-----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, Iyug9DSVG5lwzbp4W6YauDk0IevGiMXYgo3qObxNc7hiYWhXBCHhqNwjqgnFm/Kt BwpRlH54nQNp4TF3iJqOOA== 0000855108-97-000024.txt : 19970702 0000855108-97-000024.hdr.sgml : 19970702 ACCESSION NUMBER: 0000855108-97-000024 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970430 FILED AS OF DATE: 19970701 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FEDERATED MUNICIPAL TRUST CENTRAL INDEX KEY: 0000855108 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: MA FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-05911 FILM NUMBER: 97633945 BUSINESS ADDRESS: STREET 1: FEDERATED INVESTORS TOWER CITY: PITTSBURGH STATE: PA ZIP: 15222 BUSINESS PHONE: 4122887496 N-30D 1 PRESIDENT'S MESSAGE Dear Shareholder: I am pleased to present the Semi-Annual Report to Shareholders of Connecticut Municipal Cash Trust, a portfolio of Federated Municipal Trust, which covers the six-month period from November 1, 1996, through April 30, 1997. The report begins with a discussion with the fund's portfolio manager, followed by a complete listing of the fund's holdings and its financial statements. The fund is a convenient way to keep your ready cash pursuing double tax-free income -- free from federal regular income tax and Connecticut Dividend and Interest Income tax* -- through a portfolio concentrated in high-quality, short-term Connecticut municipal securities. At the end of the reporting period, the fund's holdings were diversified among issuers that use municipal bond financing for projects as varied as health care, housing, community development, and transportation. This double tax-free advantage means you have the opportunity to earn a greater after-tax yield than you could in a comparable high-quality taxable investment. Of course, the fund also brings you the added benefits of daily liquidity and stability of principal.** During the reporting period, the fund paid double tax-free dividends of $0.01 per share. The fund's net assets stood at $235.2 million at the end of the reporting period. Thank you for relying on Connecticut Municipal Cash Trust to help your ready cash pursue tax-free income every day. As always, we will continue to provide you with the highest level of professional service. We invite your questions or comments. Sincerely, [Graphic] Glen R. Johnson President June 15, 1997 * Income may be subject to the federal alternative minimum tax. ** Although money market funds seek to maintain a stable net asset value of $1.00 per share, there is no assurance that they will be able to do so. An investment in the fund is neither insured nor guaranteed by the U.S. government. INVESTMENT REVIEW An interview with the fund's portfolio manager, Mike Sirianni, Assistant Vice President, Federated Management Q Can you comment on the economy and the interest rate environment over the six-month reporting period? A Although it did not occur until near the end of the fund's semi-annual reporting period, the Federal Reserve Board (the "Fed") brought about the first change in monetary policy in over a year. On March 25, 1997, the Fed, in the face of stronger than expected demand, voted to raise the federal funds target rate from 5.25% to 5.50%. The move was viewed as being pre-emptive against the threat of future inflationary pressures possibly brought about by tight labor market conditions. Until that point, movements in interest rates reflected shifting market sentiment about the need for the Fed to move to a more restrictive policy. As the reporting period began in November 1996, the economy had been showing signs of slowing, thereby allaying the market's fears about inflation. Then, in December, the market's uneasiness was once more ignited as a string of economic statistics showed stronger growth and Fed Chairman Alan Greenspan made cautionary statements regarding inflation and "irrational exuberance" in the equity market. With inflation still appearing to be benign, the market tolerated a steady pace of growth into early 1997. However, Chairman Greenspan's Humphrey-Hawkins testimony before Congress in late February marked a turning point for the short-term money markets -- indeed the bond and equity markets as well -- as his relatively hawkish statements revealed fears at the Fed that the transitory factors that had been keeping inflation under control in the face of fairly robust growth may be coming to an end. This statement by the Fed caused a sharp reversal in interest rate movement and the market's perception about future Fed policy. The ensuing weeks brought continued evidence of persistent strength, and culminated in the Fed's action at the Federal Open Market Committee in late March. For the first three months of the reporting period, short-term interest rates traded in a relatively narrow range as the continued friendly inflation picture provided some comfort to market participants. The yield on the six-month Treasury bill, for example, moved in a range between 5.20% and 5.35% from the beginning of November through early February. However, short-term interest rates began to rise in late February, and by the time of the Fed tightening in late March, had built in much of the expectations regarding the Fed decision. In April, the financial markets continued to focus on the likelihood of an additional tightening move later in May, causing short-term yields to rise even further. Yields on the six-month Treasury bill rose sharply over this interim period, moving from a low of 5.20% in mid-February to a high of 5.68% in late April before falling back to 5.53% by the end of reporting period. Q What were your strategies for the fund during the reporting period? A The fund's average maturity at the beginning of the reporting period was approximately 60 days. As signs of strength in the economy became more apparent, and as expectation of an imminent Fed tightening grew in the first quarter of 1997, we lowered the average maturity target range of the fund from between 55 and 60 days to between 40 and 45 days. By allowing the average maturity of the portfolio to roll inward from 60 days to a target range of 40 to 45 days we were able to take advantage of higher interest rates going forward. Once an average maturity range is targeted, the portfolio attempts to maximize performance through ongoing relative value analysis. Relative value analysis includes the comparison of the richness or cheapness of municipal securities to one another as well as municipals to taxable instruments, such as Treasury securities. The fund's portfolio remained barbelled in structure, which combined a significant portion in seven-day variable rate demand notes and short maturity commercial paper with purchases of longer-term, six- to twelve-month fixed rate notes. This portfolio structure continues to pursue a competitive yield over time. Q How has the fund performed? A Naturally, the fund's yield has remained relatively stable over the majority of the reporting period since the Fed did not change their federal funds rate target until the latter part of the reporting period. The seven-day net yield for the fund on April 30, 1997, was 3.41% compared to 2.93% six months ago with the increase in yield coming at the end of the reporting period.* The latest yield was the equivalent of a 5.65% taxable yield for investors in the highest federal tax bracket. Q Looking through 1997, what is your outlook for short-term rates? A Although the Fed decided to hold short-term interest rates steady in the March meeting, our expectations are that the Fed will find cause to tighten monetary policy further in 1997 -- perhaps as soon as July. It is also anticipated that the overall tightening cycle will not be long in terms of magnitude or duration. The pre-emptive move by the Fed should help to preclude the need for more aggressive action down the road by preventing the build-up of inflationary pressures. We would look to see moderately higher short-term interest rates throughout the course of the year, but not to the extent evidenced in the last tightening cycle in 1994. As such, we will likely continue in our modestly defensive stance for the portfolio until market conditions indicate otherwise. * Performance quoted represents past performance and is not indicative of future results. Yield will vary. The seven-day net yield is calculated daily, based on the income dividends for the seven days ending on the date of calculation and then compounded and annualized. CONNECTICUT MUNICIPAL CASH TRUST PORTFOLIO OF INVESTMENTS APRIL 30, 1997 (UNAUDITED)
PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- 99.3% CONNECTICUT -- 85.5% $ 2,000,000 Brookfield, CT, 3.73% BANs, 6/12/1997 $ 2,000,066 3,000,000 Cheshire, CT, 3.64% BANs, 8/8/1997 3,000,294 10,694,376 (b)Clipper Connecticut Tax Exempt Trust, (Series 1994-1) Weekly VRDNs (State Street Bank and Trust Co. LIQ) 10,694,376 2,400,000 Connecticut Development Authority Weekly VRDNs (Banta Associates)/(Marine Midland Bank N.A., Buffalo, NY LOC) 2,400,000 600,000 Connecticut Development Authority Weekly VRDNs (Capital District Energy Center)/(Canadian Imperial Bank of Commerce, Toronto LOC) 600,000 3,800,000 Connecticut Development Authority Weekly VRDNs (Capital District Energy Center)/(Canadian Imperial Bank of Commerce, Toronto LOC) 3,800,000 1,245,800 Connecticut Development Authority Weekly VRDNs (RSA Corp.)/ (Barclays Bank PLC, London LOC) 1,245,800 930,000 Connecticut Development Authority, (Series 1985) Weekly VRDNs (Martin-Brower Company Project)/(ABN AMRO Bank N.V., Amsterdam LOC) 930,000 2,200,000 Connecticut Development Authority, (Series 1986) Weekly VRDNs (United Illuminating Co.)/(Union Bank of Switzerland, Zurich LOC) 2,200,000 8,000,000 Connecticut Development Authority, (Series 1993) Weekly VRDNs (Rand-Whitney Containerboard Limited Parntership)/(Chase Manhattan Bank N.A., New York LOC) 8,000,000 5,500,000 Connecticut Development Authority, (Series 1996A) Weekly VRDNs (Connecticut Light & Power Co.)/(AMBAC INS)/(Societe Generale, Paris LIQ) 5,500,000 8,000,000 Connecticut Development Authority, (Series 1997A) Weekly VRDNs (Bradley Airport Hotel Project)/(Kredietbank N.V., Brussels LOC) 8,000,000 13,000,000 Connecticut Development Authority, (Series A) Weekly VRDNs (Exeter Energy)/(Sanwa Bank Ltd., Osaka LOC) 13,000,000 1,000,000 Connecticut Development Authority, (Series B) Weekly VRDNs (Exeter Energy)/(Sanwa Bank Ltd., Osaka LOC) 1,000,000
PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- CONTINUED CONNECTICUT -- CONTINUED $ 7,499,000 Connecticut Development Authority, (Series C) Weekly VRDNs (Exeter Energy)/(Sanwa Bank Ltd., Osaka LOC) $ 7,499,000 4,000,000 Connecticut Development Authority, PCR (Series 1993A) Weekly VRDNs (Western Mass Electric Co.)/(Union Bank of Switzerland, Zurich LOC) 4,000,000 3,500,000 Connecticut Development Authority, PCR Refunding Bonds (Series 1993B) Weekly VRDNs (Connecticut Light & Power Co.)/(Union Bank of Switzerland, Zurich LOC) 3,500,000 5,000,000 Connecticut Development Health Care Facilities Weekly VRDNs (Independence Living)/(Chase Manhattan Bank N.A., New York LOC) 5,000,000 5,500,000 Connecticut Development Health Care Facilities Weekly VRDNs (Independence Living)/(Credit Local de France LOC) 5,500,000 10,700,000 Connecticut Municipal Electric Energy Cooperative, Power Supply System Revenue Bonds (1995 Series A), 3.45% CP (Fleet National Bank, Providence, RI LOC), Mandatory Tender 5/20/1997 10,700,000 1,700,000 Connecticut State HEFA Weekly VRDNs (Charlotte Hungerfield Hospital)/(First National Bank of Boston, MA LOC) 1,700,000 3,500,000 Connecticut State HEFA, (Series A) Weekly VRDNs (Forman School Issue)/(National Westminster Bank, PLC, London LOC) 3,500,000 6,500,000 Connecticut State HEFA, (Series N), 3.55% CP (Yale University), Mandatory Tender 6/30/1997 6,500,000 4,000,000 Connecticut State HEFA, (Series P), 3.55% CP (Yale University), Mandatory Tender 6/30/1997 4,000,000 1,000,000 Connecticut State HEFA, Revenue Bonds (Series A) Weekly VRDNs (Pomfret School Issue)/(Credit Local de France LOC) 1,000,000 7,000,000 Connecticut State HEFA, Series S, 3.45% CP (Yale University), Mandatory Tender 5/19/1997 7,000,000 4,195,000 (b)Connecticut State HFA, (PT-81) Weekly VRDNs (Rabobank Nederland, Utrecht LIQ) 4,195,000 7,025,000 Connecticut State HFA, (Series 1990C), 3.45% CP (Morgan Guaranty Trust Co., New York LIQ), Mandatory Tender 5/15/1997 7,025,000 3,000,000 Connecticut State HFA, (Series 1990D), 3.70% CP, Mandatory Tender 7/24/1997 3,000,000
PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- CONTINUED CONNECTICUT -- CONTINUED $ 3,245,000 Connecticut State HFA, (Series 1990D), 3.70% CP, Mandatory Tender 8/15/1997 $ 3,245,000 2,405,000 Connecticut State HFA, (Series A), 7.00% Bonds, 11/15/1997 2,446,051 4,925,000 Connecticut State, (1996 Series A), 4.00% Bonds, 5/15/1997 4,925,733 3,130,000 Connecticut State, 5.20% Bonds, 3/15/1998 3,172,457 2,200,000 Connecticut State, Airport Revenue Refunding Bonds (Series 1992), 7.20% Bonds (Bradley International Airport)/(FGIC INS), 10/1/1997 2,234,095 12,000,000 Connecticut State, Special Assessment Unemployment Compensation Advance Fund, Revenue Bonds (Series 1993C), 3.90% TOBs (FGIC INS)/(FGIC Securities Purchase, Inc. LIQ), Mandatory Tender 7/1/1997 12,000,000 1,000,000 Connecticut State, UT GO, 4.30% Bonds, 3/15/1998 1,003,190 2,000,000 East Hartford, CT, 3.70% BANs, 1/26/1998 2,003,575 11,100,000 Hartford, CT Redevelopment Authority Weekly VRDNs (Underwood Towers)/(FSA INS)/(Barclays Bank PLC, London LIQ) 11,100,000 5,000,000 Meriden, CT, 3.90% BANs, 8/13/1997 5,006,493 1,600,000 New Haven, CT Weekly VRDNs (Starter Sportswear)/(Fleet Bank, N.A. LOC) 1,600,000 7,000,000 New Haven, CT, 4.00% BANs (Fleet National Bank, Providence, RI LOC), 5/22/1997 7,000,980 7,500,000 Stamford, CT Housing Authority, Multi-Modal Interchangeable Rate Revenue Bonds (Series 1994) Weekly VRDNs (Morgan Street Project)/ (Deutsche Bank, AG LOC) 7,500,000 1,336,000 Thomaston, CT, 3.70% BANs, 2/19/1998 1,337,759 Total 201,064,869 PUERTO RICO -- 13.8% 7,500,000 Commonwealth of Puerto Rico, Series 1997A, 4.00% TRANs, 7/30/1997 7,510,923 12,000,000 Puerto Rico Electric Power Authority, (Series K), 9.375% Bonds (United States Treasury PRF), 7/1/1997 (@102) 12,355,649
PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- CONTINUED PUERTO RICO -- CONTINUED $ 3,125,000 Puerto Rico Government Development Bank, 3.70% CP, Mandatory Tender 7/23/1997 $ 3,125,000 9,500,000 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 6/11/1997 9,500,000 Total 32,491,572 TOTAL INVESTMENTS (AT AMORTIZED COST)(C) $ 233,556,441
Securities that are subject to Alternative Minimum Tax represent 25.7% of the portfolio as calculated based upon total portfolio market value. (a) The fund may only invest in securities rated in one of the two highest short-term rating categories by one or more 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 Ratings Group, MIG-1 or MIG-2 by Moody's Investors Service, Inc., or F-1+, F-1, and F-2 by Fitch Investors Service, Inc. are all considered rated in one of the two highest short-term rating categories. Securities rated in the highest short-term rating category (and unrated securities of comparable quality) are identified as First Tier securities. Securities rated in the second highest short-term rating category (and unrated securities of comparable quality) are identified as Second Tier securities. The fund follows applicable regulations in determining whether a security is rated and whether a security rated by multiple NRSROs in different rating categories should be identified as a First or Second Tier security. At April 30 1997, the portfolio securities were rated as follows: Tier Rating Percentage Based on Total Market Value (unaudited) FIRST TIER SECOND TIER 100% 0% (b) Denotes a restricted security which is subject to restrictions on resale under Federal Securities laws. At April 30, 1997, these securities amounted to $14,889,376 which represents 6.3% of net assets. (c) Also represents cost for federal tax purposes. Note: The categories of investments are shown as a percentage of net assets ($235,232,356) at April 30, 1997. The following acronyms are used throughout this portfolio: AMBAC -- American Municipal Bond Assurance Corporation BANs -- Bond Anticipation Notes CP -- Commercial Paper FGIC -- Financial Guaranty Insurance Company FSA -- Financial Security Assurance GO -- General Obligation HEFA -- Health and Education Facilities Authority HFA -- Housing Finance Authority INS -- Insured LIQ -- Liquidity Agreement LOC -- Letter of Credit PCR -- Pollution Control Revenue PLC -- Public Limited Company PRF -- Prerefunded TOBs -- Tender Option Bonds TRANs - -- Tax and Revenue Anticipation Notes UT -- Unlimited Tax VRDNs -- Variable Rate Demand Notes (See Notes which are an integral part of the Financial Statements) CONNECTICUT MUNICIPAL CASH TRUST STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1997 (UNAUDITED) ASSETS: Total investments in securities, at amortized cost and value $ 233,556,441 Cash 522,988 Income receivable 1,835,659 Total assets 235,915,088 LIABILITIES: Income distribution payable $ 642,861 Accrued expenses 39,871 Total liabilities 682,732 NET ASSETS for 235,232,443 shares outstanding $ 235,232,356 NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE: $235,232,356 / 235,232,443 shares outstanding $1.00
(See Notes which are an integral part of the Financial Statements) CONNECTICUT MUNICIPAL CASH TRUST STATEMENT OF OPERATIONS SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED) INVESTMENT INCOME: Interest $ 4,342,740 EXPENSES: Investment advisory fee $ 628,331 Administrative personnel and services fee 94,889 Custodian fees 6,879 Transfer and dividend disbursing agent fees and expenses 28,956 Directors'/Trustees' fees 1,269 Auditing fees 6,520 Legal fees 2,961 Portfolio accounting fees 34,272 Shareholder services fee 314,165 Share registration costs 14,251 Printing and postage 4,522 Insurance premiums 2,654 Taxes 2,112 Miscellaneous 2,396 Total expenses 1,144,177 Waivers -- Waiver of investment advisory fee $ (248,818) Waiver of shareholder services fee (138,233) Total waivers (387,051) Net expenses 757,126 Net investment income $ 3,585,614
(See Notes which are an integral part of the Financial Statements) CONNECTICUT MUNICIPAL CASH TRUST STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED YEAR ENDED (UNAUDITED) OCTOBER 31, APRIL 30, 1997 1996 INCREASE (DECREASE) IN NET ASSETS: OPERATIONS -- Net investment income $ 3,585,614 $ 6,691,741 DISTRIBUTIONS TO SHAREHOLDERS -- Distributions from net investment income (3,585,614) (6,691,741) SHARE TRANSACTIONS -- Proceeds from sale of shares 433,136,717 636,539,589 Net asset value of shares issued to shareholders in payment of distributions declared 1,056,454 2,096,326 Cost of shares redeemed (426,049,558) (596,265,388) Change in net assets resulting from share transactions 8,143,613 42,370,527 Change in net assets 8,143,613 42,370,527 NET ASSETS: Beginning of period 227,088,743 184,718,216 End of period $ 235,232,356 $ 227,088,743
(See Notes which are an integral part of the Financial Statements) Connecticut Municipal Cash Trust Financial Highlights (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED (UNAUDITED) APRIL 30, YEAR ENDED OCTOBER 31, 1997 1996 1995 1994 1993** 1992 1991 1990(A) NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 INCOME FROM INVESTMENT OPERATIONS Net investment 0.01 0.03 0.03 0.02 0.02 0.03 0.04 0.05 income LESS DISTRIBUTIONS Distributions from net investment income (0.01) (0.03) (0.03) (0.02) (0.02) (0.03) (0.04) (0.05) NET ASSET $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 VALUE, END OF PERIOD TOTAL RETURN(B) 1.43% 3.02% 3.31% 2.12% 1.96% 2.68% 4.04% 5.54% RATIOS TO AVERAGE NET ASSETS Expenses 0.60%* 0.60% 0.60% 0.59% 0.57% 0.56% 0.56% 0.48%* Net investment 2.85%* 2.97% 3.26% 2.11% 1.95% 2.66% 3.94% 5.32%* income Expense waiver/ reimbursement(c) 0.31%* 0.32% 0.30% 0.18% 0.25% 0.30% 0.21% 0.28%* SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $235,232 $227,089 $184,718 $190,423 $140,446 $140,118 $140,113 $138,738
* Computed on an annualized basis. ** Prior to November 6, 1992, the fund provided two classes of shares. (a) Reflects operations for the period from November 1, 1989 (date of initial public investment) to October 31, 1990. (b) Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable. (c) This voluntary expense decrease is reflected in both the expense and net investment income ratios shown above. (See Notes which are an integral part of the Financial Statements) CONNECTICUT MUNICIPAL CASH TRUST NOTES TO FINANCIAL STATEMENTS APRIL 30, 1997 (UNAUDITED) 1. ORGANIZATION Federated Municipal Trust (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act") as an open-end, management investment company. The Trust consists of sixteen portfolios. The financial statements included herein are only those of Connecticut Municipal Cash Trust (the "Fund"). The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. The investment objective of the Fund is current income exempt from federal regular income tax and the Connecticut Dividend and Interest Income Tax consistent with stability of principal. 2. SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with generally accepted accounting principles. INVESTMENT VALUATIONS -- The Fund's use of the amortized cost method to value its portfolio securities is in accordance with Rule 2a-7 under the Act. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS -- Interest income and expenses are accrued daily. Bond premium and discount, if applicable, are amortized as required by the Internal Revenue Code, as amended (the "Code"). Distributions to shareholders are recorded on the ex-dividend date. FEDERAL TAXES -- It is the Fund's policy to comply with the provisions of the Code applicable to regulated investment companies and to distribute to shareholders each year substantially all of its income. Accordingly, no provisions for federal tax are necessary. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS -- The Fund may engage in when-issued or delayed delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked to market daily and begin earning interest on the settlement date. RESTRICTED SECURITIES -- Restricted securities are securities that may only be resold upon registration under federal securities laws or in transactions exempt from such registration. In some cases, the issuer of restricted securities has agreed to register such securities for resale, at the issuer's expense either upon demand by the Fund or in connection with another registered offering of the securities. Many restricted securities may be resold in the secondary market in transactions exempt from registration. Such restricted securities may be determined to be liquid under criteria established by the Board of Trustees (the "Trustees"). The Fund will not incur any registration costs upon such resales. The Fund's restricted securities are valued at amortized cost in accordance with Rule 2a-7 under the Act. Additional information on each restricted security held at April 30, 1997 is as follows: SECURITY ACQUISITION DATE ACQUISITION COST Clipper Connecticut Tax Exempt Trust 5/6/94 - 11/26/94 $10,694,376 Connecticut State HFA 6/13/96 4,195,000 USE OF ESTIMATES -- The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ from those estimated. OTHER -- Investment transactions are accounted for on the trade date. 3. SHARES OF BENEFICIAL INTEREST The Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest (without par value). At April 30, 1997, capital paid-in aggregated $235,232,356. Transactions in shares were as follows:
YEAR SIX MONTHS ENDED ENDED OCTOBER 31, APRIL 30, 1997 1996 Shares sold 433,136,717 636,539,589 Shares issued to shareholders in payment of distributions declared 1,056,454 2,096,326 Shares redeemed (426,049,558) (596,265,388) Net change resulting from share transactions (8,143,613) (42,370,527)
4. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES INVESTMENT ADVISORY FEE -- Federated Management, the Fund's investment adviser (the "Adviser"), receives for its services an annual investment advisory fee equal to 0.50% of the Fund's average daily net assets. The Adviser may voluntarily choose to waive any portion of its fee. The Adviser can modify or terminate this voluntary waiver at any time at its sole discretion. ADMINISTRATIVE FEE -- Federated Services Company ("FServ"), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. The fee paid to FServ is based on the level of average aggregate daily net assets of all funds advised by subsidiaries of Federated Investors for the period. The administrative fee received during the period of the Administrative Services Agreement shall be at least $125,000 per portfolio and $30,000 per each additional class of shares. SHAREHOLDER SERVICES FEE -- Under the terms of a Shareholder Services Agreement with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to 0.25% of average daily net assets of the Fund for the period. The fee paid to FSS is used to finance certain services for shareholders and to maintain shareholder accounts. FSS may voluntarily choose to waive any portion of its fee. FSS can modify or terminate this voluntary waiver at any time at its sole discretion. TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES -- FServ, through its subsidiary, Federated Shareholder Services Company ("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 April 30, 1997, the Fund engaged in purchase and sale transactions with funds that have a common investment adviser (or affiliated investment advisers), common Directors/Trustees, and/or common Officers. These purchase and sale transactions were made at current market value pursuant to Rule 17a-7 under the Act amounting to $181,413,125 and $198,715,000, 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 April 30, 1997, 59.9% of the securities in the portfolio of investments are backed by letters of credit or bond insurance of various financial institutions and financial guaranty assurance agencies. The percentage of investments insured by or supported (backed) by a letter of credit from any one institution or agency did not exceed 7.6% of total investments. TRUSTEES John F. Donahue Thomas G. Bigley John T. Conroy, Jr. William J. Copeland James E. Dowd Lawrence D. Ellis, M.D. Edward L. Flaherty, Jr. Glen R. Johnson Peter E. Madden Gregor F. Meyer John E. Murray, Jr. Wesley W. Posvar Marjorie P. Smuts OFFICERS John F. Donahue Chairman Glen R. Johnson President J. Christopher Donahue Executive Vice President Edward C. Gonzales Executive Vice President John W. McGonigle Executive Vice President, Treasurer, and Secretary Richard B. Fisher Vice President S. Elliott Cohan Assistant Secretary Mutual funds are not bank deposits or obligations, are not guaranteed by any bank, and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other government agency. Investment in mutual funds involves risk, including possible loss of principal. Although money market funds seek to maintain a stable net asset value of $1.00 per share, there is no assurance that they will be able to do so. This report is authorized for distribution to prospective investors only when preceded or accompanied by the fund's prospectus which contains facts concerning its objective and policies, management fees, expenses and other information. CONNECTICUT MUNICIPAL CASH TRUST SEMI-ANNUAL REPORT TO SHAREHOLDERS APRIL 30, 1997 [Graphic] Federated Investors Federated Securities Corp., Distributor Cusip 314229105 0052406 (6/97) PRESIDENT'S MESSAGE Dear Shareholder: I am pleased to present the Semi-Annual Report to Shareholders of Massachusetts Municipal Cash Trust, a portfolio of Federated Municipal Trust, which covers the six-month period from November 1, 1996, through April 30, 1997. The report begins with a discussion with the fund's portfolio manager, followed by a complete listing of the fund's holdings and its financial statements. Financial data is included for the fund's Institutional Service Shares and Boston 1784 Funds Shares (formerly, 1784 Funds Shares and prior to that, Bay Funds Shares). The fund is a convenient way to keep your ready cash pursuing double tax-free income -- free from federal regular income tax and Massachusetts state income tax* -- through a portfolio concentrated in high-quality, short-term Massachusetts municipal securities. At the end of the reporting period, the fund's holdings were diversified among issuers that use municipal bond financing for projects as varied as health care, housing, community development, and transportation. This double tax-free advantage means you have the opportunity to earn a greater after-tax yield than you could in a comparable high-quality taxable investment. Of course, the fund also brings you the added benefits of daily liquidity and stability of principal.** During the reporting period, the fund paid double tax-free dividends totaling $0.02 per share for Institutional Service Shares and $0.01 per share for Boston 1784 Funds Shares. The fund's total net assets stood at $214.4 million at the end of the reporting period. Thank you for relying on Massachusetts Municipal Cash Trust to help your ready cash pursue tax-free income every day. As always, we will continue to provide you with the highest level of professional service. We invite your questions or comments. Sincerely, [Graphic] Glen R. Johnson President June 15, 1997 * Income may be subject to the federal alternative minimum tax. ** Although money market funds seek to maintain a stable net asset value of $1.00 per share, there is no assurance that they will be able to do so. An investment in the fund is neither insured nor guaranteed by the U.S. government. INVESTMENT REVIEW An interview with the fund's portfolio manager, Mary Jo Ochson, CFA, Senior Vice President, Federated Management Q Can you comment on the economy and the interest rate environment during the six-month reporting period? A Although it did not occur until near the end of the fund's semi-annual reporting period, the Federal Reserve Board (the "Fed") brought about the first change in monetary policy in over a year. On March 25, 1997, the Fed, in the face of stronger than expected demand, voted to raise the federal funds target rate from 5.25% to 5.50%. The move was viewed as being pre-emptive against the threat of future inflationary pressures possibly brought about by tight labor market conditions. Until that point, movements in interest rates reflected shifting market sentiment about the need for the Fed to move to a more restrictive policy. As the reporting period began in November 1996, the economy had been showing signs of slowing, thereby allaying the market's fears about inflation. Then, in December, the market's uneasiness was once more ignited as a string of economic statistics showed stronger growth and Fed Chairman Alan Greenspan made cautionary statements regarding inflation and "irrational exuberance" in the equity market. With inflation still appearing to be benign, the market tolerated a steady pace of growth into early 1997. However, Chairman Greenspan's Humphrey-Hawkins testimony before Congress in late February marked a turning point for the short-term money markets -- indeed the bond and equity markets as well -- as his relatively hawkish statements revealed fears at the Fed that the transitory factors that had been keeping inflation under control in the face of fairly robust growth may be coming to an end. This statement by the Fed caused a sharp reversal in interest rate movement and the market's perception about future Fed policy. The ensuing weeks brought continued evidence of persistent strength, and culminated in the Fed's action at the Federal Open Market Committee in late March. For the first three months of the reporting period, short-term interest rates traded in a relatively narrow range as the continued friendly inflation picture provided some comfort to market participants. The yield on the six-month Treasury bill, for example, moved in a range between 5.20% and 5.35% from the beginning of November through early February. However, short-term interest rates began to rise in late February, and by the time of the Fed tightening in late March, had built in much of the expectations regarding the Fed decision. In April, the financial markets continued to focus on the likelihood of an additional tightening move later in May, causing short-term yields to rise even further. Yields on the six-month Treasury bill rose sharply over this interim period, moving from a low of 5.20% in mid-February to a high of 5.68% in late April before falling back to 5.53% by the end of reporting period. Q How has the fund's yield responded to this rate environment? A The yield of the fund followed the upward trend of interest rates. The seven-day net yield for the fund's Institutional Service Shares on April 30, 1997 was 3.48% compared to 3.01% six months ago.* The latest yield was the equivalent of a 5.76% taxable rate of return for investors in the highest federal tax bracket. Over the six-month reporting period the tax-exempt yield averaged 2.93%, which is equivalent to a pre-tax yield of 4.85% for those same investors. * Performance quoted represents past performance and is not indicative of future results. Yield will vary. The seven-day net yield is calculated daily, based on the income dividends for the seven days ending on the date of calculation and then compounded and annualized. For the Boston 1784 Funds Shares, the seven-day net yield on April 30, 1997 was 3.46% compared to 2.99% six months ago.* The latest yield was equivalent to a 5.73% pre-tax yield. The average tax-exempt yield over the period was 2.91%, which is comparable to a taxable yield of 5.72% for those investors in the highest federal tax bracket. Q What was your strategy for managing the fund over the reporting period? A The fund's average maturity at the beginning of the reporting period was approximately 61 days. As signs of strength in the economy became more apparent, and as expectations of an imminent Fed tightening grew in the first quarter of 1997, we lowered the average maturity target of the fund to between 40 and 50 days. At the end of the reporting period we stood at an average maturity of 48 days. By allowing the average maturity of the portfolio to roll inward from 61 days to a target range of 40 to 50 days, we were able to take advantage of higher interest rates going forward. Once an average maturity range is targeted, the portfolio attempts to maximize performance through ongoing relative value analysis. Relative value analysis includes the comparison of the richness or cheapness of municipal securities to one another as well as municipals to taxable instruments, such as treasury securities. The fund's portfolio remained barbelled in structure, which combined a significant portion in seven-day variable rate demand notes and short maturity commercial paper with purchases of longer-term, six- to twelve-month fixed rate notes. This portfolio structure continues to pursue a competitive yield over time. Q With one rate increase behind us, what is your outlook for the remainder of 1997? A Although the Fed decided to hold short-term interest rates steady in the March meeting, our expectations are that the Fed will find cause to tighten monetary policy further in 1997 -- perhaps as soon as in July. It is also anticipated that the overall tightening cycle will not be long in terms of magnitude or duration. The pre-emptive move by the Fed should help to preclude the need for more aggressive action down the road by preventing the build-up of inflationary pressures. We would look to see moderately higher short-term interest rates throughout the course of the year, but not to the extent evidenced in the last tightening cycle in 1994. As such, we will likely continue in our modestly defensive stance for the portfolio until market conditions indicate otherwise. * Performance quoted represents past performance and is not indicative of future results. Yield will vary. The seven-day net yield is calculated daily, based on the income dividends for the seven days ending on the date of calculation and then compounded and annualized. MASSACHUSETTS MUNICIPAL CASH TRUST PORTFOLIO OF INVESTMENTS APRIL 30, 1997 (UNAUDITED)
PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- 99.2% MASSACHUSETTS -- 97.6% $ 3,000,000 Amherst-Pelham Regional School District, MA, 4.09% BANs, 2/13/1998 $ 3,007,520 742,000 Ayer, MA, 4.875% Bonds (AMBAC INS), 8/15/1997 744,465 1,000,000 Barnstable, MA, 4.00% BANs, 10/23/1997 1,000,119 1,900,000 Boston, MA Water & Sewer Commission, General Revenue Bonds (1994 Series A) Weekly VRDNs (State Street Bank and Trust Co. LOC) 1,900,000 6,500,000 Chatham, MA, 4.00% BANs, 7/2/1997 6,502,602 3,000,000 Clinton, MA, 4.00% BANs, 11/21/1997 3,005,660 14,696,550 (b)Clipper, MA Tax Exempt Trust Weekly VRDNs (State Street Bank and Trust Co. LIQ) 14,696,550 3,465,000 (b)Clipper, MA Tax Exempt Trust, (Series 1993-1) Weekly VRDNs (State Street Bank and Trust Co. LIQ) 3,465,000 3,000,000 Commonwealth of Massachusetts Weekly VRDNs (AMBAC INS)/ (Citibank N.A., New York LIQ) 3,000,000 1,645,000 Commonwealth of Massachusetts, (Series B), 5.00% Bonds, 6/1/1997 1,646,628 3,200,000 Framingham, MA IDA Weekly VRDNs (Perini Corp)/(Barclays Bank PLC, London LOC) 3,200,000 3,000,000 Gloucester, MA, 3.85% BANs, 8/8/1997 3,001,018 5,400,000 Haverhill, MA, 4.50% BANs (Fleet National Bank, Providence, RI LOC), 8/1/1997 5,408,669 2,000,000 Massachusetts Bay Transit Authority, (Series C), 3.60% CP (Westdeutsche Landesbank Girozentrale LOC), Mandatory Tender 5/22/1997 2,000,000 2,000,000 Massachusetts Bay Transit Authority, (Series C), 3.80% CP (Westdeutsche Landesbank Girozentrale LOC), Mandatory Tender 5/21/1997 2,000,000 400,000 Massachusetts HEFA Weekly VRDNs (Harvard University) 400,000 16,500,000 Massachusetts HEFA, (Series A) Weekly VRDNs (Brigham & Women's Hospital)/(Sanwa Bank Ltd, Osaka LOC) 16,500,000
MASSACHUSETTS MUNICIPAL CASH TRUST
PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- CONTINUED MASSACHUSETTS -- CONTINUED $ 2,200,000 Massachusetts HEFA, (Series A) Weekly VRDNs (Endicott College)/ (BayBanks of Boston LOC) $ 2,200,000 3,225,000 Massachusetts HEFA, (Series A) Weekly VRDNs (New England Home For Little Wanderers)/(First National Bank of Boston, MA LOC) 3,225,000 2,300,000 Massachusetts HEFA, (Series B) Weekly VRDNs (Clark University)/ (Sanwa Bank Ltd., Osaka LOC) 2,300,000 2,300,000 Massachusetts HEFA, (Series E) Weekly VRDNs (Williams College, MA) 2,300,000 3,200,000 Massachusetts HEFA, (Series E) Daily VRDNs (Capital Asset Program)/(First National Bank of Chicago LOC) 3,200,000 7,200,000 Massachusetts HEFA, (Series F) Weekly VRDNs (Children's Hospital of Boston) 7,200,000 9,835,000 Massachusetts HEFA, (Series G) Weekly VRDNs (Massachusetts Institute of Technology) 9,835,000 2,025,000 Massachusetts HEFA, (Series I) Weekly VRDNs (Harvard University) 2,025,000 6,000,000 Massachusetts HEFA, 3.75% CP (Harvard University), Mandatory Tender 7/16/1997 6,000,000 6,000,000 Massachusetts HEFA, 3.80% CP (Harvard University), Mandatory Tender 5/1/1997 6,000,000 500,000 Massachusetts IFA Weekly VRDNs (Berkshire, MA School)/(National Westminster Bank, PLC, London LOC) 500,000 1,300,000 Massachusetts IFA Weekly VRDNs (Groton School)/(National Westminster Bank, PLC, London LOC) 1,300,000 1,700,000 Massachusetts IFA Weekly VRDNs (Hampshire College)/(National Westminster Bank, PLC, London LOC) 1,700,000 2,350,000 Massachusetts IFA Weekly VRDNs (Kendall Square Entity)/(State Street Bank and Trust Co. LOC) 2,350,000 1,910,000 Massachusetts IFA, (1995 Series A) Weekly VRDNs (Bradford College Issue)/(First National Bank of Boston, MA LOC) 1,910,000 300,000 Massachusetts IFA, (Series 1992) Weekly VRDNs (Holyoke Water Power Co.)/(Canadian Imperial Bank of Commerce, Toronto LOC) 300,000
MASSACHUSETTS MUNICIPAL CASH TRUST
PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- CONTINUED MASSACHUSETTS -- CONTINUED $ 3,300,000 Massachusetts IFA, (Series 1992A) Weekly VRDNs (Ogden Haverhill)/ (Union Bank of Switzerland, Zurich LOC) $ 3,300,000 5,000,000 Massachusetts IFA, (Series 1992B), 3.50% CP (New England Power Co.), Mandatory Tender 5/29/1997 5,000,000 6,000,000 Massachusetts IFA, (Series 1995) Weekly VRDNs (Goddard House)/ (Fleet Bank of New York LOC) 6,000,000 5,800,000 Massachusetts IFA, (Series 1995) Weekly VRDNs (Whitehead Institute for Biomedical Research) 5,800,000 7,200,000 Massachusetts IFA, (Series 1996) Weekly VRDNs (Newbury College)/ (BayBanks of Boston LOC) 7,200,000 1,525,000 Massachusetts IFA, (Series A) Weekly VRDNs (Hockomock YMCA)/ (Bank of Nova Scotia, Toronto LOC) 1,525,000 5,500,000 Massachusetts IFA, (Series B) Weekly VRDNs (Williston North Hampton School)/(National Westminster Bank, PLC, London LOC) 5,500,000 5,955,000 Massachusetts IFA, Revenue Bonds (Series 1995) Weekly VRDNs (Emerson College Issue)/(BayBanks of Boston LOC) 5,955,000 5,000,000 Massachusetts IFA, Revenue Bonds (Series 1995C) Weekly VRDNs (Edgewood Retirement Community Project)/(Dresdner Bank Ag, Frankfurt LOC) 5,000,000 1,600,000 Massachusetts Municipal Wholesale Electric Company, Power Supply System Revenue Bonds (1994 Series C) Weekly VRDNs (Canadian Imperial Bank of Commerce, Toronto LOC) 1,600,000 4,000,000 Massachusetts State HFA, (Series 50), 3.70% TOBs (Bayerische Landesbank Girozentrale INV), Mandatory Tender 6/2/1997 4,000,000 3,200,000 Massachusetts Water Resources Authority, (Series 1994), 3.40% CP (Morgan Guaranty Trust Co., New York LOC), Mandatory Tender 5/19/1997 3,200,000 2,000,000 Massachusetts Water Resources Authority, (Series 1994), 3.50% CP (Morgan Guaranty Trust Co., New York LOC), Mandatory Tender 7/16/1997 2,000,000 2,000,000 Medway, MA, 4.50% BANs, 6/13/1997 2,001,724 2,300,000 Melrose, MA, 4.25% BANs, 8/22/1997 2,301,719
MASSACHUSETTS MUNICIPAL CASH TRUST
PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- CONTINUED MASSACHUSETTS -- CONTINUED $ 3,080,000 Middleton, MA, 4.10% BANs, 9/5/1997 $ 3,082,058 1,665,400 Millbury, MA, 4.00% BANs, 11/14/1997 1,667,563 3,494,797 Milton, MA, 3.73% BANs, 12/16/1997 3,495,411 5,000,000 North Andover, MA, 4.00% BANs, 1/22/1998 5,010,523 3,773,100 North Andover, MA, 4.10% BANs, 9/11/1997 3,773,485 1,100,000 Rutland, MA, 4.10% BANs, 2/13/1998 1,102,507 2,500,000 Southborough, MA, 4.00% BANs, 2/6/1998 2,505,558 4,500,000 Springfield, MA, 4.50% BANs (Fleet National Bank, Providence, RI LOC), 6/27/1997 4,503,374 Total 209,347,153 PUERTO RICO -- 1.6% 3,500,000 Puerto Rico Industrial, Medical & Environmental PCA, (Series 1988), 3.70% CP (Inter American University of Puerto Rico)/(Bank of Tokyo- Mitsubishi Ltd. LOC), Mandatory Tender 7/24/1997 3,500,000 TOTAL INVESTMENTS (AT AMORTIZED COST)(C) $ 212,847,153
(a) The fund may only invest in securities rated in one of the two highest short-term rating categories by one or more 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 Ratings Group, MIG-1 or MIG-2 by Moody's Investors Service, Inc., or F-1+, F-1, and F-2 by Fitch Investors Service, Inc. are all considered rated in one of the two highest short-term rating categories. Securities rated in the highest short-term rating category (and unrated securities of comparable quality) are identified as First Tier securities. Securities rated in the second highest short-term rating category (and unrated securities of comparable quality) are identified as Second Tier securities. The fund follows applicable regulations in determining whether a security is rated and whether a security rated by multiple NRSROs in different rating categories should be identified as a First or Second Tier security. At April 30, 1997, the portfolio securities were rated as follows: Tier Rating Percent Based on Total Market Value (unaudited) FIRST TIER SECOND TIER 99.22% 0.78% (b) Denotes a restricted security which is subject to restrictions on resale under Federal Securities laws. At April 30, 1997, these securities amounted to $18,161,550 which represents 8.5% of net assets. (c) Also represents cost for federal tax purposes. Note: The categories of investments are shown as a percentage of net assets ($214,407,753) at April 30, 1997. The following acronyms are used throughout this portfolio: AMBAC -- American Municipal Bond Assurance Corporation BANs -- Bond Anticipation Notes CP -- Commercial Paper HEFA -- Health and Education Facilities Authority HFA -- Housing Finance Authority IDA -- Industrial Development Authority IFA -- Industrial Finance Authority INS -- Insured INV -- Investment Agreement LIQ -- Liquidity Agreement LOC -- Letter of Credit PCA -- Pollution Control Authority PLC -- Public Limited Company TOBs -- Tender Option Bonds VRDNs -- Variable Rate Demand Notes (See Notes which are an integral part of the Financial Statements) MASSACHUSETTS MUNICIPAL CASH TRUST STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1997 (UNAUDITED) ASSETS: Total investments in securities, at amortized cost and value $212,847,153 Cash 583,681 Income receivable 1,560,713 Total assets 214,991,547 LIABILITIES: Payable for shares redeemed $ 25,000 Income distribution payable 504,483 Accrued expenses 54,311 Total liabilities 583,794 NET ASSETS for 214,407,753 shares outstanding $214,407,753 NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE: INSTITUTIONAL SERVICE SHARES: $164,156,547 / 164,156,547 shares outstanding $1.00 BOSTON 1784 FUNDS SHARES: $50,251,206 / 50,251,206 shares outstanding $1.00
(See Notes which are an integral part of the Financial Statements) MASSACHUSETTS MUNICIPAL CASH TRUST STATEMENT OF OPERATIONS SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED) INVESTMENT INCOME: Interest $3,283,479 EXPENSES: Investment advisory fee $ 471,143 Administrative personnel and services fee 76,818 Custodian fees 8,996 Transfer and dividend disbursing agent fees and expenses 29,284 Sub-transfer agent fees -- Boston 1784 Funds Shares 5,313 Directors'/Trustees' fees 1,654 Auditing fees 6,839 Legal fees 2,222 Portfolio accounting fees 31,822 Shareholder services fee -- Institutional Service Shares 169,166 Shareholder services fee -- Boston 1784 Funds Shares 66,416 Share registration costs 14,156 Printing and postage 11,334 Insurance premiums 2,548 Miscellaneous 1,384 Total expenses 899,095 Waivers -- Waiver of investment advisory fee $(140,528) Waiver of shareholder services fee -- Institutional Service Shares (169,166) Waiver of shareholder services fee -- Boston 1784 Funds (66,416) Shares Total waivers (376,110) Net expenses 522,985 Net investment income $2,760,494
(See Notes which are an integral part of the Financial Statements) MASSACHUSETTS MUNICIPAL CASH TRUST STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED (UNAUDITED) YEAR ENDED APRIL 30, OCTOBER 31, 1997 1996 INCREASE (DECREASE) IN NET ASSETS: OPERATIONS -- Net investment income $ 2,760,494 $ 5,167,035 DISTRIBUTIONS TO SHAREHOLDERS -- Distributions from net investment income Institutional Service Shares (1,988,395) (3,622,277) Boston 1784 Funds Shares (772,099) (1,544,758) Change in net assets resulting from (2,760,494) (5,167,035) distributions to shareholders SHARE TRANSACTIONS -- Proceeds from sale of shares 346,743,377 533,103,977 Net asset value of shares issued to shareholders in payment of distributions declared 1,162,573 2,757,964 Cost of shares redeemed (307,904,518) (507,663,326) Change in net assets resulting from share 40,001,432 28,198,615 transactions Change in net assets 40,001,432 28,198,615 NET ASSETS: Beginning of period 174,406,321 146,207,706 End of period $ 214,407,753 $ 174,406,321
(See Notes which are an integral part of the Financial Statements) MASSACHUSETTS MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS -- INSTITUTIONAL SERVICE SHARES (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED (UNAUDITED) APRIL 30, YEAR ENDED OCTOBER 31, 1997 1996 1995 1994 1993 1992 1991 1990(A) NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 INCOME FROM INVESTMENT OPERATIONS Net investment income 0.02 0.03 0.03 0.02 0.02 0.03 0.05 0.03 LESS DISTRIBUTIONS Distributions from net investment income (0.02) (0.03) (0.03) (0.02) (0.02) (0.03) (0.05) (0.03) NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 TOTAL RETURN(B) 1.46% 3.07% 3.34% 2.14% 1.99% 2.87% 4.63% 2.59% RATIOS TO AVERAGE NET ASSETS Expenses 0.55%* 0.55% 0.55% 0.55% 0.53% 0.34% 0.30% 0.17%* Net investment income 2.93%* 3.02% 3.30% 2.12% 1.97% 2.82% 4.48% 5.66%* Expense waiver/ reimbursement(c) 0.40%* 0.42% 0.45% 0.35% 0.43% 0.55% 0.69% 0.57%* SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $164,156 $119,739 $99,628 $90,013 $84,524 $85,570 $81,681 $63,483
* Computed on an annualized basis. (a) Reflects operations for the period from May 18, 1990 (date of initial public investment) to October 31, 1990. (b) Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable. (c) This voluntary expense decrease is reflected in both the expense and net investment income ratios shown above. (See Notes which are an integral part of the Financial Statements) MASSACHUSETTS MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS -- BOSTON 1784 FUNDS SHARES (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED (UNAUDITED) APRIL 30, YEAR ENDED OCTOBER 31, 1997 1996 1995 1994 1993(A) NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 INCOME FROM INVESTMENT OPERATIONS Net investment income 0.01 0.03 0.03 0.02 0.01 LESS DISTRIBUTIONS Distributions from net investment income (0.01) (0.03) (0.03) (0.02) (0.01) NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 TOTAL RETURN(B) 1.45% 3.05% 3.30% 2.05% 1.25% RATIOS TO AVERAGE NET ASSETS Expenses 0.57%* 0.58% 0.60% 0.64% 0.65%* Net investment income 2.91%* 3.01% 3.25% 2.09% 1.85%* Expense waiver/reimbursement(c) 0.40%* 0.42% 0.45% 0.35% 0.43%* SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $50,251 $54,667 $46,580 $41,912 $18,143
* Computed on an annualized basis. (a) Reflects operations for the period from March 8, 1993 (date of initial public investment) to October 31, 1993. (b) Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable. (c) This voluntary expense decrease is reflected in both the expense and net investment income ratios shown above. (See Notes which are an integral part of the Financial Statements) MASSACHUSETTS MUNICIPAL CASH TRUST NOTES TO FINANCIAL STATEMENTS APRIL 30, 1997 (UNAUDITED) 1. ORGANIZATION Federated Municipal Trust (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act") as an open-end, management investment company. The Trust consists of sixteen portfolios. The financial statements included herein are only those of Massachusetts Municipal Cash Trust (the "Fund"). The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. The Fund offers two classes of shares: Institutional Service Shares and Boston 1784 Funds Shares (formerly, 1784 Funds Shares and prior to that, Bay Funds Shares). The investment objective of the Fund is to provide current income exempt from federal regular income tax and Massachusetts state income tax consistent with stability of principal. 2. SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with generally accepted accounting principles. INVESTMENT VALUATIONS -- The Fund's use of the amortized cost method to value its portfolio securities is in accordance with Rule 2a-7 under the Act. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS -- Interest income and expenses are accrued daily. Bond premium and discount, if applicable, are amortized as required by the Internal Revenue Code, as amended (the "Code"). Distributions to shareholders are recorded on the ex-dividend date. FEDERAL TAXES -- It is the Fund's policy to comply with the provisions of the Code applicable to regulated investment companies and to distribute to shareholders each year substantially all of its income. Accordingly, no provisions for federal tax are necessary. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS -- The Fund may engage in when-issued or delayed delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked to market daily and begin earning interest on the settlement date. RESTRICTED SECURITIES -- Restricted securities are securities that may only be resold upon registration under federal securities laws or in transactions exempt from such registration. Many restricted securities may be resold in the secondary market in transactions exempt from registration. In some cases, the restricted securities may be resold without registration upon exercise of a demand feature. Such restricted securities may be determined to be liquid under criteria established by the Board of Trustees (the "Trustees"). The Fund will not incur any registration costs upon such resales. Restricted securities are valued at amortized cost in accordance with Rule 2a-7 under the Act. Additional information on each restricted security held at April 30, 1997 is as follows:
SECURITY ACQUISITION DATE ACQUISITION COST Clipper, MA Tax Exempt Trust Weekly 5/15/95-3/13/97 $14,696,550 VRDN's Clipper, MA Tax Exempt Trust, (Series 1993-1) Weekly VRDN's 6/30/95 $ 3,465,000
USE OF ESTIMATES -- The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ from those estimated. OTHER -- Investment transactions are accounted for on the trade date. 3. SHARES OF BENEFICIAL INTEREST The Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest (without par value) for each class of shares. At April 30, 1997, capital paid-in aggregated $214,407,753. Transactions in shares were as follows:
SIX-MONTHS YEAR ENDED ENDED APRIL 30, OCTOBER 31, INSTITUTIONAL SERVICE SHARES 1997 1996 Shares sold 329,987,446 489,456,450 Shares issued to shareholders in payment of distributions declared 524,602 1,214,590 Shares redeemed (286,094,346) (470,559,983) Net change resulting from Institutional Service Share transactions 44,417,702 20,111,057 SIX-MONTHS YEAR ENDED ENDED APRIL 30, OCTOBER 31, BOSTON 1784 FUND SHARES 1997 1996 Shares sold 16,755,931 43,647,527 Shares issued to shareholders in payment of distributions declared 637,971 1,543,374 Shares redeemed (21,810,172) (37,103,343) Net change resulting from Boston 1784 Funds Share transactions (4,416,270) 8,087,558 Net change resulting from share transactions 40,001,432 28,198,615
4. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES INVESTMENT ADVISORY FEE -- Federated Management, the Fund's investment adviser (the "Adviser"), receives for its services an annual investment advisory fee equal to 0.50% of the Fund's average daily net assets. The Adviser may voluntarily choose to waive any portion of its fee. The Adviser can modify or terminate this voluntary waiver at any time at its sole discretion. ADMINISTRATIVE FEE -- Federated Services Company ("FServ"), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. The fee paid to FServ is based on the level of average aggregate daily net assets of all funds advised by subsidiaries of Federated Investors for the period. The administrative fee received during the period of the Administrative Services Agreement shall be at least $125,000 per portfolio and $30,000 per each additional class of shares. SHAREHOLDER SERVICES FEE -- Under the terms of a Shareholder Services Agreement with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to 0.25% of average daily net assets of the Institutional Service Shares for the period. Under the terms of a Shareholder Services Agreement with Bank Boston, N.A., the Fund will pay Bank Boston, N.A., up to 0.25% of average daily net assets of Boston 1784 Funds Shares for the period. These fees are used to finance certain services for shareholders and to maintain shareholder accounts. FSS and Bank Boston, N.A. may voluntarily choose to waive any portion of their fees. FSS and Bank Boston, N.A. can modify or terminate these voluntary waivers at any time at their 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 April 30, 1997, 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 $149,596,550 and $129,860,000, 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 April 30, 1997, 48.0% of the securities in the portfolio of investments are backed by letters of credit or bond insurance of various financial institutions and financial guaranty assurance agencies. The percentage of investments insured by or supported (backed) by a letter of credit from any one institution or agency did not exceed 8.8% of total investments. TRUSTEES John F. Donahue Thomas G. Bigley John T. Conroy, Jr. William J. Copeland James E. Dowd Lawrence D. Ellis, M.D. Edward L. Flaherty, Jr. Glen R. Johnson Peter E. Madden Gregor F. Meyer John E. Murray, Jr. Wesley W. Posvar Marjorie P. Smuts OFFICERS John F. Donahue Chairman Glen R. Johnson President J. Christopher Donahue Executive Vice President Edward C. Gonzales Executive Vice President John W. McGonigle Executive Vice President, Treasurer, and Secretary Richard B. Fisher Vice President S. Elliott Cohan Assistant Secretary Mutual funds are not bank deposits or obligations, are not guaranteed by any bank, and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other government agency. Investment in mutual funds involves investment risk, including possible loss of principal. Although money market funds seek to maintain a stable net asset value of $1.00 per share, there is no assurance that they will be able to do so. This report is authorized for distribution to prospective investors only when preceded or accompanied by the fund's prospectus which contains facts concerning its objective and policies, management fees, expenses and other information. MASSACHUSETTS MUNICIPAL CASH TRUST SEMI-ANNUAL REPORT TO SHAREHOLDERS APRIL 30, 1997 INSTITUTIONAL SERVICE SHARES BOSTON 1784 FUNDS SHARES (FORMERLY, 1784 FUNDS SHARES AND PRIOR TO THAT, BAYFUNDS SHARES) [Graphic] Investment Adviser Federated Securities Corp., Distributor 314229832 314229303 Z00326 1052806 (6/97) PRESIDENT'S MESSAGE Dear Shareholder: I am pleased to present the Semi-Annual Report to Shareholders of Minnesota Municipal Cash Trust, a portfolio of Federated Municipal Trust, which covers the six-month period from November 1, 1996, through April 30, 1997. The report begins with a discussion with the fund's portfolio manager, followed by a complete listing of the fund's holdings and its financial statements. Financial highlights tables are provided for the fund's Institutional Shares and Cash Series Shares. The fund is a convenient way to keep your ready cash pursuing double tax-free income -- free from federal regular income tax and Minnesota personal income tax* -- through a portfolio concentrated in high-quality, short-term Minnesota municipal securities. At the end of the reporting period, the fund's holdings were diversified among issuers that use municipal bond financing for projects as varied as health care, housing, community development, and transportation. This double tax-free advantage means you have the opportunity to earn a greater after-tax yield than you could in a comparable high-quality taxable investment. Of course, the fund also brings you the added benefits of daily liquidity and stability of principal.** During the reporting period, the fund paid double tax-free dividends totaling $0.02 per share for Institutional Shares and $0.01 per share for Cash Series Shares. The fund's net assets stood at $410.7 million at the end of the reporting period. Thank you for relying on Minnesota Municipal Cash Trust to help your ready cash pursue tax-free income every day. As always, we will continue to provide you with the highest level of professional service. We invite your questions or comments. Sincerely, [Graphic] Glen R. Johnson President June 15, 1997 * Income may be subject to the federal alternative minimum tax. ** Although money market funds seek to maintain a stable net asset value of $1.00 per share, there is no assurance that they will be able to do so. An investment in the fund is neither insured nor guaranteed by the U.S. government. INVESTMENT REVIEW An interview with the fund's portfolio manager, Mary Jo Ochson, CFA, Senior Vice President, Federated Management Q Can you comment on the economy and the interest rate environment during the six-month period? A Although it did not occur until near the end of the fund's semi-annual reporting period, the Federal Reserve Board (the "Fed") brought about the first change in monetary policy in over a year. On March 25, 1997, the Fed, in the face of stronger than expected demand, voted to raise the federal funds target rate from 5.25% to 5.50%. The move was viewed as being pre-emptive against the threat of future inflationary pressures possibly brought about by tight labor market conditions. Until that point, movements in interest rates reflected shifting market sentiment about the need for the Fed to move to a more restrictive policy. As the reporting period began in November 1996, the economy had been showing signs of slowing, thereby allaying the market's fears about inflation. Then, in December, the market's uneasiness was once more ignited as a string of economic statistics showed stronger growth and Fed Chairman Alan Greenspan made cautionary statements regarding inflation and "irrational exuberance" in the equity market. With inflation still appearing to be benign, the market tolerated a steady pace of growth into early 1997. However, Chairman Greenspan's Humphrey-Hawkins testimony before Congress in late February marked a turning point for the short-term money markets -- indeed the bond and equity markets as well -- as his relatively hawkish statements revealed fears at the Fed that the transitory factors that had been keeping inflation under control in the face of fairly robust growth may be coming to an end. This statement by the Fed caused a sharp reversal in interest rate movement and the market's perception about future Fed policy. The ensuing weeks brought continued evidence of persistent strength, and culminated in the Fed's action at the Federal Open Market Committee in late March. For the first three months of the reporting period, short-term interest rates traded in a relatively narrow range as the continued friendly inflation picture provided some comfort to market participants. The yield on the six-month Treasury bill, for example, moved in a range between 5.20% and 5.35% from the beginning of November through early February. However, short-term interest rates began to rise in late February, and by the time of the Fed tightening in late March, had built in much of the expectations regarding the Fed decision. In April, the financial markets continued to focus on the likelihood of an additional tightening move later in May, causing short-term yields to rise even further. Yields on the six-month Treasury bill rose sharply over this interim period moving from a low of 5.20% in mid-February to a high of 5.68% in late April before falling back to 5.53% by the end of reporting period. Q How has the fund's yield responded to this rate environment? A The yield of the fund followed the upward trend of interest rates. The seven-day net yield for the funds' Institutional Shares on April 30, 1997 was 4.06% compared to 3.41% six months ago.* The latest yield was the equivalent of a 6.72% taxable rate of return for investors in the highest federal tax bracket. Over the six-month reporting period the tax-exempt yield averaged 3.30%, which is equivalent to a pre-tax yield of 5.46% for those same investors. For the Cash Series Shares, the seven-day net yield on April 30, 1997, was 3.56% compared to 2.91% six months ago.* The latest yield was equivalent to a 5.89% pre-tax yield. The average tax-exempt yield over the period was 2.80%, which is comparable to a taxable yield of 4.64% for those investors in the highest federal tax bracket. Q What was your strategy for managing the fund over the period? A The fund's average maturity at the beginning of the reporting period was around 48 days. As signs of strength in the economy became more apparent, and as expectations of an imminent Fed tightening increased in the first quarter of 1997, the fund's average maturity remained in the 40-50 day range. We used this neutral portfolio target while participating in the Minnesota fixed rate note season. We took advantage of its attractive yields in early 1996. At the end of the reporting period the fund stood at an average maturity of 49 days. Q With one rate increase behind us, what is your outlook for the remainder of 1997? A Although the Fed decided to hold short-term interest rates steady in the March meeting, our expectations are that the Fed will find cause to tighten monetary policy further in 1997 -- perhaps as soon as in July. It is also anticipated that the overall tightening cycle will not be long in terms of magnitude or duration. The pre-emptive move by the Fed should help to preclude the need for more aggressive action down the road by preventing the build-up of inflationary pressures. We would look to see moderately higher short-term interest rates throughout the course of the year, but not to the extent evidenced in the last tightening cycle in 1994. As such, we will likely continue in our modestly defensive stance for the portfolio until market conditions indicate otherwise. * Performance quoted represents past performance and is not indicative of future results. Yield will vary. The seven-day net yield is calculated daily, based on the income dividends for the seven days ending on the date of calculation and then compounded and annualized. MINNESOTA MUNICIPAL CASH TRUST PORTFOLIO OF INVESTMENTS APRIL 30, 1997 (UNAUDITED)
PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- 99.6% MINNESOTA -- 99.6% $ 6,000,000 Anoka City, MN Solid Waste Disposal Authority, 3.85% CP (United Power Associates)/(National Rural Utilities Cooperative Finance Corp. GTD), Mandatory Tender 7/18/1997 $ 6,000,000 2,050,000 Anoka, MN, Multifamily Housing Revenue Bonds Weekly VRDNs (Walker Plaza Project)/(First Bank N.A., Minneapolis LOC) 2,050,000 3,785,000 Apple Valley, MN, IDRB (Series 1995) Weekly VRDNs (AV Development Company Project)/(Firstar Bank, Minnesota LOC) 3,785,000 2,355,000 Baudette, MN, IDR (Series 1989) Weekly VRDNs (Reid Powell, Inc.)/ (NationsBank, South LOC) 2,355,000 2,000,000 Becker, MN, PCR (Series 1993-B), 3.35% CP (Northern States Power Co.), Mandatory Tender 5/12/1997 2,000,000 6,700,000 Becker, MN, PCR (Series 1993A & B), 3.40% CP (Northern States Power Co.), Mandatory Tender 6/11/1997 6,700,000 4,000,000 Becker, MN, PCR (Series 1993A & B), 3.80% CP (Northern States Power Co.), Mandatory Tender 8/22/1997 4,000,000 500,000 Beltrami County, MN, Environmental Control Authority Daily VRDNs (Northwood Panelboard Co.)/(Union Bank of Switzerland, Zurich LOC) 500,000 1,400,000 Beltrami County, MN, Environmental Control Authority, (Series 1995) Daily VRDNs (Northwood Panelboard Co.)/(Union Bank of Switzerland, Zurich LOC) 1,400,000 2,855,000 Blaine, MN, Industrial Development Revenue Bonds (Series 1996) Weekly VRDNs (S & S of Minnesota, LLC Project)/(Norwest Bank Minnesota, Minneapolis LOC) 2,855,000 3,000,000 Bloomington, MN Port Authority, Special Tax Revenue Refunding Bonds (Series 1994B) Weekly VRDNs (Mall of America)/(FSA INS)/ (Credit Local de France LIQ) 3,000,000 2,000,000 Bloomington, MN Port Authority, Special Tax Revenue Refunding Bonds (Series 1996B) Weekly VRDNs (Mall of America)/(FSA INS)/ (Credit Local de France LIQ) 2,000,000
MINNESOTA MUNICIPAL CASH TRUST
PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- CONTINUED MINNESOTA -- CONTINUED $ 3,300,000 Bloomington, MN, IDRB (Series 1995) Weekly VRDNs (Now Technologies, Inc. Project)/(Norwest Bank Minnesota, Minneapolis LOC) $ 3,300,000 5,000,000 Bloomington, MN, Multifamily Housing Weekly VRDNs (Crow/ Bloomington Apartments)/(Citibank N.A., New York LOC) 5,000,000 4,180,000 Burnsville, MN, Adjustable Rate IDRB (Series 1996) Weekly VRDNs (Caire, Inc. Project)/(Bank One, Milwaukee, WI N.A. LOC) 4,180,000 7,975,000 Burnsville, MN, Multifamily Housing Weekly VRDNs (Berkshire of Burnsville)/(Sumitomo Bank Ltd., Osaka LOC) 7,975,000 1,275,000 Chanhassen, MN IDA, (Series 1995) Weekly VRDNs (Building Management Group, L.L.C. Project)/(Norwest Bank Minnesota, Minneapolis LOC) 1,275,000 1,700,000 Chaska, MN, GO Refunding Bonds of 1996, 3.80% Bonds, 12/1/1997 1,698,249 5,000,000 Cloquet, MN, Industrial Facilities Revenue Bonds (Series 1996A) Weekly VRDNs (Potlatch Corp.)/(Credit Suisse, Zurich LOC) 5,000,000 2,800,000 Coon Rapids, MN Hospital Authority, (Series 1985) Weekly VRDNs (Health Central System)/(First Bank N.A., Minneapolis LOC) 2,800,000 2,350,000 Cottage Grove, MN, IDR Refunding Bonds (Series 1995) Weekly VRDNs (Supervalu Inc.)/(Wachovia Bank of Georgia N.A., Atlanta LOC) 2,350,000 5,300,000 Crystal, MN IDA Weekly VRDNs (Crystal Gallery Mall, MN)/ (Citibank N.A., New York LOC) 5,300,000 10,745,000 (b)Dakota County & Washington County MN Housing & Redevelopment Authority, MERLOTS (Series J), 4.05% TOBs (United States Treasury COL)/(Corestates Bank N.A., Philadelphia, PA LIQ), Optional Tender 6/1/1997 10,745,000 1,555,000 (b)Dakota County, MN Housing & Redevelopment Authority, (Custodial Receipts), 4.00% TOBs (GNMA COL)/(Corestates Bank N.A., Philadelphia, PA LIQ), Optional Tender 9/1/1997 1,555,000 3,000,000 (b)Dakota County, Washington County & Anoka City, MN Housing & Redevelopment Authority, MERLOTS-Series H, 4.05% TOBs (United States Treasury COL)/(Corestates Bank N.A., Philadelphia, PA LIQ), Optional Tender 6/1/1997 3,000,000
MINNESOTA MUNICIPAL CASH TRUST
PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- CONTINUED MINNESOTA -- CONTINUED $ 9,525,000 Duluth, MN, GO Tax and Aid Anticipation Certificates of Indebtedness of 1997, 4.00% TANs, 12/31/1997 $ 9,543,430 8,000,000 Eagan, MN, Multifamily Housing (Series 1992A) Weekly VRDNs (Cinnamon Ridge)/(Mellon Bank N.A., Pittsburgh LOC) 8,000,000 835,000 Eden Prairie, MN IDA, #194 Weekly VRDNs (Richard W. Cohen Project)/(Norwest Bank Minnesota, Minneapolis LOC) 835,000 1,340,000 Eden Prairie, MN IDA, (Series 1996) Weekly VRDNs (Challenge Printing, Inc. Project)/(Norwest Bank Minnesota, Minneapolis LOC) 1,340,000 1,405,000 Eden Prairie, MN IDA, (Series 1995) Weekly VRDNs (Robert Lothenbach Project)/(Norwest Bank Minnesota, Minneapolis LOC) 1,405,000 1,025,000 Elk River, MN Weekly VRDNs (Tescom Project)/(Norwest Bank Minnesota, Minneapolis LOC) 1,025,000 2,945,000 Farmington, MN, (Series 1996) Weekly VRDNs (Lexington Standard Corporation Project)/(Norwest Bank Minnesota, Minneapolis LOC) 2,945,000 960,000 Foley, MN Independent School District No. 051, 3.84% TANs (Minnesota Tax and Aid Anticipation Borrowing Program GTD), 2/6/1998 961,349 3,300,000 (b)Forest Lake, MN, Series A, 4.00% TOBs (Allina Health System, MN), Optional Tender 7/1/1997 3,300,000 3,910,000 Fridley, MN, (Series 1984) Weekly VRDNs (River Road Investors Project)/(Citibank N.A., New York LOC) 3,910,000 10,600,000 Hennepin Co. MN, (Series 1995C) Weekly VRDNs (Hennepin Co. MN GTD) 10,600,000 5,550,000 Hennepin Co. MN, (Series 1996C) Weekly VRDNs (Hennepin Co. MN GTD) 5,550,000 5,500,000 Hubbard County, MN, Solid Waste Disposal (Series 1990) Weekly VRDNs (Potlatch Corp.)/(Credit Suisse, Zurich LOC) 5,500,000 3,205,000 Lakeville, MN ISD 194, (Series 1996), 3.90% TRANs, 9/30/1997 3,205,000 1,000,000 (b)MN Insured Municipal Securities Trust, Series 1996A, Floating Rate Certificates Weekly VRDNs (Eden Prairie MN, ISD 272)/(MBIA INS)/ (Norwest Bank Minnesota, Minneapolis LIQ) 1,000,000
MINNESOTA MUNICIPAL CASH TRUST
PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- CONTINUED MINNESOTA -- CONTINUED $ 1,125,000 (b)MN Insured Municipal Securities Trust, Series 1996B, Floating Rate Certificates Weekly VRDNs (Eden Prairie MN, ISD 272)/(MBIA INS)/ (Norwest Bank Minnesota, Minneapolis LIQ) $ 1,125,000 2,500,000 (b)MN Insured Municipal Securities Trust, Series 1996H, Floating Rate Certificates Weekly VRDNs (St. Louis Park, MN Health Care Facilities)/(AMBAC INS)/(Norwest Bank Minnesota, Minneapolis LIQ) 2,500,000 5,000,000 (b)MN Municipal Securities Trust, Series 1996F, Floating Rate Certificates Weekly VRDNs (Benedictine Health System) /(Norwest Bank Minnesota, Minneapolis LIQ) 5,000,000 4,000,000 (b)MN Municipal Securities Trust, Series 1996H, Floating Rate Certificates Weekly VRDNs (Rosemount, MN ISD 196)/(FSA INS)/ (Norwest Bank Minnesota, Minneapolis LIQ) 4,000,000 2,250,000 (b)MN Municipal Securities Trusts, Series 1996D, Floating Rate Certificates Weekly VRDNs (North St. Paul-Maplewood, MN ISD 622)/(Norwest Bank Minnesota, Minneapolis LIQ) 2,250,000 3,900,000 Maple Grove, MN IDA, (Series 1991A) Weekly VRDNs (Eagle Ridge, MN Apartments)/(Sumitomo Bank Ltd., Osaka LOC) 3,900,000 3,000,000 Maple Grove, MN IDA, (Series 1991B) Weekly VRDNs (Eagle Ridge, MN Apartments)/(Sumitomo Bank Ltd., Osaka LOC) 3,000,000 2,025,000 Maplewood, MN, Multifamily Housing (Series 1993) Weekly VRDNs (Silver Ridge Project)/(Federal Home Loan Bank of Chicago LOC) 2,025,000 2,580,000 Mendota Heights, MN, Multifamily Revenue Bonds Weekly VRDNs (Lexington Heights Apartments)/(Sumitomo Bank Ltd., Osaka LOC) 2,580,000 1,555,000 Minneapolis CDA, Refunding Revenue Bonds Weekly VRDNs (Riverplace Project (The Pinnacle Apartments))/(Sumitomo Bank Ltd., Osaka LOC) 1,555,000 700,000 Minneapolis, MN IDA Weekly VRDNs (JTJ Co.)/(First Bank N.A., Minneapolis LOC) 700,000 6,600,000 Minneapolis, MN, (Series 1995B) Weekly VRDNs 6,600,000 7,000,000 Minneapolis, MN, Housing Development Revenue Refunding Bonds (Series 1988) Weekly VRDNs (Symphony Place) /(Citibank N.A., New York LOC) 7,000,000
