1933 Act File No. 33-31259
1940 Act File No. 811-5911
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
Pre-Effective Amendment No.
Post-Effective Amendment No. 24 X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 24 X
FEDERATED MUNICIPAL TRUST
(Exact Name of Registrant as Specified in Charter)
Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779
(Address of Principal Executive Offices)
(412) 288-1900
(Registrant's Telephone Number)
John W. McGonigle, Esquire,
Federated Investors Tower,
Pittsburgh, Pennsylvania 15222-3779
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b)
on _________________ pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a)
x on May 1, 1994 pursuant to paragraph (a) of Rule 485.
Registrant has filed with the Securities and Exchange Commission a
declaration pursuant to Rule 24f-2 under the Investment Company Act of
1940, and:
X filed the Notice required by that Rule on December 15, 1993; or
intends to file the Notice required by that Rule on or about
____________; or
during the most recent fiscal year did not sell any securities pursuant
to Rule 24f-2 under the Investment Company Act of 1940, and, pursuant to
Rule 24f-2(b)(2), need not file the Notice.
Copies to:
Thomas J. Donnelly, Esquire Charles H. Morin, Esquire
Houston, Houston & Donnelly Dickstein, Shapiro & Morin
2510 Centre City Tower 2101 L Street, N.W.
650 Smithfield Street Washington, D.C. 20037
Pittsburgh, Pennsylvania 15222
CROSS-REFERENCE SHEET
This Amendment to the Registration Statement of FEDERATED MUNICIPAL
TRUST, which consists of ten portfolios: (1) Connecticut Municipal Cash
Trust, (a) Institutional Service Shares; (2) Pennsylvania Municipal Cash
Trust, (a) Cash Series Shares and (b) Institutional Service Shares; (3)
Massachusetts Municipal Cash Trust, (a) Institu- tional Service Shares and
(b) BayFunds Shares; (4) Minnesota Municipal Cash Trust, (a) Cash Series
Shares and (b) Institutional Shares; (5) New Jersey Municipal Cash Trust,
(a) Institutional Shares and (b) Institutional Shares; (6) Ohio Municipal
Cash Trust, (a) Cash II Shares and (b) Institutional Shares; (7) Virginia
Municipal Cash Trust, (a) Institutional Shares and (b) Institutional
Service Shares; (8) Alabama Municipal Cash Trust; (9) North Carolina
Municipal Cash Trust; and (10) Maryland Municipal Cash Trust, relates only
to the Maryland Municipal Cash Trust and is comprised of the following:
PART A. INFORMATION REQUIRED IN A PROSPECTUS.
Prospectus Heading
(Rule 404(c) Cross Reference)
Item 1. Cover Page (1-10) Cover Page.
Item 2. Synopsis (1-10) Summary of Fund Expenses.
Item 3. Condensed Financial
Information (1-7) Financial Highlights; (1-9)
Performance Information; (3b)
Tax-Equivalent Yield.
Item 4. General Description of
Registrant (1-10) General Information;
(1-10) Investment Information;
(1-10)
Investment Objective; (1-10)
Investment Policies; (1) Connecticut
Municipal Securities; (2)
Pennsylvania
Municipal Securities;
(3) Massachusetts Municipal
Securities;
(4) Minnesota Municipal Securities;
(5) New Jersey Municipal Securities;
(6) Ohio Municipal Securities; (7)
Virginia Municipal Securities; (8)
Alabama Municipal Securities; (9)
North Carolina Municipal Securities;
(10) Maryland Municipal Securities;
(1-10) Standby Commitments;
(1) Connecticut Investment Risks;
(2)
Pennsylvania Investment Risks;
(3) Massachusetts Investment Risks;
(4) Minnesota Investment Risks;
(5) New
Jersey Investment Risks; (6) Ohio
Investment Risks; (7) Virginia
Investment Risks; (8) Alabama
Investment Risks; (9) North Carolina
Investment Risks; (10) Maryland
Investment Risks;
(1-10) Non-Diversification;
(1-10) Investment Limitations;
(1-10) Regulatory Compliance.
Item 5. Management of the Fund (1-10) Federated Municipal Trust
Information; (1-10) Management of
Federated Municipal Trust; (1-7)
Distribution of Cash Series,
Institutional, Institutional
Service,
or Cash II Shares; (8-10)
Distribution
of Fund Shares; (1-10)
Administration
of the Fund; (7) Expenses of the
Fund
and Institutional or Institutional
Service Shares; (8-10) Expenses
of the
Fund.
Item 6. Capital Stock and Other
Securities (1-10) Dividends; (1-10) Capital
Gains; (1-10) Shareholder
Information;
(1-10) Voting Rights; (1-10)
Massachusetts Partnership Law;
(1-10)
Tax Information; (1-10) Federal
Income
Tax; (1) Connecticut Tax
Considerations; (2) Pennsylvania Tax
Considerations; (3) Massachusetts
Tax
Considerations; (4) Minnesota Tax
Considerations; (5) New Jersey Tax
Considerations; (6) Ohio Tax
Considerations; (7) Virginia Tax
Considerations; (8) Alabama Taxes;
(9)
North Carolina Taxes; (10) Maryland
Tax Considerations; (1-10) Other
State
and Local Taxes; (2,3,4,5,6,7) Other
Classes of Shares.
Item 7. Purchase of Securities Being
Offered (1-10) Net Asset Value; (4a,5a,6a)
Distribution Plan; (3b,7b)
Shareholder
Services Plan; (1-7,10) Investing in
Cash Series, Institutional,
Institutional Services or Cash II
Shares; (8,9) Investing in Fund
Shares; (1-6) Share Purchases;
(1-10)
Minimum Investment Required; (1-10)
What Shares Cost; (2a,4a,6a)
Systematic Investment Program;
(2a,4a,6a) Automatic Investments;
(1-10) Subaccounting Services;
(1-10)
Certificates and Confirmations.
Item 8. Redemption or Repurchase (1-7) Redeeming Cash Series,
Institutional, Institutional Service
or Cash II Shares; (8,9) Redeeming
Fund Shares; (2a,4a,6a) Through a
Financial Institution; (2a,4a,6a,10)
Directly from the Fund;
(1,2,3,4b,5,6b,7) Telephone
Redemption; (1-9) Written Requests;
(10) By Mail; (10) By Writing a
Check;
(1-9) Redemption Before Purchase
Instruments Clear; (1-10) Accounts
With Low Balances.
Item 9. Pending Legal Proceedings None.
PART B. INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION.
Item 10. Cover Page (1-10) Cover Page.
Item 11. Table of Contents (1-10) Table of Contents.
Item 12. General Information and
History (1-10) General Information About
the Fund.
Item 13. Investment Objectives and
Policies (1-10) Investment Objective and
Policies; (1-10) Investment
Limitations.
Item 14. Management of the Fund (1-10) Federated Municipal Trust
Management.
Item 15. Control Persons and Principal
Holders of Securities Not applicable.
Item 16. Investment Advisory and Other
Services (1-10) Investment Advisory Services;
(1-10) Administrative Services;
(4a,5a,6a) Distribution Plan;
(3b,7b)
Shareholder Services Plan.
Item 17. Brokerage Allocation (1-10) Brokerage Transactions.
Item 18. Capital Stock and Other
Securities Not applicable.
Item 19. Purchase, Redemption and Pricing
of Securities Being Offered (1-10) Purchasing Shares;
(1-10) Determining Net Asset Value;
(1-10) Redeeming Shares.
Item 20. Tax Status (1-10) Tax Status.
Item 21. Underwriters Not applicable.
Item 22. Calculation of Performance
Data (1-10) Yield; (1-10) Effective
Yield;
(1,2,3a,4,5,6,7,8,9,10)
Tax-Equivalent
Yield; (1-10) Performance
Comparisons.
Item 23. Financial Statements (1-7) Filed in Part A; (8-10) To be
filed by Amendment
Maryland Municipal Cash Trust
(A Portfolio of Federated Municipal Trust)
Prospectus
The shares of Maryland Municipal Cash Trust (the "Fund") offered by this
prospectus represent interests in a non-diversified portfolio of Federated
Municipal Trust (the "Trust"), an open-end management investment company (a
mutual fund). The Fund invests in Maryland municipal securities to achieve
current income exempt from federal regular income tax and Maryland state and
local income tax consistent with stability of principal and liquidity.
The shares offered by this prospectus are not deposits or obligations of any
bank, are not endorsed or 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 these shares involves investment risks including possible loss
of principal. The Fund attempts to maintain a stable net asset value of
$1.00 per share; there can be no assurance that the Fund will be able to do
so.
This prospectus contains the information you should read and know before you
invest in the Fund. Keep this prospectus for future reference.
The Fund has also filed a Statement of Additional Information dated May 1,
1994, with the Securities and Exchange Commission. The information
contained in the Statement of Additional Information is incorporated by
reference into this prospectus. You may request a copy of the Statement of
Additional Information free of charge by calling 1-800-235-4669. To obtain
other information, or make inquiries about the Fund, contact the Fund at the
address listed in the back of this prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
Prospectus dated May 1, 1994
Table of Contents
Summary of Fund Expenses 1
General Information 2
Investment Information 2
Investment Objective 2
Investment Policies 2
Acceptable Investments 2
Variable Rate Demand Notes 3
Participation Interests 3
Municipal Leases 3
Ratings 3
Credit Enhancement 4
Demand Features 4
When-Issued and Delayed Delivery Transactions 4
Temporary Investments 4
Maryland Municipal Securities 5
Standby Commitments 5
Maryland Investment Risks 5
Non-Diversification 6
Investment Limitations 6
Regulatory Compliance 6
Federated Municipal Trust Information 7
Management of the Trust 7
Board of Trustees 7
Investment Adviser 7
Advisory Fees 7
Adviser's Background 7
Distribution of Fund Shares 7
Administration of the Fund 7
Administrative Services 7
Shareholder Services Plan 8
Custodian 8
Transfer Agent and Dividend Disbursing Agent 8
Legal Counsel 8
Independent Public Accountants 8
Expenses of the Fund 8
Net Asset Value 8
Investing in the Fund 9
Share Purchases 9
Through a Financial Institution 9
By Wire 9
By Mail 9
Minimum Investment Required 9
What Shares Cost 9
Subaccounting Services 10
Certificates and Confirmations 10
Dividends 10
Capital Gains 10
Redeeming Shares 10
Through a Financial Institution 10
Receiving Payment 11
By Wire 11
By Check 11
By Mail 11
By Writing a Check 12
Redemption Before Purchase Instruments Clear 12
Accounts with Low Balances 12
Shareholder Information 12
Voting Rights 12
Massachusetts Partnership Law 12
Tax Information 13
Federal Income Tax 13
Maryland Tax Considerations 14
Other State and Local Taxes 14
Performance Information 14
Addresses Inside Back Cover
Summary of Fund Expenses
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price)
Contingent Deferred Sales Charge (as a percentage of original
purchase price or redemption proceeds, as applicable)
Redemption Fee
Exchange Fee
ANNUAL FUND OPERATING EXPENSES
(As a percentage of average net assets)
Management Fees (after waiver)(1)
12b-1 Fees
Total Other Expenses (after expense reimbursement)
Shareholder Servicing Fee
Total Fund Operating Expenses(2)
(1) The estimated management fee has been reduced to reflect the
voluntary waiver of the management fee. The adviser can terminate this
voluntary waiver at any time at its sole discretion. The maximum management
fee is %.
(2) The Total Fund Operating Expenses are estimated to be % absent the
anticipated voluntary waiver of the management fee and the anticipated
voluntary reimbursement of certain other operating expenses.
* Total Operating Expenses are estimated based on average expenses
expected to be incurred during the period ending October 31, 1994. During the
Course of this period, expenses may be more or less than the average amount
shown.
The purpose of this table is to assist an investor in understanding the
various costs and expenses that a shareholder of the Fund will bear, either
directly or indirectly. For more complete descriptions of the various costs
and expenses, see "Investing in the Fund" and "Federated Municipal Trust
Information." Wire-transferred redemptions of less than $5,000 may be
subject to additional fees.
EXAMPLE
1 year 3 years
You would pay the following
expenses on a $1,000
investment assuming (1) 5%
annual return and (2) redemption
at the end of each time period.
As noted in the table above,
the Fund charges no contingent
deferred sales charge $ $
The above example should not be considered a representation of past or
future expenses. Actual expenses may be greater or less than those shown.
This example is based on estimated data for the Fund's fiscal year ending
October 31, 1994.
General Information
The Trust was established as a Massachusetts business trust under a
Declaration of Trust dated September 1, 1989. The Declaration of Trust
permits the Trust to offer separate series of shares of beneficial interest
representing interests in separate portfolios of securities. The shares in
any one portfolio may be offered in separate classes. With respect to this
Fund, as of the date of this prospectus, the Board of Trustees ("Trustees")
have established one class of shares. This prospectus relates only to these
shares ("Shares") of the Fund, which are designed primarily for financial
institutions acting in an agency or fiduciary capacity as a convenient means
of accumulating an interest in a professionally managed, non-diversified
portfolio investing primarily in short-term Maryland municipal securities. A
minimum initial investment of $10,000 over a 90 day period is required. The
Fund may not be a suitable investment for non-Maryland taxpayers or
retirement plans since it invests primarily in Maryland municipal
securities.
The Fund attempts to stabilize the value of a Share at $1.00. Shares are
currently sold and redeemed at that price.
