PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the Semi-Annual Report to Shareholders for Federated
Master Trust, which covers the six-month period from December 1, 1995 through
May 31, 1996. The report contains commentary by the portfolio manager, followed
by a complete list of the fund's investments on the last day of the period, and
the financial statements.
This money market mutual fund continues to pursue competitive daily
income--along with daily liquidity and stability of principal*--through a
diversified portfolio primarily composed of commercial paper, variable rate
instruments, repurchase agreements, and certificates of deposit.
Dividends paid to shareholders during the period totaled $19.2 million, or $0.03
per share. At the end of the period, the fund's net assets stood at $657
million.
Thank you for selecting Federated Master Trust as a daily cash investment. As
always, we welcome your comments and suggestions.
Sincerely,
LOGO
Glen R. Johnson
President
July 15, 1996
* Although money market funds seek to maintain a share value of $1.00, there is
no guarantee that they will do so. An investment in the fund is neither
insured nor guaranteed by the U.S. government.
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
Federated Master Trust (the "Trust") invests in money market instruments
maturing in twelve months or less. The average maturity of these securities,
computed on a dollar weighted basis, is restricted to 90 days or less. Portfolio
securities must be rated in the highest short-term rating category by one or
more of the nationally recognized statistical rating organizations or be of
comparable quality to securities having such ratings. Typical security types
include, but are not limited to, commercial paper, certificates of deposit, time
deposits, variable rate instruments and repurchase agreements.
Through the end of 1995, economic activity continued to expand but at a very
moderate pace. This was driven by particularly dismal retail sales for most of
the Christmas season. Since the beginning of 1996, however, the pace of the
economic expansion seems to have quickened. Gross Domestic Product growth for
the first quarter of 1996 rebounded to 2.8%, with growth in overall employment
leading the expansion. This faster growth was achieved despite several dampening
factors including severe winter weather during much of January, a United Auto
Workers' strike at General Motors that shut down the automotive giant's
operations for 2 1/2 weeks, and a government closure for a week related to
budget negotiations. Throughout the time period, inflation held steady. Overall
wage gains remain moderate, and material costs are subdued.
Budget negotiations also played a role in the market during the time period. As
negotiations failed and temporary "fixes" were devised for meeting the
Treasury's scheduled debt obligations, fixed income investors became nervous and
yields began to rise.
Thirty-day commercial paper started the period at 5.82% on December 1, 1995, and
held very close to that level until January 2, 1996, when year-end pressures
subsided. At that time, rates settled into the 5.55% level, reflecting a 5.50%
federal funds target established by the Federal Reserve Board (the "Fed") on
December 19, 1995. Rates fell throughout the month of January until the Fed
acted again on January 31, 1996, lowering the federal funds target to 5.25%.
Commercial paper rates have been hovering in the 5.25% area since that time.
The money market yield curve steepened dramatically throughout the time period.
One-month commercial paper rates declined 52 basis points while 6 month rates
dropped just 12 basis points, reflecting the concern in the market about the
more rapid economic growth.
The target average maturity range for Federated Master Trust began the period at
40-50 days, was subsequently lengthened to a 45-55 day range in February and
then shortened back to the 40-50 day range in May, reflecting the changing
economic and monetary sentiment. In structuring the Trust, there is continued
emphasis placed on positioning 30-35% of the Trust's core assets in variable
rate demand notes and accomplishing a modest barbell structure.
During the six-months ended May 31, 1996, the net assets of Federated Master
Trust decreased from $729.1 to $657.1 million, while the 7-day net yield
decreased from 5.39% to 4.94%.* The effective average maturity of the Trust on
May 31, 1996, was 50 days.
* Performance quoted represents past performance and is not indicative of future
results. Yield will vary.
