-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RF9RDj0A7JCHlFRhv4db8taXDpD5hwkNw0k/D82ybO4F0F5ijrHT7f6OxgFgJAIp XIrqG7Oitfw/XYfs5lMp0w== 0000855108-96-000027.txt : 19960705 0000855108-96-000027.hdr.sgml : 19960705 ACCESSION NUMBER: 0000855108-96-000027 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960430 FILED AS OF DATE: 19960703 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: 96590779 BUSINESS ADDRESS: STREET 1: FEDERATED INVESTORS TOWER CITY: PITTSBURGH STATE: PA ZIP: 15222 BUSINESS PHONE: 4122887496 N-30D 1 PRESIDENT'S MESSAGE Dear Shareholder: I am pleased to present your Semi-Annual Report to Shareholders of Alabama Municipal Cash Trust, a portfolio of Federated Municipal Trust, which covers the six-month period from November 1, 1995 through April 30, 1996. The report begins with a discussion with the fund's portfolio manager, followed by a complete listing of the fund's holdings and its financial statements. The fund is a convenient way to put your ready cash to work pursuing double- tax-free income - free from federal regular income tax and Alabama personal income tax* - through a portfolio concentrated in high-quality, short-term Alabama municipal securities. As a shareholder, you have the opportunity to earn a greater after-tax yield than you could in a comparable high-quality taxable investment. Of course, the fund also brings you the added benefits of daily liquidity and stability of principal.** During the report period, the fund paid double-tax-free dividends of $0.02 per share. Its total net assets of $192.1 million were spread among Alabama securities that use municipal bond financing for projects as varied as health care, housing, community development, and transportation. You can count on Alabama Municipal Cash Trust to seek the best tax-free income opportunities for your cash. As always, we will strive to provide you with the highest level of professional service. We appreciate your support and invite your questions or comments. Sincerely, Glen R. Johnson President June 15, 1996 * Income may be subject to the federal alternative minimum tax. ** 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. An investment in the fund is neither insured nor guaranteed by the U.S. government. INVESTMENT REVIEW An Interview with Fund Portfolio Manager, Jeff A. Kozemchak, C.F.A. Q Can you comment on the economy and the interest rate environment during the semi-annual reporting period? A The Federal Reserve Board (the "Fed") eased monetary policy twice over the six-month reporting period ending in April. Faced with slowing economic growth and benign inflationary pressures, the Fed lowered the federal funds target rate from 5.75% to 5.50% in late December 1995, and again from 5.50% to the current 5.25% at the end of January 1996. For the December 1995 move, the Fed cited a better-than-expected inflation outlook as the impetus behind the easing, although a sluggish manufacturing sector and lackluster consumer spending was thought to have had an influence. In January 1996, the Fed appeared swayed by the dampening effects of high debt loads and employment uncertainty on consumer consumption along with sluggish export growth. Through this period, the short-end of the government and municipal yield curves anticipated the policy moves from the Fed, and amid signs of a weakening economy looked forward to additional eases in the not too distant future. February and March of 1996, however, brought about a shift in market psychology regarding both the extent and direction of changes in monetary policy by the Fed. Recovering from the harsh winter weather and spurred onward by lower interest rates, the housing market and consumer spending breathed some life into the economy, which had seemed on the verge of recession earlier in the year. The market was then stunned in early March 1996 by the report of a 705,000 increase in non-farm payroll jobs for February 1996 - the largest increase in 12 years - which caused the yields on short-term securities to rise by as much as 25 basis points. Now confronted with a more robust economy than previously thought, market participants have moved expectations toward a more neutral policy from the Fed in the near term with a possible tightening, or increase in rates, later in 1996. Yields on short-term government securities reflected this rather volatile mood in the markets. The yield on the three-month Treasury bill began November 1995 at 5.48%, declined to 4.89% by mid-February 1996, and ended April 1996 at 5.14%. Correspondingly, the yield on the one-year Treasury bill began November 1995 at 5.46%, fell to 4.79% in mid-February 1996, but rose to 5.62% by the end of April 1996. Q How has the fund's yield responded to this interest rate environment? A The fund's yield was affected by Fed policy (interest rate cuts), changes in market expectations, as well as supply and demand imbalances unique to the municipal money markets. However, because of these imbalances, the fund's yield may experience more volatility on a weekly basis than Treasury yields and taxable money fund yields. In general, yields on municipal money market funds were lower over the period. For the fund, the seven-day net yield on April 30, 1996 was 3.48% compared to 3.54% six months ago.* * Past performance does not guarantee future results. Yield will vary. Q What was your strategy for managing the fund over the semi-annual reporting period? A The fund started the reporting period with an average maturity of 50 days, which is considered neutral. Because of the lack of readily available fixed- rate notes and bonds in Alabama, and the change in sentiment regarding the direction of interest rates, we allowed the average maturity to roll inward over the period to a low of approximately 30 days in early April 1996. At the end of the period, the average maturity was 38 days, reflecting our assessment of more neutral to restrictive Fed policy for the balance of 1996. Q What is your outlook for the near future? A With growth of 2.3% in the first quarter of 1996, the economy appears to be on firmer footing than it was in the fourth quarter of 1995, when gross domestic product grew at only 0.5%. As a result, the Fed should not feel the urgency to lower short-term rates further. By the same token, however, with areas of softness in the economy still evident and with consumer indebtedness at very high levels, there also appears to be no danger of the economy overheating in the near term. As long as inflation remains benign, the Fed should be content to sit on the sidelines until confronted with signs of undue strength or considerable weakness in economic growth. The average maturity of the fund will continue to be managed in accordance with our expectation for a stable monetary policy in the near term. Nevertheless, opportunities for average maturity extension will arise as the supply of fixed-rate notes in the municipal market increases significantly in June and July of 1996. This spike in supply may present opportunities to "lock-in" yields which are attractive relative to comparable maturity taxable securities. As a result, we expect the average maturity of the fund to be slightly longer throughout the summer months. ALABAMA MUNICIPAL CASH TRUST PORTFOLIO OF INVESTMENTS APRIL 30, 1996 (UNAUDITED)
PRINCIPAL CREDIT AMOUNT RATING* VALUE SHORT-TERM MUNICIPALS-99.5% ALABAMA-99.0% $ 865,000 Alabama Industrial Access Road and Bridge Corp., Capital Improvement Bonds (Series 1995), 3.70% Bonds, 6/1/1996 A1 $ 865,000 3,000,000 Alabama State IDA Weekly VRDNs (Columbus Mills Inc. Project)/(SunTrust Bank, Atlanta LOC) P-1 3,000,000 6,750,000 Alabama State IDA Weekly VRDNs (Pine City Fiber Co.)/(Barclays Bank PLC, London LOC) VMIG1 6,750,000 3,970,000 Alabama State IDA, IDRB (Series 1994) Weekly VRDNs (Decatur Aluminum Corp.)/(Star Bank, NA, Cincinnati LOC) P-1 3,970,000 1,800,000 Alabama State IDA, IDRB Weekly VRDNs (Monarch Tile, Inc. Project)/(Nationsbank of Texas, NA LOC) P-1 1,800,000 3,350,000 Alabama State IDA, Industrial Revenue Bonds Weekly VRDNs (Kappler USA, Inc. Project)/(National Bank of Canada, Montreal LOC) P-1 3,350,000 5,600,000 Alabama State IDA, Revenue Bonds Weekly VRDNs (Southern Bag Corporation, Ltd.)/(SouthTrust Bank of Alabama, Birmingham LOC) P-1 5,600,000 1,245,000 Alabama State Public School & College Authority, Capital Improvement Bonds (Series 1996), 4.50% Bonds, 11/1/1996 Aa 1,251,689 7,500,000 Alabama State, UT GO Refunding Bonds, 5.35% Bonds, 9/1/1996 AA 7,537,524 3,650,000 Arab, AL IDB, (Series 1989) Weekly VRDNs (SCI Manufacturing, Inc.)/(Bank of Tokyo-Mitsubishi LTD. LOC) A-1 3,650,000 1,100,000 Arab, AL IDB, Revenue Refunding Bonds (Series 1989) Weekly VRDNs (SCI Manufacturing, Inc.)/(Bank of Tokyo-Mitsubishi LTD. LOC) A-1 1,100,000
ALABAMA MUNICIPAL CASH TRUST
PRINCIPAL CREDIT AMOUNT RATING* VALUE SHORT-TERM MUNICIPALS-CONTINUED ALABAMA-CONTINUED $ 1,750,000 Ashland, AL IDB, (Series 1996) Weekly VRDNs (Tru-Wood Cabinets)/(First Alabama Bank, Birmingham LOC) P-1 $ 1,750,000 2,000,000 Birmingham, AL IDA Weekly VRDNs (Altec Industries, Inc.)/(Wachovia Bank of Georgia NA, Atlanta LOC) P-1 2,000,000 1,810,000 Birmingham, AL IDA Weekly VRDNs (Glasforms, Inc.)/(First Alabama Bank, Birmingham LOC) P-1 1,810,000 1,000,000 Birmingham, AL IDA, Revenue Refunding Bonds Weekly VRDNs (S.P. Hotel Company)/(Amsouth Bank NA, Birmingham LOC) VMIG1 1,000,000 535,000 Birmingham, AL Waterworks & Sewer Board, Water and Sewer Revenue Bonds (Series 1996), 3.40% Bonds, 1/1/1997 AA 535,000 1,940,000 Birmingham-Carraway, AL Special Care Facilities Financing Authority, Revenue bonds (Series 1995-A), 4.25% Bonds (Carraway Methodist Health Systems)/ (CONNIE LEE INS), 8/15/1996 AAA 1,943,818 1,880,000 Calhoun County, AL Economic Development Council Weekly VRDNs (Food Ingredients Tech. Co.)/ (Nationsbank, NA (North Carolina) LOC) P-1 1,880,000 4,310,000 Chatom, AL, (National Rural Utilities Series 1984M), 3.10% TOBs (Alabama Electric Co-op, Inc.)/(National Rural Utilities Cooperative Finance Corp. GTD), Optional Tender 8/15/1996 A-1+ 4,310,000 6,000,000 Chatom, AL, IDB PCR, 3.40% CP (Alabama Electric Co-op, Inc.)/(National Rural Utilities Cooperative Finance Corp. GTD), Mandatory Tender 5/22/1996 A-1+ 6,000,000 2,000,000 Cherokee, AL IDB, IDR Refunding Bonds (Series 1993) Weekly VRDNs (BOC Group, Inc.)/(Wachovia Bank of Georgia NA, Atlanta LOC) A-1+ 2,000,000 520,000 Dothan, AL, GO Refunding Warrants (Series 1995), 3.85% BANs (AMBAC INS), 9/1/1996 Aaa 520,000 5,000,000 Eutaw, AL IDB Weekly VRDNs (Mississippi Power Co.)/(Mississippi Power Co. GTD) VMIG1 5,000,000
ALABAMA MUNICIPAL CASH TRUST
PRINCIPAL CREDIT AMOUNT RATING* VALUE SHORT-TERM MUNICIPALS-CONTINUED ALABAMA-CONTINUED $ 1,400,000 Fairfield, AL IDA, Variable Rate Environmental Improvement Revenue Bonds (Series 1995), 3.55% TOBs (USX Corp.)/(Wachovia Bank of NC, NA, Winston-Salem LOC), Mandatory Tender 5/1/1996 VMIG1 $ 1,400,000 1,730,000 Fort Payne, AL IDB, IDRB Weekly VRDNs (Ovalstrapping, Inc.)/(U.S. Bank of Washington NA LOC) P-1 1,730,000 4,000,000 Guntersville, AL IDB, (Series 1995) Weekly VRDNs (Hercules Rubber Co. Project)/(SouthTrust Bank of Alabama, Birmingham LOC) P-1 4,000,000 3,915,000 Hoover, AL IDA Weekly VRDNs (Bud's Best Cookies, Inc.)/(SouthTrust Bank of Alabama, Birmingham LOC) P-1 3,915,000 260,000 Huntsville, AL IDA Weekly VRDNs (Parkway Project (Huntsville, AL))/(First Alabama Bank, Birmingham LOC) A-1+ 260,000 1,715,000 Ider, AL IDB, Industrial Development Bonds Weekly VRDNs (Galbreath, Inc. Proj.)/(National Bank of Canada, Montreal LOC) P-1 1,715,000 2,500,000 Jefferson County, AL, GO Warrants (Series 1996) Weekly VRDNs (Bayerische Landesbank Girozentrale LOC) A-1+ 2,500,000 2,300,000 Jefferson County, AL, Sewer Revenue Warrants (Series 1995-A) Weekly VRDNs (Bayerische Landesbank Girozentrale LOC) A-1+ 2,300,000 3,900,000 Limestone County, AL Water Authority, Water Revenue Bonds, 7.875% Bonds (United States Treasury PRF), 5/15/1996 (@103) Aaa 4,022,807 3,500,000 Lowndes County, AL IDB, (Series 1996) Weekly VRDNs (Warren Oil Company Project)/(First Union National Bank, Charlotte, NC LOC) A-1 3,500,000 1,425,000 Marshall County, AL, Special Obligation School Refunding Warrant (Series 1994) Weekly VRDNs (Marshall County, AL Board of Education)/(First Alabama Bank, Birmingham LOC) A-1+ 1,425,000
ALABAMA MUNICIPAL CASH TRUST
PRINCIPAL CREDIT AMOUNT RATING* VALUE SHORT-TERM MUNICIPALS-CONTINUED ALABAMA-CONTINUED $ 885,000 Mobile County, AL Board of School Commissioners, Capital Outlay Warrants (Series 1996), 4.75% Bonds (AMBAC INS), 3/1/1997 Aaa $ 895,044 2,540,000 Mobile, AL Downtown Redevelopment Authority, (Series 1992), 4.15% TOBs (Mitchell Project)/(SunTrust Bank, Atlanta LOC), Mandatory Tender 7/31/1996 P-1 2,540,000 14,600,000 Mobile, AL IDB, 3.65% TOBs (International Paper Co.)/ (International Paper Co. GTD), Optional Tender 10/15/1996 A-2 14,600,000 7,885,000 Mobile, AL IDB, IDRB (Series 1989) Weekly VRDNs (Newark Group Industries, Inc.)/(First Fidelity Bank, NA, New Jersey LOC) VMIG1 7,885,000 1,000,000 Mobile, AL IDB, Pollution Control Refunding Revenue Bonds, (Series 1992) Weekly VRDNs (Air Products & Chemicals, Inc.)/(Air Products & Chemicals, Inc. GTD) A-1 1,000,000 4,275,000 Mobile, AL Port City Medical Clinic Board, Revenue Bonds (Series 1992-A), 4.15% CP (Mobile, AL Infirmiary Association)/(Fuji Bank, Ltd., Tokyo LOC), Mandatory Tender 5/29/1996 VMIG1 4,275,000 455,000 Mobile, AL, General Obligations Warrants, 4.25% Bonds, 8/15/1996 NR(3) 455,000 3,000,000 Montgomery - Wynlakes Governmental Utility Services Corp., Bonds (Series 1995-A) Weekly VRDNs (Vaughn Road, L.L.C., Project)/(Amsouth Bank NA, Birmingham LOC) VMIG1 3,000,000 1,000,000 Montgomery, AL IDB, (Series 1988A) Weekly VRDNs (Smith Industries)/(SunTrust Bank, Atlanta LOC) A-1 1,000,000 2,765,000 Montgomery, AL IDB, (Series 1990-A) Weekly VRDNs (Industrial Partners)/(Wachovia Bank of Georgia NA, Atlanta LOC) VMIG1 2,765,000 3,650,000 Montgomery, AL IDB, Industrial Development Revenue Bonds (Series 1996A) Weekly VRDNs (Jobs Company, L.L.C. Project)/(Columbus Bank and Trust Co., GA LOC) P-1 3,650,000
ALABAMA MUNICIPAL CASH TRUST
PRINCIPAL CREDIT AMOUNT RATING* VALUE SHORT-TERM MUNICIPALS-CONTINUED ALABAMA-CONTINUED $ 500,000 Mountain Brook, AL, G O Warrants (Series 1996), 3.20% Bonds, 12/1/1996 NR $ 500,000 5,500,000 Pelham, AL Governmental Utility Services Corp., Wastewater Treatment and Collection Revenue Bonds (Series 1985), 9.25% Bonds (Parsons Pelham Associates Project)/(FGIC INS), 6/1/1996 (@102) Aaa 5,634,371 5,700,000 Phoenix City, AL IDB, (Series 1988), 3.25% CP (Mead Coated Board)/(ABN AMRO Bank NV, Amsterdam LOC), Mandatory Tender 5/8/1996 VMIG1 5,700,000 3,000,000 Phoenix City, AL IDB, (Series 1988), 3.25% CP (Mead Coated Board)/(ABN AMRO Bank NV, Amsterdam LOC), Mandatory Tender 5/9/1996 P-1 3,000,000 890,000 Piedmont, AL IDB Weekly VRDNs (Industrial Partners)/ (Wachovia Bank of Georgia NA, Atlanta LOC) P-1 890,000 2,500,000 Prattville, AL IDB, IDR Bonds Weekly VRDNs (Kuhnash Properties/Arkay Plastics Project)/(PNC Bank, Ohio, NA LOC) P-1 2,500,000 3,600,000 Scottsboro, AL IDB, (Series 1994) Weekly VRDNs (Maples Industries, Inc.)/(Amsouth Bank NA, Birmingham LOC) P-1 3,600,000 1,500,000 Scottsboro, AL IDB, IDRB (Series 1991) Weekly VRDNs (Maples Industries, Inc.)/(Amsouth Bank NA, Birmingham LOC) P-1 1,500,000 7,575,000 St. Clair County, AL IDB, (Series 1993) Weekly VRDNs (Ebsco Industries, Inc.)/(National Australia Bank, Ltd., Melbourne LOC) A-1+ 7,575,000 4,000,000 Stevenson, AL IDB Daily VRDNs (Mead Corporation Project)/(Societe Generale, Paris LOC) A-1+ 4,000,000 4,500,000 Stevenson, AL IDB, Industrial Revenue Bonds (Series 1996-A) Weekly VRDNs (Unitog Co.)/(UMB Bank, NA LOC) A-1 4,500,000 5,800,000 Sumter County, AL IDA, Industrial Revenue Bonds (Series 1995A) Weekly VRDNs (Fulghum Fibres Project (AL))/(First Alabama Bank, Birmingham LOC) P-1 5,800,000
ALABAMA MUNICIPAL CASH TRUST
PRINCIPAL CREDIT AMOUNT RATING* VALUE SHORT-TERM MUNICIPALS-CONTINUED ALABAMA-CONTINUED $ 1,200,000 Sumter County, AL IDA, Industrial Revenue Bonds (Series 1995B) Weekly VRDNs (Canal Chip Project)/ (First Alabama Bank, Birmingham LOC) P-1 $ 1,200,000 795,000 Sylacuaga, AL IDB Monthly VRDNs (SouthTrust Bank of Alabama, Birmingham LOC) P-1 795,000 2,000,000 Tuscaloosa County, AL, General Obligation Warrants (Series 1996), 3.55% Bonds, 1/1/1997 AA- 2,000,000 2,000,000 Tuskegee, AL IDB, IDRB (Series 1995) Weekly VRDNs (Concrete Company (The))/(Columbus Bank and Trust Co., GA LOC) P-1 2,000,000 2,550,000 Vincent, AL IDB, (Series 1993) Weekly VRDNs (Ebsco Industries, Inc.)/(National Australia Bank, Ltd., Melbourne LOC) A-1+ 2,550,000 Total 190,200,253 PUERTO RICO-0.5% 1,000,000 Puerto Rico Industrial, Medical & Environmental PCA, (Series 1983A), 3.75% TOBs (Reynolds Metals Co.)/ (ABN AMRO Bank NV, Amsterdam LOC), Optional Tender 9/1/1996 A-1+ 1,000,000 TOTAL INVESTMENTS AT AMORTIZED COST(A) $ 191,200,253
Securities that are subject to Alternative Minimum Tax represent 56.4% of the portfolio as calculated based upon total portfolio market value. (a) Also represents cost for federal tax purposes. * Please refer to the Appendix of the Statement of Additional Information for an explanation of the credit ratings. Current credit ratings are unaudited. Note: The categories of investments are shown as a percentage of net assets ($192,122,326) at April 30, 1996. The following acronym(s) are used throughout this portfolio: AMBAC -American Municipal Bond Assurance Corporation BANs -Bond Anticipation Notes CP -Commercial Paper FGIC -Financial Guaranty Insurance Company GO -General Obligation GTD -Guaranty IDA -Industrial Development Authority IDB -Industrial Development Bond IDR -Industrial Development Revenue IDRB -Industrial Development Revenue Bond INS -Insured LOC -Letter of Credit PCA -Pollution Control Authority PCR -Pollution Control Revenue PLC -Public Limited Company PRF -Prerefunded TOBs -Tender Option Bonds UT -Unlimited Tax VRDNs -Variable Rate Demand Notes (See Notes which are an integral part of the Financial Statements) ALABAMA MUNICIPAL CASH TRUST Statement of Assets and Liabilities APRIL 30, 1996 (UNAUDITED) ASSETS: Total investments in securities, at amortized cost and value $ 191,200,253 Cash 225,130 Income receivable 1,215,352 Deferred expenses 24,492 Total assets 192,665,227 LIABILITIES: Income distribution payable $ 525,334 Accrued expenses 17,567 Total liabilities 542,901 Net Assets for 192,122,326 shares outstanding $ 192,122,326 NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE: $192,122,326 / 192,122,326 shares outstanding $1.00
(See Notes which are an integral part of the Financial Statements) ALABAMA MUNICIPAL CASH TRUST STATEMENT OF OPERATIONS SIX MONTHS ENDED APRIL 30, 1996 (UNAUDITED) INVESTMENT INCOME: Interest $ 3,779,627 EXPENSES: Investment advisory fee $ 498,514 Administrative personnel and services fee 75,394 Custodian fees 14,660 Transfer and dividend disbursing agent fees and expenses 14,301 Directors'/Trustees' fees 1,108 Auditing fees 4,624 Legal fees 876 Portfolio accounting fees 27,158 Shareholder services fee 249,257 Share registration costs 16,892 Printing and postage 7,020 Insurance premiums 2,794 Taxes 30 Miscellaneous 6,840 Total expenses 919,468 Waivers- Waiver of investment advisory fee $ (301,785) Waiver of shareholder services fee (65,075) Total waivers (366,860) Net expenses 552,608 Net investment income $ 3,227,019
(See Notes which are an integral part of the Financial Statements) ALABAMA MUNICIPAL CASH TRUST STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED YEAR ENDED (UNAUDITED) OCTOBER 31, APRIL 30, 1996 1995 INCREASE (DECREASE) IN NET ASSETS: OPERATIONS- Net investment income $ 3,227,019 $ 5,893,328 DISTRIBUTIONS TO SHAREHOLDERS- Distributions from net investment income (3,227,019) (5,893,328) SHARE TRANSACTIONS- Proceeds from sale of shares 434,742,607 826,956,278 Net asset value of shares issued to shareholders in payment of distributions declared 1,363,724 2,071,166 Cost of shares redeemed (453,474,434) (762,340,876) Change in net assets resulting from share transactions (17,368,103) 66,686,568 Change in net assets (17,368,103) 66,686,568 NET ASSETS: Beginning of period 209,490,429 142,803,861 End of period $ 192,122,326 $ 209,490,429
(See Notes which are an integral part of the Financial Statements) ALABAMA MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED (UNAUDITED) APRIL 30, YEAR ENDED OCTOBER 31, 1996 1995 1994(A) NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 INCOME FROM INVESTMENT OPERATIONS Net investment income 0.02 0.04 0.02 LESS DISTRIBUTIONS Distributions from net investment income (0.02) (0.04) (0.02) NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 TOTAL RETURN(B) 1.61% 3.66% 2.31% RATIOS TO AVERAGE NET ASSETS Expenses 0.55%* 0.48% 0.36%* Net investment income 3.24%* 3.59% 2.67%* Expense waiver/reimbursement(c) 0.37%* 0.44% 0.62%* SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $192,122 $209,490 $142,804
* Computed on an annualized basis. (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 charge or contingent deferred sales charge, if applicable. (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) ALABAMA MUNICIPAL CASH TRUST NOTES TO FINANCIAL STATEMENTS APRIL 30, 1996 (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 fifteen portfolios. The financial statements included herein are only those of Alabama Municipal Cash Trust (the "Fund"), a non-diversified portfolio. The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. The investment objective of the Fund is current income exempt from federal regular income tax and the income tax imposed by the State of Alabama consistent with stability of principal. 2. SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies consistently followed by the fund in the preparation of its financial statements. These policies are in conformity with generally accepted accounting principles. 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. 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 over a period of five years from the Fund's commencement 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, 1996, 93.1% 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 from any one institution or agency did not exceed 7.6% of total investments. ALABAMA MUNICIPAL CASH TRUST USE OF ESTIMATES-The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ from those estimated. OTHER-Investment transactions are accounted for on 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, 1996, capital paid-in aggregated $192,122,326. Transactions in shares were as follows:
SIX MONTHS YEAR ENDED ENDED APRIL 30, OCTOBER 31, 1996 1995 Shares sold 434,742,607 826,956,278 Shares issued to shareholders in payment of distributions declared 1,363,724 2,071,166 Shares redeemed (453,474,434) (762,340,876) Net change resulting from share transactions (17,368,103) 66,686,568
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 0.50% of the Fund's average daily net assets. The Adviser may voluntarily choose to waive any portion of its fee and/or reimburse 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 Services Company ("FServ"), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. The fee paid to FServ 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 0.25% of daily average net assets of the Fund for the period. The fee paid to Federated Shareholder Services is used to finance certain services for shareholders and to maintain shareholder accounts. FSS may voluntarily choose to waive any portion of its fee. Federated Shareholder Services can modify or terminate this voluntary waiver at any time at its sole discretion. TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES-FServ, through its subsidiary, Federated Shareholder Services Company, serves as transfer and dividend disbursing agent for the Fund. The fee paid to FServ is based on the size, type, and number of accounts and transactions made by shareholders. PORTFOLIO ACCOUNTING FEES-FServ maintains the Fund's accounting records for which it receives a fee. The fee is based on the level of the Fund's average daily net assets for the period, plus out-of-pocket expenses. ORGANIZATIONAL EXPENSES-Organizational expenses of $26,461 and start- up administrative service expenses of $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 effective date. For the period ended April 30, 1996, the Fund paid $2,573 and $3,038 respectively, pursuant to this agreement. INTERFUND TRANSACTIONS-During the period ended April 30, 1996, the Fund engaged in purchase and sale transactions with funds that have a common investment adviser (or affiliated investment advisers), common Directors/Trustees, and/or common Officers. These purchase and sale transactions were made at current market value pursuant to Rule 17a-7 under the Act amounting to $235,185,000 and $235,956,000, 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. Executive Vice President Edward L. Flaherty, Jr. Edward C. Gonzales Glen R. Johnson Executive Vice President Peter E. Madden John W. McGonigle Gregor F. Meyer Executive Vice President and Secretary John E. Murray, Jr. Richard B. Fisher Wesley W. Posvar Vice President Marjorie P. Smuts David M. Taylor Treasurer Charles H. Field 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. ALABAMA MUNICIPAL CASH TRUST SEMI-ANNUAL REPORT TO SHAREHOLDERS APRIL 30, 1996 [GRAPHIC] Cusip 314229790 G01120-01 (6/96) 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, which covers the six-month period from November 1, 1995, through April 30, 1996. The report begins with a discussion with the fund's portfolio manager, followed by a complete listing of the fund's holdings and its financial statements. The fund is a convenient way to put your ready cash to work pursuing triple- tax-free income - free from federal regular income tax and North Carolina income tax* - through a portfolio concentrated in high-quality, short-term North Carolina municipal securities. As a shareholder, you have the opportunity to earn a greater after-tax yield than you could in a comparable high-quality taxable investment. Of course, the fund also brings you the added benefits of daily liquidity and stability of principal.** During the report period, the fund paid triple-tax-free dividends of $0.02 per share. Its total net assets of $117.8 million were spread among North Carolina securities that use municipal bond financing for projects as varied as health care, housing, community development, and transportation. You can count on North Carolina Municipal Cash Trust to seek the best tax- free income opportunities for your cash investment needs. As always, we will strive to provide you with the highest level of professional service. We invite your questions or comments. Sincerely, Glen R. Johnson President June 15, 1996 * Income may be subject to the federal alternative minimum tax. ** 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. An investment in the fund is neither insured nor guaranteed by the U.S. government. INVESTMENT REVIEW An Interview with Fund Portfolio Manager, Jeff A. Kozemchak, C.F.A. Q Can you comment on the economy and the interest rate environment during the semi-annual reporting period? A The Federal Reserve Board (the "Fed") eased monetary policy twice over the six-month reporting period ending in April. Faced with slowing economic growth and benign inflationary pressures, the Fed lowered the federal funds target rate from 5.75% to 5.50% in late December 1995, and again from 5.50% to the current 5.25% at the end of January 1996. For the December 1995 move, the Fed cited a better-than-expected inflation outlook as the impetus behind the easing, although a sluggish manufacturing sector and lackluster consumer spending was thought to have had an influence. In January 1996, the Fed appeared swayed by the dampening effects of high debt loads and employment uncertainty on consumer consumption along with sluggish export growth. Through this period, the short-end of the government and municipal yield curves anticipated the policy moves from the Fed, and amid signs of a weakening economy looked forward to additional eases in the not too distant future. February and March of 1996, however, brought about a shift in market psychology regarding both the extent and direction of changes in monetary policy by the Fed. Recovering from the harsh winter weather and spurred onward by lower interest rates, the housing market and consumer spending breathed some life into the economy, which had seemed on the verge of recession earlier in the year. The market was then stunned in early March 1996 by the report of a 705,000 increase in non-farm payroll jobs for February 1996 - the largest increase in 12 years - which caused the yields on short-term securities to rise by as much as 25 basis points. Now confronted with a more robust economy than previously thought, market participants have moved expectations toward a more neutral policy from the Fed in the near term with a possible tightening, or increase in rates, later in 1996. Yields on short-term government securities reflected this rather volatile mood in the markets. The yield on the three-month Treasury bill began November 1995 at 5.48%, declined to 4.89% by mid-February 1996, and ended April 1996 at 5.14%. Correspondingly, the yield on the one-year Treasury bill began November 1995 at 5.46%, fell to 4.79% in mid-February 1996, but rose to 5.62% by the end of April 1996. Q How has the fund's yield responded to this interest rate environment? A The fund's yield was affected by Fed policy (interest rate cuts), changes in market expectations, as well as supply and demand imbalances unique to the municipal money markets. However, because of these imbalances the fund's yield may experience more volatility on a weekly basis than Treasury yields and taxable money fund yields. In general, yields on municipal money market funds were lower over the period. For the fund, the seven-day net yield of the shares on April 30, 1996 was 3.44% compared to 3.47% six months earlier.* * Past performance does not guarantee future results. Yield will vary. Q What was your strategy for managing the fund over the semi-annual reporting period? A The fund started the reporting period with an average maturity of 50 days, reflecting a neutral to bullish outlook on the direction of interest rates. Our bias over the period was to extend the average maturity of the fund, a task made more difficult due to asset growth over the period and low supply of available fixed-rate notes and bonds. As a result, the fund's average maturity generally ranged from 40 to 50 days during the six-month reporting period. By April 30, 1996, the average maturity was 45 days, reflecting our assessment of more neutral to restrictive Fed policy for the balance of 1996. Q What is your outlook for the near future? A With growth of 2.3% in the first quarter of 1996, the economy appears to be on firmer footing than it was in the fourth quarter of 1995, when gross domestic product grew at only 0.5%. As a result, the Fed should not feel the urgency to lower short-term rates further. By the same token, however, with areas of softness in the economy still evident and with consumer indebtedness at very high levels, there also appears to be no danger of the economy overheating in the near term. As long as inflation remains benign, the Fed should be content to sit on the sidelines until confronted with signs of undue strength or considerable weakness in economic growth. The average maturity of the fund will continue to be managed in accordance with our expectation for a stable monetary policy in the near term. Nevertheless, opportunities for average maturity extension will arise as the supply of fixed-rate notes in the municipal market increases significantly in June and July of 1996. This spike in supply may present opportunities to "lock-in" yields which are attractive relative to comparable maturity taxable securities. As a result, we expect the average maturity of the fund to be slightly longer throughout the summer months. NORTH CAROLINA MUNICIPAL CASH TRUST PORTFOLIO OF INVESTMENTS APRIL 30, 1996 (UNAUDITED)
PRINCIPAL CREDIT AMOUNT RATING* VALUE SHORT-TERM MUNICIPAL SECURITIES-101.4% NORTH CAROLINA-96.4% $1,755,000 Alamance County, NC Industrial Facilities Authority, (Series B) Weekly VRDNs (Culp, Inc.)/(Wachovia Bank of NC, NA, Winston-Salem LOC) P-1 $ 1,755,000 7,200,000 Bladen County, NC Industrial Facilities & Pollution Control Financing Authority, (Series 1993) Weekly VRDNs (BCH Energy, Limited Partnership)/(Bank of Tokyo-Mitsubishi LTD. LOC) VMIG1 7,200,000 1,600,000 Buncombe County, NC Industrial Facilities & Pollution Control Financing Authority, (Series 1991) Weekly VRDNs (Rich Mount, Inc.)/(Bank of Tokyo-Mitsubishi LTD. LOC) A-1 1,600,000 1,250,000 Buncombe County, NC Metropolitan Sewer District, (Series A), 7.875% Bonds (United States Treasury PRF), 7/1/1996 (@102) Aaa 1,284,732 1,695,000 Burke County, NC Industrial Facilities & Pollution Control Financing Authority Weekly VRDNs (Norwalk Furniture Corp & Hickory Furniture)/(Branch Banking & Trust Co, Wilson LOC) P-1 1,695,000 910,000 Catawba County, NC Industrial Facilities & Pollution Control Financing Authority, (Series 1992) Weekly VRDNs (WSMP, Inc.)/(Nationsbank, N.A. (North Carolina) LOC) A-1 910,000 4,600,000 Catawba County, NC Industrial Facilities & Pollution Control Financing Authority, (Series 1994) Weekly VRDNs (Ethan Allen Inc. Project)/(Bankers Trust Co., New York LOC) P-1 4,600,000 2,435,000 Charlotte, NC, UT GO, 5.50% Bonds, 5/1/1997 Aaa 2,478,392 4,036,556 (a)Charlotte-Mecklenburg Hospital Authority, NC, Loan Participation Certificates (1995) VRNs, 5/22/1996 NR(2) 4,036,556
NORTH CAROLINA MUNICIPAL CASH TRUST
PRINCIPAL CREDIT AMOUNT RATING* VALUE SHORT-TERM MUNICIPAL SECURITIES-CONTINUED NORTH CAROLINA-CONTINUED $3,865,000 Cleveland County, NC Industrial Facilities and Pollution Control Financing Authority, IDRB (Series 1990) Weekly VRDNs (MetalsAmerica, Inc. Project)/(Nationsbank, N.A. (North Carolina) LOC) P-1 $ 3,865,000 1,670,000 Cleveland County, NC Industrial Facilities and Pollution Control Financing Authority, Pollution Control Revenue Bonds (Series 1995) Weekly VRDNs (Grover Industries, Inc. Project)/(Bank of America Illinois LOC) P-1 1,670,000 965,000 Davidson County, NC Industrial Facilities & PCFA, IDRB (Series 1995) Weekly VRDNs (Lawrence Industries, Inc. Project)/(Branch Banking & Trust Co, Wilson LOC) P-1 965,000 2,688,000 Enfield, NC, 3.50% BANs, 8/21/1996 NR 2,688,799 1,800,000 Guilford County, NC Industrial Facilities & PCFA, (Series 1989) Weekly VRDNs (Bonset America Corp.)/ (Dai-Ichi Kangyo Bank Ltd., Tokyo and Industrial Bank of Japan Ltd., Tokyo LOCs) A-1 1,800,000 1,000,000 Guilford County, NC Industrial Facilities & PCFA, (Series 1989) Weekly VRDNs (Culp, Inc.)/(Wachovia Bank of NC, NA, Winston-Salem LOC) P-1 1,000,000 9,025,000 Halifax County, NC Industrial Facilities & PCFA Weekly VRDNs (Flambeau Airmold Project)/(Norwest Bank Minnesota, Minneapolis LOC) P-1 9,025,000 1,000,000 Iredell County, NC Industrial Facilities & Pollution Control Financing Authority, Industrial Revenue Bonds Weekly VRDNs (Jet Corr, Inc. Project)/(National Bank of Canada, Montreal LOC) P-1 1,000,000 1,000,000 Johnson County, NC Industrial Facilities & Pollution Control Financing Authority, (Series 1996) Weekly VRDNs (Inolex Chemical Company Project)/(PNC Bank, N.A. LOC) P-1 1,000,000 3,000,000 Lincoln County, NC Industrial Facilities & Pollution Control Financing Authority, Industrial Revenue Bonds Weekly VRDNs (Leucadia, Inc. Project)/(National Bank of Canada, Montreal LOC) P-1 3,000,000
NORTH CAROLINA MUNICIPAL CASH TRUST
PRINCIPAL CREDIT AMOUNT RATING* VALUE SHORT-TERM MUNICIPAL SECURITIES-CONTINUED NORTH CAROLINA-CONTINUED $2,500,000 Mecklenberg County, NC Industrial Facilities and Pollution Control Financing Authority, (Series 1996) Weekly VRDNs (SteriGenics International Project)/ (Comerica Bank, Detroit, MI LOC) A-1 $ 2,500,000 2,000,000 Mecklenberg County, NC Industrial Facility & PCFA Weekly VRDNs (Manhasset Bay Associates)/(Bank of Tokyo-Mitsubishi LTD. LOC) A-1 2,000,000 1,000,000 Mecklenburg County, NC, (Series 1996) Weekly VRDNs (YMCA of Greater Charlotte Project)/(Wachovia Bank of NC, NA, Winston-Salem LOC) P-1 1,000,000 1,000,000 Morrisville, NC, GO UT, 3.35% BANs, 6/26/1996 NR 1,000,229 2,000,000 New Hanover County, NC PCFA Weekly VRDNs (Efson, Inc.)/(Branch Banking & Trust Co, Wilson LOC) P-1 2,000,000 1,555,000 New Hanover County, NC PCFA, (Series 1990), 4.15% TOBs (Wilmington Machinery Inc. Project)/ (Branch Banking & Trust Co, Wilson LOC), Optional Tender 9/1/1996 P-1 1,555,000 5,000,000 North Carolina Eastern Municipal Power Agency, 3.65% CP (Industrial Bank of Japan Ltd., Tokyo LOC), Mandatory Tender 5/13/1996 P-1 5,000,000 4,000,000 North Carolina Eastern Municipal Power Agency, 3.70% CP (Industrial Bank of Japan Ltd., Tokyo LOC), Mandatory Tender 5/13/1996 P-1 4,000,000 2,000,000 North Carolina Eastern Municipal Power Agency, Refunding Revenue Bonds (Series A), 7.50% Bonds (United States Treasury PRF), 1/1/1997 (@102) Aaa 2,093,834 4,000,000 North Carolina State, Clean Water Bonds, (Series 1995B), 4.25% Bonds, 6/1/1996 Aaa 4,002,130 1,500,000 Onslow County, NC Industrial Facilities & Pollution Control Financing Authority Weekly VRDNs (Mine Safety Appliances Co.)/(Sanwa Bank Ltd, Osaka LOC) A-1 1,500,000
NORTH CAROLINA MUNICIPAL CASH TRUST
PRINCIPAL CREDIT AMOUNT RATING* VALUE SHORT-TERM MUNICIPAL SECURITIES-CONTINUED NORTH CAROLINA-CONTINUED $3,600,000 Orange County, NC Industrial Facilities & Pollution Control Financing Authority Weekly VRDNs (Mebane Packaging Corp)/(First Union National Bank, Charlotte, NC LOC) A-1+ $ 3,600,000 1,300,000 Piedmont, NC Airport Authority Weekly VRDNs (Triad International Maintenance Corp.)/(Mellon Bank NA, Pittsburgh LOC) P-1 1,300,000 2,100,000 Randolph County, NC IDA, (Series 1990) Weekly VRDNs (Wayne Steel, Inc.)/(Bank One, Akron, NA LOC) P-1 2,100,000 3,400,000 Richmond County, NC Industrial Facilities & Pollution Control, (Series 1991) Weekly VRDNs (Bibb Company)/(Citibank NA, New York LOC) A-1 3,400,000 2,400,000 Rutherford County, NC, Industrial Facilities Pollution Control Financing Authority Weekly VRDNs (Spring-Ford Knitting Co.)/(Branch Banking & Trust Co, Wilson LOC) P-1 2,400,000 1,000,000 University of North Carolina at Chapel Hill, 4.00% Bonds, 8/1/1996 AA 1,000,486 5,700,000 Wake County, NC Industrial Facilities & PCFA, (Series 1990B), 3.70% CP (Carolina Power & Light Co.)/(Fuji Bank, Ltd., Tokyo LOC), Mandatory Tender 5/14/1996 P-1 5,700,000 3,000,000 Wake County, NC Industrial Facilities & PCFA, (Series 1990B), 3.75% CP (Carolina Power & Light Co.)/(Fuji Bank, Ltd., Tokyo LOC), Mandatory Tender 6/20/1996 P-1 3,000,000 4,400,000 Wake County, NC, UT GO, 4.25% Bonds, 3/1/1997 Aaa 4,443,315 2,000,000 Washington County, NC Industrial Facilities and Pollution Control Financing Authority, IDRB (Series 1995) Weekly VRDNs (Mackeys Ferry Sawmill, Inc. Project)/(Wachovia Bank of NC, NA, Winston-Salem LOC) Aa2 2,000,000 4,013,220 Wayne County, NC PCFA Weekly VRDNs (Cooper Industries, Inc.)/(Sanwa Bank Ltd, Osaka LOC) A-1+ 4,013,220
NORTH CAROLINA MUNICIPAL CASH TRUST
PRINCIPAL CREDIT AMOUNT RATING* VALUE SHORT-TERM MUNICIPAL SECURITIES-CONTINUED NORTH CAROLINA-CONTINUED $2,300,000 Wilson County, NC PCA, (Series 1994) Weekly VRDNs (Granutec, Inc.)/(Branch Banking & Trust Co, Wilson LOC) P-1 $ 2,300,000 Total 113,481,693 PUERTO RICO-2.5% 3,000,000 Puerto Rico Industrial, Medical & Environmental PCA, (Series 1983A), 3.75% TOBs (Reynolds Metals Co.)/(ABN AMRO Bank NV, Amsterdam LOC), Optional Tender 9/1/1996 A-1+ 3,000,000 VIRGIN ISLANDS-2.5% 3,000,000 Virgin Islands HFA, Single Family Mortgage Revenue Refunding Bonds (1995 Series B), 3.50% TOBs (FGIC INS), Mandatory Tender 11/1/1996 VMIG1 3,000,000 TOTAL INVESTMENTS (AT AMORTIZED COST)(B) $ 119,481,693
Securities that are subject to Alternative Minimum Tax represent 54.1% of the portfolio as calculated based upon total portfolio market value. (a) Denotes a restricted security which is subject to restrictions on resale under Federal Securities laws. At April 30, 1996, these securities amounted to $4,036,556 which represents 3.4% of net assets. (b) Also represents cost for federal tax purposes. * Please refer to the Appendix of the Statement of Additional Information for an explanation of the credit ratings. Current credit ratings are unaudited. Note: The categories of investments are shown as a percentage of net assets ($117,837,305) at April 30, 1996. The following acronym(s) are used throughout this portfolio: BANs - Bond Anticipation Notes CP - Commercial Paper FGIC - Financial Guaranty Insurance Company GO - General Obligation HFA - Housing Finance Authority IDA - Industrial Development Authority IDRB - Industrial Development Revenue Bond INS - Insured LOCs - Letter(s) of Credit LOC - Letter of Credit LTD - Limited PCA - Pollution Control Authority PCFA - Pollution Control Finance Authority PRF - Prerefunded TOBs - Tender Option Bonds UT - Unlimited Tax VRDNs - Variable Rate Demand Notes VRNs - Variable Rate Notes (See Notes which are an integral part of the Financial Statements) NORTH CAROLINA MUNICIPAL CASH TRUST STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1996 (UNAUDITED) ASSETS: Total investments in securities, at amortized cost and value $ 119,481,693 Cash 477,978 Income receivable 668,613 Deferred expenses 24,556 Total assets 120,652,840 LIABILITIES: Payable for investments purchased $ 2,489,180 Income distribution payable 314,347 Accrued expenses 12,008 Total liabilities 2,815,535 Net Assets for 117,837,305 shares outstanding $ 117,837,305 NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE: $117,837,305/117,837,305 shares outstanding $1.00
(See Notes which are an integral part of the Financial Statements) NORTH CAROLINA MUNICIPAL CASH TRUST STATEMENT OF OPERATIONS SIX MONTHS ENDED APRIL 30, 1996 (UNAUDITED) INVESTMENT INCOME: Interest $ 2,117,270 EXPENSES: Investment advisory fee $ 276,596 Administrative personnel and services fee 62,246 Custodian fees 10,161 Transfer and dividend disbursing agent fees and expenses 7,612 Directors'/Trustees' fees 914 Auditing fees 4,358 Legal fees 634 Portfolio accounting fees 20,522 Shareholder services fee 138,298 Share registration costs 19,046 Printing and postage 6,072 Insurance premiums 2,366 Miscellaneous 5,438 Total expenses 554,263 Waivers - Waiver of investment advisory fee (225,445) Net expenses 328,818 Net investment income $ 1,788,452
(See Notes which are an integral part of the Financial Statements) NORTH CAROLINA MUNICIPAL CASH TRUST STATEMENT OF CHANGES IN NET ASSETS SIX MONTHS ENDED (UNAUDITED) YEAR ENDED APRIL 30, OCTOBER 31, 1996 1995 INCREASE (DECREASE) IN NET ASSETS: OPERATIONS - Net investment income $ 1,788,452 $ 3,716,494 DISTRIBUTIONS TO SHAREHOLDERS - Distributions from net investment income (1,788,452) (3,716,494) SHARE TRANSACTIONS - Proceeds from sale of shares 414,748,919 901,368,780 Net asset value of shares issued to shareholders in payment of distributions declared 1,122,908 2,529,218 Cost of shares redeemed (395,636,469) (891,545,071) Change in net assets resulting from share transactions 20,235,358 12,352,927 Change in net assets 20,235,358 12,352,927 NET ASSETS: Beginning of period 97,601,947 85,249,020 End of period $ 117,837,305 $ 97,601,947
(See Notes which are an integral part of the Financial Statements) NORTH CAROLINA MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED (UNAUDITED) YEAR ENDED APRIL 30, OCTOBER 31, 1996 1995 1994(A) NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00 INCOME FROM INVESTMENT OPERATIONS Net investment income 0.02 0.04 0.02 LESS DISTRIBUTIONS Distributions from net investment income (0.02) (0.04) (0.02) NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 TOTAL RETURN(B) 1.63% 3.51% 2.06% RATIOS TO AVERAGE NET ASSETS Expenses 0.59%* 0.59% 0.49%* Net investment income 3.23%* 3.46% 2.54%* Expense waiver/reimbursement(c) 0.41%* 0.40% 0.44%* SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $117,837 $97,602 $85,249
* Computed on an annualized basis. (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 charge or contingent deferred sales charge, if applicable. (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) NORTH CAROLINA MUNICIPAL CASH TRUST NOTES TO FINANCIAL STATEMENTS APRIL 30, 1996 (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 fifteen portfolios. The financial statements included herein are only those of North Carolina Municipal Cash Trust (the "Fund"), a non-diversified portfolio. The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. The investment objective of the Fund is current income exempt from federal regular income tax and the income tax imposed by the State of North Carolina consistent with stability of principal. 2. SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies consistently followed by the Trust in the preparation of its financial statements. These policies are in conformity with generally accepted accounting principles. INVESTMENT VALUATIONS-The Trust'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. 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 over a period of five years from the Fund's commencement 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, 1996, 77% 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 from any one institution or agency did not exceed 9% of total investments. NORTH CAROLINA 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 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, 1996 is as follows:
SECURITY ACQUISITION DATE ACQUISITION COST Charlotte-Mecklenburgh Hospital Authority, NC, Loan Participation Certificates (1995) 6/30/95 $4,036,556
USE OF ESTIMATES-The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ from those estimated. OTHER-Investment transactions are accounted for on 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, 1996, capital paid-in aggregated $117,837,305. Transactions in shares were as follows:
SIX MONTHS ENDED YEAR ENDED APRIL 30, OCTOBER 31, 1996 1995 Shares sold 414,748,919 901,368,780 Shares issued to shareholders in payment of distributions declared 1,122,908 2,529,218 Shares redeemed (395,636,469) (891,545,071) Net change resulting from share transactions 20,235,358 12,352,927
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 0.50% of the Fund's average daily net assets. NORTH CAROLINA MUNICIPAL CASH TRUST The Adviser may voluntarily choose to waive any portion of its fee. The Adviser can modify or terminate this voluntary waiver at any time at its sole discretion. ADMINISTRATIVE FEE-Federated Services Company ("FServ"), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. The fee paid to FServ is based on 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, the Fund will pay Federated Shareholder Services up to 0.25% of daily average net assets of the Trust shares for the period. The fee paid to Federated Shareholder Services is used to finance certain services for shareholders and to maintain shareholder accounts. TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES-FServ, through its subsidiary, Federated Shareholder Services Company serves as transfer and dividend disbursing agent for the Fund. The fee paid to FServ is based on the size, type, and number of accounts and transactions made by shareholders. PORTFOLIO ACCOUNTING FEES-FServ maintains the Fund's accounting records for which it receives a fee. The fee is based on the level of the Fund's average daily net assets for the period, plus out-of- pocket expenses. ORGANIZATIONAL EXPENSES-Organizational expenses of $21,879 and start- up administrative service expenses of $31,507 were borne initially by Adviser. The Fund has agreed to reimburse Adviser for the organizational and start-up administrative expenses during the five-year period following effective date. For the period ended April 30, 1996, the Fund paid $4,254 and $6,126, respectively, pursuant to this agreement. INTERFUND TRANSACTIONS-During the period ended April 30, 1996, the Trust engaged in purchase and sale transactions with funds that have a common investment adviser (or affiliated investment advisers), common Directors/Trustees, and/or common Officers. These purchase and sale transactions were made at current market value pursuant to Rule 17a-7 under the Act amounting to $202,855,000 and $190,655,000, 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. Executive Vice President Edward L. Flaherty, Jr. Edward C. Gonzales Glen R. Johnson Executive Vice President Peter E. Madden John W. McGonigle Gregor F. Meyer Executive Vice President and Secretary John E. Murray, Jr. Richard B. Fisher Wesley W. Posvar Vice President Marjorie P. Smuts David M. Taylor Treasurer Charles H. Field 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 Trust's prospectus which contains facts concerning its objective and policies, management fees, expenses and other information. North Carolina Municipal Cash Trust Semi-Annual Report To Shareholders April 30, 1996 Federated Investors Federated Investors Tower Pittsburgh, PA 15222-3779 Federated Securities Corp. is the distributor of the fund and is a subsidiary of Federated Investors. Cusip 314229782 G01177-01 (6/96) - -------------------------------------------------------------------------------- CONNECTICUT - -------------------------------------------------------------------------------- MUNICIPAL - -------------------------------------------------------------------------------- CASH - -------------------------------------------------------------------------------- TRUST - -------------------------------------------------------------------------------- SEMI-ANNUAL REPORT TO SHAREHOLDERS April 30, 1996 FEDERATED SECURITIES CORP. (LOGO)Z - --------------------------------------------- Distributor A subsidiary of FEDERATED INVESTORS FEDERATED INVESTORS TOWER PITTSBURGH, PA 15222-3779 314229105 0052406 (6/96) 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, which covers the six-month period from November 1, 1995, through April 30, 1996. The report begins with a discussion with the fund's portfolio manager, followed by a complete listing of the fund's holdings and its financial statements. The fund is a convenient way to put your ready cash to work pursuing double-tax-free income--free from federal regular income tax and Connecticut investment income tax*--through a portfolio concentrated in high-quality, short-term Connecticut municipal securities. As a shareholder, you have the opportunity to earn a greater after-tax yield than you could in a comparable high-quality taxable investment. Of course, the fund also brings you the added benefits of daily liquidity and stability of principal.** During the report period, the fund paid double-tax-free dividends of $0.02 per share. Its total net assets of $219 million were diversified among Connecticut securities that use municipal bond financing for projects as varied as health care, housing, community development, and transportation. You can count on Connecticut Municipal Cash Trust to seek the best tax-free income opportunities for your cash. As always, we will strive to provide you with the highest level of service. Your questions or comments are always welcome. Sincerely, LOGO Glen R. Johnson President June 15, 1996 * Income may be subject to the federal alternative minimum tax. ** 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. An investment in the funds is neither insured nor guaranteed by the U.S. government. INVESTMENT REVIEW - -------------------------------------------------------------------------------- An Interview with Fund Portfolio Manager, Jeff A. Kozemchak, C.F.A. Q Can you comment on the economy and the interest rate environment during the semi-annual reporting period? A The Federal Reserve Board (the "Fed") eased monetary policy twice over the six-month reporting period ending in April. Faced with slowing economic growth and benign inflationary pressures, the Fed lowered the federal funds target rate from 5.75% to 5.50% in late December 1995, and again from 5.50% to the current 5.25% at the end of January 1996. For the December 1995 move, the Fed cited a better-than-expected inflation outlook as the impetus behind the easing, although a sluggish manufacturing sector and lackluster consumer spending was thought to have had an influence. In January 1996, the Fed appeared swayed by the dampening effects of high debt loads and employment uncertainty on consumer consumption along with sluggish export growth. Through this period, the short-end of the government and municipal yield curves anticipated the policy moves from the Fed, and amid signs of a weakening economy looked forward to additional eases in the not too distant future. February and March of 1996, however, brought about a shift in market psychology regarding both the extent and direction of changes in monetary policy by the Fed. Recovering from the harsh winter weather and spurred onward by lower interest rates, the housing market and consumer spending breathed some life into the economy, which had seemed on the verge of recession earlier in the year. The market was then stunned in early March 1996 by the report of a 705,000 increase in non-farm payroll jobs for February 1996--the largest increase in 12 years--which caused the yields on short-term securities to rise by as much as 25 basis points. Now confronted with a more robust economy than previously thought, market participants have moved expectations toward a more neutral policy from the Fed in the near term with a possible tightening, or increase in rates, later in 1996. Yields on short-term government securities reflected this rather volatile mood in the markets. The yield on the three-month Treasury bill began November 1995 at 5.48%, declined to 4.89% by mid-February 1996, and ended April 1996 at 5.14%. Correspondingly, the yield on the one-year Treasury bill began November 1995 at 5.46%, fell to 4.79% in mid-February 1996, but rose to 5.62% by the end of April 1996. - -------------------------------------------------------------------------------- Q How has the fund's yield responded to this interest rate environment? A The fund's yield was affected by Fed policy (interest rate cuts), changes in market expectations, as well as supply and demand imbalances unique to the municipal money markets. However, because of these imbalances the fund's yield may experience more volatility on a weekly basis than Treasury yields and taxable money fund yields. In general, yields on municipal money market funds were lower over the period. For the fund, the seven-day net yield was 3.16% at the end of the period compared to 3.30% six months ago.* Q What was your strategy for managing the fund over the semi-annual reporting period? A The fund started the reporting period with an average maturity of 64 days, reflecting a neutral to slightly bullish outlook on short-term interest rates. Because of the lack of supply of fixed-rate notes in Connecticut, we let the average maturity of the fund roll inward to 47 days by the end of the year. In the first three months of 1996, we targeted the average maturity between 40 and 50 days, reflecting the lack of value offered in the marketplace for fixed-rate, Connecticut exempt notes. In April 1996, we extended the average maturity to 69 days, as several attractive notes were offered in the marketplace. Going forward, our assessment is for more neutral Fed policy for the balance of 1996. If fixed-rate securities continue to offer relative value when compared to shorter-term overnight or weekly notes, we expect to attempt to maintain this average maturity between 50 and 65 days. Q What is your outlook for the near future? A With growth of 2.3% in the first quarter of 1996, the economy appears to be on firmer footing than it was in the fourth quarter of 1995, when gross domestic product grew at only .5%. As a result, the Fed should not feel the urgency to lower short-term rates further. By the same token, however, with areas of softness in the economy still evident and with consumer indebtedness at very high levels, there also appears to be no danger of the economy overheating in the near term. As long as inflation remains benign, the Fed should be content to sit on the sidelines until confronted with signs of undue strength or considerable weakness in economic growth. The average maturity of the fund will continue to be managed in accordance with our expectation for a stable monetary policy in the near term. Nevertheless, opportunities for average maturity extension will arise as the supply of fixed-rate notes in the municipal market increases significantly in June and July of 1996. This spike in supply may present opportunities to "lock-in" yields which are attractive relative to comparable maturity taxable securities. As a result, we expect the average maturity of the fund to be slightly longer throughout the summer months. * Past performance does not guarantee future results. Yield will vary. CONNECTICUT MUNICIPAL CASH TRUST PORTFOLIO OF INVESTMENTS APRIL 30, 1996 (UNAUDITED) - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ----------- ------------------------------------------------------- -------- ------------ SHORT-TERM MUNICIPALS--99.4% - -------------------------------------------------------------------------- CONNECTICUT--92.0% ------------------------------------------------------- $ 2,310,000 Berlin, CT, 4.00% BANs, 6/27/1996 NR(3) $ 2,311,563 ------------------------------------------------------- 4,100,000 Cheshire, CT, 4.25% BANs, 8/9/1996 NR(2) 4,106,481 ------------------------------------------------------- 9,933,170 (a) Clipper Connecticut Tax Exempt Trust, (Series 1994-1) Weekly VRDNs (State Street Bank and Trust Co. LIQ) VMIG1 9,933,170 ------------------------------------------------------- 2,640,000 Connecticut Development Authority Weekly VRDNs (Banta Associates)/(Marine Midland Bank N.A., Buffalo, NY LOC) P-1 2,640,000 ------------------------------------------------------- 700,000 Connecticut Development Authority Weekly VRDNs (Capital District Energy Center)/(Canadian Imperial Bank of Commerce, Toronto LOC) P-1 700,000 ------------------------------------------------------- 4,000,000 Connecticut Development Authority Weekly VRDNs (Capital District Energy Center)/(Canadian Imperial Bank of Commerce, Toronto LOC) P-1 4,000,000 ------------------------------------------------------- 4,500,000 Connecticut Development Authority Weekly VRDNs (Jewish Community Center (New Haven, CT))/ (Fleet National Bank, Providence, R.I. LOC) P-1 4,500,000 ------------------------------------------------------- 1,392,600 Connecticut Development Authority Weekly VRDNs (RSA Corp.)/(Barclays Bank PLC, London LOC) P-1 1,392,600 ------------------------------------------------------- 1,030,000 Connecticut Development Authority, (Series 1985) Weekly VRDNs (Martin-Brower Company Project)/ (ABN AMRO Bank N.V., Amsterdam LOC) P-1 1,030,000 ------------------------------------------------------- 5,000,000 Connecticut Development Authority, (Series 1993) Weekly VRDNs (Rand-Whitney Containerboard Limited Partnership)/(Chase Manhattan Bank N.A., New York LOC) A-1 5,000,000 ------------------------------------------------------- 11,000,000 Connecticut Development Authority, (Series A) Weekly VRDNs (Exeter Energy)/(Sanwa Bank Ltd, Osaka LOC) A-1 11,000,000 ------------------------------------------------------- 1,000,000 Connecticut Development Authority, (Series B) Weekly VRDNs (Exeter Energy)/(Sanwa Bank Ltd, Osaka LOC) A-1 1,000,000 -------------------------------------------------------
CONNECTICUT MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ----------- ------------------------------------------------------- -------- ------------ SHORT-TERM MUNICIPALS--CONTINUED - -------------------------------------------------------------------------- CONNECTICUT--CONTINUED ------------------------------------------------------- $ 7,499,000 Connecticut Development Authority, (Series C) Weekly VRDNs (Exeter Energy)/(Sanwa Bank Ltd, Osaka LOC) A-1 $ 7,499,000 ------------------------------------------------------- 5,000,000 Connecticut Development Authority, PCR (Series 1993A) Weekly VRDNs (Connecticut Light & Power Co.)/ (Deutsche Bank, AG LOC) A-1+ 5,000,000 ------------------------------------------------------- 6,700,000 Connecticut Development Authority, PCR (Series 1993A) Weekly VRDNs (Western Mass Electric Co.)/(Union Bank of Switzerland, Zurich LOC) A-1+ 6,700,000 ------------------------------------------------------- 2,500,000 Connecticut Development Authority, PCR Refunding Bonds (Series 1993B) Weekly VRDNs (Connecticut Light & Power Co.)/(Union Bank of Switzerland, Zurich LOC) A-1+ 2,500,000 ------------------------------------------------------- 1,000,000 Connecticut Development Health Care Facilities Weekly VRDNs (Independence Living)/(Chemical Bank, New York LOC) VMIG1 1,000,000 ------------------------------------------------------- 1,600,000 Connecticut Development Health Care Facilities Weekly VRDNs (Independence Living)/(Credit Local de France LOC) VMIG1 1,600,000 ------------------------------------------------------- 6,700,000 Connecticut Municipal Electric Energy Cooperative, Power Supply System Revenue Bonds (1995 Series A), 3.10% CP (Fleet National Bank, Providence, R.I. LOC), Mandatory Tender 5/17/1996 P-1 6,700,000 ------------------------------------------------------- 1,800,000 Connecticut State HEFA Weekly VRDNs (Charlotte Hungerfield Hospital)/(First National Bank of Boston, MA LOC) VMIG1 1,800,000 ------------------------------------------------------- 3,700,000 Connecticut State HEFA, (Series A) Weekly VRDNs (Forman School Issue)/(National Westminster Bank, PLC, London LOC) A-1+ 3,700,000 ------------------------------------------------------- 3,875,000 Connecticut State HEFA, (Series L), 3.25% CP (Yale University), Mandatory Tender 6/14/1996 Aaa 3,875,000 ------------------------------------------------------- 4,300,000 Connecticut State HEFA, (Series N), 3.45% CP (Yale University), Mandatory Tender 7/12/1996 Aaa 4,300,000 -------------------------------------------------------
CONNECTICUT MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ----------- ------------------------------------------------------- -------- ------------ SHORT-TERM MUNICIPALS--CONTINUED - -------------------------------------------------------------------------- CONNECTICUT--CONTINUED ------------------------------------------------------- $10,250,000 Connecticut State HEFA, 3.40% CP (Windham Community Memorial Hospital)/(Banque Paribas, Paris LOC), Mandatory Tender 5/14/1996 A-1 $ 10,250,000 ------------------------------------------------------- 1,000,000 Connecticut State HEFA, Revenue Bonds (Series A) Weekly VRDNs (Pomfret School Issue)/(Credit Local de France LOC) VMIG1 1,000,000 ------------------------------------------------------- 7,130,000 Connecticut State HFA, (Series 1990C), 4.00% CP, Mandatory Tender 7/16/1996 AA 7,130,000 ------------------------------------------------------- 3,245,000 Connecticut State HFA, (Series 1990D), 3.30% CP, Mandatory Tender 5/15/1996 A-1+ 3,245,000 ------------------------------------------------------- 3,100,000 Connecticut State HFA, (Series 1990D), 3.80% CP, Mandatory Tender 7/25/1996 AA 3,100,000 ------------------------------------------------------- 10,000,000 Connecticut State HFA, (Series A-4), 3.65% TOBs, Mandatory Tender 4/10/1997 A-1+ 10,000,000 ------------------------------------------------------- 4,100,000 Connecticut State Resource Recovery Authority, 4.00% RANs (Fleet National Bank, Providence, R.I. LOC), 6/21/1996 P-1 4,101,650 ------------------------------------------------------- 4,925,000 Connecticut State, (1996 Series A), 4.00% Bonds, 5/15/1997 AA- 4,944,845 ------------------------------------------------------- 12,000,000 Connecticut State, Special Assessment Unemployment Compensation Advance Fund, Revenue Bonds (Series 1993C), 3.90% TOBs (FGIC INS)/(FGIC Securities Purchase, Inc. LIQ), Mandatory Tender 7/1/1996 A-1+ 12,000,000 ------------------------------------------------------- 10,100,000 Hartford, CT Redevelopment Authority Weekly VRDNs (Underwood Towers)/(FSA INS)/(Barclays Bank PLC, London LIQ) A-1+ 10,100,000 ------------------------------------------------------- 9,475,000 Meriden, CT, (Lot B), 4.25% BANs, 8/14/1996 NR(3) 9,483,045 ------------------------------------------------------- 7,550,000 New Britain, CT, 3.52% BANs, 4/15/1997 NR(3) 7,551,372 ------------------------------------------------------- 1,600,000 New Haven, CT Weekly VRDNs (Starter Sportswear)/ (NatWest NA LOC) P-1 1,600,000 ------------------------------------------------------- 10,000,000 New Haven, CT, Custodial Receipts (Series D), 4.25% BANs (State Street Bank and Trust Co. LOC), 8/22/1996 P-1 10,013,416 -------------------------------------------------------
CONNECTICUT MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ----------- ------------------------------------------------------- -------- ------------ SHORT-TERM MUNICIPALS--CONTINUED - -------------------------------------------------------------------------- CONNECTICUT--CONTINUED ------------------------------------------------------- $ 942,500 Southeastern CT Water Authority, 3.50% GANs, 3/20/1997 NR(3) $ 943,708 ------------------------------------------------------- 7,500,000 Stamford, CT Housing Authority, Multi-Modal Interchangeable Rate Revenue Bonds (Series 1994) Weekly VRDNs (Morgan Street Project)/(Deutsche Bank, AG LOC) VMIG1 7,500,000 ------------------------------------------------------- 1,325,000 Trumbull, CT, GO UT, 4.00% BANs, 6/5/1996 NR(2) 1,325,741 ------------------------------------------------------- 5,000,000 West Hartford, CT, 3.34% BANs, 7/18/1996 NR(3) 5,000,407 ------------------------------------------------------- ------------ Total 201,576,998 ------------------------------------------------------- ------------ PUERTO RICO--7.4% ------------------------------------------------------- 7,000,000 Puerto Rico Government Development Bank, 3.15% CP, Mandatory Tender 5/13/1996 A-1+ 7,000,000 ------------------------------------------------------- 5,200,000 Puerto Rico Government Development Bank, 3.20% CP, Mandatory Tender 5/22/1996 A-1+ 5,200,000 ------------------------------------------------------- 3,500,000 Puerto Rico Industrial, Medical & Environmental PCA, (Series 1988), 3.25% CP (Inter American University of Puerto Rico)/(Bank of Tokyo-Mitsubishi LTD. LOC), Mandatory Tender 6/12/1996 Aa3 3,500,000 ------------------------------------------------------- 400,000 (a) Puerto Rico Public Building Authority, (PA-106) Weekly VRDNs (AMBAC INS)/(Merrill Lynch Capital Services, Inc. LIQ) VMIG1 400,000 ------------------------------------------------------- ------------ Total 16,100,000 ------------------------------------------------------- ------------ TOTAL INVESTMENTS (AT AMORTIZED COST)(B) $217,676,998 ------------------------------------------------------- ------------
