-----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, JPs8SjBvy5ikOn9hwqpyKsLk7rkaSRl5E/VbKf3tDwyMvij3Qm8EWc8JRhiweVga 85IuNxdg3rEDlXKoXb/27Q== 0000855108-96-000031.txt : 19961203 0000855108-96-000031.hdr.sgml : 19961203 ACCESSION NUMBER: 0000855108-96-000031 CONFORMED SUBMISSION TYPE: 485BPOS PUBLIC DOCUMENT COUNT: 36 FILED AS OF DATE: 19961129 EFFECTIVENESS DATE: 19961129 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: 485BPOS SEC ACT: 1933 Act SEC FILE NUMBER: 033-31259 FILM NUMBER: 96674423 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1940 Act SEC FILE NUMBER: 811-05911 FILM NUMBER: 96674424 BUSINESS ADDRESS: STREET 1: FEDERATED INVESTORS TOWER CITY: PITTSBURGH STATE: PA ZIP: 15222 BUSINESS PHONE: 4122887496 485BPOS 1 1933 Act File No. 33-31259 1940 Act File No. 811-5911 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form N-1A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X -- Pre-Effective Amendment No. ............. -- Post-Effective Amendment No. 43 ........... X and/or REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X Amendment No. 43 .......................... X FEDERATED MUNICIPAL TRUST (Exact Name of Registrant as Specified in Charter) Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779 (Address of Principal Executive Offices) (412) 288-1900 (Registrant's Telephone Number) John W. McGonigle, Esquire, Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779 (Name and Address of Agent for Service) It is proposed that this filing will become effective: immediately upon filing pursuant to paragraph (b) -- X on December 29, 1996 pursuant to paragraph (b) 60 days after filing pursuant to paragraph (a) (i) on pursuant to paragraph (a) (i). 75 days after filing pursuant to paragraph (a)(ii) on pursuant to paragraph (a)(ii) of Rule 485. ----------------- If appropriate, check the following box: This post-effective amendment designates a new effective date for a previously filed post-effective amendment. Registrant has filed with the Securities and Exchange Commission a declaration pursuant to Rule 24f-2 under the Investment Company Act of 1940, and: filed the Notice required by that Rule on ; or X intends to file the Notice required by that Rule on or about December 13, 1996; or during the most recent fiscal year did not sell any securities pursuant to Rule 24f-2 under the Investment Company Act of 1940, and, pursuant to Rule 24f-2(b)(2), need not file the Notice. Copies To: Matthew G. Maloney, Esquire Dickstein Shapiro Morin & Oshinsky LLP 2101 L Street, N.W. Washington, D.C. 20037 CROSS-REFERENCE SHEET This Amendment to the Registration Statement of FEDERATED MUNICIPAL TRUST, which consists of sixteen portfolios: (1) Connecticut Municipal Cash Trust, (a) Institutional Service Shares; (2) Pennsylvania Municipal Cash Trust, (a) Cash Series Shares and (b) Institutional Service Shares; (c) Institutional Shares (3) Minnesota Municipal Cash Trust, (a) Cash Series Shares and (b) Institutional Shares; (4) New Jersey Municipal Cash Trust, (a) Institutional Shares and (b) Institutional Service Shares; (5) Ohio Municipal Cash Trust, (a) Cash II Shares (b) Institutional Shares, and (c) Institutional Service Shares; (6) Virginia Municipal Cash Trust, (a) Institutional Shares and (b) Institutional Service Shares; (7) Alabama Municipal Cash Trust; (8) North Carolina Municipal Cash Trust; (9) Maryland Municipal Cash Trust; (10) California Municipal Cash Trust, (a) Institutional Shares and (b) Institutional Service Shares; (11) New York Municipal Cash Trust, (a) Cash II Shares and (b) Institutional Service Shares; (12) Florida Municipal Cash Trust, (a) Institutional Shares and (b) Cash II Shares; (13) Massachusetts Municipal Cash Trust, (a) Institutional Service Shares and (b) 1784 Fund Shares; (14) Michigan Municipal Cash Trust, (a) Institutional Shares and (b) Institutional Service Shares; (15) Georgia Municipal Cash; and (16) Tennessee Municipal Cash Trust, (a) Institutional Shares and (b) Institutional Service Shares, relates only to (16) Tennessee Municipal Cash Trust and is comprised of the following: PART A. INFORMATION REQUIRED IN A PROSPECTUS. Prospectus Heading (Rule 404(c) Cross Reference) Item 1. Cover Page...............(1-16) Cover Page. Item 2. Synopsis.................(1-16) Summary of Fund Expenses. Item 3. Condensed Financial Information..............(1-16) Financial Highlights; (1-16) Performance Information. Item 4. General Description of Registrant...............(1-16) General Information; (1-13a, 14- 16) Investment Information; (1-13a, 14- 16) Investment Objective; (13b) Investment Objective and Policies; (1- 13a, 14-16) Investment Policies; (13b) Acceptable Investments; (1) Connecticut Municipal Securities; (2) Pennsylvania Municipal Securities; (3) Minnesota Municipal Securities; (4) New Jersey Municipal Securities; (5) Ohio Municipal Securities; (6) Virginia Municipal Securities; (7) Alabama Municipal Securities; (8) North Carolina Municipal Securities; (9) Maryland Municipal Securities; (10) California Municipal Securities; (11) New York Municipal Securities; (12) Florida Municipal Securities; (13) Massachusetts Municipal Securities; (14) Michigan Municipal Securities; (15) Georgia Municipal Securities; (16) Tennessee Municipal Securities; (1-16) Investment Risks; (1- 16) Investment Limitations; (16) Special Information Concerning Hub and Spoke; (1-16) Non-Diversification; (2-6, 10-14, 16) Other Classes of Shares. Item 5. Management of the Fund...(1-16) Fund Information; (1-16) Management of the Fund; (13b) Management, Distribution, and Administration; (1-13a, 14-16) Distribution of Cash Series, Institutional, Institutional Service, or Cash II Shares; (1-16) Administration of the Fund; (5b,10a,16) Expenses of the Fund and Institutional Shares or Institutional Shares. Item 6. Capital Stock and Other Securities...............(1-13a,14-16) Account and Share Information; (13b) Dividends and Distributions; (1-13a, 14-16)Dividends; (1-13a, 14-16)Capital Gains; (1-13a, 14- 16) Voting Rights;(1-16) Tax Information; (1-16) Federal Income Tax; (1-16) State and Local Taxes. Item 7. Purchase of Securities Being Offered..................(1-16) Net Asset Value; (13b) Pricing of Shares; (13b) How to Buy Shares; (1-13a, 14-16) How to Purchase Shares; (1, 2a, 2b, 3a, 4b, 5a, 6b, 7-9, 10b, 11, 12, 13a, 14b, 15, 16b) Special Purchase Features; (13b) Automatic Investment Program; (13b) How to Exchange Shares. Item 8. Redemption or Repurchase.(1-16) How to Redeem Shares; (1a, 2a, 2b, 3a, 4b, 5a, 6b, 7-9, 10b, 11, 12, 13a, 14b, 15, 16b) Special Redemption Features. Item 9. Pending Legal Proceedings None. PART B. INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION. Item 10. Cover Page...............(1-16) Cover Page. Item 11. Table of Contents........(1-16) Table of Contents. Item 12. General Information and History..................(1-16) About Federated Investors; (1-16) Appendix. Item 13. Investment Objectives and Policies................. (2, 3, 5-11, 13-16) Investment Policies; (1, 4, 12) Investment Objective and Policies;(1-13a, 14-16) Investment Limitations. Item 14. Management of the Fund...(1-16) Federated Municipal Trust Management. Item 15. Control Persons and Principal Holders of Securities....Not applicable. Item 16. Investment Advisory and Other Services.................(1-16) Investment Advisory Services; (1- 16) Other Services; (13b) Shareholder Servicing Agent; (1, 4, 12, 16) Shareholder Services; (6-11, 13a, 14,15) Shareholder Services Agreement; (2,3,5) Distribution Plan and Shareholder Services Agreement. Item 17. Brokerage Allocation.....(1-16) Brokerage Transactions. Item 18. Capital Stock and Other Securities...............(1-16) Massachusetts Partnership Law. Item 19. Purchase, Redemption and Pricing of Securities Being Offered (1-16) Determining Net Asset Value; (1-16) Redemption in Kind. Item 20. Tax Status............... (1-16) The Fund's Tax Status. Item 21. Underwriters.............Not applicable. Item 22. Calculation of Performance Data.....................(1-16) Yield; (1-16) Effective Yield; (1-13a,14-16) Tax-Equivalent Yield; (1- 16) Performance Comparisons; (1-16) Performance Information, (1-13a,14-16) Tax-Equivalency Table, (1-16) Total Return. Item 23. Financial Statements (1-16) Filed in Part A. TENNESSEE MUNICIPAL CASH TRUST (A PORTFOLIO OF FEDERATED MUNICIPAL CASH TRUST) INSTITUTIONAL SHARES PROSPECTUS The Institutional Shares of Tennessee Municipal Cash Trust (the "Fund") offered by this prospectus represent interests in a portfolio of Federated Municipal Trust (the "Trust"), an open-end management investment company (a mutual fund). The Fund invests primarily in short-term Tennessee municipal securities, including securities of states, territories, and possessions of the United States which are not issued by or on behalf of Tennessee, or its political subdivisions and financing authorities, but which provide current income exempt from federal regular income tax and the personal income tax imposed by the State of Tennessee consistent with stability of principal and liquidity. THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF ANY BANK, ARE NOT ENDORSED OR 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 THESE SHARES INVOLVES INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL. THE FUND ATTEMPTS TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE; THERE CAN BE NO ASSURANCE THAT THE FUND WILL BE ABLE TO DO SO. BECAUSE THE FUND MAY INVEST A SIGNIFICANT PORTION OF ITS ASSETS IN SECURITIES OF A SINGLE ISSUER, AN INVESTMENT IN THE FUND MAY INVOLVE ADDITIONAL RISKS COMPARED TO A FULLY DIVERSIFIED MONEY MARKET FUND. This prospectus contains the information you should read and know before you invest in the Fund. Keep this prospectus for future reference. The Fund has also filed a Statement of Additional Information dated December 31, 1996, with the Securities and Exchange Commission ("SEC"). The information contained in the Statement of Additional Information is incorporated by reference into this prospectus. You may request a copy of the Statement of Additional Information or a paper copy of this prospectus, if you have received your prospectus electronically, free of charge by calling 1-800-341-7400. To obtain other information, or make inquiries about the Fund, contact the Fund at the address listed in the back of this prospectus. The Statement of Additional Information, material incorporated by reference into this document, and other information regarding the Fund is maintained electronically with the SEC at Internet Web site (http://www.sec.gov). THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. Prospectus dated December 31, 1996 TABLE OF CONTENTS SUMMARY OF FUND EXPENSES 1 FINANCIAL HIGHLIGHTS -- INSTITUTIONAL SHARES 2 GENERAL INFORMATION 3 INVESTMENT INFORMATION 3 Investment Objective 3 Investment Policies 3 Tennessee Municipal Securities 6 Investment Risks 6 Investment Limitations 7 Hub and Spoke(R) Option 7 FUND INFORMATION 7 Management of the Fund 7 Distribution of Institutional Shares 8 Administration of the Fund 8 NET ASSET VALUE 9 HOW TO PURCHASE SHARES 9 HOW TO REDEEM SHARES 10 ACCOUNT AND SHARE INFORMATION 11 TAX INFORMATION 12 Federal Income Tax 12 State and Local Taxes 12 OTHER CLASSES OF SHARES 13 PERFORMANCE INFORMATION 13 FINANCIAL HIGHLIGHTS -- INSTITUTIONAL SERVICE SHARES 14 FINANCIAL STATEMENTS 15 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 25 ADDRESSES 26
SUMMARY OF FUND EXPENSES INSTITUTIONAL SHARES SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases (as a percentage of offering price) None Maximum Sales Charge Imposed on Reinvested Dividends (as a percentage of offering price) None Contingent Deferred Sales Charge (as a percentage of original purchase price or redemption proceeds, as applicable) None Redemption Fee (as a percentage of amount redeemed, if applicable) None Exchange Fee None
ANNUAL OPERATING EXPENSES (As a percentage of projected average net assets)
Management Fee (after waiver)(1) 0.00% 12b-1 Fee None Total Other Expenses (after expense reimbursement) 0.35% Shareholder Services Fee (after waiver)(2) 0.00% Total Operating Expenses(3) 0.35%
(1) The estimated management fee has been reduced to reflect the anticipated voluntary waiver of the management fee. The adviser can terminate this anticipated voluntary waiver at any time at its sole discretion. The maximum management fee is 0.50%. (2) The shareholder services fee has been reduced to reflect the voluntary waiver of the shareholder services fee. The shareholder service provider can terminate this voluntary waiver at any time at its sole discretion. The maximum shareholder services fee is 0.25%. (3) The Total Operating Expenses in the table above are based on expenses expected during the fiscal year ending October 31, 1997. The Total Operating Expenses were 0.10% for fiscal year ended October 31, 1996 and would have been 1.72% absent the voluntary waivers of the management fee and the shareholder services fee and the voluntary reimbursement of certain other operating expenses. The purpose of this table is to assist an investor in understanding the various costs and expenses that a shareholder of the Institutional Shares of the Trust will bear, either directly or indirectly. For more complete descriptions of the various costs and expenses, see "Fund Information." Wire-transferred redemptions of less than $5,000 may be subject to additional fees.
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS You would pay the following expenses on a $1,000 investment, assuming (1) 5% annual return and (2) redemption at the end of each time period $4 $11 $20 $44
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. TENNESSEE MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS -- INSTITUTIONAL SHARES (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD) Reference is made to the Report of Independent Public Accountants on page 25.
PERIOD ENDED OCTOBER 31, 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) 1.59% RATIOS TO AVERAGE NET ASSETS Expenses 0.10%* Net investment income 3.57%* Expense waiver/reimbursement(c) 1.62%* SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $17,824
* Computed on an annualized basis. (a) Reflects operations for the period from May 22, 1996 (date of initial public investment) to October 31, 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) GENERAL INFORMATION The Trust was established as a Massachusetts business trust under a Declaration of Trust dated September 1, 1989. The Declaration of Trust permits the Trust to offer separate series of shares representing interests in separate portfolios of securities. The shares in any one portfolio may be offered in separate classes. With respect to this Fund, as of the date of this prospectus, the Board of Trustees have established two classes of shares known as Institutional Shares and Institutional Service Shares. This prospectus relates only to Institutional Shares of the Fund, which are designed primarily for financial institutions acting in a fiduciary capacity as a convenient means of accumulating an interest in a professionally managed portfolio investing in short-term municipal securities. The Fund may not be a suitable investment for retirement plans or for non-Tennessee taxpayers because it invests in municipal securities of that state. A minimum initial investment of $25,000 over a 90-day period is required. The Fund attempts to stabilize the value of a share at $1.00. Shares are currently sold and redeemed at that price. INVESTMENT INFORMATION INVESTMENT OBJECTIVE 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 Tennessee consistent with stability of principal and liquidity. This investment objective cannot be changed without shareholder approval. While there is no assurance that the Fund will achieve its investment objective, it endeavors to do so by complying with the diversification and other requirements of Rule 2a-7 under the Investment Company Act of 1940 which regulates money market mutual funds and by following the investment policies described in this prospectus. INVESTMENT POLICIES The Fund pursues its investment objective by investing in a portfolio of municipal securities maturing in 13 months or less. The average maturity of the securities in the Fund's portfolio, computed on a dollar-weighted basis, will be 90 days or less. As a matter of investment policy, which cannot be changed without shareholder approval, at least 80% of the Fund's annual interest income will be exempt from federal regular income tax and the personal income taxes imposed by the State of Tennessee. (Federal regular income tax does not include the federal individual alternative minimum tax or the federal alternative minimum tax for corporations.) Unless indicated otherwise, the investment policies may be changed by the Board of Trustees without shareholder approval. Shareholders will be notified before any material change in these policies becomes effective. ACCEPTABLE INVESTMENTS. The Fund invests primarily in debt obligations issued by or on behalf of Tennessee and its political subdivisions and financing authorities, and obligations of other states, territories, and possessions of the United States, including the District of Columbia, and any political subdivision or financing authority of any of these, the income from which is, in the opinion of qualified legal counsel, exempt from federal regular income tax and the personal income taxes imposed by the State of Tennessee ("Tennessee Municipal Securities"). Examples of Tennessee Municipal Securities include, but are not limited to: * tax and revenue anticipation notes issued to finance working capital needs in anticipation of receiving taxes or other revenues; * bond anticipation notes that are intended to be refinanced through a later issuance of longer-term bonds; * municipal commercial paper and other short-term notes; * variable rate demand notes; * municipal bonds (including bonds having serial maturities and pre-refunded bonds) and leases; and * participation, trust, and partnership interests in any of the foregoing obligations. VARIABLE RATE DEMAND NOTES. Variable rate demand notes are long-term debt instruments that have variable or floating interest rates and provide the Fund with the right to tender the security for repurchase at its stated principal amount plus accrued interest. Such securities typically bear interest at a rate that is intended to cause the securities to trade at par. The interest rate may float or be adjusted at regular intervals (ranging from daily to annually), and is normally based on a published interest rate or interest rate index. Most variable rate demand notes allow the Fund to demand the repurchase of the security on not more than seven days prior notice. Other notes only permit the Fund to tender the security at the time of each interest rate adjustment or at other fixed intervals. See "Demand Features." The Fund treats variable rate demand notes as maturing on the later of the date of the next interest rate adjustment or the date on which the Fund may next tender the security for repurchase. PARTICIPATION INTERESTS. The Fund may purchase interests in Tennessee Municipal Securities from financial institutions such as commercial and investment banks, savings associations, and insurance companies. These interests may take the form of participations, beneficial interests in a trust, partnership interests or any other form of indirect ownership that allows the Fund to treat the income from the investment as exempt from federal income tax. The Fund invests in these participation interests in order to obtain credit enhancement or demand features that would not be available through direct ownership of the underlying Tennessee Municipal Securities. MUNICIPAL LEASES. Municipal leases are obligations issued by state and local governments or authorities to finance the acquisition of equipment and facilities. They may take the form of a lease, an installment purchase contract, a conditional sales contract, or a participation interest in any of the above. Lease obligations may be subject to periodic appropriation. Municipal leases are subject to certain specific risks in the event of default or failure of appropriation. CREDIT ENHANCEMENT. Certain of the Fund's acceptable investments may be credit-enhanced by a guaranty, letter of credit, or insurance. Any bankruptcy, receivership, default, or change in the credit quality of the party providing the credit enhancement will adversely affect the quality and marketability of the underlying security and could cause losses to the Fund and affect its share price. The Fund may have more than 25% of its total assets invested in securities credit-enhanced by banks. DEMAND FEATURES. The Fund may acquire securities that are subject to puts and standby commitments ("demand features") to purchase the securities at their principal amount (usually with accrued interest) within a fixed period (usually seven days) following a demand by the Fund. The demand feature may be issued by the issuer of the underlying securities, a dealer in the securities, or by another third party, and may not be transferred separately from the underlying security. The Fund uses these arrangements to provide the Fund with liquidity and not to protect against changes in the market value of the underlying securities. The bankruptcy, receivership, or default by the issuer of the demand feature, or a default on the underlying security or other event that terminates the demand feature before its exercise, will adversely affect the liquidity of the underlying security. Demand features that are exercisable even after a payment default on the underlying security may be treated as a form of credit enhancement. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase securities on a when-issued or delayed delivery basis. These transactions are arrangements in which the Fund purchases securities with payment and delivery scheduled for a future time. The seller's failure to complete these transactions may cause the Fund to miss a price or yield considered to be advantageous. Settlement dates may be a month or more after entering into these transactions, and the market values of the securities purchased may vary from the purchase prices. The Fund may dispose of a commitment prior to settlement if the adviser deems it appropriate to do so. In addition, the Fund may enter into transactions to sell its purchase commitments to third parties at current market values and simultaneously acquire other commitments to purchase similar securities at later dates. The Fund may realize short-term profits or losses upon the sale of such commitments. RESTRICTED AND ILLIQUID SECURITIES. The Fund may invest in restricted securities. Restricted securities are any securities in which the Fund may invest pursuant to its investment objective and policies but which are subject to restrictions on resale under federal securities law. Under criteria established by the Trustees, certain restricted securities are determined to be liquid. To the extent that restricted securities are not determined to be liquid the Fund will limit their purchase, together with other illiquid securities, to 10% of its net assets. TEMPORARY INVESTMENTS. From time to time, when the investment adviser determines that market conditions call for a temporary defensive posture, the Fund may invest in tax-exempt or taxable securities, all of comparable quality to other securities in which the Fund invests, such as: obligations issued by or on behalf of municipal or corporate issuers; obligations issued or guaranteed by the U.S. government, its agencies, or instrumentalities; instruments issued by a U.S. branch of a domestic bank or other depository institutions having capital, surplus, and undivided profits in excess of $100,000,000 at the time of investment; and repurchase agreements (arrangements in which the organization selling the Fund a temporary investment agrees at the time of sale to repurchase it at a mutually agreed upon time and price). Although the Fund is permitted to make taxable, temporary investments, there is no current intention to do so. However, the interest from certain Tennessee Municipal Securities is subject to the federal alternative minimum tax. TENNESSEE MUNICIPAL SECURITIES Tennessee Municipal Securities are generally issued to finance public works, such as airports, bridges, highways, housing, hospitals, mass transportation projects, schools, streets, and water and sewer works. They are also issued to repay outstanding obligations, to raise funds for general operating expenses, and to make loans to other public institutions and facilities. Tennessee Municipal Securities include industrial development bonds issued by or on behalf of public authorities to provide financing aid to acquire sites or construct and equip facilities for privately or publicly owned corporations. The availability of this financing encourages these corporations to locate within the sponsoring communities and thereby increases local employment. The two principal classifications of Tennessee Municipal Securities are "general obligation" and "revenue" bonds. General obligation bonds are secured by the issuer's pledge of its full faith and credit and taxing power for the payment of principal and interest. Interest on and principal of revenue bonds, however, are payable only from the revenue generated by the facility financed by the bond or other specified sources of revenue. Revenue bonds do not represent a pledge of credit or create any debt of or charge against the general revenues of a municipality or public authority. Industrial development bonds are typically classified as revenue bonds. INVESTMENT RISKS Yields on Tennessee Municipal Securities depend on a variety of factors, including: the general conditions of the short-term municipal note market and of the municipal bond market; the size of the particular offering; the maturity of the obligations; and the rating of the issue. The ability of the Fund to achieve its investment objective also depends on the continuing ability of the issuers of Tennessee Municipal Securities and participation interests, or the credit enhancers of either, to meet their obligations for the payment of interest and principal when due. In addition, from time to time, the supply of Tennessee Municipal Securities acceptable for purchase by the Fund could become limited. The Fund may invest in Tennessee Municipal Securities which are repayable out of revenue streams generated from economically related projects or facilities and/or whose issuers are located in the same state. Sizable investments in these Tennessee Municipal Securities could involve an increased risk to the Fund should any of these related projects or facilities experience financial difficulties. Obligations of issuers of Tennessee Municipal Securities are subject to the provisions of bankruptcy, insolvency, and other laws affecting the rights and remedies of creditors. In addition, the obligations of such issuers may become subject to laws enacted in the future by Congress, state legislators, or referenda extending the time for payment of principal and/or interest, or imposing other constraints upon enforcement of such obligations or upon the ability of states or municipalities to levy taxes. There is also the possibility that, as a result of litigation or other conditions, the power or ability of any issuer to pay, when due, the principal of and interest on its municipal securities may be materially affected. Due to these risk considerations, the Fund's concentration in Tennessee Municipal Securities may entail a greater level of risk than other types of money market funds. INVESTMENT LIMITATIONS The Fund will not borrow money directly or through reverse repurchase agreements (arrangements in which the Fund sells a money market instrument for a percentage of its cash value with an agreement to buy it back on a set date) or pledge securities except, under certain circumstances, the Fund may borrow up to one-third of the value of its total assets and pledge assets to secure such borrowings. These investment limitations cannot be changed without shareholder approval. HUB AND SPOKE* OPTION If the Trustees determine it to be in the best interest of the Fund and its shareholders, the Fund may in the future seek to achieve its objective by investing all of its assets in another investment company having the same investment objective and substantially the same investment policies and restrictions as those applicable to the Fund. It is expected that any such investment company would be managed in substantially the same manner as the Fund. The initial shareholder of the Fund voted to vest authority to use this investment structure in the sole discretion of the Trustees. No further approval of shareholders is required. Shareholders will receive at least 30 days notice prior to any such investment. In making its determination, the Trustees will consider, among other things, the benefits to shareholders and/or the opportunity to reduce costs and achieve operational efficiencies. Although it is expected that the Trustees will not approve an arrangement that is likely to result in higher costs, no assurance is given that costs will remain the same or be materially reduced if this investment structure is implemented. FUND INFORMATION MANAGEMENT OF THE FUND BOARD OF TRUSTEES. The Fund is managed by a Board of Trustees. The Trustees are responsible for managing the Fund's business affairs and for exercising all the Trust's powers except those reserved for the shareholders. An Executive Committee of the Board of Trustees handles the Board's responsibilities between meetings of the Board. INVESTMENT ADVISER. Investment decisions for the Fund are made by Federated Management, the Fund's investment adviser, subject to direction by the Trustees. The adviser continually conducts investment research and supervision for the Fund and is responsible for the purchase and sale of portfolio instruments. ADVISORY FEES. The adviser receives an annual investment advisory fee equal to .50% of the Fund's average daily net assets. The adviser may voluntarily choose to waive a portion of its fee or reimburse other expenses of the Fund, but reserves the right to terminate such waiver or reimbursement at any time at its sole discretion. ADVISER'S BACKGROUND. Federated Management, a Delaware business trust, organized on April 11, 1989, is a registered investment adviser under the Investment Advisers Act of 1940. It is a subsidiary of Federated Investors. All of the Class A (voting) Shares of Federated Investors are owned by a trust, the trustees of which are John F. Donahue, Chairman and Trustee of Federated Investors, Mr. Donahue's wife, and Mr. Donahue's son, J. Christopher Donahue, who is President and Trustee of Federated Investors. Federated Management and other subsidiaries of Federated Investors serve as investment advisers to a number of investment companies and private accounts. Certain other subsidiaries also provide administrative services to a number of investment companies. With over $80 billion invested across more than 250 funds under management and/or administration by its subsidiaries, as of December 31, 1995, Federated Investors is one of the largest mutual fund investment managers in the United States. With more than 1,800 employees, Federated continues to be led by the management who founded the company in 1955. Federated funds are presently at work in and through 4,000 financial institutions nationwide. More than 100,000 investment professionals have selected Federated funds for their clients. Both the Trust and the adviser have adopted strict codes of ethics governing the conduct of all employees who manage the Fund and its portfolio securities. These codes recognize that such persons owe a fiduciary duty to the Fund's shareholders and must place the interests of shareholders ahead of the employees' own interests. Among other things, the codes: require preclearance and periodic reporting of personal securities transactions; prohibit personal transactions in securities being purchased or sold, or being considered for purchase or sale, by the Fund; prohibit purchasing securities in initial public offerings; and prohibit taking profits on securities held for less than sixty days. Violations of the codes are subject to review by the Trustees, and could result in severe penalties. DISTRIBUTION OF INSTITUTIONAL SHARES Federated Securities Corp. is the principal distributor for Institutional Shares of the Fund. It is a Pennsylvania corporation organized on November 14, 1969, and is the principal distributor for a number of investment companies. Federated Securities Corp. is a subsidiary of Federated Investors. SHAREHOLDER SERVICES. The Fund has entered into a Shareholder Services Agreement with Federated Shareholder Services, a subsidiary of Federated Investors, under which the Fund may make payments up to .25% of the average daily net asset value of the Institutional Shares, computed at an annual rate, to obtain certain personal services for shareholders and to maintain shareholder accounts. From time to time and for such periods as deemed appropriate, the amount stated above may be reduced voluntarily. Under the Shareholder Services Agreement, Federated Shareholder Services will either perform shareholder services directly or will select financial institutions to perform shareholder services. Financial institutions will receive fees based upon shares owned by their clients or customers. The schedules of such fees and the basis upon which such fees will be paid will be determined from time to time by the Fund and Federated Shareholder Services. SUPPLEMENTAL PAYMENTS TO FINANCIAL INSTITUTIONS. In addition to payments made pursuant to the Shareholder Services Agreement, Federated Securities Corp. and Federated Shareholder Services, from their own assets, may pay financial institutions supplemental fees for the performance of substantial sales services, distribution-related support services, or shareholder services. The support may include sponsoring sales, educational and training seminars for their employees, providing sales literature and engineering computer software programs that emphasize the attributes of the Fund. Such assistance may be predicated upon the amount of shares the financial institution sells or may sell, and/or upon the type and nature of sales or marketing support furnished by the financial institution. Any payments made by the distributor may be reimbursed by the Fund's investment adviser or its affiliates. ADMINISTRATION OF THE FUND ADMINISTRATIVE SERVICES. Federated Services Company, a subsidiary of Federated Investors, provides administrative personnel and services (including certain legal and financial reporting services) necessary to operate the Fund at an annual rate which relates to the average aggregate daily net assets of all funds advised by affiliates of Federated Investors specified below:
MAXIMUM AVERAGE AGGREGATE ADMINISTRATIVE FEE DAILY NET ASSETS .15% on the first $250 million .125% on the next $250 million .10% on the next $250 million .075% on assets in excess of $750 million
The administrative fee received during any fiscal year shall be at least $125,000 per portfolio and $30,000 per each additional class of shares. Federated Services Company may choose voluntarily to waive a portion of its fee. NET ASSET VALUE The Fund attempts to stabilize the net asset value of shares at $1.00 by valuing the portfolio securities using the amortized cost method. The net asset value per share is determined by subtracting liabilities attributable to Institutional Shares from the value of Fund assets attributable to Institutional Shares, and dividing the remainder by the number of Institutional Shares outstanding. The Fund cannot guarantee that its net asset value will always remain at $1.00 per share. The net asset value is determined at 12:00 noon, 1:00 p.m. (Eastern time), and as of the close of trading (normally 4:00 p.m., Eastern time) on the New York Stock Exchange, Monday through Friday, except on New Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day. HOW TO PURCHASE SHARES Shares are sold at their net asset value, without a sales charge, next determined after an order is received, on days on which the New York Stock Exchange is open for business. Shares may be purchased either by wire or by check. The Fund reserves the right to reject any purchase request. To make a purchase, open an account by calling Federated Securities Corp. Information needed to establish the account will be taken by telephone. The minimum initial investment is $25,000. However, an account may be opened with a smaller amount as long as the minimum is reached within 90 days. Minimum investments will be calculated by combining all accounts maintained with the Fund. Financial institutions may impose different minimum investment requirements on their customers. PURCHASING SHARES BY WIRE. Shares may be purchased by Federal Reserve wire by calling the Fund before 1:00 p.m. (Eastern time) to place an order. The order is considered received immediately. Payment by federal funds must be received before 3:00 p.m. (Eastern time) that day. Federal funds should be wired as follows: Federated Shareholder Services Company, c/o State Street Bank and Trust Company, Boston, MA; Attention: EDGEWIRE; For Credit to: Tennessee Municipal Cash Trust -- Institutional Shares; Fund Number (this number can be found on the account statement or by contacting the Fund); Group Number or Order Number; Nominee or Institution Name; and ABA Number 011000028. Shares cannot be purchased by wire on holidays when wire transfers are restricted. Questions on wire purchases should be directed to your shareholder services representative at the telephone number listed on your account statement. PURCHASING SHARES BY CHECK. Shares may be purchased by sending a check to Federated Shareholder Services Company, P.O. Box 8600, Boston, MA 02266-8600. The check should be made payable to: Tennessee Municipal Cash Trust -- Institutional Shares. Orders by mail are considered received when payment by check is converted into federal funds (normally the business day after the check is received), and shares begin earning dividends the next day. HOW TO REDEEM SHARES Shares are redeemed at their net asset value next determined after Federated Shareholder Services Company receives the redemption request. Redemptions will be made on days on which the Fund computes its net asset value. Redemption requests must be received in proper form and can be made as described below. REDEEMING SHARES BY TELEPHONE. Redemptions in any amount may be made by calling the Fund provided the Fund has a properly completed authorization form. These forms can be obtained from Federated Securities Corp. Proceeds from redemption requests before 12:00 noon (Eastern time) will be wired the same day to the shareholder's account at a domestic commercial bank which is a member of the Federal Reserve System, but will not include that day's dividend. Proceeds from redemption requests received after that time include that day's dividend but will be wired the following business day. Proceeds from redemption requests on holidays when wire transfers are restricted will be wired the following business day. Questions about telephone redemptions on days when wire transfers are restricted should be directed to your shareholder services representative at the telephone number listed on your account statement. Telephone instructions may be recorded and if reasonable procedures are not followed by the Fund, it may be liable for losses due to unauthorized or fraudulent telephone instructions. In the event of drastic economic or market changes, a shareholder may experience difficulty in redeeming by telephone. If this occurs, "Redeeming Shares By Mail" should be considered. If at any time the Fund shall determine it necessary to terminate or modify the telephone redemption privilege, shareholders would be promptly notified. REDEEMING SHARES BY MAIL. Shares may be redeemed in any amount by mailing a written request to: Federated Shareholder Services Company, P.O. Box 8600, Boston, MA 02266-8600. If share certificates have been issued, they should be sent unendorsed with the written request by registered or certified mail to the address noted above. The written request should state: the Fund name and the class designation; the account name as registered with the Fund; the account number; and the number of shares to be redeemed or the dollar amount requested. All owners of the account must sign the request exactly as the shares are registered. Normally, a check for the proceeds is mailed within one business day, but in no event more than seven days, after the receipt of a proper written redemption request. Dividends are paid up to and including the day that a redemption request is processed. Shareholders requesting a redemption of any amount to be sent to an address other than that on record with the Fund or a redemption payable other than to the shareholder of record must have their signatures guaranteed by a commercial or savings bank, trust company, or savings association whose deposits are insured by an organization which is administered by the Federal Deposit Insurance Corporation; a member firm of a domestic stock exchange; or any other "eligible guarantor institution," as defined in the Securities Exchange Act of 1934. The Fund does not accept signatures guaranteed by a notary public. ACCOUNT AND SHARE INFORMATION DIVIDENDS. Dividends are declared daily and paid monthly. Dividends are automatically reinvested on payment dates in additional shares of the Fund unless cash payments are requested by writing to the Fund. Shares purchased by wire before 1:00 p.m. (Eastern time) begin earning dividends that day. Shares purchased by check begin earning dividends the day after the check is converted into federal funds. CAPITAL GAINS. The Fund does not expect to realize any capital gains or losses. If capital gains or losses were to occur, they could result in an increase or decrease in dividends. The Fund will distribute in cash or additional shares any realized net long-term capital gains at least once every 12 months. CERTIFICATES AND CONFIRMATIONS. As transfer agent for the Fund, Federated Shareholder Services Company maintains a share account for each shareholder. Share certificates are not issued unless requested by contacting the Fund or Federated Shareholder Services Company in writing. Monthly confirmations are sent to report all transactions as well as dividends paid during the month. ACCOUNTS WITH LOW BALANCES. Due to the high cost of maintaining accounts with low balances, the Fund may redeem shares in any account and pay the proceeds to the shareholder if the account balance falls below a required minimum value of $25,000 due to shareholder redemptions. Before shares are redeemed to close an account, the shareholder is notified in writing and allowed 30 days to purchase additional shares to meet the minimum requirement. VOTING RIGHTS. Each share of the Trust owned by a shareholder gives that shareholder one vote in Trustee elections and other matters submitted to shareholders for vote. All shares of all classes of each portfolio in the Trust have equal voting rights; except that in matters affecting only a particular portfolio or class, only shareholders of that portfolio or class are entitled to vote. The Trust is not required to hold annual shareholder meetings. Shareholder approval will be sought only for certain changes in the Trust's or the Fund's operation and for election of Trustees under certain circumstances. Trustees may be removed by the Trustees or by shareholders at a special meeting. A special meeting shall be called by the Trustees upon the written request of shareholders owning at least 10% of the outstanding shares of the Trust. As of November 5, 1996, Trust Company of Knoxville, organized in the State of Tennessee owned 34.10% of the voting securities of the Institutional Shares of the Fund, and Berman Family Investment LP owned 37.52% of the voting securities of the Institutional Service Shares of the Fund. Therefore, they may, for certain purposes, be deemed to control the Fund and be able to affect the outcome of certain matters presented for a vote of shareholders. TAX INFORMATION FEDERAL INCOME TAX The Fund will pay no federal income tax because it expects to meet requirements of the Internal Revenue Code applicable to regulated investment companies and to receive the special tax treatment afforded to such companies. The Fund will be treated as a single, separate entity for federal income tax purposes so that income (including capital gains) and losses realized by the Trust's other portfolios will not be combined for tax purposes with those realized by the Fund. Shareholders are not required to pay the federal regular income tax on any dividends received from the Fund that represent net interest on tax-exempt municipal bonds. However, under the Tax Reform Act of 1986, dividends representing net interest earned on certain "private activity" bonds issued after August 7, 1986, may be included in calculating the federal individual alternative minimum tax or the federal alternative minimum tax for corporations. The Fund may purchase, within the limits of its investment policies, all types of municipal bonds, including private activity bonds. The alternative minimum tax applies when it exceeds the regular tax for the taxable year. Alternative minimum taxable income is equal to the regular taxable income of the taxpayer increased by certain "tax preference" items not included in regular taxable income and reduced by only a portion of the deductions allowed in the calculation of the regular tax. Dividends of the Fund representing net interest income earned on some temporary investments and any realized net short-term gains are taxed as ordinary income. These tax consequences apply whether dividends are received in cash or as additional shares. STATE AND LOCAL TAXES Income from the Fund is not necessarily free from taxes in states other than Tennessee. Shareholders are urged to consult their own tax advisers regarding the status of their accounts under state and local tax laws. TENNESSEE TAXES. Under existing Tennessee law, distributions made by the Fund will not be subject to Tennessee personal income taxes to the extent that such distributions qualify as "exempt-interest dividends" under the Internal Revenue Code, and represent (i) interest on obligations of the state of Tennessee or its political subdivisions; or (ii) interest on certain obligations of the United States, or any agency or instrumentality thereof. To the extent that distributions by the Fund are derived from distributions on other types of obligations, such distributions will be subject to Tennessee personal income taxes. Distributions made by the Fund will be subject to the excise taxes imposed on corporations. OTHER CLASSES OF SHARES The Fund also offers another class of shares called Institutional Service Shares. Institutional Service Shares are sold primarily to financial institutions acting in an agency capacity. Institutional Service Shares are sold at net asset value and are subject to a Shareholder Services Agreement. Investments in Institutional Service Shares are subject to a minimum initial investment of $10,000 over a 90-day period. Institutional Shares and Institutional Service Shares are subject to certain of the same expenses. Expense differences between classes may affect the performance of each class. To obtain more information and a prospectus for any other class, investors may call 1-800-341-7400. PERFORMANCE INFORMATION From time to time, the Fund advertises its yield, effective yield, tax-equivalent yield, and total return. The performance figures will be calculated separately for each class of shares. Yield represents the annualized rate of income earned on an investment over a seven-day period. It is the annualized dividends earned during the period on an investment shown as a percentage of the investment. The effective yield is calculated similarly to the yield, but when annualized, the income earned by an investment is assumed to be reinvested daily. The effective yield will be slightly higher than the yield because of the compounding effect of this assumed reinvestment. The tax-equivalent yield is calculated similarly to the yield, but is adjusted to reflect the taxable yield that would have to be earned to equal the Fund's tax-exempt yield, assuming a specific tax rate. Total return represents the change, over a specified period of time, in the value of an investment in the shares after reinvesting all income distributions. It is calculated by dividing that change by the initial investment and is expressed as a percentage. From time to time, advertisements for the Fund may refer to ratings, rankings, and other information in certain financial publications and/or compare the Fund's performance to certain indices. TENNESSEE MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS -- INSTITUTIONAL SERVICE SHARES (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD) Reference is made to the Report of Independent Public Accountants on page 25.