FEDERATED MASTER TRUST
PORTFOLIO OF INVESTMENTS
MAY 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- --------------------------------------------------------------- ------------
<C> <C> <S> <C>
BANK NOTES--5.8%
- ----------------------------------------------------------------------------------
BANKING--5.8%
---------------------------------------------------------------
$10,000,000 Comerica Bank, Detroit, MI, 5.650%-5.700%, 9/3/1996-9/23/1996 $ 9,998,935
---------------------------------------------------------------
8,000,000 Harris Trust & Savings Bank, Chicago, 5.500%, 3/26/1997 7,996,239
---------------------------------------------------------------
8,000,000 Mellon Bank NA, Pittsburgh, 5.750%-5.780%, 9/26/1996-10/16/1996 7,998,763
---------------------------------------------------------------
12,000,000 NBD Bank, Michigan, 5.000%, 7/15/1996 12,000,000
--------------------------------------------------------------- ------------
TOTAL BANK NOTES 37,993,937
--------------------------------------------------------------- ------------
CERTIFICATES OF DEPOSIT--2.4%
- ----------------------------------------------------------------------------------
5,000,000 Bayerische Vereinsbank AG, Munich, 5.420%, 9/30/1996 4,999,352
---------------------------------------------------------------
11,000,000 Dresdner Bank Ag, Frankfurt, 5.026%, 2/26/1997 10,996,806
--------------------------------------------------------------- ------------
TOTAL CERTIFICATES OF DEPOSIT 15,996,158
--------------------------------------------------------------- ------------
(A)COMMERCIAL PAPER--37.9%
- ----------------------------------------------------------------------------------
BANKING--10.6%
---------------------------------------------------------------
20,000,000 ABN AMRO N.A., Finance, Inc., (Guaranteed by ABN AMRO Bank
N.V., Amsterdam), 5.267%, 7/18/1996 19,866,050
---------------------------------------------------------------
15,000,000 Canadian Imperial Holdings, Inc., (Guaranteed by Canadian
Imperial Bank of Commerce, Toronto), 5.373%, 8/30/1996 14,801,250
---------------------------------------------------------------
10,000,000 Royal Bank of Canada, Montreal, 5.259%, 7/8/1996 9,947,275
---------------------------------------------------------------
5,000,000 Societe Generale North America, Inc., (Guaranteed by Societe
Generale, Paris), 5.015%, 8/8/1996 4,953,817
---------------------------------------------------------------
20,000,000 UBS Finance (Delaware), Inc., (Guaranteed by Union Bank of
Switzerland, Zurich), 5.412%, 6/3/1996 19,993,989
--------------------------------------------------------------- ------------
Total 69,562,381
--------------------------------------------------------------- ------------
FINANCE--COMMERCIAL--12.7%
---------------------------------------------------------------
5,000,000 Asset Securitization Cooperative Corp., 5.354%, 7/26/1996 4,959,667
---------------------------------------------------------------
29,000,000 Beta Finance, Inc., 5.003%-5.465%, 7/12/1996-11/25/1996 28,650,146
---------------------------------------------------------------
5,000,000 CIESCO, Inc., 4.992%, 8/7/1996 4,954,682
---------------------------------------------------------------
</TABLE>
FEDERATED MASTER TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- --------------------------------------------------------------- ------------
<C> <C> <S> <C>
(A)COMMERCIAL PAPER--CONTINUED
- ----------------------------------------------------------------------------------
FINANCE--CONTINUED
---------------------------------------------------------------
$ 2,000,000 CIESCO, Inc., 5.341%, 6/25/1996 $ 1,992,973
---------------------------------------------------------------
7,000,000 CIT Group Holdings, Inc., 5.317%, 6/20/1996 6,980,641
---------------------------------------------------------------
27,000,000 General Electric Capital Corp., 5.128%-5.475%,
7/29/1996-11/25/1996 26,570,975
---------------------------------------------------------------
9,350,000 Greenwich Funding Corp., 5.320%-5.352%, 6/11/1996-6/21/1996 9,328,990
--------------------------------------------------------------- ------------
Total 83,438,074
--------------------------------------------------------------- ------------
FINANCE--RETAIL--12.4%
---------------------------------------------------------------
30,000,000 Associates Corp. of North America, 5.372%-5.550%,
6/3/1996-6/5/1996 29,988,033
---------------------------------------------------------------
35,000,000 New Center Asset Trust, A1+/P1 Series, 5.351%-5.422%,
7/22/1996-10/18/1996 34,581,583
