PRESIDENT'S MESSAGE
Dear Shareholder:
I'm pleased to present the Semi-Annual Report to Shareholders for Money
Market Trust, which covers the six-month period ended January 31, 1997.
First, you will find an investment review on the short-term market from the
trust's portfolio manager. Following the investment review are the trust's
portfolio of investments and its financial statements.
Over the reporting period, dividends paid to shareholders during the
reporting period totaled $0.03 per share. At the end of the period, the
trust's net assets reached $481.4 million.
In Money Market Trust, your ready cash is at work pursuing competitive daily
income along with the additional advantages of daily liquidity and stability
of principal.* At the end of the reporting period, more than 40% of the
trust's portfolio was invested in high-quality commercial paper. The
remainder was invested in variable-rate obligations, repurchase agreements,
corporate notes, and a certificate of deposit.
Thank you for your confidence in the daily earning power of Money Market
Trust. We welcome your comments and suggestions.
Sincerely,
[Graphic]
Glen R. Johnson
President
March 15, 1997
* 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 trust is neither
insured nor guaranteed by the U.S. government.
INVESTMENT REVIEW
Money Market 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.
U.S. economic growth has slowed in a nearly ideal fashion. Labor markets are
still tight, but monthly payroll gains have downshifted from 233,000 per
month in the first half of 1996 to 171,000 over the second half. Home
building has slowed as well. Offsetting this consumer slowdown, however,
manufacturing is strengthening. The National Association of Purchasing
Managers Index* has decreased to 52.0% for January but industrial production
and capacity utilization remain high. So while the economy remains mixed,
overall it appears to be advancing at a moderate and sustainable pace.
The lingering concern is that tight labor markets and gently rising wage
pressures will prove inflationary. To date, however, price pressures have
been evident only in the food and energy sectors. Elsewhere in the economy
systematic price pressures are largely absent. The consumer price index has
risen at an annualized rate of just 2.9% over the past six months while the
producer price index increased by 3.5% for the same period.
Thirty-day commercial paper started the reporting period at 5.39% on August
1, 1996, and declined very modestly to 5.35% on January 31, 1997. This lack
of movement reflects the 5.25% Federal Funds target maintained by the
Federal Reserve Board (the "Fed") for the entire six-month time period.
The money market yield curve flattened substantially throughout the
reporting period. One month commercial paper rates decreased 4 basis points
while the six-month rates dropped 22 basis points reflecting the complacent
market attitude toward slow growth and low inflation.
The target average maturity range for the Trust remained in the 35-45 day
target range for the entire period, reflecting a neutral position regarding
Fed policy. In structuring the Trust, there is continued emphasis placed on
positioning 30-35% of the Trust's assets in variable rate demand notes and
accomplishing a modest barbell structure.
During the six months ended January 31, 1997, the net assets of the Trust
decreased from $513.7 to $481.4 million while the 7-day net yield began and
ended the reporting period at 5.04%.** The effective average maturity of the
Trust on January 31, 1997, was 37 days.
* The National Association of Purchasing Managers Index is a diffusion index
that measures the economic activity of the largest manufacturers in the
United States.
** Performance quoted represents past performance and is not indicative of
future results. Yield will vary.
