified portfolios. The financial statements included herein present only those of Alabama Municipal Cash Trust (the "Fund"). The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. 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. INVESTMENT VALUATIONS--The Fund's use of the amortized cost method to value its portfolio securities is in accordance with Rule 2a-7 under the Act. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses are accrued daily. Bond premium and discount, if applicable, are amortized as required by the Internal Revenue Code, as amended (the "Code"). Distributions to shareholders are recorded on the ex-dividend date. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the Code applicable to regulated investment companies and to distribute to shareholders each year substantially all of its income. Accordingly, no provisions for federal tax are necessary. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in when-issued or delayed delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked to market daily and begin earning interest on the settlement date. CONCENTRATION OF CREDIT RISK--Since the Fund invests a substantial portion of its assets in issuers located in one state, it will be more susceptible to factors adversely affecting issuers of that state than would be a comparable tax-exempt mutal fund that invests nationally. In order to reduce the credit risk associated with such factors, at April 30, 1995, 74.0% of the securities in the portfolio of investments are backed by letters of credit or bond insurance of various financial institutions and financial guaranty assurance agencies. The value of investments insured by or supported (backed) by a letter of credit for any one institution or agency does not exceed 8.1% of total investments. 17 ALABAMA MUNICIPAL CASH TRUST - --------------------------------------------------------- DEFERRED EXPENSES--The costs incurred by the Fund with respect to registration of its shares in its first fiscal year, excluding the initial expense of registering the shares, have been deferred and are being amortized using the straight-line method not to exceed a period of five years from the Fund's commencement date. OTHER--Investment transactions are accounted for on the trade date. 3. SHARES OF BENEFICIAL INTEREST The Declaration of Trust permits the Board of Trustees to issue an unlimited number of full and fractional shares of beneficial interest (without par value). At April 30, 1995, capital paid-in aggregated $142,643,887. Transactions in shares were as follows:
SIX MONTHS ENDED PERIOD ENDED APRIL 30, 1995 OCTOBER 31, 1994(a) - ---------------------------------------------------------------------- ------------------ ------------------- Shares sold 312,979,575 478,251,901 - ---------------------------------------------------------------------- Shares issued to shareholders in payment of distributions declared 619,607 606,720 - ---------------------------------------------------------------------- Shares redeemed (313,759,156) (336,054,760) - ---------------------------------------------------------------------- ------------------ ------------------- Net change resulting from share transactions (159,974) 142,803,861 - ---------------------------------------------------------------------- ------------------ ------------------- ------------------ ------------------- (a) For the period from November 29, 1993 (start of business) to October 31, 1994.
4. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES INVESTMENT ADVISORY FEE--Federated Management, the Fund's investment adviser (the "Adviser"), receives for its services an annual investment advisory fee equal to .50 of 1% of the Fund's average daily net assets. The Adviser may voluntarily choose to waive a portion of its fee. The Adviser can modify or terminate this voluntary waiver and reimbursement at any time at its sole discretion. ADMINISTRATIVE FEE--Federated Administrative Services ("FAS"), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. The FAS fee is based on the level of average aggregate daily net assets of all funds advised by subsidiaries of Federated Investors for the period. The administrative fee received during the period of the Administrative Services Agreement shall be at least $125,000 per portfolio and $30,000 per each additional class of shares. SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to .25 of 1% of average daily net assets of the Fund for the period. This fee is to obtain certain services for shareholders and to maintain the shareholder accounts. 18 ALABAMA MUNICIPAL CASH TRUST - --------------------------------------------------------- TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated Services Company ("FServ") serves as transfer and dividend disbursing agent for the Fund. This fee is based on the size, type, and number of accounts and transactions made by shareholders. PORTFOLIO ACCOUNTING FEES--FServ maintains the Fund's accounting records. This fee is based on the level of the Fund's average daily net assets for the period, plus out-of-pocket expenses. ORGANIZATIONAL EXPENSES--Organizational expenses ($26,461) and start-up administrative service expenses ($31,250) were borne initially by the Adviser. The Fund has agreed to reimburse the Adviser for the organizational and start-up administrative expenses during the five year period following December 1, 1993 (date the Fund became effective). For the period ended April 30, 1995, the Fund paid $3,381 and $3,993, respectively, pursuant to this agreement. INTERFUND TRANSACTIONS--During the six months ended April 30, 1995, 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 transactions were made at current market value pursuant to Rule 17a-7 under the Act amounting to $163,705,000 and $215,970,000, respectively. GENERAL--Certain of the Officers and Trustees of the Trust are Officers and Directors or Trustees of the above companies. 19
TRUSTEES OFFICERS - --------------------------------------------------------- John F. Donahue John F. Donahue Thomas G. Bigley CHAIRMAN John T. Conroy, Jr. Glen R. Johnson William J. Copeland PRESIDENT James E. Dowd J. Christopher Donahue Lawrence D. Ellis, M.D. VICE PRESIDENT Edward L. Flaherty, Jr. Richard B. Fisher Glen R. Johnson VICE PRESIDENT Peter E. Madden Edward C. Gonzales Gregor F. Meyer VICE PRESIDENT AND TREASURER John E. Murray, Jr. John W. McGonigle Wesley W. Posvar VICE PRESIDENT AND SECRETARY Marjorie P. Smuts David M. Taylor ASSISTANT TREASURER G. Andrew Bonnewell ASSISTANT SECRETARY
Mutual funds are not bank deposits or obligations, are not guaranteed by any bank, and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other government agency. Investment in mutual funds involves investment risk, including 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 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. 20 - -------------------------------------------------------------------------------- ALABAMA - -------------------------------------------------------------------------------- MUNICIPAL - -------------------------------------------------------------------------------- CASH - -------------------------------------------------------------------------------- TRUST - -------------------------------------------------------------------------------- SEMI-ANNUAL REPORT TO SHAREHOLDERS APRIL 30, 1995 [LOGO] ---------------------------------------- Distributor A subsidiary of FEDERATED INVESTORS ----------------------------------- FEDERATED INVESTORS TOWER PITTSBURGH, PA 15222-3779 ----------------------------------- [LOGO] RECYCLED PAPER 314229790 G01120-01 (6/95) ----------------------------------- PRESIDENT'S MESSAGE - -------------------------------------------------------------------------------- Dear Shareholder: I am pleased to present the Semi-Annual Report to Shareholders of North Carolina Municipal Cash Trust, a portfolio of Federated Municipal Trust, for the six-month period ended April 30, 1995. We begin this report with our customary update from the fund's portfolio manager, Jeff A. Kozemchak, who will discuss market activity and changes in the fund's strategy relative to that activity. Jeff's report is followed by the fund's Portfolio of Investments and Financial Statements. North Carolina Municipal Cash Trust continues to seek relief for you and other tax-sensitive North Carolina residents, in the form of double tax-free* monthly income. The fund is able to pursue this income by maintaining a portfolio of North Carolina municipal securities, issued to fund projects as varied as education, health care, and housing. In this way, the fund helps you make the most of your short-term finances, while funding important municipal improvements in your home state. During the six-month period covered by the report, the fund paid nearly $1.7 million in total distributions to shareholders. As of this report, the fund's total net assets are $108.1 million. As always, we strive to provide you with the highest level of professional service. We appreciate your continued support and welcome your comments or questions. Sincerely, Glen R. Johnson President June 15, 1995 *INCOME MAY BE SUBJECT TO THE FEDERAL ALTERNATIVE MINIMUM TAX. 1 INVESTMENT REVIEW - -------------------------------------------------------------------------------- JEFF A. KOZEMCHAK, CFA, VICE PRESIDENT & PORTFOLIO MANAGER Q Jeff, can you comment on the changes in money market rates during the reporting period? A In the face of resilient economic growth and the potential for this growth to create inflationary pressures, the Federal Reserve Board (the "Fed") continued to tighten monetary policy throughout 1994 and into early 1995. On November 15, 1994, the Fed hiked the federal funds target rate from 4.75% to 5.50%. The most recent move by the Fed, on February 1, 1995, increased the target rate by 50 basis points to the current 6.00% level. Short-term interest rates reflected the Fed's upward moves. The yield on the three-month Treasury bill rose from 5.22% at the beginning of the reporting period to 6.06% on February 1, 1995. The yield on the one-year Treasury bill rose from 6.25% at the beginning of the reporting period to a high of 7.32% in early January, 1995. February, March, and April, 1995, however, brought economic reports that pointed to slowing in sectors of the economy, an indication that the rate increases by the Fed that began in February, 1994, were starting to take hold. As a result, short-term interest rates declined over this period as market participants adjusted their expectations regarding the extent of future tightenings by the Fed. Reflecting this change in expectations, the three-month Treasury bill declined to 5.87% on April 30, 1995, while the one-year Treasury bill fell to 6.32%, a decline of 1.00% from the high in January, 1995. Q How have the municipal money markets and the fund's yield reacted to this interest rate environment? A Municipal money market rates were affected by the Fed tightenings early in the reporting period, as well as February's 180-degree change in market expectations regarding the potential for future Fed rate increases. In addition, municipal rates were also influenced by seasonal supply and demand imbalances throughout the reporting period. Yields on seven-day variable rate demand notes (VRDNs), the core component of a tax-free money market fund, rose from 3.22% at the beginning of the reporting period to 4.65% on April 30, 1995. Yield levels also moved upward for one-year fixed-rate notes, increasing from 4.19% in early November, 1994, to a high of 5.10% in early January, 1995, before steadily falling to 4.29% at the end of the reporting period. The divergence between short VRDN yields and one-year fixed-rate note levels resulted from market expectations that the Fed may have successfully engineered a growth slowdown, or a "soft landing." Also, tight municipal note supply conditions helped contribute to the decline in fixed note yields. The fund responded favorably to the overall increase in short-term interest rates over the reporting period. The seven-day net yield of the fund rose from 2.97% on November 1, 1994, to 3.98% on April 30, 1995*. *PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. YIELD WILL VARY. 2 - -------------------------------------------------------------------------------- Q Did you make any strategic changes to the fund's portfolio in this rate atmosphere? A We added to the fund's holdings of short maturity commercial paper (CP) and VRDNs in order to increase the responsiveness to changes in short-term interest rates. VRDNs adjust quickly to changes in Fed policy as well as supply and demand imbalances that are unique to the municipal money markets. The purchase of CP typically allows us to pick up an additional yield premium over VRDNs over time, while still retaining portfolio responsiveness to further rate increases. Also, the average maturity of the fund was targeted within a range of 30 to 45 days, with an emphasis on the shorter end of the target range. Q What is your overall outlook for rates in the near future? A Amid reports of a slightly slowing economy and restrained inflation, it appears that the Fed is nearing the end of its tightening cycle. We expect that Fed policy will continue to be neutral in the near term, as the Fed scrutinizes upcoming releases on the economy and inflation for signs that either one is stronger than expectations. Short-term interest rates should trade within a narrow range in the near future. Nevertheless, we expect the supply of fixed-rate notes in our market to increase significantly starting in mid-June, 1995, cheapening note levels. We plan, on average, to extend the average maturity of the fund during this period of heavy issuance, as yields on fixed-rate notes may become attractive versus comparable maturity taxable securities. 3 NORTH CAROLINA MUNICIPAL CASH TRUST PORTFOLIO OF INVESTMENTS APRIL 30, 1995 (UNAUDITED) - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ---------- ------------------------------------------------------------ ------- ------------ SHORT-TERM MUNICIPAL SECURITIES--99.4% - ------------------------------------------------------------------------ NORTH CAROLINA--91.5% ------------------------------------------------------------ $1,755,000 Alamance County, NC, IDA Weekly VRDNs (Series B)/ (Culp, Inc.)/(First Union National Bank LOC) P-1 $ 1,755,000 ------------------------------------------------------------ 4,000,000 Bladen County, NC, Industrial Facilities & Pollution Control Financing Authority Weekly VRDNs (Series 1993)/(BCH Energy, L.P.)/(Bank of Tokyo Ltd. LOC)/(Subject to AMT) VMIG1 4,000,000 ------------------------------------------------------------ 1,000,000 Bladen County, NC, Industrial Facilities & Pollution Control Financing Authority Weekly VRDNs (Series 1993)/(Harriet & Henderson Yarns, Inc.)/(NationsBank of North Carolina N.A. LOC)/(Subject to AMT) A-1 1,000,000 ------------------------------------------------------------ 1,600,000 Buncombe County, NC, Industrial Facilities & Pollution Control Financing Authority Weekly VRDNs (Series 1991)/(Rich Mount, Inc.)/(Bank of Tokyo Ltd. LOC)/(Subject to AMT) A-1 1,600,000 ------------------------------------------------------------ 2,055,000 Burke County, NC, Industrial Facilities & Pollution Control Financing Authority Weekly VRDNs (Norwalk Furniture Corp., Hickory Hill)/(Branch Banking & Trust Co. LOC)/(Subject to AMT) P-1 2,055,000 ------------------------------------------------------------ 1,000,000 Catawba County, NC, Industrial Facilities & Pollution Control Financing Authority Weekly VRDNs (Series 1992)/(WSMP, Inc.)/ (NationsBank of North Carolina N.A. LOC)/(Subject to AMT) A-1 1,000,000 ------------------------------------------------------------ 4,600,000 Catawba County, NC, Industrial Facilities & Pollution Control Financing Authority Weekly VRDNs (Series 1994)/(Ethan Allen, Inc.)/(Bankers Trust Co. LOC) P-1 4,600,000 ------------------------------------------------------------ 900,000 Charlotte, NC, COPs, 4.15% SB (Series 1994E)/(New Charlotte Corp.)/(City of Charlotte Guaranty)/(Subject to AMT), 9/1/1995 AA 900,000 ------------------------------------------------------------ 4,115,000 Cleveland County, NC, IDA, IDRB Weekly VRDNs (Series 1990)/(MetalsAmerica, Inc.)/(NationsBank of North Carolina N.A. LOC)/(Subject to AMT) P-1 4,115,000 ------------------------------------------------------------
4 NORTH CAROLINA MUNICIPAL CASH TRUST - ---------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ---------- ------------------------------------------------------------ ------- ------------ SHORT-TERM MUNICIPAL SECURITIES--CONTINUED - ------------------------------------------------------------------------ NORTH CAROLINA--CONTINUED ------------------------------------------------------------ $1,000,000 Davidson County, NC, Industrial Facilities & Pollution Control Financing Authority Weekly VRDNs (Series 1995)/(Lawrence Industries, Inc.)/(Branch Banking & Trust Co. LOC)/(Subject to AMT) P-1 $ 1,000,000 ------------------------------------------------------------ 1,800,000 Guilford County, NC, Industrial Facilities & Pollution Control Financing Authority Weekly VRDNs (Series 1989)/(Bonset America Corp.)/(Industrial Bank of Japan Ltd. LOCs)/(Subject to AMT) A-1 1,800,000 ------------------------------------------------------------ 2,000,000 Guilford County, NC, Industrial Facilities & Pollution Control Financing Authority Weekly VRDNs (Series 1989)/(Culp, Inc.)/ (Wachovia Bank of NC N.A. LOC)/(Subject to AMT) P-1 2,000,000 ------------------------------------------------------------ 7,000,000 Halifax County, NC, Industrial Facilities & Pollution Control Financing Authority Weekly VRDNs (Flambeau Airmold Corp.)/(Norwest Bank Minnesota LOC)/(Subject to AMT) P-1 7,000,000 ------------------------------------------------------------ 1,000,000 Iredell County, NC, Industrial Facilities & Pollution Control Financing Authority Weekly VRDNs (Jet Corr, Inc.)/(National Bank of Canada LOC)/(Subject to AMT) P-1 1,000,000 ------------------------------------------------------------ 3,400,000 Lee County, NC, Industrial Facilities & Pollution Control Financing Authority Weekly VRDNs (Series 1989)/(Avondale Mills, Inc.)/(Trust Company Bank LOC) P-1 3,400,000 ------------------------------------------------------------ 3,000,000 Lincoln County, NC, Industrial Facilities & Pollution Control Financing Authority Weekly VRDNs (Leucadia, Inc.)/(National Bank of Canada LOC)/(Subject to AMT) P-1 3,000,000 ------------------------------------------------------------ 2,000,000 Mecklenberg County, NC, Industrial Facilities & Pollution Control Financing Authority Weekly VRDNs (Manhasset Bay Associates)/(Bank of Tokyo Ltd. LOC)/(Subject to AMT) A-1 2,000,000 ------------------------------------------------------------ 1,000,000 New Hanover County, NC, Industrial Facilities & Pollution Control Financing Authority Weekly VRDNs (Efson, Inc.)/ (Branch Banking & Trust Co. LOC)/(Subject to AMT) P-1 1,000,000 ------------------------------------------------------------ 4,000,000 North Carolina Eastern Municipal Power Agency, 4.10% CP (Industrial Bank of Japan Ltd. LOC), Mandatory Tender 6/8/1995 P-1 4,000,000 ------------------------------------------------------------
5 NORTH CAROLINA MUNICIPAL CASH TRUST - ---------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ---------- ------------------------------------------------------------ ------- ------------ SHORT-TERM MUNICIPAL SECURITIES--CONTINUED - ------------------------------------------------------------------------ NORTH CAROLINA--CONTINUED ------------------------------------------------------------ $1,000,000 North Carolina Eastern Municipal Power Agency, 4.10% CP (Series 1988)/(Morgan Guaranty Trust Co. and Union Bank of Switzerland LOCs), Mandatory Tender 5/16/1995 NR $ 1,000,000 ------------------------------------------------------------ 2,718,000 North Carolina Eastern Municipal Power Agency, 4.15% CP (Industrial Bank of Japan Ltd. LOC), Mandatory Tender 6/12/1995 A-1 2,718,000 ------------------------------------------------------------ 1,000,000 North Carolina Eastern Municipal Power Agency, 4.20% CP (Series 1988)/(Morgan Guaranty Trust Co. and Union Bank of Switzerland LOCs), Mandatory Tender 6/14/1995 A-1+ 1,000,000 ------------------------------------------------------------ 1,162,000 North Carolina Eastern Municipal Power Agency, 4.25% CP (Industrial Bank of Japan Ltd. LOC), Mandatory Tender 5/22/1995 A-1 1,162,000 ------------------------------------------------------------ 1,500,000 North Carolina Educational Facilities Financing Agency Weekly VRDNs (Series 1990)/(Bowman Gray School of Medicine)/ (Wachovia Bank of NC N.A. LOC) VMIG1 1,500,000 ------------------------------------------------------------ 900,000 North Carolina Medical Care Commission Hospital Revenue Weekly VRDNs (Series 1993)/(Moses H. Cone Memorial Hospital) A-1+ 900,000 ------------------------------------------------------------ 2,520,000 North Carolina Municipal Power Agency #1, 4.20% CP, Mandatory Tender 5/31/1995 A-1 2,520,000 ------------------------------------------------------------ 2,875,000 North Carolina Municipal Power Agency #1, 9.00% SB (Prerefunded), Mandatory Tender 1/1/1996 @102 AAA 3,009,556 ------------------------------------------------------------ 500,000 Onslow County, NC, Industrial Facilities & Pollution Control Financing Authority Weekly VRDNs (Mine Safety Appliances Co.)/(Sanwa Bank Ltd. LOC) A-1+ 500,000 ------------------------------------------------------------ 4,240,000 Orange County, NC, Industrial Facilities & Pollution Control Financing Authority Weekly VRDNs (Mebane Packaging Corp.)/(First Union National Bank LOC)/(Subject to AMT) A-1+ 4,240,000 ------------------------------------------------------------ 1,400,000 Piedmont Triad Airport Authority Weekly VRDNs (Triad International Maintenance Corp.)/(Mellon Bank N.A. LOC)/ (Subject to AMT) P-1 1,400,000 ------------------------------------------------------------
6 NORTH CAROLINA MUNICIPAL CASH TRUST - ---------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ---------- ------------------------------------------------------------ ------- ------------ SHORT-TERM MUNICIPAL SECURITIES--CONTINUED - ------------------------------------------------------------------------ NORTH CAROLINA--CONTINUED ------------------------------------------------------------ $2,200,000 Randolph County, NC, Industrial Facilities & Pollution Control Financing Authority Weekly VRDNs (Series 1990)/(Wayne Steel, Inc.)/(Bank One, Akron LOC)/(Subject to AMT) P-1 $ 2,200,000 ------------------------------------------------------------ 4,000,000 Richmond County, NC, Industrial Facilities & Pollution Control Financing Authority Weekly VRDNs (Series 1991)/(Bibb Company)/(Citibank N.A. LOC)/(Subject to AMT) A-1 4,000,000 ------------------------------------------------------------ 2,800,000 Rutherford County, NC, Industrial Facilities Pollution Control Financing Authority Weekly VRDNs (Spring-Ford Knitting Co.)/(Branch Banking & Trust Co. LOC)/(Subject to AMT) P-1 2,800,000 ------------------------------------------------------------ 2,750,000 University of North Carolina, 4.65% CP (Series 1989)/ (University of NC at Chapel Hill)/(Credit Suisse LOC), Mandatory Tender 5/5/1995 VMIG1 2,750,000 ------------------------------------------------------------ 1,000,000 University of North Carolina, 5.80% Utilities Systems Refunding Revenue Bonds (Series 1993)/(University of NC at Chapel Hill), 8/1/1995 AA 1,003,333 ------------------------------------------------------------ 4,000,000 University of North Carolina, School of Medicine Ambulatory Care Clinic, 4.65% CP (Series 1990)/(University of NC at Chapel Hill), Mandatory Tender 5/9/1995 A-1+ 4,000,000 ------------------------------------------------------------ 4,000,000 Wake County, NC, Industrial Facilities & Pollution Control Financing Authority, 4.10% CP (Series 1990B)/(Carolina Power & Light Company)/(Fuji Bank Ltd. LOC), Mandatory Tender 5/22/1995 A-1 4,000,000 ------------------------------------------------------------ 3,000,000 Wake County, NC, Industrial Facilities & Pollution Control Financing Authority, 4.10% CP (Series 1990B)/(Carolina Power & Light Company)/(Fuji Bank Ltd. LOC), Mandatory Tender 7/20/1995 A-1 3,000,000 ------------------------------------------------------------ 1,000,000 Wake County, NC, Industrial Facilities & Pollution Control Financing Authority, 4.125% CP (Series 1990A)/(Carolina Power & Light Company)/(Fuji Bank Ltd. LOC), Mandatory Tender 5/30/1995 A-1 1,000,000 ------------------------------------------------------------ 4,485,362 Wayne County, NC, Pollution Control Financing Authority Weekly VRDNs (Cooper Industries, Inc.)/(Sanwa Bank Ltd. LOC) A-1+ 4,485,362 ------------------------------------------------------------
7 NORTH CAROLINA MUNICIPAL CASH TRUST - ---------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ---------- ------------------------------------------------------------ ------- ------------ SHORT-TERM MUNICIPAL SECURITIES--CONTINUED - ------------------------------------------------------------------------ NORTH CAROLINA--CONTINUED ------------------------------------------------------------ $2,500,000 Wilson County, NC, PCA, IDRB Weekly VRDNs (Series 1994)/ (Granutec, Inc.)/(Branch Banking & Trust Co. LOC)/(Subject to AMT) P-1 $ 2,500,000 ------------------------------------------------------------ ------------ Total 98,913,251 ------------------------------------------------------------ ------------ PUERTO RICO--2.8% ------------------------------------------------------------ 3,000,000 Puerto Rico Industrial, Medical & Environmental PCA, 4.00% Annual TOBs (Series 1983A)/(Reynolds Metals Co.)/(ABN AMRO Bank N.A. LOC), Optional Tender 9/1/1995 VMIG1 3,000,981 ------------------------------------------------------------ ------------ VIRGIN ISLANDS--5.1% ------------------------------------------------------------ 3,000,000 Virgin Islands, HFA, 5.00% Semi-Annual TOBs Home Mortgage Revenue Bonds (Series 1994B)/(FGIC Capital Markets Services Investment Agreement)/(Subject to AMT), Mandatory Tender 5/1/1995 SP-1+ 3,000,000 ------------------------------------------------------------ 2,500,000 Virgin Islands, HFA Single Family Mortgage Revenue Bonds, 4.375% Annual TOBs (Series 1995B)/(FGIC Insured)/(Subject to AMT), Optional Tender 2/1/1996 A-1+ 2,500,000 ------------------------------------------------------------ ------------ Total 5,500,000 ------------------------------------------------------------ ------------ TOTAL INVESTMENTS, AT AMORTIZED COST (a) $107,414,232 ------------------------------------------------------------ ------------ ------------ (a) Also represents cost for federal tax purposes. * See Notes to Portfolio of Investments on page 10. Note: The categories of investments are shown as a percentage of net assets ($108,106,331) at April 30, 1995.