---------------------------------------------------------------
17,000,000 Norwest Financial, Inc., 5.322%, 9/27/1996 16,714,702
--------------------------------------------------------------- ------------
Total 81,284,318
--------------------------------------------------------------- ------------
INSURANCE--1.5%
---------------------------------------------------------------
10,000,000 Marsh & McLennan Cos., Inc., 5.214%, 10/11/1996 9,815,933
--------------------------------------------------------------- ------------
OIL & OIL FINANCE--0.7%
---------------------------------------------------------------
5,000,000 Chevron U.K. Investment PLC, (Guaranteed by Chevron Corp.),
5.242%, 7/19/1996 4,965,933
--------------------------------------------------------------- ------------
TOTAL COMMERCIAL PAPER 249,066,639
--------------------------------------------------------------- ------------
CORPORATE NOTES--2.7%
- ----------------------------------------------------------------------------------
FINANCE--COMMERCIAL--1.9%
---------------------------------------------------------------
5,000,000 Beta Finance, Inc., 5.540%, 3/27/1997 5,000,000
---------------------------------------------------------------
7,320,000 General Electric Capital International N.V., .000%, 7/10/1996 7,280,310
--------------------------------------------------------------- ------------
Total 12,280,310
--------------------------------------------------------------- ------------
FOOD & BEVERAGE--0.6%
---------------------------------------------------------------
4,000,000 PepsiCo, Inc., 5.830%, 8/27/1996 4,000,342
--------------------------------------------------------------- ------------
</TABLE>
FEDERATED MASTER TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- --------------------------------------------------------------- ------------
<C> <C> <S> <C>
CORPORATE NOTES--CONTINUED
- ----------------------------------------------------------------------------------
INSURANCE--0.2%
---------------------------------------------------------------
$ 1,603,757 Olympic Automobile Receivables Trust 1996-A, (Guaranteed by
Financial Security Assurance, Inc.), 5.250%, 3/15/1997 $ 1,603,757
--------------------------------------------------------------- ------------
TOTAL CORPORATE NOTES 17,884,409
--------------------------------------------------------------- ------------
(B)NOTES-VARIABLE--26.9%
- ----------------------------------------------------------------------------------
BANKING--13.7%
---------------------------------------------------------------
9,840,000 500 South Front St. L.P., (Series A), (Huntington National
Bank, Columbus, OH LOC), 5.440%, 6/6/1996 9,840,000
---------------------------------------------------------------
17,900,000 Beverly Hills Nursing Center, Inc., Medilodge Project (Series
1996), (Society Bank and Trust Co., Toledo, OH, LOC), 5.490%,
6/6/1996 17,900,000
---------------------------------------------------------------
2,500,000 Bissett, William K. and Sheryl B., Multi-Option Adjustable
Rate Notes, (Huntington National Bank, Columbus, OH LOC),
5.440%, 6/6/1996 2,500,000
---------------------------------------------------------------
1,455,000 Continental Commercial Properties, (Huntington National Bank,
Columbus, OH LOC), 5.440%, 6/6/1996 1,455,000
---------------------------------------------------------------
2,380,000 Continental Downtown Properties, (Huntington National Bank,
Columbus, OH LOC), 5.440%, 6/6/1996 2,380,000
---------------------------------------------------------------
700,000 Dave White Chevrolet, Inc., (Series 1996), (Huntington National
Bank, Columbus, OH LOC), 5.440%, 6/6/1996 700,000
---------------------------------------------------------------
7,300,000 Franklin County, OH, (Edison Wielding), (Series 1995),
(Huntington National Bank, Columbus, OH LOC), 5.570%, 6/6/1996 7,300,000
---------------------------------------------------------------
2,000,000 Kentucky Rural Economic Development Authority,
(PNC Bank, N.A. LOC), 5.531%, 6/3/1996 2,000,000
---------------------------------------------------------------
7,500,000 (e) SMM Trust, (Series 1995-B), (Morgan Guaranty Trust Co.,
New York Swap Agreement), 5.438%, 6/3/1996 7,500,000
---------------------------------------------------------------
7,500,000 (e) SMM Trust, (Series 1995-L), (Morgan Guaranty Trust Co.,
New York Swap Agreement), 5.450%, 6/17/1996 7,499,904
---------------------------------------------------------------
19,000,000 (e) SMM Trust, (Series 1996-I), (Morgan Guaranty Trust Co.,
New York Swap Agreement), 5.453%, 6/3/1996 19,000,000