MINNESOTA MUNICIPAL CASH TRUST
PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- CONTINUED MINNESOTA -- CONTINUED $ 1,000,000 Minneapolis, MN, Variable Rate Demand Commercial Development Revenue Refunding Bonds (Series 1996) Weekly VRDNs (WNB & Company Project)/(First Bank N.A., Minneapolis LOC) $ 1,000,000 1,000,000 Minneapolis, MN, Variable Rate Housing Revenue Bonds Weekly VRDNs (One Ten Grant Project)/(First Bank N.A., Minneapolis LOC) 1,000,000 11,000,000 Minneapolis, MN, Various Purpose Bonds (Series 1996) Weekly VRDNs (Bayerische Vereinsbank AG, Munich LIQ) 11,000,000 991,000 (b)Minneapolis/St. Paul MN Housing Finance Board, SFM Revenue Bonds, 4.20% TOBs (GNMA COL)/(Corestates Bank N.A., Philadelphia, PA LIQ), Optional Tender 8/1/1997 991,000 4,020,000 (b)Minneapolis/St. Paul MN Housing Finance Board, SFM Revenue Bonds, MERLOTS (Series D), 4.00% TOBs (GNMA COL)/(Corestates Bank N.A., Philadelphia, PA LIQ), Optional Tender 7/1/1997 4,020,000 8,000,000 Minnesota Agricultural and Economic Development Board, (Series 1996) Weekly VRDNs (Evangelical Lutheran Good Samaritan Society)/(Rabobank Nederland, Utrecht LOC) 8,000,000 8,000,000 Minnesota State Commissioner of Iron Range Resources & Rehabilitation, (Series 1991) Weekly VRDNs (Louisiana-Pacific Corp.)/ (Wachovia Bank of NC, N.A., Winston-Salem LOC) 8,000,000 775,000 Minnesota State HFA, Rental Housing (Series D), 4.15% Bonds (MBIA INS), 8/1/1997 775,557 10,900,000 Minnesota State HFA, Single Family Mortgage Bonds (Series J), 3.65% TOBs, Mandatory Tender 12/11/1997 10,900,000 10,305,000 Minnesota State HFA, Single Family Mortgage Bonds (Series K), 3.60% TOBs, Mandatory Tender 12/11/1997 10,305,000 3,800,000 Minnesota State Higher Education Coordinating Board, (Series 1992A) Weekly VRDNs (First Bank N.A., Minneapolis LIQ) 3,800,000 7,000,000 Minnesota State Higher Education Coordinating Board, 1992 (Series B) Weekly VRDNs (First Bank N.A., Minneapolis LIQ) 7,000,000 8,700,000 Minnesota State Higher Education Coordinating Board, 1992 (Series C) Weekly VRDNs (First Bank N.A., Minneapolis LIQ) 8,700,000
MINNESOTA MUNICIPAL CASH TRUST
PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- CONTINUED MINNESOTA -- CONTINUED $ 6,500,000 Minnesota State Higher Education Coordinating Board, 1992 (Series C) Weekly VRDNs (First Bank N.A., Minneapolis LIQ) $ 6,500,000 3,000,000 Minnesota State Higher Education Facility Authority, (Series Four-A2) Weekly VRDNs (University of St. Thomas) 3,000,000 5,000,000 Minnesota State, (Series A), 5.00% Bonds (AMBAC INS), 6/30/1997 5,010,489 1,000,000 Minnesota State, 6.60% Bonds, 8/1/1997 1,006,493 3,825,000 Minnesota State, GO State Various Purpose Bonds, 5.00% Bonds, 11/1/1997 3,847,829 5,000,000 Minnesota State, UT GO Refunding Bonds, 4.70% Bonds, 8/1/1997 5,012,967 2,000,000 Minnesota Tax and Aid Anticipation Borrowing Program, (Series B), 3.65% TANs (Minnesota Tax and Aid Anticipation Borrowing Program GTD), 3/10/1998 2,000,000 9,500,000 Minnesota Tax and Aid Anticipation Borrowing Program, Certificates of Participation, Aid Anticipation Series 1996A, 4.50% TANs (Minnesota Tax and Aid Anticipation Borrowing Program GTD), 8/19/1997 9,515,145 6,600,000 Minnesota Tax and Aid Anticipation Borrowing Program, Certificates of Participation, Aid Anticipation Series 1996B, 4.50% TANs (Minnesota Tax and Aid Anticipation Borrowing Program GTD), 9/9/1997 6,614,159 1,300,000 Minnetonka, MN, IDRB (Series 1996) Weekly VRDNs (PGI Cos., Inc.)/ (Norwest Bank Minnesota, Minneapolis LOC) 1,300,000 5,900,000 Minnetonka, MN, Multifamily Housing Revenue Refunding Bonds (Series 1995) Weekly VRDNs (Southampton Apartments Project (MN))/(National Bank of Canada, Montreal LOC) 5,900,000 1,300,000 New Brighton, MN, IDR Weekly VRDNs (Unicare Homes, Inc.)/ (Banque Paribas, Paris LOC) 1,300,000 1,000,000 New Hope, MN IDRB, (Series 1994) Weekly VRDNs (Gaines and Hanson Printing Co.)/(Norwest Bank Minnesota, Minneapolis LOC) 1,000,000 3,560,000 New Hope, MN Weekly VRDNs (Paddock Labs)/(First Bank N.A., Minneapolis LOC) 3,560,000
MINNESOTA MUNICIPAL CASH TRUST
PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- CONTINUED MINNESOTA -- CONTINUED $ 2,445,000 Olmsted County, MN Building Authority, Certificates of Participation Weekly VRDNs (Human Services Infrastructure)/(Toronto-Dominion Bank LOC) $ 2,445,000 1,800,000 Perham, MN IDA Weekly VRDNs (Land O' Lakes, Inc.)/(Rabobank Nederland, Utrecht LOC) 1,800,000 1,320,000 Plymouth, MN Weekly VRDNs (Nuaire, Inc.)/(Norwest Bank Minnesota, Minneapolis LOC) 1,320,000 4,000,000 Plymouth, MN, IDRB (Series 1994) Weekly VRDNs (Olympic Steel, Inc.)/(National City Bank, Cleveland, OH LOC) 4,000,000 1,180,000 Port of Austin, MN Weekly VRDNs (Mower House Color)/(Norwest Bank Minnesota, Minneapolis LOC) 1,180,000 750,000 Rogers, MN IDA Weekly VRDNs (Metal Sales Manufacturing Corp)/ (KeyBank, N.A. LOC) 750,000 2,750,000 Rogers, MN IDA, IDRB Weekly VRDNs (DAC Development, LLC Project)/(Norwest Bank Minnesota, Minneapolis LOC) 2,750,000 8,000,000 Shakopee, MN Hospital Finance Authority Weekly VRDNs (St. Francis Regional Medical Center)/(Citibank N.A., New York LOC) 8,000,000 1,450,000 (b)St. Cloud, MN Housing & Redevelopment Authority, Revenue Refunding Bonds (Series 1994A) Weekly VRDNs (Coborn's Incorporated Project)/(Norwest Bank Minnesota, Minneapolis LOC) 1,450,000 2,655,000 (b)St. Cloud, MN Housing & Redevelopment Authority, Revenue Refunding Bonds (Series 1994B) Weekly VRDNs (Coborn's Incorporated Project)/(Norwest Bank Minnesota, Minneapolis LOC) 2,655,000 4,800,000 St. Paul, MN Housing & Redevelopment Authority Weekly VRDNs (District Cooling St. Paul, Inc.)/(Credit Local de France LOC) 4,800,000 400,000 St. Paul, MN Housing & Redevelopment Authority Weekly VRDNs (United Way)/(First Bank N.A., Minneapolis LOC) 400,000 400,000 St. Paul, MN Housing & Redevelopment Authority, (Series 1994) Weekly VRDNs (Minnesota Children's Museum)/(First Bank N.A., Minneapolis LOC) 400,000
MINNESOTA MUNICIPAL CASH TRUST
PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- CONTINUED MINNESOTA -- CONTINUED $ 2,000,000 St. Paul, MN Housing & Redevelopment Authority, District Cooling Revenue Bonds (1995 Series I) Weekly VRDNs (Credit Local de France LOC) $ 2,000,000 9,600,000 St. Paul, MN Water Utility, Variable Rate Demand Water Revenue Bonds, Series 1994D Weekly VRDNs 9,600,000 1,000,000 Steele County, MN, IDRB (Series 1994) Weekly VRDNs (Blount, Inc.)/ (NationsBank, South LOC) 1,000,000 4,500,000 Stillwater, MN ISD #834, GO Obligation Aid Anticipation Certificates of Indebtedness (Series 1996), 4.10% TRANs (Minnesota Tax and Aid Anticipation Borrowing Program), 9/30/1997 4,502,648 3,855,000 Victoria, MN, IDRB, (Series 1996A) Weekly VRDNs (HEI, Inc. Project)/(Norwest Bank Minnesota, Minneapolis LOC) 3,855,000 1,330,000 Victoria, MN, Industrial Development Revenue Bonds, (Series 1996B) Weekly VRDNs (HEI, Inc. Project)/(Norwest Bank Minnesota, Minneapolis LOC) 1,330,000 12,795,000 Washington County, MN Housing & Redevelopment Authority, (Series 90) Weekly VRDNs (Granada Pond Apartments)/(Sumitomo Bank Ltd., Osaka LOC) 12,795,000 2,250,000 Wells, MN, 3.875% TOBs (Stokely, Inc.)/(Corestates Bank N.A., Philadelphia, PA LOC), Optional Tender 6/1/1997 2,250,000 7,440,000 White Bear Lake, MN Independent School District No. 624, GO Tax Anticipation Certificates, 3.75% TANs (Minnesota Tax and Aid Anticipation Borrowing Program)/(Minnesota Tax and Aid Anticipation Borrowing Program GTD), 3/3/1998 7,446,612 1,105,000 White Bear, MN Weekly VRDNs (Thermoform Plastic, Inc.)/(Norwest Bank Minnesota, Minneapolis LOC) 1,105,000
MINNESOTA MUNICIPAL CASH TRUST
PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- CONTINUED MINNESOTA -- CONTINUED $ 2,165,000 White Bear, MN, Variable Rate Demand Industrial Revenue Bonds Weekly VRDNs (N.A. Ternes Project)/(Firstar Bank, Minnesota LOC) $ 2,165,000 2,000,000 Winsted, MN IDA Weekly VRDNs (Sterner Lighting Systems)/(Fleet National Bank, Providence, RI LOC) 2,000,000 3,900,000 (b)Woodbury, MN, Series B, 4.00% TOBs (Allina Health System, MN), Optional Tender 7/1/1997 3,900,000 TOTAL INVESTMENTS (AT AMORTIZED COST)(C) $ 409,135,927
Securities that are subject to Alternative Minimum Tax represent 33.6% of the portfolio as calculated based upon total portfolio market value. (a) The fund may only invest in securities rated in one of the two highest short-term rating categories by one or more 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 Ratings Group, MIG-1, or MIG-2 by Moody's Investors Service, Inc., or F-1+, F-1, and F-2 by Fitch Investors Service, Inc. are all considered rated in one of the two highest short-term rating categories. Securities rated in the highest short-term rating category (and unrated securities of comparable quality) are identified as First Tier securities. Securities rated in the second highest short-term rating category (and unrated securities of comparable quality) are identified as Second Tier securities. The fund follows applicable regulations in determining whether a security is rated and whether a security rated by multiple NRSROs in different rating categories should be identified as a First or Second Tier security. At April 30, 1997, the portfolio securities were rated as follows: Tier Rating Percent Based on Total Market Value (unaudited) FIRST TIER SECOND TIER 100.00% 0.00% (b) Denotes a restricted security which is subject to restrictions on resale under Federal Securities laws. At April 30, 1997, these securities amounted to $47,491,000 which represents 11.6% of net assets. (c) Also represents cost for federal tax purposes. Note: The categories of investments are shown as a percentage of net assets ($410,712,588) at April 30, 1997. The following acronyms are used throughout this portfolio: AMBAC -- American Municipal Bond Assurance Corporation CDA -- Community Development Administration COL -- Collateralized CP -- Commercial Paper FSA -- Financial Security Assurance GNMA -- Government National Mortgage Association GO -- General Obligation GTD - -- Guaranty HFA -- Housing Finance Authority IDA -- Industrial Development Authority IDR -- Industrial Development Revenue IDRB -- Industrial Development Revenue Bond INS -- Insured ISD -- Independent School District LIQ -- Liquidity Agreement LOC -- Letter of Credit MBIA -- Municipal Bond Investors Assurance PCR -- Pollution Control Revenue SFM -- Single Family Mortgage TANs -- Tax Anticipation Notes TOBs -- Tender Option Bonds TRANs -- Tax and Revenue Anticipation Notes UT -- Unlimited Tax VRDNs -- Variable Rate Demand Notes (See Notes which are an integral part of the Financial Statements) MINNESOTA MUNICIPAL CASH TRUST STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1997 (UNAUDITED) ASSETS: Total investments in securities, at amortized cost and value $409,135,927 Income receivable 3,672,353 Total assets 412,808,280 LIABILITIES: Income distribution payable $1,212,017 Payable to Bank 789,249 Accrued expenses 94,426 Total liabilities 2,095,692 NET ASSETS for 410,712,588 shares outstanding $410,712,588 NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE: INSTITUTIONAL SHARES: $218,985,964 / 218,985,964 shares outstanding $1.00 CASH SERIES SHARES: $191,726,624 / 191,726,624 shares outstanding $1.00
(See Notes which are an integral part of the Financial Statements) MINNESOTA MUNICIPAL CASH TRUST STATEMENT OF OPERATIONS SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED) INVESTMENT INCOME: Interest $ 8,138,299 EXPENSES: Investment advisory fee $ 905,489 Administrative personnel and services fee 170,932 Custodian fees 22,664 Transfer and dividend disbursing agent fees and expenses 74,020 Directors'/Trustees' fees 2,511 Auditing fees 6,697 Legal fees 1,365 Portfolio accounting fees 50,793 Distribution services fee -- Cash Series Shares 573,675 Shareholder services fee -- Institutional Shares 279,093 Shareholder services fee -- Cash Series Shares 286,837 Share registration costs 11,791 Printing and postage 8,700 Insurance premiums 3,844 Miscellaneous 2,511 Total expenses 2,400,922 Waivers -- Waiver of investment advisory fee $ (575,409) Waiver of distribution services fee -- Cash Series Shares (286,837) Waiver of shareholder services fee -- Institutional Shares (279,093) Total waivers (1,141,339) Net expenses 1,259,583 Net investment income $ 6,878,716
(See Notes which are an integral part of the Financial Statements) MINNESOTA MUNICIPAL CASH TRUST STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED (UNAUDITED) YEAR ENDED APRIL 30, OCTOBER 31, 1997 1996 INCREASE (DECREASE) IN NET ASSETS: OPERATIONS -- Net investment income $ 6,878,716 $ 12,971,151 DISTRIBUTIONS TO SHAREHOLDERS -- Distributions from net investment income Institutional Shares (3,677,900) (7,706,768) Cash Series Shares (3,200,816) (5,264,383) Change in net assets resulting from distributions to shareholders (6,878,716) (12,971,151) SHARE TRANSACTIONS -- Proceeds from sale of shares 584,594,930 1,294,216,493 Net asset value of shares issued to shareholders in payment of distributions declared 2,721,164 5,465,115 Cost of shares redeemed (629,660,699) (1,190,487,756) Change in net assets resulting from share transactions (42,344,605) 109,193,852 Change in net assets (42,344,605) 109,193,852 NET ASSETS: Beginning of period 453,057,193 343,863,341 End of period $ 410,712,588 $ 453,057,193
(See Notes which are an integral part of the Financial Statements) MINNESOTA MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS -- INSTITUTIONAL SHARES (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED (UNAUDITED) APRIL 30, YEAR ENDED OCTOBER 31, 1997 1996 1995 1994 1993 1992 1991 1990(A) NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 INCOME FROM INVESTMENT OPERATIONS Net investment income 0.02 0.03 0.04 0.03 0.02 0.03 0.05 0.01 LESS DISTRIBUTIONS Distributions from net investment income (0.02) (0.03) (0.04) (0.03) (0.02) (0.03) (0.05) (0.01) NET ASSET VALUE, END OF $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 PERIOD TOTAL RETURN(B) 1.65% 3.49% 3.82% 2.58% 2.43% 3.19% 4.89% 0.90% RATIOS TO AVERAGE NET ASSETS Expenses 0.30%* 0.30% 0.30% 0.31% 0.31% 0.31% 0.30% 0.01%* Net investment income 3.29%* 3.43% 3.77% 2.55% 2.40% 3.10% 4.73% 6.45%* Expense waiver/ reimbursement(c) 0.50%* 0.51% 0.52% 0.34% 0.34% 0.33% 0.43% 0.69%* SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $218,986 $217,443 $212,392 $159,704 $165,865 $245,168 $124,603 $75,904
* Computed on an annualized basis. (a) Reflects operations for the period from September 10, 1990 (date of initial public investment) to October 31, 1990. (b) Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable. (c) This voluntary expense decrease is reflected in both the expense and net investment income ratios shown above. (See Notes which are an integral part of the Financial Statements) MINNESOTA MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS -- CASH SERIES SHARES (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED (UNAUDITED) APRIL 30, YEAR ENDED OCTOBER 31, 1997 1996 1995 1994 1993 1992 1991(A) NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 INCOME FROM INVESTMENT OPERATIONS Net investment income 0.01 0.03 0.03 0.02 0.02 0.03 0.04 LESS DISTRIBUTIONS Distributions from net investment income (0.01) (0.03) (0.03) (0.02) (0.02) (0.03) (0.04) NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 TOTAL RETURN(B) 1.40% 2.97% 3.41% 2.17% 2.02% 2.78% 3.60% RATIOS TO AVERAGE NET ASSETS Expenses 0.80%* 0.80% 0.70% 0.71% 0.71% 0.71% 0.64%* Net investment income 2.79%* 2.93% 3.37% 2.15% 2.01% 2.75% 4.11%* Expense waiver/reimbursement(c) 0.50%* 0.51% 0.62% 0.61% 0.44% 0.44% 0.59%* SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $191,727 $235,614 $131,471 $94,335 $67,521 $75,044 $69,747
* Computed on an annualized basis. (a) Reflects operations for the period from January 7, 1991 (date of initial public investment) to October 31, 1991. (b) Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable. (c) This voluntary expense decrease is reflected in both the expense and net investment income ratios shown above. (See Notes which are an integral part of the Financial Statements) MINNESOTA MUNICIPAL CASH TRUST NOTES TO FINANCIAL STATEMENTS APRIL 30, 1997 (UNAUDITED) 1. ORGANIZATION Federated Municipal Trust (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act") as an open-end, management investment company. The Trust consists of sixteen portfolios. The financial statements included herein are only those of Minnesota Municipal Cash Trust (the "Fund"). The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. The Fund offers two classes of shares: Institutional Shares and Cash Series Shares. The investment objective of the Fund is current income exempt from federal regular income tax and the regular personal income taxes imposed by the State of Minnesota consistent with stability of principal. 2. SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with generally accepted accounting principles. INVESTMENT VALUATIONS -- The Fund's use of the amortized cost method to value its portfolio securities is in accordance with Rule 2a-7 under the Act. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS -- Interest income and expenses are accrued daily. Bond premium and discount, if applicable, are amortized as required by the Internal Revenue Code, as amended (the "Code"). Distributions to shareholders are recorded on the ex-dividend date. FEDERAL TAXES -- It is the Fund's policy to comply with the provisions of the Code applicable to regulated investment companies and to distribute to shareholders each year substantially all of its income. Accordingly, no provisions for federal tax are necessary. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS -- The Fund may engage in when-issued or delayed delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked to market daily and begin earning interest on the settlement date. RESTRICTED SECURITIES -- Restricted securities are securities that may only be resold upon registration under federal securities laws or in transactions exempt from such registration. Many restricted securities may be resold in the secondary market in transactions exempt from registration. In some cases, the restricted securities may be resold without registration upon exercise of a demand feature. Such restricted securities may be determined to be liquid under criteria established by the Board of Trustees (the "Trustees"). The Fund will not incur any registration costs upon such resales. Restricted securities are valued at amortized cost in accordance with Rule 2a-7 under the Act. Additional information on each restricted security held at April 30, 1997 is as follows:
ACQUISITION ACQUISITION SECURITY DATE COST Dakota County & Washington County, MN Housing & Redevelopment Authority, MERLOTS (Series J) 03/01/97 $10,745,000 Dakota County, MN Housing & Redevelopment Authority 03/01/97 1,555,000 Dakota County, Washington County & Anoka City, MN Housing & Redevelopment Authority, MERLOTS - Series H 03/01/97 3,000,000 Forest Lake, MN, Series A 04/01/97 3,300,000 MN Insured Municipal Securities Trust, Series 1996A, Floating Rate Certificates (Eden Prairie MN, ISD 272) 02/01/96 1,000,000 MN Insured Municipal Securities Trust, Series 1996B, Floating Rate Certificates (Eden Prairie MN, ISD 272) 02/01/96 1,125,000 MN Insured Municipal Securities Trust, Series 1996H, Floating Rate Certificates (St. Louis Park, MN, Health Care Facilities) 03/29/96 2,500,000 MN Municipal Securities Trust, Series 1996F, Floating Rate Certificates (Benedictine Health System) 08/15/96 5,000,000 MN Municipal Securities Trust, Series 1996H, Floating Rate Certificates (Rosemount, MN ISD 196) 04/01/96 4,000,000 MN Municipal Securities Trusts, Series 1996D, Floating Rate Certificates (North St. Paul - Maplewood, MN ISD 622) 03/01/96 2,250,000 Minneapolis/St. Paul MN Housing Finance Board, SFM Revenue Bonds TOBs 11/01/96 991,000 Minneapolis/St. Paul MN Housing Finance Board, SFM Revenue Bonds, MERLOTS (Series D) 04/01/97 4,020,000 St. Cloud, MN Housing & Redevelopment Authority, Revenue Refunding Bonds (Series 1994A) 12/01/94 1,450,000 St. Cloud, MN Housing & Redevelopment Authority, Revenue Refunding Bonds (Series 1994B) 12/01/94 2,655,000 Woodbury, MN, Series B 04/01/97 3,900,000
USE OF ESTIMATES -- The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ from those estimated. OTHER -- Investment transactions are accounted for on the trade date. 3. SHARES OF BENEFICIAL INTEREST The Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest (without par value) for each class of shares. At April 30, 1997, capital paid-in aggregated $410,712,588. Transactions in shares were as follows:
SIX-MONTHS YEAR ENDED ENDED APRIL 30, OCTOBER 31, INSTITUTIONAL SHARES 1997 1996 Shares sold 290,947,827 547,719,129 Shares issued to shareholders in payment of distributions declared 101,010 301,311 Shares redeemed (289,505,917) (542,969,267) Net change resulting from Institutional Share transactions 1,542,920 5,051,173 SIX-MONTHS YEAR ENDED ENDED APRIL 30, OCTOBER 31, CASH SERIES SHARES 1997 1996 Shares sold 293,647,103 746,497,364 Shares issued to shareholders in payment of distributions declared 2,620,154 5,163,804 Shares redeemed (340,154,782) (647,518,489) Net change resulting from Cash Series Share transactions (43,887,525) 104,142,679 Net change resulting from share transactions (42,344,605) 109,193,852
4. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES INVESTMENT ADVISORY FEE -- Federated Management, the Fund's investment adviser (the "Adviser"), receives for its services an annual investment advisory fee equal to 0.40% of the Fund's average daily net assets. The Adviser may voluntarily choose to waive any portion of its fee. The Adviser can modify or terminate this voluntary waiver at any time at its sole discretion. ADMINISTRATIVE FEE -- Federated Services Company ("FServ"), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. The fee paid to FServ is based on the level of average aggregate daily net assets of all funds advised by subsidiaries of Federated Investors for the period. The administrative fee received during the period of the Administrative Services Agreement shall be at least $125,000 per portfolio and $30,000 per each additional class of shares. DISTRIBUTION SERVICES FEE -- The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund will compensate Federated Securities Corp. ("FSC"), the principal distributor, from the net assets of the Fund to finance activities intended to result in the sale of the Fund's Cash Series Shares. The Plan provides that the Fund may incur distribution expenses up to 0.50% of the average daily net assets of the Cash Series Shares, annually, to compensate FSC. FSC may voluntarily choose to waive any portion of its fee. FSC can modify or terminate this voluntary waiver at any time at its sole discretion. SHAREHOLDER SERVICES FEE -- Under the terms of a Shareholder Services Agreement with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to 0.25% of average daily net assets of each class of shares for the period. The fee paid to FSS is used to finance certain services for shareholders and to maintain shareholder accounts. FSS may voluntarily choose to waive any portion of its fee. FSS can modify or terminate this voluntary waiver at any time at its sole discretion. For the period ended April 30, 1997, the Institutional Shares fully waived its shareholder services fee. 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 April 30, 1997, 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 $273,766,130 and $291,745,000, 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 April 30, 1997, 62.4% of the securities in the portfolio of investments are backed by letters of credit or bond insurance of various financial institutions and financial guaranty assurance agencies. The percentage of investments insured by or supported (backed) by a letter of credit from any one institution or agency did not exceed 8.0% of total investments. TRUSTEES John F. Donahue Thomas G. Bigley John T. Conroy, Jr. William J. Copeland James E. Dowd Lawrence D. Ellis, M.D. Edward L. Flaherty, Jr. Glen R. Johnson Peter E. Madden Gregor F. Meyer John E. Murray, Jr. Wesley W. Posvar Marjorie P. Smuts OFFICERS John F. Donahue Chairman Glen R. Johnson President J. Christopher Donahue Executive Vice President Edward C. Gonzales Executive Vice President John W. McGonigle Executive Vice President, Treasurer, and Secretary Richard B. Fisher Vice President S. Elliott Cohan Assistant Secretary Mutual funds are not bank deposits or obligations, are not guaranteed by any bank, and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other government agency. Investment in mutual funds involves investment risk, including possible loss of principal. Although money market funds seek to maintain a stable net asset value of $1.00 per share, there is no assurance that they will be able to do so. This report is authorized for distribution to prospective investors only when preceded or accompanied by the fund's prospectus which contains facts concerning its objective and policies, management fees, expenses and other information. MINNESOTA MUNICIPAL CASH TRUST SEMI-ANNUAL REPORT TO SHAREHOLDERS APRIL 30, 1997 [Graphic] Federated Investors Federated Securities Corp., Distributor 314229873 314229402 1052807 (6/97) PRESIDENT'S MESSAGE Dear Shareholder: I am pleased to present the Semi-Annual Report to Shareholders of New Jersey Municipal Cash Trust, a portfolio of Federated Municipal Trust, which covers the six-month period from November 1, 1996, through April 30, 1997. The report begins with a discussion with the fund's portfolio manager, followed by a complete listing of the fund's holdings and its financial statements. Financial highlights tables are provided for the fund's Institutional Shares and Institutional Service Shares. The fund is a convenient way to keep your ready cash pursuing double tax-free income -- free from federal regular income tax and New Jersey state income tax* -- through a portfolio concentrated in high-quality, short-term New Jersey municipal securities. At the end of the reporting period, the fund's holdings were diversified among issuers that use municipal bond financing for projects as varied as health care, housing, community development, and transportation. This double tax-free advantage means you have the opportunity to earn a greater after-tax yield than you could in a comparable high-quality taxable investment. Of course, the fund also brings you the added benefits of daily liquidity and stability of principal.** During the reporting period, the fund paid double tax-free dividends totaling $0.02 per share for Institutional Shares and $0.01 per share for Institutional Service Shares. The fund's net assets stood at $157 million at the end of the reporting period. Thank you for relying on New Jersey Municipal Cash Trust to help your ready cash pursue tax-free income every day. As always, we will continue to provide you with the highest level of professional service. We invite your questions or comments. Sincerely, [Graphic] Glen R. Johnson President June 15, 1997 * Income may be subject to the federal alternative minimum tax. ** Although money market funds seek to maintain a stable net asset value of $1.00 per share, there is no assurance that they will be able to do so. An investment in the fund is neither insured nor guaranteed by the U.S. government. INVESTMENT REVIEW An interview with the fund's portfolio manager, Jeff A. Kozemchak, CFA, Vice President, Federated Management Q Can you comment on the economy and the interest rate environment during the six-month reporting period? A Although it did not occur until near the end of the fund's semi-annual reporting period, the Federal Reserve Board (the "Fed") brought about the first change in monetary policy in over a year. On March 25, 1997, the Fed, in the face of stronger than expected demand, voted to raise the federal funds target rate from 5.25% to 5.50%. The move was viewed as being pre-emptive against the threat of future inflationary pressures possibly brought about by tight labor market conditions. Until that point, movements in interest rates reflected shifting market sentiment about the need for the Fed to move to a more restrictive policy. As the reporting period began in November 1996, the economy had been showing signs of slowing, thereby allaying the market's fears about inflation. Then, in December, the market's uneasiness was once more ignited as a string of economic statistics showed stronger growth and Fed Chairman Alan Greenspan made cautionary statements regarding inflation and "irrational exuberance" in the equity market. With inflation still appearing to be benign, the market tolerated a steady pace of growth into early 1997. However, Chairman Greenspan's Humphrey-Hawkins testimony before Congress in late February marked a turning point for the short-term money markets -- indeed the bond and equity markets as well -- as his relatively hawkish statements revealed fears at the Fed that the transitory factors that had been keeping inflation under control in the face of fairly robust growth may be coming to an end. This statement by the Fed caused a sharp reversal in interest rate movement and the market's perception about the future Fed policy. The ensuing weeks brought continued evidence of persistent strength, and culminated in the Fed's action at the Federal Open Market Committee in late March. For the first three months of the reporting period, short-term interest rates traded in a relatively narrow range as the continued friendly inflation picture provided some comfort to market participants. The yield on the six-month Treasury bill, for example, moved in a range between 5.20% and 5.35% from the beginning of November through early February. However, short-term interest rates began to rise in late February, and by the time of the Fed tightening in late March, had built in much of the expectations regarding the Fed decision. In April, the financial markets continued to focus on the likelihood of an additional tightening move later in May, causing short-term yields to rise even further. Yields on the six-month Treasury bill rose sharply over this interim period, moving from a low of 5.20% in mid-February to a high of 5.68% in late April before falling back to 5.53% by the end of reporting period. Q What were your strategies for the fund during the period? A The fund's average maturity at the beginning of the reporting period was approximately 54 days, reflecting a neutral outlook on the direction of interest rates. As the signs of strength in the economy became more apparent, and as expectation of an imminent Fed tightening increased in the first quarter of 1997 we emphasized the purchase of shorter term fixed-rate paper while maintaining approximately 70% of the portfolio in seven-day variable rate demand notes ("VRDNs"). Seven-day VRDNs provide more portfolio responsiveness to interest rate increases. We are now targeting an average maturity range between 45 and 55 days. Once an average maturity range is targeted, the portfolio attempts to maximize performance through ongoing relative value analysis. Relative value analysis includes the comparison of the richness or cheapness of municipal securities to one another as well as municipals to taxable instruments, such as Treasury securities. The fund's portfolio remained barbelled in structure, which combined a significant portion in seven-day variable rate demand notes and short maturity commercial paper with purchases of longer-term, six- to twelve-month New Jersey fixed rate notes. This portfolio structure takes advantage of the steepness of the yield curve and continues to pursue a competitive yield over time. Q How has the fund's yield responded to this rate environment? A The fund's yield was affected by Fed policy (interest rate increases), changes in market expectations, as well as supply and demand imbalances unique to the municipal money markets. However, because of these imbalances the fund's yield may experience more volatility on a weekly basis than Treasury yields and taxable money fund yields. In general, yields on municipal money market funds rose over the reporting period. For the fund, the seven-day net yield of the Institutional Shares on April 30, 1997, was 3.65%, compared to 3.04% at the beginning of the reporting period.* For the Institutional Service Shares, the seven-day net yield was 3.55%, at the end of the reporting period compared to 2.94% six months ago.* Q Looking through 1997, what is your outlook for short-term rates? A Although the Fed decided to hold short-term interest rates steady in the March meeting, our expectations are that the Fed will find cause to tighten monetary policy further in 1997 -- perhaps as soon as in July. It is also anticipated that the overall tightening cycle will not be long in terms of magnitude or duration. The pre-emptive move by the Fed should help to preclude the need for more aggressive action down the road by preventing the build-up of inflationary pressures. We would look to see moderately higher short-term interest rates throughout the course of the year, but not to the extent evidenced in the last tightening cycle in 1994. As such, we will likely continue in our modestly defensive stance for the portfolio until market conditions indicate otherwise. * Performance quoted represents past performance and is not indicative of future results. Yield will vary. The seven-day net yield is calculated daily, based on the income dividends for the seven days ending on the date of calculation and then compounded and annualized. NEW JERSEY MUNICIPAL CASH TRUST PORTFOLIO OF INVESTMENTS APRIL 30, 1997 (UNAUDITED)
PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- 99.1% NEW JERSEY -- 99.1% $ 700,000 Atlantic County, NJ Improvement Authority Weekly VRDNs (Marine Midland Bank N.A., Buffalo, NY LOC) $ 700,000 1,255,000 Atlantic Highlands, NJ, 4.125% BANs, 12/29/1997 1,258,405 1,258,375 Berkeley Township, NJ, 4.25% BANs, 5/28/1997 1,258,688 1,625,000 Bordentown, NJ, 4.50% BANs, 6/24/1997 1,625,808 1,800,000 Camden County, NJ Improvement Authority, (Series 1995) Weekly VRDNs (Jewish Federation of Southern Jersey, Inc.)/(National Westminster Bank, PLC, London LOC) 1,800,000 4,900,000 (b)Camden County, NJ Improvement Authority, (Series 1996) Weekly VRDNs (Parkview Redevelopment Housing Project)/(General Electric Capital Corp. LOC) 4,900,000 2,925,000 Cape May, NJ, 4.00% BANs, 8/21/1997 2,926,740 4,940,000 (b)Clipper New Jersey Tax-Exempt Trust, (Series 1996-2) Weekly VRDNs (New Jersey Housing & Mortgage Financing Authority)/(MBIA Corporation INS)/(State Street Bank and Trust Co. LIQ) 4,940,000 1,099,900 Colts Neck Township, NJ, (Series 1997A), 4.00% BANs, 2/27/1998 1,102,495 950,000 Ewing Township, NJ, 3.90% BANs, 10/24/1997 951,347 1,256,000 Ewing Township, NJ, 4.25% BANs, 10/24/1997 1,258,321 929,740 Fairfield Township, NJ, 3.89% BANs, 11/6/1997 930,619 1,256,000 Green Township, NJ, 4.00% BANs, 1/22/1998 1,257,318 1,275,000 Hammonton, NJ, 4.00% BANs, 11/26/1997 1,277,108 1,041,378 High Bridge Borough, NJ, 4.50% BANs, 9/5/1997 1,043,118 3,884,515 Jefferson Township, NJ, (Series 1997A), 4.00% BANs, 2/20/1998 3,893,588 3,000,000 Lower Township, NJ, 4.50% BANs, 6/27/1997 3,001,574
NEW JERSEY MUNICIPAL CASH TRUST
PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- CONTINUED NEW JERSEY -- CONTINUED $ 3,835,500 Mahwah Township, NJ, 4.25% BANs, 8/22/1997 $ 3,839,490 1,800,000 Manchester Township, NJ, (Series 1996C), 4.25% BANs, 11/26/1997 1,804,961 1,000,000 Mercer County, NJ Improvement Authority Weekly VRDNs (Mercer County, NJ Pooled Governmental Loan Program)/ (Credit Suisse, Zurich LOC) 1,000,000 1,500,000 Middlesex County, NJ PCFA Weekly VRDNs (FMC Gold Co.)/ (Wachovia Bank of NC, NA, Winston-Salem LOC) 1,500,000 1,200,000 New Brunswick, NJ, 3.875% BANs, 12/23/1997 1,201,303 9,800,000 New Jersey EDA Weekly VRDNs (Center-For-Aging - Applewood Estates)/(Banque Paribas, Paris LOC) 9,800,000 2,500,000 New Jersey EDA Weekly VRDNs (Franciscan Oaks)/(Bank of Scotland, Edinburgh LOC) 2,500,000 5,468,000 New Jersey EDA Weekly VRDNs (Meridan Health Care)/(First National Bank of Maryland, Baltimore LOC) 5,468,000 4,173,000 New Jersey EDA Weekly VRDNs (Molins Machines)/(Nationsbank, N.A., Charlotte LOC) 4,173,000 1,075,000 New Jersey EDA Weekly VRDNs (Nash Group)/(Chase Manhattan Bank N.A., New York LOC) 1,075,000 5,200,000 New Jersey EDA Weekly VRDNs (YM-YWHA of Bergen County, NJ)/ (Bank of New York, New York LOC) 5,200,000 1,440,000 New Jersey EDA, (1994 Series A), 4.30% TOBs (A.F.L. Quality, Inc.)/ (Fleet Bank. N.A. LOC), Optional Tender 6/30/1997 1,440,000 500,000 New Jersey EDA, (1994 Series B), 4.30% TOBs (Two Univac, L.L.C.)/ (Fleet Bank. N.A. LOC), Optional Tender 6/30/1997 500,000 2,300,000 New Jersey EDA, (Series 1984) Weekly VRDNs (Burmah-Castrol Inc. Project)/(Barclays Bank PLC, London LOC) 2,300,000
NEW JERSEY MUNICIPAL CASH TRUST
PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- CONTINUED NEW JERSEY -- CONTINUED $ 4,100,000 New Jersey EDA, (Series 1985) Weekly VRDNs (Seton Co.)/(First Union National Bank, Charlotte, NC LOC) $ 4,100,000 4,000,000 New Jersey EDA, (Series 1986) Weekly VRDNs (Ridgefield Associates)/ (Bank of Tokyo-Mitsubishi Ltd. LOC) 4,000,000 300,000 New Jersey EDA, (Series 1987G) Weekly VRDNs (W.Y. Urban Renewal)/ (National Westminster Bank, PLC, London LOC) 300,000 2,100,000 New Jersey EDA, (Series 1988-F) Weekly VRDNs (Lamington Corners Associates)/(First Union National Bank, North LOC) 2,100,000 1,030,000 New Jersey EDA, (Series 1992 Z) Weekly VRDNs (West-Ward Pharmaceuticals)/(Banque Nationale de Paris LOC) 1,030,000 1,040,000 New Jersey EDA, (Series 1992D-1) Weekly VRDNs (Danlin Corp.)/ (Banque Nationale de Paris LOC) 1,040,000 2,105,000 New Jersey EDA, (Series 1992I-1) Weekly VRDNs (Geshem Realty)/ (Banque Nationale de Paris LOC) 2,105,000 335,000 New Jersey EDA, (Series 1992L) Weekly VRDNs (Kent Place School)/ (Banque Nationale de Paris LOC) 335,000 1,500,000 New Jersey EDA, (Series 1995) Weekly VRDNs (Filtra Corporation Project)/(Chase Manhattan Bank N.A., New York LOC) 1,500,000 5,300,000 New Jersey EDA, (Series 1995) Weekly VRDNs (Hillcrest Health Service System, Inc.)/(Industrial Bank of Japan Ltd., Tokyo LOC) 5,300,000 3,000,000 New Jersey EDA, (Series 1995) Weekly VRDNs (International Vitamin Corporation Project)/(National Westminster Bank, PLC, London LOC) 3,000,000 1,100,000 New Jersey EDA, (Series 1995) Weekly VRDNs (Manhattan Bagel Co., Inc.)/ (First Union National Bank, North LOC) 1,100,000 5,115,000 New Jersey EDA, (Series 1996) Weekly VRDNs (R. Realty Company)/ (First Union National Bank, Charlotte, NC LOC) 5,115,000
NEW JERSEY MUNICIPAL CASH TRUST
PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- CONTINUED NEW JERSEY -- CONTINUED $ 2,585,000 New Jersey EDA, (Series 1997) Weekly VRDNs (Wood Hollow Associates, L.L.C.)/(Corestates Bank N.A., Philadelphia, PA LOC) $ 2,585,000 2,165,000 New Jersey EDA, (Series A) Weekly VRDNs (325 Midland Avenue, LLC & Wearbest Sil-Tex, Ltd.)/(Bank of New York, New York LOC) 2,165,000 950,000 New Jersey EDA, (Series B) Weekly VRDNs (Greater Trenton CMHC, Inc.)/ (Corestates N.J. National Bank, Ewing Twp. LOC) 950,000 900,000 New Jersey EDA, (Series D-1) Weekly VRDNs (The Hibbert Company)/ (Corestates N.J. National Bank, Ewing Twp. LOC) 900,000 810,000 New Jersey EDA, (Series W) Weekly VRDNs (Datatec Industries, Inc.)/ (Banque Nationale de Paris LOC) 810,000 2,815,000 New Jersey EDA, Economic Development Bonds Weekly VRDNs (Atlantic States Cast Iron Pipe Company)/(Amsouth Bank N.A., Birmingham LOC) 2,815,000 1,300,000 New Jersey EDA, Economic Development Bonds, 1987 Project Weekly VRDNs (United Jewish Community of Bergen County)/(Bank of New York, New York LOC) 1,300,000 4,800,000 New Jersey EDA, Port Facility Revenue Bonds (Series 1983) Weekly VRDNs (Trailer Marine Transport Corporation)/(Chase Manhattan Bank N.A., New York LOC) 4,800,000 5,500,000 (b)New Jersey Housing & Mortgage Financing Authority, CDC Municipal Products Class A Certificates (Series 1996B) Weekly VRDNs (MBIA Corporation INS)/(CDC Municipal Products, Inc. LIQ) 5,500,000 2,500,000 New Jersey State, (Series 1997A), 3.55% CP (Union Bank of Switzerland, Zurich LIQ), Mandatory Tender 5/27/1997 2,500,000 4,000,000 New Jersey State, (Series 1997A), 3.70% CP (Union Bank of Switzerland, Zurich LIQ), Mandatory Tender 5/22/1997 4,000,000 1,250,000 Passaic County, NJ Utilities Authority, (Series 1996B), 3.95% BANs (MBIA Corporation INS), 9/3/1997 1,250,000 1,490,000 Pine Hill Borough, NJ, (Series A), 4.14% BANs, 8/7/1997 1,490,538 1,250,000 Pine Hill Borough, NJ, 3.99% BANs, 8/8/1997 1,250,130 1,135,873 Point Pleasant, NJ, 4.375% BANs, 10/3/1997 1,137,610
NEW JERSEY MUNICIPAL CASH TRUST
PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- CONTINUED NEW JERSEY -- CONTINUED $ 10,000,000 Port Authority of New York and New Jersey, (Series 1991-4) Weekly VRDNs $ 10,000,000 4,322,655 Washington Borough, NJ, 4.00% BANs, 12/12/1997 4,330,350 833,132 Washington Township, NJ, 4.25% BANs, 12/19/1997 835,410 TOTAL INVESTMENTS (AT AMORTIZED COST)(C) $ 155,570,921
Securities that are subject to Alternative Minimum Tax represent 29.6% of the portfolio as calculated based upon total portfolio market value. (a) The fund may only invest in securities rated in one of the two highest short-term rating categories by one or more 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 Ratings Group, MIG-1, or MIG-2 by Moody's Investors Service, Inc., or F-1+, F-1, and F-2 by Fitch Investors Service, Inc. are all considered rated in one of the two highest short-term rating categories. Securities rated in the highest short-term rating category (and unrated securities of comparable quality) are identified as First Tier securities. Securities rated in the second highest short-term rating category (and unrated securities of comparable quality) are identified as Second Tier securities. The fund follows applicable regulations in determining whether a security is rated and whether a security rated by multiple NRSROs in different rating categories should be identified as a First or Second Tier security. At January 31, 1997, the portfolio securities were rated as follows: Tier Rating Percent Based on Total Market Value FIRST TIER SECOND TIER 94.48% 5.52% (b) Denotes a restricted security which is subject to restrictions on resale under Federal Securities laws. At April 30, 1997, these securities amounted to $15,340,000 which represents 9.8% of net assets. (c) Also represents cost for federal tax purposes. Note: The categories of investments are shown as a percentage of net assets ($156,964,572) at April 30, 1997. The following acronyms are used throughout this portfolio: BANs -- Bond Anticipation Notes CP -- Commercial Paper EDA -- Economic Development Authority INS -- Insured LIQ -- Liquidity Agreement LOC -- Letter of Credit MBIA -- Municipal Bond Investors Assurance PCFA -- Pollution Control Finance Authority PLC -- Public Limited Company TOBs -- Tender Option Bonds VRDNs -- Variable Rate Demand Notes (See Notes which are an integral part of the Financial Statements) NEW JERSEY MUNICIPAL CASH TRUST STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1997 (UNAUDITED) ASSETS: Total investments in securities, at amortized cost and value $ 155,570,921 Cash 456,942 Income receivable 1,367,355 Total assets 157,395,218 LIABILITIES: Income distribution payable $ 400,719 Accrued expenses 29,927 Total liabilities 430,646 NET ASSETS for 156,964,572 shares outstanding $ 156,964,572 NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE: INSTITUTIONAL SHARES: $116,024,518 / 116,024,518 shares outstanding $1.00 INSTITUTIONAL SERVICE SHARES: $40,940,054 / 40,940,054 shares outstanding $1.00
(See Notes which are an integral part of the Financial Statements) NEW JERSEY MUNICIPAL CASH TRUST STATEMENT OF OPERATIONS SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED) INVESTMENT INCOME: Interest $ 2,876,345 EXPENSES: Investment advisory fee $ 320,869 Administrative personnel and services fee 76,819 Custodian fees 6,906 Transfer and dividend disbursing agent fees and expenses 22,513 Directors'/Trustees' fees 1,048 Auditing fees 7,136 Legal fees 4,649 Portfolio accounting fees 29,802 Distribution services fee -- Institutional Service Shares 15,324 Shareholder services fee -- Institutional Shares 162,261 Shareholder services fee -- Institutional Service Shares 38,309 Share registration costs 9,999 Printing and postage 7,289 Insurance premiums 3,124 Taxes 1,381 Miscellaneous 2,049 Total expenses 709,478 Waivers -- Waiver of investment advisory fee $ (88,970) Waiver of distribution services fee -- Institutional Service (15,324) Shares Waiver of shareholder services fee -- Institutional Shares (129,809) Waiver of shareholder services fee -- Institutional Service (15,324) Shares Total waivers (249,427) Net expenses 460,051 Net investment income $ 2,416,294
(See Notes which are an integral part of the Financial Statements) NEW JERSEY MUNICIPAL CASH TRUST STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED (UNAUDITED) YEAR ENDED APRIL 30, OCTOBER 31, 1997 1996 INCREASE (DECREASE) IN NET ASSETS: OPERATIONS -- Net investment income $ 2,416,294 $ 3,903,742 DISTRIBUTIONS TO SHAREHOLDERS -- Distributions from net investment income Institutional Shares (1,965,367) (3,146,674) Institutional Service Shares (450,927) (757,068) Change in net assets resulting from distributions to shareholders (2,416,294) (3,903,742) SHARE TRANSACTIONS -- Proceeds from sale of shares 259,544,342 416,887,554 Net asset value of shares issued to shareholders in payment of distributions declared 464,840 630,451 Cost of shares redeemed (247,573,501) (389,750,630) Change in net assets resulting from share transactions 12,435,681 27,767,375 Change in net assets 12,435,681 27,767,375 NET ASSETS: Beginning of period 144,528,891 116,761,516 End of period $ 156,964,572 $ 144,528,891
(See Notes which are an integral part of the Financial Statements) NEW JERSEY MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS -- INSTITUTIONAL SHARES (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED (UNAUDITED) APRIL 30, YEAR ENDED OCTOBER 31, 1997 1996 1995 1994 1993** 1992 1991(A) NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 INCOME FROM INVESTMENT OPERATIONS Net investment income 0.02 0.03 0.03 0.02 0.02 0.03 0.04 LESS DISTRIBUTIONS Distributions from net investment income (0.02) (0.03) (0.03) (0.02) (0.02) (0.03) (0.04) NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 TOTAL RETURN(B) 1.51% 3.17% 3.46% 2.26% 2.22% 2.96% 3.87% RATIOS TO AVERAGE NET ASSETS Expenses 0.55%* 0.55% 0.55% 0.54% 0.46% 0.45% 0.27%* Net investment income 3.03%* 3.13% 3.41% 2.22% 2.19% 2.86% 4.19%* Expense waiver/reimbursement(c) 0.31%* 0.37% 0.41% 0.39% 0.45% 0.51% 0.67%* SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $116,025 $115,722 $86,944 $62,984 $66,346 $57,657 $39,423
* Computed on an annualized basis. ** Prior to October 6, 1993, the fund provided three classes of shares. (a) Reflects operations for the period from December 13, 1990 (date of initial public investment) to October 31, 1991. (b) Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable. (c) This voluntary expense decrease is reflected in both the expense and net investment income ratios shown above. (See Notes which are an integral part of the Financial Statements) NEW JERSEY MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS -- INSTITUTIONAL SERVICE SHARES (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED (UNAUDITED) APRIL 30, YEAR ENDED OCTOBER 31, 1997 1996 1995 1994 1993 1992 1991(A) NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 INCOME FROM INVESTMENT OPERATIONS Net investment income 0.01 0.03 0.03 0.02 0.02 0.03 0.04 LESS DISTRIBUTIONS Distributions from net investment income (0.01) (0.03) (0.03) (0.02) (0.02) (0.03) (0.04) NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 TOTAL RETURN(B) 1.46% 3.07% 3.36% 2.16% 2.12% 2.86% 3.82% RATIOS TO AVERAGE NET ASSETS Expenses 0.65%* 0.65% 0.65% 0.65% 0.56% 0.55% 0.35%* Net investment income 2.94%* 3.03% 3.28% 2.19% 2.08% 2.69% 4.11%* Expense waiver/reimbursement(c) 0.31%* 0.37% 0.41% 0.41% 0.45% 0.51% 0.69%* SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $40,940 $28,807 $29,817 $36,704 $21,005 $26,844 $17,709
* Computed on an annualized basis. (a) Reflects operations for the period from December 13, 1990 (date of initial public investment) to October 31, 1991. (b) Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable. (c) This voluntary expense decrease is reflected in both the expense and net investment income ratios shown above. (See Notes which are an integral part of the Financial Statements) NEW JERSEY MUNICIPAL CASH TRUST NOTES TO FINANCIAL STATEMENTS APRIL 30, 1997 (UNAUDITED) 1. ORGANIZATION Federated Municipal Trust (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act") as an open-end, management investment company. The Trust consists of sixteen portfolios. The financial statements included herein are only those of New Jersey Municipal Cash Trust (the "Fund"). The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. The Fund offers two classes of shares: Institutional Shares and Institutional Service Shares. The investment objective of the Fund is current income exempt from federal regular income tax and New Jersey state income tax imposed upon non-corporate taxpayers consistent with stability of principal. 2. SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with generally accepted accounting principles. INVESTMENT VALUATIONS -- The Fund's use of the amortized cost method to value its portfolio securities is in accordance with Rule 2a-7 under the Act. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS -- Interest income and expenses are accrued daily. Bond premium and discount, if applicable, are amortized as required by the Internal Revenue Code, as amended (the "Code"). Distributions to shareholders are recorded on the ex-dividend date. FEDERAL TAXES -- It is the Fund's policy to comply with the provisions of the Code applicable to regulated investment companies and to distribute to shareholders each year substantially all of its income. Accordingly, no provisions for federal tax are necessary. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS -- The Fund may engage in when-issued or delayed delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked to market daily and begin earning interest on the settlement date. 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. RESTRICTED SECURITIES -- Restricted securities are securities that may only be resold upon registration under federal securities laws or in transactions exempt from such registration. Many restricted securities may be resold in the secondary market in transactions exempt from registration. In some cases, the restricted securities may be resold without registration upon exercise of a demand feature. Such restricted securities may be determined to be liquid under criteria established by the Board of Trustees (the "Trustees"). The Fund will not incur any registration costs upon such resales. Restricted securities are valued at amortized cost in accordance with Rule 2a-7 under the Investment Company Act of 1940. Additional information on each restricted security held at April 30, 1997 is as follows: SECURITY ACQUISITION DATE ACQUISITION COST Camden County NJ, Improvement Authority 7/10/1996 $4,900,000 Clipper New Jersey Tax-Exempt Trust 5/1/1996 4,940,000 New Jersey Housing & Mortgage Financing Authority 7/24/1996 - 2/20/1997 5,500,000 3. SHARES OF BENEFICIAL INTEREST The Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest (without par value) for each class of shares. At April 30, 1997, capital paid-in aggregated $156,964,572. Transactions in shares were as follows:
SIX MONTHS ENDED YEAR ENDED INSTITUTIONAL SHARES APRIL 30, 1997 OCTOBER 31, 1996 Shares sold 201,567,886 334,848,832 Shares issued to shareholders in payment of distributions declared 256,832 218,331 Shares redeemed (201,522,203) (306,289,398) Net change resulting from Institutional Share transactions 302,515 28,777,765 SIX MONTHS ENDED YEAR ENDED INSTITUTIONAL SERVICE SHARES APRIL 30, 1997 OCTOBER 31, 1996 Shares sold 57,976,456 82,038,722 Shares issued to shareholders in payment of distributions declared 208,008 412,120 Shares redeemed (46,051,298) (83,461,232) Net change resulting from Institutional Service Share transactions 12,133,166 (1,010,390) Net change resulting from share transactions 12,435,681 27,767,375
4. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES INVESTMENT ADVISORY FEE -- Federated Management, the Fund's investment adviser (the "Adviser"), receives for its services an annual investment advisory fee equal to 0.40% of the Fund's average daily net assets. The Adviser may voluntarily choose to waive any portion of its fee. The Adviser can modify or terminate this voluntary waiver at any time at its sole discretion. ADMINISTRATIVE FEE -- Federated Services Company ("FServ"), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. The fee paid to FServ is based on the level of average aggregate daily net assets of all funds advised by subsidiaries of Federated Investors for the period. The administrative fee received during the period of the Administrative Services Agreement shall be at least $125,000 per portfolio and $30,000 per each additional class of shares. DISTRIBUTION SERVICES FEE -- The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund will reimburse Federated Securities Corp., ("FSC") the principal distributor, from the net assets of the Fund to finance activities intended to result in the sale of the Fund's Institutional Service Shares. The Plan provides that the Fund may incur distribution expenses up to 0.10% of the average daily net assets of the Institutional Service Shares, annually, to reimburse FSC. The distributor may voluntarily choose to waive any portion of its fee. The distributor can modify or terminate this voluntary waiver at any time at its sole discretion. SHAREHOLDER SERVICES FEE -- Under the terms of a Shareholder Services Agreement with Federated Shareholder Services, ("FSS") the Fund will pay FSS up to 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 April 30, 1997, 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 $157,750,000 and $142,395,000, 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 April 30, 1997, 65.2% 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 8.0% of total investments. TRUSTEES John F. Donahue Thomas G. Bigley John T. Conroy, Jr. William J. Copeland James E. Dowd Lawrence D. Ellis, M.D. Edward L. Flaherty, Jr. Glen R. Johnson Peter E. Madden Gregor F. Meyer John E. Murray, Jr. Wesley W. Posvar Marjorie P. Smuts OFFICERS John F. Donahue Chairman Glen R. Johnson President J. Christopher Donahue Executive Vice President Edward C. Gonzales Executive Vice President John W. McGonigle Executive Vice President, Treasurer, and Secretary Richard B. Fisher Vice President S. Elliott Cohan Assistant Secretary Mutual funds are not bank deposits or obligations, are not guaranteed by any bank, and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other government agency. Investment in mutual funds involves risk, including possible loss of principal. Although money market funds seek to maintain a stable net asset value of $1.00 per share, there is no assurance that they will be able to do so. This report is authorized for distribution to prospective investors only when preceded or accompanied by the fund's prospectus which contains facts concerning its objective and policies, management fees, expenses and other information. NEW JERSEY MUNICIPAL CASH TRUST SEMI-ANNUAL REPORT TO SHAREHOLDERS APRIL 30, 1997 Cusip 314229600 Cusip 314229709 2052902 (6/97) [Graphic] PRESIDENT'S MESSAGE Dear Shareholder: I am pleased to present the Semi-Annual Report to Shareholders of Ohio Municipal Cash Trust, a portfolio of Federated Municipal Trust, which covers the six-month period from November 1, 1996, through April 30, 1997. The report begins with a discussion with the fund's portfolio manager, followed by a complete listing of the fund's holdings and its financial statements. Financial highlights tables are provided for the fund's Institutional Service Shares, Cash II Shares, and Institutional Shares. The fund is a convenient way to keep your ready cash pursuing double tax-free income -- free from federal regular income tax and Ohio state income tax* -- through a portfolio concentrated in high-quality, short-term Ohio municipal securities. At the end of the reporting period, the fund's holdings were diversified among issuers that use municipal bond financing for projects as varied as health care, housing, community development, and transportation. This double tax-free advantage means you have the opportunity to earn a greater after-tax yield than you could in a comparable high-quality taxable investment. Of course, the fund also brings you the added benefits of daily liquidity and stability of principal.** During the reporting period, the fund paid double tax-free dividends of $0.02 per share for Institutional Service Shares, $0.01 per share for Cash II Shares, and $0.02 per share for Institutional Shares. The fund's net assets stood at $304.5 million at the end of the reporting period. Thank you for relying on Ohio Municipal Cash Trust to help your ready cash pursue tax-free income everyday. As always, we'll continue to provide you with the highest level of professional service. We invite your questions or comments. Sincerely, [Graphic] Glen R. Johnson President June 15, 1997 * Income may be subject to the federal alternative minimum tax. ** Although money market funds seek to maintain a stable net asset value of $1.00 per share, there is no assurance that they will be able to do so. An investment in the fund is neither insured nor guaranteed by the U.S. government. INVESTMENT REVIEW An interview with the fund's portfolio manager, Jeff A. Kozemchak, CFA, Vice President, Federated Management Q Can you comment on the economy and the interest rate environment during the six-month reporting period? A Although it did not occur until the end of the fund's semi-annual reporting period, the Federal Reserve Board (the "Fed") brought about the first change in monetary policy in over a year. On March 25, 1997, the Fed, in the face of stronger than expected demand, voted to raise the federal funds target rate from 5.25% to 5.50%. The move was viewed as being pre-emptive against the threat of future inflationary pressures possibly brought about by tight labor market conditions. Until that point, movements in interest rates reflected shifting market sentiment about the need for the Fed to move to a more restrictive policy. As the reporting period began in November 1996, the economy had been showing signs of slowing, thereby allaying the market's fears about inflation. Then, in December, the market's uneasiness was once more ignited as a string of economic statistics showed stronger growth and Fed Chairman Alan Greenspan made cautionary statements regarding inflation and "irrational exuberance" in the equity market. With inflation still appearing to be benign, the market tolerated a steady pace of growth into early 1997. However, Chairman Greenspan's Humphrey-Hawkins testimony before Congress in late February marked a turning point for the short-term money markets -- indeed the bond and equity markets as well -- as his relatively hawkish statements revealed fears at the Fed that the transitory factors that had been keeping inflation under control in the face of fairly robust growth may be coming to an end. This statement by the Fed caused a sharp reversal in interest rate movement and the market's perception about future Fed policy. The ensuing weeks brought continued evidence of persistent strength, and culminated in the Fed's action at the Federal Open Market Committee in late March. For the first three months of the reporting period, short-term interest rates traded in a relatively narrow range as the continued friendly inflation picture provided some comfort to market participants. The yield on the six-month Treasury bill, for example, moved in a range between 5.20% and 5.35% from the beginning of November through early February. However, short-term interest rates began to rise in late February, and by the time of the Fed tightening in late March, had built in much of the expectations regarding the Fed decision. In April, the financial markets continued to focus on the likelihood of an additional tightening move later in May, causing short-term yields to rise even further. Yields on the six-month Treasury bill rose sharply over this interim period, moving from a low of 5.20% in mid-February to a high of 5.68% in late April before falling back to 5.53% by the end of reporting period. Q What were your strategies for the fund during the period? A The fund's average maturity at the beginning of the reporting period was approximately 54 days, reflecting a neutral outlook on the direction of interest rates. As the signs of strength in the economy became more apparent, and as expectation of an imminent Fed tightening grew in the first quarter of 1997, we emphasized the purchase of shorter term fixed-rate paper while maintaining approximately 70% of the portfolio in seven-day variable rate demand notes ("VRDNs"). Seven-day VRDNs provide more portfolio responsiveness to interest rate increases. We are now targeting an average maturity range between 50 and 60 days. Once an average maturity range is targeted, the portfolio attempts to maximize performance through ongoing relative value analysis. Relative value analysis includes the comparison of the richness or cheapness of municipal securities to one another as well as municipals to taxable instruments, such as Treasury securities. The fund's portfolio remained barbelled in structure, which combined a significant portion in seven-day variable rate demand notes and short maturity commercial paper with purchases of longer-term, six- to twelve-month Ohio fixed rate notes. This portfolio structure takes advantage of the steepness of the yield curve and continues to pursue a competitive yield over time. Q How has the fund's yield responded to this rate environment? A The fund's yield was affected by Fed policy (interest rate increases), changes in market expectations, as well as supply and demand imbalances unique to the municipal money markets. However, because of these imbalances the fund's yield may experience more volatility on a weekly basis than Treasury yields and taxable money fund yields. In general, yields on municipal money market funds rose over the reporting period. For the fund, the seven-day net yield of the Institutional Service Shares on April 30, 1997 was 3.80% compared to 3.16% at the beginning of the reporting period.* For the Cash II Shares, the seven-day net yield was 3.50%, at the end of the period compared to 2.86% six months ago.* For the Institutional Shares, the seven-day yield was 4.00% on April 30, 1997, compared to 3.36% on November 1, 1996.* Q Looking through 1997, what is your outlook for short-term rates? A Although the Fed decided to hold short-term interest rates steady in the March meeting, our expectations are that the Fed will find cause to tighten monetary policy further in 1997 -- perhaps as soon as in July. It is also anticipated that the overall tightening cycle will not be long in terms of magnitude or duration. The pre-emptive move by the Fed should help to preclude the need for more aggressive action down the road by preventing the buildup of inflationary pressures. We would look to see moderately higher short-term interest rates throughout the course of the year, but not to the extent evidenced in the last tightening cycle in 1994. As such, we will likely continue in our modestly defensive stance for the portfolio until market conditions indicate otherwise. * Performance quoted represents past performance and is not indicative of future results. Yield will vary. The seven-day net yield is calculated daily, based on the income dividends for the seven days ending on the date of calculation and then compounded and annualized. OHIO MUNICIPAL CASH TRUST PORTFOLIO OF INVESTMENTS APRIL 30, 1997 (UNAUDITED)
PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- 99.2% OHIO -- 99.2% $ 575,000 Akron, Bath & Copley, OH Joint Township Weekly VRDNs (Visiting Nurses)/(National City Bank, Cleveland, OH LOC) $ 575,000 2,535,000 Ashland County, OH Health Care Weekly VRDNs (Brethren Care, Inc.)/ (National City Bank, Cleveland, OH LOC) 2,535,000 1,800,000 Belmont County, OH, 3.96% BANs, 10/1/1997 1,801,897 5,100,000 Berea, OH, Various Purpose, 4.10% BANs, 10/23/1997 5,102,934 1,040,000 Canfield, OH Local School District, (Series 1996), 4.50% BANs, 10/2/1997 1,041,685 3,370,000 Canton, OH, Adjustable Rate IDRB's (Series 1996) Weekly VRDNs (Alpha Enterprises)/(KeyBank, N.A. LOC) 3,370,000 1,500,000 Cleveland Heights, OH, (Series 1996), 4.10% BANs, 8/28/1997 1,500,704 1,700,000 Clinton County, OH Hospital Authority Weekly VRDNs (Clinton Memorial Hospital)/(National City Bank, Columbus, OH LOC) 1,700,000 1,805,000 Columbiana County, OH, Industrial Development Revenue Bonds Weekly VRDNs (C & S Land Company Project)/(Bank One, Youngstown, NA LOC) 1,805,000 1,500,000 Conneaut, OH, Water Treatment Improvement General Limited Tax, 4.50% BANs, 4/14/1998 1,503,418 600,000 Cuyahoga County, OH IDA Weekly VRDNs (Animal Protection League (Cuyahoga County))/(KeyBank, N.A. LOC) 600,000 1,500,000 Cuyahoga County, OH IDA Weekly VRDNs (East Park Community, Inc.)/ (KeyBank, N.A. LOC) 1,500,000 370,000 Cuyahoga County, OH IDA Weekly VRDNs (Interstate Diesel Service, Inc.)/ (Huntington National Bank, Columbus, OH LOC) 370,000 640,000 Cuyahoga County, OH IDA Weekly VRDNs (Parma-Commerce Parkway West)/(KeyBank, N.A. LOC) 640,000 950,000 Cuyahoga County, OH IDA Weekly VRDNs (Premier Manufacturing Corp.)/(National City Bank, Kentucky LOC) 950,000 1,885,000 Cuyahoga County, OH IDA, IDRB (Series 1995) Weekly VRDNs (Avalon Precision Casting Co. Project)/(KeyBank, N.A. LOC) 1,885,000
OHIO MUNICIPAL CASH TRUST
PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- CONTINUED OHIO -- CONTINUED $ 4,000,000 Dayton, OH, Airport Improvement BAN's (Series 1996), 3.80% BANs, 12/16/1997 $ 4,003,891 1,585,000 Delaware County, OH, IDRB (Series 1995) Weekly VRDNs (Air Waves, Inc. Project)/(KeyBank, N.A. LOC) 1,585,000 2,000,000 Elyria, OH, Police Station Improvement Notes, (Series 1997), 4.00% BANs, 12/4/1997 2,002,876 3,300,000 Elyria, OH, Various Purpose Improvement Notes, (Series 1996-2), 4.20% BANs, 9/25/1997 3,302,552 1,000,000 Finneytown, OH LSD, 4.375% BANs, 7/17/1997 1,001,523 4,500,000 Franklin County, OH IDA Weekly VRDNs (Heekin Can, Inc.)/(PNC Bank, Ohio, N.A. LOC) 4,500,000 2,940,000 Franklin County, OH IDA Weekly VRDNs (Unicorn Leasing Corp.)/(Fifth Third Bank, Cincinnati LOC) 2,940,000 3,490,000 Franklin County, OH IDA, (Series 1995) Weekly VRDNs (Fabcon L.L.C. Project)/(Norwest Bank Minnesota, Minneapolis LOC) 3,490,000 4,900,000 Franklin County, OH IDA, Adjustable Rate Demand IDRB's (Series 1996A) Weekly VRDNs (Carams, Ltd.)/(Huntington National Bank, Columbus, OH LOC) 4,900,000 2,100,000 Franklin County, OH IDA, Adjustable Rate Demand IDRB's (Series 1996B) Weekly VRDNs (Carams, Ltd.)/(Huntington National Bank, Columbus, OH LOC) 2,100,000 4,000,000 Franklin County, OH IDA, IDRB Weekly VRDNs (Tigerpoly Manufacturing, Inc.)/(Bank of Tokyo-Mitsubishi Ltd. LOC) 4,000,000 2,090,000 Franklin County, OH, Adjustable Rate Demand Economic Development Revenue Refunding Bonds (Series 1996) Weekly VRDNs (CPM Investments)/(Huntington National Bank, Columbus, OH LOC) 2,090,000 1,395,000 Franklin, OH County of, Health Care Facilities Revenue Bonds (Series 1994) Weekly VRDNs (Wesley Glenn, Inc.)/(Fifth Third Bancorp LOC) 1,395,000 1,635,000 Greene County, OH, Various Purpose Certificates of Indebtedness, 4.00% BANs, 12/11/1997 1,638,295 2,000,000 Hamilton County, OH Health System Weekly VRDNs (West Park Community)/(Fifth Third Bank, Cincinnati LOC) 2,000,000
OHIO MUNICIPAL CASH TRUST
PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- CONTINUED OHIO -- CONTINUED $ 1,725,000 Hancock County, OH, (Series A), 4.50% BANs, 9/19/1997 $ 1,728,199 7,500,000 Henry County Ohio, Series 1996 Automatic Feed Project Weekly VRDNs (Huntington National Bank, Columbus, OH LOC) 7,500,000 2,400,000 Highland Heights City, OH, 3.97% BANs, 12/18/1997 2,403,220 4,000,000 Hilliard, OH, Adjustable Rate IDRB's (Series 1996) Weekly VRDNs (Medex, Inc.)/(Bank One, Columbus, N.A. LOC) 4,000,000 2,000,000 Holmes County, OH IDA Weekly VRDNs (Poultry Processing)/(Rabobank Nederland, Utrecht LOC) 2,000,000 1,970,000 Holmes County, OH, Sanitary Sewer System Improvement Notes, 4.25% BANs, 5/21/1997 1,970,259 1,430,600 Huber Heights, OH, 4.00% BANs, 1/23/1998 1,433,622 1,195,000 Huber Heights, OH, IDRB (Series 1994) Weekly VRDNs (Lasermike, Inc. Project)/(KeyBank, N.A. LOC) 1,195,000 1,357,000 Huron City, OH, Various Purpose General Ltd Tax, 4.10% BANs, 2/25/1998 1,360,759 1,200,000 Kent, OH, Adjustable Rate IDRB's (Series 1994) Weekly VRDNs (Raven's Metal Products, Inc. Project)/(First National Bank of Ohio, Akron LOC) 1,200,000 1,000,000 Lake County, OH, 4.00% BANs, 3/12/1998 1,002,071 3,300,000 Lake County, OH, Adjustable Rate IDRB's (Series 1996) Weekly VRDNs (Apsco Properties, LTD.)/(First National Bank of Ohio, Akron LOC) 3,300,000 3,000,000 Lorain County, OH, 4.40% BANs, 9/19/1997 3,004,451 4,190,000 Lorain Port Authority, OH, (Series 1994) Weekly VRDNs (Spitzer Great Lakes Ltd., Inc.)/(Bank One, Cleveland, N.A. LOC) 4,190,000 1,240,000 Lorain Port Authority, OH, Adjustable Rate Demand Port Development Refunding Revenue Bonds (Series 1996) Weekly VRDNs (Spitzer Project)/ (Bank One, Cleveland, N.A. LOC) 1,240,000 305,000 Lorain Port Authority, OH, IDRB (Series 1996) Weekly VRDNs (Brush Wellman, Inc.)/(National City Bank, Cleveland, OH LOC) 305,000 800,000 Lucas County, OH IDA Weekly VRDNs (Kuhlman Corp.)/(KeyBank, N.A. LOC) 800,000 2,000,000 Lucas County, OH IDA, (Series 1991) Weekly VRDNs (Ohio Citizens Bank)/ (National City Bank, Cleveland, OH LOC) 2,000,000
OHIO MUNICIPAL CASH TRUST
PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- CONTINUED OHIO -- CONTINUED $ 1,775,000 Lucas County, OH, Hospital Facility Improvement Revenue Bonds (Series 93) Weekly VRDNs (Lott Industries, Inc.)/(National City Bank, Cleveland, OH LOC) $ 1,775,000 245,000 Lucas County, OH, Hospital Improvement Revenue Weekly VRDNs (Sunshine Children's Home)/(National City Bank, Cleveland, OH LOC) 245,000 2,000,000 Lucas County, OH, Hospital Refunding Revenue Bonds Weekly VRDNs (Riverside Hospital, OH)/(Huntington National Bank, Columbus, OH LOC) 2,000,000 5,300,000 Lucas County, OH, Sewer Improvement, 4.25% BANs, 10/28/1997 5,308,024 1,000,000 Lyndhurst, OH, 4.00% BANs, 3/18/1998 1,001,689 5,325,000 Mahoning County, OH Multifamily HFA Weekly VRDNs (International Towers, Inc.)/(PNC Bank, Ohio, N.A. LOC) 5,325,000 715,000 Mansfield, OH, IDR Weekly VRDNs (Designed Metal Products, Inc.)/(Bank One, Columbus, N.A. LOC) 715,000 3,750,000 Medina County, OH, 4.50% BANs, 8/28/1997 3,756,461 5,400,000 Medina County, OH, Solid Waste Disposal Revenue Bonds (Series 1995) Weekly VRDNs (Valley City Steel Company Project)/(KeyBank, N.A. LOC) 5,400,000 4,990,000 Mentor, OH, LT. GO. Series 1996, 4.00% BANs, 9/4/1997 4,996,701 500,000 Montgomery County, OH Health Facilities Authority, (Series 1995) Weekly VRDNs (Sisters of Charity Health Care System)/(Toronto-Dominion Bank LIQ) 500,000 2,020,000 Montgomery County, OH, Adjustable Rate Economic Development Revenue Refunding Bonds (Series 1997) Weekly VRDNs (Cross Country Inns, Inc.)/(Bank One, Columbus, N.A. LOC) 2,020,000 1,970,000 Montgomery, OH IDA Weekly VRDNs (Bethesda Two Limited Partnership)/(Huntington National Bank, Columbus, OH LOC) 1,970,000 320,000 North Olmsted, OH IDA Weekly VRDNs (Bryant & Stratton)/(KeyBank, N.A. LOC) 320,000 915,000 North Olmsted, OH IDA, 3.80% TOBs (Therm-All)/(National City Bank, Cleveland, OH LOC), Optional Tender 8/1/1997 915,000 1,295,000 Ohio HFA Weekly VRDNs (Westchester Village)/(KeyBank, N.A. LOC) 1,295,000 2,005,000 Ohio HFA, (CR-18), (Series 1988A), 3.90% TOBs (GNMA COL)/(Citibank N.A., New York LIQ), Optional Tender 8/1/1997 2,005,000