MONEY MARKET TRUST
PORTFOLIO OF INVESTMENTS
JANUARY 31, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
CERTIFICATE OF DEPOSIT -- 2.7%
BANKING -- 2.7%
$ 13,000,000 Mellon Bank N.A., Pittsburgh, 5.500% - 5.620%, 2/21/1997 - 4/9/1997 $ 13,000,000
(A)COMMERCIAL PAPER -- 42.7%
BROKERAGE -- 4.7%
23,000,000 Merrill Lynch & Co., Inc., 5.371% - 5.424%, 2/11/1997 - 4/24/1997 22,868,839
FINANCE - COMMERCIAL -- 24.6%
19,000,000 Asset Securitization Cooperative Corp., 5.359% - 5.453%,
2/7/1997 - 3/25/1997 18,947,999
16,000,000 CIT Group Holdings, Inc., 5.381%, 2/11/1997 - 3/4/1997 15,951,620
20,700,000 Corporate Asset Funding Co., Inc. (CAFCO), 5.378% - 5.658%,
2/19/1997 - 3/20/1997 20,603,783
16,500,000 Falcon Asset Securitization Corp., 5.373% - 5.592%,
2/19/1997 - 7/17/1997 16,266,153
23,000,000 General Electric Capital Corp., 5.410% - 5.784%, 3/6/1997 - 6/30/1997 22,670,190
24,000,000 PREFCO-Preferred Receivables Funding Co., 5.372% - 5.785%,
2/13/1997 - 4/29/1997 23,884,600
Total 118,324,345
FINANCE - RETAIL -- 4.9%
24,000,000 New Center Asset Trust, A1+/P1 Series, 5.454% - 5.510%,
4/21/1997 - 7/10/1997 23,575,194
OIL & OIL FINANCE -- 8.5%
21,000,000 Chevron Transport Corp., (Guaranteed by Chevron Corp.),
5.430% - 5.678%, 3/14/1997 - 6/13/1997 20,771,121
20,000,000 Koch Industries, Inc., 5.583%, 2/3/1997 19,993,800
Total 40,764,921
TOTAL COMMERCIAL PAPER 205,533,299
</TABLE>
MONEY MARKET TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
CORPORATE NOTES -- 8.4%
BROKERAGE -- 3.1%
$ 15,000,000 (b)Goldman Sachs Group, LP, 5.563%, 4/28/1997 $ 15,000,000
FINANCE - AUTOMOTIVE -- 2.0%
4,405,129 Olympic Automobile Receivables Trust 1996-D, 5.430%, 12/15/1997 4,405,129
5,351,983 WFS Financial Owner Trust 1996-C, 5.630%, 9/20/1997 5,351,983
Total 9,757,112
FINANCE - EQUIPMENT -- 3.3%
9,948,600 Capita Equipment Receivables Trust 1996-1, 5.600%, 10/15/1997 9,948,600
5,783,278 Case Equipment Loan Trust 1996-B, 5.563%, 9/15/1997 5,783,279
Total 15,731,879
TOTAL CORPORATE NOTES 40,488,991
(C)VARIABLE RATE OBLIGATIONS -- 30.7%
BANKING -- 17.1%
10,000,000 Bank One, Columbus, N.A., 5.350%, 2/4/1997 9,996,055
10,000,000 Bank One, Milwaukee, WI N.A., 5.270%, 2/4/1997 9,995,011
19,790,000 Beverly Hills Nursing Center, Inc., Medilodge Project Series 1996,
(KeyBank, N.A. LOC), 5.51%, 2/6/1997 19,790,000
21,235,000 Kenny, Donald R. and Cheryl A., (Huntington National Bank, Columbus,
OH LOC), 5.51%, 2/6/1997 21,235,000
7,000,000 SMM Trust, Series 1996-I, (Morgan Guaranty Trust Co., New York Swap
Agreement), 5.488%, 3/1/1997 7,000,000
3,000,000 SMM Trust, Series 1996-L, (Morgan Guaranty Trust Co., New York Swap
Agreement), 5.472%, 2/18/1997 3,000,000
5,600,000 Scranton Times, L.P., (PNC Bank, N.A. LOC), 5.447%, 2/10/1997 5,600,000
5,990,000 Westminster Village Terre Haute, Inc., (Huntington National Bank,
Columbus, OH LOC), 5.46%, 2/6/1997 5,990,000
Total 82,606,066
ELECTRICAL EQUIPMENT -- 5.2%
3,700,000 Alabama State IDA, General Electric Project, (Guaranteed by
General Electric Co.), 5.43%, 2/5/1997 3,700,000
</TABLE>
MONEY MARKET TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(C)VARIABLE RATE OBLIGATIONS -- CONTINUED
ELECTRICAL EQUIPMENT -- CONTINUED
$ 4,032,038 Marta Leasing Ltd., (Guaranteed by General Electric Co.), 5.447%,
2/10/1997 $ 4,032,039
17,422,897 Northwest Airlines, Inc., (Guaranteed by General Electric Co.), 5.422%,
2/10/1997 17,422,897
Total 25,154,936
FINANCE - RETAIL -- 4.2%
20,000,000 Carco Auto Loan Master Trust 1993-2, (Series 1993-2 Class A1), 5.655%,
2/15/1997 20,000,000
INSURANCE -- 4.2%
20,000,000 (b)Peoples Security Life Insurance, 6.110%, 3/1/1997 20,000,000
TOTAL VARIABLE RATE OBLIGATIONS 147,761,002
(D)REPURCHASE AGREEMENTS -- 15.8%
10,000,000 Bear, Stearns and Co., 5.580%, dated 1/31/1997, due 2/3/1997 10,000,000
31,900,000 Daiwa Securities America, Inc., 5.580%, dated 1/31/1997, due 2/3/1997 31,900,000
12,000,000 Fuji Government Securities, Inc., 5.590%, dated 1/31/1997,
due 2/3/1997 12,000,000
