ALABAMA
MUNICIPAL
CASH
TRUST
ANNUAL REPORT
TO SHAREHOLDERS
OCTOBER 31, 1994
[LOGO] FEDERATED SECURITIES CORP.
Distributor
A subsidiary of Federated Investors
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
314229790
007238 (12/94)
PRESIDENT'S MESSAGE
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Dear Shareholder:
I am pleased to present the Annual Report to Shareholders for Alabama Municipal
Cash Trust (the "Fund"), a portfolio of Federated Municipal Trust, for the
11-month period from the Fund's start of business date of November 29, 1993
through the Fund's fiscal year-end on October 31, 1994. The report begins with
an interview with portfolio manager Jeff Kozemchak about economic factors
affecting the Fund, followed by the Fund's Portfolio of Investments and
Financial Statements.
The Fund gives Alabama residents two ways to pursue tax-free income--its
earnings are exempt from federal regular income tax and Alabama personal income
tax.* Its portfolio includes high-quality, short-term Alabama municipal
securities of more than 40 issuers that use municipal bond financing for
projects as varied as housing, industrial development, education, and health
care.
During the report period, the Fund paid shareholders a total of $1.3 million in
dividends, or $0.02 per share. At the end of the report period, the Fund's net
assets stood at $142.8 million.
As a wise investor, you can count on the Fund to ease your tax burden by
pursuing competitive tax-free yields--with the additional advantages of daily
liquidity and stability of principal.**
Thank you for your confidence in Alabama Municipal Cash Trust. We welcome your
comments and suggestions.
Sincerely,
Glen R. Johnson
President
December 15, 1994
* Income may be subject to the federal alternative minimum tax.
** No money market fund can guarantee that a stable net asset value will be
maintained. An investment in the Fund is neither insured nor guaranteed by
the U.S. government.
INVESTMENT REVIEW
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An Interview with the Fund's Portfolio Manager Jeff A. Kozemchak
Q
Recently, there has been a lot of concern, as well as press coverage, about
the subject of derivatives. What are derivatives?
A
The term "derivative" has been applied to many different types of
investments. In the context of money market funds, derivatives generally
refer to adjustable rate securities designed for speculation on changes in
interest rates. These speculative derivatives provide above-market yields when
interest rates fall or remain stable, or when the yield curve is steep. They
provide below-market yields, however, when interest rates rise or become more
volatile, or when the yield curve flattens. All three of these conditions
occurred in 1994. As a result, many of these speculative securities lost a
significant part of their value, enough to threaten the $1.00 per share price of
some money market funds.
It is important to distinguish these speculative derivatives from adjustable
rate securities that are indexed to money market interest rates. These indexed
securities are designed to track changes in market rates, and should approximate
their par value in all reasonably foreseeable market conditions. Tax-exempt
money market funds like the Fund have the right to tender these securities for
purchase at their par value. Money market funds have used these securities for
decades, through several interest rate cycles, without jeopardizing their stable
net asset values.
Q Do Federated Investors' money market funds invest in the derivatives that
have been in the headlines recently?
A No. None of Federated Investors' money market funds has invested in any of
the types of derivatives that have been in the headlines lately. Our mutual
funds only invest in adjustable rate securities that track changes in money
market interest rates.
With respect to speculative derivatives, we determined from the outset that the
potential volatility of these securities was contrary to the intent of the rules
governing the use of variable rate securities by money market funds. We also
realized the potential for these securities to deviate significantly from par
and threaten the $1.00 per share price of a money market fund. We spoke out
against the use of these securities by money market funds at industry
conferences throughout 1993, when the securities still offered attractive
yields. Our views were vindicated when, in June 1994, the Securities and
Exchange Commission sent a letter to the Investment Company Institute requiring
money market funds to divest themselves of these securities in an orderly
manner. This caused some investment advisers to buy these securities from their
funds.
Q What happened to short-term interest rates over the period covered by this
Annual Report?
A There was a dramatic shift in the monetary policy of the Federal Reserve
Board (the "Fed") during the reporting period that ended October 31, 1994.
Throughout the fourth quarter of 1993, the Fed kept the Federal funds rate (the
rate banks charge each other for overnight loans) steady at 3.00%, where it had
been for a year and a half. The Fed had maintained short-term interest rates at
these low levels in order to stimulate the economy. However, in early 1994
reports began to show stronger than anticipated economic growth. Real gross
national product grew at a 7.00% annual rate in the fourth quarter of 1993, and
the national unemployment rate declined to 6.00%. Concerned that these factors
could lead to an increase in wages and prices, the Fed took the first step on
February 4, 1994, to fight future inflation by raising its Federal funds rate
target to 3.25%. Since then, the Fed has continued to be aggressive, moving the
Federal funds rate target upward five more times from 3.25% to 5.50%.
Q How did municipal money market yields react to these rate increases?
A Municipal money market interest rates followed the upward movement in
taxable rates but to a slightly lesser degree, as they are affected by
federal, state and local tax factors as well as market supply and demand
imbalances.
The Fund' s yields have proven to be quite responsive to the increases in money
market rates. For the period from December 3, 1994 (date of initial public
investment) to October 31, 1994, the Fund' s tax-free, annualized seven-day net
yield increased from 1.95% to 3.12%.* At October 31, 1994, the seven-day yield
was equivalent to a taxable yield of 5.44% for those investors subject to the
highest federal and state tax brackets.** These numbers illustrate the Fund's
attractiveness relative to taxable investments.
Q What is your outlook for the markets and the Fund?
A The economy continues to show surprising resilience to the Fed' s attempts
to bring growth under control. We expect that the Fed will act to tighten
monetary policy in late 1994 and possibly again in the first quarter of
1995. At that point in time, the Federal funds target could be as high as 6.50%.
As a result, we plan to maintain a conservative posture in the near future,
while attempting to maximize performance through ongoing relative value
analysis. However, we will continue to monitor changing economic and market
developments so as to serve our clients attracted to the short-term tax-exempt
securities market. In this environment, stable net asset value money market
funds like the Fund will continue to be an important component in preserving
capital, and should reflect rising short-term interest rates with increasing net
yields.
*Performance quoted represents past performance and is not indicative of future
results. Yields will vary.
**These numbers assume that state income taxes are fully deductible in computing
federal income tax liability.
