-----------------------------------
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-----------------------------------
FEDERATED
-----------------------------------
SHORT-TERM
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-----------------------------------
MUNICIPAL
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-----------------------------------
TRUST
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-----------------------------------
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
DECEMBER 31, 1995
---------------------------------------------------
---------------------------------------------------
---------------------------------------------------
---------------------------------------------------
FEDERATED SECURITIES CORP.
(LOGO)
- ---------------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
Cusip 313907107
Cusip 313907206 LOGO
8020108 (2/96)
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the Semi-Annual Report to Shareholders for Federated
Short-Term Municipal Trust for the six-month period ended December 31, 1995. The
Report begins with an Investment Review by the Fund's portfolio manager,
Jonathan C. Conley. Following his investment review are a complete list of
portfolio holdings and the Financial Statements for the Fund's Institutional
Shares and Institutional Service Shares.
On behalf of its shareholders, the Trust pursues monthly income free from
federal regular income tax through a diverse portfolio of high-quality,
short-term securities issued by municipalities across the nation.*
During the six-month period ended December 31, 1995, tax-free dividends paid to
shareholders totaled $0.21 per share for Institutional Shares and $0.20 for
Institutional Service Shares. Total return was 2.57% for Institutional Shares
and 2.44% for Institutional Service Shares.** The Trust's net asset value
increased slightly, from $10.28 on the first day of the period to $10.33 on the
last day of the period. Trust assets stood at $205.9 million on December 31,
1995.
Thank you for participating in Federated Short-Term Municipal Trust. As always,
we welcome your questions, comments, or suggestions.
Sincerely,
LOGO
Glen R. Johnson
President
February 15, 1996
* Income may be subject to the federal alternative minimum tax and state and
local taxes.
** Performance quoted represents past performance. Investment return and
principal value will fluctuate, so that an investor's shares, when redeemed,
may be worth more or less than their original cost.
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
For the six months ended December 31, 1995, interest rates for the short-term,
fixed-income securities markets in the U.S. declined markedly, as evidence of
reasonable economic growth without rampant inflation continued to be reported.
From June 30th to December 31st, yields for three-year U.S. Treasury notes
dropped from 5.86% to 5.21%, with an interim peak of 6.23% reached on August
17th. In the municipal sector, rates for three-year "AA" general obligation
bonds descended from 4.42% to 4.02%, without any intervening pinnacles.
In this environment, the Trust used the proceeds of the sale or maturity of
$24.7 million par value of pre-refunded issues and variable rate demand
obligations to purchase $19.5 million par value of high-grade general obligation
and optional tender issues. In so doing, the average coupon rate of portfolio
holdings was increased from 5.94 percent to 5.98 percent. The effective maturity
of the portfolio was reduced modestly from 2.82 years to 2.59 years. Both
factors led to a modest decline in portfolio modified duration from 2.49 to
2.33. Part of the aforementioned proceeds were used to accommodate shareholder
redemptions during the six-month interval. Trust shares outstanding declined by
7.9 percent, from 21.6 million to 19.9 million, while the net asset value per
share grew from $10.28 to $10.33.
During the six months ended December 31, 1995, a high quality profile was
maintained for the portfolio of the Trust. Expressed as a percent of aggregate
market value (with accrued interest), the quality of the Trust's holdings was as
follows on December 31, 1995: 31.0% in "AAA" issues; 50.8% in "AA" issues; 15.3%
in "A" issues; and 2.9% in the highest quality tax-exempt, money-market
equivalent issues.
During the report period, an investor in Federated Short-Term Municipal Trust
experienced a total return of 2.57 percent for Institutional Shares.+ This
outcome was comprised of 0.49 percent appreciation in the net asset value per
share and of 2.08 percent net income return.* The Lipper Short-Term Municipal
Debt Fund Average**, for the period, registered a total return of 3.12
percent.***
* For Institutional Service Shares, the total return was 2.44 percent,
comprised of 0.49 percent in NAV appreciation and of 1.95 percent net income
return.
** Lipper figures represent the average of the total returns reported by all of
the mutual funds designated by Lipper Analytical Services, Inc. as falling
into the respective categories indicated. These figures do not reflect sales
charges.
*** For the twelve months ended December 31, 1995, the Institutional Shares'
one-year, five-year and ten-year total returns were 8.09%, 4.90% and 5.27%,
respectively. Institutional Service Shares' average annual one-year and
since inception (8-31-93) total returns were 7.82% and 3.76%, respectively.
The Lipper Short-Term Municipal Debt Fund Average was 7.43%.
+ Performance quoted represents past performance. Investment return and
principal value will fluctuate, so that an investor's shares, when redeemed,
may be worth more or less than their original cost.