PERIOD ENDED OCTOBER 31, 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) 1.48% RATIOS TO AVERAGE NET ASSETS Expenses 0.39%* Net investment income 3.26%* Expense waiver/reimbursement(c) 1.33%* SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $29,824
* Computed on an annualized basis. (a) Reflects operations for the period from May 22, 1996 (date of initial public investment) to October 31, 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) TENNESSEE MUNICIPAL CASH TRUST PORTFOLIO OF INVESTMENTS OCTOBER 31, 1996
PRINCIPAL AMOUNT VALUE (a)SHORT-TERM MUNICIPALS -- 103.0% TENNESSEE -- 98.8% $ 2,200,000 Benton County, TN IDB, (Series 1996) Weekly VRDNs (Jones Plastic and Engineering Corp.)/(National City Bank, Kentucky LOC) $ 2,200,000 1,300,000 Chattanooga, TN HEFA Weekly VRDNs (Mccallie School)/(SunTrust Bank, Atlanta LOC) 1,300,000 1,100,000 Chattanooga, TN HEFA Weekly VRDNs (Sisken Hospital)/(Sumitomo Bank Ltd., Osaka LOC) 1,100,000 1,000,000 Cocke County, TN IDB Weekly VRDNs (GLI, Inc.)/(Great Lakes Chemical Corp. GTD) 1,000,000 510,000 Cocke County, TN IDB, (Series 1988) Weekly VRDNs (GLI, Inc.)/ (Great Lakes Chemical Corp. GTD) 510,000 2,000,000 Dickson County, TN IDB, (Series 1996) Weekly VRDNs (Tennessee Bun Company, LLC Project)/(PNC Bank, Ohio, N.A. LOC) 2,000,000 1,550,000 Greenfield, TN IDB, IDRB, (Series 1995) Weekly VRDNs (Plastic Products Company Project)/(Norwest Bank Minnesota, Minneapolis LOC) 1,550,000 4,200,000 Hawkins County, TN IDB, (Series 1995) Weekly VRDNs (Sekisui Ta Industries, Inc. Project)/(Bank of Tokyo-Mitsubishi Ltd. LOC) 4,200,000 2,900,000 Hendersonville, TN IDB, (Series 1996) Weekly VRDNs (Betty Machine Co. Project)/(First Union National Bank, Charlotte, N.C. LOC) 2,900,000 1,800,000 Jackson County, TN IDB, (Series B) Daily VRDNs (Esselte AB)/(Bank of America, Illinois LOC) 1,800,000 1,000,000 Jackson, TN IDB , Solid Waste Facility Bonds (Series 1995) Weekly VRDNs (Florida Steel Corp.)/(NationsBank, South LOC) 1,000,000 1,325,000 Knox County, TN IDB, (Series 1996) Weekly VRDNs (Health Ventures, Inc. Project)/(SunTrust Bank, Nashville LOC) 1,325,000 400,000 Maury County, TN HEFA, (Series 1996E) Weekly VRDNs (Southern Healthcare Systems, Inc.)/(Bank One, Texas, N.A. LOC) 400,000 2,400,000 McMinn County, TN IDB, Industrial Development Bonds, (Series 1995) Weekly VRDNs (Creative Fabrication Corp.)/(NBD Bank, Michigan LOC) 2,400,000
TENNESSEE MUNICIPAL CASH TRUST PORTFOLIO OF INVESTMENTS
PRINCIPAL AMOUNT VALUE (a)SHORT-TERM MUNICIPALS -- CONTINUED TENNESSEE -- CONTINUED $ 770,000 Memphis, TN, (Series 1996), 5.00% Bonds, 7/1/1997 $ 775,446 1,000,000 Metropolitan Government Nashville & Davidson County, TN HEFA, (Series 1989 A), 3.65% CP (Vanderbilt University), Mandatory Tender 1/10/1997 1,000,000 2,500,000 Metropolitan Government Nashville & Davidson County, TN HEFA, Hospital Revenue Bonds, (Series 1992), 3.60% CP (Baptist Hospital, Inc. (TN)/(NationsBank, South LIQ), Mandatory Tender 1/21/1997 2,500,000 1,000,000 Metropolitan Government Nashville & Davidson County, TN HEFA, Hospital Revenue Bonds, (Series 1992), 3.65% CP (Baptist Hospital, Inc. (TN)/(NationsBank, South LIQ), Mandatory Tender 1/8/1997 1,000,000 2,300,000 Metropolitan Government Nashville & Davidson County, TN IDB, Metropolitan Government Revenue Bonds, (Series 1995) Weekly VRDNs (YMCA Projects)/(Nationsbank of Tennessee LOC) 2,300,000 1,700,000 Oak Ridge, TN IDB, Solid Waste Facility Bonds, (Series 1996) Weekly VRDNs (M4 Environmental L.P. Project)/(SunTrust Bank, Atlanta LOC) 1,700,000 300,000 Paris, TN IDB Weekly VRDNs (Plumley - Marugo Limited)/(PNC Bank, Kentucky LOC) 300,000 700,000 Roane, TN IDB, (Series 1982), 3.50% (Fortafil Fibers, Inc. Project)/(ABN AMRO Bank N.V., Amsterdam LOC), 11/15/96 700,000 1,000,000 Shelby County, TN Health Education & Housing Facilities Board, 4.05% TOBs (Methodist Health System, Inc.)/(MBIA INS)/(Sanwa Bank Ltd, Osaka LIQ), Optional Tender 8/1/1997 1,000,000 1,130,000 Shelby County, TN Health Education & Housing Facilities Board, 9.625% Bonds, (Lebonheur Children's Medical Center)/(United States Treasury PRF), 7/1/1997 (@100) 1,173,395 1,000,000 Shelby County, TN Health Education & Housing Facilities Board, Multifamily Housing Revenue Bonds, (Series 1988) Weekly VRDNs (Arbor Lake Project)/(PNC Bank, N.A. LOC) 1,000,000 800,000 South Pittsburg, TN IDB, (Series 1996) Weekly VRDNs (Lodge Manufacturing Co. Project)/(SunTrust Bank, Nashville LOC) 800,000 1,000,000 Tennessee Housing Development Agency, (Series 1996-5), 4.00% TOBs, Mandatory Tender 8/21/1997 1,000,000
TENNESSEE MUNICIPAL CASH TRUST PORTFOLIO OF INVESTMENTS
PRINCIPAL AMOUNT VALUE (a)SHORT-TERM MUNICIPALS -- CONTINUED TENNESSEE -- CONTINUED $ 1,500,000 Tennessee Housing Development Agency, Homeownership Program Bonds (Issue 1996-3), 3.85% TOBs, Optional Tender 5/29/1997 $ 1,500,000 2,385,000 Tennessee State School Board Authority, (Series 1996 B), 5.00% Bonds, 5/1/1997 2,398,419 2,000,000 Union City, TN IDB, (Series 1995) Weekly VRDNs (Kohler Co.)/ (Wachovia Bank of Georgia NA, Atlanta LOC) 2,000,000 1,500,000 Union County, TN IDB, (Series 1995) Weekly VRDNs (Cooper Container Corporation Project)/(SunTrust Bank, Nashville LOC) 1,500,000 735,000 Williamson County, TN, General Obligation Capital Outlay Notes (Series 1996), 4.60% Bonds, 10/1/1997 740,432 Total 47,072,692 PUERTO RICO -- 2.1% 1,000,000 Puerto Rico Industrial, Tourist, Education, Medical & Environmental Control Finance Authority, (Series 1994A), 3.80% CP (Inter American University of Puerto Rico)/(Banque Paribas, Paris LOC), Mandatory Tender 1/14/1997 1,000,000 GUAM -- 2.1% 1,000,000 Guam Water System Revenue Bonds, (Series 1989), 6.70% Bonds (Capital Guaranty Corp. INS), 7/1/1997 1,018,234 TOTAL INVESTMENTS (AT AMORTIZED COST)(b) $ 49,090,926
Securities that are subject to Alternative Minimum Tax represent 58.8% of the portfolio as calculated based upon total market value. (a) The Fund may only invest in securities rated in one of the two highest short-term rating categories by nationally recognized statistical rating organizations ("NRSROs") or unrated securities of comparable quality. An NRSRO's two highest rating categories are determined without regard for sub-categories and gradations. For example, securities, rated SP-1+, SP-1 or SP-2 by Standard & Poor's Corporation, MIG-1 or MIG-2 by Moody's Investors Service, Inc., or FIN-1+, FIN-1 and FIN-2 by Fitch Investors Service, Inc. are all considered rated one of the two highest short-term rating securities. Securities rated in the highest short-term rating category (and unrated securities of comparable quality) are identified as First Tier securities. Securities rated in the second highest short-term rating category (and unrated securities of comparable quality) are identified as Second Tier securities. The Fund follows application regulations in determining whether a security is rated and whether a security rated by multiple NRSROs in different rating categories should be identified as a First or Second Tier security. At October 31, 1996, the portfolio securities were rated as follows:
FIRST TIER SECOND TIER Tier rating percentage based on total market value (unaudited) 100% 0.00%
(b) Also represents cost for federal tax purposes. Note: The categories of investments are shown as a percentage of net assets ($47,647,706) at October 31, 1996. The following acronyms are used throughout this portfolio: CP -- Commercial Paper GTD -- Guaranty HEFA -- Health and Education Facilities Authority IDB -- Industrial Development Bond IDRB -- Industrial Development Revenue Bond INS -- Insured LIQ -- Liquidity Agreement LOC -- Letter of Credit MBIA -- Municipal Bond Investors Assurance PRF -- Prerefunded TOBs -- Tender Option Bonds VRDNs -- Variable Rate Demand Notes (See Notes which are an integral part of the Financial Statements) TENNESSEE MUNICIPAL CASH TRUST STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1996
ASSETS: Total investments in securities, at amortized cost and value $49,090,926 Cash 169,351 Income receivable 260,093 Total assets 49,520,370 LIABILITIES: Payable for investments purchased $ 1,743,907 Payable for shares redeemed 29,682 Income distribution payable 61,845 Accrued expenses 37,230 Total liabilities 1,872,664 NET ASSETS for 47,647,706 shares outstanding $47,647,706 NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE: INSTITUTIONAL SHARES: $17,823,803 / 17,823,803 shares outstanding $1.00 INSTITUTIONAL SERVICE SHARES: $29,823,903 / 29,823,903 shares outstanding $1.00
(See Notes which are an integral part of the Financial Statements) TENNESSEE MUNICIPAL CASH TRUST STATEMENT OF OPERATIONS PERIOD ENDED OCTOBER 31, 1996*
INVESTMENT INCOME: Interest $525,612 EXPENSES: Investment advisory fee $ 71,830 Administrative personnel and services fee 71,571 Custodian fees 10,324 Transfer and dividend disbursing agent fees and expenses 6,199 Directors'/Trustees' fees 1,379 Legal fees 200 Portfolio accounting fees 26,665 Shareholder services fee -- Institutional Shares 15,852 Shareholder services fee -- Institutional Service Shares 20,063 Share registration costs 14,119 Printing and postage 5,000 Insurance premiums 3,265 Miscellaneous 686 Total expenses 247,153 Waivers and reimbursements -- Waiver of investment advisory fee $ (71,830) Waiver of shareholder services fee -- Institutional Shares (15,852) Reimbursement of other operating expenses (121,760) Total waivers and reimbursements (209,442) Net expenses 37,711 Net investment income $487,901
* For the period from May 22, 1996 (date of initial investment) to October 31, 1996. (See Notes which are an integral part of the Financial Statements) TENNESSEE MUNICIPAL CASH TRUST STATEMENT OF CHANGES IN NET ASSETS
PERIOD ENDED OCTOBER 31, 1996* INCREASE (DECREASE) IN NET ASSETS: OPERATIONS-- Net investment income $ 487,901 DISTRIBUTIONS TO SHAREHOLDERS-- Distributions from net investment income Institutional Shares (226,076) Institutional Service Shares (261,825) Change in net assets resulting from distributions to shareholders (487,901) SHARE TRANSACTIONS-- Proceeds from sale of shares 165,734,867 Net asset value of shares issued to shareholders in payment of distributions declared 209,339 Cost of shares redeemed 118,296,500) Change in net assets resulting from share transactions 47,647,706 Change in net assets 47,647,706 NET ASSETS: Beginning of period - End of period $ 47,647,706
* For the period from May 22, 1996 (date of initial public investment) to October 31, 1996. (See Notes which are an integral part of the Financial Statements) TENNESSEE MUNICIPAL CASH TRUST NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 1996 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 sixteen portfolios. The financial statements included herein are only those of Tennessee Municipal Cash Trust (the "Fund'). The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. The Fund offers two classes of shares: Institutional Shares and Institutional Service Shares. 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 Tennessee 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. 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 October 31, 1996, capital paid-in aggregated $47,647,706. Transactions in shares were as follows:
PERIOD ENDED OCTOBER 31, 1996 INSTITUTIONAL SHARES SHARES Shares sold 34,644,791 Shares issued to shareholders in payment of distributions declared 3,455 Shares redeemed (16,824,443) Net change resulting from Institutional Share transactions 17,823,803
For the period from May 22, 1996 (date of initial public investment) to October 31, 1996.
PERIOD ENDED OCTOBER 31, 1996 INSTITUTIONAL SERVICE SHARES SHARES Shares sold 131,090,076 Shares issued to shareholders in payment of distributions declared 205,884 Shares redeemed (101,472,057) Net change resulting from Institutional Service Share transactions 29,823,903 Net change resulting from share transactions 47,647,706
For the period from May 22, 1996 (date of initial public investment) to October 31, 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 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 ("FSSC") serves as transfer and dividend disbursing agent for the Fund. The fee paid to FSSC is based on the size, type, and number of accounts and transactions made by shareholders. 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 October 31, 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 $142,770,000 and $116,525,000, respectively. GENERAL -- Certain of the Officers and Trustees of the Trust are Officers and Directors or Trustees of the above companies. 5. 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 October 31, 1996, 16% 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 percentage of investments insured by or supported (backed) by a letter of credit from any one institution or agency did not exceed 14% of total investments. REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Shareholders and Board of Trustees of FEDERATED MUNICIPAL TRUST (Tennessee Municipal Cash Trust): We have audited the accompanying statement of assets and liabilities of Tennessee Municipal Cash Trust (an investment portfolio of Federated Municipal Trust, a Massachusetts business trust), including the schedule of portfolio of investments, as of October 31, 1996 and the related statements of operations and changes in net assets and the financial highlights (see pages 2 and 14 of the prospectus) for the period from May 22, 1996 to October 31, 1996. These financial statements and financial highlights are the responsibility of the Trust's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 1996, by correspondence with the custodian and broker. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Tennessee Municipal Cash Trust (an investment portfolio of Federated Municipal Trust) as of October 31, 1996 and the results of its operations, changes in its net assets, and the financial highlights for the period, from May 22, 1996 to October 31, 1996, in conformity with generally accepted accounting principles. ARTHUR ANDERSEN LLP Pittsburgh, Pennsylvania November 20, 1996 ADDRESSES Tennessee Municipal Cash Trust Institutional Shares Federated Investors Tower Pittsburgh, PA 15222-3779 Distributor Federated Securities Corp. Federated Investors Tower Pittsburgh, PA 15222-3779 Investment Adviser Federated Management Federated Investors Tower Pittsburgh, PA 15222-3779 Custodian State Street Bank and P.O. Box 8600 Trust Company Boston, MA 02266-8600 Transfer Agent and Dividend Disbursing Agent Federated Shareholder P.O. Box 8600 Services Company Boston, MA 02266-8600 Independent Public Accountants Arthur Andersen LLP 2100 One PPG Place Pittsburgh, PA 15222 Tennessee Municipal Cash Trust (A Portfolio of Federated Municipal Cash Trust) Institutional Shares Prospectus A Portfolio of Federated Municipal Trust, an Open-End, Management Investment Company Prospectus dated December 31, 1996 Federated Investors [Graphic] Federated Investors Tower Pittsburgh, PA 15222-3779 Federated Securities Corp. is the distributor of the fund and is a subsidiary of Federated Investors. [Graphic] Cusip 314229642 G01682-01 (12/96) TENNESSEE MUNICIPAL CASH TRUST (A PORTFOLIO OF FEDERATED MUNICIPAL CASH TRUST) INSTITUTIONAL SERVICE SHARES PROSPECTUS The Institutional Service Shares of Tennessee Municipal Cash Trust (the "Fund") offered by this prospectus represent interests in a portfolio of Federated Municipal Trust (the "Trust"), an open-end management investment company (a mutual fund). The Fund invests primarily in short-term Tennessee municipal securities, including securities of states, territories, and possessions of the United States which are not issued by or on behalf of Tennessee, or its political subdivisions and financing authorities, but which provide current income exempt from federal regular income tax and the personal income taxes imposed by the State of Tennessee consistent with stability of principal and liquidity. THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF ANY BANK, ARE NOT ENDORSED OR 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 THESE SHARES INVOLVES INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL. THE FUND ATTEMPTS TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE; THERE CAN BE NO ASSURANCE THAT THE FUND WILL BE ABLE TO DO SO. BECAUSE THE FUND MAY INVEST A SIGNIFICANT PORTION OF ITS ASSETS IN SECURITIES OF A SINGLE ISSUER, AN INVESTMENT IN THE FUND MAY INVOLVE ADDITIONAL RISKS COMPARED TO A FULLY DIVERSIFIED MONEY MARKET FUND. This prospectus contains the information you should read and know before you invest in the Fund. Keep this prospectus for future reference. The Fund has also filed a Statement of Additional Information dated December 31, 1996, with the Securities and Exchange Commission ("SEC"). The information contained in the Statement of Additional Information is incorporated by reference into this prospectus. You may request a copy of the Statement of Additional Information or a paper copy of this prospectus, if you have received your prospectus electronically, free of charge by calling 1-800-341-7400. To obtain other information, or make inquiries about the Fund, contact the Fund at the address listed in the back of this prospectus. The Statement of Additional Information, material incorporated by reference into this document, and other information regarding the Fund is maintained electronically with the SEC at Internet Web site (http://www.sec.gov). THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. Prospectus dated December 31, 1996 TABLE OF CONTENTS SUMMARY OF FUND EXPENSES 1 FINANCIAL HIGHLIGHTS -- INSTITUTIONAL SERVICE SHARES 2 GENERAL INFORMATION 3 INVESTMENT INFORMATION 3 Investment Objective 3 Investment Policies 3 Tennessee Municipal Securities 6 Investment Risks 6 Investment Limitations 7 Hub and Spoke* Option 7 FUND INFORMATION 7 Management of the Fund 7 Distribution of Institutional Service Shares 8 Administration of the Fund 9 NET ASSET VALUE 9 HOW TO PURCHASE SHARES 9 Special Purchase Features 10 HOW TO REDEEM SHARES 10 Special Redemption Features 11 ACCOUNT AND SHARE INFORMATION 12 TAX INFORMATION 13 Federal Income Tax 13 State and Local Taxes 13 OTHER CLASSES OF SHARES 14 PERFORMANCE INFORMATION 14 FINANCIAL HIGHLIGHTS -- INSTITUTIONAL SHARES 15 FINANCIAL STATEMENTS 16 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 26 ADDRESSES 27
SUMMARY OF FUND EXPENSES INSTITUTIONAL SERVICE SHARES SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases (as a percentage of offering price) None Maximum Sales Charge Imposed on Reinvested Dividends (as a percentage of offering price) None Contingent Deferred Sales Charge (as a percentage of original purchase price or redemption proceeds, as applicable) None Redemption Fee (as a percentage of amount redeemed, if applicable) None Exchange Fee None
ANNUAL OPERATING EXPENSES (As a percentage of projected average net assets)
Management Fee (after waiver)(1) 0.00% 12b-1 Fee None Total Other Expenses (after expense reimbursement) 0.60% Shareholder Services Fee 0.25% Total Operating Expenses(2) 0.60%
(1) The estimated management fee has been reduced to reflect the anticipated voluntary waiver of the management fee. The adviser can terminate this anticipated voluntary waiver at any time at its sole discretion. The maximum management fee is 0.50%. (2) The Total Operating Expenses in the table above are based on expenses expected during the fiscal year ending October 31, 1997. The Total Operating Expenses were 0.39% for fiscal year ended October 31, 1996 and would have been 1.72% absent the voluntary waiver of the management fee and the voluntary reimbursement of certain other operating expenses. The purpose of this table is to assist an investor in understanding the various costs and expenses that a shareholder of the Institutional Service Shares of the Trust will bear, either directly or indirectly. For more complete descriptions of the various costs and expenses, see "Fund Information." Wire-transferred redemptions of less than $5,000 may be subject to additional fees.
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS You would pay the following expenses on a $1,000 investment, assuming (1) 5% annual return and (2) redemption at the end of each time period $6 $19 $33 $75
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. TENNESSEE MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS -- INSTITUTIONAL SERVICE SHARES (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD) Reference is made to the Report of Independent Public Accountants on page 26.
PERIOD ENDED OCTOBER 31, 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) 1.48% RATIOS TO AVERAGE NET ASSETS Expenses 0.39%* Net investment income 3.26%* Expense waiver/reimbursement(c) 1.33%* SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $29,824
* Computed on an annualized basis. (a) Reflects operations for the period from May 22, 1996 (date of initial public investment) to October 31, 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) GENERAL INFORMATION The Trust was established as a Massachusetts business trust under a Declaration of Trust dated September 1, 1989. The Declaration of Trust permits the Trust to offer separate series of shares representing interests in separate portfolios of securities. The shares in any one portfolio may be offered in separate classes. With respect to this Fund, as of the date of this prospectus, the Board of Trustees has established two classes of shares known as Institutional Service Shares and Institutional Shares. This prospectus relates only to Institutional Service Shares of the Fund, which are designed primarily for financial institutions acting in an agency capacity as a convenient means of accumulating an interest in a professionally managed portfolio investing in short-term municipal securities. The Fund may not be a suitable investment for retirement plans or for non-Tennessee taxpayers because it invests in municipal securities of that state. A minimum initial investment of $10,000 over a 90-day period is required. The Fund attempts to stabilize the value of a share at $1.00. Shares are currently sold and redeemed at that price. INVESTMENT INFORMATION INVESTMENT OBJECTIVE 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 Tennessee consistent with stability of principal and liquidity. This investment objective cannot be changed without shareholder approval. While there is no assurance that the Fund will achieve its investment objective, it endeavors to do so by complying with the diversification and other requirements of Rule 2a-7 under the Investment Company Act of 1940 which regulates money market mutual funds and by following the investment policies described in this prospectus. INVESTMENT POLICIES The Fund pursues its investment objective by investing in a portfolio of municipal securities maturing in 13 months or less. The average maturity of the securities in the Fund's portfolio, computed on a dollar-weighted basis, will be 90 days or less. As a matter of investment policy, which cannot be changed without shareholder approval, at least 80% of the Fund's annual interest income will be exempt from federal regular income tax and the personal income taxes imposed by the State of Tennessee. (Federal regular income tax does not include the federal individual alternative minimum tax or the federal alternative minimum tax for corporations.) Unless indicated otherwise, the investment policies may be changed by the Board of Trustees without shareholder approval. Shareholders will be notified before any material change in these policies becomes effective. ACCEPTABLE INVESTMENTS. The Fund invests primarily in debt obligations issued by or on behalf of Tennessee and its political subdivisions and financing authorities, and obligations of other states, territories, and possessions of the United States, including the District of Columbia, and any political subdivision or financing authority of any of these, the income from which is, in the opinion of qualified legal counsel, exempt from federal regular income tax and the personal income taxes imposed by the State of Tennessee ("Tennessee Municipal Securities"). Examples of Tennessee Municipal Securities include, but are not limited to: * tax and revenue anticipation notes issued to finance working capital needs in anticipation of receiving taxes or other revenues; * bond anticipation notes that are intended to be refinanced through a later issuance of longer-term bonds; * municipal commercial paper and other short-term notes; * variable rate demand notes; * municipal bonds (including bonds having serial maturities and pre-refunded bonds) and leases; and * participation, trust, and partnership interests in any of the foregoing obligations. VARIABLE RATE DEMAND NOTES. Variable rate demand notes are long-term debt instruments that have variable or floating interest rates and provide the Fund with the right to tender the security for repurchase at its stated principal amount plus accrued interest. Such securities typically bear interest at a rate that is intended to cause the securities to trade at par. The interest rate may float or be adjusted at regular intervals (ranging from daily to annually), and is normally based on a published interest rate or interest rate index. Most variable rate demand notes allow the Fund to demand the repurchase of the security on not more than seven days prior notice. Other notes only permit the Fund to tender the security at the time of each interest rate adjustment or at other fixed intervals. See "Demand Features." The Fund treats variable rate demand notes as maturing on the later of the date of the next interest rate adjustment or the date on which the Fund may next tender the security for repurchase. PARTICIPATION INTERESTS. The Fund may purchase interests in Tennessee Municipal Securities from financial institutions such as commercial and investment banks, savings associations, and insurance companies. These interests may take the form of participations, beneficial interests in a trust, partnership interests or any other form of indirect ownership that allows the Fund to treat the income from the investment as exempt from federal income tax. The Fund invests in these participation interests in order to obtain credit enhancement or demand features that would not be available through direct ownership of the underlying Tennessee Municipal Securities. MUNICIPAL LEASES. Municipal leases are obligations issued by state and local governments or authorities to finance the acquisition of equipment and facilities. They may take the form of a lease, an installment purchase contract, a conditional sales contract, or a participation interest in any of the above. Lease obligations may be subject to periodic appropriation. Municipal leases are subject to certain specific risks in the event of default or failure of appropriation. CREDIT ENHANCEMENT. Certain of the Fund's acceptable investments may be credit-enhanced by a guaranty, letter of credit, or insurance. Any bankruptcy, receivership, default, or change in the credit quality of the party providing the credit enhancement will adversely affect the quality and marketability of the underlying security and could cause losses to the Fund and affect its share price. The Fund may have more than 25% of its total assets invested in securities credit-enhanced by banks. DEMAND FEATURES. The Fund may acquire securities that are subject to puts and standby commitments ("demand features") to purchase the securities at their principal amount (usually with accrued interest) within a fixed period (usually seven days) following a demand by the Fund. The demand feature may be issued by the issuer of the underlying securities, a dealer in the securities, or by another third party, and may not be transferred separately from the underlying security. The Fund uses these arrangements to provide the Fund with liquidity and not to protect against changes in the market value of the underlying securities. The bankruptcy, receivership, or default by the issuer of the demand feature, or a default on the underlying security or other event that terminates the demand feature before its exercise, will adversely affect the liquidity of the underlying security. Demand features that are exercisable even after a payment default on the underlying security may be treated as a form of credit enhancement. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase securities on a when-issued or delayed delivery basis. These transactions are arrangements in which the Fund purchases securities with payment and delivery scheduled for a future time. The seller's failure to complete these transactions may cause the Fund to miss a price or yield considered to be advantageous. Settlement dates may be a month or more after entering into these transactions, and the market values of the securities purchased may vary from the purchase prices. The Fund may dispose of a commitment prior to settlement if the adviser deems it appropriate to do so. In addition, the Fund may enter into transactions to sell its purchase commitments to third parties at current market values and simultaneously acquire other commitments to purchase similar securities at later dates. The Fund may realize short-term profits or losses upon the sale of such commitments. RESTRICTED AND ILLIQUID SECURITIES. The Fund may invest in restricted securities. Restricted securities are any securities in which the Fund may invest pursuant to its investment objective and policies but which are subject to restrictions on resale under federal securities law. Under criteria established by the Trustees, certain restricted securities are determined to be liquid. To the extent that restricted securities are not determined to be liquid the Fund will limit their purchase, together with other illiquid securities, to 10% of its net assets. TEMPORARY INVESTMENTS. From time to time, when the investment adviser determines that market conditions call for a temporary defensive posture, the Fund may invest in tax-exempt or taxable securities, all of comparable quality to other securities in which the Fund invests, such as: obligations issued by or on behalf of municipal or corporate issuers; obligations issued or guaranteed by the U.S. government, its agencies, or instrumentalities; instruments issued by a U.S. branch of a domestic bank or other depository institutions having capital, surplus, and undivided profits in excess of $100,000,000 at the time of investment; and repurchase agreements (arrangements in which the organization selling the Fund a temporary investment agrees at the time of sale to repurchase it at a mutually agreed upon time and price). Although the Fund is permitted to make taxable, temporary investments, there is no current intention to do so. However, the interest from certain Tennessee Municipal Securities is subject to the federal alternative minimum tax. TENNESSEE MUNICIPAL SECURITIES Tennessee Municipal Securities are generally issued to finance public works, such as airports, bridges, highways, housing, hospitals, mass transportation projects, schools, streets, and water and sewer works. They are also issued to repay outstanding obligations, to raise funds for general operating expenses, and to make loans to other public institutions and facilities. Tennessee Municipal Securities include industrial development bonds issued by or on behalf of public authorities to provide financing aid to acquire sites or construct and equip facilities for privately or publicly owned corporations. The availability of this financing encourages these corporations to locate within the sponsoring communities and thereby increases local employment. The two principal classifications of Tennessee Municipal Securities are "general obligation" and "revenue" bonds. General obligation bonds are secured by the issuer's pledge of its full faith and credit and taxing power for the payment of principal and interest. Interest on and principal of revenue bonds, however, are payable only from the revenue generated by the facility financed by the bond or other specified sources of revenue. Revenue bonds do not represent a pledge of credit or create any debt of or charge against the general revenues of a municipality or public authority. Industrial development bonds are typically classified as revenue bonds. INVESTMENT RISKS Yields on Tennessee Municipal Securities depend on a variety of factors, including: the general conditions of the short-term municipal note market and of the municipal bond market; the size of the particular offering; the maturity of the obligations; and the rating of the issue. The ability of the Fund to achieve its investment objective also depends on the continuing ability of the issuers of Tennessee Municipal Securities and participation interests, or the credit enhancers of either, to meet their obligations for the payment of interest and principal when due. In addition, from time to time, the supply of Tennessee Municipal Securities acceptable for purchase by the Fund could become limited. The Fund may invest in Tennessee Municipal Securities which are repayable out of revenue streams generated from economically related projects or facilities and/or whose issuers are located in the same state. Sizable investments in these Tennessee Municipal Securities could involve an increased risk to the Fund should any of these related projects or facilities experience financial difficulties. Obligations of issuers of Tennessee Municipal Securities are subject to the provisions of bankruptcy, insolvency, and other laws affecting the rights and remedies of creditors. In addition, the obligations of such issuers may become subject to laws enacted in the future by Congress, state legislators, or referenda extending the time for payment of principal and/or interest, or imposing other constraints upon enforcement of such obligations or upon the ability of states or municipalities to levy taxes. There is also the possibility that, as a result of litigation or other conditions, the power or ability of any issuer to pay, when due, the principal of and interest on its municipal securities may be materially affected. Due to these risk considerations, the Fund's concentration in Tennessee Municipal Securities may entail a greater level of risk than other types of money market funds. INVESTMENT LIMITATIONS The Fund will not borrow money directly or through reverse repurchase agreements (arrangements in which the Fund sells a money market instrument for a percentage of its cash value with an agreement to buy it back on a set date) or pledge securities except, under certain circumstances, the Fund may borrow up to one-third of the value of its total assets and pledge assets to secure such borrowings. These investment limitations cannot be changed without shareholder approval. HUB AND SPOKE(R) OPTION If the Trustees determine it to be in the best interest of the Fund and its shareholders, the Fund may in the future seek to achieve its objective by investing all of its assets in another investment company having the same investment objective and substantially the same investment policies and restrictions as those applicable to the Fund. It is expected that any such investment company would be managed in substantially the same manner as the Fund. The initial shareholder of the Fund voted to vest authority to use this investment structure in the sole discretion of the Trustees. No further approval of shareholders is required. Shareholders will receive at least 30 days notice prior to any such investment. In making its determination, the Trustees will consider, among other things, the benefits to shareholders and/or the opportunity to reduce costs and achieve operational efficiencies. Although it is expected that the Trustees will not approve an arrangement that is likely to result in higher costs, no assurance is given that costs will remain the same or be materially reduced if this investment structure is implemented. FUND INFORMATION MANAGEMENT OF THE FUND BOARD OF TRUSTEES. The Fund is managed by a Board of Trustees. The Trustees are responsible for managing the Fund's business affairs and for exercising all the Trust's powers except those reserved for the shareholders. An Executive Committee of the Board of Trustees handles the Board's responsibilities between meetings of the Board. INVESTMENT ADVISER. Investment decisions for the Fund are made by Federated Management, the Fund's investment adviser, subject to direction by the Trustees. The adviser continually conducts investment research and supervision for the Fund and is responsible for the purchase and sale of portfolio instruments. ADVISORY FEES. The adviser receives an annual investment advisory fee equal to .50% of the Fund's average daily net assets. The adviser may voluntarily choose to waive a portion of its fee or reimburse other expenses of the Fund, but reserves the right to terminate such waiver or reimbursement at any time at its sole discretion. ADVISER'S BACKGROUND. Federated Management, a Delaware business trust, organized on April 11, 1989, is a registered investment adviser under the Investment Advisers Act of 1940. It is a subsidiary of Federated Investors. All of the Class A (voting) Shares of Federated Investors are owned by a trust, the trustees of which are John F. Donahue, Chairman and Trustee of Federated Investors, Mr. Donahue's wife, and Mr. Donahue's son, J. Christopher Donahue, who is President and Trustee of Federated Investors. Federated Management and other subsidiaries of Federated Investors serve as investment advisers to a number of investment companies and private accounts. Certain other subsidiaries also provide administrative services to a number of investment companies. With over $80 billion invested across more than 250 funds under management and/or administration by its subsidiaries, as of December 31, 1995, Federated Investors is one of the largest mutual fund investment managers in the United States. With more than 1,800 employees, Federated continues to be led by the management who founded the company in 1955. Federated funds are presently at work in and through 4,000 financial institutions nationwide. More than 100,000 investment professionals have selected Federated funds for their clients. Both the Trust and the adviser have adopted strict codes of ethics governing the conduct of all employees who manage the Fund and its portfolio securities. These codes recognize that such persons owe a fiduciary duty to the Fund's shareholders and must place the interests of shareholders ahead of the employees' own interests. Among other things, the codes: require preclearance and periodic reporting of personal securities transactions; prohibit personal transactions in securities being purchased or sold, or being considered for purchase or sale, by the Fund; prohibit purchasing securities in initial public offerings; and prohibit taking profits on securities held for less than sixty days. Violations of the codes are subject to review by the Trustees, and could result in severe penalties. DISTRIBUTION OF INSTITUTIONAL SERVICE SHARES Federated Securities Corp. is the principal distributor for Institutional Service Shares of the Fund. It is a Pennsylvania corporation organized on November 14, 1969, and is the principal distributor for a number of investment companies. Federated Securities Corp. is a subsidiary of Federated Investors. SHAREHOLDER SERVICES. The Fund has entered into a Shareholder Services Agreement with Federated Shareholder Services, a subsidiary of Federated Investors, under which the Fund may make payments up to .25% of the average daily net asset value of the Institutional Shares, computed at an annual rate, to obtain certain personal services for shareholders and to maintain shareholder accounts. From time to time and for such periods as deemed appropriate, the amount stated above may be reduced voluntarily. Under the Shareholder Services Agreement, Federated Shareholder Services will either perform shareholder services directly or will select financial institutions to perform shareholder services. Financial institutions will receive fees based upon shares owned by their clients or customers. The schedules of such fees and the basis upon which such fees will be paid will be determined from time to time by the Fund and Federated Shareholder Services. SUPPLEMENTAL PAYMENTS TO FINANCIAL INSTITUTIONS. In addition to payments made pursuant to the Shareholder Services Agreement, Federated Securities Corp. and Federated Shareholder Services, from their own assets, may pay financial institutions supplemental fees for the performance of substantial sales services, distribution-related support services, or shareholder services. The support may include sponsoring sales, educational and training seminars for their employees, providing sales literature and engineering computer software programs that emphasize the attributes of the Fund. Such assistance may be predicated upon the amount of shares the financial institution sells or may sell, and/or upon the type and nature of sales or marketing support furnished by the financial institution. Any payments made by the distributor may be reimbursed by the Fund's investment adviser or its affiliates. ADMINISTRATION OF THE FUND ADMINISTRATIVE SERVICES. Federated Services Company, a subsidiary of Federated Investors, provides administrative personnel and services (including certain legal and financial reporting services) necessary to operate the Fund at an annual rate which relates to the average aggregate daily net assets of all funds advised by affiliates of Federated Investors specified below:
MAXIMUM AVERAGE AGGREGATE ADMINISTRATIVE FEE DAILY NET ASSETS .15% on the first $250 million .125% on the next $250 million .10% on the next $250 million .075% on assets in excess of $750 million
The administrative fee received during any fiscal year shall be at least $125,000 per portfolio and $30,000 per each additional class of shares. Federated Services Company may choose voluntarily to waive a portion of its fee. NET ASSET VALUE The Fund attempts to stabilize the net asset value of shares at $1.00 by valuing the portfolio securities using the amortized cost method. The net asset value per share is determined by subtracting liabilities attributable to Institutional Service Shares from the value of Fund assets attributable to Institutional Service Shares, and dividing the remainder by the number of Institutional Service Shares outstanding. The Fund cannot guarantee that its net asset value will always remain at $1.00 per share. The net asset value is determined at 12:00 noon, 1:00 p.m. (Eastern time), and as of the close of trading (normally 4:00 p.m., Eastern time) on the New York Stock Exchange, Monday through Friday, except on New Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day. HOW TO PURCHASE SHARES Shares are sold at their net asset value, without a sales charge, next determined after an order is received, on days which the New York Stock Exchange is open for business. Shares may be purchased as described below, either through a financial institution (such as a bank or broker/dealer) or by wire or by check directly from the Fund, with a minimum initial investment of $10,000 or more over a 90-day period. Financial institutions may impose different minimum investment requirements on their customers. In connection with any sale, Federated Securities Corp. may from time to time offer certain items of nominal value to any shareholder or investor. The Fund reserves the right to reject any purchase request. An account must be established at a financial institution or by completing, signing, and returning the new account form available from the Fund before shares can be purchased. PURCHASING SHARES THROUGH A FINANCIAL INSTITUTION. Investors may purchase shares through a financial institution which has a sales agreement with the distributor. Orders are considered received when the Fund receives payment by wire or converts payment by check from the financial institution into federal funds. It is the financial institution's responsibility to transmit orders promptly. Financial institutions may charge additional fees for their services. PURCHASING SHARES BY WIRE. Shares may be purchased by Federal Reserve wire by calling the Fund before 1:00 p.m. (Eastern time) to place an order. The order is considered received immediately. Payment by federal funds must be received before 3:00 p.m. (Eastern time) that day. Federal funds should be wired as follows: Federated Shareholder Services Company, c/o State Street Bank and Trust Company, Boston, MA; Attention: EDGEWIRE; For Credit to: Tennessee Municipal Cash Trust -- Institutional Service Shares; Fund Number (this number can be found on the account statement or by contacting the Fund); Group Number or Order Number; Nominee or Institution Name; and ABA Number 011000028. Shares cannot be purchased by wire on holidays when wire transfers are restricted. Questions on wire purchases should be directed to your shareholder services representative at the telephone number listed on your account statement. PURCHASING SHARES BY CHECK. Shares may be purchased by sending a check to Federated Shareholder Services Company, P.O. Box 8600, Boston, MA 02266-8600. The check should be made payable to: Tennessee Municipal Cash Trust -- Institutional Service Shares. Orders by mail are considered received when payment by check is converted into federal funds (normally the business day after the check is received), and shares begin earning dividends the next day. SPECIAL PURCHASE FEATURES SYSTEMATIC INVESTMENT PROGRAM. A minimum of $100 can be automatically withdrawn periodically from the shareholder's checking account at an Automated Clearing House ("ACH") member and invested in Fund shares. Shareholders should contact their financial institution or the Fund to participate in this program. HOW TO REDEEM SHARES Shares are redeemed at their net asset value next determined after Federated Shareholder Services Company receives the redemption request. Redemptions will be made on days on which the Fund computes its net asset value. Redemption requests must be received in proper form and can be made as described below. REDEEMING SHARES THROUGH A FINANCIAL INSTITUTION. Shares may be redeemed by contacting the shareholder's financial institution. Shares will be redeemed at the net asset value next determined after Federated Shareholder Services Company receives the redemption request. According to the shareholder's instructions, redemption proceeds can be sent to the financial institution or to the shareholder by check or by wire. The financial institution is responsible for promptly submitting redemption requests and providing proper written redemption instructions. Customary fees and commissions may be charged by the financial institution for this service. REDEEMING SHARES BY TELEPHONE. Redemptions in any amount may be made by calling the Fund provided the Fund has a properly completed authorization form. These forms can be obtained from Federated Securities Corp. Proceeds from redemption requests before 12:00 noon (Eastern time) will be wired the same day to the shareholder's account at a domestic commercial bank which is a member of the Federal Reserve System, but will not include that day's dividend. Proceeds from redemption requests received after that time include that day's dividend but will be wired the following business day. Under limited circumstances, arrangements may be made with the distributor for same-day payment of proceeds, without that day's dividend, for redemption requests received before 2:00 p.m. (Eastern time). Proceeds from redeemed shares purchased by check or through ACH will not be wired until that method of payment has cleared. Proceeds from redemption requests on holidays when wire transfers are restricted will be wired the following business day. Questions about telephone redemptions on days when wire transfers are restricted should be directed to your shareholder services representative at the telephone number listed on your account statement. Telephone instructions may be recorded and if reasonable procedures are not followed by the Fund, it may be liable for losses due to unauthorized or fraudulent telephone instructions. In the event of drastic economic or market changes, a shareholder may experience difficulty in redeeming by telephone. If this occurs, "Redeeming Shares By Mail" should be considered. If at any time the Fund shall determine it necessary to terminate or modify the telephone redemption privilege, shareholders would be promptly notified. REDEEMING SHARES BY MAIL. Shares may be redeemed in any amount by mailing a written request to: Federated Shareholder Services Company, P.O. Box 8600, Boston, MA 02266-8600. If share certificates have been issued, they should be sent unendorsed with the written request by registered or certified mail to the address noted above. The written request should state: the Fund name and the class designation; the account name as registered with the Fund; the account number; and the number of shares to be redeemed or the dollar amount requested. All owners of the account must sign the request exactly as the shares are registered. Normally, a check for the proceeds is mailed within one business day, but in no event more than seven days, after the receipt of a proper written redemption request. Dividends are paid up to and including the day that a redemption request is processed. Shareholders requesting a redemption of any amount to be sent to an address other than that on record with the Fund or a redemption payable other than to the shareholder of record must have their signatures guaranteed by a commercial or savings bank, trust company, or savings association whose deposits are insured by an organization which is administered by the Federal Deposit Insurance Corporation; a member firm of a domestic stock exchange; or any other "eligible guarantor institution," as defined in the Securities Exchange Act of 1934. The Fund does not accept signatures guaranteed by a notary public. SPECIAL REDEMPTION FEATURES CHECK WRITING. Upon request, a checking account will be established to allow shareholders to redeem their Fund shares. Shareholder accounts will continue to receive the daily dividend declared on the shares to be redeemed until the check is presented to UMB Bank, N.A., the bank responsible for administering the check writing program, for payment. However, checks should never be made payable or sent to UMB Bank, N.A. or the Fund to redeem shares, and a check may not be written to close an account. DEBIT CARD. Upon request, a debit account will be established. This account allows shareholders to redeem shares by using a debit card. A fee will be charged to the account for this service. SYSTEMATIC WITHDRAWAL PROGRAM. If a shareholder's account has a value of at least $10,000, a systematic withdrawal program may be established whereby automatic redemptions are made from the account and transferred electronically to any commercial bank, savings bank, or credit union that is an ACH member. Shareholders may apply for participation in this program through their financial institutions or the Fund. ACCOUNT AND SHARE INFORMATION DIVIDENDS. Dividends are declared daily and paid monthly. Dividends are automatically reinvested on payment dates in additional shares of the Fund unless cash payments are requested by writing to the Fund. Shares purchased by wire before 1:00 p.m. (Eastern time) begin earning dividends that day. Shares purchased by check begin earning dividends the day after the check is converted into federal funds. CAPITAL GAINS. The Fund does not expect to realize any capital gains or losses. If capital gains or losses were to occur, they could result in an increase or decrease in dividends. The Fund will distribute in cash or additional shares any realized net long-term capital gains at least once every 12 months. CERTIFICATES AND CONFIRMATIONS. As transfer agent for the Fund, Federated Shareholder Services Company maintains a share account for each shareholder. Share certificates are not issued unless requested by contacting the Fund or Federated Shareholder Services Company in writing. Monthly confirmations are sent to report all transactions as well as dividends paid during the month. ACCOUNTS WITH LOW BALANCES. Due to the high cost of maintaining accounts with low balances, the Fund may redeem shares in any account and pay the proceeds to the shareholder if the account balance falls below a required minimum value of $10,000 due to shareholder redemptions. Before shares are redeemed to close an account, the shareholder is notified in writing and allowed 30 days to purchase additional shares to meet the minimum requirement. VOTING RIGHTS. Each share of the Trust owned by a shareholder gives that shareholder one vote in Trustee elections and other matters submitted to shareholders for vote. All shares of all classes of each portfolio in the Trust have equal voting rights; except that in matters affecting only a particular portfolio or class, only shareholders of that portfolio or class are entitled to vote. The Trust is not required to hold annual shareholder meetings. Shareholder approval will be sought only for certain changes in the Trust's or the Fund's operation and for election of Trustees under certain circumstances. Trustees may be removed by the Trustees or by shareholders at a special meeting. A special meeting shall be called by the Trustees upon the written request of shareholders owning at least 10% of the outstanding shares of the Trust. As of November 5, 1996, Berman Family Investment LP owned 37.52% of the voting securities of the Institutional Service Shares of the Fund, and, Trust Company of Knoxville, organized in the State of Tennessee, owned 34.10% of the voting securities of the Institutional Shares of the Fund. Therefore, they may, for certain purposes, be deemed to control shares of the Fund and be able to affect the outcome of certain matters presented for a vote of shareholders. TAX INFORMATION FEDERAL INCOME TAX The Fund will pay no federal income tax because it expects to meet requirements of the Internal Revenue Code applicable to regulated investment companies and to receive the special tax treatment afforded to such companies. The Fund will be treated as a single, separate entity for federal income tax purposes so that income (including capital gains) and losses realized by the Trust's other portfolios will not be combined for tax purposes with those realized by the Fund. Shareholders are not required to pay the federal regular income tax on any dividends received from the Fund that represent net interest on tax-exempt municipal bonds. However, under the Tax Reform Act of 1986, dividends representing net interest earned on certain "private activity" bonds issued after August 7, 1986, may be included in calculating the federal individual alternative minimum tax or the federal alternative minimum tax for corporations. The Fund may purchase, within the limits of its investment policies, all types of municipal bonds, including private activity bonds. The alternative minimum tax applies when it exceeds the regular tax for the taxable year. Alternative minimum taxable income is equal to the regular taxable income of the taxpayer increased by certain "tax preference" items not included in regular taxable income and reduced by only a portion of the deductions allowed in the calculation of the regular tax. Dividends of the Fund representing net interest income earned on some temporary investments and any realized net short-term gains are taxed as ordinary income. These tax consequences apply whether dividends are received in cash or as additional shares. STATE AND LOCAL TAXES Income from the Fund is not necessarily free from taxes in states other than Tennessee. Shareholders are urged to consult their own tax advisers regarding the status of their accounts under state and local tax laws. TENNESSEE TAXES. Under existing Tennessee law, distributions made by the Fund will not be subject to Tennessee personal income taxes to the extent that such distributions qualify as "exempt-interest dividends" under the Internal Revenue Code, and represent (i) interest on obligations of the state of Tennessee or its political subdivisions; or (ii) interest on certain obligations of the United States, or any agency or instrumentality thereof. To the extent that distributions by the Fund are derived from distributions on other types of obligations, such distributions will be subject to Tennessee personal income taxes. Distributions made by the Fund will be subject to the excise taxes imposed on corporations. OTHER CLASSES OF SHARES The Fund also offers another class of shares called Institutional Shares that are sold primarily to financial institutions acting in a fiduciary capacity. Institutional Shares are sold at net asset value and are sold pursuant to a Shareholder Services Agreement. Investments in Institutional Shares are subject to a minimum initial investment of $25,000 within a 90-day period. Institutional Service Shares and Institutional Shares are subject to certain of the same expenses. Expense differences, however, between Institutional Service Shares and Institutional Shares may affect the performance of each class. To obtain more information and a prospectus for any other class, investors may call 1-800-341-7400. PERFORMANCE INFORMATION From time to time, the Fund advertises its yield, effective yield, tax-equivalent yield, and total return. The performance figures will be calculated separately for each class of shares. Yield represents the annualized rate of income earned on an investment over a seven-day period. It is the annualized dividends earned during the period on an investment shown as a percentage of the investment. The effective yield is calculated similarly to the yield, but when annualized, the income earned by an investment is assumed to be reinvested daily. The effective yield will be slightly higher than the yield because of the compounding effect of this assumed reinvestment. The tax-equivalent yield is calculated similarly to the yield, but is adjusted to reflect the taxable yield that would have to be earned to equal the Fund's tax-exempt yield, assuming a specific tax rate. Total return represents the change, over a specified period of time, in the value of an investment in the shares after reinvesting all income distributions. It is calculated by dividing that change by the initial investment and is expressed as a percentage. From time to time, advertisements for the Fund may refer to ratings, rankings, and other information in certain financial publications and/or compare the Fund's performance to certain indices. TENNESSEE MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS -- INSTITUTIONAL SHARES (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD) Reference is made to the Report of Independent Public Accountants on page 26.