8 NORTH CAROLINA MUNICIPAL CASH TRUST - --------------------------------------------------------- The following abbreviations are used throughout this portfolio: AMT --Alternative Minimum Tax COPs --Certificates of Participation CP --Commercial Paper FGIC --Financial Guaranty Insurance Company HFA --Housing Finance Authority /Agency IDA --Industrial Development Authority IDRB --Industrial Development Revenue Bonds LOCs --Letter(s) of Credit LOC --Letter of Credit PCA --Pollution Control Authority SB --Serial Bond TOBs --Tender Option Bonds VRDNs --Variable Rate Demand Notes
(See Notes which are an integral part of the Financial Statements.) 9 NORTH CAROLINA MUNICIPAL CASH TRUST NOTES TO PORTFOLIO OF INVESTMENTS (UNAUDITED) - -------------------------------------------------------------------------------- SHORT-TERM MUNICIPAL OBLIGATION RATINGS STANDARD & POOR'S RATINGS GROUP A S&P note rating reflects the liquidity concerns and market access risks unique to notes. SP-1--Very strong or strong capacity to pay principal and interest. Those issues determined to possess overwhelming safety characteristics will be given a plus (+) designation. SP-2--Satisfactory capacity to pay principal and interest. MOODY'S INVESTORS SERVICE, INC. Moody's short-term ratings are designated Moody's Investment Grade (MIG or VMIG (see below)). The purpose of the MIG or VMIG ratings is to provide investors with a simple system by which the relative investment qualities of short-term obligations may be evaluated. MIG1--This designation denotes best quality. There is present strong protection by established cash flows, superior liquidity support or demonstrated broad-based access to the market for refinancing. MIG2--This designation denotes high quality. Margins of protection are ample although not so large as in the preceding group. VARIABLE RATE DEMAND NOTES (VRDNs) AND TENDER OPTION BONDS (TOBs) RATINGS STANDARD & POOR'S RATINGS GROUP S&P assigns dual ratings to all long-term debt issues that have as part of their provisions a variable rate demand feature. The first rating (long-term rating) addresses the likelihood of repayment of principal and interest when due, and the second rating (short-term rating) describes the demand characteristics. Several examples are AAA/A-1+, AA/A-1+, A/A-1. (The definitions for the long-term and the short-term ratings are provided below.) MOODY'S INVESTORS SERVICE, INC. Short-term ratings on issues with demand features are differentiated by the use of the VMIG symbol to reflect such characteristics as payment upon periodic demand rather than fixed maturity dates and payment relying on external liquidity. In this case, two ratings are usually assigned, (for example, Aaa/VMIG-1); the first representing an evaluation of the degree of risk associated with scheduled principal and interest payments, and the second representing an evaluation of the degree of risk associated with the demand feature. The 10 NORTH CAROLINA MUNICIPAL CASH TRUST - --------------------------------------------------------- VMIG rating can be assigned a 1 or 2 designation using the same definitions described above for the MIG rating. COMMERCIAL PAPER (CP) RATINGS STANDARD & POOR'S RATINGS GROUP A S&P commercial paper rating is a current assessment of the likelihood of timely payment of debt having an original maturity of no more than 365 days. A-1--This highest category designation indicates that the degree of safety regarding timely payment is strong. Those issues determined to possess extremely strong safety characteristics are denoted with a plus (+) sign designation. A-2--Capacity for timely payment on issues with this designation is satisfactory. However, the relative degree of safety is not as high as for issues designated A-1. MOODY'S INVESTORS SERVICE, INC. P-1--Issuers rated PRIME-1 (or related supporting institutions) have a superior capacity for repayment of short-term promissory obligations. Prime-1 repayment capacity will normally be evidenced by the following characteristics: leading market positions in well established industries, high rates of return on funds employed, conservative capitalization structure with moderate reliance on debt and ample asset protection, broad margins in earning coverage of fixed financial charges and high internal cash generation, well-established access to a range of financial markets and assured sources of alternate liquidity. P-2--Issuers rated PRIME-2 (or related supporting institutions) have a strong capacity for repayment of short-term promissory obligations. This will normally be evidenced by many of the characteristics cited above, but to a lesser degree. Earnings trends and coverage ratios, while sound, will be more subject to variation. Capitalization characteristics, while still appropriate, may be more affected by external conditions. Ample alternate liquidity is maintained. 11 NORTH CAROLINA MUNICIPAL CASH TRUST - --------------------------------------------------------- LONG-TERM DEBT RATINGS STANDARD & POOR'S RATINGS GROUP AAA--Debt rated "AAA" has the highest rating assigned by S&P. Capacity to pay interest and repay principal is extremely strong. AA--Debt rated "AA" has a very strong capacity to pay interest and repay principal and differs from the highest rated issues only in small degree. A--Debt rated "A" has a strong capacity to pay interest and repay principal although it is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than debt in higher rated categories. MOODY'S INVESTORS SERVICE, INC. Aaa--Bonds that are rated AAA are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as "gilt edged." Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues. Aa--Bonds that are rated AA are judged to be of high quality by all standards. Together with the AAA group, they comprise what are generally known as high grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in AAA securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long-term risks appear somewhat larger than in AAA securities. A--Bonds that are rated A possess many favorable investment attributes and are to be considered as upper medium grade obligations. Factors giving security to principal and interest are considered adequate but elements may be present which suggest a susceptibility to impairment sometime in the future. NR--indicates that both the bonds and the obligor or credit enhancer are not currently rated by S&P or Moody's with respect to short-term indebtedness. However, management considers them to be of comparable quality to securities rated A-1 or P-1. NR(1)--The underlying issuer/obligor/guarantor has other outstanding debt rated "AAA" by S&P or "Aaa" by Moody's. NR(2)--The underlying issuer/obligor/guarantor has other outstanding debt rated "AA" by S&P or "Aa" Moody's. NR(3)--The underlying issuer/obligor/guarantor has other outstanding debt rated "A" by S&P or Moody's. 12 NORTH CAROLINA MUNICIPAL CASH TRUST STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1995 (UNAUDITED) - -------------------------------------------------------------------------------- ASSETS: - ----------------------------------------------------------------------------------------- Investments in securities, at amortized cost and value $107,414,232 - ----------------------------------------------------------------------------------------- Cash 198,796 - ----------------------------------------------------------------------------------------- Income receivable 619,922 - ----------------------------------------------------------------------------------------- Deferred expenses 28,193 - ----------------------------------------------------------------------------------------- ------------ Total assets 108,261,143 - ----------------------------------------------------------------------------------------- LIABILITIES: - ----------------------------------------------------------------------------------------- Payable for shares redeemed $22,880 - -------------------------------------------------------------------------------- Income distribution payable 96,225 - -------------------------------------------------------------------------------- Accrued expenses 35,707 - -------------------------------------------------------------------------------- ------- Total liabilities 154,812 - ----------------------------------------------------------------------------------------- ------------ NET ASSETS for 108,106,331 shares outstanding $108,106,331 - ----------------------------------------------------------------------------------------- ------------ ------------ NET ASSET VALUE, Offering Price and Redemption Proceeds Per Share: ($108,106,331 DIVIDED BY 108,106,331 shares outstanding) $ 1.00 - ----------------------------------------------------------------------------------------- ------------ ------------
(See Notes which are an integral part of the Financial Statements) 13 NORTH CAROLINA MUNICIPAL CASH TRUST STATEMENT OF OPERATIONS SIX MONTHS ENDED APRIL 30, 1995 (UNAUDITED) - -------------------------------------------------------------------------------- INVESTMENT INCOME: - ---------------------------------------------------------------------------------- Interest $2,019,193 - ---------------------------------------------------------------------------------- EXPENSES: - ---------------------------------------------------------------------------------- Investment advisory fee $250,462 - ----------------------------------------------------------------------- Administrative personnel and services fee 61,987 - ----------------------------------------------------------------------- Custodian fees 13,840 - ----------------------------------------------------------------------- Transfer agent and dividend disbursing agent fees and expenses 9,975 - ----------------------------------------------------------------------- Directors'/Trustees' fees 1,267 - ----------------------------------------------------------------------- Auditing fees 6,761 - ----------------------------------------------------------------------- Legal fees 664 - ----------------------------------------------------------------------- Portfolio accounting fees 21,256 - ----------------------------------------------------------------------- Shareholder services fee 125,231 - ----------------------------------------------------------------------- Share registration costs 15,931 - ----------------------------------------------------------------------- Printing and postage 4,405 - ----------------------------------------------------------------------- Insurance premiums 2,504 - ----------------------------------------------------------------------- Miscellaneous 4,496 - ----------------------------------------------------------------------- -------- Total expenses 518,779 - ----------------------------------------------------------------------- Deduct--Waiver of investment advisory fee 223,234 - ----------------------------------------------------------------------- -------- Net expenses 295,545 - ---------------------------------------------------------------------------------- ---------- Net investment income $1,723,648 - ---------------------------------------------------------------------------------- ---------- ----------
(See Notes which are an integral part of the Financial Statements) 14 NORTH CAROLINA MUNICIPAL CASH TRUST STATEMENT OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
SIX MONTHS ENDED PERIOD ENDED APRIL 30, 1995 OCTOBER 31, (UNAUDITED) 1994(A)(a) --------------- --------------- INCREASE (DECREASE) IN NET ASSETS: - -------------------------------------------------- OPERATIONS-- - -------------------------------------------------- Net investment income $ 1,723,648 $ 1,501,904 - -------------------------------------------------- --------------- --------------- DISTRIBUTIONS TO SHAREHOLDERS-- - -------------------------------------------------- Distributions from net investment income (1,723,648) (1,501,904) - -------------------------------------------------- --------------- --------------- SHARE TRANSACTIONS-- - -------------------------------------------------- Proceeds from sale of Shares 478,243,657 539,042,342 - -------------------------------------------------- Net asset value of Shares issued to shareholders in payment of distributions declared 1,114,090 1,065,423 - -------------------------------------------------- Cost of Shares redeemed (456,500,436) (454,858,745) - -------------------------------------------------- --------------- --------------- Change in net assets resulting from Share transactions 22,857,311 85,249,020 - -------------------------------------------------- --------------- --------------- Change in net assets 22,857,311 85,249,020 - -------------------------------------------------- NET ASSETS: - -------------------------------------------------- Beginning of period 85,249,020 -- - -------------------------------------------------- --------------- --------------- End of period $ 108,106,331 $ 85,249,020 - -------------------------------------------------- --------------- --------------- --------------- --------------- (a) For the period from November 29, 1993 (start of business) to October 31, 1994.
(See Notes which are an integral part of the Financial Statements) 15 NORTH CAROLINA MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED PERIOD ENDED APRIL 30, 1995 OCTOBER 31, (UNAUDITED) 1994(A)(a) ------------------ -------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 - ---------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS - ---------------------------------------------------- Net investment income 0.02 0.02 - ---------------------------------------------------- LESS DISTRIBUTIONS - ---------------------------------------------------- Distributions from net investment income (0.02) (0.02) - ---------------------------------------------------- -------- ------- NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 - ---------------------------------------------------- -------- ------- -------- ------- TOTAL RETURN (b) 1.71% 2.06% - ---------------------------------------------------- RATIOS TO AVERAGE NET ASSETS - ---------------------------------------------------- Expenses 0.59%(c) 0.49%(c) - ---------------------------------------------------- Net investment income 3.44%(c) 2.54%(c) - ---------------------------------------------------- Expense waiver/reimbursement (d) 0.45%(c) 0.44%(c) - ---------------------------------------------------- SUPPLEMENTAL DATA - ---------------------------------------------------- Net assets, end of period (000 omitted) $ 108,106 $ 85,249 - ---------------------------------------------------- (a) Reflects operations for the period from December 31, 1993 (date of initial public investment) to October 31, 1994. For the period from November 29, 1993 (start of business) to December 31, 1993, the Fund had no investment activity. (b) Based on net asset value, which does not reflect the sales load or contingent deferred sales charge, if applicable. (c) Computed on an annualized basis. (d) This voluntary expense decrease is reflected in both the expense and net investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements) 16 NORTH CAROLINA MUNICIPAL CASH TRUST NOTES TO FINANCIAL STATEMENTS APRIL 30, 1995 (UNAUDITED) - -------------------------------------------------------------------------------- 1. ORGANIZATION Federated Municipal Trust (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 thirteen non-diversified portfolios. The financial statements included herein present only those of North Carolina Municipal Cash Trust (the "Fund"). The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. 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. INVESTMENT VALUATIONS--The Fund's use of the amortized cost method to value its portfolio securities is in accordance with Rule 2a-7 under the Act. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses are accrued daily. Bond premium and discount, if applicable, are amortized as required by the Internal Revenue Code, as amended (the "Code"). Distributions to shareholders are recorded on the ex-dividend date. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the Code applicable to regulated investment companies and to distribute to shareholders each year substantially all of its income. Accordingly, no provisions for federal tax are necessary. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in when-issued or delayed delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked to market daily and begin earning interest on the settlement date. CONCENTRATION OF RISK--Since the Fund invests a substantial portion of its assets in issuers located in one state, it will be more susceptible to factors adversely affecting issuers of that state than would be a comparable tax-exempt mutual fund that invests nationally. In order to reduce the credit risk associated with such factors, at April 30, 1995, 89.4% of the securities in the portfolio of investments are backed by letters of credit or bond insurance of various financial institutions and financial guaranty assurance agencies. The value of investments insured by or supported (backed) by a letter of credit for any one institution or agency does not exceed 9.0% of total investments. 17 NORTH CAROLINA MUNICIPAL CASH TRUST - --------------------------------------------------------- DEFERRED EXPENSES--The costs incurred by the Fund with respect to registration of its shares in its first fiscal year, excluding the initial expense of registering the shares, have been deferred and are being amortized using the straight-line method not to exceed a period of five years from the Fund's commencement date. OTHER--Investment transactions are accounted for on the trade date. 3. SHARES OF BENEFICIAL INTEREST The Declaration of Trust permits the Board of Trustees (the "Trustees") to issue an unlimited number of full and fractional shares of beneficial interest (without par value). At April 30, 1995, capital paid-in aggregated $108,106,331. Transactions in shares were as follows:
SIX MONTHS ENDED PERIOD ENDED APRIL 30, 1995 OCTOBER 31, 1994(a) - ---------------------------------------------------------------------- ------------------ ------------------- Shares sold 478,243,657 539,042,342 - ---------------------------------------------------------------------- Shares issued to shareholders in payment of distributions declared 1,114,090 1,065,423 - ---------------------------------------------------------------------- Shares redeemed (456,500,436) (454,858,745) - ---------------------------------------------------------------------- ------------------ ------------------- Net change resulting from share transactions 22,857,311 85,249,020 - ---------------------------------------------------------------------- ------------------ ------------------- ------------------ ------------------- (a) For the period from November 29, 1993 (start of business) to October 31, 1994.
4. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES INVESTMENT ADVISORY FEE--Federated Management, the Fund's investment adviser (the "Adviser"), receives for its services an annual investment advisory fee equal to .50 of 1% of the Fund's average daily net assets. The Adviser may voluntarily choose to waive a 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, provides the Fund with administrative personnel and services. The FAS fee is based on the level of average aggregate daily net assets of all funds advised by subsidiaries of Federated Investors for the period. The administrative fee received during the period of the Administrative Services Agreement shall be at least $125,000 per portfolio and $30,000 per each additional class of shares. SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to .25 of 1% of average daily net assets of the Fund for the period. This fee is to obtain certain services for shareholders and to maintain the shareholder accounts. 18 NORTH CAROLINA MUNICIPAL CASH TRUST - --------------------------------------------------------- TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated Services Company ("FServ") serves as transfer and dividend disbursing agent for the Fund. This fee is based on the size, type, and number of accounts and transactions made by shareholders. PORTFOLIO ACCOUNTING FEES--FServ also maintains the Fund's accounting records for which it receives a fee. This fee is based on the level of the Fund's average daily net assets for the period, plus out-of-pocket expenses. ORGANIZATIONAL EXPENSES--Organizational expenses of $21,879 and start-up administrative service expenses of $31,507 were initially borne by the Adviser. The Fund has agreed to reimburse the Adviser for the organizational expenses and start-up administrative expenses during the five year period following December 1, 1993 (the date the Fund became effective). For the period ended April 30, 1995, the Fund paid $2,796 and $4,026, respectively, pursuant to this agreement. INTERFUND TRANSACTIONS--During the six-months ended April 30, 1995, the Fund engaged in purchase and sale transactions with funds that have a common investment adviser (or affiliated advisers), common Directors/Trustees, and/or common Officers. These transactions were made at current market value pursuant to Rule 17a-7 under the Act amounting to $223,473,800 and $203,310,000, respectively. GENERAL--Certain of the Officers and Trustees of the Trust are Officers and Directors or Trustees of the above companies. 19
TRUSTEES OFFICERS - --------------------------------------------------------- John F. Donahue John F. Donahue Thomas G. Bigley CHAIRMAN John T. Conroy, Jr. Glen R. Johnson William J. Copeland PRESIDENT James E. Dowd J. Christopher Donahue Lawrence D. Ellis, M.D. VICE PRESIDENT Edward L. Flaherty, Jr. Richard B. Fisher Glen R. Johnson VICE PRESIDENT Peter E. Madden Edward C. Gonzales Gregor F. Meyer VICE PRESIDENT AND TREASURER John E. Murray, Jr. John W. McGonigle Wesley W. Posvar VICE PRESIDENT AND SECRETARY Marjorie P. Smuts David M. Taylor ASSISTANT TREASURER G. Andrew Bonnewell ASSISTANT SECRETARY
Mutual funds are not bank deposits or obligations, are not guaranteed by any bank, and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other government agency. Investment in mutual funds involves investment risk, including 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 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. 20 - -------------------------------------------------------------------------------- NORTH - -------------------------------------------------------------------------------- CAROLINA - -------------------------------------------------------------------------------- MUNICIPAL - -------------------------------------------------------------------------------- CASH - -------------------------------------------------------------------------------- TRUST - -------------------------------------------------------------------------------- SEMI-ANNUAL REPORT TO SHAREHOLDERS APRIL 30, 1995 [LOGO] ---------------------------------------- Distributor A subsidiary of FEDERATED INVESTORS ----------------------------------- FEDERATED INVESTORS TOWER PITTSBURGH, PA 15222-3779 ----------------------------------- [LOGO] RECYCLED PAPER 314229782 G01177-01 (6/95) ----------------------------------- PRESIDENT'S MESSAGE - -------------------------------------------------------------------------------- Dear Shareholder: I am pleased to present the Semi-Annual Report to Shareholders of Maryland Municipal Cash Trust, a portfolio of Federated Municipal Trust, for the six-month period ended April 30, 1995. We begin this report with our customary update from the fund's portfolio manager, Jeff A. Kozemchak, who will discuss market activity and changes in the fund's strategy relative to that activity. Jeff's report is followed by the fund's Portfolio of Investments and Financial Statements. Maryland Municipal Cash Trust continues to seek relief for you and other tax-sensitive Maryland residents, in the form of triple tax-free* monthly income. The fund is able to pursue this income by maintaining a portfolio of Maryland municipal securities, issued to fund projects as varied as education, health care, and housing. In this way, the fund helps you make the most of your short-term finances, while funding important municipal improvements in your home state. During the six-month period covered by the report, the fund paid nearly $0.9 million in total distributions to shareholders. As of this report, the fund's total net assets are $53.2 million. As always, we strive to provide you with the highest level of professional service. We appreciate your continued support and welcome your comments or questions. Sincerely, Glen R. Johnson President June 15, 1995 * INCOME MAY BE SUBJECT TO THE FEDERAL ALTERNATIVE MINIMUM TAX. INCOME EARNED IS FREE FROM VARIOUS MARYLAND COUNTY INCOME TAXES. 1 INVESTMENT REVIEW - -------------------------------------------------------------------------------- AN INTERVIEW WITH THE FUND'S PORTFOLIO MANAGER, JEFF A. KOZEMCHAK Q Jeff, can you comment on the changes in money market rates during the reporting period? A In the face of resilient economic growth and the potential for this growth to create inflationary pressures, the Federal Reserve Board (the "Fed") continued to tighten monetary policy throughout 1994 and into early 1995. On November 15, 1994, the Fed hiked the federal funds target rate from 4.75% to 5.50%. The most recent move by the Fed, on February 1, 1995, increased the target rate by 50 basis points to the current 6.00% level. Short-term interest rates reflected the Fed's upward moves. The yield on the three-month Treasury bill rose from 5.22% at the beginning of the reporting period to 6.06% on February 1, 1995. The yield on the one-year Treasury bill rose from 6.25% at the beginning of the reporting period to a high of 7.32% in early January, 1995. February, March, and April, 1995, however, brought economic reports that pointed to slowing in sectors of the economy, an indication that the rate increases by the Fed that began in February, 1994, were starting to take hold. As a result, short-term interest rates declined over this period as market participants adjusted their expectations regarding the extent of future tightenings by the Fed. Reflecting this change in expectations, the three-month Treasury bill declined to 5.87% on April 30, 1995, while the one-year Treasury bill fell to 6.32%, a decline of 1.00% from the high in January, 1995. Q How have the municipal money markets and the fund's yield reacted to this interest rate environment? A Municipal money market rates were affected by the Fed tightenings early in the reporting period, as well as February's 180-degree change in market expectations regarding the potential for future Fed rate increases. In addition, municipal rates were also influenced by seasonal supply and demand imbalances throughout the reporting period. Yields on seven-day variable rate demand notes (VRDNs), the core component of a tax-free money market fund, rose from 3.22% at the beginning of the reporting period to 4.65% on April 30, 1995. Yield levels also moved upward for one-year fixed-rate notes, increasing from 4.19% in early November, 1994, to a high of 5.10% in early January, 1995, before steadily falling to 4.29% at the end of the reporting period. The divergence between short VRDN yields and one-year fixed-rate note levels resulted from market expectations that the Fed may have successfully engineered a growth slowdown, or a "soft landing." Also, tight municipal note supply conditions helped contribute to the decline in fixed note yields. The fund responded favorably to the overall increase in short-term interest rates over the reporting period. The seven-day net yield* of the fund rose from 2.86% on November 1, 1994, to 3.83% on April 30, 1995. * PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. YIELD WILL VARY. 2 - -------------------------------------------------------------------------------- Q Did you make any strategic changes to the fund's portfolio in this rate atmosphere? A We continued to fully utilize both short maturity commercial paper (CP) and VRDNs in order to maintain the responsiveness of the portfolio to changes in short-term interest rates. VRDNs adjust quickly to changes in Fed policy as well as supply and demand imbalances that are unique to the municipal money markets. The purchase of CP typically allows us to pick up an additional yield premium over VRDNs over time while still retaining portfolio responsiveness to further rate increases. Also, because of tight supply conditions, the average maturity of the fund was targeted within a range of 30 to 50 days, with an emphasis on the shorter end of the target range. Q What is your overall outlook for rates in the near future? A Amid reports of a slightly slowing economy and restrained inflation, it appears that the Fed is nearing the end of its tightening cycle. We expect that Fed policy will continue to be neutral in the near term, as the Fed scrutinizes upcoming releases on the economy and inflation for signs that either one is stronger than expectations. Short-term interest rates should trade within a narrow range in the near future. Nevertheless, we expect the supply of fixed-rate notes in our market to increase significantly starting in mid-June, 1995, cheapening note levels. We plan, on average, to extend the average maturity of the fund during this period of heavy issuance, as yields on fixed-rate notes may become attractive versus comparable maturity taxable securities. 3 MARYLAND MUNICIPAL CASH TRUST PORTFOLIO OF INVESTMENTS APRIL 30, 1995 (UNAUDITED) - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ---------- ----------------------------------------------------------------- ------- ----------- SHORT-TERM MUNICIPAL SECURITIES--98.4% - ----------------------------------------------------------------------------- MARYLAND--92.0% ----------------------------------------------------------------- $2,000,000 Anne Arundel County, MD, EDRB, 4.15% CP (Baltimore Gas & Electric Co. Guaranty)/(Subject to AMT), Mandatory Tendor 5/11/1995 A-1 $ 2,000,000 ----------------------------------------------------------------- 1,000,000 Anne Arundel County, MD, EDRB, 4.25% CP (Baltimore Gas & Electric Co. Guaranty), Mandatory Tender 7/19/1995 A-1 1,000,000 ----------------------------------------------------------------- 2,000,000 Anne Arundel County, MD, EDRB, 4.25% CP (Series 1988)/ (Baltimore Gas & Electric Co.)/(Subject to AMT), Mandatory Tender 7/18/1995 A-1 2,000,000 ----------------------------------------------------------------- 2,100,000 Baltimore County, MD, Port Facility Monthly VRDNs (Occidental Petroleum Corp.)/(National Westminster Bank, PLC LOC) A-1+ 2,100,000 ----------------------------------------------------------------- 1,000,000 Baltimore County, MD, Weekly VRDNs (Series 1992)/ (Sheppard & Enoch Pratt Hospital Facility)/(Societe Generale LOC) VMIG1 1,000,000 ----------------------------------------------------------------- 2,000,000 Baltimore County, MD, Weekly VRDNs (Series 1994)/(Direct Marketing Associates, Inc. Facility)/(First National Bank of Maryland, Baltimore LOC)/(Subject to AMT) A-1 2,000,000 ----------------------------------------------------------------- 3,000,000(a) Baltimore County, MD, Weekly VRDNs (Series 20 Putters)/ (Morgan Guaranty Trust Co. BPA) VMIG1 3,000,000 ----------------------------------------------------------------- 2,000,000 Baltimore, MD, 5.00% Highway User RANs (Series 1994), 6/9/1995 SP-1+ 2,001,812 ----------------------------------------------------------------- 2,000,000 Baltimore, MD, PCR Weekly VRDNs (SCM Plants, Inc.)/ (Barclays Bank, PLC LOC) A-1+ 2,000,000 ----------------------------------------------------------------- 1,500,000 Cecil County, MD, County Commissioners EDRB Weekly VRDNs (Series 1988S)/(Williams Mobile Offices, Inc.)/(First National Bank of Maryland LOC)/(Subject to AMT) A-1 1,500,000 ----------------------------------------------------------------- 995,000 Elkton, MD, Weekly VRDNs (Series 1992S)/(Highway Service Ventures, Inc. Facility)/(First Union Bank, Charlotte LOC) A-1 995,000 -----------------------------------------------------------------
4 MARYLAND MUNICIPAL CASH TRUST - ---------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ---------- ----------------------------------------------------------------- ------- ----------- SHORT-TERM MUNICIPAL SECURITIES--CONTINUED - ----------------------------------------------------------------------------- MARYLAND--CONTINUED ----------------------------------------------------------------- $3,141,000 Hartford County, MD, Weekly VRDNs (Series 1989)/(Hartford Commons Associates Facility)/(Nationsbank of Virginia N.A. LOC)/(Subject to AMT) P-1 $ 3,141,000 ----------------------------------------------------------------- 2,800,000 Maryland State CDA Weekly VRDNs (Series 1990B)/(Cherry Hill Apartment Ltd.)/(Nationsbank of Maryland LOC)/(Subject to AMT) P-1 2,800,000 ----------------------------------------------------------------- 500,000 Maryland State Department of Transportation, 7.10% SB (Pre- refunded in U.S. Treasuries, 8/1/1995 @102) NR(1) 513,452 ----------------------------------------------------------------- 3,000,000 Maryland State Energy Financing Administration IDRB Weekly VRDNs (Series 1988)/(Morningstar Foods, Inc.)/(Long Term Credit Bank of Japan Ltd. LOC)/(Subject to AMT) A-2 3,000,000 ----------------------------------------------------------------- 1,000,000 Maryland State HEFA Weekly VRDNs (Series 1985B)/(Pooled Loan Program)/(Sanwa Bank Ltd. LOC) VMIG1 1,000,000 ----------------------------------------------------------------- 2,000,000 Maryland State HEFA Weekly VRDNs Revenue Bonds (Series 1985A)/(Dai-Ichi Kangyo Bank Ltd. LOC) VMIG1 2,000,000 ----------------------------------------------------------------- 1,000,000 Maryland State HEFA Weekly VRDNs Revenue Bonds (Series 1992B)/(North Arundel Hospital)/(Mellon Bank N.A. LOC) VMIG1 1,000,000 ----------------------------------------------------------------- 3,245,000 Maryland State HEFA, 9.25% Pre-Refunded Bonds (Series 1985A)/(John Hopkins University), 7/1/1995 AAA 3,339,099 ----------------------------------------------------------------- 2,000,000 Maryland State HEFA, ACES Weekly VRDNs Revenue Bonds (Series 1994)/(Daughters of Charity Guaranty) VMIG1 2,000,000 ----------------------------------------------------------------- 2,300,000 Montgomery County, MD, EDA Weekly VRDNs (U.S. Pharmacopeial Convention Facility)/(Chemical Bank LOC) VMIG1 2,300,000 ----------------------------------------------------------------- 2,000,000 Montgomery County, MD, Housing Opportunities Commission SFM, 4.35% Annual TOBs (Series 1994C), Optional Tender 10/25/1995 VMIG1 2,000,000 ----------------------------------------------------------------- 2,000,000 Montgomery County, MD, Multi-Family Weekly VRDNs (Series 1991A)/(South Bay Club Apartments - Van Nuys, G.P.)/ (General Electric Capital Corp. LOC) A-1+ 2,000,000 -----------------------------------------------------------------
5 MARYLAND MUNICIPAL CASH TRUST - ---------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ---------- ----------------------------------------------------------------- ------- ----------- SHORT-TERM MUNICIPAL SECURITIES--CONTINUED - ----------------------------------------------------------------------------- MARYLAND--CONTINUED ----------------------------------------------------------------- $2,000,000 University of Maryland, Revolving Equipment Loan Program Weekly VRDNs (Series A)/(Student Loan Marketing Association LIQ) A-1+ $ 2,000,000 ----------------------------------------------------------------- 2,260,000 Wicomico County, MD, EDRB Weekly VRDNs (Series 1994)/ (Field Container Co. L.P.)/(Northern Trust Co. LOC)/(Subject to AMT) SP-1+ 2,260,000 ----------------------------------------------------------------- ----------- Total 48,950,363 ----------------------------------------------------------------- ----------- PUERTO RICO--2.6% ----------------------------------------------------------------- 1,400,000 Puerto Rico Industrial, Medical & Environmental PCA, 4.00% Annual TOBs (Series 1983A)/(Reynolds Metals Co.)/(ABN AMRO Bank N.A. LOC), Optional Tender 9/1/1995 VMIG1 1,400,457 ----------------------------------------------------------------- ----------- VIRGIN ISLANDS--3.8% ----------------------------------------------------------------- 2,000,000 Virgin Islands, HFA Single Family Mortgage Revenue Bonds, 4.375% Annual TOBs (Series 1995B)/(FGIC Insured)/(Subject to AMT), Optional Tender 2/1/1996 A-1+ 2,000,000 ----------------------------------------------------------------- ----------- TOTAL INVESTMENTS, AT AMORTIZED COST (b) $52,350,820 ----------------------------------------------------------------- ----------- ----------- * See Notes to Portfolio of Investments on page 8. (a) Denotes restricted securities which are subject to resale under Federal Securities laws. These securities have been determined to be liquid under criteria established by the Board of Trustees. (b) Also represents cost for federal tax purposes. Note: The categories of investments are shown as a percentage of net assets ($53,211,991) at April 30, 1995.
