-----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, H7vFSj3DxbESQcy8sFfwGtcBhWKRNY5CCH0U13aR4KNyMdW4ZcMyzeZH7X4T2sS+ VMmvI+YH5nlfSzU87p6thQ== 0000935490-96-000049.txt : 19970924 0000935490-96-000049.hdr.sgml : 19970924 ACCESSION NUMBER: 0000935490-96-000049 CONFORMED SUBMISSION TYPE: PRE 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960731 FILED AS OF DATE: 19960516 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: PRE 14A SEC ACT: SEC FILE NUMBER: 811-05911 FILM NUMBER: 96568650 BUSINESS ADDRESS: STREET 1: FEDERATED INVESTORS TOWER CITY: PITTSBURGH STATE: PA ZIP: 15222 BUSINESS PHONE: 4122887496 PRE 14A 1 FEDERATED MUNICIPAL TRUST SCHEDULE 14A (Rule 14a-101) INFORMATION REQUIRED IN A PROXY STATEMENT SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 Filed by the Registrant X Filed by a party other than the Registrant Check appropriate box: X Preliminary proxy statement Definitive proxy statement Definitive additional materials Solicitation material Federated Municipal Trust (Name of Registrant as Specified in Its Charter) Board of Trustees of Federated Municipal Trust (Name of Person(s) Filing Proxy Statement) Payment of filing fee (Check the appropriate box): X $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) $500 per each party to the controversy pursuant to Exchange Act Rule 14a-6(i)(3). Fee computed on table below per Exchange Act Rules 14a-6(i)(4)and 0-11. (1) Title of each class of securities to which transaction applies: (2) Aggregate number of securities to which transaction applies: (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11:1 (4) Proposed maximum aggregate value of transaction: Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration number, or the form or schedule and the date of its filing: (1) Amount previously paid: (2) Form, schedule or registration no.: (3) Filing party: (4) Date filed: P R E L I M I N A R Y C O P Y CONNECTICUT MUNICIPAL CASH TRUST FLORIDA MUNICIPAL CASH TRUST NEW JERSEY MUNICIPAL CASH TRUST Series of FEDERATED MUNICIPAL TRUST NOTICE OF SPECIAL MEETING OF SHAREHOLDERS To Be Held on July 31, 1996 To Our Shareholders: A special meeting (the "Meeting") of the Shareholders of Connecticut Municipal Cash Trust, Florida Municipal Cash Trust and New Jersey Municipal Cash Trust (each a "Fund" and collectively, the "Funds"), each a series of Federated Municipal Trust (the "Trust"), will be held on July 31, 1996, at 3:00 p.m., Eastern time, at the offices of the Trust, Federated Investors Tower, Pittsburgh, PA 15222-3779, for the following purposes: EACH FUND VOTING SEPARATELY (1) To approve or disapprove an amendment to certain investment limitations which will permit each Fund to invest all of its investable assets in a series of a separate open-end management investment company (the "Portfolio") having substantially the same investment objective, policies and limitations as the Fund; CONNECTICUT AND NEW JERSEY FUNDS VOTING SEPARATELY (2) To approve or disapprove a proposal to change each Fund's fundamental investment limitation on restricted securities and to make the amended limitation a non-fundamental policy; and EACH FUND VOTING SEPARATELY (3) To consider and act upon any matters incidental to the foregoing purposes or any of them, and any other matters which may properly come before the Meeting or any adjourned session thereof. The Board of Trustees has fixed June 5, 1996, as the record date for determination of shareholders entitled to vote at the meeting. By Order of the Trustees John W. McGonigle Secretary June 10, 1996 SIGN, DATE AND RETURN THE ENCLOSED PROXY PROMPTLY TO AVOID ADDITIONAL EXPENSE YOU CAN HELP THE TRUST AVOID THE NECESSITY AND EXPENSE OF SENDING FOLLOW-UP LETTERS TO ENSURE A QUORUM BY PROMPTLY RETURNING THE ENCLOSED PROXY. IF YOU ARE UNABLE TO ATTEND THE MEETING, PLEASE MARK, SIGN, DATE, AND RETURN THE ENCLOSED PROXY SO THAT THE NECESSARY QUORUM MAY BE REPRESENTED AT THE MEETING. THE ENCLOSED ENVELOPE REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. CONNECTICUT MUNICIPAL CASH TRUST FLORIDA MUNICIPAL CASH TRUST NEW JERSEY MUNICIPAL CASH TRUST Series of FEDERATED MUNICIPAL TRUST Federated Investors Tower Pittsburgh, PA 15222-3779 PROXY STATEMENT The enclosed Proxy Statement is solicited on behalf of the Board of Trustees (the "Trustees") of Federated Municipal Trust (the "Trust"). The proxies will be voted at the special meeting of shareholders of Connecticut Municipal Cash Trust, Florida Municipal Cash Trust and New Jersey Municipal Cash Trust (each a "Fund" and collectively, the "Funds"), each a series of the Trust, to be held on July 31, 1996, at 3:00 p.m. (Eastern time) at the offices of the Trust, Federated Investors Tower, Pittsburgh, PA 15222-3779 (such special meeting and any adjournment or postponement thereof are referred to as the "Meeting"). The proxy is revocable at any time before it is voted by sending written notice of the revocation to the Trust or by appearing personally on July 31, 1996, at the Meeting. The cost of preparing and mailing the Notice of Meeting, this proxy statement, proxy card, and any additional proxy material will be borne by the Trust. Proxy solicitations will be made primarily by mail, but may also be made by telephone, telegraph, or personal interview conducted by certain officers or employees of the Trust or of Federated Shareholder Services Company (the Trust's transfer agent) or Federated Administrative Services (the Trust's administrator). In the event that a Shareholder signs and returns the proxy ballot but does not indicate a choice as to any of the items on the proxy ballot, the proxy attorneys will vote those shares in favor of such proposal(s). The purposes of the Meeting are set forth in the accompanying Notice of Special Meeting of Shareholders. The Trustees know of no business other than that mentioned in the Notice that will be presented for consideration at the Meeting. Should other business properly be brought before the Meeting, proxies will be voted in accordance with the best judgment of the persons named as proxies. This Proxy Statement and the enclosed proxy card are expected to be mailed on or about June 10, 1996 to shareholders of record at the close of business on June 5, 1996 (the "Record Date"). Only shareholders of record on the Record Date will be entitled to vote at the Meeting. On the Record Date, the following shares of each Fund were outstanding and entitled to vote at the Meeting: Fund Number of Shares Outstanding Connecticut Municipal Cash Trust - Florida Municipal Cash Trust - New Jersey Municipal Cash Trust - (The shares of each Fund outstanding on the Record Date are referred to individually as a "Share" and collectively as the "Shares"). Each Share is entitled to one vote, and fractional Shares are entitled to proportionate shares of one vote. At the close of business on June 5, 1996, no person owned, to the knowledge of management, 5% or more of the outstanding shares of the Funds. As of the same date, no officer or Trustee of the Funds owned more than 1% of the outstanding shares of the Funds. For purposes of determining the presence of a quorum and counting votes on the matters presented, Shares represented by abstentions and "broker non-votes" will be counted as present, but not as votes cast, at the Meeting. Under the Trust's Declaration of Trust, the vote required will be determined with reference to a percentage of votes cast at the Meeting. Under the Investment