PRESIDENT'S MESSAGE
Dear Shareholder:
I am pleased to present the Semi-Annual Report to shareholders for Money Market
Trust. This report covers the first half of the trust's fiscal year, which is
the six-month reporting period ended January 31, 1998. It begins with 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
financial statements.
Over the six-month reporting period, dividends paid to shareholders totaled
$0.03 per share. At the end of the reporting period, the trust's net assets
totaled $403.7 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, 44% of the trust's net assets
were invested in high-quality commercial paper. The remainder was invested in
variable-rate obligations, repurchase agreements, short-term 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, 1998
* Money market funds seek to maintain a stable net asset value of $1.00 per
share. There is no assurance that they will be able to do so. An investment
in the trust is not insured or guaranteed by the U.S. government.
INVESTMENT REVIEW
Money Market 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 during 1997 continued at an above-average pace, slowing
only moderately during the third quarter. Specifically, third quarter Gross
Domestic Product ("GDP") registered 3.1% while fourth quarter GDP climbed back
up to 3.9%. Despite the high growth, inflation remained subdued by all measures.
The consumer price index rose just 1.6% on an annualized basis for the six-month
period ended January 31, 1998. For the same time period, the producer price
index actually declined 0.9%, due mostly to a decline in energy prices, while
the employment cost index grew at an annualized 3.7% pace during the second half
of 1997.
Thirty-day commercial paper started the reporting period at 5.53% on August 1,
1997, and then rose as high as 5.98% on December 29, 1997, reflecting year-end
technical pressures. Rates fell back off again in January 1998 with 30-day
commercial paper settling in at the 5.50% level.
The money market yield curve flattened throughout the reporting period. One
month commercial paper rates declined one basis point while six-month rates
declined 14 basis points reflecting the concern in the market about the Asian
contagion and its overall effect on U.S. growth.
The target average maturity range for the trust remained at 35-45 days
throughout the reporting period, reflecting neutral economic and monetary
sentiment. In structuring the trust, there was 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, 1998, net assets of the trust decreased
from $464.0 to $403.7 million while the 7-day net yield increased from 5.23% to
5.25%.* The effective average maturity of the trust on January 31, 1998, was 47
days.
* Performance quoted represents past performance and is not indicative of future
results. Yield will vary. Yields quoted for money market funds most closely
reflect the trust's current earnings.
PORTFOLIO OF INVESTMENTS
MONEY MARKET TRUST
JANUARY 31, 1998 (UNAUDITED)
Money Market Trust
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM NOTES--9.3%
BROKERAGE--3.5%
$ 14,000,000 Goldman Sachs & Co., 5.600%, 4/27/1998 $ 14,000,000
FINANCE - AUTOMOTIVE--2.4%
9,601,442 Ford Credit Auto Owner Trust 1997-B, 5.748%, 10/15/1998 9,601,442
FINANCE - EQUIPMENT--2.1%
3,657,926 Caterpillar Financial Asset Trust 1997-A, 5.791%, 5/25/1998 3,657,926
5,041,594 Caterpillar Financial Asset Trust 1997-B, 5.805%, 11/25/1998 5,041,594
TOTAL 8,699,520
INSURANCE--1.3%
5,372,929 WFS Financial 1997-C Owner Trust, (FSA Gtd), 5.710%, 5,372,929
9/20/1998
TOTAL SHORT-TERM NOTES 37,673,891
CERTIFICATE OF DEPOSIT--2.5%
BANKING--2.5%
10,000,000 Bankers Trust Co., New York, 5.910%, 10/13/1998 9,997,746
(A)COMMERCIAL PAPER--44.0%
BANKING--2.4%
10,000,000 AIG Funding, Inc., (Guaranteed by AIG), 5.501%, 4/16/1998 9,888,383
BROKERAGE--9.3%