6 MARYLAND MUNICIPAL CASH TRUST - --------------------------------------------------------- The following abbreviations are used throughout this portfolio: ACES --Adjustable Convertible Extendable Securities AMT --Alternative Minimum Tax BPA --Bond Purchase Agreement CP --Commercial Paper CDA --Community Development Administration EDA --Economic Development Authority EDRB --Economic Development Revenue Bonds FGIC --Financial Guaranty Insurance Company HEFA --Health and Education Facilities Authority HFA --Housing Finance Authority/Agency IDRB --Industrial Development Revenue Bonds LIQ --Liquidity Agreement LOC --Letter of Credit PCA --Pollution Control Authority PCR --Pollution Control Revenue PLC --Public Limited Company RANs --Revenue Anticipation Notes SB --Serial Bond SFM --Single Family Mortgage TOBs --Tender Option Bonds VRDNs --Variable Rate Demand Notes
(See Notes which are an integral part of the Financial Statements) 7 MARYLAND MUNICIPAL CASH TRUST NOTES TO PORTFOLIO OF INVESTMENTS (UNAUDITED) - -------------------------------------------------------------------------------- SHORT-TERM MUNICIPAL OBLIGATION RATINGS STANDARD & POOR'S RATINGS GROUP A S&P note rating reflects the liquidity concerns and market access risks unique to notes. SP-1--Very strong or strong capacity to pay principal and interest. Those issues determined to possess overwhelming safety characteristics will be given a plus (+) designation. SP-2--Satisfactory capacity to pay principal and interest. MOODY'S INVESTORS SERVICE, INC. Moody's short-term ratings are designated Moody's Investment Grade (MIG or VMIG (see below)). The purpose of the MIG or VMIG ratings is to provide investors with a simple system by which the relative investment qualities of short-term obligations may be evaluated. MIG1--This designation denotes best quality. There is present strong protection by established cash flows, superior liquidity support or demonstrated broad-based access to the market for refinancing. MIG2--This designation denotes high quality. Margins of protection are ample although not so large as in the preceding group. VARIABLE RATE DEMAND NOTES (VRDNs) AND TENDER OPTION BONDS (TOBs) RATINGS STANDARD & POOR'S RATINGS GROUP S&P assigns dual ratings to all long-term debt issues that have as part of their provisions a variable rate demand feature. The first rating (long-term rating) addresses the likelihood of repayment of principal and interest when due, and the second rating (short-term rating) describes the demand characteristics. Several examples are AAA/A-1+, AA/A-1+, A/A-1. (The definitions for the long-term and the short-term ratings are provided below.) MOODY'S INVESTORS SERVICE, INC. Short-term ratings on issues with demand features are differentiated by the use of the VMIG symbol to reflect such characteristics as payment upon periodic demand rather than fixed maturity dates and payment relying on external liquidity. In this case, two ratings are usually assigned, (for example, Aaa/VMIG-1); the first representing an evaluation of the degree of risk associated with scheduled principal and interest payments, and the second representing an evaluation of the degree of risk associated with the demand feature. The 8 MARYLAND MUNICIPAL CASH TRUST - --------------------------------------------------------- VMIG rating can be assigned a 1 or 2 designation using the same definitions described above for the MIG rating. COMMERCIAL PAPER (CP) RATINGS STANDARD & POOR'S RATINGS GROUP A S&P commercial paper rating is a current assessment of the likelihood of timely payment of debt having an original maturity of no more than 365 days. A-1--This highest category indicates that the degree of safety regarding timely payment is strong. Those issues determined to possess extremely strong safety characteristics are denoted with a plus (+) sign designation. A-2--Capacity for timely payment on issues with this designation is satisfactory. However, the relative degree of safety is not as high as for issues designated A-1. MOODY'S INVESTORS SERVICE, INC. P-1--Issuers rated PRIME-1 (or related supporting institutions) have a superior capacity for repayment of short-term promissory obligations. Prime-1 repayment capacity will normally be evidenced by the following characteristics: leading market positions in well established industries, high rates of return on funds employed, conservative capitalization structure with moderate reliance on debt and ample asset protection, broad margins in earning coverage of fixed financial charges and high internal cash generation, well-established access to a range of financial markets and assured sources of alternate liquidity. P-2--Issuers rated PRIME-2 (or related supporting institutions) have a strong capacity for repayment of short-term promissory obligations. This will normally be evidenced by many of the characteristics cited above, but to a lesser degree. Earnings trends and coverage ratios, while sound, will be more subject to variation. Capitalization characteristics, while still appropriate, may be more affected by external conditions. Ample alternate liquidity is maintained. LONG-TERM DEBT RATINGS STANDARD & POOR'S RATINGS GROUP AAA--Debt rated "AAA" has the highest rating assigned by S&P. Capacity to pay interest and repay principal is extremely strong. AA--Debt rated "AA" has a very strong capacity to pay interest and repay principal and differs from the highest rated issues only in small degree. A--Debt rated "A" has a strong capacity to pay interest and repay principal although it is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than debt in higher rated categories. 9 MARYLAND MUNICIPAL CASH TRUST - --------------------------------------------------------- MOODY'S INVESTORS SERVICES, INC. Aaa--Bonds that are rated Aaa are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as "gilt edged." Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues. Aa--Bonds that are rated Aa are judged to be of high quality by all standards. Together with the Aaa group, they comprise what are generally known as high grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in Aaa securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long-term risks appear somewhat larger than in Aaa securities. A--Bonds that are rated A possess many favorable investment attributes and are to be considered as upper medium grade obligations. Factors giving security to principal and interest are considered adequate but elements may be present which suggest a susceptibility to impairment sometime in the future. NR--indicates that both the bonds and the obligor or credit enhancer are not currently rated by S&P or Moody's with respect to short-term indebtedness. However, management considers them to be of comparable quality to securities rated A-1 or P-1. NR(1)--The underlying issuer/obligor/guarantor has other outstanding debt rated "AAA" by S&P or "Aaa" by Moody's. NR(2)--The underlying issuer/obligor/guarantor has other outstanding debt rated "AA" by S&P or "Aa" Moody's. NR(3)--The underlying issuer/obligor/guarantor has other outstanding debt rated "A" by S&P or Moody's. 10 MARYLAND MUNICIPAL CASH TRUST STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1995 (UNAUDITED) - -------------------------------------------------------------------------------- ASSETS: - ------------------------------------------------------------------------------------------ Investments in securities, at amortized cost and value $52,350,820 - ------------------------------------------------------------------------------------------ Cash 476,859 - ------------------------------------------------------------------------------------------ Income receivable 433,858 - ------------------------------------------------------------------------------------------ Receivable for shares sold 3,500 - ------------------------------------------------------------------------------------------ Deferred expenses 16,280 - ------------------------------------------------------------------------------------------ ----------- Total assets 53,281,317 - ------------------------------------------------------------------------------------------ LIABILITIES: - ------------------------------------------------------------------------------------------ Income distribution payable $13,346 - -------------------------------------------------------------------------------- Accrued expenses 55,980 - -------------------------------------------------------------------------------- ------- Total liabilities 69,326 - ------------------------------------------------------------------------------------------ ----------- NET ASSETS for 53,211,991 shares outstanding $53,211,991 - ------------------------------------------------------------------------------------------ ----------- ----------- NET ASSET VALUE, Offering Price and Redemption Proceeds Per Share: ($53,211,991 DIVIDED BY 53,211,991 shares outstanding) $ 1.00 - ------------------------------------------------------------------------------------------ ----------- -----------
(See Notes which are an integral part of the Financial Statements) 11 MARYLAND MUNICIPAL CASH TRUST STATEMENT OF OPERATIONS SIX MONTHS ENDED APRIL 30, 1995 (UNAUDITED) - -------------------------------------------------------------------------------- INVESTMENT INCOME: - ---------------------------------------------------------------------------------- Interest $1,123,449 - ---------------------------------------------------------------------------------- EXPENSES: - ---------------------------------------------------------------------------------- Investment advisory fee $141,776 - ----------------------------------------------------------------------- Administrative personnel and services fee 61,987 - ----------------------------------------------------------------------- Custodian fees 10,204 - ----------------------------------------------------------------------- Transfer agent and dividend disbursing agent fees and expenses 7,345 - ----------------------------------------------------------------------- Directors'/Trustees' fees 895 - ----------------------------------------------------------------------- Auditing fees 7,876 - ----------------------------------------------------------------------- Legal fees 2,540 - ----------------------------------------------------------------------- Portfolio accounting fees 15,645 - ----------------------------------------------------------------------- Shareholder services fee 69,924 - ----------------------------------------------------------------------- Share registration costs 15,257 - ----------------------------------------------------------------------- Printing and postage 5,975 - ----------------------------------------------------------------------- Insurance premiums 2,751 - ----------------------------------------------------------------------- Miscellaneous 3,789 - ----------------------------------------------------------------------- -------- Total expenses 345,964 - ----------------------------------------------------------------------- Deduct-- - ------------------------------------------------------------ Waiver of investment advisory fee $141,776 - ------------------------------------------------------------ Reimbursement of other operating expenses by adviser 19,880 161,656 - ------------------------------------------------------------ -------- -------- Net expenses 184,308 - ---------------------------------------------------------------------------------- ---------- Net investment income $ 939,141 - ---------------------------------------------------------------------------------- ---------- ----------
(See Notes which are an integral part of the Financial Statements) 12 MARYLAND MUNICIPAL CASH TRUST STATEMENT OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
SIX MONTHS ENDED APRIL 30, 1995 PERIOD ENDED (UNAUDITED) OCTOBER 31, 1994(a) -------------- ------------------- INCREASE (DECREASE) IN NET ASSETS: - --------------------------------------------------------------------------- OPERATIONS-- - --------------------------------------------------------------------------- Net investment income $ 939,141 $ 735,164 - --------------------------------------------------------------------------- -------------- ------------------- DISTRIBUTIONS TO SHAREHOLDERS-- - --------------------------------------------------------------------------- Distributions from net investment income (939,141) (735,164) - --------------------------------------------------------------------------- -------------- ------------------- SHARE TRANSACTIONS-- - --------------------------------------------------------------------------- Proceeds from sale of Shares 107,270,010 231,266,672 - --------------------------------------------------------------------------- Net asset value of Shares issued to shareholders in payment of distributions declared 863,890 596,061 - --------------------------------------------------------------------------- Cost of Shares redeemed (111,197,148) (175,587,494) - --------------------------------------------------------------------------- -------------- ------------------- Change in net assets resulting from Share transactions (3,063,248) 56,275,239 - --------------------------------------------------------------------------- -------------- ------------------- Change in net assets (3,063,248) 56,275,239 - --------------------------------------------------------------------------- NET ASSETS: - --------------------------------------------------------------------------- Beginning of period 56,275,239 0 - --------------------------------------------------------------------------- -------------- ------------------- End of period $ 53,211,991 $ 56,275,239 - --------------------------------------------------------------------------- -------------- ------------------- -------------- ------------------- (a) For the period from April 25, 1994 (start of business) to October 31, 1994.
(See Notes which are an integral part of the Financial Statements) 13 MARYLAND MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED APRIL 30, 1995 PERIOD ENDED (UNAUDITED) OCTOBER 31, 1994(a) ---------------- ------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 - ---------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS - ---------------------------------------------------------------------- Net investment income 0.02 0.01 - ---------------------------------------------------------------------- LESS DISTRIBUTIONS - ---------------------------------------------------------------------- Distributions from net investment income (0.02) (0.01) - ---------------------------------------------------------------------- ------- ------- NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 - ---------------------------------------------------------------------- ------- ------- ------- ------- TOTAL RETURN (b) 1.66% 1.30% - ---------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS - ---------------------------------------------------------------------- Expenses 0.65%(c) 0.46%(c) - ---------------------------------------------------------------------- Net investment income 3.31%(c) 2.68%(c) - ---------------------------------------------------------------------- Expense waiver/reimbursement (d) 0.57%(c) 0.53%(c) - ---------------------------------------------------------------------- SUPPLEMENTAL DATA - ---------------------------------------------------------------------- Net assets, end of period (000 omitted) $53,212 $56,275 - ---------------------------------------------------------------------- (a) Reflects operations for the period from May 9, 1994 (date of initial public investment) to October 31, 1994. For the period from April 25, 1994 (start of business) to May 9, 1994, the Fund had no investment activity. (b) Based on net asset value, which does not reflect the sales load or contingent deferred sales charge, if applicable. (c) Computed on an annualized basis. (d) This voluntary expense decrease is reflected in both the expense and net investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements) 14 MARYLAND MUNICIPAL CASH TRUST NOTES TO FINANCIAL STATEMENTS APRIL 30, 1995 (UNAUDITED) - -------------------------------------------------------------------------------- 1. ORGANIZATION Federated Municipal Trust (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 thirteen non-diversified portfolios. The financial statements included herein present only those of Maryland Municipal Cash Trust (the "Fund"). The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. 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. INVESTMENT VALUATIONS--The Fund's use of the amortized cost method to value its portfolio securities is in accordance with Rule 2a-7 under the Act. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses are accrued daily. Bond premium and discount, if applicable, are amortized as required by the Internal Revenue Code, as amended (the "Code"). Distributions to shareholders are recorded on the ex-dividend date. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the Code applicable to regulated investment companies and to distribute to shareholders each year substantially all of its income. Accordingly, no provisions for federal tax are necessary. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in when- issued or delayed delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked to market daily and begin earning interest on the settlement date. RESTRICTED SECURITIES--Restricted securities are securities that may only be resold upon registration under federal securities laws or in transactions exempt from such registration. Many restricted securities may be resold in the secondary market in transactions exempt from registration. In some cases, the restricted securities may be resold without registration upon exercise of a demand feature. Such restricted securities may be determined to be liquid under criteria established by the Board of Trustees ("the Trustees"). The Fund will not incur any registration costs upon such resales. Restricted securities are valued at amortized cost in 15 MARYLAND MUNICIPAL CASH TRUST - --------------------------------------------------------- accordance with Rule 2a-7 under the Act. Additional information on each restricted security held at April 30, 1995 is as follows:
SECURITY ACQUISITION DATE ACQUISITION COST - ------------------------------------ ---------------- ---------------- Baltimore County, MD, Weekly VRDNs (Series 20 Putters) 8/11/94 $3,000,000
CONCENTRATION OF RISK--Since the Fund invests a substantial portion of its assets in issuers located in one state, it will be more susceptible to factors adversely affecting issuers of that state than would be a comparable tax-exempt mutual fund that invests nationally. In order to reduce the credit risk associated with such factors, at April 30, 1995, 71.6% of the securities in the portfolio of investments are backed by letters of credit or bond insurance of various financial institutions and financial guaranty assurance agencies. The value of investments insured by or supported (backed) by a letter of credit for any one institution or agency does not exceed 6.7% of total investments. DEFERRED EXPENSES--The costs incurred by the Fund with respect to registration of its shares in its first fiscal year, excluding the initial expense of registering its shares, have been deferred and are being amortized using the straight-line method not to exceed a period of five years from the Fund's commencement date. OTHER--Investment transactions are accounted for on the trade date. 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 April 30, 1995, capital paid-in aggregated $53,211,991. Transactions in shares were as follows:
SIX MONTHS PERIOD ENDED ENDED APRIL OCTOBER 31, 30, 1995 1994* - ---------------------------------------------------- ------------- ------------- Shares sold 107,270,010 231,266,672 - ---------------------------------------------------- Shares issued to shareholders in payment of distributions declared 863,890 596,061 - ---------------------------------------------------- Shares redeemed (111,197,148) (175,587,494) - ---------------------------------------------------- ------------- ------------- Net change resulting from share transactions (3,063,248) 56,275,239 - ---------------------------------------------------- ------------- ------------- ------------- ------------- * For the period from April 25, 1994 (start of business) to October 31, 1994.
4. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES INVESTMENT ADVISORY FEE--Federated Management, the Fund's investment adviser (the "Adviser"), receives for its services an annual investment advisory fee equal to .50 of 1% of the Fund's average 16 MARYLAND MUNICIPAL CASH TRUST - --------------------------------------------------------- daily net assets. The Adviser may voluntarily choose to waive its fee and reimburse certain operating expenses of the Fund. The Adviser can modify or terminate this voluntary waiver and reimbursement at any time at its sole discretion. ADMINISTRATIVE FEE--Federated Administrative Services ("FAS"), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. The FAS fee is based on the level of average aggregate daily net assets of all funds advised by subsidiaries of Federated Investors for the period. The administrative fee received during the period of the Administrative Services Agreement shall be at least $125,000 per portfolio and $30,000 per each additional class of shares. SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to .25 of 1% of average daily net assets of the Fund for the period. This fee is to obtain certain services for shareholders and to maintain the shareholder accounts. TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated Services Company ("FServ") serves as transfer and dividend disbursing agent for the Fund. This fee is based on the size, type, and number of accounts and transactions made by shareholders. PORTFOLIO ACCOUNTING FEES--FServ also maintains the Fund's accounting records for which it receives a fee. This fee is based on the level of the Fund's average daily net assets for the period, plus out-of-pocket expenses. ORGANIZATIONAL EXPENSES--Organizational expenses of $14,426 and start-up administrative service expenses of $31,506 were borne initially by Adviser. The Fund has agreed to reimburse the Adviser for the organizational expenses and start-up administrative expenses during the five year period following May 4, 1994 (the date the Fund became effective). For the period ended April 30, 1995, the Fund paid $1,523 and $3,326, respectively, pursuant to this agreement. INTERFUND TRANSACTIONS--During the six months ended April 30, 1995, 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 transactions were made at current market value pursuant to Rule 17a-7 under the Act amounting to $73,360,000 and $77,875,000, respectively. GENERAL--Certain of the Officers and Trustees of the Trust are Officers and Directors or Trustees of the above companies. 17
TRUSTEES OFFICERS - --------------------------------------------------------- John F. Donahue John F. Donahue Thomas G. Bigley CHAIRMAN John T. Conroy, Jr. Glen R. Johnson William J. Copeland PRESIDENT James E. Dowd J. Christopher Donahue Lawrence D. Ellis, M.D. VICE PRESIDENT Edward L. Flaherty, Jr. Richard B. Fisher Glen R. Johnson VICE PRESIDENT Peter E. Madden Edward C. Gonzales Gregor F. Meyer VICE PRESIDENT AND TREASURER John E. Murray, Jr. John W. McGonigle Wesley W. Posvar VICE PRESIDENT AND SECRETARY Marjorie P. Smuts David M. Taylor ASSISTANT TREASURER G. Andrew Bonnewell ASSISTANT SECRETARY
Mutual funds are not bank deposits or obligations, are not guaranteed by any bank, and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other government agency. Investment in mutual funds involves investment risk, including 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. 18 - -------------------------------------------------------------------------------- MARYLAND - -------------------------------------------------------------------------------- MUNICIPAL - -------------------------------------------------------------------------------- CASH - -------------------------------------------------------------------------------- TRUST - -------------------------------------------------------------------------------- SEMI-ANNUAL REPORT TO SHAREHOLDERS APRIL 30, 1995 [LOGO] ---------------------------------------- Distributor A subsidiary of FEDERATED INVESTORS ---------------------------------- FEDERATED INVESTORS TOWER PITTSBURGH, PA 15222-3779[LOGO] ---------------------------------- RECYCLED PAPER 314229774 G01175-01 (6/95) ----------------------------------- CALIFORNIA MUNICIPAL CASH TRUST SEMI-ANNUAL REPORT TO SHAREHOLDERS APRIL 30, 1995 [LOGO] FEDERATED SECURITIES CORP. -------------------------- Distributor A subsidiary of Federated Investors FEDERATED INVESTORS TOWER PITTSBURGH, PA 15222-3779 314229766 0441609 (6/95) PRESIDENT'S MESSAGE - -------------------------------------------------------------------------------- Dear Shareholder: I am pleased to present the Semi-Annual Report to Shareholders of California Municipal Cash Trust, a portfolio of Federated Municipal Trust, for the six-month period ended April 30, 1995. We begin this report with our customary update from the fund's portfolio manager, Mary Jo Ochson, who will discuss market activity and changes in the fund's strategy relative to that activity. Mary Jo's report is followed by the fund's Portfolio of Investments and Financial Statements. California Municipal Cash Trust continues to seek relief for you and other tax-sensitive California residents, in the form of double tax-free* monthly income. The fund is able to pursue this income by maintaining a portfolio of California municipal securities, issued to fund projects as varied as education, health care, and housing. In this way, the fund helps you make the most of your short-term finances, while funding important municipal improvements in your home state. During the six-month period covered by the report, the fund paid nearly $1.5 million in total distributions to shareholders. As of this report, the fund's total net assets are $93.6 million. As always, we strive to provide you with the highest level of professional service. We appreciate your continued support and welcome your comments or questions. Sincerely, Glen R. Johnson President June 15, 1995 *Income may be subject to the federal alternative minimum tax. INVESTMENT REVIEW - -------------------------------------------------------------------------------- An Interview with the Fund's Portfolio Manager, Mary Jo Ochson Q Mary Jo, can you comment on the changes in money market rates during the reporting period? A In the face of resilient economic growth and the potential for this growth to create inflationary pressures, the Federal Reserve Board (the "Fed") continued to tighten monetary policy throughout 1994 and into early 1995. On November 15, 1994, the Fed hiked the federal funds target rate from 4.75% to 5.50%. The most recent move by the Fed, on February 1, 1995, increased the target rate by 50 basis points to the current 6.00% level. Short-term interest rates reflected the Fed's upward moves. The yield on the three-month Treasury bill rose from 5.22% at the beginning of the reporting period to 6.06% on February 1, 1995. The yield on the one-year Treasury bill rose from 6.25% at the beginning of the reporting period to a high of 7.32% in early January, 1995. February, March, and April, 1995, however, brought economic reports that pointed to slowing in sectors of the economy, an indication that the rate increases by the Fed that began in February, 1994, were starting to take hold. As a result, short-term interest rates declined over this period as market participants adjusted their expectations regarding the extent of future tightenings by the Fed. Reflecting this change in expectations, the three-month Treasury bill declined to 5.87% on April 30, 1995, while the one-year Treasury bill fell to 6.32%, a decline of 1.00% from its high in January, 1995. Q How have the municipal money markets and the fund's yield reacted to this interest rate environment? A Municipal money market rates were affected by the Fed tightenings early in the reporting period, as well as February's 180-degree change in market expectations, regarding the potential for future Fed rate increases. In addition, municipal rates were also influenced by seasonal supply and demand imbalances throughout the reporting period. Yields on seven-day variable rate demand notes (VRDNs), the core component of a tax-free money market fund, rose from 3.22% at the beginning of the reporting period to 4.65% on April 30, 1995. Yield levels also moved upward for one-year fixed-rate notes, increasing from 4.19% in early November, 1994, to a high of 5.10% in early January, 1995, before steadily falling to 4.29% at the end of the reporting period. The divergence between short VRDN yields and one-year fixed-rate note levels resulted from market expectations that the Fed may have successfully engineered a growth slowdown, or a "soft landing." Also, tight municipal note supply conditions helped contribute to the decline in fixed note yields. The fund responded favorably to the overall increase in short-term interest rates over the reporting period. The seven-day net yield of the fund rose from 2.83% on November 1, 1994, to 3.73% on April 30, 1995.* Q What was your strategy during the reporting period? A Early in the reporting period, the fund's average maturity was targeted within a range of 55-65 days, with an emphasis on the longer end of our target. We extended the average maturity to a period high of 62 days in late December, 1994, by purchasing fixed-rate securities. The yields on these instruments were attractive, reflecting both market expectations of several more hikes in interest rates by the Fed and concerns over the Orange County bankruptcy filing. Since then, we have been targeting a slightly shorter average maturity range of 40-50 days. The yield environment for California exempt fixed-rate paper should be fairly attractive again this summer due to the issuance of a large supply of cash flow financings from California municipalities. If credit worthy opportunities become available, we plan to again extend the average maturity to the 50-60 day range. Q What is your overall outlook for rates in the near future? A Amid reports of a slightly slowing economy and restrained inflation, it appears that the Fed is nearing the end of its tightening cycle. We expect that Fed policy will be neutral in the near term, as the Fed scrutinizes upcoming releases on the economy and inflation for signs that either one is stronger than expectations. Short-term interest rates should trade within a range in the near future. Nevertheless, we expect the supply of fixed-rate notes in our market to increase significantly starting in mid-June, 1995, cheapening note levels. We plan, on average, to extend the average maturity of the fund during this period of heavy issuance as yields on fixed-rate notes may become attractive versus comparable maturity taxable securities. Q What is the outlook for California's economy? A The outlook for California's economy appears to be mildly positive as it continues to show signs that it has rebounded from its 1990-1993 recession. The number of people employed in the state increased by 19,000 in 1994, after three consecutive years of declines which totaled over 600,000. The statewide unemployment rate, which peaked at 10.1% in January, 1994, dropped sharply to 8.2% by January, 1995, and declined further to 7.6% in March, 1995. Retail sales data, another positive sign, show increases since mid-1993 after a sharp decline in 1991 and erratic * Past performance does not guarantee future results. Yield will vary. performance in 1992. Finally, housing permits increased 14% in 1994 after declining 67% between 1988 and 1993. There are a number of reasons for the state's economic recovery: the generally strong performance of the national economy; increased building activity as a result of the earthquake in Southern California; several years of pent-up consumer demand; and some significant public works projects such as the San Joaquin Toll Road, which provided employment opportunities for construction work. A few weaknesses remain. There may be further job cutbacks at defense contracting firms. Also, the economies of the countries with whom California businesses do a great deal of trade, such as Japan and Mexico, are experiencing slowdowns. Nevertheless, the size and diversity of California's economy, along with increased economic activity and the recent sharp decline in interest rates, suggest a positive outlook for the state. CALIFORNIA MUNICIPAL CASH TRUST PORTFOLIO OF INVESTMENTS APRIL 30, 1995 (UNAUDITED) - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ------------ ---------------------------------------------------------------------- ----------- -------------- SHORT-TERM MUNICIPAL SECURITIES--98.4% - ------------------------------------------------------------------------------------ CALIFORNIA--98.4% ---------------------------------------------------------------------- $ 1,945,000 California Health Facilities Authority Weekly VRDNs (O'Connor Hospital and St. Vincent's Medical Center, Inc.)/ (Daughters of Charity Health System Guaranty) VMIG1 $ 1,945,000 ---------------------------------------------------------------------- 200,000 California Health Facilities Authority Weekly VRDNs (Santa Barbara Hospital)/(Credit Suisse LOC) VMIG1 200,000 ---------------------------------------------------------------------- 1,100,000 California Health Facilities Finance Authority Weekly VRDNs (Pooled Loan Program)/(FGIC Insured) VMIG1 1,100,000 ---------------------------------------------------------------------- 2,000,000 California HFA Multi-Unit Rental Housing, 4.20% TOBs (Custody Receipts)/(MBIA Insured)/(Citibank BPA), Optional Tender 5/1/1995 NR(1) 2,000,000 ---------------------------------------------------------------------- 3,000,000 California Pollution Control Finance Authority, 4.10% CP (Series 1988E)/(Pacific Gas & Electric Co.)/(Morgan Guaranty Trust Co. LOC), Mandatory Tender 5/30/1995 A-1+ 3,000,000 ---------------------------------------------------------------------- 3,000,000 California Pollution Control Finance Authority, 4.15% CP (Series D)/(Southern California Edison Co.), Mandatory Tender 5/31/1995 A-1 3,000,000 ---------------------------------------------------------------------- 3,000,000 California School Cash Reserve Program Authority, 4.50% TRANs (Series 1994A)/(Industrial Bank of Japan Ltd. LOC), 6/28/1995 MIG1 3,002,984 ---------------------------------------------------------------------- 4,000,000 California State Monthly VRNs (Series C) SP-1+ 4,000,000 ---------------------------------------------------------------------- 5,000,000 California State Revenue Anticipation Warrants, 5.75% RANs (Series C)/(Toronto-Dominion Bank, Bank of Nova Scotia, Banque Nationale de Paris, Canadian Imperial Bank of Commerce, Chemical Bank, Citibank, N.A., Credit Suisse, Morgan Guaranty Trust Co., National Westminister Bank, PLC, Societe General North America, Inc., Sumitomo Bank Ltd., Swiss Bank Corp., New York, Westdeutsche Landesbank, Bank of America NT & SA LOCs), 4/25/1996 SP-1 5,043,245 ---------------------------------------------------------------------- 2,000,000 California State 5.00% RANs (Series A) 6/28/1995 SP-1+ 2,002,493 ----------------------------------------------------------------------