Securities that are subject to Alternative Minimum tax represent 26.3% of the portfolio as calculated based upon total portfolio market value. * Please refer to the Appendix of the Statement of Additional Information for an explanation of the credit ratings. Current credit ratings are unaudited. (a) Denotes a restricted security which is subject to restrictions or resale under Federal Securities laws. This security has been determined to be liquid under criteria established by the Board of Trustees. At the end of the period, this security amounts to $10,333,170 which represents 5% of net assets. (b) Also represents cost for federal tax purposes. CONNECTICUT MUNICIPAL CASH TRUST - -------------------------------------------------------------------------------- Note: The categories of investments are shown as a percentage of net assets ($219,057,766) at April 30, 1996. The following acronym(s) are used throughout this portfolio: AMBAC -- American Municipal Bond Assurance Corporation BANs -- Bond Anticipation Notes CP -- Commercial Paper FGIC -- Financial Guaranty Insurance Company FSA -- Financial Security Assurance GANs -- Grant Anticipation Notes GO -- General Obligation HEFA -- Health and Education Facilities Authority HFA -- Housing Finance Authority INS -- Insured LIQ -- Liquidity Agreement LOC -- Letter of Credit PCA -- Pollution Control Authority PCR -- Pollution Control Revenue PLC -- Public Limited Company RANs -- Revenue 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) CONNECTICUT MUNICIPAL CASH TRUST STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1996 (UNAUDITED) - -------------------------------------------------------------------------------- ASSETS: - ------------------------------------------------------------------------------- Total Investments in securities, at amortized cost and value $217,676,998 - ------------------------------------------------------------------------------- Cash 366,318 - ------------------------------------------------------------------------------- Income receivable 1,608,150 - ------------------------------------------------------------------------------- ------------ Total assets 219,651,466 - ------------------------------------------------------------------------------- LIABILITIES: - -------------------------------------------------------------------- Income distribution payable $538,750 - -------------------------------------------------------------------- Accrued expenses 54,950 - -------------------------------------------------------------------- -------- Total liabilities 593,700 - ------------------------------------------------------------------------------- ------------ NET ASSETS for 219,057,766 shares outstanding $219,057,766 - ------------------------------------------------------------------------------- ------------ NET ASSET VALUE, Offering Price, and Redemption Proceeds Per Share: $219,057,766 / 219,057,766 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, 1996 (UNAUDITED) - -------------------------------------------------------------------------------- INVESTMENT INCOME: - ----------------------------------------------------------------------------------- Interest $3,989,533 - ----------------------------------------------------------------------------------- EXPENSES: - ----------------------------------------------------------------------------------- Investment advisory fee $ 549,973 - ---------------------------------------------------------------------- Administrative personnel and services fee 83,172 - ---------------------------------------------------------------------- Custodian fees 15,298 - ---------------------------------------------------------------------- Transfer and dividend disbursing agent fees and expenses 18,615 - ---------------------------------------------------------------------- Directors'/Trustees' fees 1,369 - ---------------------------------------------------------------------- Auditing fees 5,940 - ---------------------------------------------------------------------- Legal fees 1,202 - ---------------------------------------------------------------------- Portfolio accounting fees 34,898 - ---------------------------------------------------------------------- Shareholder services fee 274,987 - ---------------------------------------------------------------------- Share registration costs 10,789 - ---------------------------------------------------------------------- Printing and postage 7,254 - ---------------------------------------------------------------------- Insurance premiums 3,102 - ---------------------------------------------------------------------- Taxes 1,704 - ---------------------------------------------------------------------- Miscellaneous 310 - ---------------------------------------------------------------------- --------- Total expenses 1,008,613 - ---------------------------------------------------------------------- Waivers - ---------------------------------------------------------------------- Waiver of investment advisory fee $(238,649) - ---------------------------------------------------------- Waiver of shareholder services fee (109,996) - ---------------------------------------------------------- --------- Total waivers (348,645) - ---------------------------------------------------------------------- --------- Net expenses 659,968 - ----------------------------------------------------------------------------------- ---------- Net investment income $3,329,565 - ----------------------------------------------------------------------------------- ----------
(See Notes which are an integral part of the Financial Statements) CONNECTICUT MUNICIPAL CASH TRUST STATEMENT OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
SIX MONTHS ENDED (UNAUDITED) YEAR ENDED APRIL 30, 1996 OCTOBER 31, 1995 ----------------- ----------------- INCREASE (DECREASE) IN NET ASSETS: - ------------------------------------------------------ OPERATIONS-- - ------------------------------------------------------ Net investment income $ 3,329,565 $ 6,931,149 - ------------------------------------------------------ --------------- --------------- DISTRIBUTIONS TO SHAREHOLDERS-- - ------------------------------------------------------ Distributions from net investment income (3,329,565) (6,931,149) - ------------------------------------------------------ --------------- --------------- SHARE TRANSACTIONS-- - ------------------------------------------------------ Proceeds from sale of shares 330,898,778 522,140,169 - ------------------------------------------------------ Net asset value of shares issued to shareholders in payment of distributions declared 886,039 1,971,315 - ------------------------------------------------------ Cost of shares redeemed (297,445,267) (529,816,470) - ------------------------------------------------------ --------------- --------------- Change in net assets resulting from share transactions 34,339,550 (5,704,986) - ------------------------------------------------------ --------------- --------------- Change in net assets 34,339,550 (5,704,986) - ------------------------------------------------------ NET ASSETS: - ------------------------------------------------------ Beginning of period 184,718,216 190,423,202 - ------------------------------------------------------ --------------- --------------- End of period $ 219,057,766 $ 184,718,216 - ------------------------------------------------------ --------------- ---------------
(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 (UNAUDITED) YEAR ENDED OCTOBER 31, APRIL 30, -------------------------------------------------------------- 1996 1995 1994 1993** 1992 1991 1990(A) ----------- ------ ------ ------ ------ ------ ------- NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 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 0.02 0.03 0.04 0.05 - --------------------------- -------- ------ ------ ----- ------ ------ ------ LESS DISTRIBUTIONS - --------------------------- Distributions from net investment income (0.02) (0.03) (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 $ 1.00 - --------------------------- -------- ------ ------ ----- ------ ------ ------ TOTAL RETURN(B) 1.51% 3.31% 2.12% 1.96% 2.68% 4.04% 5.54% - --------------------------- RATIOS TO AVERAGE NET ASSETS - --------------------------- Expenses 0.60%* 0.60% 0.59% 0.57% 0.56% 0.56% 0.48%* - --------------------------- Net investment income 3.03%* 3.26% 2.11% 1.95% 2.66% 3.94% 5.32%* - --------------------------- Expense waiver/ reimbursement(c) 0.32%* 0.30% 0.18% 0.25% 0.30% 0.21% 0.28%* - --------------------------- SUPPLEMENTAL DATA - --------------------------- Net assets, end of period (000 omitted) $219,058 $184,718 $190,423 $140,446 $140,118 $140,113 $138,738 - ---------------------------
* Computed on an annualized basis. ** Prior to November 6, 1992, the Fund provided two classes of shares. (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 charge or contingent deferred sales charge, if applicable. (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) CONNECTICUT MUNICIPAL CASH TRUST NOTES TO FINANCIAL STATEMENTS APRIL 30, 1996 (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 fifteen portfolios. The financial statements included herein are only those of Connecticut Municipal Cash Trust (the "Fund"), a non-diversified portfolio. The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. The investment objective of the fund is current income exempt from federal regular income tax and Connecticut Dividend and Interest Income Tax consistent with stability of principal. (2) SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with generally accepted accounting principles. 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, 1996, 59% 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 CONNECTICUT MUNICIPAL CASH TRUST - -------------------------------------------------------------------------------- supported (backed) by a letter of credit from any one institution or agency did not exceed 9% 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 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, 1996, is as follows:
ACQUISITION ACQUISITION SECURITY DATE COST ------------------------------------------------------- ---------------- ------------- Clipper Connecticut Tax Exempt Trust, (Series 1994-1) May 6, 1994 $9,933,170 Puerto Rico Public Building Authority July 25, 1995 400,000
USE OF ESTIMATES--The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ from those estimated. OTHER--Investment transactions are accounted for on 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, 1996, capital paid-in aggregated $219,057,766. Transactions in shares were as follows:
SIX MONTHS ENDED YEAR ENDED APRIL 30, 1996 OCTOBER 31, 1995 - ---------------------------------------------------- ------------------ ----------------- Shares sold 330,898,778 522,140,169 - ---------------------------------------------------- Shares issued to shareholders in payment of distributions declared 886,039 1,971,315 - ---------------------------------------------------- Shares redeemed (297,445,267) (529,816,470) - ---------------------------------------------------- ---------------- --------------- Net change resulting from share transactions 34,339,550 (5,704,986) - ---------------------------------------------------- ---------------- ---------------
CONNECTICUT 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 0.50% of the Fund's average daily net assets. The Adviser may voluntarily choose to waive any portion of its fee and/or reimburse 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 Services Company ("FServ"), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. The fee paid to FServ 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 0.25% of daily average net assets of the Fund for the period. The fee paid to FSS is used to finance certain services for shareholders and to maintain shareholder accounts. FSS may voluntarily choose to waive any portion of its fee. FSS can modify or terminate this voluntary waiver at any time at its sole discretion. TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--FServ, through its subsidiary, Federated Shareholders Services Company serves as transfer and dividend disbursing agent for the Fund. The fee paid to FServ is based on the size, type, and number of accounts and transactions made by shareholders. PORTFOLIO ACCOUNTING FEES--FServ maintains the Fund's accounting records for which it receives a fee. The fee is based on the level of the Fund's average daily net assets for the period, plus out-of-pocket expenses. INTERFUND TRANSACTIONS--During the period ended April 30, 1996, the Fund engaged in purchase and sale transactions with funds that have a common investment adviser (or affiliated investment advisers), common Directors/Trustees, and/or common Officers. These purchase and sale transactions were made at current market value pursuant to Rule 17a-7 under the Act amounting to $123,070,000 and $144,670,000, respectively. GENERAL--Certain of the Officers and Trustees of the Fund 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. Executive Vice President Edward L. Flaherty, Jr. Edward C. Gonzales Glen R. Johnson Executive Vice President and Peter E. Madden Treasurer Gregor F. Meyer John W. McGonigle John E. Murray, Jr. Executive Vice President and Wesley W. Posvar Secretary Marjorie P. Smuts Richard B. Fisher Vice President David M. Taylor Treasurer Charles H. Field 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 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. - -------------------------------------------------------------------------------- MINNESOTA - -------------------------------------------------------------------------------- MUNICIPAL - -------------------------------------------------------------------------------- CASH - -------------------------------------------------------------------------------- TRUST - -------------------------------------------------------------------------------- SEMI-ANNUAL REPORT TO SHAREHOLDERS April 30, 1996 FEDERATED SECURITIES CORP. (LOGO)Z - --------------------------------------------- Distributor A subsidiary of FEDERATED INVESTORS FEDERATED INVESTORS TOWER PITTSBURGH, PA 15222-3779 314229873 314229402 1052807 (6/96) PRESIDENT'S MESSAGE - -------------------------------------------------------------------------------- Dear Shareholder: I am pleased to present your Semi-Annual Report to Shareholders of Minnesota Municipal Cash Trust, a portfolio of Federated Municipal Trust, which covers the six-month period from November 1, 1995, through April 30, 1996. The report begins with a discussion with the fund's portfolio manager, followed by a complete listing of the fund's holdings and its financial statements. Financial highlights tables are provided for the fund's Institutional Shares and Cash Series Shares. The fund is a convenient way to put your ready cash to work pursuing double-tax-free income--free from federal regular income tax and Minnesota personal income tax*--through a portfolio concentrated in high-quality, short-term Minnesota municipal securities. As a shareholder, you have the opportunity to earn a greater after-tax yield than you could in a comparable high-quality taxable investment. Of course, the fund also brings you the added benefits of daily liquidity and stability of principal.** During the report period, the fund paid double-tax-free dividends of $0.02 per share for both Institutional Shares and Cash Series Shares. Its total net assets of $404.9 million were spread among Minnesota securities that use municipal bond financing for projects as varied as health care, housing, community development, and transportation. You can count on Minnesota Municipal Cash Trust to seek the best tax-free income opportunities for your cash. As always, we will strive to provide you with the highest level of professional service. We appreciate your support and invite your questions or comments. Sincerely, LOGO Glen R. Johnson President June 15, 1996 * Income may be subject to the federal alternative minimum tax. ** 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. An investment in the fund is neither insured nor guaranteed by the U.S. Government. INVESTMENT REVIEW - -------------------------------------------------------------------------------- An Interview with Fund Portfolio Manager, Mary Jo Ochson, C.F.A. Q Can you comment on the economy and the interest rate environment during the semi-annual reporting period? A The Federal Reserve Board (the "Fed") eased monetary policy twice over the six-month reporting period ending in April. Faced with slowing economic growth and benign inflationary pressures, the Fed lowered the federal funds target rate from 5.75% to 5.50% in late December 1995, and again from 5.50% to the current 5.25% at the end of January 1996. For the December 1995 move, the Fed cited a better-than-expected inflation outlook as the impetus behind the easing, although a sluggish manufacturing sector and lackluster consumer spending was thought to have had an influence. In January 1996, the Fed appeared swayed by the dampening effects of high debt loads and employment uncertainty on consumer consumption along with sluggish export growth. Through this period, the short-end of the government and municipal yield curves anticipated the policy moves from the Fed, and amid signs of a weakening economy looked forward to additional eases in the not too distant future. February and March of 1996, however, brought about a shift in market psychology regarding both the extent and direction of changes in monetary policy by the Fed. Recovering from the harsh winter weather and spurred onward by lower interest rates, the housing market and consumer spending breathed some life into the economy, which had seemed on the verge of recession earlier in the year. The market was then stunned in early March 1996 by the report of a 705,000 increase in non-farm payroll jobs for February 1996--the largest increase in 12 years--which caused the yields on short-term securities to rise by as much as 25 basis points. Now confronted with a more robust economy than previously thought, market participants have moved expectations toward a more neutral policy from the Fed in the near term with a possible tightening, or increase in rates, later in 1996. Yields on short-term government securities reflected this rather volatile mood in the markets. The yield on the three-month Treasury bill began November 1995 at 5.48%, declined to 4.89% by mid-February 1996, and ended April 1996 at 5.14%. Correspondingly, the yield on the one-year Treasury bill began November 1995 at 5.46%, fell to 4.79% in mid-February 1996, but rose to 5.62% by the end of April 1996. Q How has the fund's yield responded to this interest rate environment? A The fund's yield was affected by Fed policy (interest rate cuts), changes in market expectations, as well as supply and demand imbalances unique to the municipal money markets. However, because of these imbalances the fund's yield may experience more volatility on a weekly basis than Treasury yields and taxable money fund yields. In general, yields on municipal money market funds were lower over the period. The seven-day net yield of the fund's Institutional Shares on April 30, 1996 was 3.62% compared to 3.79% six months ago.* The seven-day net yield of the fund's Cash Series Shares on April 30, 1996 was 3.12% compared to 3.39% six months ago.* *Past performance does not guarantee future results. Yield will vary. - -------------------------------------------------------------------------------- Q What was your strategy for managing the fund over the semi-annual reporting period? A The fund generally maintained a neutral average maturity range of 55 to 60 days during the reporting period. However, active management of the average maturity of the fund is strongly influenced by the seasonal nature of Minnesota fixed rate note issuance. Minnesota note supply is heaviest in the first quarter. Heavy supply results in attractive note season yields. Thus in anticipation of the first quarter, the fund was temporarily repositioned within a shorter average maturity range of 35 to 45 days. The fund purchased attractively priced paper during note season and extended its average maturity back to the neutral range for the duration of the period. Going forward we will continue to monitor the overall rate environment, the economic outlook for the State and supply factors as prime indicators of appropriate fund strategy. Q What is your outlook for rates in the near future? A With growth of 2.3% in the first quarter of 1996, the economy appears to be on firmer footing than it was in the fourth quarter of 1995, when gross domestic product grew at only 0.5%. As a result, the Fed should not feel the urgency to lower short-term rates further. By the same token, however, with areas of softness in the economy still evident and with consumer indebtedness at very high levels, there also appears to be no danger of the economy overheating in the near term. As long as inflation remains benign, the Fed should be content to sit on the sidelines until confronted with signs of undue strength or considerable weakness in economic growth. The average maturity of the fund will continue to be managed in accordance with our expectation for a stable monetary policy in the near term. MINNESOTA MUNICIPAL CASH TRUST PORTFOLIO OF INVESTMENTS APRIL 30, 1996 (UNAUDITED) - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ----------- ----------------------------------------------------- -------- ------------ SHORT-TERM MUNICIPALS--99.5% - ------------------------------------------------------------------------- MINNESOTA--97.0% ----------------------------------------------------- $ 6,400,000 Anoka City, MN Solid Waste Disposal Authority, 3.65% CP (United Power Associates)/(National Rural Utilities Cooperative Finance Corp. GTD), Mandatory Tender 7/12/1996 VMIG-1 $ 6,400,000 ----------------------------------------------------- 2,050,000 Anoka, MN, Multifamily Housing Revenue Bonds Weekly VRDNs (Walker Plaza Project)/(First Bank NA, Minneapolis LOC) A-1 2,050,000 ----------------------------------------------------- 10,000,000 Anoka-Hennepin, MN ISD 11, GO Certificates of Indebtedness (Series 1996A), 3.44% TANs (Minnesota Tax and Aid Anticipation Borrowing Program GTD), 3/13/1997 MIG1 10,000,642 ----------------------------------------------------- 3,880,000 Apple Valley, MN, IDRB (Series 1995) Weekly VRDNs (AV Development Company Project)/(Firstar Bank, Minnesota LOC) A-1 3,880,000 ----------------------------------------------------- 2,650,000 Baudette, MN, IDR (Series 1989) Weekly VRDNs (Reid Powell, Inc.)/(Nationsbank of Georgia, N.A. LOC) P-1 2,650,000 ----------------------------------------------------- 1,000,000 Becker, MN, PCR (Series 1992A), 3.15% CP (Northern States Power Co.), Mandatory Tender 5/23/1996 A-1+ 1,000,000 ----------------------------------------------------- 9,000,000 Becker, MN, PCR (Series 1992A), 3.20% CP (Northern States Power Co.), Mandatory Tender 6/18/1996 A-1+ 9,000,000 ----------------------------------------------------- 2,000,000 Becker, MN, PCR (Series 1993-B), 3.45% CP (Northern States Power Co.), Mandatory Tender 7/11/1996 A-1+ 2,000,000 ----------------------------------------------------- 2,000,000 Becker, MN, PCR (Series 1993A & B), 3.15% CP (Northern States Power Co.), Mandatory Tender 5/23/1996 A-1+ 2,000,000 ----------------------------------------------------- 6,000,000 Becker, MN, PCR (Series 1993A & B), 3.20% CP (Northern States Power Co.), Mandatory Tender 6/18/1996 A-1+ 6,000,000 -----------------------------------------------------
MINNESOTA MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ----------- ----------------------------------------------------- -------- ------------ SHORT-TERM MUNICIPALS--CONTINUED - ------------------------------------------------------------------------- $ 4,000,000 Becker, MN, PCR (Series 1993A & B), 3.60% CP (Northern States Power Co.), Mandatory Tender 5/15/1996 A-1+ $ 4,000,000 ----------------------------------------------------- 4,500,000 Becker, MN, PCR (Series 1993A & B), 3.65% CP (Northern States Power Co.), Mandatory Tender 6/12/1996 A-1+ 4,500,000 ----------------------------------------------------- 500,000 Beltrami County, MN, Environmental Control Authority Daily VRDNs (Northwood Panelboard Co.)/(Union Bank of Switzerland, Zurich LOC) A-1+ 500,000 ----------------------------------------------------- 1,400,000 Beltrami County, MN, Environmental Control Authority, (Series 1995) Daily VRDNs (Northwood Panelboard Co.)/(Union Bank of Switzerland, Zurich LOC) A-1+ 1,400,000 ----------------------------------------------------- 2,855,000 Blaine, MN, IDRB (Series 1996) Weekly VRDNs (S & S of Minnesota, LLC Project)/(Norwest Bank Minnesota, Minneapolis LOC) A-1+ 2,855,000 ----------------------------------------------------- 8,000,000 Bloomington, MN Port Authority, Special Tax Revenue Refunding Bonds (Series 1994B) Weekly VRDNs (Mall of America)/(FSA INS)/(Credit Local de France LIQ) A-1+ 8,000,000 ----------------------------------------------------- 3,600,000 Bloomington, MN, IDRB (Series 1995) Weekly VRDNs (Now Technologies, Inc. Project)/(Norwest Bank Minnesota, Minneapolis LOC) A-1+ 3,600,000 ----------------------------------------------------- 5,000,000 Bloomington, MN, Multi-Family Housing Weekly VRDNs (Crow/Bloomington Apartments)/(Citibank NA, New York LOC) P-1 5,000,000 ----------------------------------------------------- 8,080,000 Burnsville, MN, Multi-Family Housing Weekly VRDNs (Berkshire of Burnsville)/(Sumitomo Bank Ltd., Osaka LOC) A-1 8,080,000 ----------------------------------------------------- 3,280,000 Byron, MN IDB Weekly VRDNs (Schmidt Printing)/ (Norwest Bank Minnesota, Minneapolis LOC) A-1+ 3,280,000 ----------------------------------------------------- 1,275,000 Chanhassen, MN IDA, (Series 1995) Weekly VRDNs (Building Management Group, L.L.C. Project)/(Norwest Bank Minnesota, Minneapolis LOC) A-1+ 1,275,000 -----------------------------------------------------
MINNESOTA MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ----------- ----------------------------------------------------- -------- ------------ SHORT-TERM MUNICIPALS--CONTINUED - ------------------------------------------------------------------------- $ 1,270,000 Chaska, MN IDA Weekly VRDNs (Laeration Industries)/ (Norwest Bank Minnesota, Minneapolis LOC) A-1+ $ 1,270,000 ----------------------------------------------------- 5,000,000 Cloquet, MN, Industrial Facilities Revenue Bonds (Series 1996A) Weekly VRDNs (Potlatch Corp.)/(Credit Suisse, Zurich LOC) P-1 5,000,000 ----------------------------------------------------- 2,900,000 Coon Rapids, MN Hospital Authority, (Series 1985) Weekly VRDNs (Health Central System)/(First Bank NA, Minneapolis LOC) A-1 2,900,000 ----------------------------------------------------- 5,400,000 Crystal, MN IDA Weekly VRDNs (Crystal Gallery Mall, MN)/(Citibank NA, New York LOC) P-1 5,400,000 ----------------------------------------------------- 10,745,000 Dakota County & Washington County MN Hsg & Redev Auth, Bloomington Mtg Rev, 5.75% TOBs (GNMA COL)(Meridian Bank, Reading, PA LIQ), Optional Tender 9/1/1996 NR(1) 10,806,009 ----------------------------------------------------- 1,775,000 Dakota County, MN Housing & Redevelopment Authority, (Custodial Receipts), 4.00% TOBs (GNMA COL)/(Meridian Bank, Reading, PA LIQ), Optional Tender 9/1/1996 NR(1) 1,775,000 ----------------------------------------------------- 3,000,000 (a) Dakota County, Washington County & Anoka City, MN Housing & Redevelopment Authority, Merlots-Series H, 4.00% TOBs (United States Treasury COL)/(Meridian Bank, Reading, PA LIQ), Optional Tender 6/1/1996 NR(1) 3,000,000 ----------------------------------------------------- 8,000,000 Eagan, MN, Multi-Family Housing (Series 1992A) Weekly VRDNs (Cinnamon Ridge)/(Mellon Bank NA, Pittsburgh LOC) VMIG1 8,000,000 ----------------------------------------------------- 855,000 Eden Prairie, MN IDA, #194 Weekly VRDNs (Richard W. Cohen Project)/(Norwest Bank Minnesota, Minneapolis LOC) P-1 855,000 ----------------------------------------------------- 90,468 Eden Prairie, MN IDA, (Series 1987) Weekly VRDNs (Minnesota Supply Co.)/(Norwest Bank Minnesota, Minneapolis LOC) P-1 90,468 -----------------------------------------------------
MINNESOTA MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ----------- ----------------------------------------------------- -------- ------------ SHORT-TERM MUNICIPALS--CONTINUED - ------------------------------------------------------------------------- $ 1,450,000 Eden Prairie, MN IDA, (Series 1995) Weekly VRDNs (Robert Lothenbach Project)/(Norwest Bank Minnesota, Minneapolis LOC) A-1+ $ 1,450,000 ----------------------------------------------------- 1,200,000 Elk River, MN Weekly VRDNs (Tescom Project)/ (Norwest Bank Minnesota, Minneapolis LOC) P-1 1,200,000 ----------------------------------------------------- 4,025,000 Fridley, MN , (Series 1984) Weekly VRDNs (River Road Investors Project)/(Citibank NA, New York LOC) A-1 4,025,000 ----------------------------------------------------- 1,000,000 Hennepin Co. MN, (Series 1995C) Weekly VRDNs (Hennepin Co. MN GTD) NR(1) 1,000,000 ----------------------------------------------------- 2,500,000 Hennepin Co. MN, GO ULT Notes, 4.25% Bonds, 12/1/1996 NR(1) 2,513,545 ----------------------------------------------------- 3,150,000 Hennepin County, MN Independent School District No. 286, GO Certificates of Indebtedness of 1996, 3.38% TANs (Minnesota Tax and Aid Anticipation Borrowing Program GTD), 3/21/1997 NR(2) 3,150,811 ----------------------------------------------------- 5,500,000 Hubbard County, MN, Solid Waste Disposal (Series 1990) Weekly VRDNs (Potlatch Corp.)/(Credit Suisse, Zurich LOC) A-1+ 5,500,000 ----------------------------------------------------- 1,135,000 Litchfield, MN ISD, Certificates of Indebtedness, 3.33% TANs (Minnesota Tax and Aid Anticipation Borrowing Program GTD), 3/28/1997 NR(2) 1,135,296 ----------------------------------------------------- 4,000,000 Maple Grove, MN IDA, (Series 1991A) Weekly VRDNs (Eagle Ridge, MN Apartments)/(Sumitomo Bank Ltd., Osaka LOC) A-1 4,000,000 ----------------------------------------------------- 3,000,000 Maple Grove, MN IDA, (Series 1991B) Weekly VRDNs (Eagle Ridge, MN Apartments)/(First Bank NA, Minneapolis LOC) A-1 3,000,000 ----------------------------------------------------- 2,025,000 Maplewood, MN, Multi-Family Housing (Series 1993) Weekly VRDNs (Silver Ridge Project)/(Federal Home Loan Bank of Chicago LOC) A-1+ 2,025,000 ----------------------------------------------------- 2,610,000 Mendota Heights, MN, Multi-Family Revenue Bonds Weekly VRDNs (Lexington Heights Apartments)/ (Sumitomo Bank Ltd., Osaka LOC) A-1 2,610,000 -----------------------------------------------------
MINNESOTA MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ----------- ----------------------------------------------------- -------- ------------ SHORT-TERM MUNICIPALS--CONTINUED - ------------------------------------------------------------------------- $ 4,455,000 Minneapolis CDA, Refunding Revenue Bonds Weekly VRDNs (Riverplace Project (The Pinnacle Apartments)/ (Sumitomo Bank Ltd., Osaka LOC) A-1 $ 4,455,000 ----------------------------------------------------- 715,000 Minneapolis, MN IDA Weekly VRDNs (JTJ Co.)/ (First Bank NA, Minneapolis LOC) P-1 715,000 ----------------------------------------------------- 7,000,000 Minneapolis, MN, (Series 1995B) Weekly VRDNs VMIG1 7,000,000 ----------------------------------------------------- 4,460,000 (a) Minneapolis/St. Paul MN Housing Finance Board, SFM Revenue Bonds, Merlots (Series D), 4.125% TOBs (GNMA COL), Optional Tender 7/1/1996 NR(1) 4,460,000 ----------------------------------------------------- 1,141,000 (a) Minneapolis/St. Paul MN Housing Finance Board, SFM Revenue Bonds, 4.00% TOBs (GNMA COL)/(Meridian Bank, Reading, PA LIQ), Optional Tender 8/1/1996 NR(1) 1,141,000 ----------------------------------------------------- 8,000,000 Minnesota State Commissioner of Iron Range Resources & Rehabilitation, (Series 1991) Weekly VRDNs (Louisiana-Pacific Corp.)/(Wachovia Bank of NC, NA, Winston-Salem LOC) P-1 8,000,000 ----------------------------------------------------- 830,000 Minnesota State HFA, Rental Housing Bonds (Series 1995 D), 3.80% Bonds (MBIA INS), 8/1/1996 NR(1) 830,000 ----------------------------------------------------- 5,900,000 Minnesota State HFA, Single Family Mortgage Bonds (1995 Series M), 3.50% TOBs (Societe Generale, Paris GIC), Mandatory Tender 12/12/1996 VMIG1 5,900,000 ----------------------------------------------------- 800,000 Minnesota State HFA, Single Family Mortgage Bonds (1995 Series N), 3.60% TOBs (Societe Generale, Paris GIC), Mandatory Tender 12/12/1996 VMIG1 800,000 ----------------------------------------------------- 2,200,000 Minnesota State HFA, Single Family Mortgage Bonds (1995 Series O), 3.60% TOBs (Societe Generale, Paris GIC), Optional Tender 12/12/1996 VMIG1 2,200,000 ----------------------------------------------------- 2,770,000 Minnesota State HFA, Single Family Mortgage Bonds (Series 1993-T), 3.50% TOBs (Societe Generale, Paris GIC), Mandatory Tender 12/12/1996 VMIG1 2,770,000 ----------------------------------------------------- 3,800,000 Minnesota State Higher Education Coordinating Board, (Series 1992A) Weekly VRDNs (First Bank NA, Minneapolis LIQ) VMIG1 3,800,000 -----------------------------------------------------
MINNESOTA MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ----------- ----------------------------------------------------- -------- ------------ SHORT-TERM MUNICIPALS--CONTINUED - ------------------------------------------------------------------------- $ 7,000,000 Minnesota State Higher Education Coordinating Board, 1992 (Series B) Weekly VRDNs (First Bank NA, Minneapolis LIQ) VMIG1 $ 7,000,000 ----------------------------------------------------- 3,700,000 Minnesota State Higher Education Coordinating Board, 1992 (Series C) Weekly VRDNs (First Bank NA, Minneapolis LIQ) VMIG1 3,700,000 ----------------------------------------------------- 6,500,000 Minnesota State Higher Education Coordinating Board, 1992 (Series C) Weekly VRDNs (First Bank NA, Minneapolis LIQ) VMIG1 6,500,000 ----------------------------------------------------- 4,300,000 Minnesota State Higher Education Facility Authority Weekly VRDNs (Carlton College)/(Swiss Bank Corp., Basle LIQ) VMIG1 4,300,000 ----------------------------------------------------- 3,000,000 Minnesota State Higher Education Facility Authority, (Series Four-A2) Weekly VRDNs (University of St. Thomas) A-1 3,000,000 ----------------------------------------------------- 5,925,000 Minnesota State, 7.00% Bonds (United States Treasury PRF), 8/1/1996 (@100) NR(1) 5,973,385 ----------------------------------------------------- 1,500,000 Minnesota State, 7.00% Bonds, 8/1/1996 (@100) NR(1) 1,512,747 ----------------------------------------------------- 11,000,000 Minnesota Tax and Aid Anticipation Borrowing Program, (Series 1995A), 4.25% TANs (Minnesota Tax and Aid Anticipation Borrowing Program GTD), 8/23/1996 NR(2) 11,009,848 ----------------------------------------------------- 8,750,000 Minnesota Tax and Aid Anticipation Borrowing Program, Certificates of Participation (Series 1996A), 4.25% TANs (Minnesota Aid Anticipation Pooled Borrowing Program)/(Minnesota Tax and Aid Anticipation Borrowing Program GTD), 2/21/1997 MIG1 8,801,467 ----------------------------------------------------- 7,300,000 Minnesota Tax and Aid Anticipation Borrowing Program, Certificates of Participation, Aid Anticipation Series 1995B, 4.30% TRANs (Minnesota Tax and Aid Anticipation Borrowing Program GTD), 9/13/1996 NR(2) 7,307,740 ----------------------------------------------------- 1,515,000 Minnetonka, MN, IDRB (Series 1996) Weekly VRDNs (PGI Cos., Inc.)/(Norwest Bank Minnesota, Minneapolis LOC) A-1+ 1,515,000 -----------------------------------------------------
MINNESOTA MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ----------- ----------------------------------------------------- -------- ------------ SHORT-TERM MUNICIPALS--CONTINUED - ------------------------------------------------------------------------- $ 5,900,000 Minnetonka, MN, Multifamily Housing Revenue Refunding Bonds (Series 1995) Weekly VRDNs (Southampton Apartments Project (MN))/(National Bank of Canada, Montreal LOC) P-1 $ 5,900,000 ----------------------------------------------------- 2,800,000 Moorehead, MN Independent School District, Certificates of Indebtedness, 3.35% TANs (Minnesota Tax and Aid Anticipation Borrowing Program GTD), 3/27/1997 NR(2) 2,800,844 ----------------------------------------------------- 1,300,000 New Brighton, MN, IDR Weekly VRDNs (Unicare Homes, Inc.)/(Banque Paribas, Paris LOC) A-2 1,300,000 ----------------------------------------------------- 1,000,000 New Hope, MN IDRB, (Series 1994) Weekly VRDNs (Gaines and Hanson Printing Co.)/(Norwest Bank Minnesota, Minneapolis LOC) A-1+ 1,000,000 ----------------------------------------------------- 3,825,000 New Hope, MN Weekly VRDNs (Paddock Labs)/ (Norwest Bank Minnesota, Minneapolis LOC) P-1 3,825,000 ----------------------------------------------------- 2,580,000 Olmsted County, MN Building Authority, Certificates of Participation Weekly VRDNs (Human Services Infrastructure)/(Toronto-Dominion Bank LOC) A-1+ 2,580,000 ----------------------------------------------------- 2,405,000 Orono, MN ISD 278, GO Certificates of Indebtedness, (Series 1996), 3.53% TANs (Minnesota Tax and Aid Anticipation Borrowing Program GTD), 3/13/1997 NR(2) 2,406,794 ----------------------------------------------------- 2,600,000 Perham, MN IDA Weekly VRDNs (Land O' Lakes, Inc.)/ (Rabobank Nederland, Utrecht LOC) A-1+ 2,600,000 ----------------------------------------------------- 1,365,000 Plymouth, MN Weekly VRDNs (Nuaire, Inc.)/(Norwest Bank Minnesota, Minneapolis LOC) P-1 1,365,000 ----------------------------------------------------- 4,500,000 Plymouth, MN, IDRB (Series 1994) Weekly VRDNs (Olympic Steel, Inc.)/(National City Bank, Cleveland, OH LOC) P-1 4,500,000 ----------------------------------------------------- 1,435,000 Port of Austin, MN Weekly VRDNs (Mower House Color)/(Norwest Bank Minnesota, Minneapolis LOC) P-1 1,435,000 ----------------------------------------------------- 8,000,000 Rochester, MN Health Care Facility Authority Weekly VRDNs (Mayo Foundation) VMIG1 8,000,000 ----------------------------------------------------- 4,000,000 Rochester, MN Health Care Facility Authority Weekly VRDNs (Mayo Foundation) VMIG1 4,000,000 -----------------------------------------------------
MINNESOTA MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ----------- ----------------------------------------------------- -------- ------------ SHORT-TERM MUNICIPALS--CONTINUED - ------------------------------------------------------------------------- $ 2,000,000 Rochester, MN Health Care Facility Authority, (Series C), 3.20% CP (Mayo Foundation), Mandatory Tender 6/10/1996 VMIG1 $ 2,000,000 ----------------------------------------------------- 1,000,000 Rogers, MN IDA Weekly VRDNs (Metal Sales Manufacturing Corp)/(Society National Bank, Cleveland, OH LOC) P-1 1,000,000 ----------------------------------------------------- 2,870,000 Rogers, MN IDA, IDRB Weekly VRDNs (DAC Development, LLC Project)/(Norwest Bank Minnesota, Minneapolis LOC) A-1+ 2,870,000 ----------------------------------------------------- 15,950,000 Rosemount, MN, PCR (Series 1984) Weekly VRDNs (Koch Refining Co.) A-1+ 15,950,000 ----------------------------------------------------- 1,645,000 St. Cloud, MN Housing & Redevelopment Authority, Revenue Refunding Bonds (Series 1994A) Weekly VRDNs (Coborn's Incorporated Project)/(Norwest Bank Minnesota, Minneapolis LOC) A-1+ 1,645,000 ----------------------------------------------------- 2,890,000 St. Cloud, MN Housing & Redevelopment Authority, Revenue Refunding Bonds (Series 1994B) Weekly VRDNs (Coborn's Incorporated Project)/(Norwest Bank Minnesota, Minneapolis LOC) A-1+ 2,890,000 ----------------------------------------------------- 5,000,000 St. Paul, MN Housing & Redevelopment Authority Weekly VRDNs (District Cooling St Paul, Inc.)/(Credit Local de France LOC) A-1+ 5,000,000 ----------------------------------------------------- 500,000 St. Paul, MN Housing & Redevelopment Authority Weekly VRDNs (United Way)/(First Bank NA, Minneapolis LOC) A-1 500,000 ----------------------------------------------------- 1,650,000 St. Paul, MN Housing & Redevelopment Authority, (Series 1994) Weekly VRDNs (Minnesota Children's Museum)/(First Bank NA, Minneapolis LOC) A-1 1,650,000 ----------------------------------------------------- 2,000,000 St. Paul, MN Housing & Redevelopment Authority, District Cooling Revenue Bonds (1995 Series I) Weekly VRDNs (Credit Local de France LOC) P-1 2,000,000 -----------------------------------------------------
MINNESOTA MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ----------- ----------------------------------------------------- -------- ------------ SHORT-TERM MUNICIPALS--CONTINUED - ------------------------------------------------------------------------- $ 4,600,000 St. Paul, MN Port Authority, (Series 1991) Weekly VRDNs (West Gate Office)/(First Bank NA, Minneapolis LOC) A-1 $ 4,600,000 ----------------------------------------------------- 9,700,000 St. Paul, MN, Variable Rate Demand Water Revenue Bonds, Series 1994D Weekly VRDNs A-1+ 9,700,000 ----------------------------------------------------- 1,850,000 St. Peter, MN Independent School District #508, Aid Anticipation Certificates of Indebtedness, 3.96% BANs (Minnesota Tax and Aid Anticipation Borrowing Program GTD), 8/29/1996 NR(2) 1,850,170 ----------------------------------------------------- 1,000,000 Steele Couny, MN, IDRB (Series 1994) Weekly VRDNs (Blount, Inc.)/(Nationsbank of Georgia, N.A. LOC) A-1 1,000,000 ----------------------------------------------------- 6,500,000 University of Minnesota, (Series F), 3.25% TOBs (Regents of University of Minnesota), Optional Tender 8/1/1996 A-1+ 6,500,000 ----------------------------------------------------- 4,205,000 Victoria, MN, IDRB, (Series 1996A) Weekly VRDNs (HEI, Inc. Project)/(Norwest Bank Minnesota, Minneapolis LOC) A-1+ 4,205,000 ----------------------------------------------------- 1,420,000 Victoria, MN, IDRB, (Series 1996B) Weekly VRDNs (HEI, Inc. Project)/(Norwest Bank Minnesota, Minneapolis LOC) A-1+ 1,420,000 ----------------------------------------------------- 2,315,000 Waseca, MN I.S.D. #829, GO UT Notes, 3.57% TANs, 3/26/1997 NR(2) 2,315,792 ----------------------------------------------------- 12,910,000 Washington County, MN Housing & Redevelopment Authority, (Series 90) Weekly VRDNs (Granada Pond Apartments)/(Sumitomo Bank Ltd., Osaka LOC) A-1 12,910,000 ----------------------------------------------------- 1,405,000 Wells, MN, 5.00% TOBs (Stokely, Inc.)/(NBD Bank, Indiana LOC), Optional Tender 6/1/1996 A-1+ 1,405,000 ----------------------------------------------------- 4,705,000 White Bear, MN Weekly VRDNs (Thermoform Plastic, Inc.)/(Norwest Bank Minnesota, Minneapolis LOC) A-1+ 4,705,000 ----------------------------------------------------- 2,165,000 White Bear, MN, Variable Rate Demand Industrial Revenue Bonds Weekly VRDNs (N.A. Ternes Project)/ (Firstar Bank, Minnesota LOC) A-1 2,165,000 -----------------------------------------------------
MINNESOTA MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ----------- ----------------------------------------------------- -------- ------------ $ 2,000,000 Winsted, MN IDA Weekly VRDNs (Sterner Lighting Systems)/(Fleet National Bank, Providence, R.I. LOC) A-1 $ 2,000,000 ----------------------------------------------------- ------------ Total 392,861,558 ----------------------------------------------------- ------------ PUERTO RICO--2.5% ----------------------------------------------------- 10,000,000 Puerto Rico Government Development Bank, 3.50% CP, Mandatory Tender 7/12/1996 VMIG1 10,000,000 ----------------------------------------------------- ------------ TOTAL INVESTMENTS (AT AMORTIZED COST)(B) $402,861,558 ----------------------------------------------------- ------------
Securities that are subject to Alternative Minimum Tax represent 30.5% of the portfolio as calculated based upon total portfolio market value. * Please refer to the Appendix of the Statement of Additional Information for an explanation of the credit ratings. Current credit ratings are unaudited. (a) Denotes a restricted security which is subject to restrictions on resale, under Federal Securities laws. This security has been determined to be liquid under criteria established by the Board of Trustees. At the end of the period, these securities amounted to $8,601,000 which represents 2.1% of net assets. (b) Also represents cost for federal tax purposes. Note: The categories of investments are shown as a percentage of net assets ($404,975,479) at April 30, 1996. MINNESOTA MUNICIPAL CASH TRUST - -------------------------------------------------------------------------------- The following acronym(s) are used throughout this portfolio: BANs -- Bond Anticipation Notes CDA -- Community Development Administration COL -- Collateralized CP -- Commercial Paper FSA -- Financial Security Assurance GIC -- Guaranteed Investment Contract GNMA -- Government National Mortgage Association GO -- General Obligation GTD -- Guaranty HFA -- Housing Finance Authority IDA -- Industrial Development Authority IDB -- Industrial Development Bond IDR -- Industrial Development Revenue IDRB -- Industrial Development Revenue Bond INS -- Insured ISD -- Independent School District LIQ -- Liquidity Agreement LOC -- Letter of Credit MBIA -- Municipal Bond Investors Assurance PCR -- Pollution Control Revenue PRF -- Prerefunded SFM -- Single Family Mortgage TANs -- Tax Anticipation Notes TOBs -- Tender Option Bonds TRANs -- Tax and Revenue Anticipation Notes UT -- Unlimited Tax VRDNs -- Variable Rate Demand Notes
(See Notes which are an integral part of the Financial Statements) MINNESOTA MUNICIPAL CASH TRUST STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1996 (UNAUDITED) - -------------------------------------------------------------------------------- ASSETS: - -------------------------------------------------------------------------------- Total investments in securities, at amortized cost and value $402,861,558 - -------------------------------------------------------------------------------- Cash 556,057 - -------------------------------------------------------------------------------- Income receivable 2,787,882 - -------------------------------------------------------------------------------- Deferred expenses (1,401) - -------------------------------------------------------------------------------- ------------ Total assets 406,204,096 - -------------------------------------------------------------------------------- LIABILITIES: - -------------------------------------------------------------------------------- Income distribution payable $1,085,225 - ------------------------------------------------------------------- Accrued expenses 143,392 - ------------------------------------------------------------------- ---------- Total liabilities 1,228,617 - -------------------------------------------------------------------------------- ------------ NET ASSETS for 404,975,479 shares outstanding $404,975,479 - -------------------------------------------------------------------------------- ------------ NET ASSET VALUE, Offering Price and Redemption Proceeds Per Share: - -------------------------------------------------------------------------------- INSTITUTIONAL SHARES: - -------------------------------------------------------------------------------- $212,223,121 / 212,223,121 shares outstanding $1.00 - -------------------------------------------------------------------------------- ------------ CASH SERIES SHARES: - -------------------------------------------------------------------------------- $192,752,358 / 192,752,358 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, 1996 (UNAUDITED) - -------------------------------------------------------------------------------- INVESTMENT INCOME: - ------------------------------------------------------------------------------------ Interest $7,483,354 - ------------------------------------------------------------------------------------ EXPENSES: - --------------------------------------------------------------------- Investment advisory fee $ 786,327 - --------------------------------------------------------------------- Administrative personnel and services fee 148,644 - --------------------------------------------------------------------- Custodian fees 25,306 - --------------------------------------------------------------------- Transfer and dividend disbursing agent fees and expenses 43,436 - --------------------------------------------------------------------- Directors'/Trustees' fees 2,548 - --------------------------------------------------------------------- Auditing fees 6,826 - --------------------------------------------------------------------- Legal fees 3,302 - --------------------------------------------------------------------- Portfolio accounting fees 45,818 - --------------------------------------------------------------------- Distribution services fee--Cash Series Shares 416,852 - --------------------------------------------------------------------- Shareholder services fee--Institutional Shares 283,029 - --------------------------------------------------------------------- Shareholder services fee--Cash Series Shares 208,426 - --------------------------------------------------------------------- Share registration costs 51,438 - --------------------------------------------------------------------- Printing and postage 10,952 - --------------------------------------------------------------------- Insurance premiums 4,556 - --------------------------------------------------------------------- Miscellaneous 2,364 - --------------------------------------------------------------------- ----------- Total expenses 2,039,824 - --------------------------------------------------------------------- Waivers - --------------------------------------------------------------------- Waiver of investment advisory fee $(535,874) - --------------------------------------------------------- Waiver of distribution services--Cash Series Shares (208,426) - --------------------------------------------------------- Waiver of shareholder services fee--Institutional Shares (283,029) - --------------------------------------------------------- --------- Total waivers (1,027,329) - --------------------------------------------------------------------- ----------- Net expenses 1,012,495 - ------------------------------------------------------------------------------------ ---------- Net investment income $6,470,859 - ------------------------------------------------------------------------------------ ----------
(See Notes which are an integral part of the Financial Statements) MINNESOTA MUNICIPAL CASH TRUST STATEMENT OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
SIX MONTHS ENDED (UNAUDITED) YEAR ENDED APRIL 30, 1996 OCTOBER 31, 1995 ---------------- ---------------- INCREASE (DECREASE) IN NET ASSETS: - ------------------------------------------------------ OPERATIONS-- - ------------------------------------------------------ Net investment income $ 6,470,859 $ 12,302,404 - ------------------------------------------------------ ---------------- ---------------- DISTRIBUTIONS TO SHAREHOLDERS-- - ------------------------------------------------------ Distributions from net investment income: - ------------------------------------------------------ Institutional Shares (3,969,013) (8,269,227) - ------------------------------------------------------ Cash Series Shares (2,501,846) (4,033,177) - ------------------------------------------------------ ---------------- ---------------- Change in net assets resulting from distributions to shareholders (6,470,859) (12,302,404) - ------------------------------------------------------ ---------------- ---------------- SHARE TRANSACTIONS-- - ------------------------------------------------------ Proceeds from sale of shares 670,402,652 1,040,754,759 - ------------------------------------------------------ Net asset value of shares issued to shareholders in payment of distributions declared 2,143,633 4,384,166 - ------------------------------------------------------ Cost of shares redeemed (611,434,147) (955,314,263) - ------------------------------------------------------ ---------------- ---------------- Change in net assets resulting from share transactions 61,112,138 89,824,662 - ------------------------------------------------------ ---------------- ---------------- Change in net assets 61,112,138 89,824,662 - ------------------------------------------------------ NET ASSETS: - ------------------------------------------------------ Beginning of period 343,863,341 254,038,679 - ------------------------------------------------------ ---------------- ---------------- End of period $ 404,975,479 $ 343,863,341 - ------------------------------------------------------ ---------------- ----------------
(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 (UNAUDITED) YEAR ENDED OCTOBER 31, APRIL 30, ------------------------------------------------------------- 1996 1995 1994 1993 1992 1991 1990(A) ----------- ------ ------ ------ ------ ------ ------- NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 - ---------------------------------- INCOME FROM INVESTMENT OPERATIONS - ---------------------------------- Net investment income 0.02 0.04 0.03 0.02 0.03 0.05 0.01 - ---------------------------------- LESS DISTRIBUTIONS - ---------------------------------- Distributions from net investment income (0.02) (0.04) (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 $ 1.00 - ---------------------------------- -------- ------ ------ ------ ------ ------ ------ TOTAL RETURN (B) 1.76% 3.82% 2.58% 2.43% 3.19% 4.89% 0.90% - ---------------------------------- RATIOS TO AVERAGE NET ASSETS - ---------------------------------- Expenses 0.30%* 0.30% 0.31% 0.31% 0.31% 0.30% 0.01%* - ---------------------------------- Net investment income 3.51%* 3.77% 2.55% 2.40% 3.10% 4.73% 6.45%* - ---------------------------------- Expense waiver/ reimbursement (c) 0.52%* 0.52% 0.34% 0.34% 0.33% 0.43% 0.69%* - ---------------------------------- SUPPLEMENTAL DATA - ---------------------------------- Net assets, end of period (000 omitted) $212,223 $212,392 $159,704 $165,865 $245,168 $124,603 $75,904 - ----------------------------------
* Computed on an annualized basis. (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 charge or contingent deferred sales charge, if applicable. (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) MINNESOTA MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS--CASH SERIES SHARES - -------------------------------------------------------------------------------- (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED (UNAUDITED) YEAR ENDED OCTOBER 31, APRIL 30, --------------------------------------------------- 1996 1995 1994 1993 1992 1991(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 0.02 0.03 0.04 - ------------------------------------------ LESS DISTRIBUTIONS - ------------------------------------------ Distributions from net investment income (0.02) (0.03) (0.02) (0.02) (0.03) (0.04) - ------------------------------------------ ------- ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 - ------------------------------------------ ------- ------ ------ ------ ------ ------ TOTAL RETURN (B) 1.51% 3.41% 2.17% 2.02% 2.78% 3.60% - ------------------------------------------ RATIOS TO AVERAGE NET ASSETS - ------------------------------------------ Expenses 0.80%* 0.70% 0.71% 0.71% 0.71% 0.64%* - ------------------------------------------ Net investment income 3.00%* 3.37% 2.15% 2.01% 2.75% 4.11%* - ------------------------------------------ Expense waiver/reimbursement (c) 0.52%* 0.62% 0.61% 0.44% 0.44% 0.59 %* - ------------------------------------------ SUPPLEMENTAL DATA - ------------------------------------------ Net assets, end of period (000 omitted) $192,752 $131,471 $94,335 $67,521 $75,044 $69,747 - ------------------------------------------
* Computed on an annualized basis. (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 charge or contingent deferred sales charge, if applicable. (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) MINNESOTA MUNICIPAL CASH TRUST NOTES TO FINANCIAL STATEMENTS APRIL 30, 1996 (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 fifteen portfolios. The financial statements included herein are only those of Minnesota Municipal Cash Trust (the "Fund"), a non-diversified portfolio. The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. The Fund offers two classes of shares: Institutional Shares and Cash Series Shares. The investment objective of the Fund is current income exempt from federal regular income tax and the regular personal income taxes imposed by the State of Minnesota consistent with stability of principal. (2) SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with generally accepted accounting principles. 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. 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 over a period of five years from the Fund's commencement date. MINNESOTA MUNICIPAL CASH TRUST - -------------------------------------------------------------------------------- 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, 1996, 67.17 % 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 from any one institution or agency did not exceed 9.44% 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 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, 1996, is as follows:
ACQUISITION ACQUISITION SECURITY DATE COST ------------------------------------------------------- ------------- ------------ Dakota County, Washington County & Anoka City, MN Housing & Redevelopment Authority 5/31/1996 $3,000,000 Minneapolis/St. Paul MN Housing Finance Board, SFM Revenue Bonds, Merlots (Series D) 3/29/1996 $4,460,000 Minneapolis/St. Paul MN Housing Finance Board, SFM Revenue Bonds 2/1/1996 $1,141,000
USE OF ESTIMATES--The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ from those estimated. OTHER--Investment transactions are accounted for on the trade date. MINNESOTA 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) for each class of shares. At April 30, 1996, capital paid-in aggregated $404,975,479. Transactions in shares were as follows:
SIX MONTHS ENDED YEAR ENDED INSTITUTIONAL SHARES APRIL 30, 1996 OCTOBER 31, 1995 - ----------------------------------------------------- ---------------- ---------------- Shares sold 277,855,091 546,893,719 - ----------------------------------------------------- Shares issued to shareholders in payment of distributions declared 148,656 425,031 - ----------------------------------------------------- Shares redeemed (278,172,498) (494,630,825) - ----------------------------------------------------- --------------- --------------- Net change resulting from Institutional share transactions (168,751) 52,687,925 - ----------------------------------------------------- --------------- ---------------
SIX MONTHS ENDED YEAR ENDED CASH SERIES SHARES APRIL 30, 1996 OCTOBER 31, 1995 - ----------------------------------------------------- ---------------- ---------------- Shares sold 392,547,561 493,861,040 - ----------------------------------------------------- Shares issued to shareholders in payment of distributions declared 1,994,977 3,959,135 - ----------------------------------------------------- Shares redeemed (333,261,649) (460,683,438) - ----------------------------------------------------- --------------- --------------- Net change resulting from Cash Series share transactions 61,280,889 37,136,737 - ----------------------------------------------------- --------------- --------------- Net change resulting from share transactions 61,112,138 89,824,662 - ----------------------------------------------------- --------------- ---------------
(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 0.40% of the Fund's average daily net assets. The Adviser may voluntarily choose to waive any portion of its fee and/or reimburse 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 Services Company ("FServ"), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. The fee paid to FServ 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. MINNESOTA 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 0.50% of the average daily net assets of the Cash Series Shares, annually, to compensate FSC. FSC may voluntarily choose to waive any portion of its fee. FSC can modify or terminate this voluntary waiver at any time at its sole discretion. SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to 0.25% of average daily net assets of each class of shares for the period. The fee paid to FSS is used to finance certain services for shareholders and to maintain shareholder accounts. FSS may voluntarily choose to waive any portion of its fee. FSS can modify or terminate this voluntary waiver at any time at its sole discretion. TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--FServ, through its subsidiary, Federated Shareholder Services Company serves as transfer and dividend disbursing agent for the Fund. The fee paid to FServ is based on the size, type, and number of accounts and transactions made by shareholders. PORTFOLIO ACCOUNTING FEES--FServ maintains the Fund's accounting records for which it receives a fee. The fee is based on the level of the Fund's average daily net assets for the period, plus out-of-pocket expenses. INTERFUND TRANSACTIONS--During the period ended April 30, 1996, the Fund engaged in purchase and sale transactions with funds that have a common investment adviser (or affiliated investment advisers), common Directors/Trustees, and/or common Officers. These purchase and sale transactions were made at current market value pursuant to Rule 17a-7 under the Act amounting to $360,670,000 and $353,340,000, 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. Executive Vice President Edward L. Flaherty, Jr. Edward C. Gonzales Glen R. Johnson Executive Vice President and Treasurer Peter E. Madden John W. McGonigle Gregor F. Meyer Executive Vice President and Secretary John E. Murray, Jr. Richard B. Fisher Wesley W. Posvar Vice President Marjorie P. Smuts David M. Taylor Treasurer Charles H. Field 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, 1996 FEDERATED SECURITIES CORP. (LOGO) - --------------------------------------------- Distributor A subsidiary of FEDERATED INVESTORS FEDERATED INVESTORS TOWER PITTSBURGH, PA 15222-3779 Cusip 314229600 Cusip 314229709 2052902 (6/96) 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, which covers the six-month period from November 1, 1995 through April 30, 1996. The report begins with a discussion with the fund's portfolio manager, followed by a complete listing of the fund's holdings and its financial statements. Financial highlights tables are provided for the fund's Institutional Shares and Institutional Service Shares. The fund is a convenient way to put your ready cash to work pursuing double-tax-free income--free from federal regular income tax and New Jersey state income tax*--through a portfolio concentrated in high-quality, short-term New Jersey municipal securities. As a shareholder, you have the opportunity to earn a greater after-tax yield than you could in a comparable high-quality taxable investment. Of course, the fund also brings you the added benefits of daily liquidity and stability of principal.** During the report period, the fund paid double-tax-free dividends of $0.02 per share for both Institutional Shares and Institutional Service Shares. The fund's total net assets of $112.9 million were diversified among New Jersey securities that use municipal bond financing for projects as varied as health care, housing, community development, and transportation. You can count on New Jersey Municipal Cash Trust to seek the best tax-free income opportunities for your cash investment needs. As always, we'll continue to provide you with the highest level of professional service. We invite your questions or comments. Sincerely, LOGO Glen R. Johnson President June 15, 1996 * Income may be subject to the federal alternative minimum tax. ** 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. An investment in the fund is neither insured nor guaranteed by the U.S. government. INVESTMENT REVIEW - -------------------------------------------------------------------------------- An Interview with Fund Portfolio Manager, Jeff A. Kozemchak, C.F.A. Q Can you comment on the economy and the interest rate environment during the semi-annual reporting period? A The Federal Reserve Board (the "Fed") eased monetary policy twice over the six-month reporting period ended in April 1996. Faced with slowing economic growth and benign inflationary pressures, the Fed lowered the federal funds target rate from 5.75% to 5.50% in late December 1995, and again from 5.50% to the current 5.25% at the end of January 1996. For the December 1995 move, the Fed cited a better-than-expected inflation outlook as the impetus behind the easing, although a sluggish manufacturing sector and lackluster consumer spending was thought to have had an influence. In January 1996, the Fed appeared swayed by the dampening effects of high debt loads and employment uncertainty on consumer consumption along with sluggish export growth. Through this period, the short-end of the government and municipal yield curves anticipated the policy moves from the Fed, and amid signs of a weakening economy looked forward to additional eases in the not too distant future. February and March of 1996, however, brought about a shift in market psychology regarding both the extent and direction of changes in monetary policy by the Fed. Recovering from the harsh winter weather and spurred onward by lower interest rates, the housing market and consumer spending breathed some life into the economy, which had seemed on the verge of recession earlier in the year. The market was then stunned in early March 1996 by the report of a 705,000 increase in non-farm payroll jobs for February 1996--the largest increase in 12 years--which caused the yields on short-term securities to rise by as much as 25 basis points. Now confronted with a more robust economy than previously thought, market participants have moved expectations toward a more neutral policy from the Fed in the near term with a possible tightening, or increase in rates, later in 1996. Yields on short-term government securities reflected this rather volatile mood in the markets. The yield on the three-month Treasury bill began November 1995 at 5.48%, declined to 4.89% by mid-February 1996, and ended April 1996 at 5.14%. Correspondingly, the yield on the one-year Treasury bill began November 1995 at 5.46%, fell to 4.79% in mid-February 1996, but rose to 5.62% by the end of April 1996. Q How has the fund's yield responded to this rate environment? A The fund's yield was affected by Fed policy (interest rate cuts), changes in market expectations, as well as supply and demand imbalances unique to the municipal money markets. However, because of these imbalances the fund's yield may experience more volatility on a weekly basis than Treasury yields and taxable money fund yields. In general, yields on municipal money market funds were lower over the period. For the fund, the seven-day net yield of the Institutional Shares on April 30, 1996 was 3.32% compared to 3.41% on November 1, 1995. For the Institutional Service Shares, the seven-day net yield was 3.22% on April 30, 1996 compared to 3.31% on November 30, 1995.* * Performance quoted represents past performance and is not indicative of future results. Yield will vary. - -------------------------------------------------------------------------------- Q What was your strategy for managing the fund over the period? A The fund started the period with an average maturity of 58 days, reflecting a neutral outlook on short-term interest rates. Because of the supply of readily available fixed-rate notes in New Jersey and attractive yield levels, we extended the average maturity of the fund to a high of 71 days in February 1996. At the end of the period, we let the average maturity inward to 65 days, reflecting our assessment of more neutral Fed policy for the balance of 1996. If fixed-rate securities continue to offer relative value when compared to shorter-term overnight or weekly notes, we expect to maintain this average maturity between 55 and 65 days. Q What is your outlook for the near future? A With growth of 2.3% in the first quarter of 1996, the economy appears to be on firmer footing than it was in the fourth quarter of 1995, when gross domestic product grew at only .5%. As a result, the Fed should not feel the urgency to lower short-term rates further. By the same token, however, with areas of softness in the economy still evident and with consumer indebtedness at very high levels, there also appears to be no danger of the economy overheating in the near term. As long as inflation remains benign, the Fed should be content to sit on the sidelines until confronted with signs of undue strength or considerable weakness in economic growth. The average maturity of the fund will continue to be managed in accordance with our expectation for a stable monetary policy in the near term. Nevertheless, opportunities for average maturity extension will arise as the supply of fixed-rate notes in the municipal market increases significantly in June and July of 1996. This spike in supply may present opportunities to "lock-in" yields which are attractive relative to comparable maturity taxable securities. As a result, we expect the average maturity of the fund to be slightly longer throughout the summer months. NEW JERSEY MUNICIPAL CASH TRUST PORTFOLIO OF INVESTMENTS APRIL 30, 1996 (UNAUDITED) - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ----------- ------------------------------------------------------- -------- ------------ SHORT-TERM MUNICIPALS--99.2% - -------------------------------------------------------------------------- NEW JERSEY--95.2% ------------------------------------------------------- $ 700,000 Atlantic County, NJ Improvement Authority Weekly VRDNs (Marine Midland Bank N.A., Buffalo, NY LOC) VMIG1 $ 700,000 ------------------------------------------------------- 1,925,000 Bordentown, NJ, 4.15% BANs, 6/27/1996 NR 1,925,430 ------------------------------------------------------- 3,731,745 Caldwell Borough, NJ, 4.125% BANs, 12/6/1996 NR 3,744,139 ------------------------------------------------------- 2,000,000 Camden County, NJ Improvement Authority, (Series 1995) Weekly VRDNs (Jewish Federation of Southern Jersey, Inc.)/(National Westminster Bank, PLC, London LOC) P-1 2,000,000 ------------------------------------------------------- 1,250,000 Evesham Township, NJ, 4.25% BANs, 9/27/1996 NR 1,253,208 ------------------------------------------------------- 1,004,000 Florence Township, NJ Board of Education, 4.15% TANs, 12/31/1996 NR 1,006,914 ------------------------------------------------------- 2,500,000 Galloway Township, NJ, (Series B), 4.00% BANs, 3/13/1997 NR 2,508,356 ------------------------------------------------------- 1,850,000 Hopewell Township, NJ, 4.15% BANs, 8/27/1996 NR 1,850,855 ------------------------------------------------------- 1,300,000 Long Branch, NJ, 4.00% BANs, 12/13/1996 NR 1,305,317 ------------------------------------------------------- 1,961,389 Long Hill Township, NJ, 4.00% BANs, 7/19/1996 NR 1,962,449 ------------------------------------------------------- 1,500,000 Middlesex County, NJ PCFA Weekly VRDNs (FMC Gold Co.)/(Wachovia Bank of NC, NA, Winston-Salem LOC) P-1 1,500,000 ------------------------------------------------------- 1,500,000 Montclair Township, NJ, 4.25% BANs, 6/28/1996 NR(3) 1,501,133 ------------------------------------------------------- 3,000,000 Moorestown Township, NJ, 3.99% BANs, 9/5/1996 NR(3) 3,000,317 ------------------------------------------------------- 1,200,000 Morristown, NJ, 3.80% TANs, 2/14/1997 NR(3) 1,200,000 ------------------------------------------------------- 1,138,681 New Brunswick, NJ, 4.00% BANs, 12/23/1996 NR 1,141,819 ------------------------------------------------------- 2,900,000 New Jersey EDA Weekly VRDNs (Center-For-Aging-- Applewood Estates)/(Banque Paribas, Paris LOC) VMIG1 2,900,000 ------------------------------------------------------- 2,500,000 New Jersey EDA Weekly VRDNs (Franciscan Oaks)/(Bank of Scotland, Edinburgh LOC) A-1+ 2,500,000 ------------------------------------------------------- 5,553,000 New Jersey EDA Weekly VRDNs (Meridan Health Care)/ (First National Bank of Maryland, Baltimore LOC) P-1 5,553,000 -------------------------------------------------------