---------------------------------------------------------------
2,975,000 Solon, OH, (Bank One, Cleveland, N.A. LOC), 5.443%, 6/6/1996 2,975,000
---------------------------------------------------------------
</TABLE>
FEDERATED MASTER TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- --------------------------------------------------------------- ------------
<C> <C> <S> <C>
(B)NOTES-VARIABLE--CONTINUED
- ----------------------------------------------------------------------------------
BANKING--CONTINUED
---------------------------------------------------------------
$ 7,375,000 Wendys of Las Vegas and San Antonio, (Huntington National Bank,
Columbus, OH LOC), 5.440%, 6/5/1996 $ 7,375,000
---------------------------------------------------------------
1,600,000 White Brothers Properties, (Series 1996), (Huntington National
Bank, Columbus, OH LOC), 5.440%, 6/6/1996 1,600,000
--------------------------------------------------------------- ------------
Total 90,024,904
--------------------------------------------------------------- ------------
ELECTRICAL EQUIPMENT--3.9%
---------------------------------------------------------------
25,750,498 Northwest Airlines, Inc., (Guaranteed by General Electric Co.),
5.431%, 6/3/1996 25,750,498
--------------------------------------------------------------- ------------
FINANCE--RETAIL--4.1%
---------------------------------------------------------------
27,000,000 Carco Auto Loan Master Trust 1993-2, (Series 1993-2 Class A1),
5.505%, 6/17/1996 27,000,000
--------------------------------------------------------------- ------------
INSURANCE--3.7%
---------------------------------------------------------------
24,000,000 (e) Peoples Security Life Insurance, 5.600%, 6/3/1996 24,000,000
--------------------------------------------------------------- ------------
SOVEREIGN GOVERNMENT--1.5%
---------------------------------------------------------------
10,000,000 (e) Short Term Asset Corp., Secured Class F-1 Bonds, (European Bank
for Reconstruction and Development LIQ), 5.450%, 4/16/1997 10,000,000
--------------------------------------------------------------- ------------
TOTAL NOTES-VARIABLE 176,775,402
--------------------------------------------------------------- ------------
SHORT-TERM MUNICIPALS--0.8%
- ----------------------------------------------------------------------------------
MUNICIPAL--0.8%
---------------------------------------------------------------
5,000,000 New York City, NY, GO Bonds, Fiscal 1996 (Series A-2 Taxable),
(Societe Generale, New York LOC), 5.550%, 9/6/1996 5,000,000
--------------------------------------------------------------- ------------
U.S. TREASURY--2.3%
- ----------------------------------------------------------------------------------
5,100,000 United States Treasury Notes, 6.875%, 2/28/1997 5,161,322
---------------------------------------------------------------
10,000,000 United States Treasury Notes, 7.500%, 1/31/1997 10,151,835
--------------------------------------------------------------- ------------
TOTAL U.S. TREASURY 15,313,157
--------------------------------------------------------------- ------------
</TABLE>
FEDERATED MASTER TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- --------------------------------------------------------------- ------------
<C> <C> <S> <C>
(C)REPURCHASE AGREEMENTS--21.2%
- ----------------------------------------------------------------------------------
$24,000,000 Aubrey G. Lanston and Company, Inc., 5.300%, dated 5/31/1996,
due 6/3/1996 $ 24,000,000
---------------------------------------------------------------
30,000,000 Chase Securities, Inc., 5.300%, dated 5/31/1996, due 6/3/1996 30,000,000
---------------------------------------------------------------
30,000,000 J.P. Morgan & Co., Inc., 5.330%, dated 5/31/1996, due 6/3/1996 30,000,000
---------------------------------------------------------------
25,200,000 PaineWebber Group, Inc., 5.340%, dated 5/31/1996, due 6/3/1996 25,200,000
---------------------------------------------------------------
30,000,000 Swiss Bank Capital Markets, 5.310%, dated 5/31/1996, due
6/3/1996 30,000,000
--------------------------------------------------------------- ------------
TOTAL REPURCHASE AGREEMENTS 139,200,000
--------------------------------------------------------------- ------------
TOTAL INVESTMENTS (AT AMORTIZED COST)(D) $657,229,702
--------------------------------------------------------------- ------------
</TABLE>
(a) Each issue shows the rate of discount at the time of purchase for discount
issues, or the coupon for interest bearing issues.