CALIFORNIA MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ------------ -------------------------------------------------------------------- ----------- -------------- SHORT-TERM MUNICIPAL SECURITIES--CONTINUED - ------------------------------------------------------------------------------------ CALIFORNIA--CONTINUED ---------------------------------------------------------------------- $ 1,000,000 California State, 8.50% Bond, 11/1/1995 NR(3) $ 1,017,968 ---------------------------------------------------------------------- 4,200,000 California Statewide Communities Development Authority, Weekly VRDNs (Series A)/(Barton Memorial Hospital)/ (Banque Nationale de Paris LOC) VMIG1 4,200,000 ---------------------------------------------------------------------- 4,400,000 California, Pollution Control Finance Authority Weekly VRDNs (Series 1991)/(North County, CA Recycling & Energy Recovery)/(Union Bank of Switzerland LOC) A-1+ 4,400,000 ---------------------------------------------------------------------- 1,000,000 Golden Empire Schools Financing Authority Weekly VRDNs (Kern High School District)/(Barclays Bank PLC, LOC) A-1+ 1,000,000 ---------------------------------------------------------------------- 1,000,000 Golden Empire Schools Financing Authority Weekly VRDNs (Series B)/(Kern High School District)/(Barclays Bank PLC, LOC) A-1+ 1,000,000 ---------------------------------------------------------------------- 100,000 Kern County, CA, Public Facility Corp. (Series D) Weekly VRDNs (Sanwa Bank Ltd. LOC) VMIG1 100,000 ---------------------------------------------------------------------- 1,400,000 Kern County, CA, Public Facility Corp. Weekly VRDNs (Sanwa Bank Ltd. LOC) VMIG1 1,400,000 ---------------------------------------------------------------------- 3,500,000 Los Angeles County, CA, Metropolitan Transportation Authority General Revenue Bonds, Weekly VRDNs (Series 1995-A)/(Union Station Gateway)/(FSA Insured)/(Societe Generale, Paris BPA) A-1+ 3,500,000 ---------------------------------------------------------------------- 1,000,000 Los Angeles County, CA, Metropolitan Transportation Authority, 4.20% CP (ABN AMRO Bank N.V., Banque Nationale de Paris, Canadian Imperial Bank of Commerce, National Westminister Bank, PLC, and Bank of California N.A. LOCs), Mandatory Tender 7/27/1995 A-1 1,000,000 ---------------------------------------------------------------------- 3,000,000 Los Angeles County, CA, Metropolitan Transportation Authority, 4.20% CP (ABN AMRO Bank N.V., Banque Nationale de Paris, Canadian Imperial Bank of Commerce, National Westminster Bank, PLC, and Bank of California N.A. LOCs), Mandatory Tender 8/21/1995 A-1 3,000,000 ----------------------------------------------------------------------
CALIFORNIA MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ------------ -------------------------------------------------------------------- ----------- -------------- SHORT-TERM MUNICIPAL SECURITIES--CONTINUED - ------------------------------------------------------------------------------------ CALIFORNIA--CONTINUED ---------------------------------------------------------------------- $ 3,000,000 Los Angeles, CA, Wastewater System, 4.25% CP, Mandatory Tender 5/19/1995 A-1 $ 3,000,000 ---------------------------------------------------------------------- 2,000,000 Monterey Peninsula, CA, Water Management District Weekly VRDNs (Series 1992)/(Wastewater Reclamation)/ (Sumitomo Bank Ltd. LOC) VMIG1 2,000,000 ---------------------------------------------------------------------- 4,000,000 Orange County, CA, IDA Weekly VRDNs (Hon Development Corp.)/(Series 1985B-Niguel Summit II)/(Bank of America NT & SA, LOC) VMIG1 4,000,000 ---------------------------------------------------------------------- 5,700,000 Orange County, CA, IDA Weekly VRDNs (Series 1991A)/ (The Lakes)/(Citibank, N.A. LOC) A-1 5,700,000 ---------------------------------------------------------------------- 4,000,000 Orange County, CA, Local Transportation Authority, Sales Tax Revenue, 4.30% CP (Industrial Bank of Japan Ltd., LOC), Mandatory Tender 5/24/1995 A-1 4,000,000 ---------------------------------------------------------------------- 4,000,000 (a)Orange County, CA, Monthly VRDNs (Series B)/(PNC Bank N.A. LOC) A-1 4,000,000 ---------------------------------------------------------------------- 1,000,000 Placerville, CA, 4.25% TRANs, 6/30/1995 SP-1+ 1,000,158 ---------------------------------------------------------------------- 1,000,000 Riverside County, CA, COPs Weekly VRDNs (Public Facility Finance Program)/(Sanwa Bank Ltd. LOC) MIG1 1,000,000 ---------------------------------------------------------------------- 1,000,000 Roseville, CA, Hospital Facilities Authority Weekly VRDNs (Series 1989A)/(Roseville Hospital)/(Toronto-Dominion Bank LOC) VMIG1 1,000,000 ---------------------------------------------------------------------- 1,600,000 Sacramento CA, COPs Weekly VRDNs (Series 1990)/ (Administration Center & Courthouse)/(Union Bank of Switzerland LOC) VMIG1 1,600,000 ---------------------------------------------------------------------- 4,000,000 San Bernardino County, CA, 4.50% TRANs, 7/31/199S SP-1+ 4,005,725 ---------------------------------------------------------------------- 1,700,000 San Bernardino County, CA, Weekly VRDNs (Series 1985)/ (Woodview Apartments)/(Bank of America LOC) VMIG1 1,700,000 ---------------------------------------------------------------------- 1,500,000 San Francisco, CA, City and County Redevelopment Agency Weekly VRDNs (Series B1)/(Fillmore Center)/(Bank of Nova Scotia LOC) A-1+ 1,500,000 ----------------------------------------------------------------------
CALIFORNIA MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ------------ -------------------------------------------------------------------- ----------- -------------- SHORT-TERM MUNICIPAL SECURITIES--CONTINUED - ------------------------------------------------------------------------------------ CALIFORNIA--CONTINUED ---------------------------------------------------------------------- $ 1,000,000 Santa Clara County, CA, Housing Authority Weekly VRDNs (Series 1985G)/(Benton Park Central Apartments)/ (Citibank, N.A. LOC) P-1 $ 1,000,000 ---------------------------------------------------------------------- 1,400,000 Santa Clara County-El Comino Hospital District, CA, Weekly VRDNs (Valley Medical/Center)/(National Westminster Bank PLC LOC) A-1+ 1,400,000 ---------------------------------------------------------------------- 400,000 Santa Clara, CA, Weekly VRDNs (Series 1985C)/(Santa Clara Electric System)/(National Westminster Bank PLC LOC) VMIG1 400,000 ---------------------------------------------------------------------- 1,400,000 Selma, CA, 4.30% TRANs, 6/30/1995 SP-1 1,400,109 ---------------------------------------------------------------------- 2,750,000 Southern California Metropolitan Water District, 4.20% CP, Mandatory Tender 5/23/1995 A-1+ 2,750,000 ---------------------------------------------------------------------- 710,000 Stockton, CA, IDR Refunding Weekly VRDNs (Series 1993)/ (La Quinta Motor Inns, Inc.)/(Nationsbank of Texas N.A. LOC) P-1 710,000 ---------------------------------------------------------------------- 1,000,000 Vallejo, CA, Commercial Development Refunding Weekly VRDNs (Series 1994A)/(Vallejo Center Associates)/(Bank of Tokyo Ltd. LOC) A-1 1,000,000 ---------------------------------------------------------------------- 3,000,000 West Basin and Central Financing Authority, CA, 4.20% CP (West Basin Municipal Water District), Mandatory Tender 5/22/1995 A-1+ 3,000,000 ---------------------------------------------------------------------- -------------- TOTAL INVESTMENTS, AT AMORTIZED COST (B) $ 92,077,682 ---------------------------------------------------------------------- --------------
* See notes to the Portfolio of Investments on page 9. (a) This issue is backed by a LOC issued by PNC Corporation. The cost of the LOC on the date of issuance (December 7, 1994) was $30,875. The market value of the LOC at April 30, 1995 is $640,000. (b) Also represents cost for federal tax purposes. Note: The categories of investments are shown as a percentage of net assets ($93,616,091) at April 30, 1995. CALIFORNIA MUNICIPAL CASH TRUST - -------------------------------------------------------------------------------- The following abbreviations are used throughout this portfolio: BPA-- Bond Purchase Agreement COPs-- Certificates of Participation CP-- Commercial Paper FGIC-- Financial Guaranty Insurance Company FSA-- Financial Security Assurance HFA-- Housing Finance Authority IDA-- Industrial Development Authority IDR-- Industrial Development Revenue LOCs-- Letter(s) of Credit LOC-- Letter of Credit MBIA-- Municipal Bond Investors Assurance RANs-- Revenue Anticipation Notes TOBs-- Tender Option Bonds TRANs-- Tax and Revenue Anticipation Notes VRDNs-- Variable Rate Demand Notes VRNs-- Variable Rate Notes (See Notes which are an integral part of the Financial Statements) CALIFORNIA MUNICIPAL CASH TRUST NOTES TO PORTFOLIO OF INVESTMENTS (UNAUDITED) - -------------------------------------------------------------------------------- SHORT-TERM MUNICIPAL OBLIGATION RATINGS STANDARD & POOR'S RATINGS GROUP A S&P note rating reflects the liquidity concerns and market access risks unique to notes. SP-1 Very strong or strong capacity to pay principal and interest. Those issues determined to possess overwhelming safety characteristics will be given a plus (+) designation. SP-2 Satisfactory capacity to pay principal and interest. MOODY'S INVESTORS SERVICE, INC. Moody's short-term ratings are designated Moody's Investment Grade (MIG or VMIG (see below)). The purpose of the MIG or VMIG ratings is to provide investors with a simple system by which the relative investment qualities of short-term obligations may be evaluated. MIG1 This designation denotes best quality. There is present strong protection by established cash flows, superior liquidity support or demonstrated broad-based access to the market for refinancing. MIG2 This designation denotes high quality. Margins of protection are ample although not so large as in the preceding group. VARIABLE RATE DEMAND NOTES (VRDNS) AND TENDER OPTION BONDS (TOBS) RATINGS STANDARD & POOR'S RATINGS GROUP S&P assigns dual ratings to all long-term debt issues that have as part of their provisions a variable rate demand feature. The first rating (long-term rating) addresses the likelihood of repayment of principal and interest when due, and the second rating (short-term rating) describes the demand characteristics. Several examples are AAA/A-1+, AA/A-1+, A/A-1. (The definitions for the long- term and the short-term ratings are provided below.) MOODY'S INVESTORS SERVICE, INC. Short-term ratings on issues with demand features are differentiated by the use of the VMIG symbol to reflect such characteristics as payment upon periodic demand rather than fixed maturity dates and payment relying on external liquidity. In this case, two ratings are usually assigned, (for example, Aaa/VMIG-1); the first representing an evaluation of the degree of risk associated with scheduled principal and interest payments, and the second representing an evaluation of the degree of risk associated with the demand feature. The VMIG rating can be assigned a 1 or 2 designation using the same definitions described above for the MIG rating. COMMERCIAL PAPER (CP) RATINGS STANDARD & POOR'S RATINGS GROUP A S&P commercial paper rating is a current assessment of the likelihood of timely payment of debt having an original maturity of no more than 365 days. A-1 This designation indicates that the degree of safety regarding timely payment is either overwhelming or very strong. Those issues determined to possess overwhelming safety characteristics are denoted with a plus (+) sign designation. A-2 Capacity for timely payment on issues with this designation is strong. However, the relative degree of safety is not as high as for issues designated "A-1." MOODY'S INVESTORS SERVICE, INC. P-1 Issuers rated PRIME-1 (or related supporting institutions) have a superior capacity for repayment of short-term promissory obligations. P-2 Issuers rated PRIME-2 (or related supporting institutions) have a strong capacity for repayment of short-term promissory obligations. LONG-TERM DEBT RATINGS STANDARD & POOR'S RATINGS GROUP AAA Debt rated "AAA" has the highest rating assigned by Standard & Poor's. Capacity to pay interest and repay principal is extremely strong. AA Debt rated "AA" has a very strong capacity to pay interest and repay principal and differs from the highest rated issues only in small degree. A Debt rated "A" has a strong capacity to pay interest and repay principal although it is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than debt in higher rated categories. MOODY'S INVESTORS SERVICE, INC. AAA Bonds that are rated AAA are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as "gilt edge." Interest payments are protected by a large margin and principal is secure. While the various protective elements are likely to change, such changes which can be foreseen are most unlikely to impair the fundamentally strong position of such issues. AA Bonds that are rated AA are judged to be of high quality by all standards. Together with the AAA group they comprise what are generally known as high grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in AAA securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long-term risks appear somewhat larger than in AAA securities. A Bonds that are rated A possess many favorable investment attributes and are to be considered as upper medium grade obligations. Factors giving security to principal and interest are considered adequate, but elements may be present that suggest a susceptibility to impairment sometime in the future. NR indicates that both the bonds and the obligor or credit enhancer are not currently rated by S&P's or Moody's with respect to short-term indebtedness. However, management considers them to be of comparable quality to securities rated A-1 or P-1. NR(1) The underlying issuer/obligor/guarantor has other outstanding debt rated "AAA" by S&P or "Aaa" by Moody's. NR(2) The underlying issuer/obligor/guarantor has other outstanding debt rated "AA" by S&P or "Aa" Moody's. CALIFORNIA MUNICIPAL CASH TRUST STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1995 (UNAUDITED) - -------------------------------------------------------------------------------- ASSETS: - --------------------------------------------------------------------------------------------------- Total investments in securities, at amortized cost and value $ 92,077,682 - --------------------------------------------------------------------------------------------------- Cash 782,917 - --------------------------------------------------------------------------------------------------- Income receivable 1,030,972 - --------------------------------------------------------------------------------------------------- ------------- Total assets 93,891,571 - --------------------------------------------------------------------------------------------------- LIABILITIES: - --------------------------------------------------------------------------------------------------- Payable for shares redeemed 24,040 - --------------------------------------------------------------------------------------- Income distribution payable 240,813 - --------------------------------------------------------------------------------------- Accrued expenses 10,627 - --------------------------------------------------------------------------------------- ---------- Total liabilities 275,480 - --------------------------------------------------------------------------------------------------- ------------- NET ASSETS for 93,616,091 shares of beneficial interest outstanding $ 93,616,091 - --------------------------------------------------------------------------------------------------- ------------- NET ASSET VALUE, Offering Price and Redemption Proceeds Per Share: ($93,616,091 / 93,616,091 shares outstanding) $1.00 - --------------------------------------------------------------------------------------------------- -------------
(See Notes which are an integral part of the Financial Statements) CALIFORNIA MUNICIPAL CASH TRUST STATEMENT OF OPERATIONS SIX MONTHS ENDED APRIL 30, 1995 (UNAUDITED) - -------------------------------------------------------------------------------- INVESTMENT INCOME: - --------------------------------------------------------------------------------------------------- Interest $ 1,760,778 - --------------------------------------------------------------------------------------------------- EXPENSES: - --------------------------------------------------------------------------------------------------- Investment advisory fee $ 223,905 - --------------------------------------------------------------------------------------- Administrative personnel and services fee 62,965 - --------------------------------------------------------------------------------------- Custodian fees 23,429 - --------------------------------------------------------------------------------------- Transfer agent and dividend disbursing agent fees and expenses 16,058 - --------------------------------------------------------------------------------------- Directors'/Trustees' fees 4,706 - --------------------------------------------------------------------------------------- Auditing fees 9,240 - --------------------------------------------------------------------------------------- Legal fees 6,330 - --------------------------------------------------------------------------------------- Portfolio accounting fees 18,576 - --------------------------------------------------------------------------------------- Shareholder services fee 97,387 - --------------------------------------------------------------------------------------- Share registration costs 19,102 - --------------------------------------------------------------------------------------- Printing and postage 10,245 - --------------------------------------------------------------------------------------- Insurance premiums 3,083 - --------------------------------------------------------------------------------------- Miscellaneous 4,255 - --------------------------------------------------------------------------------------- ---------- Total expenses 499,281 - --------------------------------------------------------------------------------------- Deduct-- - --------------------------------------------------------------------------------------- Waiver of investment advisory fee $ 218,362 - --------------------------------------------------------------------------- Waiver of shareholder services fee 16,641 235,003 - --------------------------------------------------------------------------- ---------- ---------- Net expenses 264,278 - --------------------------------------------------------------------------------------------------- ------------ Net investment income $ 1,496,500 - --------------------------------------------------------------------------------------------------- ------------
(See Notes which are an integral part of the Financial Statements) CALIFORNIA MUNICIPAL CASH TRUST STATEMENT OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
SIX MONTHS ENDED PERIOD ENDED YEAR ENDED APRIL 30, 1995 OCTOBER 31, 1994* SEPTEMBER 30, 1994 INCREASE (DECREASE) IN NET ASSETS: - ----------------------------------------------- OPERATIONS-- - ----------------------------------------------- Net investment income $ 1,496,500 $ 189,550 $ 1,905,264 - ----------------------------------------------- ---------------- --------------------- ----------------------- DISTRIBUTIONS TO SHAREHOLDERS-- - ----------------------------------------------- Distributions from net investment income (1,496,500) (189,550) (1,905,264) - ----------------------------------------------- ---------------- --------------------- ----------------------- SHARE TRANSACTIONS - ----------------------------------------------- Proceeds from sale of Shares 204,189,511 30,010,373 362,061,495 - ----------------------------------------------- Net asset value of Shares issued to shareholders in payment of distributions declared 195,276 30,088 324,591 - ----------------------------------------------- Cost of Shares redeemed (192,331,369) (23,185,135) (392,000,668) - ----------------------------------------------- ---------------- --------------------- ----------------------- Change in net assets resulting from Share transactions 12,053,418 6,855,326 (29,614,582) - ----------------------------------------------- ---------------- --------------------- ----------------------- Change in net assets 12,053,418 6,855,326 (29,614,582) - ----------------------------------------------- NET ASSETS: - ----------------------------------------------- Beginning of period 81,562,673 74,707,347 104,321,929 - ----------------------------------------------- ---------------- --------------------- ----------------------- End of period $ 93,616,091 $ 81,562,673 $ 74,707,347 - ----------------------------------------------- ---------------- --------------------- -----------------------
*For the one month ended October 31, 1994. (See Notes which are an integral part of the Financial Statements) CALIFORNIA MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED PERIOD ENDED APRIL 30, OCTOBER 31, YEAR ENDED SEPTEMBER 30, 1995 1994(A) 1994 1993 1992 1991 1990 NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.000 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 - ---------------------------------- INCOME FROM INVESTMENT OPERATIONS - ---------------------------------- Net investment income 0.02 0.002 0.02 0.02 0.03 0.04 0.05 - ---------------------------------- ------ ------- --------- --------- --------- --------- --------- LESS DISTRIBUTIONS - ---------------------------------- Distributions from net investment income (0.02) (0.002) (0.02) (0.02) (0.03) (0.04) (0.05) - ---------------------------------- ------ ------- --------- --------- --------- --------- --------- NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.000 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 - ---------------------------------- ------ ------- --------- --------- --------- --------- --------- TOTAL RETURN (C) 1.66% 0.23% 2.07% 2.03% 2.83% 4.30% 5.38% - ---------------------------------- RATIOS TO AVERAGE NET ASSETS - ---------------------------------- Expenses 0.59%(d) 0.59%(d) 0.58% 0.54% 0.45% 0.35% 0.38% - ---------------------------------- Net investment income 3.35%(d) 2.71%(d) 2.03% 2.00% 2.76% 4.19% 5.27% - ---------------------------------- Expense waiver/ reimbursement (e) 0.53%(d) 0.44%(d) 0.40% 0.35% 0.58% 0.75% 0.86% - ---------------------------------- SUPPLEMENTAL DATA - ---------------------------------- Net assets, end of period (000 omitted) $93,616 $81,563 $74,707 $104,322 $59,709 $56,754 $50,391 - ---------------------------------- 1989(B) NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 - ---------------------------------- INCOME FROM INVESTMENT OPERATIONS - ---------------------------------- Net investment income 0.03 - ---------------------------------- ----------- LESS DISTRIBUTIONS - ---------------------------------- Distributions from net investment income (0.03) - ---------------------------------- ----------- NET ASSET VALUE, END OF PERIOD $ 1.00 - ---------------------------------- ----------- TOTAL RETURN (C) 2.95% - ---------------------------------- RATIOS TO AVERAGE NET ASSETS - ---------------------------------- Expenses 0.40%(d) - ---------------------------------- Net investment income 5.86%(d) - ---------------------------------- Expense waiver/ reimbursement (e) 0.89%(d) - ---------------------------------- SUPPLEMENTAL DATA - ---------------------------------- Net assets, end of period (000 omitted) $36,628 - ----------------------------------
(a) For the one month ended October 31, 1994. (b) Reflects operations for the period from March 15, 1989 (date of initial public offering) to September 30, 1989. (c) Based on net asset value, which does not reflect the sales load or contingent deferred sales charge, if applicable. (d) Computed on an annualized basis. (e) This voluntary expense decrease is reflected in both the expense and net investment income ratios shown above. (See Notes which are an integral part of the Financial Statements) CALIFORNIA MUNICIPAL CASH TRUST NOTES TO FINANCIAL STATEMENTS APRIL 30, 1995 (UNAUDITED) - -------------------------------------------------------------------------------- (1) ORGANIZATION Effective August 13, 1994, California Municipal Cash Trust (the "Fund") was reorganized into an investment portfolio of Federated Municipal Trust (the "Trust"). 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 thirteen non-diversified portfolios. The financial statements included herein present only those of the Fund. The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. (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. INVESTMENT VALUATIONS--The Fund's use of the amortized cost method to value its portfolio securities is in accordance with Rule 2a-7 under the Act. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses are accrued daily. Bond premium and discount, if applicable, are amortized as required by the Internal Revenue Code, as amended (the "Code"). Distributions to shareholders are recorded on the ex-dividend date. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the Code applicable to regulated investment companies and to distribute to shareholders each year substantially all of its income. Accordingly, no provisions for federal tax are necessary. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in when-issued or delayed delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked to market daily and begin earning interest on the settlement date. CONCENTRATION OF CREDIT RISK--Since the Fund invests a substantial portion of its assets in issuers located in one state, it will be more susceptible to factors adversely affecting issuers of that state than would be a comparable tax-exempt mutual fund that invests nationally. In order to reduce the credit risk associated with such factors, at April 30, 1995, 71.5 % of the securities in the portfolio of investments are backed by letters of credit or bond insurance of various financial institutions and financial guaranty assurance agencies. The value of investments insured by or supported (backed) by a letter of credit for any one institution or agency does not exceed 9.3% of total investments. OTHER--Investment transactions are accounted for on the trade date. (3) SHARES OF BENEFICIAL INTEREST The Declaration of Trust permits the Board of Trustees to issue an unlimited number of full and fractional shares of beneficial interest (without par value). At April 30, 1995, capital paid-in aggregated beneficial in Fund shares were as follows:
SIX MONTHS PERIOD ENDED YEAR ENDED ENDED APRIL 30, OCTOBER 31, SEPTEMBER 30, 1995 1994* 1994 Shares sold 204,189,511 30,010,373 362,061,495 - ---------------------------------------------------------- Shares issued to shareholders in payment of dividends declared 195,276 30,088 324,591 - ---------------------------------------------------------- Shares redeemed (192,331,369) (23,185,135) (392,000,668) - ---------------------------------------------------------- ------------------- -------------- ----------------- Net change resulting from share transactions 12,053,418 6,855,326 (29,614,582) - ---------------------------------------------------------- ------------------- -------------- -----------------
*For the one month ended October 31, 1994. (4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES INVESTMENT ADVISORY FEE--Federated Management, the Fund's investment adviser (the "Adviser"), receives for its services an annual investment advisory fee equal to .50 of 1% 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 provides the Fund with administrative personnel and services. The FAS fee is based on the level of average aggregate daily net assets of all funds advised by subsidiaries of Federated Investors for the period. The administrative fee received during the period of the Administrative Services Agreement shall be at least $125,000 per portfolio and $30,000 per each additional class of shares. SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to .25 of 1% of average daily net assets of the Fund for the period. This fee is to obtain certain services for shareholders and to maintain shareholder accounts. TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated Services Company ("FServ") serves as transfer and dividend disbursing agent for the Fund. This fee is based on the size, type, and number of accounts and transactions made by shareholders. PORTFOLIO ACCOUNTING FEES--FServ also maintains the Fund's accounting records. The fee is based on the level of the Fund's average daily net assets for the period plus, out-of-pocket expenses. ORGANIZATIONAL EXPENSES--Organizational expenses of $32,354 were borne initially by the Adviser. The Fund has agreed to reimburse the Adviser at an annual rate of .005 of 1% of average daily net assets and .01 of 1% of average daily net assets for organizational expenses,, until expenses initially borne by the Adviser are fully reimbursed or the expiration of five years after March 15, 1989, the date the Fund's registration statements first became effective, whichever occurs earlier. For the period ended April 30, 1995, the Fund paid $1,642 pursuant to this agreement. CAPITAL CONTRIBUTION--Federated Management was deemed to make a capital contribution in the amount of $30,875 to California Municipal Cash Trust during the period ending April 30, 1995. This contribution represents the cost of a Letter of Credit ("LOC") to support the value of $4,000,000 par, Orange County, CA, Monthly VRN's (series B) in the Fund's Portfolio of investments. This LOC guarantees the principal amount of the security in the event that this issuer does not timely pay the principal balance at maturity. INTERFUND TRANSACTIONS--During the period ended April 30, 1995, 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 transactions were made at current market value pursuant to Rule 17A7 under the Act amounting to $111,800,000 and $99,000,000, respectively. GENERAL--Certain of the Officers and Trustees of the Trust are Officers and Directors or Trustees of the above companies. (5) CHANGE IN FISCAL YEAR END The Fund has changed its fiscal year end from September 30, to October 31, beginning Septem- ber 30, 1994. TRUSTEES OFFICERS - -------------------------------------------------------------------------------- John F. Donahue John F. Donahue Thomas G. Bigley CHAIRMAN John T. Conroy, Jr. Glen R. Johnson William J. Copeland PRESIDENT James E. Dowd J. Christopher Donahue Lawrence D. Ellis, M.D. VICE PRESIDENT Edward L. Flaherty, Jr. Richard B. Fisher Glen R. Johnson VICE PRESIDENT Peter E. Madden Edward C. Gonzales Gregor F. Meyer VICE PRESIDENT AND TREASURER John E. Murray, Jr. John W. McGonigle Wesley W. Posvar VICE PRESIDENT AND SECRETARY Marjorie P. Smuts David M. Taylor ASSISTANT TREASURER G. Andrew Bonnewell ASSISTANT SECRETARY