PERIOD ENDED OCTOBER 31, 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) 1.59% RATIOS TO AVERAGE NET ASSETS Expenses 0.10%* Net investment income 3.57%* Expense waiver/reimbursement(c) 1.62%* SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $17,824
* Computed on an annualized basis. (a) Reflects operations for the period from May 22, 1996 (date of initial public investment) to October 31, 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) TENNESSEE MUNICIPAL CASH TRUST PORTFOLIO OF INVESTMENTS OCTOBER 31, 1996
PRINCIPAL AMOUNT VALUE (a)SHORT-TERM MUNICIPALS -- 103.0% TENNESSEE -- 98.8% $ 2,200,000 Benton County, TN IDB, (Series 1996) Weekly VRDNs (Jones Plastic and Engineering Corp.)/(National City Bank, Kentucky LOC) $ 2,200,000 1,300,000 Chattanooga, TN HEFA Weekly VRDNs (Mccallie School)/(SunTrust Bank, Atlanta LOC) 1,300,000 1,100,000 Chattanooga, TN HEFA Weekly VRDNs (Sisken Hospital)/(Sumitomo Bank Ltd., Osaka LOC) 1,100,000 1,000,000 Cocke County, TN IDB Weekly VRDNs (GLI, Inc.)/(Great Lakes Chemical Corp. GTD) 1,000,000 510,000 Cocke County, TN IDB, (Series 1988) Weekly VRDNs (GLI, Inc.)/ (Great Lakes Chemical Corp. GTD) 510,000 2,000,000 Dickson County, TN IDB, (Series 1996) Weekly VRDNs (Tennessee Bun Company, LLC Project)/(PNC Bank, Ohio, N.A. LOC) 2,000,000 1,550,000 Greenfield, TN IDB, IDRB, (Series 1995) Weekly VRDNs (Plastic Products Company Project)/(Norwest Bank Minnesota, Minneapolis LOC) 1,550,000 4,200,000 Hawkins County, TN IDB, (Series 1995) Weekly VRDNs (Sekisui Ta Industries, Inc. Project)/(Bank of Tokyo-Mitsubishi Ltd. LOC) 4,200,000 2,900,000 Hendersonville, TN IDB, (Series 1996) Weekly VRDNs (Betty Machine Co. Project)/(First Union National Bank, Charlotte, N.C. LOC) 2,900,000 1,800,000 Jackson County, TN IDB, (Series B) Daily VRDNs (Esselte AB)/(Bank of America, Illinois LOC) 1,800,000 1,000,000 Jackson, TN IDB , Solid Waste Facility Bonds (Series 1995) Weekly VRDNs (Florida Steel Corp.)/(NationsBank, South LOC) 1,000,000 1,325,000 Knox County, TN IDB, (Series 1996) Weekly VRDNs (Health Ventures, Inc. Project)/(SunTrust Bank, Nashville LOC) 1,325,000 400,000 Maury County, TN HEFA, (Series 1996E) Weekly VRDNs (Southern Healthcare Systems, Inc.)/(Bank One, Texas, N.A. LOC) 400,000 2,400,000 McMinn County, TN IDB, Industrial Development Bonds, (Series 1995) Weekly VRDNs (Creative Fabrication Corp.)/(NBD Bank, Michigan LOC) 2,400,000
TENNESSEE MUNICIPAL CASH TRUST PORTFOLIO OF INVESTMENTS
PRINCIPAL AMOUNT VALUE (a)SHORT-TERM MUNICIPALS -- CONTINUED TENNESSEE -- CONTINUED $ 770,000 Memphis, TN, (Series 1996), 5.00% Bonds, 7/1/1997 $ 775,446 1,000,000 Metropolitan Government Nashville & Davidson County, TN HEFA, (Series 1989 A), 3.65% CP (Vanderbilt University), Mandatory Tender 1/10/1997 1,000,000 2,500,000 Metropolitan Government Nashville & Davidson County, TN HEFA, Hospital Revenue Bonds, (Series 1992), 3.60% CP (Baptist Hospital, Inc. (TN)/(NationsBank, South LIQ), Mandatory Tender 1/21/1997 2,500,000 1,000,000 Metropolitan Government Nashville & Davidson County, TN HEFA, Hospital Revenue Bonds, (Series 1992), 3.65% CP (Baptist Hospital, Inc. (TN)/(NationsBank, South LIQ), Mandatory Tender 1/8/1997 1,000,000 2,300,000 Metropolitan Government Nashville & Davidson County, TN IDB, Metropolitan Government Revenue Bonds, (Series 1995) Weekly VRDNs (YMCA Projects)/(Nationsbank of Tennessee LOC) 2,300,000 1,700,000 Oak Ridge, TN IDB, Solid Waste Facility Bonds, (Series 1996) Weekly VRDNs (M4 Environmental L.P. Project)/(SunTrust Bank, Atlanta LOC) 1,700,000 300,000 Paris, TN IDB Weekly VRDNs (Plumley - Marugo Limited)/(PNC Bank, Kentucky LOC) 300,000 700,000 Roane, TN IDB, (Series 1982), 3.50% (Fortafil Fibers, Inc. Project)/(ABN AMRO Bank N.V., Amsterdam LOC), 11/15/96 700,000 1,000,000 Shelby County, TN Health Education & Housing Facilities Board, 4.05% TOBs (Methodist Health System, Inc.)/(MBIA INS)/(Sanwa Bank Ltd, Osaka LIQ), Optional Tender 8/1/1997 1,000,000 1,130,000 Shelby County, TN Health Education & Housing Facilities Board, 9.625% Bonds, (Lebonheur Children's Medical Center)/(United States Treasury PRF), 7/1/1997 (@100) 1,173,395 1,000,000 Shelby County, TN Health Education & Housing Facilities Board, Multifamily Housing Revenue Bonds, (Series 1988) Weekly VRDNs (Arbor Lake Project)/(PNC Bank, N.A. LOC) 1,000,000 800,000 South Pittsburg, TN IDB, (Series 1996) Weekly VRDNs (Lodge Manufacturing Co. Project)/(SunTrust Bank, Nashville LOC) 800,000 1,000,000 Tennessee Housing Development Agency, (Series 1996-5), 4.00% TOBs, Mandatory Tender 8/21/1997 1,000,000
TENNESSEE MUNICIPAL CASH TRUST PORTFOLIO OF INVESTMENTS
PRINCIPAL AMOUNT VALUE (a)SHORT-TERM MUNICIPALS -- CONTINUED TENNESSEE -- CONTINUED $ 1,500,000 Tennessee Housing Development Agency, Homeownership Program Bonds (Issue 1996-3), 3.85% TOBs, Optional Tender 5/29/1997 $ 1,500,000 2,385,000 Tennessee State School Board Authority, (Series 1996 B), 5.00% Bonds, 5/1/1997 2,398,419 2,000,000 Union City, TN IDB, (Series 1995) Weekly VRDNs (Kohler Co.)/ (Wachovia Bank of Georgia NA, Atlanta LOC) 2,000,000 1,500,000 Union County, TN IDB, (Series 1995) Weekly VRDNs (Cooper Container Corporation Project)/(SunTrust Bank, Nashville LOC) 1,500,000 735,000 Williamson County, TN, General Obligation Capital Outlay Notes (Series 1996), 4.60% Bonds, 10/1/1997 740,432 Total 47,072,692 PUERTO RICO -- 2.1% 1,000,000 Puerto Rico Industrial, Tourist, Education, Medical & Environmental Control Finance Authority, (Series 1994A), 3.80% CP (Inter American University of Puerto Rico)/(Banque Paribas, Paris LOC), Mandatory Tender 1/14/1997 1,000,000 GUAM -- 2.1% 1,000,000 Guam Water System Revenue Bonds, (Series 1989), 6.70% Bonds (Capital Guaranty Corp. INS), 7/1/1997 1,018,234 TOTAL INVESTMENTS (AT AMORTIZED COST)(b) $ 49,090,926
Securities that are subject to Alternative Minimum Tax represent 58.8% of the portfolio as calculated based upon total market value. (a) The Fund may only invest in securities rated in one of the two highest short-term rating categories by nationally recognized statistical rating organizations ("NRSROs") or unrated securities of comparable quality. An NRSRO's two highest rating categories are determined without regard for sub-categories and gradations. For example, securities, rated SP-1+, SP-1 or SP-2 by Standard & Poor's Corporation, MIG-1 or MIG-2 by Moody's Investors Service, Inc., or FIN-1+, FIN-1 and FIN-2 by Fitch Investors Service, Inc. are all considered rated one of the two highest short-term rating securities. Securities rated in the highest short-term rating category (and unrated securities of comparable quality) are identified as First Tier securities. Securities rated in the second highest short-term rating category (and unrated securities of comparable quality) are identified as Second Tier securities. The Fund follows application regulations in determining whether a security is rated and whether a security rated by multiple NRSROs in different rating categories should be identified as a First or Second Tier security. At October 31, 1996, the portfolio securities were rated as follows: Tier rating percentage based on total market value (unaudited)
FIRST TIER SECOND TIER 100% 0.00%
(b) Also represents cost for federal tax purposes. Note: The categories of investments are shown as a percentage of net assets ($47,647,706) at October 31, 1996. The following acronyms are used throughout this portfolio: CP -- Commercial Paper GTD -- Guaranty HEFA -- Health and Education Facilities Authority IDB -- Industrial Development Bond IDRB -- Industrial Development Revenue Bond INS -- Insured LIQ -- Liquidity Agreement LOC -- Letter of Credit MBIA -- Municipal Bond Investors Assurance PRF -- Prerefunded TOBs -- Tender Option Bonds VRDNs -- Variable Rate Demand Notes (See Notes which are an integral part of the Financial Statements) TENNESSEE MUNICIPAL CASH TRUST STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1996 ASSETS: Total investments in securities, at amortized cost and value $49,090,926 Cash 169,351 Income receivable 260,093 Total assets 49,520,370 LIABILITIES: Payable for investments purchased $ 1,743,907 Payable for shares redeemed 29,682 Income distribution payable 61,845 Accrued expenses 37,230 Total liabilities 1,872,664 NET ASSETS for 47,647,706 shares outstanding $47,647,706 NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE: INSTITUTIONAL SHARES: $17,823,803 / 17,823,803 shares outstanding $1.00 INSTITUTIONAL SERVICE SHARES: $29,823,903 / 29,823,903 shares outstanding $1.00
(See Notes which are an integral part of the Financial Statements) TENNESSEE MUNICIPAL CASH TRUST STATEMENT OF OPERATIONS PERIOD ENDED OCTOBER 31, 1996* INVESTMENT INCOME: Interest $525,612 EXPENSES: Investment advisory fee $ 71,830 Administrative personnel and services fee 71,571 Custodian fees 10,324 Transfer and dividend disbursing agent fees and expenses 6,199 Directors'/Trustees' fees 1,379 Legal fees 200 Portfolio accounting fees 26,665 Shareholder services fee -- Institutional Shares 15,852 Shareholder services fee -- Institutional Service Shares 20,063 Share registration costs 14,119 Printing and postage 5,000 Insurance premiums 3,265 Miscellaneous 686 Total expenses 247,153 Waivers and reimbursements -- Waiver of investment advisory fee $ (71,830) Waiver of shareholder services fee -- Institutional Shares (15,852) Reimbursement of other operating expenses (121,760) Total waivers and reimbursements (209,442) Net expenses 37,711 Net investment income $487,901
* For the period from May 22, 1996 (date of initial public investment) to October 31, 1996. (See Notes which are an integral part of the Financial Statements) TENNESSEE MUNICIPAL CASH TRUST STATEMENT OF CHANGES IN NET ASSETS
PERIOD ENDED OCTOBER 31, 1996* INCREASE (DECREASE) IN NET ASSETS: OPERATIONS-- Net investment income $ 487,901 DISTRIBUTIONS TO SHAREHOLDERS-- Distributions from net investment income Institutional Shares (226,076) Institutional Service Shares (261,825) Change in net assets resulting from distributions to shareholders (487,901) SHARE TRANSACTIONS-- Proceeds from sale of shares 165,734,867 Net asset value of shares issued to shareholders in payment of distributions declared 209,339 Cost of shares redeemed (118,296,500) Change in net assets resulting from share transactions 47,647,706 Change in net assets 47,647,706 NET ASSETS: Beginning of period -- End of period $ 47,647,706
* For the period from May 22, 1996 (date of initial public investment) to October 31, 1996. (See Notes which are an integral part of the Financial Statements) TENNESSEE MUNICIPAL CASH TRUST NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 1996 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 sixteen portfolios. The financial statements included herein are only those of Tennessee Municipal Cash Trust (the "Fund"). The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. The Fund offers two classes of shares: Institutional Shares and Institutional Service Shares. 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 Tennessee 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. 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 October 31, 1996, capital paid-in aggregated $47,647,706. Transactions in shares were as follows:
PERIOD ENDED OCTOBER 31, 1996 INSTITUTIONAL SHARES SHARES Shares sold 34,644,791 Shares issued to shareholders in payment of distributions declared 3,455 Shares redeemed (16,824,443) Net change resulting from Institutional Share transactions 17,823,803
For the period from May 22, 1996 (date of initial public investment) to October 31, 1996.
PERIOD ENDED OCTOBER 31, 1996 INSTITUTIONAL SERVICE SHARES SHARES Shares sold 131,090,076 Shares issued to shareholders in payment of distributions declared 205,884 Shares redeemed (101,472,057) Net change resulting from Institutional Service Share transactions 29,823,903 Net change resulting from share transactions 47,647,706
For the period from May 22, 1996 (date of initial public investment) to October 31, 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 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 ("FSSC") serves as transfer and dividend disbursing agent for the Fund. The fee paid to FSSC is based on the size, type, and number of accounts and transactions made by shareholders. 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 October 31, 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 $142,770,000 and $116,525,000, respectively. GENERAL -- Certain of the Officers and Trustees of the Trust are Officers and Directors or Trustees of the above companies. 5. 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 October 31, 1996, 16% 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 percentage of investments insured by or supported (backed) by a letter of credit from any one institution or agency did not exceed 14% of total investments. REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Shareholders and Board of Trustees of FEDERATED MUNICIPAL TRUST (Tennessee Municipal Cash Trust): We have audited the accompanying statement of assets and liabilities of Tennessee Municipal Cash Trust (an investment portfolio of Federated Municipal Trust, a Massachusetts business trust), including the schedule of portfolio of investments, as of October 31, 1996 and the related statements of operations and changes in net assets, and the financial highlights (see pages 2 and 15 of the prospectus) for the period from May 22, 1996 to October 31, 1996. These financial statements and financial highlights are the responsibility of the Trust's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 1996, by correspondence with the custodian and broker. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Tennessee Municipal Cash Trust (an investment portfolio of Federated Municipal Trust) as of October 31, 1996 and the results of its operations, changes in its net assets, and the financial highlights for the period, from May 22, 1996 to October 31, 1996, in conformity with generally accepted accounting principles. ARTHUR ANDERSEN LLP Pittsburgh, Pennsylvania November 20, 1996 ADDRESSES Tennessee Municipal Cash Trust Institutional Service Shares Federated Investors Tower Pittsburgh, PA 15222-3779 Distributor Federated Securities Corp. Federated Investors Tower Pittsburgh, PA 15222-3779 Investment Adviser Federated Management Federated Investors Tower Pittsburgh, PA 15222-3779 Custodian State Street Bank and P.O. Box 8600 Trust Company Boston, MA 02266-8600 Transfer Agent and Dividend Disbursing Agent Federated Shareholder P.O. Box 8600 Services Company Boston, MA 02266-8600 Independent Public Accountants Arthur Andersen LLP 2100 One PPG Place Pittsburgh, PA 15222 Tennessee Municipal Cash Trust (A Portfolio of Federated Municipal Cash Trust) Institutional Service Shares Prospectus A Portfolio of Federated Municipal Trust, an Open-End, Management Investment Company Prospectus dated December 31, 1996 [Graphic] 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. [Graphic] Cusip 314229634 G01682-02 (12/96) TENNESSEE MUNICIPAL CASH TRUST (A PORTFOLIO OF FEDERATED MUNICIPAL TRUST) INSTITUTIONAL SHARES INSTITUTIONAL SERVICE SHARES STATEMENT OF ADDITIONAL INFORMATION This Statement of Additional Information should be read with the prospectuses of Tennessee Municipal Cash Trust (the ``Fund'), a portfolio of Federated Municipal Trust (the ``Trust') dated December 31, 1996. This Statement is not a prospectus. You may request a copy of a prospectus or a paper copy of this Statement, if you have received it electronically, free of charge by calling 1-800-341-7400. FEDERATED INVESTORS TOWER PITTSBURGH, PA 15222-3779 Statement dated December 31, 1996 Federated Securities Corp. is the distributor of the Funds and is a subsidiary of Federated Investors. Cusip 314229634 Cusip 314229642 G01682-03 (12/96) TABLE OF CONTENTS 1 INVESTMENT POLICIES 2 Acceptable Investments 2 Participation Interests 2 Municipal Leases 2 Ratings 2 When-Issued and Delayed Delivery Transactions 2 Repurchase Agreements 3 Reverse Repurchase Agreements 3 Credit Enhancement 3 TENNESSEE INVESTMENT RISKS 3 INVESTMENT LIMITATIONS 4 FEDERATED MUNICIPAL TRUST MANAGEMENT 5 Share Ownership 9 Trustees Compensation 10 Trustee Liability 11 INVESTMENT ADVISORY SERVICES 11 Investment Adviser 11 Advisory Fees 11 BROKERAGE TRANSACTIONS 11 OTHER SERVICES 11 Fund Administration 11 Custodian and Portfolio Accountant 12 Transfer Agent 12 Independent Public Accountants 12 DETERMINING NET ASSET VALUE 12 REDEMPTION IN KIND 13 MASSACHUSETTS PARTNERSHIP LAW 13 THE FUND'S TAX STATUS 13 PERFORMANCE INFORMATION 13 Yield 13 Effective Yield 13 Tax-Equivalent Yield 14 Tax-Equivalency Table 14 Total Return 15 Performance Comparisons 15 Economic and Market Information 15 ABOUT FEDERATED INVESTORS 15 Mutual Fund Market 16 Institutional Clients 16 Trust Organizations 16 Broker/Dealers and Bank Broker/Dealer Subsidiaries 16 APPENDIX 17 INVESTMENT POLICIES Unless indicated otherwise, the policies described below may be changed by the Board of Trustees without shareholder approval. Shareholders will be notified before any material change in these policies becomes effective. ACCEPTABLE INVESTMENTS When determining whether a security presents minimal credit risks, the investment adviser will consider the creditworthiness of: the issuer of the security; the issuer of any demand feature applicable to the security; or any guarantor of either the security or any demand feature. PARTICIPATION INTERESTS The financial institutions from which the Fund purchases participation interests frequently provide or secure from another financial institution irrevocable letters of credit or guarantees and give the Fund the right to demand payment of the principal amounts of the participation interests plus accrued interest on short notice (usually within seven days). The municipal securities subject to the participation interests are not limited to the Fund's maximum maturity requirements so long as the participation interests include the right to demand payment from the issuers of those interests. By purchasing these participation interests, the Fund is buying a security meeting the maturity and quality requirements of the Fund and also is receiving the tax-free benefits of the underlying securities. MUNICIPAL LEASES The Fund may purchase municipal securities in the form of participation interests that represent an undivided proportional interest in lease payments by a governmental or nonprofit entity. The lease payments and other rights under the lease provide for and secure payments on the certificates. Lease obligations may be limited by municipal charter or the nature of the appropriation for the lease. Furthermore, a lease may provide that the participants cannot accelerate lease obligations upon default. The participants would only be able to enforce lease payments as they became due. In the event of a default or failure of appropriation, unless the participation interests are credit enhanced, it is unlikely that the participants would be able to obtain an acceptable substitute source of payment. In determining the liquidity of municipal lease securities, the investment adviser, under the authority delegated by the Trustees, will base its determination on the following factors: whether the lease can be terminated by the lessee; the potential recovery, if any, from a sale of the leased property upon termination of the lease; the lessee's general credit strength (e.g., its debt, administrative, economic and financial characteristics and prospects); the likelihood that the lessee will discontinue appropriating funding for the leased property because the property is no longer deemed essential to its operations (e.g., the potential for an `event of non-appropriation''); and any credit enhancement or legal recourse provided upon an event of non-appropriation or other termination of the lease. RATINGS The securities in which the Fund invests must be rated in one of the two highest short-term rating categories by one or more nationally recognized statistical rating organizations (`NRSROs'') or be of comparable quality to securities having such ratings. An NRSRO's two highest rating categories are determined without regard for sub-categories and gradations. For example, securities rated SP-1+, SP-1, or SP-2 by Standard & Poor's Ratings Group (`S&P''), MIG-1 or MIG-2 by Moody's Investors Service, Inc. (`Moody's''), or F-1+, F-1, or F-2 by Fitch Investors Service, Inc. (`Fitch'') are all considered rated in one of the two highest short-term rating categories. The Fund will follow applicable regulations in determining whether a security rated by more than one NRSRO can be treated as being in one of the two highest short-term rating categories; currently, such securities must be rated by two NRSROs in one of their two highest rating categories. See `Regulatory Compliance.'' WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS These transactions are made to secure what is considered to be an advantageous price or yield for the Fund. No fees or other expenses, other than normal transaction costs, are incurred. However, liquid assets of the Fund in a dollar amount sufficient to make payment for the securities to be purchased are: segregated on the Fund`s records at the trade date; marked to market daily; and maintained until the transaction is settled. The Fund does not intend to engage in when-issued and delayed delivery transactions to an extent that would cause the segregation of more than 20% of the total value of its assets. REPURCHASE AGREEMENTS Certain securities in which the Fund invests may be purchased pursuant to repurchase agreements. Repurchase agreements are arrangements in which banks, broker/dealers, and other recognized financial institutions sell securities to the Fund and agree at the time of sale to repurchase them at a mutually agreed upon time and price. To the extent that the seller does not repurchase the securities from the Fund, the Fund could receive less than the repurchase price on any sale of such securities. The Fund or its custodian will take possession of the securities subject to repurchase agreements, and these securities will be marked to market daily. In the event that a defaulting seller filed for bankruptcy or became insolvent, disposition of such securities by the Fund might be delayed pending court action. The Fund believes that under the regular procedures normally in effect for custody of the Fund's portfolio securities subject to repurchase agreements, a court of competent jurisdiction would rule in favor of the Fund and allow retention or disposition of such securities. The Fund will only enter into repurchase agreements with banks and other recognized financial institutions, such as broker/dealers, which are deemed by the Fund's adviser to be creditworthy pursuant to guidelines established by the Trustees. REVERSE REPURCHASE AGREEMENTS The Fund may also enter into reverse repurchase agreements. These transactions are similar to borrowing cash. In a reverse repurchase agreement, the Fund transfers possession of a portfolio instrument in return for a percentage of the instrument's market value in cash and agrees that on a stipulated date in the future the Fund will repurchase the portfolio instrument by remitting the original consideration plus interest at an agreed upon rate. The use of reverse repurchase agreements may enable the Fund to avoid selling portfolio instruments at a time when a sale may be deemed to be disadvantageous, but does not ensure this result. However, liquid assets of the Fund, in a dollar amount sufficient to make payment for the securities to be purchased, are: segregated on the Fund's records at the trade date; marked to market daily; and maintained until the transaction is settled. CREDIT ENHANCEMENT The Fund typically evaluates the credit quality and ratings of credit- enhanced securities based upon the financial condition and ratings of the party providing the credit enhancement (the `credit enhancer''), rather than the issuer. However, credit-enhanced securities will not be treated as having been issued by the credit enhancer for diversification purposes, unless the Fund has invested more than 10% of its assets in securities issued, guaranteed or otherwise credit enhanced by the credit enhancer, in which case the securities will be treated as having been issued by both the issuer and the credit enhancer. The Fund may have more than 25% of its total assets invested in securities credit enhanced by banks. TENNESSEE INVESTMENT RISKS Traditionally divided into three geographic regions, the State's economy has historically been dominated by agriculture in the west, manufacturing in the east, and government in the middle region. While trade and services have replaced agriculture in terms of total output, manufacturing continues to be the largest single sector of the economy. The decision by Nissan and Daikin Drivetrain to build automobile production facilities in the state suggests that manufacturing, with its inherent susceptibility to economic downturns, will continue to dominate. The state's attention to educational reform and transportation infrastructure have led to statewide business development. Total employment in 1995 grew by 2.9% following a health 4% in 1994. Projections indicate that employment will continue to grow by 1.7% through 1997. The constitution of the state requires a balanced budget. This constrain along with relatively low debt and expenditure per capita ratios has helped the state maintain its current high quality long term bond rating of AA+ by Standard and Poor's Rating Agency and Aaa by Moody's Inverstors Service Inc. The Fund's concentration in securities issued by the state and its political subdivisions provide a greter level of risk than a fund which is deiversified across a number of states and municipal entities. The ability of the state or its municipalities to meet their obligations will depend on the availability of tax and other revenues; economic, political, and demographic conditions within the state; and the underlying fiscal condition of the state, its counties, and its municipalities. INVESTMENT LIMITATIONS The following investment limitations are fundamental (except that no investment limitation of the Fund shall prevent the Fund from investing substantially all of its assets (except for assets which are not considered `investment securities'' under the Investment Company Act of 1940, or assets exempted by the SEC) in an open-end investment company with substantially the same investment objectives): SELLING SHORT AND BUYING ON MARGIN The Fund will not sell any securities short or purchase any securities on margin but may obtain such short-term credits as are necessary for clearance of transactions. ISSUING SENIOR SECURITIES AND BORROWING MONEY The Fund will not issue senior securities except that the Fund may borrow money directly or through reverse repurchase agreements in amounts up to one-third of the value of its total assets, including the amounts borrowed. The Fund will not borrow money or engage in reverse repurchase agreements for investment leverage, but rather as a temporary, extraordinary, or emergency measure or to facilitate management of the portfolio by enabling the Fund to meet redemption requests when the liquidation of portfolio securities is deemed to be inconvenient or disadvantageous. The Fund will not purchase any securities while borrowings in excess of 5% of its total assets are outstanding. PLEDGING ASSETS The Fund will not mortgage, pledge, or hypothecate any assets except as necessary to secure permitted borrowings. In those cases, it may pledge assets having a market value not exceeding the lesser of the dollar amounts borrowed or 15% of the value of total assets at the time of the pledge. LENDING CASH OR SECURITIES The Fund will not lend any of its assets, except that it may acquire publicly or nonpublicly issued Tennessee municipal securities or temporary investments or enter into repurchase agreements, in accordance with its investment objective, policies and limitations or the Trust's Declaration of Trust. INVESTING IN COMMODITIES The Fund will not purchase or sell commodities, commodity contracts, or commodity futures contracts. INVESTING IN RESTRICTED SECURITIES The Fund will not invest more than 10% of its net assets in securities subject to restrictions on resale under the Securities Act of 1933, except for certain restricted securities which meet the criteria for liquidity as established by the Board of Trustees. INVESTING IN REAL ESTATE The Fund will not purchase or sell real estate, or real estate limited partnerships, although it may invest in securities of issuers whose business involves the purchase or sale of real estate or in securities which are secured by real estate or interests in real estate. UNDERWRITING The Fund will not underwrite any issue of securities, except as it may be deemed to be an underwriter under the Securities Act of 1933 in connection with the sale of securities in accordance with its investment objective, policies, and limitations. CONCENTRATION OF INVESTMENTS The Fund will not purchase securities if, as a result of such purchase, 25% or more of the value of its total assets would be invested in any one industry or in industrial development bonds or other securities the interest upon which is paid from revenues of similar types of projects. However, the Fund may invest as temporary investments more than 25% of the value of its assets in cash or cash items, securities issued or guaranteed by the U.S. government, its agencies or instrumentalities, or instruments secured by these money market instruments, such as repurchase agreements. The above investment limitations cannot be changed without shareholder approval. The following limitations, however, may be changed by the Trustees without shareholder approval (except that no investment limitation of the Fund shall prevent the Fund from investing substantially all of its assets (except for assets which are not considered `investment securities''under the Investment Company Act of 1940, or assets exempted by the SEC) in an open-end investment company with substantially the same investment objectives). Shareholders will be notified before any material change in these limitations becomes effective. INVESTING IN ILLIQUID SECURITIES The Fund will not invest more than 10% of the value of its net assets in illiquid securities including repurchase agreements providing for settlement in more than seven days notice. INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES The Fund will not purchase securities of other investment companies, except as part of a merger, consolidation, or other acquisition. INVESTING FOR CONTROL The Fund will not invest in securities of a company for the purpose of exercising control or management. INVESTING IN OPTIONS The Fund will not invest in puts, calls, straddles, spreads, or any combination of them. For purposes of the above limitations, the Fund considers certificates of deposit and demand and time deposits issued by a U.S. branch of a domestic bank or savings association having capital, surplus, and undivided profits in excess of $100,000,000 at the time of investment to be `cash items.'' Except with respect to borrowing money, if a percentage limitation is adhered to at the time of investment, a later increase or decrease in percentage resulting from any change in value or net assets will not result in a violation of such limitation. The Fund did not borrow money or pledge securities in excess of 5% of the value of its net assets during the last fiscal year and has no present intent to do so during the coming fiscal year. REGULATORY COMPLIANCE The Fund may follow non-fundamental operational policies that are more restrictive than its fundamental investment limitations, as set forth in the prospectus and this Statement of Additional Information, in order to comply with applicable laws and regulations, including the provisions of and regulations under the Investment Company Act of 1940. In particular, the Fund will comply with the various requirements of Rule 2a-7, which regulates money market mutual funds. The Fund will determine the effective maturity of its investments , as well as its ability to consider a security as having received the requisite short-term ratings by NRSROs, according to Rule 2a-7. The Fund may change these operational policies to reflect changes in the laws and regulations without the approval of its shareholders. FEDERATED MUNICIPAL TRUST MANAGEMENT Officers and Trustees are listed with their addresses, birthdates, present positions with Federated Municipal Trust, and principal occupations. John F. Donahue@* Federated Investors Tower Pittsburgh, PA Birthdate: July 28, 1924 Chairman and Trustee Chairman and Trustee, Federated Investors, Federated Advisers, Federated Management, and Federated Research; Chairman and Director, Federated Research Corp. and Federated Global Research Corp.; Chairman, Passport Research, Ltd.; Chief Executive Officer and Director or Trustee of the Funds. Thomas G. Bigley 28th Floor, One Oxford Centre Pittsburgh, PA Birthdate: February 3, 1934 Trustee Chairman of the Board, Children's Hospital of Pittsburgh; formerly, Senior Partner, Ernst & Young LLP; Director, MED 3000 Group, Inc.; Trustee, University of Pittsburgh; Director or Trustee of the Funds. John T. Conroy, Jr. Wood/IPC Commercial Department John R. Wood and Associates, Inc., Realtors 3255 Tamiami Trail North Naples, FL Birthdate: June 23, 1937 Trustee President, Investment Properties Corporation; Senior Vice-President, John R. Wood and Associates, Inc., Realtors; Partner or Trustee in private real estate ventures in Southwest Florida; formerly, President, Naples Property Management, Inc. and Northgate Village Development Corporation; Director or Trustee of the Funds. William J. Copeland One PNC Plaza - 23rd Floor Pittsburgh, PA Birthdate: July 4, 1918 Trustee Director and Member of the Executive Committee, Michael Baker, Inc.; formerly, Vice Chairman and Director, PNC Bank, N.A., and PNC Bank Corp.; Director, Ryan Homes, Inc.; Director or Trustee of the Funds. James E. Dowd 571 Hayward Mill Road Concord, MA Birthdate: May 18, 1922 Trustee Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director or Trustee of the Funds. Lawrence D. Ellis, M.D.* 3471 Fifth Avenue, Suite 1111 Pittsburgh, PA Birthdate: October 11, 1932 Trustee Professor of Medicine, University of Pittsburgh; Medical Director, University of Pittsburgh Medical Center - Downtown; Member, Board of Directors, University of Pittsburgh Medical Center; formerly, Hematologist, Oncologist, and Internist, Presbyterian and Montefiore Hospitals; Director or Trustee of the Funds. Edward L. Flaherty, Jr.@ Miller, Ament, Henny & Kochuba 205 Ross Street Pittsburgh, PA Birthdate: June 18, 1924 Trustee Attorney of Counsel, Miller, Ament, Henny & Kochuba; Director, Eat'N Park Restaurants, Inc.; formerly, Counsel, Horizon Financial, F.A., Western Region; Director or Trustee of the Funds. Glen R. Johnson* Federated Investors Tower Pittsburgh, PA Birthdate: May 2, 1929 President and Trustee Trustee, Federated Investors; President and/or Trustee of some of the Funds; staff member, Federated Securities Corp. Peter E. Madden One Royal Palm Way 100 Royal Palm Way Palm Beach, FL Birthdate: March 16, 1942 Trustee Consultant; Former State Representative, Commonwealth of Massachusetts; formerly, President, State Street Bank and Trust Company and State Street Boston Corporation; Director or Trustee of the Funds. Gregor F. Meyer Miller, Ament, Henny & Kochuba 205 Ross Street Pittsburgh, PA Birthdate: October 6, 1926 Trustee Attorney, Member of Miller, Ament, Henny & Kochuba; Chairman, Meritcare, Inc.; Director, Eat'N Park Restaurants, Inc.; Director or Trustee of the Funds. John E. Murray, Jr., J.D., S.J.D. President, Duquesne University Pittsburgh, PA Birthdate: December 20, 1932 Trustee President, Law Professor, Duquesne University; Consulting Partner, Mollica, Murray and Hogue; Director or Trustee of the Funds. Wesley W. Posvar 1202 Cathedral of Learning University of Pittsburgh Pittsburgh, PA Birthdate: September 14, 1925 Trustee Professor, International Politics; Management Consultant; Trustee, Carnegie Endowment for International Peace, RAND Corporation, Online Computer Library Center, Inc., National Defense University, U.S. Space Foundation and Czech Management Center; President Emeritus, University of Pittsburgh; Founding Chairman, National Advisory Council for Environmental Policy and Technology, Federal Emergency Management Advisory Board and Czech Management Center; Director or Trustee of the Funds. Marjorie P. Smuts 4905 Bayard Street Pittsburgh, PA Birthdate: June 21, 1935 Trustee Public relations/Marketing/Conference Planning, Manchester Craftsmen's Guild; Restaurant Consultant, Frick Art & History Center; Conference Coordinator, University of Pittsburgh Art History Department; Director or Trustee of the Funds. J. Christopher Donahue Federated Investors Tower Pittsburgh, PA Birthdate: April 11, 1949 Executive Vice President President and Trustee, Federated Investors, Federated Advisers, Federated Management, and Federated Research; President and Director, Federated Research Corp. and Federated Global Research Corp.; President, Passport Research, Ltd.; Trustee, Federated Shareholder Services Company, and Federated Shareholder Services; Director, Federated Services Company; President or Executive Vice President of the Funds; Director or Trustee of some of the Funds. Mr. Donahue is the son of John F. Donahue, Chairman and Trustee of the Company. Edward C. Gonzales Federated Investors Tower Pittsburgh, PA Birthdate: October 22, 1930 Executive Vice President Vice Chairman, Treasurer, and Trustee, Federated Investors; Vice President, Federated Advisers, Federated Management, Federated Research, Federated Research Corp., Federated Global Research Corp. and Passport Research, Ltd.; Executive Vice President and Director, Federated Securities Corp.; Trustee, Federated Shareholder Services Company; Trustee or Director of some of the Funds; President, Executive Vice President and Treasurer of some of the Funds. John W. McGonigle Federated Investors Tower Pittsburgh, PA Birthdate: October 26, 1938 Executive Vice President , Secretary and Treasurer Executive Vice President, Secretary, and Trustee, Federated Investors; Trustee, Federated Advisers, Federated Management, and Federated Research; Director, Federated Research Corp. and Federated Global Research Corp.; Trustee, Federated Shareholder Services Company; Director, Federated Services Company; President and Trustee, Federated Shareholder Services; Director, Federated Securities Corp.; Executive Vice President and Secretary of the Funds; Treasurer of some of the Funds. Richard B. Fisher Federated Investors Tower Pittsburgh, PA Birthdate: May 17, 1923 Vice President Executive Vice President and Trustee, Federated Investors; Chairman and Director, Federated Securities Corp.; President or Vice President of some of the Funds; Director or Trustee of some of the Funds. *This Trustee is deemed to be an ``interested person'' as defined in the Investment Company Act of 1940. @Member of the Executive Committee. The Executive Committee of the Board of Trustees handles the responsibilities of the Board between meetings of the Board. As referred to in the list of Trustees and Officers, `Funds'' includes the following investment companies: 111 Corcoran Funds; Annuity Management Series; Arrow Funds; Automated Government Money Trust; Blanchard Funds; Blanchard Precious Metals Fund, Inc.; Cash Trust Series II; Cash Trust Series, Inc. ; DG Investor Series; Edward D. Jones & Co. Daily Passport Cash Trust; Federated Adjustable Rate U.S. Government Fund, Inc.; Federated American Leaders Fund, Inc.; Federated ARMs Fund; Federated Equity Funds; Federated Equity Income Fund, Inc.; Federated Fund for U.S. Government Securities, Inc.; Federated GNMA Trust; Federated Government Income Securities, Inc.; Federated Government Trust; Federated High Income Bond Fund, Inc.; Federated High Yield Trust; Federated Income Securities Trust; Federated Income Trust; Federated Index Trust; Federated Institutional Trust; Federated Insurance Series; Federated Investment Portfolios; Federated Investment Trust; Federated Master Trust; Federated Municipal Opportunities Fund, Inc.; Federated Municipal Securities Fund, Inc.; Federated Municipal Trust; Federated Short-Term Municipal Trust; Federated Short-Term U.S. Government Trust; Federated Stock and Bond Fund, Inc.; Federated Stock Trust; Federated Tax-Free Trust; Federated Total Return Series, Inc.; Federated U.S. Government Bond Fund; Federated U.S. Government Securities Fund: 1-3 Years; Federated U.S. Government Securities Fund: 2-5 Years; Federated U.S. Government Securities Fund: 5-10 Years; Federated Utility Fund, Inc.; First Priority Funds; Fixed Income Securities, Inc.; High Yield Cash Trust; Intermediate Municipal Trust; International Series, Inc.; Investment Series Funds, Inc.; Investment Series Trust; Liberty Term Trust, Inc. - 1999; Liberty U.S. Government Money Market Trust; Liquid Cash Trust; Managed Series Trust; Money Market Management, Inc.; Money Market Obligations Trust; Money Market Trust; Municipal Securities Income Trust; Newpoint Funds; Peachtree Funds; RIMCO Monument Funds; Targeted Duration Trust; Tax-Free Instruments Trust; The Planters Funds; The Starburst Funds; The Starburst Funds II; The Virtus Funds; Trust for Financial Institutions; Trust for Government Cash Reserves; Trust for Short-Term U.S. Government Securities; Trust for U.S. Treasury Obligations; and World Investment Series, Inc. SHARE OWNERSHIP Officers and Trustees as a group own less than 1% of the Fund`s outstanding shares. As of November 5, 1996, the following shareholders of record owned 5% or more of the outstanding Institutional Shares of the Tennessee Municipal Cash Trust: Union Planters National Bank owned approximately 3,036,954 shares (22.92%); Reep & Co. owned approximately 713,944 shares (5.39%); Senabco owned approximately 742,635 shares (5.60%); Sharp Market & Company owned approximately 2,423,400 shares (18.29%); Trust Company of Knoxville owned approximately 4,519,396 shares (34.10%); David & Co. owned approximately 962,698 shares (7.26%); and The Nichols Family Partnership LP owned approximately 765,637 shares (5.78%). As of November 5, 1996, the following shareholders of record owned 5% or more of the outstanding Institutional Service Shares of Tennessee Municipal Cash Trust: Berman Family Investment Corp. owned approximately 12,997,052 shares (37.52%); Union Planters National Bank owned approximately 4,465,767 shares (12.89%); Okeena & Co. owned approximately 3,357,834 shares (9.69%); Dent, Thompson owned approximately 1,941,080 shares (5.60%); Derril Reeves owned approximately 2,047,520 shares (5.91%); and BHC Securities, Inc. owned approximately 2,561,401 shares (7.40%). TRUSTEES COMPENSATION AGGREGATE NAME , COMPENSATION POSITION WITH FROM TOTAL COMPENSATION PAID TRUST TRUST*# FROM FUND COMPLEX + John F. Donahue $0 $0 for the Trust and Chairman and Trustee 54 other investment companies in the Fund Complex Thomas G. Bigley++ $3,611 $86,331 for the Trust and Trustee 54 other investment companies in the Fund Complex John T. Conroy, Jr. $3,934 $115,760 for the Trust and Trustee 54 other investment companies in the Fund Complex William J. Copeland $3,934 $115,760 for the Trust and Trustee 54 other investment companies in the Fund Complex Glen R. Johnson $0 $0 for the Trust and President and Trustee 14 other investment companies in the Fund Complex James E. Dowd $3,934 $115,760 for the Trust and Trustee 54 other investment companies in the Fund Complex Lawrence D. Ellis, M.D. $3,611 $104,898 for the Trust and Trustee 54 other investment companies in the Fund Complex Edward L. Flaherty, Jr. $3,934 $115,760 for the Trust and Trustee 54 other investment companies in the Fund Complex Peter E. Madden $3,611 $104,898 for the Trust and Trustee 54 other investment companies in the Fund Complex Gregor F. Meyer $3,611 $104,898 for the Trust and Trustee 54 other investment companies in the Fund Complex John E. Murray, Jr., $3,611 $104,898 for the Trust and Trustee 54 other investment companies in the Fund Complex Wesley W. Posvar $3,611 $104,898 for the Trust and Trustee 54 other investment companies in the Fund Complex Marjorie P. Smuts $3,611 $104,898 for the Trust and Trustee 54 other investment companies in the Fund Complex *Information is furnished for the fiscal year ended October 31, 1996. #The aggregate compensation is provided for the Trust which is comprised of 16 portfolios. +The information is provided for the last calendar year. ++ Mr. Bigley served on 39 investment companies in the Federated Funds complex from January 1 through September 30, 1995. On October 1, 1995, he was appointed a Trustee on 15 additional Federated Funds. TRUSTEE LIABILITY The Declaration of Trust provides that the Trustees will not be liable for errors of judgment or mistakes of fact or law. However, they are not protected against any liability to which they would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of their office. INVESTMENT ADVISORY SERVICES INVESTMENT ADVISER The Fund's investment adviser is Federated Management. It is a subsidiary of Federated Investors. All the voting securities of Federated Investors are owned by a trust, the trustees of which are John F. Donahue, his wife and his son, J. Christopher Donahue. The adviser shall not be liable to the Trust, the Fund, or any shareholder of the Fund for any losses that may be sustained in the purchase, holding, or sale of any security or for anything done or omitted by it, except acts or omissions involving willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties imposed upon it by its contract with the Trust. ADVISORY FEES For its advisory services, Federated Management receives an annual investment advisory fee as described in the prospectus. For the period from May 22, 1996 (date of initial public investment) through October 31, 1996, the adviser earned $71, 830 all of which was waived. BROKERAGE TRANSACTIONS When selecting brokers and dealers to handle the purchase and sale of portfolio instruments, the adviser looks for prompt execution of the order at a favorable price. In working with dealers, the adviser will generally use those who are recognized dealers in specific portfolio instruments, except when a better price and execution of the order can be obtained elsewhere. The adviser makes decisions on portfolio transactions and selects brokers and dealers subject to guidelines established by the Trustees. The adviser may select brokers and dealers who offer brokerage and research services. These services may be furnished directly to the Fund or to the adviser and may include: advice as to the advisability of investing in securities; security analysis and reports; economic studies; industry studies; receipt of quotations for portfolio evaluations; and similar services. Research services provided by brokers and dealers may be used by the adviser or its affiliates in advising the Fund and other accounts. To the extent that receipt of these services may supplant services for which the adviser or its affiliates might otherwise have paid, it would tend to reduce their expenses. The adviser and its affiliates exercise reasonable business judgment in selecting brokers who offer brokerage and research services to execute securities transactions. They determine in good faith that commissions charged by such persons are reasonable in relationship to the value of the brokerage and research services provided. For the period from May 22, 1996 (date of initial public investment) through October 31, 1996, the Fund paid no brokerage commissions. Although investment decisions for the Fund are made independently from those of the other accounts managed by the adviser, investments of the type the Fund may make may also be made by those other accounts. When the Fund and one or more other accounts managed by the adviser are prepared to invest in, or desire to dispose of, the same security, available investments or opportunities for sales will be allocated in a manner believed by the adviser to be equitable to each. In some cases, this procedure may adversely affect the price paid or received by the Fund or the size of the position obtained or disposed of by the Fund. In other cases, however, it is believed that coordination and the ability to participate in volume transactions will be to the benefit of the Fund. OTHER SERVICES FUND ADMINISTRATION Federated Services Company, a subsidiary of Federated Investors, provides administrative personnel and services to the Fund for a fee as described in the prospectus. From March 1, 1994 to March 1, 1996, Federated Administrative Services served as the Fund's Administrator. Prior to March 1, 1994, Federated Administrative Services, Inc. served as the Fund's Administrator. Both former Administrators are subsidiaries of Federated Investors. For purposes of this Statement of Additional Information, Federated Services Company and Federated Administrative Services, Inc. may hereinafter collectively be referred to as the `Administrators.'' For the period from May 22, 1996 (date of initial public investment) through October 31, 1996, the Administrators earned $71,571. CUSTODIAN AND PORTFOLIO ACCOUNTANT State Street Bank and Trust Company, Boston, MA, is custodian for the securities and cash of the Fund. Federated Services Company, Pittsburgh, PA, provides certain accounting and recordkeeping services with respect to the Fund's portfolio investments. The fee paid for this service is based upon the level of the Fund's average net assets for the period plus out-of- pocket expenses. TRANSFER AGENT Federated Services Company, through its registered transfer agent, Federated Shareholder Services Company, maintains all necessary shareholder records. For its services, the transfer agent receives a fee based on the size, type, and number of accounts and transactions made by shareholders. INDEPENDENT PUBLIC ACCOUNTANTS The independent public accountants for the Fund are Arthur Andersen LLP, Pittsburgh, PA. SHAREHOLDER SERVICES This arrangement permits the payment of fees to Federated Shareholder Services to cause services to be provided which are necessary for the maintenance of shareholder accounts and to encourage personal services to shareholders by a representative who has knowledge of the shareholder's particular circumstances and goals. These activities and services may include, but are not limited to: providing office space, equipment, telephone facilities, and various clerical, supervisory, computer, and other personnel as necessary or beneficial to establish and maintain shareholder accounts and records; processing purchase and redemption transactions and automatic investments of client account cash balances; answering routine client inquiries; and assisting clients in changing dividend options, account designations, and addresses. By adopting the Shareholder Services Agreement, the Trustees expect that the Fund will benefit by: (1) providing personal services to shareholders; (2) investing shareholder assets with a minimum of delay and administrative detail; (3) enhancing shareholder recordkeeping systems; and (4) responding promptly to shareholders' requests and inquiries concerning their accounts. For the fiscal year ending October 31, 1996, payments in the amount of $15,852 and $20,063 were made pursuant to the Shareholder Services Agreement for Institutional Shares and Institutional Service Shares, respectively, of which $15,852 was waived for Institutional Shares. DETERMINING NET ASSET VALUE The Trustees have decided that the best method for determining the value of portfolio instruments is amortized cost. Under this method, portfolio instruments are valued at the acquisition cost as adjusted for amortization of premium or accumulation of discount rather than at current market value. Accordingly, neither the amount of daily income nor the net asset value is affected by any unrealized appreciation or depreciation of the portfolio. In periods of declining interest rates, the indicated daily yield on shares of the Fund computed by dividing the annualized daily income on the Fund's portfolio by the net asset value computed as above may tend to be higher than a similar computation made by using a method of valuation based upon market prices and estimates. In periods of rising interest rates, the opposite may be true. The Fund's use of the amortized cost method of valuing portfolio instruments depends on its compliance with certain conditions in Rule 2a-7 (the `Rule'') promulgated by the Securities and Exchange Commission under the Investment Company Act of 1940. Under the Rule, the Trustees must establish procedures reasonably designed to stabilize the net asset value per share, as computed for purposes of distribution and redemption, at $1.00 per share, taking into account current market conditions and the Fund's investment objective. The procedures include monitoring the relationship between the amortized cost value per share and the net asset value per share based upon available indications of market value. The Trustees will decide what, if any, steps should be taken if there is a difference of more than 0.5 of 1% between the two values. The Trustees will take any steps they consider appropriate (such as redemption in kind or shortening the average portfolio maturity) to minimize any material dilution or other unfair results arising from differences between the two methods of determining net asset value. REDEMPTION IN KIND The Fund is obligated to redeem shares solely in cash up to $250,000 or 1% of the Fund's net asset value, whichever is less, for any one shareholder within a 90-day period. Any redemption beyond this amount will also be in cash unless the Trustees determine that further payments should be in kind. In such cases, the Fund will pay all or a portion of the remainder of the redemption in portfolio instruments valued in the same way as the Fund determines net asset value. The portfolio instruments will be selected in a manner that the Trustees deem fair and equitable. Redemption in kind is not as liquid as a cash redemption. If redemption is made in kind, shareholders who sell these securities could receive less than the redemption value and could incur certain transaction