Investment Information
Investment Objective
The investment objective of the Fund is to provide current income exempt
from federal regular income tax and the personal income taxes imposed by the
State of Maryland and Maryland municipalities consistent with stability of
principal and liquidity. This investment objective cannot be changed
without shareholder approval. While there is no assurance that the Fund
will achieve its investment objective, it endeavors to do so by following
the investment policies described in this prospectus.
Interest income of the Fund that is exempt from the income taxes described
above retains its tax-free status when distributed to the Fund's
shareholders. However, income distributed by the Fund may not necessarily be
exempt from state or municipal taxes in states other than Maryland.
Investment Policies
The Fund pursues its investment objective by investing in a portfolio of
Maryland municipal securities (as defined below) maturing in 13 months or
less. As a matter of investment policy, which cannot be changed without
shareholder approval, at least 80% of the Fund's annual interest income will
be exempt from federal regular income tax and Maryland state and local
income tax. The average maturity of the securities in the Fund's portfolio,
computed on a dollar-weighted basis, will be 90 days or less. Unless
indicated otherwise, the investment policies set forth below may be changed
by the Trustees without shareholder approval. Shareholders will be notified
before any material change in these policies becomes effective.
Acceptable Investments. The Fund invests primarily in debt obligations
issued by or on behalf of the State of Maryland and its political
subdivisions and financing authorities, and obligations of other states,
territories, and possessions of the United States, including the District of
Columbia, and any political subdivision or financing authority of any of
these, the income from which is exempt from federal regular income tax and
Maryland state and local income tax. Examples of Maryland municipal
securities include, but are not limited to:
tax and revenue anticipation notes ("TRANs") issued to finance working
capital needs in anticipation of receiving taxes or other revenues;
bond anticipation notes ("BANs") that are intended to be refinanced
through a later issuance of longer-term bonds;
municipal commercial paper and other short-term notes;
variable rate demand notes;
municipal bonds (including bonds having serial maturities and
pre-refunded bonds) and
leases; and
participation, trust and partnership interests in any of the foregoing
obligations.
Variable Rate Demand Notes. Variable rate demand notes are long-term debt
instruments that have variable or floating interest rates and provide the
Fund with the right to tender the security for repurchase at its stated
principal amount plus accrued interest. Such securities typically bear
interest at a rate that is intended to cause the securities to trade at
par. The interest rate may float or be adjusted at regular intervals
(ranging from daily to annually), and is normally based on a published
interest rate or interest rate index. Most variable rate demand notes allow
the Fund to demand the repurchase of the security on not more than seven
days prior notice. Other notes only permit the Fund to tender the security
at the time of each interest rate adjustment or at other fixed intervals.
See "Demand Features." The Fund treats variable rate demand notes as
maturing on the later of the date of the next interest rate adjustment or
the date on which the Fund may next tender the security for repurchase.
Participation Interests. The Fund may purchase interests in Maryland
municipal securities from financial institutions such as commercial and
investment banks, savings and loan associations, and insurance companies.
These interests may take the form of participations, beneficial interests
in a trust, partnership interests or any other form of indirect ownership
that allows the Fund to treat the income from the investment as exempt from
federal income tax. The Fund invests in these participation interests in
order to obtain credit enhancement or demand features that would not be
available through direct ownership of the underlying Maryland municipal
securities.
Municipal Leases. Municipal leases are obligations issued by state and
local governments or authorities to finance the acquisition of equipment
and facilities. They may take the form of a lease, an installment purchase
contract, a conditional sales contract, or a participation interest in any
of the above.
Ratings. The Maryland municipal securities in which the Fund invests must
be rated in one of the two highest short-term rating categories by one or
more nationally recognized statistical rating organizations ("NRSROs"). An
NRSRO's two highest rating categories are determined without regard for
sub-categories and gradations. For example, securities rated SP-1+, SP-1,
or SP-2 by Standard & Poor's Corporation ("S&P"), MIG-1 or MIG-2 by Moody's
Investors Service, Inc. ("Moody's"), or FIN-1+, FIN-1, and FIN-2 by Fitch
Investors Service, Inc. ("Fitch") are all considered rated in one of the two
highest short-term rating categories. The Fund will follow applicable
regulations in determining whether a security rated by more than one NRSRO
can be treated as being in one of the two highest short-term rating
categories; currently, such securities must be rated by two NRSROs in one of
their two highest rating categories. See "Regulatory Compliance."
Credit Enhancement. Certain of the Fund's acceptable investments may be
credit enhanced by a guaranty, letter of credit, or insurance. The Fund
typically evaluates the credit quality and ratings of credit enhanced
securities based upon the financial condition and ratings of the party
providing the credit enhancement (the "credit enhancer"), rather than the
issuer. However, credit enhanced securities will not be treated as having
been issued by the credit enhancer for diversification purposes, unless the
Fund has invested more than 10% of its assets in securities issued,
guaranteed or otherwise credit enhanced by the credit enhancer, in which
case the securities will be treated as having been issued by both the issuer
and the credit enhancer. The bankruptcy, receivership, or default of the
credit enhancer will adversely affect the quality and marketability of the
underlying security.
Demand Features. The Fund may acquire securities that are subject to puts
and standby commitments ("demand features") to purchase the securities at
their principal amount (usually with accrued interest) within a fixed period
(usually seven days) following a demand by the Fund. The demand feature may
be issued by the issuer of the underlying securities, a dealer in the
securities, or by another third party, and may not be transferred separately
from the underlying security. The Fund uses these arrangements to provide
the Fund with liquidity and not to protect against changes in the market
value of the underlying securities. The bankruptcy, receivership, or
default by the issuer of the demand feature, or a default on the underlying
security or other event that terminates the demand feature before its
exercise, will adversely affect the liquidity of the underlying security.
Demand features that are exercisable even after a payment default on the
underlying security may be treated as a form of credit enhancement.
When-Issued And Delayed Delivery Transactions. The Fund may purchase
securities on a when-issued or delayed delivery basis. These transactions
are arrangements in which the Fund purchases securities with payment and
delivery scheduled for a future time. The seller's failure to complete these
transactions may cause the Fund to miss a price or yield considered to be
advantageous.
Restricted and Illiquid Securities. The Fund may invest in restricted
securities. Restricted securities are any securities in which the Fund may
invest pursuant to its investment objective and policies but which are
subject to restrictions on resale under federal securities laws. Under
criteria established by the Trustees, certain restricted securities are
determined to be liquid. To the extent that restricted securities are not
determined to be liquid, the Fund will limit their purchase, together with
other illiquid securities, to 10% of its net assets.
Temporary Investments. From time to time, when the investment adviser
determines that market conditions call for a temporary defensive posture,
the Fund may invest in tax-exempt or taxable securities such as: obligations
issued by or on behalf of municipal or corporate issuers having the same
quality characteristics as described above; obligations issued or guaranteed
by the U.S. government, its agencies, or instrumentalities; instruments
issued by a U.S. branch of a domestic bank or other deposit institution
having capital, surplus, and undivided profits in excess of $100,000,000 at
the time of investment; and repurchase agreements (arrangements in which the
organization selling the Fund a temporary investment agrees at the time of
sale to repurchase it at a mutually agreed upon time and price).
Although the Fund is permitted to make taxable, temporary investments,
there is no current intention of generating income subject to federal
regular income tax or the personal income taxes imposed by the State of
Maryland.
Maryland Municipal Securities
Maryland municipal securities are generally issued to finance public works,
such as airports, bridges, highways, housing, hospitals, mass transportation
projects, schools, streets, and water and sewer works. They are also issued
to repay outstanding obligations, to raise funds for general operating
expenses, and to make loans to other public institutions and facilities.
Maryland municipal securities include industrial development bonds issued
by or on behalf of public authorities to provide financing aid to acquire
sites or construct and equip facilities for privately or publicly owned
corporations. The availability of this financing encourages these
corporations to locate within the sponsoring communities and thereby
increases local employment.
The two principal classifications of Maryland municipal securities are
"general obligation" and "revenue" bonds. General obligation bonds are
secured by the issuer's pledge of its full faith and credit and taxing power
for the payment of principal and interest. Interest on and principal of
revenue bonds, however, are payable only from the revenue generated by the
facility financed by the bond or other specified sources of revenue.
Revenue bonds do not represent a pledge of credit or create any debt of or
charge against the general revenues of a municipality or public authority.
Industrial development bonds are typically classified as revenue bonds.
Standby Commitments
Some securities dealers are willing to sell municipal securities to the Fund
accompanied by their commitments to repurchase the securities prior to
maturity, at the Fund's option, for the amortized cost of the securities at
the time of repurchase. These arrangements are not used to protect against
changes in the market value of municipal securities. They permit the Fund,
however, to remain fully invested and still provide liquidity to satisfy
redemptions. The cost of municipal securities accompanied by these "standby"
commitments could be greater than the cost of municipal securities without
such commitments. Standby commitments are not marketable or otherwise
assignable and have value only to the Fund. The default or bankruptcy of a
securities dealer giving such a commitment would not affect the quality of
the municipal securities purchased. However, without a standby commitment,
these securities could be more difficult to sell. The Fund enters into
standby commitments only with those dealers whose credit the investment
adviser believes to be of high quality.
Maryland Investment Risks
Yields on Maryland municipal securities depend on a variety of factors,
including: the general conditions of the short-term municipal market and of
the municipal bond market; the size and maturity of the particular offering;
and the rating of the issue. Further, any adverse economic conditions or
developments affecting the State of Maryland or its municipalities could
impact the Fund's portfolio. The ability of the Fund to achieve its
investment objective also depends on the continuing ability of the issuers
of Maryland municipal securities and and demand features for such
securities, or the credit enhancers of either, to meet their obligations for
the payment of interest and principal when due. In addition, from time to
time, the supply of Maryland municipal securities acceptable for purchase by
the Fund could become limited, especially if issuers do not maintain their
high quality short-term credit ratings. Obligations of issuers of Maryland
municipal securities are subject to the provisions of bankruptcy,
insolvency, and other laws affecting the rights and remedies of creditors.
In addition, the obligations of such issuers may become subject to laws
enacted in the future by Congress, state legislators, or referenda extending
the time for payment of principal and/or interest, or imposing other
constraints upon enforcement of such obligations or upon the ability of
states or municipalities to levy taxes. There is also the possibility that,
as a result of litigation or other conditions, the power or ability of any
issuer to pay, when due, the principal of and interest on its municipal
securities may be materially affected.
However, the State of Maryland's substantial resources include a relatively
stable economic structure, high wealth levels, and a long record of sound
financial operations all of which provide superior protection to
bondholders. An expanded discussion of current economic risks associated
with the purchase of Maryland municipal securities is contained in the
Statement of Additional Information.
Non-Diversification
The Fund is a non-diversified investment portfolio. An investment in the
Fund, therefore, will entail greater risk than would exist in a diversified
investment portfolio because the higher percentage of investments among
fewer issuers may result in greater fluctuation in the total market value of
the Fund's portfolio. Any economic, political, or regulatory developments
affecting the value of the securities in the Fund's portfolio will have a
greater impact on the total value of the portfolio than would be the case if
the portfolio were diversified among more issuers.
However, the Fund intends to comply with Subchapter M of the Internal
Revenue Code. This undertaking requires that, at the end of each quarter of
each taxable year, with regard to at least 50% of the Fund's total assets,
no more than 5% of its total assets are invested in the securities of a
single issuer and that with respect to the remainder of the Fund's total
assets, no more than 25% of its total assets are invested in the securities
of a single issuer.
Investment Limitations
The Fund will not borrow money or pledge securities except, under certain
circumstances, the Fund may borrow up to one-third of the value of its total
assets and pledge assets to secure such borrowings. This investment
limitation cannot be changed without shareholder approval.
Regulatory Compliance
The Fund may follow non-fundamental operational policies that are more
restrictive than its fundamental investment limitations, as set forth in
this prospectus and its Statement of Additional Information, in order to
comply with applicable laws and regulations, including the provisions of and
regulations under the Investment Company Act of 1940, as amended. In
particular, the Fund will comply with the various requirements of Rule
2a-7, which regulates money market mutual funds. The Fund will determine
the effective maturity of its investments, as well as its ability to
consider a security as having received the requisite short-term ratings by
NRSROs, according to Rule 2a-7. The Fund may change these operational
policies to reflect changes in the laws and regulations without the approval
of its shareholders.
Federated Municipal Trust Information
Management of the Trust
Board of Trustees. The Trust is managed by a Board of Trustees. The
Trustees are responsible for managing the Fund's business affairs and for
exercising all the Trust's powers except those reserved for the
shareholders. An Executive Committee of the Board of Trustees handles the
Board's responsibilities between meetings of the Board.
Investment Adviser. Investment decisions for the Fund are made by Federated
Management, the Fund's investment adviser, subject to direction by the
Trustees. The adviser continually conducts investment research and
supervision for the Fund and is responsible for the purchase and sale of
portfolio instruments.
Advisory Fees. The adviser receives an annual investment advisory fee
equal to .50 of 1% of the Fund's average daily net assets. The adviser has
undertaken to reimburse the Fund up to the amount of the advisory fee for
operating expenses in excess of limitations established by certain states.
The adviser also may voluntarily choose to waive a portion of its fee or
reimburse other expenses of the Fund, but reserves the right to terminate
such waiver or reimbursement at any time at its sole discretion.
Adviser's Background. Federated Management, a Delaware business trust,
organized on April 11, 1989, is a registered investment adviser under the
Investment Advisers Act of 1940. It is a subsidiary of Federated
Investors. All of the Class A (voting) shares of Federated Investors are
owned by a trust, the trustees of which are John F. Donahue, Chairman and
Trustee of Federated Investors, Mr. Donahue's wife, and Mr. Donahue's son,
J. Christopher Donahue, who is President and Trustee of Federated
Investors.