Company Act of 1940, as amended (the "1940 Act"), the affirmative vote necessary to approve other matters may be determined with reference to a percentage of votes present at the Meeting, which would have the effect of treating abstentions and non-votes as if they were votes against the proposal. Approval by the shareholders of a Fund of Proposal 1 and Proposal 2 requires the affirmative "vote of a majority of the outstanding voting securities" (as defined in the 1940 Act) of the Fund. Under the 1940 Act, this means that to be approved, each Proposal must receive the affirmative vote of the lesser of (a) 67% of the Shares of a Fund (all classes voting together) present at this Meeting, if the holders of more than 50% of the outstanding Shares of the Fund are present or represented by proxy, or (b) more than 50% of the outstanding Shares of the Fund. The Trust will furnish, without charge, a copy of the annual report and most recent semi-annual report succeeding the annual report, if any, to any Shareholder of record of the Trust upon request. To request an annual and/or semi-annual report, call 1-800-235-4669, or send a written request to Betsy Hamilton at Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, Pennsylvania 15222-3779. It is essential that shareholders complete, date and sign the enclosed proxy card. In order that your Shares may be represented at the Meeting, you are requested to: - indicate your instructions on the enclosed proxy card; - date and sign the proxy card; - mail the proxy card promptly in the enclosed envelope, which requires no postage if mailed in the United States; and - allow sufficient time for the proxy card to be received by 3:00 p.m. on July 31, 1996. 2 PROPOSAL 1: TO APPROVE OR DISAPPROVE THE AMENDMENT TO CERTAIN OF THE FUNDAMENTAL INVESTMENT POLICIES Summary At a meeting on April 2, 1996, the Trustees of the Trust approved, and are submitting to the shareholders of each Fund for approval, the adoption and implementation of a new investment policy for each Fund and the amendment of certain of the Funds' investment limitations to permit a Fund to invest all of its investable assets ("Assets") in a corresponding series of a separate registered investment company (a "Portfolio") each having substantially the same investment objective, policies and restrictions as the corresponding Fund as follows: Fund Corresponding Portfolio Connecticut Municipal Cash Trust Connecticut Municipal Money Market Portfolio Florida Municipal Cash Trust Florida Municipal Money Market Portfolio New Jersey Municipal Cash Trust New Jersey Municipal Money Market Portfolio Each of the Portfolios described above is a series of Federated Investment Portfolios, (the "Portfolio Trust"), an open-end, management investment company under the 1940. The amendment to certain of the fundamental investment policies of each Fund are subject to approval by the respective Fund's shareholders. If this Proposal is approved by a Fund's shareholders, the Trustees intend to invest all the respective Fund's Assets in the corresponding Portfolio, thereby converting each Fund to the Hub and Spoke(R) master-feeder fund structure1 (the "Hub and Spoke(R) Structure"). For purposes of this proxy statement, a Fund that has converted to the Hub and Spoke(R) Structure, the Fund is referred to as a "Spokesm Fund." The Trustees of the Trust recommend that shareholders of each Fund vote to approve this Proposal 1. The Trustees believe that each Fund's conversion to the Hub and Spoke(R) Structure will be advantageous to the shareholders of the Funds in several respects. Please see "Recommendation of the Board of Trustees" on page __ of this Proxy Statement for a discussion of the Trustees' recommendation. New Investment Policy The Trustees recommend that the shareholders of each Fund approve the amendment to certain of the fundamental investment policies. Each Portfolio is a series of the Portfolio Trust, an open-end management investment company registered under the 1940 Act. Each Portfolio has substantially the same - - - ---------------------- 1 Hub and Spoke(R) is a service mark registered with the U.S. Patent and Trademark Office and "HUB(sm)" and "SPOKE(sm)" each, individually, is a service mark of Signature Financial Group, Inc. ("Signature"). These terms pertain only to the Hub and Spoke U.S. master-feeder investment fund structure and the Hub and Spoke U.S. on shore/off shore master feeder investment fund structure and do not pertain to the Global Hub and Spoke(sm) structure created by Signature. 3 investment objective, policies and limitations as the corresponding Fund does currently. Federated Management ("Federated Management" or the "Adviser"), located at Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779, currently serves as each Fund's investment adviser and will serve as each Portfolio's investment adviser. Federated Management will, in turn, resign as investment adviser to the Funds upon each Fund's conversion to the Hub and Spoke(R) Structure. By investing in the corresponding Portfolio, a Spokesm Fund would seek its investment objective through its investment in the Portfolio, rather than through direct investments in securities. The Portfolio in turn would invest in securities in accordance with its investment objective, policies and limitations. The investment limitations and policies of each Portfolio are such that the Portfolio may not currently invest in any security or engage in any transaction which is not currently permitted by the investment limitations and policies of the corresponding Fund. Interests in each Portfolio are not available for purchase directly by members of the general public. The approval by shareholders of a Fund of this Proposal will authorize the Trustees of the Trust to implement the Fund's conversion to the Hub and Spoke(R) Structure. If this Proposal is approved by the shareholders of a Fund and the Trustees are satisfied with certain tax matters discussed below, the Trustees of the Trust intend to convert the Florida Municipal Cash Trust and the New Jersey Municipal Cash Trust to the Hub and Spoke(R) Structure on or about August 1, 1996 or such later date as the Board may approve. The Trustees of the Trust intend to convert the Connecticut Municipal Cash Trust upon receipt of a favorable tax ruling from the State of Connecticut stating that conversion to the Hub and Spoke(R) Structure will not effect the tax exempt status of the income paid to Fund shareholders. The Trustees of the Trust expect to implement the Funds' conversion to the Hub and Spoke(R) Structure by causing each Fund to exchange all of its Assets (securities and cash) as well as certain other assets (including receivables for securities sold and interest on securities) for an interest in the corresponding Portfolio. The value of a shareholder's investment in a Spokesm Fund will be the same immediately before and after the Spokesm Fund's investment in the corresponding Portfolio. Each Spokesm Fund would be able to withdraw its investment in the corresponding Portfolio at any time if the Trustees of the Trust determine that it is in the best interests of a Spokesm Fund to do so. Upon any such withdrawal, the Trustees would consider what action might be taken, including investing all of the Assets of the Spokesm Fund in another pooled investment entity having substantially the same investment objective as the Spokesm Fund or the retention of an investment