costs. MASSACHUSETTS PARTNERSHIP LAW Under certain circumstances, shareholders may be held personally liable as partners under Massachusetts law for obligations of the Trust. To protect its shareholders, the Trust has filed legal documents with Massachusetts that expressly disclaim the liability of its shareholders for acts or obligations of the Trust. These documents require notice of this disclaimer to be given in each agreement, obligation, or instrument the Trust or its Trustees enter into or sign. In the unlikely event a shareholder is held personally liable for the Trust's obligations, the Trust is required by the Declaration of Trust to use its property to protect or compensate the shareholder. On request, the Trust will defend any claim made and pay any judgment against a shareholder for any act or obligation of the Trust. Therefore, financial loss resulting from liability as a shareholder will occur only if the Trust itself cannot meet its obligations to indemnify shareholders and pay judgments against them. THE FUND'S TAX STATUS To qualify for the special tax treatment afforded to regulated investment companies, the Fund must, among other requirements: derive at least 90% of its gross income from dividends, interest, and gains from the sale of securities; derive less than 30% of its gross income from the sale of securities held less than three months; invest in securities within certain statutory limits; and distribute to its shareholders at least 90% of its net income earned during the year. PERFORMANCE INFORMATION Performance depends upon such variables as: portfolio quality; average portfolio maturity; type of instruments in which the portfolio is invested; changes in interest rates; changes in expenses; and the relative amount of cash flow. To the extent that financial institutions and broker/dealers charge fees in connection with services provided in conjunction with an investment in shares of the Fund, the performance will be reduced for those shareholders paying those fees. YIELD The yield is calculated based upon the seven days ending on the day of the calculation, called the `base period.'' This yield is computed by: determining the net change in the value of a hypothetical account with a balance of one share at the beginning of the base period, with the net change excluding capital changes but including the value of any additional shares purchased with dividends earned from the original one share and all dividends declared on the original and any purchased shares; dividing the net change in the account's value by the value of the account at the beginning of the base period to determine the base period return; and multiplying the base period return by 365/7. For the seven-day period ended October 31, 1996, the yields for Institutional Shares and Institutional Service Shares were 3.30% and 3.05%, respectively. EFFECTIVE YIELD The effective yield is calculated by compounding the unannualized base period return by: adding 1 to the base period return; raising the sum to the 365/7th power; and subtracting 1 from the result. For the seven-day period ended October 31, 1996, the effective yield for Institutional Shares and Institutional Service Shares were 3.35% and 3.10%, respectively. TAX-EQUIVALENT YIELD The tax-equivalent yield of the Fund is calculated similarly to the yield but is adjusted to reflect the taxable yield that the Fund would have had to earn to equal its actual yield, assuming 45.60% tax rate (the maximum combined effective federal and state rate for individuals) and assuming that the income is 100% tax exempt. For the seven-day period ended October 31, 1996, the tax-equivalent yield for Institutional Shares and Institutional Service Shares were 6.07% and 5.60%, respectively. TAX-EQUIVALENCY TABLE A tax-equivalency table may be used in advertising and sales literature. The interest earned by the municipal securities in the Fund's portfolio generally remains free from federal regular income tax,* and is often free from state and local taxes as well. As the table below indicates, a `tax- free''investment can be an attractive choice for investors, particularly in times of narrow spreads between tax-free and taxable yields. TAXABLE YIELD EQUIVALENT FOR 1996 STATE OF TENNESSEE TAX BRACKET: FEDERAL 15.00% 28.00% 31.00% 36.00% 39.60% COMBINED FEDERAL AND STATE 21.00% 34.00% 37.00% 42.00% 45.60% JOINT $1- $40,101- $96,901- $147,701- OVER RETURN 40,100 96,900 147,700 263,750 $263,750 SINGLE $1- $24,001- $58,151- $121,301- OVER RETURN 24,000 58,150 121,300 263,750 $263,750 TAX-EXEMPT YIELD TAXABLE YIELD EQUIVALENT 1.50% 1.90% 2.27% 2.38% 2.59% 2.76% 2.00% 2.53% 3.03% 3.17% 3.45% 3.68% 2.50% 3.16% 3.79% 3.97% 4.31% 4.60% 3.00% 3.80% 4.55% 4.76% 5.17% 5.51% 3.50% 4.43% 5.30% 5.56% 6.03% 6.43% 4.00% 5.06% 6.06% 6.35% 6.90% 7.35% 4.50% 5.70% 6.82% 7.14% 7.76% 8.27% 5.00% 6.33% 7.58% 7.94% 8.62% 9.19% 5.50% 6.96% 8.33% 8.73% 9.48% 10.11% 6.00% 7.59% 9.09% 9.52% 10.34% 11.03% Note: The maximum marginal tax rate for each bracket was used in calculating the taxable yield equivalent. Furthermore, additional state and local taxes paid on comparable taxable investments were not used to increase federal deductions. The chart above is for illustrative purposes only. It is not an indicator of past or future performance of the Fund. * Some portion of the Fund's income may be subject to the federal alternative minimum tax and state and local taxes. TOTAL RETURN Average annual total return is the average compounded rate of return for a given period that would equate a $1,000 initial investment to the ending redeemable value of that investment. The ending redeemable value is computed by multiplying the number of shares owned at the end of the period by the net asset value per share at the end of the period. The number of shares owned at the end of the period is based on the number of shares purchased at the beginning of the period with $1,000, adjusted over the period by any additional shares, assuming the monthly reinvestment of all dividends and distributions. Cumulative total return reflects the total performance over a specific period of time. For the period from May 22, 1996 (date of initial public investment) through October 31, 1996, the cumulative total return for Institutional Shares was 1.59% and for Institutional Service Shares was 1.48%. These total returns are representative of only five months of activity since the date of initial public investment. PERFORMANCE COMPARISONS Investors may use financial publications and/or indices to obtain a more complete view of the Fund's performance. When comparing performance, investors should consider all relevant factors such as the composition of any index used, prevailing market conditions, portfolio compositions of other funds, and methods used to value portfolio securities and compute offering price. The financial publications and/or indices which the Fund uses in advertising may include: OLIPPER ANALYTICAL SERVICES, INC., ranks funds in various fund categories based on total return, which assumes the reinvestment of all income dividends and capital gains distributions, if any. oIBC/DONOGHUE'S MONEY FUND REPORT publishes annualized yields of money market funds weekly. Donoghue's Money Market Insight publication reports monthly and 12-month-to-date investment results for the same money funds. oMONEY, a monthly magazine, regularly ranks money market funds in various categories based on the latest available seven-day effective yield. Advertising and other promotional literature may include charts, graphs and other illustrations using the Fund`s returns, or returns in general, that demonstrate basic investment concepts such as tax-deferred compounding, dollar-cost averaging and systematic investment. In addition, the Fund can compare its performance, or performance for the types of securities in which it invests, to a variety of other investments, such as bank savings accounts, certificates of deposit, and Treasury bills. ECONOMIC AND MARKET INFORMATION Advertising and sales literature for the Fund may include discussions of economic, financial and political developments and their effect on the securities market. Such discussions may take the form of commentary on these developments by the Fund portfolio mangers and their views and analysis on how such developments could affect the Funds. In addition, advertising and sales literature may quote statistics and give general information about the mutual fund industry, including growth of the industry, from sources such as the Investment Company Institute. ABOUT FEDERATED INVESTORS Federated Investors is dedicated to meeting investor needs which is reflected in its investment decision making-structured, straightforward, and consistent. This has resulted in a history of competitive performance with a range of competitive investment products that have gained the confidence of thousands of clients and their customers. The company's disciplined security selection process is firmly rooted in sound methodologies backed by fundamental and technical research. Investment decisions are made and executed by teams of portfolio managers, analysts, and traders dedicated to specific market sectors. These traders handle trillions of dollars in annual trading volume. In the money market sector, Federated Investors gained prominence in the mutual fund industry in 1974 with the creation of the first institutional money market fund. Simultaneously, the company pioneered the use of the amortized cost method of accounting for valuing shares of money market funds, a principal means used by money managers today to value money market fund shares. Other innovations include the first institutional tax-free money market fund. As of December 31, 1995, Federated Investors managed more than $40.2 billion in assets across approximately 47 money market funds, including 17 government, 10 prime and 20 municipal with assets approximating $20.9 billion, $11.5 billion and $7.8 billion, respectively. J. Thomas Madden, Executive Vice President, oversees Federated Investors' equity and high yield corporate bond management while William D. Dawson, Executive Vice President, oversees Federated Investors' domestic fixed income management. Henry A. Frantzen, Executive Vice President, oversees the management of Federated Investors' international portfolios. MUTUAL FUND MARKET Twenty-seven percent of American households are pursuing their financial goals through mutual funds. These investors, as well as businesses and institutions, have entrusted over $3 trillion to the more than 5,500 funds available.* Federated Investors, through its subsidiaries, distributes mutual funds for a variety of investment applications. Specific markets include: INSTITUTIONAL CLIENTS Federated Investors meets the needs of more than 4,000 institutional clients nationwide by managing and servicing separate accounts and mutual funds for a variety of applications, including defined benefit and defined contribution programs, cash management, and asset/liability management. Institutional clients include corporations, pension funds, tax-exempt entities, foundations/endowments, insurance companies, and investment and financial advisors. The marketing effort to these institutional clients is headed by John B. Fisher, President, Institutional Sales Division. TRUST ORGANIZATIONS Other institutional clients include close relationships with more than 1,500 banks and trust organizations. Virtually all of the trust divisions of the top 100 bank holding companies use Federated funds in their clients' portfolios. The marketing effort to trust clients is headed by Mark R. Gensheimer, Executive Vice President, Bank Marketing & Sales. BROKER/DEALERS AND BANK BROKER/DEALER SUBSIDIARIES Federated funds are available to consumers through major brokerage firms nationwide--including 200 New York Stock Exchange firms--supported by more wholesalers than any other mutual fund distributor. Federated's service to financial professionals and institutions has earned it high ratings in several surveys performed by DALBAR, Inc. DALBAR is recognized as the industry benchmark for service quality measurement. The marketing effort to these firms is headed by James F. Getz, President, Broker/Dealer Division. *Source: Investment Company Institute APPENDIX STANDARD & POOR'S RATINGS GROUP SHORT-TERM MUNICIPAL OBLIGATION RATINGS A Standard & Poor's Ratings Group (S&P) note rating reflects the liquidity concerns and market access risks unique to notes. SP-1 Very strong or strong capacity to pay principal and interest. Those issues determined to possess overwhelming safety characteristics will be given a plus sign (+) designation. SP-2 Satisfactory capacity to pay principal and interest. VARIABLE RATE DEMAND NOTES (VRDNS) AND TENDER OPTION BONDS (TOBS) RATINGS S&P assigns dual ratings to all long-term debt issues that have as part of their provisions a variable rate demand feature. The first rating (long- term rating) addresses the likelihood of repayment of principal and interest when due, and the second rating (short-term rating) describes the demand characteristics. Several examples are AAA/A-l+, AA/A-I+, A/A-1. (The definitions for the long-term and the short-term ratings are provided below.) COMMERCIAL PAPER (CP) RATINGS An S&P commercial paper rating is a current assessment of the likelihood of timely payment of debt having an original maturity of no more than 365 days. A-1 This highest category indicates that the degree of safety regarding timely payment is strong. Those issues determined to possess extremely strong safety characteristics are denoted with a plus sign (+) designation. A-2 Capacity for timely payment on issues with this designation is satisfactory. However, the relative degree of safety is not as high as for issues designated A-1. LONG-TERM DEBT RATINGS AAA Debt rated `AAA'' has the highest rating assigned by S&P. Capacity to pay interest and repay principal is extremely strong. AA Debt rate `AA'' has a very strong capacity to pay interest and repay principal and differs from the highest rated issues only in small degree. A Debt rated `A'' has a strong capacity to pay interest and repay principal although it is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than debt in higher rated categories. MOODYS INVESTORS SERVICE, INC., SHORT-TERM MUNICIPAL OBLIGATION RATINGS Moody's Investor Service, Inc. (Moody's) short-term ratings are designated Moody's Investment Grade (MIG or VMIG) (see below). The purpose of the MIG or VMIG ratings is to provide investors with a simple system by which the relative investment qualities of short-term obligations may be evaluated. MIG1 This designation denotes best quality. There is present strong protection by established cash flows, superior liquidity support or demonstrated broad based access to the market for refinancing. MIG2 This designation denotes high quality. Margins of protection are ample although not so large as in the preceding group. VARIABLE RATE DEMAND NOTES (VRDNS) AND TENDER OPTION BONDS (TOBS) RATINGS Short-term ratings on issues with demand features are differentiated by the use of the VMIG symbol to reflect such characteristics as payment upon periodic demand rather than fixed maturity dates and payment relying on external liquidity. In this case, two ratings are usually assigned, (for example, AAA/VMIG-1); the first representing an evaluation of the degree of risk associated with scheduled principal and interest payments, and the second representing an evaluation of the degree of risk associated with the demand feature. The VMIG rating can be assigned a 1 or 2 designation using the same definitions described above for the MIG rating. COMMERCIAL PAPER (CP) RATINGS P-1 Issuers rated PRIME-1 (or related supporting institutions) have a superior capacity for repayment of short-term promissory obligations. PRIME-1 repayment capacity will normally be evidenced by the following characteristics: leading market positions in well established industries, high rates of return on funds employed, conservative capitalization structure with moderate reliance on debt and ample asset protection, broad margins in earning coverage of fixed financial charges and high internal cash generation, well-established access to a range of financial markets and assured sources of alternate liquidity. P-2 Issuers rated PRIME-2 (or related supporting institutions) have a strong capacity for repayment of short-term promissory obligations. This will normally be evidenced by many of the characteristics cited above, but to a lesser degree. Earnings trends and coverage ratios, while sound, will be more subject to variation. Capitalization characteristics, while still appropriate, may be more affected by external conditions. Ample alternate liquidity is maintained. LONG-TERM DEBT RATINGS AAA Bonds which are rated AAA are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as `gilt edged.'' Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues. AA Bonds which are rated AA are judged to be of high quality by all standards. Together with the AAA group, they comprise what are generally known as high grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in AAA securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long- term risks appear somewhat larger than in AAA securities. A Bonds which are rated A possess many favorable investment attributes and are to be considered as upper medium grade obligations. Factors giving security to principal and interest are considered adequate but elements may be present which suggest a susceptibility to impairment sometime in the future. NR Indicates that both the bonds and the obligor or credit enhancer are not currently rated by S&P or Moody's with respect to short-term indebtedness. However, management considers them to be of comparable quality to securities rated A-1 or P-1. NR(1) The underlying issuer/obligor/guarantor has other outstanding debt rated `AAA'' by S&P or ``AAA'' by Moody's. NR(2) The underlying issuer/obligor/guarantor has other outstanding debt rated `AA'' by S&P or ``AA'' by Moody's. NR(3) The underlying issuer/obligor/guarantor has other outstanding debt rated `A'' by S&P or Moody's. FITCH INVESTORS SERVICES, INC. SHORT-TERM DEBT RATING DEFINITIONS F-1+ Exceptionally Strong Credit Quality. Issues assigned this rating are regarded as having the strongest degree of assurance for timely payment. F-1 Very Strong Credit Quality. Issues assigned this rating reflect an assurance for timely payment, only slightly less in degree than issues rated F-1+. F-2 Good Credit Quality. Issues carrying this rating have a satisfactory degree of assurance for timely payment, but the margin of safety is not as great as for issues assigned F-1+ and F-1 ratings. PART C. OTHER INFORMATION. Item 24. Financial Statements and Exhibits: (a) Financial Statements: (1-16) Filed in Part A. (b) Exhibits: (1) Conformed Copy of Declaration of Trust of the Registrant (Amendment No. 1 does not exist); + (i) Conformed copy of Amendment No. 2 dated March 16, 1990; + (ii) Conformed copy of Amendment No. 3 dated August 1, 1990; + (iii)Conformed copy of Amendment No. 4, dated September 1, 1989, to the Declaration of Trust (7); (iv) Conformed copy of Amendment No. 5 dated December 12, 1990; + (v) Conformed copy of Amendment No. 6 dated March 21, 1991; + (vi) Conformed copy of Amendment No. 7. dated August 26, 1991; + (vii)Conformed copy of Amendment No. 8 dated February 13, 1992; + (viii)..........Conformed copy of Amendment No. 9 dated November 9, 1992; + (ix) Conformed copy of Amendment No. 10, dated November 18, 1992, to the Declaration of Trust (12); (x) Conformed copy of Amendment No. 11 dated May 24, 1993; + (xi) Conformed copy of Amendment No. 12, dated Nov. 22, 1993, to the Declaration of Trust (17); (xii)Conformed copy of Amendment No. 13, dated February 24, 1994, to the Declaration of Trust (17); (xiii)..........Conformed copy of Amendment No. 14, dated August 25, 1994 (20); (xiv)Conformed copy of Amendment No. 15 dated August 25, 1994; + (xv) Conformed copy of Amendment No. 16 dated May 18, 1995; + + All exhibits have been filed electronically. 7. Response is incorporated by reference to Registrant's Post-Effective Amendment No. 6 on Form N-1A filed on November 6, 1990 (File Nos. 33- 31259 and 811-5911). 12. Response is incorporated by reference to Registrant's Post-Effective Amendment No. 14 on Form N-1A filed on December 23, 1992 (File Nos. 33-31251 and 811-5911). 17. Response is incorporated by reference to Registrant's Post-Effective Amendment No. 22 on Form N-1A filed on March 2, 1994 (File Nos. 33- 31251 and 811-5911). 20. Response is incorporated by reference to Registrant's Post-Effective Amendment No. 30 on Form N-1A filed on September 19, 1994 (File Nos. 33-31251 and 811-5911) (xvi)Conformed copy of Amendment No. 17 dated November 14, 1995 (28); (xvii)Conformed copy of Amendment No. 18 dated February 29, 1996; + (2) Copy of By-Laws of the Registrant (7); (3) Not applicable; (4) (i) Copy of Specimen Certificates for Shares of Beneficial Interest of Alabama Municipal Cash Trust, Minnesota Municipal Cash Trust (Cash Series Shares and Institutional Shares), Pennsylvania Municipal Cash Trust (Cash Series Shares and Institutional Service Shares), Virginia Municipal Cash Trust (Institutional Service Shares and Institutional Shares), North Carolina Municipal Cash Trust, Ohio Municipal Cash Trust (Cash II Shares and Institutional Shares), Massachusetts Municipal Cash Trust (Institutional Service Shares and BayFunds Shares), and New Jersey Municipal Cash Trust (Institutional Shares and Institutional Service Shares) (16); (ii) Copy of Specimen Certificate for Maryland Municipal Cash Trust (17); (iii)Copy of Specimen Certificate for Florida Municipal Cash Trust (20) (iv) Copy of Specimen Certificate for Michigan Municipal Cash Trust (24); (v) Copy of Specimen Certificate for Pennsylvania Municipal Cash Trust- Institutional Shares (25); (vi) Copy of Specimen Certificate for Georgia Municipal Cash Trust (26); + All exhibits have been filed electronically. 7. Response is incorporated by reference to Registrant's Post-Effective Amendment No. 6 on Form N-1A filed on November 6, 1990 (File Nos. 33- 31259 and 811-5911). 16. Response is incorporated by reference to Registrant's Post-Effective Amendment No. 21 on Form N-1A filed on December 29, 1993 (File Nos. 33-31259 and 811-5911). 17. Response is incorporated by reference to Registrant's Post-Effective Amendment No. 22 on Form N-1A filed on March 2, 1994 (File Nos. 33- 31251 and 811-5911). 20. Response is incorporated by reference to Registrant's Post-Effective Amendment No. 30 on Form N-1A filed on September 19, 1994 (File Nos. 33-31251 and 811-5911) 24. Response is incorporated by reference to Registrant's Post-Effective Amendment No. 34 on Form N-1A filed on April 13, 1995 (File Nos. 33- 31251 and 811-5911). 25. Response is incorporated by reference to Registrant's Post-Effective Amendment No. 35 on Form N-1A filed on May 19, 1995 (File Nos. 33- 31251 and 811-5911) 26. Response is incorporated by reference to Registrant's Post-Effective Amendment No. 36 on Form N-1A filed on May 31, 1995 (File Nos. 33- 31251 and 811-5911) 28. Response is incorporated by reference to Registrant's Post- Effective Amendment No. 39 on Form N-1A filed on December 22, 1995 (File Nos. 33-31259 and 811-5911) (vii)Copy of Specimen Certificates for Tennessee Municipal Cash Trust (Institutional Shares and Institutional Service Shares)(30); (viii)..........Copy of Specimen Certificates for Pennsylvania Municipal Cash Trust and Connecticut Municipal Cash Trust (2); (ix) Copy of Specimen Certificate for Ohio Municipal Cash Trust (Institutional Service Shares) (9); (5) Conformed Copy of Investment Advisory Contract of the Registrant through and including Exhibit F (7); (i) Conformed copy of Exhibit G to Investment Advisory Contract for Virginia Municipal Cash Trust (18); (ii) Conformed copy of Exhibit H to Investment Advisory Contract for Alabama Municipal Cash Trust (19); (iii)Conformed copy of Exhibit I to Investment Advisory Contract for North Carolina Municipal Cash Trust (19); (iv) Conformed copy of Exhibit J to Investment Advisory Contract for Maryland Municipal Cash Trust (19); (v) Conformed copy of Exhibit K to Investment Advisory Contract for New York Municipal Cash Trust; (22) (vi) Conformed copy of Exhibit L to Investment Advisory Contract for California Municipal Cash Trust; (22) (vii)Conformed copy of Exhibit M to Investment Advisory Contract; + + All exhibits have been filed electronically. 2. Response is incorporated by reference to Registrant's Pre-Effective Amendment No. 1 on Form N-1A filed on October 31, 1989 (File Nos. 33- 31259 and 811-5911). 7. Response is incorporated by reference to Registrant's Post-Effective Amendment No. 6 on Form N-1A filed on November 6, 1990 (File Nos. 33- 31259 and 811-5911). 9. Response is incorporated by reference to Registrant's Post-Effective Amendment No. 10 on Form N-1A filed on January 24, 1991 (File Nos. 33- 31259 and 811-5911). 18. Response is incorporated by reference to Registrant's Post-Effective Amendment No. 26 on Form N-1A filed on June 1, 1994 (File Nos. 33- 31259 and 811-5911). 19. Response is incorporated by reference to Registrant's Post-Effective Amendment No. 28 on Form N-1A filed on June 28, 1994 (File Nos. 33- 31259 and 811-5911). 22. Response is incorporated by reference to Registrant's Post-Effective Amendment No. 32 on Form N-1A filed on December 28, 1994 (File Nos. 33-31259 and 811-5911). 30. Response is incorporated by reference to Registrant's Post-Effective Amendment No. 42 on Form N-1A filed on February 2, 1996 (File Nos. 33- 31251 and 811-5911) (viii)..........Conformed copy of Exhibit N to the Investment Advisory Contract for Georgia Municipal Cash Trust (27); (ix) Conformed copy of Exhibit O to the Investment Advisory Contract for Michigan Municipal Cash Trust (27); (x) Conformed Copy of Exhibit P to the Investment Advisory Contract for Tennessee Municipal Cash Trust ; + (6) Conformed Copy of Distributor's Contract of the Registrant(7); (i) Conformed Copy of Exhibit A to the Distributor's Contract for Massachusetts Municipal Cash Trust (Institutional Service Shares) (9); (ii) Conformed copy of Exhibit B to the Distributor's Contract for Pennsylvania Municipal Cash Trust (Institutional Service Shares) (9); (iii)Conformed copy of Exhibit C to the Distributor's Contract for Connecticut Municipal Cash Trust (Institutional Service Shares) (9); (iv) Conformed copy of Exhibit D to the Distributor's Contract for Minnesota Municipal Cash Trust (Institutional Shares) (9); (v) Conformed Copy of Exhibit E to the Distributor's Contract for New Jersey Municipal Cash Trust (Institutional Shares); + (vi) Conformed Copy of Exhibit F to the Distributor's Contract for New Jersey Municipal Cash Trust (Institutional Service Shares); + (vii)Conformed Copy of Exhibit G to the Distributor's Contract for Pennsylvania Municipal Cash Trust (Cash Series Shares); + (viii)..........Exhibit H to the Distributor's Contract does not exist; (ix) Conformed Copy of Exhibit I to the Distributor's Contract for Minnesota Municipal Cash Trust (Cash Series Shares); + (x) Exhibit J to the Distributor's Contract does not exist; + All exhibits have been filed electronically. 7. Response is incorporated by reference to Registrant's Post-Effective Amendment No. 6 on Form N-1A filed on November 6, 1990 (File Nos. 33- 31259 and 811-5911). 9. Response is incorporated by reference to Registrant's Post-Effective Amendment No. 10 on Form N-1A filed on January 24, 1991 (File Nos. 33- 31259 and 811-5911). 27. Response is incorporated by reference to Registrant's Post-Effective Amendment No. 37 on Form N-1A filed on July 18, 1995 (File Nos. 33- 31259 and 811-5911). (xi) Conformed Copy of Exhibit K to the Distributor's Contract for Ohio Municipal Cash Trust (Institutional Service Shares); + (xii)Conformed Copy of Exhibit L to the Distributor's Contract for Ohio Municipal Cash Trust (Cash II Shares); + (xiii)..........Conformed copy of Exhibit M to Distributor's Contract; (22) (xiv)Conformed copy of Exhibit N to the Distributor's Contract for Virginia Municipal Cash Trust (19); (xv) Conformed copy of Exhibit O to the Distributor's Contract for Alabama Municipal Cash Trust (19); (xvi)Conformed copy of Exhibit P to the Distributor's Contract for North Carolina Municipal Cash Trust (19); (xvii)..........Conformed copy of Exhibit Q to the Distributor's Contract for Maryland Municipal Cash Trust (19); (xviii)Conformed copy of Exhibit R to the Distributor's Contract for New York Municipal Cash Trust, Cash II Shares (21); (xix)Conformed copy of Exhibit S to the Distributor's Contract for New York Municipal Cash Trust, Institutional Service Shares (21); (xx) Conformed copy of Exhibit T to the Distributor's Contract for California Municipal Cash Trust (21); (xxi)Conformed copy of Exhibit U to the Distributor's Contract for Florida Municipal Cash Trust; (22) + All exhibits have been filed electronically. 19. Response is incorporated by reference to Registrant's Post-Effective Amendment No. 28 on Form N-1A filed on June 28, 1994 (File Nos. 33- 31259 and 811-5911). 20. Response is incorporated by reference to Registrant's Post-Effective Amendment No. 30 on Form N-1A filed on September 19, 1994 (File Nos. 33-31251 and 811-5911) 21. Response is incorporated by reference to Registrant's Post-Effective Amendment No. 31 on Form N-1A filed on October 24, 1994 (File Nos. 33- 31259 and 811-5911). 22. Response is incorporated by reference to Registrant's Post-Effective Amendment No. 32 on Form N-1A filed on December 28, 1994 (File Nos. 33-31259 and 811-5911). (xxii)..........Conformed copy of Exhibit V to the Distributor's Contract for Georgia Municipal Cash Trust (27); (xxiii)Conformed copy of Exhibit W to the Distributor's Contract for Michigan Municipal Cash Trust (27); (xxiv)..........Conformed copy of Exhibit X to the Distributor's Contract for Pennsylvania Municipal Cash Trust- Institutional Shares (27); (xxv)Conformed copy of Exhibit Y to the Distributor's Contract for Florida Municipal Cash Trust-Cash II Shares (29) (xxvi)..........Conformed copy of Exhibit Z to the Distributor's Contract for California Municipal Cash Trust (Institutional Shares); + (xxvii)Conformed copy of Exhibit AA to the Distributor's Contract for Michigan Municipal Cash Trust (Institutional Shares); + (xxviii)Conformed copy of Exhibit BB to the Distributor's Contract for Ohio Municipal Cash Trust (Institutional Shares); + (xxix)..........Conformed Copy of Exhibit CC (Institutional Shares) and Exhibit DD (Institutional Service Shares) to the Distributor's Contract for Tennessee Municipal Cash Trust; + (xxx)The Registrant hereby incorporates the conformed copy of the specimen Mutual Funds Sales and Service Agreement; Mutual Funds Service Agreement and Plan Trustee/Mutual Funds Service Agreement from Item 24(b)6 of the Cash Trust Series II Registration Statement on Form N-1A, filed with the Commission on July 24, 1995. (File Nos. 33- 38550 and 811-6269) (7) Not applicable; (8) (i) Conformed copy of Custodian Agreement of the Registrant (22); (ii) Copy of Exhibit 1 to the Custodian Agreement (27); + All exhibits have been filed electronically. 22. Response is incorporated by reference to Registrant's Post-Effective Amendment No. 32 on Form N-1A filed on December 28, 1994 (File Nos. 33-31259 and 811-5911). 27. Response is incorporated by reference to Registrant's Post-Effective Amendment No. 37 on Form N-1A filed on July 18, 1995 (File Nos. 33- 31259 and 811-5911). 29 Response is incorporated by reference to Registrant's Post-Effective Amendment No. 40 on Form N-1A filed on January 30, 1996. (File Nos. 33-31259 and 811-5911). (9) (i) Conformed copy of Agreement for Fund Accounting, Shareholder Recordkeeeping, and Custody Services Procurement; + (ii) Conformed copy of Sub-Transfer Agency Agreement of the Registrant (Massachusetts Municipal Cash Trust--1784 Fund Shares only)(to be filed by amendment); (iii)Conformed copy of Shareholder Services Agreement of the Registrant (Massachusetts Municipal Cash Trust--1784 Fund Shares only); (15) (iv) Conformed copy of Shareholder Services Agreement of the Registrant; (22) (v) The response and exhibits described in Item 24(b)(6) are hereby incorporated by reference; (vi) Conformed copy of Administrative Services Agreement of the Registrant; (22) (vii)Form of Schwab Master Services Agreement (Ohio Municipal Cash Trust-Cash II Shares only); + (10) Conformed Copy of Opinion and Consent of Counsel as to the legality of shares (5); (11) Conformed Copy of Report of Independent Auditors;+ (12) Not applicable; (13) Conformed Copy of Initial Capital Understanding (2); (14) Not applicable. + All exhibits have been filed electronically. 2. Response is incorporated by reference to Registrant's Pre-Effective Amendment No. 1 on Form N-1A filed on October 31, 1989 (File Nos. 33- 31259 and 811-5911). 5. Response is incorporated by reference to Registrant's Post-Effective Amendment No. 3 on Form N-1A filed August 3, 1990 (File Nos. 33-31259 and 811-5911). 15. Response is incorporated by reference to Registrant's Post-Effective Amendment No. 18 on Form N-1A filed on October 1, 1993 (File Nos. 33- 31259 and 811-5911). 22. Response is incorporated by reference to Registrant's Post-Effective Amendment No. 32 on Form N-1A filed on December 28, 1994 (File Nos. 33-31259 and 811-5911). (15) (i) Copy of Rule 12b-1 Plan of the Registrant through and including Exhibit F (7); Additional Exhibits to the Rule 12b-1 Plan have been executed to reflect the coverage of subsequently created portfolios and/or classes under these documents. Because these exhibits are substantially identical but differ only as to the Fund name, dates, and any other Fund - specific information, pursuant to Rule 8b-31 of the Investment Company Act they need not be filed. (ii) Conformed copy of Exhibit G to 12b-1 Plan for Ohio Municipal Cash Trust Cash II Shares; + (iii)Conformed copy of Exhibit H to 12b-1 Plan for New York Municipal Cash Trust, Cash II Shares (21); (iv) Conformed copy of Exhibit I to 12b-1 Plan for New York Municipal Cash Trust, Institutional Service Shares (21); (v) Conformed copy of Exhibit J to 12b-1 Plan for Florida Municipal Cash Trust; (22) (vi) Conformed copy of Exhibit K to 12b-1 Plan for Florida Municipal Cash Trust-Cash II Shares (29); (vii)The response and exhibits described in Item 24 (b) (6) are hereby incorporated by reference. (16) Copy of Schedules for Computation of Performance Data; (i) New Jersey Municipal Cash Trust (Institutional Shares and Institutional Service Shares) (23); (ii) Ohio Municipal Cash Trust (23); + All exhibits have been filed electronically. 7. Response is incorporated by reference to Registrant's Post-Effective Amendment No. 6 on Form N-1A filed on November 6, 1990 (File Nos. 33- 31259 and 811-5911). 21. Response is incorporated by reference to Registrant's Post-Effective Amendment No. 31 on Form N-1A filed on October 24, 1994 (File Nos. 33- 31259 and 811-5911). 22. Response is incorporated by reference to Registrant's Post-Effective Amendment No. 32 on Form N-1A filed on December 28, 1994 (File Nos. 33-31259 and 811-5911). 23. Response is incorporated by reference to Registrant's Post-Effective Amendment No. 33 on Form N-1A filed on February 13, 1995 (File Nos. 33-31259 and 811-5911). 29 Response is incorporated by reference to Registrant's Post-Effective Amendment No. 40 on Form N-1A filed on January 30, 1996. (File Nos. 33-31259 and 811-5911). (iii)Virginia Municipal Cash Trust (Institutional Share and Institutional Service Shares) (16); (iv) Alabama Municipal Cash Trust (18); (v) North Carolina Municipal Cash Trust (18); (vi) Maryland Municipal Cash Trust (21); (vii)Florida Municipal Cash Trust (23); (viii)..........Michigan Municipal Cash Trust (29); (ix) Georgia Municipal Cash Trust (29); (x) Pennsylvania Municipal Cash Trust, Connecticut Municipal Cash Trust, Minnesota Municipal Cash Trust, and Massachusetts Municipal Cash Trust (2); (xi) Tennessee Municipal Cash Trust;+ (17) Financial Data Schedules;+ (18) The Registrant hereby incorporates the conformed copy of the specimen Multiple Class Plan from Item 24(b)(18) of the World Investment Series, Inc. Registration Statement on Form N-1A, filed with the Commission on January 26, 1996. (File Nos. 33-52149 and 811-07141); (19) Conformed copy of Power of Attorney of the Registrant; + + All exhibits have been filed electronically. 2. Response is incorporated by reference to Registrant's Pre-Effective Amendment No. 1 on Form N-1A filed on October 31, 1989 (File Nos. 33- 31259 and 811-5911). 16. Response is incorporated by reference to Registrant's Post-Effective Amendment No. 21 on Form N-1A filed on December 29, 1993 (File Nos. 33-31259 and 811-5911). 18. Response is incorporated by reference to Registrant's Post-Effective Amendment No. 26 on Form N-1A filed on June 1, 1994 (File Nos. 33- 31259 and 811-5911). 21. Response is incorporated by reference to Registrant's Post-Effective Amendment No. 31 on Form N-1A filed on October 24, 1994 (File Nos. 33- 31259 and 811-5911). 23. Response is incorporated by reference to Registrant's Post-Effective Amendment No. 33 on Form N-1A filed on February 13, 1995 (File Nos. 33-31259 and 811-5911). 29 Response is incorporated by reference to Registrant's Post-Effective Amendment No. 40 on Form N-1A filed on January 30, 1996. (File Nos. 33-31259 and 811-5911). Item 25. Persons Controlled by or Under Common Control with Registrant: None Item 26. Number of Holders of Securities: Number of Record Holders as of Title of Class November 5, 1996 Shares of beneficial interest (no par value) Connecticut Municipal Cash Trust Institutional Service Shares 1,617 Pennsylvania Municipal Cash Trust Cash Series Shares 894 Institutional Service Shares 380 Institutional Shares 52 Minnesota Municipal Cash Trust Cash Series Shares 4,897 Institutional Shares 55 New Jersey Municipal Cash Trust Institutional Service Shares 338 Institutional Shares 36 Ohio Municipal Cash Trust Cash II Shares 214 Institutional Shares 24 Institutional Service Shares 71 Virginia Municipal Cash Trust Institutional Service Shares 975 Institutional Shares 26 Alabama Municipal Cash Trust 668 North Carolina Municipal Cash Trust 660 Maryland Municipal Cash Trust 306 California Municipal Cash Trust Institutional Shares 15 Institutional Service Shares 12 New York Municipal Cash Trust Cash II Shares 3 Institutional Service Shares 577 Florida Municipal Cash Trust Institutional Shares 4 Cash II Shares 9 Massachusetts Municipal Cash Trust Institutional Service Shares 523 BayFunds Shares 5 Michigan Municipal Cash Trust Institutional Shares 14 Institutional Service Shares 115 Georgia Municipal Cash Trust 159 Tennessee Municipal Cash Trust Institutional Shares 19 Institutional Service Shares 62 Item 27. Indemnification: (3.) 3. Response is incorporated by reference to Registrant's Post-Effective Amendment No. 1 on Form N-1A filed on March 22, 1990 (File Nos. 33- 31259 and 811-5911). Item 28. Business and Other Connections of Investment Adviser: For a description of the other business of the investment adviser, see the section entitled `Fund Information - Management of the Fund''in Part A. The affiliations with the Registrant of four of the Trustees and one of the Officers of the investment adviser are included in Part B of this Registration Statement under `Federated Municipal Trust Management'' The remaining Trustee of the investment adviser, his position with the investment adviser, and, in parentheses, his principal occupation is: Mark D. Olson (Partner, Wilson, Halbrook & Bayard), 107 W. Market Street, Georgetown, Delaware 19947. The remaining Officers of the investment adviser are: William D. Dawson, III, Henry A. Frantzen J. Thomas Madden, and Mark L. Mallon, Executive Vice Presidents; Henry J. Gailliot, Senior Vice President-Economist; Peter R. Anderson, Drew J. Collins, Jonathan C. Conley, Mark E. Durbiano, J. Alan Minteer and Mary Jo Ochson, Senior Vice Presidents; J. Scott Albrecht, Joseph M. Balestrino, Randall A. Bauer, David F. Belton, David A. Briggs, Kenneth J. Cody, Deborah A. Cunningham, Michael P. Donnelly, Alexandre de Bethmann, Linda A. Duessel, Kathleen M. Foody-Malus, Thomas M. Franks, Edward C. Gonzales, James E. Grefenstette, Stephen A. Keen, Mark S. Kopinski, Robert M. Kowit, Jeff A. Kozemchak, Marian R. Marinack, Sandra L. McInerney, Susan M. Nason, Robert J. Ostrowski, Charles A. Ritter, Frank Semack, William F. Stotz, Tracy P. Stouffer, Edward J. Tiedge, Christopher H. Wiles, and Jolanta M Wysocka, Vice Presidents; Thomas R. Donahue, Treasurer; Stephen A. Keen, Secretary. The business address of each of the Officers of the investment adviser is Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779. These individuals are also officers of a majority of the investment advisers to the Funds listed in Part B of this Registration Statement. Item 29. Principal Underwriters: (a) 111 Corcoran Funds; Annuity Management Series; Arrow Funds; Automated Government Money Trust; BayFunds; Blanchard Funds; Blanchard Precious Metals Fund, Inc.; Cash Trust Series II; Cash Trust Series, Inc.; DG Investor Series; Edward D. Jones & Co. Daily Passport Cash Trust; Federated Adjustable Rate U.S. Government Fund, Inc.; Federated American Leaders Fund, Inc.; Federated ARMs Fund; Federated Equity Funds; Federated Equity Income Fund, Inc.; Federated Fund for U.S. Government Securities, Inc.; Federated GNMA Trust; Federated Government Income Securities, Inc.; Federated Government Trust; Federated High Income Bond Fund, Inc.; Federated High Yield Trust; Federated Income Securities Trust; Federated Income Trust; Federated Index Trust; Federated Institutional Trust; Federated Insurance Series; Federated Investment Portfolios; Federated Investment Trust; Federated Master Trust; Federated Municipal Opportunities Fund, Inc.; Federated Municipal Securities Fund, Inc.; Federated Municipal Trust; Federated Short-Term Municipal Trust; Federated Short-Term U.S. Government Trust; Federated Stock and Bond Fund, Inc.; Federated Stock Trust; Federated Tax-Free Trust; Federated Total Return Series, Inc.; Federated U.S. Government Bond Fund; Federated U.S. Government Securities Fund: 1-3 Years; Federated U.S. Government Securities Fund: 2-5 Years; Federated U.S. Government Securities Fund: 5-10 Years; Federated Utility Fund, Inc.; First Priority Funds; Fixed Income Securities, Inc.; High Yield Cash Trust; Independence One Mutual Funds; Intermediate Municipal Trust; International Series, Inc.; Investment Series Funds, Inc.; Investment Series Trust; Liberty U.S. Government Money Market Trust; Liquid Cash Trust; Managed Series Trust; Marshall Funds, Inc.; Money Market Management, Inc.; Money Market Obligations Trust; Money Market Trust; Municipal Securities Income Trust; Newpoint Funds; Peachtree Funds; RIMCO Monument Funds; SouthTrust Vulcan Funds; Star Funds; Targeted Duration Trust; Tax- Free Instruments Trust; The Biltmore Funds; The Biltmore Municipal Funds; The Monitor Funds; The Planters Funds; The Starburst Funds; The Starburst Funds II; The Virtus Funds; Tower Mutual Funds; Trust for Financial Institutions; Trust for Government Cash Reserves; Trust for Short-Term U.S. Government Securities; Trust for U.S. Treasury Obligations; Vision Group of Funds, Inc.; and World Investment Series, Inc. Federated Securities Corp. also acts as principal underwriter for the following closed-end investment company: Liberty Term Trust, Inc.- 1999. (b) (1) (2) (3) Name and Principal Positions and Offices Positions and Offices Business Address With Underwriter With Registrant Richard B. Fisher Director, Chairman, Chief Vice President Federated Investors Tower Executive Officer, Chief Pittsburgh, PA 15222-3779 Operating Officer, Asst. Secretary, and Asst. Treasurer, Federated Securities Corp. Edward C. Gonzales Director, Executive ViceExecutive Vice Federated Investors Tower President, Federated, President Pittsburgh, PA 15222-3779 Securities Corp. Thomas R. Donahue Director, Assistant Secretary, -- Federated Investors Tower Assistant Treasurer Pittsburgh, PA 15222-3779 Federated Securities Corp John B. Fisher President-Institutional Sales, -- Federated Investors Tower Federated Securities Corp. Pittsburgh, PA 15222-3779 James F. Getz President-Broker/Dealer, -- Federated Investors Tower Federated Securities Corp. Pittsburgh, PA 15222-3779 Mark R. Gensheimer Executive Vice President of -- Federated Investors Tower Bank/Trust, Federated Pittsburgh, PA 15222-3779 Securities Corp. Mark W. Bloss Senior Vice President, -- Federated Investors Tower Federated Securities Corp. Pittsburgh, PA 15222-3779 Richard W. Boyd Senior Vice President, -- Federated Investors Tower Federated Securities Corp. Pittsburgh, PA 15222-3779 Theodore Fadool, Jr. Senior Vice President, -- Federated Investors Tower Federated Securities Corp. Pittsburgh, PA 15222-3779 Bryant R. Fisher Senior Vice President, -- Federated Investors Tower Federated Securities Corp. Pittsburgh, PA 15222-3779 Christopher T. Fives Senior Vice President, -- Federated Investors Tower Federated Securities Corp. Pittsburgh, PA 15222-3779 James S. Hamilton Senior Vice President, -- Federated Investors Tower Federated Securities Corp. Pittsburgh, PA 15222-3779 James M. Heaton Senior Vice President, -- Federated Investors Tower Federated Securities Corp. Pittsburgh, PA 15222-3779 Keith Nixon Senior Vice President, -- Federated Investors Tower Federated Securities Corp. Pittsburgh, PA 15222-3779 Solon A. Person, IV Senior Vice President, -- Federated Investors Tower Federated Securities Corp. Pittsburgh, PA 15222-3779 Timothy C. Pillion Senior Vice President, -- Federated Investors Tower Federated Securities Corp. Pittsburgh, PA 15222-3779 Thomas E. Territ Senior Vice President, -- Federated Investors Tower Federated Securities Corp. Pittsburgh, PA 15222-3779 John B. Bohnet Vice President, -- Federated Investors Tower Federated Securities Corp. Pittsburgh, PA 15222-3779 Byron F. Bowman Vice President, Secretary, -- Federated Investors Tower Federated Securities Corp. Pittsburgh, PA 15222-3779 Jane E. Broeren-Lambesis Vice President, -- Federated Investors Tower Federated Securities Corp. Pittsburgh, PA 15222-3779 Dale R. Browne Vice President, -- Federated Investors Tower Federated Securities Corp. Pittsburgh, PA 15222-3779 Mary J. Combs Vice President, -- Federated Investors Tower Federated Securities Corp. Pittsburgh, PA 15222-3779 R. Edmond Connell, Jr. Vice President, -- Federated Investors Tower Federated Securities Corp. Pittsburgh, PA 15222-3779 R. Leonard Corton, Jr. Vice President, -- Federated Investors Tower Federated Securities Corp. Pittsburgh, PA 15222-3779 Kevin J. Crenny Vice President, -- Federated Investors Tower Federated Securities Corp. Pittsburgh, PA 15222-3779 Daniel T. Culbertson Vice President, -- Federated Investors Tower Federated Securities Corp. Pittsburgh, PA 15222-3779 G. Michael Cullen Vice President, -- Federated Investors Tower Federated Securites Corp. Pittsburgh, PA 15222-3779 Laura M. Deger Vice President, -- Federated Investors Tower Federated Securities Corp. Pittsburgh, PA 15222-3779 Jill Ehrenfeld Vice President, -- Federated Investors Tower Federated Securities Corp. Pittsburgh, PA 15222-3779 Mark D. Fisher Vice President, -- Federated Investors Tower Federated Securities Corp. Pittsburgh, PA 15222-3779 Joseph D. Gibbons Vice President, -- Federated Investors Tower Federated Securities Corp. Pittsburgh, PA 15222-3779 John K. Goettlicher Vice President, -- Federated Investors Tower Federated Securities Corp. Pittsburgh, PA 15222-3779 Craig S. Gonzales Vice President, -- Federated Investors Tower Federated Securities Corp. Pittsburgh, PA 15222-3779 Richard C. Gonzales Vice President, -- Federated Investors Tower Federated Securities Corp. Pittsburgh, PA 15222-3779 James E. Hickey Vice President, -- Federated Investors Tower Federated Securities Corp. Pittsburgh, PA 15222-3779 H. Joseph Kennedy Vice President, -- Federated Investors Tower Federated Securities Corp. Pittsburgh, PA 15222-3779 Steven A. La Versa Vice President, -- Federated Investors Tower Federated Securities Corp. Pittsburgh, PA 15222-3779 Mark J. Miehl Vice President, -- Federated Investors Tower Federated Securities Corp. Pittsburgh, PA 15222-3779 Richard C. Mihm Vice President, -- Federated Investors Tower Federated Securities Corp. Pittsburgh, PA 15222-3779 J. Michael Miller Vice President, -- Federated Investors Tower Federated Securities Corp. Pittsburgh, PA 15222-3779 Michael P. O'Brien Vice President, -- Federated Investors Tower Federated Securities Corp. Pittsburgh, PA 15222-3779 Robert D. Oehlschlager Vice President, -- Federated Investors Tower Federated Securities Corp. Pittsburgh, PA 15222-3779 Thomas A. Peters III Vice President, -- Federated Investors Tower Federated Securities Corp. Pittsburgh, PA 15222-3779 Robert F. Phillips Vice President, -- Federated Investors Tower Federated Securities Corp. Pittsburgh, PA 15222-3779 Eugene B. Reed Vice President, -- Federated Investors Tower Federated Securities Corp. Pittsburgh, PA 15222-3779 Paul V. Riordan Vice President, -- Federated Investors Tower Federated Securities Corp. Pittsburgh, PA 15222-3779 Edward L. Smith Vice President, -- Federated Investors Tower Federated Securities Corp. Pittsburgh, PA 15222-3779 David W. Spears Vice President, -- Federated Investors Tower Federated Securities Corp. Pittsburgh, PA 15222-3779 Jeffrey A. Stewart Vice President, -- Federated Investors Tower Federated Securities Corp. Pittsburgh, PA 15222-3779 Richard Suder Vice President, -- Federated Investors Tower Federated Securities Corp. Pittsburgh, PA 15222-3779 Jamie M. Teschner Vice President, -- Federated Investors Tower Federated Securities Corp. Pittsburgh, PA 15222-3779 William C. Tustin Vice President, -- Federated Investors Tower Federated Securities Corp. Pittsburgh, PA 15222-3779 Paul A. Uhlman Vice President, -- Federated Investors Tower Federated Securities Corp. Pittsburgh, PA 15222-3779 Miles J. Wallace Vice President, -- Federated Investors Tower Federated Securities Corp. Pittsburgh, PA 15222-3779 Richard B. Watts Vice President, -- Federated Investors Tower Federated Securities Corp. Pittsburgh, PA 15222-3779 Edward J. Wojnarowski Vice President, -- Federated Investors Tower Federated Securities Corp. Pittsburgh, PA 15222-3779 Michael P. Wolff Vice President, -- Federated Investors Tower Federated Securities Corp. Pittsburgh, PA 15222-3779 Edward R. Bozek Assistant Vice President, -- Federated Investors Tower Federated Securities Corp. Pittsburgh, PA 15222-3779 Charlene H. Jennings Assistant Vice President, -- Federated Investors Tower Federated Securities Corp. Pittsburgh, PA 15222-3779 J. Timothy Radcliff Assistant Vice President, -- Federated Investors Tower Federated Securities Corp. Pittsburgh, PA 15222-3779 Denis McAuley Treasurer, -- Federated Investors Tower Federated Securities Corp. Pittsburgh, PA 15222-3779 Leslie K. Platt Assistant Secretary, -- Federated Investors Tower Federated Securities Corp. Pittsburgh, PA 15222-3779 Item 30. Location of Accounts and Records: Registrant Federated Investors Tower Pittsburgh, PA 15222-3779 Federated Shareholder Services Company P.O. Box 8600 (`Transfer Agent, Dividend Boston, MA 02266-8600 Disbursing Agent and Portfolio Recordkeeper") Federated Administrative Services Federated Investors Tower (`Administrator'') Pittsburgh, PA 15222-3779 Federated Management Federated Investors Tower (`Adviser'') Pittsburgh, PA 15222-3779 State Street Bank and Trust Company P.O. Box 8600 (`Custodian'') Boston, MA 02266-8600 Item 31. Management Services: Not applicable. Item 32. Undertakings: Registrant hereby undertakes to comply with the provisions of Section 16(c) of the 1940 Act with respect to the removal of Trustees and the calling of special shareholder meetings by shareholders. SIGNATURES Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant, FEDERATED MUNICIPAL TRUST, certifies that it meets all of the requirements for effectiveness of this Amendment to its Registration Statement pursuant to Rule 485(b) under the Securutues Act of 1933 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereto duly authorized, in the City of Pittsburgh and Commonwealth of Pennsylvania, on the 29th day of November, 1996. FEDERATED MUNICIPAL TRUST BY: /s/ S. Elliott Cohan S. Elliott Cohan, Assistant Secretary Attorney in Fact for John F. Donahue November 29, 1996 Pursuant to the requirements of the Securities Act of 1933, this Amendment to its Registration Statement has been signed below by the following person in the capacity and on the date indicated: NAME TITLE DATE By:/s/ S. Elliott Cohan S. Elliott Cohan Attorney In Fact November 29, 1996 ASSISTANT SECRETARY For the Persons Listed Below NAME TITLE John F. Donahue* Chairman and Trustee (Chief Executive Officer) Glen R. Johnson* President and Trustee John W. McGonigle* Secretary and Treasurer (Principal Financial and Accounting Officer) Thomas G. Bigley* Trustee John T. Conroy, Jr.* Trustee William J. Copeland* Trustee James E. Dowd* Trustee Lawrence D. Ellis, M.D.* Trustee Edward L. Flaherty, Jr.* Trustee Peter E. Madden* Trustee Gregor F. Meyer* Trustee John E. Murray, Jr.* Trustee Wesley W. Posvar* Trustee Marjorie P. Smuts* Trustee * By Power of Attorney EX-99.AUDITORCNSNT 2 ARTHUR ANDERSEN LLP CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the use in Post- Effective Amendment No. 43 to Form N-1A Registration Statement of Tennessee Municipal Cash Trust (a portfolio of Federated Municipal Trust) of our report dated November 20, 1996, on the financial statements as of October 31, 1996, included in or made a part of this registration statement. /s/ Arthur Andersen LLP ARTHUR ANDERSEN LLP Pittsburgh, Pennsylvania November 27, 1996 EX-99.DECOFTRUST 3 Exhibit 1 under Form N-1A Exhibit 3(a) under Item 601/Reg. S-K FEDERATED MUNICIPAL TRUST Declaration of Trust TABLE OF CONTENTS Page ARTICLE I. NAMES AND DEFINITIONS ............................. 1 Section 1. Name ......................................... 1 Section 2. Definitions .................................. 1 ARTICLE II. PURPOSE OF TRUST .................................. 2 ARTICLE III. BENEFICIAL INTEREST................................ 2 - Section 1. Shares of Beneficial Interest ................ 2 Section 2. Ownership of Shares .......................... 2 Section 3. Investment in the Trust ...................... 