OHIO MUNICIPAL CASH TRUST
PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- CONTINUED OHIO -- CONTINUED $ 5,000,000 Ohio HFA, (Series 1997 A-2), 3.65% TOBs, Mandatory Tender 3/2/1998 $ 5,000,000 7,040,000 Ohio HFA, 4.25% TOBs (Lincoln Park Associates)/(Bank One, Dayton, N.A. LOC), Optional Tender 5/1/1997 7,040,000 7,025,000 (b)Ohio HFA, Single Family Mortgage (Series PT-71) Weekly VRDNs (GNMA COL)/(Commerzbank AG, Frankfurt LIQ) 7,025,000 4,000,000 (b)Ohio HFA, Trust Receipts (Series 1996 FR/RI-6) Weekly VRDNs (GNMA COL)/(Bank of New York, New York LIQ) 4,000,000 3,000,000 Ohio School Districts, 1996 Cash Flow Borrowing Program Certificates of Participation, 4.53% RANs, 6/30/1997 3,002,511 1,800,000 Ohio State Air Quality Development Authority, (Series 1988A) Weekly VRDNs (PPG Industries, Inc.) 1,800,000 4,600,000 Ohio State Air Quality Development Authority, 3.50% CP (Cleveland Electric Illuminating Co.)/(FGIC INS)/(FGIC Securities Purchase, Inc. LIQ), Mandatory Tender 5/9/1997 4,600,000 1,880,000 Ohio State Higher Education Facility, Revenue Bonds Weekly VRDNs (Notre Dame College Project)/(National City Bank, Cleveland, OH LOC) 1,880,000 2,000,000 Ohio State Water Development Authority, Ohio PCR Bonds (Series 1989) Weekly VRDNs (Duquesne Light Power Co.)/(Barclays Bank PLC, London LOC) 2,000,000 10,000,000 Ohio State Water Development Authority, PCR Refunding Bonds Weekly VRDNs (General Motors Corp.) 10,000,000 3,500,000 Ohio State Water Development Authority, Pollution Control Facilities Revenue Bonds, 3.80% TOBs (Union Bank of Switzerland, Zurich LOC), Optional Tender 5/1/1997 3,500,000 500,000 Ohio State Weekly VRDNs (John Carroll University, OH)/(PNC Bank, N.A. LOC) 500,000 5,000,000 Ohio State, Environmental Improvement Revenue Bonds (Series 1996) Weekly VRDNs (Newark Group Industries, Inc.)/(Chase Manhattan Bank N.A., New York LOC) 5,000,000 1,320,000 Ohio State, IDR (Series 1991) Weekly VRDNs (Standby Screw, Inc.)/ (National City Bank, Columbus, OH LOC) 1,320,000 1,400,000 Ohio State, IDRB (Series 1994) Weekly VRDNs (Anomatic Corporation)/ (National City Bank, Columbus, OH LOC) 1,400,000
OHIO MUNICIPAL CASH TRUST
PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- CONTINUED OHIO -- CONTINUED $ 4,900,000 Oregon City, OH, 4.15% BANs, 12/18/1997 $ 4,914,947 1,250,000 Orrville, OH IDA Weekly VRDNs (O.S. Associates/Contours, Inc.)/ (National City Bank, Cleveland, OH LOC) 1,250,000 5,560,000 Ottawa County, OH, 4.15% BANs, 4/7/1998 5,572,483 135,000 Portage County, OH IDA Weekly VRDNs (D & W Associates)/(Bank One, Akron, N.A. LOC) 135,000 370,000 Portage County, OH IDA, 3.95% TOBs (Neidlinger)/(KeyBank, N.A. LOC), Optional Tender 9/1/1997 370,000 4,300,000 Portage County, OH IDA, Adjustable Rate IDRB's (Series 1996) Weekly VRDNs (Barnette Project)/(National City, Northeast LOC) 4,300,000 900,000 Portage County, OH IDA, Industries Revenue Bonds Weekly VRDNs (Lovejoy Industries)/(Star Bank, N.A., Cincinnati LOC) 900,000 500,000 Ross County, OH, Hospital Facilities Revenue Bonds (Series 1995) Weekly VRDNs (Medical Center Hospital Project)/(Fifth Third Bank, Cincinnati LOC) 500,000 1,868,000 Sandusky, OH, 4.00% BANs, 11/26/1997 1,871,091 1,700,000 Seneca County, OH Hospital Facility Authority Weekly VRDNs (St. Francis Home)/(National City Bank, Cleveland, OH LOC) 1,700,000 3,890,000 Shaker Heights, OH, 4.25% BANs, 10/17/1997 3,897,799 800,000 Sharonville, OH, IDR Weekly VRDNs (Xtek, Inc.)/(Fifth Third Bank, Cincinnati LOC) 800,000 560,000 Solon, OH, IDR Weekly VRDNs (Graphic Laminating)/(KeyBank, N.A. LOC) 560,000 2,000,000 Solon, OH, IDRB (Series 1995) Weekly VRDNs (Cleveland Twist Drill Company)/(NationsBank, South LOC) 2,000,000 1,000,000 Stark County, OH IDR Weekly VRDNs (KeyBank, N.A. LOC) 1,000,000 2,180,000 Stark County, OH IDR, (Series 1994) Weekly VRDNs (Wilk of Morris)/ (KeyBank, N.A. LOC) 2,180,000 1,300,000 Stark County, OH IDR, IDRB (Series 1996) Weekly VRDNs (Foundations Systems and Anchors, Inc. Project)/(Bank One, Akron, N.A. LOC) 1,300,000 5,300,000 Stark County, OH IDR, IDRB's (Series 1995) Weekly VRDNs (Gramac Project, OH)/(KeyBank, N.A. LOC) 5,300,000
OHIO MUNICIPAL CASH TRUST
PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- CONTINUED OHIO -- CONTINUED $ 1,285,000 Strongsville, OH, IDRB (Series 1994) Weekly VRDNs (Nutro Machinery Corp., Project)/(Huntington National Bank, Columbus, OH LOC) $ 1,285,000 2,500,000 Summit County, OH IDR Weekly VRDNs (Maison Aine Limited Partnership)/(KeyBank, N.A. LOC) 2,500,000 4,500,000 Summit County, OH IDR, (Series 1994) Weekly VRDNs (Harry London Candies, Inc.)/(Bank One, Akron, N.A. LOC) 4,500,000 875,000 Summit County, OH IDR, 3.65% TOBs (S.D. Meyers, Inc.)/(Bank One, Akron, N.A. LOC), Optional Tender 8/15/1997 875,000 1,140,000 Summit County, OH IDR, 3.75% TOBs (Matech Machine Tool Co.)/(Bank One, Akron, N.A. LOC), Optional Tender 8/1/1997 1,140,000 1,030,000 Summit County, OH IDR, 3.80% TOBs (Rogers Industrial Products, Inc.)/ (Bank One, Akron, N.A. LOC), Optional Tender 5/1/1997 1,030,000 660,000 Summit County, OH IDR, 3.90% TOBs (Bechmer-Boyce Project)/(KeyBank, N.A. LOC), Optional Tender 7/15/1997 660,000 355,000 Summit County, OH IDR, 3.95% TOBs (Keltec Industries)/(Bank One, Akron, N.A. LOC), Optional Tender 9/1/1997 355,000 760,000 Summit County, OH IDR, 3.95% TOBs (Universal Rack)/(National City Bank, Cleveland, OH LOC), Optional Tender 9/1/1997 760,000 1,700,000 Summit County, OH IDR, Adjustable Rate IDRB's (Series 1996) Weekly VRDNs (Fomo Products, Inc.)/(First National Bank of Ohio, Akron LOC) 1,700,000 880,000 Summit County, OH IDR, Bonds (Series 1994) Weekly VRDNs (Austin Printing Co., Inc.)/(Bank One, Akron, N.A. LOC) 880,000 2,890,000 Summit County, OH IDR, IDRB (Series 1994B) Weekly VRDNs (Harry London Candies, Inc.)/(Bank One, Akron, N.A. LOC) 2,890,000 925,000 Summit County, OH IDR, IDRB (Series 1995) Weekly VRDNs (Cardtech Project (OH))/(KeyBank, N.A. LOC) 925,000 1,420,000 Summit County, OH IDR, Industrial Development Bonds (Series 1996) Weekly VRDNs (Creative Screen Print Project)/(National City, Northeast LOC) 1,420,000 1,350,000 Summit County, OH IDR, Multi-Mode Variable Rate I Weekly VRDNs (Mastergraphics, Inc. Project)/(KeyBank, N.A. LOC) 1,350,000
OHIO MUNICIPAL CASH TRUST
PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- CONTINUED OHIO -- CONTINUED $ 3,500,000 Summit County, OH, Adjustable Rate Healthcare Facilities Revenue Bonds (Series 1996) Weekly VRDNs (United Disability Services, Inc.)/(First National Bank of Ohio, Akron LOC) $ 3,500,000 3,000,000 Summit County, OH, Various Purpose Notes (Series 1996C), 4.375% BANs, 11/20/1997 3,011,661 1,000,000 Toledo-Lucas County, OH Port Authority, IDA Weekly VRDNs (Medusa Corp.)/(Bayerische Vereinsbank AG, Munich LOC) 1,000,000 2,500,000 Trumbull County, OH IDA, (Series 1989) Weekly VRDNs (McSonald Steel Corp.)/(PNC Bank, Ohio, N.A. LOC) 2,500,000 1,330,000 Trumbull County, OH IDA, IDR Refunding Bonds (Series 1994) Weekly VRDNs (Churchill Downs, Inc.)/(Bank One, Columbus, N.A. LOC) 1,330,000 1,165,000 Tuscarawas County, OH, Adjustable Rate IDRB's (Series 1995) Weekly VRDNs (Primary Packaging, Inc.)/(First National Bank of Ohio, Akron LOC) 1,165,000 2,085,000 Wayne County, OH, Health Care Facility Revenue Bonds (Series 1995) Weekly VRDNs (D & M Realty Project)/(Bank One, Youngstown, NA LOC) 2,085,000 5,000,000 Westlake, OH City School District, Voted Unlimited Tax GO's, 4.20% BANs, 7/28/1997 5,007,147 2,650,000 Williams County, OH, Multi-Mode Variable Rate IDRB's (Series 1996) Weekly VRDNs (Allied Moulded Products, Inc.)/(KeyBank, N.A. LOC) 2,650,000 1,100,000 Willoughby City, OH, IDR Refunding Bonds (Series 1995A) Weekly VRDNs (Pine Ridge Shopping Center Company Project)/(Star Bank, N.A., Cincinnati LOC) 1,100,000 1,185,000 Willoughby City, OH, IDR Revenue Bonds (Series 1995B) Weekly VRDNs (Pine Ridge Shopping Center Company Project)/(Star Bank, N.A., Cincinnati LOC) 1,185,000 1,200,000 Wood County, OH Weekly VRDNs (Principle Business Enterprises)/ (National City Bank, Cleveland, OH LOC) 1,200,000 2,120,000 Wood County, OH, EDRB Weekly VRDNs (Roe Inc. Project)/(Huntington National Bank, Columbus, OH LOC) 2,120,000 3,000,000 Wooster City, OH, Waterworks System Improvement (Series 1996), 4.125% BANs, 11/20/1997 3,006,023
OHIO MUNICIPAL CASH TRUST
PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- CONTINUED OHIO -- CONTINUED $ 4,300,000 Youngstown, OH, Adjustable Rate Demand IDRB's (Series 1996A) Weekly VRDNs (Cantar/Polyair Corp./Performa Corp.)/(Marine Midland Bank N.A., Buffalo, NY LOC) $ 4,300,000 TOTAL INVESTMENTS (AT AMORTIZED COST)(C) $ 302,058,893
Securities that are subject to Alternative Minimum Tax represent 48.6% of the portfolio as calculated based upon total portfolio market value. (a) The fund may only invest in securities rated in one of the two highest short-term rating categories by one or more 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 Ratings Group, MIG-1, or MIG-2 by Moody's Investors Service, Inc., or F-1+, F-1, and F-2 by Fitch Investors Service, Inc. are all considered rated in one of the two highest short-term rating categories. Securities rated in the highest short-term rating category (and unrated securities of comparable quality) are identified as First Tier securities. Securities rated in the second highest short-term rating category (and unrated securities of comparable quality) are identified as Second Tier securities. The fund follows applicable regulations in determining whether a security is rated and whether a security rated by multiple NRSROs in different rating categories should be identified as a First or Second Tier security. At April 30, 1997, the portfolio securities were rated as follows: Tier Rating Percent Based on Total Market Value (unaudited)
FIRST TIER SECOND TIER 95.8% 4.2%
(b) Denotes a restricted security which is subject to restrictions on resale under Federal Securities laws. At April 30, 1997, these securities amounted to $11,025,000 which represents 3.6% of net assets. (c) Also represents cost for federal tax purposes. Note: The categories of investments are shown as a percentage of net assets ($304,548,072) at April 30, 1997. The following acronyms are used throughout this portfolio: BANs -- Bond Anticipation Notes COL -- Collateralized CP -- Commercial Paper EDRB -- Economic Development Revenue Bonds FGIC -- Financial Guaranty Insurance Company GNMA -- Government National Mortgage Association GO - -- General Obligation HFA -- Housing Finance Authority IDA -- Industrial Development Authority IDR -- Industrial Development Revenue IDRB -- Industrial Development Revenue Bond INS -- Insured LIQ -- Liquidity Agreement LOC -- Letter of Credit LT -- Limited Tax LTD -- Limited PCR -- Pollution Control Revenue PLC -- Public Limited Company RANs -- Revenue Anticipation Notes TOBs -- Tender Option Bonds VRDNs - -- Variable Rate Demand Notes (See Notes which are an integral part of the Financial Statements) OHIO MUNICIPAL CASH TRUST STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1997 (UNAUDITED) ASSETS: Total investments in securities, at amortized cost and value $302,058,893 Cash 899,901 Income receivable 2,615,426 Total assets 305,574,220 LIABILITIES: Income distribution payable $ 879,357 Accrued expenses 146,791 Total liabilities 1,026,148 NET ASSETS for 304,548,072 shares outstanding $304,548,072 NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE: INSTITUTIONAL SERVICE SHARES: $54,336,076 / 54,336,076 shares outstanding $1.00 CASH II SHARES: $207,115,080 / 207,115,080 shares outstanding $1.00 INSTITUTIONAL SHARES: $43,096,916 / 43,096,916 shares outstanding $1.00
(See Notes which are an integral part of the Financial Statements) OHIO MUNICIPAL CASH TRUST STATEMENT OF OPERATIONS SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED) INVESTMENT INCOME: Interest $6,549,921 EXPENSES: Investment advisory fee $ 707,700 Administrative personnel and services fee 133,594 Custodian fees 24,550 Transfer and dividend disbursing agent fees and expenses 130,606 Directors'/Trustees' fees 2,262 Auditing fees 6,900 Legal fees 2,816 Portfolio accounting fees 55,490 Distribution services fee -- Cash II Shares 328,459 Shareholder services fee -- Institutional Service Shares 79,495 Shareholder services fee -- Cash II Shares 273,716 Shareholder services fee -- Institutional Shares 88,789 Share registration costs 19,120 Printing and postage 10,862 Insurance premiums 3,203 Miscellaneous 204 Total expenses 1,867,766 Waivers -- Waiver of investment advisory fee $ (434,900) Waiver of distribution services fee -- Cash II Shares (54,743) Waiver of shareholder services fee -- Institutional Service Shares (15,899) Waiver of shareholder services fee -- Institutional Shares (88,789) Total waivers (594,331) Net expenses 1,273,435 Net investment income $5,276,486
(See Notes which are an integral part of the Financial Statements) OHIO MUNICIPAL CASH TRUST STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED YEAR ENDED (UNAUDITED) OCTOBER 31, APRIL 30, 1997 1996 INCREASE (DECREASE) IN NET ASSETS: OPERATIONS -- Net investment income $ 5,276,486 $ 8,958,075 DISTRIBUTIONS TO SHAREHOLDERS -- Distributions from net investment income Institutional Service Shares (994,297) (2,339,083) Cash II Shares (3,099,687) (5,962,329) Institutional Shares (1,182,502) (656,663) Change in net assets resulting from distributions to shareholders (5,276,486) (8,958,075) SHARE TRANSACTIONS -- Proceeds from sale of shares 763,168,478 1,408,349,215 Net asset value of shares issued to shareholders in payment of distributions declared 2,579,036 6,083,711 Cost of shares redeemed (799,749,273) (1,337,048,550) Change in net assets resulting from share transactions (34,001,759) 77,384,376 Change in net assets (34,001,759) 77,384,376 NET ASSETS: Beginning of period 338,549,831 261,165,455 End of period $ 304,548,072 $ 338,549,831
(See Notes which are an integral part of the Financial Statements) OHIO MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS -- INSTITUTIONAL SERVICE SHARES (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED (UNAUDITED) APRIL 30, YEAR ENDED OCTOBER 31, 1997 1996 1995 1994 1993 1992 1991(A) NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 INCOME FROM INVESTMENT OPERATIONS Net investment income 0.02 0.03 0.04 0.02 0.02 0.03 0.02 LESS DISTRIBUTIONS Distributions from net investment income (0.02) (0.03) (0.04) (0.02) (0.02) (0.03) (0.02) NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 TOTAL RETURN(B) 1.56% 3.27% 3.61% 2.41% 2.33% 3.21% 2.40% RATIOS TO AVERAGE NET ASSETS Expenses 0.57%* 0.57% 0.57% 0.55% 0.48% 0.46% 0.35%* Net investment income 3.13%* 3.23% 3.56% 2.36% 2.30% 3.10% 4.46%* Expense 0.30%* 0.31% 0.29% 0.07% 0.19% 0.25% 0.32%* waiver/reimbursement(c) SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $54,336 $59,721 $72,931 $62,499 $81,748 $74,342 $44,771
* Computed on an annualized basis. (a) Reflects operations for the period from April 22, 1991 (date of initial public investment) to October 31, 1991. (b) Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable. (c) This voluntary expense decrease is reflected in both the expense and net investment income ratios shown above. (See Notes which are an integral part of the Financial Statements) OHIO MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS -- CASH II SHARES (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED (UNAUDITED) APRIL 30, YEAR ENDED OCTOBER 31, 1997 1996 1995 1994 1993 1992 1991(A) NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 INCOME FROM INVESTMENT OPERATIONS Net investment income 0.01 0.03 0.03 0.02 0.02 0.03 0.02 LESS DISTRIBUTIONS Distributions from net investment income (0.01) (0.03) (0.03) (0.02) (0.02) (0.03) (0.02) NET ASSET VALUE, END OF $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 PERIOD TOTAL RETURN(B) 1.41% 2.96% 3.30% 2.10% 2.02% 2.90% 2.27% RATIOS TO AVERAGE NET ASSETS Expenses 0.87%* 0.87% 0.87% 0.85% 0.78% 0.76% 0.63%* Net investment income 2.83%* 2.92% 3.25% 2.09% 2.01% 2.86% 4.18%* Expense 0.30%* 0.31% 0.29% 0.24% 0.19% 0.25% 0.34%* waiver/reimbursement(c) SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $207,115 $206,149 $188,234 $156,051 $127,017 $133,877 $94,081
* Computed on an annualized basis. (a) Reflects operations for the period from April 22, 1991 (date of initial public investment) to October 31, 1991. (b) Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable. (c) This voluntary expense decrease is reflected in both the expense and net investment income ratios shown above. (See Notes which are an integral part of the Financial Statements) OHIO MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS -- INSTITUTIONAL SHARES (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED PERIOD (UNAUDITED) ENDED APRIL 30, OCTOBER 31, 1997 1996(A) NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 INCOME FROM INVESTMENT OPERATIONS Net investment income 0.02 0.02 LESS DISTRIBUTIONS Distributions from net investment income (0.02) (0.02) NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 TOTAL RETURN(B) 1.67% 2.22% RATIOS TO AVERAGE NET ASSETS Expenses 0.37%* 0.37%* Net investment income 3.32%* 3.38%* Expense waiver/reimbursement(c) 0.50%* 0.51%* SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $43,097 $72,680
* Computed on an annualized basis. (a) Reflects operations for the period from March 5, 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) OHIO MUNICIPAL CASH TRUST NOTES TO FINANCIAL STATEMENTS APRIL 30, 1997 (UNAUDITED) 1. ORGANIZATION Federated Municipal Trust (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act") as an open-end, management investment company. The Trust consists of sixteen portfolios. The financial statements included herein are only those of Ohio Municipal Cash Trust (the "Fund"). The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. The Fund offers three classes of shares: Institutional Service Shares, Cash II Shares and Institutional Shares. The investment objective of the Fund is current income exempt from federal regular income tax and the personal income taxes imposed by the State of Ohio and Ohio municipalities consistent with stability of principal. 2. SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with generally accepted accounting principles. INVESTMENT VALUATIONS -- The Fund's use of the amortized cost method to value its portfolio securities is in accordance with Rule 2a-7 under the Act. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS -- Interest income and expenses are accrued daily. Bond premium and discount, if applicable, are amortized as required by the Internal Revenue Code, as amended (the "Code"). Distributions to shareholders are recorded on the ex-dividend date. FEDERAL TAXES -- It is the Fund's policy to comply with the provisions of the Code applicable to regulated investment companies and to distribute to shareholders each year substantially all of its income. Accordingly, no provisions for federal tax are necessary. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS -- The Fund may engage in when-issued or delayed delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked to market daily and begin earning interest on the settlement date. RESTRICTED SECURITIES -- Restricted securities are securities that may only be resold upon registration under federal securities laws or in transactions exempt from such registration. Many restricted securities may be resold in the secondary market in transactions exempt from registration. In some cases, the restricted securities may be resold without registration upon exercise of a demand feature. Such restricted securities may be determined to be liquid under criteria established by the Board of Trustees (the "Trustees"). The Fund will not incur any registration costs upon such resales. Restricted securities are valued at amortized cost in accordance with Rule 2a-7 under the Act. Additional information on each restricted security held at April 30, 1997 is as follows:
SECURITY ACQUISITION DATE ACQUISITION COST Ohio HFA, Single Family Mortgage (Series PT 71) 7/1/96 $7,025,000 Ohio HFA, Trust Receipts (Series 1996 FR/RI-6) Weekly VRDNs 3/14/97 4,000,000
USE OF ESTIMATES -- The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ from those estimated. OTHER -- Investment transactions are accounted for on the trade date. 3. SHARES OF BENEFICIAL INTEREST The Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest (without par value) for each class of shares. At April 30, 1997, capital paid-in aggregated $304,548,072. Transactions in shares were as follows:
YEAR SIX MONTHS ENDED ENDED OCTOBER 31, INSTITUTIONAL SERVICE SHARES APRIL 30, 1997 1996 Shares sold 74,408,162 440,264,015 Shares issued to shareholders in payment of distributions declared 89,019 226,623 Shares redeemed (79,882,117) (453,700,715) Net change resulting from Institutional Service share transactions (5,384,936) (13,210,077) YEAR SIX MONTHS ENDED ENDED OCTOBER 31, CASH II SHARES APRIL 30, 1997 1996 Shares sold 385,468,051 681,930,901 Shares issued to shareholders in payment of distributions declared 2,469,755 5,797,497 Shares redeemed (386,971,500) (669,813,991) Net change resulting from Cash II Share transactions 966,306 17,914,407 PERIOD SIX MONTHS ENDED ENDED OCTOBER 31, INSTITUTIONAL SHARES APRIL 30, 1997 1996(A) Shares sold 303,292,265 286,154,299 Shares issued to shareholders in payment of distributions declared 20,262 59,591 Shares redeemed (332,895,656) (213,533,844) Net change resulting from Institutional Share transactions (29,583,129) 72,680,046 Net change resulting from share transactions (34,001,759) 77,384,376
(a) For the period from March 5, 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 0.40% of the Fund's average daily net assets. The Adviser may voluntarily choose to waive any portion of its fee. The Adviser can modify or terminate this voluntary waiver at any time at its sole discretion. ADMINISTRATIVE FEE -- Federated Services Company ("FServ"), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. The fee paid to FServ is based on the level of average aggregate daily net assets of all funds advised by subsidiaries of Federated Investors for the period. The administrative fee received during the period of the Administrative Services Agreement shall be at least $125,000 per portfolio and $30,000 per each additional class of shares. DISTRIBUTION SERVICES FEE -- The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund will compensate Federated Securities Corp. ("FSC"), the principal distributor, from the net assets of the Fund to finance activities intended to result in the sale of the Fund's Cash II Shares. The Plan provides that the Fund may incur distribution expenses up to 0.30% of average daily net assets of the Cash II Shares, annually, to compensate FSC. The distributor may voluntarily choose to waive any portion of its fee. The distributor can modify or terminate this voluntary waiver at any time at its sole discretion. SHAREHOLDER SERVICES FEE -- Under the terms of a Shareholder Services Agreement with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to 0.25% of average daily net assets of the Fund for the period. The fee paid to FSS is used to finance certain services for shareholders and to maintain shareholder accounts. FSS may voluntarily choose to waive any portion of its fee. FSS can modify or terminate this voluntary waiver at any time at its sole discretion. TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES -- FServ, through its subsidiary, Federated Shareholder Services Company ("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 April 30, 1997, 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 $250,535,000 and $304,349,955, 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 April 30, 1997, 63.1% of the securities in the portfolio of investments are backed by letters of credit or bond insurance of various financial institutions and financial guaranty assurance agencies. The percentage of investments insured by or supported (backed) by a letter of credit from any one institution or agency did not exceed 11.9% of total investments. TRUSTEES John F. Donahue Thomas G. Bigley John T. Conroy, Jr. William J. Copeland James E. Dowd Lawrence D. Ellis, M.D. Edward L. Flaherty, Jr. Glen R. Johnson Peter E. Madden Gregor F. Meyer John E. Murray, Jr. Wesley W. Posvar Marjorie P. Smuts OFFICERS John F. Donahue Chairman Glen R. Johnson President J. Christopher Donahue Executive Vice President Edward C. Gonzales Executive Vice President John W. McGonigle Executive Vice President, Treasurer, and Secretary Richard B. Fisher Vice President S. Elliott Cohan Assistant Secretary Mutual funds are not bank deposits or obligations, are not guaranteed by any bank, and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other government agency. Investment in mutual funds involves risk, including possible loss of principal. Although money market funds seek to maintain a stable net asset value of $1.00 per share, there is no assurance that they will be able to do so. This report is authorized for distribution to prospective investors only when preceded or accompanied by the fund's prospectus which contains facts concerning its objective and policies, management fees, expenses and other information. OHIO MUNICIPAL CASH TRUST SEMI-ANNUAL REPORT TO SHAREHOLDERS APRIL 30, 1997 [Graphic] Federated Investors Federated Securities Corp., Distributor Cusip 314229659 Cusip 314229857 Cusip 314229840 2052903 (6/97) [Graphic] PRESIDENT'S MESSAGE Dear Shareholder: I am pleased to present the Semi-Annual Report to Shareholders of Pennsylvania Municipal Cash Trust, a portfolio of Federated Municipal Trust, which covers the six-month period from November 1, 1996, through April 30, 1997. The report begins with a discussion with the fund's portfolio manager, followed by a complete listing of the fund's holdings and its financial statements. Financial highlights tables are provided for the fund's Institutional Service Shares, Cash Series Shares, and Institutional Shares. The fund is a convenient way to keep your ready cash pursuing double tax-free income -- free from federal regular income tax, and state personal income tax* -- through a portfolio concentrated in high-quality, short-term Pennsylvania municipal securities. Investors' assets in the fund are also not subject to local personal property tax.* At the end of the reporting period, the fund's holdings were diversified among issuers that use municipal bond financing for projects as varied as health care, housing, community development, and transportation. This double tax-free advantage means you have the opportunity to earn a greater after-tax yield than you could in a comparable high-quality taxable investment. Of course, the fund also brings you the added benefits of daily liquidity and stability of principal.** During the reporting period, the fund paid double tax-free dividends of $0.02 per share for Institutional Service Shares, $0.01 per share for Cash Series Shares, and $0.02 per share for Institutional Shares. The fund's net assets stood at $316.5 million at the end of the reporting period. Thank you for relying on Pennsylvania Municipal Cash Trust to help your ready cash pursue tax-free income every day. As always, we will continue to provide you with the highest level of professional service. We invite your questions or comments. Sincerely, [Graphic] Glen R. Johnson President June 15, 1997 * Income may be subject to the federal alternative minimum tax. ** Although money market funds seek to maintain a stable net asset value of $1.00 per share, there is no assurance that they will be able to do so. An investment in the fund is neither insured nor guaranteed by the U.S. government. INVESTMENT REVIEW An interview with the fund's portfolio manager, Jeff A. Kozemchak, CFA, Vice President, Federated Management Q Can you comment on the economy and the interest rate environment during the six-month reporting period? A Although it did not occur until the end of the fund's semi-annual reporting period, the Federal Reserve Board (the "Fed") brought about the first change in monetary policy in over a year. On March 25, 1997, the Fed, in the face of stronger than expected demand, voted to raise the federal funds target rate from 5.25% to 5.50%. The move was viewed as being pre-emptive against the threat of future inflationary pressures possibly brought about by tight labor market conditions. Until that point, movements in interest rates reflected shifting market sentiment about the need for the Fed to move to a more restrictive policy. As the reporting period began in November 1996, the economy had been showing signs of slowing, thereby allaying the market's fears about inflation. Then, in December, the market's uneasiness was once more ignited as a string of economic statistics showed stronger growth and Fed Chairman Alan Greenspan made cautionary statements regarding inflation and "irrational exuberance" in the equity market. With inflation still appearing to be benign, the market tolerated a steady pace of growth into early 1997. However, Chairman Greenspan's Humphrey-Hawkins testimony before Congress in late February marked a turning point for the short-term money markets -- indeed the bond and equity markets as well -- as his relatively hawkish statements revealed fears at the Fed that the transitory factors that had been keeping inflation under control in the face of fairly robust growth may be coming to an end. This statement by the Fed caused a sharp reversal in interest rate movement and the market's perception about future Fed policy. The ensuing weeks brought continued evidence of persistent strength, and culminated in the Fed's action at the Federal Open Market Committee in late March. For the first three months of the reporting period, short-term interest rates traded in a relatively narrow range as the continued friendly inflation picture provided some comfort to market participants. The yield on the six-month Treasury bill, for example, moved in a range between 5.20% and 5.35% from the beginning of November through early February. However, short-term interest rates began to rise in late February, and by the time of the Fed tightening in late March, had built in much of the expectations regarding the Fed decision. In April, the financial markets continued to focus on the likelihood of an additional tightening move later in May, causing short-term yields to rise even further. Yields on the six-month Treasury bill rose sharply over this interim period, moving from a low of 5.20% in mid-February to a high of 5.68% in late April before falling back to 5.53% by the end of reporting period. Q What were your strategies for the fund during the period? A The fund's average maturity at the beginning of the reporting period was approximately 58 days. As signs of strength in the economy became more apparent, and as expectation of an imminent Fed tightening increased in the first quarter of 1997, we lowered the average maturity target range of the fund from between 55 and 60 days to between 50 and 55 days. By the end of the reporting period, we had allowed the average maturity to roll further inward to 48 days, as we increased the percentage of seven-day variable rate demand notes to provide more portfolio responsiveness to interest rate increases. Once an average maturity range is targeted, the portfolio attempts to maximize performance through ongoing relative value analysis. Relative value analysis includes the comparison of the richness or cheapness of municipal securities to one another as well as municipals to taxable instruments, such as Treasury securities. The fund's portfolio remained barbelled in structure, which combined a significant portion in seven-day variable rate demand notes and short maturity commercial paper with purchases of longer-term, six- to twelve-month fixed rate notes. This portfolio structure continues to pursue a competitive yield over time. Q How has the fund's yield responded to this rate environment? A The fund's yield was affected by Fed policy (interest rate increases), changes in market expectations, as well as supply and demand imbalances unique to the municipal money markets. However, because of these imbalances the fund's yield may experience more volatility on a weekly basis than Treasury yields and taxable money fund yields. In general, yields on municipal money market funds rose over the reporting period. For the fund, the seven-day net yield of Institutional Service Shares on April 30, 1997, was 3.72%, compared to 3.01% at the beginning of the reporting period.* For the Cash Service Shares, the seven-day net yield was 3.32% at the end of the period compared to 2.61% six months ago.* For the Institutional Shares, the seven-day yield was 3.92% on April 30, 1997, compared to 3.21% on November 1, 1996.* Q Looking through 1997, what is your outlook for short-term rates? A Although the Fed decided to hold short-term interest rates steady in the March meeting, our expectations are that the Fed will find cause to tighten monetary policy further in 1997 -- perhaps as soon as in July. It is also anticipated that the overall tightening cycle will not be long in terms of magnitude or duration. The pre-emptive move by the Fed should help to preclude the need for more aggressive action down the road by preventing the buildup of inflationary pressures. We would look to see moderately higher short-term interest rates throughout the course of the year, but not to the extent evidenced in the last tightening cycle in 1994. As such, we will likely continue in our modestly defensive stance for the portfolio until market conditions indicate otherwise. * Performance quoted represents past performance and is not indicative of future results. Yield will vary. The seven-day net yield is calculated daily, based on the income dividends for the seven days ending on the date of calculation and then compounded and annualized. PENNSYLVANIA MUNICIPAL CASH TRUST PORTFOLIO OF INVESTMENTS APRIL 30, 1997 (UNAUDITED)
PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- 99.4% PENNSYLVANIA -- 99.4% $ 1,000,000 Allegheny County, PA IDA, (Series 1991) Weekly VRDNs (Mine Safety Appliances Co.)/(Sanwa Bank Ltd., Osaka LOC) $ 1,000,000 1,300,000 Allegheny County, PA IDA, (Series 1991B) Weekly VRDNs (Shandon, Inc.)/(PNC Bank, N.A. LOC) 1,300,000 6,500,000 Allegheny County, PA IDA, 3.70% CP (Duquesne Light Power Co.)/ (Barclays Bank PLC, London LOC), Mandatory Tender 2/5/1998 6,500,000 4,710,000 Allegheny County, PA IDA, Commercial Development Revenue Bonds (Series 1992) Weekly VRDNs (Eleven Parkway Center Associates)/ (National City, Pennsylvania LOC) 4,710,000 5,000,000 Allegheny County, PA IDA, PCR (Series 1992A), 3.65% TOBs (Duquesne Light Power Co.)/(Canadian Imperial Bank of Commerce, Toronto LOC), Optional Tender 10/30/1997 5,000,000 3,040,000 Allegheny County, PA IDA, Variable Rate Demand Revenue Bonds (Series A of 1997) Weekly VRDNs (Jewish Community Center)/ (National City, Pennsylvania LOC) 3,040,000 5,000,000 Allegheny County, PA IDA, Variable Rate Demand Revenue Bonds (Series B of 1997) Weekly VRDNs (Jewish Community Center)/ (National City, Pennsylvania LOC) 5,000,000 5,000,000 Allegheny County, PA Port Authority, (Series A), 3.90% GANs (PNC Bank, N.A. LOC), 6/30/1997 5,000,000 3,000,000 Beaver County, PA IDA, PCR Refunding Bonds (1992 Series-E), 3.70% CP (Toledo Edison Co.)/(Toronto-Dominion Bank LOC), Mandatory Tender 12/4/1997 3,000,000 4,000,000 Bedford County, PA IDA, (Series 1985) Weekly VRDNs (Sepa, Inc. Facility)/(First Union National Bank, Charlotte, NC LOC) 4,000,000
PENNSYLVANIA MUNICIPAL CASH TRUST
PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- CONTINUED PENNSYLVANIA -- CONTINUED $ 1,210,000 Berks County, PA IDA Weekly VRDNs (ADC Quaker Maid Meats)/ (Corestates Bank N.A., Philadelphia, PA LOC) $ 1,210,000 910,000 Berks County, PA IDA Weekly VRDNs (Beacon Container)/(Corestates Bank N.A., Philadelphia, PA LOC) 910,000 1,700,000 Berks County, PA IDA, (Series 1988) Weekly VRDNs (Arrow Electronics, Inc.)/(Corestates Bank N.A., Philadelphia, PA LOC) 1,700,000 3,550,000 Berks County, PA IDA, Manufacturing Facilities Revenue Bonds (Series 1996) Weekly VRDNs (Ram Industries, Inc.)/(Corestates Bank N.A., Philadelphia, PA LOC) 3,550,000 1,865,000 Berks County, PA IDA, Manufacturing Facilities Revenue Bonds (Series 1995) Weekly VRDNs (Grafika Commercial Printing, Inc.)/ (Corestates Bank N.A., Philadelphia, PA LOC) 1,865,000 450,000 Berks County, PA IDA, Revenue Bonds (Series 1995A/Subseries A) Weekly VRDNs (Corestates Bank N.A., Philadelphia, PA LOC) 450,000 1,165,000 Berks County, PA IDA, Revenue Bonds (Series 1995A/Subseries B) Weekly VRDNs (Corestates Bank N.A., Philadelphia, PA LOC) 1,165,000 1,425,000 Berks County, PA IDA, VRD/Fixed Rate Revenue Bonds (Series A of 1996) Weekly VRDNs (Lebanon Valley Mall Co.)/(Meridian Bank, Reading, PA LOC) 1,425,000 2,135,000 Bucks County, PA IDA, Weekly VRDNs (Double H Plastics, Inc.)/ (Corestates Bank N.A., Philadelphia, PA LOC) 2,135,000 2,700,000 Bucks County, PA IDA, Weekly VRDNs (Pennsylvania Associates)/ (Corestates Bank N.A., Philadelphia, PA LOC) 2,700,000 4,000,000 Bucks County, PA IDA, (Series 1991) Weekly VRDNs (Cabot Medical Corp.)/(Corestates Bank N.A., Philadelphia, PA LOC) 4,000,000 4,000,000 Butler County, PA IDA, Weekly VRDNs (Mine Safety Appliances Co.)/ (Sanwa Bank Ltd, Osaka LOC) 4,000,000 1,000,000 Butler County, PA IDA, (Series 1992B) Weekly VRDNs (Mine Safety Appliances Co.)/(Sanwa Bank Ltd, Osaka LOC) 1,000,000 1,400,000 Butler County, PA IDA, (Series 1996 A) Weekly VRDNs (Armco, Inc.)/ (Chase Manhattan Bank N.A., New York LOC) 1,400,000
PENNSYLVANIA MUNICIPAL CASH TRUST
PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- CONTINUED PENNSYLVANIA -- CONTINUED $ 5,500,000 Butler County, PA IDA, First Mortgage Revenue Bonds, 10.125% Bonds (St. John Lutheran Care Center)/(United States Treasury PRF), 10/1/1997 (@102) $ 5,750,006 2,330,000 Butler County, PA IDA, IDRB (Series 1994) Weekly VRDNs (Lue-Rich Holding Company, Inc. Project)/(ABN AMRO Bank N.V., Amsterdam LOC) 2,330,000 5,400,000 Butler County, PA IDA, Variable Rate Demand Revenue Bonds (Series 1996A), 4.25% TOBs (Lutheran Welfare)/(PNC Bank, N.A. LOC), Mandatory Tender 11/3/1997 5,416,031 3,900,000 Cambria County, PA IDA Weekly VRDNs (Cambria Cogeneration)/ (ABN AMRO Bank N.V., Amsterdam LOC) 3,900,000 1,500,000 Carbon County, PA IDA, Weekly VRDNs (Summit Management & Utilities, Inc.)/(PNC Bank, N.A. LOC) 1,500,000 5,000,000 Carbon County, PA IDA, 3.70% CP (Panther Creek)/(National Westminster Bank, PLC, London LOC), Mandatory Tender 5/1/1997 5,000,000 1,060,000 Carbon County, PA IDA, Resource Recovery Bonds (Series B), 3.60% CP (Panther Creek)/(National Westminster Bank, PLC, London LOC), Mandatory Tender 5/13/1997 1,060,000 6,825,000 Carbon County, PA IDA, Resource Recovery Bonds, 3.70% CP (Panther Creek)/(National Westminster Bank, PLC, London LOC), Mandatory Tender 5/1/1997 6,825,000 5,000,000 Carbon County, PA IDA, Solid Waste Disposal Revenue Notes (Series 1996), 3.90% RANs (Horsehead Resource Development, Inc.)/ (Chase Manhattan Bank N.A., New York LOC), 12/3/1997 5,000,000 7,300,000 Clearfield County, PA IDA, Weekly VRDNs (Penn Traffic Co.)/ (ABN AMRO Bank N.V., Amsterdam LOC) 7,300,000 6,000,000 Clinton County, PA IDA, Solid Waste Disposal Revenue Bonds (Series 1992A), 3.75% TOBs (International Paper Co.), Optional Tender 1/15/1998 6,000,000 3,000,000 Clinton County, PA, IDA, Weekly VRDNs (Armstrong World Industries, Inc.)/(Mellon Bank N.A., Pittsburgh LOC) 3,000,000
PENNSYLVANIA MUNICIPAL CASH TRUST
PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- CONTINUED PENNSYLVANIA -- CONTINUED $ 5,000,000 Coatsville, PA School District, 4.25% TRANs, 6/30/1997 $ 5,001,970 5,000,000 Commonwealth of Pennsylvania, 4.50% TANs, 6/30/1997 5,006,399 1,300,000 Cumberland County, PA IDA, Industrial Development Bonds (Series 1994) Weekly VRDNs (Lane Enterprises, Inc. Project)/(Corestates Bank N.A., Philadelphia, PA LOC) 1,300,000 4,900,000 Delaware County Authority, PA, Hospital Revenue Bonds (Series of 1996) Weekly VRDNs (Crozer-Chester Medical Center)/(Kredietbank N.V., Brussels LOC) 4,900,000 3,900,000 East Hempfield Township, PA IDA, (Series 1985) Weekly VRDNs (Yellow Freight System)/(Wachovia Bank of Georgia N.A., Atlanta LOC) 3,900,000 10,900,000 Erie County, PA Hospital Authority Weekly VRDNs (St. Vincent Health System)/(Mellon Bank N.A., Pittsburgh LOC) 10,900,000 200,000 Erie County, PA IDA, Weekly VRDNs (P.H.B. Project)/(PNC Bank, N.A. LOC) 200,000 325,000 Erie County, PA IDA, (Series 1985) Weekly VRDNs (R. P-C Value, Inc.)/ (PNC Bank, N.A. LOC) 325,000 400,000 Erie County, PA IDA, (Series B) Weekly VRDNs (P.H.B. Project)/ (PNC Bank, N.A. LOC) 400,000 400,000 Forest County, PA IDA, Weekly VRDNs (Industrial Timber & Land Co.)/ (National City Bank, Cleveland, OH LOC) 400,000 1,155,000 Forest County, PA IDA, Weekly VRDNs (Marienville Health Care Facility)/(PNC Bank, N.A. LOC) 1,155,000 1,800,000 Franklin County, PA IDA Weekly VRDNs (The Guarriello Limited Partnership)/(PNC Bank, N.A. LOC) 1,800,000 2,670,000 Hampton Township, PA School District, 4.19% TRANs, 6/30/1997 2,670,378 7,000,000 Lancaster County, PA Hospital Authority, Health Center Revenue Bonds (Series 1996) Weekly VRDNs (Masonic Homes)/(First Union National Bank, Charlotte, NC LIQ) 7,000,000 2,050,000 Lancaster, PA Higher Education Authority, College Revenue Bonds (Series 1995) Weekly VRDNs (Franklin and Marshall College Project) 2,050,000 856,092 Lawrence County, PA IDA, (Series 1989A) Weekly VRDNs (Ellwood Uddeholm Steel Co.)/(KeyBank, N.A. LOC) 856,092
PENNSYLVANIA MUNICIPAL CASH TRUST
PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- CONTINUED PENNSYLVANIA -- CONTINUED $ 4,640,000 Lehigh County, PA General Purpose Authority, Revenue Bonds (Series 1990) Weekly VRDNs (Phoebe Terrace, Inc.)/(Corestates Bank N.A., Philadelphia, PA LOC) $ 4,640,000 2,600,000 Lehigh County, PA IDA, (Series 1989A) Weekly VRDNs (Hershey Pizza Co., Inc.)/(PNC Bank, N.A. LOC) 2,600,000 550,000 McKean County, PA IDA, Multi-Mode Revenue Refunding Bonds Weekly VRDNs (Bradford Manor, Inc.)/(PNC Bank, N.A. LOC) 550,000 3,300,000 Monroe County, PA IDA, PCR Weekly VRDNs (Cooper Industries, Inc.)/ (Sanwa Bank Ltd., Osaka LOC) 3,300,000 770,000 Montgomery County, PA Higher Education and Health Authority, (Series 1992) Weekly VRDNs (Pottstown Healthcare Corporation Project)/ (Corestates Bank N.A., Philadelphia, PA LOC) 770,000 1,300,000 Montgomery County, PA IDA, (Series 1992) Weekly VRDNs (RJI Limited Partnership)/ (Corestates Bank N.A., Philadelphia, PA LOC) 1,300,000 1,635,000 Montgomery County, PA IDA, (Series 84) Weekly VRDNs (Thomas & Betts Corp.)/(Wachovia Bank of NC, N.A., Winston-Salem LOC) 1,635,000 6,675,000 Montgomery County, PA IDA, Commercial Development Revenue Bonds (Series 1992) Weekly VRDNs (Hickory Pointe Project)/(First Union National Bank, North LOC) 6,675,000 1,140,000 Montgomery County, PA IDA, EDRB's (Series 1997) Weekly VRDNs (Palmer International, Inc.)/(Mellon Bank N.A., Pittsburgh LOC) 1,140,000 4,975,000 Moon Township, PA IDA, Weekly VRDNs (Airport Hotel Associates)/ (ABN AMRO Bank N.V., Amsterdam LOC) 4,975,000 2,500,000 New Castle, PA Area Hospital Authority, (Series 1996) Weekly VRDNs (Jameson Memorial Hospital)/(FSA INS)/(PNC Bank, N.A. LIQ) 2,500,000 3,850,000 Northampton County, PA IDA, 3.45% CP (Citizens Utilities Co.), Mandatory Tender 6/13/1997 3,850,000 9,000,000 Northampton County, PA IDA, 3.80% CP (Citizens Utilities Co.), Mandatory Tender 7/18/1997 9,000,000 10,000,000 Northeastern, PA Hospital & Education Authority, (Series 1996) Weekly VRDNs (Allhealth Pooled Financing Program)/(Chase Manhattan Bank N.A., New York LOC) 10,000,000
PENNSYLVANIA MUNICIPAL CASH TRUST
PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- CONTINUED PENNSYLVANIA -- CONTINUED $ 1,500,000 Northgate School District, PA, 4.22% TANs, 6/30/1997 $ 1,500,282 1,590,000 Northumberland County PA IDA, Revenue Bonds (Series A of 1995) Weekly VRDNs (Furman Farms, Inc. Project)/(Corestates Bank N.A., Philadelphia, PA LOC) 1,590,000 1,000,000 Penns Manor Area School District, PA, 4.07% TRANs, 6/30/1997 1,000,236 1,725,000 Pennsylvania EDFA Weekly VRDNs (Cyrogenics, Inc.)/(PNC Bank, N.A. LOC) 1,725,000 2,800,000 Pennsylvania EDFA Weekly VRDNs (Industrial Scientific Corp.)/ (Mellon Bank N.A., Pittsburgh LOC) 2,800,000 600,000 Pennsylvania EDFA Weekly VRDNs (Pioneer Fluid)/(PNC Bank, N.A. LOC) 600,000 600,000 Pennsylvania EDFA Weekly VRDNs (RMF Associates)/(PNC Bank, N.A. LOC) 600,000 775,000 Pennsylvania EDFA Weekly VRDNs (Reace Associates)/(PNC Bank, N.A. LOC) 775,000 450,000 Pennsylvania EDFA, (Series B) Weekly VRDNs (Payne Printing Co.)/ (PNC Bank, N.A. LOC) 450,000 1,000,000 Pennsylvania EDFA, Economic Development Revenue Bonds (Series 1996C) Weekly VRDNs (Napco, Inc. Project)/(Mellon Bank N.A., Pittsburgh LOC) 1,000,000 850,000 Pennsylvania EDFA, Revenue Bonds (Series G4) Weekly VRDNs (Metamora Products)/(PNC Bank, N.A. LOC) 850,000 275,000 Pennsylvania EDFA, Revenue Bonds Weekly VRDNs (DDI Pharmaceuticals, Inc.)/(PNC Bank, N.A. LOC) 275,000 375,000 Pennsylvania EDFA, Revenue Bonds Weekly VRDNs (RAM Forest Products)/(PNC Bank, N.A. LOC) 375,000 6,205,000 Pennsylvania Housing Finance Authority, 3.85% TOBs (First National Bank of Chicago LIQ), Optional Tender 10/1/1997 6,205,000 960,000 Pennsylvania Housing Finance Authority, Section 8 Assisted Residential Development Refunding Bonds (Series 1992A) Weekly VRDNs (CGIC INS)/(Citibank N.A., New York LIQ) 960,000
PENNSYLVANIA MUNICIPAL CASH TRUST
PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- CONTINUED PENNSYLVANIA -- CONTINUED $ 1,760,000 Pennsylvania Housing Finance Authority, Variable Rate Merlots (Series I), 4.10% TOBs (Corestates Bank N.A., Philadelphia, PA LIQ), Optional Tender 7/1/1997 $ 1,760,000 20,000,000 Pennsylvania State Higher Education Assistance Agency, Student Loan Adjustable Rate Revenue Bonds (Series 1997A) Weekly VRDNs (Student Loan Marketing Association LOC) 20,000,000 5,000,000 Pennsylvania State University, University Project Notes, (Series A), 4.50% BANs, 11/25/1997 5,024,057 8,100,000 Philadelphia Redevelopment Authority, Multi-Family Revenue Bonds (Series 1985) Weekly VRDNs (Franklin Town Towers)/(Marine Midland Bank N.A., Buffalo, NY LOC) 8,100,000 2,000,000 Philadelphia, PA, (Series A of 1996-1997), 4.50% TRANs, 6/30/1997 2,001,654 3,335,000 Pittsburgh, PA, (Series A), 5.00% Bonds (MBIA Corporation INS), 3/1/1998 3,370,068 2,275,000 Red Lion, PA Area School District, 4.25% TRANs, 6/30/1997 2,276,440 1,900,000 Schuylkill County, PA IDA, Manufacturing Facilities Revenue Bonds (Series 1995) Weekly VRDNs (Prime Packing, Inc. Project)/(Corestates Bank N.A., Philadelphia, PA LOC) 1,900,000 2,000,000 Schuylkill County, PA IDA, Variable Rate Demand/Fixed Rate Manufacturing Facilities Revenue Bonds (Series of 1996) Weekly VRDNs (Craftex Mills, Inc.)/(Corestates Bank N.A., Philadelphia, PA LOC) 2,000,000 2,100,000 Venango, PA IDA, Resource Recovery Bonds (Series 1993), 3.60% CP (Scrubgrass Power Corp.)/(National Westminster Bank, PLC, London LOC), Mandatory Tender 5/14/1997 2,100,000 4,000,000 Venango, PA IDA, Resource Recovery Bonds (Series 1993), 3.60% CP (Scrubgrass Power Corp.)/(National Westminster Bank, PLC, London LOC), Mandatory Tender 6/13/1997 4,000,000 695,000 Washington County, PA Hospital Authority, (Series 1990) Weekly VRDNs (Mac Plastics, Inc.)/(National City Bank, Cleveland, OH LOC) 695,000 10,700,000 Washington County, PA IDA, Solid Waste Disposal Revenue Bonds (Series 1995) Weekly VRDNs (American Iron Oxide Company Project)/ (Bank of Tokyo-Mitsubishi Ltd. LOC) 10,700,000 2,700,000 Washington County, PA Municipal Authority Facilities, (Series 1985A) Weekly VRDNs (1985-A Pooled Equipment Lease Program)/(Sanwa Bank Ltd., Osaka LOC) 2,700,000
PENNSYLVANIA MUNICIPAL CASH TRUST
PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- CONTINUED PENNSYLVANIA -- CONTINUED $ 1,050,000 Washington County, PA, IDA (Series 1988) Weekly VRDNs (Coca-Cola Co.)/(Mellon Bank N.A., Pittsburgh LOC) $ 1,050,000 935,000 West Cornwall Township, PA Municipal Authority, Revenue Bonds (Series 1995) Weekly VRDNs (Lebanon Valley Brethern Home Project (PA))/ (Corestates Bank N.A., Philadelphia, PA LOC) 935,000 4,455,000 Westmoreland County, PA IDA, Revenue Bonds (Series 1997) Weekly VRDNs (Rhodin Enterprises Project)/(Corestates Bank N.A., Philadelphia, PA LOC) 4,455,000 1,000,000 York County, PA IDA, Variable Rate Demand Ltd. Obligation Revenue Bonds (Series 1996) Weekly VRDNs (Metal Exchange Corp.)/(Comerica Bank, Detroit, MI LOC) 1,000,000 TOTAL INVESTMENTS (AT AMORTIZED COST)(B) $ 314,713,613
Securities that are subject to Alternative Minimum Tax represent 44.3% of the portfolio as calculated based upon total portfolio market value. (a) The fund may only invest in securities rated in one of the two highest short-term rating categories by one or more 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 Ratings Group, MIG-1, or MIG-2 by Moody's Investors Service, Inc., or F-1+, F-1, and F-2 by Fitch Investors Service, Inc. are all considered rated in one of the two highest short-term rating categories. Securities rated in the highest short-term rating category (and unrated securities of comparable quality) are identified as First Tier securities. Securities rated in the second highest short-term rating category (and unrated securities of comparable quality) are identified as Second Tier securities. The fund follows applicable regulations in determining whether a security is rated and whether a security rated by multiple NRSROs in different rating categories should be identified as a First or Second Tier security. At April 30, 1997, the portfolio securities were rated as follows: Tier Rating Percentage Based on Total Market Value FIRST TIER SECOND TIER 97.62% 2.38% (b) Also represents cost for federal tax purposes. Note: The categories of investments are shown as a percentage of net assets ($316,482,561) at April 30, 1997. The following acronyms are used throughout this portfolio: BANs -- Bond Anticipation Notes CGIC -- Capital Guaranty Insurance Corporation CP -- Commercial Paper EDFA -- Economic Development Financing Authority EDRB -- Economic Development Revenue Bonds FSA -- Financial Security Assurance GANs -- Grant Anticipation Notes IDA -- Industrial Development Authority IDRB -- Industrial Development Revenue Bond INS -- Insured LIQ -- Liquidity Agreement LOC -- Letter of Credit MBIA -- Municipal Bond Investors Assurance PCR -- Pollution Control Revenue PLC -- Public Limited Company PRF -- Prerefunded RANs - -- Revenue Anticipation Notes TANs -- Tax Anticipation Notes TOBs -- Tender Option Bonds TRANs -- Tax and Revenue Anticipation Notes VRDNs - -- Variable Rate Demand Notes (See Notes which are an integral part of the Financial Statements) PENNSYLVANIA MUNICIPAL CASH TRUST STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1997 (UNAUDITED) ASSETS: Total investments in securities, at amortized cost and value $ 314,713,613 Cash 402,882 Income receivable 2,309,071 Total assets 317,425,566 LIABILITIES: Income distribution payable $ 866,353 Accrued expenses 76,652 Total liabilities 943,005 Net Assets for 316,482,561 shares outstanding $ 316,482,561 NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE: INSTITUTIONAL SERVICE SHARES: $256,935,979 / 256,935,979 shares outstanding $1.00 CASH SERIES SHARES: $20,253,156 / 20,253,156 shares outstanding $1.00 INSTITUTIONAL SHARES: $39,293,426 / 39,293,426 shares outstanding $1.00
(See Notes which are an integral part of the Financial Statements) PENNSYLVANIA MUNICIPAL CASH TRUST STATEMENT OF OPERATIONS SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED) INVESTMENT INCOME: Interest $ 5,510,719 EXPENSES: Investment advisory fee $ 745,791 Administrative personnel and services fee 112,628 Custodian fees 22,115 Transfer and dividend disbursing agent fees and expenses 38,318 Directors'/Trustees' fees 2,300 Auditing fees 7,160 Legal fees 2,418 Portfolio accounting fees 49,787 Distribution services fee -- Cash Series Shares 45,178 Shareholder services fee -- Institutional Service Shares 292,639 Shareholder services fee -- Cash Series Shares 28,236 Shareholder services fee -- Institutional Shares 52,020 Share registration costs 14,876 Printing and postage 11,258 Insurance premiums 3,383 Miscellaneous 2,018 Total expenses 1,430,125 Waivers -- Waiver of investment advisory fee $ (334,277) Waiver of distribution services fee -- Cash Series Shares (5,647) Waiver of shareholder services fee -- Institutional Service Shares (58,528) Waiver of shareholder services fee -- Institutional Shares (52,020) Total waivers (450,472) Net expenses 979,653 Net investment income $ 4,531,066
(See Notes which are an integral part of the Financial Statements) PENNSYLVANIA MUNICIPAL CASH TRUST STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED (UNAUDITED) YEAR ENDED APRIL 30, OCTOBER 31, 1997 1996 INCREASE (DECREASE) IN NET ASSETS: OPERATIONS -- Net investment income $ 4,531,066 $ 9,138,414 DISTRIBUTIONS TO SHAREHOLDERS -- Distributions from net investment income Institutional Service Shares (3,561,175) (7,961,058) Cash Series Shares (295,989) (504,436) Institutional Shares (673,902) (672,920) Change in net assets resulting from distributions to shareholders (4,531,066) (9,138,414) SHARE TRANSACTIONS -- Proceeds from sale of shares 568,385,882 1,005,435,067 Net asset value of shares issued to shareholders in payment of distributions declared 873,488 2,204,567 Cost of shares redeemed (531,528,909) (1,036,079,299) Change in net assets resulting from share transactions 37,730,461 (28,439,665) Change in net assets 37,730,461 (28,439,665) NET ASSETS: Beginning of period 278,752,100 307,191,765 End of period $ 316,482,561 $ 278,752,100
(See Notes which are an integral part of the Financial Statements) PENNSYLVANIA MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS -- INSTITUTIONAL SERVICE SHARES (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED (UNAUDITED) APRIL 30, YEAR ENDED OCTOBER 31, 1997 1996 1995 1994 1993 1992 1991 1990(A) NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 INCOME FROM INVESTMENT OPERATIONS Net investment income 0.02 0.03 0.03 0.02 0.02 0.03 0.05 0.05 LESS DISTRIBUTIONS Distributions from net investment income (0.02) (0.03) (0.03) (0.02) (0.02) (0.03) (0.05) (0.05) NET ASSET VALUE, $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 END OF PERIOD TOTAL RETURN(B) 1.51% 3.16% 3.44% 2.25% 2.24% 3.08% 4.64% 5.78% RATIOS TO AVERAGE NET ASSETS Expenses 0.65%* 0.65% 0.65% 0.64% 0.57% 0.56% 0.55% 0.50%* Net investment income 3.04%* 3.12% 3.38% 2.19% 2.21% 3.04% 4.53% 5.56%* Expense waiver/ reimbursement(c) 0.27%* 0.27% 0.27% 0.02% 0.12% 0.12% 0.11% 0.18%* SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $256,936 $221,851 $276,407 $229,160 $318,518 $308,200 $317,165 $275,882
* Computed on an annualized basis. (a) Reflects operations for the period from November 21, 1989 (date of initial public investment) to October 31, 1990. (b) Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable. (c) This voluntary expense decrease is reflected in both the expense and net investment income ratios shown above. (See Notes which are an integral part of the Financial Statements) PENNSYLVANIA MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS -- CASH SERIES SHARES (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED (UNAUDITED) APRIL 30, YEAR ENDED OCTOBER 31, 1997 1996 1995 1994 1993 1992 1991(A) NET ASSET VALUE, $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 BEGINNING OF PERIOD INCOME FROM INVESTMENT OPERATIONS Net investment income 0.01 0.03 0.03 0.02 0.02 0.03 0.03 LESS DISTRIBUTIONS Distributions from net investment income (0.01) (0.03) (0.03) (0.02) (0.02) (0.03) (0.03) NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 TOTAL RETURN(B) 1.31% 2.75% 3.02% 1.84% 1.83% 2.67% 3.55% RATIOS TO AVERAGE NET ASSETS Expenses 1.05%* 1.05% 1.05% 1.04% 0.97% 0.96% 0.78%* Net investment income 2.62%* 2.72% 2.98% 1.73% 1.88% 2.64% 3.92%* Expense 0.27%* 0.27% 0.28% 0.18% 0.12% 0.12% 0.28%* waiver/reimbursement(c) SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $20,253 $19,825 $28,255 $18,352 $18,561 $24,694 $19,846
* Computed on an annualized basis. (a) Reflects operations for the period from January 25, 1991 (date of initial public investment) to October 31, 1991. (b) Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable. (c) This voluntary expense decrease is reflected in both the expense and net investment income ratios shown above. (See Notes which are an integral part of the Financial Statements) PENNSYLVANIA MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS -- INSTITUTIONAL SHARES (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED (UNAUDITED) YEAR ENDED APRIL 30, OCTOBER 31, 1997 1996 1995(A) NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 INCOME FROM INVESTMENT OPERATIONS Net investment income 0.02 0.03 0.01 LESS DISTRIBUTIONS Distributions from net investment income (0.02) (0.03) (0.01) NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 TOTAL RETURN(B) 1.61% 3.37% 1.03% RATIOS TO AVERAGE NET ASSETS Expenses 0.45%* 0.45% 0.45%* Net investment income 3.24%* 3.27% 3.81%* Expense waiver/reimbursement(c) 0.47%* 0.47% 0.46%* SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $39,293 $37,076 $2,529
* Computed on an annualized basis. (a) Reflects operations for the period from August 23, 1995 (date of initial public investment) to October 31, 1995. (b) Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable. (c) This voluntary expense decrease is reflected in both the expense and net investment income ratios shown above. (See Notes which are an integral part of the Financial Statements) PENNSYLVANIA MUNICIPAL CASH TRUST NOTES TO FINANCIAL STATEMENTS APRIL 30, 1997 (UNAUDITED) 1. ORGANIZATION Federated Municipal Trust (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act") as an open-end, management investment company. The Trust consists of sixteen portfolios. The financial statements included herein are only those of Pennsylvania Municipal Cash Trust (the "Fund"). The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. The Fund offers three classes of shares: Institutional Service Shares, Cash Series Shares and Institutional Shares. The investment objective of the Fund is current income exempt from federal regular income tax and the personal income taxes imposed by the Commonwealth of Pennsylvania consistent with stability of principal. 2. SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with generally accepted accounting principles. INVESTMENT VALUATIONS -- The Fund's use of the amortized cost method to value its portfolio securities is in accordance with Rule 2a-7 under the Act. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS -- Interest income and expenses are accrued daily. Bond premium and discount, if applicable, are amortized as required by the Internal Revenue Code, as amended (the "Code"). Distributions to shareholders are recorded on the ex-dividend date. FEDERAL TAXES -- It is the Fund's policy to comply with the provisions of the Code applicable to regulated investment companies and to distribute to shareholders each year substantially all of its income. Accordingly, no provisions for federal tax are necessary. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS -- The Fund may engage in when-issued or delayed delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked to market daily and begin earning interest on the settlement date. 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 Board of Trustees (the "Trustees") to issue an unlimited number of full and fractional shares of beneficial interest (without par value) for each class of shares. At April 30, 1997, capital paid-in aggregated $316,482,561. Transactions in shares were as follows:
SIX MONTHS ENDED YEAR ENDED INSTITUTIONAL SERVICE SHARES APRIL 30, 1997 OCTOBER 31, 1996 Shares sold 451,086,216 859,300,895 Shares issued to shareholders in payment of distributions declared 617,241 1,683,244 Shares redeemed (416,618,193) (915,540,908) Net change resulting from Institutional Service Share transactions 35,085,264 (54,556,769) SIX MONTHS ENDED YEAR ENDED CASH SERIES SHARES APRIL 30, 1997 OCTOBER 31, 1996 Shares sold 35,858,168 54,089,713 Shares issued to shareholders in payment of distributions declared 225,296 485,371 Shares redeemed (35,655,194) (63,005,461) Net change resulting from Cash Series Share transactions 428,270 (8,430,377) SIX MONTHS ENDED YEAR ENDED INSTITUTIONAL SHARES APRIL 30, 1997 OCTOBER 31, 1996 Shares sold 81,441,498 92,044,459 Shares issued to shareholders in payment of distributions declared 30,951 35,952 Shares redeemed (79,255,522) (57,532,930) Net change resulting from Institutional Share transactions 2,216,927 34,547,481 Net change resulting from share transactions 37,730,461 (28,439,665)
4. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES INVESTMENT ADVISORY FEE -- Federated Management, the Fund's investment adviser (the "Adviser"), receives for its services an annual investment advisory fee equal to 0.50% of the Fund's average daily net assets. The Adviser may voluntarily choose to waive any portion of its fee. The Adviser can modify or terminate this voluntary waiver at any time at its sole discretion. ADMINISTRATIVE FEE -- Federated Services Company ("FServ"), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. The fee paid to FServ is based on the level of average aggregate daily net assets of all funds advised by subsidiaries of Federated Investors for the period. The administrative fee received during the period of the Administrative Services Agreement shall be at least $125,000 per portfolio and $30,000 per each additional class of shares. DISTRIBUTION SERVICES FEE -- The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund will compensate Federated Securities Corp. ("FSC"), the principal distributor, from the net assets of the Fund to finance activities intended to result in the sale of the Fund's Cash Series Shares. The Plan provides that the Fund may incur distribution expenses up to 0.40% of the average daily net assets of the Cash Series Shares, annually to compensate FSC. The distributor may voluntarily choose to waive any portion of its fee. The distributor can modify or terminate this voluntary waiver at any time at its sole discretion. SHAREHOLDER SERVICES FEE -- Under the terms of a Shareholder Services Agreement with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to 0.25% of average daily net assets of the Fund 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 April 30, 1997, 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 $279,130,000 and $251,525,000, 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 RISKS Since the Fund invests a substantial portion of its assets in issuers located in one state, it will be more susceptible to factors adversely affecting issuers of that state than would be a comparable tax-exempt mutual fund that invests nationally. In order to reduce the credit risk associated with such factors, at April 30, 1997, 79% 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 12.3% of total investments. TRUSTEES John F. Donahue Thomas G. Bigley John T. Conroy, Jr. William J. Copeland James E. Dowd Lawrence D. Ellis, M.D. Edward L. Flaherty, Jr. Glen R. Johnson Peter E. Madden Gregor F. Meyer John E. Murray, Jr. Wesley W. Posvar Marjorie P. Smuts OFFICERS John F. Donahue Chairman Glen R. Johnson President J. Christopher Donahue Executive Vice President Edward C. Gonzales Executive Vice President John W. McGonigle Executive Vice President, Treasurer, and Secretary Richard B. Fisher Vice President S. Elliott Cohan Assistant Secretary Mutual funds are not bank deposits or obligations, are not guaranteed by any bank, and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other government agency. Investment in mutual funds involves risk, including possible loss of principal. Although money market funds seek to maintain a stable net asset value of $1.00 per share, there is no assurance that they will be able to do so. This report is authorized for distribution to prospective investors only when preceded or accompanied by the fund's prospectus which contains facts concerning its objective and policies, management fees, expenses and other information. PENNSYLVANIA MUNICIPAL CASH TRUST SEMI-ANNUAL REPORT TO SHAREHOLDERS APRIL 30, 1997 Cusip 314229717 Cusip 314229881 Cusip 314229204 0052405 (6/97) [Graphic] PRESIDENT'S MESSAGE Dear Shareholder: I am pleased to present the Semi-Annual Report to Shareholders of Virginia Municipal Cash Trust, a portfolio of Federated Municipal Trust, which covers the six-month period from November 1, 1996, through April 30, 1997. The report begins with a discussion with the fund's portfolio manager, followed by a complete listing of the fund's holdings and its financial statements. Financial highlights tables are provided for the fund's Institutional Shares and Institutional Service Shares. The fund is a convenient way to put your ready cash to work pursuing double tax-free income -- free from federal regular income tax and Virginia personal income tax* -- through a portfolio concentrated in high-quality, short-term Virginia municipal securities. At the end of the reporting period, the fund's holdings were diversified among issuers that use municipal bond financing for projects as varied as health care, housing, community development, and transportation. This double tax-free advantage means you have the opportunity to earn a greater after-tax yield than you could in a comparable high-quality taxable investment. Of course, the fund also brings you the added benefits of daily liquidity and stability of principal.** During the reporting period, the fund paid double tax-free dividends totaling $0.02 per share for both Institutional Shares and Institutional Service Shares. The fund's net assets stood at $217.9 million at the end of the reporting period. Thank you for relying on Virginia Municipal Cash Trust to help your ready cash pursue tax-free income every day. As always, we will continue to provide you with the highest level of professional service. We invite your questions or comments. Sincerely, [Graphic] Glen R. Johnson President June 15, 1997 * Income may be subject to the federal alternative minimum tax. ** Although money market funds seek to maintain a stable net asset value of $1.00 per share, there is no assurance that they will be able to do so. An investment in the fund is neither insured nor guaranteed by the U.S. government. INVESTMENT REVIEW An interview with the fund's portfolio manager, Jeff A. Kozemchak, CFA, Vice President, Federated Management Q Can you comment on the economy and the interest rate environment during the six-month reporting period? A Although it did not occur until near the end of the fund's semi-annual reporting period, the Federal Reserve Board (the "Fed") brought about the first change in monetary policy in over a year. On March 25, 1997, the Fed, in the face of stronger than expected demand, voted to raise the federal funds target rate from 5.25% to 5.50%. The move was viewed as being pre-emptive against the threat of future inflationary pressures possibly brought about by tight labor market conditions. Until that point, movements in interest rates reflected shifting market sentiment about the need for the Fed to move to a more restrictive policy. As the reporting period began in November 1996, the economy had been showing signs of slowing, thereby allaying the market's fears about inflation. Then, in December, the market's uneasiness was once more ignited as a string of economic statistics showed stronger growth and Fed Chairman Alan Greenspan made cautionary statements regarding inflation and "irrational exuberance" in the equity market. With inflation still appearing to be benign, the market tolerated a steady pace of growth into early 1997. However, Chairman Greenspan's Humphrey-Hawkins testimony before Congress in late February marked a turning point for the short-term money markets -- indeed the bond and equity markets as well -- as his relatively hawkish statements revealed fears at the Fed that the transitory factors that had been keeping inflation under control in the face of fairly robust growth may be coming to an end. This statement by the Fed caused a sharp reversal in interest rate movement and the market's perception about future Fed policy. The ensuing weeks brought continued evidence of persistent strength, and culminated in the Fed's action at the Federal Open Market Committee in late March. For the first three months of the reporting period, short-term interest rates traded in a relatively narrow range as the continued friendly inflation picture provided some comfort to market participants. The yield on the six-month Treasury bill, for example, moved in a range between 5.20% and 5.35% from the beginning of November through early February. However, short-term interest rates began to rise in late February, and by the time of the Fed tightening in late March, had built in much of the expectations regarding the Fed decision. In April, the financial markets continued to focus on the likelihood of an additional tightening move later in May, causing short-term yields to rise even further. Yields on the six-month Treasury bill rose sharply over this interim period, moving from a low of 5.20% in mid-February to a high of 5.68% in late April before falling back to 5.53% by the end of reporting period. Q What were your strategies for the fund during the period? A The fund's average maturity at the beginning of the reporting period was approximately 54 days. As the signs of strength in the economy became more apparent, and as expectation of an imminent Fed tightening grew in the first quarter of 1997, we lowered the average maturity target range of the fund from between 50 and 55 days to between 35 and 45 days. By the end of the reporting period, we had allowed the average maturity to roll further inward to 32 days, so as to further increase the portfolio's responsiveness to potential interest rate increases. Also, a lack of attractive, fixed-rate supply was a factor. Once an average maturity range is targeted, the portfolio attempts to maximize performance through ongoing relative value analysis. Relative value analysis includes the comparison of the richness or cheapness of municipal securities to one another as well as municipals to taxable instruments, such as Treasury securities. The fund's portfolio remained barbelled in structure, which combined a significant portion in seven-day variable rate demand notes and short maturity commercial paper with purchases of longer-term, six- to twelve-month fixed rate notes. This portfolio structure continues to pursue a competitive yield over time. Q How has the fund's yield responded to this rate environment? A The fund's yield was affected by Fed policy (interest rate increases), changes in market expectations, as well as supply and demand imbalances unique to the municipal money markets. However, because of these imbalances the fund's yield may experience more volatility on a weekly basis than Treasury yields and taxable money fund yields. In general, yields on municipal money market funds increased during the reporting period. For the fund, the seven-day net yield of the Institutional Shares on April 30, 1997 was 3.76%, compared to 3.20% at the beginning of the reporting period.* For the Institutional Service Shares, the seven-day net yield was 3.61% at the end of the reporting period compared to 3.10% six months ago.* Q Looking through 1997, what is your outlook for short-term rates? A Although the Fed decided to hold short-term interest rates steady in the May meeting, our expectations are that the Fed will find cause to tighten monetary policy further in 1997 -- perhaps as soon as in July. It is also anticipated that the overall tightening cycle will not be long in terms of magnitude or duration. The pre-emptive move by the Fed should help to preclude the need for more aggressive action down the road by preventing the build-up of inflationary pressures. We would look to see moderately higher short-term interest rates throughout the course of the year, but not to the extent evidenced in the last tightening cycle in 1994. As such, we will likely continue in our modestly defensive stance for the portfolio until market conditions indicate otherwise. * Performance quoted represents past performance and is not indicative of future results. Yield will vary. The seven-day net yield is calculated daily, based on the income dividends for the seven days ending on the date of calculation and then compounded and annualized. VIRGINIA MUNICIPAL CASH TRUST PORTFOLIO OF INVESTMENTS APRIL 30, 1997 (UNAUDITED)
PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- 99.2% VIRGINIA -- 95.5% $ 5,722,000 Alexandria, VA IDA Weekly VRDNs (American Red Cross)/(Sanwa Bank Ltd., Osaka LOC) $ 5,722,000 8,000,000 Alexandria, VA Redevelopment and Housing Authority Weekly VRDNs (Crystal City Apartments)/(Safeco Insurance Co. of America INS)/(Barclays Bank PLC, London LIQ) 8,000,000 3,500,000 Alexandria, VA Redevelopment and Housing Authority, Series 1996B Weekly VRDNs (Buckingham Village Apartments)/(First Union National Bank, Charlotte, NC LOC) 3,500,000 2,200,000 Amelia County, VA IDA, (Series 1991) Weekly VRDNs (Chambers Waste System)/(Morgan Guaranty Trust Co., New York LOC) 2,200,000 2,500,000 Bedford County, VA IDA, (Series 1996) Weekly VRDNs (Nekoosa Packaging Corporation Project)/(Canadian Imperial Bank of Commerce, Toronto LOC) 2,500,000 1,500,000 Bedford County, VA IDA, (Series 1997) Weekly VRDNs (Nekoosa Packaging Corporation Project)/(Canadian Imperial Bank of Commerce, Toronto LOC) 1,500,000 4,700,000 Botetourt County, VA IDA, IDRB (Series 1995) Weekly VRDNs (Emkay Holdings, L.L.C. Project)/(State Street Bank and Trust Co. LOC) 4,700,000 5,500,000 Campbell County, VA IDA, Solid Waste Disposal Facilities Revenue ACES Weekly VRDNs (Georgia-Pacific Corp.)/(Industrial Bank of Japan Ltd., Tokyo LOC) 5,500,000 1,000,000 Charles County, VA IDA, Solid Waste Disposal Facility Revenue Bonds (Series 1996) Weekly VRDNs (Chambers Development of Virginia, Inc. Project)/(Morgan Guaranty Trust Co., New York LOC) 1,000,000 1,750,000 Charlottesville, VA IDA, IDR Refunding Bonds, 3.65% TOBs (Safeway, Inc.)/(Bankers Trust Co., New York LOC) 6/2/1997 1,750,000 1,900,000 Chesapeake, VA IDA, (Series 1986) Weekly VRDNs (Volvo AB)/ (Union Bank of Switzerland, Zurich LOC) 1,900,000
VIRGINIA MUNICIPAL CASH TRUST
PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- CONTINUED VIRGINIA -- CONTINUED $ 5,000,000 Chesapeake, VA IDA, IDRB (Series 1988) Weekly VRDNs (Sumitomo Machinery Corp. of America Corp.)/(Sumitomo Bank Ltd., Osaka LOC) $ 5,000,000 1,500,000 Chesapeake, VA, 6.50% Bonds (United States Treasury PRF), 7/1/1997 (@102) 1,536,542 4,000,000 Commonwealth of Virginia, GO BANs (1996 Series), 3.65% CP, Mandatory Tender 5/19/1997 4,000,000 5,800,000 Danville, VA IDA, (Series 1997) Weekly VRDNs (Diebold, Inc.)/(Bank One, Akron, N.A. LOC) 5,800,000 1,131,000 Dinwiddie County, VA IDA, IDRB (Series 1989) Weekly VRDNs (Tindall Concrete VA, Inc.)/(First Union National Bank, Charlotte, NC LOC) 1,131,000 3,515,000 Dinwiddie County, VA IDA, IDRB (Series 1991) Weekly VRDNs (Maclin-Zimmer-Mcgill Tobacco Co., Inc.)/(Wachovia Bank of NC, N.A., Winston-Salem LOC) 3,515,000 5,298,975 Equity Trust III, (1996 Series) Weekly VRDNs (Bayerische Hypotheken-Und Wechsel-Bank Ag LOC) 5,298,975 4,000,000 Fairfax County, VA IDA, (Series 1993B), 3.50% CP (Inova Health System), Mandatory Tender 5/29/1997 4,000,000 6,000,000 Fairfax County, VA IDA, (Series 1993B), 3.80% CP (Inova Health System), Mandatory Tender 7/22/1997 6,000,000 5,000,000 Fairfax County, VA IDA, (Series 1993B), 3.90% CP (Inova Health System), Mandatory Tender 5/22/1997 5,000,000 2,000,000 Fairfax County, VA, (Series A), 6.50% Bonds (United States Treasury PRF), 4/1/1998 (@102) 2,087,602 5,710,000 Fairfax County, VA, Public Improvement Bonds (Series A), 5.50% Bonds, 6/1/1997 5,718,762 6,100,000 Falls Church, VA IDA, (Series 1985), 3.65% TOBs (Kaiser Permanente Medical Care Program), Optional Tender 5/1/1997 6,100,000 600,000 Fauquier County, VA IDA, Refunding Revenue Bonds Weekly VRDNs (Warrenton Development Co.)/(Nationsbank, N.A., Charlotte LOC) 600,000 7,113,000 Fluvanna County, VA IDA, (Series 1986) Weekly VRDNs (Thomasville Furniture Industries)/(Union Bank of Switzerland, Zurich LOC) 7,113,000
VIRGINIA MUNICIPAL CASH TRUST
PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- CONTINUED VIRGINIA -- CONTINUED $ 2,500,000 Front Royal & Warren County, VA IDA, IDRB (Series 1995) Weekly VRDNs (Pen-Tab Industries, Inc. Project)/(Bank of America Illinois LOC) $ 2,500,000 835,000 Grayson County, VA IDA, (Series 1987) Weekly VRDNs (Robertshaw Controls Company Project)/(Nationsbank, N.A., Charlotte LOC) 835,000 3,000,000 Halifax, VA IDA, MMMs, PCR, 3.45% CP (Virginia Electric Power Co.), Mandatory Tender 5/21/1997 3,000,000 7,500,000 Halifax, VA IDA, MMMs, PCR, 3.55% CP (Virginia Electric Power Co.), Mandatory Tender 5/19/1997 7,500,000 1,800,000 Hanover County, VA IDA Weekly VRDNs (Fiber-Lam, Inc. Project)/ (Nationsbank, N.A., Charlotte LOC) 1,800,000 435,000 Hanover County, VA, UT GO 6.50% Public Improvement Bonds (Series 1997), 7/15/1997 437,561 400,000 King George County IDA, VA, (Series 1996) Weekly VRDNs (Garnet of Virginia, Inc. Project)/(Morgan Guaranty Trust Co., New York LOC) 400,000 1,535,000 Loudoun County, VA, 6.70% Bonds, 6/1/1997 1,538,688 3,200,000 Mecklenburg County, VA IDA, IDRB Weekly VRDNs (Harden Manufacturing Corp.)/(Columbus Bank and Trust Co., GA LOC) 3,200,000 3,000,000 Mecklenburg County, VA IDA, IDRB Weekly VRDNs (Smith Land Holdings, L.L.C.)/(Columbus Bank and Trust Co., GA LOC) 3,000,000 15,000,000 Metropolitan Washington, DC Airports Authority, 3.65% CP (Nationsbank, N.A., Charlotte LOC), Mandatory Tender 5/20/1997 15,000,000 570,000 Newport News, VA, UT GO, 7.10% Bonds (United States Treasury PRF), 7/1/1997 (@100.25) 574,389 1,435,000 Newport News, VA, UT GO, 7.10% Bonds (United States Treasury PRF), 7/1/1997 (@100.25) 1,446,168 470,000 Newport News, VA, UT GO, 7.10% Bonds (United States Treasury PRF), 7/1/1997 (@100.5) 474,786 1,540,000 Newport News, VA, UT GO, 7.10% Bonds (United States Treasury PRF), 7/1/1997 (@100.5) 1,555,813 1,000,000 Norfolk, VA, 4.50% Bonds, 2/1/1998 1,006,603
VIRGINIA MUNICIPAL CASH TRUST
PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- CONTINUED VIRGINIA -- CONTINUED $ 3,000,000 Norfolk, VA, UT GO, 6.60% Bonds (United States Treasury PRF), 6/1/1997 (@102) $ 3,066,981 1,500,000 Norfolk, VA, UT GO, 6.70% Bonds (United States Treasury PRF), 6/1/1997 (@102) 1,533,445 1,425,000 Pulaski County, VA IDA, (Series 1995) Weekly VRDNs (Balogh Real Estate Ltd. Partnership Mar-Bal Inc. Project)/(Bank One, Cleveland, N.A. LOC) 1,425,000 865,000 Richmond, VA IDA, Industrial Development Revenue Refunding Bonds (Series 1987-B), 3.70% TOBs (Crow-Klein-Macfarlane Project)/ (First Union National Bank of Virginia LOC), Optional Tender 5/15/1997 865,000 500,000 Richmond, VA Redevelopment & Housing Authority, (Series B-1) Weekly VRDNs (Richmond, VA Red Tobacco Row)/(Bayerische Landesbank Girozentrale LOC) 500,000 1,500,000 Richmond, VA Redevelopment & Housing Authority, (Series B-3) Weekly VRDNs (Richmond, VA Red Tobacco Row)/(Bayerische Landesbank Girozentrale LOC) 1,500,000 2,160,000 Richmond, VA Redevelopment & Housing Authority, (Series B-5) Weekly VRDNs (Richmond, VA Red Tobacco Row)/(Bayerische Landesbank Girozentrale LOC) 2,160,000 3,555,000 Richmond, VA Redevelopment & Housing Authority, (Series B-6) Weekly VRDNs (Richmond, VA Red Tobacco Row)/(Bayerische Landesbank Girozentrale LOC) 3,555,000 2,600,000 South Hill, VA IDA, IDRB (Series 1987) Weekly VRDNs (South Hill Veneers, Inc Project)/(Bank One, Columbus, N.A. LOC) 2,600,000 2,500,000 Staunton, VA IDA, (Series 1997) Weekly VRDNs (Diebold, Inc.)/(Bank One, Akron, N.A. LOC) 2,500,000 2,375,000 Tazewell County, VA IDA, (Series 1993) Weekly VRDNs (Seville Properties Bluefield)/(Huntington National Bank, Columbus, OH LOC) 2,375,000 2,105,000 Virginia Beach, VA IDA, (Series 1993) Weekly VRDNs (Ocean Ranch Motel Corp.)/(Nationsbank, N.A., Charlotte LOC) 2,105,000 1,200,000 Virginia Beach, VA, UT GO, 5.125% Bonds, 2/1/1998 1,212,510
VIRGINIA MUNICIPAL CASH TRUST
PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- CONTINUED VIRGINIA -- CONTINUED $ 3,000,000 Virginia Peninsula Port Authority, Facility Revenue Refunding Bonds (Series 1992), 3.65% CP (CSX Corp.)/(Bank of Nova Scotia, Toronto LOC), Mandatory Tender 7/11/1997 $ 3,000,000 6,500,000 Virginia Peninsula Port Authority, Facility Revenue Refunding Bonds (Series 1992), 3.70% CP (CSX Corp.)/(Bank of Nova Scotia, Toronto LOC), Mandatory Tender 7/18/1997 6,500,000 4,944,000 Virginia Peninsula Port Authority, IDRB (Series 1986) Weekly VRDNs (Eeco Project)/(Nationsbank, N.A., Charlotte LOC) 4,944,000 4,700,000 Virginia Small Business Financing Authority Weekly VRDNs (Moses Lake Industries)/(KeyBank, N.A. LOC) 4,700,000 1,000,000 Virginia State Public Building Authority, (Series C), 4.35% Bonds, 8/1/1997 1,001,338 910,000 Virginia State Transportation Board, (Series A), 5.00% Bonds, 5/15/1997 910,500 4,860,000 Virginia State Transportation Board, (Series B), 5.00% Bonds, 5/15/1997 4,862,670 1,507,000 Williamsburg, VA IDA, (Series 1988) Weekly VRDNs (Colonial Williamsburg Foundation Museum)/(Nationsbank, N.A., Charlotte LOC) 1,507,000 1,575,000 Winchester, VA IDA, (Series 1995) Weekly VRDNs (Midwesco Filter Resources, Inc. Project)/(Harris Trust & Savings Bank, Chicago LOC) 1,575,000 3,400,000 Winchester, VA IDA, Hospital Refunding Revenue Bonds, 4.30% Bonds (Winchester Medical Center, Inc.)/(AMBAC INS), 1/1/1998 3,415,470 5,000,000 York County, VA IDA, (Series 1985), 3.80% CP (Virginia Electric Power Co.), Mandatory Tender 7/25/1997 5,000,000 Total 208,255,803 VIRGIN ISLANDS -- 1.4% 3,000,000 Virgin Islands HFA, Single Family Mortgage Revenue Refunding Bonds (1995 Series B), 3.75% TOBs (FGIC INS), Mandatory Tender 6/1/1997 3,000,000
VIRGINIA MUNICIPAL CASH TRUST
PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- CONTINUED PUERTO RICO -- 2.3% $ 1,500,000 Puerto Rico Electric Power Authority, (Series L), 8.40% Bonds (United States Treasury PRF), 7/1/1997 (@102) $ 1,540,946 3,500,000 Puerto Rico Industrial, Medical & Environmental PCA, (Series 1983A), 3.80% TOBs (Reynolds Metals Co.)/(ABN AMRO Bank N.V., Amsterdam LOC), Optional Tender 9/1/1997 3,500,569 Total 5,041,515 TOTAL INVESTMENTS (AT AMORTIZED COST)(B) $ 216,297,318
Securities that are subject to Alternative Minimum Tax represent 56.4% of the portfolio as calculated based upon total portfolio market value. (a)The fund may only invest in securities rated in one of the two highest short-term rating categories by one or more 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 Ratings Group, MIG-1, or MIG-2 by Moody's Investors Service, Inc., or F-1+, F-1, and F-2 by Fitch Investors Service, Inc. are all considered rated in one of the two highest short-term rating categories. Securities rated in the highest short-term rating category (and unrated securities of comparable quality) are identified as First Tier securities. Securities rated in the second highest short-term rating category (and unrated securities of comparable quality) are identified as Second Tier securities. The fund follows applicable regulations in determining whether a security is rated and whether a security rated by multiple NRSROs in different rating categories should be identified as a First or Second Tier security. At April 30, 1997, the portfolio securities were rated as follows: Tier Rating Percent Based on Total Market Value (unaudited) FIRST TIER SECOND TIER 100.00% 0.00% (b) Also represents cost for federal tax purposes. Note: The categories of investments are shown as a percentage of net assets ($217,945,721) at April 30, 1997. The following acronyms are used throughout this portfolio: ACES -- Adjustable Convertible Extendable Securities AMBAC -- American Municipal Bond Assurance Corporation BANs -- Bond Anticipation Notes CP -- Commercial Paper FGIC -- Financial Guaranty Insurance Company GO - -- General Obligation HFA -- Housing Finance Authority IDA -- Industrial Development Authority IDR -- Industrial Development Revenue IDRB -- Industrial Development Revenue Bond INS -- Insured LIQ -- Liquidity Agreement LOC -- Letter of Credit MMMs -- Money Market Municipals PCA -- Pollution Control Authority PCR -- Pollution Control Revenue PLC -- Public Limited Company PRF -- Prerefunded TOBs -- Tender Option Bonds UT -- Unlimited Tax VRDNs -- Variable Rate Demand Notes (See Notes which are an integral part of the Financial Statements) VIRGINIA MUNICIPAL CASH TRUST STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1997 (UNAUDITED) ASSETS: Total investments in securities, at amortized cost and value $ 216,297,318 Cash 473,160 Income receivable 1,742,870 Deferred expenses 8,777 Total assets 218,522,125 LIABILITIES: Payable for shares redeemed $ 301 Income distribution payable 559,561 Accrued expenses 16,542 Total liabilities 576,404 NET ASSETS for 217,945,721 shares outstanding $ 217,945,721 NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE: INSTITUTIONAL SHARES: $27,446,863 / 27,446,863 shares outstanding $1.00 INSTITUTIONAL SERVICE SHARES: $190,498,858 / 190,498,858 shares outstanding $1.00
(See Notes which are an integral part of the Financial Statements) VIRGINIA MUNICIPAL CASH TRUST STATEMENT OF OPERATIONS SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED) INVESTMENT INCOME: Interest $4,000,160 EXPENSES: Investment advisory fee $ 440,076 Administrative personnel and services fee 82,926 Custodian fees 16,248 Transfer and dividend disbursing agent fees and expenses 28,498 Directors'/Trustees' fees 998 Auditing fees 6,457 Legal fees 2,586 Portfolio accounting fees 35,077 Shareholder services fee -- Institutional Shares 27,184 Shareholder services fee -- Institutional Service Shares 247,898 Share registration costs 15,888 Printing and postage 9,840 Insurance premiums 2,256 Miscellaneous 5,956 Total expenses 921,888 Waivers -- Waiver of investment advisory fee $(102,905) Waiver of shareholder services fee -- Institutional Shares (27,184) Waiver of shareholder services fee -- Institutional Service (130,263) Shares Total waivers (260,352) Net expenses 661,536 Net investment income $3,338,624
(See Notes which are an integral part of the Financial Statements) VIRGINIA MUNICIPAL CASH TRUST STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED (UNAUDITED) YEAR ENDED APRIL 30, OCTOBER 31, 1997 1996 INCREASE (DECREASE) IN NET ASSETS: OPERATIONS -- Net investment income $ 3,338,624 $ 5,112,556 DISTRIBUTIONS TO SHAREHOLDERS -- Distributions from net investment income Institutional Shares (342,391) (761,548) Institutional Service Shares (2,996,233) (4,351,008) Change in net assets resulting from distributions to shareholders (3,338,624) (5,112,556) SHARE TRANSACTIONS -- Proceeds from sale of shares 823,403,850 1,246,683,348 Net asset value of shares issued to shareholders in payment of distributions declared 1,943,710 3,397,142 Cost of shares redeemed (811,278,289) (1,195,928,451) Change in net assets resulting from share 14,069,271 54,152,039 transactions Change in net assets 14,069,271 54,152,039 NET ASSETS: Beginning of period 203,876,450 149,724,411 End of period $ 217,945,721 $ 203,876,450
(See Notes which are an integral part of the Financial Statements) VIRGINIA MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS -- INSTITUTIONAL SHARES (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED (UNAUDITED) APRIL 30, YEAR ENDED OCTOBER 31, 1997 1996 1995 1994 1993(A) NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 INCOME FROM INVESTMENT OPERATIONS Net investment income 0.02 0.03 0.04 0.03 0.003 LESS DISTRIBUTIONS Distributions from net investment income (0.02) (0.03) (0.04) (0.03) (0.003) NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 TOTAL RETURN(B) 1.57% 3.24% 3.56% 2.57% 0.35% RATIOS TO AVERAGE NET ASSETS Expenses 0.49%* 0.49% 0.49% 0.33% 0.09%* Net investment income 3.13%* 3.19% 3.50% 2.56% 2.68%* Expense waiver/reimbursement(c) 0.34%* 0.40% 0.42% 0.37% 1.04%* SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $27,447 $26,302 $22,642 $20,360 $7,210
* Computed on an annualized basis. (a) Reflects operations for the period from September 16, 1993 (date of initial public investment) to October 31, 1993. (b) Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable. (c) This voluntary expense decrease is reflected in both the expense and net investment income ratios shown above. (See Notes which are an integral part of the Financial Statements) VIRGINIA MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS -- INSTITUTIONAL SERVICE SHARES (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED (UNAUDITED) APRIL 30, YEAR ENDED OCTOBER 31, 1997 1996 1995 1994 1993(A) NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 INCOME FROM INVESTMENT OPERATIONS Net investment income 0.02 0.03 0.03 0.02 0.003 LESS DISTRIBUTIONS Distributions from net investment income (0.02) (0.03) (0.03) (0.02) (0.003) NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 TOTAL RETURN(B) 1.51% 3.14% 3.46% 2.44% 0.34% RATIOS TO AVERAGE NET ASSETS Expenses 0.61%* 0.59% 0.59% 0.40% 0.19%* Net investment income 3.01%* 3.10% 3.38% 2.42% 2.67%* Expense waiver/reimbursement(c) 0.22%* 0.30% 0.32% 0.37% 1.04%* SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $190,499 $177,575 $127,083 $100,084 $45,648
* Computed on an annualized basis. (a) Reflects operations for the period from September 16, 1993 (date of initial public investment) to October 31, 1993. (b) Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable. (c) This voluntary expense decrease is reflected in both the expense and net investment income ratios shown above. (See Notes which are an integral part of the Financial Statements) VIRGINIA MUNICIPAL CASH TRUST NOTES TO FINANCIAL STATEMENTS APRIL 30, 1997 (UNAUDITED) 1. ORGANIZATION Federated Municipal Trust (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act") as an open-end, management investment company. The Trust consists of sixteen portfolios. The financial statements included herein are only those of Virginia Municipal Cash Trust (the "Fund"), a non-diversified portfolio. The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. The Fund offers two classes of shares: Institutional Shares and Institutional Service Shares. The investment objective of the Fund is current income exempt from federal regular income tax and the income tax imposed by the Commonwealth of Virginia consistent with stability of principal. 2. SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies consistently followed by the Trust in the preparation of its financial statements. These policies are in conformity with generally accepted accounting principles. INVESTMENT VALUATIONS -- The Trust's use of the amortized cost method to value its portfolio securities is in accordance with Rule 2a-7 under the Act. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS -- Interest income and expenses are accrued daily. Bond premium and discount, if applicable, are amortized as required by the Internal Revenue Code, as amended (the "Code"). Distributions to shareholders are recorded on the ex-dividend date. FEDERAL TAXES -- It is the Fund's policy to comply with the provisions of the Code applicable to regulated investment companies and to distribute to shareholders each year substantially all of its income. Accordingly, no provisions for federal tax are necessary. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS -- The Fund may engage in when-issued or delayed delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked to market daily and begin earning interest on the settlement date. DEFERRED EXPENSES -- The costs incurred by the Fund with respect to registration of its shares in its first fiscal year, excluding the initial expense of registering its shares, have been deferred and are being amortized over a period not to exceed five years from the Fund's commencement 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 Board of Trustees (the "Trustees") to issue an unlimited number of full and fractional shares of beneficial interest (without par value) for each class of shares. At April 30, 1997, capital paid-in aggregated $217,945,721. Transactions in shares were as follows:
SIX MONTHS ENDED YEAR ENDED APRIL 30, OCTOBER 31, INSTITUTIONAL SHARES 1997 1996 Shares sold 48,901,613 113,430,564 Shares issued to shareholders in payment of distributions declared 752 6,598 Shares redeemed (47,757,435) (109,777,058) Net change resulting from Institutional Share transactions 1,144,930 3,660,104 SIX MONTHS ENDED YEAR ENDED APRIL 30, OCTOBER 31, INSTITUTIONAL SERVICE SHARES 1997 1996 Shares sold 774,502,237 1,133,252,784 Shares issued to shareholders in payment of distributions declared 1,942,958 3,390,544 Shares redeemed (763,520,854) (1,086,151,393) Net change resulting from Institutional Service Share transactions 12,924,341 50,491,935 Net change resulting from share transactions 14,069,271 54,152,039
4. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES INVESTMENT ADVISORY FEE -- Federated Management, the Fund's investment adviser (the "Adviser"), receives for its services an annual investment advisory fee equal to 0.40% of the Fund's average daily net assets. The Adviser may voluntarily choose to waive any portion of its fee. The Adviser can modify or terminate this voluntary waiver at any time at its sole discretion. ADMINISTRATIVE FEE -- Federated Services Company ("FServ"), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. The fee paid to FServ is based on the level of average aggregate daily net assets of all funds advised by subsidiaries of Federated Investors for the period. The administrative fee received during the period of the Administrative Services Agreement shall be at least $125,000 per portfolio and $30,000 per each additional class of shares. SHAREHOLDER SERVICES FEE -- Under the terms of a Shareholder Services Agreement with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to 0.25% of average daily net assets of the Fund for the period. The fee paid to FSS is used to finance certain services for shareholders and to maintain shareholder accounts. 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 -- Federated Services Company maintains the Fund's accounting records for which it receives a fee. The fee is based on the level of the Fund's average daily net assets for the period, plus out-of-pocket expenses. ORGANIZATIONAL EXPENSES -- Organizational expenses of $33,493 were borne initially by the Adviser. The Fund has agreed to reimburse the Adviser for the organizational expenses during the five-year period following effective date. For the period ended April 30, 1997, the Fund paid $8,932 pursuant to this agreement. INTERFUND TRANSACTIONS -- During the period ended April 30, 1997, 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 $290,518,975 and $321,220,000 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 April 30, 1997, 63% 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 12% of total investments. TRUSTEES John F. Donahue Thomas G. Bigley John T. Conroy, Jr. William J. Copeland James E. Dowd Lawrence D. Ellis, M.D. Edward L. Flaherty, Jr. Glen R. Johnson Peter E. Madden Gregor F. Meyer John E. Murray, Jr. Wesley W. Posvar Marjorie P. Smuts OFFICERS John F. Donahue Chairman Glen R. Johnson President J. Christopher Donahue Executive Vice President Edward C. Gonzales Executive Vice President John W. McGonigle Executive Vice President, Treasurer, and Secretary Richard B. Fisher Vice President S. Elliott Cohan Assistant Secretary Mutual funds are not bank deposits or obligations, are not guaranteed by any bank, and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other government agency. Investment in mutual funds involves investment risk, including possible loss of principal. Although money market funds seek to maintain a stable net asset value of $1.00 per share, there is no assurance that they will be able to do so. This report is authorized for distribution to prospective investors only when preceded or accompanied by the fund's prospectus which contains facts concerning its objective and policies, management fees, expenses and other information. VIRGINIA MUNICIPAL CASH TRUST SEMI-ANNUAL REPORT TO SHAREHOLDERS APRIL 30, 1997 [Graphic] Federated Investors Federated Securities Corp., Distributor Cusip 314229816 Cusip 314229824 G00133-01 (6/97) [Graphic] PRESIDENT'S MESSAGE Dear Shareholder: I am pleased to present the Semi-Annual Report to Shareholders of Alabama Municipal Cash Trust, a portfolio of Federated Municipal Trust, which covers the six-month period from November 1, 1996, through April 30, 1997. The report begins with a discussion with the fund's portfolio manager, followed by a complete listing of the fund's holdings and its financial statements. The fund is a convenient way to keep your ready cash pursuing double tax-free income -- free from federal regular income tax and Alabama income tax* -- through a portfolio concentrated in high-quality, short-term Alabama municipal securities. At the end of the reporting period, the fund's holdings were diversified among issuers that use municipal bond financing for projects as varied as health care, housing, community development, and transportation. This double tax-free advantage means you have the opportunity to earn a greater after-tax yield than you could in a comparable high-quality taxable investment. Of course, the fund also brings you the added benefits of daily liquidity and stability of principal.** During the reporting period, the fund paid double tax-free dividends totaling $0.02 per share. The fund's net assets stood at $197.6 million at the end of the reporting period. Thank you for relying on Alabama Municipal Cash Trust to help your ready cash pursue tax-free income every day. As always, we will continue to provide you with the highest level of professional service. We invite your questions or comments. Sincerely, Glen R. Johnson President June 15, 1997 * Income may be subject to the federal alternative minimum tax. ** Although money market funds seek to maintain a stable net asset value of $1.00 per share, there is no assurance that they will be able to do so. An investment in the fund is neither insured nor guaranteed by the U.S. government. INVESTMENT REVIEW An interview with the fund's portfolio manager, Jeff A. Kozemchak, CFA, Vice President, Federated Management Q Can you comment on the economy and the interest rate environment during the six-month reporting period? A Although it did not occur until near the end of the fund's semi-annual reporting period, the Federal Reserve Board (the "Fed") brought about the first change in monetary policy in over a year. On March 25, 1997, the Fed, in the face of stronger than expected demand, voted to raise the federal funds target rate from 5.25% to 5.50%. The move was viewed as being pre-emptive against the threat of future inflationary pressures possibly brought about by tight labor market conditions. Until that point, movements in interest rates reflected shifting market sentiment about the need for the Fed to move to a more restrictive policy. As the reporting period began in November 1996, the economy had been showing signs of slowing, thereby allaying the market's fears about inflation. Then, in December, the market's uneasiness was once more ignited as a string of economic statistics showed stronger growth and Fed Chairman Alan Greenspan made cautionary statements regarding inflation and "irrational exuberance" in the equity market. With inflation still appearing to be benign, the market tolerated a steady pace of growth into early 1997. However, Chairman Greenspan's Humphrey-Hawkins testimony before Congress in late February marked a turning point for the short-term money markets -- indeed the bond and equity markets as well -- as his relatively hawkish statements revealed fears at the Fed that the transitory factors that had been keeping inflation under control in the face of fairly robust growth may be coming to an end. This statement by the Fed caused a sharp reversal in interest rate movement and the market's perception about future Fed policy. The ensuing weeks brought continued evidence of persistent strength, and culminated in the Fed's action at the Federal Open Market Committee in late March. For the first three months of the reporting period, short-term interest rates traded in a relatively narrow range as the continued friendly inflation picture provided some comfort to market participants. The yield on the six-month Treasury bill, for example, moved in a range between 5.20% and 5.35% from the beginning of November through early February. However, short-term interest rates began to rise in late February, and by the time of the Fed tightening in late March, had built in much of the expectations regarding the Fed decision. In April, the financial markets continued to focus on the likelihood of an additional tightening move later in May, causing short-term yields to rise even further. Yields on the six-month Treasury bill rose sharply over this interim period, moving from a low of 5.20% in mid-February to a high of 5.68% in late April before falling back to 5.53% by the end of reporting period. Q What were your strategies for the fund during the reporting period? A The fund's average maturity at the beginning of the reporting period was approximately 39 days, reflecting a neutral outlook on the direction of interest rates as well as a lack of fixed-rate six month to one-year paper in Alabama. As signs of strength in the economy became more apparent, and as expectation of an imminent Fed tightening grew in the first quarter of 1997, we emphasized the purchase of shorter term fixed-rate paper while maintaining approximately 65%-70% of the portfolio in seven-day variable rate demand notes ("VRDNs"). Seven-day VRDNs provide more portfolio responsiveness to interest rate increases. We are now targeting an average maturity range between 35 and 45 days. Once an average maturity range is targeted, the portfolio attempts to maximize performance through ongoing relative value analysis. Relative value analysis includes the comparison of the richness or cheapness of municipal securities to one another as well as municipals to taxable instruments, such as treasury securities. The fund's portfolio remained barbelled in structure, which combined a significant portion in seven-day VRDNs and short maturity commercial paper with purchases of longer-term, six- to twelve-month Alabama fixed rate notes and bonds. This portfolio structure takes advantage of the steepness of the yield curve and continues to pursue a competitive yield over time. Q How has the fund's yield responded to this rate environment? A The fund's yield was affected by Fed policy (interest rate increases), changes in market expectations, as well as supply and demand imbalances unique to the municipal money markets. However, because of these imbalances the fund's yield may experience more volatility on a weekly basis than Treasury yields and taxable money fund yields. In general, yields on municipal money market funds rose over the reporting period. For the fund, the seven-day net yield on April 30, 1997, was 3.58%, compared to 3.20% at the beginning of the reporting period.* For individual investors at the highest federal and state brackets, the latest yield was equivalent to a taxable yield of 6.46%. Q Looking through 1997, what is your outlook for short-term rates? A Although the Fed decided to hold short-term interest rates steady in the March meeting, our expectations are that the Fed will find cause to tighten monetary policy further in 1997 -- perhaps as soon as in July. It is also anticipated that the overall tightening cycle will not be long in terms of magnitude or duration. The pre-emptive move by the Fed should help to preclude the need for more aggressive action down the road by preventing the build-up of inflationary pressures. We would look to see moderately higher short-term interest rates throughout the course of the year, but not to the extent evidenced in the last tightening cycle in 1994. As such, we will likely continue in our modestly defensive stance for the portfolio until market conditions indicate otherwise. * Performance quoted represents past performance and is not indicative of future results. Yield will vary. The seven-day net yield is calculated daily, based on the income dividends for the seven days ending on the date of calculation and then compounded and annualized. ALABAMA MUNICIPAL CASH TRUST PORTFOLIO OF INVESTMENTS APRIL 30, 1997 (UNAUDITED) PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- 99.5% ALABAMA--85.6% $ 1,000,000 Alabama State Corrections Institution Finance Authority, (1993 Series A), 4.20% Bonds (MBIA INS), 4/1/1998 $ 1,002,112 500,000 Alabama State Docks Department, Docks Facilities Revenue Refunding Bonds, 6.90% Bonds (MBIA INS), 10/1/1997 506,656 3,000,000 Alabama State IDA Weekly VRDNs (Columbus Mills Inc. Project)/ (SunTrust Bank, Atlanta LOC) 3,000,000 1,760,000 Alabama State IDA Weekly VRDNs (Sunshine Homes Inc.)/ (Amsouth Bank N.A., Birmingham LOC) 1,760,000 3,970,000 Alabama State IDA, IDRB (Series 1994) Weekly VRDNs (Decatur Aluminum Corp.)/(Star Bank, N.A., Cincinnati LOC) 3,970,000 1,600,000 Alabama State IDA, IDRB Weekly VRDNs (Monarch Tile, Inc. Project)/(Nationsbank of Texas, N.A. LOC) 1,600,000 3,250,000 Alabama State IDA, IDRB's (Series 1996) Weekly VRDNs (IMI Cash Valve Project)/(Regions Bank, Alabama LOC) 3,250,000 3,350,000 Alabama State IDA, Industrial Revenue Bonds Weekly VRDNs (Kappler USA, Inc. Project)/(National Bank of Canada, Montreal LOC) 3,350,000 3,100,000 Alabama State IDA, Revenue Bonds Weekly VRDNs (Southern Bag Corporation, Ltd.)/(SouthTrust Bank of Alabama, Birmingham LOC) 3,100,000 1,000,000 Alabama State Public School & College Authority, 3.90% Bonds, 12/1/1997 1,001,550 1,100,000 Arab, AL IDB, Revenue Refunding Bonds (Series 1989) Weekly VRDNs (SCI Manufacturing, Inc.)/(Bank of Tokyo- Mitsubishi Ltd. LOC) 1,100,000 1,660,000 Ashland, AL IDB, (Series 1996) Weekly VRDNs (Tru-Wood Cabinets)/ (Regions Bank, Alabama LOC) 1,660,000 2,000,000 Birmingham, AL IDA Weekly VRDNs (Altec Industries, Inc.)/ (Wachovia Bank of Georgia N.A., Atlanta LOC) 2,000,000 1,715,000 Birmingham, AL IDA Weekly VRDNs (Glasforms, Inc.)/(Regions Bank, Alabama LOC) 1,715,000 PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- CONTINUED ALABAMA--CONTINUED $ 3,000,000 Birmingham, AL IDA, (Series 1997) Weekly VRDNs (Millcraft, AL Inc.)/(Regions Bank, Alabama LOC) $ 3,000,000 3,000,000 Birmingham, AL IDA, IDRB's (Series 1997) Weekly VRDNs (J. J. & W, IV, Ltd.)/(Svenska Handelsbanken, Inc. LOC) 3,000,000 2,500,000 Birmingham, AL IDA, Revenue Bonds (Series 1996) Weekly VRDNs (American FireLog Corp.)/(Comerica Bank, Detroit, MI LOC) 2,500,000 830,000 Birmingham-Carraway, AL Special Care Facilities Financing Authority, Series A, 4.25% Bonds (Carraway Methodist Health Systems)/(Connie Lee INS), 8/15/1997 831,511 1,415,000 Calhoun County, AL Economic Development Council Weekly VRDNs (Food Ingredients Tech. Co.)/(Nationsbank, N.A., Charlotte LOC) 1,415,000 4,230,000 Chatom, AL, (National Rural Utilities Series 1984M), 3.45% TOBs (Alabama Electric Co-op, Inc.)/(National Rural Utilities Cooperative Finance Corp. GTD), Optional Tender 8/15/1997 4,230,000 3,200,000 Chatom, AL, IDB PCR, 3.45% CP (Alabama Electric Co-op, Inc.)/ (National Rural Utilities Cooperative Finance Corp. GTD), Mandatory Tender 5/22/1997 3,200,000 6,200,000 Chatom, AL, IDB PCR, 3.55% CP (Alabama Electric Co-op, Inc.)/ (National Rural Utilities Cooperative Finance Corp. GTD), Mandatory Tender 5/9/1997 6,200,000 2,200,000 Cullman, AL IDB, IRB's (Series 1992) Weekly VRDNs (Pressac Holdings PLC)/(NBD Bank, Michigan LOC) 2,200,000 1,250,000 Cullman, AL IDB, Series 1989 Weekly VRDNs (Pressac Inc)/(NBD Bank, Michigan LOC) 1,250,000 3,000,000 Cullman, AL IDB, Variable Fixed Rate IDRB Weekly VRDNs (National Bedding Company)/(Bank of America Illinois LOC) 3,000,000 3,000,000 Decatur, AL IDB, Revenue Refunding Bonds (Series 1993) Weekly VRDNs (Allied-Signal, Inc.) 3,000,000 2,000,000 Decatur, AL IDB, Solid Waste Disposal Revenue Bonds (Series 1996) Weekly VRDNs (Trico Steel Company, L.L.C. Project)/(Chase Manhattan Bank N.A., New York LOC) 2,000,000 2,000,000 Dothan, AL IDB, Adjustable/Fixed Rate IDR's (Series 1997) Weekly VRDNs (Henderson Steel Erectors)/(Regions Financial Corp. LOC) 2,000,000 PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- CONTINUED ALABAMA--CONTINUED $ 6,175,000 Fairfield, AL IDA, Variable Rate Environmental Improvement Revenue Bonds (Series 1995), 3.45% TOBs (USX Corp.)/ (Wachovia Bank of NC, N.A., Winston-Salem LOC), Optional Tender 8/5/1997 $ 6,175,000 1,525,000 Fort Payne, AL IDB, IDRB Weekly VRDNs (Ovalstrapping, Inc.)/ (U.S. Bank of Washington N.A. LOC) 1,525,000 4,000,000 Geneva County, AL IDB, Adjustable Fixed Rate IDRB's (Series 1996) Weekly VRDNs (Brooks AG Co., Inc.)/(Regions Bank, Alabama
LOC) 4,000,000 4,000,000 Guntersville, AL IDB, (Series 1995) Weekly VRDNs (Hercules Rubber Co. Project)/(SouthTrust Bank of Alabama, Birmingham LOC) 4,000,000 3,725,000 Hamilton, AL IDB, Variable/Fixed Rate IDRB's Weekly VRDNs (Tennessee River, Inc.)/(SouthTrust Bank of Alabama, Birmingham LOC) 3,725,000 3,415,000 Hoover, AL IDA Weekly VRDNs (Bud's Best Cookies, Inc.)/ (SouthTrust Bank of Alabama, Birmingham LOC) 3,415,000 195,000 Huntsville, AL IDA Weekly VRDNs (Parkway Project (Huntsville, AL))/(Regions Bank, Alabama LOC) 195,000 1,910,000 Huntsville, AL, Warrants (Series A), 4.75% Bonds, 11/1/1997 1,918,371 1,555,000 Ider, AL IDB, Industrial Development Bonds Weekly VRDNs (Galbreath, Inc. Proj.)/(National Bank of Canada, Montreal LOC) 1,555,000 3,545,000 Jefferson County, AL, Capital Appreciation Warrants Bonds (MBIA INS), 4/1/1998 3,427,274 1,900,000 Livingston, AL IDB, Floating/Fixed Rate IDRB's (Series 1989) Weekly VRDNs (Toin Corporation U.S.A.)/(Industrial Bank of Japan Ltd., Tokyo LOC) 1,900,000 3,500,000 Lowndes County, AL IDB, (Series 1996) Weekly VRDNs (Warren Oil Company Project)/(First Union National Bank, Charlotte, NC LOC) 3,500,000 1,000,000 Mobile, AL Board of Water and Sewer Commissioners, Refunding (Series A), 9.00% Bonds (United States Treasury PRF), 1/1/1998 (@100) 1,034,582 PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- CONTINUED ALABAMA--CONTINUED $ 2,485,000 Mobile, AL Downtown Redevelopment Authority, (Series 1992) Weekly VRDNs (Mitchell Project)/(SunTrust Bank, Atlanta LOC) $ 2,485,000 3,000,000 Mobile, AL IDB, (1994 Series A), 3.65% TOBs (International Paper Co.), Optional Tender 6/1/1997 3,000,000 1,000,000 Mobile, AL IDB, Pollution Control Refunding Revenue Bonds, (Series 1992) Weekly VRDNs (Air Products & Chemicals, Inc.)/ (Air Products & Chemicals, Inc. GTD) 1,000,000 450,769 Mobile, AL, GO Warrants, 4.65% Bonds, 8/15/1997 450,769 3,000,000 Montgomery - Wynlakes Governmental Utility Services Corp., Bonds (Series 1995-A) Weekly VRDNs (Vaughn Road, L.L.C., Project)/ (Amsouth Bank N.A., Birmingham LOC) 3,000,000 800,000 Montgomery, AL IDB, (Series 1988A) Weekly VRDNs (Smith Industries)/(SunTrust Bank, Atlanta LOC) 800,000 2,665,000 Montgomery, AL IDB, (Series 1990-A) Weekly VRDNs (Industrial Partners)/(Wachovia Bank of Georgia N.A., Atlanta LOC) 2,665,000 4,000,000 Montgomery, AL IDB, (Series 1997) Weekly VRDNs (KINPAK INC. Project)/(First Union National Bank of Florida LOC) 4,000,000 3,000,000 Montgomery, AL IDB, IDRB's (Series 1996) Weekly VRDNs (CSC Fabrication, Inc. Project)/(First Union National Bank, Charlotte, NC LOC) 3,000,000 3,650,000 Montgomery, AL IDB, Industrial Development Revenue Bonds (Series 1996A) Weekly VRDNs (Jobs Company, L.L.C. Project)/ (Columbus Bank and Trust Co., GA LOC) 3,650,000 2,000,000 Phoenix City, AL IDB, (Series 1988), 3.55% CP (Mead Coated Board)/ (ABN AMRO Bank N.V., Amsterdam LOC), Mandatory Tender 5/28/1997 2,000,000 5,500,000 Phoenix City, AL IDB, (Series 1988), 3.55% CP (Mead Coated Board)/ (ABN AMRO Bank N.V., Amsterdam LOC), Mandatory Tender 6/10/1997 5,500,000 5,500,000 Phoenix City, AL IDB, (Series 1988), 3.70% CP (Mead Coated Board)/ (ABN AMRO Bank N.V., Amsterdam LOC), Mandatory Tender 7/24/1997 5,500,000 PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- CONTINUED ALABAMA--CONTINUED $ 2,900,000 Phoenix City, AL IDB, (Series 1988), 3.75% CP (Mead Coated Board)/(ABN AMRO Bank N.V., Amsterdam LOC), Mandatory Tender 9/9/1997 $ 2,900,000
850,000 Piedmont, AL IDB Weekly VRDNs (Industrial Partners)/ (Wachovia Bank of Georgia N.A., Atlanta LOC) 850,000 2,500,000 Prattville, AL IDB, IDR Bonds Weekly VRDNs (Kuhnash Properties/Arkay Plastics Project)/(PNC Bank, Ohio, N.A. LOC) 2,500,000 3,150,000 Scottsboro, AL IDB, (Series 1994) Weekly VRDNs (Maples Industries, Inc.)/(Amsouth Bank N.A., Birmingham
LOC) 3,150,000 1,250,000 Scottsboro, AL IDB, IDRB (Series 1991) Weekly VRDNs (Maples Industries, Inc.)/(Amsouth Bank N.A., Birmingham LOC) 1,250,000 5,000,000 Selma, AL IDB, Annual Tender PCR Refunding Bonds (1993 Series B), 4.15% TOBs (International Paper Co.), Optional Tender 7/15/1997 5,000,000 500,000 St. Clair County, AL IDB, (Series 1993) Weekly VRDNs (Ebsco Industries, Inc.)/(National Australia Bank, Ltd., Melbourne LOC) 500,000 300,000 Sumter County, AL IDA, Industrial Revenue Bonds (Series 1995A) Weekly VRDNs (Fulghum Fibres Project (AL))/ (Regions Bank, Alabama LOC) 300,000 1,100,000 Sumter County, AL IDA, Industrial Revenue Bonds (Series 1995B) Weekly VRDNs (Canal Chip Project)/(Regions Bank, Alabama LOC) 1,100,000 3,000,000 Troy, AL IDB, IRB's (Series 1996A) Weekly VRDNs (Hudson Sauces & Dressings, Inc.)/(Amsouth Bank N.A., Birmingham LOC) 3,000,000 2,800,000 Tuscaloosa County, AL IDA, 1995 Series A Weekly VRDNs (Tuscaloosa Steel Corporation)/(Bayerische Landesbank Girozentrale LOC) 2,800,000 2,000,000 Tuskegee, AL IDB, IDRB (Series 1995) Weekly VRDNs (Concrete Company (The))/(Columbus Bank and Trust Co., GA LOC) 2,000,000 1,185,000 University of South Alabama, University Tuition Revenue Refunding Bonds (Series 1996B), 3.80% Bonds (MBIA INS), 11/15/1997 1,185,000 PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- CONTINUED ALABAMA--CONTINUED $ 2,400,000 Vincent, AL IDB, (Series 1993) Weekly VRDNs (Ebsco Industries, Inc.)/(National Australia Bank, Ltd., Melbourne LOC) $ 2,400,000 Total 169,197,825 PUERTO RICO -- 13.9% 8,000,000 Commonwealth of Puerto Rico, Series 1997A, 4.00% TRANs, 7/30/1997 8,011,040 2,050,000 Puerto Rico Electric Power Authority, (Series K), 9.25% Bonds (United States Treasury PRF), 7/1/1997 (@102) 2,108,804 3,500,000 Puerto Rico Electric Power Authority, (Series K), 9.375% Bonds (United States Treasury PRF), 7/1/1997 (@102) 3,602,019 1,000,000 Puerto Rico Industrial, Medical & Environmental PCA, (Series 1983A), 3.80% TOBs (Reynolds Metals Co.)/(ABN AMRO Bank N.V., Amsterdam LOC), Optional Tender 9/1/1997 1,000,000 3,000,000 Puerto Rico Industrial, Medical & Environmental PCA, Pollution Control Facilities Financing Authority (Series 1983 A), 3.75% TOBs (Schering Plough Corp.)/(Morgan Guaranty Trust Co., New York LOC), Optional Tender 12/1/1997 3,002,575 6,600,000 Puerto Rico Industrial, Tourist, Education, Medical & Environmental Control Finance Authority, (Series 1994A), 3.45% CP (Inter American University of Puerto Rico)/(Banque Paribas, Paris LOC), Mandatory Tender 5/13/1997 6,600,000 2,000,000 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 6/11/1997 2,000,000 1,000,000 Puerto Rico Public Building Authority, Series H, 7.875% Bonds (United States Treasury PRF), 7/1/1997 (@102) 1,026,657 Total 27,351,095 TOTAL INVESTMENTS (AT AMORTIZED COST)(B) $ 196,548,920 Securities that are subject to Alternative Minimum Tax represent 63.1% of the portfolio as calculated based upon total portfolio market value. (a) The fund may only invest in securities rated in one of the two highest short-term rating categories by one or more 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 Ratings Group, MIG-1 or MIG-2 by Moody's Investors Service, Inc., or F-1+, F-1, and F-2 by Fitch Investors Service, Inc. are all considered rated in one of the two highest short-term rating categories. Securities rated in the highest short-term rating category (and unrated securities of comparable quality) are identified as First Tier securities. Securities rated in the second highest short-term rating category (and unrated securities of comparable quality) are identified as Second Tier securities. The fund follows applicable regulations in determining whether a security is rated and whether a security rated by multiple NRSROs in different rating categories should be identified as a First or Second Tier security. At April 30 1997, the portfolio securities were rated as follows: Tier Rating Percent Based on Total Market Value (unaudited) FIRST TIER SECOND TIER 95.93% 4.07% (b) Also represents cost for federal tax purposes. Note: The categories of investments are shown as a percentage of net assets ($197,610,673) at April 30, 1997. The following acronyms are used throughout this portfolio: CP -- Commercial Paper GO -- General Obligation GTD -- Guaranty IDA -- Industrial Development Authority IDB -- Industrial Development Bond IDR -- Industrial Development Revenue IDRB -- Industrial Development Revenue Bond INS -- Insured IRB -- Industrial Revenue Bond LOC -- Letter of Credit MBIA -- Municipal Bond Investors Assurance PCA - -- Pollution Control Authority PCR -- Pollution Control Revenue PLC -- Public Limited Company PRF -- Prerefunded TOBs -- Tender Option Bonds TRANs -- Tax and Revenue Anticipation Notes VRDNs -- Variable Rate Demand Notes (See Notes which are an integral part of the Financial Statements) ALABAMA MUNICIPAL CASH TRUST STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1997 (UNAUDITED) ASSETS: Total investments in securities, at amortized cost and value $ 196,548,920 Cash 272,135 Income receivable 1,381,367 Deferred expenses 12,196 Total assets 198,214,618 LIABILITIES: Payable for shares redeemed $ 834 Income distribution payable 565,747 Accrued expenses 37,364 Total liabilities 603,945 NET ASSETS for 197,610,673 shares outstanding $ 197,610,673 NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE: $197,610,673 / 197,610,673 shares outstanding $1.00
(See Notes which are an integral part of the Financial Statements) ALABAMA MUNICIPAL CASH TRUST STATEMENT OF OPERATIONS SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED) INVESTMENT INCOME:
Interest $ 4,153,185 EXPENSES: Investment advisory fee $ 570,160 Administrative personnel and services fee 86,106 Custodian fees 9,975 Transfer and dividend disbursing agent fees and expenses 18,230 Directors'/Trustees' fees 1,463 Auditing fees 5,670 Legal fees 2,105 Portfolio accounting fees 32,662 Shareholder services fee 285,080 Share registration costs 17,299 Printing and postage 7,314 Insurance premiums 2,473 Miscellaneous 8,531 Total expenses 1,047,068 Waivers -- Waiver of investment advisory fee $ (403,472) Waiver of shareholder services fee (11,403) Total waivers (414,875) Net expenses 632,193 Net investment income $ 3,520,992 (See Notes which are an integral part of the Financial Statements) ALABAMA MUNICIPAL CASH TRUST STATEMENT OF CHANGES IN NET ASSETS SIX MONTHS ENDED YEAR ENDED (UNAUDITED) OCTOBER 31, APRIL 30, 1997 1996 INCREASE (DECREASE) IN NET ASSETS: OPERATIONS -- Net investment income $ 3,520,992 $ 6,674,235 DISTRIBUTIONS TO SHAREHOLDERS -- Distributions from net investment income 3,520,992) (6,674,235) SHARE TRANSACTIONS -- Proceeds from sale of shares 313,012,555 712,795,816 Net asset value of shares issued to shareholders in payment of distributions declared 1,807,161 3,730,255 Cost of shares redeemed (350,929,189) (692,296,354) Change in net assets resulting from share transactions (36,109,473) 24,229,717 Change in net assets (36,109,473) 24,229,717 NET ASSETS: Beginning of period 233,720,146 209,490,429 End of period $ 197,610,673 $ 233,720,146 (See Notes which are an integral part of the Financial Statements) ALABAMA MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD) SIX MONTHS ENDED (UNAUDITED) APRIL 30, YEAR ENDED OCTOBER 31, 1997 1996 1995 1994(A) NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 INCOME FROM INVESTMENT OPERATIONS Net investment income 0.02 0.03 0.04 0.02 LESS DISTRIBUTIONS Distributions from net investment income (0.02) (0.03) (0.04) (0.02) NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 TOTAL RETURN(B) 1.55% 3.22% 3.66% 2.31% RATIOS TO AVERAGE NET ASSETS Expenses 0.55%* 0.55% 0.48% 0.36%* Net investment income 3.09%* 3.18% 3.59% 2.76%* Expense waiver/reimbursement(c) 0.36%* 0.37% 0.44% 0.62%* SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $197,611 $233,720 $209,490 $142,804
* Computed on an annualized basis. (a) Reflects operations for the period from December 3, 1993 (date of initial public investment) to October 31, 1994. For the period from November 29, 1993 (start of business) to December 3, 1993 the fund had no investment activity. (b) Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable. (c) This voluntary expense decrease is reflected in both the expense and net investment income ratios shown above. (See Notes which are an integral part of the Financial Statements) ALABAMA MUNICIPAL CASH TRUST NOTES TO FINANCIAL STATEMENTS APRIL 30, 1997 (UNAUDITED) 1. ORGANIZATION Federated Municipal Trust (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act") as an open-end, management investment company. The Trust consists of sixteen portfolios. The financial statements included herein are only those of Alabama Municipal Cash Trust (the "Fund"). The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. The investment objective of the Fund is current income exempt from federal regular income tax and the income tax imposed by the State of Alabama consistent with stability of principal. 2. SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with generally accepted accounting principles. INVESTMENT VALUATIONS -- The Fund's use of the amortized cost method to value its portfolio securities is in accordance with Rule 2a-7 under the Act. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS -- Interest income and expenses are accrued daily. Bond premium and discount, if applicable, are amortized as required by the Internal Revenue Code, as amended (the "Code"). Distributions to shareholders are recorded on the ex-dividend date. FEDERAL TAXES -- It is the Fund's policy to comply with the provisions of the Code applicable to regulated investment companies and to distribute to shareholders each year substantially all of its income. Accordingly, no provisions for federal tax are necessary. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS -- The Fund may engage in when-issued or delayed delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked to market daily and begin earning interest on the settlement date. DEFERRED EXPENSES -- The costs incurred by the Fund with respect to registration of its shares in its first year, excluding the initial expense of registering its shares, have been deferred and are being amortized over a period not to exceed five years from the Fund's commencement 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 Board of Trustees (the "Trustees") to issue an unlimited number of full and fractional shares of beneficial interest (without par value). At April 30, 1997, capital paid-in aggregated $197,610,673. Transactions in shares were as follows:
YEAR SIX MONTHS ENDED ENDED OCTOBER 31, APRIL 30, 1997 1996 Shares sold 313,012,555 712,795,816 Shares issued to shareholders in payment of distributions declared 1,807,161 3,730,255 Shares redeemed (350,929,189) (692,296,354) Net change resulting from share transactions (36,109,473) 24,229,717
4. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES INVESTMENT ADVISORY FEE -- Federated Management, the Fund's investment adviser (the "Adviser"), receives for its services an annual investment advisory fee equal to 0.50% of the Fund's average daily net assets. The Adviser may voluntarily choose to waive any portion of its fee. The Adviser can modify or terminate this voluntary waiver at any time at its sole discretion. ADMINISTRATIVE FEE -- Federated Services Company ("FServ"), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. The fee paid to FServ is based on the level of average aggregate daily net assets of all funds advised by subsidiaries of Federated Investors for the period. The administrative fee received during the period of the Administrative Services Agreement shall be at least $125,000 per portfolio and $30,000 per each additional class of shares. SHAREHOLDER SERVICES FEE -- Under the terms of a Shareholder Services Agreement with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to 0.25% of average daily net assets of the Fund for the period. The fee paid to FSS is used to finance certain services for shareholders and to maintain shareholder accounts. FSS may voluntarily choose to waive any portion of its fee. FSS can modify or terminate this voluntary waiver at any time at its sole discretion. TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES -- FServ, through its subsidiary, Federated Shareholder Services Company ("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. ORGANIZATIONAL EXPENSES -- Organizational and start-up administrative service expenses of $57,711 were borne initially by Adviser. The Fund has agreed to reimburse Adviser for the organizational and start-up administrative expenses during the five-year period following effective date. For the period ended April 30, 1997, the Fund paid $7,535 pursuant to this agreement. INTERFUND TRANSACTIONS -- During the period ended April 30, 1997, 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 $178,206,530 and $233,320,000, 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 April 30, 1997, 85% 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 8.1% of total investments. TRUSTEES John F. Donahue Thomas G. Bigley John T. Conroy, Jr. William J. Copeland James E. Dowd Lawrence D. Ellis, M.D. Edward L. Flaherty, Jr. Glen R. Johnson Peter E. Madden Gregor F. Meyer John E. Murray, Jr. Wesley W. Posvar Marjorie P. Smuts OFFICERS John F. Donahue Chairman Glen R. Johnson President J. Christopher Donahue Executive Vice President Edward C. Gonzales Executive Vice President John W. McGonigle Executive Vice President, Treasurer, and Secretary Richard B. Fisher Vice President S. Elliott Cohan Assistant Secretary Mutual funds are not bank deposits or obligations, are not guaranteed by any bank, and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other government agency. Investment in mutual funds involves risk, including possible loss of principal. Although money market funds seek to maintain a stable net asset value of $1.00 per share, there is no assurance that they will be able to do so. This report is authorized for distribution to prospective investors only when preceded or accompanied by the fund's prospectus which contains facts concerning its objective and policies, management fees, expenses and other information. ALABAMA MUNICIPAL CASH TRUST SEMI-ANNUAL REPORT TO SHAREHOLDERS APRIL 30, 1997 Federated Investors Federated Securities Corp., Distributor Cusip 314229790 G01120-01 (6/97) PRESIDENT'S MESSAGE Dear Shareholder: I am pleased to present the Semi-Annual Report to Shareholders of North Carolina Municipal Cash Trust, a portfolio of Federated Municipal Trust, which covers the six-month period from November 1, 1996, through April 30, 1997. The report begins with a discussion with the fund's portfolio manager, followed by a complete listing of the fund's holdings and its financial statements. The fund is a convenient way to keep your ready cash pursuing double tax-free income -- free from federal regular income tax and North Carolina state income tax* -- through a portfolio concentrated in high-quality, short-term North Carolina municipal securities. At the end of the reporting period, the fund's holdings were diversified among issuers that use municipal bond financing for projects as varied as health care, housing, community development, and transportation. This double tax-free advantage means you have the opportunity to earn a greater after-tax yield than you could in a comparable high-quality taxable investment. Of course, the fund also brings you the added benefits of daily liquidity and stability of principal.** During the reporting period, the fund paid double tax-free dividends of $0.02 per share. The fund's net assets stood at $100.9 million at the end of the reporting period. Thank you for relying on North Carolina Municipal Cash Trust to help your ready cash pursue tax-free income every day. As always, we will continue to provide you with the highest level of professional service. We invite your questions or comments. Sincerely, [Graphic] Glen R. Johnson President June 15, 1997 * Income may be subject to the federal alternative minimum tax. ** Although money market funds seek to maintain a stable net asset value of $1.00 per share, there is no assurance that they will be able to do so. An investment in the fund is neither insured nor guaranteed by the U.S. government. INVESTMENT REVIEW An interview with the fund's portfolio manager, Jeff A. Kozemchak, CFA, Vice President, Federated Management Q Can you comment on the economy and the interest rate environment during the six-month reporting period? A Although it did not occur until near the end of the fund's semi-annual reporting period, the Federal Reserve Board (the "Fed") brought about the first change in monetary policy in over a year. On March 25, 1997, the Fed, in the face of stronger than expected demand, voted to raise the federal funds target rate from 5.25% to 5.50%. The move was viewed as being pre-emptive against the threat of future inflationary pressures possibly brought about by tight labor market conditions. Until that point, movements in interest rates reflected shifting market sentiment about the need for the Fed to move to a more restrictive policy. As the reporting period began in November 1996, the economy had been showing signs of slowing, thereby allaying the market's fears about inflation. Then, in December, the market's uneasiness was once more ignited as a string of economic statistics showed stronger growth and Fed Chairman Alan Greenspan made cautionary statements regarding inflation and "irrational exuberance" in the equity market. With inflation still appearing to be benign, the market tolerated a steady pace of growth into early 1997. However, Chairman Greenspan's Humphrey-Hawkins testimony before Congress in late February marked a turning point for the short-term money markets -- indeed the bond and equity markets as well -- as his relatively hawkish statements revealed fears at the Fed that the transitory factors that had been keeping inflation under control in the face of fairly robust growth may be coming to an end. This statement by the Fed caused a sharp reversal in interest rate movement and the market's perception about future Fed policy. The ensuing weeks brought continued evidence of persistent strength, and culminated in the Fed's action at the Federal Open Market Committee in late March. For the first three months of the reporting period, short-term interest rates traded in a relatively narrow range as the continued friendly inflation picture provided some comfort to market participants. The yield on the six-month Treasury bill, for example, moved in a range between 5.20% and 5.35% from the beginning of November through early February. However, short-term interest rates began to rise in late February, and by the time of the Fed tightening in late March, had built in much of the expectations regarding the Fed decision. In April, the financial markets continued to focus on the likelihood of an additional tightening move later in May, causing short-term yields to rise even further. Yields on the six-month Treasury bill rose sharply over this interim period, moving from a low of 5.20% in mid-February to a high of 5.68% in late April before falling back to 5.53% by the end of reporting period. Q What were your strategies for the fund during the reporting period? A The fund's average maturity at the beginning of the reporting period was very short at 33 days, reflecting a lack of supply of money market eligible North Carolina bonds. We extended the average maturity in November and December as attractively priced bonds became available. However, as signs of strength in the economy became more apparent, and as expectation of an imminent Fed tightening grew in the first quarter of 1997, we shortened the average maturity target range to between 45 and 55 days. We also emphasized the purchase of shorter term fixed-rate paper while increasing the percentage of the portfolio in seven-day variable rate demand notes ("VRDNs"). Seven-day VRDNs provide more portfolio responsiveness to interest rate increases. Once an average maturity range is targeted, the portfolio attempts to maximize performance through ongoing relative value analysis. Relative value analysis includes the comparison of the richness or cheapness of municipal securities to one another as well as municipals to taxable instruments, such as Treasury securities. The fund's portfolio remained barbelled in structure, which combined a significant portion in seven-day VRDNs and short maturity commercial paper with purchases of longer-term, six- to twelve-month North Carolina exempt fixed rate notes and bonds. This portfolio structure takes advantage of the steepness of the yield curve and continues to pursue a competitive yield over time. Q How has the fund's yield responded to this rate environment? A The fund's yield was affected by Fed policy (interest rate increases), changes in market expectations, as well as supply and demand imbalances unique to the municipal money markets. However, because of these imbalances the fund's yield may experience more volatility on a weekly basis than Treasury yields and taxable money fund yields. In general, yields on municipal money market funds rose over the reporting period. For the fund, the seven-day net yield on April 30, 1997 was 3.66%, compared to 3.04% at the beginning of the reporting period.* For individual investors at the highest federal and state tax brackets, the latest yield was equivalent to a taxable yield of 6.95%. Q Looking through 1997, what is your outlook for short-term rates? A Although the Fed decided to hold short-term interest rates steady in the March meeting, our expectations are that the Fed will find cause to tighten monetary policy further in 1997 -- perhaps as soon as in July. It is also anticipated that the overall tightening cycle will not be long in terms of magnitude or duration. The pre-emptive move by the Fed should help to preclude the need for more aggressive action down the road by preventing the build-up of inflationary pressures. We would look to see moderately higher short-term interest rates throughout the course of the year, but not to the extent evidenced in the last tightening cycle in 1994. As such, we will likely continue in our modestly defensive stance for the portfolio until market conditions indicate otherwise. * Performance quoted represents past performance and is not indicative of future results. Yield will vary. The seven-day net yield is calculated daily, based on the income dividends for the seven days ending on the date of calculation and then compounded and annualized. NORTH CAROLINA MUNICIPAL CASH TRUST PORTFOLIO OF INVESTMENTS APRIL 30, 1997 (UNAUDITED)
PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- 99.1% NORTH CAROLINA -- 87.0% $ 1,755,000 Alamance County, NC Industrial Facilities & Pollution Control Financing Authority, (Series B) Weekly VRDNs (Culp, Inc.)/(Wachovia Bank of NC, N.A., Winston-Salem LOC) $ 1,755,000 3,500,000 Bladen County, NC Industrial Facilities & Pollution Control Financing Authority, (Series 1993) Weekly VRDNs (BCH Energy, Limited Partnership)/(Bank of Tokyo-Mitsubishi Ltd. LOC) 3,500,000 1,600,000 Buncombe County, NC Industrial Facilities & Pollution Control Financing Authority, (Series 1991) Weekly VRDNs (Rich Mount, Inc.)/(Bank of Tokyo-Mitsubishi Ltd. LOC) 1,600,000 1,335,000 Burke County, NC Industrial Facilities & Pollution Control Financing Authority Weekly VRDNs (Norwalk Furniture Corp. & Hickory Furniture)/(Branch Banking & Trust Co., Wilson LOC) 1,335,000 820,000 Catawba County, NC Industrial Facilities & Pollution Control Financing Authority, (Series 1992) Weekly VRDNs (WSMP, Inc.)/(Nationsbank, N.A., Charlotte LOC) 820,000 1,800,000 Catawba County, NC Industrial Facilities & Pollution Control Financing Authority, (Series 1994) Weekly VRDNs (Ethan Allen Inc. Project)/ (Bankers Trust Co., New York LOC) 1,800,000 2,435,000 Charlotte, NC, UT GO, 5.50% Bonds, 5/1/1997 2,435,000 3,615,000 Cleveland County, NC Industrial Facilities and Pollution Control Financing Authority, IDRB (Series 1990) Weekly VRDNs (MetalsAmerica, Inc. Project)/(Nationsbank, N.A., Charlotte LOC) 3,615,000 1,550,000 Cleveland County, NC Industrial Facilities and Pollution Control Financing Authority, Pollution Control Revenue Bonds (Series 1995) Weekly VRDNs (Grover Industries, Inc. Project)/(Bank of America Illinois LOC) 1,550,000 920,000 Davidson County, NC Industrial Facilities & PCFA, IDRB (Series 1995) Weekly VRDNs (Lawrence Industries, Inc. Project)/(Branch Banking & Trust Co., Wilson LOC) 920,000 3,501,000 Duplin County, NC Water District, (Series G), 3.501% BANs, 8/6/1997 3,501,000 1,800,000 Guilford County, NC Industrial Facilities & PCFA, (Series 1989) Weekly VRDNs (Bonset America Corp.)/(Dai-Ichi Kangyo Bank Ltd., Tokyo and Industrial Bank of Japan Ltd., Tokyo LOCs) 1,800,000
NORTH CAROLINA MUNICIPAL CASH TRUST
PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- CONTINUED NORTH CAROLINA -- CONTINUED $ 8,550,000 Halifax County, NC Industrial Facilities & PCFA Weekly VRDNs (Flambeau Airmold Project)/(Norwest Bank Minnesota, Minneapolis LOC) $ 8,550,000 1,000,000 Iredell County, NC Industrial Facilities & Pollution Control Financing Authority, Industrial Revenue Bonds Weekly VRDNs (Jet Corr, Inc. Project)/(National Bank of Canada, Montreal LOC) 1,000,000 1,000,000 Johnson County, NC Industrial Facilities & Pollution Control Financing Authority, (Series 1996) Weekly VRDNs (Inolex Chemical Company Project)/(PNC Bank, N.A. LOC) 1,000,000 2,600,000 Lincoln County, NC Industrial Facilities & Pollution Control Financing Authority, Industrial Revenue Bonds Weekly VRDNs (Leucadia, Inc. Project)/(National Bank of Canada, Montreal LOC) 2,600,000 4,000,000 Martin County, NC IFA, (Series 1993) Weekly VRDNs (Weyerhaeuser Co.) 4,000,000 2,500,000 Mecklenberg County, NC Industrial Facilities and Pollution Control Financing Authority, (Series 1996) Weekly VRDNs (SteriGenics International Project)/(Comerica Bank, Detroit, MI LOC) 2,500,000 1,000,000 Mecklenburg County, NC, (Series 1996) Weekly VRDNs (YMCA of Greater Charlotte Project)/(Wachovia Bank of NC, N.A., Winston-Salem LOC) 1,000,000 3,255,000 New Hanover County, NC PCFA Weekly VRDNs (Efson, Inc.)/(Branch Banking & Trust Co., Wilson LOC) 3,255,000 1,445,000 New Hanover County, NC PCFA, (Series 1990) Weekly VRDNs (Wilmington Machinery Inc. Project)/(Branch Banking & Trust Co., Wilson LOC) 1,445,000 2,800,000 North Carolina Agricultural Finance Authority, (Series 1996) Weekly VRDNs (Coastal Carolina Gin L.L.C. Project)/(Branch Banking & Trust Co., Wilson LOC) 2,800,000 1,070,000 North Carolina Medical Care Commission Hospital, (Series 1995), 4.40% Bonds (Gaston Memorial Hospital Project), 2/15/1998 1,075,729 4,000,000 North Carolina Municipal Power Agency No. 1, (Series A), 3.45% CP (Morgan Guaranty Trust Co., New York and Union Bank of Switzerland, Zurich LOCs), Mandatory Tender 7/15/1997 4,000,000 7,000,000 North Carolina Municipal Power Agency No. 1, Catawba Electric Revenue Refunding Bonds, 7.875% Bonds (United States Treasury PRF), 1/1/1998 (@102) 7,330,610 2,000,000 North Carolina State, UT GO, 6.10% Bonds, 3/1/1998 2,041,251
NORTH CAROLINA MUNICIPAL CASH TRUST
PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- CONTINUED NORTH CAROLINA -- CONTINUED $ 4,000,000 Onslow County, NC Industrial Facilities & Pollution Control Financing Authority Weekly VRDNs (Mine Safety Appliances Co.)/(Sanwa Bank Ltd, Osaka LOC) $ 4,000,000 1,500,000 Piedmont, NC Airport Authority Weekly VRDNs (Triad International Maintenance Corp.)/(Mellon Bank N.A., Pittsburgh LOC) 1,500,000 1,900,000 Randolph County, NC IDA, (Series 1990) Weekly VRDNs (Wayne Steel, Inc.)/(Bank One, Akron, N.A. LOC) 1,900,000 5,700,000 Wake County, NC Industrial Facilities & PCFA, (Series 1990B), 3.55% CP (Carolina Power & Light Co.)/(Fuji Bank, Ltd., Tokyo LOC), Mandatory Tender 6/13/1997 5,700,000 2,000,000 Wake County, NC, UT GO, 4.70% Bonds, 3/1/1998 2,019,456 1,900,000 Washington County, NC Industrial Facilities and Pollution Control Financing Authority, IDRB (Series 1995) Weekly VRDNs (Mackeys Ferry Sawmill, Inc. Project)/(Wachovia Bank of NC, N.A., Winston-Salem LOC) 1,900,000 3,541,079 Wayne County, NC PCFA Weekly VRDNs (Cooper Industries, Inc.)/ (Sanwa Bank Ltd, Osaka LOC) 3,541,079 Total 87,789,125 PUERTO RICO -- 9.2% 3,000,000 Puerto Rico Electric Power Authority, (Series K), 9.375% Bonds (United States Treasury PRF), 7/1/1997 (@102) 3,087,445 3,000,000 Puerto Rico Industrial, Medical & Environmental PCA, (Series 1983A), 3.80% TOBs (Reynolds Metals Co.)/(ABN AMRO Bank N.V., Amsterdam LOC), Optional Tender 9/1/1997 3,000,000 1,000,000 Puerto Rico Industrial, Medical & Environmental PCA, Pollution Control Facilities Financing Authority (Series 1983A), 3.75% TOBs (Schering Plough Corp.)/(Morgan Guaranty Trust Co., New York LOC), Optional Tender 12/1/1997 1,000,858 2,200,000 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 6/11/1997 2,200,000 Total 9,288,303
NORTH CAROLINA MUNICIPAL CASH TRUST
PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- CONTINUED VIRGIN ISLANDS--2.9% $ 3,000,000 Virgin Islands HFA, Single Family Mortgage Revenue Refunding Bonds (1995 Series B), 3.75% TOBs (FGIC INV), Mandatory Tender 6/1/1997 $ 3,000,000 TOTAL INVESTMENTS (AT AMORTIZED COST)(B) $100,077,428
Securities that are subject to Alternative Minimum Tax represent 48.3% of the portfolio as calculated based upon total portfolio market value. (a) The fund may only invest in securities rated in one of the two highest short-term rating categories by one or more 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 Ratings Group, 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 ratings categories. Securities rated in the highest short-term rating category (and unrated securities of comparable quality) are identified as First Tier securities. Securities rated in the second highest short-term rating category (and unrated securities of comparable quality) are identified as Second Tier securities. The fund follows applicable regulations in determining whether a security is rated and whether a security rated by multiple NRSROs in different rating categories should be identified as a First or Second Tier security. At April 30, 1997, the portfolio securities were rated as follows: Tier Rating Percentage Based on Total Market Value (unaudited)
FIRST TIER SECOND TIER 100% 0%
(b) Also represents cost for federal tax purposes. Note: The categories of investments are shown as a percentage of net assets ($100,942,715) at April 30, 1997. The following acronyms are used throughout this portfolio: BANs -- Bond Anticipation Notes CP -- Commercial Paper FGIC -- Financial Guaranty Insurance Company GO -- General Obligation HFA -- Housing Finance Authority IDA -- Industrial Development Authority IDRB -- Industrial Development Revenue Bond IFA -- Industrial Finance Authority INV -- Investment Agreement LOCs -- Letter(s) of Credit LOC -- Letter of Credit PCA -- Pollution Control Authority PCFA -- Pollution Control Finance Authority PRF -- Prerefunded TOBs -- Tender Option Bonds UT -- Unlimited Tax VRDNs -- Variable Rate Demand Notes (See Notes which are an integral part of the Financial Statements) NORTH CAROLINA MUNICIPAL CASH TRUST STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1997 (UNAUDITED) ASSETS: Total investments in securities, at amortized cost and value $100,077,428 Cash 229,747 Income receivable 900,577 Deferred expenses 12,769 Total assets 101,220,521 LIABILITIES: Income distribution payable $269,178 Accrued expenses 8,628 Total liabilities 277,806 NET ASSETS for 100,942,715 shares outstanding $100,942,715 NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE: $100,942,715 / 100,942,715 shares outstanding $1.00
(See Notes which are an integral part of the Financial Statements) NORTH CAROLINA MUNICIPAL CASH TRUST STATEMENT OF OPERATIONS SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED) INVESTMENT INCOME: Interest $ 2,444,484 EXPENSES: Investment advisory fee $ 334,720 Administrative personnel and services fee 61,959 Custodian fees 6,880 Transfer and dividend disbursing agent fees and expenses 14,867 Directors'/Trustees' fees 1,084 Auditing fees 6,093 Legal fees 2,040 Portfolio accounting fees 21,054 Shareholder services fee 167,360 Share registration costs 16,231 Printing and postage 5,561 Insurance premiums 1,749 Miscellaneous 9,043 Total expenses 648,641 Waivers -- Waiver of investment advisory fee (250,725) Net expenses 397,916 Net investment income $ 2,046,568
