-----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, da5opdVuRsw2NpTYm0NmgLeujfOuvK1eIjRSW4ExL8g9HpgvIjEPidS003gPR1D+ hzRYOhMbH1C/QJlNkLERrQ== 0000855108-94-000035.txt : 19941201 0000855108-94-000035.hdr.sgml : 19941201 ACCESSION NUMBER: 0000855108-94-000035 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940930 FILED AS OF DATE: 19941130 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: 94562671 BUSINESS ADDRESS: STREET 1: FEDERATED INVESTORS TOWER CITY: PITTSBURGH STATE: PA ZIP: 15222 BUSINESS PHONE: 4122887496 N-30D 1 CALIFORNIA MUNICIPAL CASH TRUST ANNUAL REPORT TO SHAREHOLDERS SEPTEMBER 30, 1994 FEDERATED SECURITIES CORP. Distributor A subsidiary of FEDERATED INVESTORS FEDERATED INVESTORS TOWER PITTSBURGH, PA 15222-3779 130482102 G00655-01 (11/94) PRESIDENT'S MESSAGE - -------------------------------------------------------------------------------- Dear Shareholder: I am pleased to present the Annual Report to Shareholders for California Municipal Cash Trust (the "Fund"), a portfolio of Federated Municipal Trust, which covers the 12-month period ended September 30, 1994. The report begins with an interview with portfolio manager Mary Jo Ochson about economic factors affecting the Fund, followed by the Fund's Portfolio of Investments and Financial Statements. The Fund gives California residents two ways to pursue tax-free income--its earnings are free of federal regular income tax and California personal income tax.* Its portfolio is diversified among high quality, short-term California municipal securities of more than 30 issuers that use municipal bond financing for projects as varied as housing, industrial development, education, and health care. Over the 12-month Report period, the Fund paid shareholders a total of $1.9 million in dividends, or $0.02 per share. At the end of the Report period, the Fund's net assets stood at $74.7 million. As a wise investor, you can count on the Fund to ease your tax burden by pursuing competitive tax-free yields--with the additional advantages of daily liquidity and stability of principal.** Thank you for your confidence in California Municipal Cash Trust. We welcome your comments and suggestions. Sincerely, Glen R. Johnson President November 15, 1994 * Income may be subject to the federal alternative minimum tax. ** As a money market mutual fund, the Fund is managed to pursue a stable share price of $1.00, although there is no guarantee that it will do so. An investment in the Fund is neither insured nor guaranteed by the U.S. government. INVESTMENT REVIEW - -------------------------------------------------------------------------------- An Interview with the Fund's Portfolio Manager Mary Jo Ochson Q What happened to short-term interest rates over the period covered by this Annual Report? A There was a dramatic shift in the monetary policy of the Federal Reserve Board (the "Fed") during the 12-month reporting period that ended September 30, 1994. Throughout the fourth quarter of 1993, the Fed seemed content to keep the federal funds rate (the rate banks charge each other for overnight loans) steady at 3.00%, where it had been for a year and a half. The Fed maintained short-term interest rates at these low levels in order to stimulate the economy. However, in early 1994 reports began to appear showing stronger-than-anticipated economic growth. Real gross national product grew at a 7% annual rate in the fourth quarter of 1993, with the national unemployment rate declining to 6%. Concerned that these factors could lead to an increase in wages and prices, the Fed took steps on February 4, 1994, to fight future inflation by raising its target federal funds rate to 3.25%. Since then, the federal funds rate has been increased five more times, moving the target from 3.25% to 5.5%. Q How did municipal money market yields--and the Fund's yield--react to these rate increases? A Municipal money market interest rates followed the upward movement in taxable rates, but to a slightly lesser degree, as they are more affected by supply and demand imbalances. Naturally, the Fund's yields increased in response to increased money market rates. The Fund's conservative average maturities and high percentage in variable rate demand securities--which automatically reset to current market levels--also helped to accelerate its adjustment to higher market rates. For the 12-month reporting period ended September 30, 1994, the Fund's annualized seven-day net yield increased from 2.33% to 2.88%.* For a California investor in the highest federal and state income tax brackets, the seven-day net yield on September 30, 1994, was equivalent to a taxable yield of 5.36%. This number illustrates the Fund's attractiveness to California investors relative to comparable taxable investment opportunities. * Performance quoted represents past performance and is not indicative of future results. Yield will vary. - -------------------------------------------------------------------------------- Q In this rising rate atmosphere, did you make any strategic changes to the Fund's portfolio? A In September 1993, the Fund's average maturity was 60 days, reflecting a neutral interest rate outlook. Starting when the Fed initiated the first move in early February, I let the average maturity roll down slowly to a low of 35 days in mid-April. Beginning in June, when California local governments came to market to issue their annual cash management notes, we extended