ALABAMA MUNICIPAL CASH TRUST
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1994
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SHORT-TERM MUNICIPAL SECURITIES--99.6%
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ALABAMA--97.5%
----------------------------------------------------------------------
$ 2,500,000 Alabama Special Care Facilities, 3.90% Annual TOBs (Series
1984A)/(Montgomery Hospital)/(AMBAC Insured), Optional Tender 7/1/95 A-1 $ 2,500,000
----------------------------------------------------------------------
2,000,000 Alabama State IDA Revenue Bonds Weekly VRDNs
(Monarch Tile, Inc.)/(NationsBank of Texas N.A. LOC)/
(Subject to AMT) P-1 2,000,000
----------------------------------------------------------------------
2,250,000 Alabama State IDA Revenue Bonds Weekly VRDNs (Tee Jays Manufacturing
Company, Inc.)/(Trust Company Bank LOC)/(Subject to AMT) P-1 2,250,000
----------------------------------------------------------------------
3,750,000 Alabama State Weekly VRDNs (Pine City Fiber Co.)/
(Barclays Bank PLC LOC) VMIG1 3,750,000
----------------------------------------------------------------------
4,000,000 Alabama State, IDA Weekly VRDNs (Series 1994)/(Decatur Aluminum
Corp.)/(Star Bank N.A. LOC)/(Subject to AMT) P-1 4,000,000
----------------------------------------------------------------------
3,000,000 Alabama State, IDA Weekly VRDNs (Columbus Mills, Inc.)/(Trust Company
Bank LOC)/(Subject to AMT) P-1 3,000,000
----------------------------------------------------------------------
1,100,000 Arab, AL, IDB Revenue Refunding Bonds Weekly VRDNs (Series 1989)/(SCI
Manufacturing, Inc.)/(Bank of Tokyo Ltd. LOC) A-1 1,100,000
----------------------------------------------------------------------
3,000,000 Birmingham, AL, GO Weekly VRDNs (Series 1992A)/(First Alabama Bank
LOC) A-1+ 3,000,000
----------------------------------------------------------------------
2,000,000 Birmingham, AL, IDA Weekly VRDNs (Altel Industries)/ (Wachovia Bank of
Georgia NA LOC)/(Subject to AMT) P-1 2,000,000
----------------------------------------------------------------------
1,900,000 Birmingham, AL, IDB Weekly VRDNs (Glasforms, Inc.)/ (First Alabama
Bank LOC)/(Subject to AMT) P-1 1,900,000
----------------------------------------------------------------------
4,600,000 Birmingham, AL, Medical Clinic Board Daily VRDNs
(University of Alabama Health Services Foundation)/
(Morgan Guaranty Trust Co. LOC) A-1+ 4,600,000
----------------------------------------------------------------------
</TABLE>
ALABAMA MUNICIPAL CASH TRUST
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SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
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ALABAMA--CONTINUED
----------------------------------------------------------------------
$ 2,250,000 Birmingham, AL, Special Care Facilities Financing
Authority, 10.00% Revenue Bonds (Health Care Facilities-
Medical Center East)/(Prerefunded), 7/1/95 (@102) AAA $ 2,366,926
----------------------------------------------------------------------
2,000,000 Bon Air, AL, IDB Weekly VRDNs (Avondale Mills, Inc.)/ (Trust Company
Bank LOC) A-1+ 2,000,000
----------------------------------------------------------------------
1,880,000 Calhoun County, AL, Economic Development Council Weekly VRDNs (Series
1990)/(Food Ingredients Technology Co.)/(NationsBank of North Carolina
N.A. LOC)/
(Subject to AMT) P-1 1,880,000
----------------------------------------------------------------------
3,085,000 Chatom, AL, 3.50% Semi-Annual TOBs (Series 1984M)/ (Alabama Electric
Co-Op, Inc.)/(NRUCFC Guaranty), Optional Tender 2/15/95 P-1 3,085,000
----------------------------------------------------------------------
3,000,000 Decatur, AL, IDB Weekly VRDNs Revenue Refunding Bonds (Series
1993)/(Allied Signal, Inc. Guaranty) A-1 3,000,000
----------------------------------------------------------------------
5,100,000 Eutaw, AL, IDB Weekly VRDNs (Mississippi Power
Company Guaranty) VMIG1 5,100,000
----------------------------------------------------------------------
670,000 Homewood, AL, 3.40% GO Refunding Warrants SB, 5/1/95 NR(2) 670,000
----------------------------------------------------------------------
6,400,000 Homewood, AL, IDA Weekly VRDNs (Mountain Brook Ltd.)/(SouthTrust Bank
of Alabama LOC) P-1 6,400,000
----------------------------------------------------------------------
4,500,000 Hoover, AL, IDA Weekly VRDNs (Bud's Best Cookies, Inc.)/(SouthTrust
Bank of Alabama LOC)/(Subject to AMT) P-1 4,500,000
----------------------------------------------------------------------
3,700,000 Huntsville, AL, Health Care Authority/Health Care
Facilities Weekly VRDNs (Series 1994A)/(MBIA Insured)/
(AmSouth Bank NA BPA) A-1 3,700,000
----------------------------------------------------------------------
2,200,000 Huntsville, AL, Health Care Authority/Health Care
Facilities Weekly VRDNs (Series 1994B)/(MBIA Insured)/
(AmSouth Bank N.A. BPA) A-1 2,200,000
----------------------------------------------------------------------
355,000 Huntsville, AL, IDA Weekly FRDNs (Parkway)/(First
Alabama Bank LOC) A-1 355,000
----------------------------------------------------------------------
</TABLE>
ALABAMA MUNICIPAL CASH TRUST
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SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
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ALABAMA--CONTINUED
----------------------------------------------------------------------
$ 1,875,000 Ider, AL, IDB Weekly VRDNs (Galbreath, Inc.)/(National Bank of Canada
LOC)/(Subject to AMT) P-1 $ 1,875,000
----------------------------------------------------------------------
1,000,000 Jefferson County, AL, Weekly VRDNs (Special Obligation
Warrants)/(Series 1992)/(Board of Education)/(Columbus Bank & Trust
Co. LOC) A-1 1,000,000
----------------------------------------------------------------------
1,885,000 Madison, AL, IDA Weekly VRDNs (Series A)/(Executive Inn Ltd.)/(AmSouth
Bank N.A. LOC) A-1 1,885,000
----------------------------------------------------------------------
3,000,000 Marshall County, AL, Special Obligation School Refunding Warrants
Weekly VRDNs (Series 1994)/(Marshall County Board of Education)/(First
Alabama Bank LOC) A-1+ 3,000,000
----------------------------------------------------------------------
2,700,000 McIntosh, AL, IDB Weekly VRDNs (Ciba Geigy Corp.)/ (Union Bank of
Switzerland LOC)/(Subject to AMT) A-1+ 2,700,000
----------------------------------------------------------------------
1,350,000 Mobile, AL, Capital Appreciation Warrant, Zero Coupon Bond, (4.15%
Yield)/(Prerefunded U.S. Treasury), 8/15/95 AAA 919,742
----------------------------------------------------------------------