(See Notes which are an integral part of the Financial Statements) NORTH CAROLINA MUNICIPAL CASH TRUST STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED YEAR ENDED (UNAUDITED) OCTOBER 31, APRIL 30, 1997 1996 INCREASE (DECREASE) IN NET ASSETS: OPERATIONS -- Net investment income $ 2,046,568 $ 3,699,402 DISTRIBUTIONS TO SHAREHOLDERS -- Distributions from net investment income (2,046,568) (3,699,402) SHARE TRANSACTIONS -- Proceeds from sale of shares 316,873,955 825,948,456 Net asset value of shares issued to shareholders in payment of distributions declared 1,471,648 2,898,862 Cost of shares redeemed (355,151,413) (788,700,740) Change in net assets resulting from share transactions (36,805,810) 40,146,578 Change in net assets (36,805,810) 40,146,578 NET ASSETS: Beginning of period 137,748,525 97,601,947 End of period $ 100,942,715 $137,748,525
(See Notes which are an integral part of the Financial Statements) NORTH CAROLINA MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED (UNAUDITED) APRIL 30, YEAR ENDED OCTOBER 31, 1997 1996 1995 1994(A) NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 INCOME FROM INVESTMENT OPERATIONS Net investment income 0.02 0.03 0.04 0.02 LESS DISTRIBUTIONS Distributions from net investment income (0.02) (0.03) (0.04) (0.02) NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 TOTAL RETURN(B) 1.54% 3.23% 3.51% 2.06% RATIOS TO AVERAGE NET ASSETS Expenses 0.59%* 0.59% 0.59% 0.49%* Net investment income 3.06%* 3.17% 3.46% 2.54%* Expense waiver/reimbursement(c) 0.37%* 0.42% 0.40% 0.44%* SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $100,943 $137,749 $97,602 $85,249
* Computed on an annualized basis. (a) Reflects operations for the period from December 31, 1993 (date of initial public investment) to October 31, 1994. For the period from November 29, 1993 (start of business) to December 31, 1993, the fund had no investment activity. (b) Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable. (c) This voluntary expense decrease is reflected in both the expense and net investment income ratios shown above. (See Notes which are an integral part of the Financial Statements) NORTH CAROLINA MUNICIPAL CASH TRUST NOTES TO FINANCIAL STATEMENTS APRIL 30, 1997 (UNAUDITED) 1. ORGANIZATION Federated Municipal Trust (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act") as an open-end, management investment company. The Trust consists of sixteen portfolios. The financial statements included herein are only those of North Carolina Municipal Cash Trust (the "Fund"). The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. The investment objective of the Fund is current income exempt from federal regular income tax and the income tax imposed by the State of North Carolina consistent with stability of principal. 2. SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with generally accepted accounting principles. INVESTMENT VALUATIONS -- The Fund's use of the amortized cost method to value its portfolio securities is in accordance with Rule 2a-7 under the Act. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS -- Interest income and expenses are accrued daily. Bond premium and discount, if applicable, are amortized as required by the Internal Revenue Code, as amended (the "Code"). Distributions to shareholders are recorded on the ex-dividend date. FEDERAL TAXES -- It is the Fund's policy to comply with the provisions of the Code applicable to regulated investment companies and to distribute to shareholders each year substantially all of its income. Accordingly, no provisions for federal tax are necessary. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS -- The Fund may engage in when-issued or delayed delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked to market daily and begin earning interest on the settlement date. DEFERRED EXPENSES -- The costs incurred by the Fund with respect to registration of its shares in its first fiscal year, excluding the initial expense of registering its shares, have been deferred and are being amortized over a period not to exceed five years from the Fund's commencement 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 Board of Trustees (the "Trustees") to issue an unlimited number of full and fractional shares of beneficial interest (without par value). At April 30, 1997, capital paid-in aggregated $100,942,715. Transactions in shares were as follows:
SIX YEAR MONTHS ENDED ENDED OCTOBER 31, APRIL 30, 1997 1996 Shares sold 316,873,955 825,948,456 Shares issued to shareholders in payment of distributions declared 1,471,648 2,898,862 Shares redeemed (355,151,413) (788,700,740) Net change resulting from share transactions (36,805,810) 40,146,578
4. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES INVESTMENT ADVISORY FEE -- Federated Management, the Fund's investment adviser (the "Adviser"), receives for its services an annual investment advisory fee equal to 0.50% of the Fund's average daily net assets. The Adviser may voluntarily choose to waive any portion of its fee. The Adviser can modify or terminate this voluntary waiver at any time at its sole discretion. ADMINISTRATIVE FEE -- Federated Services Company ("FServ"), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. The fee paid to FServ is based on the level of average aggregate daily net assets of all funds advised by subsidiaries of Federated Investors for the period. The administrative fee received during the period of the Administrative Services Agreement shall be at least $125,000 per portfolio and $30,000 per each additional class of shares. SHAREHOLDER SERVICES FEE -- Under the terms of a Shareholder Services Agreement with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to 0.25% of average daily net assets of the Fund for the period. The fee paid to FSS is used to finance certain services for shareholders and to maintain shareholder accounts. 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 Trust's average daily net assets for the period, plus out-of-pocket expenses. ORGANIZATIONAL EXPENSES -- Organizational and start-up administrative service expenses of $53,386 were borne initially by the Adviser. The Fund has agreed to reimburse the Adviser for the organizational and start-up administrative expenses during the five year period following effective date. For the period ended April 30, 1997, the Fund paid $6,970 pursuant to this agreement. INTERFUND TRANSACTIONS -- During the period ended April 30, 1997, 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 $143,290,000 and $172,980,000, respectively. GENERAL -- Certain of the Officers and Trustees of the Trust are Officers and Directors or Trustees of the above companies. 6. CONCENTRATION OF CREDIT RISK Since the Fund invests a substantial portion of its assets in issuers located in one state, it will be more susceptible to factors adversely affecting issuers of that state than would be a comparable tax-exempt mutual fund that invests nationally. In order to reduce the credit risk associated with such factors, at April 30, 1997, 74.5% of the securities in the portfolio of investments are backed by letters of credit or bond insurance of various financial institutions and financial guaranty assurance agencies. The percentage of investments insured by or supported (backed) by a letter of credit from any one institution or agency did not exceed 9.8% of total investments. TRUSTEES John F. Donahue Thomas G. Bigley John T. Conroy, Jr. William J. Copeland James E. Dowd Lawrence D. Ellis, M.D. Edward L. Flaherty, Jr. Glen R. Johnson Peter E. Madden Gregor F. Meyer John E. Murray, Jr. Wesley W. Posvar Marjorie P. Smuts OFFICERS John F. Donahue Chairman Glen R. Johnson President J. Christopher Donahue Executive Vice President Edward C. Gonzales Executive Vice President John W. McGonigle Executive Vice President, Treasurer, and Secretary Richard B. Fisher Vice President S. Elliott Cohan Assistant Secretary Mutual funds are not bank deposits or obligations, are not guaranteed by any bank, and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other government agency. Investment in mutual funds involves risk, including possible loss of principal. Although money market funds seek to maintain a stable net asset value of $1.00 per share, there is no assurance that they will be able to do so. This report is authorized for distribution to prospective investors only when preceded or accompanied by the fund's prospectus which contains facts concerning its objective and policies, management fees, expenses and other information. NORTH CAROLINA MUNICIPAL CASH TRUST SEMI-ANNUAL REPORT TO SHAREHOLDERS APRIL 30, 1997 [Graphic] Federated Investors Federated Securities Corp., Distributor Cusip 314229782 G01177-01 (6/97) [Graphic] - -------------------------------------------------------------------------------- FLORIDA - -------------------------------------------------------------------------------- MUNICIPAL - -------------------------------------------------------------------------------- CASH - -------------------------------------------------------------------------------- TRUST - -------------------------------------------------------------------------------- SEMI-ANNUAL REPORT TO SHAREHOLDERS APRIL 30, 1997 Federated Investors Logo Cusip 314229785 Cusip 314229683 G00827-02 (6/97) Recyled Paper Logo PRESIDENT'S MESSAGE - -------------------------------------------------------------------------------- Dear Shareholder: I am pleased to present the Semi-Annual Report to Shareholders of Florida Municipal Cash Trust, a portfolio of Federated Municipal Trust, which covers the six-month period from November 1, 1996 through April 30, 1997. The report begins with a discussion with the fund's portfolio manager, followed by a complete listing of the fund's holdings and its financial statements. Financial highlights tables are provided for the fund's Institutional Shares and Cash II Shares. The fund is a convenient way to put your ready cash to work pursuing tax-free income free from federal regular income tax.* In addition, the fund is free from the Florida intangibles tax. At the end of the reporting period, the fund's municipal bond holdings were diversified among Florida issuers that use municipal bond financing for projects as varied as health care, housing, community development, and transportation. This tax-free advantage means you can earn a greater after-tax yield than you could in a comparable high-quality taxable investment. Of course, the fund also brings you the added benefits of daily liquidity and stability of principal.** During the reporting period, the fund paid tax-free dividends of $0.02 per share for Institutional Shares and $0.01 per share for Cash II Shares. The fund's net assets stood at $519.8 million at the end of the reporting period. Thank you for relying on Florida Municipal Cash Trust to help your ready cash pursue tax-free income every day. As always, we'll continue to provide you with the highest level of professional service. We invite your questions or comments. Sincerely, LOGO Glen R. Johnson President June 15, 1997 * Income may be subject to the federal alternative minimum tax. ** Although money market funds seek to maintain a stable net asset value of $1.00 per share, there is no assurance that they will be able to do so. An investment in the fund is neither insured nor guaranteed by the U.S. government. INVESTMENT REVIEW - -------------------------------------------------------------------------------- An interview with the fund's portfolio manager, Jeff A. Kozemchak, CFA, Vice President, Federated Management Q Can you comment on the economy and the interest rate environment during the six month reporting period? A Although it did not occur until near the end of the fund's semi-annual reporting period, the Federal Reserve Board (the "Fed") brought about the first change in monetary policy in over a year. On March 25, 1997, the Fed, in the face of stronger than expected demand, voted to raise the federal funds target rate from 5.25% to 5.50%. The move was viewed as being pre-emptive against the threat of future inflationary pressures possibly brought about by tight labor market conditions. Until that point, movements in interest rates reflected shifting market sentiment about the need for the Fed to move to a more restrictive policy. As the reporting period began in November 1996, the economy had been showing signs of slowing, thereby allaying the market's fears about inflation. Then, in December, the market's uneasiness was once more ignited as a string of economic statistics showed stronger growth and Fed Chairman Alan Greenspan made cautionary statements regarding inflation and "irrational exuberance" in the equity market. With inflation still appearing to be benign, the market tolerated a steady pace of growth into early 1997. However, Chairman Greenspan's Humphrey-Hawkins testimony before Congress in late February marked a turning point for the short-term money markets--indeed the bond and equity markets as well--as his relatively hawkish statements revealed fears at the Fed that the transitory factors that had been keeping inflation under control in the face of fairly robust growth may be coming to an end. This statement by the Fed caused a sharp reversal in interest rate movement and the market's perception about future Fed policy. The ensuing weeks brought continued evidence of persistent strength, and culminated in the Fed's action at the Federal Open Market Committee in late March. For the first three months of the reporting period, short-term interest rates traded in a relatively narrow range as the continued friendly inflation picture provided some comfort to market participants. The yield on the six-month Treasury bill, for example, moved in a range between 5.20% and 5.35% from the beginning of November through early February. However, short-term interest rates began to rise in late February, and by the time of the Fed tightening in late March, had built in much of the expectations regarding the Fed decision. In April, the financial markets continued to focus on the likelihood of an additional tightening move later in May, causing short-term yields to rise even further. Yields on the six-month Treasury bill rose sharply over this interim period, moving from a low of 5.20% in mid-February to a high of 5.68% in late April before falling back to 5.53% by the end of reporting period. Q What were your strategies for the fund during the reporting period? A The fund's average maturity at the beginning of the reporting period was approximately 49 days, reflecting a neutral outlook on the direction of interest rates. As signs of strength in the economy became more apparent and as expectations of an imminent Fed tightening grew in the first quarter of 1997, we emphasized the purchase of shorter term fixed-rate paper while adding to the portion of the portfolio invested in seven-day variable rate demand notes ("VRDNs"). Seven-day VRDNs provide - -------------------------------------------------------------------------------- more portfolio responsiveness to interest rate increases. At the end of the reporting period, the fund's average maturity was at 49 days, with a target range between 40 and 50 days. Once an average maturity range is targeted, the portfolio attempts to maximize performance through ongoing relative value analysis. Relative value analysis includes the comparison of the richness or cheapness of municipal securities to one another as well as municipals to taxable instruments, such as Treasury securities. The fund's portfolio remained barbelled in structure, which combined a significant portion in seven-day VRDNs and short maturity commercial paper with purchases of longer-term, six-to twelve-month fixed rate notes. This portfolio structure continues to pursue a competitive yield over time. Q How has the fund's yield responded to this rate environment? A The fund's yield was affected by Fed policy (interest rate increases), changes in market expectations, as well as supply and demand imbalances unique to the municipal money markets. However, because of these imbalances the fund's yield may experience more volatility on a weekly basis than Treasury yields and taxable money fund yields. In general, yields on municipal money market funds rose over the reporting period. For the fund, the seven-day net yield of the Institutional Shares on April 30, 1997, was 3.63%, compared to 3.12% at the beginning of the reporting period.* For the Cash II Shares, the seven-day net yield was 3.37% at the end of the reporting period compared to 2.96% six months ago.* Q Looking through 1997, what is your outlook for short-term rates? A Although the Fed decided to hold short-term interest rates steady in the March meeting, our expectations are that the Fed will find cause to tighten monetary policy further in 1997--perhaps as soon as in July. It is also anticipated that the overall tightening cycle will not be long in terms of magnitude or duration. The pre-emptive move by the Fed should help to preclude the need for more aggressive action down the road by preventing the build-up of inflationary pressures. We would look to see moderately higher short-term interest rates throughout the course of the year, but not to the extent evidenced in the last tightening cycle in 1994. As such, we will likely continue in our modestly defensive stance for the portfolio until market conditions indicate otherwise. * Performance quoted represents past performance and is not indicative of future results. Yield will vary. The seven-day net yield is calculated daily, based on the income dividends for the seven days ending on the date of calculation and then compounded and annualized. FLORIDA MUNICIPAL CASH TRUST PORTFOLIO OF INVESTMENTS APRIL 30, 1997 (UNAUDITED) - --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE - ----------- ---------------------------------------------------------------- ------------ SHORT-TERM MUNICIPALS--99.5% - ----------------------------------------------------------------------------------- FLORIDA--70.6% ---------------------------------------------------------------- $ 6,500,000 Brevard County, FL School District, Series 1996, 4.20% TANs, 6/30/1997 $ 6,505,733 ---------------------------------------------------------------- 3,860,000 Broward County, FL HFA, (CR-5), 3.65% TOBs (GNMA COL)/ (Citibank NA, New York LIQ), Optional Tender 5/1/1997 3,860,000 ---------------------------------------------------------------- 3,000,000 Broward County, FL HFA, Multifamily Housing Revenue Refunding Bonds (1995 Series B) Weekly VRDNs (Harbour Town of Jacaranda Project)/(SouthTrust Bank of Alabama, Birmingham LOC) 3,000,000 ---------------------------------------------------------------- 3,240,000 Broward County, FL Health Facility Authority, Revenue Bonds Weekly VRDNs (John Knox Village of Florida)/(First Union National Bank, Charlotte, N.C. LOC) 3,240,000 ---------------------------------------------------------------- 1,130,000 Broward County, FL, IDRB (Series 1993) Weekly VRDNs (American Whirlpool Products Corp. Project)/(NationsBank, South LOC) 1,130,000 ---------------------------------------------------------------- 1,000,000 Broward County, FL, IDRB's (Series 1997) Weekly VRDNs (Fast Real Estate Partners, Ltd.)/(SunTrust Bank, Central Florida LOC) 1,000,000 ---------------------------------------------------------------- 8,000,000 Charlotte County, FL School District, Series 1996, 4.00% TANs, 6/30/1997 8,004,106 ---------------------------------------------------------------- 14,190,000 (b) Clipper Florida Tax-Exempt Trust, Class A Certificates of Participation, Series 1996-3B Weekly VRDNs (Escambia County, FL HFA)/(State Street Bank and Trust Co. LOC) 14,190,000 ---------------------------------------------------------------- 9,000,000 Dade County, FL HFA, (Series 1996), 4.00% TOBs (FGIC INV), Mandatory Tender 10/1/1997 9,000,000 ---------------------------------------------------------------- 1,900,000 Dade County, FL HFA, Hospital Revenue Bonds (Series 1995) Weekly VRDNs (Miami Children's Hospital Project)/(AMBAC INS)/(SunTrust Bank, Atlanta LIQ) 1,900,000 ---------------------------------------------------------------- 4,170,000 Dade County, FL IDA Weekly VRDNs (Futernick Associates, Inc.)/ (First Union National Bank, Charlotte, N.C. LOC) 4,170,000 ---------------------------------------------------------------- 1,000,000 Dade County, FL IDA, (Series 1985C) Weekly VRDNs (Dolphins Stadium)/(Societe Generale, Paris LOC) 1,000,000 ----------------------------------------------------------------
FLORIDA MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE - ----------- ---------------------------------------------------------------- ------------ SHORT-TERM MUNICIPALS--CONTINUED - ----------------------------------------------------------------------------------- FLORIDA--CONTINUED ---------------------------------------------------------------- $ 1,550,000 Dade County, FL IDA, IDRB (Series 1995) Weekly VRDNs (June Leasing Co. Project (FL))/(First Union National Bank of Florida LOC) $ 1,550,000 ---------------------------------------------------------------- 2,000,000 Dade County, FL IDA, IDRB's (Series 1996A) Weekly VRDNs (U.S. Holdings, Inc.)/(First Union National Bank of Florida LOC) 2,000,000 ---------------------------------------------------------------- 1,100,000 Dade County, FL IDA, Industrial Development Revenue Refunding Bonds Weekly VRDNs (Continental Farms, Inc.)/(Nationsbank, N.A., Charlotte LOC) 1,100,000 ---------------------------------------------------------------- 2,550,000 Dade County, FL Resource Recovery Facilities, 4.00% Bonds (AMBAC INS), 10/1/1997 2,550,000 ---------------------------------------------------------------- 3,000,000 Dade County, FL School District, 4.50% Bonds (MBIA INS), 2/15/1998 3,020,015 ---------------------------------------------------------------- 3,000,000 Duval County, FL HFA, Multi-family Housing Revenue Bonds (Series 1985 F) Weekly VRDNs (Lakes of Mayport Apartments Project)/(SunTrust Bank, Atlanta LOC) 3,000,000 ---------------------------------------------------------------- 2,000,000 (b) Escambia County, FL HFA, P-Floats PA-129 Weekly VRDNs (Merrill Lynch Capital Services, Inc. LIQ) 2,000,000 ---------------------------------------------------------------- 7,500,000 Escambia County, FL HFA, Single Family Mortgage Revenue Bonds (Series B), 3.75% TOBs (Bayerische Landesbank Girozentrale INV), Mandatory Tender 2/20/1998 7,500,000 ---------------------------------------------------------------- 6,140,000 Eustis Health Facilities Authority, FL, (Series 1985) Weekly VRDNs (Waterman Medical Center)/(Banque Paribas, Paris LOC) 6,140,000 ---------------------------------------------------------------- 1,400,000 Florida HFA, (Series 1989 E) Weekly VRDNs (Fairmont Oaks Project)/(Comerica Bank, Detroit, MI LOC) 1,400,000 ---------------------------------------------------------------- 3,300,000 Florida HFA, (Series 1996 U) Weekly VRDNs (Heron Park Project)/ (NationsBank, South LOC) 3,300,000 ---------------------------------------------------------------- 4,000,000 Florida HFA, (Series 2-CR-25C), 3.50% TOBs (FGIC INS)/ (Citibank NA, New York LIQ), Optional Tender 6/15/1997 4,000,000 ---------------------------------------------------------------- 6,920,000 (b) Florida HFA, Homeowner Mortgage Revenue Bonds PT-88 (Series 1996-3) Weekly VRDNs (Banco Santander LIQ) 6,920,000 ----------------------------------------------------------------
FLORIDA MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE - ----------- ---------------------------------------------------------------- ------------ SHORT-TERM MUNICIPALS--CONTINUED - ----------------------------------------------------------------------------------- FLORIDA--CONTINUED ---------------------------------------------------------------- $ 4,700,000 Florida HFA, Housing Revenue Bonds (Series J) Weekly VRDNs (Ashley Lake Project)/(Barclays Bank PLC, London LOC) $ 4,700,000 ---------------------------------------------------------------- 2,500,000 (b) Florida State Department of Transportation, (Series 1993A) Weekly VRDNs (Norwest Bank Minnesota, Minneapolis LOC) 2,500,000 ---------------------------------------------------------------- 3,620,000 Gainesville, FL Utilities Systems, (Series A), 7.75% Bonds (United States Treasury PRF), 10/1/1997 (@102) 3,749,504 ---------------------------------------------------------------- 7,500,000 Greater Orlando (FL) Aviation Authority, Airport Facilities Subordinated CP Notes (Series B), 3.60% CP, Mandatory Tender 6/11/1997 7,500,000 ---------------------------------------------------------------- 6,300,000 Greater Orlando (FL) Aviation Authority, Airport Facilities Subordinated CP Notes (Series B), 3.70% CP, Mandatory Tender 6/6/1997 6,300,000 ---------------------------------------------------------------- 7,000,000 Gulf Breeze, FL, Variable Rate Demand Revenue Bonds (Series 1995A) Weekly VRDNs (Florida Municipal Bond Fund)/ (Barnett Bank, N.A. LOC) 7,000,000 ---------------------------------------------------------------- 3,300,000 Halifax Hospital Medical Center, FL, Daytona Beach, FL (Series 1997), 4.125% TANs (Barnett Bank, N.A. LOC), 4/15/1998 3,303,765 ---------------------------------------------------------------- 7,000,000 Highlands County, FL Health Facilities, (Series 1996A Accounts Receivable) Weekly VRDNs (Adventist Health System)/(Capital Markets Assurance Corp. INS)/(First National Bank of Chicago LIQ) 7,000,000 ---------------------------------------------------------------- 5,000,000 Highlands County, FL Health Facilities, (Series 1996B Accounts Receivable) Weekly VRDNs (Adventist Health System)/(Capital Markets Assurance Corp. INS)/(Canadian Imperial Bank of Commerce, Toronto LIQ) 5,000,000 ---------------------------------------------------------------- 5,800,000 Hillsborough County, FL Aviation Authority, Bond Anticipation Commercial Paper Notes, 3.50% CP (Tampa International Airport)/ (National Westminster Bank, PLC, London LOC), Mandatory Tender 5/16/1997 5,800,000 ---------------------------------------------------------------- 4,750,000 Hillsborough County, FL HFA, Single Family Mortgage Revenue Bonds (Series 1997), 3.65% TOBs (AMBAC INV) 3/15/1998 4,750,000 ---------------------------------------------------------------- 2,000,000 Hillsborough County, FL IDA Weekly VRDNs (Ringhager Equipment Co.)/(Mellon Bank NA, Pittsburgh LOC) 2,000,000 ----------------------------------------------------------------
FLORIDA MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE - ----------- ---------------------------------------------------------------- ------------ SHORT-TERM MUNICIPALS--CONTINUED - ----------------------------------------------------------------------------------- FLORIDA--CONTINUED ---------------------------------------------------------------- $ 1,000,000 Hillsborough County, FL IDA, (Series 1988) Weekly VRDNs (Florida Steel Corp.)/(Bankers Trust Co., New York LOC) $ 1,000,000 ---------------------------------------------------------------- 2,400,000 Hillsborough County, FL IDA, (Series 1992) Weekly VRDNs (SIFCO Turbine Component Service)/(National City Bank, Cleveland, OH LOC) 2,400,000 ---------------------------------------------------------------- 1,400,000 Hillsborough County, FL IDA, IDRB's (Series 1996) Weekly VRDNs (VIGO Importing Company Project)/(Barnett Bank, N.A. LOC) 1,400,000 ---------------------------------------------------------------- 1,445,000 Hillsborough County, FL IDA, Variable Rate Demand IRDB's (Series 1996) Weekly VRDNs (Trident Yacht Building Partnership Project)/ (First Union National Bank of Florida LOC) 1,445,000 ---------------------------------------------------------------- 2,905,000 Jacksonville, FL HFDC, Health Facilities Revenue Bonds (Series 1994) Weekly VRDNs (River Garden/The Coves Project)/(First Union National Bank, Charlotte, N.C. LOC) 2,905,000 ---------------------------------------------------------------- 1,900,000 Jacksonville, FL HFDC, Health Facilities Revenue Bonds (Series 1996) Weekly VRDNs (Jacksonville Faculty Practice Association Project)/ (NationsBank, South LOC) 1,900,000 ---------------------------------------------------------------- 6,500,000 Jacksonville, FL IDA, IDRBs (series 1996) Weekly VRDNs (Portion Pac, Inc.)/(Heinz (H.J.) Co. GTD) 6,500,000 ---------------------------------------------------------------- 1,000,000 Jacksonville, FL Weekly VRDNs (Metal Sales)/(National City Bank, Kentucky LOC) 1,000,000 ---------------------------------------------------------------- 1,900,000 Jacksonville, FL, Hospital Revenue Bonds, 10.50% Bonds (Methodist Hospital of Florida)/(United States Treasury PRF), 10/1/1997 (@102) 1,988,029 ---------------------------------------------------------------- 3,900,000 Lake Shore, FL Hospital Authority, Health Facilities Revenue Bonds (Series 1991) Weekly VRDNs (Lake Shore Hospital)/(Kredietbank N.V., Brussels LOC) 3,900,000 ---------------------------------------------------------------- 5,000,000 Lee County, FL HFA, Single Family Mortgage Revenue Bonds (Series 1997A), 3.70% TOBs, Mandatory Tender 9/15/1997 5,000,000 ---------------------------------------------------------------- 2,680,000 Lee County, FL IDA, (Series 1985) Weekly VRDNs (Christian & Missionary Alliance Foundation) /(Banque Paribas, Paris LOC) 2,680,000 ----------------------------------------------------------------
FLORIDA MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE - ----------- ---------------------------------------------------------------- ------------ SHORT-TERM MUNICIPALS--CONTINUED - ----------------------------------------------------------------------------------- FLORIDA--CONTINUED ---------------------------------------------------------------- $ 1,000,000 Lee County, FL IDA, IDRB (Series 1994) Weekly VRDNs (Baader North America Corporation)/(Deutsche Bank, AG LOC) $ 1,000,000 ---------------------------------------------------------------- 5,710,000 Manatee County, FL HFA Weekly VRDNs (Carriage Club)/ (Mellon Bank NA, Pittsburgh LOC) 5,710,000 ---------------------------------------------------------------- 2,285,000 Manatee County, FL HFA, Multi-Family Mortgage Revenue Refunding Bonds (Series 1989-A) Weekly VRDNs (Hampton/ McGuire L.P.)/(Nationsbank, N.A., Charlotte LOC) 2,285,000 ---------------------------------------------------------------- 3,500,000 Manatee County, FL, IDR Refunding Bonds (Series 1997) Weekly VRDNs (CFI Manufacturing, Inc. Project)/(Barnett Bank, N.A. LOC) 3,500,000 ---------------------------------------------------------------- 1,000,000 Marion County, FL Health Facility Authority, Multifamily Revenue Bonds (1985 Series F) Weekly VRDNs (Paddock Place Project)/ (SunTrust Bank, Atlanta LOC) 1,000,000 ---------------------------------------------------------------- 2,950,000 Marion County, FL IDA, IDRB (Series 1989) Weekly VRDNs (Charter Springs Hospital, Inc.)/(Bankers Trust Co., New York LOC) 2,950,000 ---------------------------------------------------------------- 2,400,000 Martin County, FL IDA, Tender Industrial Revenue Bonds (Series 1986) Weekly VRDNs (Tampa Farm Service, Inc. Project)/ (SunTrust Banks, Inc. LOC) 2,400,000 ---------------------------------------------------------------- 5,893,000 Orange County, FL HFA, (Series 1997A) Weekly VRDNs (Regal Pointe Apartments Project)/(NationsBank, South LOC) 5,893,000 ---------------------------------------------------------------- 11,820,000 (b) Orange County, FL, Health Facilities Authority, CDC Municipal Products Inc. (Series 96J), 3.60% TOBs (Pooled Hospital Loan Program)/(MBIA INS)/(CDC Municipal Products, Inc. LIQ), Optional Tender 5/30/1997 11,820,000 ---------------------------------------------------------------- 9,455,000 (b) Orange County, FL, Health Facilities Authority, CDC Municipal Products, Inc. Class A Certificates (Series 1996 D-1), 3.60% TOBs (FGIC INS)/(CDC Municipal Products, Inc. LIQ), Mandatory Tender 5/30/1997 9,455,000 ---------------------------------------------------------------- 2,770,000 Palm Beach County, FL IDA Weekly VRDNs (Palm Beach Jewish Community Campus)/(SunTrust Bank, Central Florida LOC) 2,770,000 ----------------------------------------------------------------
FLORIDA MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE - ----------- ---------------------------------------------------------------- ------------ SHORT-TERM MUNICIPALS--CONTINUED - ----------------------------------------------------------------------------------- FLORIDA--CONTINUED ---------------------------------------------------------------- $ 2,300,000 Palm Beach County, FL, Revenue Bonds, (Series 1995) Weekly VRDNs (Norton Gallery and School of Art, Inc. Project)/ (Northern Trust Co., Chicago, IL LOC) $ 2,300,000 ---------------------------------------------------------------- 5,500,000 Pasco County, FL School Board, Variable Rate Certificates Weekly VRDNs (AMBAC INS) 5,500,000 ---------------------------------------------------------------- 3,500,000 Pinellas County Industry Council, FL, IDRB (Series 1994) Weekly VRDNs (Genca Corporation Project)/(PNC Bank, Ohio, N.A. LOC) 3,500,000 ---------------------------------------------------------------- 2,723,000 Pinellas County Industry Council, FL, IDRB (Series 1995) Weekly VRDNs (ATR International Inc., Project)/(First Union National Bank of Florida LOC) 2,723,000 ---------------------------------------------------------------- 3,380,000 Pinellas County, FL HFA, Single Family Mortgage Revenue Bonds (Series 1997 B), 3.80% TOBs (Westdeutsche Landesbank Girozentrale INV), Mandatory Tender 2/1/1998 3,380,000 ---------------------------------------------------------------- 3,200,000 (b) Pinellas County, FL Health Facility Authority, SFM Revenue Bonds (Series PA-92) Weekly VRDNs (GNMA COL)/(Merrill Lynch Capital Services, Inc. LIQ) 3,200,000 ---------------------------------------------------------------- 5,525,000 Polk County, FL IDA, PCR Refunding Bonds Weekly VRDNs (IMC Fertilizer, Inc. Project)/(Rabobank Nederland, Utrecht LOC) 5,525,000 ---------------------------------------------------------------- 1,000,000 Polk County, FL IDA, Variable Rate Demand IDRB's (Series 1996) Weekly VRDNs (Ytong Florida, Ltd. Project)/(First Union National Bank of Florida LOC) 1,000,000 ---------------------------------------------------------------- 12,700,000 Putnam County, FL Development Authority, (Series 1984D), 3.45% TOBs (Seminole Electric Cooperative, Inc (FL))/(National Rural Utilities Cooperative Finance Corp. GTD), Optional Tender 6/15/1997 12,700,000 ---------------------------------------------------------------- 8,085,000 Putnam County, FL Development Authority, Floating/Fixed Rate Poll Control Revenue Bonds (Pooled Series 1984 H-4), 3.55% TOBs (Seminole Electric Cooperative, Inc (FL))/(National Rural Utilities Cooperative Finance Corp. LOC), Optional Tender 9/15/1997 8,085,000 ---------------------------------------------------------------- 4,065,000 Putnam County, FL Development Authority, PCR Bonds (Pooled Series 1984S) Weekly VRDNs (Seminole Electric Cooperative, Inc (FL))/(National Rural Utilities Cooperative Finance Corp. LOC) 4,065,000 ----------------------------------------------------------------
FLORIDA MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE - ----------- ---------------------------------------------------------------- ------------ SHORT-TERM MUNICIPALS--CONTINUED - ----------------------------------------------------------------------------------- FLORIDA--CONTINUED ---------------------------------------------------------------- $ 2,280,000 Sarasota County, FL IDRB, (Series 1994) Monthly VRDNs (Resource Recovery Systems of Sarasota Project)/(Fleet National Bank, Providence, R.I. LOC), 6/1/1997 $ 2,280,000 ---------------------------------------------------------------- 3,000,000 Sarasota County, FL Public Hospital District, Series 1993A, 3.65% CP (Sarasota Memorial Hospital), Mandatory Tender 5/16/1997 3,000,000 ---------------------------------------------------------------- 13,000,000 Sarasota County, FL Public Hospital District, Variable Rate Demand Hospital Revenue Bonds (Series 1996A), 3.65% CP (Sarasota Memorial Hospital)/(SunTrust Bank, Central Florida LIQ), Mandatory Tender 5/22/1997 13,000,000 ---------------------------------------------------------------- 3,500,000 Sarasota County, FL Public Hospital District, Variable Rate Demand Hospital Revenue Bonds (Series 1996A), 3.80% CP (Sarasota Memorial Hospital)/(SunTrust Bank, Central Florida LIQ), Mandatory Tender 8/21/1997 3,500,000 ---------------------------------------------------------------- 4,115,000 Sarasota, FL, Educational Facilities Revenue Bonds (Series 1996) Weekly VRDNs (Ringling School of Art and Design, Inc.)/ (SunTrust Bank, Central Florida LOC) 4,115,000 ---------------------------------------------------------------- 4,400,000 Seminole County, FL Health Facility Authority IDA, (Series 1991) Weekly VRDNs (Florida Living Nursing Center)/ (Barnett Bank, N.A. LOC) 4,400,000 ---------------------------------------------------------------- 7,595,000 St. Lucie County, FL, IDR Bonds (Series 1985) Weekly VRDNs (Savannahs Hospital)/(NationsBank, South LOC) 7,595,000 ---------------------------------------------------------------- 1,300,000 Sumter County, FL IDA Weekly VRDNs (Great Southern Wood of Florida)/(SouthTrust Bank of Alabama, Birmingham LOC) 1,300,000 ---------------------------------------------------------------- 4,500,000 Suwannee County, FL, Health Facilities Revenue Bonds (Series 1996) Weekly VRDNs (Shands Teaching Hospital and Clinics, Inc.)/ (MBIA INS)/(SunTrust Bank, Central Florida LIQ) 4,500,000 ---------------------------------------------------------------- 13,500,000 (b) TEB Municipal Trust I, Class A Floating Rate Receipts Weekly VRDNs (Uniforet Inc.)/(Bank One, Columbus, N.A. LOC) 13,500,000 ---------------------------------------------------------------- 3,300,000 Tamarac, FL, IDRB (Series 1995) Weekly VRDNs (Arch Aluminum & Glass Co., Inc. Project)/(Mellon Bank NA, Pittsburgh LOC) 3,300,000 ---------------------------------------------------------------- 6,000,000 Titusville, FL, Multi-Purpose Revenue Bonds, Installment 1995A Weekly VRDNs (Banque Paribas, Paris LOC) 6,000,000 ----------------------------------------------------------------
FLORIDA MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE - ----------- ---------------------------------------------------------------- ------------ SHORT-TERM MUNICIPALS--CONTINUED - ----------------------------------------------------------------------------------- FLORIDA--CONTINUED ---------------------------------------------------------------- $ 2,060,000 Volusia County, FL Health Facilities Authority, (Series 1994A) Monthly VRDNs (Southwest Volusia Healthcare Corp.)/ (First Union National Bank, Charlotte, N.C. LOC) $ 2,060,000 ---------------------------------------------------------------- 1,575,000 Volusia County, FL IDA Weekly VRDNs (Crane Cams)/ (Wells Fargo Bank, Arizona LOC) 1,575,000 ---------------------------------------------------------------- 2,800,000 Wakulla County, FL IDA Weekly VRDNs (Winco Utilities, Inc. Project)/(Barnett Bank, N.A. LOC) 2,800,000 ---------------------------------------------------------------- ------------ Total 366,887,152 ---------------------------------------------------------------- ------------ ALABAMA--3.5% ---------------------------------------------------------------- 2,400,000 Alabama State IDA, Revenue Bonds Weekly VRDNs (Southern Bag Corporation, Ltd.)/(SouthTrust Bank of Alabama, Birmingham LOC) 2,400,000 ---------------------------------------------------------------- 1,570,000 Geneva County, AL IDB, Adjustable Fixed Rate IDRB's (Series 1996) Weekly VRDNs (Brooks AG Co., Inc.)/(Regions Bank, Alabama LOC) 1,570,000 ---------------------------------------------------------------- 7,075,000 St. Clair County, AL IDB, (Series 1993) Weekly VRDNs (Ebsco Industries, Inc.)/(National Australia Bank, Ltd., Melbourne LOC) 7,075,000 ---------------------------------------------------------------- 5,000,000 Sumter County, AL IDA, Industrial Revenue Bonds (Series 1995A) Weekly VRDNs (Fulghum Fibres Project (AL)/(Regions Bank, Alabama LOC) 5,000,000 ---------------------------------------------------------------- 2,200,000 Tuscaloosa County, AL IDA, 1995 Series A Weekly VRDNs (Tuscaloosa Steel Corporation)/(Bayerische Landesbank Girozentrale LOC) 2,200,000 ---------------------------------------------------------------- ------------ Total 18,245,000 ---------------------------------------------------------------- ------------ COLORADO--0.6% ---------------------------------------------------------------- 3,000,000 Denver (City & County), CO, Airport System Subordinate Revenue Bonds (Series 1990E), 3.60% CP (Sanwa Bank Ltd, Osaka LOC), Mandatory Tender 5/22/1997 3,000,000 ---------------------------------------------------------------- ------------ GEORGIA--1.3% ---------------------------------------------------------------- 4,995,000 Bartow County School District, GA, (Series 1997), 4.00% TANs, 12/31/1997 5,004,669 ----------------------------------------------------------------
FLORIDA MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE - ----------- ---------------------------------------------------------------- ------------ SHORT-TERM MUNICIPALS--CONTINUED - ----------------------------------------------------------------------------------- GEORGIA--CONTINUED ---------------------------------------------------------------- $ 1,500,000 Savannah, GA EDA, (Series 1995A) Weekly VRDNs (Home Depot, Inc.) $ 1,500,000 ---------------------------------------------------------------- ------------ Total 6,504,669 ---------------------------------------------------------------- ------------ INDIANA--0.4% ---------------------------------------------------------------- 2,330,000 Penn Harris Madison, IN ISD, Temporary Loan Time Warrants, 4.10% TANs, 12/31/1997 2,336,045 ---------------------------------------------------------------- ------------ MARYLAND--2.5% ---------------------------------------------------------------- 3,500,000 Anne Arundel County, MD, Economic Development Revenue Bonds (Series 1996) Weekly VRDNs (Atlas Container Corporation Project)/ (Mellon Bank NA, Pittsburgh LOC) 3,500,000 ---------------------------------------------------------------- 1,375,000 Baltimore County, MD IDA, (Series 1994A) Weekly VRDNs (Pitts Realty Limited Partnership)/(PNC Bank, NA, Delaware LOC) 1,375,000 ---------------------------------------------------------------- 1,000,000 Baltimore County, MD, Revenue Bonds (1994 Issue) Weekly VRDNs (Direct Marketing Associates, Inc. Facility)/(First National Bank of Maryland, Baltimore LOC) 1,000,000 ---------------------------------------------------------------- 2,185,000 Maryland State Community Development Administration, (Series 1990A) Weekly VRDNs (College Estates)/(First National Bank of Maryland, Baltimore LOC) 2,185,000 ---------------------------------------------------------------- 1,500,000 Maryland State Energy Financing Administration, IDRB (Series 1988) Weekly VRDNs (Morningstar Foods, Inc.)/(Nationsbank of Texas, N.A. LOC) 1,500,000 ---------------------------------------------------------------- 1,000,000 Maryland State Energy Financing Administration, Limited Obligation Variable Rate Demand Revenue Bonds (Series 1996) Weekly VRDNs (Keywell L.L.C.)/(Bank of America Illinois LOC) 1,000,000 ---------------------------------------------------------------- 1,800,000 Maryland State IDFA, Economic Development Revenue Refunding Bonds (Series 1994) Weekly VRDNs (Johnson Controls, Inc.) 1,800,000 ---------------------------------------------------------------- 500,000 Wicomico County, MD, EDRB (Series 1994) Weekly VRDNs (Field Container Co. L.P.)/(Northern Trust Co., Chicago, IL LOC) 500,000 ---------------------------------------------------------------- ------------ Total 12,860,000 ---------------------------------------------------------------- ------------
FLORIDA MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE - ----------- ---------------------------------------------------------------- ------------ SHORT-TERM MUNICIPALS--CONTINUED - ----------------------------------------------------------------------------------- MICHIGAN--2.9% ---------------------------------------------------------------- $ 925,000 Michigan Strategic Fund, Limited Obligation Revenue Bonds (Series 1995) Weekly VRDNs (Rowe Thomas Company Project)/ (Comerica Bank, Detroit, MI LOC) $ 925,000 ---------------------------------------------------------------- 860,000 Michigan Strategic Fund, Limited Obligation Revenue Bonds (Series 1995) Weekly VRDNs (Bear Lake Associates Project)/ (Old Kent Bank & Trust Co., Grand Rapids LOC) 860,000 ---------------------------------------------------------------- 7,500,000 Michigan Strategic Fund, Limited Obligation Revenue Bonds (Series 1995) Weekly VRDNs (United Waste Systems, Inc.)/ (Bank of America Illinois LOC) 7,500,000 ---------------------------------------------------------------- 1,900,000 Michigan Strategic Fund, Limited Obligation Revenue Bonds (Series 1996) Weekly VRDNs (AVL North America, Inc. Project)/ (NBD Bank, Michigan LOC) 1,900,000 ---------------------------------------------------------------- 1,790,000 Michigan Strategic Fund, Limited Obligation Revenue Bonds Weekly VRDNs (Hess Industries, Inc.)/(Norwest Bank Minnesota, Minneapolis LOC) 1,790,000 ---------------------------------------------------------------- 2,200,000 Wayne County, MI , Airport Revenue Refunding Bonds (Series 1996A) Weekly VRDNs (Detroit Metropolitan Wayne County Airport)/(Bayerische Landesbank Girozentrale LOC) 2,200,000 ---------------------------------------------------------------- ------------ Total 15,175,000 ---------------------------------------------------------------- ------------ MINNESOTA--2.1% ---------------------------------------------------------------- 2,955,000 Byron, MN IDB Weekly VRDNs (Schmidt Printing)/(Norwest Bank Minnesota, Minneapolis LOC) 2,955,000 ---------------------------------------------------------------- 6,000,000 Lino Lakes, MN, Variable Rate Demand IDRB's (Series 1997) Weekly VRDNs (Taylor Corp.)/(Norwest Bank Minnesota, Minneapolis LOC) 6,000,000 ---------------------------------------------------------------- 2,000,000 Rochester, MN Health Care Facility Authority Weekly VRDNs (Mayo Foundation) 2,000,000 ---------------------------------------------------------------- ------------ Total 10,955,000 ---------------------------------------------------------------- ------------
FLORIDA MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE - ----------- ---------------------------------------------------------------- ------------ SHORT-TERM MUNICIPALS--CONTINUED - ----------------------------------------------------------------------------------- NEW YORK--0.6% ---------------------------------------------------------------- $ 3,200,000 (b) VRDC/IVRC Trust, (Series 1992A) Weekly VRDNs (New York City Municipal Water Finance Authority)/(MBIA INS)/(Hong Kong & Shanghai Banking Corp. LIQ) $ 3,200,000 ---------------------------------------------------------------- ------------ NORTH CAROLINA--1.0% ---------------------------------------------------------------- 5,284,100 Duplin County, NC Water District, (Series F), 3.635% BANs, 8/6/1997 5,285,950 ---------------------------------------------------------------- ------------ NORTH DAKOTA--0.2% ---------------------------------------------------------------- 1,000,000 Fargo, ND, Variable Rate Demand IDRB's (Series 1997) Weekly VRDNs (Owen Industries, Inc.)/(Mellon Bank NA, Pittsburgh LOC) 1,000,000 ---------------------------------------------------------------- ------------ OHIO--7.6% ---------------------------------------------------------------- 6,500,000 Dayton, OH, Airport Improvement (Series 1996), 3.80% BANs, 12/16/1997 6,506,323 ---------------------------------------------------------------- 8,000,000 Lorain Port Authority, OH, IDRB (Series 1996) Weekly VRDNs (Brush Wellman, Inc.)/(National City Bank, Cleveland, OH LOC) 8,000,000 ---------------------------------------------------------------- 15,000,000 Ohio HFA, (Series 1997 A-1), 3.55% TOBs, Mandatory Tender 9/1/1997 15,000,000 ---------------------------------------------------------------- 3,000,000 Ohio State Public Facilities Commission, 4.25% Higher Ed Capital Facilities Revenue Bonds, (AMBAC INS), 12/1/1997 3,007,550 ---------------------------------------------------------------- 3,000,000 Ohio State Water Development Authority, Ohio PCR Bonds (Series 1989) Weekly VRDNs (Duquesne Light Power Co.)/ (Barclays Bank PLC, London LOC) 3,000,000 ---------------------------------------------------------------- 4,000,000 Toledo-Lucas County, OH Port Authority, Airport Development Revenue Bonds (Series 1996-1) Weekly VRDNs (Burlington Air Express, Inc.)/(ABN AMRO Bank N.V., Amsterdam LOC) 4,000,000 ---------------------------------------------------------------- ------------ Total 39,513,873 ---------------------------------------------------------------- ------------ RHODE ISLAND--0.9% ---------------------------------------------------------------- 4,900,000 Rhode Island Housing & Mortgage Finance Corp., Homeownership Opportunity Bonds (Series 22-B), 3.70% TOBs, Mandatory Tender 12/1/1997 4,900,000 ---------------------------------------------------------------- ------------
FLORIDA MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE - ----------- ---------------------------------------------------------------- ------------ SHORT-TERM MUNICIPALS--CONTINUED - ----------------------------------------------------------------------------------- TENNESSEE--0.3% ---------------------------------------------------------------- $ 1,550,000 Chattanooga, TN IDB, Revenue Bonds (Series 1997) Weekly VRDNs (TB Wood's Inc. Project)/(PNC Bank, N.A. LOC) $ 1,550,000 ---------------------------------------------------------------- ------------ TEXAS--3.3% ---------------------------------------------------------------- 2,100,000 Angelina and Neches River Authority, Texas, Solid Waste Disposal Revenue Bonds (Series 1993), 3.85% CP (Temple-Eastex Inc. Project)/(Temple-Inland, Inc. GTD), Mandatory Tender 6/13/1997 2,100,000 ---------------------------------------------------------------- 15,000,000 Harris County, TX HFDC, (Series 1993), 3.75% CP (Sisters of Charity of The Incarnate Word)/(Credit Suisse, Zurich LIQ), Mandatory Tender 6/30/1997 15,000,000 ---------------------------------------------------------------- ------------ Total 17,100,000 ---------------------------------------------------------------- ------------ VIRGINIA--1.7% ---------------------------------------------------------------- 8,800,000 Alexandria, VA Redevelopment and Housing Authority Weekly VRDNs (Crystal City Apartments)/(Safeco Insurance Co. of America INS)/(Barclays Bank PLC, London LIQ) 8,800,000 ---------------------------------------------------------------- ------------ TOTAL INVESTMENTS (AT AMORTIZED COST)(C) $517,312,689 ---------------------------------------------------------------- ------------
Securities that are subject to Alternative Minimum Tax represent 49.2% of the portfolio as calculated based upon total portfolio market value. FLORIDA MUNICIPAL CASH TRUST - -------------------------------------------------------------------------------- (a) The Fund may only invest in securities rated in one of the two highest short-term rating categories by one or more nationally recognized statistical rating organizations ("NRSRO's") 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 Ratings Group, MIG-1, or MIG-2 by Moody's Investors Service, Inc. or F-1+, F-1 and F-2 by Fitch Investors Service, Inc. are considered rated in one of the two highest short-term rating categories. Securities rated in the highest short-term rating category (and unrated securities of comparable quality) are identified as First Tier securities. Securities rated in the second highest short-term rating category (and unrated securities of comparable quality) are identified as Second Tier securities. The fund follows applicable regulations in determining whether a security is rated and whether a security rated by multiple NRSRO's in different rating categories should be identified as a First or Second Tier security. At April 30, 1997, the portfolio securities were rated as follows: Tier Rating Percentage Based on Total Market Value (unaudited)
FIRST TIER SECOND TIER ------------- -------------- 99.59% .41%
(b) Denotes a restricted security which is subject to restrictions on resale under Federal Securities laws. At April 30, 1997, these securities amounted to $66,785,000 which represents 12.8% of net assets. (c) Also represents cost for federal tax purposes. Note: The categories of investments are shown as a percentage of net assets ($519,808,343) at April 30, 1997. FLORIDA MUNICIPAL CASH TRUST - -------------------------------------------------------------------------------- The following acronyms are used throughout this portfolio: AMBAC -- American Municipal Bond Assurance Corporation BANs -- Bond Anticipation Notes COL -- Collateralized CP -- Commercial Paper EDRB -- Economic Development Revenue Bonds EDA -- Economic Development Authority FGIC -- Financial Guaranty Insurance Company GNMA -- Government National Mortgage Association GTD -- Guaranty HFA -- Housing Finance Authority HFDC -- Health Facility Development Corporation IDA -- Industrial Development Authority IDB -- Industrial Development Bond IDR -- Industrial Development Revenue IDRB -- Industrial Development Revenue Bond IDFA -- Industrial Development Finance Authority INS -- Insured INV -- Investment Agreement ISD -- Independent School District LIQ -- Liquidity Agreement LOC -- Letter of Credit MBIA -- Municipal Bond Investors Assurance PCR -- Pollution Control Revenue PLC -- Public Limited Company PRF -- Prerefunded SFM -- Single Family Mortgage TANs - -- Tax Anticipation Notes TOBs -- Tender Option Bonds VRDNs -- Variable Rate Demand Notes
(See Notes which are an integral part of the Financial Statements) FLORIDA MUNICIPAL CASH TRUST STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1997 (UNAUDITED) - -------------------------------------------------------------------------------- ASSETS: - ------------------------------------------------------------------------------- Total investments in securities, at amortized cost and value $517,312,689 - ------------------------------------------------------------------------------- Income receivable 4,009,231 - ------------------------------------------------------------------------------- Deferred expenses 15,764 - ------------------------------------------------------------------------------- ------------ Total assets 521,337,684 - ------------------------------------------------------------------------------- LIABILITIES: - ------------------------------------------------------------------------------- Income distribution payable $986,867 - -------------------------------------------------------------------- Payable to bank 408,565 - -------------------------------------------------------------------- Accrued expenses 133,909 - -------------------------------------------------------------------- -------- Total liabilities 1,529,341 - ------------------------------------------------------------------------------- ------------ NET ASSETS FOR 519,808,343 shares outstanding $519,808,343 - ------------------------------------------------------------------------------- ------------ NET ASSET VALUE OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE: - ------------------------------------------------------------------------------- INSTITUTIONAL SHARES: - ------------------------------------------------------------------------------- $429,906,924 / 429,906,924 shares outstanding $1.00 - ------------------------------------------------------------------------------- ------------ CASH II SHARES: - ------------------------------------------------------------------------------- $89,901,419 / 89,901,419 shares outstanding $1.00 - ------------------------------------------------------------------------------- ------------
(See Notes which are an integral part of the Financial Statements) FLORIDA MUNICIPAL CASH TRUST STATEMENT OF OPERATIONS SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED) - -------------------------------------------------------------------------------- INVESTMENT INCOME: - ----------------------------------------------------------------------------------- Interest $11,071,599 - ----------------------------------------------------------------------------------- EXPENSES: - ----------------------------------------------------------------------------------- Investment advisory fee $ 1,244,521 - -------------------------------------------------------------------- Administrative personnel and services fee 234,927 - -------------------------------------------------------------------- Custodian fees 44,398 - -------------------------------------------------------------------- Transfer and dividend disbursing agent fees and expenses 36,852 - -------------------------------------------------------------------- Directors'/Trustees' fees 2,408 - -------------------------------------------------------------------- Auditing fees 6,561 - -------------------------------------------------------------------- Legal fees 6,428 - -------------------------------------------------------------------- Portfolio accounting fees 67,398 - -------------------------------------------------------------------- Distribution services fee-Cash II Shares 130,847 - -------------------------------------------------------------------- Shareholder services fee-Institutional Shares 646,979 - -------------------------------------------------------------------- Shareholder services fee-Cash II Shares 130,847 - -------------------------------------------------------------------- Share registration costs 15,817 - -------------------------------------------------------------------- Printing and postage 14,689 - -------------------------------------------------------------------- Insurance premiums 3,067 - -------------------------------------------------------------------- Miscellaneous 3,009 - -------------------------------------------------------------------- ----------- Total expenses 2,588,748 - -------------------------------------------------------------------- Waivers-- - -------------------------------------------------------------------- Waiver of investment advisory fee $(685,786) - -------------------------------------------------------- Waiver of distribution services fee-Cash II Shares (26,597) - -------------------------------------------------------- Waiver of shareholder services fee-Institutional Shares (155,275) - -------------------------------------------------------- --------- Total waivers (867,658) - -------------------------------------------------------------------- ----------- Net expenses 1,721,090 - ----------------------------------------------------------------------------------- ----------- Net investment income $ 9,350,509 - ----------------------------------------------------------------------------------- -----------
(See Notes which are an integral part of the Financial Statements) FLORIDA MUNICIPAL CASH TRUST STATEMENT OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
SIX MONTHS ENDED (UNAUDITED) YEAR ENDED APRIL 30, 1997 OCTOBER 31, 1996 ---------------- ----------------- INCREASE (DECREASE) IN NET ASSETS: - ------------------------------------------------------ OPERATIONS-- - ------------------------------------------------------ Net investment income $ 9,350,509 $ 12,310,459 - ------------------------------------------------------ --------------- ----------------- DISTRIBUTIONS TO SHAREHOLDERS-- - ------------------------------------------------------ Distributions from net investment income: - ------------------------------------------------------ Institutional Shares (7,882,884) (10,917,907) - ------------------------------------------------------ Cash II Shares (1,467,625) (1,392,552) - ------------------------------------------------------ --------------- ----------------- Change in net assets resulting from distributions to shareholders (9,350,509) (12,310,459) - ------------------------------------------------------ --------------- ----------------- SHARE TRANSACTIONS-- - ------------------------------------------------------ Proceeds from sale of shares 1,231,978,240 2,270,320,962 - ------------------------------------------------------ Net asset value of shares issued to shareholders in payment of distributions declared 5,689,529 6,801,443 - ------------------------------------------------------ Cost of shares redeemed (1,250,676,071) (1,897,652,278) - ------------------------------------------------------ --------------- ----------------- Change in net assets resulting from share transactions (13,008,302) 379,470,127 - ------------------------------------------------------ --------------- ----------------- Change in net assets (13,008,302) 379,470,127 - ------------------------------------------------------ NET ASSETS: - ------------------------------------------------------ Beginning of period 532,816,645 153,346,518 - ------------------------------------------------------ --------------- ----------------- End of period $ 519,808,343 $ 532,816,645 - ------------------------------------------------------ --------------- -----------------
(See Notes which are an integral part of the Financial Statements) FLORIDA MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES - -------------------------------------------------------------------------------- (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED (UNAUDITED) YEAR ENDED OCTOBER 31, APRIL 30, --------------------------------- 1997 1996 1995 1994(A) ----------- -------- -------- --------- NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.000 - ----------------------------------------------- INCOME FROM INVESTMENT OPERATIONS - ----------------------------------------------- Net investment income 0.02 0.03 0.04 0.004 - ----------------------------------------------- LESS DISTRIBUTIONS - ----------------------------------------------- Distributions from net investment income (0.02) (0.03) (0.04) (0.004) - ----------------------------------------------- ------ ----- ----- --------- NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.000 - ----------------------------------------------- ------ ----- ----- --------- TOTAL RETURN(B) 1.52% 3.20% 3.60% 0.35% - ----------------------------------------------- RATIOS TO AVERAGE NET ASSETS - ----------------------------------------------- Expenses 0.51%* 0.49% 0.45% 0.28% * - ----------------------------------------------- Net investment income 3.05%* 3.17% 3.58% 3.28% * - ----------------------------------------------- Expense waiver/reimbursement(c) 0.28%* 0.34% 0.42% 1.03% * - ----------------------------------------------- SUPPLEMENTAL DATA - ----------------------------------------------- Net assets, end of period (000 omitted) $ 429,907 $500,993 $153,347 $ 53,966 - -----------------------------------------------
* Computed on an annualized basis. (a) Reflects operations for the period from September 21, 1994 (date of initial public investment) to October 31, 1994. For the period from September 12, 1994 (start of business) to September 21, 1994, the fund had no investment activity. (b) Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable. (c) This voluntary expense decrease is reflected in both the expense and net investment income ratios shown above. (See Notes which are an integral part of the Financial Statements) FLORIDA MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS--CASH II SHARES - -------------------------------------------------------------------------------- (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED (UNAUDITED) PERIOD ENDED APRIL 30, 1997 OCTOBER 31, 1996(A) --------------- --------------------- NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 - ------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS - ------------------------------------------------------ Net investment income 0.01 0.03 - ------------------------------------------------------ LESS DISTRIBUTIONS - ------------------------------------------------------ Distributions from net investment income (0.01) (0.03) - ------------------------------------------------------ ---------- ------------- NET ASSET VALUE, END OF PERIOD $1.00 $1.00 - ------------------------------------------------------ ---------- ------------- TOTAL RETURN(B) 1.39% 2.80% - ------------------------------------------------------ RATIOS TO AVERAGE NET ASSETS - ------------------------------------------------------ Expenses 0.77%* 0.65%* - ------------------------------------------------------ Net investment income 2.80%* 3.07%* - ------------------------------------------------------ Expense waiver/reimbursement(c) 0.27%* 0.43%* - ------------------------------------------------------ SUPPLEMENTAL DATA - ------------------------------------------------------ Net assets, end of period (000 omitted) $89,901 $31,824 - ------------------------------------------------------
* Computed on an annualized basis. (a) Reflects operations for the period from November 27, 1995 (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). FLORIDA MUNICIPAL CASH TRUST NOTES TO FINANCIAL STATEMENTS APRIL 30, 1997 (UNAUDITED) - -------------------------------------------------------------------------------- 1. ORGANIZATION Federated Municipal Cash 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 Florida Municipal Cash Trust (the "Fund"). The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. The Fund offers two classes of shares: Institutional Shares and Cash II Shares. The investment objective of the Fund is current income exempt from federal regular income tax consistent with stability of principal and liquidity and to maintain an investment portfolio that will cause its shares to be exempt from the Florida intangibles tax. 2. SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with generally accepted accounting principles. INVESTMENT VALUATIONS--The Fund's use of the amortized cost method to value its portfolio securities is in accordance with Rule 2a-7 under the Act. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses are accrued daily. Bond premium and discount, if applicable, are amortized as required by the Internal Revenue Code, as amended (the "Code"). Distributions to shareholders are recorded on the ex-dividend date. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the Code applicable to regulated investment companies and to distribute to shareholders each year substantially all of its income. Accordingly, no provisions for federal tax are necessary. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in when-issued or delayed delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked to market daily and begin earning interest on the settlement date. DEFERRED EXPENSES--The costs incurred by the Fund with respect to registration of its shares in its first fiscal year, excluding the initial expense of registering its shares, have been deferred and are being amortized over a period not to exceed five years from the Fund's commencement date. RESTRICTED SECURITIES--Restricted securities are securities that may only be resold upon registration under federal securities laws or in transactions exempt from such registration. Many restricted FLORIDA MUNICIPAL CASH TRUST - -------------------------------------------------------------------------------- securities may be resold in the secondary market in transactions exempt from registration. In some cases, the restricted securities may be resold without registration upon exercise of a demand feature. Such restricted securities may be determined to be liquid under criteria established by the Board of Trustees (the "Trustees"). The Fund will not incur any registration costs upon such resales. Restricted securities are valued at amortized cost in accordance with Rule 2a-7 under the Act. Additional information on each restricted security held at April 30, 1997 is as follows:
ACQUISITION ACQUISITION SECURITY DATE COST --------------------------------------------------- ---------------------- ------------ Clipper Florida Tax-Exempt Trust, Class A, Certificates of Participation, Series 1996-3B 6/14/1996-6/19/1996 $14,190,000 Escambia County, FL HFA, P-Floats PA-129 Weekly VRDNs 12/3/1996 $ 2,000,000 Florida HFA, Homeowner Mortgage, Revenue Bonds PT-88 (Series 1996-3) 9/27/1996 $ 6,920,000 Florida State Department of Transportation, (Series 1996-3) 7/23/1996 $ 2,500,000 Orange County, FL, Health Facilities Authority, CDC Municipal Products Inc. (Series 96J) 12/12/96 $11,820,000 Orange County, FL, Health Facilities Authority, CDC Municipal Products, Inc. Class A Certificates (Series 1996 D-1) 3/4/97 $ 9,455,000 Pinellas County, FL Health Facility Authority, SFM Revenue Bonds (Series PA-92) 3/3/1995 $ 3,200,000 TEB Municipal Trust I, Class A Floating Rate Receipts 8/27/1996 $13,500,000 VRDC/IVRC Trust, (Series 1992A) Weekly VRDNs (New York City Municipal Water Finance Authority) 2/11/97 $ 3,200,000
USE OF ESTIMATES--The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ from those estimated. OTHER--Investment transactions are accounted for on the trade date. FLORIDA MUNICIPAL CASH TRUST - -------------------------------------------------------------------------------- 3. SHARES OF BENEFICIAL INTEREST The Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest (without par value) for each class of shares. At April 30, 1997, capital paid-in aggregated $519,808,343. Transactions in shares were as follows:
SIX MONTHS YEAR ENDED ENDED OCTOBER 31, INSTITUTIONAL SHARES APRIL 30, 1997 1996 - ---------------------------------------------------------- -------------- --------------- Shares sold 974,031,054 1,967,231,853 - ---------------------------------------------------------- Shares issued to shareholders in payment of distributions declared 5,688,552 6,801,419 - ---------------------------------------------------------- Shares redeemed (1,050,805,587) (1,626,386,885) - ---------------------------------------------------------- -------------- --------------- Net change resulting from Institutional Share transactions (71,085,981) 347,646,387 - ---------------------------------------------------------- -------------- ---------------
SIX MONTHS YEAR ENDED ENDED OCTOBER 31, CASH II SHARES APRIL 30, 1997 1996 - ---------------------------------------------------------- -------------- --------------- Shares sold 257,947,186 303,089,109 - ---------------------------------------------------------- Shares issued to shareholders in payment of distributions declared 977 24 - ---------------------------------------------------------- Shares redeemed (199,870,484) (271,265,393) - ---------------------------------------------------------- -------------- --------------- Net change resulting from Cash II Share transactions 58,077,679 31,823,740 - ---------------------------------------------------------- -------------- --------------- Net change resulting from Share transactions (13,008,302) 379,470,127 - ---------------------------------------------------------- -------------- ---------------
4. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES INVESTMENT ADVISORY FEE--Federated Management, the Fund's investment adviser (the "Adviser"), receives for its services an annual investment advisory fee equal to 0.40% of the Fund's average daily net assets.The Adviser may voluntarily choose to waive any portion of its fee. The Adviser can modify or terminate this voluntary waiver at any time at its sole discretion. ADMINISTRATIVE FEE--Federated Services Company ("FServ"), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. The fee paid to FServ is based on the level of average aggregate daily net assets of all funds advised by subsidiaries of Federated Investors for the period. The administrative fee received during the period of the FLORIDA MUNICIPAL CASH TRUST - -------------------------------------------------------------------------------- Administrative Services Agreement shall be at least $125,000 per portfolio and $30,000 per each additional class of shares. DISTRIBUTION SERVICES FEE--The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund will compensate Federated Securities Corp. ("FSC"), the principal distributor, from the net assets of the Fund to finance activities intended to result in the sale of the Fund's Institutional Shares and Cash II Shares. The Plan provides that the Fund may incur distribution expenses according to the following schedule annually, to compensate FSC.