the average maturity back into the 50-to-60-day range because of attractive yield opportunities on these fixed-rate notes. At the end of September, the Fund's average maturity remained in this range, but is likely to shorten further as I remain more bearish on the direction of interest rates. Q What is your outlook for the markets and the Fund? A The economy continues to show surprising resilience to the Fed's attempts to bring growth under control. I believe the Fed is likely to raise the federal funds rate target another .25% in the first quarter of 1995. At that point, the federal funds rate target would be about 5.75%. In this environment, stable net asset value money market funds like the Fund will continue to be an important component in preserving capital, while attempting to return a more competitive yield. Q Economic data suggest California's economy is slowly emerging from the recession. In July, however, Moody's Investors Service, Inc. ("Moody's"), Standard & Poor's Ratings Group ("S&P"), and Fitch Investors Service, Inc. downgraded the State's general obligation debt to an "A1," "A," and "A" rating, respectively. Would you please comment on this rating action? A California continues to experience ongoing budgetary problems, and even strong economic growth is not likely to bail out the state government the way it did in the early 1980s. California's budgetary problems are structural, which will complicate any of the State's efforts to restore finances. This factor and California's growing reliance on the short-term market to finance its cash imbalance are why the State was downgraded. California's two-year budget plan defers budget balancing actions into Fiscal Year 1995-96 and relies on overly optimistic revenue projections. Additionally, the budget is being increasingly dominated by mandated spending for long-established state programs such as low-cost public higher education and generous welfare and health benefits. Structural reform to California's fiscal system will be necessary to restore the stability it once held. Two fundamental changes that need to be implemented are budget reforms that would give elected officials greater discretion in setting spending priorities and a reduction in mandated spending. - -------------------------------------------------------------------------------- Q Recently, there has been a lot of concern as well as news coverage about the subject of derivatives. What are derivatives? A The term "derivative" has been applied to many different types of investments. In the context of money market funds, derivatives generally refer to adjustable rate securities designed for speculation on changes in interest rates. These speculative derivatives provide above-market yields when interest rates fall or remain stable, or when the yield curve is steep. They provide below-market yields, however, when interest rates rise or become more volatile, or when the yield curve flattens. All three of these conditions occurred in 1994. As a result, many of these speculative securities lost a significant part of their value, enough to threaten the $1 per share price of some money market funds. It's important to distinguish these speculative derivatives from adjustable rate securities that are indexed to money market interest rates. These indexed securities are designed to track changes in market rates, and should approximate their par value in all reasonably foreseeable market conditions. Tax-exempt money market funds like the Fund have the right to tender these securities for purchase at their par value. Money market funds have used these securities for decades, through several interest rate cycles, without jeopardizing their stable net asset values. Q Do Federated Investors' money market funds invest in the derivatives that have been in the headlines recently? A No. None of Federated Investors' money market funds have invested in any of the types of derivatives that have been in the headlines lately. Our mutual funds only invest in adjustable rate securities that track changes in money market interest rates. With respect to speculative derivatives, we determined from the outset that the potential volatility of these securities was contrary to the intent of the rules governing the use of variable rate securities by money market funds. We also realized the potential for these securities to deviate significantly from par and threaten the $1 per share price of a money market fund. We spoke out against the use of these securities by money market funds at industry conferences throughout 1993, when the securities still offered attractive yields. Our views were vindicated when, in June 1994, the Securities and Exchange Commission sent a letter to the Investment Company Institute requiring money market funds to divest themselves of these securities in an orderly manner. This caused some investment advisers to buy these securities from their funds. CALIFORNIA MUNICIPAL CASH TRUST PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1994 - --------------------------------------------------------------------------------