NEW JERSEY MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ----------- ------------------------------------------------------- -------- ------------ SHORT-TERM MUNICIPALS--CONTINUED - -------------------------------------------------------------------------- $ 4,173,000 New Jersey EDA Weekly VRDNs (Molins Machines)/ (Nationsbank of Virginia, N.A. LOC) P-1 $ 4,173,000 ------------------------------------------------------- 1,320,000 New Jersey EDA Weekly VRDNs (Nash Group)/ (Chemical Bank, New York LOC) A-1 1,320,000 ------------------------------------------------------- 3,500,000 New Jersey EDA Weekly VRDNs (YA-YWHA of Bergen County, NJ)/(Bank of New York, New York LOC) VMIG1 3,500,000 ------------------------------------------------------- 1,600,000 New Jersey EDA, (1994 Series A), 4.35% TOBs (A.F.L. Quality, Inc.)/(National Westminster Bank, PLC, London LOC), Optional Tender 7/1/1996 A-1+ 1,600,000 ------------------------------------------------------- 560,000 New Jersey EDA, (1994 Series B), 4.35% TOBs (Two Univac, L.L.C.)/(National Westminster Bank, PLC, London LOC), Optional Tender 7/1/1996 A-1+ 560,000 ------------------------------------------------------- 2,700,000 New Jersey EDA, (Series 1984) Weekly VRDNs (Burmah- Castrol Inc. Project)/(Barclays Bank PLC, London LOC) A-1+ 2,700,000 ------------------------------------------------------- 4,100,000 New Jersey EDA, (Series 1986) Weekly VRDNs (Ridgefield Associates)/(Bank of Tokyo-Mitsubishi LTD. LOC) P-1 4,100,000 ------------------------------------------------------- 350,000 New Jersey EDA, (Series 1987G) Weekly VRDNs (W.Y. Urban Renewal)/(National Westminster Bank, PLC, London LOC) VMIG1 350,000 ------------------------------------------------------- 2,400,000 New Jersey EDA, (Series 1988-F) Weekly VRDNs (Lamington Corners Associates)/(First Fidelity Bank, NA, New Jersey LOC) VMIG1 2,400,000 ------------------------------------------------------- 1,500,000 New Jersey EDA, (Series 1991), 3.25% CP (Chambers Cogeneration Ltd Partnership)/(Swiss Bank Corp., Basle LOC), Mandatory Tender 5/24/1996 A-1+ 1,500,000 ------------------------------------------------------- 1,180,000 New Jersey EDA, (Series 1992 Q) Weekly VRDNs (Physical Accoustics, Inc.)/(Banque Nationale de Paris LOC) VMIG1 1,180,000 ------------------------------------------------------- 1,170,000 New Jersey EDA, (Series 1992 Z) Weekly VRDNs (West-Ward Pharmaceuticals)/(Banque Nationale de Paris LOC) VMIG1 1,170,000 ------------------------------------------------------- 1,080,000 New Jersey EDA, (Series 1992D-1) Weekly VRDNs (Danlin Corp.)/(Banque Nationale de Paris LOC) VMIG1 1,080,000 -------------------------------------------------------
NEW JERSEY MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ----------- ------------------------------------------------------- -------- ------------ SHORT-TERM MUNICIPALS--CONTINUED - -------------------------------------------------------------------------- $ 2,285,000 New Jersey EDA, (Series 1992I-1) Weekly VRDNs (Geshem Realty)/(Banque Nationale de Paris LOC) VMIG1 $ 2,285,000 ------------------------------------------------------- 3,010,000 New Jersey EDA, (Series 1992L) Weekly VRDNs (Kent Place School)/(Banque Nationale de Paris LOC) VMIG1 3,010,000 ------------------------------------------------------- 1,600,000 New Jersey EDA, (Series 1995) Weekly VRDNs (Filtra Corporation Project)/(Chemical Bank, New York LOC) P-1 1,600,000 ------------------------------------------------------- 2,000,000 New Jersey EDA, (Series 1995) Weekly VRDNs (International Vitamin Corporation Project)/(National Westminster Bank, PLC, London LOC) P-1 2,000,000 ------------------------------------------------------- 1,250,000 New Jersey EDA, (Series 1995) Weekly VRDNs (Manhattan Bagel Co., Inc.)/(First Fidelity Bank, NA, New Jersey LOC) P-1 1,250,000 ------------------------------------------------------- 3,700,000 New Jersey EDA, (Series 1995B) Weekly VRDNs (Fellowship Village Project)/(Banque Paribas, Paris LOC) VMIG1 3,700,000 ------------------------------------------------------- 1,005,000 New Jersey EDA, (Series W) Weekly VRDNs (Datatec Industries, Inc.)/(Banque Nationale de Paris LOC) P-1 1,005,000 ------------------------------------------------------- 2,815,000 New Jersey EDA, Adjustable/Fixed Rate Economic Development Bonds Weekly VRDNs (Atlantic States Cast Iron Pipe Company)/(Amsouth Bank N.A., Birmingham LOC) VMIG1 2,815,000 ------------------------------------------------------- 1,400,000 New Jersey EDA, Economic Development Bonds, 1987 Project Weekly VRDNs (United Jewish Community of Bergen County)/(Bank of New York, New York LOC) P-1 1,400,000 ------------------------------------------------------- 1,925,000 Ocean City, NJ, 4.00% BANs, 6/28/1996 NR 1,926,043 ------------------------------------------------------- 1,750,000 Pine Beach, NJ, 3.625% BANs, 2/13/1997 NR 1,752,983 ------------------------------------------------------- 10,000,000 Port Authority of New York and New Jersey, (Series 1991-4) Weekly VRDNs P-1 10,000,000 ------------------------------------------------------- 2,900,000 South Plainfield, NJ, 3.95% BANs, 7/26/1996 NR 2,900,321 -------------------------------------------------------
NEW JERSEY MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ----------- ------------------------------------------------------- -------- ------------ SHORT-TERM MUNICIPALS--CONTINUED - -------------------------------------------------------------------------- $ 3,000,000 Stafford Township, NJ, (Series A), 4.25% BANs, 9/20/1996 NR $ 3,005,098 ------------------------------------------------------- 5,700,000 Trenton, NJ, 4.125% BANs, 12/20/1996 NR 5,712,830 ------------------------------------------------------- ------------ Total 107,548,212 ------------------------------------------------------- ------------ PUERTO RICO--4.0% ------------------------------------------------------- 4,500,000 Puerto Rico Government Development Bank, 3.15% CP, Mandatory Tender 5/13/1996 A-1 4,500,000 ------------------------------------------------------- ------------ TOTAL INVESTMENTS AT AMORTIZED COST (A) $112,048,212 ------------------------------------------------------- ------------
Securities that are subject to Alternative Minimum Tax represent 29.8% of the portfolio as calculated based upon total portfolio market value. * Please refer to the Appendix of the Statement of Additional Information for an explanation of the credit ratings. Current credit ratings are unaudited. (a) Also represents cost for federal tax purposes. Note: The categories of investments are shown as a percentage of net assets ($112,905,475) at April, 30, 1996. The following acronym(s) are used throughout this portfolio: BANs -- Bond Anticipation Notes CP -- Commercial Paper EDA -- Economic Development Authority LOC -- Letter of Credit PCFA -- Pollution Control Finance Authority 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 JERSEY MUNICIPAL CASH TRUST STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1996 (UNAUDITED) - -------------------------------------------------------------------------------- ASSETS: - ------------------------------------------------------------------------------- Total investments in securities, at amortized cost and value $112,048,212 - ------------------------------------------------------------------------------- Cash 220,287 - ------------------------------------------------------------------------------- Income receivable 946,701 - ------------------------------------------------------------------------------- ------------ Total assets 113,215,200 - ------------------------------------------------------------------------------- LIABILITIES: - ------------------------------------------------------------------------------- Income distribution payable $292,512 - -------------------------------------------------------------------- Accrued expenses 17,213 - -------------------------------------------------------------------- -------- Total liabilities 309,725 - ------------------------------------------------------------------------------- ------------ NET ASSETS for 112,905,475 shares outstanding $112,905,475 - ------------------------------------------------------------------------------- ------------ NET ASSET VALUE Offering Price and Redemption Proceeds Per Share: - ------------------------------------------------------------------------------- Institutional Shares: ($92,166,645 / 92,166,645 shares outstanding) $1.00 - ------------------------------------------------------------------------------- ------------ Institutional Service Shares: ($20,738,830 / 20,738,830 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, 1996 (UNAUDITED) - -------------------------------------------------------------------------------- INVESTMENT INCOME: - -------------------------------------------------------------------------------------- Interest $2,280,140 - -------------------------------------------------------------------------------------- EXPENSES: - -------------------------------------------------------------------------------------- Investment advisory fee $ 244,595 - ------------------------------------------------------------------------- Administrative personnel and services fee 77,184 - ------------------------------------------------------------------------- Custodian fees 11,712 - ------------------------------------------------------------------------- Transfer and dividend disbursing agent fees and expenses 19,025 - ------------------------------------------------------------------------- Directors'/Trustees' fees 1,000 - ------------------------------------------------------------------------- Auditing fees 7,648 - ------------------------------------------------------------------------- Legal fees 2,202 - ------------------------------------------------------------------------- Portfolio accounting fees 27,492 - ------------------------------------------------------------------------- Distribution services fee--Institutional Service Shares 13,441 - ------------------------------------------------------------------------- Shareholder services fee--Institutional Shares 119,269 - ------------------------------------------------------------------------- Shareholder services fee--Institutional Service Shares 33,602 - ------------------------------------------------------------------------- Share registration costs 11,166 - ------------------------------------------------------------------------- Printing and postage 10,064 - ------------------------------------------------------------------------- Insurance premiums 1,520 - ------------------------------------------------------------------------- Taxes 636 - ------------------------------------------------------------------------- Miscellaneous 2,384 - ------------------------------------------------------------------------- --------- Total expenses 582,940 - ------------------------------------------------------------------------- Waivers-- - ------------------------------------------------------------------------- Waiver of investment advisory fee $(108,194) - ------------------------------------------------------------- Waiver of distribution services fee--Institutional Service Shares (13,441) - ------------------------------------------------------------- Waiver of shareholder services fee--Institutional Shares (95,415) - ------------------------------------------------------------- Waiver of shareholder services fee--Institutional Service Shares (13,441) - ------------------------------------------------------------- --------- Total waivers (230,491) - ------------------------------------------------------------------------- --------- Net expenses 352,449 - -------------------------------------------------------------------------------------- ---------- Net investment income $1,927,691 - -------------------------------------------------------------------------------------- ----------
(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 (UNAUDITED) YEAR ENDED APRIL 30, 1996 OCTOBER 31, 1995 ---------------- ---------------- INCREASE (DECREASE) IN NET ASSETS: - ------------------------------------------------------ OPERATIONS-- - ------------------------------------------------------ Net investment income $ 1,927,691 $ 3,642,951 - ------------------------------------------------------ -------------- -------------- DISTRIBUTIONS TO SHAREHOLDERS-- - ------------------------------------------------------ Distributions from net investment income: - ------------------------------------------------------ Institutional Shares (1,513,840) (2,752,708) - ------------------------------------------------------ Institutional Service Shares (413,851) (890,243) - ------------------------------------------------------ -------------- -------------- Change in net assets resulting from distributions to shareholders (1,927,691) (3,642,951) - ------------------------------------------------------ -------------- -------------- SHARE TRANSACTIONS-- - ------------------------------------------------------ Proceeds from sale of shares 198,629,424 425,149,193 - ------------------------------------------------------ Net asset value of shares issued to shareholders in payment of distributions declared 224,368 545,318 - ------------------------------------------------------ Cost of shares redeemed (202,709,833) (408,621,137) - ------------------------------------------------------ -------------- -------------- Change in net assets resulting from share transactions (3,856,041) 17,073,374 - ------------------------------------------------------ -------------- -------------- Change in net assets (3,856,041) 17,073,374 - ------------------------------------------------------ NET ASSETS: - ------------------------------------------------------ Beginning of period 116,761,516 99,688,142 - ------------------------------------------------------ -------------- -------------- End of period $ 112,905,475 $ 116,761,516 - ------------------------------------------------------ -------------- --------------
(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, (UNAUDITED) ------------------------------------------------------- APRIL 30, 1996 1995 1994 1993** 1992 1991(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 0.02 0.03 0.04 - ------------------------------ ------ ------ ------ ------ ------ ------ LESS DISTRIBUTIONS - ------------------------------ Distributions from net investment income (0.02) (0.03) (0.02) (0.02) (0.03) (0.04) - ------------------------------ ------ ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 - ------------------------------ ------ ------ ------ ------ ------ ------ TOTAL RETURN(B) 1.59% 3.46% 2.26% 2.22% 2.96% 3.87% - ------------------------------ RATIOS TO AVERAGE NET ASSETS - ------------------------------ Expenses 0.55%* 0.55% 0.54% 0.46% 0.45% 0.27%* - ------------------------------ Net investment income 3.17%* 3.41% 2.22% 2.19% 2.86% 4.19%* - ------------------------------ Expense waiver/ reimbursement(c) 0.38%* 0.41% 0.39% 0.45% 0.51% 0.67%* - ------------------------------ SUPPLEMENTAL DATA - ------------------------------ Net assets, end of period (000 omitted) $92,167 $86,944 $62,984 $66,346 $57,657 $39,423 - ------------------------------
* Computed on an annualized basis. ** Prior to October 6, 1993, the Fund provided three classes of shares. (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 charge or contingent deferred sales charge, if applicable. (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 JERSEY MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS--INSTITUTIONAL SERVICE SHARES - -------------------------------------------------------------------------------- (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED YEAR ENDED OCTOBER 31, (UNAUDITED) ------------------------------------------------------- APRIL 30, 1996 1995 1994 1993 1992 1991(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 0.02 0.03 0.04 - ------------------------------ ------ ------ ------ ------ ------ ------ LESS DISTRIBUTIONS - ------------------------------ Distributions from net investment income (0.02) (0.03) (0.02) (0.02) (0.03) (0.04) - ------------------------------ ------ ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 - ------------------------------ ------ ------ ------ ------ ------ ------ TOTAL RETURN(B) 1.54% 3.36% 2.16% 2.12% 2.86% 3.82% - ------------------------------ RATIOS TO AVERAGE NET ASSETS - ------------------------------ Expenses 0.65%* 0.65% 0.65% 0.56% 0.55% 0.35%* - ------------------------------ Net investment income 3.08%* 3.28% 2.19% 2.08% 2.69% 4.11%* - ------------------------------ Expense waiver/ reimbursement(c) 0.38%* 0.41% 0.41% 0.45% 0.51% 0.69%* - ------------------------------ SUPPLEMENTAL DATA - ------------------------------ Net assets, end of period (000 omitted) $20,739 $29,817 $36,704 $21,005 $26,844 $17,709 - ------------------------------
* Computed on an annualized basis. (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 charge or contingent deferred sales charge, if applicable. (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 JERSEY MUNICIPAL CASH TRUST NOTES TO FINANCIAL STATEMENTS APRIL 30, 1996 (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 fifteen portfolios. The financial statements included herein are only those of New Jersey Municipal Cash Trust (the "Fund"), a non-diversified portfolio. The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. The Fund offers two classes of shares: Institutional Shares and Institutional Service Shares. The investment objective of the Fund is current income exempt from federal regular income tax and New Jersey state income tax consistent with stability of principal and liquidity. (2) SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with generally accepted accounting principles. 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, 1996, 53.4% of the securities in the portfolio of investments are backed by letters of credit or bond insurance of various financial NEW JERSEY MUNICIPAL CASH TRUST - -------------------------------------------------------------------------------- institutions and financial guaranty assurance agencies. The value of investments insured by or supported (backed) by a letter of credit from any one institution or agency did not exceed 8.7% of total investments. USE OF ESTIMATES--The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ from those estimated. OTHER--Investment transactions are accounted for on 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, 1996, capital paid-in aggregated $112,905,475. Transactions in shares were as follows:
SIX MONTHS ENDED YEAR ENDED APRIL 30, 1996 OCTOBER 31, 1995 ---------------- ---------------- INSTITUTIONAL SHARES - ----------------------------------------------------- Shares sold 158,576,553 334,240,209 - ----------------------------------------------------- Shares issued to shareholders in payment of distributions declared 9,325 15,613 - ----------------------------------------------------- Shares redeemed (153,363,471) (310,295,248) - ----------------------------------------------------- -------------- -------------- Net change resulting from Institutional share transactions 5,222,407 23,960,574 - ----------------------------------------------------- -------------- -------------- INSTITUTIONAL SERVICE SHARES - ----------------------------------------------------- Shares sold 40,052,871 90,908,984 - ----------------------------------------------------- Shares issued to shareholders in payment of distributions declared 215,043 529,705 - ----------------------------------------------------- Shares redeemed (49,346,362) (98,325,889) - ----------------------------------------------------- -------------- -------------- Net change resulting from Institutional Service share transactions (9,078,448) (6,887,200) - ----------------------------------------------------- -------------- -------------- Net change resulting from share transactions (3,856,041) 17,073,374 - ----------------------------------------------------- -------------- --------------
NEW JERSEY 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 the Fund's average daily net assets.The Adviser may voluntarily choose to waive any portion of its fee. The Adviser can modify or terminate this voluntary waiver at any time at its sole discretion. ADMINISTRATIVE FEE--Federated Services Company ("FServ"), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. The fee paid to FServ is based on 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 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 the average daily net assets of the Institutional Service Shares, annually, to 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 daily average net assets of the Fund for the period. The fee paid to FSS is used to finance certain services for shareholders and to maintain shareholder accounts. FSS may voluntarily choose to waive any portion of its fee. FSS can modify or terminate this voluntary waiver at any time at its sole discretion. TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--FServ, through its subsidiary, Federated Shareholder Services Company serves as transfer and dividend disbursing agent for the Fund. The fee paid to FServ is based on the size, type, and number of accounts and transactions made by shareholders. PORTFOLIO ACCOUNTING FEES--FServ, maintains the Fund's accounting records for which it receives a fee. The fee is based on the level of the Fund's average daily net assets for the period, plus out-of-pocket expenses. ORGANIZATIONAL EXPENSES--Organizational expenses of $61,531 were borne initially by the Adviser. The Fund has agreed to reimburse Adviser for the organizational expenses at an annual rate of .005% of average daily net assets, respectively, until expenses initially borne are fully reimbursed or the expiration of five years after effective date-whichever occurs earlier. For the period ended April 30, 1996, the Fund paid $497 pursuant to this agreement. NEW JERSEY MUNICIPAL CASH TRUST - -------------------------------------------------------------------------------- INTERFUND TRANSACTIONS--During the period ended April 30, 1996, the Fund engaged in purchase and sale transactions with funds that have a common investment adviser (or affiliated investment advisers), common Directors/Trustees, and/or common Officers. These purchase and sale transactions were made at current market value pursuant to Rule 17a-7 under the Act amounting to $97,000,000 and $109,900,000, respectively. GENERAL--Certain of the Officers and Trustees of the Fund 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. Executive Vice President Edward L. Flaherty, Jr. Edward C. Gonzales Glen R. Johnson Executive Vice President Peter E. Madden John W. McGonigle Gregor F. Meyer Executive Vice President and Secretary John E. Murray, Jr. Richard B. Fisher Wesley W. Posvar Vice President Marjorie P. Smuts David M. Taylor Treasurer Charles H. Field 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. 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, which covers the six-month period from November 1, 1995 through April 30, 1996. The report begins with a discussion with the fund's portfolio manager, followed by a complete listing of the fund's holdings and its financial statements. Financial highlights tables are provided for the fund's Institutional Shares, Institutional Service Shares, and Cash II Shares. The fund is a convenient way to put your ready cash to work pursuing double-tax-free income--free from federal regular income tax and Ohio state income tax*--through a portfolio concentrated in high-quality, short-term Ohio municipal securities. As a shareholder, you have the opportunity to earn a greater after-tax yield than you could in a comparable high-quality taxable investment. Of course, the fund also brings you the added benefits of daily liquidity and stability of principal.** During the report period, the fund paid double-tax-free dividends of $0.01 per share for Institutional Shares, and $0.02 per share for both Institutional Service Shares and Cash II Shares. The fund's total net assets of $278.7 million were spread among Ohio securities that use municipal bond financing for projects as varied as health care, housing, community development, and transportation. You can count on Ohio Municipal Cash Trust to seek the best tax-free income opportunities for your cash investment needs. As always, we'll continue to provide you with the highest level of professional service. We invite your questions or comments. Sincerely, LOGO Glen R. Johnson President June 15, 1996 * Income may be subject to the federal alternative minimum tax. ** 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. An investment in the fund is neither insured nor guaranteed by the U.S. government. INVESTMENT REVIEW - -------------------------------------------------------------------------------- An Interview with Fund Portfolio Manager, Jeff A. Kozemchak, C.F.A. Q Can you comment on the economy and the interest rate environment during the semi-annual reporting period? A The Federal Reserve Board (the "Fed") eased monetary policy twice over the six-month reporting period ended in April 1996. Faced with slowing economic growth and benign inflationary pressures, the Fed lowered the federal funds target rate from 5.75% to 5.50% in late December 1995, and again from 5.50% to the current 5.25% at the end of January 1996. For the December 1995 move, the Fed cited a better-than-expected inflation outlook as the impetus behind the easing, although a sluggish manufacturing sector and lackluster consumer spending was thought to have had an influence. In January 1996, the Fed appeared swayed by the dampening effects of high debt loads and employment uncertainty on consumer consumption along with sluggish export growth. Through this period, the short-end of the government and municipal yield curves anticipated the policy moves from the Fed, and amid signs of a weakening economy looked forward to additional eases in the not too distant future. February and March of 1996, however, brought about a shift in market psychology regarding both the extent and direction of changes in monetary policy by the Fed. Recovering from the harsh winter weather and spurred onward by lower interest rates, the housing market and consumer spending breathed some life into the economy, which had seemed on the verge of recession earlier in the year. The market was then stunned in early March 1996 by the report of a 705,000 increase in non-farm payroll jobs for February 1996--the largest increase in 12 years--which caused the yields on short-term securities to rise by as much as 25 basis points. Now confronted with a more robust economy than previously thought, market participants have moved expectations toward a more neutral policy from the Fed in the near term with a possible tightening, or increase in rates, later in 1996. Yields on short-term government securities reflected this rather volatile mood in the markets. The yield on the three-month Treasury bill began November 1995 at 5.48%, declined to 4.89% by mid-February 1996, and ended April 1996 at 5.14%. Correspondingly, the yield on the one-year Treasury bill began November 1995 at 5.46%, fell to 4.79% in mid-February 1996, but rose to 5.62% by the end of April 1996. - -------------------------------------------------------------------------------- Q How has the fund's yield responded to this interest rate environment? A The fund's yield was affected by Fed policy (interest rate cuts), changes in market expectations, as well as supply and demand imbalances unique to the municipal money markets. However, because of these imbalances the fund's yield may experience more volatility on a weekly basis than Treasury yields and taxable money fund yields. In general, yields on municipal money market funds were lower over the period. For the fund, the seven-day net yield of the Institutional Shares on April 30, 1996 was 3.68% compared to 3.14% on March 11, 1996.* For the Institutional Service Shares, the seven-day net yield was 3.48% on April 30, 1996 compared to 3.59% on November 1, 1995.** For the Cash II Shares, the seven-day net yield was 3.18% on April 30, 1996 compared to 3.29% on November 1, 1995.** Q What was your strategy for managing the fund over the period? A The fund started the period with an average maturity of 60 days, reflecting a neutral to slightly bullish outlook on short-term interest rates. Because of the readily available supply of fixed-rate notes in Ohio and attractive yield levels, we kept the average maturity of the fund targeted between 55 to 65 days, reflecting the value offered in the marketplace for fixed-rate notes. At the end of the period, the average maturity was 64 days, reflecting our assessment of more neutral Fed policy for the balance of 1996. If fixed-rate securities continue to offer relative value when compared to shorter-term overnight or weekly notes, we expect to maintain this average maturity between 55 and 65 days. Q What is your outlook for the near future? A With growth of 2.3% in the first quarter of 1996, the economy appears to be on firmer footing than it was in the fourth quarter of 1995, when gross domestic product grew at only 0.5%. As a result, the Fed should not feel the urgency to lower short-term rates further. By the same token, however, with areas of softness in the economy still evident and with consumer indebtedness at very high levels, there also appears to be no danger of the economy overheating in the near term. As long as inflation remains benign, the Fed should be content to sit on the sidelines until confronted with signs of undue strength or considerable weakness in economic growth. The average maturity of the fund will continue to be managed in accordance with our expectation for a stable monetary policy in the near term. Nevertheless, opportunities for average maturity extension will arise as the supply of fixed-rate notes in the municipal market increases significantly in June and July of 1996. This spike in supply may present opportunities to "lock-in" yields which are attractive relative to comparable maturity taxable securities. As a result, we expect the average maturity of the fund to be slightly longer throughout the summer months. * The date of initial public investment for Institutional Shares was March 5, 1996. Performance quoted represents past performance and is not indicative of future results. Yield will vary. ** Performance quoted represents past performance and is not indicative of future results. Yield will vary. OHIO MUNICIPAL CASH TRUST PORTFOLIO OF INVESTMENTS APRIL 30, 1996 (UNAUDITED) - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ----------- -------------------------------------------------------- ------- ------------ SHORT-TERM MUNICIPALS--100.5% - -------------------------------------------------------------------------- OHIO--100.5% -------------------------------------------------------- $ 2,650,000 Akron, Bath & Copley, OH Joint Township Weekly VRDNs (Visiting Nurses)/(National City Bank, Cleveland, OH LOC) A-1 $ 2,650,000 -------------------------------------------------------- 2,585,000 Ashland County, OH Health Care Weekly VRDNs (Brethren Care, Inc.)/(National City Bank, Cleveland, OH LOC) P-1 2,585,000 -------------------------------------------------------- 5,875,000 Belmont County, OH Weekly VRDNs (Lesco, Inc.)/ (PNC Bank, N.A. LOC) A-1 5,875,000 -------------------------------------------------------- 1,000,000 Belmont County, OH, County Jail Improvement Notes (Third Series), 4.34% BANs, 8/30/1996 NR 1,000,921 -------------------------------------------------------- 1,500,000 Belmont County, OH, Water System Improvement, 3.89% BANs, 12/19/1996 NR 1,502,660 -------------------------------------------------------- 1,675,000 Berea, OH, 4.07% BANs, 10/24/1996 NR(3) 1,676,312 -------------------------------------------------------- 3,894,000 Bowling Green, OH, 3.80% BANs, 12/5/1996 NR 3,895,562 -------------------------------------------------------- 5,500,000 Brecksville-Broadview Heights CSD, OH, (Series 1996), 3.90% BANs, 1/17/1997 NR 5,513,254 -------------------------------------------------------- 2,050,000 Canal Winchester Village, OH, GO LT Notes, 4.27% BANs, 10/15/1996 NR 2,054,770 -------------------------------------------------------- 2,000,000 Cleveland-Cuyahoga County, OH Port Authority, (Series 1993) Weekly VRDNs (Rock & Roll Hall of Fame Museum)/(Credit Local de France LOC) A-1+ 2,000,000 -------------------------------------------------------- 1,800,000 Clinton County, OH Hospital Authority Weekly VRDNs (Clinton Memorial Hospital)/(National City Bank, Columbus, OH LOC) P-1 1,800,000 -------------------------------------------------------- 1,905,000 Columbiana County, OH, Industrial Development Revenue Bonds Weekly VRDNs (C & S Land Company Project)/ (Bank One, Youngstown, NA LOC) P-1 1,905,000 -------------------------------------------------------- 1,800,000 Conneaut, OH, 4.45% BANs, 7/26/1996 NR 1,801,217 --------------------------------------------------------
OHIO MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ----------- -------------------------------------------------------- ------- ------------ SHORT-TERM MUNICIPALS--CONTINUED - -------------------------------------------------------------------------- $ 2,000,000 Cuyahoga County, OH Hospital Authority Daily VRDNs (University Hospitals Health System, Inc.)/(Dai-Ichi Kangyo Bank Ltd., Tokyo LOC) VMIG1 $ 2,000,000 -------------------------------------------------------- 1,300,000 Cuyahoga County, OH Hospital Authority Weekly VRDNs (St. Lukes Hospital)/(First National Bank of Chicago LOC) VMIG1 1,300,000 -------------------------------------------------------- 700,000 Cuyahoga County, OH IDA Weekly VRDNs (Animal Protection League (Cuyahoga County))/(Society National Bank, Cleveland, OH LOC) VMIG1 700,000 -------------------------------------------------------- 1,650,000 Cuyahoga County, OH IDA Weekly VRDNs (East Park Community, Inc.)/(Society National Bank, Cleveland, OH LOC) P-1 1,650,000 -------------------------------------------------------- 525,000 Cuyahoga County, OH IDA Weekly VRDNs (Interstate Diesel Service, Inc.)/(Huntington National Bank, Columbus, OH LOC) P-1 525,000 -------------------------------------------------------- 690,000 Cuyahoga County, OH IDA Weekly VRDNs (Parma-Commerce Parkway West)/(Society National Bank, Cleveland, OH LOC) P-1 690,000 -------------------------------------------------------- 1,050,000 Cuyahoga County, OH IDA Weekly VRDNs (Premier Manufacturing Corp.)/(National City Bank, Kentucky LOC) P-1 1,050,000 -------------------------------------------------------- 2,000,000 Cuyahoga County, OH IDA, IDRB (Series 1995) Weekly VRDNs (Avalon Precision Casting Co. Project)/(Society National Bank, Cleveland, OH LOC) P-1 2,000,000 -------------------------------------------------------- 3,000,000 Dayton, OH, Revenue Refunding Bonds (Series 1993E) Weekly VRDNs (Emery Air Freight Corp.)/(Mellon Bank NA, Pittsburgh LOC) VMIG1 3,000,000 -------------------------------------------------------- 1,700,000 Delaware County, OH, IDRB (Series 1995) Weekly VRDNs (Air Waves, Inc. Project)/(Society National Bank, Cleveland, OH LOC) P-1 1,700,000 -------------------------------------------------------- 1,240,000 Elyria, OH, GO LT Various Purpose, 4.26% BANs, 10/11/1996 NR(3) 1,241,381 -------------------------------------------------------- 6,100,000 Franklin County, OH Hospital Facility Authority Weekly VRDNs (Riverside United Methodist Hospital)/ (National City Bank, Cleveland, OH LOC) VMIG1 6,100,000 --------------------------------------------------------
OHIO MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ----------- -------------------------------------------------------- ------- ------------ SHORT-TERM MUNICIPALS--CONTINUED - -------------------------------------------------------------------------- $ 3,620,000 Franklin County, OH Hospital Facility Authority, (Series 1992) Weekly VRDNs (Wesley Glenn, Inc.)/ (Fifth Third Bank, Cincinnati LOC) VMIG1 $ 3,620,000 -------------------------------------------------------- 4,500,000 Franklin County, OH IDA Weekly VRDNs (Heekin Can, Inc.)/(PNC Bank, Ohio, N.A. LOC) P-1 4,500,000 -------------------------------------------------------- 3,055,000 Franklin County, OH IDA Weekly VRDNs (Unicorn Leasing Corp.)/(Fifth Third Bank, Cincinnati LOC) P-1 3,055,000 -------------------------------------------------------- 3,670,000 Franklin County, OH IDA, (Series 1995) Weekly VRDNs (Fabcon L.L.C. Project)/(Norwest Bank Minnesota, Minneapolis LOC) P-1 3,670,000 -------------------------------------------------------- 2,000,000 Franklin County, OH IDA, IDRB Weekly VRDNs (Tigerpoly Manufacturing, Inc.)/(Bank of Tokyo- Mitsubishi LTD. LOC) P-1 2,000,000 -------------------------------------------------------- 2,000,000 Franklin County, OH, GO LT (Series 8/95), 4.10% BANs, 8/23/1996 NR 2,001,196 -------------------------------------------------------- 1,440,000 Franklin, OH County of, Health Care Facilities Revenue Bonds (Series 1994) Weekly VRDNs (Wesley Glenn, Inc.)/(Fifth Third Bancorp LOC) Aa2 1,440,000 -------------------------------------------------------- 2,650,000 Franklin, OH LSD, Construction Notes, 3.85% BANs, 10/30/1996 NR 2,655,160 -------------------------------------------------------- 1,300,000 Gates Mills Village, OH, Water System Improvement Notes, 3.70% BANs, 3/26/1997 NR 1,301,125 -------------------------------------------------------- 1,200,000 Gates Mills Village, OH, Water System Improvement, 4.10% BANs, 10/17/1996 NR 1,200,532 -------------------------------------------------------- 6,280,800 Hamilton, OH, GO LT, 3.75% BANs, 6/14/1996 NR 6,282,798 -------------------------------------------------------- 2,200,000 Hamilton, OH, Real Estate Acquisition/Electric Improvement System (Series A), 4.02% BANs, 6/14/1996 NR(3) 2,200,050 -------------------------------------------------------- 2,200,000 Hancock County, OH, Various Purpose, 3.81% BANs, 11/22/1996 NR 2,206,741 -------------------------------------------------------- 2,900,000 Highland Heights City, OH, Various Purpose, 3.89% BANs, 12/19/1996 NR 2,903,364 -------------------------------------------------------- 2,000,000 Holmes County, OH IDA Weekly VRDNs (Poultry Processing)/(Rabobank Nederland, Utrecht LOC) A-1+ 2,000,000 --------------------------------------------------------
OHIO MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ----------- -------------------------------------------------------- ------- ------------ SHORT-TERM MUNICIPALS--CONTINUED - -------------------------------------------------------------------------- $ 1,230,000 Huber Heights, OH, IDRB (Series 1994) Weekly VRDNs (Lasermike, Inc. Project)/(Society National Bank, Cleveland, OH LOC) P-1 $ 1,230,000 -------------------------------------------------------- 1,000,000 Huron City, OH, GO LT Various Purpose, 4.49% BANs, 5/31/1996 NR 1,000,189 -------------------------------------------------------- 1,680,000 Lake County, OH, GO and SA LT various, 4.07% BANs, 10/10/1996 NR(2) 1,680,855 -------------------------------------------------------- 2,560,000 Lake County, OH, Hospital Improvement Bonds, 7.875% Bonds (United States Treasury PRF), 1/1/1997 (@102) Aaa 2,681,969 -------------------------------------------------------- 2,815,000 Lake County, OH, Hospital Improvement Bonds, 8.00% Bonds (United States Treasury PRF), 1/1/1997 (@102) Aaa 2,951,401 -------------------------------------------------------- 2,885,000 Lorain County, OH, Health Facilities Revenue Bonds (Series 1992A) Weekly VRDNs (Elyria United Methodist Home)/(Fifth Third Bank, Cincinnati LOC) P-1 2,885,000 -------------------------------------------------------- 4,385,000 Lorain Port Authority, OH, (Series 1994) Weekly VRDNs (Spitzer Great Lakes Ltd., Inc.)/(Bank One, Cleveland, N.A. LOC) P-1 4,385,000 -------------------------------------------------------- 1,200,000 Lucas County, OH IDA Weekly VRDNs (Kuhlman Corp.)/ (Society National Bank, Cleveland, OH LOC) P-1 1,200,000 -------------------------------------------------------- 1,905,000 Lucas County, OH, Hospital Facility Improvement Revenue Bonds (Series 93) Weekly VRDNs (Lott Industries, Inc.)/ (National City Bank, Cleveland, OH LOC) P-1 1,905,000 -------------------------------------------------------- 270,000 Lucas County, OH, Hospital Improvement Revenue Weekly VRDNs (Sunshine Children's Home)/(National City Bank, Cleveland, OH LOC) P-1 270,000 -------------------------------------------------------- 8,500,000 Lucas County, OH, Hospital Refunding Revenue Bonds Weekly VRDNs (Riverside Hospital, OH)/(Huntington National Bank, Columbus, OH LOC) P-1 8,500,000 -------------------------------------------------------- 2,000,000 Lucas County, OH, Metropolitan Sewer & Water District Improvement Notes (Series 1995), 4.25% BANs, 11/28/1996 NR 2,004,997 -------------------------------------------------------- 5,325,000 Mahoning County, OH Multifamily HFA Weekly VRDNs (International Towers, Inc.)/(PNC Bank, N.A. LOC) A-1 5,325,000 -------------------------------------------------------- 985,000 Mansfield, OH, IDR Weekly VRDNs (Designed Metal Products, Inc.)/(Bank One, Columbus, N.A. LOC) P-1 985,000 --------------------------------------------------------
OHIO MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ----------- -------------------------------------------------------- ------- ------------ SHORT-TERM MUNICIPALS--CONTINUED - -------------------------------------------------------------------------- $ 870,000 Mayfield, OH City School District, 4.00% BANs, 4/24/1997 NR $ 871,643 -------------------------------------------------------- 460,000 Medina County, OH, IDR, 3.35% TOBs (Bopco)/(Bank One, Akron, N.A. LOC), Optional Tender 9/1/1996 P-1 460,000 -------------------------------------------------------- 5,400,000 Medina County, OH, Solid Waste Disposal Revenue Bonds (Series 1995) Weekly VRDNs (Valley City Steel Company Project)/(Society National Bank, Cleveland, OH LOC) P-1 5,400,000 -------------------------------------------------------- 4,000,000 Montgomery County, OH, Variable Rate Hospital Facilities Revenue Bonds (1985 Series B), 3.50% CP (Miami (OH) Valley Hospital)/(Northern Trust Co., Chicago, IL LOC), Mandatory Tender 7/9/1996 Aa3 4,000,000 -------------------------------------------------------- 2,010,000 Montgomery, OH IDA Weekly VRDNs (Bethesda Two Limited Partnership)/(Huntington National Bank, Columbus, OH LOC) A-1 2,010,000 -------------------------------------------------------- 2,000,000 Muskingum County, OH, County Building Improvement (Series 1996), 3.75% BANs, 3/4/1997 NR 2,004,060 -------------------------------------------------------- 345,000 North Olmsted, OH IDA Weekly VRDNs (Bryant & Stratton)/(Society National Bank, Cleveland, OH LOC) P-1 345,000 -------------------------------------------------------- 1,000,000 North Olmsted, OH IDA, 3.55% TOBs (Therm-All)/ (National City Bank, Cleveland, OH LOC), Optional Tender 8/1/1996 P-1 1,000,000 -------------------------------------------------------- 4,000,000 North Olmsted, OH, Various Purpose Improvement Notes, (Series 1995), 4.67% BANs, 6/20/1996 NR(3) 4,002,198 -------------------------------------------------------- 2,035,000 Ohio HFA Weekly VRDNs (Westchester Village)/ (Society National Bank, Cleveland, OH LOC) P-1 2,035,000 -------------------------------------------------------- 7,235,000 Ohio HFA, 4.25% TOBs (Comerica, Inc.)/(Comerica Bank, Detroit, MI LOC), Optional Tender 5/1/1996 P-1 7,235,000 -------------------------------------------------------- 8,500,000 Ohio HFA, Residential Mortgage Revenue Convertible (1996 Series A-3), 3.40% TOBs (AIG Funding, Inc. GIC), Mandatory Tender 3/3/1997 A-1+ 8,500,000 -------------------------------------------------------- 8,405,000 (a) Ohio HFA, Single Family Mortgage (Series PT-71) Weekly VRDNs (GNMA COL)/(Commerzbank AG, Frankfurt LIQ) A-1+ 8,405,000 --------------------------------------------------------
OHIO MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ----------- -------------------------------------------------------- ------- ------------ SHORT-TERM MUNICIPALS--CONTINUED - -------------------------------------------------------------------------- $ 2,230,000 Ohio State Air Quality Development Authority, Variable Rate Environmental Improvement Revenue Bonds (Series 1995), 3.70% TOBs (USX Corp.)/(Wachovia Bank of NC, NA, Winston-Salem LOC), Mandatory Tender 5/1/1996 A-1+ $ 2,230,000 -------------------------------------------------------- 1,000,000 Ohio State Building Authority, State Facilities Bonds (Series 1995A), 3.65% Bonds, 10/1/1996 A+ 1,000,000 -------------------------------------------------------- 1,880,000 Ohio State Higher Education Facility, Revenue Bonds Weekly VRDNs (Notre Dame College Project)/(National City Bank, Cleveland, OH LOC) P-1 1,880,000 -------------------------------------------------------- 1,000,000 Ohio State Water Development Authority Weekly VRDNs (PPG Industries, Inc.) P-1 1,000,000 -------------------------------------------------------- 5,000,000 Ohio State Water Development Authority, Ohio PCR Bonds (Series 1989) Weekly VRDNs (Duquesne Light Power Co.)/(Barclays Bank PLC, London LOC) A-1+ 5,000,000 -------------------------------------------------------- 3,500,000 Ohio State Water Development Authority, Pollution Control Facilities Revenue Bonds, 4.75% TOBs (Union Bank of Switzerland, Zurich LOC), Optional Tender 5/1/1996 A-1+ 3,500,000 -------------------------------------------------------- 600,000 Ohio State Weekly VRDNs (John Carroll University, OH)/ (PNC Bank, N.A. LOC) P-1 600,000 -------------------------------------------------------- 1,360,000 Ohio State, General Obligation Infrastructure Improvement Bonds (Series 1996), 3.40% Bonds, 8/1/1996 AA 1,360,000 -------------------------------------------------------- 1,420,000 Ohio State, IDR (Series 1991) Weekly VRDNs (Standby Screw, Inc.)/(National City Bank, Columbus, OH LOC) A-1 1,420,000 -------------------------------------------------------- 1,400,000 Ohio State, IDRB (Series 1994) Weekly VRDNs (Anomatic Corporation)/(National City Bank, Columbus, OH LOC) P-1 1,400,000 -------------------------------------------------------- 1,350,000 Orrville, OH IDA Weekly VRDNs (O.S. Associates/ Contours, Inc.)/(National City Bank, Cleveland, OH LOC) A-1 1,350,000 -------------------------------------------------------- 2,000,000 Ottawa County, OH, Regional Water System Notes, 3.98% BANs, 4/9/1997 NR 2,004,158 -------------------------------------------------------- 1,000,000 Perry Local School District, OH, UT GO Bonds, 3.75% Bonds (Bank One, Cleveland, N.A. LOC), 12/1/1996 Aa2 1,000,000 -------------------------------------------------------- 210,000 Portage County, OH IDA Weekly VRDNs (D & W Associates)/(Bank One, Akron, N.A. LOC) P-1 210,000 --------------------------------------------------------
OHIO MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ----------- -------------------------------------------------------- ------- ------------ SHORT-TERM MUNICIPALS--CONTINUED - -------------------------------------------------------------------------- $ 400,000 Portage County, OH IDA, 3.35% TOBs (Neidlinger)/ (Society National Bank, Cleveland, OH LOC), Optional Tender 9/1/1996 P-1 $ 400,000 -------------------------------------------------------- 900,000 Portage County, OH IDA, Industries Revenue Bonds Weekly VRDNs (Lovejoy Industries)/(Star Bank, NA, Cincinnati LOC) P-1 900,000 -------------------------------------------------------- 1,250,000 Ross County, OH, Hospital Facilities Revenue Bonds (Series 1995) Weekly VRDNs (Medical Center Hospital Project)/(Fifth Third Bank, Cincinnati LOC) AA- 1,250,000 -------------------------------------------------------- 1,200,000 Sharonville, OH, IDR Weekly VRDNs (Xtek, Inc.)/ (Fifth Third Bank, Cincinnati LOC) VMIG1 1,200,000 -------------------------------------------------------- 1,150,000 Shelby City, OH, GO LT Water System Improvement Notes (Series 1995), 4.50% BANs, 8/22/1996 NR 1,150,850 -------------------------------------------------------- 880,000 Solon, OH, IDR Weekly VRDNs (Graphic Laminating)/ (Society National Bank, Cleveland, OH LOC) P-1 880,000 -------------------------------------------------------- 2,000,000 Solon, OH, IDRB (Series 1995) Weekly VRDNs (Cleveland Twist Drill Company)/(Nationsbank of Georgia, N.A. LOC) A-1 2,000,000 -------------------------------------------------------- 2,000,000 Springdale, OH, (Series 1995), 4.15% BANs, 9/20/1996 NR 2,001,479 -------------------------------------------------------- 1,200,000 Stark County, OH IDR Weekly VRDNs (Society National Bank, Cleveland, OH LOC) P-1 1,200,000 -------------------------------------------------------- 2,325,000 Stark County, OH IDR, (Series 1994) Weekly VRDNs (Wilk of Morris)/(Society National Bank, Cleveland, OH LOC) P-1 2,325,000 -------------------------------------------------------- 1,300,000 Stark County, OH IDR, IDRB (Series 1996) Weekly VRDNs (Foundations Systems and Anchors, Inc. Project)/(Bank One, Akron, N.A. LOC) NR 1,300,000 -------------------------------------------------------- 5,300,000 Stark County, OH IDR, IDRB (Series 1995) Weekly VRDNs (Gramac Project, OH)/(Society National Bank, Cleveland, OH LOC) P-1 5,300,000 -------------------------------------------------------- 1,340,000 Stow, OH, GO LT Various Purpose Refunding, 4.25% BANs, 12/20/1996 NR 1,344,931 -------------------------------------------------------- 1,350,000 Strongsville, OH, IDRB (Series 1994) Weekly VRDNs (Nutro Machinery Corp., Project)/(Huntington National Bank, Columbus, OH LOC) A-1 1,350,000 --------------------------------------------------------
OHIO MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ----------- -------------------------------------------------------- ------- ------------ SHORT-TERM MUNICIPALS--CONTINUED - -------------------------------------------------------------------------- $ 2,700,000 Summit County, OH IDR Weekly VRDNs (Maison Aine Limited Partnership)/(Society National Bank, Cleveland, OH LOC) P-1 $ 2,700,000 -------------------------------------------------------- 4,500,000 Summit County, OH IDR, (Series 1994) Weekly VRDNs (Harry London Candies, Inc.) /(Bank One, Akron, N.A. LOC) P-1 4,500,000 -------------------------------------------------------- 910,000 Summit County, OH IDR, 3.20% TOBs (S.D. Meyers, Inc.)/(Bank One, Akron, N.A. LOC), Optional Tender 8/15/1996 P-1 910,000 -------------------------------------------------------- 385,000 Summit County, OH IDR, 3.35% TOBs (Keltec Industries)/ (Bank One, Akron, N.A. LOC), Optional Tender 9/1/1996 P-1 385,000 -------------------------------------------------------- 795,000 Summit County, OH IDR, 3.35% TOBs (Universal Rack)/ (National City Bank, Cleveland, OH LOC), Optional Tender 9/1/1996 P-1 795,000 -------------------------------------------------------- 1,245,000 Summit County, OH IDR, 3.50% TOBs (Matech Machine Tool Co.)/(Bank One, Akron, N.A. LOC), Optional Tender 5/1/1996 P-1 1,245,000 -------------------------------------------------------- 725,000 Summit County, OH IDR, 3.80% TOBs (Bechmer-Boyce Project)/(Society National Bank, Cleveland, OH LOC), Optional Tender 7/15/1996 P-1 725,000 -------------------------------------------------------- 1,075,000 Summit County, OH IDR, 3.95% TOBs (Rogers Industrial Products, Inc.)/(Bank One, Akron, N.A. LOC), Optional Tender 5/1/1996 P-1 1,075,000 -------------------------------------------------------- 960,000 Summit County, OH IDR, Bonds (Series 1994) Weekly VRDNs (Austin Printing Co., Inc.)/(Bank One, Akron, N.A. LOC) P-1 960,000 -------------------------------------------------------- 2,890,000 Summit County, OH IDR, IDRB (Series 1994B) Weekly VRDNs (Harry London Candies, Inc.)/(Bank One, Akron, N.A. LOC) P-1 2,890,000 -------------------------------------------------------- 1,000,000 Summit County, OH IDR, IDRB (Series 1995) Weekly VRDNs (Cardtech Project (OH))/(Society National Bank, Cleveland, OH LOC) P-1 1,000,000 -------------------------------------------------------- 1,550,000 Summit County, OH IDR, Industrial Development Bonds (Series 1996) Weekly VRDNs (Creative Screen Print Project)/(National City, Northeast LOC) P-1 1,550,000 --------------------------------------------------------
OHIO MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ----------- -------------------------------------------------------- ------- ------------ SHORT-TERM MUNICIPALS--CONTINUED - -------------------------------------------------------------------------- $ 1,500,000 Summit County, OH IDR, Multi-Mode Variable Rate I Weekly VRDNs (Mastergraphics, Inc. Project)/(Society National Bank, Cleveland, OH LOC) P-1 $ 1,500,000 -------------------------------------------------------- 3,000,000 Toledo, OH, City Services Special Assessment Notes (Series 1995), 4.32% TRANs (Bank of Tokyo-Mitsubishi LTD. LOC), 7/31/1996 MIG1 3,004,530 -------------------------------------------------------- 1,000,000 Toledo-Lucas County, OH Port Authority, IDA Weekly VRDNs (Medusa Corp.)/(Bayerische Vereinsbank AG, Munich LOC) VMIG1 1,000,000 -------------------------------------------------------- 2,700,000 Trumbull County, OH IDA, (Series 1989) Weekly VRDNs (McSonald Steel Corp.)/(PNC Bank, N.A. LOC) A-1 2,700,000 -------------------------------------------------------- 1,355,000 Trumbull County, OH IDA, IDR Refunding Bonds (Series 1994) Weekly VRDNs (Churchill Downs, Inc.)/ (Bank One, Columbus, N.A. LOC) P-1 1,355,000 -------------------------------------------------------- 1,750,000 Trumbull County, OH, Correctional Facilities GO LT Notes, 1996 Renewal, 4.07% BANs, 4/10/1997 NR 1,754,288 -------------------------------------------------------- 715,000 Trumbull County, OH, Various Purpose GO LT Notes (Series 1996), 4.00% BANs, 10/10/1996 NR 716,082 -------------------------------------------------------- 3,000,000 University of Cincinnati, OH, General Receipts Anticipation Notes-Series T, 4.25% BANs, 8/28/1996 MIG1 3,002,344 -------------------------------------------------------- 2,265,000 Wayne County, OH, Health Care Facility Revenue Bonds (Series 1995) Weekly VRDNs (D & M Realty Project)/ (Bank One, Youngstown, NA LOC) P-1 2,265,000 -------------------------------------------------------- 2,000,000 Wayne Local School District, OH, School Improvement GO UT, 4.34% BANs, 7/18/1996 NR 2,002,674 -------------------------------------------------------- 3,800,000 Westlake, OH, IDR Weekly VRDNs (Kahal Limited Partnership)/(Society National Bank, Cleveland, OH LOC) P-1 3,800,000 -------------------------------------------------------- 1,140,000 Willoughby City, OH, IDR Refunding Bonds (Series 1995A) Weekly VRDNs (Pine Ridge Shopping Center Company Project)/(Star Bank, NA, Cincinnati LOC) P-1 1,140,000 -------------------------------------------------------- 1,230,000 Willoughby City, OH, IDR Revenue Bonds (Series 1995 B) Weekly VRDNs (Pine Ridge Shopping Center Company Project)/(Star Bank, NA, Cincinnati LOC) P-1 1,230,000 --------------------------------------------------------
OHIO MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ----------- -------------------------------------------------------- ------- ------------ SHORT-TERM MUNICIPALS--CONTINUED - -------------------------------------------------------------------------- $ 1,400,000 Wood County, OH Weekly VRDNs (Principle Business Enterprises)/(National City Bank, Cleveland, OH LOC) P-1 $ 1,400,000 -------------------------------------------------------- 2,200,000 Wood County, OH, EDRB Weekly VRDNs (Roe Inc. Project)/(Huntington National Bank, Columbus, OH LOC) P-1 2,200,000 -------------------------------------------------------- 5,095,000 (a) Youngstown City School District, OH, Municipal Installment Trust Receipts (Series 1994-A) Weekly VRDNs (Internationale Nederlanden Bank N.V. LIQ)/ (Internationale Nederlanden Bank N.V. LOC) A-1+ 5,095,000 -------------------------------------------------------- ------------ TOTAL INVESTMENTS (AT AMORTIZED COST)(B) $279,980,691 -------------------------------------------------------- ------------
Securities that are subject to Alternative Minimum Tax represent 45.2% of the portfolio as calculated based upon total portfolio market value. * Please refer to the Appendix of the Statement of Additional Information for an explanation of the credit ratings. Current credit ratings are unaudited. (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. At the end of the period, these securities amounted to $13,500,000 which represents 4.8% of net assets. (b) Also represents cost for federal tax purposes. Note: The categories of investments are shown as a percentage of net assets ($278,660,577) at April 30, 1996. OHIO MUNICIPAL CASH TRUST - -------------------------------------------------------------------------------- The following acronym(s) are used throughout this portfolio: BANs -- Bond Anticipation Notes COL -- Collateralized CP -- Commercial Paper CSD -- Central School District EDRB -- Economic Development Revenue Bonds GIC -- Guaranteed Investment Contract GNMA -- Government National Mortgage Association GO -- General Obligation HFA -- Housing Finance Authority IDA -- Industrial Development Authority IDR -- Industrial Development Revenue IDRB -- Industrial Development Revenue Bond LIQ -- Liquidity Agreement LOC -- Letter of Credit LT -- Limited Tax PCR -- Pollution Control Revenue PLC -- Public Limited Company PRF -- Prerefunded SA -- Support Agreement TOBs -- Tender Option Bonds TRANs -- Tax and Revenue Anticipation Notes UT -- Unlimited Tax VRDNs -- Variable Rate Demand Notes
(See Notes which are an integral part of the Financial Statements) OHIO MUNICIPAL CASH TRUST STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1996 (UNAUDITED) - -------------------------------------------------------------------------------- ASSETS: - -------------------------------------------------------------------------------- Total investments in securities, at amortized cost and value $279,980,691 - -------------------------------------------------------------------------------- Cash 84,672 - -------------------------------------------------------------------------------- Income receivable 2,458,884 - -------------------------------------------------------------------------------- ------------ Total assets 282,524,247 - -------------------------------------------------------------------------------- LIABILITIES: - -------------------------------------------------------------------------------- Payable for investments purchased $3,004,530 - ------------------------------------------------------------------- Income distribution payable 722,931 - ------------------------------------------------------------------- Accrued expenses 136,209 - ------------------------------------------------------------------- ---------- Total liabilities 3,863,670 - -------------------------------------------------------------------------------- ------------ NET ASSETS for 278,660,577 shares outstanding $278,660,577 - -------------------------------------------------------------------------------- ------------ NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE: - -------------------------------------------------------------------------------- INSTITUTIONAL SERVICE SHARES: - -------------------------------------------------------------------------------- $58,049,545 / 58,049,545 shares outstanding $1.00 - -------------------------------------------------------------------------------- ------------ CASH II SHARES: - -------------------------------------------------------------------------------- $199,898,028 / 199,898,028 shares outstanding $1.00 - -------------------------------------------------------------------------------- ------------ INSTITUTIONAL SHARES: - -------------------------------------------------------------------------------- $20,713,004 / 20,713,004 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, 1996 (UNAUDITED) - -------------------------------------------------------------------------------- INVESTMENT INCOME: - --------------------------------------------------------------------------------------- Interest $5,649,109 - --------------------------------------------------------------------------------------- EXPENSES: - --------------------------------------------------------------------------------------- Investment advisory fee $ 581,552 - ------------------------------------------------------------------------- Administrative personnel and services fee 109,936 - ------------------------------------------------------------------------- Custodian fees 37,930 - ------------------------------------------------------------------------- Transfer agent and dividend disbursing agent fees and expenses 72,560 - ------------------------------------------------------------------------- Directors'/Trustees' fees 2,116 - ------------------------------------------------------------------------- Auditing fees 7,572 - ------------------------------------------------------------------------- Legal fees 2,113 - ------------------------------------------------------------------------- Portfolio accounting fees 46,100 - ------------------------------------------------------------------------- Distribution services fee-Cash II Shares 309,994 - ------------------------------------------------------------------------- Shareholder services fee-Institutional Service Shares 99,969 - ------------------------------------------------------------------------- Shareholder services fee-Cash II Shares 258,329 - ------------------------------------------------------------------------- Shareholder services fee-Institutional Shares 5,173 - ------------------------------------------------------------------------- Share registration costs 26,859 - ------------------------------------------------------------------------- Printing and postage 11,353 - ------------------------------------------------------------------------- Insurance premiums 4,010 - ------------------------------------------------------------------------- Miscellaneous 2,867 - ------------------------------------------------------------------------- ---------- Total expenses 1,578,433 - ------------------------------------------------------------------------- Waivers - ------------------------------------------------------------------------- Waiver of investment advisory fee $(170,725) - ------------------------------------------------------------- Waiver of distribution services fee-Cash II Shares (186,033) - ------------------------------------------------------------- Waiver of shareholder services fee-Institutional Service Shares (75,537) - ------------------------------------------------------------- Waiver of shareholder services fee-Institutional Shares (5,173) - ------------------------------------------------------------- --------- Total waivers (437,468) - ------------------------------------------------------------------------- ---------- Net expenses 1,140,965 - --------------------------------------------------------------------------------------- ---------- Net investment income $4,508,144 - --------------------------------------------------------------------------------------- ----------