PERCENTAGE OF AVERAGE SHARE CLASS NAME DAILY NET ASSETS OF CLASS ------------------------ ---------------------------- Institutional Shares 0.25% Cash II Shares 0.25%
The distributor may voluntarily choose to waive any portion of its fee. The distributor can modify or terminate this voluntary waiver at any time at its sole discretion. For the period ending April 30, 1997, Institutional Shares did not incur a distribution services fee. SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to 0.25% of average daily net assets of the Fund for the period. The fee paid to FSS is used to finance certain services for shareholders and to maintain shareholder accounts. FSS may voluntarily choose to waive any portion of its fee. FSS can modify or terminate this voluntary waiver at any time at its sole discretion. TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--FServ, through its subsidiary, Federated Shareholder Services Company ("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. ORGANIZATIONAL EXPENSES--Organizational expenses of $15,374 were borne initially by the Adviser. The Fund has agreed to reimburse the Adviser for the organizational expenses during the five year period following effective date. For the period ended April 30, 1997, the Fund paid $1,580 pursuant to this agreement. INTERFUND TRANSACTIONS--During the period ended April 30, 1997, 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 $961,380,000 and $1,040,310,000, respectively. FLORIDA MUNICIPAL CASH TRUST - -------------------------------------------------------------------------------- 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 April 30, 1997, 72.0% of the securities in the portfolio of investments are backed by letters of credit or bond insurance of various financial institutions and financial guaranty assurance agencies. The percentage of investments insured by or supported (backed) by a letter of credit from any one institution or agency did not exceed 4.4% of total investments. TRUSTEES OFFICERS - --------------------------------------------------------------------------------------------- John F. Donahue John F. Donahue Thomas G. Bigley Chairman John T. Conroy, Jr. Glen R. Johnson William J. Copeland President James E. Dowd J. Christopher Donahue Lawrence D. Ellis, M.D. Executive Vice President Edward L. Flaherty, Jr. Edward C. Gonzales Glen R. Johnson Executive Vice President Peter E. Madden John W. McGonigle Gregor F. Meyer Executive Vice President, John E. Murray, Jr. Treasurer, and Secretary Wesley W. Posvar Richard B. Fisher Marjorie P. Smuts Vice President S. Elliott Cohan Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any bank, and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other government agency. Investment in mutual funds involves investment risk, including possible loss of principal. Although money market funds seek to maintain a stable net asset value of $1.00 per share, there is no assurance that they will be able to do so. This report is authorized for distribution to prospective investors only when preceded or accompanied by the fund's prospectus which contains facts concerning its objective and policies, management fees, expenses and other information. PRESIDENT'S MESSAGE Dear Shareholder: I am pleased to present the Semi-Annual Report to Shareholders of New York Municipal Cash Trust, a portfolio of Federated Municipal Trust, which covers the six-month period from November 1, 1996, through April 30, 1997. The report begins with a discussion with the fund's portfolio manager, followed by a complete listing of the fund's holdings and its financial statements. Financial highlights tables are provided for the fund's Institutional Service Shares and Cash II Shares. The fund is a convenient way to put your ready cash to work pursuing double- or triple-tax-free income -- free from federal regular income tax, New York state income tax, AND New York City local income tax* -- through a portfolio concentrated in high-quality, short-term New York municipal securities. At the end of the reporting period, the fund's holdings were diversified among issuers that use municipal bond financing for projects as varied as health care, housing, community development, and transportation. This double- or triple-tax-free advantage means you have the opportunity to earn a greater after-tax yield than you could in a comparable high-quality taxable investment. Of course, the fund also brings you the added benefits of daily liquidity and stability of principal.** During the reporting period, the fund paid tax-free dividends totaling $0.02 per share for Institutional Service Shares and $0.01 per share for Cash II Shares. The fund's total net assets stood at $429.5 million at the end of the reporting period. Thank you for relying on New York Municipal Cash Trust to help your ready cash pursue tax-free income every day. As always, we will continue to provide you with the highest level of professional service. We invite your questions or comments. Sincerely, [Graphic] Glen R. Johnson President June 15, 1997 * Income may be subject to the federal alternative minimum tax. ** Although money market funds seek to maintain a stable net asset value of $1.00 per share, there is no assurance that they will be able to do so. An investment in the fund is neither insured nor guaranteed by the U.S. government. INVESTMENT REVIEW An interview with the fund's portfolio manager, Jeff A. Kozemchak, CFA, Vice President, Federated Management Q Can you comment on the economy and the interest rate environment during the six month reporting period? A Although it did not occur until near the end of the fund's semi-annual reporting period, the Federal Reserve Board (the "Fed") brought about the first change in monetary policy in over a year. On March 25, 1997, the Fed, in the face of stronger than expected demand, voted to raise the federal funds target rate from 5.25% to 5.50%. The move was viewed as being pre-emptive against the threat of future inflationary pressures possibly brought about by tight labor market conditions. Until that point, movements in interest rates reflected shifting market sentiment about the need for the Fed to move to a more restrictive policy. As the reporting period began in November 1996, the economy had been showing signs of slowing, thereby allaying the market's fears about inflation. Then, in December, the market's uneasiness was once more ignited as a string of economic statistics showed stronger growth and Fed Chairman Alan Greenspan made cautionary statements regarding inflation and "irrational exuberance" in the equity market. With inflation still appearing to be benign, the market tolerated a steady pace of growth into early 1997. However, Chairman Greenspan's Humphrey-Hawkins testimony before Congress in late February marked a turning point for the short-term money markets -- indeed the bond and equity markets as well -- as his relatively hawkish statements revealed fears at the Fed that the transitory factors that had been keeping inflation under control in the face of fairly robust growth may be coming to an end. This statement by the Fed caused a sharp reversal in interest rate movement and the market's perception about future Fed policy. The ensuing weeks brought continued evidence of persistent strength, and culminated in the Fed's action at the Federal Open Market Committee in late March. For the first three months of the reporting period, short-term interest rates traded in a relatively narrow range as the continued friendly inflation picture provided some comfort to market participants. The yield on the six-month Treasury bill, for example, moved in a range between 5.20% and 5.35% from the beginning of November through early February. However, short-term interest rates began to rise in late February, and by the time of the Fed tightening in late March, had built in much of the expectations regarding the Fed decision. In April, the financial markets continued to focus on the likelihood of an additional tightening move later in May, causing short-term yields to rise even further. Yields on the six-month Treasury bill rose sharply over this interim period, moving from a low of 5.20% in mid-February to a high of 5.68% in late April before falling back to 5.53% by the end of reporting period. Q What were your strategies for the fund during the period? A The fund's average maturity at the beginning of the reporting period was approximately 51 days. As signs of strength in the economy became more apparent, and as expectation of an imminent Fed tightening grew in the first quarter of 1997, we lowered the average maturity target range of the fund from between 50 and 55 days to between 40 and 45 days. We also emphasized the purchase of shorter term fixed-rate paper while increasing the percentage of the portfolio in seven-day variable rate demand notes ("VRDNs"). Seven-day VRDNs provide more portfolio responsiveness to interest rate increases. Once an average maturity range is targeted, the portfolio attempts to maximize performance through ongoing relative value analysis. Relative value analysis includes the comparison of the richness or cheapness of municipal securities to one another as well as municipals to taxable instruments, such as Treasury securities. The fund's portfolio remained barbelled in structure, which combined a significant portion in seven-day variable rate demand notes and short maturity commercial paper with purchases of longer-term, six- to twelve-month fixed rate notes. This portfolio structure continues to pursue a competitive yield over time. Q How has the fund's yield responded to this rate environment? A The fund's yield was affected by Fed policy (interest rate increases), changes in market expectations, as well as supply and demand imbalances unique to the municipal money markets. However, because of these imbalances the fund's yield may experience more volatility on a weekly basis than Treasury yields and taxable money fund yields. In general, yields on municipal money market funds increased during the reporting period. For the fund, the seven-day net yield of the Institutional Service Shares on April 30, 1997 was 3.88%, compared to 3.18% at the beginning of the reporting period.* For the Cash II Shares, the seven-day net yield was 3.70%, at the end of the reporting period compared to 3.00% six months ago.* Q Looking through 1997, what is your outlook for short-term rates? A Although the Fed decided to hold short-term interest rates steady in the March meeting, our expectations are that the Fed will find cause to tighten monetary policy further in 1997 -- perhaps as soon as in July. It is also anticipated that the overall tightening cycle will not be long in terms of magnitude or duration. The pre-emptive move by the Fed should help to preclude the need for more aggressive action down the road by preventing the build-up of inflationary pressures. We would look to see moderately higher short-term interest rates throughout the course of the year, but not to the extent evidenced in the last tightening cycle in 1994. As such, we will likely continue in our modestly defensive stance for the portfolio until market conditions indicate otherwise. * Performance quoted represents past performance and is not indicative of future results. Yield will vary. The seven-day net yield is calculated daily, based on the income dividends for the seven days ending on the date of calculation and then compounded and annualized. NEW YORK MUNICIPAL CASH TRUST PORTFOLIO OF INVESTMENTS APRIL 30, 1997 (UNAUDITED)
PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- 99.4% NEW YORK -- 99.4% $ 9,195,000 (b)Albany County Airport Authority, NY, Trust Receipts (Series 1997) Weekly VRDNs (FSA INS)/(Bank of New York, New York LIQ) $ 9,195,000 945,000 Albany, NY IDA, 3.95% TOBs (146 State Street)/(Fleet Bank of New York LOC), Optional Tender 12/1/1997 945,000 2,480,000 Alden Central School District, NY, UT GO, 4.25% BANs, 6/24/1997 2,481,251 900,000 Babylon, NY IDA, (1994 Series) Weekly VRDNs (J. D'Addario & Company, Inc. Project)/(National Westminster Bank, PLC, London LOC) 900,000 2,000,000 Brockport Village, NY, 4.125% BANs, 2/27/1998 2,005,494 3,800,000 Brookhaven-Comsewogue Union Free School District, NY, 4.00% TANs, 6/30/1997 3,801,217 4,000,000 Canisteo Central School District, NY, 4.00% BANs, 1/2/1998 4,006,731 1,500,000 Cattaraugus County, NY IDA, (Series 1996A) Weekly VRDNs (Gier's Farm Service, Inc. Project)/(Key Bank of New York LOC) 1,500,000 2,550,000 Chautauqua County, NY IDA Weekly VRDNs (Cliffstar Corp.)/ (KeyBank, N.A. LOC) 2,550,000 3,900,000 Chautauqua County, NY IDA Weekly VRDNs (Mogen David Wine Corp.)/(Wells Fargo Bank, N.A. LOC) 3,900,000 5,000,000 Chautauqua County, NY, 4.00% TANs, 12/18/1997 5,009,185 3,400,000 Clyde-Savannah Central School District, NY, 4.375% BANs, 6/27/1997 3,401,400 980,000 Colonie, NY IDA Weekly VRDNs (Herbert S. Ellis)/(Marine Midland Bank N.A., Buffalo, NY LOC) 980,000 710,000 Colonie, NY IDA, (Series 1988) Weekly VRDNs (13 Green M-1 Drive Project)/(Marine Midland Bank N.A., Buffalo, NY LOC) 710,000 3,380,000 Colonie, NY IDA, 3.90% TOBs (800 North Pearl Associates)/ (Fleet Bank of New York LOC), Optional Tender 12/1/1997 3,380,000 4,720,000 Corinth, NY IDA, Solid Waste Disposal Revenue Bonds (Series A), 3.80% TOBs (International Paper Co.)/(International Paper Co. GTD), Optional Tender 3/1/1998 4,720,000
NEW YORK MUNICIPAL CASH TRUST
PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- CONTINUED NEW YORK -- CONTINUED $ 7,500,000 Deer Park Union Free School District, NY, 4.50% BANs, 10/3/1997 $ 7,517,772 1,300,000 Dutchess County, NY IDA, Series 1995 Weekly VRDNs (Laerdal Medical Corp.)/(Bank of New York, New York LOC) 1,300,000 5,000,000 Erie County, NY IDA, IDRB (Series 1994) Weekly VRDNs (Servotronics, Inc. Project)/(Fleet Bank of New York LOC) 5,000,000 1,800,000 Franklin County, NY IDA, (Series 1991A) Weekly VRDNs (KES Chateaugay)/(Bank of Tokyo-Mitsubishi Ltd. LOC) 1,800,000 2,900,000 Freeport, NY, 4.125% BANs, 11/25/1997 2,904,643 945,000 Fulton County, NY IDA, 3.95% TOBs (Gates Mills Inc.)/(Fleet Bank of New York LOC), Optional Tender 12/1/1997 945,000 1,400,000 Guilderland, NY IDA, (Series 1993A) Weekly VRDNs (Northeastern Industrial Park, Inc.)/(Fleet Bank of New York LOC) 1,400,000 4,420,000 Herkimer County, NY IDA, 1994 IDRB Weekly VRDNs (Granny's Kitchen)/(Bank of New York, New York LOC) 4,420,000 2,500,000 Herkimer County, NY, 3.875% BANs, 12/12/1997 2,503,344 7,435,000 Hilton Central School District, NY, 3.90% BANs, 11/25/1997 7,444,373 1,880,000 Madison County, NY IDA, (Series 1989A) Weekly VRDNs (Madison, NY Upstate Metals)/(Fleet Bank of New York LOC) 1,880,000 4,900,000 Madison County, NY IDA, (Series A) Weekly VRDNs (Owl Wire and Cable)/(KeyBank, N.A. LOC) 4,900,000 15,000,000 Marine Midland, NY, Premium Tax-Exempt Bond & Loan Trust Weekly VRDNs (Marine Midland New York Trust)/(Marine Midland Bank N.A., Buffalo, NY LOC) 15,000,000 3,300,000 (b)Monroe County, NY Airport Authority, (PT-98) Weekly VRDNs (Greater Rochester International Airport)/(MBIA INS)/(Bayerische Hypotheken-Und Wechsel-Bank AG LIQ) 3,300,000 6,785,000 Mount Pleasant, NY Industrial Development Agency, Pollution Control Revenue Bonds (Series 1985) Weekly VRDNs (General Motors Corp.) 6,785,000 3,600,000 New York City Housing Development Corp., (Series A) Weekly VRDNs (East 96th Street Project)/(Bank of Tokyo-Mitsubishi Ltd. LOC) 3,600,000 1,000,000 New York City Housing Development Corp., (Series A) Weekly VRDNs (Upper Fifth Avenue)/(Bankers Trust Co., New York LOC) 1,000,000
NEW YORK MUNICIPAL CASH TRUST
PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- CONTINUED NEW YORK -- CONTINUED $ 4,900,000 (b)New York City Housing Development Corp., Municipal Securities Trust Receipts (Series 1996-CMC1A) Weekly VRDNs (Chase Manhattan Corp. LIQ) $ 4,900,000 4,900,000 (b)New York City Housing Development Corp., Municipal Securities Trust Receipts (Series 1996-CMC1B) Weekly VRDNs (Chase Manhattan Corp. LIQ) 4,900,000 13,150,000 New York City Municipal Water Finance Authority, Water and Sewer System Revenue Bonds (Series 1995A) Daily VRDNs (FGIC INS)/ (FGIC Securities Purchase, Inc. LIQ) 13,150,000 194,445 New York City, NY IDA Weekly VRDNs (David Rosen Bakers Supply)/ (Ford Motor Credit Corp. LIQ)/(Chase Manhattan Bank N.A., New York LOC) 194,445 28,162,850 New York City, NY IDA, (Series 1995A) Weekly VRDNs (Brooklyn Navy Yard Cogeneration Partners, L.P. Project)/(Bank of America NT and SA, San Francisco LOC) 28,162,850 7,175,000 (b)New York City, NY IDA, CDC (Series 1997H) Class A Certificates Weekly VRDNs (Japan Airlines Co.)/(FSA INS)/(CDC Municipal Products, Inc. LIQ) 7,175,000 3,600,000 (b)New York City, NY IDA, CDC (Series 1996H) Weekly VRDNs (Japan Airlines Co.)/(FSA INS)/(CDC Municipal Products, Inc. LIQ) 3,600,000 9,340,000 (b)New York City, NY IDA, CDC (Series 1997E) Class A Certificates Weekly VRDNs (Japan Airlines Co.)/(FSA INS)/(CDC Municipal Products, Inc. LIQ) 9,340,000 4,500,000 New York City, NY, (Series 1995 F-5) Weekly VRDNs (Landesbank Hessen-Thueringen, Frankfurt LOC) 4,500,000 5,000,000 New York City, NY, (Series B), 4.50% RANs (Bank of Nova Scotia, Toronto, Canadian Imperial Bank of Commerce, Toronto and Commerzbank AG, Frankfurt LOCs), 6/30/1997 5,005,601 4,700,000 New York State Dormitory Authority, (Series 1989C), 3.40% CP (Sloan-Kettering Memorial Cancer Center)/(Chase Manhattan Bank N.A., New York LOC), Mandatory Tender 5/19/1997 4,700,000 5,475,000 (b)New York State Dormitory Authority, PA-60 (Series 1993) Weekly VRDNs (Rochester General Hospital)/(FHA INS)/(Merrill Lynch Capital Services, Inc. LIQ) 5,475,000
NEW YORK MUNICIPAL CASH TRUST
PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- CONTINUED NEW YORK -- CONTINUED $ 8,000,000 New York State Energy Research & Development Authority, (Series 1985A), 3.60% TOBs (Long Island Lighting Co.)/(Deutsche Bank, AG LOC), Optional Tender 3/1/1998 $ 8,000,000 3,000,000 New York State Energy Research & Development Authority, (Series 1993A) Weekly VRDNs (Long Island Lighting Co.)/(Toronto-Dominion Bank LOC) 3,000,000 12,200,000 (b)New York State Environmental Facilities Corp., Trust Receipts (Series 1997) Weekly VRDNs (New York City Municipal Water Finance Authority)/(Bank of New York, New York LIQ) 12,200,000 1,620,000 New York State HFA Weekly VRDNs (Special Surgery Hospital)/ (Chase Manhattan Bank N.A., New York LOC) 1,620,000 10,900,000 New York State HFA, Housing Revenue Bonds (1985 Series A) Weekly VRDNs (Liberty View Apartments)/(Chase Manhattan Bank N.A., New York LOC) 10,900,000 955,000 New York State Job Development Authority Weekly VRDNs (New York State GTD)/(Sumitomo Bank Ltd., Osaka LOC) 955,000 1,390,000 New York State Job Development Authority Weekly VRDNs (New York State GTD)/(Sumitomo Bank Ltd., Osaka LOC) 1,390,000 1,805,000 New York State Job Development Authority, (Series C-1) Monthly VRDNs (New York State GTD)/(Sumitomo Bank Ltd., Osaka LOC) 1,805,000 880,000 New York State Job Development Authority, (Series D-1) Monthly VRDNs (New York State GTD)/(Sumitomo Bank Ltd., Osaka LOC) 880,000 2,025,000 New York State Job Development Authority, (Series E-1) Monthly VRDNs (New York State GTD)/(Sumitomo Bank Ltd., Osaka LOC) 2,025,000 4,100,000 New York State Local Government Assistance Corp., (Series B) Weekly VRDNs (Bank of Nova Scotia, Toronto LOC) 4,100,000 10,100,000 New York State Local Government Assistance Corp., (Series D) Weekly VRDNs (Societe Generale, Paris LOC) 10,100,000 2,700,000 New York State Local Government Assistance Corp., Bonds (Series 1993A) Weekly VRDNs (Credit Suisse, Zurich and Union Bank of Switzerland, Zurich LOCs) 2,700,000 1,100,000 New York State Medical Care Facilities Finance Agency Weekly VRDNs (Pooled Loan Program)/(Chase Manhattan Bank N.A., New York LOC) 1,100,000
NEW YORK MUNICIPAL CASH TRUST
PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- CONTINUED NEW YORK -- CONTINUED $ 4,560,000 (b)New York State Medical Care Facilities Finance Agency, Hospital & Nursing Home Mortgage Revenue Bonds (1994 Series C) Weekly VRDNs (FHA INS)/(Merrill Lynch Capital Services, Inc. LIQ) $ 4,560,000 3,700,000 (b)New York State Mortgage Agency, (Series PA-29) Weekly VRDNs (Merrill Lynch Capital Services, Inc. LIQ) 3,700,000 4,500,000 (b)New York State Mortgage Agency, Homeowner Mortgage Revenue Bonds (PA-87) Weekly VRDNs (Merrill Lynch Capital Services, Inc. LIQ) 4,500,000 7,015,000 (b)New York State Mortgage Agency, Homeowner Mortgage Revenue Bonds (Series PT-15B) Weekly VRDNs (Commerzbank AG, Frankfurt LIQ) 7,015,000 2,390,000 (b)New York State Urban Development Corp., (PA-140) Weekly VRDNs (AMBAC INS)/(Merrill Lynch Capital Services, Inc. LIQ) 2,390,000 8,400,000 (b)New York State Urban Development Corp., Municipal SecuritiesTrust Receipts (Series 1996-CMC6) Weekly VRDNs (Chase Manhattan Corp. LIQ) 8,400,000 3,660,000 New York State, (Series A), 4.50% Bonds, 7/15/1997 3,664,581 4,700,000 Newark Central School District, NY, 3.875% BANs, 12/5/1997 4,706,091 5,000,000 Niagara County, NY IDA Weekly VRDNs (Allegheny Ludlum Corp.)/ (PNC Bank, N.A. LOC) 5,000,000 1,000,000 North Babylon Union Free School District, NY, 4.40% TANs, 6/26/1997 1,000,864 1,400,000 Norwich, NY, 4.375% BANs, 9/19/1997 1,401,426 3,000,000 Oneida County, NY, Custodial Receipts (2nd Series 1996-D), 4.25% BANs (State Street Bank and Trust Co. LOC), 5/9/1997 3,000,282 400,000 Onondaga County, NY IDA Weekly VRDNs (Beverage Corp.)/(Marine Midland Bank N.A., Buffalo, NY LOC) 400,000 1,725,000 Onondaga County, NY Weekly VRDNs (Grainger (W.W.), Inc.) 1,725,000 1,912,000 Onondaga, NY, 4.00% BANs, 3/27/1998 1,913,660 1,450,000 Ontario, NY IDA Weekly VRDNs (Hillcrest Enterprises/Buckeye Corrugated)/(National City Bank, Cleveland, OH LOC) 1,450,000 5,700,000 Oswego County, NY IDA Weekly VRDNs (Copperweld Corp.)/(Credit Lyonnais, Paris LOC) 5,700,000 15,000,000 Port Authority of New York and New Jersey Weekly VRDNs 15,000,000
NEW YORK MUNICIPAL CASH TRUST
PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- CONTINUED NEW YORK -- CONTINUED $15,000,000 Port Authority of New York and New Jersey Weekly VRDNs $ 15,000,000 1,000,000 Rotterdam, NY IDA, (Series 1993A) Weekly VRDNs (Rotterdam Industrial Park)/(Fleet Bank of New York LOC) 1,000,000 416,871 Schenectady, NY IDA Weekly VRDNs (McClellan Street Associates)/ (Ford Motor Credit Corp. LIQ)/(Chase Manhattan Bank N.A., New York LOC) 416,871 1,640,000 Schenectady, NY IDA, IDRB (Series 1995A) Weekly VRDNs (Fortitech Holding Corporation Project)/(Fleet Bank of New York LOC) 1,640,000 3,500,000 Sodus Central School District, NY, 4.00% BANs, 2/4/1998 3,505,137 3,000,000 South Country Central School District, NY, 4.50% TANs, 6/25/1997 3,001,953 3,040,000 Southeast, NY IDA, IDRB (Series 1995) Weekly VRDNs (Dairy Conveyor Corporation Project)/(Chase Manhattan Bank N.A., New York LOC) 3,040,000 3,700,000 Southeast, NY IDA, Variable Rate IDRB 1996 Weekly VRDNs (The Rawplug Company, Inc.)/(Bank of New York, New York LOC) 3,700,000 1,200,000 Stamford Village, NY, 4.30% BANs, 4/3/1998 1,201,589 2,100,000 Suffolk County, NY IDA Weekly VRDNs (C & J Realty Corp.)/(Ford Motor Credit Corp. LIQ)/(Chase Manhattan Bank N.A., New York LOC) 2,100,000 750,000 Suffolk County, NY IDA Weekly VRDNs (Poly Research Corp.)/ (Marine Midland Bank N.A., Buffalo, NY LOC) 750,000 800,000 Suffolk County, NY IDA Weekly VRDNs (YM-YWHA of Suffolk)/ (European American Bank, New York LOC) 800,000 1,800,000 Suffolk County, NY IDA, 5.363% TOBs (Grainger (W.W.), Inc.), Optional Tender 6/1/1997 1,800,000 8,300,000 (b)VRDC/IVRC Trust, (Series 1992A) Weekly VRDNs (New York City Municipal Water Finance Authority)/(MBIA INS)/(Hong Kong & Shanghai Banking Corp. LIQ) 8,300,000 7,000,000 (b)VRDC/IVRC Trust, (Series 1993B) Weekly VRDNs (Metropolitan Transportation Authority, New York)/(AMBAC INS)/(Hong Kong & Shanghai Banking Corp. LIQ) 7,000,000
NEW YORK MUNICIPAL CASH TRUST
PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- CONTINUED NEW YORK -- CONTINUED $ 4,800,000 (b)VRDC/IVRC Trust, (Series 1993G) Weekly VRDNs (St. Lukes Roosevelt Hospital Center)/(FHA INS)/(Hong Kong & Shanghai Banking Corp. LIQ) $ 4,800,000 7,500,000 Walden Village, NY IDA, IDRB (Series 1994) Weekly VRDNs (Spence Engineering Co.)/(First Union National Bank, Charlotte, NC LOC) 7,500,000 5,280,000 Warren & Washington Counties, NY IDA Weekly VRDNs (Sandy Hill Corp.)/(First Union National Bank, Charlotte, NC LOC) 5,280,000 4,000,000 Westhampton Beach Union Free School District, NY, 4.00% TANs, 6/27/1997 4,001,526 1,290,000 Yates County, NY IDA, (Series 1992A) Weekly VRDNs (Clearplass Container)/(Fleet Bank of New York LOC) 1,290,000 2,200,000 Yonkers, NY IDA, (Series 1992A) Weekly VRDNs (Consumers Union Facility)/(Industrial Bank of Japan Ltd., Tokyo LOC) 2,200,000 TOTAL INVESTMENTS (AT AMORTIZED COST)(C) $426,917,286
Securities that are subject to Alternative Minimum Tax represent 37.0% of the portfolio as calculated based upon total portfolio market value. (a) The fund may only invest in securities rated in one of the two highest short-term rating categories by one or more nationally recognized statistical rating organizations ("NRSRO's") 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 Ratings Group, MIG-1, or MIG-2 by Moody's Investors Service, Inc. or F-1+, F-1 and F-2 by Fitch Investors Service, Inc. are considered rated in one of the two highest short-term rating categories. Securities rated in the highest short-term rating category (and unrated securities of comparable quality) are identified as First Tier securities. Securities rated in the second highest short-term rating category (and unrated securities of comparable quality) are identified as Second Tier securities. The fund follows application regulations in determining whether a security is rated and whether a security rated by multiple NRSRO's in different rating categories should be identified as a First or Second Tier security. At April 30, 1997, the portfolio securities were rated as follows: Tier Rating Percentage Based on Total Market Value (unaudited)
FIRST TIER SECOND TIER 93.04% 6.96%
(b) Denotes a restricted security which is subject to restrictions on resale under Federal Securities laws. At April 30, 1997, these securities amounted to $110,750,000 which represents 25.8% of net assets. (c) Also represents cost for federal tax purposes. Note: The categories of investments are shown as a percentage of net assets ($429,545,696) at April 30, 1997. The following acronyms are used throughout this portfolio: AMBAC -- American Municipal Bond Assurance Corporation BANs -- Bond Anticipation Notes CP -- Commercial Paper FGIC -- Financial Guaranty Insurance Company FHA -- Federal Housing Administration FSA -- Financial Security Assurance GO -- General Obligation GTD -- Guaranty HFA -- Housing Finance Authority IDA -- Industrial Development Authority IDRB -- Industrial Development Revenue Bond INS -- Insured LIQ -- Liquidity Agreement LOCs -- Letter(s) of Credit LOC -- Letter of Credit MBIA -- Municipal Bond Investors Assurance PLC -- Public Limited Company RANs -- Revenue Anticipation Notes TANs -- Tax Anticipation Notes TOBs -- Tender Option Bonds UT -- Unlimited Tax VRDNs -- Variable Rate Demand Notes (See Notes which are an integral part of the Financial Statements) NEW YORK MUNICIPAL CASH TRUST STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1997 (UNAUDITED) ASSETS: Total investments in securities, at amortized cost and value $426,917,286 Cash 440,957 Income receivable 3,412,255 Total assets 430,770,498 LIABILITIES: Income distribution payable $1,167,101 Accrued expenses 57,701 Total liabilities 1,224,802 NET ASSETS for 429,545,696 shares outstanding $429,545,696 NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE: INSTITUTIONAL SERVICE SHARES: $409,015,359 / 409,015,359 shares outstanding $1.00 CASH II SHARES: $20,530,337 / 20,530,337 shares outstanding $1.00
(See Notes which are an integral part of the Financial Statements) NEW YORK MUNICIPAL CASH TRUST STATEMENT OF OPERATIONS SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
INVESTMENT INCOME: Interest $7,859,668 EXPENSES: Investment advisory fee $ 865,073 Administrative personnel and services fee 163,299 Custodian fees 16,814 Transfer and dividend disbursing agent fees and expenses 38,346 Directors'/Trustees' fees 1,686 Auditing fees 5,927 Legal fees 4,901 Portfolio accounting fees 46,914 Distribution services fee -- Institutional Service Shares 511,974 Distribution services fee -- Cash II Shares 28,632 Shareholder services fee -- Institutional Service Shares 511,974 Shareholder services fee -- Cash II Shares 28,632 Share registration costs 38,204 Printing and postage 12,297 Insurance premiums 1,310 Taxes 770 Miscellaneous 2,296 Total expenses 2,279,049 Waivers -- Waiver of investment advisory fee $ (203,002) Waiver of distribution services fee -- Institutional Service Shares (511,974) Waiver of distribution services fee -- Cash II Shares (28,632) Waiver of shareholder services fee -- Institutional Service Shares (368,621) Total waivers (1,112,229) Net expenses 1,166,820 Net investment income $6,692,848
(See Notes which are an integral part of the Financial Statements) NEW YORK MUNICIPAL CASH TRUST STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED (UNAUDITED) YEAR ENDED APRIL 30, OCTOBER 31, 1997 1996 INCREASE (DECREASE) IN NET ASSETS: OPERATIONS -- Net investment income $ 6,692,848 $ 10,289,169 Net realized gain (loss) on investments -- 5,609 Change in net assets resulting from operations 6,692,848 10,294,778 DISTRIBUTIONS TO SHAREHOLDERS -- Distributions from net investment income Institutional Service Shares (6,360,314) (9,551,350) Cash II Shares (332,534) (737,819) Change in net assets resulting from distributions to shareholders (6,692,848) (10,289,169) SHARE TRANSACTIONS -- Proceeds from sale of shares 843,368,279 1,133,036,436 Net asset value of shares issued to shareholders in payment of distributions declared 2,027,706 2,199,491 Cost of shares redeemed (746,954,557) (1,094,725,252) Change in net assets resulting from share transactions 98,441,428 40,510,675 Change in net assets 98,441,428 40,516,284 NET ASSETS: Beginning of period 331,104,268 290,587,984 End of period $429,545,696 $ 331,104,268
(See Notes which are an integral part of the Financial Statements) NEW YORK MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS -- INSTITUTIONAL SERVICE SHARES (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED (UNAUDITED) APRIL 30, YEAR ENDED OCTOBER 31, 1997 1996 1995 1994 1993(A) 1992 1991 1990 1989 1988 NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 INCOME FROM INVESTMENT OPERATIONS Net investment 0.02 0.03 0.04 0.02 0.02 0.03 0.04 0.05 0.06 0.05 income LESS DISTRIBUTIONS Distributions from net investment (0.02) (0.03) (0.04) (0.02) (0.02) (0.03) (0.04) (0.05) (0.06) (0.05) income NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 TOTAL RETURN(B) 1.54% 3.24% 3.56% 2.35% 2.16% 3.01% 4.59% 5.51% 5.70% 4.66% RATIOS TO AVERAGE NET ASSETS Expenses 0.53%* 0.53% 0.54% 0.52% 0.54% 0.57% 0.52% 0.54% 0.55% 0.51% Net investment 3.11%* 3.18% 3.49% 2.31% 2.14% 2.99% 4.48% 5.36% 5.56% 4.57% income Expense waiver/ reimbursement(c) 0.52%* 0.54% 0.53% 0.13% 0.17% -- -- -- -- -- SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $409,015 $305,533 $276,149 $236,580 $274,357 $164,492 $191,616 $197,213 $245,542 $212,786
* Computed on an annualized basis. (a) Prior to November 9, 1992, the fund provided three classes of shares. (b) Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable. (c) This voluntary expense decrease is reflected in both the expense and net investment income ratios shown above. (See Notes which are an integral part of the Financial Statements) NEW YORK MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS -- CASH II SHARES (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED (UNAUDITED) APRIL 30, YEAR ENDED OCTOBER 31, 1997 1996 1995 1994 1993(A) 1992 1991(B) NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 INCOME FROM INVESTMENT OPERATIONS Net investment income 0.01 0.03 0.03 0.02 0.02 0.03 0.02 LESS DISTRIBUTIONS Distributions from net investment income (0.01) (0.03) (0.03) (0.02) (0.02) (0.03) (0.02) NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 TOTAL RETURN(C) 1.45% 3.05% 3.37% 2.15% 1.98% 2.86% 2.20% RATIOS TO AVERAGE NET ASSETS Expenses 0.71%* 0.71% 0.71% 0.71% 0.71% 0.73% 0.46%* Net investment income 2.90%* 3.02% 3.20% 2.19% 1.96% 2.46% 4.08%* Expense 0.34%* 0.36% 0.36% 0.21% 0.17% -- -- waiver/reimbursement(d) SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $20,530 $25,571 $14,439 $134,051 $58,884 $4,641 $56
* Computed on an annualized basis. (a) Prior to November 9, 1992, the fund provided three classes of shares. (b) Reflects operations for the period from April 25, 1991 (date of initial public investment) to October 31, 1991. (c) Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable. (d) This voluntary expense decrease is reflected in both the expense and net investment income ratios shown above. (See Notes which are an integral part of the Financial Statements) NEW YORK MUNICIPAL CASH TRUST NOTES TO FINANCIAL STATEMENTS APRIL 30, 1997 (UNAUDITED) 1. ORGANIZATION Federated Municipal Trust (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act") as an open-end, management investment company. The Trust consists of sixteen portfolios. The financial statements included herein are only those of New York Municipal Cash Trust (the "Fund"). The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. The Fund offers two classes of shares: Institutional Service Shares and Cash II Shares. The investment objective of the Fund is current income exempt from federal regular income tax and the personal income taxes imposed by New York State and New York municipalities consistent with stability of principal. 2. SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with generally accepted accounting principles. INVESTMENT VALUATIONS -- The Fund's use of the amortized cost method to value its portfolio securities is in accordance with Rule 2a-7 under the Act. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS -- Interest income and expenses are accrued daily. Bond premium and discount, if applicable, are amortized as required by the Internal Revenue Code, as amended (the "Code"). Distributions to shareholders are recorded on the ex-dividend date. FEDERAL TAXES -- It is the Fund's policy to comply with the provisions of the Code applicable to regulated investment companies and to distribute to shareholders each year substantially all of its income. Accordingly, no provisions for federal tax are necessary. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS -- The Fund may engage in when-issued or delayed delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked to market daily and begin earning interest on the settlement date. RESTRICTED SECURITIES -- Restricted securities are securities that may only be resold upon registration under federal securities laws or in transactions exempt from such registration. Many restricted securities may be resold in the secondary market in transactions exempt from registration. In some cases, the restricted securities may be resold without registration upon exercise of a demand feature. Such restricted securities may be determined to be liquid under criteria established by the Board of Trustees (the "Trustees"). The Fund will not incur any registration costs upon such resales. Restricted securities are valued at amortized cost in accordance with Rule 2a-7 under the Act. Additional information on each restricted security held at April 30, 1997 is as follows:
SECURITY ACQUISITION DATE ACQUISITION COST Albany County Airport Authority, NY (Series 1997) 2/28/1997 $ 9,195,000 Monroe County, NY (PT-98) 2/24/1997 3,300,000 New York City Housing Development Corp. (Series 1996-CMC1A) 9/11/1996 4,900,000 New York City Housing Development Corp. (Series 1996-CMC1B) 9/11/1996 4,900,000 New York City, NY CDC (Series 1997H) 4/11/1997 7,175,000 New York City, NY CDC (Series 1996H) 12/12/1996 3,600,000 New York City, NY CDC (Series 1997E) 3/11/1997 9,340,000 New York State Dormitory Authority, PA-60 3/13/1995 5,475,000 New York State Environmental Facilities Corp. (Series 1997) 2/25/1997-2/28/1997 12,200,000 New York State Medical Care Facilities Finance Agency 8/22/1996 4,560,000 New York State Mortgage Agency (Series PA-29) 4/3/1995 3,700,000 New York State Mortgage Agency (Series PA-87) 7/5/1995 4,500,000 New York State Mortgage Agency (Series PT-15B) 12/29/1995-5/30/1996 7,015,000 New York State Urban Development Corp. (Series PA-140) 1/29/1997 2,390,000 New York State Urban Development Corp. (Series 1996-CMC6) 11/21/1996 8,400,000 VRDC/IVRC Trust (Series 1992A) 7/5/1995-1/31/1997 8,300,000 VRDC/IVRC Trust (Series 1993G) 3/26/1997-4/10/1997 4,800,000 VRDC/IVRC Trust (Series 1993B) 12/20/1996 7,000,000
USE OF ESTIMATES -- The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ from those estimated. OTHER -- Investment transactions are accounted for on the trade date. 3. SHARES OF BENEFICIAL INTEREST The Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest (without par value) for each class of shares. At April 30, 1997, capital paid-in aggregated $429,545,696. Transactions in shares were as follows:
YEAR SIX MONTHS ENDED ENDED OCTOBER 31, INSTITUTIONAL SERVICE SHARES APRIL 30, 1997 1996 Shares sold 789,704,080 990,741,683 Shares issued to shareholders in payment of distributions declared 1,815,159 1,624,496 Shares redeemed (688,037,308) (962,988,268) Net change resulting from Institutional Service Share transactions 103,481,931 29,377,911 YEAR SIX MONTHS ENDED ENDED OCTOBER 31, CASH II SHARES APRIL 30, 1997 1996 Shares sold 53,664,199 142,294,754 Shares issued to shareholders in payment of distributions declared 212,547 574,995 Shares redeemed (58,917,249) (131,736,985) Net change resulting from Cash II Share transactions (5,040,503) 11,132,764 Net change resulting from share transactions 98,441,428 40,510,675
4. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES INVESTMENT ADVISORY FEE -- Federated Management, the Fund's investment adviser (the "Adviser"), receives for its services an annual investment advisory fee equal to 0.40% of the Fund's average daily net assets. The Adviser may voluntarily choose to waive any portion of its fee. The Adviser can modify or terminate this voluntary waiver at any time at its sole discretion. ADMINISTRATIVE FEE -- Federated Services Company ("FServ"), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. The fee paid to FServ is based on the level of average aggregate daily net assets of all funds advised by subsidiaries of Federated Investors for the period. The administrative fee received during the period of the Administrative Services Agreement shall be at least $125,000 per portfolio and $30,000 per each additional class of shares. DISTRIBUTION SERVICES FEE -- The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund will reimburse Federated Securities Corp., ("FSC") the principal distributor, from the net assets of the Fund to finance activities intended to result in the sale of the Fund's Institutional Service Shares and Cash II Shares. The Plan provides that the Fund may incur distribution expenses up to 0.25% of the average daily net assets of the Institutional Service Shares and Cash II Shares, annually, to reimburse FSC. The distributor may voluntarily choose to waive any portion of its fee. The distributor can modify or terminate this voluntary waiver at any time at its sole discretion. SHAREHOLDER SERVICES FEE -- Under the terms of a Shareholder Services Agreement with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to 0.25% of average daily net assets of the Fund for the period. The fee paid to FSS is used to finance certain services for shareholders and to maintain shareholder accounts. FSS may voluntarily choose to waive any portion of its fee. FSS can modify or terminate this voluntary waiver at any time at its sole discretion. TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES -- FServ, through its subsidiary, Federated Shareholder Services Company ("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 April 30, 1997, 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 $282,567,500 and $326,015,000, 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 April 30, 1997, 64.5% of the securities in the portfolio of investments are backed by letters of credit or bond insurance of various financial institutions and financial guaranty assurance agencies. The percentage of investments insured by or supported (backed) by a letter of credit from any one institution or agency did not exceed 6.9% of total investments. TRUSTEES John F. Donahue Thomas G. Bigley John T. Conroy, Jr. William J. Copeland James E. Dowd Lawrence D. Ellis, M.D. Edward L. Flaherty, Jr. Glen R. Johnson Peter E. Madden Gregor F. Meyer John E. Murray, Jr. Wesley W. Posvar Marjorie P. Smuts OFFICERS John F. Donahue Chairman Glen R. Johnson President J. Christopher Donahue Executive Vice President Edward C. Gonzales Executive Vice President John W. McGonigle Executive Vice President, Treasurer, and Secretary Richard B. Fisher Vice President S. Elliott Cohan Assistant Secretary Mutual funds are not bank deposits or obligations, are not guaranteed by any bank, and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other government agency. Investment in mutual funds involves risk, including possible loss of principal. Although money market funds seek to maintain a stable net asset value of $1.00 per share, there is no assurance that they will be able to do so. This report is authorized for distribution to prospective investors only when preceded or accompanied by the fund's prospectus which contains facts concerning its objective and policies, management fees, expenses and other information. NEW YORK MUNICIPAL CASH TRUST SEMI-ANNUAL REPORT TO SHAREHOLDERS APRIL 30, 1997 [Graphic] Federated Investors Federated Securities Corp., Distributor Cusip 314229733 Cusip 314229741 8060106 (6/97) [Graphic] PRESIDENT'S MESSAGE Dear Shareholder: I am pleased to present the Semi-Annual Report to Shareholders of California Municipal Cash Trust, a portfolio of Federated Municipal Trust, which covers the six-month period from November 1, 1996, through April 30, 1997. The report begins with a discussion with the fund's portfolio manager, followed by a complete listing of the fund's holdings and its financial statements. Financial highlights tables are provided for the fund's Institutional Service Shares and Institutional Shares. The fund is a convenient way to keep your ready cash pursuing double tax-free income -- free from federal regular income tax and California income tax* -- through a portfolio concentrated in high-quality, short-term California municipal securities. At the end of the reporting period, the fund's holdings were diversified among issuers that use municipal bond financing for projects as varied as health care, housing, community development, and transportation. This double tax-free advantage means you have the opportunity to earn a greater after-tax yield than you could in a comparable high-quality taxable investment. Of course, the fund also brings you the added benefits of daily liquidity and stability of principal.** During the reporting period, the fund paid double tax-free dividends totaling $0.02 per share for both Institutional Service Shares and Institutional Shares. The fund's net assets stood at $180.7 million at the end of the reporting period. Thank you for relying on California Municipal Cash Trust to help your ready cash pursue tax-free income every day. As always, we will continue to provide you with the highest level of professional service. We invite your questions or comments. Sincerely, [Graphic] Glen R. Johnson President June 15, 1997 * Income may be subject to the federal alternative minimum tax. ** Although money market funds seek to maintain a stable net asset value of $1.00 per share, there is no assurance that they will be able to do so. An investment in the fund is neither insured nor guaranteed by the U.S. government. INVESTMENT REVIEW An interview with the fund's portfolio manager, Mike Sirianni, Assistant Vice President, Federated Management Q Can you comment on the economy and the interest rate environment during the six-month reporting period? A Although it did not occur until near the end of the fund's semi-annual reporting period, the Federal Reserve Board (the "Fed") brought about the first change in monetary policy in over a year. On March 25, 1997, the Fed, in the face of stronger than expected demand, voted to raise the federal funds target rate from 5.25% to 5.50%. The move was viewed as being pre-emptive against the threat of future inflationary pressures possibly brought about by tight labor market conditions. Until that point, movements in interest rates reflected shifting market sentiment about the need for the Fed to move to a more restrictive policy. As the reporting period began in November 1996,the economy had been showing signs of slowing, thereby allaying the market's fears about inflation. Then, in December, the market's uneasiness was once more ignited as a string of economic statistics showed stronger growth and Fed Chairman Alan Greenspan made cautionary statements regarding inflation and "irrational exuberance" in the equity market. With inflation still appearing to be benign, the market tolerated a steady pace of growth into early 1997. However, Chairman Greenspan's Humphrey-Hawkins testimony before Congress in late February marked a turning point for the short-term money markets -- indeed the bond and equity markets as well -- as his relatively hawkish statements revealed fears at the Fed that the transitory factors that had been keeping inflation under control in the face of fairly robust growth may be coming to an end. This statement by the Fed caused a sharp reversal in interest rate movement and the market's perception about future Fed policy. The ensuing weeks brought continued evidence of persistent strength, and culminated in the Fed's action at the Federal Open Market Committee in late March. For the first three months of the reporting period, short-term interest rates traded in a relatively narrow range as the continued friendly inflation picture provided some comfort to market participants. The yield on the six-month Treasury bill, for example, moved in a range between 5.20% and 5.35% from the beginning of November through early February. However, short-term interest rates began to rise in late February, and by the time of the Fed tightening in late March, had built in much of the expectations regarding the Fed decision. In April, the financial markets continued to focus on the likelihood of an additional tightening move later in May, causing short-term yields to rise even further. Yields on the six-month Treasury bill rose sharply over this interim period, moving from a low of 5.20% in mid-February to a high of 5.68% in late April before falling back to 5.53% by the end of reporting period. Q What were your strategies for the fund during the period? A The fund's average maturity at the beginning of the reporting period was approximately 60 days. As signs of strength in the economy became more apparent, and as expectation of an imminent Fed tightening grew in the first quarter of 1997, we lowered the average maturity target range of the fund from between 55 and 60 days to between 45 and 50 days. By allowing the average maturity of the portfolio to roll inward from 60 days to a target range of 45 to 50 days we were able to take advantage of higher interest rates going forward. Once an average maturity range is targeted, the portfolio attempts to maximize performance through ongoing relative value analysis. Relative value analysis includes the comparison of the richness or cheapness of municipal securities to one another as well as municipals to taxable instruments, such as Treasury securities. The fund's portfolio remained barbelled in structure, which combined a significant portion in seven-day variable rate demand notes and short maturity commercial paper with purchases of longer-term, six- to twelve-month fixed rate notes. This portfolio structure continues to pursue a competitive yield over time. Q How has the fund performed? A The fund's average yield has remained relatively stable over the majority of the reporting period since the Fed did not change their federal funds rate target until the latter part of the reporting period. The seven-day net yield for the fund's Institutional Service Shares on April 30, 1997, was 3.57% compared to 3.17% six months ago with the increase in yield coming at the end of the reporting period.* The latest yield was the equivalent of a 5.91% taxable yield for investors in the highest federal tax bracket. For the Institutional Shares, the seven-day net yield on April 30, 1997, was 3.82% compared to 3.42% six months ago.* The latest yield was equivalent to a 6.325% pre-tax yield. Q Looking through 1997, what is your outlook for short-term rates? A Although the Fed decided to hold short-term interest rates steady in the March meeting, our expectations are that the Fed will find cause to tighten monetary policy further in 1997 -- perhaps as soon as in July. It is also anticipated that the overall tightening cycle will not be long in terms of magnitude or duration. The pre-emptive move by the Fed should help to preclude the need for more aggressive action down the road by preventing the build-up of inflationary pressures. We would look to see moderately higher short-term interest rates throughout the course of the year, but not to the extent evidenced in the last tightening cycle in 1994. As such, we will likely continue in our modestly defensive stance for the portfolio until market conditions indicate otherwise. * Performance quoted represents past performance and is not indicative of future results. Yield will vary. The seven-day net yield is calculated daily, based on the income dividends for the seven days ending on the date of calculation and then compounded and annualized. CALIFORNIA MUNICIPAL CASH TRUST PORTFOLIO OF INVESTMENTS APRIL 30, 1997 (UNAUDITED)
PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- 98.9% CALIFORNIA -- 97.8% $ 1,015,000 California Educational Facilities Authority, (Series 1996), 3.60% Bonds (Chapman University)/(Connie Lee INS), 10/1/1997 $ 1,015,000 1,100,000 California Health Facilities Financing Authority Weekly VRDNs (FGIC INS)/(Morgan Guaranty Trust Co., New York LIQ) 1,100,000 1,200,000 California PCFA, (Series 1984A) Weekly VRDNs (Homestate Mining Company)/(Bank of Nova Scotia, Toronto LOC) 1,200,000 4,500,000 California School Cash Reserve Program Authority, (Series B), 4.50% TRANs (MBIA INS), 12/19/1997 4,524,842 2,600,000 California State Department of Water Resources, (Series 1), 3.45% CP (Canadian Imperial Bank of Commerce, Toronto and Swiss Bank Corp., Basle LIQs), Mandatory Tender 7/21/1997 2,600,000 4,850,000 California State Public Works Board, (1997 Series A), 5.00% Bonds (California Community Colleges), 4/1/1998 4,897,493 10,000,000 California State, (Series B) VRNs, 6/30/1997 10,000,000 5,000,000 California State, CDC Municipal Products, Inc. (Series 1996L) Weekly VRDNs (FGIC INS)/(CDC Municipal Products, Inc. LIQ) 5,000,000 5,000,000 California State, UT GO, 5.00% Bonds, 10/1/1997 5,028,698 4,000,000 California Statewide Communities Development Authority, (1996 Series A), 4.75% TRANs (FSA INS), 6/30/1997 4,005,001 6,000,000 Central Unified School District, CA, Certificates of Participation (1995 Financing Project) Weekly VRDNs (Union Bank of California LOC) 6,000,000 4,000,000 (b)Clipper CA Tax-Exempt Trust, (1996 Issue A) Weekly VRDNs (California Rural Home Mortgage Finance Authority)/(MBIA INS)/(State Street Bank and Trust Co. LIQ) 4,000,000 5,200,000 Contra Costa, CA Water District, (Series A), 3.38% CP (Westdeutsche Landesbank Girozentrale LIQ), Mandatory Tender 5/28/1997 5,200,000 2,395,000 Folsom Cordova Unified School District, CA, 4.50% TRANs, 10/16/1997 2,402,898 7,100,000 Glendale, CA, (Series 1984A) Monthly VRDNs (Reliance Development Company, Inc.)/(Barclays Bank PLC, London LOC) 7,100,000
CALIFORNIA MUNICIPAL CASH TRUST
PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- CONTINUED CALIFORNIA -- CONTINUED $ 4,000,000 Huntington Beach, CA, Multifamily Housing Revenue Refunding Bonds (1996 Series A) Weekly VRDNs (Huntington Breakers Apartments)/ (Sumitomo Bank Ltd., Osaka LOC) $ 4,000,000 5,000,000 Long Beach, CA Housing Authority, (1995 Series A) Weekly VRDNs (Channel Point Apartments)/(Union Bank of California LOC) 5,000,000 5,000,000 Los Angeles County, CA Local Educational Agencies, (Series A), 4.75% TRANs (FSA INS), 6/30/1997 5,005,645 4,000,000 Los Angeles County, CA Metropolitan Transportation Authority, 3.35% CP (Bayerische Vereinsbank AG, Munich, Canadian Imperial Bank of Commerce, Toronto and National Westminster Bank, PLC, London LOCs), Mandatory Tender 5/20/1997 4,000,000 3,900,000 Los Angeles County, CA Metropolitan Transportation Authority, 3.45% CP (Bayerische Vereinsbank AG, Munich, Canadian Imperial Bank of Commerce, Toronto and National Westminster Bank, PLC, London LOCs), Mandatory Tender 5/15/1997 3,900,000 4,000,000 Los Angeles County, CA, (Series A), 4.50% TRANs (Bank of America NT and SA, San Francisco, Credit Suisse, Zurich, Morgan Guaranty Trust Co., New York, Union Bank of Switzerland, Zurich and Westdeutsche Landesbank Girozentrale LOCs), 6/30/1997 4,005,243 2,000,000 Monterey Peninsula, CA Water Management District Weekly VRDNs (Wastewater Reclaimation)/(Sumitomo Bank Ltd., Osaka LOC) 2,000,000 2,200,000 North County, CA Schools Financing Authority, 4.75% TRANs, 7/1/1997 2,202,116 1,200,000 Orange County, CA IDA, (Series 1985B - Niguel Summit II) Weekly VRDNs (Hon Development Corp.)/(Bank of America NT and SA, San Francisco LOC) 1,200,000 1,300,000 Orange County, CA IDA, (Series 1991A) Weekly VRDNs (The Lakes)/ (Citibank N.A., New York LOC) 1,300,000 3,000,000 Orange County, CA Local Transportation Authority, (Series 1992), 4.90% Bonds (FGIC INS), 2/15/1998 3,026,077 10,000,000 Orange County, CA Local Transportation Authority, Sales Tax Revenue Notes, 3.70% CP (Industrial Bank of Japan Ltd., Tokyo LOC), Mandatory Tender 5/1/1997 10,000,000
CALIFORNIA MUNICIPAL CASH TRUST
PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- CONTINUED CALIFORNIA -- CONTINUED $ 2,600,000 Orange County, CA Local Transportation Authority, Trust Receipts (Series FR 1997-8) Weekly VRDNs (FGIC INS)/(Bank of New York, New York LIQ) $ 2,600,000 10,330,000 Oxnard Harbor District, CA, (Series 1995 II), PT-105 Weekly VRDNs (Asset Guaranty INS)/(Credit Suisse First Boston LIQ) 10,330,000 13,250,000 Pitney Bowes Credit Corp. Leasetops Trust, Leasetops Certificates (Series 1996A) Weekly VRDNs (San Diego County, CA, Regional Communications System)/(Pitney Bowes Credit Corp. LIQ)/(Landesbank Hessen-Thueringen, Frankfurt LOC) 13,250,000 8,000,000 Regents of University of California, (Series A), 3.45% CP (Bank of America NT and SA, San Francisco, Bank of Montreal, Caisse Nationale De Credit Agricole, Paris, Canadian Imperial Bank of Commerce, Toronto and Societe Generale, Paris LIQs), Mandatory Tender 7/25/1997 8,000,000 3,000,000 Riverside County, CA School Financing Authority, 4.625% RANs, 7/17/1997 3,003,492 900,000 Roseville, CA, Hospital Facilities Authority, (Series 1989A) Weekly VRDNs (Toronto-Dominion Bank LOC) 900,000 5,000,000 Sacramento County, CA HDA, Multifamily Housing Revenue Refunding Bonds (1996 Series C) Weekly VRDNs (River Terrace Apartments)/ (Dai-Ichi Kangyo Bank Ltd., Tokyo LOC) 5,000,000 1,700,000 San Bernardino County, CA, (Series 1985) Weekly VRDNs (Woodview Apartments)/(Swiss Bank Corp., Basle LOC) 1,700,000 3,400,000 San Dimas, CA Redevelopment Agency, (Series 1995) Weekly VRDNs (Diversified Shopping Center Project)/(Morgan Guaranty Trust Co., New York LOC) 3,400,000 1,500,000 San Francisco, CA Redevelopment Finance Agency, (Series B1) Weekly VRDNs (Fillmore Center)/(Bank of Nova Scotia, Toronto LOC) 1,500,000 5,000,000 Santa Clara County, CA, 4.50% TRANs, 8/1/1997 5,011,094 1,400,000 Santa Clara County-El Comino Hospital District, CA, (Series 1985G) Weekly VRDNs (Valley Medical Center)/(National Westminster Bank, PLC, London LOC) 1,400,000 400,000 Santa Clara, CA, (Series 1985C) Weekly VRDNs (Santa Clara, CA Electric System)/(National Westminster Bank, PLC, London LOC) 400,000
CALIFORNIA MUNICIPAL CASH TRUST
PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- CONTINUED CALIFORNIA -- CONTINUED $ 1,500,000 Selma, CA, 4.50% TRANs, 6/30/1997 $ 1,500,717 2,000,000 South Coast, CA Local Education Agencies, (Series 1996A), 4.75% TRANs, 6/30/1997 2,002,145 4,000,000 Southern California Metropolitan Water District, CA, Commercial Paper Notes (Series B), 3.45% CP (Westdeutsche Landesbank Girozentrale LIQ), Mandatory Tender 5/19/1997 4,000,000 2,420,000 Southern California Public Power Authority, (Series PA-1005) Weekly VRDNs (MBIA INS)/(Merrill Lynch Capital Services, Inc. LIQ) 2,420,000 510,000 Stockton, CA, (Series 1993) Weekly VRDNs (La Quinta Inns, Inc.)/ (Nationsbank of Texas, N.A. LOC) 510,000 Total 176,640,461 PUERTO RICO -- 1.1% 2,000,000 Puerto Rico Industrial, Medical & Environmental PCA, (Series 1988), 3.70% CP (Inter American University of Puerto Rico)/(Bank of Tokyo-Mitsubishi Ltd. LOC), Mandatory Tender 7/24/1997 2,000,000 TOTAL INVESTMENTS (AT AMORTIZED COST)(C) $ 178,640,461
(a) The fund may only invest in securities rated in one of the two highest short-term rating categories by one or more 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 Ratings Group, MIG-1, or MIG-2 by Moody's Investors Service, Inc., or F-1+, F-1, and F-2 by Fitch Investors Service, Inc. are all considered rated in one of the two highest short-term rating categories. Securities rated in the highest short-term rating category (and unrated securities of comparable quality) are identified as First Tier securities. Securities rated in the second highest short-term rating category (and unrated securities of comparable quality) are identified as Second Tier securities. The fund follows applicable regulations in determining whether a security is rated and whether a security rated by multiple NRSROs in different rating categories should be identified as a First or Second Tier security. At April 30, 1997, the portfolio securities were rated as follows: Tier Rating Percentage Based on Total Market Value (unaudited) FIRST TIER SECOND TIER 100.00% 0.00% (b) Denotes a restricted security which is subject to restrictions on resale under Federal Securities laws. At April 30, 1997, this security represented 2.2% of net assets. (c) Also represents cost for federal tax purposes. Note: The categories of investments are shown as a percentage of net assets ($180,671,530) at April 30, 1997. The following acronyms are used throughout this portfolio: CP -- Commercial Paper FGIC -- Financial Guaranty Insurance Company FSA -- Financial Security Assurance GO -- General Obligation HDA -- Hospital Development Authority IDA -- Industrial Development Authority INS -- Insured LIQ - -- Liquidity Agreement LOCs -- Letter(s) of Credit LOC -- Letter of Credit MBIA -- Municipal Bond Investors Assurance PCA -- Pollution Control Authority PCFA -- Pollution Control Finance Authority PLC -- Public Limited Company RANs -- Revenue Anticipation Notes SA -- Support Agreement TRANs -- Tax and Revenue Anticipation Notes UT -- Unlimited Tax VRDNs -- Variable Rate Demand Notes VRNs -- Variable Rate Notes (See Notes which are an integral part of the Financial Statements) CALIFORNIA MUNICIPAL CASH TRUST STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1997 (UNAUDITED) ASSETS: Total investments in securities, at amortized cost and value $ 178,640,461 Cash 848,788 Income receivable 1,818,606 Receivable for shares sold 209,665 Total assets 181,517,520 LIABILITIES: Payable for shares redeemed $ 33,055 Income distribution payable 750,856 Accrued expenses 62,079 Total liabilities 845,990 NET ASSETS for 180,671,530 shares outstanding $ 180,671,530 NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE: INSTITUTIONAL SERVICE SHARES: $153,404,124 / 153,404,124 shares outstanding $1.00 INSTITUTIONAL SHARES: $27,267,406 / 27,267,406 shares outstanding $1.00
(See Notes which are an integral part of the Financial Statements) CALIFORNIA MUNICIPAL CASH TRUST STATEMENT OF OPERATIONS SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED) INVESTMENT INCOME: Interest $ 3,310,025 EXPENSES: Investment advisory fee $ 473,329 Administrative personnel and services fee 77,113 Custodian fees 6,588 Transfer and dividend disbursing agent fees and expenses 37,336 Directors'/Trustees' fees 1,805 Auditing fees 6,140 Legal fees 2,763 Portfolio accounting fees 29,787 Shareholder services fee -- Institutional Service Shares 206,687 Shareholder services fee -- Institutional Shares 32,202 Share registration costs 15,883 Printing and postage 7,497 Insurance premiums 2,522 Miscellaneous 1,068 Total expenses 900,720 Waivers -- Waiver of investment advisory fee $ (468,334) Waiver of shareholder services fee -- Institutional Shares (32,202) Total waivers and reimbursements (500,536) Net expenses 400,184 Net investment income $ 2,909,841
(See Notes which are an integral part of the Financial Statements) CALIFORNIA MUNICIPAL CASH TRUST STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED (UNAUDITED) YEAR ENDED APRIL 30, OCTOBER 31, 1997 1996 INCREASE (DECREASE) IN NET ASSETS: OPERATIONS -- Net investment income $ 2,909,841 $ 3,198,194 DISTRIBUTIONS TO SHAREHOLDERS -- Distributions from net investment income Institutional Service Shares (2,485,682) (2,906,707) Institutional Shares (424,159) (291,487) Change in net assets resulting from distributions to shareholders (2,909,841) (3,198,194) SHARE TRANSACTIONS -- Proceeds from sale of shares 381,715,934 477,899,575 Net asset value of shares issued to shareholders in payment of distributions declared 1,107,617 907,904 Cost of shares redeemed (354,399,455) (423,093,903) Change in net assets resulting from share transactions 28,424,096 55,713,576 Change in net assets 28,424,096 55,713,576 NET ASSETS: Beginning of period 152,247,434 96,533,858 End of period $ 180,671,530 $ 152,247,434
(See Notes which are an integral part of the Financial Statements) CALIFORNIA MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS -- INSTITUTIONAL SERVICE SHARES (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED PERIOD (UNAUDITED) YEAR ENDED ENDED APRIL 30, OCTOBER 31, OCTOBER 31, YEAR ENDED SEPTEMBER 30, 1997 1996 1995 1994(A) 1994 1993 1992 1991 1990 1989(B) NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 INCOME FROM INVESTMENT OPERATIONS Net investment income 0.02 0.03 0.03 0.002 0.02 0.02 0.03 0.04 0.05 0.03 Net realized loss on investment -- -- (0.01) -- -- -- -- - -- -- -- Total from investment operations 0.02 0.03 0.02 0.002 0.02 0.02 0.03 0.04 0.05 0.03 CAPITAL CONTRIBUTIONS -- -- 0.01 -- -- -- -- - -- -- -- LESS DISTRIBUTIONS Distributions from net investment income (0.02) (0.03) (0.03) (0.002) (0.02) (0.02) (0.03) (0.04) (0.05) (0.03) NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 TOTAL RETURN(C) 1.53% 3.22% 3.37% 0.23% 2.07% 2.03% 2.83% 4.30% 5.38% 2.95% RATIOS TO AVERAGE NET ASSETS Expenses 0.46%* 0.49% 0.59% 0.59%* 0.58% 0.54% 0.45% 0.35% 0.38% 0.40%* Net investment income 3.04%* 3.17% 3.33% 2.71%* 2.03% 2.00% 2.76% 4.19% 5.27% 5.86%* Expense waiver/ reimbursement(d) 0.49%* 0.62% 0.50% 0.44%* 0.40% 0.35% 0.58% 0.75% 0.86% 0.89%* SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $153,404 $132,159 $96,534 $81,563 $74,707 $104,322 $59,709 $56,754 $50,391 $36,628
* Computed on an annualized basis. (a) For the one month ended October 31, 1994. The fund changed its fiscal year-end from September 30, to October 31, beginning September 30, 1994. (b) Reflects operations for the period from March 15, 1989 (date of initial public investment) to September 30, 1989. (c) Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable. (d) This voluntary expense decrease is reflected in both the expense and net investment income ratios shown above. (See Notes which are an integral part of the Financial Statements) CALIFORNIA MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS -- INSTITUTIONAL SHARES (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED (UNAUDITED) YEAR ENDED APRIL 30, OCTOBER 31, 1997 1996(A) NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 INCOME FROM INVESTMENT OPERATIONS Net investment income 0.02 0.02 LESS DISTRIBUTIONS Distributions from net investment income (0.02) (0.02) NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 TOTAL RETURN(B) 1.66% 2.24% RATIOS TO AVERAGE NET ASSETS Expenses 0.20%* 0.20%* Net investment income 3.29%* 3.33%* Expense waiver/reimbursement(c) 0.74%* 0.90%* SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $27,267 $20,089
* Computed on an annualized basis. (a) Reflects operations for the period from March 4, 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) CALIFORNIA MUNICIPAL CASH TRUST NOTES TO FINANCIAL STATEMENTS APRIL 30, 1997 (UNAUDITED) 1. ORGANIZATION Federated Municipal Trust (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act") as an open-end, management investment company. The Trust consists of sixteen portfolios. The financial statements included herein are only those of California Municipal Cash Trust (the "Fund"). The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. The Fund offers two classes of shares: Institutional Service Shares and Institutional Shares. The investment objective of the Fund is current income exempt from federal regular income tax and the personal income taxes imposed by the State of California consistent with stability of principal. 2. SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with generally accepted accounting principles. INVESTMENT VALUATIONS -- The Fund's use of the amortized cost method to value its portfolio securities is in accordance with Rule 2a-7 under the Act. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS -- Interest income and expenses are accrued daily. Bond premium and discount, if applicable, are amortized as required by the Internal Revenue Code, as amended (the "Code"). Distributions to shareholders are recorded on the ex-dividend date. FEDERAL TAXES -- It is the Fund's policy to comply with the provisions of the Code applicable to regulated investment companies and to distribute to shareholders each year substantially all of its income. Accordingly, no provisions for federal tax are necessary. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS -- The Fund may engage in when-issued or delayed delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked to market daily and begin earning interest on the settlement date. RESTRICTED SECURITIES -- Restricted securities are securities that may only be resold upon registration under federal securities laws or in transactions exempt from such registration. Many restricted securities may be resold in the secondary market in transactions exempt from registration. In some cases, the restricted securities may be resold without registration upon exercise of a demand feature. Such restricted securities may be determined to be liquid under criteria established by the Board of Trustees (the "Trustees"). The Fund will not incur any registration costs upon such resales. Restricted securities are valued at amortized cost in accordance with Rule 2a-7 under the Act. Additional information on each restricted security held at April 30, 1997 is as follows: SECURITY ACQUISITION DATE ACQUISITION COST Clipper CA Tax-Exempt Trust (1996 Issue A) 6/28/1996 $4,079,190 USE OF ESTIMATES -- The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ from those estimated. OTHER -- Investment transactions are accounted for on the trade date. 3. SHARES OF BENEFICIAL INTEREST The Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest (without par value) for each class of shares. At April 30, 1997, capital paid-in aggregated $180,671,530. Transactions in shares were as follows:
SIX MONTHS ENDED YEAR ENDED APRIL 30, OCTOBER 31, INSTITUTIONAL SERVICE SHARES 1997 1996 Shares sold 335,694,185 422,168,406 Shares issued to shareholders in payment of distributions declared 1,096,321 907,892 Shares redeemed (315,545,218) (387,451,320) Net change resulting from Institutional Service Share transactions 21,245,288 35,624,978 SIX MONTHS ENDED YEAR ENDED APRIL 30, OCTOBER 31, INSTITUTIONAL SHARES 1997 1996(A) Shares sold 46,021,749 55,731,169 Shares issued to shareholders in payment of distributions declared 11,296 12 Shares redeemed (38,854,237) (35,642,583) Net change resulting from Institutional Share transactions 7,178,808 20,088,598 Net change resulting from share transactions 28,424,096 55,713,576