3 Section 4. No Pre-emptive Rights ........................ 3 Section 5. Establishment and Designation of Series or Class ................................... 3 ARTICLE IV. THE TRUSTEES ...................................... 5 Section 1. Management of the Trust ...................... 5 Section 2. Election of Trustees at Meeting of Shareholders ............................... 5 Section 3. Term of Office of Trustees ................... 5 Section 4. Termination of Service and Appointment of Trustees ................................ 5 Section 5. Number of Trustees ........................... 6 Section 6. Effect of Death, Resignation, etc. of a Trustee .................................... 6 Section 7. Ownership of Assets .......................... 6 ARTICLE V. POWERS OF THE TRUSTEES ............................ 6 Section 1. Powers ....................................... 6 Section 2. Principal Transactions ....................... 8 Section 3. Trustees and Officers as Shareholders......... 9 Section 4. Parties to Contract .......................... 9 -i- Page ARTICLE VI. TRUSTEES' EXPENSES AND COMPENSATION ............... 9 Section 1. Trustee Reimbursement ........................ 9 Section 2. Trustee Compensation ......................... 10 ARTICLE VII. INVESTMENT ADVISER, ADMINISTRATIVE SERVICES, PRINCIPAL UNDERWRITER AND TRANSFER AGENT ......................... 10 Section 1. Investment Adviser ........................... 10 Section 2. Administrative Services ...................... 11 Section 3. Principal Underwriter ........................ 11 Section 4. Transfer Agent ............................... 11 ARTICLE VIII. SHAREHOLDERS' VOTING POWERS AND MEETINGS .......... 11 Section 1. Voting Powers ................................ 11 Section 2. Meetings ..................................... 12 Section 3. Quorum and Required Vote ..................... 12 Section 4. Additional Provisions ........................ 12 ARTICLE IX. CUSTODIAN ......................................... 12 ARTICLE X. DISTRIBUTIONS AND REDEMPTIONS ..................... 13 Section 1. Distributions ................................ 13 Section 2. Redemptions and Repurchases .................. 13 Section 3. Net Asset Value of Shares .................... 14 Section 4. Suspension of the Right of Redemption......... 14 Section 5. Trust's Right to Redeem Shares ............... 14 ARTICLE XI. LIMITATION OF LIABILITY AND INDEMNIFICATION ....... 15 Section 1. Limitation of Personal Liability and Indemnification of Shareholders ............ 15 Section 2. Limitation of Personal Liability of Trustees, Officers, Employees or -3- Agents of the Trust ........................ 15 Section 3. Express Exculpatory Clauses and Instruments ................................ 16 -ii- Page ARTICLE XII. MISCELLANEOUS...................................... 16 Section 1. Trust is not a Partnership ................... 16 Section 2. Trustee Action Binding, Expert Advice, No Bond or Surety .......................... 16 Section 3. Establishment of Record Dates ................ 16 Section 4. Termination of Trust ......................... 17 Section 5. Offices of the Trust, Filing of Copies, Headings, Counterparts ..................... 17 Section 6. Applicable Law ............................... 18 Section 7. Amendments -- General ........................ 18 Section 8. Amendments -- Series ......................... 18 -4- DECLARATION OF TRUST FEDERATED MUNICIPAL TRUST Dated September 1, 1989 DECLARATION OF TRUST made September 1, 1989 by John F. Donahue, William J. Copeland, James F. Dowd, Lawrence D. Ellis, M.D., Edward L. Flaherty, Jr., Glen R. Johnson, J. Joseph Maloney, Jr., Gregor F. Meyer, Wesley W. Posvar, Marjorie P. Smuts, and John A. Staley, IV. WHEREAS, the Trustees desire to establish a trust fund for the investment and reinvestment of funds contributed thereto; NOW, THEREFORE, the Trustees declare that all money and property contributed to the trust fund hereunder shall be held and managed under this Declaration of Trust IN TRUST as herein set forth below. ARTICLE I NAMES AND DEFINITIONS Section 1. Name. -5- This Trust shall be known as Federated Municipal Trust. Section 2. Definitions. Wherever used herein, unless otherwise required by the context or specifically provided: (a) The terms "Affiliated Person," "Assignment," "Commission," "Interested Person," "Majority Shareholder Vote" (the 67% or 50% requirement of Section 2(a)(42) of the 1940 Act, whichever may be applicable) and "Principal Underwriter" shall have the meanings given them in the 1940 Act, as amended from time to time; (b) The "Trust" refers to Federated Municipal Trust; (c) "Class" refers to a class of Shares established and designated under or in accordance with the provisions of Article III; (d) "Series" refers to a series of Shares established and designated under or in accordance with the provisions of Article III; (e) "Series Company" refers to the form of a registered open-end investment company described in Section 18(f)(2) of the 1940 Act or in any successor statutory provision; (f) "Shareholder" means a record owner of Shares of any Series or Class; -6- (g) The "Trustees" refer to the individual Trustees in their capacity as Trustees hereunder of the Trust and their successor or successors for the time being in office as such Trustees; (h) "Shares" means the equal proportionate units of interest into which the beneficial interest in the Trust shall be divided from time to time, or if more than one Series or Class of Shares is authorized by the Trustees, the equal proportionate units into which each Series or Class of Shares shall be divided from time to time and includes fractions of Shares as well as whole Shares; and (i) The "1940 Act" refers to the Investment Company Act of 1940, and the Rules and Regulations thereunder (including any exemptions granted thereunder), as amended from time to time. ARTICLE II PURPOSE OF TRUST The purpose of this Trust is to provide investors a continuous source of managed investments by investing primarily in securities (including options) and also in debt instruments, commodities, commodity contracts and options thereon. ARTICLE III BENEFICIAL INTEREST Section 1. Shares of Beneficial Interest. The beneficial interest in the Trust shall at all times be divided into transferable Shares, without par value. Subject to the provisions of Section 5 of this Article III, each Share shall have -7- voting rights as provided in Article VIII hereof, and holders of the Shares of any Series shall be entitled to receive dividends, when and as declared with respect thereto in the manner provided in Article X, Section 1 hereof. The Shares of any Series may be issued in two or more Classes, as the Trustees may authorize pursuant to Article XII, Section 8 hereof. Unless the Trustees have authorized the issuance of Shares of a Series in two or more Classes, each Share of a Series shall represent an equal proportionate interest in the assets and liabilities of the Series with each other Share of the same Series, none having priority or preference over another. If the Trustees have authorized the issuance of Shares of a Series in two or more Classes, then the Classes may have such variations as to dividend, redemption, and voting rights, net asset values, expenses borne by the Classes, and other matters as the Trustees have authorized provided that each Share of a Class shall represent an equal proportionate interest in the assets and liabilities of the Class with each other Share of the same Class, none having priority or preference over another. The number of Shares authorized shall be unlimited. The Trustees may from time to time divide or combine the Shares of any Series or Class into a greater or lesser number without thereby changing the proportionate beneficial interests in the Series or Class. Section 2. Ownership of Shares. The ownership of Shares shall be recorded in the books of the Trust or a transfer agent, which books shall be maintained separately for the Shares of each Series or Class. The Trustees may make such rules as they consider appropriate for the transfer of Shares and similar matters. The record books of the Trust or any transfer agent, as the case may be, shall be conclusive as to who are the Shareholders -8- of each Series or Class and as to the number of Shares of each Series or Class held from time to time by each. Section 3. Investment in the Trust. The Trustees shall accept investments in the Trust from such persons and on such terms as they may from time to time authorize. After the date of the initial contribution of capital (which shall occur prior to the initial public offering of Shares), the number of Shares to represent the initial contribution shall be considered as outstanding and the amount received by the Trustees on account of the contribution shall be treated as an asset of the Trust to be allocated among any Series or Classes in the manner described in Section 5(a) of this Article. Subsequent to such initial contribution of capital, Shares (including Shares which may have been redeemed or repurchased by the Trust) may be issued or sold at a price which will net the relevant Series or Class, as the case may be, before paying any taxes in connection with such issue or sale, not less than the net asset value (as defined in Article X, Section 3) thereof; provided, however, that the Trustees may in their discretion impose a sales charge upon investments in the Trust. Section 4. No Pre-emptive Rights. Shareholders shall have no pre-emptive or other right to subscribe to any additional Shares or other securities issued by the Trust. Section 5. Establishment and Designation of Series or Class. Without limiting the authority of the Trustees set forth in Article XII, Section 8, inter alia, to establish and designate any -9- additional Series or Class or to modify the rights and preferences of any existing Series or Class, Prime Cash Series, Government Cash Series and Municipal Cash Series shall be, and are established and designated as, a Series of the Trust. Shares of any Series or Class established in this Section 5 shall have the following relative rights and preferences: (a) Assets belonging to Series or Class. All consideration received by the Trust for the issue or sale of Shares of a particular Series or Class, together with all assets in which such consideration is invested or reinvested, all income, earnings, profits, and proceeds thereof from whatever source derived, including, without limitation, any proceeds derived from the sale, exchange or liquidation of such assets, and any funds or payments derived from any reinvestment of such proceeds in whatever form the same may be, shall irrevocably belong to that Series or Class for all purposes, subject only to the rights of creditors, and shall be so recorded upon the books of account of the Trust. Such consideration, assets, income, earnings, profits and proceeds thereof, from whatever source derived, including, without limitation, any proceeds derived from the sale, exchange or liquidation of such assets, and any funds or payments derived from any reinvestment of such proceeds, in whatever form the same may be, are herein referred to as "assets belonging to" that Series or Class. In the event that there are any assets, income, earnings, profits and proceeds thereof, funds or payments which are not readily identifiable as belonging to any particular Series or Class (collectively "General Assets"), the Trustees shall allocate such General Assets to, between or among any one or more of the Series or Classes established and designated from time to time in such -10- manner and on such basis as they, in their sole discretion, deem fair and equitable, and any General Assets so allocated to a particular Series or Class shall belong to that Series or Class. Each such allocation by the Trustees shall be conclusive and binding upon the Shareholders of all Series or Classes for all purposes. (b) Liabilities Belonging to Series or Class. The assets belonging to each particular Series or Class shall be charged with the liabilities of the Trust in respect to that Series or Class and all expenses, costs, charges and reserves attributable to that Series or Class, and any general liabilities of the Trust which are not readily identifiable as belonging to any particular Series or Class shall be allocated and charged by the Trustees to and among any one or more of the Series or Classes established and designated from time to time in such manner and on such basis as the Trustees in their sole discretion deem fair and equitable. The liabilities, expenses, costs, charges and reserves so charged to a Series or Class are herein referred to as "liabilities belonging to" that Series or Class. Each allocation of liabilities belonging to a Series or Class by the Trustees shall be conclusive and binding upon the Shareholders of all Series or Classes for all purposes. (c) Dividends, Distributions, Redemptions, Repurchases and Indemnification. Notwithstanding any other provisions of this Declaration, including, without limitation, Article X, no dividend or distribution (including, without limitation, any distribution paid upon termination of the Trust or of any Series or Class) with respect to, nor any redemption or repurchase of, the Shares of any Series or Class shall be affected by the Trust other than from the assets belonging to such Series or Class, nor except as -11- specifically provided in Section 1 of Article XI hereof, shall any Shareholder of any particular Series or Class otherwise have any right or claim against the assets belonging to any other Series or Class except to the extent that such Shareholder has such a right or claim hereunder as a Shareholder of such other Series or Class. (d) Voting. Notwithstanding any of the other provisions of this Declaration, including, without limitation, Section 1 of Article VIII, only Shareholders of a particular Series or Class shall be entitled to vote on any matters affecting such Series or Class. Except with respect to matters as to which any particular Series or Class is affected, all of the Shares of each Series or Class shall, on matters as to which such Series or Class is entitled to vote, vote with other Series or Classes so entitled as a single class. Notwithstanding the foregoing, with respect to matters which would otherwise be voted on by two or more Series or Classes as a single class, the Trustees may, in their sole discretion, submit such matters to the Shareholders of any or all such Series or Classes, separately. (e) Fraction. Any fractional Share of a Series or Class shall carry proportionately all the rights and obligations of a whole Share of that Series or Class, including rights with respect to voting, receipt of dividends and distributions, redemption of Shares and termination of the Trust or of any Series or Class. (f) Exchange Privilege. The Trustees shall have the authority to provide that the holders of Shares of any Series or Class shall have the right to exchange said Shares for Shares of one or more other Series or Classes in accordance with such requirements and procedures as may be established by the Trustees. -12- (g) Combination of Series or Classes. The Trustees shall have the authority, without the approval of the Shareholders of any Series or Class, unless otherwise required by applicable law, to combine the assets and liabilities belonging to a single Series or Class with the assets and liabilities of one or more other Series or Classes. (h) Elimination of Series or Classes. At any time that there are no Shares outstanding of any particular Series or Class previously established and designated, the Trustees may amend this Declaration of Trust to abolish that Series or Class and to rescind the establishment and designation thereof. ARTICLE IV THE TRUSTEES Section 1. Management of the Trust. The business and affairs of the Trust shall be managed by the Trustees, and they shall have all powers necessary and desirable to carry out that responsibility. The Trustees who shall serve until the election of Trustees at the Meeting of Shareholders subsequent to the initial public offering of Shares shall be John F. Donahue, William J. Copeland, Glen R. Johnson, James E. Dowd, Lawrence D. Ellis, M.D., Edward L. Flaherty, Jr., J. Joseph Maloney, Jr., Gregor F. Meyer, Wesley W. Posvar, Marjorie P. Smuts, and John A. Staley, IV. Section 2. Election of Trustees at Meeting of Shareholders. -13- On a date fixed by the Trustees, which shall be subsequent to the initial public offering of Shares, the Shareholders shall elect Trustees. The number of Trustees shall be determined by the Trustees pursuant to Article IV, Section 5. Section 3. Term of Office of Trustees. The Trustees shall hold office during the lifetime of this Trust, and until its termination as hereinafter provided; except (a) that any Trustee may resign his office at any time by written instrument signed by him and delivered to the other Trustees, which shall take effect upon such delivery or upon such later date as is specified therein; (b) that any Trustee may be removed at any time by written instrument signed by at least two-thirds of the number of Trustees prior to such removal, specifying the date when such removal shall become effective; (c) that any Trustee who requests in writing to be retired or who has become mentally or physically incapacitated may be retired by written instrument signed by a majority of the other Trustees, specifying the date of his retirement; and (d) a Trustee may be removed at any special meeting of Shareholders of the Trust by a vote of two-thirds of the outstanding Shares. Section 4. Termination of Service and Appointment of Trustees. In case of the death, resignation, retirement, removal or mental or physical incapacity of any of the Trustees, or in case a vacancy shall, by reason of an increase in number, or for any other reason, exist, the remaining Trustees shall fill such vacancy by appointing such other person as they in their discretion shall see fit. Such appointment shall be effected by the signing of a written instrument by a majority of the Trustees in office. An appointment of a Trustee -14- may be made by the Trustees then in office in anticipation of a vacancy to occur by reason of retirement, resignation or increase in number of Trustees effective at a later date, provided that said appointment shall become effective only at or after the effective date of said retirement, resignation or increase in number of Trustees. As soon as any Trustee so appointed shall have accepted this Trust, the trust estate shall vest in the new Trustee or Trustees, together with the continuing Trustees, without any further act or conveyance, and he shall be deemed a Trustee hereunder. Any appointment authorized by this Section 4 is subject to the provisions of Section 16(a) of the 1940 Act. Section 5. Number of Trustees. The number of Trustees, not less than three (3) nor more than twenty (20) serving hereunder at any time, shall be determined by the Trustees themselves. Whenever a vacancy in the Board of Trustees shall occur, until such vacancy is filled or while any Trustee is physically or mentally incapacitated, the other Trustees shall have all the powers hereunder and the certificate signed by a majority of the other Trustees of such vacancy, absence or incapacity, shall be conclusive, provided, however, that no vacancy which reduces the number of Trustees below three (3) shall remain unfilled for a period longer than six calendar months. Section 6. Effect of Death, Resignation, etc. of a Trustee. The death, resignation, retirement, removal, or mental or physical incapacity of the Trustees, or any one of them, shall not operate to -15- annul the Trust or to revoke any existing agency created pursuant to the terms of this Declaration of Trust. Section 7. Ownership of Assets. The assets belonging to each Series or Class shall be held separate and apart from any assets now or hereafter held in any capacity other than as Trustee hereunder by the Trustees or any successor Trustee. All of the assets belonging to each Series or Class or owned by the Trust shall at all times be considered as vested in the Trustees. No Shareholder shall be deemed to have a severable ownership interest in any individual asset belonging to any Series or Class or owned by the Trust or any right of partition or possession thereof, but each Shareholder shall have a proportionate undivided beneficial interest in a Series or Class. ARTICLE V POWERS OF THE TRUSTEES Section 1. Powers. The Trustees in all instances shall act as principals, and are and shall be free from the control of the Shareholders. The Trustees shall have full power and authority to do any and all acts and to make and execute any and all contracts and instruments that they may consider necessary or appropriate in connection with the management of the Trust or a Series or Class. The Trustees shall not be bound or limited by present or future laws or customs in regard to trust investments, but shall have full authority and power to make any and all investments which they, in their uncontrolled discretion, shall deem proper to accomplish the purpose of this Trust. Without limiting -16- the foregoing, the Trustees shall have the following specific powers and authority, subject to any applicable limitation in this Declaration of Trust or in the By-Laws of the Trust: (a) To buy, and invest funds in their hands in securities including, but not limited to, common stocks, preferred stocks, bonds, debentures, warrants and rights to purchase securities, options, certificates of beneficial interest, money market instruments, notes or other evidences of indebtedness issued by any corporation, trust or association, domestic or foreign, or issued or guaranteed by the United States of America or any agency or instrumentality thereof, by the government of any foreign country, by any State of the United States, or by any political subdivision or agency or instrumentality of any State or foreign country, or in "when-issued" or "delayed-delivery" contracts for any such securities, or in any repurchase agreement or reverse repurchase agreement, or in debt instruments, commodities, commodity contracts and options thereon, or to retain assets belonging to each and every Series or Class in cash, and from time to time to change the investments of the assets belonging to each Series or Class; (b) To adopt By-Laws of the Trust not inconsistent with the Declaration of Trust providing for the conduct of the business of the Trust and to amend and repeal them to the extent that they do not reserve that right to the Shareholders; (c) To elect and remove such officers of the Trust and appoint and terminate such agents of the Trust as they consider appropriate; -17- (d) To appoint or otherwise engage a bank or trust company as custodian of any assets belonging to any Series or Class subject to any conditions set forth in this Declaration of Trust or in the By-Laws; (e) To appoint or otherwise engage transfer agents, dividend disbursing agents, Shareholder servicing agents, investment advisers, sub-investment advisers, principal underwriters, administrative service agents, and such other agents as the Trustees may from time to time appoint or otherwise engage; (f) To provide for the distribution of any Shares of any Series or Class either through a principal underwriter in the manner hereinafter provided for or by the Trust itself, or both; (g) To set record dates in the manner hereinafter provided for; (h) To delegate such authority as they consider desirable to a committee or committees composed of Trustees, including without limitation, an Executive Committee, or to any officers of the Trust and to any agent, custodian or underwriter; (i) To sell or exchange any or all of the assets belonging to one or more Series or Classes, subject to the provisions of Article XII, Section 4(b) hereof; (j) To vote or give assent, or exercise any rights of ownership, with respect to stock or other securities or property; and to execute and deliver powers of attorney to such person or persons as the Trustees shall deem proper, granting to such person -18- or persons such power and discretion with relation to securities or property as the Trustees shall deem proper; (k) To exercise powers and rights of subscription or otherwise which in any manner arise out of ownership of securities; (l) To hold any security or property in a form not indicating any trust, whether in bearer, unregistered or other negotiable form; or either in its own name or in the name of a custodian or a nominee or nominees, subject in either case to proper safeguards according to the usual practice of Massachusetts trust companies or investment companies; (m) To consent to or participate in any plan for the reorganization, consolidation or merger of any corporation or concern, any security of which belongs to any Series or Class; to consent to any contract, lease, mortgage, purchase, or sale of property by such corporation or concern, and to pay calls or subscriptions with respect to any security which belongs to any Series or Class; (n) To engage in and to prosecute, compound, compromise, abandon, or adjust, by arbitration, or otherwise, any actions, suits, proceedings, disputes, claims, demands, and things relating to the Trust, and out of the assets belonging to any Series or Class to pay, or to satisfy, any debts, claims or expenses incurred in connection therewith, including those of litigation, upon any evidence that the Trustees may deem sufficient (such powers shall include without limitation any actions, suits, proceedings, disputes, claims, demands and things relating to the Trust wherein any of the Trustees may be named individually and the subject -19- matter of which arises by reason of business for or on behalf of the Trust); (o) To make distributions of income and of capital gains to Shareholders; (p) To borrow money; (q) From time to time to issue and sell the Shares of any Series or Class either for cash or for property whenever and in such amounts as the Trustees may deem desirable, but subject to the limitation set forth in Section 3 of Article III. (r) To purchase insurance of any kind, including, without limitation, insurance on behalf of any person who is or was a Trustee, officer, employee or agent of the Trust, or is or was serving at the request of the Trust as a trustee, director, officer, agent or employee of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity or arising out of his status as such. (s) To sell, exchange, lend, pledge, mortgage, hypothecate, lease, or write options with respect to or otherwise deal in any property rights relating to any or all of the assets belonging to any Series or Class. The Trustees shall have all of the powers set forth in this Section 1 with respect to all assets and liabilities of each Series and Class. -20- Section 2. Principal Transactions. The Trustees shall not cause the Trust on behalf of any Series or Class to buy any securities (other than Shares) from or sell any securities (other than Shares) to, or lend any assets belonging to any Series or Class to any Trustee or officer or employee of the Trust or any firm of which any such Trustee or officer is a member acting as principal unless permitted by the 1940 Act, but the Trust may employ any such other party or any such person or firm or company in which any such person is an Interested Person in any capacity not prohibited by the 1940 Act. Section 3. Trustees and Officers as Shareholders. Any Trustee, officer or other agent of the Trust or any Series or Class may acquire, own and dispose of Shares of any Series or Class to the same extent as if he were not a Trustee, officer or agent; and the Trustees may issue and sell or cause to be issued or sold Shares of any Series or Class to and buy such Shares from any such person or any firm or company in which he is an interested person subject only to the general limitations herein contained as to the sale and purchase of such Shares; and all subject to any restrictions which may be contained in the By-Laws. Section 4. Parties to Contract. The Trustees may enter into any contract of the character described in Article VII or in Article IX hereof or any other capacity not prohibited by the 1940 Act with any corporation, firm, trust or association, although one or more of the Shareholders, Trustees, officers, employees or agents of the Trust or any Series or Class or -21- their affiliates may be an officer, Director, Trustee, Shareholder or Interested Person of such other party to the contract, and no such contract shall be invalidated or rendered voidable by reason of the existence of any such relationship, nor shall any person holding such relationship be liable merely by reason of such relationship for any loss or expense to the Trust or any Series or Class under or by reason of said contract or accountable for any profit realized directly or indirectly therefrom, in the absence of actual fraud. The same person (including a firm, corporation, trust or association) may be the other party to contracts entered into pursuant to Article VII or Article IX or any other capacity not prohibited by the 1940 Act, and any individual may be financially interested or otherwise an Interested Person of persons who are parties to any or all of the contracts mentioned in this Section 4. ARTICLE VI TRUSTEES' EXPENSES AND COMPENSATION Section 1. Trustee Reimbursement. The Trustees shall be reimbursed from the assets belonging to each particular Series or Class for all of such Trustees' expenses as such expenses are allocated to and among any one or more of the Series or Classes pursuant to Article III, Section 5(b), including, without limitation, expenses of organizing the Trust or any Series or Class and continuing its or their existence; fees and expenses of Trustees and officers of the Trust; fees for investment advisory services, administrative services and principal underwriting services provided for in Article VII, Sections 1, 2 and 3; fees and expenses of preparing and printing Registration Statements under the Securities Act of 1933 and the 1940 Act and any amendments thereto; expenses of -22- registering and qualifying the Trust and any Series or Class and the Shares of any Series or Class under federal and state laws and regulations; expenses of preparing, printing and distributing prospectuses and any amendments thereto sent to Shareholders, underwriters, broker-dealers and to investors who may be considering the purchase of Shares; expenses of registering, licensing or other authorization of the Trust or any Series or Class as a broker-dealer and of its or their officers as agents and salesmen under federal and state laws and regulations; interest expense, taxes, fees and commissions of every kind; expenses of issue (including cost of share certificates), purchases, repurchases and redemptions of Shares, including expenses attributable to a program of periodic issue; charges and expenses of custodians, transfer agents, dividend disbursing agents, Shareholder servicing agents and registrars; printing and mailing costs; auditing, accounting and legal expenses; reports to Shareholders and governmental officers and commissions; expenses of meetings of Shareholders and proxy solicitations therefor; insurance expenses; association membership dues and nonrecurring items as may arise, including all losses and liabilities by them incurred in administering the Trust and any Series or Class, including expenses incurred in connection with litigation, proceedings and claims and the obligations of the Trust under Article XI hereof and the By-Laws to indemnify its Trustees, officers, employees, Shareholders and agents, and any contract obligation to indemnify principal underwriters under Section 3 of Article VII; and for the payment of such expenses, disbursements, losses and liabilities, the Trustees shall have a lien on the assets belonging to each Series or Class prior to any rights or interests of the Shareholders of any Series or Class. This section shall not preclude the Trust from directly paying any of the aforementioned fees and expenses. -23- Section 2. Trustee Compensation. The Trustees shall be entitled to compensation from the Trust from the assets belonging to any Series or Class for their respective services as Trustees, to be determined from time to time by vote of the Trustees, and the Trustees shall also determine the compensation of all officers, consultants and agents whom they may elect or appoint. The Trust may pay out of the assets belonging to any Series or Class any Trustee or any corporation, firm, trust or other entity of which a Trustee is an Interested Person for services rendered in any capacity not prohibited by the 1940 Act, and such payments shall not be deemed compensation for services as a Trustee under the first sentence of this Section 2 of Article VI. ARTICLE VII INVESTMENT ADVISER, ADMINISTRATIVE SERVICES, PRINCIPAL UNDERWRITER AND TRANSFER AGENT Section 1. Investment Adviser. Subject to a Majority Shareholder Vote by the relevant Series or Class, the Trustees may in their discretion from time to time enter into an investment advisory contract whereby the other party to such contract shall undertake to furnish the Trustees investment advisory services for such Series or Class upon such terms and conditions and for such compensation as the Trustees may in their discretion determine. Subject to a Majority Shareholder Vote by the relevant Series or Class, the investment adviser may enter into a sub- investment advisory contract to receive investment advice and/or statistical and factual information from the sub-investment adviser for such Series or Class upon such terms and conditions and for such -24- compensation as the Trustees, in their discretion, may agree. Notwithstanding any provisions of this Declaration of Trust, the Trustees may authorize the investment adviser or sub-investment adviser or any person furnishing administrative personnel and services as set forth in Article VII, Section 2 (subject to such general or specific instructions as the Trustees may from time to time adopt) to effect purchases, sales or exchanges of portfolio securities belonging to a Series or Class on behalf of the Trustees or may authorize any officer or Trustee to effect such purchases, sales, or exchanges pursuant to recommendations of the investment adviser (and all without further action by the Trustees). Any such purchases, sales and exchanges shall be deemed to have been authorized by the Trustees. The Trustees may also authorize the investment adviser to determine what firms shall be employed to effect transactions in securities for the account of a Series or Class and to determine what firms shall participate in any such transactions or shall share in commissions or fees charged in connection with such transactions. Section 2. Administrative Services. The Trustees may in their discretion from time to time contract for administrative personnel and services whereby the other party shall agree to provide the Trustees administrative personnel and services to operate the Trust or a Series or Class on a daily basis, on such terms and conditions as the Trustees may in their discretion determine. Such services may be provided by one or more entities. Section 3. Principal Underwriter. The Trustees may in their discretion from time to time enter into an exclusive or nonexclusive contract or contracts providing for the -25- sale of the Shares of a Series or Class to net such Series or Class not less than the amount provided in Article III, Section 3 hereof, whereby a Series or Class may either agree to sell the Shares to the other party to the contract or appoint such other party its sales agent for such shares. In either case, the contract shall be on such terms and conditions (including indemnification of principal underwriters allowable under applicable law and regulation) as the Trustees may in their discretion determine not inconsistent with the provisions of this Article VII; and such contract may also provide for the repurchase or sale of Shares of a Series or Class by such other party as principal or as agent of the Trust and may provide that the other party may maintain a market for shares of a Series or Class. Section 4. Transfer Agent. The Trustees may in their discretion from time to time enter into transfer agency and shareholder services contracts whereby the other party shall undertake to furnish a transfer agency and shareholder services. The contracts shall be on such terms and conditions as the Trustees may in their discretion determine not inconsistent with the provisions of this Declaration of Trust or of the By-Laws. Such services may be provided by one or more entities. ARTICLE VIII SHAREHOLDERS' VOTING POWERS AND MEETINGS Section 1. Voting Powers. Subject to the provisions set forth in Article III, Section 5(d), the Shareholders shall have power to vote, (i) for the election of Trustees as provided in Article IV, Section 2; (ii) for the removal of -26- Trustees as provided in Article IV, Section 3(d); (iii) with respect to any investment adviser or sub-investment adviser as provided in Article VII, Section 1; (iv) with respect to the amendment of this Declaration of Trust as provided in Article XII, Section 7; (v) to the same extent as the shareholders of a Massachusetts business corporation as to whether or not a court action, proceeding or claim should be brought or maintained derivatively or as a class action on behalf of the Trust or the Shareholders; and (vi) with respect to such additional matters relating to the Trust as may be required by law, by this Declaration of Trust, or the By-Laws of the Trust or any regulation of the Trust or the Commission or any State, or as the Trustees may consider desirable. Each whole Share shall be entitled to one vote as to any matter on which it is entitled to vote, and each fractional Share shall be entitled to a proportionate fractional vote. There shall be no cumulative voting in the election of Trustees. Shares may be voted in person or by proxy. Until Shares of a Series or Class are issued, the Trustees may exercise all rights of Shareholders of such Series or Class with respect to matters affecting such Series or Class, and may take any action with respect to the Trust or such Series or Class required or permitted by law, this Declaration of Trust or any By-Laws of the Trust to be taken by Shareholders. Section 2. Meetings. A Shareholders meeting shall be held as specified in Section 2 of Article IV at the principal office of the Trust or such other place as the Trustees may designate. Special meetings of the Shareholders may be called by the Trustees or the Chief Executive Officer of the Trust and shall be called by the Trustees upon the written request of Shareholders owning at least one-tenth of the outstanding Shares of -27- all Series and Classes entitled to vote. Shareholders shall be entitled to at least fifteen days' notice of any meeting. Section 3. Quorum and Required Vote. Except as otherwise provided by law, to constitute a quorum for the transaction of any business at any meeting of Shareholders there must be present, in person or by proxy, holders of more than fifty percent of the total number of outstanding Shares of all Series and Classes entitled to vote at such meeting. When any one or more Series or Classes is entitled to vote as a single Series or Class, more than fifty percent of the shares of each such Series or Class entitled to vote shall constitute a quorum at a Shareholder's meeting of that Series or Class. If a quorum shall not be present for the purpose of any vote that may properly come before the meeting, the Shares present in person or by proxy and entitled to vote at such meeting on such matter may, by plurality vote, adjourn the meeting from time to time to such place and time without further notice than by announcement to be given at the meeting until a quorum entitled to vote on such matter shall be present, whereupon any such matter may be voted upon at the meeting as though held when originally convened. Subject to any applicable requirement of law or of this Declaration of Trust or the By-Laws, a plurality of the votes cast shall elect a Trustee, and all other matters shall be decided by a majority of the votes cast and entitled to vote thereon. Section 4. Additional Provisions. The By-Laws may include further provisions for Shareholders' votes and meetings and related matters. -28- ARTICLE IX CUSTODIAN The Trustees may, in their discretion, from time to time enter into contracts providing for custodial and accounting services to the Trust or any Series or Class. The contracts shall be on the terms and conditions as the Trustees may in their discretion determine not inconsistent with the provisions of this Declaration of Trust or of the By-Laws. Such services may be provided by one or more entities, including one or more sub- custodians. ARTICLE X DISTRIBUTIONS AND REDEMPTIONS Section 1. Distributions. (a) The Trustees may from time to time declare and pay dividends to the Shareholders of any Series or Class, and the amount of such dividends and the payment of them shall be wholly in the discretion of the Trustees. Such dividends may be accrued and automatically reinvested in additional Shares (or fractions thereof) of the relevant Series or Class or paid in cash or additional Shares of such Series or Class, all upon such terms and conditions as the Trustees may prescribe. (b) The Trustees may distribute in respect of any fiscal year as dividends and as capital gains distributions, respectively, amounts sufficient to enable any Series or Class to qualify as a regulated investment company to avoid any liability for federal income taxes in respect of that year. -29- (c) The decision of the Trustees as to what constitutes income and what constitutes principal shall be final, and except as specifically provided herein the decision of the Trustees as to what expenses and charges of any Series or Class shall be charged against principal and what against the income shall be final. Any income not distributed in any year may be permitted to accumulate and as long as not distributed may be invested from time to time in the same manner as the principal funds of any Series or Class. (d) All dividends and distributions on Shares of a particular Series or Class shall be distributed pro rata to the holders of that Series or Class in proportion to the number of Shares of that Series or Class held by such holders and recorded on the books of the Trust or its transfer agent at the date and time of record established for that payment. Section 2. Redemptions and Repurchases. (a) In case any Shareholder of record of any Series or Class at any time desires to dispose of Shares of such Series or Class recorded in his name, he may deposit a written request (or such other form of request as the Trustees may from time to time authorize) requesting that the Trust purchase his Shares, together with such other instruments or authorizations to effect the transfer as the Trustees may from time to time require, at the office of the Transfer Agent, and the Trust shall purchase his Shares out of assets belonging to such Series or Class. The purchase price shall be the net asset value of his shares reduced by any redemption charge as the Trustees from time to time may determine. -30- Payment for such Shares shall be made by the Trust to the Shareholder of record within that time period required under the 1940 Act after the request (and, if required, such other instruments or authorizations of transfer) is deposited, subject to the right of the Trustees to postpone the date of payment pursuant to Section 4 of this Article X. If the redemption is postponed beyond the date on which it would normally occur by reason of a declaration by the Trustees suspending the right of redemption pursuant to Section 4 of this Article X, the right of the Shareholder to have his Shares purchased by the Trust shall be similarly suspended, and he may withdraw his request (or such other instruments or authorizations of transfer) from deposit if he so elects; or, if he does not so elect, the purchase price shall be the net asset value of his Shares determined next after termination of such suspension (reduced by any redemption charge), and payment therefor shall be made within the time period required under the 1940 Act. (b) The Trust may purchase Shares of a Series or Class by agreement with the owner thereof at a purchase price not exceeding the net asset value per Share (reduced by any redemption charge) determined (1) next after the purchase or contract of purchase is made or (2) at some later time. (c) The Trust may pay the purchase price (reduced by any redemption charge) in whole or in part by a distribution in kind of securities from the portfolio of the relevant Series or Class, taking such securities at the same value employed in determining net asset value, and selecting the securities in such manner as the Trustees may deem fair and equitable. -31- Section 3. Net Asset Value of Shares. The net asset value of each Share of a Series or Class outstanding shall be determined at such time or times as may be determined by or on behalf of the Trustees. The power and duty to determine net asset value may be delegated by the Trustees from time to time to one or more of the Trustees or officers of the Trust, to the other party to any contract entered into pursuant to Section 1 or 2 of Article VII or to the custodian or to a transfer agent or other person designated by the Trustees. The net asset value of each Share of a Series or Class as of any particular time shall be the quotient (adjusted to the nearer cent) obtained by dividing the value, as of such time, of the net assets belonging to such Series or Class (i.e., the value of the assets belonging to such Series or Class less the liabilities belonging to such Series or Class exclusive of capital and surplus) by the total number of Shares outstanding of the Series or Class at such time in accordance with the requirements of the 1940 Act and applicable provisions of the By-Laws of the Trust in conformity with generally accepted accounting practices and principles. The Trustees may declare a suspension of the determination of net asset value for the whole or any part of any period in accordance with the 1940 Act. Section 4. Suspension of the Right of Redemption. The Trustees may declare a suspension of the right of redemption or postpone the date of payment for the whole or any part of any period in accordance with the 1940 Act. -32- Section 5. Trust's Right to Redeem Shares. The Trust shall have the right to cause the redemption of Shares of any Series or Class in any Shareholder's account for their then current net asset value and promptly make payment to the shareholder (which payment may be reduced by any applicable redemption charge), if at any time the total investment in the account does not have a minimum dollar value determined from time to time by the Trustees in their sole discretion. ARTICLE XI LIMITATION OF LIABILITY AND INDEMNIFICATION Section 1. Limitation of Personal Liability and Indemnification of Shareholders. The Trustees, officers, employees or agents of the Trust shall have no power to bind any Shareholder of any Series or Class personally or to call upon such Shareholder for the payment of any sum of money or assessment whatsoever, other than such as the Shareholder may at any time agree to pay by way of subscription to any Shares or otherwise. No Shareholder or former Shareholder of any Series or Class shall be liable solely by reason of his being or having been a Shareholder for any debt, claim, action, demand, suit, proceeding, judgment, decree, liability or obligation of any kind, against, or with respect to the Trust or any Series or Class arising out of any action taken or omitted for or on behalf of the Trust or such Series or Class, and the Trust or such Series or Class shall be solely liable therefor and -33- resort shall be had solely to the property of the relevant Series or Class of the Trust for the payment or performance thereof. Each Shareholder or former Shareholder of any Series or Class (or their heirs, executors, administrators or other legal representatives or, in case of a corporate entity, its corporate or general successor) shall be entitled to be indemnified and reimbursed by the Trust to the full extent of such liability and the costs of any litigation or other proceedings in which such liability shall have been determined, including, without limitation, the fees and disbursements of counsel if, contrary to the provisions hereof, such Shareholder or former Shareholder of such Series or Class shall be held to be personally liable. Such indemnification and reimbursement shall come exclusively from the assets of the relevant Series or Class. The Trust shall, upon request by a Shareholder or former Shareholder, assume the defense of any claim made against any Shareholder for any act or obligation of the Trust or any Series or Class and satisfy any judgment thereon. Section 2. Limitation of Personal Liability of Trustees, Officers, Employees or Agents of the Trust. No Trustee, officer, employee or agent of the Trust shall have the power to bind any other Trustee, officer, employee or agent of the Trust personally. The Trustees, officers, employees or agents of the Trust incurring any debts, liabilities or obligations, or in taking or omitting any other actions for or in connection with the Trust are, and each shall be deemed to be, acting as Trustee, officer, employee or agent of the Trust and not in his own individual capacity. -34- Trustees and officers of the Trust shall be liable for their willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of the office of Trustee or officer, as the case may be, and for nothing else. Section 3. Express Exculpatory Clauses and Instruments. The Trustees shall use every reasonable means to assure that all persons having dealings with the Trust or any Series or Class shall be informed that the property of the Shareholders and the Trustees, officers, employees and agents of the Trust or any Series or Class shall not be subject to claims against or obligations of the Trust or any other Series or Class to any extent whatsoever. The Trustees shall cause to be inserted in any written agreement, undertaking or obligation made or issued on behalf of the Trust or any Series or Class (including certificates for Shares of any Series or Class) an appropriate reference to the provisions of this Declaration, providing that neither the Shareholders, the Trustees, the officers, the employees nor any agent of the Trust or any Series or Class shall be liable thereunder, and that the other parties to such instrument shall look solely to the assets belonging to the relevant Series or Class for the payment of any claim thereunder or for the performance thereof; but the omission of such provisions from any such instrument shall not render any Shareholder, Trustee, officer, employee or agent liable, nor shall the Trustee, or any officer, agent or employee of the Trust or any Series or Class be liable to anyone for such omission. If, notwithstanding this provision, any Shareholder, Trustee, officer, employee or agent shall be held liable to any other person by reason of the omission of such provision from any such agreement, undertaking or obligation, the Shareholder, Trustee, -35- officer, employee or agent shall be indemnified and reimbursed by the Trust. ARTICLE XII MISCELLANEOUS Section 1. Trust is not a Partnership. It is hereby expressly declared that a trust and not a partnership is created hereby. Section 2. Trustee Action Binding, Expert Advice, No Bond or Surety. The exercise by the Trustees of their powers and discretions hereunder shall be binding upon everyone interested. Subject to the provisions of Article XI, the Trustees shall not be liable for errors of judgment or mistakes of fact or law. The Trustees may take advice of counsel or other experts with respect to the meaning and operation of this Declaration of Trust, and subject to the provisions of Article XI, shall be under no liability for any act or omission in accordance with such advice or for failing to follow such advice. The Trustees shall not be required to give any bond as such, nor any surety if a bond is required. Section 3. Establishment of Record Dates. The Trustees may close the Share transfer books of the Trust maintained with respect to any Series or Class for a period not exceeding sixty (60) days preceding the date of any meeting of Shareholders of the Trust or any Series or Class, or the date for the payment of any dividend or the making of any distribution to -36- Shareholders, or the date for the allotment of rights, or the date when any change or conversion or exchange of Shares of any Series or Class shall go into effect; or in lieu of closing the Share transfer books as aforesaid, the Trustees may fix in advance a date, not exceeding sixty (60) days preceding the date of any meeting of Shareholders of the Trust or any Series or Class, or the date for the payment of any dividend or the making of any distribution to Shareholders of any Series or Class, or the date for the allotment of rights, or the date when any change or conversion or exchange of Shares of any Series or Class shall go into effect, or the last day on which the consent or dissent of Shareholders of any Series or Class may be effectively expressed for any purpose, as a record date for the determination of the Shareholders entitled to notice of, and, to vote at, any such meeting and any adjournment thereof, or entitled to receive payment of any such dividend or distribution, or to any such allotment of rights, or to exercise the rights in respect of any such change, conversion or exchange of shares, or to exercise the right to give such consent or dissent, and in such case such Shareholders and only such Shareholders as shall be Shareholders of record on the date so fixed shall be entitled to such notice of, and to vote at, such meeting, or to receive payment of such dividend or distribution, or to receive such allotment or rights, or to exercise such rights, as the case may be, notwithstanding, after such date fixed aforesaid, any transfer of any Shares on the books of the Trust maintained with respect to any Series or