FEDERATED SHORT-TERM MUNICIPAL TRUST
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ----------- ------------------------------------------------------ ------- ------------
<C> <S> <C> <C>
SHORT-INTERMEDIATE MUNICIPAL SECURITIES--100.3%
- ----------------------------------------------------------------------
ALABAMA--2.9%
------------------------------------------------------
$ 4,000,000 Alabama State, UT GO Refunding Bonds, 5.55%, 9/1/1997 AA $ 4,114,000
------------------------------------------------------
1,850,000 Alabama State, UT GO Refunding Bonds, 5.70%, 9/1/1998 AA 1,931,474
------------------------------------------------------ ------------
Total 6,045,474
------------------------------------------------------ ------------
ARIZONA--1.2%
------------------------------------------------------
2,500,000 Salt River Project, AZ Agricultural Improvement &
Power District, Electric System Revenue Refunding
Bonds (Series A), 4.00% (Original Issue Yield: 4.05%),
1/1/1996 AA 2,500,050
------------------------------------------------------ ------------
CALIFORNIA--15%
------------------------------------------------------
4,000,000 California State, UT GO Bonds, 10.00%, 4/1/1998 A1 4,508,560
------------------------------------------------------
7,500,000 California State, UT GO Bonds, 6.50%, 11/1/1997 A1 7,861,350
------------------------------------------------------
13,000,000 Los Angeles, CA Wastewater System, Revenue Bonds
(Series D), 6.70% (MBIA Insurance Corporation INS)/
(United States Treasury PRF)/(Original Issue Yield:
6.769%), 12/1/2000 (@102) Aaa 14,711,450
------------------------------------------------------
3,310,000 University of California, Hospital Revenue Refunding
Bonds, 8.00% (UCLA Medical Center)/(MBIA Insurance
Corporation INS), 12/1/1998 Aaa 3,666,288
------------------------------------------------------ ------------
Total 30,747,648
------------------------------------------------------ ------------
DISTRICT OF COLUMBIA--0.5%
------------------------------------------------------
1,000,000 District of Columbia, UT GO Bonds (Series C), 8.00%
(United States Treasury PRF)/(Original Issue Yield:
8.057%), 6/1/1996 (@102) Aaa 1,038,470
------------------------------------------------------ ------------
GEORGIA--2.1%
------------------------------------------------------
4,060,000 Georgia State, UT GO Bonds (Series D), 8.40%, 6/1/1997 Aaa 4,320,693
------------------------------------------------------ ------------
</TABLE>
FEDERATED SHORT-TERM MUNICIPAL TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ----------- ------------------------------------------------------ ------- ------------
<C> <S> <C> <C>
SHORT-INTERMEDIATE MUNICIPAL SECURITIES--CONTINUED
- ----------------------------------------------------------------------
HAWAII--10.6%
------------------------------------------------------
$ 5,000,000 Hawaii State, UT GO Bonds (Series BN), 7.10% (United
States Treasury PRF), 6/1/1998 (@101.5) Aaa $ 5,428,450
------------------------------------------------------
5,500,000 Hawaii State, UT GO Refunding Bonds (Series BV), 5.40%
(Original Issue Yield: 5.45%), 11/1/1997 AA 5,656,035
------------------------------------------------------
4,500,000 Honolulu, HI City & County, UT GO Bonds (Series B),
4.80% (Original Issue Yield: 4.90%), 6/1/1998 AA 4,583,745
------------------------------------------------------
6,000,000 Honolulu, HI City & County, UT GO Refunding &
Improvement Bonds (Series B), 4.20% (Original Issue
Yield: 4.30%), 10/1/1997 AA 6,037,560
------------------------------------------------------ ------------
Total 21,705,790
------------------------------------------------------ ------------
ILLINOIS--3.0%
------------------------------------------------------
2,900,000 Illinois State Sales Tax, Revenue Bonds (Series V),
5.625%, 6/15/1998 AAA 3,008,315
------------------------------------------------------
3,000,000 Illinois State, UT GO Bonds, 5.50%, 8/1/1999 AA- 3,130,590
------------------------------------------------------ ------------
Total 6,138,905
------------------------------------------------------ ------------
IOWA--1.1%
------------------------------------------------------
1,095,000 Sioux City, IA Hospital Authority, Hospital Revenue
Refunding Bonds, 4.15% (Sisters of Mercy Health
System), 8/15/1996 A 1,096,369
------------------------------------------------------
1,140,000 Sioux City, IA Hospital Authority, Hospital Revenue
Refunding Bonds, 4.15% (Sisters of Mercy Health
System)/(MBIA Insurance Corporation INS), 8/15/1997 Aaa 1,144,412
------------------------------------------------------ ------------
Total 2,240,781