1,000,000 Mobile, AL, Downtown Redevelopment Authority, 2.70%
Annual TOBs (Series 1992)/(Mitchell Project)/(Trust
Company Bank LOC)/(Subject to AMT), Mandatory
Tender 12/1/94 P-1 1,000,000
----------------------------------------------------------------------
1,500,000 Mobile, AL, IDA Weekly VRDNs (McRae's, Inc.)/
(NationsBank, North Carolina N.A. LOC) A-1 1,500,000
----------------------------------------------------------------------
4,500,000 Mobile, AL, IDB 4.10% Semi-Annual TOBs (International Paper Company),
Optional Tender 4/15/95 A-2 4,500,000
----------------------------------------------------------------------
2,000,000 Mobile, AL, IDB Weekly VRDNs (Series 1989)/(Newark Group Industries
Inc.)/(First Fidelity Bank N.A. LOC)/
(Subject to AMT) VMIG1 2,000,000
----------------------------------------------------------------------
3,500,000 Mobile, AL, IDB, PCR Weekly VRDNs (Series 1993A)/
(Alabama Power Company) A-1 3,500,000
----------------------------------------------------------------------
4,000,000 Mobile, AL, IDB, PCR Weekly VRDNs (Series 1993B)/
(Alabama Power Company) A-1 4,000,000
----------------------------------------------------------------------
</TABLE>
ALABAMA MUNICIPAL CASH TRUST
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SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------
ALABAMA--CONTINUED
----------------------------------------------------------------------
$ 5,000,000 Mobile, AL, Medical Clinic Board, 3.40% CP (Series 1992A)/(Mobile
Alabama Infirmary Assoc.)/(Fuji Bank Ltd. and Mitsubishi Bank Ltd.
LOCs), Mandatory Tender
11/17/94 A-1 $ 5,000,000
----------------------------------------------------------------------
1,000,000 Mobile, AL, Port City Medical Clinic Board Hospital
Revenue Bond, 3.75% CP (Series 1992-A)/(Infirmary
Association)/(Fuji Bank Ltd. and Mitsubishi Bank Ltd. LOCs), Mandatory
Tender 1/17/95 P-1 1,000,000
----------------------------------------------------------------------
4,000,000 Montgomery, AL, IDB Pollution Control & Solid Disposal Revenue, 3.40%
CP (General Electric Company), Mandatory Tender 1/12/95 A-1+ 4,000,000
----------------------------------------------------------------------
2,000,000 Montgomery, AL, IDB Pollution Control & Solid Disposal Revenue, 3.45%
CP (General Electric Company), Mandatory Tender 12/20/94 A-1+ 2,000,000
----------------------------------------------------------------------
1,000,000 Montgomery, AL, IDB Pollution Control & Solid Waste Disposal Revenue,
3.00% CP (General Electric Company), Mandatory Tender 12/14/94 A-1+ 1,000,000
----------------------------------------------------------------------
2,865,000 Montgomery, AL, IDB Weekly VRDNs (Series 1990A)/ (Industrial Partners,
Inc.)/(Wachovia Bank of Georgia N.A. LOC)/(Subject to AMT) Aa2 2,865,000
----------------------------------------------------------------------
435,000 Opelika, AL, 3.60% GO Warrants (Series 1994A)/(AMBAC Insured), 7/1/95 AAA 435,000
----------------------------------------------------------------------
1,000,000 Phoenix City, AL, IDB, 3.40% CP (Series 1988)/(Mead Coated Board)/(ABN
AMRO Bank N.V. LOC)/(Subject to AMT), Mandatory Tender 11/18/94 P-1 1,000,000
----------------------------------------------------------------------
5,325,000 Phoenix City, AL, IDB, 3.60% CP (Series 1988)/(Mead Coated Board)/(ABN
AMRO Bank N.V. LOC)/ Mandatory Tender 1/24/95 P-1 5,325,000
----------------------------------------------------------------------
</TABLE>
ALABAMA MUNICIPAL CASH TRUST
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SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
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ALABAMA--CONTINUED
----------------------------------------------------------------------
$ 965,000 Piedmont, AL, IDB Weekly VRDNs (Industrial Partners)/ (First National
Bank of Atlanta LOC)/(Subject to AMT) P-1 $ 965,000
----------------------------------------------------------------------
1,750,000 Scottsboro, AL, Adjusted/Fixed Rate IDRB Weekly VRDNs (Series
1991)/(Maples Industries, Inc.)/(AmSouth Bank N.A. LOC)/(Subject to
AMT) P-1 1,750,000
----------------------------------------------------------------------
4,500,000 Scottsboro, AL, IDB Weekly VRDNs (Series 1994)/(Maples Industries,
Inc.)/(AmSouth Bank N.A. LOC)/(Subject to AMT) P-1 4,500,000
----------------------------------------------------------------------
510,000 Southeast Gas District, AL, Natural Gas System Revenue Bonds, 3.85% SB
(Series 1994A)/(MBIA Insured), 3/1/95 AAA 510,000
----------------------------------------------------------------------
6,100,000 St. Clair County, AL, IDB Weekly VRDNs (Series 1993)/ (EBSCO
Industries, Inc.)/(National Australia Bank Ltd. LOC)/(Subject to AMT) A-1+ 6,100,000
----------------------------------------------------------------------
900,000 Sylacauga, AL, IDB Industrial Development Revenue Bonds Daily VRDNs
(Series 1991)/(Parker Fertilizer)/
(SouthTrust Bank of Alabama LOC)/(Subject to AMT) P-1 900,000
----------------------------------------------------------------------
1,930,000 Tuscaloosa, AL, IDB Weekly VRDNs (Series 1994)/(Harco, Inc.)/(AmSouth
Bank N.A. LOC) P-1 1,930,000
----------------------------------------------------------------------
4,065,000 Vincent, AL, IDA Weekly VRDNs (Headquarters Partnership)/(National
Australia Bank Ltd. LOC) P-1 4,065,000
----------------------------------------------------------------------
2,690,000 Vincent, AL, IDB Weekly VRDNs (Series 1993)/(Ebsco Industries,
Inc.)/(National Australia Bank Ltd. LOC)/
(Subject to AMT) A-1+ 2,690,000
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Total 139,271,668
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PUERTO RICO--2.1%
----------------------------------------------------------------------
2,000,000 Government Development Bank of Puerto Rico Weekly VRDNs (Credit Suisse
and Sumitomo Bank Ltd. LOCs) A-1 2,000,000
----------------------------------------------------------------------
</TABLE>
ALABAMA MUNICIPAL CASH TRUST
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SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
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PUERTO RICO--CONTINUED
----------------------------------------------------------------------
$ 1,000,000 Puerto Rico Industrial, Medical & Environmental PCA, 4.00% Annual TOBs
(Series 1983A)/(Reynolds Metals Co.)/ (ABN AMRO Bank N.A. LOC),
Optional Tender 9/1/95 VMIG1 $ 1,000,809
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Total 3,000,809
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TOTAL INVESTMENTS, AT AMORTIZED COST $ 142,272,477+
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</TABLE>
* See Notes to Portfolio of Investments on page 10. Current credit ratings are
unaudited.
+ Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($142,803,861) at
October 31, 1994.
The following abbreviations are used in this portfolio:
AMBAC-- American Municipal Bond
Assurance Corporation
AMT-- Alternative Minimum Tax
BPA-- Bond Purchase Agreement
CP-- Commercial Paper
FRDNs-- Floating Rate Demand Notes
GO-- General Obligation
IDA-- Industrial Development Authority
IDB-- Industrial Development Bond
IDRB-- Industrial Development Revenue Bonds
LOC(s)-- Letter(s) of Credit
MBIA-- Municipal Bond Investors Assurance
NRUCFC-- National Rural Utilities
Cooperative Finance Corporation
PCA-- Pollution Control Authority
PCR-- Pollution Control Revenue
SB-- Serial Bond
TOBs-- Tender Option Bonds
VRDNs-- Variable Rate Demand Notes
(See Notes which are an integral part of the Financial Statements)
ALABAMA MUNICIPAL CASH TRUST
NOTES TO PORTFOLIO OF INVESTMENTS
(UNAUDITED)
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SHORT-TERM MUNICIPAL OBLIGATION RATINGS
STANDARD & POOR'S RATING GROUP
A S&P 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 ratings 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 & POOR'S RATING GROUP
S&P 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 long-
term and 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 as 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
ALABAMA MUNICIPAL CASH TRUST
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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 & POOR'S RATING GROUP
A S&P 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 highest category indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong
safety characteristics are denoted with a plus (+) sign designation.
A-2 Capacity for timely payment on issues with this designation is satisfactory.
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. PRIME-1
repayment capacity will normally be evidenced by the following
characteristics: leading market positions in well established industries,
high rates of return on funds employed, conservative capitalization
structure with moderate reliance on debt and ample asset protection, broad
margins in earning coverage of fixed financial charges and high internal
cash generation, well-established access to a range of financial markets and
assured sources of alternate liquidity.
P-2 Issuers rated PRIME-2 (or related supporting institutions) have a strong
capacity for repayment of short-term promissory obligations. This will
normally be evidenced by many of the characteristics cited above, but to a
lesser degree. Earnings trends and coverage ratios, while sound, will be
more subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.
LONG-TERM DEBT RATINGS
STANDARD & POOR'S RATING GROUP
AAA Debt rated "AAA" has the highest rating assigned by S&P. 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 highest 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.
MOODY'S INVESTORS SERVICE, INC.
ALABAMA MUNICIPAL CASH TRUST
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AAA Bonds that 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 edged." 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 that 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 that 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.
NR indicates that both the bonds and the obligor or credit enhancer are not
currently rated by S&P or Moody's 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 S&P or "Aaa" by Moody's.
NR (2) The underlying issuer/obligor/guarantor has other outstanding debt rated
"AA" by S&P or "Aa" by Moody's.
NR (3) The underlying issuer/obligor/guarantor has other outstanding debt rated
"A" by S&P or Moody's.
ALABAMA MUNICIPAL CASH TRUST
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1994
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<TABLE>
<S> <C> <C>
ASSETS:
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Investments in securities, at amortized cost and value $ 142,272,477
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Cash 120,759
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Interest receivable 689,982
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Deferred expenses 23,475
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Total assets 143,106,693
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LIABILITIES:
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Dividends payable $ 197,638
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Payable to shareholder services agent 36,086
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Accrued expenses 69,108
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Total liabilities 302,832
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NET ASSETS for 142,803,861 shares of beneficial interest outstanding $ 142,803,861
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NET ASSET VALUE, Offering Price, and Redemption Proceeds Per share:
($142,803,861 3 142,803,861 shares of beneficial interest outstanding) $1.00
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</TABLE>
(See Notes which are an integral part of the Financial Statements)
ALABAMA MUNICIPAL CASH TRUST
STATEMENT OF OPERATIONS
PERIOD ENDED OCTOBER 31, 1994*
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<TABLE>
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INVESTMENT INCOME:
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Interest income $ 1,475,274
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EXPENSES:
- ---------------------------------------------------------------------------------------
Investment advisory fee $ 243,579
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Administrative personnel and services 52,411
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Custodian and portfolio accounting fees 55,371
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Transfer and dividend disbursing agent fees and expenses 10,609
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Fund share registration costs 5,869
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Shareholder services fee 85,320
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Legal fees 3,330
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Printing and postage 9,263
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Insurance premiums 6,490
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Miscellaneous 6,020
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Total expenses 478,262
- ---------------------------------------------------------------------------------------
Deduct--
- ---------------------------------------------------------------------------------------
Waiver of investment advisory fee $ 243,579
- ---------------------------------------------------------------------------
Reimbursement of other operating expenses 60,875 304,454
- --------------------------------------------------------------------------- ---------- ----------
Net expenses 173,808
- --------------------------------------------------------------------------------------------------- ------------
Net investment income $ 1,301,466
- --------------------------------------------------------------------------------------------------- ------------
</TABLE>
*For the period from November 29, 1993 (start of business) to October 31, 1994.