Federated Management and other subsidiaries of Federated Investors serve as
investment advisers to a number of investment companies and private
accounts. Certain other subsidiaries also provide administrative services
to a number of investment companies. Total assets under management or
administration by these and other subsidiaries of Federated Investors are
approximately 75 billion. Federated Investors, which was founded in 1956
as Federated Investors, Inc., develops and manages mutual funds primarily
for the financial industry. Federated Investors' track record of
competitive performance and its disciplined, risk averse investment
philosophy serve approximately 3,500 client institutions nationwide.
Through these same client institutions, individual shareholders also have
access to this same level of investment expertise.
Distribution of Fund Shares
Federated Securities Corp. is the principal distributor for Shares of the
Fund. It is a Pennsylvania corporation organized on November 14, 1969, and
is the principal distributor for a number of investment companies.
Federated Securities Corp. is a subsidiary of Federated Investors.
Administration of the Fund
Administrative Services. Federated Administrative Services, Inc., a
subsidiary of Federated Investors, provides administrative personnel and
services necessary to operate the Fund. Such services include shareholder
servicing and certain legal and accounting services. Federated
Administrative Services, Inc. provides these at approximate cost.
Shareholder Services Plan. The Fund has adopted a Shareholder Services Plan
(the "Services Plan"). Under the Services Plan, financial institutions will
enter into shareholder service agreements with the Fund to provide
administrative support services to their customers who from time to time may
be owners of record or beneficial owners of Fund Shares. In return for
providing these support services, a financial institution may receive
payments from the Fund at a rate not exceeding 0.25% of the average daily
net assets of the Shares beneficially owned by the financial institution's
customers for whom it is holder of record or with whom it has a servicing
relationship. These administrative services may include, but are not limited
to, the provision of personal service and maintenance of shareholder
accounts.
Custodian. State Street Bank and Trust, Boston, MA is custodian for the
securities and cash of the Fund.
Transfer Agent and Dividend Disbursing Agent. Federated Services Company,
Pittsburgh, PA is transfer agent for the shares of, and dividend disbursing
agent for, the Fund.
Legal Counsel. Legal counsel is provided by Houston, Houston and Donnelly,
Pittsburgh, PA and Dickstein, Shapiro and Morin, Washington, DC
Independent Public Accountants. The independent Public Accountants for
the Fund are Arthur Andersen and Co., Pittsburgh, PA.
Expenses of the Fund
The Fund pays all of its allocable share of Trust expenses. The expenses of
the Fund include, but are not limited to, the cost of: organizing the Trust
and continuing its existence; Trustees' fees; investment advisory and
administrative services; printing prospectuses and other Fund documents for
shareholders; registering the Trust, the Fund, and Shares of the Fund; taxes
and commissions; issuing, purchasing, repurchasing, and redeeming Shares;
fees for custodians, transfer agents, dividend disbursing agents,
shareholder servicing agents, and registrars; printing, mailing, auditing
and certain accounting and legal expenses; reports to shareholders and
governmental agencies; meetings of Trustees and shareholders and proxy
solicitations therefor; insurance premiums; association membership dues; and
such non-recurring and extraordinary items as may arise. However, the
Adviser may voluntarily reimburse the Fund the amount, up to the amount of
the advisory fee, by which operating expenses exceed limitations imposed by
certain states.
Net Asset Value
The Fund attempts to stabilize the net asset value of its Shares at $1.00 by
valuing the portfolio securities using the amortized cost method. The net
asset value per Share is determined by subtracting total liabilities from
total assets and dividing the remainder by the number of shares outstanding.
The Fund cannot guarantee that its net asset value will always remain at
$1.00 per Share.
Investing in the Trust
Share Purchases
Shares are sold on days on which the New York Stock Exchange and the Federal
Reserve Wire System are open for business. Shares may be purchased as
described below. In connection with any sale, Federated Securities Corp. may
from time to time offer certain items of nominal value to any shareholder or
investor. The Fund reserves the right to reject any purchase request.
Through a Financial Institution. Investors may call their financial
institutions to place an order. Orders through a financial institution are
considered received when the Fund receives payment by wire or converts
payment by check from the financial institution into federal funds. It is
the financial institution's responsibility to transmit orders promptly.
Financial institutions may charge additional fees for their services.
By Wire. To purchase by wire, call the Fund. All information needed will
be taken over the telephone, and the order is considered received when State
Street Bank receives payment by wire. Federal funds should be wired as
follows: State Street Bank and Trust Company, Boston, Massachusetts;
Attention; EDGEWIRE; For Credit to: Maryland Municipal Cash Trust; Fund
Number (this number can be found on the account statement or by contacting
the Fund) Group Number or Order Number; Nominee or Institution Name; and ABA
Number 011000028. Shares cannot be purchased by wire on days on which the
New York Stock Exchange is closed and on federal holidays restricting wire
transfers.
By Mail. To purchase by mail, send a check made payable to Maryland
Municipal Cash Trust to State Street Bank and Trust Company, P.O. Box 8604 ,
Boston, MA 02266-8604. Orders by mail are considered received when payment
by check is converted by State Street Bank into federal funds. This is
normally the next business day after the check is received.
Minimum Investment Required
The minimum initial investment is $10,000. However, an account may be opened
with a smaller amount as long as the minimum is reached within 90 days.
Minimum investments will be calculated by combining all accounts maintained
with the Fund. Financial institutions may impose different minimum
investment requirements on their customers.
What Shares Cost
Shares are sold at their net asset value next determined after an order is
received. There is no sales charge imposed by the Fund. Investors who
purchase Shares through a bank or broker may be charged an additional
service fee by that bank or broker.
The net asset value is determined at 12:00 noon (Eastern time), 1:00 p.m.
(Eastern time), and 4:00 p.m. (Eastern time), Monday through Friday, except
on: (i) days on which there are not sufficient changes in the value of the
Fund's portfolio securities that its net asset value might be materially
affected; (ii) days during which no shares are tendered for redemption and
no orders to purchase shares are received; or (iii) the following holidays:
New Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day, and Christmas Day.
Subaccounting Services
Financial institutions are encouraged to open single master accounts.
However, certain financial institutions may wish to use the transfer agent's
subaccounting system to minimize their internal recordkeeping requirements.
The transfer agent charges a fee based on the level of subaccounting
services rendered. Financial institutions may charge or pass through
subaccounting fees as part of or in addition to normal trust or agency
account fees. They may also charge fees for other services provided which
may be related to the ownership of Fund Shares. This prospectus should,
therefore, be read together with any agreement between the customer and the
financial institution with regard to the services provided, the fees charged
for those services and any restrictions and limitations imposed.
Certificates and Confirmations
As transfer agent for the Fund, Federated Services Company maintains a share
account for each shareholder. Share certificates are not issued unless
requested by contacting the Fund or Federated Services Company in writing.
Monthly confirmations are sent to report transactions such as all purchases
and redemptions as well as dividends paid during the month.
Dividends
Dividends are declared daily and paid monthly. Dividends are automatically
reinvested on payment dates in additional Shares of the Fund unless cash
payments are requested by writing to the Fund. Shares purchased by wire
before 1:00 p.m. (Eastern time) begin earning dividends that day. Shares
purchased by check begin earning dividends on the day after the check is
converted, upon instruction of the transfer agent, into federal funds.
Capital Gains
The Fund does not expect to realize any capital gains or losses. If capital
gains or losses were to occur, they could result in an increase or decrease
in dividends. The Fund will distribute in cash or additional Shares any
realized net long-term capital gains at least once every 12 months.
Redeeming Shares
Shares are redeemed at their net asset value next determined after the Fund
receives the redemption request. Redemptions will be made on days on which
the Fund computes its net asset value. Redemption requests must be received
in proper form and can be made as described below.
Through a Financial Institution
Shares may be redeemed by calling the shareholder's financial institution.
Shares will be redeemed at the net asset value next determined after the
Fund receives the redemption request from the financial institution. The
financial institution is responsible for promptly submitting redemption
requests and providing proper written redemption instructions. The financial
institution may charge customary fees and commissions for this service.
An authorization form permitting redemption requests by telephone must first
be completed. Authorization forms and information on this service are
available from Federated Securities Corp. Telephone redemption instructions
may be recorded. If reasonable procedures are not followed by the Fund, it
may be liable for losses due to unauthorized or fraudulent telephone
instructions.
In the event of drastic economic or market changes, a shareholder may
experience difficulty in redeeming by telephone. If this occurs, another
method of redemption, such as "By Mail", should be considered.
Receiving Payment. Pursuant to instructions from the financial institution,
redemptions will be made by check or by wire.
By Wire. Proceeds for redemption requests received before 12:00 noon,
(Eastern time) will be wired the same day but will not be entitled to
that day's dividend. Redemption requests received after 12:00 noon,
(Eastern time) will receive that day's dividends and will be wired the
following business day.
By Check. Normally, a check for the proceeds is mailed within one
business day, but in no event more than seven days, after receipt of a
proper redemption request. Dividends are paid up to and including the
day that a redemption request is processed.
By Mail
Shares may be redeemed by sending a written request to the transfer agent.
The written request should state: Maryland Municipal Cash Trust;
shareholder's name; the account number; and the Share or dollar amount
requested. Sign the request exactly as the Shares are registered.
Shareholders should call the Fund for assistance in redeeming by mail.
If share certificates have been issued, they must be properly endorsed and
should be sent by registered or certified mail with the written request.
Shareholders requesting a redemption of $50,000 or more, a redemption of any
amount to be sent to an address other than that on record with the Fund, or
a redemption payable other than to the shareholder of record must have their
signatures guaranteed by:
a trust company or commercial bank whose deposits are insured by the Bank
Insurance Fund which is administered by the Federal Deposit Insurance
Corporation ("FDIC");
a member firm of the New York, American, Boston, Midwest, or Pacific
Stock Exchange;
a savings bank or savings and loan association whose deposits are insured
by the Savings Association Insurance Fund, which is administered by the
FDIC; or
any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934.
The Fund does not accept signatures guaranteed by a notary public.
The Fund and the transfer agent have adopted standards for accepting
signature guarantees from the above institutions. The Fund may elect in the
future to limit eligible signature guarantors to institutions that are
members of the signature guarantee program. The Fund and its transfer agent
reserve the right to amend these standards at any time without notice.
Normally, a check for the proceeds is mailed within one business day, but in
no event more than seven days, after receipt of a proper written redemption
request. Dividends are paid up to and including the day that a redemption
request is processed.
By Writing a Check
At the shareholder's request, State Street Bank and Trust will establish a
checking account for redeeming shares. A fee is charged for this service.
For further information, contact the Fund.
With this checking account, Shares may be redeemed by writing a check. The
redemption will be made at the net asset value on the date that the check is
presented to the Fund. A check may not be written to close an account. A
shareholder may obtain cash by negotiating the check through the
shareholder's local bank. Checks should never be made payable or sent to
State Street Bank and Trust to redeem Shares. Cancelled checks are sent to
the shareholder each month.
Redemption Before Purchase Instruments Clear
When shares are purchased by check, the proceeds from the redemption of
those shares are not available until the Fund or its agents are reasonably
certain that the purchase check has cleared, which could take up to ten
calendar days.
Accounts with Low Balances
Due to the high cost of maintaining accounts with low balances, the Fund may
redeem shares in any account and pay the proceeds to the shareholder if the
account balance falls below a required minimum value of $10,000 due to
shareholder redemptions.
Before Shares are redeemed to close an account, the shareholder is notified
in writing and allowed 30 days to purchase additional Shares to meet the
minimum requirement.
Shareholder Information
Voting Rights
Each share of the Trust gives the shareholder one vote in Trustee elections
and other matters submitted to shareholders for vote. All shares of all
classes of each portfolio in the Trust have equal voting rights, except that
in matters affecting only a particular portfolio or class, only shares of
that portfolio or class are entitled to vote. As a Massachusetts business
trust, the Trust is not required to hold annual shareholder meetings.
Shareholder approval will be sought only for certain changes in the Trust's
or the Fund's operation and for the election of Trustees under certain
circumstances.
Trustees may be removed by the Trustees or by shareholders at a special
meeting. A special meeting of the shareholders for this purpose shall be
called by the Trustees upon the written request of shareholders owning at
least 10% of the outstanding Shares of the Trust.
Massachusetts Partnership Law
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for obligations of the Trust. To protect
its shareholders, the Trust has filed legal documents with Massachusetts
that expressly disclaim the liability of its shareholders for acts or
obligations of the Trust. These documents require notice of this disclaimer
to be given in each agreement, obligation, or instrument the Trust or its
Trustees enter into or sign.
In the unlikely event a shareholder is held personally liable for the
Trust's obligations, the Trust is required by the Declaration of Trust to
use its property to protect or compensate the shareholder. On request, the
Trust will defend any claim made and pay any judgment against a shareholder
for any act or obligation of the Trust. Therefore, financial loss resulting
from liability as a shareholder will occur only if the Trust itself cannot
meet its obligations to indemnify shareholders and pay judgments against
them.
Tax Information
Federal Income Tax
The Fund will pay no federal income tax because it expects to meet
requirements of the Internal Revenue Code applicable to regulated investment
companies and to receive the special tax treatment afforded to such
companies.
The Fund will be treated as a single, separate entity for federal income tax
purposes so that income (including capital gains) and losses realized by the
Trust's other portfolios will not be combined for tax purposes with those
realized by the Fund.