------------------------------------------------------ ------------
MICHIGAN--5.1%
------------------------------------------------------
5,000,000 Detroit, MI City School District, UT GO Refunding
Bonds, 5.30% (Michigan State GTD), 5/1/1999 AA 5,164,650
------------------------------------------------------
3,325,000 Michigan State Hospital Finance Authority, Hospital
Refunding & Revenue Bonds (Series 1995), 4.20% (Henry
Ford Health System, MI), 11/15/1998 A 3,320,312
------------------------------------------------------
</TABLE>
FEDERATED SHORT-TERM MUNICIPAL TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ----------- ------------------------------------------------------ ------- ------------
<C> <S> <C> <C>
SHORT-INTERMEDIATE MUNICIPAL SECURITIES--CONTINUED
- ----------------------------------------------------------------------
MICHIGAN--CONTINUED
------------------------------------------------------
$ 2,120,000 Michigan State Hospital Finance Authority, Revenue
Refunding Bonds (Series P), 4.00% (Sisters of Mercy
Health System), 8/15/1996 A $ 2,120,700
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Total 10,605,662
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MINNESOTA--3.5%
------------------------------------------------------
5,000,000 Minnesota State, UT GO Refunding Bonds, 4.70%,
8/1/1997 AA+ 5,075,150
------------------------------------------------------
2,000,000 Southern Minnesota Municipal Power Agency, Power
Supply System Revenue Bonds (Series C), 9.125% (United
States Treasury PRF)/(Original Issue Yield: 9.224%),
1/1/1996 (@102) Aaa 2,040,600
------------------------------------------------------ ------------
Total 7,115,750
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NEVADA--7.8%
------------------------------------------------------
2,000,000 Clark County, NV School District, LT GO Bonds (Series
A), 7.10%, 3/1/1997 A+ 2,076,400
------------------------------------------------------
8,500,000 Nevada State Highway Improvement Authority, Motor
Vehicle Fuel Tax Revenue Bonds, 4.75% (Original Issue
Yield: 4.90%), 4/1/1998 AA 8,632,940
------------------------------------------------------
5,000,000 Nevada State Highway Improvement Authority, Motor
Vehicle Fuel Tax Revenue Bonds, 7.00%, 4/1/1999 AA 5,423,800
------------------------------------------------------ ------------
Total 16,133,140
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NEW HAMPSHIRE--4.2%
------------------------------------------------------
7,900,000 New Hampshire State Turnpike System, Revenue Bonds,
8.25% (United States Treasury PRF)/(Original Issue
Yield: 8.30%), 11/1/1997 (@102) Aaa 8,669,934
------------------------------------------------------ ------------
NEW JERSEY--7.4%
------------------------------------------------------
7,000,000 New Jersey State, UT GO Bonds, 7.20%, 4/15/1999 AA+ 7,681,030
------------------------------------------------------
7,000,000 New Jersey State, UT GO Refunding Bonds (Series C),
6.50%, 1/15/2002 AA+ 7,476,910
------------------------------------------------------ ------------
Total 15,157,940
------------------------------------------------------ ------------
</TABLE>
FEDERATED SHORT-TERM MUNICIPAL TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ----------- ------------------------------------------------------ ------- ------------
<C> <S> <C> <C>
SHORT-INTERMEDIATE MUNICIPAL SECURITIES--CONTINUED
- ----------------------------------------------------------------------
NEW MEXICO--5.3%
------------------------------------------------------
$ 2,250,000 Albuquerque, NM Joint Water & Sewer System, Revenue
Refunding Bonds (Series A), 4.00% (Original Issue
Yield: 4.099%), 7/1/1999 AA $ 2,238,727
------------------------------------------------------
8,650,000 Albuquerque, NM, UT GO Bonds (Series A & B), 4.60%,
7/1/1998 AA 8,777,674
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Total 11,016,401
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NEW YORK--7.9%
------------------------------------------------------
5,000,000 New York City Municipal Water Finance Authority, Water
& Sewer System Revenue Bonds (Series A), 7.20%,
6/15/1999 A 5,474,350
------------------------------------------------------
680,000 New York City Municipal Water Finance Authority, Water
& Sewer System Revenue Bonds (Series C), 6.50% (AMBAC
INS)/(United States Treasury PRF)/(Original Issue
Yield: 6.519%), 6/15/1997 (@101.5) Aaa 716,890
------------------------------------------------------
9,540,000 New York State, UT GO Bonds, 5.75%, 9/15/1999 A 10,060,979
------------------------------------------------------ ------------