(See Notes which are an integral part of the Financial Statements)
ALABAMA MUNICIPAL CASH TRUST
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD ENDED
OCTOBER 31, 1994*
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -------------------------------------------------------------------------------------------
OPERATIONS--
- -------------------------------------------------------------------------------------------
Net investment income $ 1,301,466
- ------------------------------------------------------------------------------------------- ---------------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -------------------------------------------------------------------------------------------
Dividends to shareholders from net investment income (1,301,466)
- ------------------------------------------------------------------------------------------- ---------------------
FUND SHARE (PRINCIPAL) TRANSACTIONS--
- -------------------------------------------------------------------------------------------
Proceeds from sale of shares 478,251,901
- -------------------------------------------------------------------------------------------
Net asset value of shares issued to shareholders in
payment of dividends declared 606,720
- -------------------------------------------------------------------------------------------
Cost of shares redeemed (336,054,760)
- ------------------------------------------------------------------------------------------- ---------------------
Change in net assets resulting from Fund share transactions 142,803,861
- ------------------------------------------------------------------------------------------- ---------------------
Change in net assets 142,803,861
- -------------------------------------------------------------------------------------------
NET ASSETS:
- -------------------------------------------------------------------------------------------
Beginning of period --
- ------------------------------------------------------------------------------------------- ---------------------
End of period $ 142,803,861
- ------------------------------------------------------------------------------------------- ---------------------
</TABLE>
*For the period from November 29, 1993 (start of business) to October 31, 1994.
(See Notes which are an integral part of the Financial Statements)
ALABAMA MUNICIPAL CASH TRUST
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
PERIOD ENDED
OCTOBER 31, 1994*
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00
- -------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------------------
Net investment income 0.02
- -------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
- -------------------------------------------------------------------------------------------
Dividends to shareholders from net investment income (0.02)
- ------------------------------------------------------------------------------------------- -------
NET ASSET VALUE, END OF PERIOD $ 1.00
- ------------------------------------------------------------------------------------------- -------
TOTAL RETURN** 2.31%
- -------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -------------------------------------------------------------------------------------------
Expenses 0.36%(b)
- -------------------------------------------------------------------------------------------
Net investment income 2.67%(b)
- -------------------------------------------------------------------------------------------
Expense waiver/reimbursement (a) 0.62%(b)
- -------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- -------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted)
$142,804
- -------------------------------------------------------------------------------------------
</TABLE>
* Reflects operations for the period from December 3, 1993 (date of initial
public investment) to October 31, 1994. For the period from November 29, 1993
(start of business) to December 3, 1993 the Fund had no investment activity.
** Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(a) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(b) Computed on an annualized basis.
(See Notes which are an integral part of the Financial Statements)
ALABAMA MUNICIPAL CASH TRUST
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1994
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Federated Municipal Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "Act"), as an open-end, management
investment company. The Trust consists of thirteen non-diversified portfolios.
The financial statements included herein are only those of Alabama Municipal
Cash Trust (the "Fund"). The financial statements of the other portfolios are
presented separately. The assets of each portfolio are segregated and a
shareholder's interest is limited to the portfolio in which shares are held.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
A. INVESTMENT VALUATIONS--The Fund's use of the amortized cost method to value
its portfolio securities is in accordance with Rule 2a-7 under the Act.
B. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--lnterest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized
as required by the Internal Revenue Code, as amended (the "Code").
Distributions to shareholders are recorded on the ex-dividend date.
C. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its tax-exempt income.
Accordingly, no provisions for federal tax are necessary.
D. WHEN-LSSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
E. CONCENTRATION OF CREDIT RISK--Since the Fund invests a substantial portion
of its assets in issuers located in one state, it will be more susceptible
to factors adversely affecting issuers of that state than would be a
comparable general tax-exempt mutual fund. In order to reduce the credit
risk associated with such factors, at October 31, 1994, 83.9% of the
securities in the portfolio of investments are backed by letters of credit
or bond insurance of various financial institutions and financial guaranty
assurance agencies. The value of investments insured by or supported
(backed) by a letter of credit for any one institution or agency did not
exceed 9.0% of total investments.
ALABAMA MUNICIPAL CASH TRUST
- --------------------------------------------------------------------------------
F. DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering its shares, have been deferred and are being
amortized using the straight-line method not to exceed a period of five
years from the Fund's commencement date.
G. OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Board of Trustees to issue an unlimited
number of full and fractional shares of beneficial interest (without par value).
At October 31, 1994, capital paid-in aggregated $142,803,861. Transactions in
Fund shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31, 1994*
<S> <C>
Shares sold 478,251,901
- -------------------------------------------------------------------------------------------
Shares issued to shareholders in payment of dividends declared 606,720
- -------------------------------------------------------------------------------------------
Shares redeemed (336,054,760)
- ------------------------------------------------------------------------------------------- ---------------------
Net change resulting from Fund share transactions 142,803,861
- ------------------------------------------------------------------------------------------- ---------------------
</TABLE>
*For the period from November 29, 1993 (start of business) to October 31, 1994.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Management, the Fund's investment adviser
(the "Adviser"), receives for its services an annual investment advisory fee
equal to .50 of 1% of the Fund's average daily net assets. The Adviser may
voluntarily choose to waive its fee and reimburse certain operating expenses of
the Fund. The Adviser can modify or terminate this voluntary waiver and
reimbursement at any time at its sole discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Fund
with administrative personnel and services. Prior to March 1, 1994, these
services were provided at approximate cost. Effective March 1, 1994, the FAS fee
is based on the level of average aggregate daily net assets of all funds advised
by subsidiaries of Federated Investors for the period. The administrative fee
received during the period of the Administrative Services Agreement shall be at
least $125,000 per portfolio and $30,000 per each additional class of shares.