adviser to manage the Fund's assets in accordance with its investment objective and policies (as is presently the case). Investment Advisory and Other Services The Board of Trustees of the Trust has, subject to shareholder approval of this Proposal 1, approved a revised contract structure for the Funds. In addition, the conversion to the Hub and Spoke(R) Structure will require certain 4 other changes in the current contract structure. These changes are described below. Following the conversion to the Hub and Spoke(R) Structure, the total aggregate corresponding expense ratio of each Spokesm Fund and the Portfolio (in terms of average daily net assets of the Fund) shall, after fee waivers, remain identical to the current annual expense ratios, after fee waivers, of the Fund. Federated Management has agreed to voluntarily partially waive its fees in order to keep current annual expense ratios identical. Because a Spokesm Fund invests all of its Assets in the corresponding Portfolio, the Spokesm Fund would no longer directly require investment advisory services. For this reason, if shareholders approve Proposal 1, and the Fund invests all of its Assets in the corresponding Portfolio, the Fund will terminate its investment advisory agreement with the Adviser. The investment advisory function will then be performed by the Adviser under a substantially identical investment advisory contract with the corresponding Portfolio. Each Portfolio's investment advisory fee will be identical to the corresponding Fund's current contractual advisory fee. Each Spokesm Fund will, therefore, indirectly bear its proportionate share of the advisory fees paid by the corresponding Portfolio pursuant to its investment advisory agreement with the Adviser. Pursuant to the Portfolios' investment advisory agreement, the Portfolio is obligated to pay the Adviser an annual fee at the following percentages of the respective Portfolio's average daily net assets: Connecticut Municipal Money Market Portfolio -- 0.50%; Florida Municipal Money Market Portfolio -- 0.40%; and New Jersey Municipal Money Market Portfolio -- 0.40%. Federated Administrative Services (the "Portfolio Administrator") will provide the Portfolio Trust with administrative personnel and services under an administrative services agreement. For these services, the Portfolio is obligated to pay the Portfolio Administrator a fee from each Portfolio equal on an annual basis up to 0.05% of the Portfolio's average daily net assets, plus certain out-of-pocket expenses. Upon exchange of its Assets for an interest in the corresponding Portfolio, each Spokesm Fund will retain the services of Federated Services Company ("Federated Services") under a master services agreement. Under the master services agreement, Federated Services will provide each Spokesm Fund with portfolio accounting, transfer agency, fund administration and compliance services. For these services, the Spokesm Fund is obligated to pay Federated Services fee equal on an annual basis to 0.35% of that Fund's average daily net assets. Federated Management and Federated Services have voluntarily agreed to partially waive their fees to reduce the aggregate annual operating expenses (excluding brokerage commissions, taxes and extraordinary expenses) of each Fund and the corresponding Portfolio, respectively, such that, following such waivers, "Total Operating Expenses" will remain identical to "Total Operating Expenses" in effect immediately prior to the Funds' conversion to the Hub and Spoke(R) Structure. 5 In addition, upon conversion of the Funds to the Hub and Spoke(R) Structure, Federated Securities Corp. ("Federated Securities") will continue serve as the Spokesm Funds' principal distributor. Federated Securities, a subsidiary of Federated Investors, is located at Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779. Comparative Expenses The following table shows the actual expenses of each Fund for the fiscal year ended October 31, 1995, a pro forma adjustment thereof assuming that the Spokesm Fund had invested all of its Assets in the corresponding Portfolio for the entire period then ended and an example. The pro forma adjustment 22 includes the estimated costs of converting the Funds to the Hub and Spoke(R) Structure and the estimated costs of this proxy solicitation. The pro forma adjustment assumes that: (i) there were no holders of interests in each Portfolio other than the corresponding Spokesm Fund; and (ii) the average daily net assets of each Spokesm Fund and its corresponding Portfolio were equal to the actual average daily net assets of the respective Fund during the period. Connecticut Municipal Cash Trust - Institutional Service Shares Actual Fund Expenses ----------------- Annual Operating Expenses Management fee (after waiver)................................. 0.31% 12b-1 Fee..................................................... None Total other expenses.......................................... 0.26% Shareholder Services Fee (after waiver).................................................. 0.14% Other expenses............................................. 0.15% Total Operating Expenses (after waiver)..................................................... 0.60% Pro Forma Expenses (assuming that the average daily net assets invested by the Fund in the Portfolio were $______) Annual Operating Expenses Management fee (after waiver)................................. 0.24% 12b-1 Fee..................................................... None Total other expenses.......................................... 0.36% Shareholder Services Fee (after waiver).................................................. 0.15% Total Operating Expenses (after waiver)..................................................... 0.60% 6
1 year 3 years 5 years 10 years ------- ------- -------- --------- EXAMPLE: You would pay the following expenses on a $1,000 investment, assuming (1) 5% annual return and (2) redemption at the end of each time period......................... $6 $19 $33 $75
The above example should not be considered a representation of past or future expenses. Actual expenses may be greater or less than those shown. Florida Municipal Cash Trust - Cash II Shares Actual Fund Expenses -------------- Annual Operating Expenses Management fee (after waiver)................................. 0.00% 12b-1 Fee..................................................... 0.14% Total other expenses.......................................... 0.51% Shareholder Services Fee (after waiver).................................................. 0.25% Total Operating Expenses (after waiver)..................................................... 0.65% Pro Forma Expenses (assuming that the average daily net assets invested by the Fund in the Portfolio were $__) Annual Operating Expenses Management fee (after waiver)................................. 0.19% 12b-1 Fee..................................................... 0.10% Total other expenses.......................................... 0.36% Shareholder Services Fee (after waiver).................................................. 0.25% Total Operating Expenses (after waiver)..................................................... 0.65% 1 year 3 years ---------- --------- EXAMPLE: You would pay the following expenses on a $1,000 investment, assuming (1) 5% annual return and (2) redemption at the end of each time period...... $7 $21 The above example should not be considered a representation of past or future expenses. Actual expenses may be greater or less than those shown. This example is based on estimated data for Cash II Shares fiscal year ending October 31, 1996. 