Shareholders are not required to pay the federal regular income tax on any
dividends received from the Fund that represent net interest on tax-exempt
municipal bonds. However, under the Tax Reform Act of 1986, dividends
representing net interest earned on certain "private activity" bonds issued
after August 7, 1986, may be included in calculating the federal individual
alternative minimum tax or the federal alternative minimum tax for
corporations. The Fund may purchase all types of municipal bonds, including
private activity bonds.
The alternative minimum tax, up to 28% of alternative minimum taxable income
for individuals and 20% for corporations, applies when it exceeds the
regular tax for the taxable year. Alternative minimum taxable income is
equal to the regular taxable income of the taxpayer increased by certain
"tax preference" items not included in regular taxable income and reduced by
only a portion of the deductions allowed in the calculation of the regular
tax.
The Tax Reform Act of 1986 treats interest on certain "private activity"
bonds issued after August 7, 1986, as a tax preference item for both
individuals and corporations. Unlike traditional governmental purpose
municipal bonds, which finance roads, schools, libraries, prisons and other
public facilities, private activity bonds provide benefits to private
parties. The Fund may purchase all types of municipal bonds, including
private activity bonds. Thus, should it purchase any such bonds, a portion
of the Fund's dividends may be treated as a tax preference item.
In addition, in the case of a corporate shareholder, dividends of the Fund
which represent interest on municipal bonds may be subject to the 20%
corporate alternative minimum tax because the dividends are included in a
corporation's "adjusted current earnings." The corporate alternative minimum
tax treats 75% of the excess of a taxpayer's pre-tax "adjusted current
earnings" over the taxpayer's preadjusted alternative minimum taxable income
as a tax preference item. "Adjusted current earnings " is based upon the
concept of a corporation's "earnings and profits." Since "earnings and
profits" generally includes the full amount of any Fund dividend, and
alternative minimum taxable income does not include the portion of the
Fund's dividend attributable to municipal bonds which are not private
activity bonds, 75% of the difference will be included in the calculation of
the corporation's alternative minimum tax.
Dividends of the Fund representing net interest income earned on some
temporary investments and any realized net short-term gains are taxed as
ordinary income.
These tax consequences apply whether dividends are received in cash or as
additional shares.
Maryland Tax Considerations
Under existing Maryland law, shareholders of the Fund who are individuals,
corporations, estates or trusts will not be subject to Maryland state or
local taxes on Fund dividends to the extent that such dividends qualify as
exempt-interest dividends for federal income tax purposes which are
attributable to (i) interest on tax-exempt obligations of Maryland or its
political subdivisions or authorities, (ii) interest on obligations of the
United States or an authority, commission, instrumentality, possession or
territory of the United States, or (iii) gain realized by the Fund from the
sale or exchange of bonds issued by Maryland, a political subdivision of
Maryland, or the United States government (excluding obligations issued by
the District of Columbia, a territory or possession of the United States, or
a department, agency, instrumentality, or political subdivision of the
District, territory or possession).
Distributions, if any, derived from other sources generally will be taxable
for Maryland income tax purposes to shareholders of the Fund who are subject
to Maryland income tax.
Other State and Local Taxes
Income from the Fund is not necessarily free from taxes in states other than
Maryland. Shareholders are urged to consult their own tax advisers
regarding the status of their accounts under state and local tax laws.
Performance Information
From time to time the Fund advertises its yield, effective yield, and
tax-equivalent yield.
Yield represents the annualized rate of income earned on an investment over
a seven-day period. It is the annualized dividends earned during the period
on an investment shown as a percentage of the investment. The effective
yield is calculated similarly to the yield, but when annualized, the income
earned by an investment is assumed to be reinvested daily. The effective
yield will be slightly higher than the yield because of the compounding
effect of this assumed reinvestment. The tax-equivalent yield is calculated
similarly to the yield, but is adjusted to reflect the taxable yield that
would have to be earned to equal the Fund's tax exempt yield, assuming a
specific tax rate.
Advertisements and sales literature may also refer to total return. Total
return represents the change, over a specified period of time, in the value
of an investment in the Fund after reinvesting all income distributions. It
is calculated by dividing that change by the initial investment and is
expressed as a percentage.
From time to time, the Fund may advertise its performance using certain
reporting services and/or compare its performance to certain indices.
Fund
Maryland Municipal Cash Trust Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
Investment Advisor
Federated Management Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
Custodian
State Street Bank and Trust Company P.O. Box 8602
Boston, Massachusetts 02266-8602
Transfer Agent and
Dividend Disbursing Agent
Federated Services Company Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
Legal Counsel
Houston, Houston & Donnelly 2510 Centre City Tower
Pittsburgh, Pennsylvania 15222
Legal Counsel
Dickstein, Shapiro & Morin 2101 L Street, N.W.
Washington, D.C. 20037
Independent Public Accountants
Arthur Andersen & Co. 2100 PPG Place
Pittsburgh, Pennsylvania 15222
Maryland Municipal Cash Trust
Prospectus
A non-diversified Portfolio of Federated Municipal Trust,
an Open-End Management Investment Company
Prospectus dated
FEDERATED SECURITIES CORP.
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
MARYLAND MUNICIPAL CASH TRUST
(A PORTFOLIO OF FEDERATED MUNICIPAL TRUST)
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information should be read with the
prospectus of Maryland Municipal Cash Trust (the "Fund") dated May 1,
1994. This Statement is not a prospectus itself. To receive a copy of
the prospectus, write or call Federated Municipal Trust.
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
Statement dated May 1, 1994
FEDERATED SECURITIES CORP.
---------------------------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
A subsidiary of FEDERATED INVESTORS
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
GENERAL INFORMATION ABOUT THE FUND 1
- ---------------------------------------------------------------
INVESTMENT OBJECTIVE AND POLICIES 1
- ---------------------------------------------------------------
Acceptable Investments 1
When-Issued and Delayed
Delivery Transactions 1
Temporary Investments 2
Investment Limitations 2
Maryland Investment Risks 4
TRUST MANAGEMENT 4
- ---------------------------------------------------------------
Officers and Trustees 4
Fund Ownership 6
The Funds 6
Trustee Liability 7
INVESTMENT ADVISORY SERVICES
7
- ---------------------------------------------------------------
Adviser to the Fund 7
Advisory Fees 7
ADMINISTRATIVE SERVICES 7
- ---------------------------------------------------------------
BROKERAGE TRANSACTIONS 7
- ---------------------------------------------------------------
PURCHASING SHARES 8
- ---------------------------------------------------------------
Conversion to Federal Funds 8
DETERMINING NET ASSET VALUE 8
- ---------------------------------------------------------------
Use of Amortized Cost Method 8
REDEEMING SHARES 9
- ---------------------------------------------------------------
Redemption in Kind 9
TAX STATUS 9
- ---------------------------------------------------------------
The Fund's Tax Status 9
YIELD 10
- ---------------------------------------------------------------
EFFECTIVE YIELD 10
- ---------------------------------------------------------------
TAX-EQUIVALENT YIELD 10
- ---------------------------------------------------------------
Tax-Equivalency Table 10
PERFORMANCE COMPARISONS 11
- ---------------------------------------------------------------
APPENDIX 12
- ---------------------------------------------------------------
GENERAL INFORMATION ABOUT THE FUND
- --------------------------------------------------------------------------------
The Fund is a portfolio in Federated Municipal Trust (the "Trust"), which was
established as a Massachusetts business trust under a Declaration of Trust dated
September 1, 1989.
INVESTMENT OBJECTIVE AND POLICIES
- --------------------------------------------------------------------------------
The Fund's investment objective is to provide current income exempt from federal
regular income tax and the income tax imposed by the State of Maryland and
Maryland municipalities consistent with stability of principal. The investment
objective cannot be changed without approval of shareholders.
ACCEPTABLE INVESTMENTS
The Fund invests primarily in debt obligations issued by or on behalf of the
State of Maryland and of other states, territories and possessions of the United
States, including the District of Columbia, and any political subdivision or
financing authority of any of these, the income from which is, in the opinion of
qualified legal counsel, exempt from both federal regular income tax and
Maryland state and local income tax.
When determining whether a Maryland municipal security presents minimal credit
risks, the investment adviser considers the creditworthiness of the issuer of
the security, the issuer of a demand feature if the Fund has the unconditional
right to demand payment for the security, or the guarantor of payment by either
of those issuers.
If a security loses its rating or the security's rating is reduced below the
required minimum after the Fund purchased it, the Fund is not required to sell
the security. The investment adviser considers this event, however, in its
determination of whether the Fund should continue to hold the security in its
portfolio. If ratings made by Moody's Investors Service, Inc. ("Moody's") or
Standard & Poor's Corporation ("S&P") change because of changes in those
organizations or in their rating systems, the Fund will try to use comparable
ratings as standards in accordance with the investment policies described in the
Fund's prospectus.
MUNICIPAL LEASES
The Fund may purchase municipal securities in the form of participation
interests which represent undivided proportional interests in lease
payments by a governmental or non-profit entity. The lease payments and
other rights under the lease provide for and secure the payments on the
certificates. Lease obligations may be limited by municipal charter or
the nature of the appropriation for the lease. In particular, lease
obligations may be subject to periodic appropriation. If the entity does
not appropriate funds for future lease payments, the entity cannot be
compelled to make such payments. Furthermore, a lease may provide that
the participants cannot accelerate lease obligations upon default. The
participants would only be able to enforce lease payments as they became
due. In the event of a default or failure of appropriation, unless the
participation interests are credit enhanced, it is unlikely that the
participants would be able to obtain an acceptable substitute source of
payment.
Under the criteria currently established by the Board of Trustees
("Trustees"), the Fund's investment adviser must consider the following
factors in determining the liquidity of municipal lease securities: (1)
the frequency of trades and quotes for the security; (2) the volatility
of quotations and trade prices for the security; (3) the number of
dealers willing to purchase or sell the security and the number of
potential purchasers; (4) dealer undertakings to make a market in the
security; (5) the nature of the security and the nature of the
marketplace trades; (6) the rating of the security and the financial
condition and prospects of the issuer of the security; and (7) such other
factors as may be relevant to the Fund's ability to dispose of the
security. In the case of a municipal lease security, the adviser must
also consider the following additional factors: (a) whether the lease can
be terminated by the lessee; (b) the potential recovery, if any, from a
sale of the leased property upon termination of the lease; (c) the
lessee's general credit strength; (d) the likelihood that the lessee will
discontinue appropriating funding for the leased property because the
property is no longer deemed essential to its operations; and (e) any
credit enhancement or legal recourse provided upon an event of
nonappropriation or other termination of the lease.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
These transactions are arrangements in which the Fund purchases securities with
payment and delivery scheduled for a future time. The Fund engages in
when-issued and delayed delivery transactions only for the purpose of acquiring
portfolio securities consistent with the Fund's investment objective and
policies, not for investment leverage.
These transactions are made to secure what is considered to be an advantageous
price and yield for the Fund. Settlement dates may be a month or more after
entering into these transactions, and the market values of the securities
purchased may vary from the purchase prices.
No fees or other expenses, other than normal transaction costs, are incurred.
However, liquid assets of the Fund sufficient to make payment for the securities
to be purchased are segregated on the Fund's records at the trade date. These
securities are marked to market daily and maintained until the transaction is
settled.
The Fund may engage in these transactions to an extent that would cause the
segregation of an amount up to 20% of the total value of its assets.
TEMPORARY INVESTMENTS
The Fund may also invest in high quality temporary investments during times of
unusual market conditions for defensive purposes and to maintain liquidity.
REPURCHASE AGREEMENTS
Repurchase agreements are arrangements in which banks, broker/dealers and
other recognized financial institutions sell U.S. government securities
or other securities to the Fund and agree at the time of sale to
repurchase them at a mutually agreed upon time and price within one year
from the date of acquisition. The Fund or its custodian will take
possession of the securities subject to repurchase agreements and these
securities will be marked to market daily. To the extent that the
original seller does not repurchase the securities from the Fund, the
Fund could receive less than the repurchase price on any sale of such
securities. In the event that a defaulting seller filed for bankruptcy or
became insolvent, disposition of such securities by the Fund might be
delayed pending court action. The Fund believes that under the regular
procedures normally in effect for custody of the Fund's portfolio
securities subject to repurchase agreements, a court of competent
jurisdiction would rule in favor of the Fund and allow retention or
disposition of such securities. The Fund will only enter into repurchase
agreements with banks and other recognized financial institutions, such
as broker/dealers, which are deemed by the Fund's investment adviser to
be creditworthy pursuant to guidelines established by the Trustees.
INVESTMENT LIMITATIONS
SELLING SHORT AND BUYING ON MARGIN
The Fund will not sell any securities short or purchase any securities on
margin but may obtain such short-term credits as may be necessary for
clearance of transactions.
ISSUING SENIOR SECURITIES AND BORROWING MONEY
The Fund will not issue senior securities except that the Fund may borrow
money directly or through reverse repurchase agreements in amounts up to
one-third of the value of its net assets, including the amounts borrowed.
The Fund will not borrow money or engage in reverse repurchase agreements
for investment leverage, but rather as a temporary, extraordinary, or
emergency measure or to facilitate management of the portfolio by
enabling the Fund to meet redemption requests when the liquidation of
portfolio securities is deemed to be inconvenient or disadvantageous. The
Fund will not purchase any securities while borrowings in excess of 5% of
its total assets are outstanding.