(b) Current rate and next reset date shown.
(c) The repurchase agreements are fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio. The
investments in the repurchase agreements are through participation in joint
accounts with other Federated funds.
(d) Also represents cost for federal tax purposes.
(e) Denotes a restricted security which is subject to restrictions on resale
under Federal Securities laws. At the end of the period, these securities
amounted to $67,999,904 which represents 10.3% of net assets.
Note: The categories of investments are shown as a percentage of net assets
($657,078,334) at May 31, 1996.
The following acronyms are used throughout this portfolio:
<TABLE>
<S> <C>
GO -- General Obligation
LIQ -- Liquidity Agreement
LOC -- Letter of Credit
PLC -- Public Limited Company
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED MASTER TRUST
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- --------------------------------------------------------------------------------
Total investments in securities, at amortized cost and value $657,229,702
- --------------------------------------------------------------------------------
Cash 247,708
- --------------------------------------------------------------------------------
Income receivable 2,611,314
- -------------------------------------------------------------------------------- ------------
Total assets 660,088,724
- --------------------------------------------------------------------------------
LIABILITIES:
- --------------------------------------------------------------------------------
Income distribution payable $2,956,136
- -------------------------------------------------------------------
Accrued expenses 54,254
- ------------------------------------------------------------------- ----------
Total liabilities 3,010,390
- -------------------------------------------------------------------------------- ------------
NET ASSETS for 657,078,334 shares outstanding $657,078,334
- -------------------------------------------------------------------------------- ------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
$657,078,334 / 657,078,334 shares outstanding $1.00
- -------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED MASTER TRUST
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MAY 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- -----------------------------------------------------------------------------------
Interest $20,928,992
- -----------------------------------------------------------------------------------
EXPENSES:
- -----------------------------------------------------------------------------------
Investment advisory fee $ 1,506,146
- --------------------------------------------------------------------
Administrative personnel and services fee 284,662
- --------------------------------------------------------------------
Custodian fees 56,684
- --------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 37,077
- --------------------------------------------------------------------
Directors'/Trustees' fees 9,771
- --------------------------------------------------------------------
Auditing fees 8,052
- --------------------------------------------------------------------
Legal fees 3,661
- --------------------------------------------------------------------
Portfolio accounting fees 53,833
- --------------------------------------------------------------------
Shareholder services fee 941,341
- --------------------------------------------------------------------
Share registration costs 14,457
- --------------------------------------------------------------------
Printing and postage 5,429
- --------------------------------------------------------------------
Insurance premiums 6,649
- --------------------------------------------------------------------
Taxes 15,553
- --------------------------------------------------------------------
Miscellaneous 3,368
- -------------------------------------------------------------------- -----------
Total expenses 2,946,683
- --------------------------------------------------------------------
Waivers--
- --------------------------------------------------------------------
Waiver of investment advisory fee $(474,186)
- --------------------------------------------------------
Waiver of shareholder services fee (753,073)
- -------------------------------------------------------- ---------
Total waivers (1,227,259)