7 Florida Municipal Cash Trust - Institutional Shares Actual Fund Expenses ----------- Annual Operating Expenses Management fee (after waiver)................................. 0.00% 12b-1 Fee..................................................... 0.00% Total other expenses.......................................... 0.49% Shareholder Services Fee (after waiver).................................................. 0.20% Total Operating Expenses (after waiver)..................................................... 0.49% Pro Forma Expenses (assuming that the average daily net assets invested by the Fund in the Portfolio were $______) Annual Operating Expenses Management fee (after waiver)................................. 0.19% 12b-1 Fee..................................................... None Total other expenses.......................................... 0.30% Shareholder Services Fee (after waiver).................................................. 0.19% Total Operating Expenses (after waiver)..................................................... 0.49%
1 year 3 years 5 years 10 years ------- -------- -------- -------- EXAMPLE: You would pay the following expenses on a $1,000 investment, assuming (1) 5% annual return and (2) redemption at the end of each time period.. $5 $16 $27 $62
The above example should not be considered a representation of past or future expenses. Actual expenses may be greater or less than those shown. New Jersey Municipal Cash Trust - Institutional Shares Actual Fund Expenses ----------- Annual Operating Expenses Management fee (after waiver)................................. 0.19% 12b-1 Fee..................................................... None Total other expenses.......................................... 0.36% Shareholder Services Fee (after waiver).................................................. 0.05% Total Operating Expenses (after waiver)..................................................... 0.55% 8 Pro Forma Expenses (assuming that the average daily net assets invested by the Fund in the Portfolio were $______) Annual Operating Expenses Management fee (after waiver)................................. 0.18% 12b-1 Fee..................................................... None Total other expenses.......................................... 0.37% Shareholder Services Fee (after waiver).................................................. 0.05% Total Operating Expenses (after waiver)..................................................... 0.55% 1 year 3 years 5 years 10 years --------- --------- -------- ---------- EXAMPLE: You would pay the following expenses on a $1,000 investment, assuming (1) 5% annual return and (2) redemption at the end of each time period........................ $6 $18 $31 $69
The above example should not be considered a representation of past or future expenses. Actual expenses may be greater or less than those shown. New Jersey Municipal Services - Institutional Service Shares Actual Fund Expenses ----------- Annual Operating Expenses Management fee (after waiver)................................. 0.19% 12b-1 Fee..................................................... 0.00% Total other expenses.......................................... 0.46% Shareholder Services Fee (after waiver).................................................. 0.15% Total Operating Expenses (after waiver)..................................................... 0.65% Pro Forma Expenses (assuming that the average daily net assets invested by the Fund in the Portfolio were $______) Annual Operating Expenses Management fee (after waiver)................................. 0.18% 12b-1 Fee..................................................... 0.00% Total other expenses.......................................... 0.47% Shareholder Services Fee (after waiver).................................................. 0.15% Total Operating Expenses (after waiver)..................................................... 0.65% 9 1 year 3 years 5 years 10 years --------- --------- --------- --------- EXAMPLE: You would pay the following expenses on a $1,000 investment, assuming (1) 5% annual return and (2) redemption at the end of each time period...................... $7 $21 $36 $81
The above example should not be considered a representation of past or future expenses. Actual expenses may be greater or less than those shown. Assuming that each Spokesm Fund was the only holder of an interest in the corresponding Portfolio and that each Spokesm Fund was fully invested therein, the net asset value per share, distributions per share and net investment income per share of each Spokesm Fund would have been approximately the same on a pro forma basis as the actual net asset value, distributions and net investment income per share of the respective Fund during the period indicated. Waiver. Federated Management and Federated Services have voluntarily agreed to partially waive their fees to reduce the aggregate annual operating expenses (excluding brokerage commissions, taxes and extraordinary expenses) of each Fund and the corresponding Portfolio, respectively, such that, following such waivers, "Total Operating Expenses" will remain identical to "Total Operating Expenses" in effect immediately prior to the Funds' conversion to the Hub and Spoke(R) Structure. In the absence of this waiver, Other Expenses and Total Fund Operating Expenses in the aggregate are estimated on a pro forma combined basis to be as follows: Connecticut Municipal Cash Trust Institutional Service Shares -- 1.15%; Florida Municipal Cash Trust - Cash II Shares -- 1.30%; Florida Municipal Cash Trust - Institutional Shares -- 1.05; New Jersey Municipal Cash Trust - Institutional Shares -- 1.05%; and New Jersey Municipal Cash Trust - Institutional Service Shares -- 1.15%. This waiver will not be terminated without approval of the Board of Trustees of both the Portfolio Trust and the Trust. Tax Considerations The Trust will apply for a ruling from the Internal Revenue Service ("IRS") to the effect that its contribution of each Fund's assets to the corresponding Portfolio in exchange for an interest in the corresponding Portfolio will not result in the recognition of gain or loss to the respective Fund for federal income tax purposes. Management of the Trust currently intends to proceed with these contributions only upon the issuance of a favorable ruling by the IRS or the availability of an opinion of tax counsel with respect to the matters requested in such ruling. There can be no assurance that the ruling will be issued or such an opinion will be available. As a regulated investment company under the Internal Revenue Code of 1986, as amended (the "Code"), each Fund does not pay federal income or excise taxes 10 to the extent that the Fund distributes to shareholders its net investment income and net realized capital gains in accordance with the timing requirement imposed by the Code. Under current law, so long as a Fund qualifies as a regulated investment company for federal income tax purposes, the Fund is not liable for any income, corporate excise or franchise taxes in the Commonwealth of Massachusetts. The Portfolios are organized and intend to conduct their operations in a manner such that they also will