(See Notes which are an integral part of the Financial Statements) OHIO MUNICIPAL CASH TRUST STATEMENT OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
SIX MONTHS ENDED (UNAUDITED) YEAR ENDED APRIL 30, 1996 OCTOBER 31, 1995 ----------------- ----------------- INCREASE (DECREASE) IN NET ASSETS: - ------------------------------------------------------ OPERATIONS-- - ------------------------------------------------------ Net investment income $ 4,508,144 $ 8,010,653 - ------------------------------------------------------ ----------------- ----------------- DISTRIBUTIONS TO SHAREHOLDERS-- - ------------------------------------------------------ Distributions from net investment income - ------------------------------------------------------ Institutional Service Shares (1,323,080) (2,660,655) - ------------------------------------------------------ Cash II Shares (3,113,571) (5,349,998) - ------------------------------------------------------ Institutional Shares (71,493) -- - ------------------------------------------------------ ----------------- ----------------- Change in net assets resulting from distributions to shareholders (4,508,144) (8,010,653) - ------------------------------------------------------ ----------------- ----------------- SHARE TRANSACTIONS-- - ------------------------------------------------------ Proceeds from sale of shares 700,721,901 1,275,288,208 - ------------------------------------------------------ Net asset value of shares issued to shareholders in payment of distributions declared 2,638,871 5,470,332 - ------------------------------------------------------ Cost of shares redeemed (685,865,650) (1,238,142,557) - ------------------------------------------------------ ----------------- ----------------- Change in net assets resulting from share transactions 17,495,122 42,615,983 - ------------------------------------------------------ ----------------- ----------------- Change in net assets 17,495,122 42,165,983 - ------------------------------------------------------ NET ASSETS: - ------------------------------------------------------ Beginning of period 261,165,455 218,549,472 - ------------------------------------------------------ ----------------- ----------------- End of period $ 278,660,577 $ 261,165,455 - ------------------------------------------------------ ----------------- -----------------
(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)
PERIOD ENDED (UNAUDITED) APRIL 30, 1996(A) ------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 - ----------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS - ----------------------------------------------------------------------- Net investment income 0.01 - ----------------------------------------------------------------------- LESS DISTRIBUTIONS - ----------------------------------------------------------------------- Distributions from net investment income (0.01) - ----------------------------------------------------------------------- --------- NET ASSET VALUE, END OF PERIOD $ 1.00 - ----------------------------------------------------------------------- --------- TOTAL RETURN(B) 0.52% - ----------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS - ----------------------------------------------------------------------- Expenses 0.37%* - ----------------------------------------------------------------------- Net investment income 3.47%* - ----------------------------------------------------------------------- Expense waiver(c) 0.53%* - ----------------------------------------------------------------------- SUPPLEMENTAL DATA - ----------------------------------------------------------------------- Net assets, end of period (000 omitted) $20,713 - -----------------------------------------------------------------------
* Computed on an annualized basis. (a) Reflects operations for the period from March 5, 1996 (date of initial public investment) to April 30, 1996. (b) Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable. (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) OHIO MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS--INSTITUTIONAL SERVICE SHARES - -------------------------------------------------------------------------------- (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED (UNAUDITED) YEAR ENDED OCTOBER 31, APRIL 30, ----------------------------------------------- 1996 1995 1994 1993 1992 1991(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 0.04 0.02 0.02 0.03 0.02 - ----------------------------------- LESS DISTRIBUTIONS - ----------------------------------- Distributions from net investment income (0.02) (0.04) (0.02) (0.02) (0.03) (0.02 ) - ----------------------------------- -------- ------ ------ ------ ------ ------- NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 - ----------------------------------- -------- ------ ------ ------ ------ ------- TOTAL RETURN(B) 1.66% 3.61% 2.41% 2.33% 3.21% 2.40 % - ----------------------------------- RATIOS TO AVERAGE NET ASSETS - ----------------------------------- Expenses 0.57%* 0.57% 0.55% 0.48% 0.46% 0.35 %* - ----------------------------------- Net investment income 3.31%* 3.56% 2.36% 2.30% 3.10% 4.46 %* - ----------------------------------- Expense waiver(c) 0.30%* 0.29% 0.07% 0.19% 0.25% 0.32 %* - ----------------------------------- SUPPLEMENTAL DATA - ----------------------------------- Net assets, end of period (000 omitted) $58,050 $72,931 $62,499 $81,748 $74,342 $44,771 - -----------------------------------
* Computed on an annualized basis. (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 charge or contingent deferred sales charge, if applicable. (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) OHIO MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS--CASH II SHARES - -------------------------------------------------------------------------------- (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED (UNAUDITED) YEAR ENDED OCTOBER 31, APRIL 30, --------------------------------------------------- 1996 1995 1994 1993 1992 1991(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 0.02 0.03 0.02 - -------------------------------- LESS DISTRIBUTIONS - -------------------------------- Distributions from net investment income (0.02) (0.03) (0.02) (0.02) (0.03) (0.02 ) - -------------------------------- --------- ------ ------ ------ ------ ------- NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 - -------------------------------- --------- ------ ------ ------ ------ ------- TOTAL RETURN(B) 1.51% 3.30% 2.10% 2.02% 2.90% 2.27 % - -------------------------------- RATIOS TO AVERAGE NET ASSETS - -------------------------------- Expenses 0.87%* 0.87% 0.85% 0.78% 0.76% 0.63 %* - -------------------------------- Net investment income 3.01%* 3.25% 2.09% 2.01% 2.86% 4.18 %* - -------------------------------- Expense waiver(c) 0.30%* 0.29% 0.24% 0.19% 0.25% 0.34 %* - -------------------------------- SUPPLEMENTAL DATA - -------------------------------- Net assets, end of period (000 omitted) $199,898 $188,234 $156,051 $127,017 $133,877 $94,081 - --------------------------------
* Computed on an annualized basis. (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 charge or contingent deferred sales charge, if applicable. (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) OHIO MUNICIPAL CASH TRUST NOTES TO FINANCIAL STATEMENTS APRIL 30, 1996 (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 fifteen portfolios. The financial statements included herein are only those of Ohio Municipal Cash Trust (the "Fund"), a non-diversified portfolio. The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. The Fund offers three classes of shares: Institutional Service Shares (Effective March 5, 1996, the Fund's Institutional Shares changed to Institutional Service Shares), Cash II Shares and Institutional Shares (Effective March 5, 1996, the Fund added Institutional Shares). The investment objective of the Fund is current income exempt from federal regular income tax and the personal income taxes imposed by the state of Ohio and Ohio municipalities consistent with stability of principal. (2) SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with generally accepted accounting principles. 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 OHIO MUNICIPAL CASH TRUST - -------------------------------------------------------------------------------- reduce the credit risk associated with such factors, at April 30, 1996, 72.6% 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 from any one institution or agency did not exceed 13.1% 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 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, 1996 is as follows:
ACQUISITION ACQUISITION SECURITY DATE COST ----------------------------------------------------------------- ----------- ----------- Ohio HFA, Single Family Mortgage (Series PT-71) Weekly VRDNs 03/05/96 $8,405,000 Youngstown City School District, OH, Municipal Installment Trust Receipts (Series 1994-A) Weekly VRDNs 01/04/95 5,095,000
USE OF ESTIMATES--The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ from those estimated. OTHER--Investment transactions are accounted for on 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, 1996, capital paid-in aggregated $278,660,577. OHIO MUNICIPAL CASH TRUST - -------------------------------------------------------------------------------- Transactions in shares were as follows:
SIX MONTHS ENDED YEAR ENDED INSTITUTIONAL SERVICE SHARES APRIL 30, 1996 OCTOBER 31, 1995 - -------------------------------------------------------- --------------- ---------------- Shares sold 293,754,110 571,719,826 - -------------------------------------------------------- Shares issued to shareholders in payment of distributions declared 109,464 277,721 - -------------------------------------------------------- Shares redeemed (308,745,118) (561,565,338) - -------------------------------------------------------- ------------- ------------- Net change resulting from Institutional Service Share transactions (14,881,544) 10,432,209 - -------------------------------------------------------- ------------- -------------
SIX MONTHS ENDED YEAR ENDED CASH II SHARES APRIL 30, 1996 OCTOBER 31, 1995 - -------------------------------------------------------- --------------- ---------------- Shares sold 360,520,811 703,568,382 - -------------------------------------------------------- Shares issued to shareholders in payment of distributions declared 2,517,463 5,192,611 - -------------------------------------------------------- Shares redeemed (351,374,612) (676,577,219) - -------------------------------------------------------- ------------- ------------- Net change resulting from Cash II Share transactions 11,663,662 32,183,774 - -------------------------------------------------------- ------------- -------------
PERIOD ENDED INSTITUTIONAL SHARES APRIL 30, 1996* - ------------------------------------------------------- ---------------- Shares sold 46,446,980 - ------------------------------------------------------- Shares issued to shareholders in payment of distributions declared 11,944 - ------------------------------------------------------- Shares redeemed (25,745,920) - ------------------------------------------------------- ------------ Net change resulting from Institutional Share transactions 20,713,004 - ------------------------------------------------------- ------------ Net change resulting from Fund share transactions 17,495,122 42,615,983 - ------------------------------------------------------- ------------ -----------
* Reflects operations for the period from March 5, 1996 (date of initial public investment) to April 30, 1996. (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 0.40% of the Fund's average daily net assets. The Adviser may voluntarily choose to waive any portion of its fee and/or reimburse certain OHIO MUNICIPAL CASH TRUST - -------------------------------------------------------------------------------- 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 Services Company ("FServ"), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. The fee paid to FServ 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 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 0.30% of the average daily net assets of the Cash II shares, annually, to compensate FSC. FSC 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 0.25% of daily average net assets of the Fund for the period. The fee paid to FSS is used to finance certain services for shareholders and to maintain shareholder accounts. FSS may voluntarily choose to waive any portion of its fee. FSS can modify or terminate this voluntary waiver at any time at its sole discretion. For the six month period ended April 30, 1996, Institutional Shares fully waived its shareholder services fee. TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--FServ, through its subsidiary, Federated Shareholder Services Company serves as transfer and dividend disbursing agent for the Fund. The fee paid to FServ is based on the size, type, and number of accounts and transactions made by shareholders. PORTFOLIO ACCOUNTING FEES--FServ maintains the Fund's accounting records for which it receives a fee. The fee is based on the level of the Fund's average daily net assets for the period, plus out-of-pocket expenses. INTERFUND TRANSACTIONS--During the period ended April 30, 1996, the Fund engaged in purchase and sale transactions with funds that have a common investment adviser (or affiliated investment advisers), common Directors/Trustees, and/or common Officers. These purchase and sale transactions were made at current market value pursuant to Rule 17a-7 under the Act amounting to $270,795,000 and $262,420,000, 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. Executive Vice President Edward L. Flaherty, Jr. Edward C. Gonzales Glen R. Johnson Executive Vice President Peter E. Madden John W. McGonigle Gregor F. Meyer Executive Vice President and Secretary John E. Murray, Jr. Richard B. Fisher Wesley W. Posvar Vice President Marjorie P. Smuts David M. Taylor Treasurer Charles H. Field 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, 1996 [LOGO] FEDERATED INVESTORS Since 1955 Federated Investors Tower Pittsburgh, PA 15222-3779 Federated Securities Corp. is the distributor of the fund and is a subsidiary of Federated Investors. Cusip 314229659 Cusip 314229857 Cusip 314229840 2052903 (6/96) 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, which covers the six-month period from November 1, 1995 through April 30, 1996. The report begins with a discussion with the fund's portfolio manager, followed by a complete listing of the fund's holdings and its financial statements. Financial highlights tables are provided for the fund's Institutional Shares, Institutional Service Shares, and Cash Series Shares. The fund is a convenient way to put your ready cash to work pursuing triple-tax-free income--free from federal regular income tax, state income tax, and state personal property tax*--through a portfolio concentrated in high-quality, short-term Pennsylvania municipal securities. As a shareholder, you have the opportunity to earn a greater after-tax yield than you could in a comparable high-quality taxable investment. Of course, the fund also brings you the added benefits of daily liquidity and stability of principal.** During the report period, the fund paid triple-tax free dividends of $0.02 per share for Institutional Shares, $0.02 per share for Institutional Service Shares, and $0.01 per share for Cash Series Shares. Its total net assets of $265.2 million were spread among Pennsylvania securities that use municipal bond financing for projects as varied as health care, housing, community development, and transportation. You can count on Pennsylvania Municipal Cash Trust to seek the best tax-free income opportunities for your cash investment needs. As always, we will continue to provide you with the highest level of professional service. We invite your questions or comments. Sincerely, Glen R. Johnson President June 15, 1996 *Income may be subject to the federal alternative minimum tax. **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. An investment in the fund is neither insured nor guaranteed by the U.S. government. INVESTMENT REVIEW - -------------------------------------------------------------------------------- An Interview with Fund Portfolio Manager, Jeff A. Kozemchak, C.F.A. Q Can you comment on the economy and the interest rate environment during the semi-annual reporting period? A The Federal Reserve Board (the "Fed") eased monetary policy twice over the six-month reporting period ended in April 1996. Faced with slowing economic growth and benign inflationary pressures, the Fed lowered the federal funds target rate from 5.75% to 5.50% in late December 1995, and again from 5.50% to the current 5.25% at the end of January 1996. For the December 1995 move, the Fed cited a better-than-expected inflation outlook as the impetus behind the easing, although a sluggish manufacturing sector and lackluster consumer spending was thought to have had an influence. In January 1996, the Fed appeared swayed by the dampening effects of high debt loads and employment uncertainty on consumer consumption along with sluggish export growth. Through this period, the short-end of the government and municipal yield curves anticipated the policy moves from the Fed, and amid signs of a weakening economy looked forward to additional eases in the not too distant future. February and March of 1996, however, brought about a shift in market psychology regarding both the extent and direction of changes in monetary policy by the Fed. Recovering from the harsh winter weather and spurred onward by lower interest rates, the housing market and consumer spending breathed some life into the economy, which had seemed on the verge of recession earlier in the year. The market was then stunned in early March 1996 by the report of a 705,000 increase in non-farm payroll jobs for February 1996--the largest increase in 12 years--which caused the yields on short-term securities to rise by as much as 25 basis points. Now confronted with a more robust economy than previously thought, market participants have moved expectations toward a more neutral policy from the Fed in the near term with a possible tightening, or increase in rates, later in 1996. Yields on short-term government securities reflected this rather volatile mood in the markets. The yield on the three-month Treasury bill began November 1995 at 5.48%, declined to 4.89% by mid-February 1996, and ended April 1996 at 5.14%. Correspondingly, the yield on the one-year Treasury bill began November 1995 at 5.46%, fell to 4.79% in mid-February 1996, but rose to 5.62% by the end of April 1996. Q How has the fund's yield responded to this interest rate environment? A The fund's yield was affected by Fed policy (interest rate cuts), changes in market expectations, as well as supply and demand imbalances unique to the municipal money markets. However, because of these imbalances the fund's yield may experience more volatility on a weekly - -------------------------------------------------------------------------------- basis than Treasury yields and taxable money fund yields. In general, yields on municipal money market funds were lower over the period. For the fund, the seven-day net yield of the Institutional Shares on April 30, 1996, was 3.50%, compared to 3.58% on November 1, 1995.* For the Institutional Service Shares, the seven-day net yield was 3.30% on April 30, 1996, compared to 3.38% on November 1, 1995.* For the Cash Series Shares, the seven-day net yield was 2.90% on April 30, 1996, compared to 2.98% on November 1, 1995.* Q What was your strategy for managing the fund over the period? A The fund started the period with an average maturity of 63 days, reflecting a neutral to slightly bullish outlook on short-term interest rates. Because the supply of attracively priced fixed-rate notes and bonds in Pennsylvania was readily available, we kept the average maturity of the fund targeted between 55 to 70 days, reflecting the value offered in the marketplace for fixed-rate notes. At the end of the period, the average maturity was 61 days, reflecting our assessment of more neutral Fed policy for the balance of 1996. If fixed-rate securities continue to offer relative value when compared to shorter-term overnight or weekly notes, we expect to maintain this average maturity between 55 and 65 days over the near-term. Q What is your outlook for the near future? A With growth of 2.3% in the first quarter of 1996, the economy appears to be on firmer footing than it was in the fourth quarter of 1995, when gross domestic product grew at only 0.5%. As a result, the Fed should not feel the urgency to lower short-term rates further. By the same token, however, with areas of softness in the economy still evident and with consumer indebtedness at very high levels, there also appears to be no danger of the economy overheating in the near term. As long as inflation remains benign, the Fed should be content to sit on the sidelines until confronted with signs of undue strength or considerable weakness in economic growth. The average maturity of the fund will continue to be managed in accordance with our expectation for a stable monetary policy in the near term. Nevertheless, opportunities for average maturity extension will arise as the supply of fixed-rate notes in the municipal market increases significantly in June and July of 1996. This spike in supply may present opportunities to "lock-in" yields which are attractive relative to comparable maturity taxable securities. As a result, we anticipate the average maturity of the fund to be slightly longer throughout the summer months. * Performance quoted represents past performance and is not indicative of future results. Yield will vary. PENNSYLVANIA MUNICIPAL CASH TRUST PORTFOLIO OF INVESTMENTS APRIL 30, 1996 (UNAUDITED) - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ------------- ----------------------------------------------------------------------- ----------- -------------- SHORT-TERM MUNICIPALS--99.0% - -------------------------------------------------------------------------------------- PENNSYLVANIA--99.0% ----------------------------------------------------------------------- $ 1,000,000 Allegheny County, PA IDA, (Series 1991) Weekly VRDNs (Mine Safety Appliances Co.)/(Sanwa Bank Ltd, Osaka LOC) P-1 $ 1,000,000 ----------------------------------------------------------------------- 1,500,000 Allegheny County, PA IDA, (Series 1991B) Weekly VRDNs (Shandon, Inc.)/(PNC Bank, N.A. LOC) P-1 1,500,000 ----------------------------------------------------------------------- 6,500,000 Allegheny County, PA IDA, 3.50% CP (Duquesne Light Power Co.)/(Barclays Bank PLC, London LOC), Mandatory Tender 6/6/1996 A-1+ 6,500,000 ----------------------------------------------------------------------- 4,850,000 Allegheny County, PA IDA, Commercial Development Revenue Bonds (Series 1992) Weekly VRDNs (Eleven Parkway Center Associates)/(Integra Bank, Pittsburgh LOC) A-1 4,850,000 ----------------------------------------------------------------------- 5,000,000 Allegheny County, PA IDA, PCR (Series 1992A), 3.75% TOBs (Duquesne Light Power Co.)/(Canadian Imperial Bank of Commerce, Toronto LOC), Optional Tender 11/7/1996 P-1 5,000,000 ----------------------------------------------------------------------- 3,000,000 Beaver County, PA IDA, PCR Refunding Bonds (1992 Series-E), 3.25% CP (Toledo Edison Co.)/(Toronto-Dominion Bank LOC), Mandatory Tender 6/5/1996 A-1+ 3,000,000 ----------------------------------------------------------------------- 4,000,000 Bedford County, PA IDA, IDRB's (Series 1985) Weekly VRDNs (Sepa, Inc. Facility)/(Banque Paribas LOC) A-2 4,000,000 ----------------------------------------------------------------------- 1,260,000 Berks County, PA IDA Weekly VRDNs (ADC Quaker Maid Meats)/(Meridian Bank, Reading, PA LOC) VMIG1 1,260,000 ----------------------------------------------------------------------- 1,245,000 Berks County, PA IDA Weekly VRDNs (Beacon Container)/ (Corestates Bank N.A., Philadelphia, PA LOC) P-1 1,245,000 ----------------------------------------------------------------------- 1,900,000 Berks County, PA IDA, (Series 1988) Weekly VRDNs (Arrow Electronics, Inc.)/(Corestates Bank N.A., Philadelphia, PA LOC) P-1 1,900,000 -----------------------------------------------------------------------
PENNSYLVANIA MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ------------- ----------------------------------------------------------------------- ----------- -------------- SHORT-TERM MUNICIPALS--CONTINUED - -------------------------------------------------------------------------------------- PENNSYLVANIA--CONTINUED ----------------------------------------------------------------------- $ 2,000,000 Berks County, PA IDA, Mfg Facilities Revenue Bonds (Series 1995) Weekly VRDNs (Grafika Commercial Printing, Inc.)/(Meridian Bank, Reading, PA LOC) P-1 $ 2,000,000 ----------------------------------------------------------------------- 560,000 Berks County, PA IDA, Revenue Bonds (Series 1995A/ Subseries A) Weekly VRDNs (Meridian Bank, Reading, PA LOC) P-1 560,000 ----------------------------------------------------------------------- 1,285,000 Berks County, PA IDA, Revenue Bonds (Series 1995A/ Subseries B) Weekly VRDNs (Meridian Bank, Reading, PA LOC) P-1 1,285,000 ----------------------------------------------------------------------- 4,000,000 Berks County, PA, (Series 1996), 4.50% TRANs, 12/31/1996 NR 4,012,817 ----------------------------------------------------------------------- 2,445,000 Bucks County, PA IDA Weekly VRDNs (Double H Plastics, Inc.)/(Meridian Bank, Reading, PA LOC) VMIG1 2,445,000 ----------------------------------------------------------------------- 2,835,000 Bucks County, PA IDA Weekly VRDNs (Pennsylvania Associates)/(Meridian Bank, Reading, PA LOC) P-1 2,835,000 ----------------------------------------------------------------------- 4,500,000 Bucks County, PA IDA, (Series 1991) Weekly VRDNs (Cabot Medical Corp.)/(Meridian Bank, Reading, PA LOC) VMIG1 4,500,000 ----------------------------------------------------------------------- 1,360,000 Bucks County, PA IDA, Variable Rate Environmental Improvement Revenue Bonds (Series 1995), 3.70% TOBs (USX Corp.)/(Wachovia Bank of NC, NA, Winston-Salem LOC), Mandatory Tender 5/1/1996 A-1+ 1,360,000 ----------------------------------------------------------------------- 1,000,000 Butler County, PA IDA Weekly VRDNs (Mine Safety Appliances Co.)/(Sanwa Bank Ltd, Osaka LOC) P-1 1,000,000 ----------------------------------------------------------------------- 3,000,000 Butler County, PA IDA Weekly VRDNs (Mine Safety Appliances Co.)/(Sanwa Bank Ltd, Osaka LOC) P-1 3,000,000 ----------------------------------------------------------------------- 1,000,000 Butler County, PA IDA, (Series 1992B) Weekly VRDNs (Mine Safety Appliances Co.)/(Sanwa Bank Ltd, Osaka LOC) P-1 1,000,000 ----------------------------------------------------------------------- 2,385,000 Butler County, PA IDA, IDRB (Series 1994) Weekly VRDNs (Lue-Rich Holding Company, Inc. Project)/(ABN AMRO Bank N.V., Amsterdam LOC) A-1+ 2,385,000 -----------------------------------------------------------------------
PENNSYLVANIA MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ------------- ----------------------------------------------------------------------- ----------- -------------- SHORT-TERM MUNICIPALS--CONTINUED - -------------------------------------------------------------------------------------- PENNSYLVANIA--CONTINUED ----------------------------------------------------------------------- $ 700,000 Cambria County, PA IDA Weekly VRDNs (Cambria Cogeneration)/(Fuji Bank, Ltd., Tokyo LOC) P-1 $ 700,000 ----------------------------------------------------------------------- 11,000,000 Cambria Township, PA Water Authority, Industrial User Revenue Bonds (Series 1993A), 3.90% TOBs (Banque Paribas, Paris LOC), Mandatory Tender 6/1/1996 VMIG1 11,000,000 ----------------------------------------------------------------------- 1,700,000 Carbon County, PA IDA Weekly VRDNs (Summit Management & Utilities, Inc.)/(PNC Bank, N.A. LOC) A-1 1,700,000 ----------------------------------------------------------------------- 5,000,000 Carbon County, PA IDA, 3.50% CP (Panther Creek)/ (National Westminster Bank, PLC, London LOC), Mandatory Tender 5/23/1996 A-1+ 5,000,000 ----------------------------------------------------------------------- 2,620,000 Carbon County, PA IDA, Resource Recovery Bonds, 3.25% CP (Panther Creek)/(National Westminster Bank, PLC, London LOC), Mandatory Tender 7/24/1996 A-1+ 2,620,000 ----------------------------------------------------------------------- 6,825,000 Carbon County, PA IDA, Resource Recovery Bonds, 3.55% CP (Panther Creek)/(National Westminster Bank, PLC, London LOC), Mandatory Tender 7/11/1996 A-1+ 6,825,000 ----------------------------------------------------------------------- 5,000,000 Carbon County, PA IDA, Solid Waste Disposal Revenue Notes (Series 1995B), 3.90% RANs (Horsehead Resource Development, Inc.)/(Chemical Bank, New York LOC), 12/3/1996 A-1+ 5,000,000 ----------------------------------------------------------------------- 7,300,000 Clearfield County, PA IDA Weekly VRDNs (Penn Traffic Co.)/(ABN AMRO Bank N.V., Amsterdam LOC) P-1 7,300,000 ----------------------------------------------------------------------- 8,000,000 Clinton County, PA IDA, Solid Waste Disposal Revenue Bonds (Series 1992A), 3.80% TOBs (International Paper Co.), Optional Tender 1/15/1997 A-2 8,000,000 ----------------------------------------------------------------------- 3,000,000 Clinton County, PA, IDA Weekly VRDNs (Armstrong World Industries, Inc.)/(Mellon Bank NA, Pittsburgh LOC) P-1 3,000,000 ----------------------------------------------------------------------- 17,000,000 Commonwealth of Pennsylvania, (First Series of 1995-1996), 4.50% TANs, 6/28/1996 SP-1+ 17,019,201 ----------------------------------------------------------------------- $ 1,500,000 Cumberland County, PA IDA, Industrial Development Bonds (Series 1994) Weekly VRDNs (Lane Enterprises, Inc. Project)/(Meridian Bank, Reading, PA LOC) P-1 $ 1,500,000 -----------------------------------------------------------------------
PENNSYLVANIA MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ------------- ----------------------------------------------------------------------- ----------- -------------- SHORT-TERM MUNICIPALS--CONTINUED - -------------------------------------------------------------------------------------- PENNSYLVANIA--CONTINUED ----------------------------------------------------------------------- 400,000 Erie County, PA IDA Weekly VRDNs (P.H.B. Project)/(PNC Bank, N.A. LOC) P-1 400,000 ----------------------------------------------------------------------- 425,000 Erie County, PA IDA, (Series 1985) Weekly VRDNs (R. P-C Value, Inc.)/(PNC Bank, N.A. LOC) P-1 425,000 ----------------------------------------------------------------------- 500,000 Erie County, PA IDA, (Series B) Weekly VRDNs (P.H.B. Project)/(PNC Bank, N.A. LOC) P-1 500,000 ----------------------------------------------------------------------- 1,665,000 Erie County, PA IDA, Multi Mode Revenue Refunding Bonds Weekly VRDNs (Corry Manor, Inc.)/(PNC Bank, N.A. LOC) A-1 1,665,000 ----------------------------------------------------------------------- 500,000 Forest County, PA IDA Weekly VRDNs (Industrial Timber & Land Co.)/(National City Bank, Cleveland, OH LOC) P-1 500,000 ----------------------------------------------------------------------- 1,280,000 Forest County, PA IDA Weekly VRDNs (Marienville Health Care Facility)/(PNC Bank, N.A. LOC) P-1 1,280,000 ----------------------------------------------------------------------- 1,800,000 Franklin County, PA IDA Weekly VRDNs (The Guarriello Limited Partnership)/(PNC Bank, N.A. LOC) P-1 1,800,000 ----------------------------------------------------------------------- 2,800,000 Lackawanna County, PA IDA, (Series 1992) Weekly VRDNs (Hem Project)/(Corestates Bank N.A., Philadelphia, PA LOC) P-1 2,800,000 ----------------------------------------------------------------------- 1,856,092 Lawrence County, PA IDA, (Series 1989A) Weekly VRDNs (Ellwood Uddeholm Steel Co.)/(Society National Bank, Cleveland, OH LOC) P-1 1,856,092 ----------------------------------------------------------------------- 1,000,000 Lehigh County, PA General Purpose Authority, Revenue Bonds (Series 1990) Weekly VRDNs (Phoebe Terrace, Inc.)/ (Meridian Bank, Reading, PA LOC) P-1 1,000,000 ----------------------------------------------------------------------- 3,100,000 Lehigh County, PA IDA, (Series 1989A) Weekly VRDNs (Hershey Pizza Co., Inc.)/(PNC Bank, N.A. LOC) A-1 3,100,000 ----------------------------------------------------------------------- 5,000,000 Luzerne Co, PA, 3.85% TRANs, 12/31/1996 NR 5,004,811 ----------------------------------------------------------------------- $ 1,650,000 Marple Township, PA, (Series 1996), 4.25% TRANs, 12/31/1996 NR $ 1,656,902 -----------------------------------------------------------------------
PENNSYLVANIA MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ------------- ----------------------------------------------------------------------- ----------- -------------- SHORT-TERM MUNICIPALS--CONTINUED - -------------------------------------------------------------------------------------- PENNSYLVANIA--CONTINUED ----------------------------------------------------------------------- 790,000 McKean County, PA IDA, Multi-Mode Revenue Refunding Bonds Weekly VRDNs (Bradford Manor, Inc.)/(PNC Bank, N.A. LOC) A-1 790,000 ----------------------------------------------------------------------- 3,300,000 Monroe County, PA IDA, PCR Weekly VRDNs (Cooper Industries, Inc.)/(Sanwa Bank Ltd, Osaka LOC) A-1 3,300,000 ----------------------------------------------------------------------- 1,070,000 Montgomery County, PA Higher Education and Health Authority, (Series 1992) Weekly VRDNs (Pottstown Healthcare Corporation Project)/(Meridian Bank, Reading, PA LOC) VMIG1 1,070,000 ----------------------------------------------------------------------- 1,300,000 Montgomery County, PA IDA, (Series 1992) Weekly VRDNs (RJI Limited Partnership)/(Meridian Bank, Reading, PA LOC) VMIG1 1,300,000 ----------------------------------------------------------------------- 2,800,000 Montgomery County, PA IDA, (Series 84) Weekly VRDNs (Thomas & Betts Corp.)/(Wachovia Bank of NC, NA, Winston-Salem LOC) P-1 2,800,000 ----------------------------------------------------------------------- 5,075,000 Moon Township, PA IDA Weekly VRDNs (Airport Hotel Associates)/(ABN AMRO Bank N.V., Amsterdam LOC) A-1+ 5,075,000 ----------------------------------------------------------------------- 3,250,000 Norristown, PA, (Series 1996), 3.75% TRANs, 12/31/1996 NR 3,250,000 ----------------------------------------------------------------------- 3,850,000 Northampton County, PA IDA, 3.35% CP (Citizens Utilities Co.), Mandatory Tender 5/15/1996 AAA 3,850,000 ----------------------------------------------------------------------- 9,000,000 Northampton County, PA IDA, 3.65% CP (Citizens Utilities Co.), Mandatory Tender 7/11/1996 A-1+ 9,000,000 ----------------------------------------------------------------------- 1,590,000 Northumberland County PA IDA, Revenue Bonds (Series A of 1995) Weekly VRDNs (Furman Farms, Inc. Project)/ (Meridian Bank, Reading, PA LOC) P-1 1,590,000 ----------------------------------------------------------------------- 1,800,000 Pennsylvania Education Development Authority Weekly VRDNs (Cyrogenics, Inc.)/(PNC Bank, N.A. LOC) A-1 1,800,000 ----------------------------------------------------------------------- $ 3,000,000 Pennsylvania Education Development Authority Weekly VRDNs (Industrial Scientific Corp.)/(Mellon Bank NA, Pittsburgh LOC) P-1 $ 3,000,000 -----------------------------------------------------------------------
PENNSYLVANIA MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ------------- ----------------------------------------------------------------------- ----------- -------------- SHORT-TERM MUNICIPALS--CONTINUED - -------------------------------------------------------------------------------------- PENNSYLVANIA--CONTINUED ----------------------------------------------------------------------- 675,000 Pennsylvania Education Development Authority Weekly VRDNs (Pioneer Fluid)/(PNC Bank, N.A. LOC) A-1 675,000 ----------------------------------------------------------------------- 675,000 Pennsylvania Education Development Authority Weekly VRDNs (RMF Associates)/(PNC Bank, N.A. LOC) A-1 675,000 ----------------------------------------------------------------------- 850,000 Pennsylvania Education Development Authority Weekly VRDNs (Reace Associates)/(PNC Bank, N.A. LOC) A-1 850,000 ----------------------------------------------------------------------- 4,300,000 Pennsylvania Education Development Authority Weekly VRDNs (Walnut And Craig)/(PNC Bank, N.A. LOC) P-1 4,300,000 ----------------------------------------------------------------------- 500,000 Pennsylvania Education Development Authority, (Series B) Weekly VRDNs (Payne Printing Co.)/(PNC Bank, N.A. LOC) A-1 500,000 ----------------------------------------------------------------------- 1,000,000 Pennsylvania Education Development Authority, Economic Development Revenue Bonds (Series 1996C) Weekly VRDNs (Napco, Inc. Project)/(Mellon Bank NA, Pittsburgh LOC) P-1 1,000,000 ----------------------------------------------------------------------- 1,075,000 Pennsylvania Education Development Authority, Revenue Bonds (Series G4) Weekly VRDNs (Metamora Products)/ (PNC Bank, N.A. LOC) A-1 1,075,000 ----------------------------------------------------------------------- 300,000 Pennsylvania Education Development Authority, Revenue Bonds Weekly VRDNs (DDI Pharmaceuticals, Inc.)/(PNC Bank, N.A. LOC) A-1 300,000 ----------------------------------------------------------------------- 500,000 Pennsylvania Education Development Authority, Revenue Bonds Weekly VRDNs (RAM Forest Products)/(PNC Bank, N.A. LOC) A-1 500,000 ----------------------------------------------------------------------- 6,700,000 Pennsylvania Housing Finance Authority, 3.50% TOBs (First National Bank of Chicago LIQ), Optional Tender 10/1/1996 NR(2) 6,700,000 ----------------------------------------------------------------------- $ 980,000 Pennsylvania Housing Finance Authority, Section 8 Assisted Residential Development Refunding Bonds (Series 1992A) Weekly VRDNs (CGIC INS)/(Citibank NA, New York LIQ) P-1 $ 980,000 -----------------------------------------------------------------------
PENNSYLVANIA MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ------------- ----------------------------------------------------------------------- ----------- -------------- SHORT-TERM MUNICIPALS--CONTINUED - -------------------------------------------------------------------------------------- PENNSYLVANIA--CONTINUED ----------------------------------------------------------------------- 2,210,000 Pennsylvania Housing Finance Authority, Single Family Housing (Series O), 4.00% TOBs (Meridian Bank, Reading, PA LIQ), Optional Tender 5/1/1996 NR(2) 2,210,000 ----------------------------------------------------------------------- 3,300,000 Pennsylvania State University, Series of 1996, 4.25% BANs, 4/4/1997 MIG1 3,322,124 ----------------------------------------------------------------------- 7,000,000 Philadelphia, PA IDA, 4.25% TOBs (Suite Hotel)/(First National Bank of Boston, MA LOC), Optional Tender 6/1/ 1996 P-1 7,000,000 ----------------------------------------------------------------------- 3,700,000 Philadelphia, PA IDA, Commercial Development Revenue Bonds (Series A), 4.00% TOBs (Economy Inn)/(First National Bank of Boston, MA LOC), Optional Tender 7/1/ 1996 P-1 3,700,000 ----------------------------------------------------------------------- 1,700,000 Philadelphia, PA IDA, Commercial Development Revenue Bonds (Series B), 4.00% TOBs (Economy Inn)/(First National Bank of Boston, MA LOC), Optional Tender 7/1/ 1996 A-1 1,700,000 ----------------------------------------------------------------------- 5,500,000 Philadelphia, PA, (Series A), 4.50% TRANs, 6/27/1996 SP-1 5,504,127 ----------------------------------------------------------------------- 5,000,000 Port Authority of Allegheny County, PA, (Series 1995A), 3.875% GANs (PNC Bank, N.A. LOC), 6/28/1996 MIG1 5,000,000 ----------------------------------------------------------------------- 20,000 Sayre, PA, Health Care Facilities Authority Weekly VRDNs (VHA of Pennsylvania)/(AMBAC INS)/(First National Bank of Chicago LIQ) A-1 20,000 ----------------------------------------------------------------------- 2,000,000 Schuylkill County, PA IDA, Manufacturing Facilities Revenue Bonds (Series 1995) Weekly VRDNs (Prime Packing, Inc. Project)/(Corestates Bank N.A., Philadelphia, PA LOC) VMIG1 2,000,000 ----------------------------------------------------------------------- $ 4,000,000 Temple University, Commonwealth System of Higher Education University Funding Obligations (Series 1995), 5.00% BANs, 5/22/1996 SP-1+ $ 4,001,540 ----------------------------------------------------------------------- 3,824,000 Upper Darby School District, PA, 4.13% TRANs, 6/28/1996 NR(3) 3,824,346 -----------------------------------------------------------------------
PENNSYLVANIA MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ------------- ----------------------------------------------------------------------- ----------- -------------- SHORT-TERM MUNICIPALS--CONTINUED - -------------------------------------------------------------------------------------- PENNSYLVANIA--CONTINUED ----------------------------------------------------------------------- 5,850,000 Venango, PA IDA, (Series A), 3.55% CP (Scrubgrass Power Corp.)/(National Westminster Bank, PLC, London LOC), Mandatory Tender 7/12/1996 A-1+ 5,850,000 ----------------------------------------------------------------------- 4,000,000 Venango, PA IDA, Resource Recovery Bonds (Series 1993), 3.35% CP (Scrubgrass Power Corp.)/(National Westminster Bank, PLC, London LOC), Mandatory Tender 5/14/1996 A-1+ 4,000,000 ----------------------------------------------------------------------- 2,100,000 Venango, PA IDA, Resource Recovery Bonds (Series 1993), 3.45% CP (Scrubgrass Power Corp.)/(National Westminster Bank, PLC, London LOC), Mandatory Tender 5/21/1996 A-1+ 2,100,000 ----------------------------------------------------------------------- 870,000 Washington County, PA Hospital Authority, (Series 1990) Weekly VRDNs (Mac Plastics, Inc.)/(National City Bank, Cleveland, OH LOC) VMIG1 870,000 ----------------------------------------------------------------------- 2,700,000 Washington County, PA Municipal Authority Facilities, (Series 1985A) Weekly VRDNs (1985-A Pooled Equipment Lease Program)/(Sanwa Bank Ltd, Osaka LOC) VMIG1 2,700,000 ----------------------------------------------------------------------- 1,200,000 Washington County, PA, IDA (Series 1988) Weekly VRDNs (Coca-Cola Co.)/(Mellon Bank NA, Pittsburgh LOC) P-1 1,200,000 ----------------------------------------------------------------------- 1,000,000 West Cornwall Township, PA Municipal Authority, Revenue Bonds (Series 1995) Weekly VRDNs (Lebanon Valley Brethern Home Project (PA))/(Meridian Bank, Reading, PA LOC) P-1 1,000,000 ----------------------------------------------------------------------- 1,418,000 West York Area School District, PA, (Series 1995), 4.26% TRANs, 6/28/1996 NR(3) 1,418,172 ----------------------------------------------------------------------- 2,588,850 Woodland Hills School District, PA, 4.21% TRANs, 6/28/1996 NR 2,589,084 ----------------------------------------------------------------------- -------------- Total 262,679,216 ----------------------------------------------------------------------- -------------- TOTAL INVESTMENTS (AT AMORTIZED COST) (A) $ 262,679,216 ----------------------------------------------------------------------- --------------
Securities that are subject to the Alternative Minimum Tax represent 46.5% of the portfolio as calculated based upon total portfolio market value. *Please refer to the Appendix of the Statement of Additional Information for an explanation of the credit ratings. PENNSYLVANIA MUNICIPAL CASH TRUST - -------------------------------------------------------------------------------- (a) Also represents cost for federal tax purposes. Note: The categories of investments are shown as a percentage of net assets ($265,248,674) at April 30, 1996. The following acronyms are used throughout this portfolio: AMBAC-- American Municipal Bond Assurance Corporation BANs-- Bond Anticipation Notes CGIC-- Capital Guaranty Insurance Corporation CP-- Commercial Paper GANs-- Grant Anticipation Notes IDA-- Industrial Development Authority IDRB-- Industrial Development Revenue Bond INS-- Insured LIQ-- Liquidity Agreement LOC-- Letter of Credit PCR-- Pollution Control Revenue PLC-- Public Limited Company RANs-- Revenue Anticipation Notes TANs-- Tax Anticipation Notes 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 STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1996 (UNAUDITED) - -------------------------------------------------------------------------------- ASSETS: - ------------------------------------------------------------------------------------------------- Total investments in securities, at amortized cost and value $ 262,679,216 - ------------------------------------------------------------------------------------------------- Cash 660,970 - ------------------------------------------------------------------------------------------------- Income receivable 2,772,695 - ------------------------------------------------------------------------------------------------- -------------- Total assets 266,112,881 - ------------------------------------------------------------------------------------------------- LIABILITIES: - ------------------------------------------------------------------------------------------------- Income distribution payable 719,096 - ----------------------------------------------------------------------------------- Accrued expenses 145,111 - ----------------------------------------------------------------------------------- ------------ Total liabilities 864,207 - ------------------------------------------------------------------------------------------------- -------------- NET ASSETS for 265,248,674 shares outstanding $ 265,248,674 - ------------------------------------------------------------------------------------------------- -------------- NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE: - ------------------------------------------------------------------------------------------------- INSTITUTIONAL SERVICE SHARES: - ------------------------------------------------------------------------------------------------- $229,695,967 / 229,695,967 shares outstanding $ 1.00 - ------------------------------------------------------------------------------------------------- -------------- CASH SERIES SHARES: - ------------------------------------------------------------------------------------------------- $16,320,696 / 16,320,696 shares outstanding $ 1.00 - ------------------------------------------------------------------------------------------------- -------------- INSTITUTIONAL SHARES: - ------------------------------------------------------------------------------------------------- $19,232,011 / 19,232,011 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, 1996 (UNAUDITED) - -------------------------------------------------------------------------------- INVESTMENT INCOME: - ---------------------------------------------------------------------------------------------------- Interest $ 5,908,737 - ---------------------------------------------------------------------------------------------------- EXPENSES: - -------------------------------------------------------------------------------------- Investment advisory fee $ 767,812 - -------------------------------------------------------------------------------------- Administrative personnel and services fee 116,119 - -------------------------------------------------------------------------------------- Custodian fees 21,017 - -------------------------------------------------------------------------------------- Transfer and dividend disbursing agent fees and expenses 33,453 - -------------------------------------------------------------------------------------- Directors'/Trustees' fees 1,140 - -------------------------------------------------------------------------------------- Auditing fees 10,094 - -------------------------------------------------------------------------------------- Legal fees 2,707 - -------------------------------------------------------------------------------------- Portfolio accounting fees 46,518 - -------------------------------------------------------------------------------------- Distribution services fee--Cash Series Shares 37,615 - -------------------------------------------------------------------------------------- Shareholder services fee--Institutional Service Shares 345,618 - -------------------------------------------------------------------------------------- Shareholder services fee--Cash Series Shares 23,509 - -------------------------------------------------------------------------------------- Shareholder services fee--Institutional Shares 14,678 - -------------------------------------------------------------------------------------- Share registration costs 18,482 - -------------------------------------------------------------------------------------- Printing and postage 15,350 - -------------------------------------------------------------------------------------- Insurance premiums 3,208 - -------------------------------------------------------------------------------------- Miscellaneous 4,163 - -------------------------------------------------------------------------------------- ------------ Total expenses 1,461,483 - -------------------------------------------------------------------------------------- Waivers and reimbursements-- - ------------------------------------------------------------------------- Waiver of investment advisory fee $ (342,275) - ------------------------------------------------------------------------- Waiver of distribution services fee--Cash Series Shares (4,702) - ------------------------------------------------------------------------- Waiver of shareholder services fee--Institutional Service Shares (69,124) - ------------------------------------------------------------------------- Waiver of shareholder services fee--Institutional Shares (14,678) - ------------------------------------------------------------------------- ----------- Total waivers (430,779) - -------------------------------------------------------------------------------------- ------------ Net expenses 1,030,704 - ---------------------------------------------------------------------------------------------------- ------------ Net investment income $ 4,878,033 - ---------------------------------------------------------------------------------------------------- ------------
(See Notes which are an integral part of the Financial Statements) PENNSYLVANIA MUNICIPAL CASH TRUST STATEMENT OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
SIX MONTHS ENDED (UNAUDITED) YEAR ENDED APRIL 30, OCTOBER 31, 1996 1995 - ------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS: - ------------------------------------------------------------------------------- OPERATIONS-- - ------------------------------------------------------------------------------- Net investment income $ 4,878,033 $ 9,679,534 - ------------------------------------------------------------------------------- --------------- --------------- DISTRIBUTIONS TO SHAREHOLDERS-- - ------------------------------------------------------------------------------- Distributions from net investment income - ------------------------------------------------------------------------------- Institutional Service Shares (4,419,298) (8,951,830) - ------------------------------------------------------------------------------- Cash Series Shares (261,150) (718,640) - ------------------------------------------------------------------------------- Institutional Shares (197,585) (9,064) - ------------------------------------------------------------------------------- --------------- --------------- Change in net assets resulting from distributions to shareholders (4,878,033) (9,679,535) - ------------------------------------------------------------------------------- --------------- --------------- SHARE TRANSACTIONS-- - ------------------------------------------------------------------------------- Proceeds from sale of shares 508,833,170 1,028,950,579 - ------------------------------------------------------------------------------- Net asset value of shares issued to shareholders in payment of distributions declared 1,046,137 2,339,163 - ------------------------------------------------------------------------------- Cost of shares redeemed (551,822,398) (971,610,388) - ------------------------------------------------------------------------------- --------------- --------------- Change in net assets resulting from share transactions (41,943,091) 59,679,354 - ------------------------------------------------------------------------------- --------------- --------------- Change in net assets (41,943,091) 59,679,354 - ------------------------------------------------------------------------------- --------------- --------------- NET ASSETS: - ------------------------------------------------------------------------------- Beginning of period 307,191,765 247,512,411 - ------------------------------------------------------------------------------- --------------- --------------- End of period $ 265,248,674 $ 307,191,765 - ------------------------------------------------------------------------------- --------------- ---------------
(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 (UNAUDITED) APRIL 30, YEAR ENDED OCTOBER 31, 1996 1995 1994 1993 1992 1991 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 0.02 0.03 0.05 - --------------------------------------------------------- LESS DISTRIBUTIONS - --------------------------------------------------------- Distributions from net investment income (0.02) (0.03) (0.02) (0.02) (0.03) (0.05) - --------------------------------------------------------- ----- --------- --------- --------- --------- --------- NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 - --------------------------------------------------------- ----- --------- --------- --------- --------- --------- TOTAL RETURN (B) 1.60% 3.44% 2.25% 2.24% 3.08% 4.64% - --------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS - --------------------------------------------------------- Expenses 0.65%* 0.65% 0.64% 0.57% 0.56% 0.55% - --------------------------------------------------------- Net investment income 3.20%* 3.38% 2.19% 2.21% 3.04% 4.53% - --------------------------------------------------------- Expense waiver/reimbursement (c) 0.27%* 0.27% 0.02% 0.12% 0.12% 0.11% - --------------------------------------------------------- SUPPLEMENTAL DATA - --------------------------------------------------------- Net assets, end of period (000 omitted) $229,696 $276,407 $229,160 $318,518 $308,200 $317,165 - --------------------------------------------------------- 1990(A) NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 - --------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS - --------------------------------------------------------- Net investment income 0.05 - --------------------------------------------------------- LESS DISTRIBUTIONS - --------------------------------------------------------- Distributions from net investment income (0.05) - --------------------------------------------------------- --------- NET ASSET VALUE, END OF PERIOD $ 1.00 - --------------------------------------------------------- --------- TOTAL RETURN (B) 5.78% - --------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS - --------------------------------------------------------- Expenses 0.50%* - --------------------------------------------------------- Net investment income 5.56%* - --------------------------------------------------------- Expense waiver/reimbursement (c) 0.18%* - --------------------------------------------------------- SUPPLEMENTAL DATA - --------------------------------------------------------- Net assets, end of period (000 omitted) $275,882 - ---------------------------------------------------------
* Computed on an annualized basis. (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 charge or contingent deferred sales charge, if applicable. (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) PENNSYLVANIA MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS--CASH SERIES SHARES - -------------------------------------------------------------------------------- (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED (UNAUDITED) APRIL 30, YEAR ENDED OCTOBER 31, 1996 1995 1994 1993 1992 1991(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 0.01 0.03 0.02 0.02 0.03 0.03 - -------------------------------------- LESS DISTRIBUTIONS - -------------------------------------- Distributions from net investment income (0.01) (0.03) (0.02) (0.02) (0.03) (0.03) - -------------------------------------- ------- --------- --------- --------- --------- ----------- NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 - -------------------------------------- ------- --------- --------- --------- --------- ----------- TOTAL RETURN (B) 1.40% 3.02% 1.84% 1.83% 2.67% 3.55% - -------------------------------------- RATIOS TO AVERAGE NET ASSETS - -------------------------------------- Expenses 1.06%* 1.05% 1.04% 0.97% 0.96% 0.78%* - -------------------------------------- Net investment income 2.79%* 2.98% 1.73% 1.88% 2.64% 3.92%* - -------------------------------------- Expense waiver/ reimbursement (c) 0.27%* 0.28% 0.18% 0.12% 0.12% 0.28%* - -------------------------------------- SUPPLEMENTAL DATA - -------------------------------------- Net assets, end of period (000 omitted) $16,321 $28,255 $18,352 $18,561 $24,694 $19,846 - --------------------------------------
* Computed on an annualized basis. (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 charge or contingent deferred sales charge, if applicable. (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) PENNSYLVANIA MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES - -------------------------------------------------------------------------------- (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED (UNAUDITED) YEAR ENDED APRIL 30, OCTOBER 31, 1996 1995(A) Net asset value, beginning of period $ 1.00 $ 1.00 - ------------------------------------------------------------------------------- INCOME FROM INVESTMENToperations - ------------------------------------------------------------------------------- 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) 1.70% 0.90% - ------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS - ------------------------------------------------------------------------------- Expenses 0.46%* 0.45%* - ------------------------------------------------------------------------------- Net investment income 3.35%* 3.81%* - ------------------------------------------------------------------------------- Expense waiver/reimbursement (c) 0.45%* 0.46%* - ------------------------------------------------------------------------------- SUPPLEMENTAL DATA - ------------------------------------------------------------------------------- Net assets, end of period (000 omitted) $19,232 $2,529 - -------------------------------------------------------------------------------
* Computed on an annualized basis. (a) Reflects operations for the period from August 23, 1995 (date of initial public investment) to October 31, 1995. (b) Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable. (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) PENNSYLVANIA MUNICIPAL CASH TRUST NOTES TO FINANCIAL STATEMENTS APRIL 30, 1996 (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 fifteen portfolios. The financial statements included herein are only those of Pennsylvania Municipal Cash Trust (the "Fund"), a non-diversified portfolio. The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. The Fund offers three classes of shares: Institutional Service Shares, Cash Series Shares, and Institutional Shares. The investment objective of the Fund is current income exempt from federal regular income tax and the personal income taxes imposed by the Commonwealth of Pennsylvania consistent with stability of principal. (2) SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with generally accepted accounting principles. 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, 1996, 69% 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 from any one institution or agency did not exceed 11% of total investments. USE OF ESTIMATES--The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses, and revenues reported in the financial statements. Actual results could differ from those estimated. OTHER--Investment transactions are accounted for on 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, 1996, capital paid-in aggregated $265,248,674. Transactions in shares were as follows:
SIX MONTHS ENDED YEAR ENDED APRIL 30, OCTOBER 31, 1996 1995 -------------- -------------- INSTITUTIONAL SERVICE SHARES SHARES SHARES - ---------------------------------------------------------------------------------- -------------- -------------- Shares sold 452,612,568 940,400,092 - ---------------------------------------------------------------------------------- Shares issued to shareholders in payment of distributions declared 822,864 1,631,397 - ---------------------------------------------------------------------------------- Shares redeemed (500,146,949) (894,784,261) - ---------------------------------------------------------------------------------- -------------- -------------- Net change resulting from Institutional Service share transactions (46,711,517) 47,247,228 - ---------------------------------------------------------------------------------- -------------- --------------
SIX MONTHS ENDED YEAR ENDED APRIL 30, OCTOBER 31, 1996 1995 -------------- -------------- CASH SERIES SHARES SHARES SHARES - ---------------------------------------------------------------------------------- -------------- -------------- Shares sold 22,312,631 85,377,025 - ---------------------------------------------------------------------------------- Shares issued to shareholders in payment of distributions declared 213,778 705,513 - ---------------------------------------------------------------------------------- Shares redeemed (34,460,977) (76,179,429) - ---------------------------------------------------------------------------------- -------------- -------------- Net change resulting from Cash Series share transactions (11,934,568) 9,903,109 - ---------------------------------------------------------------------------------- -------------- -------------- SIX MONTHS YEAR ENDED ENDED OCTOBER 31, APRIL 30, 1995 1996 (A) -------------- -------------- INSTITUTIONAL SHARES SHARES SHARES - ---------------------------------------------------------------------------------- -------------- -------------- Shares sold 33,907,971 3,173,462 - ---------------------------------------------------------------------------------- Shares issued to shareholders in payment of distributions declared 9,495 2,253 - ---------------------------------------------------------------------------------- Shares redeemed (17,214,472) (646,698) - ---------------------------------------------------------------------------------- -------------- -------------- Net change resulting from Institutional share transactions 16,702,994 2,529,017 - ---------------------------------------------------------------------------------- -------------- -------------- Net change resulting from share transactions (41,943,091) 59,679,354 - ---------------------------------------------------------------------------------- -------------- --------------