8,000,000 Goldman Sachs & Co., 5.608%, 4/6/1998 7,921,351
15,000,000 J.P. Morgan & Co., Inc., 5.608%, 4/6/1998 14,852,533
15,000,000 Merrill Lynch & Co., Inc., 5.514%, 4/13/1998 14,839,067
TOTAL 37,612,951
FINANCE - COMMERCIAL--22.9%
17,000,000 Asset Securitization Cooperative Corp., 5.809% - 5.841%, 16,883,393
3/9/1998 - 3/23/1998
22,600,000 CIESCO, L.P., 5.507% - 5.556%, 4/9/1998 - 4/23/1998 22,364,257
20,000,000 CIT Group Holdings, Inc., 5.586% - 5.654%, 4/3/1998 - 19,806,469
4/6/1998
12,310,000 Falcon Asset Securitization Corp., 5.687% - 5.814%, 2/18/1998 12,193,732
- 6/22/1998
13,500,000 General Electric Capital Corp., 5.709% - 5.823%, 3/2/1998 - 13,362,717
5/29/1998
5,000,000 Sheffield Receivables Corp., 5.577%, 2/6/1998 4,996,146
2,800,000 Southern Electric Generating Co. (SEGCO), (Guaranteed by 2,789,893
Alabama Power Co., Guaranteed by Georgia Power Co.), 5.679%,
2/24/1998
TOTAL 92,396,607
</TABLE>
MONEY MARKET TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)COMMERCIAL PAPER--CONTINUED
FINANCE - RETAIL--7.4%
$ 8,000,000 Associates Corp. of North America, 5.667%, 3/30/1998 $ 7,930,207
22,000,000 New Center Asset Trust, A1+/P1 Series, 5.605% - 5.718%, 21,856,014
2/27/1998 - 4/3/1998
TOTAL 29,786,221
OIL & OIL FINANCE--2.0%
8,000,000 Chevron Transport Corp., (Guaranteed by Chevron Corp.), 7,968,568
5.666% - 5.709%, 2/5/1998 - 3/20/1998
TOTAL COMMERCIAL PAPER 177,652,730
(B)VARIABLE RATE OBLIGATIONS--31.4%
BANKING--15.5%
3,765,000 500 South Front St. LP, Series A, (Huntington National Bank, 3,765,000
Columbus, OH LOC), 5.580%, 2/5/1998
19,330,000 Beverly Hills Nursing Center, Inc., Medilodge Project Series 19,330,000
1996, (KeyBank, N.A. LOC), 5.630%, 2/5/1998
3,300,000 Economic Development Partnership of Alabama, Inc., Series 3,300,000
1998, (Amsouth Bank N.A., Birmingham LOC), 5.625%, 2/5/1998
20,815,000 Kenny, Donald R. and Cheryl A., (Huntington National Bank, 20,815,000
Columbus, OH LOC), 5.630%, 2/5/1998
4,300,000 Scranton Times, LP, (PNC Bank, N.A. LOC), 5.601%, 2/2/1998 4,300,000
5,000,000 Scranton Times, LP, Series 1997, (PNC Bank, N.A. LOC), 5,000,000
5.601%, 2/2/1998
5,990,000 Westminster Village Terre Haute, Inc., (Huntington National 5,990,000
Bank, Columbus, OH LOC), 5.580%, 2/5/1998
TOTAL 62,500,000
ELECTRICAL EQUIPMENT--6.1%
3,700,000 Alabama State IDA, General Electric Project, (General 3,700,000
Electric Co. LOC), 5.560%, 2/5/1998
3,330,631 Marta Leasing Ltd., (Guaranteed by General Electric Co.), 3,330,630
5.601%, 2/2/1998
17,422,897 Northwest Airlines, Inc., (Guaranteed by General Electric 17,422,897
Co.), 5.601%, 2/2/1998
TOTAL 24,453,527
FINANCE - RETAIL--4.9%
20,000,000 Carco Auto Loan Master Trust 1993-2, (Series 1993-2 Class 20,000,000
A1), 5.855%, 2/17/1998
INSURANCE--4.9%
20,000,000 Peoples Security Life Insurance Company, 6.139%, 2/2/1998 20,000,000
TOTAL VARIABLE RATE OBLIGATIONS 126,953,527
(C)REPURCHASE AGREEMENTS--13.9%
8,000,000 Fuji Government Securities, Inc., 5.620%, dated 1/30/1998, 8,000,000
due 2/2/1998
10,000,000 Goldman Sachs Group, LP, 5.650%, dated 1/30/1998, due 10,000,000
2/2/1998
8,000,000 PaineWebber Group, Inc., 5.610%, dated 1/30/1998, due 8,000,000
2/2/1998
</TABLE>
MONEY MARKET TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(C)REPURCHASE AGREEMENTS--CONTINUED
$ 5,000,000 Societe Generale, New York, 5.600%, dated 1/30/1998, due $ 5,000,000
2/2/1998
10,000,000 (d)Chase Government Securities, Inc., 5.550%, dated 10,000,000
1/20/1998, due 4/20/1998
15,000,000 (d)Chase Government Securities, Inc., 5.550%, dated 15,000,000
1/27/1998, due 4/6/1998
TOTAL REPURCHASE AGREEMENTS 56,000,000
TOTAL INVESTMENTS (AT AMORTIZED COST)(E) $ 408,277,894
</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) Although final maturity falls beyond seven days, a liquidity feature is
included in each transaction to permit termination of the repurchase agreement
within seven days.