not be required to pay any federal or Massachusetts income or excise taxes. All Funds will apply for a tax ruling from each of their respective states seeking a ruling that the Hub and Spoke(R) Structure will not affect the tax exempt status of income paid to a Fund shareholder. Furthermore, each Fund's conversion to the Hub and Spoke(R) Structure will be contingent upon receiving these tax rulings. Description of the Portfolios The Portfolio Trust is a business trust organized under the laws of the Commonwealth of Massachusetts on September 29, 1995. The investment objective of each Portfolio is the same as the investment objective of the corresponding Spokesm Fund. Each Portfolio seeks to achieve its investment objective through investments limited to the types of securities in which the corresponding Fund is authorized to invest. The investment limitations and policies of each Portfolio are such that the Portfolio may not invest in any security or engage in any transaction which is not currently permitted by the investment limitations and policies of the corresponding Spokesm Fund. The investment objective of each Portfolio, and certain other investment policies and limitations are fundamental and, as such, cannot be changed without investor approval. The approval of the Portfolios' investors (i.e., the Spokesm Funds and other holders of interests in the corresponding Portfolio) would be required to change any of the Portfolios' fundamental investment policies or restrictions; however, any change in nonfundamental investment policies or restrictions would not require such approval. In all cases, the Trustees of the Portfolio Trust must approve changes in the investment objective and the investment policies and restrictions. Each Portfolio attempts to enable the corresponding Fund to stabilize its net asset value at $1.00 by valuing the Portfolio's securities using the amortized cost method. Like the Funds, each Portfolio determines its net asset value on each day on which the New York Stock Exchange is open. Each Portfolio's and the corresponding Spokesm Fund's net asset value is determined at 12:00 noon, 1:00 p.m. (Eastern time) and as of the close of trading (normally 4:00 p.m., Eastern time) on the New York Stock Exchange, Monday through Friday, except on New Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. Each Portfolio's net asset value is computed by determining the value of each Portfolio's total assets (the securities it holds plus any cash or other assets, including interest accrued but not yet received), and subtracting all of the Portfolio's liabilities (including accrued expenses). Each Spokesm Fund's net asset value per share is calculated 11 by determining the value of each Spokesm Fund's assets (e.g., its investment in the corresponding Portfolio and other assets), subtracting all of the Spokesm Fund's liabilities (including accrued expenses), and dividing the result by the total number of shares outstanding at such time. Interests in the Portfolio Trust have no preemptive or conversion rights, and are fully paid and non-assessable. The Portfolio Trust normally will not hold meetings of holders of such interests except as required under the 1940 Act. The Portfolio Trust would be required to hold a meeting of holders in the event that at any time less than a majority of its Trustees holding office have been elected by holders. The Trustees of the Portfolio Trust continue to hold office until their successors are elected and have qualified. Holders holding 10% or more of the net asset value of the Portfolio Trust may call a meeting of holders in the Portfolio Trust for the purpose of removing any Trustee. A Trustee of the Portfolio Trust may be removed upon a majority vote of the interests held by holders in the Portfolio Trust qualified to vote in the election. The 1940 Act requires the Portfolio Trust to assist its holders in calling such a meeting. Upon liquidation of a Portfolio, holders in the Portfolio would be entitled to share pro rata in the net assets of the Portfolio available for distribution to holders. Each holder in a Portfolio is entitled to a vote in proportion to its percentage interest in that Portfolio. Except as described below, whenever a Spokesm Fund is requested to vote on matters pertaining to its corresponding Portfolio, the Spokesm Fund will request instructions from its shareholders and will cast its votes proportionately as instructed. Shareholders who do not provide instructions will not affect the Spokesm Fund's votes at the corresponding Portfolio's meeting. The percentage of a Spokesm Fund's votes representing Spokesm Fund shareholders not voting will be voted by the Trustees of the Trust in the same proportion as the Spokesm Fund shareholders who provide instructions. Subject to applicable statutory and regulatory requirements, a Spokesm Fund would not be required to request instructions of their respective shareholders with respect to (a) any proposal relating to the corresponding Portfolio, which proposal, if made with respect to the Spokesm Fund, would not require the vote of the shareholders of the Spokesm Fund, or (b) any proposal with respect to the corresponding Portfolio that is identical in all material respects to a proposal that has previously been approved by shareholders of the Fund. Any proposal submitted to holders in a Portfolio that does not require instructions from shareholders of the corresponding Fund would nonetheless be voted on by the Trustees of the Portfolio Trust. If the Portfolio is successful in attracting additional investment vehicles, the smaller funds investing in the Portfolio may be materially affected by the actions of larger funds investing in the Portfolio. For example, if a large Spokesm Fund withdraws from the Portfolio, the remaining Spokesm Funds may experience higher pro rata operating expenses thereby producing lower returns. Additionally, the Portfolio may become less diverse, resulting in increased portfolio risk. Also, Spokesm Funds with a greater pro rata ownership in the Portfolio could have effective voting control over operations of the Portfolio. 12 While the Fund is expected to be the largest investment vehicle in the Portfolio for the foreseeable future, there is no assurance that it will remain so. Investments in the Portfolios may not be transferred, but a holder may withdraw all or any portion of its investment at any time at net asset value. Each holder in a Portfolio, including the corresponding Fund, will be liable for the obligations of the Portfolio up to the amount of its interest in the Portfolio. In addition, holders in a Portfolio may be held liable as partners for the Portfolio's obligations. However, because the Portfolio Trust's declaration of trust disclaims holder liability and provides for indemnification against such liability, the risk of a holder in a Portfolio incurring financial loss on account of such liability is limited to circumstances in which both inadequate insurance existed and the corresponding Portfolio itself was unable to meet its obligations. As such, it is unlikely that a Spokesm Fund would experience liability from the new investment structure itself. In any event, shareholders of a Spokesm Fund will continue to remain shareholders of a Massachusetts business trust, and the risk of such a person incurring liability as a shareholder of a Spokesm Fund is considered to be remote. The Portfolio Trust has