Total 16,252,219
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OHIO--3.7%
------------------------------------------------------
3,600,000 Miami Valley Regional Transit Authority, OH, Ltd Tax
GO Bonds, 4.75%, 4/15/1997 MIG1 3,623,796
------------------------------------------------------
4,000,000 Ohio State Public Facilities Commission, Higher Ed
Capital Facilities Revenue Bonds, 4.25% (AMBAC INS),
12/1/1997 Aaa 4,028,880
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Total 7,652,676
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OREGON--2.0%
------------------------------------------------------
2,000,000 Oregon State Department of Transportation, Regional
Light Rail Revenue Bonds, Westside Project, 5.375%
(MBIA Insurance Corporation INS), 6/1/1999 Aaa 2,086,100
------------------------------------------------------
</TABLE>
FEDERATED SHORT-TERM MUNICIPAL TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ----------- ------------------------------------------------------ ------- ------------
<C> <S> <C> <C>
SHORT-INTERMEDIATE MUNICIPAL SECURITIES--CONTINUED
- ----------------------------------------------------------------------
OREGON--CONTINUED
------------------------------------------------------
$ 2,000,000 Oregon State Department of Transportation, Regional
Light Rail Revenue Bonds, Westside Project, 5.50%
(MBIA Insurance Corporation INS), 6/1/2000 Aaa $ 2,110,880
------------------------------------------------------ ------------
Total 4,196,980
------------------------------------------------------ ------------
PENNSYLVANIA--4.6%
------------------------------------------------------
5,000,000 Commonwealth of Pennsylvania, UT GO Second Series
Refunding Bonds, 4.75%, 6/15/1998 AA- 5,085,200
------------------------------------------------------
4,375,000 Pennsylvania Intergovernmental Coop Authority, Special
Tax Revenue Bond, City of Philadelphia Funding
Program, 5.40% (FGIC INS)/(Original Issue Yield:
5.50%), 6/15/1997 Aaa 4,470,069
------------------------------------------------------ ------------
Total 9,555,269
------------------------------------------------------ ------------
TEXAS--7.2%
------------------------------------------------------
1,200,000 Harris County, TX HFDC Daily VRDNs (St. Luke's
Episcopal Hospital) A-1+ 1,200,000
------------------------------------------------------
3,000,000 Mesquite, TX Independent School District No. 1, UT GO
Refunding Bonds, 7.00%, 2/15/1997 A+ 3,108,360
------------------------------------------------------
2,425,000 Texas State Public Property Finance Corp., Revenue
Refunding Bonds, 4.30% (Mental Health & Retardation,
TX)/(CGIC INS), 9/1/1997 Aaa 2,438,483
------------------------------------------------------
4,440,000 Texas State, UT GO Public Finance Authority (Series
B), 8.00%, 10/1/1999 AA 5,037,446
------------------------------------------------------
3,000,000 Texas State, UT GO Public Finance Authority (Series
C), 6.50%, 10/1/1997 AA 3,134,790
------------------------------------------------------ ------------
Total 14,919,079
------------------------------------------------------ ------------
</TABLE>
FEDERATED SHORT-TERM MUNICIPAL TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ----------- ------------------------------------------------------ ------- ------------
<C> <S> <C> <C>
SHORT-INTERMEDIATE MUNICIPAL SECURITIES--CONTINUED
- ----------------------------------------------------------------------
WASHINGTON--5.2%
------------------------------------------------------
$ 3,000,000 Washington State, UT GO Bonds (Series B), 5.00%,
5/1/1998 AA $ 3,065,850
------------------------------------------------------
7,425,000 Washington State, UT GO Bonds (Series B), 5.00%,
5/1/1999 AA 7,630,005
------------------------------------------------------ ------------
Total 10,695,855
------------------------------------------------------ ------------
TOTAL SHORT-INTERMEDIATE MUNICIPAL SECURITIES
(IDENTIFIED COST $203,164,924) 206,708,716
------------------------------------------------------ ------------
SHORT-TERM MUNICIPAL SECURITIES--0.4%
- ----------------------------------------------------------------------
PUERTO RICO--0.4%
------------------------------------------------------
750,000 Puerto Rico Government Development Bank Weekly VRDNs
(Credit Suisse, Zurich LOC) (AT AMORTIZED COST) A-1+ 750,000
------------------------------------------------------ ------------
TOTAL INVESTMENTS (IDENTIFIED COST $203,914,924)(A) $207,458,716
------------------------------------------------------ ------------
</TABLE>
(a) The cost of investments for federal tax purposes amounts to $203,914,924.