(e) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($403,689,826) at January 31, 1998.
The following acronyms are used throughout this portfolio:
FSA --Financial Security Assurance
IDA --Industrial Development Authority
LOC --Letter of Credit
LP --Limited Partnership
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF ASSETS AND LIABILITIES
MONEY MARKET TRUST
JANUARY 31, 1998 (UNAUDITED)
<TABLE>
<S> <C> <C>
ASSETS:
Investments in repurchase agreements $ 56,000,000
Investments in securities 352,277,894
Total investments in securities, at amortized cost and value $ 408,277,894
Income receivable 1,577,748
Receivable for shares sold 87,587
Total assets 409,943,229
LIABILITIES:
Income distribution payable 1,971,045
Payable to Bank 4,263,092
Accrued expenses 19,266
Total liabilities 6,253,403
Net Assets for 403,689,826 shares outstanding $ 403,689,826
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
$403,689,826 / 403,689,826 shares outstanding $1.00
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF OPERATIONS
MONEY MARKET TRUST
SIX MONTHS ENDED JANUARY 31, 1998 (UNAUDITED)
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 13,109,523
EXPENSES:
Investment advisory fee $ 916,043
Administrative personnel and services fee 172,827
Custodian fees 21,710
Transfer and dividend disbursing agent fees and expenses 23,256
Directors'/Trustees' fees 10,120
Auditing fees 6,808
Legal fees 4,600
Portfolio accounting fees 47,228
Shareholder services fee 572,527
Share registration costs 14,076
Printing and postage 6,072
Insurance premiums 2,760
Taxes 8,280
Miscellaneous 4,231
Total expenses 1,810,538
Waivers--
Waiver of investment advisory fee $ (299,518)
Waiver of shareholder services fee (458,021)
Total waivers (757,539)
Net expenses 1,052,999
Net investment income $ 12,056,524
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF CHANGES IN NET ASSETS
MONEY MARKET TRUST
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED) YEAR ENDED
JANUARY 31, 1998 JULY 31, 1997
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 12,056,524 $ 25,685,832
DISTRIBUTIONS TO SHAREHOLDERS--
Distributions from net investment income (12,056,524) (25,685,832)
SHARE TRANSACTIONS--
Proceeds from sale of shares 1,129,704,119 2,424,533,267
Net asset value of shares issued to shareholders in payment 1,769,920 4,283,370
of distributions declared
Cost of shares redeemed (1,191,796,132) (2,478,491,926)
Change in net assets resulting from share transactions (60,322,093) (49,675,289)
Change in net assets (60,322,093) (49,675,289)
NET ASSETS:
Beginning of period 464,011,919 513,687,208
End of period $ 403,689,826 $ 464,011,919
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
P SIX MONTHS
ENDED
(UNAUDITED)
JANUARY 31, YEAR ENDED JULY 31,
<S> <C> <C> <C> <C> <C> <C>
1998 1997 1996 1995 1994 1993
NET ASSET VALUE, BEGINNING OF PERIOD $ 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 0.05 0.03 0.03
LESS DISTRIBUTIONS
Distributions from net investment income (0.03) (0.05) (0.05) (0.05) (0.03) (0.03)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN(A) 2.68% 5.19% 5.31% 5.42% 3.18% 3.00%
RATIOS TO AVERAGE NET ASSETS
Expenses 0.46%* 0.46% 0.46% 0.46% 0.46% 0.46%
Net investment income 5.26%* 5.09% 5.22% 5.32% 3.11% 2.98%
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $403,690 $464,012 $513,687 $507,272 $539,983 $712,577*
Computed on an annualized basis.
</TABLE>
(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)
NOTES TO FINANCIAL STATEMENTS
MONEY MARKET TRUST
JANUARY 31, 1998 (UNAUDITED)
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.
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.
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.
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, 1998, capital paid-in aggregated $403,689,826. Transactions in
shares were as follows:
<TABLE>
Six Months Ended Year Ended
January 31, 1998 July 31, 1997
<S> <C> <C>
Shares sold 1,129,704,119 2,424,533,267
Shares issued to shareholders in payment of distributions declared 1,769,920 4,283,370
Shares redeemed (1,191,796,132) (2,478,491,926)
Net change resulting from share transactions (60,322,093) (49,675,289)
</TABLE>
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
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 the
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.
NOTES
NOTES
[Graphic]
Money Market Trust
Federated Securities Corp., Distributor
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
1-800-341-7400
www.federatedinvestors.com
SEMI-ANNUAL REPORT TO SHAREHOLDERS JANUARY 31, 1998
Cusip 609900105
8030103 (3/98)