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement
with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to .25 of
1% of average net assets of the Fund for the period. This fee is to obtain
certain personal services for shareholders and to maintain shareholder accounts.
ALABAMA MUNICIPAL CASH TRUST
- --------------------------------------------------------------------------------
TRANSFER AND DIVIDEND DISBURSING AGENT FEES--Federated Services Company
("FServ") serves as transfer and dividend disbursing agent for the Fund. The
FServ fee is based on the size, type, and number of accounts and transactions
made by shareholders.
ORGANIZATIONAL EXPENSES--Organizational expenses ($26,461) and start-up
administrative service expenses ($31,250) were borne initially by the Adviser.
The Fund has agreed to reimburse the Adviser for the organizational expenses and
start-up administrative expenses during the five year period following December
1, 1993 (date the Fund first became effective). For the year ended October 31,
1994, the Fund paid $3,381 and $3,993, respectively, pursuant to this agreement.
INTERFUND TRANSACTIONS--During the year ended October 31, 1994, the Fund engaged
in purchase and sale transactions with other affiliated funds at current value
pursuant to Rule 17a-7 under the Act amounting to $290,417,322, and
$213,075,000, respectively.
Certain of the Officers and Trustees of the Trust are Officers and Directors or
Trustees of the above companies.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
FEDERATED MUNICIPAL TRUST (Alabama Municipal Cash Trust):
We have audited the accompanying statement of assets and liabilities of Alabama
Municipal Cash Trust (an investment portfolio of Federated Municipal Trust, a
Massachusetts business trust), including the schedule of portfolio investments,
as of October 31, 1994, and the related statement of operations and changes in
net assets, and the financial highlights for the period from November 29, 1993
(start of business), to October 31, 1994. These financial statements and
financial highlights are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1994, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Alabama Municipal Cash Trust (an investment portfolio of Federated Municipal
Trust) as of October 31, 1994, and the results of its operations, the changes in
its net assets, and its financial highlights for the period from November 29,
1993 (start of business), to October 31, 1994, in conformity with generally
accepted accounting principles.
Pittsburgh, Pennsylvania, ARTHUR ANDERSEN LLP
December 14, 1994
THIS PAGE INTENTIONALLY LEFT BLANK
TRUSTEES OFFICERS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
John F. Donahue John F. Donahue
John T. Conroy, Jr. Chairman
William J. Copeland Glen R. Johnson
James E. Dowd President
Lawrence D. Ellis, M.D. J. Christopher Donahue
Edward L. Flaherty, Jr. Vice President
Glen R. Johnson Richard B. Fisher
Peter E. Madden Vice President
Gregor F. Meyer Edward C. Gonzales
Wesley W. Posvar Vice President and Treasurer
Marjorie P. Smuts John W. McGonigle
Vice President and Secretary
David M. Taylor
Assistant Treasurer
G. Andrew Bonnewell
Assistant Secretary
</TABLE>
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
governmental agency. Investment in mutual funds involves risk, including
possible loss of principal. Although money market funds seek to maintain a
stable net asset value of $1.00 per share, there is no assurance that they will
be able to do so.
This report is authorized for distribution to prospective investors only when
preceded
or accompanied by the Fund's prospectus which contains facts concerning its
objective and policies, management fees, expenses and other information.
CALIFORNIA
MUNICIPAL
CASH
TRUST
ANNUAL REPORT
TO SHAREHOLDERS
OCTOBER 31, 1994
[LOGO] FEDERATED SECURITIES CORP.
--------------------------
Distributor
A subsidiary of Federated Investors
Federated Investors Tower
Pittsburgh, PA 15222-3779
130482102
G00655-01 (12/94)
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the Annual Report to Shareholders for California
Municipal Cash Trust (the "Fund"), a portfolio of Federated Municipal Trust. Due
to a change in the Fund's fiscal year-end from September to October, this report
covers the one-month period ended October 31, 1994. The report begins with an
interview with portfolio manager Mary Jo Ochson about economic factors affecting
the Fund, followed by the Fund's Portfolio of Investments and Financial
Statements.
The Fund gives California residents two ways to pursue tax-free income--its
earnings are exempt from federal regular income tax and California personal
income tax.* Its portfolio includes high-quality, short-term California
municipal securities of more than 30 issuers that use municipal bond financing
for projects as varied as housing, industrial development, education, and health
care.
During the report period, the Fund paid shareholders a total of $190 thousand in
dividends. At the end of the report period, the Fund's net assets stood at $81.6
million.
As a wise investor, you can count on the Fund to ease your tax burden by
pursuing competitive tax-free yields--with the additional advantages of daily
liquidity and stability of principal.**
Thank you for your confidence in California Municipal Cash Trust. We welcome
your comments and suggestions.
Sincerely,
Glen R. Johnson
President
December 15, 1994
* Income may be subject to the federal alternative minimum tax.
** No money market fund can guarantee that a stable net asset value will be
maintained. An investment in the Fund is neither insured nor guaranteed by
the U.S. government.
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
An Interview with Fund Portfolio Manager Mary Jo Ochson
Q Recently, there has been a lot of concern, as well as press coverage, about
the subject of derivatives. What are derivatives?
A The term "derivative" has been applied to many different types of
investments. In the context of money market funds, derivatives generally
refer to adjustable rate securities designed for speculation on changes in
interest rates. These speculative derivatives provide above-market yields when
interest rates fall or remain stable, or when the yield curve is steep. They
provide below-market yields, however, when interest rates rise or become more
volatile, or when the yield curve flattens. All three of these latter conditions
occurred in 1994. As a result, many of these speculative securities lost a
significant part of their value, enough to threaten the $1.00 per share price of
some money market funds.
It is important to distinguish these speculative derivatives from adjustable
rate securities that are indexed to money market interest rates. These indexed
securities are designed to track changes in market rates, and should approximate
their par value in reasonably foreseeable market conditions. Tax-exempt money
market funds like the Fund have the right to tender many of these securities for
purchase at their par value. Money market funds have used these securities for
decades, through several interest rate cycles, without jeopardizing their stable
net asset values.