(a) For the period from August 23, 1995 (date of initial public investment) to October 31, 1995. (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 0.50% of the Fund's average daily net assets. The Adviser may voluntarily choose to waive any portion of its fee. The Adviser can modify or terminate this voluntary waiver at any time at its sole discretion. ADMINISTRATIVE FEE--Federated Services Company ("FServ"), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. The fee paid to FServ is based on 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 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 of up to 0.40% of average daily net assets of the Cash Series Shares, annually, to 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 0.25% of average daily net assets of the Fund for the period. The fee paid to FSS is used to finance certain services for shareholders and to maintain shareholder accounts. FSS may voluntarily choose to waive any portion of its fee. FSS can modify or terminate this voluntary waiver at any time at its sole discretion. TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--FServ, through its subsidiary, Federated Shareholder Services Company serves as transfer and dividend disbursing agent for the Fund. The fee paid to FServ is based on the size, type, and number of accounts and transactions made by shareholders. PORTFOLIO ACCOUNTING FEES--FServ maintains the Fund's accounting records for which it receives a fee. The fee is based on the level of the Fund's average daily net assets for the period, plus out-of-pocket expenses. INTERFUND TRANSACTIONS--During the period ended April 30, 1996, the Fund engaged in purchase and sale transactions with funds that have a common investment adviser (or affiliated investment advisers), common Directors/Trustees, and/or common Officers. These purchase and sale transactions were made at current market value pursuant to Rule 17a-7 under the Act amounting to $211,550,000 and $284,880,000, 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. Executive Vice President Edward L. Flaherty, Jr. Edward C. Gonzales Glen R. Johnson Executive Vice President Peter E. Madden John W. McGonigle Gregor F. Meyer Executive Vice President and Secretary John E. Murray, Jr. Richard B. Fisher Wesley W. Posvar Vice President Marjorie P. Smuts David M. Taylor Treasurer Charles H. Field 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. PENNSYLVANIA MUNICIPAL CASH TRUST SEMI-ANNUAL REPORT TO SHAREHOLDERS APRIL 30, 1996 [LOGO] FEDERATED INVESTORS Since 1955 Federated Investors Tower Pittsburgh, PA 15222-3779 Federated Securities Corp. is the distributor of the fund and is a subsidiary of Federated Investors. Cusip 314229717 Cusip 314229881 Cusip 314229204 0052405 (6/96) PRESIDENT'S MESSAGE - -------------------------------------------------------------------------------- Dear Shareholder: I am pleased to present your Semi-Annual Report to Shareholders of Massachusetts Municipal Cash Trust, a portfolio of Federated Municipal Trust, which covers the six-month period from November 1, 1995 through April 30, 1996. The report begins with a discussion with the fund's portfolio manager, followed by a complete listing of the fund's holdings and its financial statements. Financial highlights tables are provided for the fund's Institutional Service Shares and BayFunds Shares. The fund is a convenient way to put your ready cash to work pursuing double-tax-free income--free from federal regular income tax and Massachusetts state income tax*--through a portfolio concentrated in high-quality, short-term Massachusetts municipal securities. As a shareholder, you have the opportunity to earn a greater after-tax yield than you could in a comparable high-quality taxable investment. Of course, the fund also brings you the added benefits of daily liquidity and stability of principal.** During the report period, the fund paid double-tax-free dividends of $0.02 per share for both Institutional Service Shares and BayFunds Shares. Its total net assets of $160.6 million were spread among Massachusetts securities that use municipal bond financing for projects as varied as health care, housing, community development, and transportation. You can count on Massachusetts Municipal Cash Trust to seek the best tax-free income opportunities for your cash. As always, we will continue to provide you with the highest level of service. Your questions or comments are always welcome. Sincerely, Glen R. Johnson President June 15, 1996 *Income may be subject to the federal alternative minimum tax. **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. 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 Can you comment on the economy and the interest rate environment during the semi-annual reporting period? A The Federal Reserve Board (the "Fed") eased monetary policy twice over the six-month reporting period ended April 30, 1996. Faced with slowing economic growth and benign inflationary pressures, the Fed lowered the federal funds target rate from 5.75% to 5.50% in late December, and again from 5.50% to the current 5.25% at the end of January. For the December move, the Fed cited a better-than-expected inflation outlook as the impetus behind the easing, although a sluggish manufacturing sector and lackluster consumer spending was thought to have had an influence. In January, the Fed appeared swayed by the dampening effects of high debt loads and employment uncertainty on consumer consumption along with sluggish export growth. Through this period, the short-end of the government and municipal yield curves anticipated the policy moves from the Fed, and amid signs of a weakening economy looked forward to additional eases in the not too distant future. February and March, however, brought about a shift in market psychology regarding both the extent and direction of changes in monetary policy by the Fed. Recovering from the harsh winter weather and spurred onward by lower interest rates, the housing market and consumer spending breathed some life into the economy, which had seemed on the verge of recession earlier in the year. The market was then stunned in early March by the report of a 705,000 increase in non-farm payroll jobs for February--the largest increase in 12 years--which caused the yields on short-term securities to rise by as much as 25 basis points. Now confronted with a more robust economy than previously thought, market participants have moved expectations toward a more neutral policy from the Fed in the near term with a possible tightening, or increase in rates, later in 1996. Yields on short-term government securities reflected this rather volatile mood in the markets. The yield on the three-month Treasury bills began November 1995 at 5.48%, declined to 4.89% by mid-February 1996, and ended April at 5.14%. Correspondingly, the yield on one-year Treasury bills began November at 5.46%, fell to 4.79% in mid-February, but rose to 5.62% by the end of April. Q How has the fund's yield responded to this rate environment? A The fund's yield was affected by Fed policy (interest rate cuts) as well as supply and demand imbalances unique to the municipal money markets. Because of these imbalances, however, on a weekly basis the fund's yield experiences more volatility than Treasury yields and taxable money fund yields. In general, yields on municipal money market funds were lower over the period. The seven-day net yield of the fund's Institutional Service Shares on April 30, 1996, was 3.20% compared to 3.34% six months earlier.* - -------------------------------------------------------------------------------- For the BayFunds Shares, the seven-day net yield was 3.18% on April 30, 1996, compared to 3.30% six months earlier.* Q What was your strategy for managing the fund over the period? A We maintained a neutral average maturity of 55 to 60 days during the reporting period by taking advantage of the overall improvement in the Massachusetts economy and buying a variety of local municipal note issues at attractive levels. Going forward we will continue to monitor the overall rate environment as well as the economic outlook for the State. Q What is your outlook for rates in the near future? A With growth of 2.3% in the first quarter of 1996, the economy appears to be on firmer footing than it was in the fourth quarter of 1995, when gross domestic product grew at only .5%. As a result, the Fed should not feel the urgency to lower short-term rates further. By the same token, however, with areas of softness in the economy still evident and with consumer indebtedness at very high levels, there also appears to be no danger of the economy overheating in the near term. As long as inflation remains benign, the Fed should be content to sit on the sidelines until confronted with signs of undue strength or considerable weakness in economic growth. The average maturity of the fund will continue to be managed in accordance with our expectation for a stable monetary policy in the near term. Nevertheless, opportunities for average maturity extension will arise as the supply of fixed-rate notes in the municipal market increases significantly in June and July. This spike in supply may present opportunities to "lock-in" yields which are attractive relative to comparable maturity taxable securities. As a result, we expect the average maturity of the fund to be slightly longer throughout the summer months. *Performance quoted represents past performance and is not indicative of future results. Yield will vary. MASSACHUSETTS MUNICIPAL CASH TRUST PORTFOLIO OF INVESTMENTS APRIL 30, 1996 (UNAUDITED) - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ------------ ------------------------------------------------------------------------ ----------- -------------- SHORT-TERM MUNICIPALS--99.3% - -------------------------------------------------------------------------------------- MASSACHUSETTS--96.2% ------------------------------------------------------------------------ $ 2,000,000 Attleboro, MA, 3.50% BANs, 2/6/1997 NR(4) $ 2,001,486 ------------------------------------------------------------------------ 620,000 Billerica, MA, LT GO Bonds, 7.25% Bonds (MBIA INS), 10/15/1996 NR(1) 628,849 ------------------------------------------------------------------------ 2,000,000 Boston, MA Water & Sewer Commission, General Revenue Bonds (1994 Series A) Weekly VRDNs (State Street Bank and Trust Co. LOC) VMIG1 2,000,000 ------------------------------------------------------------------------ 5,000,000 (a) Clipper, MA Tax Exempt Trust Weekly VRDNs (State Street Bank and Trust Co. LIQ) VMIG1 5,000,000 ------------------------------------------------------------------------ 3,465,000 (a) Clipper, MA Tax Exempt Trust, (Series 1993-1) Weekly VRDNs (State Street Bank and Trust Co. LIQ) VMIG1 3,465,000 ------------------------------------------------------------------------ 3,000,000 Commonwealth of Massachusetts Weekly VRDNs (AMBAC INS)/(Citibank NA, New York LIQ) NR(1) 3,000,000 ------------------------------------------------------------------------ 4,000,000 Danvers, Massachusetts, 4.10% BANs, 7/19/1996 NR(3) 4,002,528 ------------------------------------------------------------------------ 1,000,000 Dracut, MA, 3.75% BANs, 6/28/1996 NR(3) 1,000,234 ------------------------------------------------------------------------ 3,200,000 Framingham, MA IDA Weekly VRDNs (Perini Corp)/ (Barclays Bank PLC, London LOC) A-1+ 3,200,000 ------------------------------------------------------------------------ 2,500,000 Gardner, MA, 4.00% BANs, 4/1/1997 NR(4) 2,504,405 ------------------------------------------------------------------------ 3,093,000 Greenfield, MA, 4.25% BANs, 9/13/1996 NR(3) 3,095,742 ------------------------------------------------------------------------ 3,925,000 Mashpee, MA, 4.00% BANs, 2/7/1997 NR(3) 3,936,685 ------------------------------------------------------------------------ 4,000,000 Mashpee, MA, 4.22% BANs, 7/5/1996 NR(3) 4,000,414 ------------------------------------------------------------------------ 5,300,000 Massachusetts Bay Transit Authority, (Series C), 3.80% CP (Westdeutsche Landesbank Girozentrale LOC), Mandatory Tender 5/23/1996 SP-1+ 5,300,000 ------------------------------------------------------------------------ 3,350,000 Massachusetts HEFA Weekly VRDNs (Newbury College)/ (Barclays Bank PLC, London LOC) P-1 3,350,000 ------------------------------------------------------------------------ 6,400,000 Massachusetts HEFA, (Series A) Weekly VRDNs (Brigham & Women's Hospital)/(Sanwa Bank Ltd, Osaka LOC) P-1 6,400,000 ------------------------------------------------------------------------
MASSACHUSETTS MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ------------ ------------------------------------------------------------------------ ----------- -------------- SHORT-TERM MUNICIPALS--CONTINUED - -------------------------------------------------------------------------------------- MASSACHUSETTS--CONTINUED ------------------------------------------------------------------------ $ 2,300,000 Massachusetts HEFA, (Series A) Weekly VRDNs (Endicott College)/(BayBank, Burlington, MA LOC) P-2 $ 2,300,000 ------------------------------------------------------------------------ 3,320,000 Massachusetts HEFA, (Series A) Weekly VRDNs (New England Home For Little Wanderers)/(First National Bank of Boston, MA LOC) P-1 3,320,000 ------------------------------------------------------------------------ 2,600,000 Massachusetts HEFA, (Series B) Weekly VRDNs (Clark University)/(Sanwa Bank Ltd, Osaka LOC) VMIG1 2,600,000 ------------------------------------------------------------------------ 2,400,000 Massachusetts HEFA, (Series E) Weekly VRDNs (Williams College, MA) A-1+ 2,400,000 ------------------------------------------------------------------------ 3,000,000 Massachusetts HEFA, (Series E) Daily VRDNs (Capital Asset Program)/(First National Bank of Chicago LOC) VMIG1 3,000,000 ------------------------------------------------------------------------ 6,300,000 Massachusetts HEFA, (Series F) Weekly VRDNs (Children's Hospital of Boston) A-1+ 6,300,000 ------------------------------------------------------------------------ 2,500,000 Massachusetts HEFA, (Series G) Weekly VRDNs (Massachusetts Institute of Technology) NR(1) 2,500,000 ------------------------------------------------------------------------ 1,000,000 Massachusetts HEFA, 3.15% CP (Harvard University), Mandatory Tender 6/7/1996 VMIG1 1,000,000 ------------------------------------------------------------------------ 5,000,000 Massachusetts HEFA, 3.35% CP (Harvard University), Mandatory Tender 5/23/1996 VMIG1 5,000,000 ------------------------------------------------------------------------ 6,000,000 Massachusetts HEFA, 3.70% CP (Fallon Heathcare System)/ (Sanwa Bank Ltd, Osaka LOC), Mandatory Tender 7/5/1996 A-1 6,000,000 ------------------------------------------------------------------------ 500,000 Massachusetts IFA Weekly VRDNs (Berkshire, MA School)/ (National Westminster Bank, PLC, London LOC) VMIG1 500,000 ------------------------------------------------------------------------ 1,300,000 Massachusetts IFA Weekly VRDNs (Groton School)/ (National Westminster Bank, PLC, London LOC) VMIG1 1,300,000 ------------------------------------------------------------------------ 1,910,000 Massachusetts IFA, (1995 Series A) Weekly VRDNs (Bradford College Issue)/(First National Bank of Boston, MA LOC) P-1 1,910,000 ------------------------------------------------------------------------ 300,000 Massachusetts IFA, (Series 1992) Weekly VRDNs (Holyoke Water Power Co.)/(Canadian Imperial Bank of Commerce, Toronto LOC) VMIG1 300,000 ------------------------------------------------------------------------
MASSACHUSETTS MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ------------ ------------------------------------------------------------------------ ----------- -------------- SHORT-TERM MUNICIPALS--CONTINUED - -------------------------------------------------------------------------------------- MASSACHUSETTS--CONTINUED ------------------------------------------------------------------------ $ 1,000,000 Massachusetts IFA, (Series 1992A) Weekly VRDNs (Ogden Haverhill)/(Union Bank of Switzerland, Zurich LOC) A-1+ $ 1,000,000 ------------------------------------------------------------------------ 5,000,000 Massachusetts IFA, (Series 1992B), 3.30% CP (New England Power Co.), Mandatory Tender 5/20/1996 A-1 5,000,000 ------------------------------------------------------------------------ 3,000,000 Massachusetts IFA, (Series 1992B), 3.55% CP (New England Power Co.), Mandatory Tender 7/12/1996 A-1 3,000,000 ------------------------------------------------------------------------ 5,000,000 Massachusetts IFA, (Series 1993A), 4.35% CP (New England Power Co.), Mandatory Tender 5/21/1996 A-1 5,000,000 ------------------------------------------------------------------------ 5,800,000 Massachusetts IFA, (Series 1995) Weekly VRDNs (Whitehead Institute for Biomedical Research) VMIG1 5,800,000 ------------------------------------------------------------------------ 925,000 Massachusetts IFA, (Series A) Weekly VRDNs (Hockomock YMCA)/(Bank of Nova Scotia, Toronto LOC) P-1 925,000 ------------------------------------------------------------------------ 4,000,000 Massachusetts IFA, (Series B) Weekly VRDNs (Williston North Hampton School)/(National Westminster Bank, PLC, London LOC) A-1+ 4,000,000 ------------------------------------------------------------------------ 1,495,000 Massachusetts IFA, Museum Revenue Refunding Bonds (1996 Issue), 3.80% Bonds (Museum of Fine Arts, Boston)/ (MBIA INS), 1/1/1997 NR(1) 1,501,816 ------------------------------------------------------------------------ 1,000,000 Massachusetts IFA, Refunding Revenue Bonds 1994 Project Daily VRDNs (Showa Womens Institute Boston, Inc.)/(Bank of America NT and SA, San Francisco LOC) VMIG1 1,000,000 ------------------------------------------------------------------------ 5,800,000 Massachusetts IFA, Revenue Bonds (Series 1995) Weekly VRDNs (Emerson College Issue)/(BayBank, Burlington, MA LOC) P-2 5,800,000 ------------------------------------------------------------------------ 5,000,000 Massachusetts IFA, Revenue Bonds (Series 1995C) Weekly VRDNs (Edgewood Retirement Community Project)/ (Dresdner Bank Ag, Frankfurt LOC) A-1+ 5,000,000 ------------------------------------------------------------------------ 3,270,000 Massachusetts State HFA, Multi-Family Housing Refunding Bonds (1995 Series A), 5.00% Bonds (MBIA INS), 7/1/1996 NR(1) 3,274,468 ------------------------------------------------------------------------ 2,500,000 North Adams, MA, 4.24% BANs, 6/30/1996 NR(3) 2,500,352 ------------------------------------------------------------------------ $ 6,000,000 North Andover, MA, 4.00% BANs, 1/23/1997 NR(3) $ 6,009,665 ------------------------------------------------------------------------
MASSACHUSETTS MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ------------ ------------------------------------------------------------------------ ----------- -------------- SHORT-TERM MUNICIPALS--CONTINUED - -------------------------------------------------------------------------------------- MASSACHUSETTS--CONTINUED ------------------------------------------------------------------------ 8,000,000 Springfield, MA , 3.75% BANs (Fleet National Bank, Providence, R.I. LOC), 7/12/1996 P-1 8,008,603 ------------------------------------------------------------------------ 1,725,000 Stoughton, MA, 3.51% BANs, 1/30/1997 NR(3) 1,725,742 ------------------------------------------------------------------------ 2,514,160 Stoughton, MA, 3.75% BANs, 3/7/1997 NR(3) 2,521,376 ------------------------------------------------------------------------ 1,148,837 Yarmouth, MA, 3.40% RANs, 3/4/1997 NR(3) 1,149,958 ------------------------------------------------------------------------ -------------- Total 154,532,323 ------------------------------------------------------------------------ -------------- PUERTO RICO--3.1% ------------------------------------------------------------------------ 5,000,000 Puerto Rico Government Development Bank, 3.20% CP, Mandatory Tender 5/22/1996 A-1+ 5,000,000 ------------------------------------------------------------------------ -------------- TOTAL INVESTMENTS (AT AMORTIZED COST)(B) $ 159,532,323 ------------------------------------------------------------------------ --------------
* Please refer to the Appendix of the Statement of Additional Information for an explanation of the credit ratings. Current credit ratings are unaudited. (a) Denotes a restricted security which is subject to restrictions on resale under Federal Securities laws. At April 30, 1996, these securities amounted to $8,465,000 which represents 5.3% of net assets. (b) Also represents cost for federal tax purposes. Note: The categories of investments are shown as a percentage of net assets ($160,630,716) at April 30, 1996. MASSACHUSETTS MUNICIPAL CASH TRUST - -------------------------------------------------------------------------------- The following acronyms are used throughout this portfolio: AMBAC-- American Municipal Bond Assurance Corporation BANs--Bond Anticipation Notes CP--Commercial Paper GO--General Obligation HEFA-- Health and Education Facilities Authority HFA--Housing Finance Authority IDA--Industrial Development Authority IFA--Industrial Finance Authority INS--Insured LIQ--Liquidity Agreement LOC--Letter of Credit LT--Limited Tax MBIA--Municipal Bond Investors Assurance PLC--Public Limited Company RANs--Revenue Anticipation Notes SA--Support Agreement VRDNs--Variable Rate Demand Notes (See Notes which are an integral part of the Financial Statements) MASSACHUSETTS MUNICIPAL CASH TRUST STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1996 (UNAUDITED) - -------------------------------------------------------------------------------- ASSETS: - ------------------------------------------------------------------------------------------------- Total investments in securities, at amortized cost and value $ 159,532,323 - ------------------------------------------------------------------------------------------------- Cash 503,179 - ------------------------------------------------------------------------------------------------- Income receivable 1,055,409 - ------------------------------------------------------------------------------------------------- -------------- Total assets 161,090,911 - ------------------------------------------------------------------------------------------------- LIABILITIES: - ------------------------------------------------------------------------------------------------- Income distribution payable $ 410,383 - ------------------------------------------------------------------------------------- Accrued expenses 49,812 - ------------------------------------------------------------------------------------- ---------- Total liabilities 460,195 - ------------------------------------------------------------------------------------------------- -------------- NET ASSETS for 160,630,753 shares outstanding $ 160,630,716 - ------------------------------------------------------------------------------------------------- -------------- NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE: - ------------------------------------------------------------------------------------------------- INSTITUTIONAL SERVICE SHARES: - ------------------------------------------------------------------------------------------------- $109,957,209 / 109,957,234 shares outstanding $ 1.00 - ------------------------------------------------------------------------------------------------- -------------- BAYFUNDS SHARES: - ------------------------------------------------------------------------------------------------- $50,673,507 / 50,673,519 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, 1996 (UNAUDITED) - -------------------------------------------------------------------------------- INVESTMENT INCOME: - ---------------------------------------------------------------------------------------------------- Interest $ 2,926,324 - ---------------------------------------------------------------------------------------------------- EXPENSES: - ---------------------------------------------------------------------------------------------------- Investment advisory fee $ 399,200 - --------------------------------------------------------------------------------------- Administrative personnel and services fee 77,184 - --------------------------------------------------------------------------------------- Custodian fees 13,450 - --------------------------------------------------------------------------------------- Transfer and dividend disbursing agent fees and expenses 34,819 - --------------------------------------------------------------------------------------- Directors'/Trustees' fees 1,002 - --------------------------------------------------------------------------------------- Auditing fees 6,632 - --------------------------------------------------------------------------------------- Legal fees 1,826 - --------------------------------------------------------------------------------------- Portfolio accounting fees 28,164 - --------------------------------------------------------------------------------------- Shareholder services fee--Institutional Service Shares 136,466 - --------------------------------------------------------------------------------------- Shareholder services fee--BayFunds Shares 63,135 - --------------------------------------------------------------------------------------- Share registration costs 5,994 - --------------------------------------------------------------------------------------- Printing and postage 21,220 - --------------------------------------------------------------------------------------- Insurance premiums 2,728 - --------------------------------------------------------------------------------------- Miscellaneous 4,214 - --------------------------------------------------------------------------------------- ----------- Total expenses 796,034 - --------------------------------------------------------------------------------------- Waivers-- - --------------------------------------------------------------------------------------- Waiver of investment advisory fee $ (145,940) - -------------------------------------------------------------------------- Waiver of shareholder services fee--Institutional Service Shares (136,466) - -------------------------------------------------------------------------- Waiver of shareholder services fee--BayFunds Shares (63,135) - -------------------------------------------------------------------------- ----------- Total waivers (345,541) - --------------------------------------------------------------------------------------- ----------- Net expenses 450,493 - ---------------------------------------------------------------------------------------------------- ------------ Net investment income $ 2,475,831 - ---------------------------------------------------------------------------------------------------- ------------
(See Notes which are an integral part of the Financial Statements) MASSACHUSETTS MUNICIPAL CASH TRUST STATEMENT OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
SIX MONTHS ENDED (UNAUDITED) YEAR ENDED APRIL 30, OCTOBER 31, 1996 1995 INCREASE (DECREASE) IN NET ASSETS: - --------------------------------------------------------------------------------- OPERATIONS-- - --------------------------------------------------------------------------------- Net investment income $ 2,475,831 $ 4,506,984 - --------------------------------------------------------------------------------- -------------- -------------- DISTRIBUTIONS TO SHAREHOLDERS-- - --------------------------------------------------------------------------------- Distributions from net investment income - --------------------------------------------------------------------------------- Institutional Service Shares (1,698,960) (3,066,535) - --------------------------------------------------------------------------------- BayFunds Shares (776,871) (1,440,449) - --------------------------------------------------------------------------------- -------------- -------------- Change in net assets resulting from distributions to shareholders (2,475,831) (4,506,984) - --------------------------------------------------------------------------------- -------------- -------------- SHARE TRANSACTIONS-- - --------------------------------------------------------------------------------- Proceeds from sale of shares 256,872,275 371,068,422 - --------------------------------------------------------------------------------- Net asset value of shares issued to shareholders in payment of distributions declared 1,069,477 2,255,146 - --------------------------------------------------------------------------------- Cost of shares redeemed (243,518,742) (359,040,754) - --------------------------------------------------------------------------------- -------------- -------------- Change in net assets resulting from share transactions 14,423,010 14,282,814 - --------------------------------------------------------------------------------- -------------- -------------- Change in net assets 14,423,010 14,282,814 - --------------------------------------------------------------------------------- NET ASSETS: - --------------------------------------------------------------------------------- Beginning of period 146,207,706 131,924,892 - --------------------------------------------------------------------------------- -------------- -------------- End of period $ 160,630,716 $ 146,207,706 - --------------------------------------------------------------------------------- -------------- --------------
(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 (UNAUDITED) APRIL 30, YEAR ENDED OCTOBER 30, 1996 1995 1994 1993 1992 1991 1990(A) NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 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 0.02 0.03 0.05 0.03 - ------------------------------------ LESS DISTRIBUTIONS - ------------------------------------ Distributions from net investment income (0.02) (0.03) (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 $ 1.00 - ------------------------------------ ------- --------- --------- --------- --------- --------- ----------- TOTAL RETURN (B) 1.56% 3.34% 2.14% 1.99% 2.87% 4.63% 2.59% - ------------------------------------ RATIOS TO AVERAGE NET ASSETS - ------------------------------------ Expenses 0.55%* 0.55% 0.55% 0.53% 0.34% 0.30% 0.17%* - ------------------------------------ Net investment income 3.11%* 3.30% 2.12% 1.97% 2.82% 4.48% 5.66%* - ------------------------------------ Expense waiver/ reimbursement (c) 0.43%* 0.45% 0.35% 0.43% 0.55% 0.69% 0.57%* - ------------------------------------ SUPPLEMENTAL DATA - ------------------------------------ Net assets, end of period (000 omitted) $109,957 $99,628 $90,013 $84,524 $85,570 $81,681 $63,483 - ------------------------------------
* Computed on an annualized basis. (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 charge or contingent deferred sales charge, if applicable. (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) MASSACHUSETTS MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS--BAYFUNDS SHARES - -------------------------------------------------------------------------------- (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED (UNAUDITED) YEAR ENDED APRIL 30, OCTOBER 31, 1996 1995 1994 1993(A) NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 - ----------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS - ----------------------------------------------------------- Net investment income 0.02 0.03 0.02 0.01 - ----------------------------------------------------------- LESS DISTRIBUTIONS - ----------------------------------------------------------- Distributions from net investment income (0.02) (0.03) (0.02) (0.01) - ----------------------------------------------------------- ------- --------- --------- ----------- NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 - ----------------------------------------------------------- ------- --------- --------- ----------- TOTAL RETURN (B) 1.54% 3.30% 2.05% 1.25% - ----------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS - ----------------------------------------------------------- Expenses 0.59%* 0.60% 0.64% 0.65%* - ----------------------------------------------------------- Net investment income 3.08%* 3.25% 2.09% 1.85%* - ----------------------------------------------------------- Expense waiver/reimbursement (c) 0.43%* 0.45% 0.35% 0.43%* - ----------------------------------------------------------- SUPPLEMENTAL DATA - ----------------------------------------------------------- Net assets, end of period (000 omitted) $50,674 $46,580 $41,912 $18,143 - -----------------------------------------------------------
* Computed on an annualized basis. (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 charge or contingent deferred sales charge, if applicable. (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) MASSACHUSETTS MUNICIPAL CASH TRUST NOTES TO FINANCIAL STATEMENTS APRIL 30, 1996 (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 fifteen portfolios. The financial statements included herein are only those of Massachusetts Municipal Cash Trust (the "Fund"), a non-diversified portfolio. The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. The Fund offers two classes of shares: Institutional Service Shares and BayFundst Shares. The investment objective of the Fund is to provide current income which is exempt from regular federal and Massachusetts state income tax consistent with stability of principal. (2) SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with generally accepted accounting principles. 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, 1996, 47.4% 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 from any one institution or agency did not exceed 9.4% 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 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 April 30, 1996 is as follows:
ACQUISITION ACQUISITION SECURITY DATE COST Clipper, MA Tax Exempt Trust Weekly VRDN's (State Street Bank and Trust Co. LIQ) 5/15/95 $ 5,000,000 Clipper, MA Tax Exempt Trust, (Series 1993-1) Weekly VRDN's (State Street Bank and Trust Co. LIQ) 6/30/95 3,465,000
USE OF ESTIMATES--The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ from those estimated. OTHER--Investment transactions are accounted for on 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, 1996, capital paid-in aggregated $160,630,716. Transactions in shares were as follows:
SIX MONTHS ENDED YEAR ENDED APRIL 30, OCTOBER 31, INSTITUTIONAL SERVICE SHARES 1996 1995 - ---------------------------------------------------------------------------------- -------------- -------------- Shares sold 232,825,380 337,436,671 - ---------------------------------------------------------------------------------- Shares issued to shareholders in payment of distributions declared 418,005 814,368 - ---------------------------------------------------------------------------------- Shares redeemed (222,913,939) (328,636,637) - ---------------------------------------------------------------------------------- -------------- -------------- Net change resulting from Institutional Service share transactions 10,329,446 9,614,402 - ---------------------------------------------------------------------------------- -------------- -------------- SIX MONTHS ENDED YEAR ENDED APRIL 30, OCTOBER 31, BAYFUNDS SHARES 1996 1995 - ---------------------------------------------------------------------------------- -------------- -------------- Shares sold 24,046,932 33,631,751 - ---------------------------------------------------------------------------------- Shares issued to shareholders in payment of distributions declared 651,472 1,440,778 - ---------------------------------------------------------------------------------- Shares redeemed (20,604,803) (30,404,117) - ---------------------------------------------------------------------------------- -------------- -------------- Net change resulting from Retired share transactions 4,093,601 4,668,412 - ---------------------------------------------------------------------------------- -------------- -------------- Net change resulting from share transactions 14,423,047 14,282,814 - ---------------------------------------------------------------------------------- -------------- --------------
(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 0.50% of the Fund's average daily net assets. The Adviser may voluntarily choose to waive any portion of its fee. The Adviser can modify or terminate this voluntary waiver at any time at its sole discretion. ADMINISTRATIVE FEE--Federated Services Company ("FServ"), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. The fee paid to FServ is based on 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 0.25% 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 0.25% of the average daily net assets of the BayFunds Shares for the period. These fees are used to finance certain services for shareholders and to maintain shareholder accounts. FSS and BayBank Systems, Inc. may voluntarily choose to waive any portion of their fees. FSS and BayBank Systems, Inc. can modify or terminate this voluntary waiver at any time at their sole discretion. TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES--FServ, through its subsidiary, Federated Shareholder Services Company, serves as transfer and dividend disbursing agent for the Fund. The fee paid to FServ is based on the size, type, and number of accounts and transactions made by shareholders. PORTFOLIO ACCOUNTING FEES--FServ maintains the Fund's accounting records for which it receives a fee. The fee is based on the level of the Fund's average daily net assets for the period, plus out-of-pocket expenses. INTERFUND TRANSACTIONS--During the period ended Apri 30, 1996, 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 $97,700,000 and $99,600,000, 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. Executive Vice President Edward L. Flaherty, Jr. Edward C. Gonzales Glen R. Johnson Executive Vice President Peter E. Madden John W. McGonigle Gregor F. Meyer Executive Vice President, Treasurer and Secretary John E. Murray, Jr. Richard B. Fisher Wesley W. Posvar Vice President Marjorie P. Smuts Douglas L. Hein Assistant Treasurer Charles H. Field 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. MASSACHUSETTS MUNICIPAL CASH TRUST SEMI-ANNUAL REPORT TO SHAREHOLDERS APRIL 30, 1996 INSTITUTIONAL SERVICE SHARES BAYFUNDSa SHARES Federated Management Investment Adviser FEDERATED SECURITIES CORP. Distributor A subsidiary of FEDERATED INVESTORS 314229832 314229303 Z00326 1052806 (6/96) 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, which covers the six-month period from November 1, 1995, through April 30, 1996. The report begins with a discussion with the fund's portfolio manager, followed by a complete listing of the fund's holdings and its financial statements. Financial highlights tables are provided for the fund's Institutional Shares and Institutional Service Shares. The fund is a convenient way to put your ready cash to work pursuing double-tax-free income--free from federal regular income tax and California income tax*--through a portfolio concentrated in high-quality, short-term California municipal securities. As a shareholder, you have the opportunity to earn a greater after-tax yield than you could in a comparable high-quality taxable investment. Of course, the fund also brings you the added benefits of daily liquidity and stability of principal.** During the report period, the fund paid double-tax-free dividends of $0.01 per share for Institutional Shares $0.02 per share for Institutional Service Shares. The fund's total net assets of $85.3 million were spread among California securities that use municipal bond financing for projects as varied as health care, housing, community development, and transportation. You can count on California Municipal Cash Trust to seek the best tax-free income opportunities for your cash investment needs. As always, we will continue to provide you with the highest level of professional service. We invite your questions or comments. Sincerely, LOGO Glen R. Johnson President June 15, 1996 * Income may be subject to the federal alternative minimum tax. ** 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. An investment in the fund is neither insured nor guaranteed by the U.S. government. INVESTMENT REVIEW - -------------------------------------------------------------------------------- An Interview with Fund Portfolio Manager, Mary Jo Ochson, C.F.A. and Co-Portfolio Manager Michael Sirianni. Q Can you comment on the economy and the interest rate environment during the semi-annual reporting period? A The Federal Reserve Board (the "Fed") eased monetary policy twice over the six-month reporting period ending in April 1996. Faced with slowing economic growth and benign inflationary pressures, the Fed lowered the federal funds target rate from 5.75% to 5.50% in late December 1995, and again from 5.50% to the current 5.25% at the end of January 1996. For the December 1995 move, the Fed cited a better-than-expected inflation outlook as the impetus behind the easing, although a sluggish manufacturing sector and lackluster consumer spending was thought to have had an influence. In January 1996, the Fed appeared swayed by the dampening effects of high debt loads and employment uncertainty on consumer consumption along with sluggish export growth. Through this period, the short-end of the government and municipal yield curves anticipated the policy moves from the Fed, and amid signs of a weakening economy looked forward to additional eases in the not too distant future. February and March of 1996, however, brought about a shift in market psychology regarding both the extent and direction of changes in monetary policy by the Fed. Recovering from the harsh winter weather and spurred onward by lower interest rates, the housing market and consumer spending breathed some life into the economy, which had seemed on the verge of recession earlier in the year. The market was then stunned in early March 1996 by the report of a 705,000 increase in non-farm payroll jobs for February 1996--the largest increase in 12 years--which caused the yields on short-term securities to rise by as much as 25 basis points. Now confronted with a more robust economy than previously thought, market participants have moved expectations toward a more neutral policy from the Fed in the near term with a possible tightening, or increase in rates, later in 1996. Yields on short-term government securities reflected this rather volatile mood in the markets. The yield on the three-month Treasury bill began November 1995 at 5.48%, declined to 4.89% by mid-February 1996, and ended April 1996 at 5.14%. Correspondingly, the yield on the one-year Treasury bill began November 1995 at 5.46%, fell to 4.79% in mid-February 1996, but rose to 5.62% by the end of April 1996. Q How has the fund's yield responded to this interest rate environment? A The fund's yield was affected by Fed policy (interest rate cuts) as well as supply and demand imbalances unique to the municipal money markets. Because of these imbalances, however, on a weekly basis the fund's yield may experience more volatility than Treasury yields and taxable money fund yields. In general, yields on municipal money market funds were lower over the reporting period. The seven-day net yield* of the fund's Institutional Shares on April 30 1996, was 3.67%. (Institutional Shares were introduced in March, 1996.) * Performance quoted represents past performance and is not indicative of future results. Yield will vary. - -------------------------------------------------------------------------------- For the Institutional Service Shares, the seven-day net yield* was 3.42% on April 30, 1996, compared to 3.57% six months earlier. Q What was your strategy for managing the fund over the semi-annual reporting period? A We extended the average maturity during July of 1995 by taking advantage of some very attractive fixed rate notes. The extension enabled the fund to maintain a neutral average maturity target of 55 to 60 days early in the reporting period. During the first quarter of 1996, we repositioned the fund within a shorter average maturity range of 35 to 45 days due to the change in sentiment with respect to the direction of interest rates. Going forward, we will continue to monitor the overall interest rate environment as well as the economic outlook for the State. Additionally, if the June and July 1996 issuance of cash flow notes are attractive, we will extend the fund to the 50 day range. Q What is your outlook for rates in the near future? A With growth of 2.3% in the first quarter of 1996, the economy appears to be on firmer footing than it was in the fourth quarter of 1995, when gross domestic product grew at only 0.5%. As a result, the Fed should not feel the urgency to lower short-term rates further. By the same token, however, with areas of softness in the economy still evident and with consumer indebtedness at very high levels, there also appears to be no danger of the economy overheating in the near term. As long as inflation remains benign, the Fed should be content to sit on the sidelines until confronted with signs of undue strength or considerable weakness in economic growth. The average maturity of the fund will continue to be managed in accordance with our expectation for a stable monetary policy in the near term. Nevertheless, opportunities for average maturity extension will arise as the supply of fixed-rate notes in the municipal market increases significantly in June and July of 1996. This spike in supply may present opportunities to "lock-in" yields which are attractive relative to comparable maturity taxable securities. As a result, we expect the average maturity of the fund to be slightly longer throughout the summer months. * Performance quoted represents past performance and is not indicative of future results. Yield will vary. CALIFORNIA MUNICIPAL CASH TRUST PORTFOLIO OF INVESTMENTS APRIL 30, 1996 (UNAUDITED) - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ---------- ------------------------------------------------------ -------- ----------- SHORT-TERM MUNICIPALS--99.2% - ------------------------------------------------------------------------- CALIFORNIA--95.1% ------------------------------------------------------ $2,920,000 California HFA Home Mortgage, (Series 1989F), 3.25% TOBs (Citibank NA, New York LIQ), Optional Tender 8/1/1996 A-1+ $ 2,920,000 ------------------------------------------------------ 1,100,000 California Health Facilities Financing Authority Weekly VRDNs (FGIC INS)/(Morgan Guaranty Trust Co., New York LIQ) VMIG1 1,100,000 ------------------------------------------------------ 4,000,000 California PCFA, (Series 1991) Weekly VRDNs (North County, CA Recycling & Energy Recovery)/(Union Bank of Switzerland, Zurich LOC) SP-1 4,000,000 ------------------------------------------------------ 3,655,000 California PCFA, (Series D), 3.50% CP (Pacific Gas & Electric Co.)/(Bank of Tokyo-Mitsubishi LTD. LOC), Mandatory Tender 7/25/1996 A-1 3,655,000 ------------------------------------------------------ 3,400,000 (a) California Public Capital Improvements Financing Authority, Trust Receipts (Series 1996 FR-3) Weekly VRDNs (MBIA INS)/(Bank of New York, New York LIQ) SP-1 3,400,000 ------------------------------------------------------ 3,900,000 California Statewide Communities Development Authority, (Series A) Weekly VRDNs (Barton Memorial Hospital)/ (Banque Nationale de Paris LOC) VMIG1 3,900,000 ------------------------------------------------------ 2,000,000 California Statewide Communities Development Authority, Certificates of Participation, 4.00% Bonds (Queen of Angels-Hollywood Presbyterian Medical Center), 1/1/1997 NR(3) 2,000,000 ------------------------------------------------------ 6,000,000 Central Unified School District, CA, Certificates of Participation (1995 Financing Project) Weekly VRDNs (Union Bank of California LOC) VMIG1 6,000,000 ------------------------------------------------------ 1,000,000 Livermore Valley, CA USD, (Series 1995-96), 4.75% TRANs, 9/19/1996 MIG1 1,002,589 ------------------------------------------------------ 5,000,000 Long Beach, CA Housing Authority, (1995 Series A) Weekly VRDNs (Channel Point Apartments)/(Union Bank of California LOC) VMIG1 5,000,000 ------------------------------------------------------
CALIFORNIA MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ---------- ------------------------------------------------------ -------- ----------- SHORT-TERM MUNICIPALS--CONTINUED - ------------------------------------------------------------------------- $2,000,000 Los Angeles County, CA Metropolitan Transportation Authority, 3.25% CP (ABN AMRO Bank N.V., Amsterdam, Banque Nationale de Paris, Canadian Imperial Bank of Commerce, Toronto, National Westminster Bank, PLC, London and Union Bank of California LOCs), Mandatory Tender 5/20/1996 A-1 $ 2,000,000 ------------------------------------------------------ 3,500,000 Los Angeles County, CA Metropolitan Transportation Authority, General Revenue Bonds, (Series 1995-A) Weekly VRDNs (Union Station Gateway Project)/(FSA INS)/(Societe Generale, Paris LIQ) A-1+ 3,500,000 ------------------------------------------------------ 2,000,000 Los Angeles, CA Wastewater System, 3.25% CP, Mandatory Tender 5/17/1996 A-1 2,000,000 ------------------------------------------------------ 3,000,000 (a) Los Angeles, CA Wastewater System, Tender Option Certificates, (Series 1995D) Weekly VRDNs (MBIA INS)/ (Canadian Imperial Bank of Commerce, Toronto LIQ) A-1+ 3,000,000 ------------------------------------------------------ 2,000,000 Monterey Peninsula, CA Water Management District Weekly VRDNs (Wastewater Reclaimation)/(Sumitomo Bank Ltd., Osaka LOC) VMIG1 2,000,000 ------------------------------------------------------ 600,000 Orange County, CA IDA, (Series 1985B -- Niguel Summit II) Weekly VRDNs (Hon Development Corp.)/ (Bank of America NT and SA, San Francisco LOC) VMIG1 600,000 ------------------------------------------------------ 3,000,000 Orange County, CA IDA, (Series 1991A) Weekly VRDNs (The Lakes)/(Citibank NA, New York LOC) A-1+ 3,000,000 ------------------------------------------------------ 4,000,000 Orange County, CA Local Transportation Authority, Sales Tax Revenue Notes, 3.45% CP (Industrial Bank of Japan Ltd., Tokyo LOC), Mandatory Tender 5/22/1996 A-1 4,000,000 ------------------------------------------------------ 4,250,000 Pomona, CA, 4.70% TRANs, 6/28/1996 SP-1+ 4,252,582 ------------------------------------------------------ 1,200,000 Riverside County, CA, (Series A) Weekly VRDNs (Riverside, CA Public Facility Finance)/ (Commerzbank AG, Frankfurt and National Westminster Bank, PLC, London LOCs) MIG1 1,200,000 ------------------------------------------------------ 950,000 Roseville, CA, Hospital Facilities Authority, (Series 1989A) Weekly VRDNs (Toronto-Dominion Bank LOC) VMIG1 950,000 ------------------------------------------------------ 1,700,000 San Bernardino County, CA, (Series 1985) Weekly VRDNs (Woodview Apartments)/(Swiss Bank Corp., Basle LOC) VMIG1 1,700,000 ------------------------------------------------------
CALIFORNIA MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ---------- ------------------------------------------------------ -------- ----------- SHORT-TERM MUNICIPALS--CONTINUED - ------------------------------------------------------------------------- $3,400,000 San Dimas, CA Redevelopment Agency, (Series 1995) Weekly VRDNs (Diversified Shopping Center Project)/ (Morgan Guaranty Trust Co., New York LOC) A-1+ $ 3,400,000 ------------------------------------------------------ 1,500,000 San Francisco, CA Redevelopment Finance Agency, (Series B1) Weekly VRDNs (Fillmore Center)/(Bank of Nova Scotia, Toronto LOC) A-1+ 1,500,000 ------------------------------------------------------ 1,400,000 Santa Clara County-El Comino Hospital District, CA, (Series 1985G) Weekly VRDNs (Valley Medical Center)/ (National Westminster Bank, PLC, London LOC) A-1+ 1,400,000 ------------------------------------------------------ 400,000 Santa Clara, CA, (Series 1985C) Weekly VRDNs (Santa Clara, CA Electric System)/(National Westminster Bank, PLC, London LOC) A-1+ 400,000 ------------------------------------------------------ 4,000,000 Santa Cruz County, CA, 4.50% TRANs, 7/11/1996 SP-1+ 4,003,727 ------------------------------------------------------ 1,500,000 Selma, CA, 4.75% TRANs, 6/30/1996 SP-1+ 1,501,018 ------------------------------------------------------ 2,000,000 Southern California Public Power Authority, Transmission Project Revenue Bonds, 7.875% Bonds (United States Treasury PRF), 7/1/1996 (@103) NR(1) 2,075,038 ------------------------------------------------------ 610,000 Stockton, CA, (Series 1993) Weekly VRDNs (La Quinta Inns, Inc.) /(Nationsbank of Texas, N.A. LOC) P-1 610,000 ------------------------------------------------------ 2,500,000 Temecula Valley Unified School District, CA, 4.50% TRANs, 7/5/1996 SP-1+ 2,502,132 ------------------------------------------------------ 995,000 Vallejo, CA, Commercial Development Refunding Revenue Bonds (1994 Series A) Weekly VRDNs (Vallejo Center Associates Project)/(Bank of Tokyo-Mitsubishi LTD. LOC) A-1 995,000 ------------------------------------------------------ 1,500,000 Victor Valley Community College District, CA, 4.00% TRANs (Union Bank of California LOC), 1/17/1997 SP-1 1,504,130 ------------------------------------------------------ ----------- Total 81,071,216 ------------------------------------------------------ -----------
CALIFORNIA MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ---------- ------------------------------------------------------ -------- ----------- SHORT-TERM MUNICIPAL SECURITIES--CONTINUED - ------------------------------------------------------------------------- PUERTO RICO--4.1% ------------------------------------------------------ $3,500,000 Puerto Rico Government Development Bank, 3.15% CP, Mandatory Tender 5/13/1996 A-1+ $ 3,500,000 ------------------------------------------------------ ----------- TOTAL INVESTMENTS (AT AMORTIZED COST)(B) $84,571,216 ------------------------------------------------------ -----------
(a) Denotes a restricted security which is subject to restrictions on resale under Federal Securities laws. At the end of the period, these securities amounted to $6,400,000 which represents 7.5% of net assets. (b) Also represents cost for federal tax purposes. * Please refer to the Appendix of the Statement of Additional Information for an explanation of the credit ratings. Note: The categories of investments are shown as a percentage of net assets ($85,288,653) at April 30, 1996. The following abbreviations are used in this portfolio: CP -- Commercial Paper FGIC -- Financial Guaranty Insurance Company FSA -- Financial Security Assurance HFA -- Housing Finance Authority IDA -- Industrial Development Authority INS -- Insured LIQ -- Liquidity Agreement LOCs -- Letter(s) of Credit LOC -- Letter of Credit MBIA -- Municipal Bond Investors Assurance PCFA -- Pollution Control Finance Authority PLC -- Public Limited Company PRF -- Prerefunded SA -- Support Agreement TOBs -- Tender Option Bonds TRANs -- Tax and Revenue Anticipation Notes USD -- University School District VRDNs -- Variable Rate Demand Notes
(See Notes which are an integral part of the Financial Statements) CALIFORNIA MUNICIPAL CASH TRUST STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1996 (UNAUDITED) - -------------------------------------------------------------------------------- ASSETS: - -------------------------------------------------------------------------------- Total investments in securities, at amortized cost and value $84,571,216 - -------------------------------------------------------------------------------- Cash 146,415 - -------------------------------------------------------------------------------- Income receivable 877,114 - -------------------------------------------------------------------------------- ----------- Total assets 85,594,745 - -------------------------------------------------------------------------------- LIABILITIES: - -------------------------------------------------------------------------------- Income distribution payable $247,278 - --------------------------------------------------------------------- Accrued expenses 58,814 - --------------------------------------------------------------------- -------- Total liabilities 306,092 - -------------------------------------------------------------------------------- ----------- NET ASSETS for 85,288,653 shares outstanding $85,288,653 - -------------------------------------------------------------------------------- ----------- NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE: - -------------------------------------------------------------------------------- INSTITUTIONAL SERVICE SHARES: - -------------------------------------------------------------------------------- $77,830,376 / 77,830,376 shares outstanding $1.00 - -------------------------------------------------------------------------------- ----------- INSTITUTIONAL SHARES: - -------------------------------------------------------------------------------- $7,458,277 / 7,458,277 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, 1996 (UNAUDITED) - -------------------------------------------------------------------------------- INVESTMENT INCOME: - ----------------------------------------------------------------------------------- Interest $1,659,750 - ----------------------------------------------------------------------------------- EXPENSES: - ----------------------------------------------------------------------------------- Investment advisory fee $ 218,161 - ---------------------------------------------------------------------- Administrative personnel and services fee 53,351 - ---------------------------------------------------------------------- Custodian fees 11,702 - ---------------------------------------------------------------------- Transfer and dividend disbursing agent fees and expenses 13,331 - ---------------------------------------------------------------------- Directors'/Trustees' fees 1,965 - ---------------------------------------------------------------------- Auditing fees 6,547 - ---------------------------------------------------------------------- Legal fees 4,629 - ---------------------------------------------------------------------- Portfolio accounting fees 24,921 - ---------------------------------------------------------------------- Shareholder services fee-Institutional Service Shares 106,551 - ---------------------------------------------------------------------- Shareholder services fee-Institutional Shares 2,529 - ---------------------------------------------------------------------- Share registration costs 29,142 - ---------------------------------------------------------------------- Printing and postage 11,219 - ---------------------------------------------------------------------- Insurance premiums 3,913 - ---------------------------------------------------------------------- Miscellaneous 1,481 - ---------------------------------------------------------------------- --------- Total expenses 489,442 - ---------------------------------------------------------------------- Waivers and reimbursements-- - ---------------------------------------------------------------------- Waiver of investment advisory fee $(218,161) - ---------------------------------------------------------- Waiver of shareholder services fee-Institutional Service Shares (19,427) - ---------------------------------------------------------- Waiver of shareholder services fee-Institutional Shares (2,529) - ---------------------------------------------------------- Reimbursement of other operating expenses (14,734) - ---------------------------------------------------------- --------- Total waivers and reimbursements (254,851) - ---------------------------------------------------------------------- --------- Net expenses 234,591 - ----------------------------------------------------------------------------------- ---------- Net investment income $1,425,159 - ----------------------------------------------------------------------------------- ----------
(See Notes which are an integral part of the Financial Statements) CALIFORNIA MUNICIPAL CASH TRUST STATEMENT OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
SIX MONTHS ENDED (UNAUDITED) YEAR ENDED APRIL 30, 1996 OCTOBER 31, 1995 ----------------- ----------------- INCREASE (DECREASE) IN NET ASSETS: - ----------------------------------------------------- OPERATIONS-- - ----------------------------------------------------- Net investment income $ 1,425,159 $ 3,099,882 - ----------------------------------------------------- ------------- ------------- Net realized gain (loss) on investments -- (750,875) - ----------------------------------------------------- ------------- ------------- Change in net assets resulting from operations 1,425,159 2,349,007 - ----------------------------------------------------- ------------- ------------- DISTRIBUTIONS TO SHAREHOLDERS-- - ----------------------------------------------------- Distributions from net investment income - ----------------------------------------------------- Institutional Service Shares (1,389,611) (3,099,882) - ----------------------------------------------------- Institutional Shares (35,548) -- - ----------------------------------------------------- ------------- ------------- Change in net assets resulting from distributions to shareholders (1,425,159) (3,099,882) - ----------------------------------------------------- ------------- ------------- SHARE TRANSACTIONS-- - ----------------------------------------------------- Proceeds from sale of shares 196,596,882 361,842,642 - ----------------------------------------------------- Net asset value of shares issued to shareholders in payment of distributions declared 194,097 471,326 - ----------------------------------------------------- Cost of shares redeemed (208,036,184) (347,342,783) - ----------------------------------------------------- ------------- ------------- Change in net assets resulting from share transactions (11,245,205) 14,971,185 - ----------------------------------------------------- ------------- ------------- Change in net assets (11,245,205) 14,971,185 - ----------------------------------------------------- NET ASSETS: - ----------------------------------------------------- Beginning of period 96,533,858 81,562,673 - ----------------------------------------------------- ------------- ------------- End of period $ 85,288,653 $ 96,533,858 - ----------------------------------------------------- ------------- -------------
(See Notes which are an integral part of the Financial Statements) CALIFORNIA MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS--INSTITUTIONAL SERVICE SHARES - -------------------------------------------------------------------------------- (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED (UNAUDITED) YEAR ENDED APRIL 30, OCTOBER 31,(A) YEAR ENDED SEPTEMBER 30, ------------ ------------------ ---------------------------------------------------- 1996 1995 1994 1993 1992 1991 1990 1989(B) ------------ ------- ------- -------- ------- ------- ------- ------- 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 0.03 0.02 0.02 0.03 0.04 0.05 0.03 - ---------------------------------- Net realized loss on investments -- (0.01) -- -- -- -- -- -- - ---------------------------------- ----- ----- ----- ----- ----- ----- ----- ----- Total from investment operations 0.02 0.02 0.02 0.02 0.03 0.04 0.05 0.03 - ---------------------------------- CAPITAL CONTRIBUTION -- 0.01 -- -- -- -- -- -- - ---------------------------------- ----- ----- ----- ----- ----- ----- ----- ----- LESS DISTRIBUTIONS - ---------------------------------- Distributions from net investment income (0.02) (0.03) (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 $1.00 $1.00 - ---------------------------------- ----- ----- ----- ----- ----- ----- ----- ----- TOTAL RETURN(C) 1.64% 3.37% 2.07% 2.03% 2.83% 4.30% 5.38% 2.95% - ---------------------------------- RATIOS TO AVERAGE NET ASSETS - ---------------------------------- Expenses 0.55%* 0.59% 0.58% 0.54% 0.45% 0.35% 0.38% 0.40%* - ---------------------------------- Net investment income 3.26%* 3.33% 2.03% 2.00% 2.76% 4.19% 5.27% 5.86%* - ---------------------------------- Expense waiver/reimbursement(d) 0.58%* 0.50% 0.40% 0.35% 0.58% 0.75% 0.86% 0.89%* - ---------------------------------- SUPPLEMENTAL DATA - ---------------------------------- Net assets, end of period (000 omitted) $ 77,830 $96,534 $74,707 $104,322 $59,709 $56,754 $50,391 $36,628 - ----------------------------------
* Computed on an annualized basis. (a) The Fund changed its fiscal year-end from September 30, to October 31, beginning September 30, 1994. (b) Reflects operations for the period from March 15, 1989 (date of initial public investment) to September 30, 1989. (c) Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable. (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) CALIFORNIA MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES - -------------------------------------------------------------------------------- (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
PERIOD ENDED (UNAUDITED) APRIL 30, 1996(A) ----------- NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 - ------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS - ------------------------------------------------------------------------------ Net investment income 0.01 - ------------------------------------------------------------------------------ LESS DISTRIBUTIONS - ------------------------------------------------------------------------------ Distributions from net investment income (0.01) - ------------------------------------------------------------------------------ ------ NET ASSET VALUE, END OF PERIOD $ 1.00 - ------------------------------------------------------------------------------ ------ TOTAL RETURN(B) 0.55% - ------------------------------------------------------------------------------ RATIOS TO AVERAGE NET ASSETS - ------------------------------------------------------------------------------ Expenses 0.21%* - ------------------------------------------------------------------------------ Net investment income 3.76%* - ------------------------------------------------------------------------------ Expense waiver/reimbursement(c) 0.78%* - ------------------------------------------------------------------------------ SUPPLEMENTAL DATA - ------------------------------------------------------------------------------ Net assets, end of period (000 omitted) $ 7,458 - ------------------------------------------------------------------------------
* Computed on an annualized basis. (a) Reflects operations for the period from March 4, 1996 (date of initial public investment) to April 30, 1996. (b) Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable. (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) CALIFORNIA MUNICIPAL CASH TRUST NOTES TO FINANCIAL STATEMENTS APRIL 30, 1996 (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 fifteen portfolios. The financial statements included herein are only those of California Municipal Cash Trust (the "Fund"), a non-diversified portfolio. The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. The Fund offers two classes of shares: Institutional Service Shares and Institutional Shares. The investment objective of the Fund is current income exempt from federal regular income tax and the personal income taxes imposed by the State of California consistent with stability of principal. (2) SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with generally accepted accounting principles. 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, 1996, 69.5% 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 from any one institution or agency did not exceed 17.2% of total investments. CALIFORNIA 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 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, 1996 is as follows:
ACQUISITION ACQUISITION SECURITY DATE COST ----------------------------------------------------------- ------------ ----------- California Public Capital Improvements Financing Authority, Fund Receipts (Series 1996 FR-3) Weekly VRDNs 3/7-4/1/1996 $3,400,000 Los Angeles, CA Wastewater System, Tender Option Certificates, (Series 1995-A) Weekly VRDNs 3/4/1996 $3,000,000