- -------------------------------------------------------------------- -----------
Net expenses 1,719,424
- ----------------------------------------------------------------------------------- -----------
Net investment income $19,209,568
- ----------------------------------------------------------------------------------- -----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED MASTER TRUST
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
(UNAUDITED) YEAR ENDED
MAY 31, 1996 NOVEMBER 30, 1995
---------------- -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ----------------------------------------------------
OPERATIONS--
- ----------------------------------------------------
Net investment income $ 19,209,568 $ 45,982,852
- ---------------------------------------------------- -------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ----------------------------------------------------
Distributions from net investment income (19,209,568) (45,982,852)
- ---------------------------------------------------- -------------- ----------------
SHARE TRANSACTIONS--
- ----------------------------------------------------
Proceeds from sale of shares 1,528,815,980 3,261,351,161
- ----------------------------------------------------
Net asset value of shares issued to shareholders in
payment of distributions declared 4,817,852 11,188,290
- ----------------------------------------------------
Cost of shares redeemed (1,605,699,773) (3,316,655,250)
- ---------------------------------------------------- -------------- ----------------
Change in net assets resulting from share
transactions (72,065,941) (44,115,799)
- ---------------------------------------------------- -------------- ----------------
Change in net assets (72,065,941) (44,115,799)
- ----------------------------------------------------
NET ASSETS:
- ----------------------------------------------------
Beginning of period 729,144,275 773,260,074
- ---------------------------------------------------- -------------- ----------------
End of period $ 657,078,334 $ 729,144,275
- ---------------------------------------------------- -------------- ---------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED MASTER TRUST
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED) YEAR ENDED NOVEMBER 30,
MAY 31, ---------------------------------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
----------- ----- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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 0.03 0.06 0.04 0.03 0.04 0.06 0.08 0.09 0.07 0.06
- -----------
LESS
DISTRIBUTIONS
- -----------
Distributions
from net
investment
income (0.03) (0.06) (0.04) (0.03) (0.04) (0.06) (0.08) (0.09) (0.07) (0.06)
- ----------- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
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 (A) 2.58% 5.73% 3.78% 2.91% 3.76% 6.22% 8.16% 9.21% 7.33% 6.39%
- -----------
RATIOS TO
AVERAGE
NET ASSETS
- -----------
Expenses 0.46%* 0.46% 0.46% 0.46% 0.46% 0.46% 0.45% 0.45% 0.45% 0.45%
- -----------
Net
investment
income 5.10%* 5.59% 3.72% 2.88% 3.73% 6.13% 7.87% 8.83% 7.03% 6.22%
- -----------
SUPPLEMENTAL
DATA
- -----------
Net
assets,
end of
period
(000
omitted) $657,078 $729,144 $773,260 $868,828 $1,058,671 $1,302,565 $1,495,299 $2,109,661 $2,391,625 $3,237,809
- -----------
</TABLE>
* Computed on an annualized basis.
(a) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(See Notes which are an integral part of the Financial Statements)
FEDERATED MASTER TRUST
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Federated Master Trust (the "Trust") is registered under the Investment Company
Act of 1940, as amended (the "Act"), as a diversified, open-end management
investment company. The investment objective of the Trust is current income
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.
<TABLE>
<S> <C>
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.
REPURCHASE AGREEMENTS--It is the policy of the Trust to require the custodian bank to
take possession, to have legally segregated in the Federal Reserve Book Entry System, or
to have segregated within the custodian bank's vault, all securities held as collateral
under repurchase agreement transactions. Additionally, procedures have been established
by the Trust to monitor, on a daily basis, the market value of each repurchase
agreement's collateral to ensure that the value of collateral at least equals the
repurchase price to be paid under the repurchase agreement transaction.