Q Do money market funds advised by Federated invest in the derivatives that
have been in the headlines recently?
A No. None of the money market funds advised by Federated has invested in any
of the types of derivatives that have been in the headlines lately. Our
mutual funds only invest in adjustable rate securities that track changes
in money market interest rates.
With respect to speculative derivatives, we determined from the outset that the
potential volatility of these securities was contrary to the intent of the rules
governing the use of variable rate securities by money market funds. We also
realized the potential for these securities to deviate significantly from par
and threaten the $1.00 per share price of a money market fund. We spoke out
against the use of these securities by money market funds at industry
conferences throughout 1993, when the securities still offered attractive
yields. Our views were vindicated when, in June, 1994, the Securities and
Exchange Commission sent a letter to the Investment Company Institute requiring
money market funds to divest themselves of these securities in an orderly
manner.
Q What happened to short-term interest rates over the past year?
A There was a dramatic shift in the monetary policy of the Federal Reserve
Board (the "Fed") during the 12 months preceding October 31, 1994.
Throughout the fourth quarter of 1993, the Fed kept the Federal funds rate (the
rate banks charge each other for overnight loans) steady at 3.00%, where it had
been for a year and a half. The Fed had maintained short-term interest rates at
these low levels in order to stimulate the economy. However, in early 1994,
reports began to show stronger than anticipated economic growth. Real gross
national product grew at a 7.00% annual rate in the fourth quarter of 1993, and
the national unemployment rate declined to 6.00%. Concerned that these factors
could lead to an increase in wages and prices, the Fed took the first step on
February 4, 1994, to fight future inflation by raising its Federal funds rate
target to 3.25%. Since then, the Fed has continued to be aggressive, moving the
Federal funds rate target upward five more times from 3.25% to 5.50%.
Q How did municipal money market yields react to these rate increases?
A Municipal money market interest rates followed the upward movement in
taxable rates but to a slightly lesser degree, as they are affected by
federal, state and local tax factors as well as market supply and demand
imbalances.
The Fund's yields have proven to be responsive to the increases in money market
rates. As of October 31, 1994, the Fund's tax-free, annualized seven-day net
yield was 2.81%.* This was equivalent to a taxable yield of 5.23% for those
investors subject to the highest federal and state tax brackets.** These numbers
illustrate the Fund's attractiveness relative to taxable investments.
*Performance quoted represents past performance and is not indicative of future
results. Yields will vary.
**These numbers assume that state income taxes are fully deductible in computing
federal income tax liability.
Q What is your outlook for the markets and the Fund?
A The economy continues to show surprising resilience to the Fed's attempts
to bring growth under control. We expect that the Fed will act again to
tighten monetary policy in the first quarter of 1995. At that point in
time, the Federal funds target could be as high as 6.50%. As a result, we plan
to maintain a conservative posture in the near future, while attempting to
maximize performance through ongoing relative value analysis. However, we will
continue to monitor changing economic and market developments so as to serve our
clients attracted to the short-term tax-exempt securities market. In this
environment, stable net asset value money market funds like the Fund will
continue to be an important component in preserving capital, and should reflect
rising short-term interest rates with increasing net yields.
Q On December 6, 1994, the Board of Supervisors of Orange County, California
filed a bankruptcy petition under Chapter 9 of the bankruptcy code on
behalf of the county and the county investment pool. What effect does this
petition have on the Fund?
A The Fund owns $4 million principal amount of Orange County, California
1994-1995 Tax and Revenue Anticipation Notes Series B due August 10, 1995
("TRANs"). In response to the bankruptcy filing, a letter of credit issued
by PNC Bank has been obtained which guarantees full payment of the principal
value of the TRANs held by the Fund. The Fund has no other exposure to Orange
County or its investment pool. The exposure to the Orange County TRANs does not
present any risk to the Fund's $1.00 net asset value. Of course, there is no
assurance that, in the event of other municipal bankruptcies or defaults, the
Fund will be able to similarly secure repayment of affected portfolio securities
from a letter of credit or another source.
CALIFORNIA MUNICIPAL CASH TRUST
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
<C> <S> <C> <C>
- ------------ ------------------------------------------------------------------------ ---------- -------------
SHORT-TERM MUNICIPAL SECURITIES--99.3%
- --------------------------------------------------------------------------------------
$ 1,980,000 California Health Facilities Authority Weekly VRDNs (O'Connor Hospital
and St. Vincent's Medical Center, Inc.)/ (Daughters of Charity Health
System Guaranty) VMIG1 $ 1,980,000
------------------------------------------------------------------------
200,000 California Health Facilities Authority Weekly VRDNs (Santa Barbara
Hospital)/(Credit Suisse LOC) VMIG1 200,000
------------------------------------------------------------------------
1,200,000 California Health Facilities Finance Authority Weekly VRDNs (Pooled Loan
Program)/(FGIC Insured) VMIG1 1,200,000
------------------------------------------------------------------------
2,000,000 California HFA Multi-Unit Rental Housing, 3.40% Semi-Annual TOBs (MBIA
Insured)/(Citibank BPA), Optional Tender 11/1/94 NR(1) 2,000,000
------------------------------------------------------------------------
2,600,000 California Pollution Control Finance Authority Weekly VRDNs (Series
1991)/(North County Recycling & Energy Recovery Centre)/(Union Bank of
Switzerland LOC) A-1+ 2,600,000
------------------------------------------------------------------------
3,000,000 California Pollution Control Finance Authority, 3.20% CP (Series
1988E)/(Pacific Gas & Electric Co.)/(Morgan Guaranty Trust Co. LOC),
Mandatory Tender 11/29/94 A-1+ 3,000,000
------------------------------------------------------------------------
3,000,000 California Pollution Control Finance Authority, 3.65% CP (Series
1988F)/(Pacific Gas & Electric Co.)/(Banque Nationale de Paris LOC),
Mandatory Tender 1/12/95 A-1+ 3,000,000
------------------------------------------------------------------------
3,000,000 California School Cash Reserve Program Authority, 4.50% TRANs (Series
1994A)/(Industrial Bank of Japan Ltd. LOC), 6/28/95 MIG1 3,012,297
------------------------------------------------------------------------
2,000,000 California State, 5.00% RANs (Series A), 6/28/95 SP-1+ 2,010,272
------------------------------------------------------------------------
4,000,000 California State, Monthly VRNs (Series C) SP-1+ 4,000,000
------------------------------------------------------------------------
5,000,000 (a)California VRDCs/IVRCs Trust Weekly VRDNs (Series 1994C)/(Regents of
the University of California)/(AMBAC Insured)/(Hong Kong & Shanghai Bank
Corp.) A-1 5,000,000
------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
<C> <S> <C> <C>
- ------------ ------------------------------------------------------------------------ ---------- -------------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- --------------------------------------------------------------------------------------
$ 1,000,000 Golden Empire Schools Financing Authority Weekly VRDNs (Kern High School
District)/(Barclays Bank PLC LOC) VMIG1 $ 1,000,000
------------------------------------------------------------------------
1,000,000 Golden Empire Schools Financing Authority Weekly VRDNs (Series B)/(Kern
High School District)/(Barclays Bank PLC LOC) A-l+ l,000,000
------------------------------------------------------------------------
1,600,000 Irvine, CA, Public Facilities and Infrastructure Authority Weekly VRDNs
(Capital Improvements Program)/(National Westminster Bank PLC LOC) A-l+ 1,600,000
------------------------------------------------------------------------
900,000 Kern Community College District, CA, Weekly VRDNs (Swiss Bank Corp. LOC) VMIG1 900,000
------------------------------------------------------------------------
1,500,000 Kern County, CA, Public Facility Corp. Weekly VRDNs (Sanwa Bank Ltd.