USE OF ESTIMATES--The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ from those estimated. OTHER--Investment transactions are accounted for on 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, 1996, capital paid-in aggregated $85,288,653. Transactions in shares were as follows:
SIX MONTHS ENDED YEAR ENDED INSTITUTIONAL SHARES APRIL 30, 1996 OCTOBER 31, 1995 - -------------------------------------------------------- --------------- ---------------- Shares sold 186,522,416 361,842,642 - -------------------------------------------------------- Shares issued to shareholders in payment of distributions declared 194,097 471,326 - -------------------------------------------------------- Shares redeemed (205,419,995) (347,342,783) - -------------------------------------------------------- ------------ ------------ Net change resulting from Institutional Service share transactions (18,703,482) 14,971,185 - -------------------------------------------------------- ------------ ------------
CALIFORNIA MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PERIOD INSTITUTIONAL SHARES APRIL 30, 1996* - --------------------------------------------------------------------------- ---------------- Shares sold 10,074,466 - --------------------------------------------------------------------------- Shares issued to shareholders in payment of distributions declared -- - --------------------------------------------------------------------------- Shares redeemed (2,616,189) - --------------------------------------------------------------------------- ------------ Net change resulting from Institutional share transactions 7,458,277 - --------------------------------------------------------------------------- ------------ Net change resulting from share transactions (11,245,205) - --------------------------------------------------------------------------- ------------
* For the period from March 4, 1996 (date of initial public investment) to April 30, 1996. (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 0.50% of the Fund's average daily net assets. The Adviser may voluntarily choose to waive any portion of its fee. The Adviser can modify or terminate this voluntary waiver at any time at its sole discretion. ADMINISTRATIVE FEE--Federated Services Company ("FServ"), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. The fee paid to FServ is based on 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 0.25% of daily average net assets of the Fund for the period. The fee paid to FSS is used to finance certain services for shareholders and to maintain shareholder accounts. FSS may voluntarily choose to waive any portion of its fee. FSS can modify or terminate this voluntary waiver at any time at its sole discretion. For the period ended April 30, 1996, the Institutional Shares did not incur a shareholder services fee. TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--FServ, through its subsidiary, Federated Shareholder Services Company serves as transfer and dividend disbursing agent for the Fund. The fee paid to FServ is based on the size, type, and number of accounts and transactions made by shareholders. PORTFOLIO ACCOUNTING FEES--FServ maintains the Fund's accounting records for which it receives a fee. The fee is based on the level of the Fund's average daily net assets for the period, plus out-of-pocket expenses. CAPITAL CONTRIBUTION--Federated Management made a capital contribution in the amount of $750,875 to California Municipal Cash Trust during the year ended October 31, 1995. The contribution represents the excess over fair market value ($720,000) paid by Federated Management to acquire $4,000,000 par, Orange County, CA, Series B Bonds from the Fund on July 10, 1995. The contribution CALIFORNIA MUNICIPAL CASH TRUST - -------------------------------------------------------------------------------- also consists of the cost of an LOC ($30,875) obtained by Federated Management on December 7, 1994 to support the value of the Orange County Bonds. The LOC guaranteed the principal amount of the securities in the event the issuer did not timely pay the principal at maturity. These transactions resulted in a permanent book and tax difference. As such, the paid-in-capital and accumulated net realized gain/loss accounts have been adjusted accordingly. This adjustment did not affect net investment income, net realized gains/losses, or net assets. INTERFUND TRANSACTIONS--During the period ended April 30, 1996, the Fund engaged in purchase and sale transactions with funds that have a common investment adviser (or affiliated investment advisers), common Directors/Trustees, and/or common Officers. These purchase and sale transactions were made at current market value pursuant to Rule 17a-7 under the Act amounting to $95,295,000 and $102,800,000, 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. Executive Vice President Edward L. Flaherty, Jr. Edward C. Gonzales Glen R. Johnson Executive Vice President Peter E. Madden John W. McGonigle Gregor F. Meyer Executive Vice President and Secretary John E. Murray, Jr. Richard B. Fisher Wesley W. Posvar Vice President Marjorie P. Smuts David M. Taylor Treasurer Charles H. Field 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. - ----------------------------------------------------------------------------- CALIFORNIA - ----------------------------------------------------------------------------- MUNICIPAL - ----------------------------------------------------------------------------- CASH - ----------------------------------------------------------------------------- TRUST - ----------------------------------------------------------------------------- SEMI-ANNUAL REPORT TO SHAREHOLDERS - ----------------------------------------------------------------------------- APRIL 30, 1996 [LOGO OF FEDERATED INVESTORS] Federated Investors Tower Pittsburgh, PA 15222-3779 Federated Securities Corp. is the distributor of the fund and a subsidiary of Federated Investors. Cusip 314229675 Cusip 314229766 0041609 (6/96) [RECYCLED LOGO] - -------------------------------------------------------------------------------- FLORIDA - -------------------------------------------------------------------------------- MUNICIPAL - -------------------------------------------------------------------------------- CASH - -------------------------------------------------------------------------------- TRUST - -------------------------------------------------------------------------------- SEMI-ANNUAL REPORT TO SHAREHOLDERS April 30, 1996 FEDERATED INVESTORS (LOGO)Z - --------------------------------------------- Distributor A subsidiary of FEDERATED INVESTORS FEDERATED INVESTORS TOWER PITTSBURGH, PA 15222-3779 CUSIP 314229758 CUSIP 314229683 G00827-02 (6/96) 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, which covers the six-month period from November 1, 1995, through April 30, 1996. The report begins with a discussion with the fund's portfolio manager, followed by a complete listing of the fund's holdings and its financial statements. Financial highlights tables are provided for the fund's Institutional Shares and Cash II Shares. The fund is a convenient way to put your ready cash to work pursuing double-tax-free income--free from federal regular income tax and the Florida intangibles tax*--through a portfolio concentrated in high-quality, short-term Florida municipal securities. As a shareholder, you have the opportunity to earn a greater after-tax yield than you could in a comparable high-quality taxable investment. Of course, the fund also brings you the added benefits of daily liquidity and stability of principal.** During the report period, the fund paid double-tax-free dividends of $0.02 per share for Institutional Shares and $0.01 per share for Cash II Shares. Its total net assets of $320.3 million were diversified among Florida securities that use municipal bond financing for projects as varied as health care, housing, community development, and transportation. You can count on Florida Municipal Cash Trust to seek the best tax-free income opportunities for your cash investment needs. As always, we will strive to continue to provide you with the highest level of professional service. We invite your questions or comments. Sincerely, LOGO Glen R. Johnson President June 15, 1996 * Income may be subject to the federal alternative minimum tax. ** 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. An investment in the fund is neither insured nor guaranteed by the U.S. government. INVESTMENT REVIEW - -------------------------------------------------------------------------------- An Interview with Fund Portfolio Manager, Jeff A. Kozemchak, C.F.A. Q Can you comment on the economy and the interest rate environment during the semi-annual reporting period? A The Federal Reserve Board (the "Fed") eased monetary policy twice over the six-month reporting period ended in April 1996. Faced with slowing economic growth and benign inflationary pressures, the Fed lowered the federal funds target rate from 5.75% to 5.50% in late December 1995, and again from 5.50% to the current 5.25% at the end of January 1996. For the December 1995 move, the Fed cited a better-than-expected inflation outlook as the impetus behind the easing, although a sluggish manufacturing sector and lackluster consumer spending was thought to have had an influence. In January 1996, the Fed appeared swayed by the dampening effects of high debt loads and employment uncertainty on consumer consumption along with sluggish export growth. Through this period, the short-end of the government and municipal yield curves anticipated the policy moves from the Fed, and amid signs of a weakening economy looked forward to additional eases in the not too distant future. February and March of 1996, however, brought about a shift in market psychology regarding both the extent and direction of changes in monetary policy by the Fed. Recovering from the harsh winter weather and spurred onward by lower interest rates, the housing market and consumer spending breathed some life into the economy, which had seemed on the verge of recession earlier in the year. The market was then stunned in early March 1996 by the report of a 705,000 increase in non-farm payroll jobs for February 1996--the largest in 12 years--which caused the yields on short-term securities to rise by as much as 25 basis points. Now confronted with a more robust economy than previously thought, market participants have moved expectations toward a more neutral policy from the Fed in the near term with a possible tightening, or increase in rates, later in 1996. Yields on short-term government securities reflected this rater volatile mood in the markets. The yield on the three-month Treasury bill began November 1995 at 5.48%, declined to 4.89% by mid-February 1996, and ended April 1996 at 5.14%. Correspondingly, the yield on the one-year Treasury bill began November 1995 at 5.46%, fell to 4.79% in mid-February 1996, but rose to 5.62% by the end of April 1996. Q How has the fund's yield responded to this interest rate environment? A The fund's yield was affected by Fed policy (interest rate cuts), changes in market expectations, as well as supply and demand imbalances unique to the municipal money markets. However, because of these imbalances the fund's yield may experience more volatility on a weekly basis than Treasury yields and taxable money fund yields. In general, yields on municipal money market funds were lower over the reporting period. For the fund, the seven-day net yield* of the Institutional Shares on April 30, 1996 was 3.33% compared to 3.44% six months ago. For the Cash II Shares, the seven-day net yield* was 3.17% on April 30, 1996 compared to 3.20% on December 3, 1995, near the inception date of the share class. * Performance quoted represents past performance and is not indicative of future results. Yield will vary. - -------------------------------------------------------------------------------- Q What was your strategy for managing the fund over the semi-annual reporting period? A The fund started the reporting period with an average maturity of 68 days, which was slightly longer than our neutral target of 55 to 65 days. As November and December of 1995 progressed, the average maturity rolled inward considerably as the fund received large cash inflows due to the state intangibles tax levy imposed on non-Florida securities. These inflows were invested in liquid short-term variable rate demand notes, which brought the average maturity to a period low of 17 days by early January 1996. In January and February of 1996, a portion of these assets left the fund and the maturity of the fund returned to our 55-65 day target level. By the end of the reporting period, the average maturity was 76 days, which was slightly longer than our target range of 55-65 days due to redemptions related to federal income tax payments in April 1996. We expect to shorten this maturity to 65 days by early June 1996. Q What is your outlook for the near future? A With growth of 2.3% in the first quarter of 1996, the economy appears to be on firmer footing than it was in the fourth quarter of 1995, when Gross Domestic Product grew at only .5%. As a result, the Fed should not feel the urgency to lower short-term rates further. By the same token, however, with areas of softness in the economy still evident and with consumer indebtedness at very high levels, there also appears to be no danger of the economy overheating in the near term. As long as inflation remains benign, the Fed should be content to sit on the sidelines until confronted with signs of undue strength or considerable weakness in economic growth. The average maturity of the fund will continue to be managed in accordance with our expectation for a stable monetary policy in the near term. Nevertheless, opportunities for average maturity extension will arise as the supply of fixed-rate notes in the municipal market increases significantly in June and July of 1996. This spike in supply may present opportunities to "lock-in" yields which are attractive relative to comparable maturity taxable securities. As a result, we expect the average maturity of the fund to be on the longer side of our target range throughout the summer months. FLORIDA MUNICIPAL CASH TRUST PORTFOLIO OF INVESTMENTS APRIL 30, 1996 (UNAUDITED) - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ----------- ----------------------------------------------------- --------- ------------ SHORT-TERM MUNICIPALS--99.3% - ------------------------------------------------------------------------ FLORIDA--77.4% ----------------------------------------------------- $ 3,000,000 Broward County, FL HFA, Multi-family Housing Revenue Refunding Bonds (1995 Series B) Weekly VRDNs (Harbour Town of Jacaranda Project)/(SouthTrust Bank of Alabama, Birmingham LOC) P-1 $ 3,000,000 ----------------------------------------------------- 1,130,000 Broward County, FL, IDRB (Series 1993) Weekly VRDNs (American Whirlpool Products Corp. Project)/ (Nationsbank of Florida, N.A. LOC) P-1 1,130,000 ----------------------------------------------------- 8,000,000 Charlotte County, FL School District, (Series 1995), 3.90% TANs, 6/30/1996 MIG1 8,001,901 ----------------------------------------------------- 3,000,000 Clay County, FL Development Authority, IDRB (Series 1994) Weekly VRDNs (Carlisle Corporation Project)/(SunTrust Bank, Atlanta LOC) P-1 3,000,000 ----------------------------------------------------- 1,950,000 Dade County, FL IDA, IDRB (Series 1995) Weekly VRDNs (June Leasing Co. Project (FL))/(First Union National Bank of Florida LOC) A-1 1,950,000 ----------------------------------------------------- 20,000,000 Dade County, FL Solid Waste System, IDRB (Series 1990 A) Weekly VRDNs (Montenay-Dade Ltd. Project)/(Banque Paribas, Paris LOC) VMIG1 20,000,000 ----------------------------------------------------- 22,000,000 Dade County, FL, Aviation Revenue Bonds Tender Option Certificates (Series 1995G) Weekly VRDNs (MBIA INS)/(Bayerische Hypotheken-Und Wechsel-Bank Ag LIQ) A-1+ 22,000,000 ----------------------------------------------------- 4,000,000 Dade County, FL, Development Revenue Bonds, (Series 1988) Weekly VRDNs (Montenay-Dade Ltd. Project)/(Banque Paribas, Paris LOC) VMIG1 4,000,000 ----------------------------------------------------- 3,000,000 Duval County, FL HFA, Multi-family Housing Revenue Bonds (Series 1985 F) Weekly VRDNs (Lakes of Mayport Apartments Project)/(SunTrust Bank, Atlanta LOC) AA- 3,000,000 -----------------------------------------------------
FLORIDA MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ----------- ----------------------------------------------------- --------- ------------ SHORT-TERM MUNICIPALS--CONTINUED - ------------------------------------------------------------------------ FLORIDA--CONTINUED ----------------------------------------------------- $ 3,900,000 Escambia County, FL HFA, SFM Revenue Bonds (Series 1996B), 3.65% TOBs (Trinity Financing Corp. GIC), Mandatory Tender 4/1/1997 Aaa $ 3,900,000 ----------------------------------------------------- 4,700,000 Florida HFA, Housing Revenue Bonds (Series J) Weekly VRDNs (Ashley Lake Project)/(Barclays Bank PLC, London LOC) VMIG1 4,700,000 ----------------------------------------------------- 6,570,000 Florida HFA, Multi-family Housing Revenue Bonds (1995 Series M) Weekly VRDNs (Bainbridge Club Apartments Project)/(PNC Bank, Kentucky LOC) VMIG1 6,570,000 ----------------------------------------------------- 5,380,000 Florida State Board of Education Administration, (CR55D), 3.60% TOBs (Citibank N.A., New York LIQ), Optional Tender 6/1/1996 NR(2) 5,380,000 ----------------------------------------------------- 3,000,000 Florida State Board of Education Administration, Puttable Tax-Exempt Receipts (Series 10) Weekly VRDNs (Florida State)/(Morgan Guaranty Trust Co., New York LIQ) VMIG1 3,000,000 ----------------------------------------------------- 9,000,000 Greater Orlando (FL) Aviation Authority, Airport Facilities Subordinated CP Notes (Series B), 3.75% CP, Mandatory Tender 7/15/1996 P-1 9,000,000 ----------------------------------------------------- 7,000,000 Hillsborough County, FL Aviation Authority, Bond Anticipation CP Notes, 3.35% CP (Tampa International Airport)/(National Westminster Bank, PLC, London LOC), Mandatory Tender 5/10/1996 A-1+ 7,000,000 ----------------------------------------------------- 3,000,000 Hillsborough County, FL Aviation Authority, Bond Anticipation CP Notes, 3.35% CP (Tampa International Airport)/(National Westminster Bank, PLC, London LOC), Mandatory Tender 5/13/1996 A-1+ 3,000,000 ----------------------------------------------------- 5,500,000 Hillsborough County, FL Aviation Authority, Bond Anticipation CP Notes, 3.65% CP (Tampa International Airport)/(National Westminster Bank, PLC, London LOC), Mandatory Tender 6/12/1996 A-1+ 5,500,000 ----------------------------------------------------- 2,000,000 Hillsborough County, FL IDA Weekly VRDNs (Ringhager Equipment Co.)/(Mellon Bank N.A., Pittsburgh LOC) P-1 2,000,000 -----------------------------------------------------
FLORIDA MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ----------- ----------------------------------------------------- --------- ------------ SHORT-TERM MUNICIPALS--CONTINUED - ------------------------------------------------------------------------ FLORIDA--CONTINUED ----------------------------------------------------- $ 2,700,000 Hillsborough County, FL IDA, (Series 1992) Weekly VRDNs (SIFCO Turbine Component Service)/(National City Bank, Cleveland, OH LOC) P-1 $ 2,700,000 ----------------------------------------------------- 17,975,000 Hillsborough County, FL IDA, PCR Refunding Bonds Long Option Period (CR-31I), 3.60% TOBs (Tampa Electric Company)/(MBIA INS), Optional Tender 4/1/1997 NR(1) 17,975,000 ----------------------------------------------------- 1,013,200 Immokalee Water and Sewer District, Water and Sewer Revenue, 3.65% BANs, 8/30/1996 NR 1,013,200 ----------------------------------------------------- 2,250,000 Indian River County School District, FL, (Series 1995), 4.00% TANs, 6/30/1996 MIG1 2,250,689 ----------------------------------------------------- 6,425,000 Jacksonville, FL HFDC Daily VRDNs (River Garden Project)/(Banque Paribas, Paris LOC) A-2 6,425,000 ----------------------------------------------------- 3,000,000 Jacksonville, FL HFDC, Health Facilities Revenue Bonds (Series 1994) Weekly VRDNs (River Garden/The Coves Project)/(First Union National Bank, Charlotte, NC LOC) A-1 3,000,000 ----------------------------------------------------- 2,000,000 Jacksonville, FL HFDC, Health Facilities Revenue Bonds (Series 1996) Weekly VRDNs (Jacksonville Faculty Practice Association Project)/(Nationsbank of Georgia, N.A. LOC) A-1 2,000,000 ----------------------------------------------------- 1,200,000 Jacksonville, FL Weekly VRDNs (Metal Sales)/(National City Bank, Kentucky LOC) P-1 1,200,000 ----------------------------------------------------- 1,000,000 Lee County, FL IDA, IDRB (Series 1994) Weekly VRDNs (Baader North America Corporation)/(Deutsche Bank, AG LOC) VMIG1 1,000,000 ----------------------------------------------------- 3,500,000 Manatee County, FL HFA, SFM Revenue Bonds (Series 1996), 3.75% TOBs (Bayerische Landesbank Girozentrale GIC), Optional Tender 10/15/1996 VMIG1 3,500,000 -----------------------------------------------------
FLORIDA MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ----------- ----------------------------------------------------- --------- ------------ SHORT-TERM MUNICIPALS--CONTINUED - ------------------------------------------------------------------------ FLORIDA--CONTINUED ----------------------------------------------------- $ 1,000,000 Marion County, FL HFA, Multi-family Revenue Bonds (1985 Series F) Weekly VRDNs (Paddock Place Project)/(SunTrust Bank, Atlanta LOC) A-1 $ 1,000,000 ----------------------------------------------------- 2,400,000 Martin County, FL IDA, Tender Industrial Revenue Bonds (Series 1986) Weekly VRDNs (Tampa Farm Service, Inc. Project)/(SunTrust Banks, Inc. LOC) Aa3 2,400,000 ----------------------------------------------------- 4,500,000 Martin County, FL School District, District Operating Millage (Series 1995), 4.25% TANs, 6/8/1996 NR 4,501,799 ----------------------------------------------------- 4,000,000 Miami, FL, (Series 1995), 4.50% TANs, 9/27/1996 SP-1+ 4,010,974 ----------------------------------------------------- 5,000,000 Orange County, FL HFA, (Series 1996B), 3.65% TOBs (Westdeutsche Landesbank Girozentrale GIC), Mandatory Tender 4/1/1997 A-1+ 5,000,000 ----------------------------------------------------- 2,230,000 Orange County, FL HFA, Multi-family Housing Revenue Bonds Weekly VRDNs (Sutton Place, Ltd. Project)/(Nationsbank of Maryland, N.A. LOC) A-1+ 2,230,000 ----------------------------------------------------- 8,000,000 Orange County, FL School District, (Series 1995), 4.50% TANs, 10/16/1996 SP-1+ 8,024,750 ----------------------------------------------------- 2,000,000 Orlando & Orange County Expressway Authority, FL, Expressway Revenue Bonds, 7.25% Bonds (United States Treasury PRF), 7/1/1996 (@102) AAA 2,052,423 ----------------------------------------------------- 200,000 Palm Beach County, FL IDA Weekly VRDNs (Palm Beach Jewish Community Campus)/(SunTrust Bank, Central Florida LOC) A-1+ 200,000 ----------------------------------------------------- 5,500,000 Pasco County, FL School District, (Series 1995), 3.90% TANs, 6/30/1996 MIG1 5,500,877 ----------------------------------------------------- 3,500,000 Pinellas County Industry Council, FL, IDRB (Series 1994) Weekly VRDNs (Genca Corporation Project)/(PNC Bank, Ohio, N.A. LOC) P-1 3,500,000 ----------------------------------------------------- 2,903,000 Pinellas County Industry Council, FL, IDRB (Series 1995) Weekly VRDNs (ATR International, Inc., Project)/(First Union National Bank of Florida LOC) P-1 2,903,000 -----------------------------------------------------
FLORIDA MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ----------- ----------------------------------------------------- --------- ------------ SHORT-TERM MUNICIPALS--CONTINUED - ------------------------------------------------------------------------ FLORIDA--CONTINUED ----------------------------------------------------- $ 6,000,000 Pinellas County, FL HFA, SFM Revenue Bonds (Series B), 3.40% TOBs (Trinity Financing Corp. GIC), Mandatory Tender 3/1/1997 VMIG1 $ 6,000,000 ----------------------------------------------------- 3,200,000 Pinellas County, FL HFA, SFM Revenue Bonds (Series PA-92) Weekly VRDNs (GNMA COL)/(Merrill Lynch Capital Services, Inc. LIQ) A-1+ 3,200,000 ----------------------------------------------------- 3,040,000 Sarasota County, FL IDRB, (Series 1994) Monthly VRDNs (Resource Recovery Systems of Sarasota Project)/(Fleet National Bank, Providence, R.I. LOC) A-1 3,040,000 ----------------------------------------------------- 12,800,000 Sarasota County, FL Public Hospital District, 3.20% CP (Sarasota Memorial Hospital), Mandatory Tender 6/10/1996 A-1 12,800,000 ----------------------------------------------------- 9,100,000 Sarasota County, FL Public Hospital District, 3.40% CP (Sarasota Memorial Hospital), Mandatory Tender 5/16/1996 A-1 9,100,000 ----------------------------------------------------- 1,400,000 Sumter County, FL IDA Weekly VRDNs (Great Southern Wood of Florida)/(SouthTrust Bank of Alabama, Birmingham LOC) VMIG1 1,400,000 ----------------------------------------------------- 10,000,000 Sunshine State Governmental Finance Commission, FL, 3.35% CP (Morgan Guaranty Trust Co., New York, National Westminster Bank, PLC, London and Union Bank of Switzerland, Zurich LOCs), Mandatory Tender 5/23/1996 VMIG1 10,000,000 ----------------------------------------------------- 2,300,000 Tamarac, FL, IDRB (Series 1995) Weekly VRDNs (Arch Aluminum & Glass Co., Inc. Project)/(Mellon Bank N.A., Pittsburgh LOC) P-1 2,300,000 ----------------------------------------------------- 1,625,000 Volusia County, FL IDA Weekly VRDNs (Crane Cams)/(First Interstate Bank of Arizona, N.A. LOC) P-1 1,625,000 ----------------------------------------------------- ------------ Total 247,984,613 ----------------------------------------------------- ------------ GEORGIA--0.6% ----------------------------------------------------- 2,000,000 Douglas County, GA School District, 3.75% TANs, 12/31/1996 NR 2,006,497 ----------------------------------------------------- ------------
FLORIDA MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ----------- ----------------------------------------------------- --------- ------------ SHORT-TERM MUNICIPALS--CONTINUED - ------------------------------------------------------------------------ ILLINOIS--1.6% ----------------------------------------------------- $ 5,000,000 Chicago, IL, Collateralized SFM Revenue Bonds (Series 1996-B), 3.30% TOBs (MBIA INS), Optional Tender 10/15/1996 VMIG1 $ 5,000,000 ----------------------------------------------------- ------------ MAINE--0.7% ----------------------------------------------------- 2,485,000 Jay, ME, Solid Waste Disposal Revenue Bonds, 4.50% TOBs (International Paper Co.), Optional Tender 6/1/1996 A-2 2,486,406 ----------------------------------------------------- ------------ MINNESOTA--1.6% ----------------------------------------------------- 5,000,000 Faribault, MN IDA, (Series 1988) Weekly VRDNs (Jerome Foods)/(Norwest Bank Minnesota, Minneapolis LOC) P-1 5,000,000 ----------------------------------------------------- ------------ NEW HAMPSHIRE--4.4% ----------------------------------------------------- 3,000,000 Belknap County, NH, 3.53% TANs, 12/27/1996 NR 3,000,775 ----------------------------------------------------- 6,000,000 Merrimack, NH, 3.62% TANs, 12/31/1996 NR 6,000,755 ----------------------------------------------------- 5,000,000 Strafford County, NH, 3.42% TANs, 12/27/1996 NR 5,002,229 ----------------------------------------------------- ------------ Total 14,003,759 ----------------------------------------------------- ------------ NEW JERSEY--0.9% ----------------------------------------------------- 3,000,000 New Brunswick, NJ, 4.00% BANs, 12/23/1996 NR 3,008,267 ----------------------------------------------------- ------------ SOUTH CAROLINA--1.6% ----------------------------------------------------- 5,000,000 Georgetown County, SC, Pollution Control Facilities Adjustable Rate Bonds (Series A), 4.30% TOBs (International Paper Co.), Optional Tender 9/1/1996 A-2 5,006,250 ----------------------------------------------------- ------------ TENNESSEE--1.6% ----------------------------------------------------- 5,000,000 Oak Ridge, TN IDB, Solid Waste Facility Bonds (Series 1996) Weekly VRDNs (M4 Environmental L.P. Project)/(SunTrust Bank, Atlanta LOC) Aa3 5,000,000 ----------------------------------------------------- ------------
FLORIDA MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ----------- ----------------------------------------------------- --------- ------------ SHORT-TERM MUNICIPALS--CONTINUED - ------------------------------------------------------------------------ TEXAS--3.4% ----------------------------------------------------- $10,750,000 Angelina and Neches River Authority, Texas, Solid Waste Disposal Revenue Bonds (Series 1993), 3.60% CP (Temple-Eastex, Inc. Project)/(Temple-Inland, Inc. GTD), Mandatory Tender 5/22/1996 A-1 $ 10,750,000 ----------------------------------------------------- ------------ VIRGINIA--5.5% ----------------------------------------------------- 3,000,000 Halifax, VA IDA, MMMs, PCR, 3.40% CP (Virginia Electric Power Co.), Mandatory Tender 5/14/1996 A-1 3,000,000 ----------------------------------------------------- 6,100,000 Richmond, VA Redevelopment & Housing Authority, (Series B-1) Weekly VRDNs (Richmond, VA Red Tobacco Row)/(Westdeutsche Landesbank Girozentrale LOC) VMIG1 6,100,000 ----------------------------------------------------- 3,555,000 Richmond, VA Redevelopment & Housing Authority, (Series B-6) Weekly VRDNs (Richmond, VA Red Tobacco Row)/(Westdeutsche Landesbank Girozentrale LOC) VMIG1 3,555,000 ----------------------------------------------------- 5,200,000 Richmond, VA Redevelopment & Housing Authority, (Series B-9) Weekly VRDNs (Richmond, VA Red Tobacco Row)/(Westdeutsche Landesbank Girozentrale LOC) VMIG1 5,200,000 ----------------------------------------------------- ------------ Total 17,855,000 ----------------------------------------------------- ------------ TOTAL INVESTMENTS (AT AMORTIZED COST)(A) $318,100,792 ----------------------------------------------------- ------------
Securities that are subject to Alternative Minimum Tax represent 57.5% of the portfolio as calculated based upon total portfolio market value. (a) Also represents cost for federal tax purposes. * Please refer to the Appendix of the Statement of Additional Information for an explanation of the credit ratings. Note: The categories of investments are shown as a percentage of net assets ($320,328,833) at April 30, 1996. The following abbreviations are used in this portfolio: BANs --Bond Anticipation Notes COL --Collateralized CP --Commercial Paper GNMA --Government National Mortgage Association GTD --Guaranty HFA --Housing Finance Authority HFDC --Health Facility Development Corporation IDA --Industrial Development Authority IDB --Industrial Development Bond IDRB --Industrial Development Revenue Bond INS --Insured LIQ --Liquidity Agreement LOCs --Letter(s) of Credit LOC --Letter of Credit MBIA --Municipal Bond Investors Assurance MMMs --Money Market Municipals PCR --Pollution Control Revenue PLC --Public Limited Company PRF --Prerefunded 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) FLORIDA MUNICIPAL CASH TRUST STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1996 (UNAUDITED) - -------------------------------------------------------------------------------- ASSETS: - ------------------------------------------------------------------------------- Total investments in securities, at amortized cost and value $318,100,792 - ------------------------------------------------------------------------------- Income receivable 3,192,092 - ------------------------------------------------------------------------------- Deferred expenses 23,988 - ------------------------------------------------------------------------------- ------------ Total assets 321,316,872 - ------------------------------------------------------------------------------- LIABILITIES: - ------------------------------------------------------------------------------- Income distribution payable $664,262 - -------------------------------------------------------------------- Payable to Bank 206,582 - -------------------------------------------------------------------- Accrued expenses 117,195 - -------------------------------------------------------------------- -------- Total liabilities 988,039 - ------------------------------------------------------------------------------- ------------ NET ASSETS FOR 320,328,833 shares outstanding $320,328,833 - ------------------------------------------------------------------------------- ------------ NET ASSET VALUE Offering Price and Redemption Proceeds Per Share: - ------------------------------------------------------------------------------- INSTITUTIONAL SHARES: - ------------------------------------------------------------------------------- $293,178,955/293,178,955 shares outstanding $1.00 - ------------------------------------------------------------------------------- ------------ CASH II SHARES: - ------------------------------------------------------------------------------- $27,149,878/27,149,878 shares outstanding $1.00 - ------------------------------------------------------------------------------- ------------
(See Notes which are an integral part of the Financial Statements) FLORIDA MUNICIPAL CASH TRUST STATEMENT OF OPERATIONS SIX MONTHS ENDED APRIL 30, 1996 (UNAUDITED) - -------------------------------------------------------------------------------- INVESTMENT INCOME: - ------------------------------------------------------------------------------------ Interest $7,177,836 - ------------------------------------------------------------------------------------ EXPENSES: - ------------------------------------------------------------------------------------ Investment advisory fee $ 772,503 - --------------------------------------------------------------------- Administrative personnel and services fee 146,332 - --------------------------------------------------------------------- Custodian fees 24,543 - --------------------------------------------------------------------- Transfer and dividend disbursing agent fees and expenses 30,316 - --------------------------------------------------------------------- Directors'/Trustees' fees 1,894 - --------------------------------------------------------------------- Auditing fees 6,030 - --------------------------------------------------------------------- Legal fees 1,648 - --------------------------------------------------------------------- Portfolio accounting fees 53,625 - --------------------------------------------------------------------- Distribution services fee-Cash II Shares 74,415 - --------------------------------------------------------------------- Shareholder services fee-Institutional Shares 408,397 - --------------------------------------------------------------------- Shareholder services fee-Cash II Shares 74,415 - --------------------------------------------------------------------- Share registration costs 38,916 - --------------------------------------------------------------------- Printing and postage 11,370 - --------------------------------------------------------------------- Insurance premiums 3,281 - --------------------------------------------------------------------- Miscellaneous 1,734 - --------------------------------------------------------------------- ----------- Total expenses 1,649,419 - --------------------------------------------------------------------- Waivers and reimbursements-- - --------------------------------------------------------------------- Waiver of investment advisory fee $(504,435) - --------------------------------------------------------- Waiver of distribution services fee-Cash II Shares (44,649) - --------------------------------------------------------- Waiver of shareholder services fee-Institutional Shares (98,015) - --------------------------------------------------------- --------- Total waivers (647,099) - --------------------------------------------------------------------- ----------- Net expenses 1,002,320 - ------------------------------------------------------------------------------------ ---------- Net investment income $6,175,516 - ------------------------------------------------------------------------------------ ----------
(See Notes which are an integral part of the Financial Statements) FLORIDA MUNICIPAL CASH TRUST STATEMENT OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
SIX MONTHS ENDED (UNAUDITED) YEAR ENDED APRIL 30, 1996 OCTOBER 31, 1995 ---------------- ----------------- INCREASE (DECREASE) IN NET ASSETS: - ------------------------------------------------------ OPERATIONS-- - ------------------------------------------------------ Net investment income $ 6,175,516 $ 4,683,407 - ------------------------------------------------------ --------------- ----------------- DISTRIBUTIONS TO SHAREHOLDERS-- - ------------------------------------------------------ Distributions from net investment income: - ------------------------------------------------------ Institutional Shares (5,241,841) (4,683,407) - ------------------------------------------------------ Cash II Shares (933,675) -- - ------------------------------------------------------ --------------- ----------------- Change in net assets resulting from distributions to shareholders (6,175,516) (4,683,407) - ------------------------------------------------------ --------------- ----------------- SHARE TRANSACTIONS-- - ------------------------------------------------------ Proceeds from sale of shares 1,530,191,144 1,361,774,097 - ------------------------------------------------------ Net asset value of shares issued to shareholders in payment of distributions declared 2,246,668 2,166,363 - ------------------------------------------------------ Cost of shares redeemed (1,365,455,497) (1,264,560,129) - ------------------------------------------------------ --------------- ----------------- Change in net assets resulting from share transactions 166,982,315 99,380,331 - ------------------------------------------------------ --------------- ----------------- Change in net assets 166,982,315 99,380,331 - ------------------------------------------------------ NET ASSETS: - ------------------------------------------------------ Beginning of period 153,346,518 53,966,187 - ------------------------------------------------------ --------------- ----------------- End of period $ 320,328,833 $ 153,346,518 - ------------------------------------------------------ --------------- -----------------
(See Notes which are an integral part of the Financial Statements) FLORIDA MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES - -------------------------------------------------------------------------------- (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED (UNAUDITED) YEAR ENDED PERIOD ENDED APRIL 30, OCTOBER 31, OCTOBER 31, ----------- ----------- ------------- 1996 1995 1994(A) ----------- ----------- ------------- NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.000 - ------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS - ------------------------------------------------ Net investment income 0.02 0.04 0.004 - ------------------------------------------------ LESS DISTRIBUTIONS - ------------------------------------------------ Distributions from net investment income (0.02) (0.04) (0.004) - ------------------------------------------------ ------- ------- --------- NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.000 - ------------------------------------------------ ------- ------- --------- TOTAL RETURN(B) 1.59% 3.60% 0.35% - ------------------------------------------------ RATIOS TO AVERAGE NET ASSETS - ------------------------------------------------ Expenses 0.49%* 0.45% 0.28%* - ------------------------------------------------ Net investment income 3.21%* 3.58% 3.28%* - ------------------------------------------------ Expense waiver/reimbursement(c) 0.32%* 0.42% 1.03%* - ------------------------------------------------ SUPPLEMENTAL DATA - ------------------------------------------------ Net assets, end of period (000 omitted) $ 293,179 $ 153,347 $53,966 - ------------------------------------------------
* Computed on an annualized basis. (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 charge or contingent deferred sales charge, if applicable. (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) FLORIDA MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS--CASH II SHARES - -------------------------------------------------------------------------------- (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
PERIOD ENDED (UNAUDITED) APRIL 30, 1996(A) ------------------ NET ASSET VALUE, BEGINNING OF PERIOD $1.00 - -------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS - -------------------------------------------------------------------- Net investment income 0.01 - -------------------------------------------------------------------- LESS DISTRIBUTIONS - -------------------------------------------------------------------- Distributions from net investment income (0.01) - -------------------------------------------------------------------- ----------- NET ASSET VALUE, END OF PERIOD $1.00 - -------------------------------------------------------------------- ----------- TOTAL RETURN(B) 0.69% - -------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS - -------------------------------------------------------------------- Expenses 0.65%* - -------------------------------------------------------------------- Net investment income 3.14%* - -------------------------------------------------------------------- Expense waiver/reimbursement(c) 0.41%* - -------------------------------------------------------------------- SUPPLEMENTAL DATA - -------------------------------------------------------------------- Net assets, end of period (000 omitted) $ 27,150 - --------------------------------------------------------------------
* Computed on an annualized basis. (a) Reflects operations for the period from November 17, 1995 (date of initial public investment) to April 30, 1996. (b) Based on net asset value which does not reflect the sales charge or contingent deferred sales charge, if applicable. (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). FLORIDA MUNICIPAL CASH TRUST NOTES TO FINANCIAL STATEMENTS APRIL 30, 1996 (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 fifteen portfolios. The financial statements included herein are only those of Florida Municipal Cash Trust (the "Fund"), a non-diversified portfolio. The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. Effective November 17, 1995, the Fund added Cash II Shares. The Fund offers two classes of shares: Institutional Shares and Cash II Shares. The investment objective of the Fund is current income exempt from federal regular income tax consistent with stability of principal and liquidity and to maintain an investment portfolio that will cause its shares to be exempt from the Florida intangibles tax. (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. 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 over a period of five years from the Fund's commencement date. 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. In some cases, the issuer of restricted securities has agreed to register such securities for resale, at the issuer's expense either upon demand by the Fund or in connection with another registered offering of the securities. Many restricted securities may be resold in the secondary market in transactions exempt from registration. Such restricted securities may be determined to be liquid under criteria established by the Board of Directors. The Fund will not incur any registration costs upon such resales. The Fund's restricted securities are valued at the price provided by dealers in the secondary market or, if no market prices are available, at the fair value as determined by the Fund's pricing committee. Additional information on each restricted security held at April 30, 1996 is as follows:
ACQUISITION SECURITY ACQUISITION DATE COST --------------------------------------------------- ----------------- ----------------- Florida State Board of Education Administration, Weekly VRDNs 12/28/95 $ 3,000,000
CONCENTRATION OF CREDIT RISK--Since the Fund invests a substantial portion of its assets in issuers located in Florida and Virginia, it will be more susceptible to factors adversely affecting issuers of those states 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, 1996, 71.6% of the portfolio securities which were issued in the states of Florida and Virginia 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 from any one institution or agency did not exceed 12.6% of total investments. USE OF ESTIMATES--The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ from those estimated. OTHER--Investment transactions are accounted for on the trade date. FLORIDA 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) for each class of shares. At April 30, 1996, capital paid-in aggregated $320,328,833. Transactions in shares were as follows:
SIX MONTHS YEAR ENDED ENDED OCTOBER 31, INSTITUTIONAL SHARES APRIL 30, 1996 1995 - ---------------------------------------------------------- -------------- --------------- Shares sold 1,270,008,267 1,361,774,097 - ---------------------------------------------------------- Shares issued to shareholders in payment of distributions declared 2,246,668 2,166,363 - ---------------------------------------------------------- Shares redeemed (1,132,422,498) (1,264,560,129) - ---------------------------------------------------------- -------------- --------------- Net change resulting from Institutional share transactions 139,832,437 99,380,331 - ---------------------------------------------------------- -------------- ---------------
SIX MONTHS ENDED APRIL 30, CASH II SHARES 1996(A) - ------------------------------------------------------------------------------ ------------ Shares sold 260,182,877 - ------------------------------------------------------------------------------ Shares issued to shareholders in payment of distributions declared -- - ------------------------------------------------------------------------------ Shares redeemed (233,032,999) - ------------------------------------------------------------------------------ ----------- Net change resulting from Cash II share transactions 27,149,878 - ------------------------------------------------------------------------------ ----------- Net change resulting from share transactions 166,982,315 - ------------------------------------------------------------------------------ -----------
(a) For the period from November 17, 1995 (date of initial public investment) to April 30, 1996. (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 0.40% of the Fund's average daily net assets. The Adviser may voluntarily choose to waive any portion of its fee. The Adviser can modify or terminate this voluntary waiver at any time at its sole discretion. ADMINISTRATIVE FEE--Federated Services Company ("FServ"), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. The fee paid to FServ is based on 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 Administra- FLORIDA MUNICIPAL CASH TRUST - -------------------------------------------------------------------------------- tive 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 net assets of the Fund to finance activities intended to result in the sale of the Fund's Institutional and Cash II shares. The Plan provides that the Fund may incur distribution expenses of up to 0.25% of average daily net assets of Institutional and Cash II shares, annually, to 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. For the six months ended April 30, 1996, the Institutional Shares did not incur a distribution services fee. SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to 0.25% of daily average net assets of the Fund's Institutional and Cash II Shares for the period. The fee paid to FSS is used to finance certain services for shareholders and to maintain shareholder accounts. FSS may voluntarily choose to waive any portion of its fee. FSS can modify or terminate this voluntary waiver at any time at its sole discretion. TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--FServ, through its subsidiary, Federated Shareholder Services Company serves as transfer and dividend disbursing agent for the Fund. The fee paid to FServ is based on the size, type, and number of accounts and transactions made by shareholders. PORTFOLIO ACCOUNTING FEES--FServ maintains the Fund's accounting records for which it receives a fee. The fee is based on the level of the Fund's average daily net assets for the period, plus out-of-pocket expenses. 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 effective date. For the period ended April 30, 1996, the Fund paid $1,068 pursuant to this agreement. INTERFUND TRANSACTIONS--During the period ended April 30, 1996, the Fund engaged in purchase and sale transactions with funds that have a common investment adviser (or affiliated investment advisers), common Directors/Trustees, and/or common Officers. These purchase and sale transactions were made at current market value pursuant to Rule 17a-7 under the Act amounting to $667,370,345 and $879,315,000, respectively. GENERAL--Certain of the Officers and Trustees of the Fund 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. Executive Vice President Edward L. Flaherty, Jr. Edward C. Gonzales Glen R. Johnson Executive Vice President Peter E. Madden John W. McGonigle Gregor F. Meyer Executive Vice President and Secretary John E. Murray, Jr. Richard B. Fisher Wesley W. Posvar Vice President Marjorie P. Smuts David M. Taylor Treasurer Charles H. Field 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. PRESIDENT'S MESSAGE Dear Shareholder: I am pleased to present the Semi-Annual Report to Shareholders of Georgia Municipal Cash Trust, a portfolio of Federated Municipal Trust, which covers the six-month period from November 1, 1995, through April 30, 1996. The report begins with a discussion with the fund's portfolio manager, followed by a complete listing of the fund's holdings and its financial statements. The fund is a convenient way to put your ready cash to work pursuing double- tax-free income - free from federal regular income tax and Georgia income tax* - through a portfolio concentrated in high-quality, short-term Georgia municipal securities. As a shareholder, you have the opportunity to earn a greater after-tax yield than you could in a comparable high-quality taxable investment. Of course, the fund also brings you the added benefits of daily liquidity and stability of principal.** During the report period, the fund paid double-tax-free dividends of $0.02 per share. Its total net assets of $114.5 million were spread among Georgia securities that use municipal bond financing for projects as varied as health care, housing, community development, and transportation. You can count on Georgia Municipal Cash Trust to seek the best tax-free income opportunities for your cash investment needs. As always, we will continue to provide you with the highest level of professional service. We invite your questions or comments. Sincerely, Glen R. Johnson President June 15, 1996 * Income may be subject to the federal alternative minimum tax. ** 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. An investment in the fund is neither insured nor guaranteed by the U.S. government. INVESTMENT REVIEW An Interview with Fund Portfolio Manager, Jeff A. Kozemchak, C.F.A. Q Can you comment on the economy and the interest rate environment during the semi-annual reporting period? A The Federal Reserve Board (the "Fed") eased monetary policy twice over the six-month reporting period ending in April 1996. Faced with slowing economic growth and benign inflationary pressures, the Fed lowered the federal funds target rate from 5.75% to 5.50% in late December 1995, and again from 5.50% to the current 5.25% at the end of January 1996. For the December 1995 move, the Fed cited a better-than-expected inflation outlook as the impetus behind the easing, although a sluggish manufacturing sector and lackluster consumer spending was thought to have had an influence. In January 1996, the Fed appeared swayed by the dampening effects of high debt loads and employment uncertainty on consumer consumption along with sluggish export growth. Through this period, the short-end of the government and municipal yield curves anticipated the policy moves from the Fed, and amid signs of a weakening economy looked forward to additional eases in the not too distant future. February and March of 1996, however, brought about a shift in market psychology regarding both the extent and direction of changes in monetary policy by the Fed. Recovering from the harsh winter weather and spurred onward by lower interest rates, the housing market and consumer spending breathed some life into the economy, which had seemed on the verge of recession earlier in the year. The market was then stunned in early March 1996 by the report of a 705,000 increase in non-farm payroll jobs for February 1996 - the largest increase in 12 years - which caused the yields on short-term securities to rise by as much as 25 basis points. Now confronted with a more robust economy than previously thought, market participants have moved expectations toward a more neutral policy from the Fed in the near term with a possible tightening, or increase in rates, later in 1996. Yields on short-term government securities reflected this rather volatile mood in the markets. The yield on the three-month Treasury bill began November 1995 at 5.48%, declined to 4.89% by mid-February 1996, and ended April 1996 at 5.14%. Correspondingly, the yield on the one-year Treasury bill began November 1995 at 5.46%, fell to 4.79% in mid-February 1996, but rose to 5.62% by the end of April 1996. Q How has the fund's yield responded to this interest rate environment? A The fund's yield was affected by Fed policy (interest rate cuts), changes in market expectations, as well as supply and demand imbalances unique to the municipal money markets. However, because of these imbalances, the fund's yield may experience more volatility on a weekly basis than Treasury yields and taxable money fund yields. In general, yields on municipal money market funds were lower over the reporting period. For the fund, the seven-day net yield* of the shares on April 30, 1996 was 3.49% compared to 3.82% six months earlier. * Performance quoted represents past performance and is not indicative of future results. Yield will vary. Q What was your strategy for managing the fund over the semi-annual reporting period? A The fund started the reporting period with an average maturity of 47 days, reflecting a neutral to bullish outlook on the direction of interest rates. Our bias over the period was to extend the average maturity of the fund, a task made more difficult due to significant asset growth over the reporting period and low supply of available fixed-rate notes and bonds. As a result, the fund's average maturity ranged from 40 to 60 days during the six-month reporting period. By April 30, 1996, the average maturity was 40 days, reflecting our assessment of more neutral to restrictive Fed policy for the balance of 1996. Q What is your outlook for the near future? A With growth of 2.3% in the first quarter of 1996, the economy appears to be on firmer footing than it was in the fourth quarter of 1995, when gross domestic product grew at only 0.5%. As a result, the Fed should not feel the urgency to lower short-term rates further. By the same token, however, with areas of softness in the economy still evident and with consumer indebtedness at very high levels, there also appears to be no danger of the economy overheating in the near term. As long as inflation remains benign, the Fed should be content to sit on the sidelines until confronted with signs of undue strength or considerable weakness in economic growth. The average maturity of the fund will continue to be managed in accordance with our expectation for a stable monetary policy in the near term. Nevertheless, opportunities for average maturity extension will arise as the supply of fixed-rate notes in the municipal market increases significantly in June and July of 1996. This spike in supply may present opportunities to "lock-in" yields which are attractive relative to comparable maturity taxable securities. As a result, we expect the average maturity of the fund to be slightly longer throughout the summer months. GEORGIA MUNICIPAL CASH TRUST PORTFOLIO OF INVESTMENTS APRIL 30, 1996 (UNAUDITED)
PRINCIPAL CREDIT AMOUNT RATING* VALUE SHORT-TERM MUNICIPALS-99.2% GEORGIA-99.2% $1,000,000 Athens, GA Water & Sewer District, (Series A), 7.60% Bonds (United States Treasury PRF), 1/1/1997 (@102) NR(1) $ 1,047,692 5,000,000 Athens-Clarke County, GA IDA, (Series 1988), 3.35% CP (Rhone Merieux, Inc. Project)/(Societe Generale, Paris LOC), Mandatory Tender 5/16/1996 VMIG1 5,000,000 1,600,000 Atlanta, GA, Urban Residential Finance Authority, Multifamily Housing Revenue Bonds (Series 1995) Weekly VRDNs (West End Housing Development Project)/(First Union National Bank, Charlotte, NC LOC) A-1 1,600,000 4,800,000 Atlanta, GA, Urban Residential Finance Authority, Multifamily Rental Housing Revenue Refunding Bonds (Series 1988A), 3.75% TOBs (West Paces Club Towers Project)/(Sanwa Bank Ltd, Osaka LOC), Optional Tender 5/1/1996 A-1 4,800,000 3,980,000 Brunswick, GA, Housing Authority, (Series S93) Weekly VRDNs (Island Square Apartments)/(Columbus Bank and Trust Co., GA LOC) A-1 3,980,000 3,400,000 Burke County, GA Development Authority, (Series 1992A), 3.30% CP (Oglethorpe Power Corp.)/(Credit Suisse, Zurich LOC), Mandatory Tender 5/23/1996 A-1+ 3,400,000 2,050,000 Carrolton, GA Payroll Development Authority, (Series 1993) Weekly VRDNs (Sunox, Inc. Project)/(First Union National Bank, Charlotte, NC LOC) P-1 2,050,000 2,155,000 Cherokee County, GA Development Authority, IDRB Weekly VRDNs (Morrison Products, GA)/(Society National Bank, Cleveland, OH LOC) P-1 2,155,000 3,500,000 Clayton County, GA Development Authority, (Series 1994) Weekly VRDNs (Lear Seating Corp.)/(Chemical Bank, New York LOC) P-1 3,500,000 1,900,000 Cobb County, GA IDA, IDRB (Series 1995) Weekly VRDNs (Consolidated Engineering Company, Inc. Project)/(Nationsbank of Georgia, N.A. LOC) A-1 1,900,000
GEORGIA MUNICIPAL CASH TRUST
PRINCIPAL CREDIT AMOUNT RATING* VALUE SHORT-TERM MUNICIPALS-CONTINUED GEORGIA-CONTINUED $1,170,000 Columbia County, GA Development Authority, (Series 1991) Weekly VRDNs (Augusta Sportswear, Inc.)/ (Wachovia Bank of Georgia NA, Atlanta LOC) Aa2 $ 1,170,000 3,800,000 Columbus, GA IDA Industrial & Port Development Commission, (Series 1992) Weekly VRDNs (Maine Street Village Partnership)/(Columbus Bank and Trust Co., GA LOC) A-1 3,800,000 1,455,000 Columbus, GA IDA, (Series 90B) Weekly VRDNs (R. P. Real Estate, Inc.)/(Columbus Bank and Trust Co., GA LOC) A-1 1,455,000 6,000,000 Crisp County, GA Development Authority, (Series B), 4.30% TOBs (Masonite Corporation)/(International Paper Co. GTD), Optional Tender 9/1/1996 A-2 6,000,000 1,775,000 De Kalb County, GA Development Authority, (Series 1992) Weekly VRDNs (House of Cheatham, Inc. Project)/ (Nationsbank of Georgia, N.A. LOC) P-1 1,775,000 600,000 De Kalb County, GA Development Authority, (Series 1993) Weekly VRDNs (Pet, Inc.)/(PNC Bank, N.A. LOC) P-1 600,000 2,950,000 Douglas County, GA School District, 3.75% TANs, 12/31/1996 NR 2,959,582 1,000,000 Floyd County, GA, (Series 1996), 3.49% TANs, 12/31/1996 NR 1,000,579 1,200,000 Forsythe County, GA Development Authority, (Series 1989) Weekly VRDNs (Cross Systems, Inc. Project)/ (Meridian Bank, Reading, PA LOC) P-1 1,200,000 1,000,000 Forsythe County, GA Development Authority, IDRB (Series 1995) Weekly VRDNs (American BOA, Inc. Project)/(Dresdner Bank Ag, Frankfurt LOC) Aaa 1,000,000 4,400,000 Franklin County, GA Industrial Building Authority, (Series 1995) Weekly VRDNs (Bosal Industries, Inc.)/ (ABN AMRO Bank N.V., Amsterdam LOC) A-1+ 4,400,000 2,000,000 Fulco, GA Hospital Authority, (Series 1989), 4.00% CP (St. Joseph's Hospital of Atlanta)/(SunTrust Bank, Atlanta LOC), Mandatory Tender 5/17/1996 VMIG1 2,000,000
GEORGIA MUNICIPAL CASH TRUST
PRINCIPAL CREDIT AMOUNT RATING* VALUE SHORT-TERM MUNICIPALS-CONTINUED GEORGIA-CONTINUED $1,000,000 Fulton County, GA Building Authority, 8.20% Bonds (United States Treasury PRF), 1/1/1997 (@102) Aaa $ 1,050,177 2,335,000 Fulton County, GA Housing Authority, Multifamily Housing Revenue Bonds (Series 1993) Weekly VRDNs (Provence North Apartments Project)/(Federal Home Loan Bank of Atlanta LOC) A-1+ 2,335,000 5,115,000 Georgia State HFA, (Series 1990C), 3.80% TOBs (First National Bank of Chicago LIQ), Optional Tender 6/1/1996 NR(2) 5,115,000 4,000,000 Georgia State Municipal Gas Authority, Gas Revenue Bonds (Series D), 3.20% CP (Wachovia Bank of NC, NA, Winston-Salem LOC), Mandatory Tender 6/10/1996 A-1+ 4,000,000 2,000,000 Georgia State, 7.25% Bonds, 9/1/1996 Aaa 2,022,189 1,000,000 Georgia State, GO UT Bonds (Series C), 6.50% Bonds, 7/1/1996 Aaa 1,005,358 1,000,000 Glynn County, GA, 3.60% TANs, 12/31/1996 NR 1,001,294 4,000,000 Gwinnett County, GA IDA Daily VRDNs (Volvo)/ (Union Bank of Switzerland, Zurich LOC) NR 4,000,000 1,000,000 Gwinnett County, GA School District, UT GO (Series B), 5.45% Bonds, 2/1/1997 AA+ 1,014,268 2,000,000 Gwinnett County, GA, Certificates of Participation Water & Sewer, 7.75% Bonds, 8/1/1996 AA+ 2,018,928 3,375,000 Jackson County, GA IDA, (Series 1996) Weekly VRDNs (Buhler Quality Yarns Corporation Project)/(Union Bank of Switzerland, Zurich LOC) P-1 3,375,000 3,180,000 La Grange, GA, Multifamily Housing Authority, Revenue Bonds, 4.25% TOBs (Lee's Crossing Project Phase II)/(Barnett Bank of Jacksonville LOC), Optional Tender 5/1/1996 A-1 3,180,000 3,000,000 La Grange, GA, Multifamily Housing Authority, Revenue Bonds, 4.25% TOBs (Lee's Crossing Project Phase I)/(Barnett Bank of Jacksonville LOC), Optional Tender 5/1/1996 A-1 3,000,000
GEORGIA MUNICIPAL CASH TRUST
PRINCIPAL CREDIT AMOUNT RATING* VALUE SHORT-TERM MUNICIPALS-CONTINUED GEORGIA-CONTINUED $ 880,000 Macon-Bibb County, GA Industrial Authority, IDRB (Series 1990) Weekly VRDNs (Diamond Plastics Corporation Project)/(Nationsbank, N.A. (North Carolina) LOC) A-1 $ 880,000 1,280,000 Macon-Bibb County, GA Urban Development Authority, Refunding Revenue Bonds (Series 1995) Weekly VRDNs (Macon Hotel Investors Project)/(NBD Bank, Michigan LOC) AA 1,280,000 1,400,000 Marietta, GA Housing Authority, Multifamily Housing Revenue Bonds (Series 1995) Weekly VRDNs (Chalet Apartments Project)/(General Electric Capital Corp. LOC) P-1 1,400,000 2,200,000 Metropolitan Atlanta Rapid Transit Authority, Tender Option Custodial Receipts (BT-70), 3.80% TOBs (AMBAC INS)/(Bankers Trust Co., New York LIQ), Mandatory Tender 10/3/1996 Aaa 2,200,000 1,600,000 Municipal Electric Authority of Georgia, (Series 1985A), 3.25% CP (Bayerische Landesbank Girozentrale, Credit Suisse, Zurich and Morgan Guaranty Trust Co., New York LOCs), Mandatory Tender 5/14/1996 A-1+ 1,600,000 3,000,000 Municipal Electric Authority of Georgia, (Series 1994B), 3.25% CP (ABN AMRO Bank N.V., Amsterdam LOC), Mandatory Tender 5/14/1996 A-1+ 3,000,000 1,000,000 Rockdale County, GA Development Authority, (Series 1995) Weekly VRDNs (Great Southern Wood Preserving Co.)/(SunTrust Bank, Central Florida LOC) P-1 1,000,000 5,700,000 Savannah, GA EDA, (Series 1995A) Weekly VRDNs (Home Depot, Inc.) A-1 5,700,000 1,700,000 Savannah, GA Housing Authority, Multifamily Housing Revenue Bonds (Series 1985 B) Weekly VRDNs (Somerset Wharf Project)/(Amsouth Bank N.A., Birmingham LOC) A-1 1,700,000 1,000,000 Wayne County, GA, IDA, Revenue Bonds, (Series 1995) Weekly VRDNs (Harsco Corp.)/(Nationsbank, N.A. (North Carolina) LOC) A-1 1,000,000
GEORGIA MUNICIPAL CASH TRUST
PRINCIPAL CREDIT AMOUNT RATING* VALUE SHORT-TERM MUNICIPALS-CONTINUED GEORGIA-CONTINUED $ 4,000,000 Whitfield County, GA Development Authority Weekly VRDNs (Franklin Industries Inc., Project)/(Nationsbank of Virginia, N.A. LOC) P-1 $ 4,000,000 TOTAL INVESTMENTS (AT AMORTIZED COST)(A) $ 113,670,067
Securities that are subject to alternative minimum tax represent 58.6% of the portfolio as calculated based upon total portfolio market value. (a) Also represents cost for federal tax purposes. * Please refer to the Appendix of the Statement of Additional Information for an explanation of the credit ratings. Note: The categories of investments are shown as a percentage of net assets ($114,535,290) at April 30, 1996. The following acronym(s) are used throughout this portfolio: AMBAC - American Municipal Bond Assurance Corporation CP - Commercial Paper EDA - Economic Development Authority GO - General Obligation GTD - Guaranty HFA - Housing Finance Authority IDA - Industrial Development Authority IDRB - Industrial Development Revenue Bond INS - Insured LIQ - Liquidity Agreement LOCs - Letter(s) of Credit LOC - Letter of Credit PRF - Prerefunded 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) GEORGIA MUNICIPAL CASH TRUST STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1996 (UNAUDITED) ASSETS: Total investments in securities, at amortized cost and value $ 113,670,067 Cash 354,802 Income receivable 811,983 Deferred expenses 22,800 Total assets 114,859,652 LIABILITIES: Income distribution payable $ 279,604 Accrued expenses 44,758 Total liabilities 324,362 Net Assets for 114,535,290 shares outstanding $ 114,535,290 NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE: $114,535,290/114,535,290 shares outstanding $1.00
(See Notes which are an integral part of the Financial Statements) GEORGIA MUNICIPAL CASH TRUST STATEMENT OF OPERATIONS SIX MONTHS ENDED APRIL 30, 1996 (UNAUDITED) INVESTMENT INCOME: Interest $ 2,006,222 EXPENSES: Investment advisory fee $ 261,070 Administrative personnel and services fee 62,171 Custodian fees 12,657 Transfer and dividend disbursing agent fees and expenses 11,009 Directors'/Trustees' fees 766 Auditing fees 4,383 Legal fees 967 Portfolio accounting fees 21,504 Shareholder services fee 130,535 Share registration costs 12,617 Printing and postage 5,535 Insurance premiums 2,036 Miscellaneous 2,326 Total expenses 527,576 Waivers and reimbursements - Waiver of investment advisory fee $ (261,070) Waiver of shareholder services fee (15,030) Reimbursement of other operating expenses (28,478) Total waivers and reimbursements (304,578) Net expenses 222,998 Net investment income $ 1,783,224