PLEDGING ASSETS
The Fund will not mortgage, pledge, or hypothecate any assets except to
secure permitted borrowings. In those cases, it may pledge assets having
a market value not exceeding the lesser of the dollar amounts borrowed or
15% of the value of its total assets at the time of the pledge.
INVESTING IN REAL ESTATE
The Fund will not purchase or sell real estate or real estate limited
partnership's, although it may invest in securities of issuers whose
business involves the purchase or sale of real estate or in securities
which are secured by real estate or interests in real estate.
INVESTING IN COMMODITIES
The Fund will not purchase or sell commodities, commodity contracts, or
commodity futures contracts.
UNDERWRITING
The Fund will not underwrite any issue of securities, except as it may be
deemed to be an underwriter under the Securities Act of 1933 in
connection with the sale of securities in accordance with its investment
objective, policies and limitations.
LENDING CASH OR SECURITIES
The Fund will not lend any of its assets, except that it may acquire
publicly or nonpublicly issued Maryland municipal securities or temporary
investments or enter into repurchase agreements, in accordance with its
investment objective, policies, limitations, and its Declaration of
Trust.
CONCENTRATION OF INVESTMENTS
The Fund will not purchase securities if, as a result of such purchase,
25% or more of the value of its total assets would be invested in any one
industry or in industrial development bonds or other securities, the
interest upon which is paid from revenues of similar types of projects.
However, the Fund may invest as temporary investments more than 25% of
the value of its assets in cash or cash items, securities issued or
guaranteed by the U.S. government, its agencies, or instrumentalities, or
instruments secured by these money market instruments, such as repurchase
agreements.
The above investment limitations cannot be changed without shareholder approval.
The following investment limitations, however, may be changed by the Trustees
without shareholder approval. Shareholders will be notified before any material
change in these limitations becomes effective.
RESTRICTED SECURITIES
The Fund will not invest more than 10% of its total assets in securities
subject to restrictions on resale under the Securities Act of 1933 except
for certain restricted securities which meet the criteria for liquidity
as established by the Trustees.
ILLIQUID SECURITIES
The Fund will not invest more than 10% of the value of its net assets in
securities which are illiquid, including repurchase agreements providing
for settlement in more than seven days after notice, certain restricted
securities not determined by the Trustees to be liquid, and
non-negotiable fixed time deposits with maturities over seven days.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES
The Fund will not purchase securities of other investment companies,
except as part of a merger, consolidation, reorganization, or other
acquisition.
INVESTING IN NEW ISSUERS
The Fund will not invest more than 5% of the value of its total assets in
industrial development bonds or other municipal securities where the
principal and interest is the responsibility of companies (or guarantors,
where applicable) with less than three years of continuous operations,
including the operation of any predecessor.
INVESTING IN ISSUERS WHOSE SECURITIES ARE OWNED BY OFFICERS AND TRUSTEES OF
THE TRUST
The Fund will not purchase or retain the securities of any issuer if the
officers and Trustees of the Trust or its investment adviser, owning
individually more than 1/2 of 1% of the issuer's securities, together own
more than 5% of the issuer's securities.
INVESTING IN MINERALS
The Fund will not purchase or sell oil, gas, or other mineral exploration
or development programs, or leases.
Except with respect to borrowing money, if a percentage limitation is adhered to
at the time of investment, a later increase or decrease in percentage resulting
from any change in value or net assets will not result in a violation of such
restriction.
The Fund does not expect to borrow money or pledge securities in excess of 5% of
the value of its net assets during the coming fiscal year.
In order to comply with certain state restrictions, the Fund will not invest in
real estate limited partnership's or oil, gas or other mineral leases.
For purpose of its policies and limitations, the Fund considers certificates of
deposit and demand and time deposits issued by a U.S. branch of a domestic bank
or savings and loan having capital, surplus, and undivided profits in excess of
$100,000,000 at the time of investment to be "cash items".
MARYLAND INVESTMENT RISKS
The State of Maryland's economy differs from that of the nation, with a far
smaller contribution to jobs and earnings coming from manufacturing, and a
heavier dependence on government, services (particularly business, engineering,
and management services), and trade. Much of Maryland's economic structure
reflects its location adjacent to Washington, DC. The state was little affected
by the recession of the early 1980's with total jobs growing at a pace 23%
faster that the nation's during the entire decade. In the 1990-91 recession, the
state experienced significant job losses in the construction and retail trade
sectors; however, throughout the recession and during the past two years, the
state's unemployment rate remained below that of the nation. Slow growth is now
apparent in several sectors of the state's economy.
State finances are well managed with strong administrative control exercised by
the State Board of Public Works, which is comprised of the governor, treasurer,
and the controller. The revenue stream is diversified, relying on sales and
income taxes; state property tax continues to be levied to provide for a portion
of debt service. The State experienced moderate financial strain from 1990
through 1992, requiring successive budgetary adjustments and remedial action to
control operating deficits. The fiscal 1994 budget relies on conservative
revenue estimates and economic growth, and establishes a rainy day fund at 5% of
General Fund revenues, up from the 2% target level of prior years.
Maryland has been among the most heavily indebted of the states, although its
position is more moderate given the borrowing associated with the state's
assumption of local school construction costs. Closely following the annual
recommendation of its capital debt affordability committee, the state has
restrained borrowing in recent years, yielding a more modest relative debt
position.
The Fund's concentration in securities issued by the State and its political
subdivisions provides a greater level of risk than a fund which is diversified
across numerous states and municipal entities. The ability of the State or its
municipalities to meet their obligations will depend on the availability of tax
and other revenues; economic, political, and demographic conditions within the
State; and the underlying fiscal condition of the State, and its municipalities.
TRUST MANAGEMENT
- --------------------------------------------------------------------------------
OFFICERS AND TRUSTEES
Officers and Trustees are listed with their addresses, principal occupations,
and present positions, including any affiliation with Federated Management,
Federated Investors, Federated Securities Corp., Federated Services Company,
Federated Administrative Services, Inc., and the Funds (as defined below).
<TABLE>
<CAPTION>
POSITION WITH PRINCIPAL OCCUPATION
NAME AND ADDRESS THE TRUST DURING PAST FIVE YEARS
<S> <C> <C>
John F. Donahue*\ Chairman and Chairman and Trustee, Federated Investors; Chairman and Trustee,
Federated Investors Tower Trustee Federated Advisers, Federated Management, and Federated Research;
Pittsburgh, PA Director, AEtna Life and Casualty Company; Chief Executive Officer and
Director, Trustee, or Managing General Partner of the Funds; formerly,
Director, The Standard Fire Insurance Company. Mr. Donahue is the father
of J. Christopher Donahue, Vice President of the Trust.
John T. Conroy, Jr. Trustee President, Investment Properties Corporation; Senior Vice-President,
Wood/IPC Commercial John R. Wood and Associates, Inc., Realtors; President, Northgate
Department Village Development Corporation; General Partner or Trustee in private
John R. Wood and real estate ventures in Southwest Florida; Director, Trustee, or
Associates, Inc., Realtors Managing General Partner of the Funds; formerly, President, Naples
3255 Tamiami Trail North Property Management, Inc.
Naples, FL
William J. Copeland Trustee Director and Member of the Executive Committee, Michael Baker, Inc.;
One PNC Plaza Director, Trustee, or Managing General Partner of the Funds; formerly,
23rd Floor Vice Chairman and Director, PNC Bank, N.A. and PNC Bank Corp. and
Pittsburgh, PA Director, Ryan Homes, Inc.
James E. Dowd Trustee Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director,
571 Hayward Mill Road Trustee, or Managing General Partner of the Funds; formerly, Director,
Concord, MA Blue Cross of Massachusetts, Inc.
Lawrence D. Ellis, M.D. Trustee Hematologist, Oncologist, and Internist, Presbyterian and Montefiore
3471 Fifth Avenue Hospitals; Clinical Professor of Medicine and Trustee, University of
Suite 1111 Pittsburgh; Director, Trustee, or Managing General Partner of the Funds.
Pittsburgh, PA
Edward L. Flaherty, Jr.\ Trustee Attorney-at-law; Partner, Meyer and Flaherty; Director, Eat'N Park
5916 Penn Mall Restaurants, Inc., and Statewide Settlement Agency, Inc.; Director,
Pittsburgh, PA Trustee, or Managing General Partner of the Funds; formerly, Counsel,
Horizon Financial, F.A., Western Region.
Glen R. Johnson* President and Trustee, Federated Investors; President and/or Trustee of some of the
Federated Investors Tower Trustee Funds; staff member, Federated Securities Corp. and Federated
Pittsburgh, PA Administrative Services, Inc.
Peter E. Madden Trustee Consultant; State Representative, Commonwealth of Massachusetts;
225 Franklin Street Director, Trustee, or Managing General Partner of the Funds; formerly,
Boston, MA President, State Street Bank and Trust Company and State Street Boston
Corporation and Trustee, Lahey Clinic Foundation, Inc.
Gregor F. Meyer Trustee Attorney-at-law; Partner, Meyer and Flaherty; Chairman,
5916 Penn Mall Meritcare, Inc.; Director, Eat'N Park Restaurants, Inc.; Director,
Pittsburgh, PA Trustee, or Managing General Partner of the Funds; formerly, Vice
Chairman, Horizon Financial, F.A.
Wesley W. Posvar Trustee Professor, Foreign Policy and Management Consultant; Trustee, Carnegie
1202 Cathedral of Learning Endowment for International Peace, OnLine Computer Library Center, Inc.,
University of Pittsburgh RAND Corporation, and U.S. Space Foundation; Chairman, Czecho Slovak
Pittsburgh, PA Management Center; Director, Trustee or Managing General Partner of the
Funds; President Emeritus, University of Pittsburgh; formerly Chairman,
National Advisory Council for Environmental Policy and Technology.
Marjorie P. Smuts Trustee Public relations/marketing consultant; Director, Trustee, or Managing
4905 Bayard Street General Partner of the Funds.
Pittsburgh, PA
J. Christopher Donahue Vice President President and Trustee, Federated Investors; Trustee, Federated Advisers,
Federated Investors Tower Federated Management, and Federated Research; President and Director,
Pittsburgh, PA Federated Administrative Services, Inc.; Trustee, Federated Services
Company; President or Vice President of the Funds; Director, Trustee or
Managing General Partner of some of the Funds. Mr. Donahue is the son of
John F. Donahue, Chairman and Trustee of the Trust.
Richard B. Fisher Vice President Executive Vice President and Trustee, Federated Investors; Chairman and
Federated Investors Tower Director, Federated Securities Corp.; President or Vice President of the
Pittsburgh, PA Funds; Director or Trustee of some of the Funds.
Edward C. Gonzales Vice President Vice President, Treasurer and Trustee, Federated Investors; Vice
Federated Investors Tower and Treasurer President and Treasurer, Federated Advisers, Federated Management, and
Pittsburgh, PA Federated Research; Trustee, Federated Services Company; Executive Vice
President, Treasurer, and Director, Federated Securities Corp.;
Chairman, Treasurer, and Director, Federated Administrative Services,
Inc.; Trustee or Director of some of the Funds; Vice President and
Treasurer of the Funds.
John W. McGonigle Vice President Vice President, Secretary, General Counsel, and Trustee, Federated
Federated Investors Tower and Secretary Investors; Vice President, Secretary and Trustee, Federated Advisers,
Pittsburgh, PA Federated Management, and Federated Research; Trustee, Federated
Services Company; Executive Vice President, Secretary, and Director,
Federated Administrative Services, Inc.; Director and Executive Vice
President, Federated Securities Corp.; Vice President and Secretary of
the Funds.
John A. Staley, IV Vice President Vice President and Trustee, Federated Investors; Executive Vice
Federated Investors Tower President, Federated Securities Corp.; President and Trustee, Federated
Pittsburgh, PA Advisers, Federated Management, and Federated Research; Vice President
of the Funds; Director, Trustee, or Managing General Partner of some of
the Funds; formerly, Vice President, The Standard Fire Insurance Compa-
ny and President of its Federated Research Division.
</TABLE>
*This Trustee is deemed to be an "interested person" of the Trust as
defined in the Investment Company Act of 1940, as amended.
\Member of the Trust's Executive Committee. The Executive Committee of the Board
of Trustees handles the responsibilities of the Trustees between meetings of
the Trustees.
FUND OWNERSHIP
Officers and Trustees own less than 1% of the Fund's outstanding shares.
THE FUNDS
"The Funds" and "Funds" mean the following investment companies: A.T. Ohio
Tax-Free Money Fund; American Leaders Fund, Inc.; Annuity Management Series;
Automated Cash Management Trust; Automated Government Money Trust; BankSouth
Select Funds; The Boulevard Funds; California Municipal Cash Trust; Cash Trust
Series, Inc.; Cash Trust Series II; DG Investor Series; Edward D. Jones & Co.