Class. Nothing in the foregoing sentence shall be construed as precluding the Trustees from setting different record dates for different Series or Classes. Section 4. Termination of Trust. -37- (a) This Trust shall continue without limitation of time but subject to the provisions of paragraphs (b), (c) and (d) of this Section 4. (b) The Trustees may, by majority action, with the approval of the holders of more than fifty percent of the outstanding Shares of each Series or Class entitled to vote and voting separately by Series or Class, sell and convey the assets of the Trust or any Series or Class to another trust or corporation. Upon making provision for the payment of all liabilities, by assumption or otherwise, the Trustees shall distribute the remaining proceeds belonging to each Series or Class ratably among the holders of the Shares of that Series or Class then outstanding. (c) Subject to a Majority Shareholder Vote by such Series or Class, the Trustees may at any time sell and convert into money all the assets of the Trust or any Series or Class. Upon making provision for the payment of all outstanding obligations, taxes and other liabilities, accrued or contingent, belonging to each Series or Class, the Trustees shall distribute the remaining assets belonging to each Series or Class ratably among the holders of the outstanding Shares of that Series or Class. (d) Upon completion of the distribution of the remaining proceeds of the remaining assets as provided in paragraphs (b) and (c), the Trust or the applicable Series or Class shall terminate and the Trustees shall be discharged of any and all further liabilities and duties hereunder or with respect thereto and the right, title and interest of all parties shall be canceled and discharged. -38- Section 5. Offices of the Trust, Filing of Copies, Headings, Counterparts. The Trust shall maintain a usual place of business in Massachusetts, which, initially, shall be 50 Congress Street, Boston, Massachusetts, and shall continue to maintain an office at such address unless changed by the Trustees to another location in Massachusetts. The Trust may maintain other offices as the Trustees may from time to time determine. The original or a copy of this instrument and of each Declaration of Trust supplemental hereto shall be kept at the office of the Trust where it may be inspected by any Shareholder. A copy of this instrument and of each supplemental declaration of trust shall be filed by the Trustees with the Massachusetts Secretary of State and the Boston City Clerk, as well as any other governmental office where such filing may from time to time be required. Headings are placed herein for convenience of reference only and in case of any conflict, the text of this instrument, rather than the headings shall control. This instrument may be executed in any number of counterparts each of which shall be deemed an original. Section 6. Applicable Law. The Trust set forth in this instrument is created under and is to be governed by and construed and administered according to the laws of The Commonwealth of Massachusetts. The Trust shall be of the type commonly called a Massachusetts business trust, and without limiting the provisions hereof, the Trust may exercise all powers which are ordinarily exercised by such a trust. -39- Section 7. Amendments -- General. Prior to the initial issuance of Shares pursuant to Section 3 of Article III, a majority of the Trustees then in office may amend or otherwise supplement this instrument by making a Declaration of Trust supplemental hereto, which thereafter shall form a part hereof. Subsequent to such initial issuance of Shares, amendments or supplements to this instrument may be authorized by a majority of the Trustees then in office and by a Majority Shareholder Vote of all Series and Classes then outstanding and entitled to vote thereon (except that any amendments or supplements changing the name of the Trust or pursuant to Section 8 hereunder may be made without shareholder approval), or by any larger vote which may be required by applicable law or this Declaration of Trust in any particular case, which amendment or supplement thereafter shall form a part hereof. Any such amendment or supplement (which may be in the form of a complete restatement) may be evidenced by either (i) a supplemental Declaration of Trust signed by at least a majority of the Trustees then in office or (ii) by a certificate of the President and Secretary of the Trust setting forth such amendment or supplement and certifying that such amendment or supplement has been duly authorized by the Trustees, and if required, by the shareholders. Copies of the supplemental Declaration of Trust or the certificate of the President and Secretary, as the case may be, shall be filed as specified in Section 5 of this Article XII. Section 8. Amendments -- Series. The establishment and designation of any series or class of Shares in addition to those established and designated in Section 5 of Article III hereof shall be effective upon the execution by a majority -40- of the then Trustees of an amendment to this Declaration of Trust, taking the form of a complete restatement or otherwise, setting forth such establishment and designation and the relative rights and preferences of any such Series or Class, or as otherwise provided in such instrument. Without limiting the generality of the foregoing, the Declaration of the Trust may be amended to: (a) create one or more Series or Classes of Shares (in addition to any Series or Classes already existing or otherwise) with such rights and preferences and such eligibility requirements for investment therein as the Trustees shall determine and reclassify any or all outstanding Shares as Shares of particular Series or Classes in accordance with such eligibility requirements; (b) combine two or more Series or Classes of Shares into a single Series or Class on such terms and conditions as the Trustees shall determine; (c) change or eliminate any eligibility requirements for investment in Shares of any Series or Class, including without limitation the power to provide for the issue of Shares of any Series or Class in connection with any merger or consolidation of the Trust with another trust or company or any acquisition by the Trust of part or all of the assets of another trust or company; (d) change the designation of any Series or Class of Shares; (e) change the method of allocating dividends among the various Series and Classes of Shares; -41- (f) allocate any specific assets or liabilities of the Trust or any specific items of income or expense of the Trust to one or more Series and Classes of Shares; (g) specifically allocate assets to any or all Series or Classes of Shares or create one or more additional Series or Classes of Shares which are preferred over all other Series or Classes of Shares in respect of assets specifically allocated thereto or any dividends paid by the Trust with respect to any net income, however determined, earned from the investment and reinvestment of any assets so allocated or otherwise and provide for any special voting or other rights with respect to such Series or Classes. IN WITNESS WHEREOF, the undersigned have executed this instrument the day and year first above written. /s/ John F. Donahue /s/Edward L. Flaherty, Jr. John F. Donahue Edward L. Flaherty, Jr. /s/ William J. Copeland /s/ J. Joseph Maloney, Jr. William J. Copeland J. Joseph Maloney, Jr. /s/ Glen R. Johnson /s/ Gregor F. Meyer Glen R. Johnson Gregor F. Meyer -42- /s/ James E. Dowd /s/ Wesley W. Posvar James E. Dowd Wesley W. Posvar /s/ Lawrence D. Ellis, M.D. /s/ Marjorie P. Smuts Lawrence D. Ellis, M.D. Marjorie P. Smuts /s/ John A. Staley, IV John A. Staley, IV COMMONWEALTH OF PENNSYLVANIA ) ) ss: COUNTY OF ALLEGHENY ) I hereby certify that on September 1, 1989, before me, the subscriber, a Notary Public of the Commonwealth of Pennsylvania, in the County of Allegheny, personally appeared JOHN F. DONAHUE, WILLIAM J. COPELAND, LAWRENCE D. ELLIS, M.D., EDWARD L. FLAHERTY, JR., GLEN R. JOHNSON, GREGOR F. MEYER, WESLEY W. POSVAR, MARJORIE P. SMUTS, AND JOHN A. STALEY, IV., who acknowledged the foregoing Declaration of Trust to be their act. Witness my hand and notarial seal the day and year above written. /s/ Loretta Y. Crum Notary Public -43- COMMONWEALTH OF MASSACHUSETTS ) ) ss: COUNTY OF SUFFOLK ) I hereby certify that on September 1, 1989, before me, the subscriber, a Notary Public of the Commonwealth of Massachusetts, in the County of Suffolk, personally appeared JAMES E. DOWD and J. JOSEPH MALONEY, JR., who acknowledged the foregoing Declaration of Trust to be their act. Witness my hand and notarial seal the day and year above written. /s/ Martha M. Campbell Notary Public EX-99.AMENDTODOT 4 Exhibit 1(i) under Form N-1A Exhibit 3(a) under Item 601/Reg. S-K FEDERATED MUNICIPAL TRUST Amendment No. 2 to DECLARATION OF TRUST Dated September 1, 1989 THIS Declaration of Trust is amended as follows: A. Strike the first paragraph of Section 5 of Article III in its entirety from the Declaration of Trust and substitute in its place the following: `Section 5. Establishment and Designation of Series or Class. Without limiting the authority of the Trustees set forth in Article XII, Section 8, inter alia, to establish and designate any additional Series of Class or to modify the rights and preferences of any existing Series or Class, Connecticut Municipal Cash Trust, Massachusetts Municipal Cash Trust, and Pennsylvania Municipal Cash Trust shall be, and are established and designated as, Series of the Trust.'' The undersigned Assistant Secretary of Federated Municipal trust hereby certifies that the above stated amendment is a true and correct Amendment to the Declaration of Trust, as adopted by the Trustees of the Trust by unanimous consent on the 16th day of March, 1990. WITNESS the due execution hereof this 16th day of March 1990. /s/ Charles C. Torie Charles C. Torie Assistant Secretary EX-99.AMENDTODOT 5 Exhibit 1(ii) under Form N-1A Exhibit 3(a) under Item 601/Reg. S-K FEDERATED MUNICIPAL TRUST Amendment No. 3 to DECLARATION OF TRUST Dated September 1, 1989 THIS Declaration of Trust is amended as follows: A. Strike the first paragraph of Section 5 of Article III in its entirety from the Declaration of Trust and substitute in its place the following: `Section 5. Establishment and Designation of Series or Class. Without limiting the authority of the Trustees set forth in Article XII, Section 8, inter alia, to establish and designate any additional Series of Class or to modify the rights and preferences of any existing Series or Class, Connecticut Municipal Cash Trust, Massachusetts Municipal Cash Trust, and Pennsylvania Municipal Cash Trust shall be, and are established and designated as, Series of the Trust.'' The undersigned Assistant Secretary of Federated Municipal Trust hereby certifies that the above stated amendment is a true and correct Amendment to the Declaration of Trust, as adopted by the Trustees of the Trust by unanimous consent on the 19th day of June, 1990. WITNESS the due execution hereof this 1st day of August 1990. /s/ G. Andrew Bonnewell G. Andrew Bonnewell Assistant Secretary EX-99.AMENDTODOT 6 Exhibit 1(iv) under Form N-1A Exhibit 3(a) under Item 601/Reg. S-K FEDERATED MUNICIPAL TRUST Amendment No. 5 to DECLARATION OF TRUST Dated September 1, 1989 THIS Declaration of Trust is amended as follows: A. Strike the first paragraph of Section 5 of Article III in its entirety from the Declaration of Trust and substitute in its place the following: `Section 5. Establishment and Designation of Series or Class. Without limiting the authority of the Trustees set forth in Article XII, Section 8, inter alia, to establish and designate any additional Series of Class or to modify the rights and preferences of any existing Series or Class, the Series and Classes of the Trust shall be and are established and designated as, Connecticut Municipal Cash Trust Institutional Service Shares, Connecticut Municipal Cash Trust Cash Series Shares, Massachusetts Municipal Cash Trust Institutional Service Shares, Massachusetts Municipal Cash Trust Cash Series Shares, Minnesota Municipal Cash Trust Institutional Shares, Minnesota Municipal Cash Trust Series Shares, New Jersey Municipal Cash Trust Institutional Service Shares, new Jersey Municipal Cash Trust Cash Series Shares, Ohio Municipal Cash Trust Institutional Shares, Ohio Municipal Cash Trust Institutional Service Shares, Pennsylvania Municipal Cash Trust Institutional Service Shares, and Pennsylvania Municipal Cash Trust Cash Series Shares.'' The undersigned Assistant Secretary of Federated Municipal Trust hereby certifies that the above stated amendment is a true and correct Amendment to the Declaration of Trust, as adopted by the Trustees of the Trust by unanimous consent on the 15th day of November, 1990. WITNESS the due execution hereof this 12th day of December 1990. /s/ G. Andrew Bonnewell G. Andrew Bonnewell Assistant Secretary EX-99.AMENDTODOT 7 Exhibit 1(v) under Form N-1A Exhibit 3(a) under Item 601/Reg. S-K FEDERATED MUNICIPAL TRUST Amendment No. 6 to DECLARATION OF TRUST Dated September 1, 1989 THIS Declaration of Trust is amended as follows: A. Strike the first paragraph of Section 5 of Article III in its entirety from the Declaration of Trust and substitute in its place the following: `Section 5. Establishment and Designation of Series or Class. Without limiting the authority of the Trustees set forth in Article XII, Section 8, inter alia, to establish and designate any additional Series of Class or to modify the rights and preferences of any existing Series or Class, the Series and Classes of the Trust shall be and are established and designated as, Connecticut Municipal Cash Trust Institutional Service Shares, Connecticut Municipal Cash Trust Cash Series Shares, Massachusetts Municipal Cash Trust Institutional Service Shares, Massachusetts Municipal Cash Trust Cash Series Shares, Minnesota Municipal Cash Trust Institutional Shares, Minnesota Municipal Cash Trust Series Shares, New Jersey Municipal Cash Trust Institutional Service Shares, new Jersey Municipal Cash Trust Cash Series Shares, Ohio Municipal Cash Trust Institutional Shares, Ohio Municipal Cash Trust Institutional Service Shares, Pennsylvania Municipal Cash Trust Institutional Service Shares, and Pennsylvania Municipal Cash Trust Cash Series Shares.'' The undersigned Assistant Secretary of Federated Municipal Trust hereby certifies that the above stated amendment is a true and correct Amendment to the Declaration of Trust, as adopted by the Trustees of the Trust by unanimous consent on the 21st day of March, 1991. WITNESS the due execution hereof this 21st day of March 1991. /s/ Jay S. Neuman Jay S. Neuman Assistant Secretary EX-99.AMENDTODOT 8 Exhibit 1(vi) under Form N-1A Exhibit 3(a) under Item 601/Reg. S-K FEDERATED MUNICIPAL TRUST Amendment No. 7 to DECLARATION OF TRUST Dated September 1, 1989 THIS Declaration of Trust is amended as follows: A. Strike the first paragraph of Section 5 of Article III in its entirety from the Declaration of Trust and substitute in its place the following: `Section 5. Establishment and Designation of Series or Class. Without limiting the authority of the Trustees set forth in Article XII, Section 8, inter alia, to establish and designate any additional Series of Class or to modify the rights and preferences of any existing Series or Class, the Series and Classes of the Trust shall be and are established and designated as: Connecticut Municipal Cash Trust Institutional Service Shares, Connecticut Municipal Cash Trust Cash Series Shares, Massachusetts Municipal Cash Trust Institutional Service Shares, Massachusetts Municipal Cash Trust BayFunds Shares, Minnesota Municipal Cash Trust Institutional Shares, Minnesota Municipal Cash Trust Series Shares, New Jersey Municipal Cash Trust Institutional Service Shares, New Jersey Municipal Cash Trust Cash Series Shares, Ohio Municipal Cash Trust Institutional Shares, Ohio Municipal Cash Trust Cash II Shares Pennsylvania Municipal Cash Trust Institutional Service Shares, Pennsylvania Municipal Cash Trust Cash Series Shares. The undersigned Assistant Secretary of Federated Municipal Trust hereby certifies that the above stated amendment is a true and correct Amendment to the Declaration of Trust, as adopted by the Trustees of the Trust by unanimous consent on the 22nd day of August, 1991. WITNESS the due execution hereof this 22nd day of August 1991. /s/ James E. Banks James E. Banks Assistant Secretary EX-99.AMENDTODOT 9 Exhibit 1(vii) under Form N-1A Exhibit 3(a) under Item 601/Reg. S-K FEDERATED MUNICIPAL TRUST Amendment No. 8 to DECLARATION OF TRUST Dated September 1, 1989 THIS Declaration of Trust is amended as follows: A. Strike the first paragraph of Section 5 of Article III and substitute in its place the following: `Section 5. Establishment and Designation of Series or Class. Without limiting the authority of the Trustees set forth in Article XII, Section 8, inter alia, to establish and designate any additional Series of Class or to modify the rights and preferences of any existing Series or Class, the Series and Classes of the Trust shall be and are established and designated as: Connecticut Municipal Cash Trust Institutional Service Shares Cash Series Shares Massachusetts Municipal Cash Trust Institutional Service Shares Minnesota Municipal Cash Trust Institutional Shares Cash Series Shares New Jersey Municipal Cash Trust Institutional Service Shares Cash Series Shares Ohio Municipal Cash Trust Institutional Shares Cash II Shares Pennsylvania Municipal Cash Trust Institutional Service Shares Cash Series Shares The undersigned Assistant Secretary of Federated Municipal Trust hereby certifies that the above stated amendment is a true and correct Amendment to the Declaration of Trust, as adopted by the Trustees of the Trust by unanimous consent on the 11th day of February, 1992. WITNESS the due execution hereof this 13th day of February 1992. /s/ G. Andrew Bonnewell G. Andrew Bonnewell Assistant Secretary EX-99.AMENDTODOT 10 Exhibit 1(viii) under Form N-1A Exhibit 3(a) under Item 601/Reg. S-K FEDERATED MUNICIPAL TRUST Amendment No. 9 to DECLARATION OF TRUST Dated September 1, 1989 THIS Declaration of Trust is amended as follows: A. Strike the first paragraph of Section 5 of Article III and substitute in its place the following: `Section 5. Establishment and Designation of Series or Class. Without limiting the authority of the Trustees set forth in Article XII, Section 8, inter alia, to establish and designate any additional Series of Class or to modify the rights and preferences of any existing Series or Class, the Series and Classes shall be and are established and designated as: Connecticut Municipal Cash Trust Institutional Service Shares Massachusetts Municipal Cash Trust Institutional Service Shares Minnesota Municipal Cash Trust Institutional Shares Cash Series Shares New Jersey Municipal Cash Trust Institutional Shares Institutional Service Shares Cash Series Shares Ohio Municipal Cash Trust Institutional Shares Cash II Shares Pennsylvania Municipal Cash Trust Institutional Service Shares Cash Series Shares The undersigned Assistant Secretary of Federated Municipal Trust hereby certifies that the above stated Amendment is a true and correct Amendment to the Declaration of Trust, effective as of November 9, 1992, as adopted by the Trustees of the Trust on the 27th day of August, 1992. WITNESS the due execution hereof this 9th day of November, 1992. /s/ G. Andrew Bonnewell G. Andrew Bonnewell Assistant Secretary EX-99.AMENDTODOT 11 Exhibit 1(x) under Form N-1A Exhibit 3(a) under Item 601/Reg. S-K FEDERATED MUNICIPAL TRUST Amendment No. 11 to DECLARATION OF TRUST Dated September 1, 1989 THIS Declaration of Trust is amended as follows: Delete the first paragraph of Section 5 of Article III and substitute in its place the following: `Section 5. Establishment and Designation of Series or Class. Without limiting the authority of the Trustees set forth in Article XII, Section 8, inter alia, to establish and designate any additional Series of Class or to modify the rights and preferences of any existing Series or Class, the Series and Classes shall be and are established and designated as: Connecticut Municipal Cash Trust Institutional Service Shares Massachusetts Municipal Cash Trust BayFunds Shares Institutional Service Shares Minnesota Municipal Cash Trust Institutional Shares Cash Series Shares New Jersey Municipal Cash Trust Institutional Shares Institutional Service Shares Cash Series Shares Ohio Municipal Cash Trust Institutional Shares Cash II Shares Pennsylvania Municipal Cash Trust Institutional Service Shares Cash Series Shares Virginia Municipal Cash Trust Institutional Shares Institutional Service Shares The undersigned Assistant Secretary of Federated Municipal Trust hereby certifies that the above stated Amendment is a true and correct Amendment to the Declaration of Trust as adopted by the Trustees of the Trust on the 21st day of May, 1993. WITNESS the due execution hereof this 24th day of May, 1993. /s/ G. Andrew Bonnewell G. Andrew Bonnewell Assistant Secretary EX-99.AMENDTODOT 12 Exhibit 1(xiv) under Form N-1A Exhibit 3(a) under Item 601/Reg. S-K FEDERATED MUNICIPAL TRUST Amendment No. 15 to DECLARATION OF TRUST Dated September 1, 1989 THIS Declaration of Trust is amended as follows: Delete the first paragraph of Section 5 of Article III and substitute in its place the following: `Section 5. Establishment and Designation of Series or Class. Without limiting the authority of the Trustees set forth in Article XII, Section 8, inter alia, to establish and designate any additional Series or Class or to modify the rights and preferences of any existing Series or Class, the Series and Classes shall be and are established and designated as: Alabama Municipal Cash Trust California Municipal Cash Trust Institutional Service Shares Connecticut Municipal Cash Trust Institutional Service Shares Florida Municipal Cash Trust Maryland Municipal Cash Trust Massachusetts Municipal Cash Trust BayFunds Shares Institutional Service Shares Minnesota Municipal Cash Trust Cash Series Shares Institutional Shares New Jersey Municipal Cash Trust Institutional Shares Institutional Service Shares New York Municipal Cash Trust Cash II Shares Institutional Service Shares North Carolina Municipal Cash Trust Ohio Municipal Cash Trust Institutional Shares Cash II Shares Pennsylvania Municipal Cash Trust Cash Series Shares Institutional Service Shares Virginia Municipal Cash Trust Institutional Service Shares Institutional Shares The undersigned Assistant Secretary of Federated Municipal Trust hereby certifies that the above stated Amendment is a true and correct Amendment to the Declaration of Trust as adopted by the Trustees of the Trust on the 25th day of August, 1994. WITNESS the due execution hereof this 25th day of August, 1994. /s/ G. Andrew Bonnewell G. Andrew Bonnewell Assistant Secretary EX-99.AMENDTODOT 13 Exhibit 1(xv) under Form N-1A Exhibit 3(a) under Item 601/Reg. S-K FEDERATED MUNICIPAL TRUST Amendment No. 16 to DECLARATION OF TRUST Dated September 1, 1989 THIS Declaration of Trust is amended as follows: Delete the first paragraph of Section 5 of Article III and substitute in its place the following: `Section 5. Establishment and Designation of Series or Class. Without limiting the authority of the Trustees set forth in Article XII, Section 8, inter alia, to establish and designate any additional Series or Class or to modify the rights and preferences of any existing Series or Class, the Series and Classes shall be and are established and designated as: Alabama Municipal Cash Trust California Municipal Cash Trust Connecticut Municipal Cash Trust Institutional Service Shares Florida Municipal Cash Trust Georgia Municipal Cash Trust Maryland Municipal Cash Trust Massachusetts Municipal Cash Trust BayFunds Shares Institutional Service Shares Michigan Municipal Cash Trust Minnesota Municipal Cash Trust Cash Series Shares Institutional Shares New Jersey Municipal Cash Trust Institutional Service Shares Institutional Shares New York Municipal Cash Trust Cash II Shares Institutional Service Shares North Carolina Municipal Cash Trust Ohio Municipal Cash Trust Cash II Shares Institutional Shares Pennsylvania Municipal Cash Trust Cash Series Shares Institutional Service Shares Institutional Shares Virginia Municipal Cash Trust Institutional Service Shares Institutional Shares'' The undersigned Assistant Secretary of Federated Municipal Trust hereby certifies that the above stated Amendment is a true and correct Amendment to the Declaration of Trust, as adopted by the Trustees on the 18th day of May, 1995. WITNESS the due execution hereof this 18th day of May, 1995. /s/ G. Andrew Bonnewell G. Andrew Bonnewell Assistant Secretary EX-99.AMENDTODOT 14 Exhibit 1(xvii) under Form N-1A Exhibit 3(a) under Item 601/Reg. S-K FEDERATED MUNICIPAL TRUST Amendment No. 18 to DECLARATION OF TRUST Dated September 1, 1989 THIS Declaration of Trust is amended as follows: Delete the first paragraph of Section 5 of Article III from the Declaration of Trust and substitute in its place the following: `Section 5. Establishment and Designation of Series or Class. Without limiting the authority of the Trustees set forth in Article XII, Section 8, inter alia, to establish and designate any additional Series or Class or to modify the rights and preferences of any existing Series or Class, the Series and Classes shall be and are established and designated as: Alabama Municipal Cash Trust California Municipal Cash Trust Institutional Service Shares Institutional Shares Connecticut Municipal Cash Trust Institutional Service Shares Florida Municipal Cash Trust Cash II Shares institutional Shares Georgia Municipal Cash Trust Maryland Municipal Cash Trust Massachusetts Municipal Cash Trust BayFunds Shares Institutional Service Shares Michigan Municipal Cash Trust Institutional Service Shares Institutional Shares Minnesota Municipal Cash Trust Cash Series Shares Institutional Shares New Jersey Municipal Cash Trust Institutional Service Shares Institutional Shares New York Municipal Cash Trust Cash II Shares Institutional Service Shares North Carolina Municipal Cash Trust Ohio Municipal Cash Trust Institutional Service Shares Institutional Shares Cash II Shares Pennsylvania Municipal Cash Trust Cash Series Shares Institutional Service Shares Institutional Shares Tennessee Municipal Cash Trust Institutional Service Shares Institutional Shares Virginia Municipal Cash Trust Institutional Service Shares Institutional Shares'' The undersigned Assistant Secretary of Federated Municipal Trust hereby certifies that the above stated Amendment is a true and correct Amendment to the Declaration of Trust, as adopted by the Board of Trustees on the 29th day of February, 1996. WITNESS the due execution hereof this 29th day of February, 1996. /s/ Charles H. Field Charles H. Field Assistant Secretary EX-99.INVADV 15 Exhibit 5(vii) under Form N-1A Exhibit 10 under Item 601/Reg. S-K EXHIBIT M to the Investment Advisory Contract FLORIDA MUNICIPAL CASH TRUST For all services rendered by Adviser hereunder, the above-named Fund of the Trust shall pay to Adviser and Adviser agrees to accept as full compensation for all services rendered hereunder, an annual investment advisory fee equal to .40 of 1% of the average daily net assets of the Fund. The portion of the fee based upon the average daily net assets of the Fund shall be accrued daily at the rate of 1/365th of .40 of 1% applied to the daily net assets of the Fund. The advisory fee so accrued shall be paid to Adviser daily. Witness the due execution hereof this 1st day of September, 1994. Attest: FEDERATED MANAGEMENT /s/ John W. McGonigle By:/s/ William D. Dawson, III Secretary Executive Vice President Attest: FEDERATED MUNICIPAL TRUST /s/ S. Elliott Cohan By:/s/ J. Christopher Donahue Assistant Secretary Vice President EX-99.INVADV 16 Exhibit 5(x) under Form N-1A Exhibit 10 under Item 601/Reg. S-K EXHIBIT P to the Investment Advisory Contract TENNESSEE MUNICIPAL CASH TRUST For all services rendered by Adviser hereunder, the above-named Fund of the Trust shall pay to Adviser and Adviser agrees to accept as full compensation for all services rendered hereunder, an annual investment advisory fee equal to .50 OF 1% of the average daily net assets of the Fund. The portion of the fee based upon the average daily net assets of the Fund shall be accrued daily at the rate of 1/365TH OF .50 OF 1% applied to the daily net assets of the Fund. The advisory fee so accrued shall be paid to Adviser daily. Witness the due execution hereof this 1st day of March, 1996. Attest: FEDERATED MANAGEMENT /s/ Stephen A. Keen /s/ William D. Dawson, III By: Stephen A. Keen William D. Dawson, III Secretary Executive Vice President Attest: FEDERATED MUNICIPAL TRUST /s/ S. Elliott Cohan /s/ Richard B. Fisher By: S. Elliott Cohan Richard B. Fisher Assistant Secretary Vice President EX-99.DISTCONTRACT 17 Exhibit 6(v) under Form N-1A Exhibit 1 under Item 601/Reg. S-K Exhibit E FEDERATED MUNICIPAL TRUST New Jersey Municipal Cash Trust Institutional Shares In consideration of the mutual convenants set forth in the Distributor's Contract dated August 31, 1990, between Federated Municipal Trust Federated Securities Corp., Federated Municipal Trust executes and delivers this Exhibit on behalf of the Funds, and with respect to the separate Classes of Shares thereof, first set forth in this Exhibit. Witness the due execution hereof this 10th day of December, 1990. ATTEST: FEDERATED MUNICIPAL TRUST /s/ John W. McGonigle By: /s/ Glen R. Johnson Secretary President (SEAL) ATTEST: FEDERATED SECURITIES CORP. /s/ S. Elliott Cohan By: /s/ Richard B. Fisher Secretary President (SEAL) EX-99.DISTCONTRACT 18 Exhibit 6(vi) under Form N-1A Exhibit 1 under Item 601/Reg. S-K Exhibit F FEDERATED MUNICIPAL TRUST New Jersey Municipal Cash Trust Institutional Service Shares The following provisions are hereby incorporated and made part of the Distributor's Contract dated the 31st day of August, 1990, between Federated Municipal Trust and Federated Securities Corp. with respect to the separate Classes of Shares thereof, first set forth in this Exhibit. 1. The Trust hereby appoints FSC to engage in activities principally intended to result in the sale of shares of the Classes. Pursuant to this appointment FSC is authorized to select a group of brokers (`Brokers'') to sell shares of the above-listed Classes (`Shares''), at the current offering price thereof as described and set forth in the respective prospectuses of the Trust, and to render administrative support services to the Trust and its shareholders. In addition, FSC is authorized to select a group of Administrators (`Administrators'') to render administrative support services to the Trust and its shareholders. 2. Administrative support services may include, but are not limited to, the following eleven functions: (1)account openings: the Broker or Administrator communicates account openings via computer terminals located on the Broker or Administrator's premises; 2) account closings: the Broker or Administrator communicates account closings via computer terminals; 3) enter purchase transactions: purchase transactions are entered through the Broker or Administrator's own personal computer or through the use of a toll-free telephone number; 4) enter redemption transactions: Broker or Administrator enters redemption transactions in the same manner as purchases; 5) account maintenance: Broker or Administrator provides or arranges to provide funds and receives funds for Trust share purchases and redemptions, confirms and reconciles all transactions, reviews the activity in the Trust's accounts, and provides training and supervision of its personnel; 6) interest posting: Broker or Administrator posts and reinvests dividends to the trust's accounts; 7) prospectus and shareholder reports: Broker or Administrator maintains and distributes current copies of prospectuses and shareholder reports; 8) advertisements: the Broker or Administrator continuously advertises the availability of its services and products; 9) customer lists: the Broker or Administrator continuously provides names of potential customers; 10) design services: the Broker or Administrator continuously designs material to send to customer and develops methods of making such materials accessible to customers; and 11) consultation services: the Broker or Administrator continuously provides information about the product needs of customers. 3. During the term of this Agreement, the Trust will pay FSC for services pursuant to this Agreement, a monthly fee computed at the annual rate of .10% of the average aggregate net asset value of the Institutional Services Shares and .50% of the average aggregate net asset value of the Cash Series Shares of the New Jersey Municipal Cash Trust held during the month. For the month in which this Agreement becomes effective or terminates, there shall be an appropriate proportion of any fee payable on the basis of the number of days that the Agreement is in effect during the month. 4. FSC may from time-to-time and for such periods as it deems appropriate reduce its compensation to the extent any Class expenses exceed such lower expense limitation as FSC may, by notice to the Trust, voluntarily declare to be effective. 5. FSC will enter into separate written agreements with various firms to provide certain of the services set forth in paragraph 1 herein. FSC, in its sole discretion, may pay Brokers and Administrators a periodic fee in respect of Shares owned from time to time by their clients or customers. The schedules of such fees and the basis upon which such fees will be paid shall be determined from time to time by FSC in its sole discretion. 6. FSC will prepare reports to the Board of Trustees of the Trust on a quarterly basis showing amounts expensed hereunder including amounts paid to Brokers and Administrators and the purpose for such payments. In consideration of the mutual covenants set forth in the Distributor's Contract dated August 31, 1990 between Federated Municipal Trust and Federated Securities Corp., Federated Municipal Trust executes and delivers this Exhibit thereof, first set forth in this Exhibit. Witness the due execution hereof this 10th day of December, 1990. ATTEST: FEDERATED MUNICIPAL TRUST /s/ John W. McGonigle By: /s/ Glen R. Johnson Secretary President (SEAL) ATTEST: FEDERATED SECURITIES CORP. /s/ S. Elliott Cohan By: /s/ Richard B. Fisher Secretary President (SEAL) EX-99.DISTCONTRACT 19 Exhibit 6(vii) under Form N-1A Exhibit 1 under Item 601/Reg. S-K Exhibit G FEDERATED MUNICIPAL TRUST Pennsylvania Municipal Cash Trust Cash Series Shares The following provisions are hereby incorporated and made part of the Distributor's Contract dated the 31st day of August, 1990, between Federated Municipal Trust and Federated Securities Corp. with respect to separate Classes of Shares thereof, first set forth in this Exhibit. 1. The Trust hereby appoints FSC to engage in activities principally intended to result in the sale of shares of the Classes. Pursuant to this appointment FSC is authorized to select a group of brokers (`Brokers'') to sell shares of the above-listed Classes (`Shares''), at the current offering price thereof as described and set forth in the respective prospectuses of the Trust, and to render administrative support services to the Trust and its shareholders. In addition, FSC is authorized to select a group of Administrators (`Administrators'') to render administrative support services to the Trust and its shareholders. 2. Administrative support services may include, but are not limited to, the following eleven functions: (1)account openings: the Broker or Administrator communicates account openings via computer terminals located on the Broker or Administrator's premises; 2) account closings: the Broker or Administrator communicates account closings via computer terminals; 3) enter purchase transactions: purchase transactions are entered through the Broker or Administrator's own personal computer or through the use of a toll-free telephone number; 4) enter redemption transactions: Broker or Administrator enters redemption transactions in the same manner as purchases; 5) account maintenance: Broker or Administrator provides or arranges to provide funds and receives funds for Trust share purchases and redemptions, confirms and reconciles all transactions, reviews the activity in the Trust's accounts, and provides training and supervision of its personnel; 6) interest posting: Broker or Administrator posts and reinvests dividends to the trust's accounts; 7) prospectus and shareholder reports: Broker or Administrator maintains and distributes current copies of prospectuses and shareholder reports; 8) advertisements: the Broker or Administrator continuously advertises the availability of its services and products; 9) customer lists: the Broker or Administrator continuously provides names of potential customers; 10) design services: the Broker or Administrator continuously designs material to send to customer and develops methods of making such materials accessible to customers; and 11) consultation services: the Broker or Administrator continuously provides information about the product needs of customers. 3. During the term of this Agreement, the Trust will pay FSC for services pursuant to this Agreement, a monthly fee computed at the annual rate of .40% of the average aggregate net asset value of the Cash Series Shares of the Pennsylvania Municipal Cash Trust held during the month. For the month in which this Agreement becomes effective or terminates, there shall be an appropriate proportion of any fee payable on the basis of the number of days that the Agreement is in effect during the month. 4. FSC may from time-to-time and for such periods as it deems appropriate reduce its compensation to the extent any Class expenses exceed such lower expense limitation as FSC may, by notice to the Trust, voluntarily declare to be effective. 5. FSC will enter into separate written agreements with various firms to provide certain of the services set forth in paragraph 1 herein. FSC, in its sole discretion, may pay Brokers and Administrators a periodic fee in respect of Shares owned from time to time by their clients or customers. The schedules of such fees and the basis upon which such fees will be paid shall be determined from time to time by FSC in its sole discretion. 6. FSC will prepare reports to the Board of Trustees of the Trust on a quarterly basis showing amounts expensed hereunder including amounts paid to Brokers and Administrators and the purpose for such payments. In consideration of the mutual covenants set forth in the Distributor's Contract dated August 31, 1990 between Federated Municipal Trust and Federated Securities Corp., Federated Municipal Trust executes and delivers this Exhibit on behalf of the Funds, and with respect to the separate Classes of Shares thereof, first set forth in this Exhibit. Witness the due execution hereof this 31st day of December, 1990. ATTEST: FEDERATED MUNICIPAL TRUST /s/ John W. McGonigle By: /s/ Glen R. Johnson Secretary President (SEAL) ATTEST: FEDERATED SECURITIES CORP. /s/ S. Elliott Cohan By: /s/ Richard B. Fisher Secretary President (SEAL) EX-99.DISTCONTRACT 20 Exhibit 6(ix) under Form N-1A Exhibit 1 under Item 601/Reg. S-K Exhibit I FEDERATED MUNICIPAL TRUST Minnesota Municipal Cash Trust Cash Series Shares The following provisions are hereby incorporated and made part of the Distributor's Contract dated the 31st day of August, 1990, between Federated Municipal Trust and Federated Securities Corp. with respect to separate Classes of Shares thereof, first set forth in this Exhibit. 1. The Trust hereby appoints FSC to engage in activities principally intended to result in the sale of shares of the Classes. Pursuant to this appointment FSC is authorized to select a group of brokers (`Brokers'') to sell shares of the above-listed Classes (`Shares''), at the current offering price thereof as described and set forth in the respective prospectuses of the Trust, and to render administrative support services to the Trust and its shareholders. In addition, FSC is authorized to select a group of Administrators (`Administrators'') to render administrative support services to the Trust and its shareholders. 2. Administrative support services may include, but are not limited to, the following eleven functions: (1)account openings: the Broker or Administrator communicates account openings via computer terminals located on the Broker or Administrator's premises; 2) account closings: the Broker or Administrator communicates account closings via computer terminals; 3) enter purchase transactions: purchase transactions are entered through the Broker or Administrator's own personal computer or through the use of a toll-free telephone number; 4) enter redemption transactions: Broker or Administrator enters redemption transactions in the same manner as purchases; 5) account maintenance: Broker or Administrator provides or arranges to provide funds and receives funds for Trust share purchases and redemptions, confirms and reconciles all transactions, reviews the activity in the Trust's accounts, and provides training and supervision of its personnel; 6) interest posting: Broker or Administrator posts and reinvests dividends to the trust's accounts; 7) prospectus and shareholder reports: Broker or Administrator maintains and distributes current copies of prospectuses and shareholder reports; 8) advertisements: the Broker or Administrator continuously advertises the availability of its services and products; 9) customer lists: the Broker or Administrator continuously provides names of potential customers; 10) design services: the Broker or Administrator continuously designs material to send to customer and develops methods of making such materials accessible to customers; and 11) consultation services: the Broker or Administrator continuously provides information about the product needs of customers. 3. During the term of this Agreement, the Trust will pay FSC for services pursuant to this Agreement, a monthly fee computed at the annual rate of .50% of the average aggregate net asset value of the Cash Series Shares of the Minnesota Municipal Cash Trust held during the month. For the month in which this Agreement becomes effective or terminates, there shall be an appropriate proportion of any fee payable on the basis of the number of days that the Agreement is in effect during the month. 4. FSC may from time-to-time and for such periods as it deems appropriate reduce its compensation to the extent any Class expenses exceed such lower expense limitation as FSC may, by notice to the Trust, voluntarily declare to be effective. 5. FSC will enter into separate written agreements with various firms to provide certain of the services set forth in paragraph 1 herein. FSC, in its sole discretion, may pay Brokers and Administrators a periodic fee in respect of Shares owned from time to time by their clients or customers. The schedules of such fees and the basis upon which such fees will be paid shall be determined from time to time by FSC in its sole discretion. 6. FSC will prepare reports to the Board of Trustees of the Trust on a quarterly basis showing amounts expensed hereunder including amounts paid to Brokers and Administrators and the purpose for such payments. In consideration of the mutual covenants set forth in the Distributor's Contract dated August 31, 1990 between Federated Municipal Trust and Federated Securities Corp., Federated Municipal Trust executes and delivers this Exhibit on behalf of the Funds, and with respect to the separate Classes of Shares thereof, first set forth in this Exhibit. Witness the due execution hereof this 31st day of December, 1990. ATTEST: FEDERATED MUNICIPAL TRUST /s/ John W. McGonigle By: /s/ Glen R. Johnson Secretary President (SEAL) ATTEST: FEDERATED SECURITIES CORP. /s/ S. Elliott Cohan By: /s/ Richard B. Fisher Secretary President (SEAL) EX-99.DISTCONTRACT 21 Exhibit 6(xi) under Form N-1A Exhibit 1 under Item 601/Reg. S-K Exhibit K FEDERATED MUNICIPAL TRUST Ohio Municipal Cash Trust Institutional Shares In consideration of the mutual convenants set forth in the Distributor's Contract dated August 31, 1990, between Federated Municipal Trust and Federated Securities Corp., Federated Municipal Trust executes and delivers this Exhibit on behalf of the Funds, and with respect to the separate Classes of Shares thereof, first set forth in this Exhibit. Witness the due execution hereof this 26th day of March, 1991. ATTEST: FEDERATED MUNICIPAL TRUST /s/ John W. McGonigle By: /s/ Glen R. Johnson Secretary President (SEAL) ATTEST: FEDERATED SECURITIES CORP. /s/ S. Elliott Cohan By: /s/ Richard B. Fisher Secretary President (SEAL) EX-99.DISTCONTRACT 22 Exhibit 6(xii) under Form N-1A Exhibit 1 under Item 601/Reg. S-K Exhibit L FEDERATED MUNICIPAL TRUST Ohio Municipal Cash Trust Cash II Shares The following provisions are hereby incorporated and made part of the Distributor's Contract dated the 31st day of August, 1990, between Federated Municipal Trust and Federated Securities Corp. with respect to separate Classes of Shares thereof, first set forth in this Exhibit. 1. The Trust hereby appoints FSC to engage in activities principally intended to result in the sale of shares of the Classes. Pursuant to this appointment FSC is authorized to select a group of brokers (`Brokers'') to sell shares of the above-listed Classes (`Shares''), at the current offering price thereof as described and set forth in the respective prospectuses of the Trust, and to render administrative support services to the Trust and its shareholders. In addition, FSC is authorized to select a group of Administrators (`Administrators'') to render administrative support services to the Trust and its shareholders. 2. Administrative support services may include, but are not limited to, the following eleven functions: (1)account openings: the Broker or Administrator communicates account openings via computer terminals located on the Broker or Administrator's premises; 2) account closings: the Broker or Administrator communicates account closings via computer terminals; 3) enter purchase transactions: purchase transactions are entered through the Broker or Administrator's own personal computer or through the use of a toll-free telephone number; 4) enter redemption transactions: Broker or Administrator enters redemption transactions in the same manner as purchases; 5) account maintenance: Broker or Administrator provides or arranges to provide funds and receives funds for Trust share purchases and redemptions, confirms and reconciles all transactions, reviews the activity in the Trust's accounts, and provides training and supervision of its personnel; 6) interest posting: Broker or Administrator posts and reinvests dividends to the trust's accounts; 7) prospectus and shareholder reports: Broker or Administrator maintains and distributes current copies of prospectuses and shareholder reports; 8) advertisements: the Broker or Administrator continuously advertises the availability of its services and products; 9) customer lists: the Broker or Administrator continuously provides names of potential customers; 10) design services: the Broker or Administrator continuously designs material to send to customer and develops methods of making such materials accessible to customers; and 11) consultation services: the Broker or Administrator continuously provides information about the product needs of customers. 3. During the term of this Agreement, the Trust will pay FSC for services pursuant to this Agreement, a monthly fee computed at the annual rate of .30% of the average aggregate net asset value of the Cash II Shares of the Ohio Municipal Cash Trust held during the month. For the month in which this Agreement becomes effective or terminates, there shall be an appropriate proportion of any fee payable on the basis of the number of days that the Agreement is in effect during the month. 4. FSC may from time-to-time and for such periods as it deems appropriate reduce its compensation to the extent any Class expenses exceed such lower expense limitation as FSC may, by notice to the Trust, voluntarily declare to be effective. 5. FSC will enter into separate written agreements with various firms to provide certain of the services set forth in paragraph 1 herein. FSC, in its sole discretion, may pay Brokers and Administrators a periodic fee in respect of Shares owned from time to time by their clients or customers. The schedules of such fees and the basis upon which such fees will be paid shall be determined from time to time by FSC in its sole discretion. 6. FSC will prepare reports to the Board of Trustees of the Trust on a quarterly basis showing amounts expensed hereunder including amounts paid to Brokers and Administrators and the purpose for such payments. In consideration of the mutual covenants set forth in the Distributor's Contract dated August 31, 1990 between Federated Municipal Trust and Federated Securities Corp., Federated Municipal Trust executes and delivers this Exhibit on behalf of the Funds, and with respect to the separate Class of Shares thereof, first set forth in this Exhibit. Witness the due execution hereof this 26th day of March, 1991. ATTEST: FEDERATED MUNICIPAL TRUST /s/ John W. McGonigle By: /s/ Glen R. Johnson Secretary President (SEAL) ATTEST: FEDERATED SECURITIES CORP. /s/ S. Elliott Cohan By: /s/ Richard B. Fisher Secretary President (SEAL) EX-99.DISTCONTRACT 23 Exhibit 6(xxvi) under Form N-1A Exhibit 1 under Item 601/Reg. S-K Exhibit Z to the Distributor's Contract FEDERATED MUNICIPAL TRUST CALIFORNIA MUNICIPAL CASH TRUST INSTITUTIONAL SHARES The following provisions are hereby incorporated and made part of the Distributor's Contract dated the 31st day of August, 1990, between Federated Municipal Trust and Federated Securities Corp. with respect to Classes of the Funds set forth above. 1. The Trust hereby appoints FSC to engage in activities principally intended to result in the sale of shares of the above-listed Portfolio (`Shares''). Pursuant to this appointment, FSC is authorized to select a group of brokers (`Brokers'') to sell Shares at the current offering price thereof as described and set forth in the respective prospectuses of the Trust, and to render administrative support services to the Trust and its shareholders. In addition, FSC is authorized to select a group of administrators (`Administrators'') to render administrative support services to the Trust and its shareholders. 2. Administrative support services may include, but are not limited to, the following functions: 1) account openings: the Broker or Administrator communicates account openings via computer terminals located on the Broker's or Administrator's premises; 2) account closings: the Broker or Administrator communicates account closings via computer terminals; 3) enter purchase transactions: purchase transactions are entered through the Broker's or Administrator's own personal computer or through the use of a toll-free telephone number; 4) enter redemption transactions: Broker or Administrator enters redemption transactions in the same manner as purchases; 5) account maintenance: Broker or Administrator provides or arranges to provide accounting support for all transactions. Broker or Administrator also wires funds and receives funds for Trust share purchases and redemptions, confirms and reconciles all transactions, reviews the activity in the Trust's accounts, and provides training and supervision of its personnel; 6) interest posting: Broker or Administrator posts and reinvests dividends to the Trust's accounts; 7) prospectus and shareholder reports: Broker or Administrator maintains and distributes current copies of prospectuses and shareholder reports; 8) advertisements: the Broker or Administrator continuously advertises the availability of its services and products; 9) customer lists: the Broker or Administrator continuously provides names of potential customers; 10) design services: the Broker or Administrator continuously designs material to send to customers and develops methods of making such materials accessible to customers; and 11) consultation services: the Broker or Administrator continuously provides information about the product needs of customers. 3. During the term of this Agreement, the Trust will pay FSC for services pursuant to this Agreement, a monthly fee computed at the annual rate of .25% of the average aggregate net asset value of the Shares held during the month. For the month in which this Agreement becomes effective or terminates, there shall be an appropriate proration of any fee payable on the basis of the number of days that the Agreement is in effect during the month. 4. FSC may from time-to-time and for such periods as it deems appropriate reduce its compensation to the extent any Classes' expenses exceed such lower expense limitation as FSC may, by notice to the Trust, voluntarily declare to be effective. 5. FSC will enter into separate written agreements with various firms to provide certain of the services set forth in Paragraph 1 herein. FSC, in its sole discretion, may pay Brokers and Administrators a periodic fee in respect of Shares owned from time to time by their clients or customers. The schedules of such fees and the basis upon which such fees will be paid shall be determined from time to time by FSC in its sole discretion. 6. FSC will prepare reports to the Board of Trustees of the Trust on a quarterly basis showing amounts expended hereunder including amounts paid to Brokers and Administrators and the purpose for such payments. In consideration of the mutual covenants set forth in the Distributor's Contract dated August 31, 1990 between Federated Municipal Trust and Federated Securities Corp., Federated Municipal Trust executes and delivers this Exhibit on behalf of the Funds, and with respect to the separate Classes of Shares thereof, first set forth in this Exhibit. Witness the due execution hereof this 1st day of March, 1996. ATTEST: FEDERATED MUNICIPAL TRUST /s/ John W. McGonigle /s/ Glen R. Johnson By: John W. McGonigle Glen R. Johnson Secretary President ATTEST: FEDERATED SECURITIES CORP. /s/ Byron F. Bowman /s/ Edward C. Gonzales By: Byron F. Bowman Edward C. Gonzales President Executive Vice President EX-99.DISTCONTRACT 24 Exhibit 6(xxvii) under Form N-1A Exhibit 1 under Item 601/Reg. S-K Exhibit AA to the Distributor's Contract FEDERATED MUNICIPAL TRUST MICHIGAN MUNICIPAL CASH TRUST INSTITUTIONAL SHARES The following provisions are hereby incorporated and made part of the Distributor's Contract dated the 31st day of August, 1990, between Federated Municipal Trust and Federated Securities Corp. with respect to Classes of the Funds set forth above. 