(a) For the period from March 4, 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. The Adviser can modify or terminate this voluntary waiver at any time at its sole discretion. ADMINISTRATIVE FEE -- Federated Services Company ("FServ"), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. The fee paid to FServ is based on the level of average aggregate daily net assets of all funds advised by subsidiaries of Federated Investors for the period. The administrative fee received during the period of the Administrative Services Agreement shall be at least $125,000 per portfolio and $30,000 per each additional class of shares. SHAREHOLDER SERVICES FEE -- Under the terms of a Shareholder Services Agreement with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to 0.25% of average daily net assets of the Fund for the period. The fee paid to FSS is used to finance certain services for shareholders and to maintain shareholder accounts. FSS may voluntarily choose to waive any portion of its fee. FSS can modify or terminate this voluntary waiver at any time at its sole discretion. TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES -- FServ, through its subsidiary, Federated Shareholder Services Company ("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 April 30, 1997, 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 $129,350,000 and $169,600,000, 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 April 30, 1997, 68.7% of the securities in the portfolio of investments are backed by letters of credit or bond insurance of various financial institutions and financial guaranty assurance agencies. The percentage of investments insured by or supported (backed) by a letter of credit from any one institution or agency did not exceed 7.4% of total investments. TRUSTEES John F. Donahue Thomas G. Bigley John T. Conroy, Jr. William J. Copeland James E. Dowd Lawrence D. Ellis, M.D. Edward L. Flaherty, Jr. Glen R. Johnson Peter E. Madden Gregor F. Meyer John E. Murray, Jr. Wesley W. Posvar Marjorie P. Smuts OFFICERS John F. Donahue Chairman Glen R. Johnson President J. Christopher Donahue Executive Vice President Edward C. Gonzales Executive Vice President John W. McGonigle Executive Vice President, Treasurer, and Secretary Richard B. Fisher Vice President S. Elliott Cohan Assistant Secretary Mutual funds are not bank deposits or obligations, are not guaranteed by any bank, and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other government agency. Investment in mutual funds involves risk, including possible loss of principal. Although money market funds seek to maintain a stable net asset value of $1.00 per share, there is no assurance that they will be able to do so. This report is authorized for distribution to prospective investors only when preceded or accompanied by the fund's prospectus which contains facts concerning its objective and policies, management fees, expenses and other information. CALIFORNIA MUNICIPAL CASH TRUST SEMI-ANNUAL REPORT TO SHAREHOLDERS APRIL 30, 1997 [Graphic] Federated Investors Federated Securities Corp., Distributor Cusip 314229675 Cusip 314229766 0041609 (6/97) [Graphic] PRESIDENT'S MESSAGE Dear Shareholder: I am pleased to present the Semi-Annual Report to Shareholders of Maryland Municipal Cash Trust, a portfolio of Federated Municipal Trust, which covers the six-month period from November 1, 1996, through April 30, 1997. The report begins with a discussion with the fund's portfolio manager, followed by a complete listing of the fund's holdings and its financial statements. The fund is a convenient way to put your ready cash to work pursuing double tax-free income -- free from federal regular income tax and Maryland personal income tax* -- through a portfolio concentrated in high-quality, short-term Maryland municipal securities. At the end of the reporting period, the fund's holdings were diversified among issuers that use municipal bond financing for projects as varied as health care, housing, community development, and transportation. This tax-free advantage means you have the opportunity to earn a greater after-tax yield than you could in a comparable high-quality taxable investment. Of course, the fund also brings you the added benefits of daily liquidity and stability of principal.** During the reporting period, the fund paid double tax-free dividends of $0.01 per share. The fund's net assets stood at $35.2 million at the end of the reporting period. Thank you for relying on Maryland Municipal Cash Trust to help your ready cash pursue tax-free income every day. As always, we will continue to provide you with the highest level of professional service. We invite your questions or comments. Sincerely, [Graphic] Glen R. Johnson President June 15, 1997 * Income may be subject to the federal alternative minimum tax. ** Although money market funds seek to maintain a stable net asset value of $1.00 per share, there is no assurance that they will be able to do so. An investment in the fund is neither insured nor guaranteed by the U.S. government. INVESTMENT REVIEW An interview with the fund's portfolio manager, Jeff A. Kozemchak, CFA, Vice President, Federated Management Q Can you comment on the economy and the interest rate environment during the six-month reporting period? A Although it did not occur until near the end of the fund's semi-annual reporting period, the Federal Reserve Board (the "Fed") brought about the first change in monetary policy in over a year. On March 25, 1997, the Fed, in the face of stronger than expected demand, voted to raise the federal funds target rate from 5.25% to 5.50%. The move was viewed as being pre-emptive against the threat of future inflationary pressures possibly brought about by tight labor market conditions. Until that point, movements in interest rates reflected shifting market sentiment about the need for the Fed to move to a more restrictive policy. As the reporting period began in November 1996, the economy had been showing signs of slowing, thereby allaying the market's fears about inflation. Then, in December, the market's uneasiness was once more ignited as a string of economic statistics showed stronger growth and Fed Chairman Alan Greenspan made cautionary statements regarding inflation and "irrational exuberance" in the equity market. With inflation still appearing to be benign, the market tolerated a steady pace of growth into early 1997. However, Chairman Greenspan's Humphrey-Hawkins testimony before Congress in late February marked a turning point for the short-term money markets -- indeed the bond and equity markets as well -- as his relatively hawkish statements revealed fears at the Fed that the transitory factors that had been keeping inflation under control in the face of fairly robust growth may be coming to an end. This statement by the Fed caused a sharp reversal in interest rate movement and the market's perception about future Fed policy. The ensuing weeks brought continued evidence of persistent strength, and culminated in the Fed's action at the Federal Open Market Committee in late March. For the first three months of the reporting period, short-term interest rates traded in a relatively narrow range as the continued friendly inflation picture provided some comfort to market participants. The yield on the six-month Treasury bill, for example, moved in a range between 5.20% and 5.35% from the beginning of November through early February. However, short-term interest rates began to rise in late February, and by the time of the Fed tightening in late March, had built in much of the expectations regarding the Fed decision. In April, the financial markets continued to focus on the likelihood of an additional tightening move later in May, causing short-term yields to rise even further. Yields on the six-month Treasury bill rose sharply over this interim period, moving from a low of 5.20% in mid-February to a high of 5.68% in late April before falling back to 5.53% by the end of reporting period. Q What were your strategies for the fund during the period? A The fund's average maturity at the beginning of the reporting period was approximately 63 days, reflecting a neutral outlook on the direction of interest rates. As the signs of strength in the economy became more apparent, and as expectation of an imminent Fed tightening grew in the first quarter of 1997, we shortened the average maturity target range to between 45 and 55 days. We also emphasized the purchase of shorter term fixed-rate paper while maintaining approximately 50-55% of the portfolio in seven-day variable rate demand notes ("VRDNs"). Seven-day VRDNs provide more portfolio responsiveness to interest rate increases. Once an average maturity range is targeted, the portfolio attempts to maximize performance through ongoing relative value analysis. Relative value analysis includes the comparison of the richness or cheapness of municipal securities to one another as well as municipals to taxable instruments, such as Treasury securities. The fund's portfolio remained barbelled in structure, which combined a significant portion in seven-day variable rate demand notes and short maturity commercial paper with purchases of longer-term, six- to twelve-month Maryland exempt fixed rate notes and bonds. This portfolio structure takes advantage of the steepness of the yield curve and continues to pursue a competitive yield over time. Q How has the fund's yield responded to this rate environment? A The fund's yield was affected by Fed policy (interest rate increases), changes in market expectations, as well as supply and demand imbalances unique to the municipal money markets. However, because of these imbalances the fund's yield may experience more volatility on a weekly basis than Treasury yields and taxable money fund yields. In general, yields on municipal money market funds increased during the reporting period. For the fund, the seven-day net yield on April 30, 1997 was 3.50%, compared to 3.10% at the beginning of the reporting period.* For individual investors at the highest federal, state and local brackets, the latest yield was equivalent to a taxable yield of 6.62%. Q Looking through 1997, what is your outlook for short-term rates? A Although the Fed decided to hold short-term interest rates steady in the March meeting, our expectations are that the Fed will find cause to tighten monetary policy further in 1997 -- perhaps as soon as in July. It is also anticipated that the overall tightening cycle will not be long in terms of magnitude or duration. The pre-emptive move by the Fed should help to preclude the need for more aggressive action down the road by preventing the build-up of inflationary pressures. We would look to see moderately higher short-term interest rates throughout the course of the year, but not to the extent evidenced in the last tightening cycle in 1994. As such, we will likely continue in our modestly defensive stance for the portfolio until market conditions indicate otherwise. * Performance quoted represents past performance and is not indicative of future results. Yield will vary. The seven-day net yield is calculated daily, based on the income dividends for the seven days ending on the date of calculation and then compounded and annualized. MARYLAND MUNICIPAL CASH TRUST PORTFOLIO OF INVESTMENTS APRIL 30, 1997 (UNAUDITED)
PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- 99.1% MARYLAND -- 95.1% $ 1,000,000 Anne Arundel County, MD, EDRB (Series 1988), 3.50% CP (Baltimore Gas & Electric Co.), Mandatory Tender 5/21/1997 $ 1,000,000 1,000,000 Anne Arundel County, MD, EDRB (Series 1988), 3.60% CP (Baltimore Gas & Electric Co.), Mandatory Tender 5/14/1997 1,000,000 1,000,000 Anne Arundel County, MD, EDRB (Series 1988), 3.60% CP (Baltimore Gas & Electric Co.), Mandatory Tender 6/13/1997 1,000,000 1,475,000 Anne Arundel County, MD, Economic Development Revenue Bonds (Series 1996) Weekly VRDNs (Atlas Container Corporation Project)/ (Mellon Bank N.A., Pittsburgh LOC) 1,475,000 1,000,000 Baltimore County, MD IDA, (Series 1994A) Weekly VRDNs (Pitts Realty Limited Partnership)/(PNC Bank, N.A., Delaware LOC) 1,000,000 700,000 Baltimore County, MD Port Facility Monthly VRDNs (Occidental Petroleum Corp.)/(Morgan Guaranty Trust Co., New York LOC) 700,000 500,000 Baltimore County, MD, Public Improvement, 5.00% Bonds, 5/1/1997 500,000 1,400,000 Baltimore County, MD, Revenue Bonds (1994 Issue) Weekly VRDNs (Direct Marketing Associates, Inc. Facility)/(First National Bank of Maryland, Baltimore LOC) 1,400,000 1,000,000 Hartford County, MD, EDRB (Series 1996) Weekly VRDNs (Citrus and Allied Essences Ltd.)/(First National Bank of Maryland, Baltimore LOC) 1,000,000 3,141,000 Hartford County, MD, (Series 1989) Weekly VRDNs (Hartford Commons Associates Facility)/(Nationsbank, N.A., Charlotte LOC) 3,141,000 1,300,000 Howard County, MD, Consolidated Improvement Bonds (Series 1997), 4.25% Bonds, 2/15/1998 1,306,157 2,000,000 Maryland Health & Higher Educational Facilities Authority, Pooled Loan Program Revenue Notes, 3.40% CP (John Hopkins University)/ (Sanwa Bank Ltd., Osaka LIQ), Mandatory Tender 5/20/1997 2,000,000 800,000 Maryland State Community Development Administration, (Series 1990A) Weekly VRDNs (College Estates)/(First National Bank of Maryland, Baltimore LOC) 800,000
PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- CONTINUED MARYLAND -- CONTINUED $ 2,000,000 Maryland State Community Development Administration, Single Family Program Bonds (1996 Second Series), 4.00% TOBs, Mandatory Tender 9/1/1997 $ 2,000,000 2,000,000 Maryland State Energy Financing Administration, Annual Tender Solid Waste Disposal Revenue Refunding Bonds, 4.10% TOBs (Nevamar Corp.)/(International Paper Co. GTD), Optional Tender 9/1/1997 2,000,000 1,500,000 Maryland State Energy Financing Administration, IDRB (Series 1988) Weekly VRDNs (Morningstar Foods, Inc.)/(Nationsbank of Texas, N.A. LOC) 1,500,000 1,000,000 Maryland State Energy Financing Administration, Limited Obligation Variable Rate Demand Revenue Bonds (Series 1996) Weekly VRDNs (Keywell L.L.C.)/(Bank of America Illinois LOC) 1,000,000 1,500,000 Maryland State IDFA, (Series 1996) Weekly VRDNs (Chesapeake Biological Labs, Inc.)/(First Union National Bank, Charlotte, NC LOC) 1,500,000 1,500,000 Maryland State IDFA, Economic Development Revenue Refunding Bonds (Series 1994) Weekly VRDNs (Johnson Controls, Inc.) 1,500,000 1,000,000 Montgomery County, MD Housing Opportunities Commission, (1996 Series A), 3.70% TOBs, Mandatory Tender 11/13/1997 1,000,000 1,500,000 Montgomery County, MD, EDR Weekly VRDNs (U.S. Pharmacopeial Convention Facility)/(Chase Manhattan Bank N.A., New York LOC) 1,500,000 1,000,000 Prince George's County, MD, 7.10% Bonds (United States Treasury PRF), 9/1/1997 (@102) 1,031,590 1,100,000 Prince George's County, MD, IDRB (Series 1993), 4.10% TOBs (International Paper Co.)/(International Paper Co. GTD), Optional Tender 7/15/1997 1,100,000 1,500,000 University of Maryland, Series A, 6.90% Bonds, 10/1/1997 1,519,238 1,500,000 Wicomico County, MD, EDRB (Series 1994) Weekly VRDNs (Field Container Co. L.P.)/(Northern Trust Co., Chicago, IL LOC) 1,500,000 Total 33,472,985
PRINCIPAL AMOUNT VALUE (A)SHORT-TERM MUNICIPALS -- CONTINUED PUERTO RICO -- 4.0% $ 1,400,000 Puerto Rico Industrial, Medical & Environmental PCA, (Series 1983A), 3.80% TOBs (Reynolds Metals Co.)/(ABN AMRO Bank N.V., Amsterdam LOC), Optional Tender 9/1/1997 $ 1,400,000 TOTAL INVESTMENTS (AT AMORTIZED COST)(B) $ 34,872,985
Securities that are subject to Alternative Minimum Tax represent 64.0% of the portfolio as calculated based upon total portfolio market value. (a) The fund may only invest in securities rated in one of the two highest short-term rating categories by one or more 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 Ratings Group, MIG-1, or MIG-2 by Moody's Investors Service, Inc., or F-1+, F-1 and F-2 by Fitch Investors Service, Inc. Are all considered rated in one of the two highest short-term rating categories. Securities rated in the highest short-term rating category (and unrated securities of comparable quality) are identified as First Tier securities. Securities rated in the second highest short-term rating category (and unrated securities of comparable quality) are identified as Second Tier securities. The fund follows application regulations in determining whether a security is rated and whether a security rated by multiple NRSRO's in different rating categories should be identified as a First or Second Tier security. At April 30, 1997, the portfolio securities were rated as follows: Tier Rating Percentage Based on Total Market Value (unaudited) FIRST TIER SECOND TIER 99.22% 0.78% (b) Also represents cost for federal tax purposes. Note: The categories of investments are shown as a percentage of net assets ($35,178,502) at April 30, 1997. The following acronyms are used throughout this portfolio: CP -- Commercial Paper EDR -- Economic Development Revenue EDRB -- Economic Development Revenue Bonds GTD -- Guaranty IDA -- Industrial Development Authority IDRB -- Industrial Development Revenue Bond IDFA -- Industrial Development Finance Authority LIQ -- Liquidity Agreement LOC -- Letter of Credit PCA -- Pollution Control Authority PRF -- Prerefunded TOBs -- Tender Option Bonds VRDNs -- Variable Rate Demand Notes (See Notes which are an integral part of the Financial Statements) MARYLAND MUNICIPAL CASH TRUST STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1997 (UNAUDITED) ASSETS: Total investments in securities, at amortized cost and value $ 34,872,985 Cash 117,628 Income receivable 265,257 Deferred expenses 21,244 Total assets 35,277,114 LIABILITIES: Income distribution payable $ 93,809 Accrued expenses 4,803 Total liabilities 98,612 NET ASSETS for 35,178,502 shares outstanding $ 35,178,502 NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE: $35,178,502 / 35,178,502 shares outstanding $1.00
(See Notes which are an integral part of the Financial Statements) MARYLAND MUNICIPAL CASH TRUST STATEMENT OF OPERATIONS SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED) INVESTMENT INCOME: Interest $ 888,089 EXPENSES: Investment advisory fee $ 120,857 Administrative personnel and services fee 61,959 Custodian fees 2,976 Transfer and dividend disbursing agent fees and expenses 9,891 Directors'/Trustees' fees 754 Auditing fees 5,612 Legal fees 2,203 Portfolio accounting fees 20,604 Shareholder services fee 60,428 Share registration costs 11,071 Printing and postage 3,830 Insurance premiums 1,478 Taxes 181 Miscellaneous 6,728 Total expenses 308,572 Waivers and reimbursements -- Waiver of investment advisory fee $ (120,857) Waiver of shareholder services fee (2,417) Reimbursement of other operating expenses (21,919) Total waivers and reimbursements (145,193) Net expenses 163,379 Net investment income $ 724,710
(See Notes which are an integral part of the Financial Statements) MARYLAND MUNICIPAL CASH TRUST STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED YEAR ENDED (UNAUDITED) OCTOBER 31, APRIL 30, 1997 1996 INCREASE (DECREASE) IN NET ASSETS: OPERATIONS -- Net investment income $ 724,710 $ 1,465,068 DISTRIBUTIONS TO SHAREHOLDERS -- Distributions from net investment income (724,710) (1,465,068) SHARE TRANSACTIONS -- Proceeds from sale of shares 71,605,869 135,836,347 Net asset value of shares issued to shareholders in payment of distributions declared 546,572 1,324,055 Cost of shares redeemed (91,259,742) (134,274,793) Change in net assets resulting from share transactions (19,107,301) 2,885,609 Change in net assets (19,107,301) 2,885,609 NET ASSETS: Beginning of period 54,285,803 51,400,194 End of period $ 35,178,502 $ 54,285,803
(See Notes which are an integral part of the Financial Statements) MARYLAND MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED (UNAUDITED) APRIL 30, YEAR ENDED OCTOBER 31, 1997 1996 1995 1994(A) NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 INCOME FROM INVESTMENT OPERATIONS Net investment income 0.01 0.03 0.03 0.01 LESS DISTRIBUTIONS Distributions from net investment income (0.01) (0.03) (0.03) (0.01) NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 TOTAL RETURN(B) 1.50% 3.11% 3.36% 1.30% RATIOS TO AVERAGE NET ASSETS Expenses 0.68%* 0.65% 0.65% 0.46%* Net investment income 3.00%* 3.09% 3.30% 2.68%* Expense waiver/reimbursement(c) 0.60%* 0.65% 0.50% 0.53%* SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $35,179 $54,286 $51,400 $56,275
* Computed on an annualized basis. (a) Reflects operations for the period from May 9, 1994 (date of initial public investment) to October 31, 1994. For the period from April 25, 1994 (start of business) to May 9, 1994, the fund had no investment activity. (b) Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable. (c) This voluntary expense decrease is reflected in both the expense and net investment income ratios shown above. (See Notes which are an integral part of the Financial Statements) MARYLAND MUNICIPAL CASH TRUST NOTES TO FINANCIAL STATEMENTS APRIL 30, 1997 (UNAUDITED) 1. ORGANIZATION Federated Municipal Trust (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act") as an open-end, management investment company. The Trust consists of sixteen portfolios. The financial statements included herein are only those of Maryland Municipal Cash Trust (the "Fund"). The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. 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 Maryland and Maryland municipalities consistent with stability of principal and liquidity. 2. SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with generally accepted accounting principles. INVESTMENT VALUATIONS -- The Fund's use of the amortized cost method to value its portfolio securities is in accordance with Rule 2a-7 under the Act. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS -- Interest income and expenses are accrued daily. Bond premium and discount, if applicable, are amortized as required by the Internal Revenue Code, as amended (the "Code"). Distributions to shareholders are recorded on the ex-dividend date. FEDERAL TAXES -- It is the Fund's policy to comply with the provisions of the Code applicable to regulated investment companies and to distribute to shareholders each year substantially all of its income. Accordingly, no provisions for federal tax are necessary. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS -- The Fund may engage in when-issued or delayed delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked to market daily and begin earning interest on the settlement date. DEFERRED EXPENSES -- The costs incurred by the Fund with respect to registration of its shares in its first fiscal year, excluding the initial expense of registering its shares, have been deferred and are being amortized over a period not to exceed five years from the Fund's commencement 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 Board of Trustees (the "Trustees") to issue an unlimited number of full and fractional shares of beneficial interest (without par value). At April 30, 1997, capital paid-in aggregated $35,178,502. Transactions in shares were as follows:
SIX MONTHS YEAR ENDED ENDED APRIL 30, OCTOBER 31, 1997 1996 Shares sold 71,605,869 135,836,347 Shares issued to shareholders in payment of distributions declared 546,572 1,324,055 Shares redeemed (91,259,742) (134,274,793) Net change resulting from share transactions (19,107,301) 2,885,609
4. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES INVESTMENT ADVISORY FEE -- Federated Management, the Fund's investment adviser (the "Adviser"), receives for its services an annual investment advisory fee equal to 0.50% of the Fund's average daily net assets. The Adviser may voluntarily choose to waive any portion of its fee and/or reimburse certain operating expenses of the Fund. The Adviser can modify or terminate this voluntary waiver and/or reimbursement at any time at its sole discretion. ADMINISTRATIVE FEE -- Federated Services Company ("FServ"), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. The fee paid to FServ is based on the level of average aggregate daily net assets of all funds advised by subsidiaries of Federated Investors for the period. The administrative fee received during the period of the Administrative Services Agreement shall be at least $125,000 per portfolio and $30,000 per each additional class of shares. SHAREHOLDER SERVICES FEE -- Under the terms of a Shareholder Services Agreement with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to 0.25% of average daily net assets of the Fund for the period. The fee paid to FSS is used to finance certain services for shareholders and to maintain shareholder accounts. 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. ORGANIZATIONAL EXPENSES -- Organizational and/or start-up administrative service expenses of $45,952 were borne initially by Adviser. The Fund has agreed to reimburse Adviser for the organizational and/or start-up administrative expenses during the five-year period following effective date. For the period ended April 30, 1997, the Fund paid $5,496 pursuant to this agreement. INTERFUND TRANSACTIONS -- During the period ended April 30, 1997, 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 $38,160,000 and $54,015,000, 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 April 30, 1997, 56.2% 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 9.0% of total investments. TRUSTEES John F. Donahue Thomas G. Bigley John T. Conroy, Jr. William J. Copeland James E. Dowd Lawrence D. Ellis, M.D. Edward L. Flaherty, Jr. Glen R. Johnson Peter E. Madden Gregor F. Meyer John E. Murray, Jr. Wesley W. Posvar Marjorie P. Smuts OFFICERS John F. Donahue Chairman Glen R. Johnson President J. Christopher Donahue Executive Vice President Edward C. Gonzales Executive Vice President John W. McGonigle Executive Vice President, Treasurer, and Secretary Richard B. Fisher Vice President S. Elliott Cohan Assistant Secretary Mutual funds are not bank deposits or obligations, are not guaranteed by any bank, and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other government agency. Investment in mutual funds involves risk, including possible loss of principal. Although money market funds seek to maintain a stable net asset value of $1.00 per share, there is no assurance that they will be able to do so. This report is authorized for distribution to prospective investors only when preceded or accompanied by the fund's prospectus which contains facts concerning its objective and policies, management fees, expenses and other information. MARYLAND MUNICIPAL CASH TRUST SEMI-ANNUAL REPORT TO SHAREHOLDERS APRIL 30, 1997 [Graphic] Federated Investors Federated Securities Corp., Distributor Cusip 314229774 G01175-01 (6/97) - -------------------------------------------------------------------------------- MICHIGAN - -------------------------------------------------------------------------------- MUNICIPAL - -------------------------------------------------------------------------------- CASH - -------------------------------------------------------------------------------- TRUST - -------------------------------------------------------------------------------- SEMI-ANNUAL REPORT TO SHAREHOLDERS APRIL 30, 1997 Federated Investors Logo Cusip 314229667 Cusip 314229725 G01456-02 (6/97) Recyled Paper Logo PRESIDENT'S MESSAGE - -------------------------------------------------------------------------------- Dear Shareholder: I am pleased to present the Semi-Annual Report to Shareholders of Michigan Municipal Cash Trust, a portfolio of Federated Municipal Trust, which covers the six-month period from November 1, 1996 through April 30, 1997. The report begins with a discussion with the fund's portfolio manager, followed by a complete listing of the fund's holdings and its financial statements. Financial highlights tables are provided for the fund's Institutional Service Shares and Institutional Shares. The fund is a convenient way to put your ready cash to work pursuing double tax free income--free from federal regular income tax* and Michigan personal income tax--through a portfolio concentrated in high-quality, short-term Michigan municipal securities. At the end of the reporting period, the fund's holdings were diversified among issuers that use municipal bond financing for projects as varied as health care, housing, community development, and transportation. This double tax free advantage means you have the opportunity to earn a greater after-tax yield than you could in a comparable high-quality taxable investment. Of course, the fund also brings you the added benefits of daily liquidity and stability of principal.** During the reporting period, the fund paid double tax free dividends totaling $0.02 per share for both Institutional Service Shares and Institutional Shares. The fund's net assets stood at $93.9 million at the end of the reporting period. Thank you for relying on Michigan Municipal Cash Trust to help your ready cash pursue tax-free income every day. As always, we'll continue to provide you with the highest level of professional service. We invite your questions or comments. Sincerely, LOGO Glen R. Johnson President June 15, 1997 * Income may be subject to the federal alternative minimum tax. ** Although money market funds seek to maintain a stable net asset value of $1.00 per share, there is no assurance that they will be able to do so. An investment in the fund is neither insured nor guaranteed by the U.S. government. INVESTMENT REVIEW - -------------------------------------------------------------------------------- An interview with the fund's portfolio manager, Mary Jo Ochson, CFA, Senior Vice President, Federated Management Q Can you comment on the economy and the interest rate environment during the six-month reporting period? A Although it did not occur until near the end of the fund's semi-annual reporting period, the Federal Reserve Board (the "Fed") brought about the first change in monetary policy in over a year. On March 25, 1997 the Fed, in the face of stronger than expected demand, voted to raise the federal funds target rate from 5.25% to 5.50%. The move was viewed as being pre-emptive against the threat of future inflationary pressures possibly brought about by tight labor market conditions. Until that point, movements in interest rates reflected shifting market sentiment about the need for the Fed to move to a more restrictive policy. As the reporting period began in November 1996, the economy had been showing signs of slowing, thereby allaying the market's fears about inflation. Then, in December, the market's uneasiness was once more ignited as a string of economic statistics showed stronger growth and Fed Chairman Alan Greenspan made cautionary statements regarding inflation and "irrational exuberance" in the equity market. With inflation still appearing to be benign, the market tolerated a steady pace of growth into early 1997. However, Chairman Greenspan's Humphrey-Hawkins testimony before Congress in late February marked a turning point for the short-term money markets--indeed the bond and equity markets as well--as his relatively hawkish statements revealed fears at the Fed that the transitory factors that had been keeping inflation under control in the face of fairly robust growth may be coming to an end. This statement by the Fed caused a sharp reversal in interest rate movement and the market's perception about future Fed policy. The ensuing weeks brought continued evidence of persistent strength, and culminated in the Fed's action at the Federal Open Market Committee in late March. For the first three months of the reporting period, short-term interest rates traded in a relatively narrow range as the continued friendly inflation picture provided some comfort to market participants. The yield on the six-month Treasury bill, for example, moved in a range between 5.20% and 5.35% from the beginning of November through early February. However, short-term interest rates began to rise in late February, and by the time of the Fed tightening in late March, had built in much of the expectations regarding the Fed decision. In April, the financial markets continued to focus on the likelihood of an additional tightening move later in May, causing short-term yields to rise even further. Yields on the six-month Treasury bill rose sharply over this interim period, moving from a low of 5.20% in mid-February to a high of 5.68% in late April before falling back to 5.53% by the end of reporting period. - -------------------------------------------------------------------------------- Q How has the fund's yield responded to this rate environment? A The yield of the fund followed the upward trend of interest rates. The seven-day net yield for the fund's Institutional Service Shares on April 30, 1997, was 3.68% compared to 3.22% six months ago.* The latest yield was equivalent to a 6.09% pre-tax yield. The average tax-exempt yield over the reporting period was 3.11%, which is comparable to a taxable yield of 5.15% for those investors in the highest federal tax bracket. For the Institutional Shares, the seven-day net yield on April 30, 1997 was 3.84% compared to 3.35% six months ago.* The latest yield was the equivalent of a 6.36% taxable rate of return for investors in the highest federal tax bracket. Over the six month reporting period the tax-exempt yield averaged 3.25%, which is equivalent to a pre-tax yield of 5.38% for those same investors. Q What was your strategy for managing the fund over the reporting period? A As signs of strength in the economy became more apparent and as expectations of an imminent Fed tightening grew in the first quarter of 1997, we lowered the average maturity target of the fund to between 35 and 45 days. At the end of the reporting period, we stood at an average maturity of 43 days. By allowing the average maturity of the portfolio to roll inward, we were able to take advantage of higher interest rates going forward. Once an average maturity range is targeted, the portfolio attempts to maximize performance through ongoing relative value analysis. Relative value analysis includes the comparison of the richness or cheapness of municipal securities to one another as well as municipals to taxable instruments, such as Treasury securities. The fund's portfolio remained barbelled in structure, which combined a significant portion in seven-day variable rate demand notes and short maturity commercial paper with purchases of longer-term, six- to twelve-month fixed rate notes. This portfolio structure continues to pursue a competitive yield over time. Q With one rate increase behind us, what is your outlook for the remainder of 1997? A Although the Fed decided to hold short-term interest rates steady in the March meeting, our expectations are that the Fed will find cause to tighten monetary policy further in 1997--perhaps as soon as in July. It is also anticipated that the overall tightening cycle will not be long in terms of magnitude or duration. The pre-emptive move by the Fed should help to preclude the need for more aggressive action down the road by preventing the build-up of inflationary pressures. We would look to see moderately higher short-term interest rates throughout the course of the year, but not to the extent evidenced in the last tightening cycle in 1994. As such, we will likely continue in our modestly defensive stance for the portfolio until market conditions indicate otherwise. * Performance quoted represents past performance and is not indicative of future results. Yield will vary. The seven-day net yield is calculated daily, based on the income dividends for the seven days ending on the date of calculation and then compounded and annualized. MICHIGAN MUNICIPAL CASH TRUST PORTFOLIO OF INVESTMENTS APRIL 30, 1997 (UNAUDITED) - --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE - ---------- ------------------------------------------------------------------ ----------- (A) SHORT-TERM MUNICIPALS--99.3% - ------------------------------------------------------------------------------------ MICHIGAN--88.5% ------------------------------------------------------------------ $4,500,000 Auburn Hills, MI EDC, Limited Obligation Multi-Option Revenue Bonds (Series 1995) Weekly VRDNs (Suburban Tool, Inc.)/ (Huntington National Bank, Columbus, OH LOC) $ 4,500,000 ------------------------------------------------------------------ 1,455,000 Bedford Township, MI Economic Development Corp., EDRB (Series 1985) Weekly VRDNs (Form-Tech Steel Inc.)/(KeyBank, N.A. LOC) 1,455,000 ------------------------------------------------------------------ 1,610,000 Berrien County, MI Economic Development Corp., Economic Development Refunding Revenue Bonds (Series 1992), 5.45% TOBs (Arlington Metals Corp.)/(American National Bank, Chicago LOC), Mandatory Tender 10/1/1997 1,621,144 ------------------------------------------------------------------ 1,200,000 Bruce Township, MI Hospital Finance Authority, Adjustable Rate Tender Securities (Series 1988B), 3.65% TOBs (Sisters of Charity Health Care System)/(MBIA Corporation INS)/(Morgan Guaranty Trust Co., New York LIQ), Optional Tender 5/1/1997 1,200,000 ------------------------------------------------------------------ 750,000 Dearborn, MI Economic Development Corp, (Series 1990) Weekly VRDNs (Exhibit Productions, Inc. Project)/(First of America Bank--Illinois LOC) 750,000 ------------------------------------------------------------------ 2,500,000 Fenton Area Public Schools, MI, LT GO State Aid Notes, 4.15% RANs, 5/1/1997 2,500,000 ------------------------------------------------------------------ 4,500,000 Garden City, MI School District, State Aid Notes, 4.70% RANs (NBD Bank, Michigan LOC), 4/1/1998 4,527,789 ------------------------------------------------------------------ 1,300,000 Melvindale, MI, 4.00% TANs, 8/15/1997 1,301,328 ------------------------------------------------------------------ 1,000,000 Michigan Higher Education Facilities Authority, Variable Rate Demand Limited Obligation Revenue Bonds (Series 1997) Weekly VRDNs (Davenport College of Business)/(Old Kent Bank & Trust Co., Grand Rapids LOC) 1,000,000 ------------------------------------------------------------------ 3,100,000 Michigan Job Development Authority, Limited Obligation Revenue Bonds Weekly VRDNs (Andersons Project)/(Credit Lyonnais, Paris LOC) 3,100,000 ------------------------------------------------------------------
MICHIGAN MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE - ---------- ------------------------------------------------------------------ ----------- (A) SHORT-TERM MUNICIPALS--CONTINUED - ------------------------------------------------------------------------------------ MICHIGAN--CONTINUED ------------------------------------------------------------------ $6,000,000 Michigan State Building Authority, (Series 1), 3.50% CP (Canadian Imperial Bank of Commerce, Toronto LOC), Mandatory Tender 5/1/1997 $ 6,000,000 ------------------------------------------------------------------ 1,000,000 Michigan State Hospital Finance Authority, Revenue Refunding Bonds (Series P), 4.00% Bonds (Sisters of Mercy Health Corporation)/(MBIA Corporation INS), 8/15/1997 1,000,999 ------------------------------------------------------------------ 4,870,000 Michigan State Housing Development Authority, Revenue Bonds (Series A), 3.55% CP (Credit Suisse, Zurich LOC), Mandatory Tender 6/11/1997 4,870,000 ------------------------------------------------------------------ 1,300,000 Michigan State, 4.50% TRANs, 9/30/1997 1,305,430 ------------------------------------------------------------------ 2,000,000 Michigan Strategic Fund Weekly VRDNs (Tesco Engineering)/ (Bank of Tokyo-Mitsubishi Ltd. LOC) 2,000,000 ------------------------------------------------------------------ 4,000,000 Michigan Strategic Fund, (Series 1989) Weekly VRDNs (Hi-Lex Controls Inc.)/(Bank of Tokyo-Mitsubishi Ltd. LOC) 4,000,000 ------------------------------------------------------------------ 5,620,000 Michigan Strategic Fund, (Series 1991) Weekly VRDNs (AGA Gas, Inc.)/(Svenska Handelsbanken, Stockholm LOC) 5,620,000 ------------------------------------------------------------------ 900,000 Michigan Strategic Fund, (Series 1995) Weekly VRDNs (Rood Industries, Inc. Project)/(NBD Bank, Michigan LOC) 900,000 ------------------------------------------------------------------ 2,500,000 Michigan Strategic Fund, Adjustable Rate Limited Obligation Revenue and Revenue Refunding Bonds (Series 1996) Weekly VRDNs (C-Tec, Inc.)/(SunTrust Bank, Atlanta LOC) 2,500,000 ------------------------------------------------------------------ 2,000,000 Michigan Strategic Fund, Limited Obligation PCR Bonds (Series 1993) Weekly VRDNs (Allied-Signal, Inc.) 2,000,000 ------------------------------------------------------------------ 3,000,000 Michigan Strategic Fund, Limited Obligation Revenue Bonds (Series 1995) Weekly VRDNs (Bear Lake Associates Project)/ (Old Kent Bank & Trust Co., Grand Rapids LOC) 3,000,000 ------------------------------------------------------------------ 1,000,000 Michigan Strategic Fund, Limited Obligation Revenue Bonds (Series 1995) Weekly VRDNs (Hercules Drawn Steel Corporation Project)/(KeyBank, N.A. LOC) 1,000,000 ------------------------------------------------------------------
MICHIGAN MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE - ---------- ------------------------------------------------------------------ ----------- (A) SHORT-TERM MUNICIPALS--CONTINUED - ------------------------------------------------------------------------------------ MICHIGAN--CONTINUED ------------------------------------------------------------------ $4,070,000 Michigan Strategic Fund, Limited Obligation Revenue Bonds (Series 1995) Weekly VRDNs (J.R. Automation Technologies Project)/ (Old Kent Bank & Trust Co., Grand Rapids LOC) $ 4,070,000 ------------------------------------------------------------------ 1,020,000 Michigan Strategic Fund, Limited Obligation Revenue Bonds (Series 1995) Weekly VRDNs (RSR Project)/(Old Kent Bank & Trust Co., Grand Rapids LOC) 1,020,000 ------------------------------------------------------------------ 1,000,000 Michigan Strategic Fund, Limited Obligation Revenue Bonds (Series 1995) Weekly VRDNs (United Waste Systems, Inc.)/(Bank of America Illinois LOC) 1,000,000 ------------------------------------------------------------------ 900,000 Michigan Strategic Fund, Limited Obligation Revenue Bonds (Series 1996) Weekly VRDNs (ACI Properties, L.L.C. Project)/ (Comerica Bank, Detroit, MI LOC) 900,000 ------------------------------------------------------------------ 945,000 Michigan Strategic Fund, Limited Obligation Revenue Bonds (Series 1996) Weekly VRDNs (Akemi, Inc.)/ (Comerica Bank, Detroit, MI LOC) 945,000 ------------------------------------------------------------------ 1,000,000 Michigan Strategic Fund, Limited Obligation Revenue Bonds (Series 1996) Weekly VRDNs (Echo Properties, L.L.C. Project)/ (Comerica Bank, Detroit, MI LOC) 1,000,000 ------------------------------------------------------------------ 2,700,000 Michigan Strategic Fund, Limited Obligation Revenue Bonds (Series 1996) Weekly VRDNs (G & T Real Estate Investments Co., L.L.C.)/(NBD Bank, Michigan LOC) 2,700,000 ------------------------------------------------------------------ 1,000,000 Michigan Strategic Fund, Limited Obligation Revenue Bonds (Series 1996) Weekly VRDNs (Inalfa-Hollandia, Inc.)/ (Comerica Bank, Detroit, MI LOC) 1,000,000 ------------------------------------------------------------------ 4,300,000 Michigan Strategic Fund, Limited Obligation Revenue Bonds Weekly VRDNs (Hess Industries, Inc.)/(Norwest Bank Minnesota, Minneapolis LOC) 4,300,000 ------------------------------------------------------------------ 2,125,000 Michigan Strategic Fund, Variable Rate Demand Limited Obligation Revenue Bonds (Series 1996) Weekly VRDNs (R.H. Wyner Associates, Inc.)/(State Street Bank and Trust Co. LOC) 2,125,000 ------------------------------------------------------------------ 1,000,000 Walled Lake, MI Consolidated School District, 3.65% Bonds (MBIA Corporation INS), 5/1/1997 1,000,000 ------------------------------------------------------------------
MICHIGAN MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE - ---------- ------------------------------------------------------------------ ----------- (A) SHORT-TERM MUNICIPALS--CONTINUED - ------------------------------------------------------------------------------------ MICHIGAN--CONTINUED ------------------------------------------------------------------ $5,000,000 Wayne County, MI Downriver Sewage Disposal System, (1994 Series B), 3.50% CP (Wayne County, MI) /(Comerica Bank, Detroit, MI LOC), Mandatory Tender 6/10/1997 $ 5,000,000 ------------------------------------------------------------------ 1,900,000 Wayne County, MI , Airport Revenue Refunding Bonds (Series 1996A) Weekly VRDNs (Detroit Metropolitan Wayne County Airport)/ (Bayerische Landesbank Girozentrale LOC) 1,900,000 ------------------------------------------------------------------ ----------- TOTAL MICHIGAN 83,111,690 ------------------------------------------------------------------ ----------- PUERTO RICO--9.7% ------------------------------------------------------------------ 1,000,000 Commonwealth of Puerto Rico, Public Improvement Bonds, 7.25% Bonds (United States Treasury PRF), 7/1/1997 (@102) 1,026,046 ------------------------------------------------------------------ 7,000,000 Commonwealth of Puerto Rico, Series 1997A, 4.00% TRANs, 7/30/1997 7,009,660 ------------------------------------------------------------------ 1,075,000 Puerto Rico Industrial, Medical & Environmental PCA, Pollution Control Facilities Financing Authority (Series 1983A), 3.75% TOBs (Schering Plough Corp.)/(Morgan Guaranty Trust Co., New York LOC), Optional Tender 12/1/1997 1,075,916 ------------------------------------------------------------------ ----------- TOTAL PUERTO RICO 9,111,622 ------------------------------------------------------------------ -----------
MICHIGAN MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE - ---------- ------------------------------------------------------------------ ----------- (A) SHORT-TERM MUNICIPALS--CONTINUED - ------------------------------------------------------------------------------------ VIRGIN ISLANDS--1.1% ------------------------------------------------------------------ $1,000,000 Virgin Islands HFA, Single Family Mortgage Revenue Refunding Bonds (1995 Series B), 3.75% TOBs (FGIC INV), Mandatory Tender 6/1/1997 $ 1,000,000 ------------------------------------------------------------------ ----------- TOTAL INVESTMENTS (AT AMORTIZED COST)(B) $93,223,312 ------------------------------------------------------------------ -----------
At April 30, 1997, 53.3% of the total investments at market value were subject to alternative minimum tax. (a) The fund may only invest in securities rated in one of the two highest short-term rating categories by one or more 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 Ratings Group, MIG-1, or MIG-2 by Moody's Investors Service, Inc., or F-1+, F-1, and F-2 by Fitch Investors Service, Inc. are all considered rated in one of the two highest short-term rating categories. Securities rated in the highest short-term rating category (and unrated securities of comparable quality) are identified as First Tier securities. Securities rated in the second highest short-term rating category (and unrated securities of comparable quality) are identified as Second Tier securities. The fund follows applicable regulations in determining whether a security is rated and whether a security rated by multiple NRSROs in different rating categories should be identified as a First or Second Tier security. At April 30, 1997, the portfolio securities were rated as follows: Tier Rating Percentage Based on Total Market Value (unaudited)
FIRST TIER SECOND TIER ------------ ------------- 100% 0%
(b) Also represents cost for federal tax purposes. Note: The categories of investments are shown as a percentage of net assets ($93,931,435) at April 30, 1997. MICHIGAN MUNICIPAL CASH TRUST - -------------------------------------------------------------------------------- The following acronyms are used throughout this portfolio: CP -- Commercial Paper EDC -- Economic Development Commission EDRB -- Economic Development Revenue Bonds FGIC -- Financial Guaranty Insurance Company GO -- General Obligation HFA -- Housing Finance Authority INS -- Insured INV -- Investment Agreement LIQ -- Liquidity Agreement LOC -- Letter of Credit LT -- Limited Tax MBIA -- Municipal Bond Investors Assurance PCA -- Pollution Control Authority PCR -- Pollution Control Revenue PRF -- Prerefunded RANs -- Revenue Anticipation Notes TANs -- Tax Anticipation Notes TOBs -- Tender Option Bonds TRANs -- Tax and Revenue Anticipation Notes VRDNs -- Variable Rate Demand Notes
(See Notes which are an integral part of the Financial Statements) MICHIGAN MUNICIPAL CASH TRUST STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1997 (UNAUDITED) - -------------------------------------------------------------------------------- ASSETS: - -------------------------------------------------------------------------------- Total investments in securities, at amortized cost and value $93,223,312 - -------------------------------------------------------------------------------- Cash 238,774 - -------------------------------------------------------------------------------- Income receivable 755,330 - -------------------------------------------------------------------------------- Deferred expenses 6,160 - -------------------------------------------------------------------------------- ----------- Total assets 94,223,576 - -------------------------------------------------------------------------------- LIABILITIES: - -------------------------------------------------------------------------------- Income distribution payable $283,379 - --------------------------------------------------------------------- Accrued expenses 8,762 - --------------------------------------------------------------------- -------- Total liabilities 292,141 - -------------------------------------------------------------------------------- ----------- NET ASSETS for 93,931,435 shares outstanding $93,931,435 - -------------------------------------------------------------------------------- ----------- NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE: - -------------------------------------------------------------------------------- INSTITUTIONAL SERVICE SHARES: - -------------------------------------------------------------------------------- $84,508,366 / 84,508,366 shares outstanding $1.00 - -------------------------------------------------------------------------------- ----------- INSTITUTIONAL SHARES: - -------------------------------------------------------------------------------- $9,423,069 / 9,423,069 shares outstanding $1.00 - -------------------------------------------------------------------------------- -----------
(See Notes which are an integral part of the Financial Statements) MICHIGAN MUNICIPAL CASH TRUST STATEMENT OF OPERATIONS SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED) - -------------------------------------------------------------------------------- INVESTMENT INCOME: - ----------------------------------------------------------------------------------- Interest $2,148,569 - ----------------------------------------------------------------------------------- EXPENSES: - ----------------------------------------------------------------------------------- Investment advisory fee $ 295,106 - ---------------------------------------------------------------------- Administrative personnel and services fee 75,674 - ---------------------------------------------------------------------- Custodian fees 3,502 - ---------------------------------------------------------------------- Transfer and dividend disbursing agent fees and expenses 39,677 - ---------------------------------------------------------------------- Directors'/Trustees' fees 1,028 - ---------------------------------------------------------------------- Auditing fees 5,859 - ---------------------------------------------------------------------- Legal fees 2,639 - ---------------------------------------------------------------------- Portfolio accounting fees 22,838 - ---------------------------------------------------------------------- Shareholder services fee-Institutional Service Shares 132,876 - ---------------------------------------------------------------------- Shareholder services fee-Institutional Shares 14,677 - ---------------------------------------------------------------------- Share registration costs 17,651 - ---------------------------------------------------------------------- Printing and postage 8,139 - ---------------------------------------------------------------------- Insurance premiums 679 - ---------------------------------------------------------------------- Miscellaneous 1,761 - ---------------------------------------------------------------------- --------- Total expenses 622,106 - ---------------------------------------------------------------------- Waivers-- - ---------------------------------------------------------------------- Waiver of investment advisory fee $(245,746) - ---------------------------------------------------------- Waiver of shareholder services fee-Institutional Service Shares (56,868) - ---------------------------------------------------------- Waiver of shareholder services fee-Institutional Shares (14,677) - ---------------------------------------------------------- --------- Total waivers (317,291) - ---------------------------------------------------------------------- --------- Net expenses 304,815 - ----------------------------------------------------------------------------------- ---------- Net investment income $1,843,754 - ----------------------------------------------------------------------------------- ----------
(See Notes which are an integral part of the Financial Statements) MICHIGAN MUNICIPAL CASH TRUST STATEMENT OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
SIX MONTHS ENDED (UNAUDITED) YEAR ENDED APRIL 30, 1997 OCTOBER 31, 1996 ---------------- ----------------- INCREASE (DECREASE) IN NET ASSETS: - ------------------------------------------------------ OPERATIONS-- - ------------------------------------------------------ Net investment income $ 1,843,754 $ 2,173,858 - ------------------------------------------------------ ---------------- ----------------- DISTRIBUTIONS TO SHAREHOLDERS-- - ------------------------------------------------------ Distributions from net investment income - ------------------------------------------------------ Institutional Service Shares (1,652,754) (1,958,685) - ------------------------------------------------------ Institutional Shares (191,000) (215,173) - ------------------------------------------------------ ---------------- ----------------- Change in net assets resulting from distributions to shareholders (1,843,754) (2,173,858) - ------------------------------------------------------ ---------------- ----------------- SHARE TRANSACTIONS-- - ------------------------------------------------------ Proceeds from sale of shares 410,552,935 318,706,288 - ------------------------------------------------------ Net asset value of shares issued to shareholders in payment of distributions declared 1,126,686 1,590,062 - ------------------------------------------------------ Cost of shares redeemed (421,637,315) (246,540,494) - ------------------------------------------------------ ---------------- ----------------- Change in net assets resulting from share transactions (9,957,694) 73,755,856 - ------------------------------------------------------ ---------------- ----------------- Change in net assets (9,957,694) 73,755,856 - ------------------------------------------------------ NET ASSETS: - ------------------------------------------------------ Beginning of period 103,889,129 30,133,273 - ------------------------------------------------------ ---------------- ----------------- End of period $ 93,931,435 $ 103,889,129 - ------------------------------------------------------ ---------------- -----------------
(See Notes which are an integral part of the Financial Statements) MICHIGAN MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS--INSTITUTIONAL SERVICE SHARES - -------------------------------------------------------------------------------- (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED YEAR ENDED (UNAUDITED) OCTOBER 31, APRIL 30, ----------------- 1997 1996 1995(A) ----------- ------ ------- NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 - ------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS - ------------------------------------------------------------- Net investment income 0.02 0.03 0.01 - ------------------------------------------------------------- LESS DISTRIBUTIONS - ------------------------------------------------------------- Distributions from net investment income (0.02) (0.03) (0.01) - ------------------------------------------------------------- -------- ------ ------- NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 - ------------------------------------------------------------- -------- ------ ------- TOTAL RETURN(B) 1.56% 3.26% 1.35% - ------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS - ------------------------------------------------------------- Expenses 0.53%* 0.50% 0.32% * - ------------------------------------------------------------- Net investment income 3.11%* 3.21% 3.67% * - ------------------------------------------------------------- Expense waiver/reimbursement(c) 0.52%* 0.76% 1.63% * - ------------------------------------------------------------- SUPPLEMENTAL DATA - ------------------------------------------------------------- Net assets, end of period (000 omitted) $84,508 $92,275 $30,133 - -------------------------------------------------------------
* Computed on an annualized basis. (a) Reflects operations for the period from June 20, 1995 (date of initial public investment) to October 31, 1995. (b) Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable. (c) This voluntary expense decrease is reflected in both the expense and net investment income ratios shown above. (See Notes which are an integral part of the Financial Statements) MICHIGAN MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES - -------------------------------------------------------------------------------- (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS PERIOD ENDED ENDED (UNAUDITED) OCTOBER 31, APRIL 30, ----------- 1997 1996(A) ----------- ----------- NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 - ---------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS - ---------------------------------------------------------------- Net investment income 0.02 0.02 - ---------------------------------------------------------------- LESS DISTRIBUTIONS - ---------------------------------------------------------------- Distributions from net investment income (0.02) (0.02) - ---------------------------------------------------------------- -------- -------- NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 - ---------------------------------------------------------------- -------- -------- TOTAL RETURN(B) 1.63% 2.19% - ---------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS - ---------------------------------------------------------------- Expenses 0.39%* 0.37%* - ---------------------------------------------------------------- Net investment income 3.25%* 3.40%* - ---------------------------------------------------------------- Expense waiver/reimbursement(c) 0.67%* 0.89%* - ---------------------------------------------------------------- SUPPLEMENTAL DATA - ---------------------------------------------------------------- Net assets, end of period (000 omitted) $9,423 $11,614 - ----------------------------------------------------------------
* Computed on an annualized basis. (a) Reflects operations for the period from March 2, 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) MICHIGAN MUNICIPAL CASH TRUST NOTES TO FINANCIAL STATEMENTS APRIL 30, 1997 (UNAUDITED) - -------------------------------------------------------------------------------- 1. ORGANIZATION Federated Municipal Trust (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act") as an open-end, management investment company. The Trust consists of sixteen portfolios. The financial statements included herein are only those of Michigan Municipal Cash Trust (the "Fund"). The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. The Fund offers two classes of shares: Institutional Service Shares and Institutional Shares. The investment objective of the Fund is current income exempt from federal regular income tax and the personal income tax imposed by the State of Michigan consistent with stability of principal. 2. SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with generally accepted accounting principles. INVESTMENT VALUATIONS--The Fund's use of the amortized cost method to value its portfolio securities is in accordance with Rule 2a-7 under the Act. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses are accrued daily. Bond premium and discount, if applicable, are amortized as required by the Internal Revenue Code, as amended (the "Code"). Distributions to shareholders are recorded on the ex-dividend date. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the Code applicable to regulated investment companies and to distribute to shareholders each year substantially all of its income. Accordingly, no provisions for federal tax are necessary. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in when-issued or delayed delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked to market daily and begin earning interest on the settlement date. DEFERRED EXPENSES--The costs incurred by the Fund with respect to registration of its shares in its first fiscal year, excluding the initial expense of registering its shares, have been deferred and are being amortized over a period not to exceed five years from the Fund's commencement 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 MICHIGAN MUNICIPAL CASH TRUST - -------------------------------------------------------------------------------- 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 Board of Trustees (the "Trustees") to issue an unlimited number of full and fractional shares of beneficial interest (without par value). At April 30, 1997, capital paid-in aggregated $93,931,435. Transactions in shares were as follows:
SIX MONTHS ENDED YEAR ENDED INSTITUTIONAL SERVICE SHARES APRIL 30, 1997 OCTOBER 31, 1996 - -------------------------------------------------- ----------------- -------------------- Shares sold 384,750,386 286,548,847 - -------------------------------------------------- Shares issued to shareholders in payment of distributions declared 1,115,265 1,585,481 - -------------------------------------------------- Shares redeemed (393,632,742) (225,992,144) - -------------------------------------------------- --------------- ----------------- Net change resulting from Institutional Service Share transactions (7,767,091) 62,142,184 - -------------------------------------------------- --------------- -----------------
SIX MONTHS ENDED PERIOD ENDED INSTITUTIONAL SHARES APRIL 30, 1997 OCTOBER 31, 1996(A) - -------------------------------------------------- ----------------- -------------------- Shares sold 25,802,549 32,157,441 - -------------------------------------------------- Shares issued to shareholders in payment of distributions declared 11,421 4,581 - -------------------------------------------------- Shares redeemed (28,004,573) (20,548,350) - -------------------------------------------------- --------------- ---------------- Net change resulting from Institutional Share transactions (2,190,603) 11,613,672 - -------------------------------------------------- -------------- --------------- Net change resulting from Share transactions (9,957,694) 73,755,856 - -------------------------------------------------- -------------- ---------------
(a) For the period from March 2, 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. The Adviser can modify or terminate this voluntary waiver at any time at its sole discretion. MICHIGAN MUNICIPAL CASH TRUST - -------------------------------------------------------------------------------- ADMINISTRATIVE FEE--Federated Services Company ("FServ"), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. The fee paid to FServ is based on the level of average aggregate daily net assets of all funds advised by subsidiaries of Federated Investors for the period. The administrative fee received during the period of the Administrative Services Agreement shall be at least $125,000 per portfolio and $30,000 per each additional class of shares. SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to 0.25% of average daily net assets of the Fund for the period. The fee paid to FSS is used to finance certain services for shareholders and to maintain shareholder accounts. FSS may voluntarily choose to waive any portion of its fee. FSS can modify or terminate this voluntary waiver at any time at its sole discretion. TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--FServ, through its subsidiary, Federated Shareholder Services Company ("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. ORGANIZATIONAL EXPENSES--Organizational expenses of $20,243 were borne initially by the Adviser. The Fund has agreed to reimburse the Adviser for the organizational expenses during the five year period following the effective date. For the period ended April 30, 1997, the Fund paid $1,597 pursuant to this agreement. INTERFUND TRANSACTIONS--During the period ended April 30, 1997, 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 $198,165,000 and $219,024,000 respectively. GENERAL--Certain of the Officers and Trustees of the Trust are Officers and Directors or Trustees of the above companies. MICHIGAN MUNICIPAL CASH TRUST - -------------------------------------------------------------------------------- 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 April 30, 1997, 82.7% of the securities in the portfolio of investments are backed by letters of credit or bond insurance of various financial institutions and financial guaranty assurance agencies. The percentage of investments insured by or supported (backed) by a letter of credit from any one institution or agency did not exceed 12.9% of total investments. TRUSTEES OFFICERS - --------------------------------------------------------------------------------------------- John F. Donahue John F. Donahue Thomas G. Bigley Chairman John T. Conroy, Jr. Glen R. Johnson William J. Copeland President James E. Dowd J. Christopher Donahue Lawrence D. Ellis, M.D. Executive Vice President Edward L. Flaherty, Jr. Edward C. Gonzales Glen R. Johnson Executive Vice President Peter E. Madden John W. McGonigle Gregor F. Meyer Executive Vice President, John E. Murray, Jr. Treasurer, and Secretary Wesley W. Posvar Richard B. Fisher Marjorie P. Smuts Vice President S. Elliott Cohan Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any bank, and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other government agency. Investment in mutual funds involves investment risk, including possible loss of principal. Although money market funds seek to maintain a stable net asset value of $1.00 per share, there is no assurance that they will be able to do so. This report is authorized for distribution to prospective investors only when preceded or accompanied by the fund's prospectus which contains facts concerning its objective and policies, management fees, expenses and other information. - -------------------------------------------------------------------------------- GEORGIA - -------------------------------------------------------------------------------- MUNICIPAL - -------------------------------------------------------------------------------- CASH - -------------------------------------------------------------------------------- TRUST - -------------------------------------------------------------------------------- SEMI-ANNUAL REPORT TO SHAREHOLDERS APRIL 30, 1997 Federated Investors Logo Cusip 314229691 G01478-01 (6/97) Recyled Paper Logo PRESIDENT'S MESSAGE - -------------------------------------------------------------------------------- Dear Shareholder: I am pleased to present the Semi-Annual Report to Shareholders of Georgia Municipal Cash Trust, a portfolio of Federated Municipal Trust, which covers the six-month period from November 1, 1996 through April 30, 1997. The report begins with a discussion with the fund's portfolio manager, followed by a complete listing of the fund's holdings and its financial statements. The fund is a convenient way to keep your ready cash pursuing double tax-free income--free from federal regular income tax and Georgia income tax*--through a portfolio concentrated in high-quality, short-term Georgia municipal securities. At the end of the reporting period, the fund's holdings were diversified among issuers that use municipal bond financing for projects as varied as health care, housing, community development, and transportation. This double tax-free advantage means you have the opportunity to earn a greater after-tax yield than you could in a comparable high-quality taxable investment. Of course, the fund also brings you the added benefits of daily liquidity and stability of principal.** During the reporting period, the fund paid double tax-free dividends totaling $0.02 per share. The fund's net assets stood at $155.1 million at the end of the reporting period. Thank you for relying on Georgia Municipal Cash Trust to help your ready cash pursue tax-free income every day. As always, we'll continue to provide you with the highest level of professional service. We invite your questions or comments. Sincerely, LOGO Glen R. Johnson President June 15, 1997 * Income may be subject to the federal alternative minimum tax. ** Although money market funds seek to maintain a stable net asset value of $1.00 per share, there is no assurance that they will be able to do so. An investment in the fund is neither insured nor guaranteed by the U.S. government. INVESTMENT REVIEW - -------------------------------------------------------------------------------- An interview with the fund's portfolio manager, Jeff A. Kozemchak, CFA, Vice President, Federated Management Q Can you comment on the economy and the interest rate environment during the six month reporting period? A Although it did not occur until near the end of the fund's semi-annual reporting period, the Federal Reserve Board (the "Fed") brought about the first change in monetary policy in over a year. On March 25, 1997 the Fed, in the face of stronger than expected demand, voted to raise the federal funds target rate from 5.25% to 5.50%. The move was viewed as being pre-emptive against the threat of future inflationary pressures possibly brought about by tight labor market conditions. Until that point, movements in interest rates reflected shifting market sentiment about the need for the Fed to move to a more restrictive policy. As the reporting period began in November 1996, the economy had been showing signs of slowing, thereby allaying the market's fears about inflation. Then, in December, the market's uneasiness was once more ignited as a string of economic statistics showed stronger growth and Fed Chairman Alan Greenspan made cautionary statements regarding inflation and "irrational exuberance" in the equity market. With inflation still appearing to be benign, the market tolerated a steady pace of growth into early 1997. However, Chairman Greenspan's Humphrey-Hawkins testimony before Congress in late February marked a turning point for the short-term money markets--indeed the bond and equity markets as well--as his relatively hawkish statements revealed fears at the Fed that the transitory factors that had been keeping inflation under control in the face of fairly robust growth may be coming to an end. This statement by the Fed caused a sharp reversal in interest rate movement and the market's perception about future Fed policy. The ensuing weeks brought continued evidence of persistent strength, and culminated in the Fed's action at the Federal Open Market Committee in late March. For the first three months of the reporting period, short-term interest rates traded in a relatively narrow range as the continued friendly inflation picture provided some comfort to market participants. The yield on the six-month Treasury bill, for example, moved in a range between 5.20% and 5.35% from the beginning of November through early February. However, short-term interest rates began to rise in late February, and by the time of the Fed tightening in late March, had built in much of the expectations regarding the Fed decision. In April, the financial markets continued to focus on the likelihood of an additional tightening move later in May, causing short-term yields to rise even further. Yields on the six-month Treasury bill rose sharply over this interim period, moving from a low of 5.20% in mid-February to a high of 5.68% in late April before falling back to 5.53% by the end of reporting period. - -------------------------------------------------------------------------------- Q What were your strategies for the fund during the reporting period? A The fund's average maturity at the beginning of the reporting period was approximately 53 days, reflecting a neutral outlook on the direction of interest rates. As signs of strength in the economy became more apparent, and as expectation of an imminent Fed tightening grew in the first quarter of 1997, we shortened the average maturity target range to between 35 and 45 days. We also emphasized the purchase of shorter term fixed-rate paper while increasing the percentage of the portfolio in seven-day variable rate demand notes ("VRDNs"). Seven-day VRDNs provide more portfolio responsiveness to interest rate increases. Once an average maturity range is targeted, the portfolio attempts to maximize performance through ongoing relative value analysis. Relative value analysis includes the comparison of the richness or cheapness of municipal securities to one another as well as municipals to taxable instruments, such as treasury securities. The fund's portfolio remained barbelled in structure, which combined a significant portion in seven-day VRDNs and short maturity commercial paper with purchases of longer-term, six-to twelve-month Georgia exempt fixed rate notes and bonds. This portfolio structure takes advantage of the steepness of the yield curve and continues to pursue a competitive yield over time. Q How has the fund's yield responded to this rate environment? A The fund's yield was affected by Fed policy (interest rate increases), changes in market expectations, as well as supply and demand imbalances unique to the municipal money markets. However, because of these imbalances the fund's yield may experience more volatility on a weekly basis than Treasury yields and taxable money fund yields. In general, yields on municipal money market funds rose over the reporting period. For the fund, the seven-day net yield on April 30, 1997 was 3.92%, compared to 3.19% at the beginning of the reporting period.* For individual investors at the highest federal and state tax brackets, the latest yield was equivalent to a taxable yield of 7.21%. Q Looking through 1997, what is your outlook for short-term rates? A Although the Fed decided to hold short-term interest rates steady in the March meeting, our expectations are that the Fed will find cause to tighten monetary policy further in 1997 - perhaps as soon as in July. It is also anticipated that the overall tightening cycle will not be long in terms of magnitude or duration. The pre-emptive move by the Fed should help to preclude the need for more aggressive action down the road by preventing the build-up of inflationary pressures. We would look to see moderately higher short-term interest rates throughout the course of the year, but not to the extent evidenced in the last tightening cycle in 1994. As such, we will likely continue in our modestly defensive stance for the portfolio until market conditions indicate otherwise. * Performance quoted represents past performance and is not indicative of future results. Yield will vary. The seven-day net yield is calculated daily, based on the income dividends for the seven days ending on the date of calculation and then compounded and annualized. GEORGIA MUNICIPAL CASH TRUST PORTFOLIO OF INVESTMENTS APRIL 30, 1997 (UNAUDITED) - --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE - ---------- ----------------------------------------------------------------- ------------ (A)SHORT-TERM MUNICIPALS--99.5% - ----------------------------------------------------------------------------------- GEORGIA--99.5% ----------------------------------------------------------------- $4,400,000 Athens-Clarke County, GA IDA, (Series 1988), 3.55% CP (Rhone Merieux, Inc. Project)/(Societe Generale, Paris LOC), Mandatory Tender 5/19/1997 $ 4,400,000 ----------------------------------------------------------------- 1,600,000 Atlanta, GA, Urban Residential Finance Authority, Multifamily Housing Revenue Bonds (Series 1995) Weekly VRDNs (West End Housing Development Project)/(First Union National Bank, Charlotte, N.C. LOC) 1,600,000 ----------------------------------------------------------------- 4,800,000 Atlanta, GA, Urban Residential Finance Authority, Multifamily Rental Housing Revenue Refunding Bonds (Series 1988A), 4.30% TOBs (West Paces Club Towers Project)/(Sanwa Bank Ltd., Osaka LOC), Optional Tender 5/1/1997 4,800,000 ----------------------------------------------------------------- 2,370,000 Brunswick and Glynn County, GA Development Authority, Multi-Mode Variable Rate IDRB's (Series 1996) Weekly VRDNs (Daewoo Equipment Corp.)/(KeyBank, N.A. LOC) 2,370,000 ----------------------------------------------------------------- 3,865,000 Brunswick, GA, Housing Authority, (Series S93) Weekly VRDNs (Island Square Apartments)/(Columbus Bank and Trust Co., GA LOC) 3,865,000 ----------------------------------------------------------------- 1,850,000 Carrolton, GA Payroll Development Authority, (Series 1993) Weekly VRDNs (Sunox, Inc. Project)/(First Union National Bank, Charlotte, N.C. LOC) 1,850,000 ----------------------------------------------------------------- 2,000,000 Chatam County, GA Hospital Authority, (Series A), 4.15% Bonds (Memorial Medical Center; Savannah, GA)/(AMBAC INS), 1/1/1998 2,007,142 ----------------------------------------------------------------- 1,885,000 Cherokee County, GA Development Authority, IDRB Weekly VRDNs (Morrison Products, GA)/(KeyBank, N.A. LOC) 1,885,000 ----------------------------------------------------------------- 500,000 Clarke County, GA Hospital Authority, 3.90% Bonds (Athens Medic Centr)/(MBIA INS), 1/1/1998 500,000 ----------------------------------------------------------------- 3,000,000 Clayton County, GA Development Authority, (Series 1994) Weekly VRDNs (Lear Seating Corp.)/(Chase Manhattan Bank N.A., New York LOC) 3,000,000 -----------------------------------------------------------------