Daily Passport Cash Trust; FT Series, Inc.; Federated ARMs Fund; Federated
Exchange Fund, Ltd.; Federated GNMA Trust; Federated Government Trust; Federated
Growth Trust; Federated High Yield Trust; Federated Income Securities Trust;
Federated Income Trust; Federated Index Trust; Federated Intermediate Government
Trust; Federated Master Trust; Federated Municipal Trust; Federated
Short-Intermediate Government Trust; Federated Short-Term U.S. Government Trust;
Federated Stock Trust; Federated Tax-Free Trust; Federated U.S. Government Bond
Fund; First Priority Funds; Fixed Income Securities, Inc.; Fortress Adjustable
Rate U.S. Government Fund, Inc.; Fortress Municipal Income Fund, Inc.; Fortress
Utility Fund, Inc.; Fund for U.S. Government Securities, Inc.; Government Income
Securities, Inc.; High Yield Cash Trust; Insight Institutional Series, Inc.;
Insurance Management Series; Intermediate Municipal Trust; Investment Series
Funds, Inc.; Investment Series Trust; Liberty Equity Income Fund, Inc.; Liberty
High Income Bond Fund, Inc.; Liberty Municipal Securities Fund, Inc.; Liberty
Term Trust, Inc.--1999; Liberty U.S. Government Money Market Trust; Liberty
Utility Fund, Inc.; Liquid Cash Trust; Mark Twain Funds; Money Market
Management, Inc.; Money Market Obligations Trust; Money Market Trust; Municipal
Securities Income Trust; New York Municipal Cash Trust; 111 Corcoran Funds; The
Planters Funds; Portage Funds; RIMCO Monument Funds; The Shawmut Funds; Short-
Term Municipal Trust; Signet Select Funds; Star Funds; The Starburst Funds; The
Starburst Funds II; Stock and Bond Fund, Inc.; Sunburst Funds; Targeted Duration
Trust; Tax-Free Instruments Trust; Trademark Funds; Trust for Financial
Institutions; Trust for Government Cash Reserves; Trust for Short-Term U.S.
Government Securities; and Trust for U.S. Treasury Obligations.
TRUSTEE LIABILITY
The Trust's Declaration of Trust provides that the Trustees will not be liable
for errors of judgment or mistakes of fact or law. However, they are not
protected against any liability to which they would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of their office.
INVESTMENT ADVISORY SERVICES
- --------------------------------------------------------------------------------
ADVISER TO THE FUND
The Fund's investment adviser is Federated Management. Federated Management is a
subsidiary of Federated Investors. All of the Class A (voting) shares of
Federated Investors are owned by a trust, the trustees of which are John F.
Donahue, his wife, and his son, J. Christopher Donahue. John F. Donahue is
Chairman and Trustee, Federated Management; Chairman and Trustee, Federated
Investors; and Chairman and Trustee of the Trust. John A. Staley, IV, is
President and Trustee, Federated Management; Vice President and Trustee,
Federated Investors; Executive Vice President, Federated Securities Corp.; and
Vice President of the Trust. J. Christopher Donahue is Trustee, Federated
Management; President and Trustee, Federated Investors; President and Director,
Federated Administrative Services, Inc.; and Vice President of the Trust. John
W. McGonigle is Vice President, Secretary, and Trustee, Federated Management;
Vice President, Secretary, General Counsel, and Trustee, Federated Investors;
Executive Vice President, Secretary and Director, Federated Administrative
Services, Inc.; Executive Vice President and Director, Federated Securities
Corp; and Vice President and Secretary of the Trust.
The adviser shall not be liable to the Trust, the Fund, or any shareholder of
the Fund for any losses that may be sustained in the purchase, holding, or sale
of any security, or for anything done or omitted by it, except acts or omissions
involving willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties imposed upon it by its contract with the Trust.
ADVISORY FEES
For its advisory services, Federated Management receives an annual investment
advisory fee as described in the prospectus.
STATE EXPENSE LIMITATIONS
The adviser has undertaken to comply with the expense limitations
established by certain states for investment companies whose shares are
registered for sale in those states. If the Fund's normal operating
expenses (including the investment advisory fee, but not including
brokerage commissions, interest, taxes, and extraordinary expenses)
exceed 2-1/2% per year of the first $30 million of average net assets, 2%
per year of the next $70 million of average net assets, and 1-1/2% per
year of the remaining average net assets, the adviser will reimburse the
Fund for its expenses over the limitation.
If the Fund's monthly projected operating expenses exceed this expense
limitation, the investment advisory fee paid will be reduced by the
amount of the excess, subject to an annual adjustment. If the expense
limitation is exceeded, the amount to be reimbursed by the adviser will
be limited, in any single fiscal year, by the amount of the investment
advisory fee.
These arrangements are not part of the advisory contract and have been
established only to comply with applicable state authorities. They may be
amended or rescinded in the future.
ADMINISTRATIVE SERVICES
- --------------------------------------------------------------------------------
Federated Administrative Services, Inc., a subsidiary of Federated Investors,
provides administrative personnel and services to the Fund at approximate cost.
John A. Staley, IV, an officer of the Trust, and Dr. Henry J. Gailliot, an
officer of Federated Management, the adviser to the Fund, hold approximately 15%
and 20%, respectively, of the outstanding common stock and serve as directors of
Commercial Data Services, Inc., a company which provides computer processing
services to Federated Administrative Services, Inc. For the fiscal years ended
October 31, 1993, 1992, and 1991, Federated Administrative Services, Inc. paid
approximately $165,431, $189,741, and $187,677, respectively, for services
provided by Commercial Data Services, Inc.
BROKERAGE TRANSACTIONS
- --------------------------------------------------------------------------------
When selecting brokers and dealers to handle the purchase and sale of portfolio
instruments, the adviser looks for prompt execution of the order at a favorable
price. In working with dealers, the investment adviser will generally
use those who are recognized dealers in specific portfolio instruments, except
when a better price and execution of the order can be obtained elsewhere. The
adviser makes decisions on portfolio transactions and selects brokers and
dealers subject to review by the Trustees.
The adviser may select brokers and dealers who offer brokerage and research
services. These services may be furnished directly to the Fund or to the adviser
and may include:
advice as to the advisability of investing in securities;
security analysis and reports;
economic studies;
industry studies;
receipt of quotations for portfolio evaluations; and
similar services.
The adviser and its affiliates exercise reasonable business judgment in
selecting brokers who offer brokerage and research services to execute
securities transactions. They determine in good faith that commissions charged
by such persons are reasonable in relationship to the value of the brokerage and
research services provided.
Research services provided by brokers may be used by the adviser or by
affiliates of Federated Investors in advising other accounts. To the extent that
receipt of these services may supplant services for which the adviser or its
affiliates might otherwise have paid, it would tend to reduce their expenses.
PURCHASING SHARES
- --------------------------------------------------------------------------------
Shares are sold at their net asset value without a sales charge on days the New
York Stock Exchange and the Federal Reserve Wire System are open for business.
The procedure for purchasing shares is explained in the prospectus under
"Investing in the Fund."
CONVERSION TO FEDERAL FUNDS
It is the Fund's policy to be as fully invested as possible so that maximum
interest may be earned. To this end, all payments from shareholders must be in
federal funds or be converted into federal funds. State Street Bank acts as the
shareholder's agent in depositing checks and converting them to federal funds.
DETERMINING NET ASSET VALUE
- --------------------------------------------------------------------------------
The Fund attempts to stabilize the value of a share at $1.00. The days on which
net asset value is calculated by the Fund are described in the prospectus. Net
asset value will not be calculated on the following holidays: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, and Christmas Day.
USE OF AMORTIZED COST METHOD
The Trustees have decided that the best method for determining the value of
portfolio instruments is amortized cost. Under this method, portfolio
instruments are valued at the acquisition cost as adjusted for amortization of
premium or accumulation of discount rather than at current market value.
The Fund's use of the amortized cost method of valuing portfolio instruments
depends on its compliance with certain conditions in Rule 2a-7, as amended (the
"Rule"), promulgated by the Securities and Exchange Commission under the
Investment Company Act of 1940. Under the Rule, the Trustees must establish
procedures reasonably designed to stabilize the net asset value per share, as
computed for purposes of distribution and redemption, at $1.00, taking into
account current market conditions and the Fund's investment objective.
Under the Rule, the Fund is permitted to purchase instruments which are subject
to demand features or standby commitments. As defined by the Rule, a demand
feature entitles the Fund to receive the principal amount of the instrument from
the issuer or a third party (1) on no more than 30 days' notice or (2) at
specified intervals not exceeding one year on no more than 30 days' notice. A
standby commitment entitles the Fund to achieve same day settlement and to
receive an exercise price equal to the amortized cost of the underlying
instrument plus accrued interest at the time of exercise.
Although demand features and standby commitments are techniques and are defined
as "puts" under the Rule, the Fund does not consider them to be "puts" as that
term is used in the Fund's investment limitations. Demand features and standby
commitments are features which enhance an instrument's liquidity, and the
investment limitation which proscribes puts is designed to prohibit the purchase
and sale of put and call options and is not designed to prohibit the Fund from
using techniques which enhance the liquidity of portfolio instruments.
MONITORING PROCEDURES
The Trustees' procedures include monitoring the relationship between the
amortized cost value per share and the net asset value per share based
upon available indications of market value. The Trustees will decide
what, if any, steps should be taken if there is a difference of more than
0.5% between the two values. The Trustees will take any steps they
consider appropriate (such as redemption in kind or shortening the
average portfolio maturity) to minimize any material dilution or other
unfair results arising from differences between the two methods of
determining net asset value.
INVESTMENT RESTRICTIONS
The Rule requires that the Fund limit its investments to instruments
that, in the opinion of the Trustees, present minimal credit risk and
have received the requisite rating from one or more nationally recognized
statistical rating organizations. If the instruments are not rated, the
Trustees must determine that they are of comparable quality. The Rule
also requires the Fund to maintain a dollar-weighted average portfolio
maturity (not more than 90 days) appropriate to the objective of
maintaining a stable net asset value of $1.00 per share. In addition, no
instrument with a remaining maturity of more than 397 days can be
purchased by the Fund. For the treatment of Variable Rate Municipal
Securities with demand features, refer to "Variable Rate Demand Notes" in
the prospectus.
Should the disposition of a portfolio security result in a
dollar-weighted average portfolio maturity of more than 90 days, the Fund
will invest its available cash to reduce the average maturity to 90 days
or less as soon as possible.
The Fund may attempt to increase yield by trading portfolio securities to take
advantage of short-term market variations. This policy may, from time to time,
result in high portfolio turnover. Under the amortized cost method of valuation,
neither the amount of daily income nor the net asset value is affected by any
unrealized appreciation or depreciation of the portfolio.
In periods of declining interest rates, the indicated daily yield on shares of
the Fund, computed by dividing the annualized daily income on the Fund's
portfolio by the net asset value computed as above, may tend to be higher than a
similar computation made by using a method of valuation based upon market prices
and estimates.
In periods of rising interest rates, the indicated daily yield on shares of the
Fund computed the same way may tend to be lower than a similar computation made
by using a method of calculation based upon market prices and estimates.
REDEEMING SHARES
- --------------------------------------------------------------------------------
The Fund redeems shares at the next computed net asset value after the Fund
receives the redemption request. Redemption procedures are explained in the
prospectus under "Redeeming Shares." Although State Street Bank does not charge
for telephone redemptions, it reserves the right to charge a fee for the cost of
wire-transferred redemptions of less than $5,000.
REDEMPTION IN KIND
Although the Trust intends to redeem shares in cash, it reserves the right under
certain circumstances to pay the redemption price in whole or in part by a
distribution of securities from the Fund's portfolio. To the extent available,
such securities will be readily marketable.
Redemption in kind will be made in conformity with applicable Securities and
Exchange Commission rules, taking such securities at the same value employed in
determining net asset value and selecting the securities in a manner the
Trustees determine to be fair and equitable.
The Trust has elected to be governed by Rule 18f-1 of the Investment Company Act
of 1940 under which the Trust is obligated to redeem shares for any one
shareholder in cash only up to the lesser of $250,000 or 1% of the Fund's net
asset value during any 90-day period.
TAX STATUS
- --------------------------------------------------------------------------------
THE FUND'S TAX STATUS
The Fund will pay no federal income tax because it expects to meet the
requirements of Subchapter M of the Internal Revenue Code, as amended,
applicable to regulated investment companies and to receive the special tax
treatment afforded to such companies. To qualify for this treatment, the Fund
must, among other requirements:
derive at least 90% of its gross income from dividends, interest, and gains from
the sale of securities;
derive less than 30% of its gross income from the sale of securities held less
than three months;
invest in securities within certain statutory limits; and
distribute to its shareholders at least 90% of its net income earned during the
year.
YIELD
- --------------------------------------------------------------------------------
The Fund calculates its yield based upon the seven days ending on the day of the
calculation, called the "base period." This yield is computed by:
determining the net change in the value of a hypothetical account with a balance
of one share at the beginning of the base period, with the net change excluding
capital changes but including the value of any additional shares purchased with
dividends earned from the original one share and (on funds that pay dividends
daily) all dividends declared on the original and any purchased shares;
dividing the net change in the account's value by the value of the account at
the beginning of the base period to determine the base period return; and
multiplying the base period return by (365/7).
To the extent that financial institutions and broker/dealers charge fees in
connection with services provided in conjunction with an investment in the Fund,
the performance will be reduced for those shareholders paying those fees.
EFFECTIVE YIELD
- --------------------------------------------------------------------------------
The Fund's effective yield is computed by compounding the unannualized base
period return by:
adding 1 to the base period return;
raising the sum to the 365/7th power; and
subtracting 1 from the result.
TAX-EQUIVALENT YIELD
- --------------------------------------------------------------------------------
The Fund's tax-equivalent yield is calculated similarly to the yield, but is
adjusted to reflect the taxable yield that the Fund would have had to earn to
equal its actual yield, assuming a 39.6% tax rate (the maximum effective federal
rate for individuals) assuming that income earned is 100% tax-exempt.
TAX-EQUIVALENCY TABLE
The Fund may also use a tax-equivalency table in advertising and sales
literature. The interest earned by the municipal bonds in the Fund's
portfolio generally remains free from federal regular income tax,* and is
often free from state and local taxes as well. As the table below
indicates, a "tax-free" investment is an attractive choice for investors,
particularly in times of narrow spreads between tax-free and taxable
yields.