(See Notes which are an integral part of the Financial Statements) GEORGIA MUNICIPAL CASH TRUST STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED (UNAUDITED) YEAR ENDED APRIL 30, OCTOBER 31, 1996 1995(A) INCREASE (DECREASE) IN NET ASSETS: OPERATIONS - Net investment income $ 1,783,224 $ 663,846 DISTRIBUTIONS TO SHAREHOLDERS - Distributions from net investment income (1,783,224) (663,846) SHARE TRANSACTIONS- Proceeds from sale of shares 342,571,393 276,631,071 Net asset value of shares issued to shareholders in payment of distributions declared 736,761 363,049 Cost of shares redeemed (340,050,487) (165,716,497) Change in net assets resulting from share transactions 3,257,667 111,277,623 Change in net assets 3,257,667 111,277,623 NET ASSETS: Beginning of period 111,277,623 - End of period $ 114,535,290 $ 111,277,623
* For the period from August 22, 1995 (date of initial public investment) to October 31, 1995. (See Notes which are an integral part of the Financial Statements) GEORGIA MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED (UNAUDITED) PERIOD ENDED APRIL 30, OCTOBER 31, 1996 1995(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) 1.70% 0.73% RATIOS TO AVERAGE NET ASSETS Expenses 0.43%* 0.25%* Net investment income 3.42%* 3.81%* Expense waiver/reimbursement(c) 0.58%* 0.75%* SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $114,535 $111,278
* Computed on an annualized basis. (a) Reflects operations for the period from August 22, 1995 (date of initial public investment) to October 31, 1995. (b) Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable. (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) GEORGIA MUNICIPAL CASH TRUST NOTES TO FINANCIAL STATEMENTS APRIL 30, 1996 (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 fifteen portfolios. The financial statements included herein are only those of Georgia Municipal Cash Trust (the "Fund"), a non-diversified portfolio. The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. The investment objective of the Fund is current income exempt from federal regular income tax and the income tax imposed by the State of Georgia consistent with stability of principal and liquidity. 2. SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with generally accepted accounting principles. 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. 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 over a period of five years from the Fund's commencement 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, 1996, 84.4% 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 from any one institution or agency did not exceed 8.1% of total investments. GEORGIA MUNICIPAL CASH TRUST USE OF ESTIMATES-The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ from those estimated. OTHER-Investment transactions are accounted for on 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, 1996, capital paid-in aggregated $114,535,290. Transactions in shares were as follows:
SIX MONTHS ENDED PERIOD ENDED APRIL 30, OCTOBER 31, 1996 1995(A) Shares sold 342,571,393 276,631,071 Shares issued to shareholders in payment of distributions declared 736,761 363,049 Shares redeemed (340,050,487) (165,716,497) Net change resulting from share transactions 3,257,667 111,277,623
(a) Reflects operations for the period from August 22, 1995 (date of initial public investment) to October 31, 1995. 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 0.50% of the Fund's average daily net assets. The Adviser may voluntarily choose to waive any portion of its fee and/or reimburse 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 Services Company ("FServ"), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. The fee paid to FServ 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. GEORGIA 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 0.25% of average daily net assets of the Fund for the period. The fee paid to FSS is used to finance certain services for shareholders and to maintain shareholder accounts. FSS may voluntarily choose to waive any portion of its fee. FSS can modify or terminate this voluntary waiver at any time at its sole discretion. TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES-FServ, through its subsidiary, Federated Shareholder Services Company serves as transfer and dividend disbursing agent for the Fund. The fee paid to FServ is based on the size, type, and number of accounts and transactions made by shareholders. PORTFOLIO ACCOUNTING FEES-FServ maintains the Fund's accounting records for which it receives a fee. The fee is based on the level of the Fund's average daily net assets for the period, plus out-of-pocket expenses. ORGANIZATIONAL EXPENSES-Organizational expenses of $13,648 were borne initially by Adviser. The Fund has agreed to reimburse the Adviser for the organizational expenses during the five-year period following effective date. For the period ended April 30, 1996, the Fund paid $531 pursuant to this agreement. INTERFUND TRANSACTIONS-During the period ended April 30, 1996, the Fund engaged in purchase and sale transactions with funds that have a common investment adviser (or affiliated investment advisers), common Directors/Trustees, and/or common Officers. These purchase and sale transactions were made at current market value pursuant to Rule 17a-7 under the Act amounting to $181,425,000 and $234,029,429, 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. Executive Vice President Edward L. Flaherty, Jr. Edward C. Gonzales Glen R. Johnson Executive Vice President Peter E. Madden John W. McGonigle Gregor F. Meyer Executive Vice President and Secretary John E. Murray, Jr. Richard B. Fisher Wesley W. Posvar Vice President Marjorie P. Smuts David M. Taylor Treasurer Charles H. Field 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. Georgia Municipal Cash Trust Semi-Annual Report To Shareholders April 30, 1996 Federated Investors Federated Investors Tower Pittsburgh, PA 15222-3779 Federated Securities Corp. is the distributor of the fund and is a subsidiary of Federated Investors. Cusip 314229691 G01478-01 (6/96) 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, which covers the six-month period from November 1, 1995 through April 30, 1996. The report begins with a discussion with the fund's portfolio manager, followed by a complete listing of the fund's holdings and its financial statements. The fund is a convenient way to put your ready cash to work pursuing double-tax-free income--free from federal regular income tax and Maryland personal income tax*--through a portfolio concentrated in high-quality, short-term Maryland municipal securities. As a shareholder, you have the opportunity to earn a greater after-tax yield than you could in a comparable high-quality taxable investment. Of course, the fund also brings you the added benefits of daily liquidity and stability of principal.** During the report period, the fund paid double-tax-free dividends of $0.02 per share. Its total net assets of $47.7 million were spread among Maryland securities that use municipal bond financing for projects as varied as health care, housing, community development, and transportation. You can count on Maryland Municipal Cash Trust to seek the best tax-free income opportunities for your cash. As always, we will continue to provide you with the highest level of professional service. We appreciate your support and invite your questions or comments. Sincerely, LOGO Glen R. Johnson President June 15, 1996 * Income may be subject to the federal alternative minimum tax. ** 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. An investment in the fund is neither insured nor guaranteed by the U.S. government. INVESTMENT REVIEW - -------------------------------------------------------------------------------- An Interview with Fund Portfolio Manager, Jeff A. Kozemchak, C.F.A. Q Can you comment on the economy and the interest rate environment during the semi-annual reporting period? A The Federal Reserve Board (the "Fed") eased monetary policy twice over the six-month reporting period ending in April 1996. Faced with slowing economic growth and benign inflationary pressures, the Fed lowered the federal funds target rate from 5.75% to 5.50% in late December 1995, and again from 5.50% to the current 5.25% at the end of January 1996. For the December 1995 move, the Fed cited a better-than-expected inflation outlook as the impetus behind the easing, although a sluggish manufacturing sector and lackluster consumer spending was thought to have had an influence. In January 1996, the Fed appeared swayed by the dampening effects of high debt loads and employment uncertainty on consumer consumption along with sluggish export growth. Through this period, the short-end of the government and municipal yield curves anticipated the policy moves from the Fed, and amid signs of a weakening economy looked forward to additional eases in the not too distant future. February and March of 1996, however, brought about a shift in market psychology regarding both the extent and direction of changes in monetary policy by the Fed. Recovering from the harsh winter weather and spurred onward by lower interest rates, the housing market and consumer spending breathed some life into the economy, which had seemed on the verge of recession earlier in the year. The market was then stunned in early March 1996 by the report of a 705,000 increase in non-farm payroll jobs for February 1996--the largest increase in 12 years--which caused the yields on short-term securities to rise by as much as 25 basis points. Now confronted with a more robust economy than previously thought, market participants have moved expectations toward a more neutral policy from the Fed in the near term with a possible tightening, or increase in rates, later in 1996. Yields on short-term government securities reflected this rather volatile mood in the markets. The yield on the three-month Treasury bill began November 1995 at 5.48%, declined to 4.89% by mid-February 1996, and ended April 1996 at 5.14%. Correspondingly, the yield on the one-year Treasury bill began November 1995 at 5.46%, fell to 4.79% in mid-February 1996, but rose to 5.62% by the end of April 1996. Q How has the fund's yield responded to this interest rate environment? A The fund's yield was affected by Fed policy (interest rate cuts), changes in market expectations, as well as supply and demand imbalances unique to the municipal money markets. However, because of these imbalances, the fund's yield may experience more volatility on a weekly basis than Treasury yields and taxable money fund yields. In general, yields on municipal money market funds were lower over the reporting period. However, the fund's seven-day net yield* was 3.37% on April 30, 1996 versus 3.33% on November 1, 1995. * Performance quoted represents past performance and is not indicative of future results. Yield will vary. - -------------------------------------------------------------------------------- Q What was your strategy for managing the fund over the semi-annual reporting period? A The fund started the reporting period with an average maturity of 66 days, which is considered a neutral to slightly bullish outlook on short-term interest rates. Because of the lack of readily available fixed-rate notes and bonds in Maryland, and the change in sentiment regarding the direction of interest rates, we allowed the average maturity to roll inward over the period to a low of approximately 41 days in mid-April. At the end of the reporting period, the average maturity was 43 days, reflecting our assessment of more neutral to restrictive Fed policy for the balance of 1996. Q What is your outlook for the near future? A With growth of 2.3% in the first quarter of 1996, the economy appears to be on firmer footing than it was in the fourth quarter of 1995, when gross domestic product grew at only 0.5%. As a result, the Fed should not feel the urgency to lower short-term rates further. By the same token, however, with areas of softness in the economy still evident and with consumer indebtedness at very high levels, there also appears to be no danger of the economy overheating in the near term. As long as inflation remains benign, the Fed should be content to sit on the sidelines until confronted with signs of undue strength or considerable weakness in economic growth. The average maturity of the fund will continue to be managed in accordance with our expectation for a stable monetary policy in the near term. Nevertheless, opportunities for average maturity extension will arise as the supply of fixed-rate notes in the municipal market increases significantly in June and July of 1996. This spike in supply may present opportunities to "lock-in" yields which are attractive relative to comparable maturity taxable securities. As a result, we anticipate the average maturity of the fund could be slightly longer throughout the summer months. MARYLAND MUNICIPAL CASH TRUST PORTFOLIO OF INVESTMENTS APRIL 30, 1996 (UNAUDITED) - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ----------- --------------------------------------------------------- ------- ----------- SHORT-TERM MUNICIPALS--99.2% - --------------------------------------------------------------------------- MARYLAND--96.2% --------------------------------------------------------- $ 1,000,000 Anne Arundel County, MD, EDRB (Series 1988), 3.35% CP (Baltimore Gas & Electric Co.), Mandatory Tender 8/8/1996 A-1 $ 1,000,000 --------------------------------------------------------- 1,500,000 Anne Arundel County, MD, EDRB (Series 1988), 3.50% CP (Baltimore Gas & Electric Co.), Mandatory Tender 5/16/1996 A-1 1,500,000 --------------------------------------------------------- 2,000,000 Anne Arundel County, MD, EDRB (Series 1996) Weekly VRDNs (Atlas Container Corporation Project)/(Mellon Bank NA, Pittsburgh LOC) P-1 2,000,000 --------------------------------------------------------- 1,475,000 Baltimore County, MD IDA, (Series 1994A) Weekly VRDNs (Pitts Realty Limited Partnership)/(PNC Bank, NA, Delaware LOC) P-1 1,475,000 --------------------------------------------------------- 1,900,000 Baltimore County, MD Metropolitan District, Special Assessment Bonds-63rd Issue, 5.70% Bonds, 7/1/1996 Aaa 1,905,744 --------------------------------------------------------- 1,700,000 Baltimore County, MD Port Facility Monthly VRDNs (Occidental Petroleum Corp.)/(Morgan Guaranty Trust Co., New York LOC) A-1+ 1,700,000 --------------------------------------------------------- 1,700,000 Baltimore County, MD, Revenue Bonds (1994 Issue) Weekly VRDNs (Direct Marketing Associates, Inc. Facility)/(First National Bank of Maryland, Baltimore LOC) A-1 1,700,000 --------------------------------------------------------- 1,000,000 Baltimore, MD PCR Weekly VRDNs (SCM Plants, Inc.)/ (Barclays Bank PLC, London LOC) A-1+ 1,000,000 --------------------------------------------------------- 800,000 Baltimore, MD, (Series 1988) Weekly VRDNs (Cherill Associated Facility)/(Nationsbank of Maryland, N.A. LOC) P-1 800,000 --------------------------------------------------------- 1,500,000 Cecil County, MD, County Commissioners EDRB (Series 1988S) Weekly VRDNs (Williams Mobile Offices, Inc.)/ (First National Bank of Maryland, Baltimore LOC) A-1 1,500,000 --------------------------------------------------------- 910,000 Elkton, MD, Revenue Refunding Bonds (Series 1992) Weekly VRDNs (Highway Service Ventures, Inc. Facility)/(First Union National Bank, Charlotte, N.C. LOC) A-1 910,000 ---------------------------------------------------------
MARYLAND MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ----------- --------------------------------------------------------- ------- ----------- SHORT-TERM MUNICIPALS--CONTINUED - --------------------------------------------------------------------------- $ 1,500,000 Frederick County, MD, Revenue Bonds (Series 1995) Weekly VRDNs (Sheppard Pratt Residential Treatment Facility)/(Societe Generale, Paris LOC) P-1 $ 1,500,000 --------------------------------------------------------- 3,141,000 Hartford County, MD, (Series 1989) Weekly VRDNs (Hartford Commons Associates Facility)/(Nationsbank of Virginia, N.A. LOC) P-1 3,141,000 --------------------------------------------------------- 1,200,000 Maryland Health & Higher Educational Facilities Authority, (Series 1985B) Weekly VRDNs (First National Bank of Chicago LOC) VMIG1 1,200,000 --------------------------------------------------------- 1,300,000 Maryland Health & Higher Educational Facilities Authority, Revenue Bonds (Series 1985A) Weekly VRDNs (First National Bank of Chicago LOC) VMIG1 1,300,000 --------------------------------------------------------- 1,000,000 Maryland Health & Higher Educational Facilities Authority, Revenue Bonds (Series 1992B) Weekly VRDNs (North Arundel Hospital)/(Mellon Bank NA, Pittsburgh LOC) VMIG1 1,000,000 --------------------------------------------------------- 1,750,000 Maryland State Community Development Administration, (Second Series), 3.55% TOBs, Mandatory Tender 10/1/1996 AA 1,750,000 --------------------------------------------------------- 1,000,000 Maryland State Community Development Administration, (Series 1990B) Weekly VRDNs (Cherry Hill Apartment Ltd.)/(Nationsbank of Maryland, N.A. LOC) P-1 1,000,000 --------------------------------------------------------- 2,000,000 Maryland State Energy Financing Administration, Annual Tender Solid Waste Disposal Revenue Refunding Bonds, 4.30% TOBs (Nevamar Corp.)/(International Paper Co. GTD), Optional Tender 9/1/1996 A-2 2,000,000 --------------------------------------------------------- 3,000,000 Maryland State Energy Financing Administration, IDRB (Series 1988) Weekly VRDNs (Morningstar Foods, Inc.)/ (Nationsbank of Texas, N.A. LOC) P-1 3,000,000 --------------------------------------------------------- 1,400,000 Maryland State IDFA, Economic Development Revenue Refunding Bonds (Series 1994) Weekly VRDNs (Johnson Controls, Inc.) VMIG1 1,400,000 --------------------------------------------------------- 1,000,000 Montgomery County, MD EDA Weekly VRDNs (Howard Hughes Medical Center) A-1+ 1,000,000 ---------------------------------------------------------
MARYLAND MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ----------- --------------------------------------------------------- ------- ----------- SHORT-TERM MUNICIPALS--CONTINUED - --------------------------------------------------------------------------- $ 1,600,000 Montgomery County, MD EDA Weekly VRDNs (U.S. Pharmacopeial Convention Facility)/(Chemical Bank, New York LOC) VMIG1 $ 1,600,000 --------------------------------------------------------- 1,500,000 Montgomery County, MD Housing Opportunities Commission, (Series 1996 C), 3.70% TOBs, Mandatory Tender 3/17/1997 VMIG1 1,500,000 --------------------------------------------------------- 1,000,000 Montgomery County, MD Housing Opportunities Commission, Multifamily Housing Revenue Bonds (1995 Series B), 3.90% BANs, 11/14/1996 MIG1 1,000,000 --------------------------------------------------------- 2,000,000 Montgomery County, MD, Unlimited GO's, 9.20% Bonds, 6/1/1996 NR(1) 2,008,984 --------------------------------------------------------- 1,100,000 Prince George's County, MD, IDRB (Series 1993), 4.00% TOBs (International Paper Co.)/(International Paper Co. GTD), Optional Tender 7/15/1996 A-2 1,100,000 --------------------------------------------------------- 1,500,000 University of Maryland, Revolving Equipment Loan Program (Series A) Weekly VRDNs (Student Loan Marketing Association LIQ) A-1+ 1,500,000 --------------------------------------------------------- 1,135,000 Washington Suburban Sanitation District, MD, General Construction GO Bonds, 4.50% Bonds, 6/1/1996 Aa1 1,135,745 --------------------------------------------------------- 2,260,000 Wicomico County, MD, EDRB (Series 1994) Weekly VRDNs (Field Container Co. L.P.)/(Northern Trust Co., Chicago, IL LOC) A-1+ 2,260,000 --------------------------------------------------------- ----------- Total 45,886,473 --------------------------------------------------------- -----------
MARYLAND MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ----------- --------------------------------------------------------- ------- ----------- SHORT-TERM MUNICIPALS--CONTINUED - --------------------------------------------------------------------------- PUERTO RICO--2.9% --------------------------------------------------------- $ 1,400,000 Puerto Rico Industrial, Medical & Environmental PCA, (Series 1983A), 3.75% TOBs (Reynolds Metals Co.)/ (ABN AMRO Bank N.V., Amsterdam LOC), Optional Tender 9/1/1996 A-1+ $ 1,400,000 --------------------------------------------------------- ----------- TOTAL INVESTMENTS, AT AMORTIZED COST(A) $47,286,473 --------------------------------------------------------- -----------
Securities that are subject to Alternative Minimum Tax represent 51% of the portfolio as calculated based upon total portfolio market value. * Please refer to the Appendix of the Statement of Additional Information for an explanation of the credit ratings. Current credit ratings are unaudited. (a) Also represents cost for federal tax purposes. Note: The categories of investments are shown as a percentage of net assets ($47,681,650) at April 30, 1996. The following acronym(s) are used throughout this portfolio: BANs -- Bond Anticipation Notes CP -- Commercial Paper EDA -- Economic Development Authority EDRB -- Economic Development Revenue Bonds GO -- General Obligation GTD -- Guaranty IDA -- Industrial Development Authority IDRB -- Industrial Development Revenue Bond IDFA -- Industrial Development Finance Authority LIQ -- Liquidity Agreement LOC -- Letter of Credit PCA -- Pollution Control Authority PCR -- Pollution Control Revenue PLC -- Public Limited Company TOBs -- Tender Option Bonds VRDNs -- Variable Rate Demand Notes
(See Notes which are an integral part of the Financial Statements.) MARYLAND MUNICIPAL CASH TRUST STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1996 (UNAUDITED) - -------------------------------------------------------------------------------- ASSETS: - -------------------------------------------------------------------------------- Total investments in securities, at amortized cost and value $47,286,473 - -------------------------------------------------------------------------------- Cash 102,493 - -------------------------------------------------------------------------------- Income receivable 391,253 - -------------------------------------------------------------------------------- Deferred expenses 21,244 - -------------------------------------------------------------------------------- ----------- Total assets 47,801,463 - -------------------------------------------------------------------------------- LIABILITIES: - -------------------------------------------------------------------------------- Income distribution payable $112,579 - --------------------------------------------------------------------- Accrued expenses 7,234 - --------------------------------------------------------------------- -------- Total liabilities 119,813 - -------------------------------------------------------------------------------- ----------- NET ASSETS for 47,681,650 shares outstanding $47,681,650 - -------------------------------------------------------------------------------- ----------- NET ASSET VALUE, Offering Price and Redemption Proceeds Per Share: - -------------------------------------------------------------------------------- $47,681,650 / 47,681,650 shares outstanding $1.00 - -------------------------------------------------------------------------------- -----------
(See Notes which are an integral part of the Financial Statements) MARYLAND MUNICIPAL CASH TRUST STATEMENT OF OPERATIONS SIX MONTHS ENDED APRIL 30, 1996 (UNAUDITED) - -------------------------------------------------------------------------------- INVESTMENT INCOME: - ------------------------------------------------------------------------------------- Interest $813,928 - ------------------------------------------------------------------------------------- EXPENSES: - ------------------------------------------------------------------------------------- Investment advisory fee $106,891 - ------------------------------------------------------------------------- Administrative personnel and services fee 62,249 - ------------------------------------------------------------------------- Custodian fees 8,481 - ------------------------------------------------------------------------- Transfer and dividend disbursing agent fees and expenses 10,674 - ------------------------------------------------------------------------- Directors'/Trustees' fees 1,168 - ------------------------------------------------------------------------- Auditing fees 6,374 - ------------------------------------------------------------------------- Legal fees 1,688 - ------------------------------------------------------------------------- Portfolio accounting fees 17,683 - ------------------------------------------------------------------------- Shareholder services fee 53,446 - ------------------------------------------------------------------------- Share registration costs 12,202 - ------------------------------------------------------------------------- Printing and postage 5,920 - ------------------------------------------------------------------------- Insurance premiums 2,300 - ------------------------------------------------------------------------- Miscellaneous 4,166 - ------------------------------------------------------------------------- -------- Total expenses 293,242 - ------------------------------------------------------------------------- Waivers and reimbursements-- - ------------------------------------------------------------------------- Waiver of investment advisory fee $(106,891) - ------------------------------------------------------------- Waiver of shareholder services fee (2,138) - ------------------------------------------------------------- Reimbursement of other operating expenses (44,313) - ------------------------------------------------------------- --------- Total waivers and reimbursements (153,342) - ------------------------------------------------------------------------- -------- Net expenses 139,900 - ------------------------------------------------------------------------------------- -------- Net investment income $674,028 - ------------------------------------------------------------------------------------- --------
(See Notes which are an integral part of the Financial Statements) MARYLAND MUNICIPAL CASH TRUST STATEMENT OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
SIX MONTHS ENDED (UNAUDITED) YEAR ENDED APRIL 30, 1996 OCTOBER 31, 1995 ----------------- ----------------- INCREASE (DECREASE) IN NET ASSETS: - --------------------------------------------------- OPERATIONS-- - --------------------------------------------------- Net investment income $ 674,028 $ 1,952,599 - --------------------------------------------------- ------------- ------------- DISTRIBUTIONS TO SHAREHOLDERS-- - --------------------------------------------------- Distributions from net investment income (674,028) (1,952,599) - --------------------------------------------------- ------------- ------------- SHARE TRANSACTIONS-- - --------------------------------------------------- Proceeds from sale of shares 57,113,391 180,327,160 - --------------------------------------------------- Net asset value of shares issued to shareholders in payment of distributions declared 534,102 1,800,625 - --------------------------------------------------- Cost of shares redeemed (61,366,037) (187,002,830) - --------------------------------------------------- ------------- ------------- Change in net assets resulting from share transactions (3,718,544) (4,875,045) - --------------------------------------------------- ------------- ------------- Change in net assets (3,718,544) (4,875,045) - --------------------------------------------------- NET ASSETS: - --------------------------------------------------- Beginning of period 51,400,194 56,275,239 - --------------------------------------------------- ------------- ------------- End of period $ 47,681,650 $ 51,400,194 - --------------------------------------------------- ------------- ------------- (See Notes which are an integral part of the Financial Statements) MARYLAND MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
YEAR ENDED OCTOBER SIX MONTHS ENDED 31, (UNAUDITED) ------------------ APRIL 30, 1996 1995 1994(A) ----------------- ------- ------- NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 - ---------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS - ---------------------------------------------------- Net investment income 0.02 0.03 0.01 - ---------------------------------------------------- ------ ------ ------ LESS DISTRIBUTIONS - ---------------------------------------------------- Distributions from net investment income (0.02) (0.03) (0.01) - ---------------------------------------------------- ------ ------ ------ NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 - ---------------------------------------------------- ------ ------ ------ TOTAL RETURN(B) 1.56% 3.36% 1.30% - ---------------------------------------------------- RATIOS TO AVERAGE NET ASSETS - ---------------------------------------------------- Expenses 0.65%* 0.65% 0.46%* - ---------------------------------------------------- Net investment income 3.15%* 3.30% 2.68%* - ---------------------------------------------------- Expense waiver/reimbursement(c) 0.72%* 0.50% 0.53%* - ---------------------------------------------------- SUPPLEMENTAL DATA - ---------------------------------------------------- Net assets, end of period (000 omitted) $47,682 $51,400 $56,275 - ----------------------------------------------------
* Computed on an annualized basis. (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 charge or contingent deferred sales charge, if applicable. (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) MARYLAND MUNICIPAL CASH TRUST NOTES TO FINANCIAL STATEMENTS APRIL 30, 1996 (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 fifteen portfolios. The financial statements included herein are only those of Maryland Municipal Cash Trust (the "Fund"), a non-diversified portfolio. The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. The investment objective of the Fund is current income exempt from federal regular income tax and the income tax imposed by the state of Maryland consistent with stability of principal. (2) SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with generally accepted accounting principles. 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. 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 over a period of five years from the Fund's commencement date. MARYLAND MUNICIPAL CASH TRUST - -------------------------------------------------------------------------------- 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 associated with such factors, at April 30, 1996, 66.8% 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 from any one institution or agency did not exceed 6.6% of total investments. USE OF ESTIMATES--The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ from those estimated. OTHER--Investment transactions are accounted for on 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, 1996, capital paid-in aggregated $47,681,650. Transactions in shares were as follows:
SIX MONTHS ENDED YEAR ENDED APRIL 30, 1996 OCTOBER 31, 1995 ----------------- ----------------- - --------------------------------------------------- Shares sold 57,113,391 180,327,160 - --------------------------------------------------- Shares issued to shareholders in payment of distributions declared 534,102 1,800,625 - --------------------------------------------------- Shares redeemed (61,366,037) (187,002,830) - --------------------------------------------------- ----------- ------------ Net change resulting from shares transactions (3,718,544) (4,875,045) - --------------------------------------------------- ----------- ------------
(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 0.50% of the Fund's average daily net assets. The Adviser may voluntarily choose to waive any portion of its fee and/or reimburse 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 Services Company ("FServ"), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. The fee paid to FServ 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 MARYLAND MUNICIPAL CASH TRUST - -------------------------------------------------------------------------------- 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 0.25% of daily average net assets of the Fund shares for the period. The fee paid to FSS is used to finance certain services for shareholders and to maintain shareholder accounts. FSS may voluntarily choose to waive any portion of its fee. FSS can modify or terminate this voluntary waiver at any time at its sole discretion. TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--FServ, through its subsidiary, Federated Shareholder Services Company serves as transfer and dividend disbursing agent for the Fund. The fee paid to FServ is based on the size, type, and number of accounts and transactions made by shareholders. PORTFOLIO ACCOUNTING FEES--FServ maintains the Fund's accounting records for which it receives a fee. The fee is based on the level of the Fund's average daily net assets for the period, plus out-of-pocket expenses. ORGANIZATIONAL EXPENSES--Organizational expenses of $14,446 and start-up administrative service expenses of $31,506 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 effective date. For the period ended April 30, 1996, the Fund paid $1,242 and $3,326, respectively, pursuant to this agreement. INTERFUND TRANSACTIONS--During the period ended April 30, 1996, the Fund engaged in purchase and sale transactions with funds that have a common investment adviser (or affiliated investment advisers), common Directors/Trustees, and/or common Officers. These purchase and sale transactions were made at current market value pursuant to Rule 17a-7 under the Act amounting to $37,900,000 and $34,400,000, 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. Executive Vice President Edward L. Flaherty, Jr. Edward C. Gonzales Glen R. Johnson Executive Vice President Peter E. Madden John W. McGonigle Gregor F. Meyer Executive Vice President and Secretary John E. Murray, Jr. Richard B. Fisher Wesley W. Posvar Vice President Marjorie P. Smuts David M. Taylor Treasurer Charles H. Field 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. - ----------------------------------------------------------------------------- MARYLAND - ----------------------------------------------------------------------------- MUNICIPAL - ----------------------------------------------------------------------------- CASH - ----------------------------------------------------------------------------- TRUST - ----------------------------------------------------------------------------- SEMI-ANNUAL REPORT TO SHAREHOLDERS - ----------------------------------------------------------------------------- APRIL 30, 1996 [LOGO OF FEDERATED INVESTORS] Federated Investors Tower Pittsburgh, PA 15222-3779 Federated Securities Corp. is the distributor of the fund and a subsidiary of Federated Investors. Cusip 314229774 G01175-01 (6/96) [RECYCLED LOGO] - -------------------------------------------------------------------------------- MICHIGAN - -------------------------------------------------------------------------------- MUNICIPAL - -------------------------------------------------------------------------------- CASH - -------------------------------------------------------------------------------- TRUST - -------------------------------------------------------------------------------- SEMI-ANNUAL REPORT TO SHAREHOLDERS April 30, 1996 FEDERATED INVESTORS (LOGO) - --------------------------------------------- Distributor A subsidiary of FEDERATED INVESTORS FEDERATED INVESTORS TOWER PITTSBURGH, PA 15222-3779 Cusip 314229667 Cusip 314229725 G01456-02 (6/96) PRESIDENT'S MESSAGE - -------------------------------------------------------------------------------- Dear Shareholder: I am pleased to present the Semi-Annual Report to Shareholders of Michigan Municipal Cash Trust, a portfolio of Federated Municipal Trust, which covers the six-month period from November 1, 1995 through April 30, 1996. The report begins with a discussion with the fund's portfolio manager, followed by a complete listing of the fund's holdings and its financial statements. Financial highlights tables are provided for the fund's Institutional Shares and Institutional Service Shares. The fund is a convenient way to put your ready cash to work pursuing double-tax-free income--free from federal regular income tax and Michigan personal income tax *--through a portfolio concentrated in high-quality, short-term Michigan municipal securities. As a shareholder, you have the opportunity to earn a greater after-tax yield than you could in a comparable high-quality taxable investment. Of course, the fund also brings you the added benefits of daily liquidity and stability of principal.** During the report period, the fund paid double-tax-free dividends of $0.005 per share for Institutional Shares $0.02 per share for Institutional Service Shares. The fund's total net assets of $70.7 million were spread among Michigan securities that use municipal bond financing for projects as varied as health care, housing, community development, and transportation. You can count on Michigan Municipal Cash Trust to seek the best tax-free income opportunities for your cash investment needs. As always, we will strive to provide you with the highest level of professional service. We invite your questions or comments. Sincerely, LOGO Glen R. Johnson President June 15, 1996 * Income may be subject to the federal alternative minimum tax. ** 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. An investment in the fund is neither insured nor guaranteed by the U.S. government. INVESTMENT REVIEW - -------------------------------------------------------------------------------- An Interview with Fund Portfolio Manager, Jeff A. Kozemchak, C.F.A. Q Can you comment on the economy and the interest rate environment during the semi-annual reporting period? A The Federal Reserve Board (the "Fed") eased monetary policy twice over the six-month reporting period ending in April 1996. Faced with slowing economic growth and benign inflationary pressures, the Fed lowered the federal funds target rate from 5.75% to 5.50% in late December 1995, and again from 5.50% to the current 5.25% at the end of January 1996. For the December 1995 move, the Fed cited a better-than-expected inflation outlook as the impetus behind the easing, although a sluggish manufacturing sector and lackluster consumer spending was thought to have had an influence. In January 1996, the Fed appeared swayed by the dampening effects of high debt loads and employment uncertainty on consumer consumption along with sluggish export growth. Through this period, the short-end of the government and municipal yield curves anticipated the policy moves from the Fed, and amid signs of a weakening economy looked forward to additional eases in the not too distant future. February and March of 1996, however, brought about a shift in market psychology regarding both the extent and direction of changes in monetary policy by the Fed. Recovering from the harsh winter weather and spurred onward by lower interest rates, the housing market and consumer spending breathed some life into the economy, which had seemed on the verge of recession earlier in the year. The market was then stunned in early March 1996 by the report of a 705,000 increase in non-farm payroll jobs for February 1996--the largest increase in twelve years--which caused the yields on short-term securities to rise by as much as 25 basis points. Now confronted with a more robust economy than previously thought, market participants have moved expectations toward a more neutral policy from the Fed in the near term with a possible tightening, or increase in rates, later in 1996. Yields on short-term government securities reflected this rather volatile mood in the markets. The yield on the three-month Treasury bill began November 1995 at 5.48%, declined to 4.89% by mid-February 1996, and ended April 1996 at 5.14%. Correspondingly, the yield on the one-year Treasury bill began November 1995 at 5.46%, fell to 4.79% in mid-February 1996, but rose to 5.62% by the end of April 1996. Q How has the fund's yield responded to this interest rate environment? A The fund's yield was affected by Fed policy (interest rate cuts), changes in market expectations, as well as supply and demand imbalances unique to the municipal money markets. However, because of these imbalances, the fund's yield may experience more volatility on a weekly basis than Treasury yields and taxable money fund yields. In general, yields on municipal money market funds were lower over the period. The seven-day net yield* of the fund's Institutional Shares on April 30, 1996 was 3.63% which is equivalent to a taxable yield of 6.29% for Michigan investors subject to the highest federal and state tax rates. * Performance quoted represents past performance and is not indicative of future results. Yield will vary. - -------------------------------------------------------------------------------- The seven-day net yield* of the fund's Institutional Service Shares on April 30, 1996 was 3.50% which is equivalent to a taxable yield of 6.06% for Michigan investors subject to the highest federal and state tax rates. Q What was your strategy for managing the fund over the semi-annual reporting period? A The fund started the reporting period with an average maturity of 64 days, which is somewhat bullish. We allowed the fund's average maturity to roll inward over the reporting period due to uneven supply of Michigan fixed-rate notes and bonds and due to a change in sentiment regarding the direction of interest rates. At the end of the reporting period, the average maturity was 28 days, reflecting our assessment of more neutral to restrictive Fed policy for the balance of 1996. Going forward, we will continue to monitor the overall interest rate environment, the economic outlook for the State, and supply factors as prime indicators of appropriate fund strategy. Q What is your outlook for rates in the near future? A With growth of 2.3% in the first quarter of 1996, the economy appears to be on firmer footing than it was in the fourth quarter of 1995, when gross domestic product grew at only 0.5%. As a result, the Fed should not feel the urgency to lower short-term rates further. By the same token, however, with areas of softness in the economy still evident and with consumer indebtedness at very high levels, there also appears to be no danger of the economy overheating in the near term. As long as inflation remains benign, the Fed should be content to sit on the sidelines until confronted with signs of undue strength or considerable weakness in economic growth. The average maturity of the fund will continue to be managed in accordance with our expectation for a stable monetary policy in the near term. * Performance quoted represents past performance and is not indicative of future results. Yield will vary. MICHIGAN MUNICIPAL CASH TRUST PORTFOLIO OF INVESTMENTS APRIL 30, 1996 (UNAUDITED) - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ---------- ------------------------------------------------------- --------- ----------- SHORT-TERM MUNICIPALS--99.3% - ------------------------------------------------------------------------- MICHIGAN--97.9% ------------------------------------------------------- $1,000,000 Auburn Hills, MI EDC, Limited Obligation Multi-Option Revenue Bonds (Series 1995) Weekly VRDNs (Suburban Tool, Inc.)/(Huntington National Bank, Columbus, OH LOC) P-1 $ 1,000,000 ------------------------------------------------------- 2,909,000 Battle Creek, MI Economic Development Corporation, Ltd. Obligation Economic Development Revenue Refunding Bonds (Series 1992) Weekly VRDNs (Michigan Carton & Paperboard Company)/(American National Bank, Chicago LOC) P-1 2,909,000 ------------------------------------------------------- 1,580,000 Bedford Township, MI Economic Development Corp., EDRB (Series 1985) Weekly VRDNs (Form-Tech Steel, Inc.)/ (Society National Bank, Cleveland, OH LOC) P-1 1,580,000 ------------------------------------------------------- 1,400,000 Bruce Township, MI Hospital Finance Authority, Adjustable Rate Tender Securities (Series 1988B), 3.70% TOBs (Sisters of Charity Health Care System)/(MBIA INS)/(Morgan Guaranty Trust Co., New York LIQ), Optional Tender 5/1/1996 VMIG1 1,400,000 ------------------------------------------------------- 900,000 Clinton Twp, MI EDA, Tender Securities Weekly VRDNs (Sisters of Charity Health Care System)/(MBIA INS)/ (Morgan Guaranty Trust Co., New York LIQ) A-1+ 900,000 ------------------------------------------------------- 1,100,000 Cornell, MI Economic Development Corp., Industrial Development Revenue Refunding Bonds (Series 1990), 3.80% CP (Mead-Escanaba Paper Co. Project)/(Credit Suisse, Zurich LOC), Mandatory Tender 5/30/1996 A-1+ 1,100,000 ------------------------------------------------------- 850,000 Dearborn, MI Economic Development Corp., (Series 1990) Weekly VRDNs (Exhibit Productions, Inc. Project)/(First of America Bank -- Illinois LOC) P-1 850,000 ------------------------------------------------------- 1,650,000 Dearborn, MI Economic Development Corp., (Series 1991) Weekly VRDNs (Oakbrook Common)/(Mellon Bank NA, Pittsburgh LOC) A-1 1,650,000 -------------------------------------------------------
MICHIGAN MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ---------- ------------------------------------------------------- --------- ----------- SHORT-TERM MUNICIPALS--CONTINUED - ------------------------------------------------------------------------- $1,000,000 Delta County, MI Economy Development Corp., Environmental Improvement Revenue Refunding Bonds (Series 1985 A), 3.15% CP (Mead-Escanaba Paper Co. Project)/(Swiss Bank Corp., Basle LOC), Mandatory Tender 5/9/1996 P-1 $ 1,000,000 ------------------------------------------------------- 1,000,000 Delta County, MI Economy Development Corp., Environmental Improvement Revenue Refunding Bonds (Series 1985 A), 3.25% CP (Mead-Escanaba Paper Co. Project)/(Swiss Bank Corp., Basle LOC), Mandatory Tender 5/9/1996 P-1 1,000,000 ------------------------------------------------------- 2,000,000 Delta County, MI Economy Development Corp., Environmental Improvement Revenue Refunding Bonds (Series 1985 B), 3.05% CP (Mead-Escanaba Paper Co. Project)/(Union Bank of Switzerland, Zurich LOC), Mandatory Tender 5/8/1996 P-1 2,000,000 ------------------------------------------------------- 1,450,000 Kalamazoo, MI Economic Development Corp., 1995 Limited Obligation Revenue Refunding Bonds Weekly VRDNs (Wyndham Project, MI)/(First of America Bank -Illinois LOC) A-1 1,450,000 ------------------------------------------------------- 1,300,000 Melvindale, MI, GO UT, 3.90% TANs, 8/15/1996 NR(3) 1,300,721 ------------------------------------------------------- 2,800,000 Michigan Higher Education Student Loan Authority, Refunding Revenue Bonds (Series X11-B) Weekly VRDNs (AMBAC INS)/(Kredietbank N.V., Brussels LIQ) P-1 2,800,000 ------------------------------------------------------- 3,100,000 Michigan Job Development Authority, Limited Obligation Revenue Bonds Weekly VRDNs (Andersons Project) /(Credit Lyonnais, Paris LOC) P-2 3,100,000 ------------------------------------------------------- 1,000,000 Michigan Municipal Bond Authority, (Series 1995C), 4.50% RANs, 9/6/1996 SP-1+ 1,001,848 ------------------------------------------------------- 1,000,000 Michigan Municipal Bond Authority, 4.50% RANs, 7/3/1996 SP-1+ 1,001,247 ------------------------------------------------------- 2,000,000 Michigan State Building Authority, (Series 1), 3.50% CP (Canadian Imperial Bank of Commerce, Toronto LOC), Mandatory Tender 5/7/1996 A-1+ 2,000,000 -------------------------------------------------------
MICHIGAN MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ---------- ------------------------------------------------------- --------- ----------- SHORT-TERM MUNICIPALS--CONTINUED - ------------------------------------------------------------------------- $ 310,000 Michigan State Hospital Finance Authority, (Series 1994) Weekly VRDNs (Mt. Clemens General Hospital)/(Comerica Bank, Detroit, MI LOC) VMIG1 $ 310,000 ------------------------------------------------------- 1,000,000 Michigan State Hospital Finance Authority, (Series A) Weekly VRDNs (OSF Health Care Systems) VMIG1 1,000,000 ------------------------------------------------------- 2,000,000 Michigan State Hospital Finance Authority, Hospital Equipment Loan Program Bonds (Series A) Weekly VRDNs (First of America Bank -- Michigan LOC) VMIG1 2,000,000 ------------------------------------------------------- 1,105,000 Michigan State Hospital Finance Authority, Hospital Revenue Refunding Bonds (Series 1995), 4.00% Bonds (Port Huron Hospital Obligated Group)/(FSA INS), 7/1/1996 NR(1) 1,105,621 ------------------------------------------------------- 1,000,000 Michigan State Housing Development Authority, Revenue Bonds (Series A), 3.60% CP (Sanwa Bank Ltd., Osaka LOC), Mandatory Tender 5/10/1996 A-1 1,000,000 ------------------------------------------------------- 2,000,000 Michigan State Housing Development Authority, (Series 1990 B CR-71), 3.50% TOBs, Optional Tender 6/1/1996 NR(2) 2,000,000 ------------------------------------------------------- 1,500,000 Michigan State Trunk Line, Refunding Bonds (Series B), 4.00% Bonds (FGIC INS), 11/15/1996 NR(1) 1,501,956 ------------------------------------------------------- 2,000,000 Michigan State, GO UT Notes, 4.00% TRANs, 9/30/1996 SP-1+ 2,004,766 ------------------------------------------------------- 1,445,000 Michigan State, Recreation Program (Series 1992), 4.85% Bonds, 11/1/1996 NR(2) 1,452,036 ------------------------------------------------------- 5,620,000 Michigan State, Strategic Fund (Series 1991) Weekly VRDNs (AGA Gas, Inc.)/(Svenska Handelsbanken, Stockholm LOC) P-1 5,620,000 ------------------------------------------------------- 2,000,000 Michigan State, Strategic Fund Weekly VRDNs (Tesco Engineering)/(Bank of Tokyo-Mitsubishi Ltd., LOC) VMIG1 2,000,000 ------------------------------------------------------- 1,000,000 Michigan Strategic Fund, (Series 1995) Weekly VRDNs (Rood Industries, Inc. Project)/(NBD Bank, Michigan LOC) A-1+ 1,000,000 ------------------------------------------------------- 1,100,000 Michigan Strategic Fund, Limited Obligation Revenue Bonds (Series 1991) Weekly VRDNs (Martin Luther Memorial Home, Inc.)/(National Australia Bank, Ltd., Melbourne LOC) A-1 1,100,000 -------------------------------------------------------
MICHIGAN MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ---------- ------------------------------------------------------- --------- ----------- SHORT-TERM MUNICIPALS--CONTINUED - ------------------------------------------------------------------------- $4,200,000 Michigan Strategic Fund, Limited Obligation Revenue Bonds (Series 1995) Weekly VRDNs (Bear Lake Associates Project)/(Old Kent Bank & Trust Co., Grand Rapids LOC) P-1 $ 4,200,000 ------------------------------------------------------- 1,000,000 Michigan Strategic Fund, Limited Obligation Revenue Bonds (Series 1995) Weekly VRDNs (Hercules Drawn Steel Corporation Project)/(Society National Bank, Cleveland, OH LOC) P-1 1,000,000 ------------------------------------------------------- 1,050,000 Michigan Strategic Fund, Limited Obligation Revenue Bonds (Series 1995) Weekly VRDNs (RSR Project)/(Old Kent Bank & Trust Co., Grand Rapids LOC) A-1 1,050,000 ------------------------------------------------------- 6,000,000 Michigan Strategic Fund, Limited Obligation Revenue Bonds (Series 1995) Weekly VRDNs (United Waste Systems, Inc.)/(Bank of America Illinois LOC) A-1 6,000,000 ------------------------------------------------------- 1,000,000 Michigan Strategic Fund, Limited Obligation Revenue Bonds (Series 1996) Weekly VRDNs (ACI Properties, L.L.C. Project)/(Comerica Bank LOC) A-1 1,000,000 ------------------------------------------------------- 2,000,000 Michigan Strategic Fund, Ltd. Obligations PCRs, (Series 1993) Weekly VRDNs (Allied-Signal, Inc.) A-1 2,000,000 ------------------------------------------------------- 995,000 Michigan Strategic Fund, Obligation Revenue Bonds (Series 1995) Weekly VRDNs (Rowe Thomas Company Project)/(Comerica Bank, Detroit, MI LOC) P-1 995,000 ------------------------------------------------------- 2,300,000 Michigan Strategic Fund, Obligation Revenue Bonds (Series 1995) Weekly VRDNs (Wayne Disposal-Oakland, Inc. Project)/(Comerica Bank, Detroit, MI LOC) A-1 2,300,000 ------------------------------------------------------- 500,000 Ottawa County, MI Economic Development Corp., Limited Obligation Revenue Bonds (Series 1995B) Weekly VRDNs (Sunset Manor, Inc. Project)/(Old Kent Bank & Trust Co., Grand Rapids LOC) A-1 500,000 ------------------------------------------------------- ----------- Total 69,182,195 ------------------------------------------------------- -----------
MICHIGAN MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ---------- ------------------------------------------------------- --------- ----------- SHORT-TERM MUNICIPALS--CONTINUED - ------------------------------------------------------------------------- VIRGIN ISLANDS--1.4% ------------------------------------------------------- $1,000,000 Virgin Islands HFA, Single Family Mortgage Revenue Refunding Bonds (1995 Series B), 3.50% TOBs (FGIC INS), Mandatory Tender 11/1/1996 VMIG1 $ 1,000,000 ------------------------------------------------------- ----------- TOTAL INVESTMENTS (AT AMORTIZED COST)(A) $70,182,195 ------------------------------------------------------- -----------
Securities that are subject to Alternative Minimum Tax represent 49.0% of the portfolio as calculated based upon total portfolio market value. (a) Also represents cost for federal tax purposes. * Please refer to the Appendix of the Statement of Additional Information for an explanation of the credit ratings. Current credit ratings are unaudited. Note: The categories of investments are shown as a percentage of net assets ($70,687,291) at April 30, 1996. The following acronyms are used throughout this portfolio: AMBAC -- American Municipal Bond Assurance Corporation CP -- Commercial Paper EDA -- Economic Development Authority EDC -- Economic Development Commission EDRB -- Economic Development Revenue Bonds FGIC -- Financial Guaranty Insurance Company FSA -- Financial Security Assurance GO -- General Obligation HFA -- Housing Finance Authority INS -- Insured LIQ -- Liquidity Agreement LOC -- Letter of Credit MBIA -- Municipal Bond Investors Assurance PCR -- Pollution Control Revenue RANs -- Revenue Anticipation Notes TANs -- Tax Anticipation Notes TOBs -- Tender Option Bonds TRANs -- Tax and Revenue Anticipation Notes UT -- Unlimited Tax VRDNs -- Variable Rate Demand Notes
(See Notes which are an integral part of the Financial Statements) MICHIGAN MUNICIPAL CASH TRUST STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1996 (UNAUDITED) - -------------------------------------------------------------------------------- ASSETS: - -------------------------------------------------------------------------------- Total investments in securities, at amortized cost and value $70,182,195 - -------------------------------------------------------------------------------- Cash 210,103 - -------------------------------------------------------------------------------- Income receivable 456,264 - -------------------------------------------------------------------------------- Deferred expenses 29,498 - -------------------------------------------------------------------------------- ----------- Total assets 70,878,060 - -------------------------------------------------------------------------------- LIABILITIES: - -------------------------------------------------------------------------------- Income distribution payable $161,944 - --------------------------------------------------------------------- Accrued expenses 28,825 - --------------------------------------------------------------------- -------- Total liabilities 190,769 - -------------------------------------------------------------------------------- ----------- NET ASSETS for 70,687,291 shares outstanding $70,687,291 - -------------------------------------------------------------------------------- ----------- NET ASSET VALUE, Offering Price and Redemption Proceeds Per Share: - -------------------------------------------------------------------------------- INSTITUTIONAL SERVICE SHARES: - -------------------------------------------------------------------------------- $64,406,673 / 64,406,673 shares outstanding $1.00 - -------------------------------------------------------------------------------- ----------- INSTITUTIONAL SHARES: - -------------------------------------------------------------------------------- $6,280,618 / 6,280,618 shares outstanding $1.00 - -------------------------------------------------------------------------------- -----------
(See Notes which are an integral part of the Financial Statements) MICHIGAN MUNICIPAL CASH TRUST STATEMENT OF OPERATIONS SIX MONTHS ENDED APRIL 30, 1996 (UNAUDITED) - -------------------------------------------------------------------------------- INVESTMENT INCOME: - ------------------------------------------------------------------------------------- Interest $926,500 - ------------------------------------------------------------------------------------- EXPENSES: - ------------------------------------------------------------------------------------- Investment advisory fee $ 123,792 - ------------------------------------------------------------------------ Administrative personnel and services fee 65,504 - ------------------------------------------------------------------------ Custodian fees 8,797 - ------------------------------------------------------------------------ Transfer and dividend disbursing agent fees and expenses 13,121 - ------------------------------------------------------------------------ Directors'/Trustees' fees 507 - ------------------------------------------------------------------------ Auditing fees 4,258 - ------------------------------------------------------------------------ Legal fees 972 - ------------------------------------------------------------------------ Portfolio accounting fees 22,776 - ------------------------------------------------------------------------ Shareholder services fee-Institutional Service Shares 59,512 - ------------------------------------------------------------------------ Shareholder services fee-Institutional Shares 2,314 - ------------------------------------------------------------------------ Share registration costs 24,766 - ------------------------------------------------------------------------ Printing and postage 5,546 - ------------------------------------------------------------------------ Insurance premiums 2,706 - ------------------------------------------------------------------------ Miscellaneous 1,651 - ------------------------------------------------------------------------ --------- Total expenses 336,222 - ------------------------------------------------------------------------ Waivers and reimbursements-- - ------------------------------------------------------------------------ Waiver of investment advisory fee $(123,792) - ------------------------------------------------------------ Waiver of shareholder services fee-Institutional Service Shares (28,566) - ------------------------------------------------------------ Waiver of shareholder services fee-Institutional Shares (2,314) - ------------------------------------------------------------ Reimbursement of other operating expenses (58,584) - ------------------------------------------------------------ --------- Total waivers and reimbursements (213,256) - ------------------------------------------------------------------------ --------- Net expenses 122,966 - ------------------------------------------------------------------------------------- -------- Net investment income $803,534 - ------------------------------------------------------------------------------------- --------
(See Notes which are an integral part of the Financial Statements) MICHIGAN MUNICIPAL CASH TRUST STATEMENT OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
SIX MONTHS ENDED PERIOD ENDED (UNAUDITED) OCTOBER 31, APRIL 30, 1996 1995(A) ---------------- ------------------ INCREASE (DECREASE) IN NET ASSETS: - ----------------------------------------------------- OPERATIONS-- - ----------------------------------------------------- Net investment income $ 803,534 $ 235,600 - ----------------------------------------------------- ------------ ------------ DISTRIBUTIONS TO SHAREHOLDERS-- - ----------------------------------------------------- Distributions from net investment income - ----------------------------------------------------- Institutional Service Shares (772,459) (235,600) - ----------------------------------------------------- Institutional Shares (31,075) -- - ----------------------------------------------------- ------------ ------------ Change in net assets resulting from distributions to shareholders (803,534) (235,600) - ----------------------------------------------------- ------------ ------------ SHARE TRANSACTIONS-- - ----------------------------------------------------- Proceeds from sale of shares 111,661,388 41,468,554 - ----------------------------------------------------- Net asset value of shares issued to shareholders in payment of distributions declared 460,415 229,562 - ----------------------------------------------------- Cost of shares redeemed (71,567,785) (11,564,843) - ----------------------------------------------------- ------------ ------------ Change in net assets resulting from share transactions 40,554,018 30,133,273 - ----------------------------------------------------- ------------ ------------ Change in net assets 40,554,018 30,133,273 - ----------------------------------------------------- NET ASSETS: - ----------------------------------------------------- Beginning of period 30,133,273 -- - ----------------------------------------------------- ------------ ------------ End of period $ 70,687,291 $ 30,133,273 - ----------------------------------------------------- ------------ ------------
(a) For the period from June 20, 1995 (date of initial public investment) to October 31, 1995. (See Notes which are an integral part of the Financial Statements) MICHIGAN MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS--INSTITUTIONAL SERVICE SHARES - -------------------------------------------------------------------------------- (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED (UNAUDITED) YEAR ENDED APRIL 30, OCTOBER 31, ----------- ----------- 1996 1995(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) 1.62% 1.35% - ---------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS - ---------------------------------------------------------------- Expenses 0.50%* 0.32%* - ---------------------------------------------------------------- Net investment income 3.24%* 3.67%* - ---------------------------------------------------------------- Expense waiver/reimbursement(c) 0.85%* 1.63%* - ---------------------------------------------------------------- SUPPLEMENTAL DATA - ---------------------------------------------------------------- Net assets, end of period (000 omitted) $64,407 $30,133 - ----------------------------------------------------------------
* Computed on an annualized basis. (a) Reflects operations for the period from June 20, 1995 (date of initial public investment) to October 31, 1995. (b) Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable. (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) MICHIGAN MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES - -------------------------------------------------------------------------------- (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
SIX MONTHS ENDED (UNAUDITED) APRIL 30, 1996(A) ------------------ NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 - ----------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS - ----------------------------------------------------------------- Net investment income 0.005 - ----------------------------------------------------------------- LESS DISTRIBUTIONS - ----------------------------------------------------------------- Distributions from net investment income (0.005) - ----------------------------------------------------------------- ------- NET ASSET VALUE, END OF PERIOD $ 1.00 - ----------------------------------------------------------------- ------- TOTAL RETURN(B) 0.51% - ----------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS - ----------------------------------------------------------------- Expenses 0.38%* - ----------------------------------------------------------------- Net investment income 3.26%* - ----------------------------------------------------------------- Expense waiver/reimbursement(c) 1.08%* - ----------------------------------------------------------------- SUPPLEMENTAL DATA - ----------------------------------------------------------------- Net assets, end of period (000 omitted) $ 6,281 - -----------------------------------------------------------------
* Computed on an annualized basis. (a) Reflects operations for the period from March 2, 1996 (date of initial public investment) to April 30, 1996. (b) Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable. (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). MICHIGAN MUNICIPAL CASH TRUST NOTES TO FINANCIAL STATEMENTS APRIL 30, 1996 (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 fifteen portfolios. The financial statements included herein are only those of Michigan Municipal Cash Trust (the "Fund"), a non-diversified portfolio. The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. The Fund offers two classes of shares: Institutional Service Shares and Institutional Shares. The investment objective of the Fund is current income exempt from federal regular income tax and the personal income tax imposed by the State of Michigan consistent with the stability of principal and liquidity. Effective March 2, 1996 the Fund added Institutional 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. 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 over a period of five years from the Fund's commencement date. MICHIGAN MUNICIPAL CASH TRUST - -------------------------------------------------------------------------------- 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, 1996, 83% 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 from any one institution or agency did not exceed 8.5% of total investments. USE OF ESTIMATES--The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ from those estimated. OTHER--Investment transactions are accounted for on 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. Transactions in shares were as follows: At April 30, 1996, capital paid-in aggregated $70,687,291.