its own Board of Trustees, including a majority of Trustees who are not "interested persons" (as defined in the 1940 Act) of the Portfolio Trust (the "Portfolio Independent Trustees"). The Trustees of the Portfolio Trust are the same individuals who presently serve as Trustees of the Trust with the exception of J. Christopher Donahue, Trustee and President of the Portfolio Trust and Glen R. Johnson, Trustee and President of the Trust. Proposed Amendment of Investment Limitations The Trustees have approved, subject to shareholder approval, a general exception to all of the fundamental investment limitations of each Fund to permit the Fund to invest all of its Assets in the corresponding Portfolio. Certain of each Fund's fundamental and non-fundamental investment limitations may be deemed to prohibit the Fund from seeking its investment objective by investing all of its Assets in the corresponding Portfolio. The investment limitations for each Fund would be amended to provide that the current investment limitations apply "(except that the Fund may invest substantially all of its assets (other than assets which are not "investment securities," as defined in the 1940 Act, or are excepted by the SEC) in an open-end management investment company (or series thereof) with substantially the same investment objective as the Fund)." Shareholder approval is required to amend the designated fundamental investment limitations. Only Trustee approval is required to amend the designated non-fundamental investment limitations. However, as a practical matter, the non-fundamental limitations will be amended only if the shareholders approve the amendments to the fundamental limitations. 13 Recommendation of the Board of Trustees The Trustees of the Trust recommend that shareholders of each Fund vote to approve this Proposal 1. The Trustees believe, based primarily on their discussions with the Adviser, that the Hub and Spoke(R) Structure will permit other investment vehicles (for example, other mutual funds, common and collective funds, etc.) having different distribution arrangements to invest in the Portfolios. Since certain of these other vehicles would not otherwise invest in the Funds under their current structure due to tax and other reasons, but could invest with the Funds in the Portfolios, the Trustees believe that additional assets should be attracted to each Portfolio, thus increasing the Portfolio's asset base. This anticipated larger asset base will be advantageous to the shareholders of the Fund in several respects. The following and other factors were considered by the Board in recommending the proposed conversion to the Hub and Spoke(R) Structure. First, to the extent that a Portfolio can increase its asset base over the current size of the corresponding Fund by attracting new investment vehicles that otherwise could not invest in the Fund, greater diversification of the Portfolios investment portfolio can be achieved than is currently possible for the Fund. Greater diversification is expected to be beneficial to shareholders of a Fund and other investors in the corresponding Portfolio because it may minimize the impact that the adverse performance of any one portfolio security may have on the performance of the entire investment portfolio. Second, the larger anticipated size of the Portfolio would permit the purchase of investments in larger denominations than the corresponding Fund may otherwise be able to purchase. This may result in a Portfolio purchasing investments at more advantageous prices. Although greater diversification can also minimize the positive impact of the performance of any one investment portfolio, it has the overall potential to minimize value fluctuations and smooth out performance of the overall portfolio. Although these benefits could be realized by the direct growth of a Fund's assets, the Trustees believe that growth is more likely to be achieved through investments in the corresponding Portfolio by entities in addition to the Fund. There can, however, be no assurance that either an increase in assets of the Portfolio or the benefits described above will be realized and no such benefits are anticipated until other investors invest their Assets in the Portfolio. The Trustees have been advised about other investors that are interested in investing in the Portfolios. While such investments are anticipated, they cannot be assured. However, the Trustee's decision to recommend shareholder approval of the proposed conversion of the Fund to a Hub and Spoke(R) Structure is premised on the expectation of additional investors in the Portfolios. The Trustees also recognize that the Adviser may benefit from the proposed Hub and Spoke(R) Structure because such structure may enable the Adviser to increase its assets under management through additional investors investing in the Portfolio. These additional investors may include other investment companies or other collective investment vehicles advised by the Adviser. However, this 14 benefit would be enjoyed by the Adviser if assets in the Funds were increased under the current structure. In addition, the Adviser has voluntarily agreed to reduce its fees and reimburse certain Portfolio expenses to maintain the aggregate operating expenses of the Fund at the same level before and after the proposed conversion. The Trustees believe that over time the aggregate operating expenses of each Spokesm Fund and the corresponding Portfolio should not be more than the expenses that would be incurred by the Fund if it continued to retain the services of an investment adviser and invested directly in securities, although there can be no assurance that any expense savings will be realized. While the Hub and Spoke(R) Structure does not require certain of the same services to be provided for the Spokesm Fund and the Portfolio (such as administration, accounting and legal compliance, but not advisory services), the Trustees have considered this in light of the action by Federated Services and Federated Management to voluntarily limit the aggregate operating expenses (as declared above) of the Fund and its corresponding Portfolio to maintain the same aggregate expense ratio after the conversion. The Trustees also considered risks associated with an investment in the Portfolios. The Trustees believe that the Portfolios' investment policies and limitations involve substantially the same risks as are associated with the Funds' direct investment in securities. In recommending that the shareholders authorize the conversion of the Funds to the Hub and Spoke(R) Structure, the Trustees have taken into account and evaluated the possible effects that increased assets in the Portfolios may have on the expense ratio of the corresponding Spokesm Fund and have considered the expense limitation, described above, voluntarily agreed to by Federated Services and Federated Management. After carefully weighing the costs involved against the anticipated benefits of converting the Funds to the Hub and Spoke(R) Structure, the Trustees recommend that the shareholders of each Fund vote to approve Proposal 1. Based on their consideration, analysis and evaluation of the above factors and other information deemed by them to be relevant to this Proposal, the Trustees (including the Trustees who are not "interested persons" as defined in the 1940 Act) have concluded that it would be in the best interests of each Fund and its shareholders