Mutual funds are not bank deposits or obligations, are not guaranteed by any bank, and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other government agency. Investment in mutual funds involves investment risk, including 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 contain facts concerning its objective and policies, management fees, expenses and other information. NEW YORK MUNICIPAL CASH TRUST SEMI-ANNUAL REPORT TO SHAREHOLDERS APRIL 30, 1995 [LOGO] FEDERATED SECURITIES CORP. -------------------------- Distributor A subsidiary of Federated Investors FEDERATED INVESTORS TOWER PITTSBURGH, PA 15222-3779 314229733 314229741 8060106 (6/95) PRESIDENT'S MESSAGE - -------------------------------------------------------------------------------- Dear Shareholder: I am pleased to present the Semi-Annual Report to Shareholders of New York Municipal Cash Trust, a portfolio of Federated Municipal Trust, for the six-month period ended April 30, 1995. The fund consists of two classes of shares known as Institutional Service Shares and Cash II Shares. We begin this report with our customary update from the fund's portfolio manager, Jeff A. Kozemchak, who will discuss market activity and changes in the fund's strategy relative to that activity. Jeff's report is followed by the fund's Portfolio of Investments and Financial Statements. In addition, Financial Highlights tables have been included for Institutional Service Shares and Cash II Shares. New York Municipal Cash Trust continues to seek relief for you and other tax-sensitive New York residents, in the form of triple tax-free* monthly income. The fund is able to pursue this income by maintaining a portfolio of New York municipal securities, issued to fund projects as varied as education, health care, and housing. In this way, the fund helps you make the most of your short-term finances, while funding important municipal improvements in your home state. During the six-month period covered by the report, the fund paid nearly $6.0 million in total distributions to shareholders. As of this report, the fund's total net assets are $272.9 million. As always, we strive to provide you with the highest level of professional service. We appreciate your continued support and welcome your comments or questions. Sincerely, Glen R. Johnson President June 15, 1995 *Income may be subject to the federal alternative minimum tax. Income earned is free from local New York income taxes. INVESTMENT REVIEW - -------------------------------------------------------------------------------- An Interview with Fund Portfolio Manager, Jeff A. Kozemchak Q Jeff, can you comment on the changes in money market rates during the reporting period? A In the face of resilient economic growth and the potential for this growth to create inflationary pressures, the Federal Reserve Board (the "Fed") continued to tighten monetary policy throughout 1994 and into early 1995. On November 15, 1994, the Fed hiked the federal funds target rate from 4.75% to 5.50%. The most recent move by the Fed, on February 1, 1995, increased the target rate by 50 basis points to the current 6.00% level. Short-term interest rates reflected the Fed's upward moves. The yield on the three-month Treasury bill rose from 5.22% at the beginning of the reporting period to 6.06% on February 1, 1995. The yield on the one-year Treasury bill rose from 6.25% at the beginning of the reporting period to a high of 7.32% in early January, 1995. February, March, and April, 1995, however, brought economic reports that pointed to slowing in sectors of the economy, an indication that the rate increases by the Fed that began in February, 1994, were starting to take hold. As a result, short-term interest rates declined over this period as market participants adjusted their expectations regarding the extent of future tightenings by the Fed. Reflecting this change in expectations, the three-month Treasury bill declined to 5.87% on April 30, 1995, while the one-year Treasury bill fell to 6.32%, a decline of 1.00% from the high in January, 1995. Q How have the municipal money markets and the fund's yield reacted to this interest rate environment? A Municipal money market rates were affected by the Fed tightenings early in the reporting period, as well as February's 180-degree change in market expectations regarding the potential for future Fed rate increases. In addition, municipal rates were also influenced by seasonal supply and demand imbalances throughout the reporting period. Yields on seven-day variable rate demand notes (VRDNs), the core component of a tax-free money market fund, rose from 3.22% at the beginning of the reporting period to 4.65% on April 30, 1995. Yield levels also moved upward for one-year fixed-rate notes, increasing from 4.19% in early November, 1994, to a high of 5.10% in early January, 1995, before steadily falling to 4.29% at the end of the reporting period. The divergence between short VRDN yields and one-year fixed-rate note levels resulted from market expectations that the Fed may have successfully engineered a growth slowdown, or a "soft landing." Also, tight municipal note supply conditions helped contribute to the decline in fixed note yields. The fund responded favorably to the overall increase in short-term interest rates over the reporting period. The seven-day net yield of the fund's Institutional Service Shares rose from 3.07% on November 1, 1994, to 3.95% on April 30, 1995.* For the Cash II Shares, the seven-day net yield rose from 2.88% on November 1, 1994, to 3.79% on April 30, 1995.* Q Did you make any strategic changes to the fund's portfolio in this rate atmosphere? A Early in the reporting period, we added to our positions of short maturity commercial paper (CP) and fully utilized VRDNs in order to maintain the responsiveness of the portfolio to changes in short-term interest rates. VRDNs adjust quickly to changes in Fed policy as well as supply and demand imbalances that are unique to the municipal money markets. The purchase of CP typically allows us to pick up an additional yield premium over VRDNs over time, while still retaining portfolio responsiveness to further rate increases. As a result, the average maturity of the fund ranged predominantly in the 35-45 day range, with an emphasis on the shorter end of this range. Q What is your overall outlook for rates in the near future? A Amid reports of a slightly slowing economy and restrained inflation, it appears that the Fed is nearing the end of its tightening cycle. We expect that Fed policy will continue to be neutral in the near term, as the Fed scrutinizes upcoming releases on the economy and inflation for signs that either one is stronger than expectations. Short-term interest rates should trade within a narrow range in the near future. Nevertheless, we expect the supply of fixed-rate notes in our market to increase significantly starting in mid-June, 1995, cheapening note levels. We plan to extend the average maturity of the fund during this period of heavy issuance, as yields on fixed-rate notes may become attractive versus comparable maturity taxable securities. * Past performance does not guarantee future results. Yield will vary. NEW YORK MUNICIPAL CASH TRUST PORTFOLIO OF INVESTMENTS APRIL 30, 1995 (UNAUDITED) - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ------------ ------------------------------------------------------------------------ ----------- -------------- SHORT-TERM MUNICIPAL SECURITIES--100.6% - -------------------------------------------------------------------------------------- NEW YORK--100.6% ------------------------------------------------------------------------ $ 4,525,000 Albany City School District, NY, 4.75% BANs (Series 1995), 5/3/1996 NR(3) $ 4,542,286 ------------------------------------------------------------------------ 480,000 Amherst, NY, IDA Weekly VRDNs (Nanhardt/Alexander, Inc.)/(Marine Midland Bank LOC)/(Subject to AMT) A-2 480,000 ------------------------------------------------------------------------ 1,000,000 Babylon, NY, IDA, Weekly VRDNs (Series 1994)/(J. D'Addario & Company, Inc.)/(National Westminster Bank, PLC LOC)/(Subject to AMT) VMIG1 1,000,000 ------------------------------------------------------------------------ 5,000,000 Brentwood, NY, Union Free School District, 4.50% TANs, 6/30/1995 NR 5,004,748 ------------------------------------------------------------------------ 3,600,000 Broome County, NY, 4.75% BANs (Series 1995), 4/19/1996 NR(3) 3,615,014 ------------------------------------------------------------------------ 6,000,000 Central Islip, NY, 4.50% TANs, 6/30/1995 NR 6,004,736 ------------------------------------------------------------------------ 3,000,000 Chautauqua County, NY, 5.50% TANs (Series 1995), 12/21/1995 NR(3) 3,007,160 ------------------------------------------------------------------------ 4,000,000 Chautauqua County, NY, IDA Weekly VRDNs (Cliffstar Corp.)/(Society Bank, N.A. LOC)/(Subject to AMT) P-1 4,000,000 ------------------------------------------------------------------------ 3,900,000 Chautauqua County, NY, IDA Weekly VRDNs (Mogen David Wine Corp.)/(Mellon Bank N.A. LOC)/(Subject to AMT) P-1 3,900,000 ------------------------------------------------------------------------ 1,140,000 Colonie, NY, IDA Weekly VRDNs (Herbert S. Ellis)/(Marine Midland Bank N.A. LOC)/(Subject to AMT) A-2 1,140,000 ------------------------------------------------------------------------ 820,000 Colonie, NY, IDA Weekly VRDNs (Series 1988)/(13 Green Mountain Drive)/(Marine Midland Bank N.A. LOC)/(Subject to AMT) A-2 820,000 ------------------------------------------------------------------------ 5,000,000 Erie County, NY, IDA Weekly VRDNs (Series 1994)/ (Servotronics, Inc.)/(Fleet Bank of New York LOC)/ (Subject to AMT) P-1 5,000,000 ------------------------------------------------------------------------
NEW YORK MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ------------ ------------------------------------------------------------------------ ----------- -------------- SHORT-TERM MUNICIPAL SECURITIES--CONTINUED - -------------------------------------------------------------------------------------- NEW YORK--CONTINUED ------------------------------------------------------------------------ $ 1,280,000 Erie County, NY, IDA Weekly VRDNs (Data-Rex, Inc.)/ (Marine Midland Bank N.A. LOC)/(Subject to AMT) A-2 $ 1,280,000 ------------------------------------------------------------------------ 1,800,000 Franklin County, NY, IDA Weekly VRDNs (Series 1991A)/ (KES Chateaugay)/(Bank of Tokyo Ltd. LOC) A-1 1,800,000 ------------------------------------------------------------------------ 1,500,000 Guilderland, NY, IDA Weekly VRDNs (Series 1993A)/ (Northeastern Industrial Park, Inc.)/(Chemical Bank LOC) P-1 1,500,000 ------------------------------------------------------------------------ 4,000,000 Hempstead, NY, 5.50% BANs (Series 1995A), 3/1/1996 VMIG1 4,024,500 ------------------------------------------------------------------------ 5,100,000 Herkimer County, NY, IDA Weekly VRDNs (Series 1994)/ (Granny's Kitchens, Ltd.)/(Bank of New York, New York LOC)/(Subject to AMT) A-1 5,100,000 ------------------------------------------------------------------------ 10,000,000 Longwood, NY, Central School District, 4.25% TANs, 6/23/1995 NR 10,006,846 ------------------------------------------------------------------------ 2,120,000 Madison County, NY, IDA Monthly VRDNs (Series 1989A)/ (Upstate Metals Corp.)/(Fleet Bank of New York N.A. LOC)/(Subject to AMT) A-1 2,120,000 ------------------------------------------------------------------------ 15,000,000 Marine Midland, NY, Premium Tax-Exempt Bond & Loan Trust Weekly VRDNs (Marine Midland Bank N.A. and Hong Kong Shanghai Bank LOCs) P-1 15,000,000 ------------------------------------------------------------------------ 581,000 Nassau County, NY, IDA Weekly VRDNs (465 Endo Associates)/(Dai-Ichi Kangyo Bank Ltd. LOC, Ford Motor Credit BPA) P-1 581,000 ------------------------------------------------------------------------ 1,127,812 Nassau County, NY, IDA Weekly VRDNs (D.L. Blair Corp.)/ (Dai-Ichi Kangyo Bank Ltd. LOC, Ford Motor Credit Co. BPA) P-1 1,127,812 ------------------------------------------------------------------------ 1,650,000 Nassau County, NY, IDA Weekly VRDNs (R.M. Pascucci Corp.)/(Dai-Ichi Kangyo Bank Ltd. LOC, Ford Motor Credit BPA) P-1 1,650,000 ------------------------------------------------------------------------ 7,000,000 New York City, NY, Municipal Water Finance Authority, 4.45% CP (Credit Suisse LOC), Mandatory Tender 7/17/1995 A-1+ 7,000,000 ------------------------------------------------------------------------ 14,000,000 New York City, NY, Monthly VRDNs (Series B) SP-1 14,000,000 ------------------------------------------------------------------------
NEW YORK MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ------------ ------------------------------------------------------------------------ ----------- -------------- SHORT-TERM MUNICIPAL SECURITIES--CONTINUED - -------------------------------------------------------------------------------------- NEW YORK--CONTINUED ------------------------------------------------------------------------ $ 4,900,000 New York City, NY, IDA Daily VRDNs (Japan Airlines Co.)/ (Morgan Guaranty Trust Co. LOC)/(Subject to AMT) A-1+ $ 4,900,000 ------------------------------------------------------------------------ 316,667 New York City, NY, IDA Weekly VRDNs (David Rosen Bakers Supply, Inc.)/(Dai-Ichi Kangyo Bank Ltd. LOC, Ford Motor Credit BPA) P-1 316,667 ------------------------------------------------------------------------ 506,668 New York City, NY, IDA Weekly VRDNs (Lomar Development Corp.)/(Dai-Ichi Kangyo Bank Ltd. LOC, Ford Motor Credit BPA) P-1 506,668 ------------------------------------------------------------------------ 135,431 New York City, NY, IDA Weekly VRDNs (MLN Associates)/ (Dai-Ichi Kangyo Bank Ltd. LOC, Ford Motor Credit BPA) P-1 135,431 ------------------------------------------------------------------------ 900,000 New York City, NY, IDA Weekly VRDNs (Mindel Associates)/(Chemical Bank LOC)/(Subject to AMT) A-1 900,000 ------------------------------------------------------------------------ 1,900,000 New York City, NY, IDA Weekly VRDNs Special Facility Revenue Bonds (Series 1990)/(Air France)/(Societe Generale LOC)/(Subject to AMT) A-1+ 1,900,000 ------------------------------------------------------------------------ 7,000,000 New York City, NY, Municipal Water Finance Authority, 4.40% CP (Series 4)/(Credit Suisse LOC), Mandatory Tender 5/23/1995 A-1+ 7,000,000 ------------------------------------------------------------------------ 2,600,000 New York City, NY, Trust for Cultural Resources Daily VRDNs (Series 1990B)/(Solomon R. Guggenheim Foundation)/(Swiss Bank Corp. LOC) A-1+ 2,600,000 ------------------------------------------------------------------------ 5,475,000 (a)New York State Dormitory Authority Weekly VRDNs PA-60 (Series 1993)/(Rochester General Hospital)/(FHA Insured)/ (Merrill Lynch Capital Services, Inc. BPA) A-1+ 5,475,000 ------------------------------------------------------------------------ 6,850,000 New York State Dormitory Authority, 5.00% CP (Series 1989B)/(Sloan-Kettering Memorial Cancer Center)/(Fuji Bank Ltd. LOC), Mandatory Tender 5/1/1995 A-1 6,850,000 ------------------------------------------------------------------------ 2,700,000 New York State Energy Research & Development Authority Weekly VRDNs (Long Island Lighting Co.)/(Toronto- Dominion Bank LOC)/(Subject to AMT) VMIG1 2,700,000 ------------------------------------------------------------------------
NEW YORK MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ------------ ------------------------------------------------------------------------ ----------- -------------- SHORT-TERM MUNICIPAL SECURITIES--CONTINUED - -------------------------------------------------------------------------------------- NEW YORK--CONTINUED ------------------------------------------------------------------------ $ 3,000,000 New York State Energy Research & Development Authority Weekly VRDNs (Series 1993A)/(Long Island Lighting Co.)/ (Toronto-Dominion Bank LOC) VMIG1 $ 3,000,000 ------------------------------------------------------------------------ 3,285,000 New York State Energy Research & Development Authority, 4.40% Annual TOBs (Series 1985)/(Rochester Gas & Electric Corp.)/(Credit Suisse LOC), Optional Tender 11/15/1995 A-1+ 3,285,000 ------------------------------------------------------------------------ 2,000,000 New York State Energy Research & Development Authority, 4.65% TOBs (New York State Electric and Gas Corp.)/ (Morgan Bank LOC), Optional Tender 3/15/1996 A-1+ 2,000,000 ------------------------------------------------------------------------ 2,000,000 New York State Energy Research Pollution Authority, PCR, 4.70% Annual TOBs (Long Island Lighting Company)/ (Deutsche Bank AG LOC), Optional Tender 3/1/1996 A-1+ 2,000,000 ------------------------------------------------------------------------ 8,000,000 (a)New York State Floating Rate Trust Certificate Weekly VRDNs (Series 144A)/(AMBAC Insured) A-1+ 8,000,000 ------------------------------------------------------------------------ 1,290,000 New York State Job Development Authority Weekly VRDNs (New York State, Guaranty)/(Subject to AMT) VMIG1 1,290,000 ------------------------------------------------------------------------ 1,590,000 New York State Job Development Authority Weekly VRDNs (Sumitomo Bank Ltd. LOC)/(Subject to AMT) VMIG1 1,590,000 ------------------------------------------------------------------------ 12,000,000 (a)New York State Medical Care Facilities Finance Agency Weekly VRDNs (Series 1993G)/(St. Luke's-Roosevelt Hospital Center)/(FHA Insured, Hong Kong & Shanghai Banking Corp. BPA) A-1 12,000,000 ------------------------------------------------------------------------ 3,700,000 (a)New York State Mortgage Agency Weekly VRDNs (Merrill Lynch Capital Services, Inc. BPA)/(Subject to AMT) VMIG1 3,700,000 ------------------------------------------------------------------------ 980,000 (a)New York State Mortgage Agency, Homeowner Mortgage Revenue Bonds Weekly VRDNs (Series PT-15B)/(Dai-Ichi Kangyo Bank Ltd. BPA)/(Subject to AMT) VMIG1 980,000 ------------------------------------------------------------------------ 3,000,000 Niagara County, NY, IDA Weekly VRDNs (Allegheny Ludlum Corp.)/(PNC Bank N.A. LOC) A-1 3,000,000 ------------------------------------------------------------------------
NEW YORK MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ------------ ------------------------------------------------------------------------ ----------- -------------- SHORT-TERM MUNICIPAL SECURITIES--CONTINUED - -------------------------------------------------------------------------------------- NEW YORK--CONTINUED ------------------------------------------------------------------------ $ 9,500,000 Niagara County, NY, IDA, Solid Waste Disposal Facility, 4.25% CP (Series 1994C)/(American Ref-Fuel Company)/ (Subject to AMT), 5/18/1995 A-1 $ 9,500,000 ------------------------------------------------------------------------ 1,010,000 North Hempstead, NY, 4.75% BANS (Series 1995B), 4/25/1996 NR(3) 1,014,282 ------------------------------------------------------------------------ 820,000 Onondaga County, NY, IDA Weekly VRDNs (Beverage Corp.)/(Marine Midland Bank N.A. LOC)/(Subject to AMT) A-2 820,000 ------------------------------------------------------------------------ 1,075,000 Onondaga County, NY, IDA Weekly VRDNs (Series 1987)/ (Southern Container Corp.)/(Chemical Bank LOC)/(Subject to AMT) VMIG1 1,075,000 ------------------------------------------------------------------------ 1,725,000 Onondaga County, NY, IDA Weekly VRDNs (W.W. Grainger, Inc.) A-1+ 1,725,000 ------------------------------------------------------------------------ 1,550,000 Ontario, NY, IDA Weekly VRDNs (Hillcrest Enterprises/ Buckeye Corrugated, Inc.)/(National City Bank, Cleveland LOC)/(Subject to AMT) P-1 1,550,000 ------------------------------------------------------------------------ 5,700,000 Oswego County, NY, IDA Weekly VRDNs (Copperweld Co.)/(PNC Bank N.A. LOC) P-1 5,700,000 ------------------------------------------------------------------------ 8,000,000 Planview, NY, Old Bethpage Central School District, 4.50% TANs, 6/30/1995 NR 8,005,949 ------------------------------------------------------------------------ 15,000,000 Port Authority of New York and New Jersey Weekly VRDNs A-1+ 15,000,000 ------------------------------------------------------------------------ 15,000,000 Port Authority of New York and New Jersey Weekly VRDNs (Subject to AMT) A-1+ 15,000,000 ------------------------------------------------------------------------ 1,000,000 Rotterdam, NY, IDA Weekly VRDNs (Series 1993A)/ (Rotterdam Industrial Park)/(Chemical Bank LOC) P-1 1,000,000 ------------------------------------------------------------------------ 722,677 Schenectady, NY, IDA Weekly VRDNs (McClellan Street Associates)/(Dai-Ichi Kangyo Bank Ltd. LOC, Ford Motor Credit BPA) P-1 722,677 ------------------------------------------------------------------------ 5,000,000 South Country, NY, Central School District, 4.50% TANs, 6/29/1995 NR 5,002,792 ------------------------------------------------------------------------ 1,800,000 Suffolk County, NY, IDA, 5.525% Semi-Annual TOBs (W.W. Grainger, Inc. Guaranty), Optional Tender 6/1/1995 P-1 1,800,000 ------------------------------------------------------------------------
NEW YORK MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ------------ ------------------------------------------------------------------------ ----------- -------------- SHORT-TERM MUNICIPAL SECURITIES--CONTINUED - -------------------------------------------------------------------------------------- NEW YORK--CONTINUED ------------------------------------------------------------------------ $ 6,000,000 Suffolk County, NY, 5.25% TANs (Series I)/(Westdeutsche Landesbank Gironzentrale LOC), 8/15/1995 SP-1+ $ 6,007,638 ------------------------------------------------------------------------ 3,450,000 Suffolk County, NY, IDA Weekly VRDNs (C & J Realty Corp.)/(Dai-Ichi Kangyo Bank Ltd. LOC, Ford Motor Credit BPA) P-1 3,450,000 ------------------------------------------------------------------------ 564,167 Suffolk County, NY, IDA Weekly VRDNs (CS Property/Tara Toy, Inc.)/(Dai-Ichi Kangyo Bank Ltd. LOC, Ford Motor Credit BPA) P-1 564,167 ------------------------------------------------------------------------ 350,000 Suffolk County, NY, IDA Weekly VRDNs (D.A. Yaron)/ (Dai-Ichi Kangyo Bank Ltd. LOC, Ford Motor Credit BPA)/ (Subject to AMT) P-1 350,000 ------------------------------------------------------------------------ 1,050,000 Suffolk County, NY, IDA Weekly VRDNs (Poly Research Corp.)/(Marine Midland Bank N.A. LOC)/(Subject to AMT) A-2 1,050,000 ------------------------------------------------------------------------ 7,500,000 Walden Village, NY, IDRB (Series 1994) Weekly VRDNs (Spence Engineering Co.)/(First Union National Bank LOC) P-1 7,500,000 ------------------------------------------------------------------------ 6,090,000 Warren & Washington Counties, NY, IDA Monthly VRDNs (Sandy Hill Corp.)/(Fleet Bank of New York N.A. LOC)/ (Subject to AMT) A-1 6,090,000 ------------------------------------------------------------------------ 1,510,000 Yates County, NY, IDA Weekly VRDNs (Series 1992A)/ (Clearplass Containers, Inc.)/(Norstar Bank of Upstate NY LOC)/(Subject to AMT) A-1 1,510,000 ------------------------------------------------------------------------ 2,400,000 Yonkers, NY, IDA Weekly VRDNs (Series 1992A)/(Consumers Union Facility)/(Industrial Bank of Japan Ltd. LOC) VMIG1 2,400,000 ------------------------------------------------------------------------ -------------- TOTAL INVESTMENTS, AT AMORTIZED COST (B) $ 274,670,373 ------------------------------------------------------------------------ --------------
(a) Denotes a restricted security which is subject to resale under Federal Securities laws. This security has been determined to be liquid under criteria established by the Board of Trustees. (b) Also represents cost for federal tax purposes. * See Notes to Portfolio of Investments on page 11. Note: The categories of investments are shown as a percentage of net assets ($272,932,010) at April 30, 1995. NEW YORK MUNICIPAL CASH TRUST - -------------------------------------------------------------------------------- The following abbreviation(s) are used throughout this portfolio: AMBAC-- American Municipal Bond Assurance Corporation AMT-- Alternative Minimum Tax BANs-- Bond Anticipation Notes BPA-- Bond Purchase Agreement CP-- Commercial Paper FHA-- Federal Housing Administration IDA-- Industrial Development Authority IDRB-- Industrial Development Revenue Bond LOCs-- Letter(s) of Credit LOC-- Letter of Credit PCR-- Pollution Control Revenue PLC-- Public Limited Company TANs-- Tax Anticipation Notes TOBs-- Tender Option Bonds VRDNs-- Variable Rate Demand Notes (See Notes which are an integral part of the Financial Statements) NEW YORK MUNICIPAL CASH TRUST NOTES TO PORTFOLIO OF INVESTMENTS (UNAUDITED) - -------------------------------------------------------------------------------- SHORT-TERM MUNICIPAL OBLIGATION RATINGS STANDARD & POOR'S RATINGS GROUP A S&P note rating reflects the liquidity concerns and market access risks unique to notes. SP-1 Very strong or strong capacity to pay principal and interest. Those issues determined to possess overwhelming safety characteristics will be given a plus (+) designation. SP-2 Satisfactory capacity to pay principal and interest. MOODY'S INVESTORS SERVICE, INC. Moody's short-term ratings are designated Moody's Investment Grade (MIG or VMIG (see below) ). The purpose of the MIG or VMIG ratings is to provide investors with a simple system by which the relative investment qualities of short-term obligations may be evaluated. MIG1 This designation denotes best quality. There is present strong protection by established cash flows, superior liquidity support or demonstrated broad-based access to the market for refinancing. MIG2 This designation denotes high quality. Margins of protection are ample although not so large as in the preceding group. VARIABLE RATE DEMAND NOTES (VRDNS) AND TENDER OPTION BONDS (TOBS) RATINGS STANDARD & POOR'S RATINGS GROUP S&P assigns dual ratings to all long-term debt issues that have as part of their provisions a variable rate demand feature. The first rating (long-term rating) addresses the likelihood of repayment of principal and interest when due, and the second rating (short-term rating) describes the demand characteristics. Several examples are AAA/A-1+, AA/A-1+, A/A-1. (The definitions for the long- term and the short-term ratings are provided below.) MOODY'S INVESTORS SERVICE, INC. Short-term ratings on issues with demand features are differentiated by the use of the VMIG symbol to reflect such characteristics as payment upon periodic demand rather than fixed maturity dates and payment relying on external liquidity. In this case, two ratings are usually assigned, (for example, Aaa/VMIG-1); the first representing an evaluation of the degree of risk associated with scheduled principal and interest payments, and the NEW YORK MUNICIPAL CASH TRUST - -------------------------------------------------------------------------------- second representing an evaluation of the degree of risk associated with the demand feature. The VMIG rating can be assigned a 1 or 2 designation using the same definitions described above for the MIG rating. COMMERCIAL PAPER (CP) RATINGS STANDARD & POOR'S RATINGS GROUP A S&P commercial paper rating is a current assessment of the likelihood of timely payment of debt having an original maturity of no more than 365 days. A-1 This highest category indicates that the degree of safety regarding timely payment is strong. Those issues determined to possess extremely strong safety characteristics are denoted with a plus (+) sign designation. A-2 Capacity for timely payment on issues with this designation is satisfactory. However, the relative degree of safety is not as high as for issues designated A-1. MOODY'S INVESTORS SERVICE, INC. P-1 Issuers rated PRIME-1 (or related supporting institutions) have a superior capacity for repayment of short-term promissory obligations. PRIME-1 repayment capacity will normally be evidenced by the following characteristics: leading market positions in well established industries, high rates of return on funds employed, conservative capitalization structure with moderate reliance on debt and ample asset protection, broad margins in earning coverage of fixed financial charges and high internal cash generation, well-established access to a range of financial markets and assured sources of alternate liquidity. P-2 Issuers rated PRIME-2 (or related supporting institutions) have a strong capacity for repayment of short-term promissory obligations. This will normally be evidenced by many of the characteristics cited above, but to a lesser degree. Earnings trends and coverage ratios, while sound, will be more subject to variation. Capitalization characteristics, while still appropriate, may be more affected by external conditions. Ample alternate liquidity is maintained. LONG-TERM DEBT RATINGS STANDARD & POOR'S RATINGS GROUP AAA Debt rated "AAA" has the highest rating assigned by S&P. Capacity to pay interest and repay principal is extremely strong. AA Debt rated "AA" has a very strong capacity to pay interest and repay principal and differs from the highest rated issues only in small degree. A Debt rated "A" has a strong capacity to pay interest and repay principal although it is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than debt in higher rated categories. NEW YORK MUNICIPAL CASH TRUST - -------------------------------------------------------------------------------- MOODY'S INVESTORS SERVICE, INC. AAA Bonds that are rated AAA are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as "gilt edged." Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues. AA Bonds that are rated AA are judged to be of high quality by all standards. Together with the AAA group, they comprise what are generally known as high grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in AAA securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long-term risks appear somewhat larger than in AAA securities. A Bonds that are rated A possess many favorable investment attributes and are to be considered as upper medium grade obligations. Factors giving security to principal and interest are considered adequate but elements may be present which suggest a susceptibility to impairment sometime in the future. NR indicates that both the bonds and the obligor or credit enhancer are not currently rated by S&P or Moody's with respect to short-term indebtedness. However, management considers them to be of comparable quality to securities rated A-1 or P-1. NR(1) The underlying issuer/obligor/guarantor has other outstanding debt rated "AAA" by S&P or "Aaa" by Moody's. NR(2) The underlying issuer/obligor/guarantor has other outstanding debt rated "AA" by S&P or "Aa" Moody's. NR(3) The underlying issuer/obligor/guarantor has other outstanding debt rated "A" by S&P or Moody's. NEW YORK MUNICIPAL CASH TRUST STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1995 (UNAUDITED) - -------------------------------------------------------------------------------- ASSETS: - ------------------------------------------------------------------------------------------------- Investments in securities, at amortized cost and value $ 274,670,373 - ------------------------------------------------------------------------------------------------- Cash 866,724 - ------------------------------------------------------------------------------------------------- Income receivable 2,600,618 - ------------------------------------------------------------------------------------------------- -------------- Total assets 278,137,715 - ------------------------------------------------------------------------------------------------- LIABILITIES: - ------------------------------------------------------------------------------------------------- Payable for investments purchased $ 4,542,337 - ----------------------------------------------------------------------------------- Income distribution payable 663,368 - ----------------------------------------------------------------------------------- ------------ Total liabilities 5,205,705 - ------------------------------------------------------------------------------------------------- -------------- NET ASSETS for 272,949,618 shares outstanding $ 272,932,010 - ------------------------------------------------------------------------------------------------- -------------- NET ASSETS CONSISTS OF: - ------------------------------------------------------------------------------------------------- Paid in capital $ 272,949,619 - ------------------------------------------------------------------------------------------------- Accumulated net realized gain (loss) on investments (17,609) - ------------------------------------------------------------------------------------------------- -------------- Total Net Assets $ 272,932,010 - ------------------------------------------------------------------------------------------------- -------------- NET ASSET VALUE, Offering Price and Redemption Proceeds Per Share: - ------------------------------------------------------------------------------------------------- INSTITUTIONAL SERVICE SHARES ($263,442,155 / 263,460,075 shares outstanding) $1.00 - ------------------------------------------------------------------------------------------------- -------------- CASH II SHARES ($9,489,855 / 9,489,543 shares outstanding) $1.00 - ------------------------------------------------------------------------------------------------- --------------
(See Notes which are an integral part of the Financial Statements) NEW YORK MUNICIPAL CASH TRUST STATEMENT OF OPERATIONS SIX MONTHS ENDED APRIL 30, 1995 (UNAUDITED) - -------------------------------------------------------------------------------- INVESTMENT INCOME: - ---------------------------------------------------------------------------------------------------- Interest $ 7,076,379 - ---------------------------------------------------------------------------------------------------- EXPENSES: - ---------------------------------------------------------------------------------------------------- Investment advisory fee $ 711,245 - -------------------------------------------------------------------------------------- Administrative personnel and services fee 134,603 - -------------------------------------------------------------------------------------- Custodian fees 37,615 - -------------------------------------------------------------------------------------- Transfer agent and dividend disbursing agent fees and expenses 34,418 - -------------------------------------------------------------------------------------- Directors'/Trustees' fees 4,955 - -------------------------------------------------------------------------------------- Auditing fees 7,361 - -------------------------------------------------------------------------------------- Legal fees 5,374 - -------------------------------------------------------------------------------------- Portfolio accounting fees 32,491 - -------------------------------------------------------------------------------------- Distribution services fee--Institutional Service Shares 37,525 - -------------------------------------------------------------------------------------- Distribution services fee--Cash II Shares 130,422 - -------------------------------------------------------------------------------------- Shareholder services fee--Institutional Service Shares 196,103 - -------------------------------------------------------------------------------------- Shareholder services fee--Cash II Shares 129,596 - -------------------------------------------------------------------------------------- Share registration costs 12,386 - -------------------------------------------------------------------------------------- Printing and postage 16,004 - -------------------------------------------------------------------------------------- Insurance premiums 5,134 - -------------------------------------------------------------------------------------- Miscellaneous 3,589 - -------------------------------------------------------------------------------------- ------------ Total expenses 1,498,821 - -------------------------------------------------------------------------------------- Deduct-- - -------------------------------------------------------------------------------------- Waiver of investment advisory fee $ 189,187 - -------------------------------------------------------------------------- Waiver of distribution services fee--Institutional Service Shares 37,525 - -------------------------------------------------------------------------- Waiver of distribution services fee--Class II Shares 128,849 - -------------------------------------------------------------------------- Waiver of shareholder services fee--Institutional Service Shares 103,358 - -------------------------------------------------------------------------- Waiver of shareholder services fee--Class II Shares 1,573 460,492 - -------------------------------------------------------------------------- ---------- ------------ Net expenses 1,038,329 - ---------------------------------------------------------------------------------------------------- ------------ Net investment income 6,038,050 - ---------------------------------------------------------------------------------------------------- ------------
(See Notes which are an integral part of the Financial Statements) NEW YORK MUNICIPAL CASH TRUST STATEMENT OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