12,000,000 PaineWebber Group, Inc., 5.570%, dated 1/31/1997, due 2/3/1997 12,000,000
10,000,000 UBS Securities, Inc., 5.530%, dated 1/31/1997, due 2/3/1997 10,000,000
TOTAL REPURCHASE AGREEMENTS 75,900,000
TOTAL INVESTMENTS, AT AMORTIZED COST(E) $ 482,683,292
</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) Denotes a restricted security which is subject to restrictions on resale
under Federal Securities laws. At January 31, 1997, these securities
amounted to $35,000,000 which represents 7.3% of net assets.
(c) Current rate and next reset date shown.
(d) 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.
(e) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($481,439,563) at January 31, 1997.
The following acronyms are used throughout this portfolio:
IDA -- Industrial Development Authority
LOC -- Letter of Credit
LP -- Limited Partnership
(See Notes which are an integral part of the Financial Statements)
MONEY MARKET TRUST
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1997 (UNAUDITED)
<TABLE>
<S> <C> <C>
ASSETS:
Investments in repurchase agreements $ 75,900,000
Investments in securities 406,783,292
Total investments in securities, at amortized cost and value $ 482,683,292
Income receivable 1,111,391
Receivable for shares sold 31,602
Total assets 483,826,285
LIABILITIES:
Income distribution payable 2,158,473
Payable to Bank 166,563
Accrued expenses 61,686
Total liabilities 2,386,722
NET ASSETS for 481,439,563 shares outstanding $ 481,439,563
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
$481,439,563 / 481,439,563 shares outstanding $1.00
</TABLE>
(See Notes which are an integral part of the Financial Statements)
MONEY MARKET TRUST
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JANUARY 31, 1997 (UNAUDITED)
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 14,499,221
EXPENSES:
Investment advisory fee $ 1,054,173
Administrative personnel and services fee 199,128
Custodian fees 51,439
Transfer and dividend disbursing agent fees and expenses 14,278
Directors'/Trustees' fees 9,264
Auditing fees 6,624
Legal fees 5,152
Portfolio accounting fees 50,036
Shareholder services fee 658,858
Share registration costs 12,328
Printing and postage 4,600
Insurance premiums 3,200
Taxes 7,084
Miscellaneous 2,885
Total expenses 2,079,049
Waivers --
Waiver of investment advisory fee $ (346,605)
Waiver of shareholder services fee (527,086)
Total waivers (873,691)
Net expenses 1,205,358
Net investment income $ 13,293,863
</TABLE>
(See Notes which are an integral part of the Financial Statements)
MONEY MARKET TRUST
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED)
JANUARY 31, YEAR ENDED
1997 JULY 31, 1996
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS --
Net investment income $ 13,293,863 $ 25,115,141
DISTRIBUTIONS TO SHAREHOLDERS --
Distributions from net investment income (13,293,863) (25,115,141)
SHARE TRANSACTIONS --
Proceeds from sale of shares 1,286,603,360 2,528,203,824
Net asset value of shares issued to shareholders in
payment of distributions declared 1,701,380 4,299,023
Cost of shares redeemed (1,320,552,385) (2,526,087,334)
Change in net assets resulting from share (32,247,645) 6,415,513
transactions
Change in net assets (32,247,645) 6,415,513
NET ASSETS:
Beginning of period 513,687,208 507,271,695
End of period $ 481,439,563 $ 513,687,208
</TABLE>
(See Notes which are an integral part of the Financial Statements)
MONEY MARKET TRUST
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED)
JANUARY 31, YEAR ENDED JULY 31,
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
<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 0.05 0.05 0.03 0.03 0.04 0.07 0.08 0.09 0.07
LESS DISTRIBUTIONS
Distributions
from net
investment
income (0.03) (0.05) (0.05) (0.03) (0.03) (0.04) (0.07) (0.08) (0.09) (0.07)
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) 2.56% 5.31% 5.42% 3.18% 3.00% 4.49% 7.05% 8.43% 8.93% 6.94%
RATIOS TO
AVERAGE
NET ASSETS
Expenses 0.46%* 0.46% 0.46% 0.46% 0.46% 0.46% 0.46% 0.46% 0.45% 0.45%
Net
investment