to approve the adoption and implementation of the amendment to the fundamental investment limitations to enable the Fund to invest all of its respective Assets in the corresponding Portfolio. In the event the shareholders of a Fund fail to approve this Proposal, the Trustees would continue to retain Federated Management as the investment adviser for the Fund to manage the Fund's assets through directly investing in securities, and the advisory agreement with Federated Management would continue in effect in its current form. THE BOARD OF TRUSTEES RECOMMENDS THAT THE SHAREHOLDERS APPROVE THE AMENDMENT OF CERTAIN FUNDAMENTAL INVESTMENT LIMITATIONS 15 PROPOSAL 2: APPROVAL OR DISAPPROVAL OF CHANGING EACH FUND'S FUNDAMENTAL INVESTMENT LIMITATION ON RESTRICTED SECURITIES TO A NON-FUNDAMENTAL INVESTMENT LIMITATION The Connecticut Municipal Cash Trust and the New Jersey Municipal Cash Trust currently have a fundamental investment limitation, which may only be changed with Shareholder approval, limiting investments in securities subject to restriction on resale under the Securities Act of 1933 ("Restricted Securities") to 10% of each Fund's net assets. In addition, each Fund has a non-fundamental investment policy that limits its investments in illiquid securities, including certain Restricted Securities not determined by the Trustees of the Trust to be liquid, non-negotiable time deposits, and repurchase agreement providing for settlement in more than seven days after notice, to 10% of its net assets. Both of these investment limitations reflect the long-standing policy of the Securities and Exchange Commission (the "Commission") that mutual funds, such as the Funds, should maintain a high level of liquid assets to meet redemption re22quests from shareholders. The Funds' current investment limitations are redundant insofar as the Commission has traditionally treated all Restricted Securities (other than Rule 144A securities deemed by the Board to be liquid) as illiquid. Thus, any security (other than such Rule 144A securities) subject to a Fund's fundamental investment limitation on Restricted Securities is also subject to the investment limitation on illiquid securities. The limitation on illiquid securities is generally more restrictive, however, since it also counts illiquid securities that are not Restricted Securities against the 10% limitation. The Commission has defined an illiquid security as "any asset which may not be sold or disposed of in the ordinary course of business within seven days at approximately the value at which the mutual fund has valued the investment." At a meeting on April 2, 1996, the Trustees adopted a non-fundamental investment limitation, which may be changed without Shareholder approval, on restricted securities. The effect of this change is to combine the investment limitations on restricted and illiquid securities into one non-fundamental investment limitation. The amended limitation reads as follows: The Fund will limit investments in illiquid securities, including certain restricted securities not determined by the Trustees to be liquid, non-negotiable time deposits, and repurchase agreements providing for settlement in more than seven days after notice, to 10% of its net assets. The proposed change to the fundamental investment limitations will not affect the Funds' ability to purchase Restricted Securities eligible for resale under Rule 144A of the Securities Act of 1933 without limit, provided that they satisfy the criteria for liquidity established by the Trustees. The Trustees' current guidelines require the Adviser to consider the following factors in determining the liquidity of such securities: 1. The frequency of trades and quotes for the security; 2. The volatility of quotations and trade prices for the security; 16 3. The number of dealers willing to purchase or sell the security and the number of potential purchasers; 4. Dealer undertakings to make a market in the security; 5. The nature of the security and the nature of the marketplace trades (e.g., the time needed to dispose of the security, the method of soliciting offers, and the mechanics of transfer); 6. The rating of the security and the financial condition and prospects of the issuer of the security; and 7. Such other factors as may be relevant to the Funds' ability to dispose of the security. The guidelines also require that the Adviser reasonably expect that the security will maintain its liquidity throughout the time the instrument is held by each Fund. The change to the fundamental limitations on Restricted Securities will also allow a Fund to invest up to 10% of its net assets in Restricted Securities that do not meet the criteria established by the Trustees' guidelines and other illiquid securities. In the event the Shareholders fail to approve this change to a Fund's fundamental investment limitations, the Trustees will consider whether to amend, subject to Shareholder approval, the investment limitation on Restricted Securities to reflect the changes to the Commission's policies or to continue to operate under the present fundamental investment limitations. THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS APPROVE THE CHANGE TO THE FUNDS' FUNDAMENTAL INVESTMENT LIMITATIONS ON RESTRICTED SECURITIES. 17 ADDITIONAL INFORMATION The Trust is not required, and does not intend, to hold annual meetings of shareholders. Shareholders wishing to submit proposals for consideration for inclusion in a proxy statement for the next meeting of shareholders should send their written proposals to Federated Municipal Trust, Federated Investors Tower, Pittsburgh, PA 15222-3779, so that they are received within a reasonable time before any such meeting. No business other than the matters described above is expected to come before the Meeting, but should any other matter requiring a vote of shareholders arise, including any question as to an adjournment or postponement of the Meeting, the persons named on the enclosed proxy card will vote on such matters according to their best judgment in the interests of the Funds. Proxies, Quorum and Voting at the Meeting Any person giving a proxy has the power to revoke it any time prior to its exercise by executing a superseding proxy or by submitting a written notice of revocation to the Secretary of the Trust. In addition, although mere attendance at the Meeting will not revoke a proxy, a shareholder present at the Meeting may withdraw his or her proxy and vote in person. All properly executed and unrevoked proxies received in time for the Meeting will be voted in accordance with the instructions contained in the proxies. If no instruction is given, the persons named as proxies will vote the shares represented thereby in favor of the matters set forth in the attached Notice. In the event that, at the time any session of the Meeting is called to order, a quorum is not present at the Meeting, or in the event that a quorum is present at the Meeting but sufficient votes to approve any of the proposals are not received, the persons named as proxies may propose one or more adjournments of the Meeting (with respect to all or some of the proposals) to permit further solicitation of proxies. Any such adjournment will require the affirmative vote of a majority of those Shares affected by the adjournment represented at the Meeting in person or by proxy. If a quorum is present, the persons named as proxies will vote those