SIX MONTHS ENDED APRIL 30, YEAR ENDED 1995 OCTOBER 31, (UNAUDITED) 1994 - ------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS: - ------------------------------------------------------------------------------- OPERATIONS-- - ------------------------------------------------------------------------------- Net investment income $ 6,038,050 $ 7,881,134 - ------------------------------------------------------------------------------- Net realized gain (loss) on investments-identified cost basis -- 322 - ------------------------------------------------------------------------------- --------------- --------------- Change in assets resulting from operations 6,038,050 7,881,456 - ------------------------------------------------------------------------------- --------------- --------------- DISTRIBUTIONS TO SHAREHOLDERS-- - ------------------------------------------------------------------------------- Distributions from net investment income: - ------------------------------------------------------------------------------- Institutional Service Shares (4,387,678) (5,630,675) - ------------------------------------------------------------------------------- Cash II Shares (1,650,372) (2,250,459) - ------------------------------------------------------------------------------- --------------- --------------- Change in net assets resulting from distributions to shareholders (6,038,050) (7,881,134) - ------------------------------------------------------------------------------- --------------- --------------- SHARE TRANSACTIONS - ------------------------------------------------------------------------------- Proceeds from sale of Shares 660,842,963 918,756,952 - ------------------------------------------------------------------------------- Net asset value of Shares issued to shareholders in payment of distributions declared 2,286,295 2,705,999 - ------------------------------------------------------------------------------- Cost of Shares redeemed (760,828,368) (884,074,127) - ------------------------------------------------------------------------------- --------------- --------------- Change in net assets resulting from Share transactions (97,699,110) 37,388,824 - ------------------------------------------------------------------------------- --------------- --------------- Change in net assets (97,699,110) 37,389,146 - ------------------------------------------------------------------------------- NET ASSETS: - ------------------------------------------------------------------------------- Beginning of period 370,631,120 333,241,974 - ------------------------------------------------------------------------------- --------------- --------------- End of period $ 272,932,010 $ 370,631,120 - ------------------------------------------------------------------------------- --------------- ---------------
(See Notes which are an integral part of the Financial Statements) NEW YORK MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS--INSTITUTIONAL SERVICE SHARES - -------------------------------------------------------------------------------- (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED APRIL 30, 1995 YEAR ENDED OCTOBER 31, (UNAUDITED) 1994 1993 1992 1991 1990 1989 1988 NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 - --------------------------------- INCOME FROM INVESTMENT OPERATIONS - --------------------------------- Net investment income 0.02 0.02 0.02 0.03 0.04 0.05 0.06 0.05 - --------------------------------- LESS DISTRIBUTIONS - --------------------------------- Distributions from net investment income (0.02) (0.02) (0.02) (0.03) (0.04) (0.05) (0.06) (0.05) - --------------------------------- ----- --------- --------- --------- --------- --------- --------- --------- NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 - --------------------------------- ----- --------- --------- --------- --------- --------- --------- --------- TOTAL RETURN (A) 1.74% 2.35% 2.16% 3.01% 4.59% 5.51% 5.70% 4.66% - --------------------------------- RATIOS TO AVERAGE NET ASSETS - --------------------------------- Expenses 0.53%(b) 0.52% 0.54% 0.57% 0.52% 0.54% 0.55% 0.51% - --------------------------------- Net investment income 3.48%(b) 2.31% 2.14% 2.99% 4.48% 5.36% 5.56% 4.57% - --------------------------------- Expense waiver/reimbursement (c) 0.22%(b) 0.13% 0.17% 0.00% 0.00% 0.00% 0.00% 0.00% - --------------------------------- SUPPLEMENTAL DATA - --------------------------------- Net assets, end of period (000 omitted) $263,442 $236,580 $274,357 $164,492 $191,616 $197,213 $245,542 $212,786 - --------------------------------- 1987 1986 NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 - --------------------------------- INCOME FROM INVESTMENT OPERATIONS - --------------------------------- Net investment income 0.04 0.04 - --------------------------------- LESS DISTRIBUTIONS - --------------------------------- Distributions from net investment income (0.04) (0.04) - --------------------------------- --------- --------- NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 - --------------------------------- --------- --------- TOTAL RETURN (A) 3.90% 4.35% - --------------------------------- RATIOS TO AVERAGE NET ASSETS - --------------------------------- Expenses 0.47% 0.47% - --------------------------------- Net investment income 3.81% 4.18% - --------------------------------- Expense waiver/reimbursement (c) 0.00% 0.00% - --------------------------------- SUPPLEMENTAL DATA - --------------------------------- Net assets, end of period (000 omitted) $141,040 $183,941 - ---------------------------------
(a) Based on net asset value, which does not reflect the sales load or contingent deferred sales charge, if applicable. (b) Computed on an annualized basis. (c) This voluntary expense decrease is reflected in both the expense and net investment income ratios shown above. (See Notes which are an integral part of the Financial Statements) NEW YORK MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS--CLASS II SHARES - -------------------------------------------------------------------------------- (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED APRIL 30, 1995 YEAR ENDED OCTOBER 31, (UNAUDITED) 1994 1993 1992 1991(A) NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 - -------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS - -------------------------------------------------- Net investment income 0.02 0.02 0.02 0.03 0.02 - -------------------------------------------------- LESS DISTRIBUTIONS - -------------------------------------------------- Distributions from net investment income (0.02) (0.02) (0.02) (0.03) (0.02) - -------------------------------------------------- ------- --------- --------- --------- ----------- NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 - -------------------------------------------------- ------- --------- --------- --------- ----------- TOTAL RETURN (B) 1.65% 2.15% 1.98% 2.86% 2.20% - -------------------------------------------------- RATIOS TO AVERAGE NET ASSETS - -------------------------------------------------- Expenses 0.71%(c) 0.71% 0.71% 0.73% 0.46%(c) - -------------------------------------------------- Net investment income 3.18%(c) 2.19% 1.96% 2.46% 4.08%(c) - -------------------------------------------------- Expense waiver/reimbursement (d) 0.35%(c) 0.21% 0.17% 0.00% 0.00%(c) - -------------------------------------------------- SUPPLEMENTAL DATA - -------------------------------------------------- Net assets, end of period (000 omitted) $9,490 $134,051 $58,884 $4,641 $56 - --------------------------------------------------
(a) Reflects operations for the period from April 25, 1991 (date of initial public investment) to October 31, 1991. (b) Based on net asset value, which does not reflect the sales load or contingent deferred sales charge, if applicable. (c) Computed on an annualized basis. (d) This voluntary expense decrease is reflected in both the expense and net investment income ratios shown above. (See Notes which are an integral part of the Financial Statements) NEW YORK MUNICIPAL CASH TRUST NOTES TO FINANCIAL STATEMENTS APRIL 30, 1995 (UNAUDITED) - -------------------------------------------------------------------------------- (1) ORGANIZATION Federated Municipal Trust (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 thirteen non-diversified portfolios. The financial statements included herein present only those of New York Municipal Cash Trust (the "Fund"). The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. The Fund offers two classes of shares: Institutional Service Shares and Class II Shares. On August 26, 1994, shareholders of the Fund approved the reorganization of the Fund into a portfolio of the Trust. The information included in the financial statements includes data from the period of the time preceding the reorganization. (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. INVESTMENT VALUATIONS--The Fund's use of the amortized cost method to value its portfolio securities is in accordance with Rule 2a-7 under the Act. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses are accrued daily. Bond premium and discount, if applicable, are amortized as required by the Internal Revenue Code, as amended (the "Code"). Distributions to shareholders are recorded on the ex-dividend date. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the Code applicable to regulated investment companies and to distribute to shareholders each year substantially all of its income. Accordingly, no provisions for federal tax are necessary. At October 31, 1994, the Fund, for federal tax purposes, had a capital loss carryforward of $17,609, 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 be necessary to relieve the Fund of any liability for federal tax. Pursuant to the Code, such capital loss carryforward will expire in 1996. 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. CONCENTRATION OF CREDIT RISK--Since the Fund invests a substantial portion of its assets in issuers located in one state, it will be more susceptible to factors adversely affecting issuers of that state than would be a comparable tax-exempt mutual fund that invests nationally. In order to reduce the credit risk associated with such factors, at April 30, 1995, 59.3% of the securities in the portfolio of investments are backed by letters of credit or bond insurance of various financial institutions and financial guaranty assurance agencies. The value of investments insured by or supported (backed) by a letter of credit for any one institution or agency does not exceed 6.4% of total investments. 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 come 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. Additional information on each restricted security held at April 30, 1995, is as follows:
ACQUISITION ACQUISITION SECURITY DATE COST New York Dormitory Authority Weekly VRDN's 3/13/95 $ 5,475,000 New York State Floating Rate Trust Certificate Weekly VRDN's 4/12/93-7/2/93 8,000,000 New York State Medical Care Facilities Finance Agency Weekly VRDN's 4/7/95-4/10/95 12,000,000 New York State Mortgage Agency Weekly VRDN's 4/3/95 3,700,000 New York State Mortgage Agency Weekly VRDN's Homeowner Mortgage Revenue 3/3/95 980,000
OTHER--Investment transactions are accounted for on the trade date. (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) for each class of shares. At April 30, 1995, capital paid in aggregated $272,932,010. Transactions in shares were as follows:
SIX MONTHS ENDED YEAR ENDED APRIL 30, OCTOBER 31, 1995 1994 -------------- -------------- INSTITUTIONAL SERVICE SHARES SHARES SHARES - ---------------------------------------------------------------------------------- -------------- -------------- Shares sold 465,336,953 548,493,561 - ---------------------------------------------------------------------------------- Shares issued to shareholders in payment of distributions declared 586,154 758,005 - ---------------------------------------------------------------------------------- Shares redeemed (439,060,795) (587,029,347) - ---------------------------------------------------------------------------------- -------------- -------------- Net change resulting from Institutional Service Shares transactions 26,862,312 (37,777,781) - ---------------------------------------------------------------------------------- -------------- -------------- SIX MONTHS ENDED YEAR ENDED APRIL 30, OCTOBER 31, 1995 1994 -------------- -------------- CASH II SHARES SHARES SHARES - ---------------------------------------------------------------------------------- -------------- -------------- Shares sold 195,506,008 370,263,391 - ---------------------------------------------------------------------------------- Shares issued to shareholders in payment of distributions declared 1,700,142 1,947,994 - ---------------------------------------------------------------------------------- Shares redeemed (321,767,573) (297,044,780) - ---------------------------------------------------------------------------------- -------------- -------------- Net change resulting from Cash II Shares transactions (124,561,423) 75,166,605 - ---------------------------------------------------------------------------------- -------------- -------------- Net change resulting from share transactions (97,699,111) 37,388,824 - ---------------------------------------------------------------------------------- -------------- --------------
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES INVESTMENT ADVISORY FEE--Federated Management, the Fund's investment adviser (the "Adviser"), receives for its services an annual investment advisory fee equal to .40 of 1% of the Fund's average daily net assets. The Adviser may voluntarily choose to waive a portion of its fee. The Adviser can modify or terminate this voluntary waiver at any time at its sole discretion. As of September 2, 1994, the Fund changed its expense cap from contractual to voluntary. ADMINISTRATIVE FEE--Federated Administrative Services ("FAS"), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. The FAS fee is based on the level of average aggregate daily net assets of all funds advised by subsidiaries of Federated Investors for the period. The administrative fee received during the period of the Administrative Services Agreement shall be at least $125,000 per portfolio and $30,000 per each additional class of shares. DISTRIBUTION SERVICES FEE--The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund will compensate 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 the Fund's shares. The Plan provides that the Fund may incur distribution expenses up to .25 of 1% of the average daily net assets of the Institutional Service Shares and Cash II Shares, annually, to reimburse FSC. The distributor may voluntarily choose to waive any portion of its fee. The distributor can modify or terminate this voluntary waiver at any time at its sole discretion. SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to .25 of 1% of average daily net assets of the Fund for the period. This fee is to obtain certain personal services for shareholders and to maintain the shareholder accounts. TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated Services Company ("FServ") serves as transfer and dividend disbursing agent for the Fund. This fee is based on the size, type, and number of accounts and transactions made by shareholders. PORTFOLIO ACCOUNTING FEES--FServ also maintains the Fund's accounting records for which it receives a fee. This fee is based on the level of the Fund's average daily net assets for the period, plus out-of-pocket expenses. INTERFUND TRANSACTIONS--During the six-months ended April 30, 1995, 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 transactions were made at current market value pursuant to Rule 17a-7 under the Act amounting to $259,005,000 and $286,135,000, respectively. GENERAL--Certain of the Officers and Trustees of the Trust are Officers and Directors or Trustees of the above companies. TRUSTEES OFFICERS - -------------------------------------------------------------------------------- John F. Donahue John F. Donahue Thomas G. Bigley CHAIRMAN John T. Conroy, Jr. Glen R. Johnson William J. Copeland PRESIDENT James E. Dowd J. Christopher Donahue Lawrence D. Ellis, M.D. VICE PRESIDENT Edward L. Flaherty, Jr. Richard B. Fisher Glen R. Johnson VICE PRESIDENT Peter E. Madden Edward C. Gonzales Gregor F. Meyer VICE PRESIDENT AND TREASURER John E. Murray, Jr. John W. McGonigle Wesley W. Posvar VICE PRESIDENT AND SECRETARY Marjorie P. Smuts David M. Taylor ASSISTANT TREASURER G. Andrew Bonnewell ASSISTANT SECRETARY
Mutual funds are not bank deposits or obligations, are not guaranteed by any bank, and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other government agency. Investment in mutual funds involves investment risk, including 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 contain facts concerning its objective and policies, management fees, expenses and other information. PRESIDENT'S MESSAGE - -------------------------------------------------------------------------------- Dear Shareholder: I am pleased to present the Semi-Annual Report to Shareholders of Florida Municipal Cash Trust, a portfolio of Federated Municipal Trust, for the six-month period ended April 30, 1995. We begin this report with our customary update from the fund's portfolio manager, Jeff A. Kozemchak, who will discuss market activity and changes in the fund's strategy relative to that activity. Jeff's report is followed by the fund's Portfolio of Investments and Financial Statements. Florida Municipal Cash Trust continues to seek relief for you and other tax-sensitive Florida residents, in the form of tax-free* monthly income. The fund is able to pursue this income by maintaining a portfolio of Florida municipal securities, issued to fund projects as varied as education, health care, and housing. In this way, the fund helps you make the most of your short-term finances, while funding important municipal improvements in your home state. During the six-month period covered by the report, the fund paid more than $2.3 million in total distributions to shareholders, and the fund's total net assets increased from $53.9 million to $119.2 million. As always, we strive to provide you with the highest level of professional service. We appreciate your continued support and welcome your comments or questions. Sincerely, Glen R. Johnson President June 15, 1995 * INCOME MAY BE SUBJECT TO THE FEDERAL ALTERNATIVE MINIMUM TAX. SHARES OF THE FUND ARE EXEMPT FROM FLORIDA'S INTANGIBLES TAX ON PERSONAL PROPERTY. 1 INVESTMENT REVIEW - -------------------------------------------------------------------------------- AN INTERVIEW WITH THE FUND'S PORTFOLIO MANAGER, JEFF A. KOZEMCHAK Q Jeff, can you comment on the changes in money market rates during the reporting period? A In the face of resilient economic growth and the potential for this growth to create inflationary pressures, the Federal Reserve Board (the "Fed") continued to tighten monetary policy throughout 1994 and into early 1995. On November 15, 1994, the Fed hiked the federal funds target rate from 4.75% to 5.50%. The most recent move by the Fed, on February 1, 1995, increased the target rate by 50 basis points to the current 6.00% level. Short-term interest rates reflected the Fed's upward moves. The yield on the three-month Treasury bill rose from 5.22% at the beginning of the reporting period to 6.06% on February 1, 1995. The yield on the one-year Treasury bill rose from 6.25% at the beginning of the reporting period to a high of 7.32% in early January, 1995. February, March, and April, 1995, however, brought economic reports that pointed to slowing in sectors of the economy, an indication that the rate increases by the Fed that began in February, 1994, were starting to take hold. As a result, short-term interest rates declined over this period as market participants adjusted their expectations regarding the extent of future tightenings by the Fed. Reflecting this change in expectations, the three-month Treasury bill declined to 5.87% on April 30, 1995, while the one-year Treasury bill fell to 6.32%, a decline of 1.00% from the high in January, 1995. Q How have the municipal money markets and the fund's yield reacted to this interest rate environment? A Municipal money market rates were affected by the Fed tightenings early in the reporting period, as well as February's 180-degree change in market expectations regarding the potential for future Fed rate increases. In addition, municipal rates were also influenced by seasonal supply and demand imbalances throughout the reporting period. Yields on seven-day variable rate demand notes (VRDNs), the core component of a tax-free money market fund, rose from 3.22% at the beginning of the reporting period to 4.65% on April 30, 1995. Yield levels also moved upward for one-year fixed-rate notes, increasing from 4.19% in early November, 1994, to a high of 5.10% in early January, 1995, before steadily falling to 4.29% at the end of the reporting period. The divergence between short VRDN yields and one-year fixed-rate note levels resulted from market expectations that the Fed may have successfully engineered a growth slowdown, or a "soft landing." Also, tight municipal note supply conditions helped contribute to the decline in fixed note yields. The fund responded favorably to the overall increase in short-term interest rates over the reporting period. The seven-day net yield* of the fund rose from 3.16% on November 1, 1994, to 3.98% on April 30, 1995. * PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. YIELD WILL VARY. 2 - -------------------------------------------------------------------------------- Q Did you make any strategic changes to the fund's portfolio in this rate atmosphere? A We added to the fund's holdings of short maturity commercial paper (CP) and VRDNs in order to increase the responsiveness to changes in short-term interest rates. VRDNs adjust quickly to changes in Fed policy as well as supply and demand imbalances that are unique to the municipal money markets. The purchase of CP typically allows us to pick up an additional yield premium over VRDNs over time, while still retaining portfolio responsiveness to further rate increases. Also, the average maturity of the fund was targeted within a range of 30 to 45 days, with an emphasis on the shorter end of the target range. Q What is your overall outlook for rates in the near future? A Amid reports of a slightly slowing economy and restrained inflation, it appears that the Fed is nearing the end of its tightening cycle. We expect that Fed policy will continue to be neutral in the near term, as the Fed scrutinizes upcoming releases on the economy and inflation for signs that either one is stronger than expectations. Short-term interest rates should trade within a narrow range in the near future. Nevertheless, we expect the supply of fixed-rate notes in our market to increase significantly starting in mid-June, 1995, cheapening note levels. We plan, on average, to extend the average maturity of the fund during this period of heavy issuance, as yields on fixed-rate notes may become attractive versus comparable maturity taxable securities. 3 FLORIDA MUNICIPAL CASH TRUST PORTFOLIO OF INVESTMENTS APRIL 30, 1995 (UNAUDITED) - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ---------- ----------------------------------------------------------------- ------- ------------ SHORT-TERM MUNICIPAL SECURITIES--99.2% - ----------------------------------------------------------------------------- FLORIDA--92.9% ----------------------------------------------------------------- $1,600,000 Alachua County, FL, HFA, Health Facility Revenue Bonds Weekly VRDNs (Series 1991)/(North Florida Retirement Village)/(Kredietbank N.V. LOC) A-1 $ 1,600,000 ----------------------------------------------------------------- 3,000,000 Clay County, FL, IDRB Weekly VRDNs (Series 1994)/(Trust Company Bank LOC) P-1 3,000,000 ----------------------------------------------------------------- 2,900,000 Columbia County, FL, Health Facility Authority Weekly VRDNs (Series 1991)/(Lake Shore Hospital)/(Sumitomo Bank Ltd. LOC) A-1 2,900,000 ----------------------------------------------------------------- 2,000,000 Dade County, FL, IDA, IDRB Weekly VRDNs (Series 1995)/ (June Leasing Co.)/(First Union National Bank of Florida LOC)/(Subject to AMT) A-1 2,000,000 ----------------------------------------------------------------- 3,000,000 Florida HFA, Multi-Family Housing Revenue Refunding Bonds Weekly VRDNs (Series 1995D)/(Park Colony L.P.)/(Mellon Bank N.A. LOC) A-1 3,000,000 ----------------------------------------------------------------- 1,000,000 Florida HFA Weekly VRDNs (Series 1985A)/(Parrot's Landing)/ (Citibank N.A. LOC) A-1 1,000,000 ----------------------------------------------------------------- 4,000,000 Florida Local Government Finance Authority, 4.30% CP (Series A)/(First Union National Bank of Florida LOC), Mandatory Tender 6/23/1995 A-1 4,000,000 ----------------------------------------------------------------- 4,000,000 Florida Municipal Loan Council, 4.25% CP (Series 1985-1)/ (Florida League of Cities)/(Sumitomo Bank Ltd. LOC), Mandatory Tender 5/11/1995 VMIG1 4,000,000 ----------------------------------------------------------------- 5,290,000 Florida State Board of Education, 4.30% Semi-Annual TOBs, Optional Tender 6/1/1995 NR(2) 5,290,000 ----------------------------------------------------------------- 1,250,000 Florida State Board of Education, 8.40% SB (Prerefunded), 7/1/1995 (@102) AAA 1,282,259 ----------------------------------------------------------------- 1,690,000 Florida State, 5.125% Bond (Series H), 7/1/1995 AA 1,692,453 ----------------------------------------------------------------- 1,825,000 Florida State, 5.50% Bond, 7/1/1995 AA 1,828,772 -----------------------------------------------------------------
4 FLORIDA MUNICIPAL CASH TRUST - ---------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ---------- ----------------------------------------------------------------- ------- ------------ SHORT-TERM MUNICIPAL SECURITIES--CONTINUED - ----------------------------------------------------------------------------- FLORIDA--CONTINUED ----------------------------------------------------------------- $3,000,000 Greater Orlando, FL, Aviation Authority Airport Facilities, 4.00% CP (Series B), Mandatory Tender 5/12/1995 A-1 $ 3,000,000 ----------------------------------------------------------------- 3,000,000 Hillsborough County, FL, Aviation Authority, 4.20% Bond Anticipation CP (Tampa International Airport)/(National Westminster Bank PLC LOC)/(Subject to AMT), Mandatory Tender 6/8/1995 A-1+ 3,000,000 ----------------------------------------------------------------- 3,000,000 Hillsborough County, FL, Aviation Authority, 4.30% CP (Tampa International Airport)/(National Westminster Bank PLC LOC)/ (Subject to AMT), Mandatory Tender 5/10/1995 A-1+ 3,000,000 ----------------------------------------------------------------- 2,000,000 Hillsborough County, FL, IDA Weekly VRDNs (Ringhaver Equipment Co.)/(Mellon Bank N.A. LOC)/(Subject to AMT) P-1 2,000,000 ----------------------------------------------------------------- 2,600,000 Hillsborough County, FL, IDA Weekly VRDNs (SIFCO Turbine Component Service)/(Series 1992)/(National City Bank, Cleveland LOC)/(Subject to AMT) P-1 2,600,000 ----------------------------------------------------------------- 450,000 Indian River County School District, FL, 4.50% TANs (Series 1994), 6/30/1995 MIG1 450,299 ----------------------------------------------------------------- 1,500,000 Jacksonville, FL, Health Facility Authority Weekly VRDNs (Series 1994)/(River Garden/The Coves)/(First Union National Bank of North Carolina LOC) A+ 1,500,000 ----------------------------------------------------------------- 1,300,000 Jacksonville, FL, Weekly VRDNs (Metal Sales Manufacturing)/ (First National Bank, Louisville LOC)/(Subject to AMT) P-1 1,300,000 ----------------------------------------------------------------- 4,200,000 Key West, FL, Community Redevelopment Authority Weekly VRDNs (Pier House Joint Venture)/(PNC Bank N.A. LOC) P-1 4,200,000 ----------------------------------------------------------------- 1,000,000 Lee County, FL, Health Care Facility Weekly VRDNs (Hope Hospice)/(Sun Bank N.A. LOC) VMIG1 1,000,000 ----------------------------------------------------------------- 2,860,000 Lee County, FL, IDA Weekly VRDNs (Christian & Missionary Alliance Foundation)/(Banque Paribas LOC) P-1 2,860,000 ----------------------------------------------------------------- 1,000,000 Lee County, FL, IDA, IDRB Weekly VRDNs (Series 1994)/ (Baader North America Corp.)/(Deutsche Bank Financial, Inc. LOC)/(Subject to AMT) VMIG1 1,000,000 -----------------------------------------------------------------
5 FLORIDA MUNICIPAL CASH TRUST - ---------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ---------- ----------------------------------------------------------------- ------- ------------ SHORT-TERM MUNICIPAL SECURITIES--CONTINUED - ----------------------------------------------------------------------------- FLORIDA--CONTINUED ----------------------------------------------------------------- $1,000,000 Marion County, FL, HFA Multi-Family Revenue Bonds Weekly VRDNs (Series 1985F)/(Paddock Place)/(First National Bank of Boston LOC) A-1 $ 1,000,000 ----------------------------------------------------------------- 3,000,000 Miami, FL, 5.00% TANs, 9/28/1995 SP-1+ 3,001,892 ----------------------------------------------------------------- 2,700,000 Mount Dora, FL, Health Facility Authority Weekly VRDNs (Series 1989)/(Waterman Village)/(Sumitomo Bank Ltd. LOC) A-1 2,700,000 ----------------------------------------------------------------- 1,000,000 Orange County, FL, 4.05% CP, Mandatory Tender 5/4/1995 A-1+ 1,000,000 ----------------------------------------------------------------- 2,000,000 Orange County, FL, 4.65% CP, Mandatory Tender 5/4/1995 A-1+ 2,000,000 ----------------------------------------------------------------- 2,000,000 Orange County, FL, Health Facilities Authority Weekly VRDNs (Mayflower Retirement Community, Inc.)/(Banque Paribas LOC) A-1 2,000,000 ----------------------------------------------------------------- 1,815,000 Palm Beach County, FL, IDA Weekly VRDNs (Palm Jewish Community Campus Corp.)/(Sun Bank N.A. LOC) A-1+ 1,815,000 ----------------------------------------------------------------- 3,500,000 Pinellas County Industry Council, FL, IDRB Weekly VRDNs (Series 1994)/(Genca Corporation)/(PNC Bank, Ohio N.A. LOC)/(Subject to AMT) P-1 3,500,000 ----------------------------------------------------------------- 3,200,000 (b)Pinellas County, FL, HFA, SFM Revenue Bonds Weekly VRDNs (Series PA-92)/(GNMA Collateralized)/(Merrill Lynch Capital Services LIQ)/(Subject to AMT) A-1+ 3,200,000 ----------------------------------------------------------------- 300,000 Pinellas County, FL, Pooled HFA Daily VRDNs (Chemical Bank LOC) A-1 300,000 ----------------------------------------------------------------- 4,000,000 Putnam County, FL, Development Authority, Floating/Fixed Rate Poll Control Revenue Bonds, 4.30% Semi-Annual TOBs (Pooled Series 1984H)/(CFC Guaranty), Optional Tender 9/15/1995 A-1+ 4,000,000 ----------------------------------------------------------------- 4,845,000 Saint Lucie County, FL, IDR Bonds Weekly VRDNs (Series 1985)/(Savannah Hospital)/(NationsBank of Georgia N.A. LOC) P-1 4,845,000 ----------------------------------------------------------------- 4,000,000 Saint Lucie County, FL, PCR, 4.25% CP (Florida Power & Light Co.), Mandatory Tender 5/10/1995 A-1 4,000,000 -----------------------------------------------------------------
6 FLORIDA MUNICIPAL CASH TRUST - ---------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ---------- ----------------------------------------------------------------- ------- ------------ SHORT-TERM MUNICIPAL SECURITIES--CONTINUED - ----------------------------------------------------------------------------- FLORIDA--CONTINUED ----------------------------------------------------------------- $3,800,000 Sarasota County, FL, IDRB Monthly VRDNs (Series 1994)/ (Resource Recovery Systems of Sarasota)/(Fleet National Bank LOC)/(Subject to AMT) A-1 $ 3,800,000 ----------------------------------------------------------------- 3,000,000 Seminole County, FL, Health Facility Authority IDA Weekly VRDNs (Series 1991)/(Florida Living Nursing Center)/(Barnett Bank of Central Florida N.A. LOC) VMIG1 3,000,000 ----------------------------------------------------------------- 1,450,000 Sumter County, FL, IDA Weekly VRDNs (Great Southern Wood of Florida, Inc.)/(SouthTrust Bank of Alabama LOC)/ (Subject to AMT) VMIG1 1,450,000 ----------------------------------------------------------------- 4,300,000 Sunshine State Governmental Finance Commission, FL, 4.10% CP (Morgan Guaranty Trust Co., National Westminster Bank PLC, and Union Bank of Switzerland LOCs), Mandatory Tender 6/13/1995 VMIG1 4,300,000 ----------------------------------------------------------------- 1,600,000 Suwannee County, FL, Weekly VRDNs (Series 1989)/(Advent Christian Village)/(Barnett Bank of Jacksonville LOC) VMIG1 1,600,000 ----------------------------------------------------------------- 2,000,000 Volusia County, FL, HFA Weekly VRDNs (Fisherman's Landing)/(Mellon Bank N.A. LOC) P-1 2,000,000 ----------------------------------------------------------------- 1,725,000 Volusia County, FL, IDA Weekly VRDNs (Crane Cams)/(First Interstate Bank of Arizona N.A. LOC) P-1 1,725,000 ----------------------------------------------------------------- 2,000,000 Volusia County, FL, IDA Weekly VRDNs (Series 1994)/ (Southern States Utilities, Inc.)/(Sun Bank N.A. LOC) VMIG1 2,000,000 ----------------------------------------------------------------- ------------ Total 110,740,675 ----------------------------------------------------------------- ------------ ALABAMA--2.1% ----------------------------------------------------------------- 2,500,000 Mobile, AL, IDB, 4.50% Semi-Annual TOBs (International Paper Co.), Optional Tender 10/15/1995 A-2 2,500,000 ----------------------------------------------------------------- ------------
7 FLORIDA MUNICIPAL CASH TRUST - ---------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ---------- ----------------------------------------------------------------- ------- ------------ SHORT-TERM MUNICIPAL SECURITIES--CONTINUED - ----------------------------------------------------------------------------- CALIFORNIA--4.2% ----------------------------------------------------------------- $5,000,000 Orange County, CA, Local Transportation Authority, Sales Tax Revenue, 4.30% CP (Industrial Bank of Japan Ltd. LOC), Mandatory Tender 5/24/1995 A-1 $ 5,000,000 ----------------------------------------------------------------- ------------ TOTAL INVESTMENTS, AT AMORTIZED COST (a) $118,240,675 ----------------------------------------------------------------- ------------ ------------ (a) Also represents cost for federal tax purposes. (b) Denotes a restricted security which is subject to resale under Federal Securities laws. This security has been determined to be liquid under criteria established by the Board of Trustees. * See Notes to Portfolio of Investments on page 9. Note: The categories of investments are shown as a percentage of net assets ($119,178,176) at April 30, 1995.