CREDIT RATING: PRINCIPAL MOODY'S AMOUNT OR S&P* VALUE - ---------- ------------------------------------------------------ -------- ----------- SHORT-TERM MUNICIPAL SECURITIES--99.3% - ------------------------------------------------------------------------- $1,980,000 California Health Facilities Authority Weekly VRDNs (O'Connor Hospital and St. Vincent's Medical Center, Inc.)/(Daughters of Charity Health System Guaranty) VMIG1 $ 1,980,000 ------------------------------------------------------ 200,000 California Health Facilities Authority Weekly VRDNs (Santa Barbara Hospital)/(Credit Suisse LOC) VMIG1 200,000 ------------------------------------------------------ 1,200,000 California Health Facilities Finance Authority Weekly VRDNs (Pooled Loan Program)/(FGIC Insured) VMIG1 1,200,000 ------------------------------------------------------ 2,000,000 California HFA Multi-Unit Rental Housing, 3.40% Semi- Annual TOBs (MBIA Insured)/(Citibank BPA), Optional Tender 11/1/94 NR(1) 2,000,000 ------------------------------------------------------ 3,000,000 California Pollution Control Finance Authority, 3.45% CP (Pacific Gas & Electric Co.)/(Morgan Guaranty Trust Co. LOC), Mandatory Tender 10/24/94 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), 6/28/95 MIG1 3,013,892 ------------------------------------------------------ 2,000,000 California State, 5.00% RANs (Series A), 6/28/95 SP-1+ 2,011,604 ------------------------------------------------------ 4,000,000 California State, Monthly VRNs (Series C), 6/28/95 SP-1+ 4,000,000 ------------------------------------------------------ 5,000,000 (a) California VRDCs/IVRCs Trust (Series 1994C) Weekly VRDNs/(Regents of the University of California)/ (AMBAC Insured) A-1 5,000,000 ------------------------------------------------------ 1,000,000 Golden Empire Schools Financing Authority Weekly VRDNs (Kern High School District)/(Barclays Bank PLC LOC) VMIG1 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 ------------------------------------------------------
CALIFORNIA MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
CREDIT RATING: PRINCIPAL MOODY'S AMOUNT OR S&P* VALUE - ---------- ------------------------------------------------------ -------- ----------- SHORT-TERM MUNICIPAL SECURITIES--CONTINUED - ------------------------------------------------------------------------- $1,600,000 Irvine, CA, Public Facilities and Infrastructure Authority Weekly VRDNs (Capital Improvements Program)/ (National Westminster Bank PLC LOC) A-1+ $ 1,600,000 ------------------------------------------------------ 900,000 Kern Community College District, CA, Weekly VRDNs (Swiss Bank Corp. LOC) VMIG1 900,000 ------------------------------------------------------ 1,500,000 Kern County, CA, Public Facility Corp. Weekly VRDNs (Sanwa Bank Ltd. LOC) VMIG1 1,500,000 ------------------------------------------------------ 3,000,000 Los Angeles County, CA, Transportation Commission, 3.40% 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 10/21/94 A-1+ 3,000,000 ------------------------------------------------------ 1,000,000 Los Angeles, CA, IDA Weekly VRDNs (Series 1985A)/ (Mediatech)/(Chemical Bank LOC) P-1 1,000,000 ------------------------------------------------------ 3,000,000 Los Angeles, CA, Wastewater System, 3.30% CP, Mandatory Tender 12/15/94 A-1+ 3,000,000 ------------------------------------------------------ 2,750,000 Metropolitan Water District, CA, 3.45% CP (Southern California District), Mandatory Tender 12/21/94 A-1+ 2,750,000 ------------------------------------------------------ 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, Monthly VRNs (Series B) SP-1+ 4,000,000 ------------------------------------------------------ 1,800,000 Orange County, CA, IDA Weekly VRDNs (Hon Development Corp.)/(Series 1985B--Niguel Summit II)/(Bank of America NT&SA LOC) VMIG1 1,800,000 ------------------------------------------------------ 1,900,000 Orange County, CA, IDA Weekly VRDNs (Series 1991A)/ (Apartment Development The Lakes)/(Citibank N.A. LOC) A-1 1,900,000 ------------------------------------------------------
CALIFORNIA MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
CREDIT RATING: PRINCIPAL MOODY'S AMOUNT OR S&P* VALUE - ---------- ------------------------------------------------------ -------- ----------- SHORT-TERM MUNICIPAL SECURITIES--CONTINUED - ------------------------------------------------------------------------- $1,900,000 Orange County, CA, Municipal Water District Water Facilities COPs Weekly VRDNs (Series B)/ (Allen-McColloch Pipeline, Inc.)/(National Westminster Bank PLC LOC) A-1+ $ 1,900,000 ------------------------------------------------------ 1,000,000 Placerville, CA, 4.25% TRANs, 6/30/95 SP-1+ 1,000,716 ------------------------------------------------------ 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, 7/31/95 SP-1+ 4,019,063 ------------------------------------------------------ 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 ------------------------------------------------------ 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 ------------------------------------------------------ 900,000 Santa Clara County-El Comino Hospital District, CA, Weekly VRDNs (Valley Medical Center)/(National Westminster Bank LOC) A-1+ 900,000 ------------------------------------------------------ 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, 6/30/95 SP-1 1,400,493 ------------------------------------------------------ 1,000,000 Solano County, CA, 3.25% TRANs, 11/1/94 SP-1+ 1,000,413 ------------------------------------------------------
CALIFORNIA MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