The net unrealized appreciation of investments on a federal tax cost basis
amounts to $3,543,792, which is comprised of $3,552,349 appreciation and
$8,557 depreciation at December 31, 1995.
* Please refer to the Appendix of the Statement of Additional Information for an
explanation of the credit ratings. Current credit ratings are unaudited.
Note: The catagories of investments are shown as a percentage of net assets
($205,991,783) at December 31, 1995.
The following acronyms are used throughout this portfolio:
<TABLE>
<S> <C>
AMBAC --American Municipal Bond Assurance Corporation
CGIC --Capital Guaranty Insurance Corporation
FGIC --Financial Guaranty Insurance Company
GO --General Obligation
GTD --Guaranty
HFDC --Health Facility Development Corporation
INS --Insured
LOC --Letter of Credit
LT --Limited Tax
MBIA --Municipal Bond Investors Assurance
PRF --Prerefunded
UT --Unlimited Tax
VRDNs --Variable Rate Demand Notes
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED SHORT-TERM MUNICIPAL TRUST
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- --------------------------------------------------------------------------------
Total investments in securities, at value (identified and tax cost $203,914,924) $207,458,716
- --------------------------------------------------------------------------------
Income receivable 2,539,375
- --------------------------------------------------------------------------------
Receivable for shares sold 70,223
- -------------------------------------------------------------------------------- ------------
Total assets 210,068,314
- --------------------------------------------------------------------------------
LIABILITIES:
- --------------------------------------------------------------------------------
Payable for investments purchased $3,339,741
- -------------------------------------------------------------------
Income distribution payable 710,235
- -------------------------------------------------------------------
Payable to Bank 16,905
- -------------------------------------------------------------------
Accrued expenses 9,650
- ------------------------------------------------------------------- ----------
Total liabilities 4,076,531
- -------------------------------------------------------------------------------- ------------
NET ASSETS for 19,934,788 shares outstanding $205,991,783
- -------------------------------------------------------------------------------- ------------
NET ASSETS CONSIST OF:
- --------------------------------------------------------------------------------
Paid in capital $211,391,071
- --------------------------------------------------------------------------------
Net unrealized appreciation of investments 3,543,792
- --------------------------------------------------------------------------------
Accumulated net realized loss on investments (8,943,080)
- -------------------------------------------------------------------------------- ------------
Total Net Assets $205,991,783
- -------------------------------------------------------------------------------- ------------
NET ASSET VALUE, Offering Price and Redemption Proceeds Per Share:
- --------------------------------------------------------------------------------
Institutional Shares ($200,147,599 / 19,369,213 shares outstanding) $10.33
- -------------------------------------------------------------------------------- ------------
Institutional Service Shares ($5,844,184 / 565,575 shares outstanding) $10.33
- -------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED SHORT-TERM MUNICIPAL TRUST
STATEMENT OF OPERATIONS
SIX MONTHS ENDED DECEMBER 31, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------------------
Interest $4,943,178
- ---------------------------------------------------------------------------------------------
EXPENSES:
- ---------------------------------------------------------------------------------------------
Investment advisory fee $433,959
- ---------------------------------------------------------------------------------
Administrative personnel and services fee 82,111
- ---------------------------------------------------------------------------------
Custodian fees 16,273
- ---------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 23,868
- ---------------------------------------------------------------------------------
Directors'/Trustees' fees 6,624
- ---------------------------------------------------------------------------------
Auditing fees 9,384
- ---------------------------------------------------------------------------------
Legal fees 4,048
- ---------------------------------------------------------------------------------
Portfolio accounting fees 34,717
- ---------------------------------------------------------------------------------
Distribution services fee--Institutional Service Shares 6,874
- ---------------------------------------------------------------------------------
Shareholder services fee--Institutional Shares 264,351
- ---------------------------------------------------------------------------------
Shareholder services fee--Institutional Service Shares 6,874
- ---------------------------------------------------------------------------------
Share registration costs 13,064