The Trust will only enter into repurchase agreements with banks and other recognized
financial institutions, such as broker/dealers, which are deemed by the Trust's adviser
to be creditworthy pursuant to the guidelines and/or standards reviewed or established
by the Board of Trustees (the "Trustees"). Risks may arise from the potential inability
of counterparties to honor the terms of the repurchase agreement. Accordingly, the Trust
could receive less than the repurchase price on the sale of collateral securities.
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 Trust'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.
</TABLE>
FEDERATED MASTER TRUST
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Trust may engage in when-issued or
delayed delivery transactions. The Trust 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 Trustees.
The Trust 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 May 31, 1996 is as follows:
</TABLE>
<TABLE>
<CAPTION>
ACQUISITION ACQUISITION
SECURITY DATE COST
-------------------------------------------------- -------------------- -----------
<S> <C> <C>
SMM Trust, Series 1995-B, 5.438%, 6/3/1996 8/4/1995 $7,500,000
SMM Trust, Series 1995-L, 5.450%, 6/17/1996 8/4/1995 7,499,904
SMM Trust, Series 1996-I, 5.453%, 6/3/1996 5/26/1995 19,000,000
Peoples Security Life Insurance, 5.600%, 6/3/1996 5/25/1989-12/13/1990 24,000,000
Short Term Asset Corp., 5.450%, 4/16/1997 5/7/1996 10,000,000
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.
</TABLE>
(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 May
31, 1996, capital paid-in-aggregated $657,078,334.
FEDERATED MASTER TRUST
- --------------------------------------------------------------------------------
Transactions in shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
MAY 31, 1996 NOVEMBER 30, 1995
- --------------------------------------------------- ----------------- ------------------
<S> <C> <C>
Shares sold 1,528,815,980 3,261,351,161
- ---------------------------------------------------
Shares issued to shareholders in payment of
distributions declared 4,817,852 11,188,290
- ---------------------------------------------------
Shares redeemed (1,605,699,773) (3,316,655,250)
- --------------------------------------------------- -------------- --------------
Net change resulting from share transactions (72,065,941) (44,115,799)
- --------------------------------------------------- -------------- --------------
</TABLE>
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Research, the Trust's investment adviser,
(the "Adviser"), receives for its services an annual investment advisory fee
equal to 0.40% of the Trust's average daily net assets. The Adviser will waive,
to the extent of its advisory fee, the amount, if any, by which the Trust's
aggregate annual operating expenses exceed 0.45% of average daily net assets of
the Trust.
ADMINISTRATIVE FEE--Federated Services Company ("FServ"), under the
Administrative Services Agreement, provides the Trust 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 Trust will pay FSS up to 0.25%
of average daily net assets of the Trust shares for the period. The fee paid to
FSS is used to finance certain services for shareholders and to maintain
shareholder accounts. FSS may voluntarily choose to waive any portion of its
fee. FSS can modify or terminate this voluntary waiver at any time at its sole
discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--FServ, through its
subsidiary, Federated Shareholder Services Company serves as transfer and
dividend disbursing agent for the Trust. The fee paid to FServ is based on the
size, type, and number of accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ maintains the Trust'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.
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
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<S> <C>
TRUSTEES OFFICERS
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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. Vice President
Edward L. Flaherty, Jr. Richard B. Fisher
Peter E. Madden Vice President
Gregor F. Meyer Edward C. Gonzales
John E. Murray, Jr. Vice President and Treasurer
Wesley W. Posvar John W. McGonigle
Marjorie P. Smuts Vice President and Secretary
David M. Taylor
Assistant Treasurer
J. Crilley Kelly
Assistant Secretary
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Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risk,
including possible loss of principal. Although money market funds seek to
maintain a stable net asset value of $1.00 per share, there is no assurance that
they will be able to do so.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Trust's prospectus which contains facts
concerning its objective and policies, management fees, expenses and other
information.
FEDERATED
MASTER
TRUST
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
MAY 31, 1996
FEDERATED SECURITIES CORP.
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Distributor
A subsidiary of Federated Investors
Federated Investors Tower
Pittsburgh, PA 15222-3779
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Cusip 314214107
8070106 (7/96)