CREDIT RATING: PRINCIPAL MOODY'S AMOUNT OR S&P* VALUE - ---------- ------------------------------------------------------ -------- ----------- SHORT-TERM MUNICIPAL SECURITIES--CONTINUED - ------------------------------------------------------------------------- $ 885,000 Stockton, CA, IDR Refunding Weekly VRDNs (Series 1993)/(La Quinte Motor Inns, Inc.)/(Nationsbank of Texas N.A. LOC) P-1 $ 885,000 ------------------------------------------------------ 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, 3.40% CP (Municipal Water District)/(Toronto Dominion Bank BPA), Mandatory Tender 11/28/94 A-1+ 3,000,000 ------------------------------------------------------ 3,000,000 Yuba, CA, Community College District, 3.00% TRANs, 12/7/94 MIG1 3,001,872 ------------------------------------------------------ ----------- TOTAL INVESTMENTS, AT AMORTIZED COST $74,163,053+ ------------------------------------------------------ -----------
(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. + 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 ($74,707,347) at September 30, 1994. CALIFORNIA MUNICIPAL CASH TRUST - -------------------------------------------------------------------------------- The following abbreviations are used in this portfolio: AMBAC -- American Municipal Bond Assurance Corporation BPA -- Bond Purchase Agreement COPs -- Certificates of Participation CP -- Commercial Paper FGIC -- Financial Guaranty Insurance Company HFA -- Housing Finance Authority/Agency IDA -- Industrial Development Authority IDR -- Industrial Development Revenue LOC -- Letter of Credit LOCs -- Letters of Credit MBIA -- Municipal Bond Investors Assurance PLC -- Public Limited Company RANs -- Revenue Anticipation Notes TOBs -- Tender Option Bonds TRANs -- Tax and Revenue Anticipation Notes VRDCs/IVRCs -- Variable Rate Demand Certificates/Inverse Variable Rate Certificates 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 S&P A Standard & Poor's 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 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 S&P Standard & Poor's 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 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 S&P A Standard & Poor's 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 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 S&P 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 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 SEPTEMBER 30, 1994 - -------------------------------------------------------------------------------- ASSETS: - -------------------------------------------------------------------------------- Investments, at amortized cost and value $74,163,053 - -------------------------------------------------------------------------------- Cash 330,509 - -------------------------------------------------------------------------------- Interest receivable 347,207 - -------------------------------------------------------------------------------- Receivable from adviser 36,500 - -------------------------------------------------------------------------------- Receivable for Fund shares sold 310 - -------------------------------------------------------------------------------- ----------- Total assets 74,877,579 - -------------------------------------------------------------------------------- LIABILITIES: - -------------------------------------------------------------------------------- Dividends payable $141,678 - --------------------------------------------------------------------- Payable for Fund shares redeemed 2,220 - --------------------------------------------------------------------- Accrued expenses 26,334 - --------------------------------------------------------------------- -------- Total liabilities 170,232 - -------------------------------------------------------------------------------- ----------- NET ASSETS for 74,707,347 shares of beneficial interest outstanding $74,707,347 - -------------------------------------------------------------------------------- ----------- NET ASSET VALUE, Offering Price, and Redemption Proceeds Per Share: ($74,707,347 / 74,707,347 shares of beneficial interest outstanding) $1.00 - -------------------------------------------------------------------------------- -----------
(See Notes which are an integral part of the Financial Statements) CALIFORNIA MUNICIPAL CASH TRUST STATEMENT OF OPERATIONS YEAR ENDED SEPTEMBER 30, 1994 - -------------------------------------------------------------------------------- INVESTMENT INCOME: - --------------------------------------------------------------------------------- Interest income $2,453,713 - --------------------------------------------------------------------------------- EXPENSES: - --------------------------------------------------------------------------------- Investment advisory fee $469,163 - ---------------------------------------------------------------------- Trustees' fees 9,277 - ---------------------------------------------------------------------- Administrative personnel and services 178,552 - ---------------------------------------------------------------------- Custodian and portfolio accounting fees 61,140 - ---------------------------------------------------------------------- Transfer and dividend disbursing agent fees and expenses 25,339 - ---------------------------------------------------------------------- Fund share registration costs 20,632 - ---------------------------------------------------------------------- Auditing fees 19,760 - ---------------------------------------------------------------------- Legal