proxies which they are entitled to vote FOR all such proposals in favor of such an adjournment, and will vote those proxies required to be voted AGAINST any such proposal against any adjournment. A shareholder vote may be taken on one or more of the proposals in this Proxy Statement prior to any such adjournment if sufficient votes have been received for approval. Under the Declaration of Trust of the Trust, a quorum is constituted by the presence in person or by proxy of the holders of a majority of the issued and outstanding Shares of the Trust entitled to vote at the Meeting except that where the holders of any series of Shares are to vote as a series, then the presence in person or by proxy of the holders of a majority of the Shares of such series issued and outstanding and entitled to vote thereat shall constitute a quorum for the transaction of such business. Shares of each Fund (including shares which abstain or do not vote with respect to any of the proposals presented for shareholder approval) will be 18 counted for purposes of determining whether a quorum is present at the Meeting. Abstentions from voting will be treated as shares that are present and entitled to vote for purposes of determining the number of shares that are present and entitled to vote with respect to a proposal, but will not be counted as a vote in favor of that proposal. Accordingly, an abstention from voting has the same effect as a vote against a proposal. SHAREHOLDERS ARE REQUESTED TO COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT IN THE ENCLOSED ENVELOPE, WHICH NEEDS NO POSTAGE IF MAILED IN THE UNITED STATES. 19 PRELIMINARY COPY PROXY BALLOT CONNECTICUT MUNICIPAL CASH TRUST A Series of FEDERATED MUNICIPAL TRUST The undersigned, revoking all prior proxies, hereby appoints [ ], [ ] and [ ], or any of them individually, as proxies, with full powers of substitution, to vote for the undersigned at the special meeting of shareholders of Connecticut Municipal Cash Trust Fund (the "Fund"), a series of Federated Municipal Trust (the "Trust"), to be held at the offices of the Trust, Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779, on July 31, 1996, at 3:00 p.m., or at any adjournment thereof, notice of which meeting and the Proxy Statement accompanying the same have been received by the undersigned, upon the following matters as described in the Notice of Special Meeting and accompanying Proxy Statement: 1) TO APPROVE OR DISAPPROVE AN AMENDMENT TO CERTAIN INVESTMENT LIMITATIONS WHICH WILL PERMIT THE FUND TO INVEST ALL OF ITS INVESTABLE ASSETS IN A SERIES OF A SEPARATE OPEN-END MANAGEMENT INVESTMENT COMPANY HAVING SUBSTANTIALLY THE SAME INVESTMENT OBJECTIVE, POLICIES AND LIMITATIONS AS THE FUND. --- --- --- --- FOR --- AGAINST --- ABSTAIN 2) TO APPROVE OR DISAPPROVE A CHANGE TO THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS ON RESTRICTED SECURITIES AND TO MAKE THE AMENDED LIMITATION A NON-FUNDAMENTAL POLICY. --- --- --- --- FOR --- AGAINST --- ABSTAIN 3) TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF. THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES SAID PROXIES WILL VOTE THIS PROXY AS DIRECTED, OR IF NO DIRECTION IS INDICATED, FOR PROPOSALS 1, 2, AND 3 UNLESS AUTHORITY TO DO SO IS SPECIFICALLY WITHHELD IN THE MANNER PROVIDED. THE APPROVAL OF A PROPOSAL IS NOT CONDITIONED ON THE APPROVAL OF ANY OTHER PROPOSAL. Dated , 1996 (Please date this proxy) Please sign exactly as your name or names appear at left. Corporate proxies should be signed by an authorized officer. PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY BALLOT PROMPTLY, USING THE ENCLOSED ENVELOPE. PRELIMINARY COPY PROXY BALLOT FLORIDA MUNICIPAL CASH TRUST A Series of FEDERATED MUNICIPAL TRUST The undersigned, revoking all prior proxies, hereby appoints [ ], [ ] and [ ], or any of them individually, as proxies, with full powers of substitution, to vote for the undersigned at the special meeting of shareholders of Connecticut Municipal Cash Trust Fund (the "Fund"), a series of Federated Municipal Trust (the "Trust"), to be held at the offices of the Trust, Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779, on July 31, 1996, at 3:00 p.m., or at any adjournment thereof, notice of which meeting and the Proxy Statement accompanying the same have been received by the undersigned, upon the following matters as described in the Notice of Special Meeting and accompanying Proxy Statement: 1) TO APPROVE OR DISAPPROVE AN AMENDMENT TO CERTAIN INVESTMENT LIMITATIONS WHICH WILL PERMIT THE FUND TO INVEST ALL OF ITS INVESTABLE ASSETS IN A SERIES OF A SEPARATE OPEN-END MANAGEMENT INVESTMENT COMPANY HAVING SUBSTANTIALLY THE SAME INVESTMENT OBJECTIVE, POLICIES AND LIMITATIONS AS THE FUND. --- --- --- --- FOR --- AGAINST --- ABSTAIN 2) TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF. THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES SAID PROXIES WILL VOTE THIS PROXY AS DIRECTED, OR IF NO DIRECTION IS INDICATED, FOR PROPOSALS 1 AND 2 UNLESS AUTHORITY TO DO SO IS SPECIFICALLY WITHHELD IN THE MANNER PROVIDED. THE APPROVAL OF A PROPOSAL IS NOT CONDITIONED ON THE APPROVAL OF ANY OTHER PROPOSAL. Dated , 1996 (Please date this proxy) Please sign exactly as your name or names appear at left. Corporate proxies should be signed by an authorized officer. PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY BALLOT PROMPTLY, USING THE ENCLOSED ENVELOPE. PRELIMINARY COPY PROXY BALLOT NEW JERSEY MUNICIPAL CASH TRUST A Series of FEDERATED MUNICIPAL TRUST The undersigned, revoking all prior proxies, hereby appoints [ ], [ ] and [ ], or any of them individually, as proxies, with full powers of substitution, to vote for the undersigned at the special meeting of shareholders of Connecticut Municipal Cash Trust Fund (the "Fund"), a series of Federated Municipal Trust (the "Trust"), to be held at the offices of the Trust, Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779, on July 31, 1996, at 3:00 p.m., or at any adjournment thereof, notice of which meeting and the Proxy Statement accompanying the same have been received by the undersigned, upon the following matters as described in the Notice of Special Meeting and accompanying Proxy Statement: 1) TO APPROVE OR DISAPPROVE AN AMENDMENT TO CERTAIN INVESTMENT LIMITATIONS WHICH WILL PERMIT THE FUND TO INVEST ALL OF ITS INVESTABLE ASSETS IN A SERIES OF A SEPARATE OPEN-END MANAGEMENT INVESTMENT COMPANY HAVING SUBSTANTIALLY THE SAME INVESTMENT OBJECTIVE, POLICIES AND LIMITATIONS AS THE FUND. --- --- --- --- FOR --- AGAINST --- ABSTAIN 2) TO APPROVE OR DISAPPROVE A CHANGE TO THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS ON RESTRICTED SECURITIES AND TO MAKE THE AMENDED LIMITATION A NON-FUNDAMENTAL POLICY. --- --- --- --- FOR --- AGAINST --- ABSTAIN 3) TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF. THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES SAID PROXIES WILL VOTE THIS PROXY AS DIRECTED, OR IF NO DIRECTION IS INDICATED, FOR PROPOSALS 1, 2 AND 3 UNLESS AUTHORITY TO DO SO IS SPECIFICALLY WITHHELD IN THE MANNER PROVIDED. THE APPROVAL OF A PROPOSAL IS NOT CONDITIONED ON THE APPROVAL OF ANY OTHER PROPOSAL. Dated , 1996 (Please date this proxy) Please sign exactly as your name or names appear at left. Corporate proxies should be signed by an authorized officer. PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY BALLOT PROMPTLY, USING THE ENCLOSED ENVELOPE. FED0001H -----END PRIVACY-ENHANCED MESSAGE-----