The following abbreviations are used throughout this portfolio: AMT --Alternative Minimum Tax CFC --Cooperative Finance Corporation CP --Commercial Paper GNMA --Government National Mortgage Association HFA --Housing Finance Authority IDA --Industrial Development Authority IDB --Industrial Development Bond IDR --Industrial Development Revenue IDRB --Industrial Development Revenue Bonds LIQ --Liquidity Agreement LOCs --Letter(s) of Credit LOC --Letter of Credit PCR --Pollution Control Revenue PLC --Public Limited Company SB --Serial Bond SFM --Single Family Mortgage TANs --Tax Anticipation Notes TOBs --Tender Option Bonds VRDNs --Variable Rate Demand Notes
(See Notes which are an integral part of the Financial Statements) 8 FLORIDA MUNICIPAL CASH TRUST NOTES TO PORTFOLIO OF INVESTMENTS (UNAUDITED) - -------------------------------------------------------------------------------- SHORT-TERM MUNICIPAL OBLIGATION RATINGS STANDARD & POOR'S RATINGS GROUP A S&P note rating reflects the liquidity concerns and market access risks unique to notes. SP-1--Very strong or strong capacity to pay principal and interest. Those issues determined to possess overwhelming safety characteristics will be given a plus (+) designation. SP-2--Satisfactory capacity to pay principal and interest. MOODY'S INVESTORS SERVICE, INC. Moody's short-term ratings are designated Moody's Investment Grade (MIG or VMIG (see below)). The purpose of the MIG or VMIG ratings is to provide investors with a simple system by which the relative investment qualities of short-term obligations may be evaluated. MIG1--This designation denotes best quality. There is present strong protection by established cash flows, superior liquidity support or demonstrated broad-based access to the market for refinancing. MIG2--This designation denotes high quality. Margins of protection are ample although not so large as in the preceding group. VARIABLE RATE DEMAND NOTES (VRDNs) AND TENDER OPTION BONDS (TOBs) RATINGS STANDARD & POOR'S RATINGS GROUP S&P assigns dual ratings to all long-term debt issues that have as part of their provisions a variable rate demand feature. The first rating (long-term rating) addresses the likelihood of repayment of principal and interest when due, and the second rating (short-term rating) describes the demand characteristics. Several examples are AAA/A-1+, AA/A-1+, A/A-1. (The definitions for the long-term and the short-term ratings are provided below.) MOODY'S INVESTORS SERVICE, INC. Short-term ratings on issues with demand features are differentiated by the use of the VMIG symbol to reflect such characteristics as payment upon periodic demand rather than fixed maturity dates and payment relying on external liquidity. In this case, two ratings are usually assigned, (for example, Aaa/VMIG-1); the first representing an evaluation of the degree of risk associated with scheduled principal and interest payments, and the 9 FLORIDA MUNICIPAL CASH TRUST - --------------------------------------------------------- second representing an evaluation of the degree of risk associated with the demand feature. The VMIG rating can be assigned a 1 or 2 designation using the same definitions described above for the MIG rating. COMMERCIAL PAPER (CP) RATINGS STANDARD & POOR'S RATINGS GROUP A S&P commercial paper rating is a current assessment of the likelihood of timely payment of debt having an original maturity of no more than 365 days. A-1--This highest category designation indicates that the degree of safety regarding timely payment is strong. Those issues determined to possess extremely strong safety characteristics are denoted with a plus (+) sign designation. A-2--Capacity for timely payment on issues with this designation is satisfactory. However, the relative degree of safety is not as high as for issues designated A-1. MOODY'S INVESTORS SERVICE, INC. P-1--Issuers rated Prime-1 (or related supporting institutions) have a superior capacity for repayment of short-term promissory obligations. Prime-1 repayment capacity will normally be evidenced by the following characteristics: leading market positions in well established industries, high rates of return on funds employed, conservative capitalization structure with moderate reliance on debt and ample asset protection, broad margins in earning coverage of fixed financial charges and high internal cash generation, well-established access to a range of financial markets and assured sources of alternate liquidity. P-2--Issuers rated Prime-2 (or related supporting institutions) have a strong capacity for repayment of short-term promissory obligations. This will normally be evidenced by many of the characteristics cited above, but to a lesser degree. Earnings trends and coverage ratios, while sound, will be more subject to variation. Capitalization characteristics, while still appropriate, may be more affected by external conditions. Ample alternate liquidity is maintained. 10 FLORIDA MUNICIPAL CASH TRUST - --------------------------------------------------------- LONG-TERM DEBT RATINGS STANDARD & POOR'S RATINGS GROUP AAA--Debt rated "AAA" has the highest rating assigned by S&P. Capacity to pay interest and repay principal is extremely strong. AA--Debt rated "AA" has a very strong capacity to pay interest and repay principal and differs from the highest rated issues only in small degree. A--Debt rated "A" has a strong capacity to pay interest and repay principal although it is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than debt in higher rated categories. MOODY'S INVESTORS SERVICE, INC. Aaa--Bonds that are rated Aaa are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as "gilt edged." Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues. Aa--Bonds that are rated Aa are judged to be of high quality by all standards. Together with the Aaa group; they comprise what are generally known as high grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in Aaa securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long-term risks appear somewhat larger than in Aaa securities. A--Bonds that are rated A possess many favorable investment attributes and are to be considered as upper medium grade obligations. Factors giving security to principal and interest are considered adequate but elements may be present which suggest a susceptibility to impairment sometime in the future. NR--indicates that both the bonds and the obligor or credit enhancer are not currently rated by S&P or Moody's with respect to short-term indebtedness. However, management considers them to be of comparable quality to securities rated A-1 or P-1. NR(1)--The underlying issuer/obligor/guarantor has other outstanding debt rated "AAA" by S&P or "Aaa" by Moody's. NR(2)--The underlying issuer/obligor/guarantor has other outstanding debt rated "AA" by S&P or "Aa" Moody's. NR(3)--The underlying issuer/obligor/guarantor has other outstanding debt rated "A" by S&P or Moody's. 11 FLORIDA MUNICIPAL CASH TRUST STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1995 (UNAUDITED) - -------------------------------------------------------------------------------- ASSETS: - -------------------------------------------------------------------------------------------------- Investments in securities, at amortized cost and value (identified and tax cost $118,240,675) $118,240,675 - -------------------------------------------------------------------------------------------------- Cash 338,734 - -------------------------------------------------------------------------------------------------- Income receivable 879,569 - -------------------------------------------------------------------------------------------------- Deferred expenses 32,009 - -------------------------------------------------------------------------------------------------- ------------ Total assets 119,490,987 - -------------------------------------------------------------------------------------------------- LIABILITIES: - -------------------------------------------------------------------------------------------------- Income distribution payable $ 220,991 - ------------------------------------------------------------------------------------- Accrued expenses 91,820 - ------------------------------------------------------------------------------------- ---------- Total liabilities 312,811 - -------------------------------------------------------------------------------------------------- ------------ NET ASSETS for 119,178,176 shares outstanding $119,178,176 - -------------------------------------------------------------------------------------------------- ------------ ------------ NET ASSET VALUE, Offering Price and Redemption Proceeds Per Share: ($119,178,176 DIVIDED BY 119,178,176 shares outstanding) $ 1.00 - -------------------------------------------------------------------------------------------------- ------------ ------------
(See Notes which are an integral part of the Financial Statements) 12 FLORIDA MUNICIPAL CASH TRUST STATEMENT OF OPERATIONS SIX MONTHS ENDED APRIL 30, 1995 (UNAUDITED) - -------------------------------------------------------------------------------- INVESTMENT INCOME: - ---------------------------------------------------------------------------------- Interest $2,640,385 - ---------------------------------------------------------------------------------- EXPENSES: - ---------------------------------------------------------------------------------- Investment advisory fee $259,995 - ----------------------------------------------------------------------- Administrative personnel and services fee 64,297 - ----------------------------------------------------------------------- Custodian fees 12,587 - ----------------------------------------------------------------------- Transfer agent and dividend disbursing agent fees and expenses 10,281 - ----------------------------------------------------------------------- Directors'/Trustees' fees 2,450 - ----------------------------------------------------------------------- Auditing fees 6,485 - ----------------------------------------------------------------------- Legal fees 3,795 - ----------------------------------------------------------------------- Portfolio accounting fees 23,767 - ----------------------------------------------------------------------- Shareholder services fee 162,497 - ----------------------------------------------------------------------- Share registration costs 19,219 - ----------------------------------------------------------------------- Printing and postage 4,905 - ----------------------------------------------------------------------- Insurance premiums 3,235 - ----------------------------------------------------------------------- Taxes 2,600 - ----------------------------------------------------------------------- Miscellaneous 2,975 - ----------------------------------------------------------------------- -------- Total expenses 579,088 - ----------------------------------------------------------------------- Deduct-- - ------------------------------------------------------------ Waiver of investment advisory fee $259,995 - ------------------------------------------------------------ Waiver of shareholder services fee 26,657 - ------------------------------------------------------------ Reimbursement of other operating expenses 26,128 312,780 - ------------------------------------------------------------ -------- -------- Net expenses 266,308 - ---------------------------------------------------------------------------------- ---------- Net investment income $2,374,077 - ---------------------------------------------------------------------------------- ---------- ----------
(See Notes which are an integral part of the Financial Statements) 13 FLORIDA MUNICIPAL CASH TRUST STATEMENT OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
SIX MONTHS ENDED APRIL PERIOD ENDED 30, 1995 OCTOBER 31, (UNAUDITED) 1994(a) -------------- ------------- INCREASE (DECREASE) IN NET ASSETS: - ----------------------------------------------------------------- OPERATIONS-- - ----------------------------------------------------------------- Net investment income $ 2,374,077 $ 165,156 - ----------------------------------------------------------------- -------------- ------------- DISTRIBUTIONS TO SHAREHOLDERS-- - ----------------------------------------------------------------- Distributions from net investment income (2,374,077) (165,156) - ----------------------------------------------------------------- -------------- ------------- SHARE TRANSACTIONS-- - ----------------------------------------------------------------- Proceeds from sale of Shares 804,129,320 134,110,437 - ----------------------------------------------------------------- Net asset value of Shares issued to shareholders in payment of distributions declared 1,135,365 92,846 - ----------------------------------------------------------------- Cost of Shares redeemed (740,052,696) (80,237,096) - ----------------------------------------------------------------- -------------- ------------- Change in net assets resulting from Share transactions 65,211,989 53,966,187 - ----------------------------------------------------------------- -------------- ------------- Change in net assets 65,211,989 53,966,187 - ----------------------------------------------------------------- NET ASSETS: - ----------------------------------------------------------------- Beginning of period 53,966,187 -- - ----------------------------------------------------------------- -------------- ------------- End of period $ 119,178,176 $ 53,966,187 - ----------------------------------------------------------------- -------------- ------------- -------------- ------------- (a) For the period from September 12, 1994 (start of business) to October 31, 1994.
(See Notes which are an integral part of the Financial Statements) 14 FLORIDA MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED PERIOD ENDED APRIL 30, 1995 OCTOBER 31, (UNAUDITED) 1994(a) ------------------ ----------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 - ---------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS - ---------------------------------------------------------------------- Net investment income 0.02 0.0004 - ---------------------------------------------------------------------- -------- ------- LESS DISTRIBUTIONS - ---------------------------------------------------------------------- Distributions from net investment income (0.02) (0.0004) - ---------------------------------------------------------------------- -------- ------- NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 - ---------------------------------------------------------------------- -------- ------- -------- ------- TOTAL RETURN (b) 1.78% 0.35% - ---------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS - ---------------------------------------------------------------------- Expenses 0.41%(c) 0.28%(c) - ---------------------------------------------------------------------- Net investment income 3.65%(c) 3.28%(c) - ---------------------------------------------------------------------- Expense waiver/reimbursement (d) 0.48%(c) 1.03%(c) - ---------------------------------------------------------------------- SUPPLEMENTAL DATA - ---------------------------------------------------------------------- Net assets, end of period (000 omitted) $119,178 $53,966 - ---------------------------------------------------------------------- (a) Reflects operations for the period from September 21, 1994 (date of initial public investment) to October 31, 1994. For the period from September 12, 1994 (start of business) to September 21, 1994 the Fund had no investment activity. (b) Based on net asset value, which does not reflect the sales load or contingent deferred sales charge, if applicable. (c) Computed on an annualized basis. (d) This voluntary expense decrease is reflected in both the expense and net investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements) 15 FLORIDA MUNICIPAL CASH TRUST NOTES TO FINANCIAL STATEMENTS APRIL 30, 1995 (UNAUDITED) - -------------------------------------------------------------------------------- 1. ORGANIZATION Federated Municipal Trust (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 thirteen non-diversified portfolios. The financial statements included herein present only those of Florida Municipal Cash Trust (the "Fund"). The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. 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. INVESTMENT VALUATIONS--The Fund's use of the amortized cost method to value its portfolio securities is in accordance with Rule 2a-7 under the Act. INTEREST INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses are accrued daily. Bond premium and discount, if applicable, are amortized as required by the Internal Revenue Code, as amended (the "Code"). Distributions to shareholders are recorded on the ex-dividend date. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the Code applicable to regulated investment companies and to distribute to shareholders each year substantially all of its income. Accordingly, no provisions for federal tax are necessary. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in when- issued or delayed delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked to market daily and begin earning interest on the settlement date. CONCENTRATION OF CREDIT RISK--Since the Fund invests a substantial portion of its assets in issuers located in one state, it will be more susceptible to factors adversely affecting issuers of that state than would be a comparable tax-exempt mutual fund that invests nationally. In order to reduce the credit risk associated with such factors, at April 30, 1995, 67.6% of the securities in the portfolio of investments are backed by letters of credit or bond insurance of various financial institutions and financial guaranty assurance agencies. The value of investments insured by or supported (backed) by a letter of credit for any one institution or agency does not exceed 8.1% of total investments. 16 FLORIDA MUNICIPAL CASH TRUST - --------------------------------------------------------- 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. Additional information on each restricted security held at April 30, 1995 is as follows:
ACQUISITION ACQUISITION SECURITY DATE COST -------------------------------------------------- -------- ---------- Pinellas County, FL, HFA, SFM Revenue Bonds Weekly VRDNs (Series PA-92) 3/3/95 $3,200,000
DEFERRED EXPENSES--The costs incurred by the Fund with respect to registration of its shares in its first fiscal year, excluding the initial expense of registering the shares, have been deferred and are being amortized using the straight-line method not to exceed a period of five years from the Fund's commencement date. OTHER--Investment transactions are accounted for on the trade date. 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 April 30, 1995, capital paid-in aggregated $119,178,176. Transactions in shares were as follows:
SIX MONTHS ENDED PERIOD ENDED APRIL 30, OCTOBER 31, 1995 1994* - ---------------------------------------------------------------------- ------------- ------------ Shares sold 804,129,320 134,110,437 - ---------------------------------------------------------------------- Shares issued to shareholders in payment of distributions declared 1,135,365 92,846 - ---------------------------------------------------------------------- Shares redeemed (740,052,696) (80,237,096) - ---------------------------------------------------------------------- ------------- ------------ Net change resulting from Share transactions 65,211,989 53,966,187 - ---------------------------------------------------------------------- ------------- ------------ ------------- ------------ * For the period from September 12, 1994 (start of business) to October 31, 1994.
4. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES INVESTMENT ADVISORY FEE--Federated Management, the Fund's investment adviser (the "Adviser"), receives for its services an annual investment advisory fee equal to .40 of 1% of the Fund's average daily net assets. The Adviser may voluntarily choose to waive any portion of its fee and reimburse 17 FLORIDA MUNICIPAL CASH TRUST - --------------------------------------------------------- certain operating expenses of the Fund. The Adviser can modify or terminate this voluntary waiver and/or reimbursement at any time at its sole discretion. ADMINISTRATIVE FEE--Federated Administrative Services ("FAS"), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. The FAS fee is based on the level of average aggregate daily net assets of all funds advised by subsidiaries of Federated Investors for the period. The administrative fee received during the period of the Administrative Services Agreement shall be at least $125,000 per portfolio and $30,000 per each additional class of shares. DISTRIBUTION SERVICES FEE--The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund will compensate 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 the Fund's shares. The Plan provides that the Fund may incur distribution expenses up to .25 of 1% of the average daily net assets of the Fund, annually, to compensate FSC. SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to .25 of 1% of average daily net assets of the Fund for the period. This fee is to obtain certain personal services for shareholders and to maintain the shareholder accounts. TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated Services Company ("FServ") serves as transfer and dividend disbursing agent for the Fund. This fee is based on the size, type, and number of accounts and transactions made by shareholders. ORGANIZATIONAL EXPENSES--Organizational expenses of $15,374 were borne initially by the Adviser. The Fund has agreed to reimburse the Adviser for the organizational expenses during the five year period following September 19, 1994 (date the Fund became effective). For the period ended April 30, 1995, the Fund paid $1,110 pursuant to this agreement. INTERFUND TRANSACTIONS--During the six months ended April 30, 1995, the Fund engaged in purchase and sale transactions with funds that have a common investment adviser (or affiliated investment advisers), common Directors or Trustees, and common Officers. These transactions were made at current market value pursuant to Rule 17a-7 under the Act amounting to $394,370,000 and $411,245,000, respectively. GENERAL--Certain of the Officers and Trustees of the Trust are Officers and Directors or Trustees of the above companies. 18
TRUSTEES OFFICERS - --------------------------------------------------------- John F. Donahue John F. Donahue Thomas G. Bigley CHAIRMAN John T. Conroy, Jr. Glen R. Johnson William J. Copeland PRESIDENT James E. Dowd J. Christopher Donahue Lawrence D. Ellis, M.D. VICE PRESIDENT Edward L. Flaherty, Jr. Richard B. Fisher Glen R. Johnson VICE PRESIDENT Peter E. Madden Edward C. Gonzales Gregor F. Meyer VICE PRESIDENT AND TREASURER John E. Murray, Jr. John W. McGonigle Wesley W. Posvar VICE PRESIDENT AND SECRETARY Marjorie P. Smuts David M. Taylor ASSISTANT TREASURER G. Andrew Bonnewell ASSISTANT SECRETARY
Mutual funds are not bank deposits or obligations, are not guaranteed by any bank, and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other government agency. Investment in mutual funds involves investment risk, including 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. 19 - -------------------------------------------------------------------------------- FLORIDA - -------------------------------------------------------------------------------- MUNICIPAL - -------------------------------------------------------------------------------- CASH - -------------------------------------------------------------------------------- TRUST - -------------------------------------------------------------------------------- SEMI-ANNUAL REPORT TO SHAREHOLDERS APRIL 30, 1995 [LOGO] ---------------------------------------- Distributor A subsidiary of FEDERATED INVESTORS ----------------------------------- FEDERATED INVESTORS TOWER PITTSBURGH, PA 15222-3779 --------------------------------------------- [LOGO] RECYCLED PAPER 314229758 G00827-02 (6/95) ------------------------------ MASSACHUSETTS MUNICIPAL CASH TRUST SEMI-ANNUAL REPORT TO SHAREHOLDERS APRIL 30, 1995 INSTITUTIONAL SERVICE SHARES BAYFUNDS SHARES FEDERATED MANAGEMENT - --------------------------------- Investment Adviser FEDERATED SECURITIES CORP. - --------------------------------- Distributor A subsidiary of Federated Investors 314229832 314229303 Z00176 1052806 (6/95) PRESIDENT'S MESSAGE - -------------------------------------------------------------------------------- Dear Shareholder: I am pleased to present the Semi-Annual Report to Shareholders of Massachusetts Municipal Cash Trust, a portfolio of Federated Municipal Trust, for the six-month period ended April 30, 1995. The fund consists of two classes of shares known as Institutional Service Shares and BayFunds Shares. We begin this report with our customary update from the fund's portfolio manager, Mary Jo Ochson, who will discuss market activity and changes in the fund's strategy relative to that activity. Mary Jo's report is followed by the fund's Portfolio of Investments and Financial Statements. In addition, Financial Highlights tables have been included for Institutional Service Shares and BayFunds Shares. Massachusetts Municipal Cash Trust continues to seek relief for you and other tax-sensitive Massachusetts residents, in the form of double tax-free* monthly income. The fund is able to pursue this income by maintaining a portfolio of Massachusetts municipal securities, issued to fund projects as varied as education, health care, and housing. In this way, the fund helps you make the most of your short-term finances, while funding important municipal improvements in your home state. During the six-month period covered by the report, the fund paid nearly $2.1 million in total distributions to shareholders. As of this report, the fund's total net assets are $127.7 million. As always, we strive to provide you with the highest level of professional service. We appreciate your continued support and welcome your comments or questions. Sincerely, Glen R. Johnson President June 15, 1995 *Income may be subject to the federal alternative minimum tax. INVESTMENT REVIEW - -------------------------------------------------------------------------------- An Interview with the Fund's Portfolio Manager, Mary Jo Ochson Q Mary Jo, can you comment on the changes in money market rates during the reporting period? A In the face of resilient economic growth and the potential for this growth to create inflationary pressures, the Federal Reserve Board (the "Fed") continued to tighten monetary policy throughout 1994 and into early 1995. On November 15, 1994, the Fed hiked the federal funds target rate from 4.75% to 5.50%. The most recent move by the Fed, on February 1, 1995, increased the target rate by 50 basis points to the current 6.00% level. Short-term interest rates reflected the Fed's upward moves. The yield on the three-month Treasury bill rose from 5.22% at the beginning of the reporting period to 6.06% on February 1, 1995. The yield on the one-year Treasury bill rose from 6.25% at the beginning of the reporting period to a high of 7.32% in early January, 1995. February, March, and April, 1995, however, brought economic reports that pointed to slowing in sectors of the economy, an indication that the rate increases by the Fed that began in February, 1994, were starting to take hold. As a result, short-term interest rates declined over this period as market participants adjusted their expectations regarding the extent of future tightenings by the Fed. Reflecting this change in expectations, the three-month Treasury bill declined to 5.87% on April 30, 1995, while the one-year Treasury bill fell to 6.32%, a decline of 1.00% from its high in January, 1995. Q How have the municipal money markets and the fund's yield reacted to this interest rate environment? A Municipal money market rates were affected by the Fed tightenings early in the reporting period, as well as February's 180-degree change in market expectations regarding the potential for future Fed rate increases. In addition, municipal rates were also influenced by seasonal supply and demand imbalances throughout the reporting period. Yields on seven-day variable rate demand notes (VRDNs), the core component of a tax-free money market fund, rose from 3.22% at the beginning of the reporting period (November 1, 1994) to 4.65% on April 30, 1995. Yield levels also moved upward for one-year fixed-rate notes, increasing from 4.19% in early November, 1994, to a high of 5.10% in early January, 1995, before steadily falling to 4.29% at the end of the reporting period. The divergence between short VRDN yields and one-year fixed-rate note levels resulted from market expectations that the Fed may have successfully engineered a growth slowdown, or a "soft landing." Also, tight municipal note supply conditions helped contribute to the decline in fixed note yields. The fund responded favorably to the overall increase in short-term interest rates over the reporting period. The 7-day net yield* of the fund's Institutional Service Shares rose from 2.82% at the beginning of the reporting period to 3.82% on April 30, 1995. For the fund's BayFunds Shares, the 7-day net yield* rose from 2.75% at the beginning of the reporting period to 3.78% on April 30, 1995. Q What is your overall outlook for rates in the near future? A Amid reports of a slightly slowing economy and restrained inflation, it appears that the Fed is nearing the end of its tightening cycle. We would expect that Fed policy will be neutral in the near term, as the Fed scrutinizes upcoming releases on the economy and inflation for signs that either one is stronger than expectations. As such, short-term interest rates should trade within a range in the near future. Nevertheless, we expect the supply of fixed-rate notes in our market to increase significantly in mid-June, 1995, cheapening note levels. We plan on average to extend our maturities during that period of heavy issuance as yields on fixed-rate notes may become attractive versus comparable maturity taxable securities. Q In November of 1994, Moody's Investors Service, Inc. upgraded the Commonwealth of Massachusetts from A to A1.** At the same time, Standard and Poor's Ratings Group and Fitch Investors Service, Inc. rated the Commonwealth A+** with a positive outlook. Please comment on the factors which have contributed to Massachusetts' improving credit situation. A The improved credit position of Massachusetts can be attributed to both budgetary and economic factors. The Commonwealth has continued along the course of economic recovery that began in 1992 after a deep regional recession. Massachusetts' economy retains diverse sources of strength and generates personal income levels among the highest in the nation. In the post recession period (1992-1994), the Commonwealth's 3.3% job growth was thirteenth fastest in the nation, and in 1993 the Commonwealth maintained its personal income per capita position (118% of the national average) following several years of decline. Recently, like the rest of the country, Massachusetts has shown signs of slowing economic growth. While non-farm jobs are still on an upward trend, the rate of growth has slowed to only 2.4% from November, 1993, to November, 1994. Future economic performance will hinge on how well the Commonwealth's economy absorbs higher interest rates, defense procurement cutbacks, and health care industry restructuring. The Commonwealth closed fiscal year 1994 with a $112 million surplus in its budgeted operating funds, marking the third consecutive surplus. The Commonwealth restored fiscal control by following a disciplined spending program and adhering to reasonable revenue assumptions. For example, in the face of slower economic growth, the Commonwealth has responsibly reduced tax revenue estimates for fiscal year 1995. The current estimate of $11,179 million represents a still-healthy 5.4% increase over last year's tax revenue amount. The 1995 budget is tightly balanced. * Past performance does not guarantee future results. Yield will vary. ** Ratings are subject to change. - -------------------------------------------------------------------------------- Future upgrades are contingent upon Massachusetts' economic performance meeting or exceeding national averages, continued sound financial operations, and maintenance of the overall debt burden at current levels. MASSACHUSETTS MUNICIPAL CASH TRUST PORTFOLIO OF INVESTMENTS APRIL 30, 1995 (UNAUDITED) - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ------------ ------------------------------------------------------------------------ ----------- -------------- SHORT-TERM MUNICIPAL SECURITIES--100.8% - -------------------------------------------------------------------------------------- MASSACHUSETTS--99.9% ------------------------------------------------------------------------ $ 3,500,000 Attleboro, MA, 5.00% BANs (Series A), 7/7/1995 NR(4) $ 3,501,886 ------------------------------------------------------------------------ 2,000,000 Attleboro, MA, 5.25% BANs (Series B), 2/14/1996 NR(4) 2,002,249 ------------------------------------------------------------------------ 1,250,000 Attleboro, MA, 5.50% BANs (Series B), 2/14/1996 NR(4) 1,253,761 ------------------------------------------------------------------------ 1,000,000 Boston, MA, Water & Sewer Commission Weekly VRDNs (Series 1985A)/(Dai-Ichi Kangyo Bank Ltd. LOC) VMIG1 1,000,000 ------------------------------------------------------------------------ 1,000,000 Boston, MA, Water & Sewer Commission Weekly VRDNs (Series 1985A)/(Dai-Ichi Kangyo Bank Ltd. LOC) VMIG1 1,000,000 ------------------------------------------------------------------------ 1,000,000 Boston, MA, Water & Sewer Commission Weekly VRDNs (Series 1994A)/(State Street Bank and Trust Co. LOC) VMIG1 1,000,000 ------------------------------------------------------------------------ 4,950,000 (a)Clipper, MA, Tax Exempt Trust Weekly VRDNs (Series 1993-1)/(State Street Bank and Trust Co. BPA) VMIG1 4,950,000 ------------------------------------------------------------------------ 3,200,000 Framingham, MA, IDA Weekly VRDNs (Perin Corp.)/ (Barclays Bank PLC LOC) A-1+ 3,200,000 ------------------------------------------------------------------------ 2,000,000 Gloucester, MA, 4.33% BANs, 9/22/1995 NR(4) 2,000,221 ------------------------------------------------------------------------ 3,925,000 Gloucester, MA, 4.50% BANs, 9/22/1995 NR(4) 3,924,726 ------------------------------------------------------------------------ 1,000,000 Haverhill, MA, 8.875% Bond (Prerefunded), 12/1/1995 NR(1) 1,044,635 ------------------------------------------------------------------------ 300,000 Ludlow, MA, Weekly VRDNs (Advanced Drainage System, Inc.)/(FNB, Chicago LOC) P-1 300,000 ------------------------------------------------------------------------ 1,800,000 (a)Massachusetts Municipal Wholesale Electric Company VRDC Trust, Weekly VRDNs (Series 1993D)/(AMBAC Insured)/(Hong Kong Shanghai Banking Corp. BPA) A-1 1,800,000 ------------------------------------------------------------------------ 4,000,000 Massachusetts Bay Transit Authority, 4.10% CP (Industrial Bank of Japan Ltd. LOC), Mandatory Tender 5/23/1995 VMIG1 4,000,000 ------------------------------------------------------------------------ 2,200,000 Massachusetts Bay Transit Authority, 4.10% CP (Series A)/ (ABN AMRO Bank N.V. LOC), Mandatory Tender 5/15/1995 A-1+ 2,200,000 ------------------------------------------------------------------------ 3,000,000 Massachusetts GO Refunding Weekly VRDNs (Series 1993A)/(AMBAC Insured)/(Citibank N.A. BPA) NR(1) 3,000,000 ------------------------------------------------------------------------