1. The Trust hereby appoints FSC to engage in activities principally intended to result in the sale of shares of the above-listed Portfolio (`Shares''). Pursuant to this appointment, FSC is authorized to select a group of brokers (`Brokers'') to sell Shares at the current offering price thereof as described and set forth in the respective prospectuses of the Trust, and to render administrative support services to the Trust and its shareholders. In addition, FSC is authorized to select a group of administrators (`Administrators'') to render administrative support services to the Trust and its shareholders. 2. Administrative support services may include, but are not limited to, the following functions: 1) account openings: the Broker or Administrator communicates account openings via computer terminals located on the Broker's or Administrator's premises; 2) account closings: the Broker or Administrator communicates account closings via computer terminals; 3) enter purchase transactions: purchase transactions are entered through the Broker's or Administrator's own personal computer or through the use of a toll-free telephone number; 4) enter redemption transactions: Broker or Administrator enters redemption transactions in the same manner as purchases; 5) account maintenance: Broker or Administrator provides or arranges to provide accounting support for all transactions. Broker or Administrator also wires funds and receives funds for Trust share purchases and redemptions, confirms and reconciles all transactions, reviews the activity in the Trust's accounts, and provides training and supervision of its personnel; 6) interest posting: Broker or Administrator posts and reinvests dividends to the Trust's accounts; 7) prospectus and shareholder reports: Broker or Administrator maintains and distributes current copies of prospectuses and shareholder reports; 8) advertisements: the Broker or Administrator continuously advertises the availability of its services and products; 9) customer lists: the Broker or Administrator continuously provides names of potential customers; 10) design services: the Broker or Administrator continuously designs material to send to customers and develops methods of making such materials accessible to customers; and 11) consultation services: the Broker or Administrator continuously provides information about the product needs of customers. 3. During the term of this Agreement, the Trust will pay FSC for services pursuant to this Agreement, a monthly fee computed at the annual rate of .25% of the average aggregate net asset value of the Shares held during the month. For the month in which this Agreement becomes effective or terminates, there shall be an appropriate proration of any fee payable on the basis of the number of days that the Agreement is in effect during the month. 4. FSC may from time-to-time and for such periods as it deems appropriate reduce its compensation to the extent any Classes' expenses exceed such lower expense limitation as FSC may, by notice to the Trust, voluntarily declare to be effective. 5. FSC will enter into separate written agreements with various firms to provide certain of the services set forth in Paragraph 1 herein. FSC, in its sole discretion, may pay Brokers and Administrators a periodic fee in respect of Shares owned from time to time by their clients or customers. The schedules of such fees and the basis upon which such fees will be paid shall be determined from time to time by FSC in its sole discretion. 6. FSC will prepare reports to the Board of Trustees of the Trust on a quarterly basis showing amounts expended hereunder including amounts paid to Brokers and Administrators and the purpose for such payments. In consideration of the mutual covenants set forth in the Distributor's Contract dated August 31, 1990 between Federated Municipal Trust and Federated Securities Corp., Federated Municipal Trust executes and delivers this Exhibit on behalf of the Funds, and with respect to the separate Classes of Shares thereof, first set forth in this Exhibit. Witness the due execution hereof this 1st day of March, 1996. ATTEST: FEDERATED MUNICIPAL TRUST /s/ John W. McGonigle /s/ Glen R. Johnson By: John W. McGonigle Glen R. Johnson Secretary President ATTEST: FEDERATED SECURITIES CORP. /s/ Byron F. Bowman /s/ Edward C. Gonzales By: Byron F. Bowman Edward C. Gonzales Secretary Executive Vice President EX-99.DISTCONTRACT 25 Exhibit 6(xxviii) under Form N-1A Exhibit 1 under Item 601/Reg. S-K Exhibit BB to the Distributor's Contract FEDERATED MUNICIPAL TRUST OHIO MUNICIPAL CASH TRUST INSTITUTIONAL SHARES The following provisions are hereby incorporated and made part of the Distributor's Contract dated the 31st day of August, 1990, between Federated Municipal Trust and Federated Securities Corp. with respect to Classes of the Funds set forth above. 1. The Trust hereby appoints FSC to engage in activities principally intended to result in the sale of shares of the above-listed Portfolio (`Shares''). Pursuant to this appointment, FSC is authorized to select a group of brokers (`Brokers'') to sell Shares at the current offering price thereof as described and set forth in the respective prospectuses of the Trust, and to render administrative support services to the Trust and its shareholders. In addition, FSC is authorized to select a group of administrators (`Administrators'') to render administrative support services to the Trust and its shareholders. 2. Administrative support services may include, but are not limited to, the following functions: 1) account openings: the Broker or Administrator communicates account openings via computer terminals located on the Broker's or Administrator's premises; 2) account closings: the Broker or Administrator communicates account closings via computer terminals; 3) enter purchase transactions: purchase transactions are entered through the Broker's or Administrator's own personal computer or through the use of a toll-free telephone number; 4) enter redemption transactions: Broker or Administrator enters redemption transactions in the same manner as purchases; 5) account maintenance: Broker or Administrator provides or arranges to provide accounting support for all transactions. Broker or Administrator also wires funds and receives funds for Trust share purchases and redemptions, confirms and reconciles all transactions, reviews the activity in the Trust's accounts, and provides training and supervision of its personnel; 6) interest posting: Broker or Administrator posts and reinvests dividends to the Trust's accounts; 7) prospectus and shareholder reports: Broker or Administrator maintains and distributes current copies of prospectuses and shareholder reports; 8) advertisements: the Broker or Administrator continuously advertises the availability of its services and products; 9) customer lists: the Broker or Administrator continuously provides names of potential customers; 10) design services: the Broker or Administrator continuously designs material to send to customers and develops methods of making such materials accessible to customers; and 11) consultation services: the Broker or Administrator continuously provides information about the product needs of customers. 3. During the term of this Agreement, the Trust will pay FSC for services pursuant to this Agreement, a monthly fee computed at the annual rate of .25% of the average aggregate net asset value of the Shares held during the month. For the month in which this Agreement becomes effective or terminates, there shall be an appropriate proration of any fee payable on the basis of the number of days that the Agreement is in effect during the month. 4. FSC may from time-to-time and for such periods as it deems appropriate reduce its compensation to the extent any Classes' expenses exceed such lower expense limitation as FSC may, by notice to the Trust, voluntarily declare to be effective. 5. FSC will enter into separate written agreements with various firms to provide certain of the services set forth in Paragraph 1 herein. FSC, in its sole discretion, may pay Brokers and Administrators a periodic fee in respect of Shares owned from time to time by their clients or customers. The schedules of such fees and the basis upon which such fees will be paid shall be determined from time to time by FSC in its sole discretion. 6. FSC will prepare reports to the Board of Trustees of the Trust on a quarterly basis showing amounts expended hereunder including amounts paid to Brokers and Administrators and the purpose for such payments. In consideration of the mutual covenants set forth in the Distributor's Contract dated August 31, 1990 between Federated Municipal Trust and Federated Securities Corp., Federated Municipal Trust executes and delivers this Exhibit on behalf of the Funds, and with respect to the separate Classes of Shares thereof, first set forth in this Exhibit. Witness the due execution hereof this 1st day of March, 1996. ATTEST: FEDERATED MUNICIPAL TRUST /s/ John W. McGonigle /s/ Glen R. Johnson By: John W. McGonigle Glen R. Johnson Secretary President ATTEST: FEDERATED SECURITIES CORP. /s/ Byron F. Bowman /s/ Edward C. Gonzales By: Byron F. Bowman Edward C. Gonzales Secretary Executive Vice President EX-99.DISTCONTRACT 26 Exhibit 6(xxix) under Form N-1A Exhibit 1 under Item 601/Reg. S-K Exhibit CC to the Distributor's Contract FEDERATED MUNICIPAL TRUST TENNESSEE MUNICIPAL CASH TRUST INSTITUTIONAL SHARES The following provisions are hereby incorporated and made part of the Distributor's Contract dated the 31st day of August, 1990, between Federated Municipal Trust and Federated Securities Corp. with respect to Classes of the Funds set forth above. 1. The Trust hereby appoints FSC to engage in activities principally intended to result in the sale of shares of the above-listed Portfolio (`Shares''). Pursuant to this appointment, FSC is authorized to select a group of brokers (`Brokers'') to sell Shares at the current offering price thereof as described and set forth in the respective prospectuses of the Trust, and to render administrative support services to the Trust and its shareholders. In addition, FSC is authorized to select a group of administrators (`Administrators'') to render administrative support services to the Trust and its shareholders. 2. Administrative support services may include, but are not limited to, the following functions: 1) account openings: the Broker or Administrator communicates account openings via computer terminals located on the Broker's or Administrator's premises; 2) account closings: the Broker or Administrator communicates account closings via computer terminals; 3) enter purchase transactions: purchase transactions are entered through the Broker's or Administrator's own personal computer or through the use of a toll-free telephone number; 4) enter redemption transactions: Broker or Administrator enters redemption transactions in the same manner as purchases; 5) account maintenance: Broker or Administrator provides or arranges to provide accounting support for all transactions. Broker or Administrator also wires funds and receives funds for Trust share purchases and redemptions, confirms and reconciles all transactions, reviews the activity in the Trust's accounts, and provides training and supervision of its personnel; 6) interest posting: Broker or Administrator posts and reinvests dividends to the Trust's accounts; 7) prospectus and shareholder reports: Broker or Administrator maintains and distributes current copies of prospectuses and shareholder reports; 8) advertisements: the Broker or Administrator continuously advertises the availability of its services and products; 9) customer lists: the Broker or Administrator continuously provides names of potential customers; 10) design services: the Broker or Administrator continuously designs material to send to customers and develops methods of making such materials accessible to customers; and 11) consultation services: the Broker or Administrator continuously provides information about the product needs of customers. 3. During the term of this Agreement, the Trust will pay FSC for services pursuant to this Agreement, a monthly fee computed at the annual rate of .25% of the average aggregate net asset value of the Shares held during the month. For the month in which this Agreement becomes effective or terminates, there shall be an appropriate proration of any fee payable on the basis of the number of days that the Agreement is in effect during the month. 4. FSC may from time-to-time and for such periods as it deems appropriate reduce its compensation to the extent any Classes' expenses exceed such lower expense limitation as FSC may, by notice to the Trust, voluntarily declare to be effective. 5. FSC will enter into separate written agreements with various firms to provide certain of the services set forth in Paragraph 1 herein. FSC, in its sole discretion, may pay Brokers and Administrators a periodic fee in respect of Shares owned from time to time by their clients or customers. The schedules of such fees and the basis upon which such fees will be paid shall be determined from time to time by FSC in its sole discretion. 6. FSC will prepare reports to the Board of Trustees of the Trust on a quarterly basis showing amounts expended hereunder including amounts paid to Brokers and Administrators and the purpose for such payments. In consideration of the mutual covenants set forth in the Distributor's Contract dated August 31, 1990 between Federated Municipal Trust and Federated Securities Corp., Federated Municipal Trust executes and delivers this Exhibit on behalf of the Funds, and with respect to the separate Classes of Shares thereof, first set forth in this Exhibit. Witness the due execution hereof this 1st day of March, 1996. ATTEST: FEDERATED MUNICIPAL TRUST /s/ John W. McGonigle /s/ Glen R. Johnson By: John W. McGonigle Glen R. Johnson Secretary President ATTEST: FEDERATED SECURITIES CORP. /s/ Byron F. Bowman /s/ Edward C. Gonzales By: Byron F. Bowman Edward C. Gonzales Secretary Executive Vice President Exhibit DD FEDERATED MUNICIPAL TRUST Tennessee Municipal Cash Trust Institutional Service Shares The following provisions are hereby incorporated and made part of the Distributor's Contract dated the 31st day of August, 1990, between Federated Municipal Trust and Federated Securities Corp. with respect to the separate Class of Shares thereof, first set forth in this Exhibit. 1. The Trust hereby appoints FSC to engage in activities principally intended to result in the sale of shares of the Class. Pursuant to this appointment FSC is authorized to select a group of brokers ("Brokers") to sell shares of the above-listed Class ("Shares"), at the current offering price thereof as described and set forth in the respective prospectuses of the Trust, and to render administrative support services to the Trust and its shareholders. In addition, FSC is authorized to select a group of Administrators ("Administrators") to render administrative support services to the Trust and its shareholders. 2. Administrative support services may include, but are not limited to, the following eleven functions: (1) account openings: the Broker or Administrator communicates account openings via computer terminals located on the Broker or Administrator's premises; 2) account closings: the Broker or Administrator communicates account closings via computer terminals; 3) enter purchase transactions: purchase transactions are entered through the Broker or Administrator's own personal computer or through the use of a toll-free telephone number; 4) enter redemption transactions: Broker or Administrator enters redemption transactions in the same manner as purchases; 5) account maintenance: Broker or Administrator provides or arranges to provide accounting support for all transactions. Broker or Administrator also wires funds and receives funds for Trust share purchases and redemptions, confirms and reconciles all transactions, reviews the activity in the Trust's accounts, and provides training and supervision of its personnel; 6) interest posting: Broker or Administrator posts and reinvests dividends to the Trust's accounts; 7) prospectus and shareholder reports: Broker or Administrator maintains and distributes current copies of prospectuses and shareholder reports; 8) advertisements: the Broker or Administrator continuously advertises the availability of its services and products; 9) customer lists: the Broker or Administrator continuously provides names of potential customers; 10) design services: the Broker or Administrator continuously designs material to send to customers and develops methods of making such materials accessible to customers; and 11) consultation services: the Broker or Administrator continuously provides information about the product needs of customers. 3. During the term of this Agreement, the Trust will pay FSC for services pursuant to this Agreement, a monthly fee computed at the annual rate of up to .25% of the average aggregate net asset value of the Institutional Service Shares of New York Municipal Cash Trust held during the month. For the month in which this Agreement becomes effective or terminates, there shall be an appropriate proration of any fee payable on the basis of the number of days that the Agreement is in effect during the month. 4. FSC may from time-to-time and for such periods as it deems appropriate reduce its compensation to the extent any Class expenses exceed such lower expense limitation as FSC may, by notice to the Trust, voluntarily declare to be effective. 5. FSC will enter into separate written agreements with various firms to provide certain of the services set forth in Paragraph 1 herein. FSC, in its sole discretion, may pay Brokers and Administrators a periodic fee in respect of Shares owned from time to time by their clients or customers. The schedules of such fees and the basis upon which such fees will be paid shall be determined from time to time by FSC in its sole discretion. 6. FSC will prepare reports to the Board of Trustees of the Trust on a quarterly basis showing amounts expended hereunder including amounts paid to Brokers and Administrators and the purpose for such payments. In consideration of the mutual covenants set forth in the Distributor's Contract dated August 31, 1990 between Federated Municipal Trust and Federated Securities Corp., Federated Municipal Trust executes and delivers this Exhibit on behalf of the Funds, and with respect to the separate Class of Shares thereof, first set forth in this Exhibit. Witness the due execution hereof this 1st day of March, 1996. Attest: FEDERATED MUNICIPAL TRUST /s/ John W. McGonigle /s/ Glen R. Johnson By: Secretary President Attest: FEDERATED SECURITIES CORP. /s/ Byron F. Bowman /s/ Edward C. Gonzales By: Secretary President EX-99.T/AAGREEMENT 27 Exhibit 9(I) under Form N-1A Exhibit 10 under Item 601/Reg. S-K AGREEMENT FOR FUND ACCOUNTING SERVICES, ADMINISTRATIVE SERVICES, TRANSFER AGENCY SERVICES AND CUSTODY SERVICES PROCUREMENT AGREEMENT made as of March 1, 1996, by and between those investment companies listed on Exhibit 1 as may be amended from time to time, having their principal office and place of business at Federated Investors Tower, Pittsburgh, PA 15222-3779 (the `Investment Company''), on behalf of the portfolios (individually referred to herein as a `Fund'' and collectively as `Funds'') of the Investment Company, and FEDERATED SERVICES COMPANY, a Pennsylvania corporation, having its principal office and place of business at Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779 on behalf of itself and its subsidiaries (the `Company''). WHEREAS, the Investment Company is registered as an open-end management investment company under the Investment Company Act of 1940, as amended (the `1940 Act''), with authorized and issued shares of capital stock or beneficial interest (`Shares''); WHEREAS, the Investment Company may desire to retain the Company as fund accountant to provide fund accounting services (as herein defined) including certain pricing, accounting and recordkeeping services for each of the Funds, including any classes of shares issued by any Fund (`Classes'') if so indicated on Exhibit 1, and the Company desires to accept such appointment; WHEREAS, the Investment Company may desire to appoint the Company as its administrator to provide it with administrative services (as herein defined), if so indicated on Exhibit, and the Company desires to accept such appointment; WHEREAS, the Investment Company may desire to appoint the Company as its transfer agent and dividend disbursing agent to provide it with transfer agency services (as herein defined) if so indicated on Exhibit 1, and agent in connection with certain other activities, and the Company desires to accept such appointment; and WHEREAS, the Investment Company may desire to appoint the Company as its agent to select, negotiate and subcontract for custodian services from an approved list of qualified banks if so indicated on Exhibit 1, and the Company desires to accept such appointment; and NOW THEREFORE, in consideration of the premises and mutual covenants herein contained, and intending to be legally bound hereby, the parties hereto agree as follows: SECTION ONE: FUND ACCOUNTING. ARTICLE 1. APPOINTMENT. The Investment Company hereby appoints the Company to provide certain pricing and accounting services to the Funds, and/or the Classes, for the period and on the terms set forth in this Agreement. The Company accepts such appointment and agrees to furnish the services herein set forth in return for the compensation as provided in Article 3 of this Section. ARTICLE 2. THE COMPANY'S DUTIES. Subject to the supervision and control of the Investment Company's Board of Trustees or Directors (`Board''), the Company will assist the Investment Company with regard to fund accounting for the Investment Company, and/or the Funds, and/or the Classes, and in connection therewith undertakes to perform the following specific services; A. Value the assets of the Funds using: primarily, market quotations, including the use of matrix pricing, supplied by the independent pricing services selected by the Company in consultation with the adviser, or sources selected by the adviser, and reviewed by the board; secondarily, if a designated pricing service does not provide a price for a security which the Company believes should be available by market quotation, the Company may obtain a price by calling brokers designated by the investment adviser of the fund holding the security, or if the adviser does not supply the names of such brokers, the Company will attempt on its own to find brokers to price those securities; thirdly, for securities for which no market price is available, the Pricing Committee of the Board will determine a fair value in good faith. Consistent with Rule 2a-4 of the 40 Act, estimates may be used where necessary or appropriate. The Company's obligations with regard to the prices received from outside pricing services and designated brokers or other outside sources, is to exercise reasonable care in the supervision of the pricing agent. The Company is not the guarantor of the securities prices received from such agents and the Company is not liable to the Fund for potential errors in valuing a Fund's assets or calculating the net asset value per share of such Fund or Class when the calculations are based upon such prices. All of the above sources of prices used as described are deemed by the Company to be authorized sources of security prices. The Company provides daily to the adviser the securities prices used in calculating the net asset value of the fund, for its use in preparing exception reports for those prices on which the adviser has comment. Further, upon receipt of the exception reports generated by the adviser, the Company diligently pursues communication regarding exception reports with the designated pricing agents; B. Determine the net asset value per share of each Fund and/or Class, at the time and in the manner from time to time determined by the Board and as set forth in the Prospectus and Statement of Additional Information (``Prospectus') of each Fund; C. Calculate the net income of each of the Funds, if any; D. Calculate realized capital gains or losses of each of the Funds resulting from sale or disposition of assets, if any; E. Maintain the general ledger and other accounts, books and financial records of the Investment Company, including for each Fund, and/or Class, as required under Section 31(a) of the 1940 Act and the Rules thereunder in connection with the services provided by the Company; F. Preserve for the periods prescribed by Rule 31a-2 under the 1940 Act the records to be maintained by Rule 31a-1 under the 1940 Act in connection with the services provided by the Company. The Company further agrees that all such records it maintains for the Investment Company are the property of the Investment Company and further agrees to surrender promptly to the Investment Company such records upon the Investment Company's request; G. At the request of the Investment Company, prepare various reports or other financial documents in accordance with generally accepted accounting principles as required by federal, state and other applicable laws and regulations; and H. Such other similar services as may be reasonably requested by the Investment Company. The foregoing, along with any additional services that the Company shall agree in writing to perform for the Investment Company under this Section One, shall hereafter be referred to as `Fund Accounting Services.'' ARTICLE 3. COMPENSATION AND ALLOCATION OF EXPENSES. A. The Funds will compensate the Company for Fund Accounting Services in accordance with the fees agreed upon from time to time between the parties hereto. Such fees do not include out-of-pocket disbursements of the Company for which the Funds shall reimburse the Company. Out-of-pocket disbursements shall include, but shall not be limited to, the items agreed upon between the parties from time to time. B. The Fund and/or the Class, and not the Company, shall bear the cost of: custodial expenses; membership dues in the Investment Company Institute or any similar organization; transfer agency expenses; investment advisory expenses; costs of printing and mailing stock certificates, Prospectuses, reports and notices; administrative expenses; interest on borrowed money; brokerage commissions; taxes and fees payable to federal, state and other governmental agencies; fees of Trustees or Directors of the Investment Company; independent auditors expenses; legal and audit department expenses billed to the Company for work performed related to the Investment Company, the Funds, or the Classes; law firm expenses; organizational expenses; or other expenses not specified in this Article 3 which may be properly payable by the Funds and/or Classes. C. The compensation and out-of-pocket expenses attributable to the Fund shall be accrued by the Fund and shall be paid to the Company no less frequently than monthly, and shall be paid daily upon request of the Company. The Company will maintain detailed information about the compensation and out-of-pocket expenses by Fund and Class. D. Any schedule of compensation agreed to hereunder, as may be adjusted from time to time, shall be dated and signed by a duly authorized officer of the Investment Company and/or the Funds and a duly authorized officer of the Company. E. The fee for the period from the effective date of this Agreement with respect to a Fund or a Class to the end of the initial month shall be prorated according to the proportion that such period bears to the full month period. Upon any termination of this Agreement before the end of any month, the fee for such period shall be prorated according to the proportion which such period bears to the full month period. For purposes of determining fees payable to the Company, the value of the Fund's net assets shall be computed at the time and in the manner specified in the Fund's Prospectus. F. The Company, in its sole discretion, may from time to time subcontract to, employ or associate with itself such person or persons as the Company may believe to be particularly suited to assist it in performing Fund Accounting Services. Such person or persons may be affiliates of the Company, third-party service providers, or they may be officers and employees who are employed by both the Company and the Investment Company; provided, however, that the Company shall be as fully responsible to each Fund for the acts and omissions of any such subcontractor as it is for its own acts and omissions. The compensation of such person or persons shall be paid by the Company and no obligation shall be incurred on behalf of the Investment Company, the Funds, or the Classes in such respect. SECTION TWO: ADMINISTRATIVE SERVICES. ARTICLE 4. APPOINTMENT. The Investment Company hereby appoints the Company as Administrator for the period on the terms and conditions set forth in this Agreement. The Company hereby accepts such appointment and agrees to furnish the services set forth in Article 5 of this Agreement in return for the compensation set forth in Article 9 of this Agreement. ARTICLE 5. THE COMPANY'S DUTIES. As Administrator, and subject to the supervision and control of the Board and in accordance with Proper Instructions (as defined hereafter) from the Investment Company the Company will provide facilities, equipment, and personnel to carry out the following administrative services for operation of the business and affairs of the Investment Company and each of its portfolios: A. prepare, file, and maintain the Investment Company's governing documents and any amendments thereto, including the Charter (which has already been prepared and filed), the By-laws and minutes of meetings of the Board and Shareholders; B. prepare and file with the Securities and Exchange Commission and the appropriate state securities authorities the registration statements for the Investment Company and the Investment Company's shares and all amendments thereto, reports to regulatory authorities and shareholders, prospectuses, proxy statements, and such other documents all as may be necessary to enable the Investment Company to make a continuous offering of its shares; C. prepare, negotiate, and administer contracts (if any) on behalf of the Investment Company with, among others, the Investment Company's investment advisers and distributors, subject to any applicable restrictions of the Board or the 1940 Act; D. calculate performance data of the Investment Company for dissemination to information services covering the investment company industry; E. prepare and file the Investment Company's tax returns; F. coordinate the layout and printing of publicly disseminated prospectuses and reports; G. perform internal audit examinations in accordance with a charter to be adopted by the Company and the Investment Company; H. assist with the design, development, and operation of the Investment Company and the Funds; I. provide individuals reasonably acceptable to the Board for nomination, appointment, or election as officers of the Investment Company, who will be responsible for the management of certain of the Investment Company's affairs as determined by the Investment Company's Board; and J. consult with the Investment Company and its Board on matters concerning the Investment Company and its affairs. The foregoing, along with any additional services that the Company shall agree in writing to perform for the Investment Company under this Section 4, shall hereafter be referred to as "Administrative Services." ARTICLE 6. RECORDS. The Company shall create and maintain all necessary books and records in accordance with all applicable laws, rules and regulations, including but not limited to records required by Section 31(a) of the Investment Company act of 1940 and the rules thereunder, as the same may be amended from time to time, pertaining to the Administrative Services performed by it and not otherwise created and maintained by another party pursuant to contract with the Investment Company. Where applicable, such records shall be maintained by the Company for the periods and in the places required by Rule 31a-2 under the 1940 Act. The books and records pertaining to the Investment Company which are in the possession of the Company shall be the property of the Investment Company. The Investment Company, or the Investment Company's authorized representatives, shall have access to such books and records at all times during the Company's normal business hours. Upon the reasonable request of the Investment Company, copies of any such books and records shall be provided promptly by the Company to the Investment Company or the Investment Company's authorized representatives. ARTICLE 7. DUTIES OF THE FUND. The Fund assumes full responsibility for the preparation, contents and distribution of its own offering document and for complying with all applicable requirements the 1940 Act, the Internal Revenue Code, and any other laws, rules and regulations of government authorities having jurisdiction. ARTICLE 8. EXPENSES. The Company shall be responsible for expenses incurred in providing office space, equipment, and personnel as may be necessary or convenient to provide the Administrative Services to the Investment Company, including the compensation of the Company employees who serve as trustees or directors or officers of the Investment Company. The Investment Company shall be responsible for all other expenses incurred by the Company on behalf of the Investment Company, including without limitation postage and courier expenses, printing expenses, travel expenses, registration fees, filing fees, fees of outside counsel and independent auditors, or other professional services, organizational expenses, insurance premiums, fees payable to persons who are not the Company's employees, trade association dues, and other expenses properly payable by the Funds and/or the Classes. ARTICLE 9. COMPENSATION. For the Administrative Services provided, the Investment Company hereby agrees to pay and the Company hereby agrees to accept as full compensation for its services rendered hereunder an administrative fee at an annual rate per Fund, as specified below. The compensation and out of pocket expenses attributable to the Fund shall be accrued by the Fund and paid to the Company no less frequently than monthly, and shall be paid daily upon request of the Company. The Company will maintain detailed information about the compensation and out of pocket expenses by the Fund. MAX. ADMIN. AVERAGE DAILY NET ASSETS FEE OF THE FUNDS .150% on the first $250 million .125% on the next $250 million .100% on the next $250 million .075% on assets in excess of $750 million (Average Daily Net Asset break-points are on a complex-wide basis) However, in no event shall the administrative fee received during any year of the Agreement be less than, or be paid at a rate less than would aggregate $125,000 per Fund and $30,000 per Class. The minimum fee set forth above in this Article 9 may increase annually upon each March 1 anniversary of this Agreement over the minimum fee during the prior 12 months, as calculated under this agreement, in an amount equal to the increase in Pennsylvania Consumer Price Index (not to exceed 6% annually) as last reported by the U.S. Bureau of Labor Statistics for the twelve months immediately preceding such anniversary. ARTICLE 10. RESPONSIBILITY OF ADMINISTRATOR. A. The Company shall not be liable for any error of judgment or mistake of law or for any loss suffered by the Investment Company in connection with the matters to which this Agreement relates, except a loss resulting from willful misfeasance, bad faith or gross negligence on its part in the performance of its duties or from reckless disregard by it of its obligations and duties under this Agreement. The Company shall be entitled to rely on and may act upon advice of counsel (who may be counsel for the Investment Company) on all matters, and shall be without liability for any action reasonably taken or omitted pursuant to such advice. Any person, even though also an officer, director, trustee, partner, employee or agent of the Company, who may be or become an officer, director, trustee, partner, employee or agent of the Investment Company, shall be deemed, when rendering services to the Investment Company or acting on any business of the Investment Company (other than services or business in connection with the duties of the Company hereunder) to be rendering such services to or acting solely for the Investment Company and not as an officer, director, trustee, partner, employee or agent or one under the control or direction of the Company even though paid by the Company. B. The Company shall be kept indemnified by the Investment Company and be without liability for any action taken or thing done by it in performing the Administrative Services in accordance with the above standards. In order that the indemnification provisions contained in this Article 10 shall apply, however, it is understood that if in any case the Investment Company may be asked to indemnify or hold the Company harmless, the Investment Company shall be fully and promptly advised of all pertinent facts concerning the situation in question, and it is further understood that the Company will use all reasonable care to identify and notify the Investment Company promptly concerning any situation which presents or appears likely to present the probability of such a claim for indemnification against the Investment Company. The Investment Company shall have the option to defend the Company against any claim which may be the subject of this indemnification. In the event that the Investment Company so elects, it will so notify the Company and thereupon the Investment Company shall take over complete defense of the claim, and the Company shall in such situation initiate no further legal or other expenses for which it shall seek indemnification under this Article. the Company shall in no case confess any claim or make any compromise in any case in which the Investment Company will be asked to indemnify the Company except with the Investment Company's written consent. SECTION THREE: TRANSFER AGENCY SERVICES. ARTICLE 11. TERMS OF APPOINTMENT. Subject to the terms and conditions set forth in this Agreement, the Investment Company hereby appoints the Company to act as, and the Company agrees to act as, transfer agent and dividend disbursing agent for each Fund's Shares, and agent in connection with any accumulation, open-account or similar plans provided to the shareholders of any Fund (`Shareholder(s)''), including without limitation any periodic investment plan or periodic withdrawal program. ARTICLE 12. DUTIES OF THE COMPANY. The Company shall perform the following services in accordance with Proper Instructions as may be provided from time to time by the Investment Company as to any Fund: A. Purchases (1) The Company shall receive orders and payment for the purchase of shares and promptly deliver payment and appropriate documentation therefore to the custodian of the relevant Fund, (the ``Custodian'). The Company shall notify the Fund and the Custodian on a daily basis of the total amount of orders and payments so delivered. (2) Pursuant to purchase orders and in accordance with the Fund's current Prospectus, the Company shall compute and issue the appropriate number of Shares of each Fund and/or Class and hold such Shares in the appropriate Shareholder accounts. (3) For certificated Funds and/or Classes, if a Shareholder or its agent requests a certificate, the Company, as Transfer Agent, shall countersign and mail by first class mail, a certificate to the Shareholder at its address as set forth on the transfer books of the Funds, and/or Classes, subject to any Proper Instructions regarding the delivery of certificates. (4) In the event that any check or other order for the purchase of Shares of the Fund and/or Class is returned unpaid for any reason, the Company shall debit the Share account of the Shareholder by the number of Shares that had been credited to its account upon receipt of the check or other order, promptly mail a debit advice to the Shareholder, and notify the Fund and/or Class of its action. In the event that the amount paid for such Shares exceeds proceeds of the redemption of such Shares plus the amount of any dividends paid with respect to such Shares, the Fund and/the Class or its distributor will reimburse the Company on the amount of such excess. B. Distribution (1) Upon notification by the Funds of the declaration of any distribution to Shareholders, the Company shall act as Dividend Disbursing Agent for the Funds in accordance with the provisions of its governing document and the then-current Prospectus of the Fund. The Company shall prepare and mail or credit income, capital gain, or any other payments to Shareholders. As the Dividend Disbursing Agent, the Company shall, on or before the payment date of any such distribution, notify the Custodian of the estimated amount required to pay any portion of said distribution which is payable in cash and request the Custodian to make available sufficient funds for the cash amount to be paid out. The Company shall reconcile the amounts so requested and the amounts actually received with the Custodian on a daily basis. If a Shareholder is entitled to receive additional Shares by virtue of any such distribution or dividend, appropriate credits shall be made to the Shareholder's account, for certificated Funds and/or Classes, delivered where requested; and (2) The Company shall maintain records of account for each Fund and Class and advise the Investment Company, each Fund and Class and its Shareholders as to the foregoing. C. Redemptions and Transfers (1) The Company shall receive redemption requests and redemption directions and, if such redemption requests comply with the procedures as may be described in the Fund Prospectus or set forth in Proper Instructions, deliver the appropriate instructions therefor to the Custodian. The Company shall notify the Funds on a daily basis of the total amount of redemption requests processed and monies paid to the Company by the Custodian for redemptions. (2) At the appropriate time upon receiving redemption proceeds from the Custodian with respect to any redemption, the Company shall pay or cause to be paid the redemption proceeds in the manner instructed by the redeeming Shareholders, pursuant to procedures described in the then-current Prospectus of the Fund. (3) If any certificate returned for redemption or other request for redemption does not comply with the procedures for redemption approved by the Fund, the Company shall promptly notify the Shareholder of such fact, together with the reason therefor, and shall effect such redemption at the price applicable to the date and time of receipt of documents complying with said procedures. (4) The Company shall effect transfers of Shares by the registered owners thereof. (5) The Company shall identify and process abandoned accounts and uncashed checks for state escheat requirements on an annual basis and report such actions to the Fund. D. Recordkeeping (1) The Company shall record the issuance of Shares of each Fund, and/or Class, and maintain pursuant to applicable rules of the Securities and Exchange Commission (``SEC') a record of the total number of Shares of the Fund and/or Class which are authorized, based upon data provided to it by the Fund, and issued and outstanding. The Company shall also provide the Fund on a regular basis or upon reasonable request with the total number of Shares which are authorized and issued and outstanding, but shall have no obligation when recording the issuance of Shares, except as otherwise set forth herein, to monitor the issuance of such Shares or to take cognizance of any laws relating to the issue or sale of such Shares, which functions shall be the sole responsibility of the Funds. (2) The Company shall establish and maintain records pursuant to applicable rules of the SEC relating to the services to be performed hereunder in the form and manner as agreed to by the Investment Company or the Fund to include a record for each Shareholder's account of the following: (a) Name, address and tax identification number (and whether such number has been certified); (b) Number of Shares held; (c) Historical information regarding the account, including dividends paid and date and price for all transactions; (d) Any stop or restraining order placed against the account; (e) Information with respect to withholding in the case of a foreign account or an account for which withholding is required by the Internal Revenue Code; (f) Any dividend reinvestment order, plan application, dividend address and correspondence relating to the current maintenance of the account; (g) Certificate numbers and denominations for any Shareholder holding certificates; (h) Any information required in order for the Company to perform the calculations contemplated or required by this Agreement. (3) The Company shall preserve any such records required to be maintained pursuant to the rules of the SEC for the periods prescribed in said rules as specifically noted below. Such record retention shall be at the expense of the Company, and such records may be inspected by the Fund at reasonable times. The Company may, at its option at any time, and shall forthwith upon the Fund's demand, turn over to the Fund and cease to retain in the Company's files, records and documents created and maintained by the Company pursuant to this Agreement, which are no longer needed by the Company in performance of its services or for its protection. If not so turned over to the Fund, such records and documents will be retained by the Company for six years from the year of creation, during the first two of which such documents will be in readily accessible form. At the end of the six year period, such records and documents will either be turned over to the Fund or destroyed in accordance with Proper Instructions. E. Confirmations/Reports (1) The Company shall furnish to the Fund periodically the following information: (a) A copy of the transaction register; (b) Dividend and reinvestment blotters; (c) The total number of Shares issued and outstanding in each state for ``blue sky''purposes as determined according to Proper Instructions delivered from time to time by the Fund to the Company; (d) Shareholder lists and statistical information; (e) Payments to third parties relating to distribution agreements, allocations of sales loads, redemption fees, or other transaction- or sales-related payments; (f) Such other information as may be agreed upon from time to time. (2) The Company shall prepare in the appropriate form, file with the Internal Revenue Service and appropriate state agencies, and, if required, mail to Shareholders, such notices for reporting dividends and distributions paid as are required to be so filed and mailed and shall withhold such sums as are required to be withheld under applicable federal and state income tax laws, rules and regulations. (3) In addition to and not in lieu of the services set forth above, the Company shall: (a) Perform all of the customary services of a transfer agent, dividend disbursing agent and, as relevant, agent in connection with accumulation, open-account or similar plans (including without limitation any periodic investment plan or periodic withdrawal program), including but not limited to: maintaining all Shareholder accounts, mailing Shareholder reports and Prospectuses to current Shareholders, withholding taxes on accounts subject to back-up or other withholding (including non-resident alien accounts), preparing and filing reports on U.S. Treasury Department Form 1099 and other appropriate forms required with respect to dividends and distributions by federal authorities for all Shareholders, preparing and mailing confirmation forms and statements of account to Shareholders for all purchases and redemptions of Shares and other conformable transactions in Shareholder accounts, preparing and mailing activity statements for Shareholders, and providing Shareholder account information; and (b) provide a system which will enable the Fund to monitor the total number of Shares of each Fund (and/or Class) sold in each state (``blue sky reporting'). The Fund shall by Proper Instructions (i) identify to the Company those transactions and assets to be treated as exempt from the blue sky reporting for each state and (ii) verify the classification of transactions for each state on the system prior to activation and thereafter monitor the daily activity for each state. The responsibility of the Company for each Fund's (and/or Class's) state blue sky registration status is limited solely to the recording of the initial classification of transactions or accounts with regard to blue sky compliance and the reporting of such transactions and accounts to the Fund as provided above. F. Other Duties (1) The Company shall answer correspondence from Shareholders relating to their Share accounts and such other correspondence as may from time to time be addressed to the Company; (2) The Company shall prepare Shareholder meeting lists, mail proxy cards and other material supplied to it by the Fund in connection with Shareholder meetings of each Fund; receive, examine and tabulate returned proxies, and certify the vote of the Shareholders; (3) The Company shall establish and maintain facilities and procedures for safekeeping of stock certificates, check forms and facsimile signature imprinting devices, if any; and for the preparation or use, and for keeping account of, such certificates, forms and devices. ARTICLE 13. DUTIES OF THE INVESTMENT COMPANY. A. Compliance The Investment Company or Fund assume full responsibility for the preparation, contents and distribution of their own and/or their classes' Prospectus and for complying with all applicable requirements of the Securities Act of 1933, as amended (the ``1933 Act''), the 1940 Act and any laws, rules and regulations of government authorities having jurisdiction. B. Share Certificates The Investment Company shall supply the Company with a sufficient supply of blank Share certificates and from time to time shall renew such supply upon request of the Company. Such blank Share certificates shall be properly signed, manually or by facsimile, if authorized by the Investment Company and shall bear the seal of the Investment Company or facsimile thereof; and notwithstanding the death, resignation or removal of any officer of the Investment Company authorized to sign certificates, the Company may continue to countersign certificates which bear the manual or facsimile signature of such officer until otherwise directed by the Investment Company. C. Distributions The Fund shall promptly inform the Company of the declaration of any dividend or distribution on account of any Fund's shares. ARTICLE 14. COMPENSATION AND EXPENSES. A. Annual Fee For performance by the Company pursuant to Section Three of this Agreement, the Investment Company and/or the Fund agree to pay the Company an annual maintenance fee for each Shareholder account as agreed upon between the parties and as may be added to or amended from time to time. Such fees may be changed from time to time subject to written agreement between the Investment Company and the Company. Pursuant to information in the Fund Prospectus or other information or instructions from the Fund, the Company may sub- divide any Fund into Classes or other sub-components for recordkeeping purposes. The Company will charge the Fund the same fees for each such Class or sub-component the same as if each were a Fund. B. Reimbursements In addition to the fee paid under Article 7A above, the Investment Company and/or Fund agree to reimburse the Company for out-of-pocket expenses or advances incurred by the Company for the items agreed upon between the parties, as may be added to or amended from time to time. In addition, any other expenses incurred by the Company at the request or with the consent of the Investment Company and/or the Fund, will be reimbursed by the appropriate Fund. C. Payment The compensation and out-of-pocket expenses shall be accrued by the Fund and shall be paid to the Company no less frequently than monthly, and shall be paid daily upon request of the Company. The Company will maintain detailed information about the compensation and out-of-pocket expenses by Fund and Class. D. Any schedule of compensation agreed to hereunder, as may be adjusted from time to time, shall be dated and signed by a duly authorized officer of the Investment Company and/or the Funds and a duly authorized officer of the Company. SECTION FOUR: CUSTODY SERVICES PROCUREMENT. ARTICLE 15. APPOINTMENT. The Investment Company hereby appoints Company as its agent to evaluate and obtain custody services from a financial institution that (i) meets the criteria established in Section 17(f) of the 1940 Act and (ii) has been approved by the Board as eligible for selection by the Company as a custodian (the `Eligible Custodian''). The Company accepts such appointment. ARTICLE 16. THE COMPANY AND ITS DUTIES. Subject to the review, supervision and control of the Board, the Company shall: A. evaluate and obtain custody services from a financial institution that meets the criteria established in Section 17(f) of the 1940 Act and has been approved by the Board as being eligible for selection by the Company as an Eligible Custodian; B. negotiate and enter into agreements with Eligible Custodians for the benefit of the Investment Company, with the Investment Company as a party to each such agreement. The Company may, as paying agent, be a party to