GEORGIA MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE - ---------- ----------------------------------------------------------------- ------------ (A)SHORT-TERM MUNICIPALS--CONTINUED - ----------------------------------------------------------------------------------- GEORGIA--CONTINUED ----------------------------------------------------------------- $2,550,000 Clayton County, GA Housing Authority, Revenue Refunding Bonds (Series 1992) Weekly VRDNs (Oxford Townhomes Project)/ (Amsouth Bank N.A., Birmingham LOC) $ 2,550,000 ----------------------------------------------------------------- 2,955,000 Cobb County, GA IDA Weekly VRDNs (Atlanta RDC Co.)/ (First Union National Bank, Charlotte, N.C. LOC) 2,955,000 ----------------------------------------------------------------- 1,800,000 Cobb County, GA IDA, IDRB (Series 1995) Weekly VRDNs (Consolidated Engineering Company, Inc. Project)/ (NationsBank, South LOC) 1,800,000 ----------------------------------------------------------------- 2,500,000 Cobb County, GA School District, 5.00% Bonds, 2/1/1998 2,525,636 ----------------------------------------------------------------- 1,365,000 Cobb County, GA, Water & Sewer, 5.00% Bonds, 7/1/1997 1,367,434 ----------------------------------------------------------------- 970,000 Columbia County, GA Development Authority, (Series 1991) Weekly VRDNs (Augusta Sportswear, Inc.)/(Wachovia Bank of Georgia NA, Atlanta LOC) 970,000 ----------------------------------------------------------------- 1,070,000 Columbus, GA IDA Industrial & Port Development Commission, (Series 1992) Weekly VRDNs (Maine Street Village Partnership)/ (Columbus Bank and Trust Co., GA LOC) 1,070,000 ----------------------------------------------------------------- 1,185,000 Columbus, GA IDA, (Series 90B) Weekly VRDNs (R. P. Real Estate, Inc.)/(Columbus Bank and Trust Co., GA LOC) 1,185,000 ----------------------------------------------------------------- 2,000,000 Conyers-Rockdale-Big Haynes, GA Impoundment Authority, (Series 1997), 3.75% BANs, 12/31/1997 2,000,643 ----------------------------------------------------------------- 3,000,000 Coweta County, GA IDA, (Series 1995) Weekly VRDNs (Lanelco L.L.C. Project)/(NBD Bank, Michigan LOC) 3,000,000 ----------------------------------------------------------------- 1,000,000 Coweta County, GA Residential Care Facilities for the Elderly, First Lien Revenue Bonds (Series 1996B) Weekly VRDNs (Wesley Woods of Newman-Peachtree City, Inc. Project)/(Banque Paribas, Paris LOC) 1,000,000 ----------------------------------------------------------------- 6,000,000 Crisp County, GA Development Authority, (Series B), 4.10% TOBs (Masonite Corporation)/(International Paper Co. GTD), Optional Tender 9/1/1997 6,000,000 ----------------------------------------------------------------- 1,580,000 De Kalb County, GA Development Authority, (Series 1992) Weekly VRDNs (House of Cheatham, Inc. Project)/ (NationsBank, South LOC) 1,580,000 -----------------------------------------------------------------
GEORGIA MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE - ---------- ----------------------------------------------------------------- ------------ (A)SHORT-TERM MUNICIPALS--CONTINUED - ----------------------------------------------------------------------------------- GEORGIA--CONTINUED ----------------------------------------------------------------- $ 600,000 De Kalb County, GA Development Authority, (Series 1993) Weekly VRDNs (Pet, Inc.)/(PNC Bank, N.A. LOC) $ 600,000 ----------------------------------------------------------------- 1,250,000 De Kalb County, GA Development Authority, (Series 1996) Weekly VRDNs (DeKalb Steel, Inc.)/(SouthTrust Bank of Georgia, Atlanta LOC) 1,250,000 ----------------------------------------------------------------- 4,000,000 De Kalb County, GA Multi-Family Housing Authority, Multifamily Housing Revenue Bonds (Series 1996) Weekly VRDNs (Bryton Hill Apartments)/(PNC Bank, Kentucky LOC) 4,000,000 ----------------------------------------------------------------- 1,000,000 Forsythe County, GA Development Authority, IDRB (Series 1995) Weekly VRDNs (American BOA, Inc. Project)/(Dresdner Bank Ag, Frankfurt LOC) 1,000,000 ----------------------------------------------------------------- 6,100,000 Franklin County, GA Industrial Building Authority, (Series 1995) Weekly VRDNs (Bosal Industries, Inc.)/(ABN AMRO Bank N.V., Amsterdam LOC) 6,100,000 ----------------------------------------------------------------- 1,660,000 Fulton County, GA Housing Authority, (Series 1996) Weekly VRDNs (Champions Green Apartments Project)/(SouthTrust Bank of Alabama, Birmingham LOC) 1,660,000 ----------------------------------------------------------------- 2,335,000 Fulton County, GA Housing Authority, Multifamily Housing Revenue Bonds (Series 1993) Weekly VRDNs (Provence North Apartments Project)/(Federal Home Loan Bank of Atlanta LOC) 2,335,000 ----------------------------------------------------------------- 2,200,000 Fulton County, GA IDA Weekly VRDNs (Automatic Data Processing, Inc.) 2,200,000 ----------------------------------------------------------------- 3,300,000 Fulton County, GA IDA Weekly VRDNs (C.K.S. Packaging, Inc.)/ (SouthTrust Bank of Georgia, Atlanta LOC) 3,300,000 ----------------------------------------------------------------- 1,000,000 Fulton County, GA School District, 7.625% Bonds (United States Treasury PRF), 5/1/1997 (@103) 1,030,000 ----------------------------------------------------------------- 300,000 Gainesville, GA Redevelopment Authority, IDRB (Series 1986) Weekly VRDNs (Hotel of Gainesville Associates Project)/ (Regions Bank, Alabama LOC) 300,000 ----------------------------------------------------------------- 1,750,000 Georgia Environmental Facilities Authority, (Series 1992), 6.10% Bonds (Georgia State), 7/1/1997 1,757,178 -----------------------------------------------------------------
GEORGIA MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE - ---------- ----------------------------------------------------------------- ------------ (A)SHORT-TERM MUNICIPALS--CONTINUED - ----------------------------------------------------------------------------------- GEORGIA--CONTINUED ----------------------------------------------------------------- $2,000,000 Georgia Municipal Electric Authority, (Series P), 8.125% Bonds (United States Treasury PRF), 1/1/1998 (@102) $ 2,096,634 ----------------------------------------------------------------- 2,000,000 Georgia Ports Authority, (Series 1996A) Weekly VRDNs (Colonel's Island Terminal)/(SunTrust Bank, Atlanta LOC) 2,000,000 ----------------------------------------------------------------- 6,345,000 (b) Georgia State HFA, (Series 1990C), 3.70% TOBs (First National Bank of Chicago LIQ), Optional Tender 6/1/1997 6,345,000 ----------------------------------------------------------------- 5,190,000 Georgia State Municipal Gas Authority, Gas Revenue Bonds (Series D), 3.65% CP (Wachovia Bank of NC, NA, Winston-Salem LOC), Mandatory Tender 7/24/1997 5,190,000 ----------------------------------------------------------------- 5,800,000 Gwinnett County, GA IDA Daily VRDNs (Volvo AB)/(Union Bank of Switzerland, Zurich LOC) 5,800,000 ----------------------------------------------------------------- 3,300,000 Gwinnett County, GA IDA, (Series 1996) Weekly VRDNs (Sidel, Inc. Project)/(NationsBank, South LOC) 3,300,000 ----------------------------------------------------------------- 6,750,000 Jackson County, GA IDA, (Series 1996) Weekly VRDNs (Buhler Quality Yarns Corporation Project)/(Union Bank of Switzerland, Zurich LOC) 6,750,000 ----------------------------------------------------------------- 3,180,000 La Grange, GA, Multi-Family Housing Authority, Revenue Bonds, 4.25% TOBs (Lee's Crossing Project Phase II), Optional Tender 5/1/1997 3,180,000 ----------------------------------------------------------------- 3,000,000 La Grange, GA, Multi-Family Housing Authority, Revenue Bonds, 4.25% TOBs (Lee's Crossing Project Phase I), Optional Tender 5/1/1997 3,000,000 ----------------------------------------------------------------- 4,000,000 Lowndes County Schools, GA, 3.88% TANs, 12/31/1997 4,002,074 ----------------------------------------------------------------- 940,000 Macon-Bibb County, GA Industrial Authority, IDRB (Series 1990) Weekly VRDNs (Diamond Plastics Corporation Project)/ (Nationsbank, N.A., Charlotte LOC) 940,000 ----------------------------------------------------------------- 1,280,000 Macon-Bibb County, GA Urban Development Authority, Refunding Revenue Bonds (Series 1995) Weekly VRDNs (Macon Hotel Investors Project)/(NBD Bank, Michigan LOC) 1,280,000 -----------------------------------------------------------------
GEORGIA MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE - ---------- ----------------------------------------------------------------- ------------ (A)SHORT-TERM MUNICIPALS--CONTINUED - ----------------------------------------------------------------------------------- GEORGIA--CONTINUED ----------------------------------------------------------------- $4,470,000 (b) Marietta, GA Housing Authority, Multifamily Housing Revenue Bonds (Series 1995) Weekly VRDNs (Chalet Apartments Project)/ (General Electric Capital Corp. LOC) $ 4,470,000 ----------------------------------------------------------------- 3,000,000 Municipal Electric Authority of Georgia, (Series 1985A), 3.70% CP (Bayerische Landesbank Girozentrale, Credit Suisse, Zurich and Morgan Guaranty Trust Co., New York LOCs), Mandatory Tender 7/25/1997 3,000,000 ----------------------------------------------------------------- 1,000,000 Rockdale County, GA Development Authority, (Series 1995) Weekly VRDNs (Great Southern Wood Preserving Co.)/ (SunTrust Bank, Central Florida LOC) 1,000,000 ----------------------------------------------------------------- 1,000,000 Rockdale County, GA Hospital Authority, Revenue Anticipation Certificates (Series 1994) Weekly VRDNs (Rockdale Hospital)/ (SunTrust Bank, Atlanta LOC) 1,000,000 ----------------------------------------------------------------- 3,490,000 Rome, GA, 4.25% TANs, 12/31/1997 3,497,240 ----------------------------------------------------------------- 1,200,000 Roswell, GA Housing Authority, Multifamily Housing Refunding Revenue Bonds (Series 1988A) Weekly VRDNs (Belcourt Ltd. Project)/(Northern Trust Co., Chicago, IL LOC) 1,200,000 ----------------------------------------------------------------- 3,850,000 Savannah, GA EDA, (Series 1995A) Weekly VRDNs (Home Depot, Inc.) 3,850,000 ----------------------------------------------------------------- 4,000,000 Screven County, GA IDA, (Series 1995) Weekly VRDNs (Sylvania Yarn Systems, Inc. Project)/(SunTrust Bank, Atlanta LOC) 4,000,000 ----------------------------------------------------------------- 1,000,000 Wayne County, GA, IDA, Revenue Bonds, (Series 1995) Weekly VRDNs (Harsco Corp.)/(NationsBank, N.A., Charlotte LOC) 1,000,000 ----------------------------------------------------------------- 4,000,000 Whitfield County, GA Development Authority Weekly VRDNs (Franklin Industries Inc., Project)/(NationsBank, N.A., Charlotte LOC) 4,000,000 ----------------------------------------------------------------- 2,115,000 Whitfield County, GA Development Authority, (Series 1996) Weekly VRDNs (AMC International, Inc. Project)/ (SouthTrust Bank of Alabama, Birmingham LOC) 2,115,000 -----------------------------------------------------------------
GEORGIA MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE - ---------- ----------------------------------------------------------------- ------------ (A)SHORT-TERM MUNICIPALS--CONTINUED - ----------------------------------------------------------------------------------- GEORGIA--CONTINUED ----------------------------------------------------------------- $1,485,000 Winder-Barrow Industrial Building Authority, (Series 1996) Weekly VRDNs (Windor Builders Supply, Inc. Project)/(National Bank of Canada, Montreal LOC) $ 1,485,000 ----------------------------------------------------------------- ------------ TOTAL INVESTMENTS (AT AMORTIZED COST)(C) $154,313,981 ----------------------------------------------------------------- ------------
Securities that are subject to Alternative Minimum Tax represent 64.4% of the portfolio as calculated based upon total portfolio market value. (a) The fund may only invest in securities rated in one of the two highest short-term rating categories by one or more 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 Ratings Group, MIG-1, or MIG-2 by Moody's Investors Service, Inc., or F-1+, F-1, ands F-2 by Fitch Investors Service, Inc. are all considered rated in one of the two highest short-term rating categories. Securities rated in the highest short-term rating category (and unrated securities of comparable quality) are identified as First Tier securities. Securities rated in the second highest short-term rating category (and unrated securities of comparable quality) are identified as Second Tier securities. The fund follows applicable regulations in determining whether a security is rated and whether a security rated by multiple NRSROs in different rating categories should be identified as a First or Second Tier security. At April 30 1997, the portfolio securities were rated as follows: Tier Rating Percent Based on Total Market Value (unaudited)
FIRST TIER SECOND TIER ------------- -------------- 93.52% 6.48%
(b) Denotes a restricted security which is subject to restrictions on resale under Federal Securities laws. At April 30, 1997, these securities amounted to $10,815,000 which represents 7.0% of net assets. (c) Also represents cost for federal tax purposes. Note: The categories of investments are shown as a percentage of net assets ($155,123,623) at April 30, 1997. GEORGIA MUNICIPAL CASH TRUST - -------------------------------------------------------------------------------- The following acronyms are used throughout this portfolio: AMBAC -- American Municipal Bond Assurance Corporation BANs -- Bond Anticipation Notes CP -- Commercial Paper EDA -- Economic Development Authority GTD -- Guaranty HFA -- Housing Finance Authority IDA -- Industrial Development Authority IDRB -- Industrial Development Revenue Bond INS -- Insured LIQ -- Liquidity Agreement LOC(s) -- Letter of Credit(s) MBIA -- Municipal Bond Investors Assurance PRF -- Prerefunded TANs -- Tax Anticipation Notes TOBs -- Tender Option Bonds VRDNs -- Variable Rate Demand Notes
(See Notes which are an integral part of the Financial Statements) GEORGIA MUNICIPAL CASH TRUST STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1997 (UNAUDITED) - -------------------------------------------------------------------------------- ASSETS: - ------------------------------------------------------------------------------- Total investments in securities, at amortized cost and value $154,313,981 - ------------------------------------------------------------------------------- Cash 336,846 - ------------------------------------------------------------------------------- Income receivable 1,097,727 - ------------------------------------------------------------------------------- Deferred expenses 17,100 - ------------------------------------------------------------------------------- ------------ Total assets 155,765,654 - ------------------------------------------------------------------------------- LIABILITIES: - ------------------------------------------------------------------------------- Payable for shares redeemed $134,000 - -------------------------------------------------------------------- Income distribution payable 464,836 - -------------------------------------------------------------------- Accrued expenses 43,195 - -------------------------------------------------------------------- -------- Total liabilities 642,031 - ------------------------------------------------------------------------------- ------------ NET ASSETS for 155,123,623 shares outstanding $155,123,623 - ------------------------------------------------------------------------------- ------------ NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE: - ------------------------------------------------------------------------------- $155,123,623 / 155,123,623 shares outstanding $ 1.00 - ------------------------------------------------------------------------------- ------------
(See Notes which are an integral part of the Financial Statements) GEORGIA MUNICIPAL CASH TRUST STATEMENT OF OPERATIONS SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED) - -------------------------------------------------------------------------------- INVESTMENT INCOME: - ----------------------------------------------------------------------------------- Interest $2,765,003 - ----------------------------------------------------------------------------------- EXPENSES: - ----------------------------------------------------------------------------------- Investment advisory fee $ 374,476 - ---------------------------------------------------------------------- Administrative personnel and services fee 62,076 - ---------------------------------------------------------------------- Custodian fees 5,282 - ---------------------------------------------------------------------- Transfer and dividend disbursing agent fees and expenses 13,792 - ---------------------------------------------------------------------- Directors'/Trustees' fees 745 - ---------------------------------------------------------------------- Auditing fees 4,819 - ---------------------------------------------------------------------- Legal fees 1,413 - ---------------------------------------------------------------------- Portfolio accounting fees 21,757 - ---------------------------------------------------------------------- Shareholder services fee 187,238 - ---------------------------------------------------------------------- Share registration costs 12,401 - ---------------------------------------------------------------------- Printing and postage 4,964 - ---------------------------------------------------------------------- Insurance premiums 1,761 - ---------------------------------------------------------------------- Miscellaneous 3,906 - ---------------------------------------------------------------------- --------- Total expenses 694,630 - ---------------------------------------------------------------------- Waivers-- - ---------------------------------------------------------------------- Waiver of investment advisory fee $(282,700) - ---------------------------------------------------------- Waiver of shareholder services fee (44,937) - ---------------------------------------------------------- --------- Total waivers (327,637) - ---------------------------------------------------------------------- --------- Net expenses 366,993 - ----------------------------------------------------------------------------------- ---------- Net investment income $2,398,010 - ----------------------------------------------------------------------------------- ----------
(See Notes which are an integral part of the Financial Statements) GEORGIA MUNICIPAL CASH TRUST STATEMENT OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
SIX MONTHS ENDED (UNAUDITED) YEAR ENDED APRIL 30, 1997 OCTOBER 31, 1996 ---------------- ----------------- INCREASE (DECREASE) IN NET ASSETS: - ----------------------------------------------------- OPERATIONS-- - ----------------------------------------------------- Net investment income $ 2,398,010 $ 3,883,056 - ----------------------------------------------------- ---------------- ----------------- DISTRIBUTIONS TO SHAREHOLDERS-- - ----------------------------------------------------- Distributions from net investment income (2,398,010) (3,883,056) - ----------------------------------------------------- ---------------- ----------------- SHARE TRANSACTIONS-- - ----------------------------------------------------- Proceeds from sale of shares 303,433,267 594,865,591 - ----------------------------------------------------- Net asset value of shares issued to shareholders in payment of distributions declared 1,131,552 2,027,740 - ----------------------------------------------------- Cost of shares redeemed (272,381,229) (585,230,921) - ----------------------------------------------------- ---------------- ----------------- Change in net assets resulting from share transactions 32,183,590 11,662,410 - ----------------------------------------------------- ---------------- ----------------- Change in net assets 32,183,590 11,662,410 - ----------------------------------------------------- NET ASSETS: - ----------------------------------------------------- Beginning of period 122,940,033 111,277,623 - ----------------------------------------------------- ---------------- ----------------- End of period $ 155,123,623 $ 122,940,033 - ----------------------------------------------------- ---------------- -----------------
(See Notes which are an integral part of the Financial Statements) GEORGIA MUNICIPAL CASH TRUST FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED (UNAUDITED) YEAR ENDED APRIL 30, OCTOBER 31, ----------- ------------------ 1997 1996 1995(A) ----------- ------ -------- NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 - ----------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS - ----------------------------------------------------------- Net investment income 0.02 0.03 0.01 - ----------------------------------------------------------- LESS DISTRIBUTIONS - ----------------------------------------------------------- Distributions from net investment income (0.02) (0.03) (0.01) - ----------------------------------------------------------- -------- ------ ------- NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 - ----------------------------------------------------------- -------- ------ ------- TOTAL RETURN(B) 1.60% 3.37% 0.73% - ----------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS - ----------------------------------------------------------- Expenses 0.49%* 0.46% 0.25%* - ----------------------------------------------------------- Net investment income 3.20%* 3.31% 3.81%* - ----------------------------------------------------------- Expense waiver/reimbursement(c) 0.44%* 0.52% 0.75%* - ----------------------------------------------------------- SUPPLEMENTAL DATA - ----------------------------------------------------------- Net assets, end of period (000 omitted) $155,124 $122,940 $111,278 - -----------------------------------------------------------
* Computed on an annualized basis. (a) Reflects operations for the period from August 22, 1995 (date of initial public investment) to October 31, 1995. (b) Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable. (c) This voluntary expense decrease is reflected in both the expense and net investment income ratios shown above. (See Notes which are an integral part of the Financial Statements) GEORGIA MUNICIPAL CASH TRUST NOTES TO FINANCIAL STATEMENTS APRIL 30, 1997 (UNAUDITED) - -------------------------------------------------------------------------------- 1. ORGANIZATION Federated Municipal Trust (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act") as an open-end, management investment company. The Trust consists of sixteen portfolios. The financial statements included herein are only those of Georgia 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 investment objective of the Fund is current income exempt from federal regular income tax and the income tax imposed by the State of Georgia consistent with stability of principal and liquidity. 2. SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with generally accepted accounting principles. INVESTMENT VALUATIONS--The Fund's use of the amortized cost method to value its portfolio securities is in accordance with Rule 2a-7 under the Act. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses are accrued daily. Bond premium and discount, if applicable, are amortized as required by the Internal Revenue Code, as amended (the "Code"). Distributions to shareholders are recorded on the ex-dividend date. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the Code applicable to regulated investment companies and to distribute to shareholders each year substantially all of its income. Accordingly, no provisions for federal tax are necessary. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in when-issued or delayed delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked to market daily and begin earning interest on the settlement date. DEFERRED EXPENSES--The costs incurred by the Fund with respect to registration of its shares in its first fiscal year, excluding the initial expense of registering its shares, have been deferred and are being amortized over a period not to exceed five years from the Fund's commencement date. RESTRICTED SECURITIES--Restricted securities are securities that may only be resold upon registration under federal securities laws or in transactions exempt from such registration. Many restricted securities may be resold in the secondary market in transactions exempt from registration. In some GEORGIA MUNICIPAL CASH TRUST - -------------------------------------------------------------------------------- cases, the restricted securities may be resold without registration upon exercise of a demand feature. Such restricted securities may be determined to be liquid under criteria established by the Board of Trustees (the "Trustees"). The Fund will not incur any registration costs upon such resales. Restricted securities are valued at amortized cost in accordance with Rule 2a-7 under the Act. Additional information on each restricted security held at April 30, 1997 is as follows:
SECURITY ACQUISITION DATE ACQUISITION COST ------------------------------------------------- ------------------ ------------------ Georgia State Housing Finance Authority, (Series 1990C) 12/01/96 $6,345,000 Marietta, GA Housing Authority, Multifamily Housing Revenue Bonds (Series 1995) 12/02/96-01/02/97 4,470,000
USE OF ESTIMATES--The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ from those estimated. OTHER--Investment transactions are accounted for on the trade date. 3. SHARES OF BENEFICIAL INTEREST The Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest (without par value). At April 30, 1997, capital paid-in aggregated $155,123,623. Transactions in shares were as follows:
SIX MONTHS ENDED YEAR ENDED APRIL 30, 1997 OCTOBER 31, 1996 ----------------- ----------------- Shares sold 303,433,267 594,865,591 - ----------------------------------------------------- Shares issued to shareholders in payment of distributions declared 1,131,552 2,027,740 - ----------------------------------------------------- Shares redeemed (272,381,229) (585,230,921) - ----------------------------------------------------- --------------- --------------- Net change resulting from Share transactions 32,183,590 11,662,410 - ----------------------------------------------------- --------------- ---------------
4. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES INVESTMENT ADVISORY FEE--Federated Management, the Fund's investment adviser (the "Adviser"), receives for its services an annual investment advisory fee equal to 0.50% of the Fund's average daily net assets. The Adviser may voluntarily choose to waive any portion of its fee. The Adviser can modify or terminate this voluntary waiver at any time at its sole discretion. GEORGIA MUNICIPAL CASH TRUST - -------------------------------------------------------------------------------- ADMINISTRATIVE FEE--Federated Services Company ("FServ"), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. The fee paid to FServ is based on the level of average aggregate daily net assets of all funds advised by subsidiaries of Federated Investors for the period. The administrative fee received during the period of the Administrative Services Agreement shall be at least $125,000 per portfolio and $30,000 per each additional class of shares. SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to 0.25% of average daily net assets of the Fund for the period. The fee paid to FSS is used to finance certain services for shareholders and to maintain shareholder accounts. FSS may voluntarily choose to waive any portion of its fee. FSS can modify or terminate this voluntary waiver at any time at its sole discretion. TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--FServ, through its subsidiary, Federated Shareholder Services Company ("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. ORGANIZATIONAL EXPENSES--Organizational expenses of $13,648 were borne initially by the Adviser. The Fund has agreed to reimburse the Adviser for the organizational expenses during the five year period following effective date. For the period ended April 30, 1997, the Fund paid $1,235 pursuant to this agreement. INTERFUND TRANSACTIONS--During the period ended April 30, 1997, 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 $182,940,000 and $154,620,000, respectively. GENERAL--Certain of the Officers and Trustees of the Trust are Officers and Directors or Trustees of the above companies. GEORGIA MUNICIPAL CASH TRUST - -------------------------------------------------------------------------------- 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 April 30, 1997, 76.1% of the securities in the portfolio of investments are backed by letters of credit or bond insurance of various financial institutions and financial guaranty assurance agencies. The percentage of investments insured by or supported (backed) by a letter of credit from any one institution or agency did not exceed 8.1% of total investments. TRUSTEES OFFICERS - --------------------------------------------------------------------------------------------- John F. Donahue John F. Donahue Thomas G. Bigley Chairman John T. Conroy, Jr. Glen R. Johnson William J. Copeland President James E. Dowd J. Christopher Donahue Lawrence D. Ellis, M.D. Executive Vice President Edward L. Flaherty, Jr. Edward C. Gonzales Glen R. Johnson Executive Vice President Peter E. Madden John W. McGonigle Gregor F. Meyer Executive Vice President, John E. Murray, Jr. Treasurer, and Secretary Wesley W. Posvar Richard B. Fisher Marjorie P. Smuts Vice President S. Elliott Cohan Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any bank, and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other government agency. Investment in mutual funds involves investment risk, including possible loss of principal. Although money market funds seek to maintain a stable net asset value of $1.00 per share, there is no assurance that they will be able to do so. This report is authorized for distribution to prospective investors only when preceded or accompanied by the fund's prospectus which contains facts concerning its objective and policies, management fees, expenses and other information. - -------------------------------------------------------------------------------- TENNESSEE - -------------------------------------------------------------------------------- MUNICIPAL - -------------------------------------------------------------------------------- CASH - -------------------------------------------------------------------------------- TRUST - -------------------------------------------------------------------------------- SEMI-ANNUAL REPORT TO SHAREHOLDERS APRIL 30, 1997 Federated Investors Logo Cusip 314229634 Cusip 314229632 G01865-02 (6/97) Recyled Paper Logo PRESIDENT'S MESSAGE - -------------------------------------------------------------------------------- Dear Shareholder: I am pleased to present the Semi-Annual Report to Shareholders of Tennessee Municipal Cash Trust, a portfolio of Federated Municipal Trust, which covers the six-month period from November 1, 1996 through April 30, 1997. The report begins with a discussion with the fund's portfolio manager, followed by a complete listing of the fund's holdings and its financial statements. Financial highlights tables are provided for the fund's Institutional Shares and Institutional Service Shares. The fund is a convenient way to keep your ready cash pursuing double tax-free income--free from federal regular income tax* and Tennessee state income tax--through a portfolio concentrated in high-quality, short-term Tennessee municipal securities. At the end of the reporting period, the fund's holdings were diversified among issuers that use municipal bond financing for projects as varied as health care, housing, community development, and transportation. This double tax-free advantage means you have the opportunity to earn a greater after-tax yield than you could in a comparable high-quality taxable investment. Of course, the fund also brings you the added benefits of daily liquidity and stability of principal.** During the reporting period, the fund paid double tax-free dividends totaling $0.02 per share for both Institutional Shares and Institutional Service Shares. The fund's net assets stood at more than $30 million at the end of the reporting period. Thank you for relying on Tennessee Municipal Cash Trust to help your ready cash pursue tax-free income every day. As always, we'll continue to provide you with the highest level of professional service. We invite your questions or comments. Sincerely, LOGO Glen R. Johnson President June 15, 1997 * Income may be subject to the federal alternative minimum tax. ** Although money market funds seek to maintain a stable net asset value of $1.00 per share, there is no assurance that they will be able to do so. An investment in the fund is neither insured nor guaranteed by the U.S. government. INVESTMENT REVIEW - -------------------------------------------------------------------------------- An interview with the fund's portfolio manager, Jeff A. Kozemchak, CFA, Vice President, Federated Management Q Can you comment on the economy and the interest rate environment during the six month reporting period? A Although it did not occur until near the end of the fund's semi-annual reporting period, the Federal Reserve Board (the "Fed") brought about the first change in monetary policy in over a year. On March 25, 1997 the Fed, in the face of stronger than expected demand, voted to raise the federal funds target rate from 5.25% to 5.50%. The move was viewed as being pre-emptive against the threat of future inflationary pressures possibly brought about by tight labor market conditions. Until that point, movements in interest rates reflected shifting market sentiment about the need for the Fed to move to a more restrictive policy. As the reporting period began in November 1996, the economy had been showing signs of slowing, thereby allaying the market's fears about inflation. Then, in December, the market's uneasiness was once more ignited as a string of economic statistics showed stronger growth and Fed Chairman Alan Greenspan made cautionary statements regarding inflation and "irrational exuberance" in the equity market. With inflation still appearing to be benign, the market tolerated a steady pace of growth into early 1997. However, Chairman Greenspan's Humphrey-Hawkins testimony before Congress in late February marked a turning point for the short-term money markets--indeed the bond and equity markets as well--as his relatively hawkish statements revealed fears at the Fed that the transitory factors that had been keeping inflation under control in the face of fairly robust growth may be coming to an end. This statement by the Fed caused a sharp reversal in interest rate movement and the market's perception about future Fed policy. The ensuing weeks brought continued evidence of persistent strength, and culminated in the Fed's action at the Federal Open Market Committee in late March. For the first three months of the reporting period, short-term interest rates traded in a relatively narrow range as the continued friendly inflation picture provided some comfort to market participants. The yield on the six-month Treasury bill, for example, moved in a range between 5.20% and 5.35% from the beginning of November through early February. However, short-term interest rates began to rise in late February, and by the time of the Fed tightening in late March, had built in much of the expectations regarding the Fed decision. In April, the financial markets continued to focus on the likelihood of an additional tightening move later in May, causing short-term yields to rise even further. Yields on the six-month Treasury bill rose sharply over this interim period, moving from a low of 5.20% in mid-February to a high of 5.68% in late April before falling back to 5.53% by the end of reporting period. Q What were your strategies for the fund during the reporting period? A The fund's average maturity at the beginning of the period was approximately 60 days, reflecting a neutral outlook on the direction of interest rates. As signs of strength in the economy became more apparent, and as expectation of an imminent Fed tightening grew in the first quarter of 1997 we emphasized the purchase of shorter term fixed-rate paper while maintaining approximately 60%-70% of - -------------------------------------------------------------------------------- the portfolio in seven-day variable rate demand notes ("VRDNs"). Seven-day VRDNs provide more portfolio responsiveness to interest rate increases. We are now targeting an average maturity range between 50 and 60 days. Once an average maturity range is targeted, the portfolio attempts to maximize performance through ongoing relative value analysis. Relative value analysis includes the comparison of the richness or cheapness of municipal securities to one another as well as municipals to taxable instruments, such as treasury securities. The fund's portfolio remained barbelled in structure, which combined a significant portion in seven-day VRDNs and short maturity commercial paper with purchases of longer-term, one year Tennessee fixed rate bonds. This portfolio structure takes advantage of the steepness of the yield curve and continues to purse a competitive yield over time. Q How has the fund's yield responded to this rate environment? A The fund's yield was affected by Fed policy (interest rate increases), changes in market expectations, as well as supply and demand imbalances unique to the municipal money markets. However, because of these imbalances the fund's yield may experience more volatility on a weekly basis than Treasury yields and taxable money fund yields. In general, yields on municipal money market funds rose over the reporting period. For the fund, the seven-day net yield of Institutional Shares on April 30, 1997 was 3.79%, compared to 3.30% at the beginning of the reporting period*. For the Institutional Service Shares, the seven-day net yield was 3.54% at the end of the reporting period compared to 3.05% six months ago*. Q Looking through 1997, what is your outlook for short-term rates? A Although the Fed decided to hold short-term interest rates steady in the March meeting, our expectations are that the Fed will find cause to tighten monetary policy further in 1997--perhaps as soon as in July. It is also anticipated that the overall tightening cycle will not be long in terms of magnitude or duration. The pre-emptive move by the Fed should help to preclude the need for more aggressive action down the road by preventing the build-up of inflationary pressures. We would look to see moderately higher short-term interest rates throughout the course of the year, but not to the extent evidenced in the last tightening cycle in 1994. As such, we will likely continue in our modestly defensive stance for the portfolio until market conditions indicate otherwise. * Performance quoted represents past performance and is not indicative of future results. Yield will vary. The seven-day net yield is calculated daily, based on the income dividends for the seven days ending on the date of calculation and then compounded and annualized. TENNESSEE MUNICIPAL CASH TRUST PORTFOLIO OF INVESTMENTS APRIL 30, 1997 (UNAUDITED) - --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE - ---------- ------------------------------------------------------------------ ----------- (A) SHORT-TERM MUNICIPALS--98.8% - ------------------------------------------------------------------------------------ TENNESSEE--92.2% ------------------------------------------------------------------ $1,000,000 Benton County TN IDB, (Series 1996) Weekly VRDNs (Jones Plastic and Engineering Corp.)/(National City Bank, Kentucky LOC) $ 1,000,000 ------------------------------------------------------------------ 1,000,000 Chattanooga, TN IDB, Revenue Bonds (Series 1997) Weekly VRDNs (TB Wood's Inc. Project)/(PNC Bank, N.A. LOC) 1,000,000 ------------------------------------------------------------------ 1,500,000 Chattanooga-Hamilton County, TN Hospital Authority Daily VRDNs (Erlanger Medical Center)/(Morgan Guaranty Trust Co., New York LIQ) 1,500,000 ------------------------------------------------------------------ 1,000,000 Chattanooga-Hamilton County, TN Hospital Authority, Hospital Revenue and Refunding Bonds (Series 1993), 4.40% Bonds (Erlanger Medical Center)/(FSA INS), 10/1/1997 1,003,256 ------------------------------------------------------------------ 800,000 Collierville, TN IDB, Industrial Development Revenue Bonds (Series 1994) Weekly VRDNs (Ardco, Inc.)/(Harris Trust & Savings Bank, Chicago LOC) 800,000 ------------------------------------------------------------------ 250,000 Greenfield, TN IDB, (Series 1995) Weekly VRDNs (Plastic Products Company Project)/(Norwest Bank Minnesota, Minneapolis LOC) 250,000 ------------------------------------------------------------------ 1,200,000 Hawkins County, TN IDB, (Series 1995) Weekly VRDNs (Sekisui Ta Industries, Inc. Project)/(Bank of Tokyo-Mitsubishi Ltd. LOC) 1,200,000 ------------------------------------------------------------------ 900,000 Hendersonville, TN IDB, (Series 1996) Weekly VRDNs (Betty Machine Co. Project)/(First Union National Bank, Charlotte, N.C. LOC) 900,000 ------------------------------------------------------------------ 880,000 Jackson, TN, Electric System Revenue Refunding and Improvement Bonds (Series 1997), 3.70% Bonds (MBIA Corporation INS), 2/1/1998 880,000 ------------------------------------------------------------------ 400,000 Knox County, TN IDB, (Series 1996) Weekly VRDNs (Health Ventures, Inc. Project)/(SunTrust Bank, Nashville LOC) 400,000 ------------------------------------------------------------------ 1,000,000 McMinn County, TN IDB, Industrial Development Bonds (Series 1995) Weekly VRDNs (Creative Fabrication Corp.)/(NBD Bank, Michigan LOC) 1,000,000 ------------------------------------------------------------------ 770,000 Memphis, TN, (Series 1996), 5.00% Bonds, 7/1/1997 771,373 ------------------------------------------------------------------ 1,000,000 Metropolitan Government Nashville & Davidson County, TN HEFA, Hospital Revenue Bonds, (Series 1992), 3.55% CP (Baptist Hospital, Inc. (TN))/(NationsBank, South LIQ), Mandatory Tender 5/1/1997 1,000,000 ------------------------------------------------------------------
TENNESSEE MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE - ---------- ------------------------------------------------------------------ ----------- (A) SHORT-TERM MUNICIPALS--CONTINUED - ------------------------------------------------------------------------------------ TENNESSEE--CONTINUED ------------------------------------------------------------------ $1,000,000 Metropolitan Government Nashville & Davidson County, TN HEFA, Revenue Bonds (Series 1985A), 3.65% TOBs (Vanderbilt University) 1/15/1998 $ 1,000,000 ------------------------------------------------------------------ 1,500,000 Metropolitan Government Nashville & Davidson County, TN IDB, (Series 1994) Weekly VRDNs (Shoney's Inn)/(First Union National Bank,Charlotte, N.C. LOC) 1,500,000 ------------------------------------------------------------------ 300,000 Paris, TN, IDB Weekly VRDNs (Plumley--Marugo Limited)/ (PNC Bank, Kentucky LOC) 300,000 ------------------------------------------------------------------ 700,000 Roane, TN IDB, (Series 1982) Monthly VRDNs (Fortafil Fibers, Inc. Project)/(ABN AMRO Bank N.V., Amsterdam LOC) 700,000 ------------------------------------------------------------------ 1,000,000 Shelby County, TN Health Education & Housing Facilities Board, 4.05% TOBs (Methodist Health System, Inc.)/(MBIA Corporation 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) 1,140,938 ------------------------------------------------------------------ 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 ------------------------------------------------------------------ 1,575,000 Shelby County, TN, 6.50% Bonds (United States Treasury PRF), 8/1/1997 (@101.75) 1,613,977 ------------------------------------------------------------------ 1,000,000 South Pittsburg, TN IDB, (Series 1996) Weekly VRDNs (Lodge Manufacturing Co. Project)/(SunTrust Bank, Nashville LOC) 1,000,000 ------------------------------------------------------------------ 1,000,000 Tennessee Housing Development Agency, (Series 1996-5), 4.00% TOBs, Mandatory Tender 8/21/1997 1,000,000 ------------------------------------------------------------------ 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 2,385,000 ------------------------------------------------------------------ 1,000,000 Tennessee State, (Series A), 5.50% Bonds, 3/1/1998 1,014,575 ------------------------------------------------------------------
TENNESSEE MUNICIPAL CASH TRUST - --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE - ---------- ------------------------------------------------------------------ ----------- (A) SHORT-TERM MUNICIPALS--CONTINUED - ------------------------------------------------------------------------------------ TENNESSEE--CONTINUED ------------------------------------------------------------------ $ 300,000 Union County, TN IDB, (Series 1995) Weekly VRDNs (Cooper Container Corporation Project)/(SunTrust Bank, Nashville LOC) $ 300,000 ------------------------------------------------------------------ 735,000 Williamson County,TN, General Obligation Capital Outlay Notes (Series 1996), 4.60% Bonds, 10/1/1997 737,541 ------------------------------------------------------------------ ----------- Total 27,896,660 ------------------------------------------------------------------ ----------- PUERTO RICO--3.3% ------------------------------------------------------------------ 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 6/11/1997 1,000,000 ------------------------------------------------------------------ ----------- GUAM--3.3% ------------------------------------------------------------------ 1,000,000 Guam Water System Revenue Bonds, (Series 1989), 6.70% Bonds (Capital Guaranty Corp. INS), 7/1/1997 1,004,596 ------------------------------------------------------------------ ----------- TOTAL INVESTMENTS (AT AMORTIZED COST)(B) $29,901,256 ------------------------------------------------------------------ -----------
Securities that are subject to Alternative Minimum Tax represent 44.0% 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 one or more 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 Rating Group, MIG-1, or MIG-2 by Moody's Investors Service, Inc., or F-1+, F-1, and F-2 by Fitch Investors Service, Inc. are all considered rated in one of the two highest short-term rating categories. Securities rated in the highest short-term rating category (and unrated securities of comparable quality) are identified as First Tier securities. Securities rated in the second highest short-term rating category (and unrated securities of comparable quality) are identified as Second Tier securities. The fund follows applicable regulations in determining whether a security is rated and whether a security rated by multiple NRSROs in different rating categories should be identified as a First or Second Tier security. At January 31, 1997, the portfolio securities were rated as follows: Tier Rating Percent Based on Total Market Value (unaudited)
FIRST TIER SECOND TIER ------------- -------------- 100% 0%
(b) Also represents cost for federal tax purposes. Note: The categories of investments are shown as a percentage of net assets ($30,252,350) at April 30, 1997. TENNESSEE MUNICIPAL CASH TRUST - -------------------------------------------------------------------------------- The following acronyms are used throughout this portfolio: CP -- Commercial Paper FSA -- Financial Security Assurance HEFA -- Health and Education Facilities Authority IDB -- Industrial Development 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 APRIL 30, 1997 (UNAUDITED) - -------------------------------------------------------------------------------- ASSETS: - -------------------------------------------------------------------------------- Total investments in securities, at amortized cost and value $29,901,256 - -------------------------------------------------------------------------------- Cash 130,212 - -------------------------------------------------------------------------------- Income receivable 330,980 - -------------------------------------------------------------------------------- ----------- Total assets 30,362,448 - -------------------------------------------------------------------------------- LIABILITIES: - -------------------------------------------------------------------------------- Income distribution payable 110,098 - -------------------------------------------------------------------------------- ----------- NET ASSETS for 30,252,350 shares outstanding $30,252,350 - -------------------------------------------------------------------------------- ----------- NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE: - -------------------------------------------------------------------------------- INSTITUTIONAL SHARES: - -------------------------------------------------------------------------------- $15,310,667 / 15,310,667 shares outstanding $1.00 - -------------------------------------------------------------------------------- ----------- INSTITUTIONAL SERVICE SHARES: - -------------------------------------------------------------------------------- $14,941,683 / 14,941,683 shares outstanding $1.00 - -------------------------------------------------------------------------------- -----------
(See Notes which are an integral part of the Financial Statements) TENNESSEE MUNICIPAL CASH TRUST STATEMENT OF OPERATIONS SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED) - -------------------------------------------------------------------------------- INVESTMENT INCOME: - ------------------------------------------------------------------------------------- Interest $822,338 - ------------------------------------------------------------------------------------- EXPENSES: - ------------------------------------------------------------------------------------- Investment advisory fee $ 112,520 - ------------------------------------------------------------------------ Administrative personnel and services fee 76,811 - ------------------------------------------------------------------------ Custodian fees 11,509 - ------------------------------------------------------------------------ Transfer and dividend disbursing agent fees and expenses 14,822 - ------------------------------------------------------------------------ Directors'/Trustees' fees 1,488 - ------------------------------------------------------------------------ Auditing fees 8,634 - ------------------------------------------------------------------------ Legal fees 1,756 - ------------------------------------------------------------------------ Portfolio accounting fees 29,812 - ------------------------------------------------------------------------ Shareholder services fee-Institutional Shares 18,493 - ------------------------------------------------------------------------ Shareholder services fee-Institutional Service Shares 37,679 - ------------------------------------------------------------------------ Share registration costs 17,345 - ------------------------------------------------------------------------ Printing and postage 5,289 - ------------------------------------------------------------------------ Insurance premiums 1,254 - ------------------------------------------------------------------------ Miscellaneous 2,366 - ------------------------------------------------------------------------ --------- Total expenses 339,778 - ------------------------------------------------------------------------ Waivers and reimbursements-- - ------------------------------------------------------------------------ Waiver of investment advisory fee $(112,520) - ------------------------------------------------------------ Waiver of shareholder services fee-Institutional Shares (18,493) - ------------------------------------------------------------ Reimbursement of other operating expenses (91,555) - ------------------------------------------------------------ --------- Total waivers and reimbursements (222,568) - ------------------------------------------------------------------------ --------- Net expenses 117,210 - ------------------------------------------------------------------------------------- -------- Net investment income $705,128 - ------------------------------------------------------------------------------------- --------
(See Notes which are an integral part of the Financial Statements) TENNESSEE MUNICIPAL CASH TRUST STATEMENT OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
SIX MONTHS ENDED (UNAUDITED) PERIOD ENDED APRIL 30, 1997 OCTOBER 31, 1996 ---------------- ----------------- INCREASE (DECREASE) IN NET ASSETS: - ------------------------------------------------------ OPERATIONS-- - ------------------------------------------------------ Net investment income $ 705,128 $ 487,901 - ------------------------------------------------------ ---------------- ----------------- DISTRIBUTIONS TO SHAREHOLDERS-- - ------------------------------------------------------ Distributions from net investment income - ------------------------------------------------------ Institutional Shares (244,655) (226,076) - ------------------------------------------------------ Institutional Service Shares (460,473) (261,825) - ------------------------------------------------------ ---------------- ----------------- Change in net assets resulting from distributions to shareholders (705,128) (487,901) - ------------------------------------------------------ ---------------- ----------------- SHARE TRANSACTIONS-- - ------------------------------------------------------ Proceeds from sale of shares 72,184,431 165,734,867 - ------------------------------------------------------ Net asset value of shares issued to shareholders in payment of distributions declared 282,274 209,339 - ------------------------------------------------------ Cost of shares redeemed (89,862,061) (118,296,500) - ------------------------------------------------------ ---------------- ----------------- Change in net assets resulting from share transactions (17,395,356) 47,647,706 - ------------------------------------------------------ ---------------- ----------------- Change in net assets (17,395,356) 47,647,706 - ------------------------------------------------------ NET ASSETS: - ------------------------------------------------------ Beginning of period 47,647,706 -- - ------------------------------------------------------ ---------------- ----------------- End of period $ 30,252,350 $ 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 FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES - -------------------------------------------------------------------------------- (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED PERIOD (UNAUDITED) ENDED APRIL 30, OCTOBER 31, 1997 1996(A) ----------- ----------- NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 - ---------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS - ---------------------------------------------------------------- Net investment income 0.02 0.01 - ---------------------------------------------------------------- LESS DISTRIBUTIONS - ---------------------------------------------------------------- Distributions from net investment income (0.02) (0.01) - ---------------------------------------------------------------- -------- -------- NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 - ---------------------------------------------------------------- -------- -------- TOTAL RETURN(B) 1.67% 1.59% - ---------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS - ---------------------------------------------------------------- Expenses 0.35%* 0.10%* - ---------------------------------------------------------------- Net investment income 3.31%* 3.57%* - ---------------------------------------------------------------- Expense waiver/reimbursement(c) 1.16%* 1.62%* - ---------------------------------------------------------------- SUPPLEMENTAL DATA - ---------------------------------------------------------------- Net assets, end of period (000 omitted) $15,310 $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 FINANCIAL HIGHLIGHTS--INSTITUTIONAL SERVICE SHARES - -------------------------------------------------------------------------------- (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED PERIOD (UNAUDITED) ENDED APRIL 30, OCTOBER 31, 1997 1996(A) ----------- ----------- NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 - ---------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS - ---------------------------------------------------------------- Net investment income 0.02 0.01 - ---------------------------------------------------------------- LESS DISTRIBUTIONS - ---------------------------------------------------------------- Distributions from net investment income (0.02) (0.01) - ---------------------------------------------------------------- -------- -------- NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 - ---------------------------------------------------------------- -------- -------- TOTAL RETURN(B) 1.53% 1.48% - ---------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS - ---------------------------------------------------------------- Expenses 0.60%* 0.39%* - ---------------------------------------------------------------- Net investment income 3.05%* 3.26%* - ---------------------------------------------------------------- Expense waiver/reimbursement(c) 0.91%* 1.33%* - ---------------------------------------------------------------- SUPPLEMENTAL DATA - ---------------------------------------------------------------- Net assets, end of period (000 omitted) $14,942 $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 NOTES TO FINANCIAL STATEMENTS APRIL 30, 1997 (UNAUDITED) - -------------------------------------------------------------------------------- 1. ORGANIZATION Federated Municipal Trust (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act") as an open-end, management investment company. The Trust consists of 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 taxes 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. TENNESSEE MUNICIPAL CASH TRUST - -------------------------------------------------------------------------------- 3. SHARES OF BENEFICIAL INTEREST The Declaration of Trust permits the Board of Trustees (the "Trustees") to issue an unlimited number of full and fractional shares of beneficial interest (without par value) for each class of shares. At April 30, 1997, capital paid-in aggregated $30,252,350. Transactions in shares were as follows:
SIX MONTHS ENDED PERIOD ENDED INSTITUTIONAL SHARES APRIL 30, 1997 OCTOBER 31, 1996(A) - -------------------------------------------------- ------------------ --------------------- Shares sold 35,936,962 34,644,791 - -------------------------------------------------- Shares issued to shareholders in payment of distributions declared 2,077 3,455 - -------------------------------------------------- Shares redeemed (38,452,175) (16,824,443) - -------------------------------------------------- --------------- ---------------- Net change resulting from Institutional Share transactions (2,513,136) 17,823,803 - -------------------------------------------------- --------------- ----------------
SIX MONTHS ENDED PERIOD ENDED INSTITUTIONAL SERVICE SHARES APRIL 30, 1997 OCTOBER 31, 1996(A) - -------------------------------------------------- ------------------ --------------------- Shares sold 36,247,469 131,090,076 - -------------------------------------------------- Shares issued to shareholders in payment of distributions declared 280,197 205,884 - -------------------------------------------------- Shares redeemed (51,409,886) (101,472,057) - -------------------------------------------------- --------------- ----------------- Net change resulting from Institutional Service Share transactions (14,882,220) 29,823,903 - -------------------------------------------------- --------------- ----------------- Net change resulting from Share transactions (17,395,356) 47,647,706 - -------------------------------------------------- --------------- -----------------
(a) 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 TENNESSEE MUNICIPAL CASH TRUST - -------------------------------------------------------------------------------- Administrative Services Agreement shall be at least $125,000 per portfolio and $30,000 per each additional class of shares. SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to 0.25% of average daily net assets of the Fund for the period. The fee paid to FSS is used to finance certain services for shareholders and to maintain shareholder accounts. FSS may voluntarily choose to waive any portion of its fee. FSS can modify or terminate this voluntary waiver at any time at its sole discretion. TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--FServ, through its subsidiary, Federated Shareholder Services Company ("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. ORGANIZATIONAL EXPENSES--Organizational expenses of $24,645 were borne initially by the Adviser. The Fund has agreed to reimburse the Adviser for the organizational expenses during the five year period following effective date. For the period ended April 30, 1997, the Fund paid $2,328 pursuant to this agreement. INTERFUND TRANSACTIONS--During the period ended April 30, 1997, 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 $35,700,000 and $56,535,000, 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 April 30, 1997, 54.3% of the securities in the portfolio of investments are backed by letters of credit or bond insurance of various financial institutions and financial guaranty assurance agencies. The percentage of investments insured by or supported (backed) by a letter of credit from any one institution or agency did not exceed 8.0% of total investments. TRUSTEES OFFICERS - --------------------------------------------------------------------------------------------- John F. Donahue John F. Donahue Thomas G. Bigley Chairman John T. Conroy, Jr. Glen R. Johnson William J. Copeland President James E. Dowd J. Christopher Donahue Lawrence D. Ellis, M.D. Executive Vice President Edward L. Flaherty, Jr. Edward C. Gonzales Glen R. Johnson Executive Vice President Peter E. Madden John W. McGonigle Gregor F. Meyer Executive Vice President, John E. Murray, Jr. Treasurer, and Secretary Wesley W. Posvar Richard B. Fisher Marjorie P. Smuts Vice President S. Elliott Cohan Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any bank, and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other government agency. Investment in mutual funds involves investment risk, including possible loss of principal. Although money market funds seek to maintain a stable net asset value of $1.00 per share, there is no assurance that they will be able to do so. This report is authorized for distribution to prospective investors only when preceded or accompanied by the fund's prospectus which contains facts concerning its objective and policies, management fees, expenses and other information. [THIS PAGE INTENTIONALLY LEFT BLANK] [THIS PAGE INTENTIONALLY LEFT BLANK] -----END PRIVACY-ENHANCED MESSAGE-----