MASSACHUSETTS MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ------------ ------------------------------------------------------------------------ ----------- -------------- SHORT-TERM MUNICIPAL SECURITIES--CONTINUED - -------------------------------------------------------------------------------------- MASSACHUSETTS--CONTINUED ------------------------------------------------------------------------ $ 2,400,000 Massachusetts HEFA Weekly VRDNs (Series E)/(Williams College) A-1+ $ 2,400,000 ------------------------------------------------------------------------ 3,460,000 Massachusetts HEFA Weekly VRDNs (Newbury College)/ (Barclays Bank PLC LOC) P-1 3,460,000 ------------------------------------------------------------------------ 200,000 Massachusetts HEFA Weekly VRDNs (Series A)/(Brigham & Women's Hospital)/(Sanwa Bank Ltd. LOC) P-1 200,000 ------------------------------------------------------------------------ 3,410,000 Massachusetts HEFA Weekly VRDNs (Series A)/(New England Home For Little Wanderers Issue)/(First National Bank of Boston LOC) P-1 3,410,000 ------------------------------------------------------------------------ 1,200,000 Massachusetts HEFA Weekly VRDNs (Series B)/(Clark University)/(Sanwa Bank Ltd. LOC) VMIG1 1,200,000 ------------------------------------------------------------------------ 1,150,000 Massachusetts HEFA Weekly VRDNs (Series E)/(Capital Asset Program)/(Sanwa Bank Ltd. LOC) A-1+ 1,150,000 ------------------------------------------------------------------------ 6,300,000 Massachusetts HEFA Weekly VRDNs (Series F)/(Children's Hospital of Boston) A-1+ 6,300,000 ------------------------------------------------------------------------ 2,500,000 Massachusetts HEFA Weekly VRDNs (Series G)/(Massachusetts Institute of Technology) NR(1) 2,500,000 ------------------------------------------------------------------------ 2,100,000 Massachusetts HEFA, 4.05% CP (Harvard University), Mandatory Tender 7/17/1995 A-1+ 2,100,000 ------------------------------------------------------------------------ 5,000,000 Massachusetts HEFA, 4.20% CP (Harvard University), Mandatory Tender 5/18/1995 A-1+ 5,000,000 ------------------------------------------------------------------------ 5,000,000 Massachusetts HEFA, 4.30% CP (Fallon Heathcare System)/ (Sanwa Bank Ltd. LOC), Mandatory Tender 5/22/1995 A-1+ 5,000,000 ------------------------------------------------------------------------ 5,500,000 Massachusetts HEFA, 4.65% CP (Series E)/(Tufts University), Mandatory Tender 5/9/1995 VMIG1 5,500,000 ------------------------------------------------------------------------ 4,500,000 Massachusetts IFA Daily VRDNs (Series 1994)/(Showa Women's Institute Boston, Inc.)/(Fuji Bank, Ltd. LOC) VMIG1 4,500,000 ------------------------------------------------------------------------ 300,000 Massachusetts IFA PCR Weekly VRDNs (Series 1992A)/ (Holyoke Water Power Co.)/(Canadian Imperial Bank of Commerce LOC) VMIG1 300,000 ------------------------------------------------------------------------
MASSACHUSETTS MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ------------ ------------------------------------------------------------------------ ----------- -------------- SHORT-TERM MUNICIPAL SECURITIES--CONTINUED - -------------------------------------------------------------------------------------- MASSACHUSETTS--CONTINUED ------------------------------------------------------------------------ $ 1,000,000 Massachusetts IFA Weekly VRDNs (Berkshire School)/ (National Westminster Bank PLC LOC) VMIG1 $ 1,000,000 ------------------------------------------------------------------------ 2,500,000 Massachusetts IFA Weekly VRDNs (Kendall Square, Inc.)/ (National Westminster Bank PLC LOC) A-1+ 2,500,000 ------------------------------------------------------------------------ 1,300,000 Massachusetts IFA Weekly VRDNs (Groton School)/ (National Westminster Bank PLC LOC) VMIG1 1,300,000 ------------------------------------------------------------------------ 1,300,000 Massachusetts IFA Weekly VRDNs (Series 1993B)/(New England Deaconess Association)/(Banque Paribas LOC) A-1 1,300,000 ------------------------------------------------------------------------ 6,000,000 Massachusetts IFA Weekly VRDNs (Series 1995)/(Emerson College Issue)/(Baybanks, Inc. LOC) P-2 6,000,000 ------------------------------------------------------------------------ 925,000 Massachusetts IFA Weekly VRDNs (Series A)/(Hockomock YMCA)/(Westpac Banking Corp. LOC) P-1 925,000 ------------------------------------------------------------------------ 3,000,000 Massachusetts IFA Weekly VRDNs (Series B)/(Williston North Hampton School)/(National Westminster Bank PLC LOC) A-1+ 3,000,000 ------------------------------------------------------------------------ 2,000,000 Massachusetts IFA, 4.20% CP (Series 1993A)/(New England Power Co.), Mandatory Tender 5/31/1995 VMIG1 2,000,000 ------------------------------------------------------------------------ 1,100,000 Massachusetts IFA, 5.25% TOBs (1991 Issue)/(St. Mark's School of Southborough, Inc.)/(Barclays Bank PLC LOC), Mandatory Tender 1/9/1996 VMIG1 1,100,000 ------------------------------------------------------------------------ 2,000,000 Massachusetts State PCR, 4.25% CP (New England Power Co.), Mandatory Tender 7/24/1995 A-1 2,000,000 ------------------------------------------------------------------------ 4,500,000 Massachusetts Municipal Wholesale Electric Company Power Supply System Bonds, Weekly VRDNs (Series 1994C)/(Canadian Imperial Bank of Commerce LOC) A-1+ 4,500,000 ------------------------------------------------------------------------ 1,395,000 Needham, MA, 4.00% BANs, 5/26/1995 NR 1,395,415 ------------------------------------------------------------------------ 3,400,000 New Bedford, MA, 4.75% BANs (Fleet National Bank Guaranty), 8/11/1995 P-1 3,405,926 ------------------------------------------------------------------------ 2,330,000 North Andover, MA, 4.10% BANs, 6/29/1995 NR 2,331,634 ------------------------------------------------------------------------ 2,297,900 North Attleborough, MA, 4.65% BANs, 4/19/1996 NR(3) 2,302,036 ------------------------------------------------------------------------
MASSACHUSETTS MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ------------ ------------------------------------------------------------------------ ----------- -------------- SHORT-TERM MUNICIPAL SECURITIES--CONTINUED - -------------------------------------------------------------------------------------- MASSACHUSETTS--CONTINUED ------------------------------------------------------------------------ $ 2,335,000 Norwood, MA, IDRB 3.90% TOBs (Dash Realty Trust)/(Fleet National Bank LOC), Mandatory Tender 7/1/1995 SP-1 $ 2,335,000 ------------------------------------------------------------------------ 4,550,000 Springfield, MA, 4.75% BANs (Fleet National Bank Guaranty), 8/4/1995 P-1 4,555,131 ------------------------------------------------------------------------ 3,500,000 Springfield, MA, 5.10% RANs (Fleet National Bank Guaranty), 6/30/1995 P-1 3,503,952 ------------------------------------------------------------------------ 2,927,000 Watertown, MA, 4.25% BANs, 10/12/1995 NR(3) 2,928,901 ------------------------------------------------------------------------ -------------- Total 127,580,473 ------------------------------------------------------------------------ -------------- PUERTO RICO--0.9% ------------------------------------------------------------------------ 1,100,000 Puerto Rico Government Development Bank, Weekly VRDNs (Credit Suisse, Zurich and Sumitomo Bank Ltd. LOCs) A-1 1,100,000 ------------------------------------------------------------------------ -------------- TOTAL INVESTMENTS, AT AMORTIZED COST (B) $ 128,680,473 ------------------------------------------------------------------------ --------------
(a) Denotes a restricted security which is subject to restrictions on resale under Federal Securities laws. These securities have been determined to be liquid under criteria established by the Board of Trustees. (b) Also represents cost for federal tax purposes. * See Notes to Portfolio of Investments on page 10. Note: The categories of investments are shown as a percentage of net assets ($127,683,235) at April 30, 1995. MASSACHUSETTS MUNICIPAL CASH TRUST - -------------------------------------------------------------------------------- The following abbreviation(s) are used throughout this portfolio: AMBAC-- American Municipal Bond Assurance Corporation BANs-- Bond Anticipation Notes BPA-- Bond Purchase Agreement CP-- Commercial Paper GO-- General Obligation HEFA-- Health and Education Facilities Authority IDA-- Industrial Development Authority IDRB-- Industrial Development Revenue Bonds IFA-- Industrial Finance Authority LOCs-- Letter(s) of Credit LOC-- Letter of Credit PCR-- Pollution Control Revenue PLC-- Public Limited Company RANs-- Revenue Anticipation Notes TOBs-- Tender Option Bonds VRDNs-- Variable Rate Demand Notes (See Notes which are an integral part of the Financial Statements) MASSACHUSETTS MUNICIPAL CASH TRUST NOTES TO PORTFOLIO OF INVESTMENTS (UNAUDITED) - -------------------------------------------------------------------------------- SHORT-TERM MUNICIPAL OBLIGATION RATINGS STANDARD & POOR'S RATINGS GROUP A S&P note rating reflects the liquidity concerns and market access risks unique to notes. SP-1 Very strong or strong capacity to pay principal and interest. Those issues determined to possess overwhelming safety characteristics will be given a plus (+) designation. SP-2 Satisfactory capacity to pay principal and interest. MOODY'S INVESTORS SERVICE, INC. Moody's short-term ratings are designated Moody's Investment Grade (MIG or VMIG (see below)). The purpose of the MIG or VMIG ratings is to provide investors with a simple system by which the relative investment qualities of short-term obligations may be evaluated. MIG1 This designation denotes best quality. There is present strong protection by established cash flows, superior liquidity support or demonstrated broad-based access to the market for refinancing. MIG2 This designation denotes high quality. Margins of protection are ample although not so large as in the preceding group. VARIABLE RATE DEMAND NOTES (VRDNS) AND TENDER OPTION BONDS (TOBS) RATINGS STANDARD & POOR'S RATINGS GROUP S&P assigns dual ratings to all long-term debt issues that have as part of their provisions a variable rate demand feature. The first rating (long-term rating) addresses the likelihood of repayment of principal and interest when due, and the second rating (short-term rating) describes the demand characteristics. Several examples are AAA/A-1+, AA/A-1+, A/A-1. (The definitions for the long- term and the short-term ratings are provided below.) MOODY'S INVESTORS SERVICE, INC. Short-term ratings on issues with demand features are differentiated by the use of the VMIG symbol to reflect such characteristics as payment upon periodic demand rather than fixed maturity dates and payment relying on external liquidity. In this case, two ratings are usually assigned, (for example, Aaa/VMIG-1); the first representing an evaluation of the degree of risk associated with scheduled principal and interest payments, and the second representing an evaluation of the degree of risk associated with the demand feature. The VMIG rating can be assigned a 1 or 2 designation using the same definitions described above for the MIG rating. COMMERCIAL PAPER (CP) RATINGS STANDARD & POOR'S RATINGS GROUP A S&P commercial paper rating is a current assessment of the likelihood of timely payment of debt having an original maturity of no more than 365 days. A-1 This highest category indicates that the degree of safety regarding timely payment is strong. Those issues determined to possess extremely strong safety characteristics are denoted with a plus (+) sign designation. A-2 Capacity for timely payment on issues with this designation is satisfactory. However, the relative degree of safety is not as high as for issues designated A-1. MOODY'S INVESTORS SERVICE, INC. P-1 Issuers rated PRIME-1 (or related supporting institutions) have a superior capacity for repayment of short-term promissory obligations. PRIME-1 repayment capacity will normally be evidenced by the following characteristics: leading market positions in well established industries, high rates of return on funds employed, conservative capitalization structure with moderate reliance on debt and ample asset protection, broad margins in earning coverage of fixed financial charges and high internal cash generation, well-established access to a range of financial markets and assured sources of alternate liquidity. P-2 Issuers rated PRIME-2 (or related supporting institutions) have a strong capacity for repayment of short-term promissory obligations. This will normally be evidenced by many of the characteristics cited above, but to a lesser degree. Earnings trends and coverage ratios, while sound, will be more subject to variation. Capitalization characteristics, while still appropriate, may be more affected by external conditions. Ample alternate liquidity is maintained. LONG-TERM DEBT RATINGS STANDARD & POOR'S RATINGS GROUP AAA Debt rated "AAA" has the highest rating assigned by S&P. Capacity to pay interest and repay principal is extremely strong. AA Debt rated "AA" has a very strong capacity to pay interest and repay principal and differs from the highest rated issues only in small degree. A Debt rated "A" has a strong capacity to pay interest and repay principal although it is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than debt in higher rated categories. MASSACHUSETTS MUNICIPAL CASH TRUST - -------------------------------------------------------------------------------- BBB Debt rated "BBB" is regarded as having an adequate capacity to pay interest and repay principal. Whereas it normally exhibits adequate protection parameters, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to pay interest and repay principal for debt in this category than in higher rated categories. MOODY'S INVESTORS SERVICE, INC. AAA Bonds that are rated AAA are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as "gilt edged." Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues. AA Bonds that are rated AA are judged to be of high quality by all standards. Together with the AAA group, they comprise what are generally known as high grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in AAA securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long-term risks appear somewhat larger than in AAA securities. A Bonds that are rated A possess many favorable investment attributes and are to be considered as upper medium grade obligations. Factors giving security to principal and interest are considered adequate but elements may be present which suggest a susceptibility to impairment sometime in the future. BAA Bonds that are rated BAA are considered as medium grade obligations, i.e., they are neither highly protected nor poorly secured. Interest payments and principal security appear adequate for the present but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Such bonds lack outstanding investment characteristics and in fact have speculative characteristics as well. NR indicates that both the bonds and the obligor or credit enhancer are not currently rated by S&P or Moody's with respect to short-term indebtedness. However, management considers them to be of comparable quality to securities rated A-1 or P-1. NR(1) The underlying issuer/obligor/guarantor has other outstanding debt rated "AAA" by S&P or "Aaa" by Moody's. NR(2) The underlying issuer/obligor/guarantor has other outstanding debt rated "AA" by S&P or "Aa" Moody's. NR(3) The underlying issuer/obligor/guarantor has other outstanding debt rated "A" by S&P or Moody's. NR(4) The underlying issuer/obligor/guarantor has other outstanding debt rated "BBB" by S&P or "Baa" by Moody's. MASSACHUSETTS MUNICIPAL CASH TRUST STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1995 (UNAUDITED) - -------------------------------------------------------------------------------- ASSETS: - ------------------------------------------------------------------------------------------------- Investments in securities, at amortized cost and value $ 128,680,473 - ------------------------------------------------------------------------------------------------- Cash 364,594 - ------------------------------------------------------------------------------------------------- Income receivable 1,157,083 - ------------------------------------------------------------------------------------------------- Deferred expenses 1,248 - ------------------------------------------------------------------------------------------------- -------------- Total assets 130,203,398 - ------------------------------------------------------------------------------------------------- LIABILITIES: - ------------------------------------------------------------------------------------------------- Payable for investments purchased $ 2,305,004 - ----------------------------------------------------------------------------------- Payable for shares redeemed 1,000 - ----------------------------------------------------------------------------------- Income distribution payable 182,958 - ----------------------------------------------------------------------------------- Accrued expenses 31,201 - ----------------------------------------------------------------------------------- ------------ Total liabilities 2,520,163 - ------------------------------------------------------------------------------------------------- -------------- NET ASSETS for 127,683,235 shares outstanding $ 127,683,235 - ------------------------------------------------------------------------------------------------- -------------- NET ASSET VALUE, Offering Price and Redemption Proceeds Per Share: - ------------------------------------------------------------------------------------------------- INSTITUTIONAL SERVICE SHARES ($87,755,941 / 87,755,941 shares outstanding) $1.00 - ------------------------------------------------------------------------------------------------- -------------- BAYFUNDS SHARES ($39,927,294 / 39,927,294 shares outstanding) $1.00 - ------------------------------------------------------------------------------------------------- --------------
(See Notes which are an integral part of the Financial Statements) MASSACHUSETTS MUNICIPAL CASH TRUST STATEMENT OF OPERATIONS SIX MONTHS ENDED APRIL 30, 1995 (UNAUDITED) - -------------------------------------------------------------------------------- INVESTMENT INCOME: - --------------------------------------------------------------------------------------------------- Interest $ 2,484,342 - --------------------------------------------------------------------------------------------------- EXPENSES: - --------------------------------------------------------------------------------------------------- Investment advisory fee $ 326,619 - --------------------------------------------------------------------------------------- Administrative personnel and services fee 76,864 - --------------------------------------------------------------------------------------- Custodian fees 20,788 - --------------------------------------------------------------------------------------- Transfer agent and dividend disbursing agent fees and expenses 30,301 - --------------------------------------------------------------------------------------- Directors'/Trustees' fees 1,362 - --------------------------------------------------------------------------------------- Auditing fees 8,647 - --------------------------------------------------------------------------------------- Legal fees 6,309 - --------------------------------------------------------------------------------------- Portfolio accounting fees 17,851 - --------------------------------------------------------------------------------------- Shareholder services fee--Institutional Service Shares 56,594 - --------------------------------------------------------------------------------------- Share registration costs 11,000 - --------------------------------------------------------------------------------------- Printing and postage 26,472 - --------------------------------------------------------------------------------------- Insurance premiums 4,466 - --------------------------------------------------------------------------------------- Miscellaneous 6,237 - --------------------------------------------------------------------------------------- ---------- Total expenses 593,510 - --------------------------------------------------------------------------------------- Deduct-- - --------------------------------------------------------------------------------------- Waiver of investment advisory fee $ 166,005 - --------------------------------------------------------------------------- Waiver of shareholder services fee--Institutional Service Shares 56,594 222,599 - --------------------------------------------------------------------------- ---------- ---------- Net expenses 370,911 - --------------------------------------------------------------------------------------------------- ------------ Net investment income $ 2,113,431 - --------------------------------------------------------------------------------------------------- ------------
(See Notes which are an integral part of the Financial Statements) MASSACHUSETTS MUNICIPAL CASH TRUST STATEMENT OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
SIX MONTHS ENDED APRIL 30, YEAR ENDED 1995 OCTOBER 31, (UNAUDITED) 1994 INCREASE (DECREASE) IN NET ASSETS: - ------------------------------------------------------------------------------- OPERATIONS-- - ------------------------------------------------------------------------------- Net investment income $ 2,113,431 $ 2,717,161 - ------------------------------------------------------------------------------- --------------- --------------- DISTRIBUTIONS TO SHAREHOLDERS-- - ------------------------------------------------------------------------------- Distributions from net investment income: - ------------------------------------------------------------------------------- Institutional Service Shares (1,439,688) (2,037,982) - ------------------------------------------------------------------------------- BayFunds Shares (673,743) (679,179) - ------------------------------------------------------------------------------- --------------- --------------- Change in net assets resulting from distributions to shareholders (2,113,431) (2,717,161) - ------------------------------------------------------------------------------- --------------- --------------- SHARE TRANSACTIONS - ------------------------------------------------------------------------------- Proceeds from sale of Shares 176,741,686 349,831,127 - ------------------------------------------------------------------------------- Net asset value of Shares issued to shareholders in payment of distributions declared 1,128,390 1,275,493 - ------------------------------------------------------------------------------- Cost of Shares redeemed (182,111,733) (321,848,920) - ------------------------------------------------------------------------------- --------------- --------------- Change in net assets resulting from Share transactions (4,241,657) 29,257,700 - ------------------------------------------------------------------------------- --------------- --------------- Change in net assets (4,241,657) 29,257,700 - ------------------------------------------------------------------------------- NET ASSETS: - ------------------------------------------------------------------------------- Beginning of period 131,924,892 102,667,192 - ------------------------------------------------------------------------------- --------------- --------------- End of period $ 127,683,235 $ 131,924,892 - ------------------------------------------------------------------------------- --------------- ---------------
(See Notes which are an integral part of the Financial Statements) MASSACHUSETTS MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS--INSTITUTIONAL SERVICE SHARES - -------------------------------------------------------------------------------- (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED APRIL 30, 1995 YEAR ENDED OCTOBER 31, (UNAUDITED) 1994 1993 1992 1991 1990(A) NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 - ---------------------------------------------- INCOME FROM INVESTMENT OPERATIONS - ---------------------------------------------- Net investment income 0.02 0.02 0.02 0.03 0.05 0.03 - ---------------------------------------------- LESS DISTRIBUTIONS - ---------------------------------------------- Distributions from net investment income (0.02) (0.02) (0.02) (0.03) (0.05) (0.03) - ---------------------------------------------- ------- --------- --------- --------- --------- ----------- NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 - ---------------------------------------------- ------- --------- --------- --------- --------- ----------- TOTAL RETURN (B) 1.62% 2.14% 1.99% 2.87% 4.63% 2.59% - ---------------------------------------------- RATIOS TO AVERAGE NET ASSETS - ---------------------------------------------- Expenses 0.55%(c) 0.55% 0.53% 0.34% 0.30% 0.17%(c) - ---------------------------------------------- Net investment income 3.26%(c) 2.12% 1.97% 2.82% 4.48% 5.66%(c) - ---------------------------------------------- Expense waiver/reimbursement (d) 0.38%(c) 0.35% 0.43% 0.55% 0.69% 0.57%(c) - ---------------------------------------------- SUPPLEMENTAL DATA - ---------------------------------------------- Net assets, end of period (000 omitted) $87,756 $90,013 $84,524 $85,570 $81,681 $63,483 - ----------------------------------------------
(a) Reflects operations for the period from May 18, 1990 (date of initial public investment) to October 31, 1990. (b) Based on net asset value, which does not reflect the sales load or contingent deferred sales charge, if applicable. (c) Computed on an annualized basis. (d) This voluntary expense decrease is reflected in both the expense and net investment income ratios shown above. (See Notes which are an integral part of the Financial Statements) MASSACHUSETTS MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS--BAYFUNDS SHARES - -------------------------------------------------------------------------------- (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED APRIL 30, YEAR ENDED 1995 OCTOBER 31, (UNAUDITED) 1994 1993(A) NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 - ------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS - ------------------------------------------------------------------------ Net investment income 0.02 0.02 0.01 - ------------------------------------------------------------------------ LESS DISTRIBUTIONS - ------------------------------------------------------------------------ Distributions from net investment income (0.02) (0.02) (0.01) - ------------------------------------------------------------------------ ------- --------- ----------- NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 - ------------------------------------------------------------------------ ------- --------- ----------- TOTAL RETURN (B) 1.59% 2.05% 1.25% - ------------------------------------------------------------------------ RATIOS TO AVERAGE NET ASSETS - ------------------------------------------------------------------------ Expenses 0.61%(c) 0.64% 0.65%(c) - ------------------------------------------------------------------------ Net investment income 3.19%(c) 2.09% 1.85%(c) - ------------------------------------------------------------------------ Expense waiver/reimbursement (d) 0.25%(c) 0.35% 0.43%(c) - ------------------------------------------------------------------------ SUPPLEMENTAL DATA - ------------------------------------------------------------------------ Net assets, end of period (000 omitted) $39,927 $41,912 $18,143 - ------------------------------------------------------------------------
(a) Reflects operations for the period from March 8, 1993 (date of initial public investment) to October 31, 1993. (b) Based on net asset value, which does not reflect the sales load or contingent deferred sales charge, if applicable. (c) Computed on an annualized basis. (d) This voluntary expense decrease is reflected in both the expense and net investment income ratios shown above. (See Notes which are an integral part of the Financial Statements) MASSACHUSETTS MUNICIPAL CASH TRUST NOTES TO FINANCIAL STATEMENTS APRIL 30, 1995 (UNAUDITED) - -------------------------------------------------------------------------------- (1) ORGANIZATION Federated Municipal Trust (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 thirteen non-diversified portfolios. The financial statements included herein present only those of Massachusetts Municipal Cash Trust (the "Fund"). The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. The Fund offers two classes of shares: Institutional Service Shares and BayFunds Shares. (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. INVESTMENT VALUATIONS--The Fund's use of the amortized cost method to value its portfolio securities is in accordance with Rule 2a-7 under the Act. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses are accrued daily. Bond premium and discount, if applicable, are amortized as required by the Internal Revenue Code, as amended (the "Code"). Distributions to shareholders are recorded on the ex-dividend date. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the Code applicable to regulated investment companies and to distribute to shareholders each year substantially all of its income. Accordingly, no provisions for federal tax are necessary. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in when-issued or delayed delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked to market daily and begin earning interest on the settlement date. CONCENTRATION OF CREDIT RISK--Since the Fund invests a substantial portion of its assets in issuers located in one state, it will be more susceptible to factors adversely affecting issuers of that state than would be a comparable tax-exempt mutual fund that invests nationally. In order to reduce the credit risk associated with such factors, at April 30, 1995, 60.8% of the securities in the portfolio of investments are backed by letters of credit or bond insurance of various financial institutions and financial guaranty assurance agencies. The value of investments insured by or supported (backed) by a letter of credit for any one institution or agency does not exceed 10.7% of total investments. 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 come 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. Additional information on each restricted security held at April 30, 1995 is as follows:
ACQUISITION ACQUISITION SECURITY DATE COST Clipper, MA, Tax Exempt Trust Weekly VRDNs (Series 1993-1)/(State Street Bank and Trust Co. BPA) 1/6/94 $ 4,950,000 Massachusetts Municipal Wholesale Electric Company VRDC Trust, Weekly VRDNs (Series 1993D)/ (AMBAC Insured)/(Hong Kong Shanghai Banking Corp. BPA) 6/11/93 $ 1,800,000
DEFERRED EXPENSES--The costs incurred by the Fund with respect to registration of its shares in its first fiscal year, excluding the initial expense of registering the shares, have been deferred and are being amortized using the straight-line method not to exceed a period of five years from the Fund's commencement date. OTHER--Investment transactions are accounted for on the trade date. (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) for each class of shares. At April 30, 1995, capital paid-in aggregated $127,683,235. Transactions in shares were as follows:
SIX MONTHS ENDED YEAR ENDED APRIL 30, OCTOBER 31, INSTITUTIONAL SERVICE SHARES 1995 1994 - ---------------------------------------------------------------------------------- -------------- -------------- Shares sold 163,420,299 298,784,520 - ---------------------------------------------------------------------------------- Shares issued to shareholders in payment of distributions declared 454,079 594,441 - ---------------------------------------------------------------------------------- Shares redeemed (166,131,823) (293,889,923) - ---------------------------------------------------------------------------------- -------------- -------------- Net change resulting from Institutional Service Shares transactions (2,257,445) 5,489,038 - ---------------------------------------------------------------------------------- -------------- -------------- SIX MONTHS ENDED YEAR ENDED APRIL 30, OCTOBER 31, BAYFUNDS SHARES 1995 1994 - ---------------------------------------------------------------------------------- -------------- -------------- Shares sold 13,321,387 51,046,608 - ---------------------------------------------------------------------------------- Shares issued to shareholders in payment of distributions declared 674,311 681,051 - ---------------------------------------------------------------------------------- Shares redeemed (15,979,910) (27,958,997) - ---------------------------------------------------------------------------------- -------------- -------------- Net change resulting from BayFunds Shares transactions (1,984,212) 23,768,662 - ---------------------------------------------------------------------------------- -------------- -------------- Net change resulting from share transactions (4,241,657) 29,257,700 - ---------------------------------------------------------------------------------- -------------- --------------
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES INVESTMENT ADVISORY FEE--Federated Management, the Fund's investment adviser (the "Adviser"), receives for its services an annual investment advisory fee equal to .50 of 1% of the Fund's average daily net assets. The Adviser may voluntarily choose to waive a 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, provides the Fund with administrative personnel and services. The FAS fee is based on the level of average aggregate daily net assets of all funds advised by subsidiaries of Federated Investors for the period. The administrative fee received during the period of the Administrative Services Agreement shall be at least $125,000 per portfolio and $30,000 per each additional class of shares. SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to .25 of 1% of average daily net assets of the Institutional Service Shares for the period. Under the terms of a Shareholder Services Agreement with BayBank Systems, Inc., the Fund will pay BayBank Systems, Inc. up to .25 of 1% of average daily net assets of the BayFunds Shares for the period. These fees are to obtain certain services for shareholders and to maintain shareholder accounts. For the six months ended April 30, 1995, BayFunds Shares did not incur a Shareholder Services fee. TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated Services Company ("FServ") serves as transfer and dividend disbursing agent for the Fund. This fee is based on the size, type, and number of accounts and transactions made by shareholders. PORTFOLIO ACCOUNTING FEES--FServ also maintains the Fund's accounting records for which it receives a fee. This fee is based on the level of the Fund's average daily net assets for the period, plus out-of-pocket expenses. ORGANIZATIONAL EXPENSES--Organizational expenses of $44,840 and start-up administrative service expenses of $43,014 were initially borne by the Adviser. The Fund has agreed to reimburse the Adviser at an annual rate of .005 of 1% and .01% of 1% of average daily net assets for the organizational and start-up administrative expenses, respectively, until expenses initially borne by the Adviser are fully reimbursed or the expiration of five years after May 18, 1990 (the date the Fund became effective), whichever occurs earlier. For the period ended April 30, 1995, the Fund paid $3,311 and $4,291, respectively, pursuant to this agreement. During the period, the Fund completed its obligation for start-up administrative expenses pursuant to this agreement. INTERFUND TRANSACTIONS--During the six-months ended April 30, 1995, the Fund engaged in purchase and sale transactions with funds that have a common investment adviser (or affiliated advisers), common Directors/Trustees, and/or common Officers. These transactions were made at current market value pursuant to Rule 17a-7 under the Act amounting to $74,300,000 and $94,050,000, respectively. GENERAL--Certain of the Officers and Trustees of the Trust are Officers and Directors or Trustees of the above companies. TRUSTEES OFFICERS - -------------------------------------------------------------------------------- John F. Donahue John F. Donahue Thomas G. Bigley Chairman John T. Conroy, Jr. Glen R. Johnson William J. Copeland President James E. Dowd J. Christopher Donahue Lawrence D. Ellis, M.D. Vice President Edward L. Flaherty, Jr. Richard B. Fisher Glen R. Johnson Vice President Peter E. Madden Edward C. Gonzales Gregor F. Meyer Vice President and Treasurer John E. Murray, Jr. John W. McGonigle Wesley W. Posvar Vice President and Secretary Marjorie P. Smuts David M. Taylor Assistant Treasurer G. Andrew Bonnewell Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any bank, and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other governmental agency. Investment in mutual funds involves investment risk, including possible loss of principal. Although money market funds seek to maintain a stable net asset value of $1.00 per share, there is no assurance that they will be able to do so. This report is authorized for distribution to prospective investors only when preceded or accompanied by the fund's prospectuses which contain facts concerning its objective and policies, management fees, expenses and other information. -----END PRIVACY-ENHANCED MESSAGE-----