PERIOD ENDED ------------------------------------- APRIL 30, 1996 OCTOBER 31, 1995(A) --------------- ------------------- INSTITUTIONAL SERVICE SHARES SHARES SHARES - ------------------------------------------------------- --------------- ------------------- Shares sold 103,323,266 41,468,554 - ------------------------------------------------------- Shares issued to shareholders in payment of distributions declared 460,415 229,562 - ------------------------------------------------------- Shares redeemed (69,510,280) (11,564,843) - ------------------------------------------------------- ------------ ----------- Net change resulting from Institutional Service share transactions 34,273,401 30,133,273 - ------------------------------------------------------- ------------- -----------
MICHIGAN MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PERIOD ENDED APRIL 30, 1996(B) ------------------- INSTITUTIONAL SHARES SHARES - --------------------------------------------------- ------------------- Shares sold 8,338,122 - --------------------------------------------------- Shares issued to shareholders in payment of distributions declared -- - --------------------------------------------------- Shares redeemed (2,057,505) - --------------------------------------------------- ---------- Net change resulting from Institutional share transactions 6,280,617 - --------------------------------------------------- ---------- Net change resulting from share transactions 40,554,018 - --------------------------------------------------- ----------
(a) For the period from June 20, 1995 (date of initial public investment) to October 31, 1995. (b) For the period from March 2, 1996 (date of initial public investment) to April 30, 1996. (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 0.50% of the Fund's average daily net assets. The Adviser may voluntarily choose to waive any portion of its fee and/or reimburse 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 Services Company ("FServ"), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. The fee paid to FServ 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 0.25% of average daily net assets of the Fund for the period. The fee paid to FSS is used to finance certain services for shareholders and to maintain shareholder accounts. For the period ended April 30, 1996, the Institutional Shares did not incur a shareholder services fee. FSS may voluntarily choose to waive any portion of its fee. FSS can modify or terminate this voluntary waiver at any time at its sole discretion. TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--FServ, through its subsidiary, Federated Shareholder Services Company serves as transfer and dividend disbursing agent for the Fund. The fee paid to FServ is based on the size, type, and number of accounts and transactions made by shareholders. MICHIGAN MUNICIPAL CASH TRUST - -------------------------------------------------------------------------------- PORTFOLIO ACCOUNTING FEES--FServ maintains the Fund's accounting records for which it receives a fee. The fee is based on the level of the Trust's average daily net assets for the period, plus out-of-pocket expenses. ORGANIZATIONAL EXPENSES--Organizational expenses of $18,618 were borne initially by Adviser. The Fund has agreed to reimburse Adviser for the organizational expenses during the five year period following effective date. For the period ended April 30, 1996, the Fund paid $1,034 pursuant to this agreement. INTERFUND TRANSACTIONS--During the period ended April 30, 1996, the Fund engaged in purchase and sale transactions with funds that have a common investment adviser (or affiliated investment advisers), common Directors/Trustees, and/or common Officers. These purchase and sale transactions were made at current market value pursuant to Rule 17a-7 under the Act amounting to $70,130,000 and $58,480,000, 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. Executive Vice President Edward L. Flaherty, Jr. Edward C. Gonzales Glen R. Johnson Executive Vice President Peter E. Madden John W. McGonigle Gregor F. Meyer Executive Vice President and Secretary John E. Murray, Jr. Richard B. Fisher Wesley W. Posvar Vice President Marjorie P. Smuts David M. Taylor Treasurer Charles H. Field 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. 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, which covers the six-month period from November 1, 1995, through April 30, 1996. The report begins with a discussion with the fund's portfolio manager, followed by a complete listing of the fund's holdings and its financial statements. Financial highlights tables are provided for the fund's Institutional Service Shares and Cash II Shares. The fund is a convenient way to put your ready cash to work pursuing triple-tax-free income--free from federal regular income tax, New York state income tax, and New York City local income tax*-- through a portfolio concentrated in high-quality, short-term New York municipal securities. As a shareholder, you have the opportunity to earn a greater after-tax yield than you could in a comparable high-quality taxable investment. Of course, the fund also brings you the added benefits of daily liquidity and stability of principal.** During the report period, the fund paid triple tax-free dividends of $0.02 per share for both Institutional Service Shares and Cash II Shares. The fund's total net assets of $305.8 million were spread among New York securities that use municipal bond financing for projects as varied as health care, housing, community development, and transportation. You can count on New York Municipal Cash Trust to seek the best tax-free income opportunities for your cash investment needs. As always, we will continue to provide you with the highest level of professional service. We invite your questions or comments. Sincerely, Glen R. Johnson President June 15, 1996 *Income may be subject to the federal alternative minimum tax. **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. An investment in the fund is neither insured nor guaranteed by the U.S. government. INVESTMENT REVIEW - -------------------------------------------------------------------------------- An Interview with Fund Portfolio Manager, Jeff A. Kozemchak, C.F.A. Q Can you comment on the economy and the interest rate environment during the semi-annual reporting period? A The Federal Reserve Board (the "Fed") eased monetary policy twice over the six-month reporting period ending in April 1996. Faced with slowing economic growth and benign inflationary pressures, the Fed lowered the federal funds target rate from 5.75% to 5.50% in late December 1995, and again from 5.50% to the current 5.25% at the end of January 1996. For the December 1995 move, the Fed cited a better-than-expected inflation outlook as the impetus behind the easing, although a sluggish manufacturing sector and lackluster consumer spending was thought to have had an influence. In January 1996, the Fed appeared swayed by the dampening effects of high debt loads and employment uncertainty on consumer consumption along with sluggish export growth. Through this period, the short-end of the government and municipal yield curves anticipated the policy moves from the Fed, and amid signs of a weakening economy looked forward to additional eases in the not too distant future. February and March of 1996, however, brought about a shift in market psychology regarding both the extent and direction of changes in monetary policy by the Fed. Recovering from the harsh winter weather and spurred onward by lower interest rates, the housing market and consumer spending breathed some life into the economy, which had seemed on the verge of recession earlier in the year. The market was then stunned in early March 1996 by the report of a 705,000 increase in non-farm payroll jobs for February 1996--the largest increase in 12 years--which caused the yields on short-term securities to rise by as much as 25 basis points. Now confronted with a more robust economy than previously thought, market participants have moved expectations toward a more neutral policy from the Fed in the near term with a possible tightening, or increase in rates, later in 1996. Yields on short-term government securities reflected this rather volatile mood in the markets. The yield on the three-month Treasury bill began November 1995 at 5.48%, declined to 4.89% by mid-February 1996, and ended April 1996 at 5.14%. Correspondingly, the yield on the one-year Treasury bill began November at 5.46%, fell to 4.79% in mid-February 1996, but rose to 5.62% by the end of April 1996. Q How has the fund's yield responded to this interest rate environment? A The fund's yield was affected by Fed policy (interest rate cuts), changes in market expectations, as well as supply and demand imbalances unique to the municipal money markets. However, because of these imbalances, the fund's yield may experience more volatility on a weekly basis than Treasury yields and taxable money fund yields. In general, yields on municipal money - -------------------------------------------------------------------------------- market funds were lower over the reporting period. For the fund, the seven-day net yield* of the Institutional Service Shares on April 30, 1996, was 3.39%, compared to 3.51% at the beginning of the period. For the Cash II Shares, the seven-day net yield* was 3.21% on April 30, 1996 compared to 3.33% on November 1, 1995. Q What was your strategy for managing the fund over the semi-annual reporting period? A The fund started the reporting period with an average maturity of 63 days, reflecting a neutral to slightly bullish outlook on short-term interest rates. Because the supply of attractively priced fixed-rate notes and bonds in New York was readily available, we kept the average maturity of the fund targeted between 55 to 65 days, reflecting the value offered in the marketplace for fixed-rate notes. At the end of the reporting period, the average maturity was 66 days, reflecting tax-related redemptions in April 1996 as well as our assessment of more neutral Fed policy for the balance of 1996. If fixed-rate securities continue to offer relative value when compared to shorter-term overnight or weekly notes, we expect to maintain this average maturity between 55 and 65 days over the near term. Q What is your outlook for the near future? A With growth of 2.3% in the first quarter of 1996, the economy appears to be on firmer footing than it was in the fourth quarter of 1995, when gross domestic product grew at only 0.5%. As a result, the Fed should not feel the urgency to lower short-term rates further. By the same token, however, with areas of softness in the economy still evident and with consumer indebtedness at very high levels, there also appears to be no danger of the economy overheating in the near term. As long as inflation remains benign, the Fed should be content to sit on the sidelines until confronted with signs of undue strength or considerable weakness in economic growth. The average maturity of the fund will continue to be managed in accordance with our expectation for a stable monetary policy in the near term. Nevertheless, opportunities for average maturity extension will arise as the supply of fixed-rate notes in the municipal market increases significantly in June and July of 1996. This spike in supply may present opportunities to 'lock-in' yields which are attractive relative to comparable maturity taxable securities. As a result, we expect the average maturity of the fund to be slightly longer throughout the summer months. *Performance quoted represents past performance and is not indicative of future results. Yield will vary. NEW YORK MUNICIPAL CASH TRUST PORTFOLIO OF INVESTMENTS APRIL 30, 1996 (UNAUDITED) - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ------------- ----------------------------------------------------------------------- ----------- -------------- SHORT-TERM MUNICIPALS--99.0% - -------------------------------------------------------------------------------------- NEW YORK--95.8% ----------------------------------------------------------------------- $ 4,525,000 Albany City School District, NY, (Series 1995), 4.75% BANs, 5/3/1996 NR (3) $ 4,525,095 ----------------------------------------------------------------------- 2,500,000 Albany, NY IDA, (Series 1995) Weekly VRDNs (Davies Office Refurbishing, Inc. Project)/(Marine Midland Bank N.A., Buffalo, NY LOC) P-2 2,500,000 ----------------------------------------------------------------------- 1,000,000 Babylon, NY IDA, (1994 Series) Weekly VRDNs (J. D'Addario & Company, Inc. Project)/(National Westminster Bank, PLC, London LOC) VMIG1 1,000,000 ----------------------------------------------------------------------- 3,246,000 Beacon, NY, 4.00% BANs, 8/16/1996 NR (3) 3,246,317 ----------------------------------------------------------------------- 6,000,000 Brentwood Union Free School District, NY, 4.375% TANs, 6/28/1996 NR (4) 6,002,505 ----------------------------------------------------------------------- 5,000,000 Brentwood Union Free School District, NY, 4.50% TANs, 6/ 28/1996 NR (3) 5,003,046 ----------------------------------------------------------------------- 3,800,000 Canisteo Central School District, NY, 4.125% BANs, 4/30/1997 NR 3,810,762 ----------------------------------------------------------------------- 1,555,000 Cattaraugus County, NY IDA, (Series 1996A) Weekly VRDNs (Gier's Farm Service, Inc. Project)/(Key Bank of New York LOC) A-1 1,555,000 ----------------------------------------------------------------------- 3,300,000 Chautauqua County, NY IDA Weekly VRDNs (Cliffstar Corp.)/(Society National Bank, Cleveland, OH LOC) P-1 3,300,000 ----------------------------------------------------------------------- 3,900,000 Chautauqua County, NY IDA Weekly VRDNs (Mogen David Wine Corp.)/(Wells Fargo Bank, N.A. LOC) P-1 3,900,000 ----------------------------------------------------------------------- 5,000,000 Chautauqua County, NY, 3.60% TANs, 12/20/1996 NR 5,006,194 ----------------------------------------------------------------------- 1,060,000 Colonie, NY IDA Weekly VRDNs (Herbert S. Ellis)/(Marine Midland Bank N.A., Buffalo, NY LOC) P-2 1,060,000 ----------------------------------------------------------------------- 765,000 Colonie, NY IDA, (Series 1988) Weekly VRDNs (13 Green M-1 Drive Project)/(Marine Midland Bank N.A., Buffalo, NY LOC) P-2 765,000 -----------------------------------------------------------------------
NEW YORK MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ------------- ----------------------------------------------------------------------- ----------- -------------- SHORT-TERM MUNICIPALS--CONTINUED - -------------------------------------------------------------------------------------- NEW YORK--CONTINUED ----------------------------------------------------------------------- $ 2,220,000 Colonie, NY, (Series 1996B), 4.00% BANs, 4/18/1997 NR $ 2,225,152 ----------------------------------------------------------------------- 5,000,000 Erie County, NY IDA, IDRB (Series 1994) Weekly VRDNs (Servotronics, Inc. Project)/(Fleet Bank of New York LOC) P-1 5,000,000 ----------------------------------------------------------------------- 4,500,000 Florida Union Free School District, NY, 4.125% BANs, 12/5/1996 NR 4,509,676 ----------------------------------------------------------------------- 1,800,000 Franklin County, NY IDA, (Series 1991A) Weekly VRDNs (KES Chateaugay)/(Bank of Tokyo-Mitsubishi LTD. LOC) A-1 1,800,000 ----------------------------------------------------------------------- 3,263,366 Gloversville, NY, 4.25% BANs, 12/27/1996 NR 3,273,666 ----------------------------------------------------------------------- 1,500,000 Guilderland, NY IDA, (Series 1993A) Weekly VRDNs (Northeastern Industrial Park, Inc.)/(Fleet Bank of New York LOC) P-1 1,500,000 ----------------------------------------------------------------------- 5,140,000 Hempstead Union Free School District, NY, 4.50% TANs, 6/28/1996 NR (3) 5,144,858 ----------------------------------------------------------------------- 4,760,000 Herkimer County, NY IDA, 1994 IDRB Weekly VRDNs (Granny's Kitchen)/(Bank of New York, New York LOC) A-1 4,760,000 ----------------------------------------------------------------------- 3,500,000 Hudson Falls, NY Central School District, 3.82% BANs, 6/28/1996 NR (3) 3,500,102 ----------------------------------------------------------------------- 3,700,000 Levittown Union Free School District, NY, 4.125% BANs, 10/25/1996 NR 3,702,996 ----------------------------------------------------------------------- 1,000,000 Levittown Union Free School District, NY, 4.50% BANs, 10/25/1996 NR 1,002,556 ----------------------------------------------------------------------- 927,000 Liverpool Central School District, NY, 3.90% BANs, 6/19/1996 NR (3) 927,178 ----------------------------------------------------------------------- 3,770,000 Lockport, NY, 4.17% BANs, 5/30/1996 NR (3) 3,770,201 ----------------------------------------------------------------------- 4,200,000 Longwood Central School District, NY, 4.50% TANs, 6/26/1996 NR (3) 4,202,780 ----------------------------------------------------------------------- 2,005,000 Madison County, NY IDA, (Series 1989A) Weekly VRDNs (Madison, NY Upstate Metals)/(Fleet Bank of New York LOC) A-1 2,005,000 -----------------------------------------------------------------------
NEW YORK MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ------------- ----------------------------------------------------------------------- ----------- -------------- SHORT-TERM MUNICIPALS--CONTINUED - -------------------------------------------------------------------------------------- NEW YORK--CONTINUED ----------------------------------------------------------------------- $ 15,000,000 Marine Midland, NY, Premium Tax-Exempt Bond & Loan Trust Weekly VRDNs (Marine Midland New York Trust)/ (Marine Midland Bank N.A., Buffalo, NY LOC) P-1 $ 15,000,000 ----------------------------------------------------------------------- 250,001 New York City, NY IDA Weekly VRDNs (David Rosen Bakers Supply)/(Ford Motor Credit Corp. LIQ)/(Chemical Bank, New York LOC) P-1 250,001 ----------------------------------------------------------------------- 426,668 New York City, NY IDA Weekly VRDNs (Lomar Development Corp.)/(Ford Motor Credit Corp. LIQ)/ (Chemical Bank, New York LOC) P-1 426,668 ----------------------------------------------------------------------- 27,099 New York City, NY IDA Weekly VRDNs (MLN Associates)/ (Ford Motor Credit Corp. LIQ)/(Chemical Bank, New York LOC) P-1 27,099 ----------------------------------------------------------------------- 3,100,000 New York City, NY IDA Weekly VRDNs (Mindel Associates)/(Chemical Bank, New York LOC) A-1 3,100,000 ----------------------------------------------------------------------- 1,900,000 New York City, NY IDA, Special Facility Revenue Bonds (Series 1990) Weekly VRDNs (Air France)/(Societe Generale, Paris LOC) A-1+ 1,900,000 ----------------------------------------------------------------------- 2,865,000 New York City, NY, (Series B), 4.75% RANs (Bank of Nova Scotia, Toronto, Canadian Imperial Bank of Commerce, Toronto, Chemical Bank, New York, Citibank NA, New York, Commerzbank AG, Frankfurt, Morgan Guaranty Trust Co., New York and Union Bank of Switzerland, Zurich LOCs), 6/28/1996 MIG1 2,870,601 ----------------------------------------------------------------------- 4,600,000 New York City, NY, 3.25% TOBs (FSA INS)/(Citibank NA, New York LIQ), Optional Tender 8/15/1996 NR (1) 4,600,000 ----------------------------------------------------------------------- 2,000,000 New York City, NY, UT GO Fiscal 1994 (Series H-3), 3.60% CP (FSA INS)/(Banque Paribas, Paris LIQ), Mandatory Tender 8/22/1996 VMIG1 2,000,000 ----------------------------------------------------------------------- 4,700,000 New York City, NY, UT GO Fiscal 1994 (Series H-3), 3.60% CP (FSA INS)/(Banque Paribas, Paris LIQ), Mandatory Tender 8/23/1996 VMIG1 4,700,000 -----------------------------------------------------------------------
NEW YORK MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ------------- ----------------------------------------------------------------------- ----------- -------------- SHORT-TERM MUNICIPALS--CONTINUED - -------------------------------------------------------------------------------------- NEW YORK--CONTINUED ----------------------------------------------------------------------- $ 2,200,000 New York City, NY, UT GO Fiscal 1994 (Series H-3), 4.00% CP (FSA INS)/(Banque Paribas, Paris LIQ), Mandatory Tender 8/22/1996 VMIG1 $ 2,200,000 ----------------------------------------------------------------------- 5,475,000 (a)New York State Dormitory Authority, PA-60 (Series 1993) Weekly VRDNs (Rochester General Hospital)/(FHA INS)/ (Merrill Lynch Capital Services, Inc. LIQ) A-1+ 5,475,000 ----------------------------------------------------------------------- 3,000,000 New York State Energy Research & Development Authority, (Series 1993A) Weekly VRDNs (Long Island Lighting Co.)/(Toronto-Dominion Bank LOC) VMIG1 3,000,000 ----------------------------------------------------------------------- 1,210,000 New York State Job Development Authority Weekly VRDNs (Sumitomo Bank Ltd., Osaka LOC) VMIG1 1,210,000 ----------------------------------------------------------------------- 1,500,000 New York State Job Development Authority Weekly VRDNs (Sumitomo Bank Ltd., Osaka LOC) VMIG1 1,500,000 ----------------------------------------------------------------------- 12,250,000 (a)New York State Medical Care Facilities Finance Agency, Tender Option Certificate (Series 1995A) Weekly VRDNs (Monte Fiore Medical Center)/(AMBAC INS) A-1 12,250,000 ----------------------------------------------------------------------- 3,700,000 (a)New York State Mortgage Agency, (Series PA-29) Weekly VRDNs (Merrill Lynch Capital Services, Inc. LIQ) VMIG1 3,700,000 ----------------------------------------------------------------------- 4,885,000 (a)New York State Mortgage Agency, Homeowner Mortgage Revenue Bonds (PA-87) Weekly VRDNs (Merrill Lynch Capital Services, Inc. LIQ) VMIG1 4,885,000 ----------------------------------------------------------------------- 3,640,000 (a)New York State Mortgage Agency, Homeowner Mortgage Revenue Bonds (Series PT-15B) Weekly VRDNs (Commerzbank AG, Frankfurt LIQ) VMIG1 3,640,000 ----------------------------------------------------------------------- 3,510,000 New York State, UT GO, 5.00% Bonds, 1/15/1997 A 3,548,795 ----------------------------------------------------------------------- 6,500,000 Niagara County, NY IDA Weekly VRDNs (Allegheny Ludlum Corp.)/(PNC Bank, N.A. LOC) A-1 6,500,000 ----------------------------------------------------------------------- $ 5,000,000 Niagara County, NY IDA, Solid Waste Disposal Facility Revenue Bonds (Series 1994C), 3.30% CP (American Ref-Fuel Company)/(Air Products & Chemicals, Inc. and Browning-Ferris Industries, Inc. GTDs), Mandatory Tender 5/20/1996 A-1 $ 5,000,000 -----------------------------------------------------------------------
NEW YORK MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ------------- ----------------------------------------------------------------------- ----------- -------------- SHORT-TERM MUNICIPALS--CONTINUED - -------------------------------------------------------------------------------------- NEW YORK--CONTINUED ----------------------------------------------------------------------- 6,000,000 Niagara County, NY IDA, Solid Waste Disposal Facility Revenue Bonds (Series 1994C), 3.50% CP (American Ref-Fuel Company)/(Air Products & Chemicals, Inc. and Browning-Ferris Industries, Inc. GTDs), Mandatory Tender 5/23/1996 A-1 6,000,000 ----------------------------------------------------------------------- 610,000 Onondaga County, NY IDA Weekly VRDNs (Beverage Corp.)/(Marine Midland Bank N.A., Buffalo, NY LOC) P-2 610,000 ----------------------------------------------------------------------- 910,000 Onondaga County, NY IDA, (Series 1987) Weekly VRDNs (Southern Container Corp.)/(Chemical Bank, New York LOC) VMIG1 910,000 ----------------------------------------------------------------------- 1,725,000 Onondaga County, NY Weekly VRDNs (Grainger (W.W.), Inc.) A-1+ 1,725,000 ----------------------------------------------------------------------- 1,500,000 Ontario, NY IDA Weekly VRDNs (Hillcrest Enterprises/ Buckeye Corrugated)/(National City Bank, Cleveland, OH LOC) P-1 1,500,000 ----------------------------------------------------------------------- 5,700,000 Oswego County, NY IDA Weekly VRDNs (Copperweld Corp.)/(Credit Lyonnais, Paris LOC) P-1 5,700,000 ----------------------------------------------------------------------- 1,525,000 Perry Central School District, NY, 4.125% BANs, 6/21/1996 NR (3) 1,525,869 ----------------------------------------------------------------------- 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 A-1+ 15,000,000 ----------------------------------------------------------------------- 1,000,000 Rotterdam, NY IDA, (Series 1993A) Weekly VRDNs (Rotterdam Industrial Park)/(Fleet Bank of New York LOC) P-1 1,000,000 ----------------------------------------------------------------------- 4,000,000 Saranac Central School District, NY, 4.50% BANs, 6/28/1996 NR (2) 4,003,962 ----------------------------------------------------------------------- $ 575,705 Schenectady, NY IDA Weekly VRDNs (McClellan Street Associates)/(Ford Motor Credit Corp. LIQ)/(Chemical Bank, New York LOC) P-1 $ 575,705 ----------------------------------------------------------------------- 1,700,000 Schenectady, NY IDA, IDRB (Series 1995A) Weekly VRDNs (Fortitech Holding Corporation Project)/(Fleet Bank of New York LOC) VMIG1 1,700,000 -----------------------------------------------------------------------
NEW YORK MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ------------- ----------------------------------------------------------------------- ----------- -------------- SHORT-TERM MUNICIPALS--CONTINUED - -------------------------------------------------------------------------------------- NEW YORK--CONTINUED ----------------------------------------------------------------------- 3,200,000 Southeast, NY IDA, IDRB (Series 1995) Weekly VRDNs (Dairy Conveyor Corporation Project)/(Chemical Bank, New York LOC) A-1 3,200,000 ----------------------------------------------------------------------- 2,700,000 Suffolk County, NY IDA Weekly VRDNs (C & J Realty Corp.)/(Ford Motor Credit Corp. LIQ)/(Chemical Bank, New York LOC) P-1 2,700,000 ----------------------------------------------------------------------- 454,167 Suffolk County, NY IDA Weekly VRDNs (CS Property/Tara Toy, Inc.)/(Ford Motor Credit Corp. LIQ)/(Chemical Bank, New York LOC) P-1 454,167 ----------------------------------------------------------------------- 900,000 Suffolk County, NY IDA Weekly VRDNs (Poly Research Corp.)/(Marine Midland Bank N.A., Buffalo, NY LOC) P-2 900,000 ----------------------------------------------------------------------- 1,800,000 Suffolk County, NY IDA, 5.688% TOBs (Grainger (W.W.), Inc.), Optional Tender 6/1/1996 P-1 1,800,000 ----------------------------------------------------------------------- 11,299,000 Syracuse, NY, (Series 1995), 4.00% BANs, 12/20/1996 NR (2) 11,323,952 ----------------------------------------------------------------------- 3,768,000 Syracuse, NY, 3.60% BANs, 2/28/1997 NR (2) 3,774,006 ----------------------------------------------------------------------- 2,200,000 Tompkins County, NY, (Series A), 4.00% BANs, 4/11/1997 NR (2) 2,206,010 ----------------------------------------------------------------------- 9,000,000 Ulster County, NY, Custodial Receipt (1996 Series A), 4.25% TANs (State Street Bank and Trust Co. LOC), 3/26/1997 P-1 9,038,779 ----------------------------------------------------------------------- 5,000,000 (a)VRDC/IVRC Trust, (Series 1992A) Weekly VRDNs (New York City Municipal Water Finance Authority)/(MBIA INS)/ (Hong Kong & Shanghai Banking Corp. LIQ) A-1 5,000,000 ----------------------------------------------------------------------- 3,500,000 (a)VRDC/IVRC Trust, (Series 1993G) Weekly VRDNs (St. Lukes Roosevelt Hospital Center)/(FHA INS)/(Hong Kong & Shanghai Banking Corp. LIQ) A-1 3,500,000 ----------------------------------------------------------------------- $ 7,500,000 Walden Village, NY IDA, IDRB (Series 1994) Weekly VRDNs (Spence Engineering Co.)/(First Union National Bank, Charlotte, N.C. LOC) P-1 $ 7,500,000 ----------------------------------------------------------------------- 5,685,000 Warren & Washington Counties, NY IDA Weekly VRDNs (Sandy Hill Corp.)/(First Union National Bank, Charlotte, N.C. LOC) A-1 5,685,000 -----------------------------------------------------------------------
NEW YORK MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE - ------------- ----------------------------------------------------------------------- ----------- -------------- SHORT-TERM MUNICIPALS--CONTINUED - -------------------------------------------------------------------------------------- NEW YORK--CONTINUED ----------------------------------------------------------------------- 1,415,000 Yates County, NY IDA, (Series 1992A) Weekly VRDNs (Clearplass Container)/(Fleet Bank of New York LOC) A-1 1,415,000 ----------------------------------------------------------------------- 2,300,000 Yonkers, NY IDA, (Series 1992A) Weekly VRDNs (Consumers Union Facility)/(Industrial Bank of Japan Ltd., Tokyo LOC) VMIG1 2,300,000 ----------------------------------------------------------------------- -------------- Total 292,828,698 ----------------------------------------------------------------------- -------------- PUERTO RICO--3.3% ----------------------------------------------------------------------- 10,000,000 Commonwealth of Puerto Rico, Public Improvement Refunding Bonds TOC (Series 1995B) Weekly VRDNs (MBIA INS)/(Dai-Ichi Kangyo Bank Ltd., Tokyo LIQ) A-1 10,000,000 ----------------------------------------------------------------------- -------------- TOTAL INVESTMENTS, AT AMORTIZED COST (B) $ 302,828,698 ----------------------------------------------------------------------- --------------
Securities that are subject to Alternative Minimum Tax represent 32% of the portfolio as calculated based upon total portfolio market value. * Please refer to the Appendix of the Statement of Additional Information for an explanation of the credit ratings. Current credit ratings are unaudited. (a) Donotes 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. At the end of the period, these securities amounted to ($38,450,000) which represents 13% of net assets. (b) Also represents cost for federal tax purposes. Note: The categories of investments are shown as a percentage of net assets ($305,791,844) at April 30, 1996. The following acronym(s) are used throughout this portfolio: NEW YORK MUNICIPAL CASH TRUST - -------------------------------------------------------------------------------- AMBAC-- American Municipal Bond Assurance Corporation BANs-- Bond Anticipation Notes CP-- Commercial Paper FHA-- Federal Housing Administration FSA-- Financial Security Assurance GO-- General Obligation IDA-- Industrial Development Authority IDRB-- Industrial Development Revenue Bond INS-- Insured LIQ-- Liquidity Agreement LOCs-- Letter(s) of Credit LOC-- Letter of Credit MBIA-- Municipal Bond Investors Assurance PLC-- Public Limited Company RANs-- Revenue Anticipation Notes 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) NEW YORK MUNICIPAL CASH TRUST STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1996 (UNAUDITED) - -------------------------------------------------------------------------------- ASSETS: - ------------------------------------------------------------------------------------------------- Total investments in securities, at amortized cost and value $ 302,828,727 - ------------------------------------------------------------------------------------------------- Cash 336,262 - ------------------------------------------------------------------------------------------------- Income receivable 3,567,145 - ------------------------------------------------------------------------------------------------- -------------- Total assets 306,732,134 - ------------------------------------------------------------------------------------------------- LIABILITIES: - ------------------------------------------------------------------------------------------------- Income distribution payable $ 829,582 - ------------------------------------------------------------------------------------- Accrued expenses 110,708 - ------------------------------------------------------------------------------------- ---------- Total liabilities 940,290 - ------------------------------------------------------------------------------------------------- -------------- Net Assets for 305,791,844 shares outstanding $ 305,791,844 - ------------------------------------------------------------------------------------------------- -------------- NET ASSETS CONSIST OF: - ------------------------------------------------------------------------------------------------- Paid in capital $ 305,791,844 - ------------------------------------------------------------------------------------------------- -------------- Total Net Assets $ 305,791,844 - ------------------------------------------------------------------------------------------------- -------------- NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE: - ------------------------------------------------------------------------------------------------- INSTITUTIONAL SERVICE SHARES: - ------------------------------------------------------------------------------------------------- $282,892,885 / 282,892,885 shares outstanding $1.00 - ------------------------------------------------------------------------------------------------- -------------- CASH II SHARES: - ------------------------------------------------------------------------------------------------- $22,898,959 / 22,898,959 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, 1996 (UNAUDITED) - -------------------------------------------------------------------------------- INVESTMENT INCOME: - ----------------------------------------------------------------------------------------------------- Interest $ 6,122,990 - ----------------------------------------------------------------------------------------------------- EXPENSES: - ----------------------------------------------------------------------------------------------------- Investment advisory fee $ 647,914 - ---------------------------------------------------------------------------------------- Administrative personnel and services fee 122,480 - ---------------------------------------------------------------------------------------- Custodian fees 24,157 - ---------------------------------------------------------------------------------------- Transfer and dividend disbursing agent fees and expenses 37,424 - ---------------------------------------------------------------------------------------- Directors'/Trustees' fees 5,028 - ---------------------------------------------------------------------------------------- Auditing fees 8,906 - ---------------------------------------------------------------------------------------- Legal fees 613 - ---------------------------------------------------------------------------------------- Portfolio accounting fees 57,007 - ---------------------------------------------------------------------------------------- Distribution services fee--Institutional Service Shares 375,471 - ---------------------------------------------------------------------------------------- Distribution services fee--Cash II Shares 29,475 - ---------------------------------------------------------------------------------------- Shareholder services fee--Institutional Service Shares 375,919 - ---------------------------------------------------------------------------------------- Shareholder services fee--Cash II Shares 29,475 - ---------------------------------------------------------------------------------------- Share registration costs 18,265 - ---------------------------------------------------------------------------------------- Printing and postage 17,961 - ---------------------------------------------------------------------------------------- Insurance premiums 4,371 - ---------------------------------------------------------------------------------------- Miscellaneous 1,644 - ---------------------------------------------------------------------------------------- ----------- Total expenses 1,756,110 - ---------------------------------------------------------------------------------------- Waivers - ---------------------------------------------------------------------------------------- Waiver of investment advisory fee $ (200,670) - ---------------------------------------------------------------------------- Waiver of distribution services fee--Institutional Service Shares (375,471) - ---------------------------------------------------------------------------- Waiver of distribution services fee--Cash II Shares (29,475) - ---------------------------------------------------------------------------- Waiver of shareholder services fee--Institutional Service Shares (269,983) - ---------------------------------------------------------------------------- ---------- Total waivers (875,599) - ---------------------------------------------------------------------------------------- ----------- Net expenses 880,511 - ----------------------------------------------------------------------------------------------------- ----------- Net investment income 5,242,479 - ----------------------------------------------------------------------------------------------------- ----------- Net realized gain on investments 5,609 - ----------------------------------------------------------------------------------------------------- ----------- Change in net assets resulting from operations $ 5,248,088 - ----------------------------------------------------------------------------------------------------- -----------
(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 (UNAUDITED) YEAR ENDED APRIL 30, 1996 OCTOBER 31, 1995 - -------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS: - -------------------------------------------------------------------- OPERATIONS-- - -------------------------------------------------------------------- Net investment income $ 5,242,479 $ 11,498,874 - -------------------------------------------------------------------- Net realized gain (loss) on investments 5,609 12,000 - -------------------------------------------------------------------- ---------------------- -------------------- Change in net assets resulting from operations 5,248,088 11,510,874 - -------------------------------------------------------------------- ---------------------- -------------------- DISTRIBUTIONS TO SHAREHOLDERS-- - -------------------------------------------------------------------- Distributions from net investment income - -------------------------------------------------------------------- Institutional Service Shares (4,876,748) (9,657,797) - -------------------------------------------------------------------- Cash II Shares (365,731) (1,841,077) - -------------------------------------------------------------------- ---------------------- -------------------- Change in net assets resulting from distributions to shareholders (5,242,479) (11,498,874) - -------------------------------------------------------------------- ---------------------- -------------------- SHARE TRANSACTIONS-- - -------------------------------------------------------------------- Proceeds from sale of Shares 603,215,545 1,236,075,244 - -------------------------------------------------------------------- Net asset value of Shares issued to shareholders in payment of distributions declared 1,011,236 3,314,165 - -------------------------------------------------------------------- Cost of Shares redeemed (589,028,530) (1,319,444,545) - -------------------------------------------------------------------- ---------------------- -------------------- Change in net assets resulting from share transactions 15,198,251 (80,055,136) - -------------------------------------------------------------------- ---------------------- -------------------- Change in net assets 15,203,860 (80,043,136) - -------------------------------------------------------------------- NET ASSETS: - -------------------------------------------------------------------- Beginning of period 290,587,984 370,631,120 - -------------------------------------------------------------------- ---------------------- -------------------- End of period $ 305,791,844 $ 290,587,984 - -------------------------------------------------------------------- ---------------------- --------------------
(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 (UNAUDITED) APRIL 30, YEAR ENDED OCTOBER 31, 1996 1995 1994 1993 1992 1991 1990 1989 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 0.04 0.02 0.02 0.03 0.04 0.05 0.06 - --------------------------------- LESS DISTRIBUTIONS - --------------------------------- Distributions from net investment income (0.02) (0.04) (0.02) (0.02) (0.03) (0.04) (0.05) (0.06) - --------------------------------- ----- --------- --------- --------- --------- --------- --------- --------- 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) 1.63% 3.56% 2.35% 2.16% 3.01% 4.59% 5.51% 5.70% - --------------------------------- RATIOS TO AVERAGE NET ASSETS - --------------------------------- Expenses 0.53%* 0.54% 0.52% 0.54% 0.57% 0.52% 0.54% 0.55% - --------------------------------- Net investment income 3.25%* 3.49% 2.31% 2.14% 2.99% 4.48% 5.36% 5.56% - --------------------------------- Expense waiver/reimbursement (b) 0.55%* 0.53% 0.13% 0.17% -- -- -- -- - --------------------------------- SUPPLEMENTAL DATA - --------------------------------- Net assets, end of period (000 omitted) $282,893 $276,149 $236,580 $274,357 $164,492 $191,616 $197,213 $245,542 - --------------------------------- 1988 1987 NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 - --------------------------------- INCOME FROM INVESTMENT OPERATIONS - --------------------------------- Net investment income 0.05 0.04 - --------------------------------- LESS DISTRIBUTIONS - --------------------------------- Distributions from net investment income (0.05) (0.04) - --------------------------------- --------- --------- NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 - --------------------------------- --------- --------- TOTAL RETURN (A) 4.66% 3.90% - --------------------------------- RATIOS TO AVERAGE NET ASSETS - --------------------------------- Expenses 0.51% 0.47%* - --------------------------------- Net investment income 4.57% 3.81%* - --------------------------------- Expense waiver/reimbursement (b) -- -- - --------------------------------- SUPPLEMENTAL DATA - --------------------------------- Net assets, end of period (000 omitted) $212,786 $141,040 - ---------------------------------
* Computed on an annualized basis. (a) Based on net asset value, which does not reflect the sales charge, or contingent deferred sales charge, if applicable. (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) NEW YORK MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS--CASH II SHARES - -------------------------------------------------------------------------------- (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED (UNAUDITED) APRIL 30, YEAR ENDED OCTOBER 31, 1996 1995 1994 1993** 1992 1991(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 0.02 0.03 0.02 - ----------------------------------------- LESS DISTRIBUTIONS - ----------------------------------------- Distributions from net investment income (0.02) (0.03) (0.02) (0.02) (0.03) (0.02) - ----------------------------------------- ------- --------- --------- ----------- --------- ----------- NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 - ----------------------------------------- ------- --------- --------- ----------- --------- ----------- TOTAL RETURN (B) 1.54% 3.37% 2.15% 1.98% 2.86% 2.20% - ----------------------------------------- RATIOS TO AVERAGE NET ASSETS - ----------------------------------------- Expenses 0.71%* 0.71% 0.71% 0.71% 0.73% 0.46%* - ----------------------------------------- Net investment income 3.10%* 3.20% 2.19% 1.96% 2.46% 4.08%* - ----------------------------------------- Expense waiver/ reimbursement (c) 0.37%* 0.36% 0.21% 0.17% -- -- - ----------------------------------------- SUPPLEMENTAL DATA - ----------------------------------------- Net assets, end of period (000 omitted) $22,899 $14,439 $134,051 $58,884 $4,641 $56 - -----------------------------------------
* Computed on an annualized basis. ** Prior to November 9, 1992, the Fund provided three classes of shares. (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 charge or contingent deferred sales charge, if applicable. (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 NOTES TO FINANCIAL STATEMENTS APRIL 30, 1996 (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 fifteen portfolios. The financial statements included herein are only those of New York Municipal Cash Trust (the "Fund"), a non-diversified portfolio. The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. The Fund offers two classes of shares: Institutional Service Shares and Cash II Shares. The investment objective of the Fund is current income exempt from federal regular income tax and the personal income taxes imposed by New York State and New York municipalities consistent with stability of principal. (2) SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with generally accepted accounting principles. 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 last fiscal year-end date, the Fund, for federal tax purposes, had a capital loss carryforward of $5,609, 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 as follows:
EXPIRATION YEAR EXPIRATION AMOUNT 1996 $5,609
NEW YORK MUNICIPAL CASH TRUST - -------------------------------------------------------------------------------- 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, 1996, 56% 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 from any one institution or agency did not exceed 5.0% 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 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, 1996 is as follows:
ACQUISITION ACQUISITION SECURITY DATE COST New York State Dormitory Authority PA-60 (Series 1993) March 13, 1995 $ 5,475,000 New York State State Medical Care Facilities Finance Agency January 3, 1996 12,250,000 New York State Mortgage Agency (Series PA-29) April 3, 1995 3,700,000 New York State Mortgage Agency (Series PA-87) July 5, 1995 4,885,000 New York State Mortgage Agency (Series PT-15B) July 5, 1995 3,640,000 VRDC/IVRC Trust (Series 1992A) New York City Municipal Water Finance Authority July 5, 1995 5,000,000 VRDC/IVRC Trust (Series 1993G) St. Lukes Roosevelt Hospital Center April 22, 1996 3,500,000
USE OF ESTIMATES--The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ from those estimated. NEW YORK 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) for each class of shares. At April 30, 1996, capital paid-in aggregated $305,791,844. Transactions in shares were as follows:
SIX MONTHS ENDED YEAR ENDED APRIL 30, 1996 OCTOBER 31, 1995 ---------------------- -------------------- INSTITUTIONAL SERVICE SHARES SHARES SHARES - -------------------------------------------------------------------- ---------------------- -------------------- Shares sold 516,686,256 1,002,966,036 - -------------------------------------------------------------------- Shares issued to shareholders in payment of distributions declared 756,172 1,484,402 - -------------------------------------------------------------------- Shares redeemed (510,705,060) (964,892,684) - -------------------------------------------------------------------- ---------------------- -------------------- Net change resulting from Institutional Service Share transactions 6,737,368 39,557,754 - -------------------------------------------------------------------- ---------------------- -------------------- SIX MONTHS ENDED YEAR ENDED APRIL 30, 1996 OCTOBER 31, 1995 ---------------------- -------------------- CASH II SHARES SHARES SHARES - -------------------------------------------------------------------- ---------------------- -------------------- Shares sold 86,529,289 233,109,208 - -------------------------------------------------------------------- Shares issued to shareholders in payment of distributions declared 255,064 1,829,763 - -------------------------------------------------------------------- Shares redeemed (78,323,470) (354,551,861) - -------------------------------------------------------------------- ---------------------- -------------------- Net change resulting from Cash II share transactions 8,460,883 (119,612,890) - -------------------------------------------------------------------- ---------------------- -------------------- Net change resulting from share transactions 15,198,251 (80,055,136) - -------------------------------------------------------------------- ---------------------- --------------------
(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 0.40% of the Fund's average daily net assets. The Adviser may voluntarily choose to waive any portion of its fee and/or reimburse 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. NEW YORK MUNICIPAL CASH TRUST - -------------------------------------------------------------------------------- ADMINISTRATIVE FEE--Federated Services Company ("FServ"), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. The fee paid to FServ is based on 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., the principal distributor, from the net assets of the Fund to finance activities intended to result in the sale of the Fund's Institutional Service Shares and Cash II Shares. The Plan provides that the Fund may incur distribution expenses according to the following schedule annually, to compensate Federated Securities Corp.
% OF AVG. DAILY NET SHARE CLASS NAME ASSETS OF CLASS Institutional Service Shares 0.25% Cash II Shares 0.25%
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 0.25% of daily average net assets of the Fund shares for the period. The fee paid to FSS is used to finance certain services for shareholders and to maintain shareholder accounts. FSS may voluntarily choose to waive any portion of its fee. FSS can modify or terminate this voluntary waiver at any time at its sole discretion. TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--FServ, through its subsidiary, Federated Shareholder Services Company serves as transfer and dividend disbursing agent for the Fund. The fee paid to FServ is based on the size, type, and number of accounts and transactions made by shareholders. PORTFOLIO ACCOUNTING FEES--FServ maintains the Fund's accounting records for which it receives a fee. The fee is based on the level of the Fund's average daily net assets for the period, plus out-of-pocket expenses. INTERFUND TRANSACTIONS--During the period ended April 30, 1996, the Fund engaged in purchase and sale transactions with funds that have a common investment adviser (or affiliated investment advisers), common Directors/Trustees, and/or common Officers. These purchase and sale transactions were made at current market value pursuant to Rule 17a-7 under the Act amounting to $239,430,000 and $234,380,000, respectively. NEW YORK MUNICIPAL CASH TRUST - -------------------------------------------------------------------------------- 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. Executive Vice President Edward L. Flaherty, Jr. Edward C. Gonzales Glen R. Johnson Executive Vice President Peter E. Madden John W. McGonigle Gregor F. Meyer Executive Vice President and Secretary John E. Murray, Jr. Richard B. Fisher Wesley W. Posvar Vice President Marjorie P. Smuts David M. Taylor Treasurer Charles H. Field 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, 1996 - ----------------------------------------------------------------------------- [LOGO OF FEDERATED INVESTORS] Federated Investors Tower Pittsburgh, PA 15222-3779 Federated Securities Corp. is the distributor of the fund and a subsidiary of Federated Investors. Cusip 314229741 Cusip 314229773 8060106 (6/96) [RECYCLED LOGO] 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, which covers the six-month period from November 1, 1995 through April 30, 1996. The report begins with a discussion with the fund's portfolio manager, followed by a complete listing of the fund's holdings and its financial statements. Financial highlights tables are provided for the fund's Institutional Shares and Institutional Service Shares. The fund is a convenient way to put your ready cash to work pursuing double- tax-free income - free from federal regular income tax and Virginia personal income tax* - through a portfolio concentrated in high-quality, short-term Virginia municipal securities. As a shareholder, you have the opportunity to earn a greater after-tax yield than you could in a comparable high-quality taxable investment. Of course, the fund also brings you the added benefits of daily liquidity and stability of principal.** During the report period, the fund paid double-tax-free dividends of $0.02 per share for both Institutional Shares and Institutional Service Shares. The fund's total net assets of $125.4 million were spread among Virginia securities that use municipal bond financing for projects as varied as health care, housing, community development, and transportation. You can count on Virginia Municipal Cash Trust to seek the best tax-free income opportunities for your cash investment needs. As always, we will strive to provide you with the highest level of professional service. We invite your questions or comments. Sincerely, Glen R. Johnson President June 15, 1996 * Income may be subject to the federal alternative minimum tax. ** 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. An investment in the fund is neither insured nor guaranteed by the U.S. government. INVESTMENT REVIEW An Interview with Fund Portfolio Manager, Jeff A. Kozemchak, C.F.A. Q Can you comment on the economy and the interest rate environment during the semi-annual reporting period? A The Federal Reserve Board (the "Fed") eased monetary policy twice over the six-month reporting period ending in April 1996. Faced with slowing economic growth and benign inflationary pressures, the Fed lowered the federal funds target rate from 5.75% to 5.50% in late December 1995, and again from 5.50% to the current 5.25% at the end of January 1996. For the December 1995 move, the Fed cited a better-than-expected inflation outlook as the impetus behind the easing, although a sluggish manufacturing sector and lackluster consumer spending was thought to have had an influence. In January 1996, the Fed appeared swayed by the dampening effects of high debt loads and employment uncertainty on consumer consumption along with sluggish export growth. Through this period, the short-end of the government and municipal yield curves anticipated the policy moves from the Fed, and amid signs of a weakening economy looked forward to additional eases in the not too distant future. February and March of 1996, however, brought about a shift in market psychology regarding both the extent and direction of changes in monetary policy by the Fed. Recovering from the harsh winter weather and spurred onward by lower interest rates, the housing market and consumer spending breathed some life into the economy, which had seemed on the verge of recession earlier in the year. The market was then stunned in early March 1996 by the report of a 705,000 increase in non-farm payroll jobs for February 1996-the largest increase in 12 years-which caused the yields on short- term securities to rise by as much as 25 basis points. Now confronted with a more robust economy than previously thought, market participants have moved expectations toward a more neutral policy from the Fed in the near term with a possible tightening, or increase in rates, later in 1996. Yields on short-term government securities reflected this rather volatile mood in the markets. The yield on the three-month Treasury bill began November 1995 at 5.48%, declined to 4.89% by mid-February 1996, and ended April 1996 at 5.14%. Correspondingly, the yield on the one-year Treasury bill began November 1995 at 5.46%, fell to 4.79% in mid-February 1996, but rose to 5.62% by the end of April 1996. Q How has the fund's yield responded to this interest rate environment? A The fund's yield was affected by Fed policy (interest rate cuts), changes in market expectations, as well as supply and demand imbalances unique to the municipal money markets. However, because of these imbalances, the fund's yield may experience more volatility on a weekly basis than Treasury yields and taxable money fund yields. In general, yields on municipal money market funds were lower over the reporting period. For the fund, the seven-day net yield* of the Institutional Shares on April 30, 1996 was 3.37% compared to 3.51% six months earlier. For the Institutional Service Shares, the seven-day net yield* was 3.27% on April 30, 1996 compared to 3.41% six months earlier. * Performance quoted represents past performance and is not indicative of future results. Yield will vary. Q What was your strategy for managing the fund over the semi-annual reporting period? A The fund started the reporting period with an average maturity of 48 days, reflecting a neutral to slightly bullish outlook on short-term interest rates. Because the supply of eligible fixed-rate notes and bonds in Virginia was moderately low over the reporting period, we targeted the average maturity between 45 and 55 days. At the end of the reporting period, the average maturity was 46 days, reflecting our assessment of more neutral Fed policy for the balance of 1996. If fixed-rate securities offer relative value when compared to shorter-term overnight or weekly notes, we expect to maintain this average maturity between 45 and 55 days. Q What is your outlook for the near future? A With growth of 2.3% in the first quarter of 1996, the economy appears to be on firmer footing than it was in the fourth quarter of 1995, when gross domestic product grew at only 0.5%. As a result, the Fed should not feel the urgency to lower short-term rates further. By the same token, however, with areas of softness in the economy still evident and with consumer indebtedness at very high levels, there also appears to be no danger of the economy overheating in the near term. As long as inflation remains benign, the Fed should be content to sit on the sidelines until confronted with signs of undue strength or considerable weakness in economic growth. The average maturity of the fund will continue to be managed in accordance with our expectation for a stable monetary policy in the near term. Nevertheless, opportunities for average maturity extension will arise as the supply of fixed-rate notes in the municipal market increases significantly in June and July of 1996. This spike in supply may present opportunities to "lock-in" yields which are attractive relative to comparable maturity taxable securities. As a result, we expect the average maturity of the fund to be slightly longer throughout the summer months. VIRGINIA MUNICIPAL CASH TRUST PORTFOLIO OF INVESTMENTS APRIL 30, 1996 (UNAUDITED)
PRINCIPAL CREDIT AMOUNT RATING* VALUE SHORT-TERM MUNICIPALS-99.0% VIRGINIA-96.6% $ 1,000,000 Alexandria, VA IDA Weekly VRDNs (American Red Cross)/(Sanwa Bank Ltd, Osaka LOC) A-1 $ 1,000,000 3,500,000 Alexandria, VA Redevelopment and Housing Authority Weekly VRDNs (Crystal City Apartments)/(Safeco Insurance Co. of America INS)/(Sumitomo Bank Ltd., Osaka LIQ) A-1 3,500,000 1,500,000 Alexandria, VA Redevelopment and Housing Authority, Series 1996B Weekly VRDNs (Buckingham Village Apartments)/(First Union National Bank, Charlotte, N.C. LOC) A-1 1,500,000 2,200,000 Amelia County, VA IDA, (Series 1991) Weekly VRDNs (Chambers Waste System)/(Nationsbank, N.A. (North Carolina) LOC) VMIG1 2,200,000 3,200,000 Botetourt County, VA IDA, IDRB (Series 1995) Weekly VRDNs (Emkay Holdings, L.L.C. Project)/(State Street Bank and Trust Co. LOC) VMIG1 3,200,000 2,250,000 Carroll County, VA IDA, IDRB (Series 1995) Weekly VRDNs (Kentucky Derby Hosiery Co, Inc Project)/ (Liberty National Bank & Trust Co. LOC) A-1+ 2,250,000 1,000,000 Charles County, VA IDA, Solid Waste Disposal Facility Revenue Bonds (Series 1996) Weekly VRDNs (Chambers Development of Virginia, Inc. Project)/ (Morgan Guaranty Trust Co., New York LOC) AAA 1,000,000 1,900,000 Chesapeake, VA IDA, (Series 1986) Weekly VRDNs (Volvo)/(Union Bank of Switzerland, Zurich LOC) P-1 1,900,000 2,000,000 Chesapeake, VA IDA, IDRB (Series 1988) Weekly VRDNs (Sumitomo Machinery Corp. of America Corp.)/(Sumitomo Bank Ltd., Osaka LOC) VMIG1 2,000,000 3,600,000 Chesterfield County, VA IDA, 3.30% CP (Virginia Electric Power Co.), Mandatory Tender 5/13/1996 A-1 3,600,000
VIRGINIA MUNICIPAL CASH TRUST
PRINCIPAL CREDIT AMOUNT RATING* VALUE SHORT-TERM MUNICIPALS-CONTINUED VIRGINIA-CONTINUED $ 1,535,000 Chesterfield County, VA, UT GO, 7.25% Bonds (United States Treasury PRF), 7/15/1996 (@102) AAA $ 1,577,058 1,609,500 Dinwiddie County, VA IDA, IDRB (Series 1989) Weekly VRDNs (Tindall Concrete VA, Inc.)/(First Union National Bank, Charlotte, NC LOC) P-1 1,609,500 3,515,000 Dinwiddie County, VA IDA, IDRB (Series 1991) Weekly VRDNs (Maclin-Zimmer-Mcgill Tobacco Co., Inc.)/ (Wachovia Bank of NC, NA, Winston-Salem LOC) P-1 3,515,000 3,500,000 Fairfax County, VA IDA, (Series 1993B), 3.25% CP (Inova Health System), Mandatory Tender 5/8/1996 A-1+ 3,500,000 4,000,000 Fairfax County, VA IDA, (Series 1993B), 3.75% CP (Inova Health System), Mandatory Tender 5/29/1996 A-1+ 4,000,000 1,250,000 Fairfax County, VA, UT GO Refunding Bonds (Series B), 6.60% Bonds (United States Treasury PRF), 11/1/1996 (@101) Aaa 1,279,450 6,100,000 Falls Church, VA IDA, (Series 1985), 3.70% TOBs (Kaiser Permanente Medical Care Program), Optional Tender 5/1/1996 A-1+ 6,100,000 600,000 Fauquier County, VA IDA, Refunding Revenue Bonds Weekly VRDNs (Warrenton Development Co.)/ (Nationsbank of Maryland, N.A. LOC) P-1 600,000 7,113,000 Fluvanna County, VA IDA, (Series 1986) Weekly VRDNs (Thomasville Furniture Industries)/(Union Bank of Switzerland, Zurich LOC) P-1 7,113,000 1,070,000 Grayson County, VA IDA, (Series 1987) Weekly VRDNs (Robertshaw Controls Company Project)/(Nationsbank of Virginia, N.A. LOC) P-1 1,070,000 7,500,000 Halifax, VA IDA, MMMs, PCR, 3.55% CP (Virginia Electric Power Co.), Mandatory Tender 6/14/1996 A-1 7,500,000 4,000,000 Halifax, VA IDA, MMMs, PCR, 3.85% CP (Virginia Electric Power Co.), Mandatory Tender 7/25/1996 A-1 4,000,000 1,000,000 Hanover County, VA IDA Weekly VRDNs (Fiber-Lam, Inc. Project)/(Nationsbank of Virginia, N.A. LOC) A-1 1,000,000
VIRGINIA MUNICIPAL CASH TRUST
PRINCIPAL CREDIT AMOUNT RATING* VALUE SHORT-TERM MUNICIPALS-CONTINUED VIRGINIA-CONTINUED $ 2,582,000 Harrisonburg, VA Redevelopment & Housing Authority, (1989 Series) Weekly VRDNs (Potomac Hills Apartments Project)/(Nationsbank of Virginia, N.A. LOC) P-1 $ 2,582,000 2,000,000 Lynchburg, VA, 3.15% BANs, 3/1/1997 SP-1+ 2,000,797 2,495,000 Norfolk, VA, 7.10% Bonds (United States Treasury PRF), 6/1/1996 (@102) Aaa 2,551,628 4,015,000 Prince William County, VA, (Series C), 3.60% Bonds, 8/1/1996 AA 4,015,172 1,500,000 Pulaski County, VA IDA, (Series 1995) Weekly VRDNs (Balogh Real Estate Ltd. Partnership Mar-Bal Inc. Project)/(Bank One, Cleveland, N.A. LOC) P-1 1,500,000 965,000 Richmond, VA IDA, Industrial Development Revenue Refunding Bonds (Series 1987-B), 3.50% TOBs (Crow- Klein-Macfarlane Project)/(First Union National Bank of Virginia LOC), Optional Tender 5/15/1996 P-1 965,000 1,000,000 Richmond, VA Redevelopment & Housing Authority, (Series B-1) Weekly VRDNs (Richmond, VA Red Tabacco Row)/(Westdeutsche Landesbank Girozentrale LOC) VMIG1 1,000,000 7,500,000 Richmond, VA, (Series 1996A), 4.00% RANs, 6/28/1996 SP-1+ 7,508,211 1,000,000 Richmond, VA, 6.00% Bonds (United States Treasury PRF), 7/15/1996 (@100.5) Aaa 1,009,990 2,900,000 South Hill, VA IDA, IDRB (Series 1987) Weekly VRDNs (South Hill Veneers, Inc Project)/(Bank One, Columbus, N.A. LOC) P-1 2,900,000 675,000 Stafford County, VA, Water & Sewer System Revenue Bonds (Series 1996), 3.80% Bonds (FGIC INS), 7/1/1996 Aaa 675,529 5,000,000 Suffolk, VA Redevelopment & Housing Authority, Multifamily Housing Revenue Bonds (Series 1995A), 4.00% TOBs (Prince William Commons Seniors Apartments)/(United States Treasury COL), Mandatory Tender 5/30/1996 NR (1) 5,000,000
VIRGINIA MUNICIPAL CASH TRUST
PRINCIPAL CREDIT AMOUNT RATING* VALUE SHORT-TERM MUNICIPALS-CONTINUED VIRGINIA-CONTINUED $ 2,460,000 Tazewell County, VA IDA, (Series 1993) Weekly VRDNs (Seville Properties Bluefield)/(Huntington National Bank, Columbus, OH LOC) P-1 $ 2,460,000 1,840,000 Virginia Education Loan Authority, (Series E), 5.00% Bonds, 9/1/1996 Aaa 1,846,999 2,200,000 Virginia Peninsula Port Authority, Coal Terminal Revenue Refunding Bonds (Series 1987A), 3.40% CP (Dominion Terminal Associates)/(National Westminster Bank, PLC, London LOC), Mandatory Tender 5/28/1996 VMIG1 2,200,000 5,500,000 Virginia Peninsula Port Authority, Facility Revenue Refunding Bonds (Series 1992), 3.55% CP (CSX Corp.)/ (Bank of Nova Scotia, Toronto LOC), Mandatory Tender 7/18/1996 A-1+ 5,500,000 4,944,000 Virginia Peninsula Port Authority, IDRB (Series 1986) Weekly VRDNs (Eeco Project)/(Nationsbank of Virginia, N.A. LOC) P-1 4,944,000 1,060,000 Virginia State Public School Authority, Series A, 6.85% Bonds (United States Treasury PRF), 1/1/1997 (@102) Aaa 1,102,482 1,507,000 Williamsburg, VA IDA, (Series 1988) Weekly VRDNs (Colonial Williamsburg Foundation Museum)/(Sanwa Bank Ltd, Osaka LOC) P-1 1,507,000 1,575,000 Winchester, VA IDA, (Series 1995) Weekly VRDNs (Midwesco Filter Resources, Inc. Project)/(Harris Trust & Savings Bank, Chicago LOC) A-1+ 1,575,000 3,300,000 Winchester, VA IDA, Hospital Revenue Bonds, 4.05% Bonds (Winchester Medical Center, Inc.)/(AMBAC INS), 1/1/1997 Aaa 3,313,876 Total 121,171,692
VIRGINIA MUNICIPAL CASH TRUST
PRINCIPAL CREDIT AMOUNT RATING* VALUE SHORT-TERM MUNICIPALS-CONTINUED VIRGIN ISLANDS-2.4% $ 3,000,000 Virgin Islands HFA, Single Family Mortgage Revenue Refunding Bonds (1995 Series B), 3.50% TOBs (FGIC INS), Mandatory Tender 11/1/1996 VMIG1 $ 3,000,000 TOTAL INVESTMENTS (AT AMORTIZED COST)(A) $ 124,171,692
Securities that are subject to Alternative Minimum Tax represent 51.2% of the portfolio as calculated based upon total market value. * Please refer to the Appendix of the Statement of Additional Information for an explanation of the credit ratings. Current credit ratings are unaudited. (a) Also represents cost for federal tax purposes. Note: The categories of investments are shown as a percentage of net assets ($125,377,365) at April 30, 1996. The following acronyms are used throughout this portfolio: AMBAC - American Municipal Bond Assurance Corporation BANs - Bond Anticipation Notes COL - Collateralized CP - Commercial Paper FGIC - Financial Guaranty Insurance Company GO - General Obligation HFA - Housing Finance Authority IDA - Industrial Development Authority IDRB - Industrial Development Revenue Bond INS - Insured LIQ - Liquidity Agreement LOC - Letter of Credit MMMs - Money Market Municipals PCR - Pollution Control Revenue PLC - Public Limited Company PRF - Prerefunded RANs - Revenue 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) VIRGINIA MUNICIPAL CASH TRUST Statement of Assets and Liabilities APRIL 30, 1996 (UNAUDITED) ASSETS: Total investments in securities, at amortized cost and value $ 124,171,692 Cash 593,248 Income receivable 899,458 Deferred expenses 17,555 Total assets 125,681,953 LIABILITIES: Income distribution payable $ 300,441 Accrued expenses 4,147 Total liabilities 304,588 Net Assets for 125,377,365 shares outstanding $ 125,377,365 NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE: INSTITUTIONAL SHARES: $19,626,761 / 19,626,761 shares outstanding $1.00 INSTITUTIONAL SERVICE SHARES: $105,750,604 / 105,750,604 shares outstanding $1.00
(See Notes which are an integral part of the Financial Statements) VIRGINIA MUNICIPAL CASH TRUST STATEMENT OF OPERATIONS SIX MONTHS ENDED APRIL 30, 1996 (UNAUDITED) <>C> INVESTMENT INCOME: Interest $ 2,877,542 EXPENSES: Investment advisory fee $ 306,719 Administrative personnel and services fee 77,253 Custodian fees 12,141 Transfer and dividend disbursing agent fees and expenses 18,534 Directors'/Trustees' fees 982 Auditing fees 8,586 Legal fees 1,360 Portfolio accounting fees 31,028 Shareholder services fee-Institutional Shares 27,262 Shareholder services fee-Institutional Service Shares 164,437 Share registration costs 18,008 Printing and postage 8,906 Insurance premiums 3,004 Miscellaneous 5,246 Total expenses 683,466 Waivers- Waiver of investment advisory fee $ (112,663) Waiver of shareholder services fee-Institutional Shares (27,262) Waiver of shareholder services fee-Institutional Service Shares (98,662) Total waivers (238,587) Net expenses 444,879 Net investment income $ 2,432,663
(See Notes which are an integral part of the Financial Statements) VIRGINIA MUNICIPAL CASH TRUST STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED YEAR ENDED (UNAUDITED) OCTOBER 31, APRIL 30, 1996 1995 INCREASE (DECREASE) IN NET ASSETS: OPERATIONS- Net investment income $ 2,432,663 $ 4,384,563 DISTRIBUTIONS TO SHAREHOLDERS- Distributions from net investment income Institutional Shares (355,968) (834,541) Institutional Service Shares (2,076,695) (3,550,022) Change in net assets resulting from distributions to shareholders (2,432,663) (4,384,563) SHARE TRANSACTIONS- Proceeds from sale of shares 538,441,141 1,020,240,888 Net asset value of shares issued to shareholders in payment of distributions declared 1,462,722 2,822,568 Cost of shares redeemed (564,250,909) (993,783,278) Change in net assets resulting from share transactions (24,347,046) 29,280,178 Change in net assets (24,347,046) 29,280,178 NET ASSETS: Beginning of period 149,724,411 120,444,233 End of period $ 125,377,365 $ 149,724,411
(See Notes which are an integral part of the Financial Statements) VIRGINIA MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS-INSTITUTIONAL SHARES (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED (UNAUDITED) APRIL 30, YEAR ENDED OCTOBER 31, 1996 1995 1994 1993(A) NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 INCOME FROM INVESTMENT OPERATIONS Net investment income 0.02 0.04 0.03 0.003 LESS DISTRIBUTIONS Distributions from net investment income (0.02) (0.04) (0.03) (0.003) NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 TOTAL RETURN(B) 1.63% 3.56% 2.57% 0.35% RATIOS TO AVERAGE NET ASSETS Expenses 0.49%* 0.49% 0.33% 0.09%* Net investment income 3.26%* 3.50% 2.56% 2.68%* Expense waiver/reimbursement(c) 0.40%* 0.42% 0.37% 1.04%* SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $19,627 $22,642 $20,360 $7,210
* Computed on an annualized basis. (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 charge or contingent deferred sales charge, if applicable. (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) VIRGINIA MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS - INSTITUTIONAL SERVICE SHARES (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Six Months Ended (unaudited) April 30, Year Ended October 31, 1996 1995 1994 1993(a) NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 INCOME FROM INVESTMENT OPERATIONS Net investment income 0.02 0.03 0.02 0.003 LESS DISTRIBUTIONS Distributions from net investment income (0.02) (0.03) (0.02) (0.003) NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 TOTAL RETURN(B) 1.58% 3.46% 2.44% 0.34% RATIOS TO AVERAGE NET ASSETS Expenses 0.59%* 0.59% 0.40% 0.19%* Net investment income 3.16%* 3.38% 2.42% 2.67%* Expense waiver/reimbursement(c) 0.30%* 0.32% 0.37% 1.04%* SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $105,751 $127,083 $100,084 $45,648
* Computed on an annualized basis. (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 charge or contingent deferred sales charge, if applicable. (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) VIRGINIA MUNICIPAL CASH TRUST NOTES TO FINANCIAL STATEMENTS APRIL 30, 1996 (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 fifteen portfolios. The financial statements included herein are only those of Virginia Municipal Cash Trust (the "Fund"), a non-diversified portfolio. The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. The Fund offers two classes of shares: Institutional Shares and Institutional Service Shares. The investment objective of the Fund is current income exempt from federal regular income tax and the income tax imposed by the Commonwealth of Virginia consistent with stability of principal. 2. SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with generally accepted accounting principles. 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. 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 over a period of five years from the Fund's commencement 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, 1996, 64.5% 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 10.0% of total investments. USE OF ESTIMATES - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ from those estimated. OTHER - Investment transactions are accounted for on 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, 1996, capital paid-in aggregated $125,377,365. Transactions in shares were as follows:
Six Months Year Ended Ended April 30, October 31, Institutional Shares 1996 1995 Shares sold 52,562,348 87,290,291 Shares issued to shareholders in payment of distributions declared 3,523 15,666 Shares redeemed (55,580,939) (85,024,334) Net change resulting from Institutional Share transactions (3,015,068) 2,281,623 Six Months Year Ended Ended April 30, October 31, Institutional Service Shares 1996 1995 Shares sold 485,878,793 932,950,597 Shares issued to shareholders in payment of distributions declared 1,459,199 2,806,902 Shares redeemed (508,669,970) (908,758,944) Net change resulting from Institutional Service Share transactions (21,331,978) 26,998,555 Net change resulting from Fund share transactions (24,347,046) 29,280,178
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 the Fund's average daily net assets. The Adviser may voluntarily choose to waive any portion of its fee. The Adviser can modify or terminate this voluntary waiver at any time at its sole discretion. ADMINISTRATIVE FEE - Federated Services Company ("FServ"), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. The fee paid to FServ is based on 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 0.25% of daily average net assets of the Fund for the period. The fee paid to FSS is used to finance certain services for shareholders and to maintain shareholder accounts. FSS may voluntarily choose to waive any portion of its fee. FSS can modify or terminate this voluntary waiver at any time at its sole discretion. TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES - FServ, through its subsidiary, Federated Shareholder Services Company serves as transfer and dividend disbursing agent for the Fund. The fee paid to FServ is based on the size, type, and number of accounts and transactions made by shareholders. PORTFOLIO ACCOUNTING FEES - FServ maintains the Fund's accounting records for which it receives a fee. The fee is based on the level of the Fund's average daily net assets for the period, plus out-of-pocket expenses. 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 effective date. For the period ended April 30, 1996, the Fund paid $3,349 pursuant to this agreement. INTERFUND TRANSACTIONS - During the period ended April 30, 1996, the Fund engaged in purchase and sale transactions with funds that have a common investment adviser (or affiliated investment advisers), common Directors/Trustees, and/or common Officers. These purchase and sale transactions were made at current market value pursuant to Rule 17a-7 under the Act amounting to $132,355,000 and $177,640,000, 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. Executive Vice President Edward L. Flaherty, Jr. Edward C. Gonzales Glen R. Johnson Executive Vice President Peter E. Madden John W. McGonigle Gregor F. Meyer Executive Vice President and Secretary John E. Murray, Jr. Richard B. Fisher Wesley W. Posvar Vice President Marjorie P. Smuts David M. Taylor Treasurer Charles H. Field 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. VIRGINIA MUNICIPAL CASH TRUST SEMI-ANNUAL REPORT TO SHAREHOLDERS APRIL 30, 1996 Federated Investors Federated Investors Tower Pittsburgh, PA 15222-3779 Federated Securities Corp. is the distributor of the fund and is a subsidiary of Federated Investors. Cusip 314229816 Cusip 314229824 G00133-01 (6/96) -----END PRIVACY-ENHANCED MESSAGE-----