- ---------------------------------------------------------------------------------
Printing and postage 11,224
- ---------------------------------------------------------------------------------
Insurance premiums 4,968
- ---------------------------------------------------------------------------------
Taxes 6,992
- ---------------------------------------------------------------------------------
Miscellaneous 2,208
- --------------------------------------------------------------------------------- --------
Total expenses 927,539
- ---------------------------------------------------------------------------------
Waivers--
- ---------------------------------------------------------------------------------
Waiver of investment advisory fee $(141,180)
- ---------------------------------------------------------------------
Waiver of distribution services fee--Institutional Service Shares (6,489)
- ---------------------------------------------------------------------
Waiver of shareholder services fee--Institutional Shares (264,351)
- ---------------------------------------------------------------------
Waiver of shareholder services fee--Institutional Service Shares (385)
- --------------------------------------------------------------------- ---------
Total waivers (412,405)
- --------------------------------------------------------------------------------- --------
Net expenses 515,134
- --------------------------------------------------------------------------------------------- ----------
Net investment income 4,428,044
- --------------------------------------------------------------------------------------------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- ---------------------------------------------------------------------------------------------
Net realized gain (loss) on investments --
- ---------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments 1,087,213
- --------------------------------------------------------------------------------------------- ----------
Net realized and unrealized gain on investments 1,087,213
- --------------------------------------------------------------------------------------------- ----------
Change in net assets resulting from operations $5,515,257
- --------------------------------------------------------------------------------------------- ----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED SHORT-TERM MUNICIPAL TRUST
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
(UNAUDITED) YEAR ENDED
DECEMBER 31, 1995 JUNE 30, 1995
----------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ---------------------------------------------------------
OPERATIONS--
- ---------------------------------------------------------
Net investment income $ 4,428,044 $ 11,058,131
- ---------------------------------------------------------
Net realized gain (loss) on investments ($0 and
$1,189,491, respectively, as computed for federal tax
purposes) -- (3,533,063)
- ---------------------------------------------------------
Net change in unrealized appreciation (depreciation) 1,087,213 5,627,330
- --------------------------------------------------------- --------------- ------------
Change in net assets resulting from operations 5,515,257 13,152,398
- --------------------------------------------------------- --------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ---------------------------------------------------------
Distributions from net investment income
- ---------------------------------------------------------
Institutional Shares (4,322,212) (10,679,008)
- ---------------------------------------------------------
Institutional Service Shares (105,832) (379,123)
- --------------------------------------------------------- --------------- ------------
Change in net assets resulting from distributions to
shareholders (4,428,044) (11,058,131)
- --------------------------------------------------------- --------------- ------------
SHARE TRANSACTIONS--
- ---------------------------------------------------------
Proceeds from sale of Shares 24,542,703 51,547,320
- ---------------------------------------------------------
Net asset value of Shares issued to shareholders in
payment of distributions declared 974,987 2,700,836
- ---------------------------------------------------------
Cost of Shares redeemed (43,548,852) (181,676,422)
- --------------------------------------------------------- --------------- ------------
Change in net assets resulting from Share
transactions (18,031,162) (127,428,266)
- --------------------------------------------------------- --------------- ------------
Change in net assets (16,943,949) (125,333,999)
- ---------------------------------------------------------
NET ASSETS:
- ---------------------------------------------------------
Beginning of period 222,935,732 348,269,731
- --------------------------------------------------------- --------------- ------------
End of period $ 205,991,783 $222,935,732
- --------------------------------------------------------- --------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED SHORT-TERM MUNICIPAL TRUST
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED)
DECEMBER 31, YEAR ENDED JUNE 30,
------------- ------------------------------------------------------------------------------------------------------