fees 22,741 - ---------------------------------------------------------------------- Printing and postage 22,548 - ---------------------------------------------------------------------- Insurance premiums 6,782 - ---------------------------------------------------------------------- Shareholder services fee 74,107 - ---------------------------------------------------------------------- Miscellaneous 8,568 - ---------------------------------------------------------------------- -------- Total expenses 918,609 - ---------------------------------------------------------------------- Deduct--Waiver of investment advisory fee 370,160 - ---------------------------------------------------------------------- -------- Net expenses 548,449 - --------------------------------------------------------------------------------- ---------- Net investment income $1,905,264 - --------------------------------------------------------------------------------- ----------
(See Notes which are an integral part of the Financial Statements) CALIFORNIA MUNICIPAL CASH TRUST STATEMENT OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30, ------------------------------ 1994 1993 ------------- ------------- INCREASE (DECREASE) IN NET ASSETS: - --------------------------------------------------------------- OPERATIONS-- - --------------------------------------------------------------- Net investment income $ 1,905,264 $ 2,163,015 - --------------------------------------------------------------- ------------- ------------- DISTRIBUTIONS TO SHAREHOLDERS-- - --------------------------------------------------------------- Dividends to shareholders from net investment income (1,905,264) (2,163,015) - --------------------------------------------------------------- ------------- ------------- FUND SHARE (PRINCIPAL) TRANSACTIONS-- - --------------------------------------------------------------- Proceeds from sale of shares 362,061,495 446,459,618 - --------------------------------------------------------------- Net asset value of shares issued to shareholders in payment of dividends declared 324,591 279,614 - --------------------------------------------------------------- Cost of shares redeemed (392,000,668) (402,126,423) - --------------------------------------------------------------- ------------- ------------- Change in net assets from Fund share transactions (29,614,582) 44,612,809 - --------------------------------------------------------------- ------------- ------------- Change in net assets (29,614,582) 44,612,809 - --------------------------------------------------------------- NET ASSETS: - --------------------------------------------------------------- Beginning of period 104,321,929 59,709,120 - --------------------------------------------------------------- ------------- ------------- End of period $ 74,707,347 $ 104,321,929 - --------------------------------------------------------------- ------------- -------------
(See Notes which are an integral part of the Financial Statements) CALIFORNIA MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
YEAR ENDED SEPTEMBER 30, ----------------------------------------------------------------- 1994 1993 1992 1991 1990 1989* - ------------------------------------ ----- ----- ----- ----- ----- ----- 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 0.03 0.04 0.05 0.03 - ------------------------------------ ----- ----- ----- ----- ----- ----- LESS DISTRIBUTIONS - ------------------------------------ Dividends to shareholders from net investment income (0.02) (0.02) (0.03) (0.04) (0.05) (0.03) - ------------------------------------ ----- ----- ----- ----- ----- ----- NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 - ------------------------------------ ----- ----- ----- ----- ----- ----- TOTAL RETURN** 2.07% 2.03% 2.83% 4.30% 5.38% 2.95% - ------------------------------------ RATIOS TO AVERAGE NET ASSETS - ------------------------------------ Expenses 0.58% 0.54% 0.45% 0.35% 0.38% 0.40%(a) - ------------------------------------ Net investment income 2.03% 2.00% 2.76% 4.19% 5.27% 5.86%(a) - ------------------------------------ Expense waiver/reimbursement (b) 0.40% 0.35% 0.58% 0.75% 0.86% 0.89%(a) - ------------------------------------ SUPPLEMENTAL DATA - ------------------------------------ Net assets, end of period (000 omitted) $74,707 $104,322 $59,709 $56,754 $50,391 $36,628 - ------------------------------------
* Reflects operations for the period from March 15, 1989 (date of initial public offering) to September 30, 1989. ** Based on net asset value, which does not reflect the sales load or contingent deferred sales charge, if applicable. (a) Computed on an annualized basis. (b) This voluntary expense decrease is reflected in both the expense and net investment income ratios shown above. (See Notes which are an integral part of the Financial Statements) CALIFORNIA MUNICIPAL CASH TRUST NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1994 - -------------------------------------------------------------------------------- (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. A. 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. B. 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. C. 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 tax-exempt income. Accordingly, no provisions for federal tax are necessary. D. 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. E. 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 general tax-exempt mutual fund. In order to reduce the credit risk associated with such factors, at September 30, 1994, 64.7% 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 did not exceed 6.7% of total investments. CALIFORNIA MUNICIPAL CASH TRUST - -------------------------------------------------------------------------------- F. 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 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 September 30, 1994 is as follows:
ACQUISITION ACQUISITION SECURITY DATE COST ------------------------------------------------------------- ----------- ----------- California VRDCs/IVRCs Trust (Series 1994C) Weekly VRDNs 2/22/94 $5,000,000
G. 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 September 30, 1994, capital paid-in aggregated $74,707,347. Transactions in Fund shares were as follows:
YEAR ENDED SEPTEMBER 30, ----------------------------- 1994 1993 - --------------------------------------------------------------- ------------ ------------ Shares sold 362,061,495 446,459,618 - --------------------------------------------------------------- Shares issued to shareholders in payment of dividends declared 324,591 279,614 - --------------------------------------------------------------- Shares redeemed (392,000,668) (402,126,423) - --------------------------------------------------------------- ------------ ------------ Net change resulting from Fund share transactions (29,614,582) 44,612,809 - --------------------------------------------------------------- ------------ ------------
(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") provides the Fund administrative personnel and services. Prior to March 1, 1994, these services were provided at approximate cost. Effective March 1, 1994, 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. CALIFORNIA MUNICIPAL CASH TRUST - -------------------------------------------------------------------------------- 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 AND DIVIDEND DISBURSING AGENT FEES--Federated Services Company ("FServ") serves as transfer and dividend disbursing agent for the Fund. The FServ fee is based on the size, type and number of accounts and transactions made by shareholders. 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 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 statement first became effective, whichever occurs earlier. For the year ended September 30, 1994, the Fund paid the Adviser $2,492 pursuant to this agreement. INTERFUND TRANSACTIONS--During the year ended September 30, 1994, the Fund engaged in purchase and sale transactions with other affiliated funds pursuant to Rule 17a-7 under the Act amounting to $178,300,000 and $207,670,000, respectively. These purchases and sales were conducted on an arms length basis and transacted for cash consideration only, at independent current market prices, and without brokerage commissions, fees, or other remuneration. Certain of the Officers and Trustees of the Fund are Officers and Directors or Trustees of the above companies. REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS - -------------------------------------------------------------------------------- To the Shareholders and Board of Trustees of Federated Municipal Trust (California Municipal Cash Trust): We have audited the accompanying statement of assets and liabilities of California Municipal Cash Trust (an investment portfolio of Federated Municipal Trust, a Massachusetts business trust), including the schedule of portfolio investments, as of September 30, 1994, and the related statements of operations, changes in net assets, and the financial highlights for the year then ended. These financial statements and financial highlights are the responsibility of the Trust's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audit. The financial statements referred to above for California Municipal Cash Trust as of September 30, 1993, as well as the financial highlights for the periods ended September 30, 1989, through September 30, 1993, were audited by other auditors whose report dated November 12, 1993, expressed an unqualified opinion on those statements and financial highlights. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform our audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of September 30, 1994, by correspondence with the custodian. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of California Municipal Cash Trust, an investment portfolio of Federated Municipal Trust, as of September 30, 1994, the results of its operations, changes in its net assets and the financial highlights for the year then ended, in conformity with generally accepted accounting principles. ARTHUR ANDERSEN LLP Pittsburgh, Pennsylvania November 8, 1994 TRUSTEES OFFICERS - --------------------------------------------------------------------------------------------- John F. Donahue John F. Donahue John T. Conroy, Jr. Chairman William J. Copeland Glen R. Johnson James E. Dowd President Lawrence D. Ellis, M.D. J. Christopher Donahue Edward L. Flaherty, Jr. Vice President Glen R. Johnson Richard B. Fisher Peter E. Madden Vice President Gregor F. Meyer Edward C. Gonzales Wesley W. Posvar Vice President and Treasurer Marjorie P. Smuts John W. McGonigle Vice President and Secretary John A. Staley, IV Vice President 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. -----END PRIVACY-ENHANCED MESSAGE-----