income 5.04%* 5.22% 5.32% 3.11% 2.98% 4.40% 6.88% 8.14% 8.58% 6.72%
Net assets,
end
of period
(000 omitted) $481,440 $513,687 $507,272 $539,983 $712,577 $943,893 $956,538 $1,189,023 $1,649,683 $1,685,914
</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)
MONEY MARKET TRUST
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1997 (UNAUDITED)
1. ORGANIZATION
Money Market Trust (the "Trust") is registered under the Investment Company
Act of 1940, as amended (the "Act"), as an open-end management investment
company. The investment objective of the Trust is stability of principal and
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.
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.
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 Act.
Additional information on each restricted security held at January 31, 1997
is as follows:
SECURITY ACQUISITION DATE ACQUISITION COST
Goldman Sachs Group, LP 1/27/97 $15,000,000
Peoples Security
Life Insurance 7/8/96 $20,000,000
USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual results
could differ from those estimated.
OTHER -- Investment transactions are accounted for on the trade date.
3. SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number
of full and fractional shares of beneficial interest (without par value). At
January 31, 1997, capital paid-in aggregated $481,439,563. Transactions in
shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JANUARY 31, YEAR ENDED
1997 JULY 31, 1996
<S> <C> <C>
Shares sold 1,286,603,360 2,528,203,824
Shares issued to shareholders in payment of distributions declared 1,701,380 4,299,023
Shares redeemed (1,320,552,385) (2,526,087,334)
Net change resulting from share transactions (32,247,645) 6,415,513
</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 (excluding
interest, taxes, brokerage commissions, expenses of registering and
qualifying the Trust and its shares under federal and state law, expenses of
withholding taxes, and extraordinary 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 for the period. The
fee paid to FSS is used to finance certain services for shareholders and to
maintain shareholder accounts. FSS may voluntarily choose to waive any
portion of its fee. FSS can modify or terminate this voluntary waiver at any
time at its sole discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES -- FServ, through
its subsidiary, Federated Shareholder Services Company ("FSSC") serves as
transfer and dividend disbursing agent for the Trust. The fee paid to FSSC
is based on the size, type, and number of accounts and transactions made by
shareholders.
PORTFOLIO ACCOUNTING FEES -- FServ maintains the 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.
TRUSTEES
John F. Donahue
Thomas G. Bigley
John T. Conroy, Jr.
William J. Copeland
James E. Dowd
Lawrence D. Ellis, M.D.
Edward L. Flaherty, Jr.
Peter E. Madden
Gregor F. Meyer
John E. Murray, Jr.
Wesley W. Posvar
Marjorie P. Smuts
OFFICERS
John F. Donahue
Chairman
Glen R. Johnson
President
J. Christopher Donahue
Executive Vice President
Edward C. Gonzales
Executive Vice President
John W. McGonigle
Executive Vice President, Treasurer, and Secretary
Richard B. Fisher
Vice President
J. Crilley Kelly
Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves risk, including
possible loss of principal. Although money market funds seek to maintain a
stable net asset value of $1.00 per share, there is no assurance that they
will be able to do so.
This report is authorized for distribution to prospective investors only
when preceded or accompanied by the trust's prospectus which contains facts
concerning its objective and policies, management fees, expenses and other
information.
MONEY MARKET TRUST
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
JANUARY 31, 1997
[Graphic]
Federated Investors
Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Securities Corp. is the distributor of the fund
and is a subsidiary of Federated Investors.
Cusip 609900105
8030103 (3/97)
[Graphic]