1995 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 $10.28 $10.15 $10.37 $10.29 $10.18 $10.14 $10.10 $10.19 $10.24 $10.31
- ---------
INCOME
FROM
INVESTMENT
OPERATIONS
- ---------
Net
investment
income 0.21 0.42 0.40 0.44 0.53 0.60 0.60 0.57 0.54 0.51
- ---------
Net
realized
and
unrealized
gain
(loss)
on
investments 0.05 0.13 (0.22) 0.08 0.11 0.04 0.04 (0.09) (0.05) (0.07)
- --------- -------- ----- ----- ----- ----- ----- ----- ----- ----- -----
Total
from
investment
operations 0.26 0.55 0.18 0.52 0.64 0.64 0.64 0.48 0.49 0.44
- --------- -------- ----- ----- ----- ----- ----- ----- ----- ----- -----
LESS
DISTRIBUTIONS
- ---------
Distributions
from net
investment
income (0.21) (0.42) (0.40) (0.44) (0.53) (0.60) (0.60) (0.57) (0.54) (0.51)
- --------- -------- ----- ----- ----- ----- ----- ----- ----- ----- -----
NET ASSET
VALUE,
END
OF PERIOD $ 10.33 $10.28 $10.15 $10.37 $10.29 $10.18 $10.14 $10.10 $10.19 $10.24
- --------- -------- ----- ----- ----- ----- ----- ----- ----- ----- -----
TOTAL
RETURN
(A) 2.57% 5.52% 1.76% 5.11% 6.40% 6.47% 6.54% 4.84% 4.89% 4.37%
- ---------
RATIOS TO
AVERAGE
NET
ASSETS
- ---------
Expenses 0.47%* 0.46% 0.47% 0.46% 0.46% 0.46% 0.47% 0.46% 0.47% 0.47%
- ---------
Net
investment
income 4.08%* 4.09% 3.89% 4.21% 5.12% 5.89% 5.94% 5.59% 5.25% 4.95%
- ---------
SUPPLEMENTAL
DATA
- ---------
Net
assets,
end of
period
(000
omitted) $200,148 $217,713 $316,810 $318,932 $205,101 $142,493 $139,113 $178,978 $315,154 $483,279
- ---------
Portfolio
turnover 2% 33% 36% 15% 42% 40% 69% 55% 63% 57%
- ---------
</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 SHORT-TERM MUNICIPAL TRUST
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SERVICE SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED) YEAR ENDED
DECEMBER 31, JUNE 30,
------------- -------------------
1995 1995 1994
------------- ------ ------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.28 $10.15 $10.35
- --------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- --------------------------------------------------------
Net investment income 0.20 0.39 0.31
- --------------------------------------------------------
Net realized and unrealized gain (loss) on investments 0.05 0.13 (0.20)
- -------------------------------------------------------- ------ ------ ------
Total from investment operations 0.25 0.52 0.11
- -------------------------------------------------------- ------ ------ ------
LESS DISTRIBUTIONS
- --------------------------------------------------------
Distributions from net investment income (0.20) (0.39) (0.31)
- -------------------------------------------------------- ------ ------ ------
NET ASSET VALUE, END OF PERIOD $10.33 $10.28 $10.15
- -------------------------------------------------------- ------ ------ ------
TOTAL RETURN (A) 2.44% 5.26% 1.08%
- --------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- --------------------------------------------------------
Expenses 0.72%* 0.71% 0.72%*
- --------------------------------------------------------
Net investment income 3.84%* 3.69% 3.65%*
- --------------------------------------------------------
Expense waiver/reimbursement (c) 0.25%* 0.25% 0.18%*
- --------------------------------------------------------
SUPPLEMENTAL DATA
- --------------------------------------------------------
Net assets, end of period (000 omitted) $5,844 $5,233 $31,459
- --------------------------------------------------------
Portfolio turnover 2% 33% 36%
- --------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from August 31, 1993 (date of initial
public offering) to June 30, 1994.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease for the distribution service fee is
reflected in both the expense and net investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
FEDERATED SHORT-TERM MUNICIPAL TRUST
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Federated Short-Term Municipal 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 Trust offers two classes of shares:
Institutional Shares and Institutional Service Shares.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--Short-term securities with remaining maturities of
sixty days or less at the time of purchase may be valued at amortized cost,
which approximates fair market value. All other securities are valued at
prices provided by an independent pricing service.
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.
At June 30, 1995, the Trust, for federal tax purposes, had a capital loss
carryforward of $6,345,635, which will reduce the Trust's taxable income
arising from future net realized gain on investments, if any, to the extent
permitted by the Code, and thus will reduce the amount of the distributions
to shareholders which would otherwise be necessary to relieve the Trust of
any liability for federal tax. Pursuant to the Code, such capital loss
carryforward will expire as follows:
<TABLE>
<CAPTION>
EXPIRATION EXPIRATION
YEAR AMOUNT
------------ -----------
<S> <C>
1996 $2,255,334
1997 $1,097,445
1998 $1,729,378
1999 $ 11,866
2001 $ 62,121
2002 $1,189,491
</TABLE>
FEDERATED SHORT-TERM MUNICIPAL TRUST
- --------------------------------------------------------------------------------
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.
OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
DECEMBER 31, 1995 JUNE 30, 1995
-------------------------- -----------------------------
INSTITUTIONAL SHARES SHARES AMOUNT SHARES AMOUNT
- -------------------------------------- ---------- ------------ ------------ -------------
<S> <C> <C> <C> <C>
Shares sold 2,207,482 $ 22,728,578 4,823,992 $ 48,787,554
- --------------------------------------
Shares issued to shareholders in
payment of distributions declared 87,125 897,368 234,548 2,373,194
- --------------------------------------
Shares redeemed (4,101,572) (42,251,790) (15,099,319) (152,318,952)
- -------------------------------------- ---------- ------------ ------------ -------------
Net change resulting from
Institutional share transactions (1,806,965) $(18,625,844) (10,040,779) $(101,158,204)
- -------------------------------------- ---------- ------------ ------------ -------------
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
DECEMBER 31, 1995 JUNE 30, 1995
-------------------------- ----------------------------
INSTITUTIONAL SERVICE SHARES SHARES AMOUNT SHARES AMOUNT
- --------------------------------------- ---------- ------------ ----------- -------------
<S> <C> <C> <C> <C>
Shares sold 175,986 $ 1,814,125 272,110 $ 2,759,766
- ---------------------------------------
Shares issued to shareholders in
payment of distributions declared 7,536 77,619 32,358 327,642
- ---------------------------------------
Shares redeemed (125,954) (1,297,062) (2,896,311) (29,357,470)
- --------------------------------------- ---------- ------------ ----------- -------------
Net change resulting from
Institutional Service share
transactions 57,568 $ 594,682 (2,591,843) $ (26,270,062)
- --------------------------------------- ---------- ------------ ----------- -------------
Net change resulting from share
transactions (1,749,397) $(18,031,162) (12,632,622) $(127,428,266)
- --------------------------------------- ---------- ------------ ----------- -------------
</TABLE>
FEDERATED SHORT-TERM MUNICIPAL TRUST
- --------------------------------------------------------------------------------
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Management, the Trust's investment adviser,
(the "Adviser"), receives for its services an annual investment advisory fee
equal to .40 of 1% 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 (excluding interest, taxes,
brokerage commissions, expenses of registering and qualifying the Trust and its
shares under federal and state laws and regulations, expenses of withholding
taxes, and extraordinary expenses) exceed .45 of 1% of average daily net assets
of the Trust.
ADMINISTRATIVE FEE--Federated Administrative Services, under the Administrative
Services Agreement, provides the Trust with administrative personnel and
services. This fee is based on the level of average aggregate daily net assets
of all funds advised by subsidiaries of Federated Investors for the period. The
administrative fee received during the period of the Administrative Services
Agreement shall be at least $125,000 per portfolio and $30,000 per each
additional class of shares.
DISTRIBUTION SERVICES FEE--The Trust has adopted a Distribution Plan (the
"Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the
Trust will compensate Federated Securities Corp.("FSC"), the principal
distributor, from the net assets of the Trust to finance activities intended to
result in the sale of the Trust's Institutional Service Shares. The Plan
provides that the Trust may incur distribution expenses up to .25 of 1% of the
average daily net assets of the Institutional Service Shares, annually, to
compensate FSC. The distributor may voluntarily choose to waive any portion of
its fee. The distributor can modify or terminate this voluntary waiver at any
time at its sole discretion.
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement
with Federated Shareholder Services ("FSS"), the Trust will pay FSS up to .25 of
1% of the average daily net assets of the Trust for the period. This fee is to
obtain certain services for shareholders and to maintain shareholder accounts.
FSS may voluntarily choose to waive any portion of its fee. FSS can modify or
terminate this voluntary waiver at any time at its sole discretion. For the
period ended December 31, 1995, Institutional Shares fully waived its
shareholder services fee.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES-- Federated Shareholder
Services Company serves as transfer and dividend disbursing agent for the Trust.
This fee is based on the size, type, and number of accounts and transactions
made by shareholders.
PORTFOLIO ACCOUNTING FEES--Federated Services Company 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.
INTERFUND TRANSACTIONS--During the period ended December 31, 1995, the Trust
engaged in purchase and sale transactions with funds that have a common
investment adviser (or affiliated investment advisers), common
Directors/Trustees, and/or common Officers. These purchase and sale transactions
were made at current market value pursuant to Rule 17a-7 under the Act amounting
to $50,450,000 and $43,800,000, respectively.
FEDERATED SHORT-TERM MUNICIPAL TRUST
- --------------------------------------------------------------------------------
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended December 31, 1995, were as follows:
<TABLE>
<S> <C>
PURCHASES $ 3,325,000
- ------------------------------------------------------------------------------- -----------
SALES $16,755,000
- ------------------------------------------------------------------------------- -----------
</TABLE>
<TABLE>
<S> <C>
TRUSTEES OFFICERS
- ---------------------------------------------------------------------------------------------
John F. Donahue John F. Donahue
Thomas G. Bigley Chairman
John T. Conroy, Jr. Glen R. Johnson
William J. Copeland President
James E. Dowd J. Christopher Donahue
Lawrence D. Ellis, M.D. Executive Vice President
Edward L. Flaherty, Jr. Edward C. Gonzales
Glen R. Johnson Executive Vice President
Peter E. Madden John W. McGonigle
Gregor F. Meyer Executive Vice President and Secretary
John E. Murray, Jr. Richard B. Fisher
Wesley W. Posvar Vice President
Marjorie P. Smuts David M. Taylor
Treasurer
S. Elliott Cohan
Assistant Secretary
</TABLE>
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.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Fund's prospectus which contains facts concerning