any agreement with any such Eligible Custodian; C. establish procedures to monitor the nature and the quality of the services provided by Eligible Custodians; D. monitor and evaluate the nature and the quality of services provided by Eligible Custodians; E. periodically provide to the Investment Company (i) written reports on the activities and services of Eligible Custodians; (ii) the nature and amount of disbursements made on account of the each Fund with respect to each custodial agreement; and (iii) such other information as the Board shall reasonably request to enable it to fulfill its duties and obligations under Sections 17(f) and 36(b) of the 1940 Act and other duties and obligations thereof; F. periodically provide recommendations to the Board to enhance Eligible Custodian's customer services capabilities and improve upon fees being charged to the Fund by Eligible Custodian; and The foregoing, along with any additional services that Company shall agree in writing to perform for the Fund under this Section Four, shall hereafter be referred to as "Custody Services Procurement." ARTICLE 17. FEES AND EXPENSES. A. Annual Fee For the performance of Custody Services Procurement by the Company pursuant to Section Four of this Agreement, the Investment Company and/or the Fund agree to compensate the Company in accordance with the fees agreed upon from time to time. B. Reimbursements In addition to the fee paid under Section 11A above, the Investment Company and/or Fund agree to reimburse the Company for out-of-pocket expenses or advances incurred by the Company for the items agreed upon between the parties, as may be added to or amended from time to time. In addition, any other expenses incurred by the Company at the request or with the consent of the Investment Company and/or the Fund, will be reimbursed by the appropriate Fund. C. Payment The compensation and out-of-pocket expenses shall be accrued by the Fund and shall be paid to the Company no less frequently than monthly, and shall be paid daily upon request of the Company. The Company will maintain detailed information about the compensation and out-of-pocket expenses by Fund. D. Any schedule of compensation agreed to hereunder, as may be adjusted from time to time, shall be dated and signed by a duly authorized officer of the Investment Company and/or the Funds and a duly authorized officer of the Company. ARTICLE 18. REPRESENTATIONS. The Company represents and warrants that it has obtained all required approvals from all government or regulatory authorities necessary to enter into this arrangement and to provide the services contemplated in Section Four of this Agreement. SECTION FIVE: GENERAL PROVISIONS. ARTICLE 19. PROPER INSTRUCTIONS. As used throughout this Agreement, a ``Proper Instruction'' means a writing signed or initialed by one or more person or persons as the Board shall have from time to time authorized. Each such writing shall set forth the specific transaction or type of transaction involved. Oral instructions will be deemed to be Proper Instructions if (a) the Company reasonably believes them to have been given by a person previously authorized in Proper Instructions to give such instructions with respect to the transaction involved, and (b) the Investment Company, or the Fund, and the Company promptly cause such oral instructions to be confirmed in writing. Proper Instructions may include communications effected directly between electro-mechanical or electronic devices provided that the Investment Company, or the Fund, and the Company are satisfied that such procedures afford adequate safeguards for the Fund's assets. Proper Instructions may only be amended in writing. ARTICLE 20. ASSIGNMENT. Except as provided below, neither this Agreement nor any of the rights or obligations under this Agreement may be assigned by either party without the written consent of the other party. A. This Agreement shall inure to the benefit of and be binding upon the parties and their respective permitted successors and assigns. B. With regard to Transfer Agency Services, the Company may without further consent on the part of the Investment Company subcontract for the performance of Transfer Agency Services with (1) its subsidiary, Federated Shareholder Service Company, a Delaware business trust, which is duly registered as a transfer agent pursuant to Section 17A(c)(1) of the Securities Exchange Act of 1934, as amended, or any succeeding statute (``Section 17A(c)(1)''); or (2) such other provider of services duly registered as a transfer agent under Section 17A(c)(1) as Company shall select. The Company shall be as fully responsible to the Investment Company for the acts and omissions of any subcontractor as it is for its own acts and omissions. C. With regard to Fund Accounting Services, Administrative Services and Custody Procurement Services, the Company may without further consent on the part of the Investment Company subcontract for the performance of such services with Federated Administrative Services, a wholly-owned subsidiary of the Company. D. The Company shall upon instruction from the Investment Company subcontract for the performance of services under this Agreement with an Agent selected by the Investment Company, other than as described in B. and C. above; provided, however, that the Company shall in no way be responsible to the Investment Company for the acts and omissions of the Agent. ARTICLE 21. DOCUMENTS. A. In connection with the appointment of the Company under this Agreement, the Investment Company shall file with the Company the following documents: (1) A copy of the Charter and By-Laws of the Investment Company and all amendments thereto; (2) A copy of the resolution of the Board of the Investment Company authorizing this Agreement; (3) Specimens of all forms of outstanding Share certificates of the Investment Company or the Funds in the forms approved by the Board of the Investment Company with a certificate of the Secretary of the Investment Company as to such approval; (4) All account application forms and other documents relating to Shareholders accounts; and (5) A copy of the current Prospectus for each Fund. B. The Fund will also furnish from time to time the following documents: (1) Each resolution of the Board of the Investment Company authorizing the original issuance of each Fund's, and/or Class's Shares; (2) Each Registration Statement filed with the SEC and amendments thereof and orders relating thereto in effect with respect to the sale of Shares of any Fund, and/or Class; (3) A certified copy of each amendment to the governing document and the By-Laws of the Investment Company; (4) Certified copies of each vote of the Board authorizing officers to give Proper Instructions to the Custodian and agents for fund accountant, custody services procurement, and shareholder recordkeeping or transfer agency services; (5) Specimens of all new Share certificates representing Shares of any Fund, accompanied by Board resolutions approving such forms; (6) Such other certificates, documents or opinions which the Company may, in its discretion, deem necessary or appropriate in the proper performance of its duties; and (7) Revisions to the Prospectus of each Fund. ARTICLE 22. REPRESENTATIONS AND WARRANTIES. A. Representations and Warranties of the Company The Company represents and warrants to the Fund that: (1) it is a corporation duly organized and existing and in good standing under the laws of the Commonwealth of Pennsylvania; (2) It is duly qualified to carry on its business in each jurisdiction where the nature of its business requires such qualification, and in the Commonwealth of Pennsylvania; (3) it is empowered under applicable laws and by its Articles of Incorporation and By-Laws to enter into and perform this Agreement; (4) all requisite corporate proceedings have been taken to authorize it to enter into and perform its obligations under this Agreement; (5) it has and will continue to have access to the necessary facilities, equipment and personnel to perform its duties and obligations under this Agreement; (6) it is in compliance with federal securities law requirements and in good standing as an administrator and fund accountant; and B. Representations and Warranties of the Investment Company The Investment Company represents and warrants to the Company that: (1) It is an investment company duly organized and existing and in good standing under the laws of its state of organization; (2) It is empowered under applicable laws and by its Charter and By-Laws to enter into and perform its obligations under this Agreement; (3) All corporate proceedings required by said Charter and By-Laws have been taken to authorize it to enter into and perform its obligations under this Agreement; (4) The Investment Company is an open-end investment company registered under the 1940 Act; and (5) A registration statement under the 1933 Act will be effective, and appropriate state securities law filings have been made and will continue to be made, with respect to all Shares of each Fund being offered for sale. ARTICLE 23. STANDARD OF CARE AND INDEMNIFICATION. A. Standard of Care With regard to Sections One, Three and Four, the Company shall be held to a standard of reasonable care in carrying out the provisions of this Contract. The Company shall be entitled to rely on and may act upon advice of counsel (who may be counsel for the Investment Company) on all matters, and shall be without liability for any action reasonably taken or omitted pursuant to such advice, provided that such action is not in violation of applicable federal or state laws or regulations, and is in good faith and without negligence. B. Indemnification by Investment Company The Company shall not be responsible for and the Investment Company or Fund shall indemnify and hold the Company, including its officers, directors, shareholders and their agents, employees and affiliates, harmless against any and all losses, damages, costs, charges, counsel fees, payments, expenses and liabilities arising out of or attributable to: (1) The acts or omissions of any Custodian, Adviser, Sub-adviser or other party contracted by or approved by the Investment Company or Fund, (2) The reliance on or use by the Company or its agents or subcontractors of information, records and documents in proper form which (a) are received by the Company or its agents or subcontractors and furnished to it by or on behalf of the Fund, its Shareholders or investors regarding the purchase, redemption or transfer of Shares and Shareholder account information; (b) are received by the Company from independent pricing services or sources for use in valuing the assets of the Funds; or (c) are received by the Company or its agents or subcontractors from Advisers, Sub-advisers or other third parties contracted by or approved by the Investment Company of Fund for use in the performance of services under this Agreement; (d) have been prepared and/or maintained by the Fund or its affiliates or any other person or firm on behalf of the Investment Company. (3) The reliance on, or the carrying out by the Company or its agents or subcontractors of Proper Instructions of the Investment Company or the Fund. (4) The offer or sale of Shares in violation of any requirement under the federal securities laws or regulations or the securities laws or regulations of any state that such Shares be registered in such state or in violation of any stop order or other determination or ruling by any federal agency or any state with respect to the offer or sale of such Shares in such state. Provided, however, that the Company shall not be protected by this Article 23.B. from liability for any act or omission resulting from the Company's willful misfeasance, bad faith, negligence or reckless disregard of its duties or failure to meet the standard of care set forth in 23.A. above. C. Reliance At any time the Company may apply to any officer of the Investment Company or Fund for instructions, and may consult with legal counsel with respect to any matter arising in connection with the services to be performed by the Company under this Agreement, and the Company and its agents or subcontractors shall not be liable and shall be indemnified by the Investment Company or the appropriate Fund for any action reasonably taken or omitted by it in reliance upon such instructions or upon the opinion of such counsel provided such action is not in violation of applicable federal or state laws or regulations. The Company, its agents and subcontractors shall be protected and indemnified in recognizing stock certificates which are reasonably believed to bear the proper manual or facsimile signatures of the officers of the Investment Company or the Fund, and the proper countersignature of any former transfer agent or registrar, or of a co-transfer agent or co-registrar. D. Notification In order that the indemnification provisions contained in this Article 23 shall apply, upon the assertion of a claim for which either party may be required to indemnify the other, the party seeking indemnification shall promptly notify the other party of such assertion, and shall keep the other party advised with respect to all developments concerning such claim. The party who may be required to indemnify shall have the option to participate with the party seeking indemnification in the defense of such claim. The party seeking indemnification shall in no case confess any claim or make any compromise in any case in which the other party may be required to indemnify it except with the other party's prior written consent. ARTICLE 24. TERM AND TERMINATION OF AGREEMENT. This Agreement shall be effective from March 1, 1996 and shall continue until February 28, 2003 (`Term'). Thereafter, the Agreement will continue for 18 month terms. The Agreement can be terminated by either party upon 18 months notice to be effective as of the end of such 18 month period. In the event, however, of willful misfeasance, bad faith, negligence or reckless disregard of its duties by the Company, the Investment Company has the right to terminate the Agreement upon 60 days written notice, if Company has not cured such willful misfeasance, bad faith, negligence or reckless disregard of its duties within 60 days. The termination date for all original or after-added Investment companies which are, or become, a party to this Agreement. shall be coterminous. Investment Companies that merge or dissolve during the Term, shall cease to be a party on the effective date of such merger or dissolution. Should the Investment Company exercise its rights to terminate, all out- of-pocket expenses associated with the movement of records and materials will be borne by the Investment Company or the appropriate Fund. Additionally, the Company reserves the right to charge for any other reasonable expenses associated with such termination. The provisions of Articles 10 and 23 shall survive the termination of this Agreement. ARTICLE 25. AMENDMENT. This Agreement may be amended or modified by a written agreement executed by both parties. ARTICLE 26. INTERPRETIVE AND ADDITIONAL PROVISIONS. In connection with the operation of this Agreement, the Company and the Investment Company may from time to time agree on such provisions interpretive of or in addition to the provisions of this Agreement as may in their joint opinion be consistent with the general tenor of this Agreement. Any such interpretive or additional provisions shall be in a writing signed by both parties and shall be annexed hereto, provided that no such interpretive or additional provisions shall contravene any applicable federal or state regulations or any provision of the Charter. No interpretive or additional provisions made as provided in the preceding sentence shall be deemed to be an amendment of this Agreement. ARTICLE 27. GOVERNING LAW. This Agreement shall be construed and the provisions hereof interpreted under and in accordance with the laws of the Commonwealth of Massachusetts ARTICLE 28. NOTICES. Except as otherwise specifically provided herein, Notices and other writings delivered or mailed postage prepaid to the Investment Company at Federated Investors Tower, Pittsburgh, Pennsylvania, 15222-3779, or to the Company at Federated Investors Tower, Pittsburgh, Pennsylvania, 15222-3779, or to such other address as the Investment Company or the Company may hereafter specify, shall be deemed to have been properly delivered or given hereunder to the respective address. ARTICLE 29. COUNTERPARTS. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original. ARTICLE 30. LIMITATIONS OF LIABILITY OF TRUSTEES AND SHAREHOLDERS OF THE COMPANY. The execution and delivery of this Agreement have been authorized by the Trustees of the Company and signed by an authorized officer of the Company, acting as such, and neither such authorization by such Trustees nor such execution and delivery by such officer shall be deemed to have been made by any of them individually or to impose any liability on any of them personally, and the obligations of this Agreement are not binding upon any of the Trustees or Shareholders of the Company, but bind only the appropriate property of the Fund, or Class, as provided in the Declaration of Trust. ARTICLE 31. MERGER OF AGREEMENT. This Agreement constitutes the entire agreement between the parties hereto and supersedes any prior agreement with respect to the subject hereof whether oral or written. ARTICLE 32. SUCCESSOR AGENT. If a successor agent for the Investment Company shall be appointed by the Investment Company, the Company shall upon termination of this Agreement deliver to such successor agent at the office of the Company all properties of the Investment Company held by it hereunder. If no such successor agent shall be appointed, the Company shall at its office upon receipt of Proper Instructions deliver such properties in accordance with such instructions. In the event that no written order designating a successor agent or Proper Instructions shall have been delivered to the Company on or before the date when such termination shall become effective, then the Company shall have the right to deliver to a bank or trust company, which is a `bank'' as defined in the 1940 Act, of its own selection, having an aggregate capital, surplus, and undivided profits, as shown by its last published report, of not less than $2,000,000, all properties held by the Company under this Agreement. Thereafter, such bank or trust company shall be the successor of the Company under this Agreement. ARTICLE 33. FORCE MAJEURE. The Company shall have no liability for cessation of services hereunder or any damages resulting therefrom to the Fund as a result of work stoppage, power or other mechanical failure, natural disaster, governmental action, communication disruption or other impossibility of performance. ARTICLE 34. ASSIGNMENT; SUCCESSORS. This Agreement shall not be assigned by either party without the prior written consent of the other party, except that either party may assign all of or a substantial portion of its business to a successor, or to a party controlling, controlled by, or under common control with such party. Nothing in this Article 34 shall prevent the Company from delegating its responsibilities to another entity to the extent provided herein. ARTICLE 35. SEVERABILITY. In the event any provision of this Agreement is held illegal, void or unenforceable, the balance shall remain in effect. ARTICLE 36. LIMITATIONS OF LIABILITY OF TRUSTEES AND SHAREHOLDERS OF THE INVESTMENT COMPANY. The execution and delivery of this Agreement have been authorized by the Trustees of the Investment Company and signed by an authorized officer of the Investment Company, acting as such, and neither such authorization by such Trustees nor such execution and delivery by such officer shall be deemed to have been made by any of them individually or to impose any liability on any of them personally, and the obligations of this Agreement are not binding upon any of the Trustees or Shareholders of the Investment Company, but bind only the property of the Fund, or Class, as provided in the Declaration of Trust. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed in their names and on their behalf under their seals by and through their duly authorized officers, as of the day and year first above written. INVESTMENT COMPANIES (LISTED ON EXHIBIT 1) By: /s/ S. Elliott Cohan S. Elliott Cohan Assistant Secretary FEDERATED SERVICES COMPANY By: /s/ Thomas J. Ward Thomas J. Ward Secretary EXHIBIT 1 CONTRACT DATE INVESTMENT COMPANY Portfolios Classes March 1, 1996 FEDERATED MUNICIPAL TRUST CONNECTICUT MUNICIPAL CASH TRUST INSTITUTIONAL SERVICE SHARES PENNSYLVANIA MUNICIPAL CASH TRUST CASH SERIES SHARES INSTITUTIONAL SERVICE SHARES INSTITUTIONAL SHARES MINNESOTA MUNICIPAL CASH TRUST CASH SERIES SHARES INSTITUTIONAL SHARES NEW JERSEY MUNICIPAL CASH TRUST INSTITUTIONAL SHARES INSTITUTIONAL SERVICE SHARES OHIO MUNICIPAL CASH TRUST CASH II SHARES INSTITUTIONAL SHARES INSTITUTIONAL SERVICE SHARES VIRGINIA MUNICIPAL CASH TRUST INSTITUTIONAL SHARES INSTITUTIONAL SERVICE SHARES ALABAMA MUNICIPAL CASH TRUST NORTH CAROLINA MUNICIPAL CASH TRUST MARYLAND MUNICIPAL CASH TRUST CALIFORNIA MUNICIPAL CASH TRUST INSTITUTIONAL SHARES INSTITUTIONAL SERVICE SHARES NEW YORK MUNICIPAL CASH TRUST CASH II SHARES INSTITUTIONAL SERVICE SHARES FLORIDA MUNICIPAL CASH TRUST INSTITUTIONAL SHARES CASH II SHARES MASSACHUSETTS MUNICIPAL CASH TRUST INSTITUTIONAL SERVICE SHARES BAYFUNDS SHARES MICHIGAN MUNICIPAL CASH TRUST INSTITUTIONAL SHARES INSTITUTIONAL SERVICE SHARES GEORGIA MUNICIPAL CASH TRUST TENNESSEE MUNICIPAL CASH TRUST INSTITUTIONAL SHARES INSTITUTIONAL SERVICE SHARES FEDERATED SERVICES COMPANY provides the following services: Administrative Services Fund Accounting Services Shareholder Recordkeeping Services Custody Services Procurement EX-99.SCHWABAGREMNT 28 Exhibit 9(vii) under Form N-1A Exhibit 10 Under Item 601/Reg. S-K SERVICES AGREEMENT This Agreement is made as of the day of , 199 between (i) the undersigned entity identified in the signature block below under the heading `Fund Party'', and (ii) Charles Schwab & Co., Inc. (`Schwab''), a California corporation. RECITALS A. Fund Party is the principal underwriter or distributor for an open-end investment company with one or more series or classes of shares (each such series or class of shares identified on Schedule I hereto, as amended from time to time, being referred to as a `Fund''). B. Fund Party wishes to have Schwab perform certain recordkeeping, shareholder communication, and other services for each Fund. C. Schwab is willing to perform such services on the terms and conditions set forth herein. AGREEMENT THEREFORE, in consideration of the foregoing and the mutual promises set forth below, the parties agree as follows: 1. Services. During the term of this Agreement, Schwab shall perform the services set forth on Exhibit A hereto, as such exhibit may be amended from time to time (the `Services''). 2. Fees. For the Services, Schwab shall receive a fee (the `Fee'') based on the percentage per annum on Exhibit C applied to the average daily value of the shares of Fund held in the Schwab accounts of Schwab's customers. The Fee shall be calculated and paid in accordance with Exhibit B hereto. Should Exhibit A be amended to revise the Services, the parties shall also amend Exhibits B and C, if necessary, in order to reflect any changes in the Fee. 3. Effectiveness of Agreement; Term. a. This Agreement will become effective as to any particular Fund as of the later of (i) the date set forth on Schedule I opposite the name of such Fund or (ii) such later date as Schwab may, in its discretion, designate. b. This Agreement may be terminated by either party as to any Fund upon 60 days' written notice or upon such shorter notice as is required by law, order, or instruction by a court of competent jurisdiction or a regulatory body or self-regulatory organization with jurisdiction over the terminating party or immediately upon written notice from Schwab if such termination is due to a change in the policies or operating procedures of such Fund in a manner that is inconsistent with the Operating Agreement, as contemplated in Section 4, below. After the date of such a termination as to any Fund, Fund Party will not be obligated to pay the Fee with respect to any shares of such Fund that are first placed or purchased in Schwab customer accounts after the date of such termination. However, notwithstanding any such termination, for so long as any shares of such Fund that was considered in the calculation of the Fee as of the date of such termination (a `Pre-Termination Share'') is held in any Schwab account (x) except as set forth in the next following sentence, Fund Party will remain obligated to pay Schwab the Fee as to each Pre-Termination Share, and (y) for so long as Fund Party or some other person or entity continues to pay the Fee or, in accordance with the next following sentence, such Fund continues to pay a portion of the Fee, Schwab will continue to perform the Services hereunder with respect to each such Pre- Termination Share. If at any time, as to any particular Fund, neither Fund Party nor any person controlling, controlled by, or under common control with Fund Party continues to be engaged by a Fund in any capacity, then Fund Party shall be relieved of its obligation to continue to pay the Fee beginning at the time that (A) this Agreement is assigned to and Fund Party's obligations hereunder are assumed by a successor approved by Schwab in accordance with Section 14 or (B) such Fund agrees to pay such portion of the Fee as to such Pre-Termination Shares as such Fund is legally permitted to pay, but in no event less than % per annum of the average daily value of such Pre-Termination Shares. Further, for so long as Schwab continues to perform the Services as to any Pre-Termination Share, the agreements regarding operational matters set forth in Section 4, the representations and warranties in Section 6, and all of the agreements, acknowledgments, and undertakings set forth in Sections 6 through 17, inclusive, will remain in full force and effect as to such Pre-Termination Shares. Fund Party shall reimburse Schwab promptly for any reasonable expenses Schwab incurs in effecting any termination of this Agreement, including delivery to any Fund or Fund Party of any records, instruments, or documents required by Fund Party. 4. Operational Matters. In processing purchase, redemption and exchange orders placed by Schwab on behalf of its customers, and in order to facilitate Schwab's performance of the Services, Fund Party agrees to follow and comply with, and to use its best efforts to cause each Fund to follow and comply with, the procedures, terms and conditions set forth in Schwab's standard form of Operating Agreement governing operational matters in Schwab's Mutual Fund Marketplace, as that standard form may be supplemented or amended from time (the `Operating Agreement''). Fund Party's undertaking to cause a Fund to follow and comply with the procedures, terms, and conditions of the Operating Agreement are subject to the right of the Board of Trustees of any Fund to change any policies or operating procedures of such Fund as in its sole judgment are necessary or appropriate. However, Fund Party shall use its best efforts to convince each such Board of Trustees not the change such policies or operating procedures in a manner that would be inconsistent with the Operating Agreement, and Fund Party will notify Schwab in writing as soon as practicable after becoming aware of any such change or proposed change in order that Schwab may either make any adjustments necessitated by such changes or proposed changes or terminate this Agreement. 5. Transaction Charges. Schwab shall not, during the term of this Agreement, assess against or collect from its brokerage customers any transaction fee upon the purchase or redemption of any Fund's shares that are considered in calculating the Fee. The parties acknowledge and agree that Schwab may collect such transaction fees from certain customers (including `Active Traders,'' as Schwab may define that term) for certain special trading services and from other customers upon such other customers' redemption of certain shares. The value of shares as to which such transaction fees are charged will not be included in the calculation of the Fee. 6. Representations and Warranties. a. Fund Party represents and warrants to Schwab that Fund Party and the persons executing this Agreement on its behalf, including on behalf of any Fund, are duly authorized and empowered to execute and deliver this Agreement on behalf of Fund Party. b. Schwab represents and warrants that it and the persons executing this Agreement on its behalf are duly authorized and empowered to enter into this Agreement and that Schwab is a member of the National Association of Securities Dealers, Inc. 7. Compliance Responsibilities; Uncontrollable Events; Indemnification. a. Fund Party acknowledges and agrees that it, the Funds, and certain `Affiliates'' (as defined below) are, and Schwab is not, responsible for (i) the compliance of all prospectuses, annual reports, proxy statements, and items of advertising or marketing material of or relating to any Fund, and of the tabulation of returned proxies, with all applicable laws, rules, or regulations (ii) the registration or qualification of all shares of each Fund under all federal and applicable state laws and (iii) the compliance by each Fund, Fund Party, and `affiliated person'' (as that term is defined in the rules under the Investment Company Act of 1940, as amended (the `Company Act'')) of any of them (each, an `Affiliate''), with all applicable federal and state laws, rules and regulations, (including the Company Act, the Investment Advisers Act of 1940, as amended, and the rules and regulations thereunder) and the rules and regulations of all self-regulatory organizations with jurisdiction over such Fund, Fund Party or Affiliate. b. Schwab acknowledges and agrees that it, and not Fund Party, any Fund, or any Affiliate, is responsible for Schwab's compliance with all laws, rules, regulations and rules and regulations of self-regulatory organizations with jurisdiction over Schwab, in each case governing Schwab's performance of the Services (including those governing the registration and business practices of broker-dealers), except to the extent that Schwab's compliance with any such law, rule, or regulation is dependent on the compliance by Fund Party or such Fund or Affiliate with any law, rule, or regulation applicable to such Fund or Affiliate, or satisfaction by Fund Party or such Fund or Affiliate of all or any obligations or requirements under this Agreement applicable to Fund Party or such Fund or Affiliate. c. In providing the Services, each party to this Agreement is entitled to rely on any written records or instructions provided to it by any other party to this Agreement, by its employees, officers or agents, or by its customers. d. Neither party to this Agreement assumes any responsibility hereunder to the other, and neither will be liable to the other, for any damage, loss of data, delay, or any other loss whatsoever caused by fires, earthquakes, floods, acts of war, civil insurrection, or other similar catastrophic events beyond its reasonable control. e. Fund Party shall indemnify, defend and protect Schwab and each officer, employee and agent of Schwab and hold Schwab and each such officer, employee, and agent harmless from and against any and all claims, demands, actions, losses, damages, liabilities, or costs, charges, counsel fees, and expenses of any nature (`Losses'') arising out of (i) any inaccuracy or omission in any prospectus, registration statement, annual report or proxy statement, of any Fund or Fund Party or any advertising or promotional material generated by any Fund or Fund Party, (ii) any breach by Fund Party of any representation, warranty, covenant, or agreement contained in this Agreement or any applicable Operating Agreement, and (iii) any action taken or omitted to be taken by Schwab pursuant to this Agreement, except to the extent such Losses result from Schwab's breach of this Agreement, willful misconduct, or gross negligence. f. Schwab shall indemnify, defend, and protect Fund Party and each director, officer, employee, and agent of Fund Party and hold Fund Party and each such director, officer, employee, and agent harmless from and against any and all Losses arising out of: (i) Schwab's dissemination of information regarding Fund Party or a Fund that is materially incorrect and that was not provided to Schwab by Fund Party, a Fund, or an affiliate, derived accurately from materials published or provided to Schwab by any of them, or approved by Fund Party or such Fund; or (ii) Schwab's willful misconduct or negligence in the performance of, or failure to perform, its obligations under this Agreement, except in each case to the extent such Losses result from Fund Party's breach of this Agreement or Fund Party's or any Fund's willful misconduct or negligence. 8. Role and Relationship of Schwab. The parties acknowledge and agree that the Services are recordkeeping, shareholder communication and related services only and are not the services of an underwriter or a principal underwriter of any Fund within the meaning of the Securities Act of 1933 or the Company Act. This Agreement does not grant Schwab any right to purchase shares from any Fund (although it does not preclude Schwab from purchasing any such shares), nor does it constitute Schwab an agent of any Fund or Fund Party for purposes of selling shares of any Fund to any dealer or the public. To the extent Schwab is involved in any Schwab customer's purchase of shares of any Fund, such involvement will be made as agent of such customer only and such purchases will be made through the principal underwriter of such Fund. 9. Use of Schwab's Name. Without Schwab's prior written consent, Fund Party will not, nor will Fund Party cause or permit any Fund to, describe or refer to Schwab or the Services or relationship contemplated by this Agreement in any advertisement or promotional materials or activities. 10. Proprietary Information. Fund Party acknowledges that the identifies of Schwab's customers, information maintained by Schwab regarding those customers, and all computer programs and procedures developed by Schwab or Schwab's agents in connection with Schwab's performance of its duties hereunder constitute the valuable property of Schwab. Fund Party agrees that should it come into possession of any list or compilation of the identities of or other information about Schwab's customers, or any other property of Schwab, Fund Party will hold such information or property in confidence and refrain from using, disclosing, or distributing any of such information or other property except (i) with Schwab's prior written consent, or (ii) as required by law or judicial process. Fund Party acknowledges that any breach of the foregoing agreements would result in immediate and irreparable harm to Schwab for which there would be no adequate remedy at law and agrees that in the event of such a breach Schwab would be entitled to equitable relief by way of temporary and permanent injunctions, as well as such other relief as any court of competent jurisdiction deems appropriate. 11. Information to be Provided. Fund Party has provided to Schwab and, as to each Fund, shall provide to Schwab prior to the effectiveness of this Agreement as to such Fund, the following information and documents: a. Evidence reasonably acceptable to Schwab of the authorization of Fund Party to enter into this Agreement as to each Fund; b. A list of the officers of Fund Party who are authorized to instruct Schwab in connection with the Services with respect to such Fund, together with specimen signatures of those officers; and c. Two copies of the then-current Prospectus and Statement of Additional Information for each such Fund. Fund Party shall furnish Schwab with written copies of any amendments to or changes in any of the documents referred to in this Section as soon as practicable after such amendments or changes become available. 12. Multi-Class Funds. Notwithstanding anything in this Agreement to the contrary, as to any Fund that offers to the public more than one class of shares, (i) this Agreement shall not become effective until the effective date of any agreement or document containing such representations, warranties, covenants, and agreements as may be both required by any order of the Securities and Exchange Commission relating to the offer and sale of such multiple classes of shares and acceptable to Schwab and (ii) this Agreement shall be terminable under the terms set forth in Section 3.b. of this Agreement at such times and upon such events as are required in any such order. 13. Nonexclusivity. Fund Party acknowledges that Schwab may perform services similar to those to be provided under this Agreement to other investment companies, investment company sponsors, or service providers to investment companies. Schwab acknowledges that Fund Party may obtain services similar to those provided by Schwab under this Agreement from other brokers, dealers, or providers of services to investment companies. 14. Assignability. This Agreement is not assignable by either party without the other party's prior written consent; provided that Schway may, without Fund Party's consent, assign its rights and obligations under this Agreement to any corporation that (i) controls, is controlled by, or is under common control with Schwab and (ii) is registered as a transfer agent under Section 17A(c) of the Securities Exchange Act of 1934, as amended. In the event of an `assignment'' of this Agreement, within the meaning of the Company Act and the rules of the Securities and Exchange commission promulgated thereunder, this Agreement shall terminate in accordance with and subject to the terms of Section 3.b. of this Agreement. If any event is proposed (x) for which the consents, if any, required by the first sentence of this Section 14 have been obtained, and (y) that would constitute such an `assignment,'' then Schwab and Fund Party shall each use its best efforts to cause a new agreement, in form and substance as nearly identical to this Agreement as possible, to be executed and delivered by the appropriate parties and made effective prior to the time of such proposed event. If such a new agreement cannot be executed, delivered, and made effective prior to the termination of this Agreement, Schwab and Fund Party shall each use its best efforts to obtain such ratifications or approvals and take such other steps as may be necessary to reinstate this Agreement, or to cause the effectiveness of anew agreement in form and substance as nearly identical to this Agreement as possible, all as soon after such termination as practicable. 15. Notices. All notices required by this Agreement shall be in writing and delivered personally or sent by first class mail. All notices and other communications concerning this Agreement will be deemed to have been received as of the earlier of actual physical receipt or three days after deposit, first class postage prepaid, in the United States Mail. All such notices and other communication shall be made: if to Schwab, to: Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 Attention: John McGonigle With a copy to: General Counsel, at same address if to Fund Party, to the address given below in the signature block 16. Exhibits. All Exhibits and Schedules attached to this Agreement, as they may be amended from time to time , are by this reference incorporated into and made a part of this Agreement. 17. Amendment. this Agreement and the Exhibits and Schedules hereto may be amended only by a writing executed by each party hereto that is to be bound by such amendment. 18. Governing Law. This Agreement will be governed by and interpreted under the laws of the State of California as applied to contracts entered into and to be performed entirely within that state. 19. Counterparts. This Agreement may be executed in one or more counterparts, each of which will be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. CHARLES SCHWAB & CO., INC. By: Its: FUND PARTY (name) By: Its: Address: Attn.: SCHEDULE I (List of Funds/Portfolios/Classes to which fees are applicable) Fund Date EXHIBIT A SERVICES Capitalized terms used in this Exhibit have the meanings given them in the agreement to which this Exhibit is attached (the `Agreement''). Record Maintenance. Schwab shall maintain records for each Schwab customer who holds shares of any Fund in a Schwab account and for each Fund, which records shall include: A. Number of shares; B. Date and price of purchases and redemptions (including dividend reinvestments) and dates and amounts of dividends paid for at least the current year to date; C. Name and address of each such Schwab customer, including zip codes and tax identification numbers; D. Records of distributions and dividends payments; E. Any transfers of shares; and F. Overall control records. Fund Communications. Schwab shall, on a daily basis and for each Fund, report the number of shares on which the Fee is to be paid pursuant to the Agreement and the number of shares on which no such Fee is to be paid. Schwab shall also provide each Fund with monthly summaries of reports. Such summaries shall be expressed in both shares and dollar amounts. Shareholder Communications. Schwab shall: A. Mail Fund prospectuses upon customer request and, as applicable, with confirmation statements and in accordance with applicable law, including; B. As to each Fund, provide to a shareholder mailing agent employed by such Fund for the purpose of mailing certain Fund-related materials the names and addresses of all Schwab customers who hold shares of such Fund in their Schwab accounts. Such shareholder mailing agent shall be a person or entity engaged by such Fund in accordance with the Operating Agreement referred to in Section 4 of the Agreement and the Fund-related materials to be sent by such agent shall consist of updated prospectuses, annual and semi-annual reports, proxy statements, and other appropriate shareholder communications. Schwab shall provide such customer names and addresses as of any time reasonably requested by such Fund; C. Mail statements to customers on a monthly basis, (or, as to accounts in which there has been no activity in a particular money, no less frequently than quarterly) showing, among other things, the number of shares of each Fund owned by such customer and the net asset values of such Funds as of a recent date; D. With respect to each Fund, produce and mail to customers and to the appropriate Federal taxing authority statement indicating, for Federal tax purposes, the amounts of dividend income and capital gains attributable to such customers from such Fund; E. Produce and mail to customers confirmation statements reflecting purchases and redemptions of shares of each Fund in Schwab brokerage accounts; and F. Respond to customer inquiries regarding, among other things, share prices, account balances, dividend amounts, and dividend payment dates. Transactional Services. Schwab shall communicate, as to shares of each Fund, purchase, redemption and exchange orders reflecting the orders it receives from its customers, in accordance with the procedures contemplated in the Agreement. EXHIBIT B CALCULATION OF FEE Capitalized terms used in this Exhibit have the meanings given them in the agreement to which this Exhibit is attached (the `Agreement''). 1. Fund Party shall pay to Schwab, for each Fund, a fee, computed daily and paid monthly in arrears, equal to the percentage per annum specified on Exhibit C to the Agreement applied to the average daily value of the total number of shares of such Fund held in accounts at Schwab (subject to the exclusion in the next sentence). Notwithstanding the preceding sentence there shall be excluded from the computation of such amount the value of (i) shares as to which a broker customer paid Schwab a transaction fee upon such customer's purchase of such shares, (ii) shares held in a Schwab brokerage account prior to the effective date of the Agreement as to the Fund issuing such shares, and (iii) shares first placed or purchased in a Schwab brokerage account after the termination of the Agreement as to the Fund issuing such shares. 2. As soon as practicable after the end of each month, for each Fund, Schwab shall send Fund Party, in the manner called for in the Agreement, a statement of the average daily value for the preceding month of shares of such Fund as to which the fee called for in Section 1 of this Exhibit are calculated, together with a statement of the amount of such fee. In the calculation of fee, Schwab's records shall govern unless an error can be shown in the number of shares used in such calculation. 3. Fund Party shall pay Schwab such fee within 30 days after Fund Party's receipt (in accordance with the Agreement) of such statement. Such payment shall be by wire transfer unless the amount thereof is less than $500. Wire transfers shall be sent to Citibank Account No. 4055-8865 or such other account as Schwab may designate from time to time. Such wire transfers shall be separate from wire transfers of redemption proceeds and distributions. Amounts less than $500 may, at Fund Party's discretion, be paid by check, 4. for purposes of this Exhibit, the average daily value of the shares of each Fund will be based on the net asset values reported by such Fund to the National Association of Securities Dealers, Inc. Automated Quotation System. No adjustments will be made to such net asset values to correct errors in the net asset values so reported for any day unless such error is corrected and the correct net asset value per share is reported to Schwab before 5 o'clock p.m., San Francisco time, on the first business day after the day to which the error relates. EXHIBIT C AMOUNT OF FEE Percentage Per Annum of Average Daily FUND PARTY Value of Fund Shares (name) % EX-99.EXHTOPLAN 29 Exhibit 15(ii) under Form N-1A Exhibit 1 under Item 601/Reg. S-K EXHIBIT G FEDERATED MUNICIPAL TRUST Ohio Municipal Cash Trust Cash II Shares The Plan is adopted by Federated Municipal trust with respect to the Class of Shares of the Fund set forth above. In compensation for the services provided pursuant to this Plan, FSC will be paid a monthly fee computed at the annual rate of .30 of 1% of the average aggregate net asset value of the Cash II Shares of the Ohio Municipal Cash Trust during the month. Witness the due execution hereof this 26th day of March, 1991. FEDERATED MUNICIPAL TRUST By: /s/ Richard B. Fisher EX-99.SCHOFPERFORM 30
Exhibit 16 16(xi) under Form N-1A Exhibit 99 under Item 601/Reg. S-K Schedule for computation of Yield Calculation Tennessee Municipal Cash Trust (Institutional Shares) This example illustrates the yield quotation for the seven-day period 31-Oct-96 ended: Value of a hypothetical pre-existing account with exactly $1.000000000 one share at the beginning of the base period Value of same account (excluding capital changes) at end $1.000632774 of the seven-day base period* $0.000632774 Net change in account value Base Period Return: Net change in account value divided by the beginning account value $0.000632774 ($ .000632774 / $1.000000000) Annualized Current Net Yield ( .000632774 x 365/7) 3.30% Effective Yield ** (.000632774 + 1 ) ^ (365/7) - 1 3.35% * This value includes the value of additional shares purchased with dividends from the original share, and dividends declared on both the original share and any such additional shares. ** This value may change to include shares purchased with dividends reinvested on a less frequent basis. Tax Equivalent Yield (Assumes individual does not itemize on Federal Return) 100% minus the Federal and Tennessee taxable %'s (100% - 28% - 6% = 66%) 7 Day Net Yield / by the tax eqivalent % (3.30% / 66%) = 5.00% 100
EX-99.SCHOFPERFORM 31
Schedule for computation of Yield Calculation Tennessee Municipal Cash Trust (Institutional Service Shares) This example illustrates the yield quotation for the seven-day period ended: 31-Oct-96 Value of a hypothetical pre-existing account with exactly $1.000000000 one share at the beginning of the base period Value of same account (excluding capital changes) at end $1.000584831 of the seven-day base period* $0.000584831 Net change in account value Base Period Return: Net change in account value divided by the beginning account value $0.000584831 ($ .000584831 / $1.000000000) Annualized Current Net Yield ( .000584831 x 365/7) 3.05% Effective Yield ** (.000584831 + 1 ) ^ (365/7) - 1 3.10% * This value includes the value of additional shares purchased with dividends from the original share, and dividends declared on both the original share and any such additional shares. ** This value may change to include shares purchased with dividends reinvested on a less frequent basis. Tax Equivalent Yield (Assumes individual does not itemize on Federal Return) 100% minus the Federal and Michigan taxable %'s (100% - 28% - 6% = 66%) 7 Day Net Yield / by the tax eqivalent % (3.05% / 66%) = 4.62%
EX-99.SCHOFPERFORM 32
Schedule for Computation of Initial Fund Performance Data Invest of: $1,000 Tennessee Municipal Cash Trust Institutional Shares Initial Offering Price/Share= $1.00 Return Since Inception 5/22/95NAV= $1.00 ending 10/31/96 FYE: October 31, 1996 Beginning Capital Reinvest Ending Total DECLARED: Daily Reinvest Period Dividend Gain Price Period Ending Investment PAID: Monthly Dates Shares /Share /Share /Share Shares Price Value 5/31/96 1000.000 0.001119240 0.00000 $1.00 1001.11 $1.00 $1,001.12 9 6/30/96 1001.119 0.002987905 0.00000 $1.00 1004.11 $1.00 $1,004.11 0 7/31/96 1004.110 0.002770331 0.00000 $1.00 1006.89 $1.00 $1,006.89 2 8/31/96 1006.892 0.003135774 0.00000 $1.00 1010.05 $1.00 $1,010.05 0 9/30/96 1010.050 0.002928798 0.00000 $1.00 1013.00 $1.00 $1,013.01 8 10/31/96 1013.008 0.002855103 0.00000 $1.00 1015.90 $1.00 $1,015.90 0 Note: The Fund has not paid any income or ST capital gain dividends in FYE 10/31/96. $1,000 (1+T) = Ending Value T = 1.59%
EX-99.SCHOFPERFORM 33
Schedule for Computation of Initial Fund Performance Data Invest of: $1,000 Tennessee Municipal Cash Trust Institutional Service Shares Initial Offering Price/Share= $1.00 Return Since Inception 5/22/95NAV= $1.00 ending 10/31/96 FYE: October 31, 1996 Beginning Capital Reinvest Ending Total DECLARED: Daily Reinvest Period Dividend Gain Price Period Ending Investment PAID: Monthly Dates Shares /Share /Share /Share Shares Price Value 5/31/96 1000.000 0.001050959 0.00000 $1.00 1001.05 $1.00 $1,001.05 1 6/30/96 1001.051 0.002782435 0.00000 $1.00 1003.83 $1.00 $1,003.84 6 7/31/96 1003.836 0.002558012 0.00000 $1.00 1006.40 $1.00 $1,006.40 4 8/31/96 1006.404 0.002923455 0.00000 $1.00 1009.34 $1.00 $1,009.35 6 9/30/96 1009.346 0.002723328 0.00000 $1.00 1012.09 $1.00 $1,012.10 5 10/31/96 1012.095 0.002642784 0.00000 $1.00 1014.77 $1.00 $1,014.77 0 Note: The Fund has not paid any income or ST capital gain dividends in FYE 10/31/96. $1,000 (1+T) = Ending Value T = 1.48%
EX-99.POWEROFATTY 34 Exhibit 19 under Form N-1A Exhibit 24 under Item 601/Reg. S-K POWER OF ATTORNEY Each person whose signature appears below hereby constitutes and appoints the Secretary and Assistant Secretary of FEDERATED MUNICIPAL TRUST and the Deputy General Counsel of Federated Investors, and each of them, their true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution for them and in their names, place and stead, in any and all capacities, to sign any and all documents to be filed with the Securities and Exchange Commission pursuant to the Securities Act of 1933, the Securities Exchange Act of 1934 and the Investment Company Act of 1940, by means of the Securities and Exchange Commission's electronic disclosure system known as EDGAR; and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to sign and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as each of them might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue thereof. SIGNATURES TITLE DATE /s/ John F. Donahue Chairman and Trustee June 5, 1996 John F. Donahue (Chief Executive Officer) /s/ Glen R. Johnson President and Trustee June 5, 1996 Glen R. Johnson /s/ John W. McGonigle Treasurer and Executive ViceJune 5, 1996 John W. McGonigle President (Principal Financial and Accounting Officer) /s/ Thomas G. Bigley Trustee June 5, 1996 Thomas G. Bigley /s/ John T. Conroy, Jr. Trustee June 5, 1996 John T. Conroy, Jr. SIGNATURES TITLE DATE /s/ William J. Copeland Trustee June 5, 1996 William J. Copeland /s/ James E. Dowd Trustee June 5, 1996 James E. Dowd /s/ Lawrence D. Ellis, M.D. Trustee June 5, 1996 Lawrence D. Ellis, M.D. /s/ Edward L Flaherty, Jr. Trustee June 5, 1996 Edward L. Flaherty, Jr. /s/ Peter E. Madden Trustee June 5, 1996 Peter E. Madden /s/ Gregor F. Meyer Trustee June 5, 1996 Gregor F. Meyer /s/ John E. Murray, Jr. Trustee June 5, 1996 John E. Murray, Jr. /s/ Wesley W. Posvar Trustee June 5, 1996 Wesley W. Posvar /s/ Marjorie P. Smuts Trustee June 5, 1996 Marjorie P. Smuts Sworn to and subscribed before me this 5th day of June, 1996 /s/ Marie M. Hamm Notarial Seal Marie M. Hamm, Notary Public Plum Boro, Allegheny County My Commission Expires Sept. 16, 1996 Member Pennsylvania Association of Notaries EX-27.FINANDATASCH 35
6 161 Federated Municipal Trust Tennessee Municipal Cash Trust Institutional Shares 5-mos Oct-31-1996 Oct-31-1996 49,090,926 49,090,926 260,093 169,351 0 49,520,370 1,743,907 128,757 0 1,872,664 0 47,647,706 17,823,803 0 0 0 0 0 0 17,823,803 0 525,612 0 37,711 487,901 0 0 487,901 0 226,076 0 0 34,644,791 16,824,443 3,455 47,647,706 0 0 0 0 71,830 0 247,153 32,257,381 1.000 0.010 0.000 0.010 0.000 0.000 1.000 0.10 0 0.000
EX-27.FINANDATASCH 36
6 162 Federated Municipal Trust Tennessee Municipal Cash Trust Institutional Service Shares 5-mos Oct-31-1996 Oct-31-1996 49,090,926 49,090,926 260,093 169,351 0 49,520,370 1,743,907 128,757 0 1,872,664 0 47,647,706 29,823,903 0 0 0 0 0 0 29,823,903 0 525,612 0 37,711 487,901 0 0 487,901 0 261,825 0 0 131,090,076 101,472,057 205,884 47,647,706 0 0 0 0 71,830 0 247,153 32,257,381 1.000 0.010 0.000 0.010 0.000 0.000 1.000 0.37 0 0.000
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