<TABLE>
<CAPTION>
TAXABLE YIELD EQUIVALENT FOR 1994
STATE OF MARYLAND
INCLUDING LOCAL INCOME TAX
- ------------------------------------------------------------------------------------------------------------
COMBINED FEDERAL, STATE AND COUNTY INCOME TAX BRACKET
<S> <C> <C> <C> <C> <C> <C> <C>
22.50% 35.50% 38.50% 40.00% 43.50% 45.00% 48.60%
- ------------------------------------------------------------------------------------------------------------
SINGLE $1- $22,751- $55,101- $100,001- $140,001- Over
Return: 22,750 55,100 100,000 140,000 250,000 $250,000
Joint $1- $38,001- $91,851- $140,001- $150,001- Over
Return: 38,000 91,850 140,000 150,000 250,000 $250,000
- ------------------------------------------------------------------------------------------------------------
<CAPTION>
TAX-EXEMPT YIELD TAXABLE YIELD EQUIVALENT
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
3.50% 4.52% 5.43% 5.69% 5.83% 6.19% 6.36% 6.81%
4.00 5.16 6.20 6.50 6.67 7.08 7.27 7.78
4.50 5.81 6.98 7.32 7.50 7.96 8.18 8.75
5.00 6.45 7.75 8.13 8.33 8.85 9.09 9.73
5.50 7.10 8.53 8.94 9.17 9.73 10.00 10.70
6.00 7.74 9.30 9.76 10.00 10.62 10.91 11.67
6.50 8.39 10.08 10.57 10.83 11.50 11.82 12.65
7.00 9.03 10.85 11.38 11.67 12.39 12.73 13.62
7.50 9.68 11.63 12.20 12.50 13.27 13.64 14.59
8.00 10.32 12.40 13.01 13.33 14.16 14.55 15.56
</TABLE>
Note: The maximum marginal tax rate for each bracket was used in calculating the
taxable yield equivalent. Furthermore, additional state and local taxes
paid on comparable taxable investments were not used to increase federal
deductions. The local income tax rate is assumed to be 50% of the state
rate for all counties excluding Alleghany, Montgomery, Prince George's,
Talbot, and Worcester.
The chart above is for illustrative purposes only. It is not an indicator of
past or future performance of the Fund.
*Some portion of the Fund's income may be subject to the federal alternative
minimum tax and state and local regular or alternative minimum taxes.
PERFORMANCE COMPARISONS
- --------------------------------------------------------------------------------
The performance of the Fund depends upon such variables as:
portfolio quality;
average portfolio maturity;
type of instruments in which the portfolio is invested;
changes in interest rates on money market instruments;
changes in the Fund's expenses; and
the relative amount of Fund cash flow.
Investors may use financial publications and/or indices to obtain a more
complete view of the Fund's performance. When comparing performance, investors
should consider all relevant factors such as the composition of any index used,
prevailing market conditions, portfolio compositions of other funds, and methods
used to value portfolio securities and compute net asset value. The financial
publications and/or indices which the Fund uses in advertising may include:
LIPPER ANALYTICAL SERVICES, INC. ranks funds in various fund categories by
making comparative calculations using total return. Total return assumes the
reinvestment of all income dividends and capital gains distributions, if any.
From time to time, the Fund will quote its Lipper ranking in the "tax-exempt
money market fund" category in advertising and sales literature.
MORNINGSTAR, INC., an independent rating service, is the publisher of the
bi-weekly Mutual Fund Values. Mutual Fund Values rates more than 1,000
NASDAQ-listed mutual funds of all types, according to their risk adjusted
returns. The maximum rating is five stars and ratings are effective for two
weeks.
Advertisements and other sales literature for the Fund may refer to total
return. Total return is the historic change in the value of an investment in the
Fund based on the monthly reinvestment of dividends over a specified period of
time.
APPENDIX
- --------------------------------------------------------------------------------
MUNICIPAL BOND RATING DEFINITIONS
STANDARD AND POOR'S CORPORATION
AAA--Debt rated AAA has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.
AA--Debt rated AA has a very strong capacity to pay interest and repay principal
and differs from the higher rated issues only in small degree.
A--Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB--Debt rated BBB is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB, B, CCC, CC--Debt rated BB, B, CCC and CC is regarded, on balance, as
predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. BB indicates the
lowest degree of speculation and CC the highest degree of speculation. While
such debt will likely have some quality and protective characteristics, these
outweighed by large uncertainties of major risk exposure to adverse conditions.
C--The rating C is reserved for income bonds on which no interest is being paid.
D--Debt rated D is in default, and payment of interest and/or repayment of
principal is in arreas.
MOODY'S INVESTORS SERVICE, INC.
Aaa--Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa--Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long term risks appear somewhat larger than in Aaa securities.
A--Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
Baa--Bonds which are rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba--Bonds which are Ba are judged to have speculative elements; their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded during
both good and bad times over the future. Uncertainty of position characterizes
bonds in this class.
B--Bonds which are rated B generally lack characterstics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa--Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca--Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
C--Bonds which are rated C are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
SHORT-TERM MUNICIPAL OBLIGATION RATINGS
STANDARD AND POOR'S CORPORATION
A Standard & Poor's note rating reflects the liquidity concerns and market
access risks unique to notes.
SP-1 Very strong or strong capacity to pay principal and interest. Those issues
determined to possess overwhelming safety characteristics will be given a
plus (+) designation.
SP-2 Satisfactory capacity to pay principal and interest.
MOODY'S INVESTORS SERVICE, INC.
Moody's short-term ratings are designated Moody's Investment Grade (MIG OR VMIG
(see below)). The purpose of the MIG or VMIG rating is to provide investors with
a simple system by which the relative investment qualities of short-term
obligations may be evaluated.
MIG1 This designation denotes best quality. There is present strong protection
by established cash flows, superior liquidity support or demonstrated
broad-based access to the market for refinancing.
MIG2 This designation denotes high quality. Margins of protection are ample
although not so large as in the preceding group.
VARIABLE RATE DEMAND NOTES (VRDNS)
AND
TENDER OPTION BONDS (TOBS)
RATINGS
STANDARD AND POOR'S CORPORATION
Standard & Poor's assigns dual ratings to all long-term debt issues that have as
part of their provisions a variable rate demand feature. The first rating
(long-term rating) addresses the likelihood of repayment of principal and
interest when due, and the second rating (short-term rating) describes the
demand characteristics. Several examples are AAA/A-1+, AA/A-1+, A/A-1. (The
definitions for the short-term ratings are provided below).
MOODY'S INVESTORS SERVICE, INC.
Short-term ratings on issues with demand features are differentiated by the use
of the VMIG symbol to reflect such characteristics are payment upon periodic
demand rather than fixed maturity dates and payment relying on external
liquidity.
In this case, two ratings are usually assigned, (for example, Aaa/VMIG-1); the
first representing an evaluation of the degree of risk associated with scheduled
principal and interest payments, and the second representing an evaluation of
the degree of risk associated with the demand feature. The VMIG rating can be
assigned a 1 or 2 designation using the same definitions described above for the
MIG rating.
COMMERCIAL PAPER (CP) RATINGS
STANDARD AND POOR'S CORPORATION
A Standard & Poor's commercial paper rating is a current assessment of the
likelihood of timely payment of debt having an original maturity of no more than
365 days.
A-1 This designation indicates that the degree of safety regarding timely
payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics are denoted with a plus (+) sign
designation.
A-2 Capacity for timely payment on issues with this designation is strong.
However, the relative degree of safety is not as high as for issues
designated "A-1."
MOODY'S INVESTORS SERVICE, INC.
P-1 Issuers rated PRIME-1 (or related supporting institutions) have a superior
capacity for repayment of short-term promissory obligations.
P-2 Issuers rated PRIME-2 (or related supporting institutions) have a strong
capacity for repayment of short-term promissory obligations.
The following is an explanation of the Fitch ratings. These ratings are not
referenced in the Portfolio of Investments.
FITCH TAX-EXEMPT INVESTMENT NOTE RATING DEFINITIONS
F-1+ (Exceptionally Strong Credit Quality). Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-1 (Very Strong Credit Quality). Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated
"F-1+."
F-2 (Good Credit Quality). Issues carrying this rating have a satisfactory
degree of assurance for timely payment, but the margin of safety is not as
great as the "F-1+" and "F-1" categories.
NR NR indicates that both the bonds and the obligor or credit enhancer are
currently rated by Standard and Poor's Corporation or Moody's Investors
Service, Inc. with respect to short term indebtedness. However, management
considers them to be of comparable quality to securities rated A-1 or P-1.
NR(1) The underlying issuer/obligor/guarantor has other outstanding debt rated
"AAA" by Standard and Poor's Corporation or "Aaa" by Moody's Investors
Service, Inc.
NR(2) The underlying issuer/obligor/guarantor has other outstanding debt rated
"AA" by Standard and Poor's Corporation or "Aa" by Moody's Investors
Service, Inc.
NR(3) The underlying issuer/obligor/guarantor has other outstanding debt rated
"A" by Standard and Poor's Corporation or Moody's Investors Service, Inc.
4020807B (2/94)
PART C. OTHER INFORMATION.
Item 24. Financial Statements and Exhibits:
(a) Financial Statements [(1-7) Filed in Part A; (8-10) To be
Filed by Amendment]
(b) Exhibits:
(1) Copy of Declaration of Trust of the Registrant (1);
(i) Copy of the Declaration of Trust, as amended
(7);
(ii) Copy of Amendment No. 7, dated August 22, 1991,
to the Declaration of Trust (12);
(iii) Copy of Amendment No. 8, dated February 11,
1992, to the Declaration of Trust (12);
(iv) Copy of Amendment No. 9, dated November 9,
1992, to the Declaration of Trust (12);
(v) Copy of Amendment No. 10, dated November 18,
1992, to the Declaration of Trust (12);
(2) Copy of By-Laws of the Registrant (7);
(3) Not applicable;
(4) Copy of Specimen Certificates for Shares of Beneficial
Interest of Alabama Municipal Cash Trust, Minnesota
Municipal Cash Trust (Cash Series Shares and
Institutional Shares), Pennsylvania Municipal Cash
Trust (Cash Series Shares and Institutional Service
Shares), Virginia Municipal Cash Trust (Institutional
Service Shares and Institutional Shares), North
Carolina Municipal Cash Trust, Ohio Municipal Cash
Trust (Cash II Shares and Institutional Shares),
Massachusetts Municipal Cash Trust (Institutional
Service Shares and BayFunds Shares), and New Jersey
Municipal Cash Trust (Institutional Shares and
Institutional Service Shares) (16);
(i) Copy of Specimen Certificate for Maryland
Municipal Cash Trust; (17)
(5) Copy of Investment Advisory Contract of the Registrant
(7);
(i) Form of Exhibit H to Investment Advisory Contract
for Alabama Municipal Cash Trust; (17)
(ii) Form of Exhibit I to Investment Advisory Contract
for North Carolina Municipal Cash Trust; (17)
(iii) Form of Exhibit J to Investment Advisory
Contract for Maryland Municipal Cash Trust; (17)
+ All exhibits have been filed electronically.
1. Response is incorporated by reference to Registrant's Initial
Registration Statement on Form N-1A filed on September 29, 1989 (File
Nos. 33-31259 and 811-5911).
5. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 3 on Form N-1A filed on August 3, 1990 (File Nos. 33-31259
and 811-5911).
7. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 6 on Form N-1A filed on November 6, 1990 (File Nos.
33-31259 and 811-5911).
12. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 14 on Form N-1A filed on December 23, 1992 (File Nos.
33-31251 and 811-5911).
13. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 15 on Form N-1A filed on December 24, 1992 (File Nos.
33-31251 and 811-5911).
16. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 21 on Form N-1A filed on December 29, 1993 (File Nos.
33-31251 and 811-5911).
17. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 22 on Form N-1A filed on March 2, 1994 (File Nos. 33-31251
and 811-5911)
(6) Copy of Distributor's Contract of the Registrant
(5);
(i) Exhibit M to Distributor's Contract (13);
(ii) Form of Exhibit N to the Distributor's Contract
for Virginia Municipal Cash Trust; (17)
(iii) Form of Exhibit O to the Distributor's Contract
for Alabama Municipal Cash Trust; (17)
(iv) Form of Exhibit P to the Distributor's Contract
for North Carolina Municipal Cash Trust; (17)
(v) Form of Exhibit Q to the Distributor's Contract
for Maryland Municipal Cash Trust; (17)
(7) Not applicable;
(8) (i) Conformed copy of Custodian Agreement of the
Registrant; (17)
(ii) Conformed copy of Transfer Agency Agreement;
(17)
(9) (i) Conformed copy of Agency Agreement
of the Registrant (15);
(ii) Conformed copy of Sub-Transfer Agency Agreement
of the Registrant (Massachusetts Municipal Cash
Trust--BayFunds Shares only)(15);
(iii) Conformed copy of Shareholder Services Plan of
the Registrant (15);
(iv) Conformed copy of Shareholder Services
Agreement of the Registrant (Massachusetts
Municipal Cash Trust--BayFunds Shares only)
(15);
(v) Form of Shareholder Services Agreement of the
Registrant; (17)
(vi) Copy of Exhibit A to Shareholder Services
Agreement for Virginia Municipal Cash Trust;
(17)
(vii) Copy of Exhibit B to Shareholder Services
Agreement for Maryland Municipal Cash Trust;
(17)
(viii) Form of Shareholder Services Plan of the
Registrant; (17)
(ix) Form of Exhibit A to Shareholder Services Plan
for Virginia Municipal Cash Trust-Institutional
Service Shares; (17)
(x) Form of Exhibit B to Shareholder Services Plan
for Maryland Municipal Cash Trust; (17)
(10) (i) Copy of Opinion and Consent of
Counsel as to the legality of shares for
Minnesota Municipal Cash Trust (5);
(ii) Copy of Opinion and Consent of Counsel as to
the legality of shares for New Jersey Municipal
Cash Trust (7);
(11) Conformed copy of Consent of Independent
Accountants; Not applicable
(12) Not applicable;
(13) Copy of Initial Capital Understanding (2);
(14) Not applicable.
(15) (i) Copy of Rule 12b-1 Plan of the
Registrant (7);
(ii) Copy of Rule 12b-1 Agreement of the Registrant
(7); Additional Exhibits to the Rule 12b-1 Plan
and Agreement have been executed to reflect the
coverage of subsequently created portfolios
and/or classes under these documents. Because
these exhibits are substantially identical but
differ only as to the Fund name, dates, and any
other Fund - specific information, pursuant to
Rule 8b-31 of the Investment Company Act they
need not be filed.
+ All exhibits have been filed electronically.
2. Response is incorporated by reference to Registrant's Pre-Effective
Amendment No. 1 on Form N-1A filed on October 31, 1989 (File Nos.
33-31259 and 811-5911).
5. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 3 on Form N-1A filed August 3, 1990 (File Nos. 33-31259
and 811-5911).
7. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 6 on Form N-1A filed on November 6, 1990 (File Nos.
33-31259 and 811-5911).
9. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 10 on Form N-1A filed June 7, 1991 (File Nos. 33-31259 and
811-5911).
14. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 16 on Form N-1A filed on February 19, 1993 (File Nos.
33-31251 and 811-5911).
15. Response is incorporated by reference to Registrant's
Post-Effective Amendment No. 18 on Form N-1A filed on October 1,
1993 (File Nos. 33-31259 and 811-5911).
17. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 22 on Form N-1A filed on March 2, 1994 (File Nos. 33-31251
and 811-5911)
(16) Schedules for Computation of Performance Data;
(i) New Jersey Municipal Cash Trust (9);
(ii) Ohio Municipal Cash Trust (10);
(iii) Virginia Municipal Cash Trust (Institutional
Share and Institutional Service Shares) (16);
(17) Conformed copy of Power of Attorney(16);
(18) Conformed copy of Opinion and Consent of
Counsel as to Availability of Rule 485(b).Not
applicable
Item 25. Persons Controlled by or Under Common Control with Registrant:
None
Item 26. Number of Holders of Securities:
Number of Record Holders
Title of Class as of February 14, 1994
Shares of beneficial
interest (no par value)
Alabama Municipal Cash Trust 75
Connecticut Municipal Cash Trust
Institutional Service Shares 741
Massachusetts Municipal Cash Trust
Institutional Service Shares 195
BayFunds Shares 4
Minnesota Municipal Cash Trust
Cash Series Shares 2,093
Institutional Shares 37
New Jersey Municipal Cash Trust
Institutional Service Shares 99
Institutional Shares 27
North Carolina Municipal Cash Trust 46
Ohio Municipal Cash Trust
Cash II Shares 133
Institutional Shares 51
Pennsylvania Municipal Cash Trust
Cash Series Shares 363
Institutional Service Shares 275
Virginia Municipal Cash Trust
Institutional Shares 17
Institutional Service Shares 222
+ All exhibits have been filed electronically.
7. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 6 on Form N-1A filed on November 6, 1990 (File Nos.
33-31259 and 811-5911).
9. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 10 on Form N-1A filed on June 7, 1991 (File Nos. 33-31259
and 811-5911).
10. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 11 on Form N-1A filed on June 28, 1991 (File Nos. 33-31259
and 811-5911).
11. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 13 on Form N-1A filed on December 23, 1991 (File Nos.
33-31259 and 811-5911).
Item 27. Indemnification: (3.)
Item 28. Business and Other Connections of Investment Adviser:
For a description of the other business of the investment adviser,
see the section entitled "Federated Municipal Trust Information -
Management of the Trust" in Part A. The affiliations with the
Registrant of four of the Trustees and one of the Officers of the
investment adviser are included in Part B of this Registration
Statement under "Federated Municipal Trust Management - Officers
and Trustees." The remaining Trustee of the investment adviser,
his position with the investment adviser, and, in parentheses, his
principal occupation is: Mark D. Olson (Partner, Wilson, Halbrook
& Bayard), 107 W. Market Street, Georgetown, Delaware 19947.
The remaining Officers of the investment adviser are: William D.
Dawson, J. Thomas Madden, Mark L. Mallon, Executive Vice
President; Henry J. Gailliot, Senior Vice President-Economist;
Peter R. Anderson, Gary J. Madich, and J. Alan Minteer, Senior
Vice Presidents; Randall A. Bauer, Jonathan C. Conley, Deborah A.
Cunningham, Mark E. Durbiano, Roger A. Early, Kathleen M.
Foody-Malus, David C. Francis, Thomas M. Franks, Edward C.
Gonzales, Jeff A. Kozemchak, Marian R. Marinack, John W.
McGonigle, Gregory M. Melvin, Susan M. Nason, Mary Jo Ochson,
Robert J. Ostrowski, Charles A. Ritter, and Christopher H. Wiles,
Vice Presidents; Edward C. Gonzales, Treasurer; and John W.
McGonigle, Secretary. The business address of each of the
Officers of the investment adviser is Federated Investors Tower,
Pittsburgh, Pennsylvania 15222-3779. These individuals are also
officers of a majority of the investment advisers to the Funds
listed in Part B of this Registration Statement under "The Funds."
3. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 1 on Form N-1A filed on March 22, 1990 (File Nos. 33-31259
and 811-5911).
Item 29. Principal Underwriters:
(a) Federated Securities Corp., the Distributor for shares of the
Registrant, also acts as principal underwriter for the
following open-end investment companies: A.T. Ohio Tax-Free
Money Fund; Alexander Hamilton Funds; American Leaders Fund,
Inc.; Annuity Management Series; Automated Cash Management
Trust; Automated Government Money Trust; BankSouth Select
Funds; BayFunds; The Biltmore Funds; The Biltmore Municipal
Funds; The Boulevard Funds; California Municipal Cash Trust;
Cambridge Series Trust; Cash Trust Series, Inc.; Cash Trust
Series II; DG Investor Series; Edward D. Jones & Co. Daily
Passport Cash Trust; FT Series, Inc.; Federated ARMs Fund;
Federated Exchange Fund, Ltd.; Federated GNMA Trust; Federated
Government Trust; Federated Growth Trust; Federated High Yield
Trust; Federated Income Securities Trust; Federated Income
Trust; Federated Index Trust; Federated Intermediate Government
Trust; Federated Master Trust; Federated Municipal Trust;
Federated Short-Intermediate Government Trust; Federated
Short-Term U.S. Government Trust; Federated Stock Trust;
Federated Tax-Free Trust; Federated U.S. Government Bond Fund;
Financial Reserves Fund; First Priority Funds; First Union
Funds; Fixed Income Securities, Inc.; Fortress Adjustable Rate
U.S. Government Fund, Inc.; Fortress Municipal Income Fund,
Inc.; Fortress Utility Fund, Inc.; Fountain Square Funds; Fund
for U.S. Government Securities, Inc.; Government Income
Securities, Inc.; High Yield Cash Trust; Independence One
Mutual Funds; Insight Institutional Series, Inc.; Insurance
Management Series; Intermediate Municipal Trust; Investment
Series Funds, Inc.; Investment Series Trust; Liberty Equity
Income Fund, Inc.; Liberty High Income Bond Fund, Inc.; Liberty
Municipal Securities Fund, Inc.; Liberty U.S. Government Money
Market Trust; Liberty Utility Fund, Inc.; Liquid Cash Trust;
Mark Twain Funds; Marshall Funds, Inc.; Money Market
Management, Inc.; Money Market Obligations Trust; Money Market
Trust; The Monitor Funds; Municipal Securities Income Trust;
New York Municipal Cash Trust; 111 Corcoran Funds; The Planters
Funds; Portage Funds; RIMCO Monument Funds; The Shawmut Funds;
Short-Term Municipal Trust; Signet Select Funds; SouthTrust
Vulcan Funds; Star Funds; The Starburst Funds; The Starburst
Funds II; Stock and Bond Fund, Inc.; Sunburst Funds; Targeted
Duration Trust; Tax-Free Instruments Trust; Tower Mutual Funds;
Trademark Funds; Trust for Financial Institutions; Trust for
Government Cash Reserves; Trust for Short-Term U.S. Government
Securities; Trust for U.S. Treasury Obligations; Vision
Fiduciary Funds, Inc.; and Vision Group of Funds, Inc.
Federated Securities Corp. also acts as principal underwriter
for the following closed-end investment company: Liberty Term
Trust, Inc.- 1999.
(b)
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Richard B. Fisher Director, Chairman, Chief Vice President
Federated Investors Tower Executive Officer, Chief
Pittsburgh, PA 15222-3779 Operating Officer, and
Asst. Treasurer, Federated
Securities Corp.
Edward C. Gonzales Director, Executive Vice Vice President
Federated Investors Tower President, and Treasurer, and Treasurer
Pittsburgh, PA 15222-3779 Federated Securities
Corp.
John W. McGonigle Director, Executive Vice Vice President and
Federated Investors Tower President, and Assistant Secretary
Pittsburgh, PA 15222-3779 Secretary, Federated
Securities Corp.
John A. Staley, IV Executive Vice President Vice President
Federated Investors Tower and Assistant Secretary,
Pittsburgh, PA 15222-3779 Federated Securities Corp.
John B. Fisher President-Institutional Sales, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James F. Getz President-Broker/Dealer, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark R. Gensheimer Executive Vice President of --
Federated Investors Tower Bank/Trust,
Pittsburgh, PA 15222-3779 Federated Securities Corp.
James S. Hamilton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James R. Ball Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark W. Bloss Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard W. Boyd Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Mary J. Combs Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Laura M. Deger Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jill Ehrenfeld Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Theodore Fadool, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Bryant R. Fisher Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark D. Fisher Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Christopher T. Fives Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Joseph D. Gibbons Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James M. Heaton Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
William E. Kugler Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Dennis M. Laffey Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
J. Michael Miller Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
R. Jeffrey Niss Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Keith Nixon Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Michael P. O'Brien Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Solon A. Person, IV Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Robert F. Phillips Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Timothy C. Pillion Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Eugene B. Reed Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Paul V. Riordan Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Charles A. Robison Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
David W. Spears Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Brian L. Sullivan Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Thomas E. Territ Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard B. Watts Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
R. Edmond Connell, Jr. Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Philip C. Hetzel Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
H. Joseph Kennedy Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
S. Elliott Cohan Secretary, Federated Assistant Secretary
Federated Investors Tower Securities Corp.
Pittsburgh, PA 15222-3779
(c) Not applicable.
Item 30. Location of Accounts and Records: (3.)
Item 31. Management Services: Not applicable.
Item 32. Undertakings:
Registrant hereby undertakes to comply with the provisions of
Section 16(c) of the 1940 Act with respect to the removal of
Trustees and the calling of special shareholder meetings by
shareholders.
Registrant hereby undertakes to file a post-effective amendment on
behalf of Alabama Municipal Cash Trust and North Carolina
Municipal Cash Trust, portfolios of Federated Municipal Trust,
using financial statements for such portfolios, which need not be
certified, within four to six months from the effective date of
Post-Effective Amendment No. 18 to the Registrant's Registration
Statement.
Registrant hereby undertakes to file a post-effective amendment on
behalf of Maryland Municipal Cash Trust, a portfolio of Federated
Municipal Trust, using financial statements for Maryland Municipal
Cash Trust, which need not be certified, within four to six months
from the date of this Post-Effective Amendment No. 22.
Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered a copy of the Registrant's latest annual
report to shareholders, upon request and without charge.
3. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 1 on Form N-1A filed on March 22, 1990 (File Nos. 33-31259
and 811-5911).
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, FEDERATED MUNICIPAL
TRUST, has duly caused this Amendment to its Registration Statement to
be signed on its behalf by the undersigned, thereunto duly authorized,
all in the City of Pittsburgh and Commonwealth of Pennsylvania, on the
17th day of February, 1994.
FEDERATED MUNICIPAL TRUST
BY: /s/G. Andrew Bonnewell
G. Andrew Bonnewell, Assistant Secretary
Attorney in Fact for John F. Donahue
March 30, 1994
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to its Registration Statement has been signed below by the
following person in the capacity and on the date indicated:
NAME TITLE DATE
By: /s/G. Andrew Bonnewell
G. Andrew Bonnewell Attorney In Fact March 30, 1994
ASSISTANT SECRETARY For the Persons
Listed Below
NAME TITLE
John F. Donahue* Chairman and Trustee
(Chief Executive Officer)
Glen R. Johnson* President
Edward C. Gonzales* Vice President and Treasurer
(Principal Financial and
Accounting Officer)
John T. Conroy, Jr.* Trustee
William J. Copeland* Trustee
James E. Dowd* Trustee
Lawrence D. Ellis, M.D.* Trustee
Edward L. Flaherty, Jr.* Trustee
Peter E. Madden* Trustee
Gregor F. Meyer* Trustee
Wesley W. Posvar* Trustee
Marjorie P. Smuts* Trustee
* By Power of Attorney