LOC) VMIG1 1,500,000
------------------------------------------------------------------------
3,000,000 Los Angeles County, CA, Metropolitan Transportation Authority, 3.55% CP
(ABN AMRO Bank N.V., Banque Nationale de Paris, Canadian Imperial Bank
of Commerce, National Westminster Bank PLC and Bank of California N.A.
LOCs), Mandatory Tender 1/24/95 A-1+ 3,000,000
------------------------------------------------------------------------
1,000,000 Los Angeles, CA, IDA Weekly VRDNs (Series 1985A)/ (Mediatech
West)/(Chemical Bank LOC) P-1 1,000,000
------------------------------------------------------------------------
3,000,000 Los Angeles, CA, Wastewater System, 3.30% CP (Sumitomo Bank BPA),
Mandatory Tender 12/15/94 A-1+ 3,000,000
------------------------------------------------------------------------
2,000,000 Monterey Peninsula, CA, Water Management District Weekly VRDNs (Series
1992)/(Wastewater Reclamation)/ (Sumitomo Bank Ltd. LOC) VMIG1 2,000,000
------------------------------------------------------------------------
4,000,000 (b)Orange County, CA, Monthly VRNs (Series B) SP-1+ 4,000,000
------------------------------------------------------------------------
1,800,000 Orange County, CA, IDA Weekly VRDNs (Hon Development Corp.)/(Series
1985B--Niguel Summit II)/(Bank of America NT&SA LOC) VMIG1 1,800,000
------------------------------------------------------------------------
1,900,000 Orange County, CA, IDA Weekly VRDNs (Series 1991A)/ (Apartment
Development The Lakes)/(Citibank N.A. LOC) A-1 1,900,000
------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
<C> <S> <C> <C>
- ------------ ------------------------------------------------------------------------ ---------- -------------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- --------------------------------------------------------------------------------------
$ 3,100,000 Orange County, CA, Municipal Water District Water Facilities Corporate
COPs Weekly VRDNs (Series B)/(Allen-McColloch Pipeline, Inc.)/(National
Westminster Bank PLC LOC) A-1+ $ 3,100,000
------------------------------------------------------------------------
1,000,000 Placerville, CA, 4.25% TRANs, 6/30/95 SP-1+ 1,000,634
------------------------------------------------------------------------
1,000,000 Riverside County, CA, COPs Weekly VRDNs (Public Facility Finance
Program)/(Sanwa Bank Ltd. LOC) MIG1 1,000,000
------------------------------------------------------------------------
1,000,000 Roseville, CA, Hospital Facilities Authority Weekly VRDNs (Series
1989A)/(Roseville Hospital)/(Toronto Dominion Bank LOC) VMIG1 1,000,000
------------------------------------------------------------------------
1,600,000 Sacramento, CA, COPs Weekly VRDNs (Series 1990)/ (Administration Center
& Courthouse)/(Union Bank of
Switzerland LOC) VMIG1 1,600,000
------------------------------------------------------------------------
4,000,000 San Bernardino County, CA, 4.50% TRANs, 7/31/95 SP-1+ 4,017,113
------------------------------------------------------------------------
1,700,000 San Bernardino County, CA, Weekly VRDNs (Series 1985)/ (Woodview
Apartments)/(Bank of America LOC) VMIGl l,700,000
------------------------------------------------------------------------
1,500,000 San Francisco, CA, City and County Redevelopment Agency Weekly VRDNs
(Series B1)/(Fillmore Center)/(Bank of Nova Scotia LOC) A-1+ 1,500,000
------------------------------------------------------------------------
1,000,000 Santa Clara County, CA, Housing Authority Weekly VRDNs (Series
1985G)/(Benton Park Central Apartments)/(Citibank N.A. LOC) P-1 1,000,000
------------------------------------------------------------------------
900,000 Santa Clara County-El Comino Hospital District, CA, Weekly VRDNs (Valley
Medical Center)/(National
Westminster Bank LOC) A-1+ 900,000
------------------------------------------------------------------------
400,000 Santa Clara, CA, Weekly VRDNs (Series 1985C)/(Santa Clara Electric
System)/(National Westminster Bank PLC LOC) VMIG1 400,000
------------------------------------------------------------------------
1,400,000 Selma, CA, 4.30% TRANs, 6/30/95 SP-1 1,400,436
------------------------------------------------------------------------
l,000,000 Solano County, CA, 3.25% TRANs, 11/1/94 SP-1+ l,000,000
------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
<C> <S> <C> <C>
- ------------ ------------------------------------------------------------------------ ---------- -------------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- --------------------------------------------------------------------------------------
$ 2,750,000 Southern California Metropolitan Water District, CA, 3.45% CP, Mandatory
Tender 12/21/94 A-1+ $ 2,750,000
------------------------------------------------------------------------
885,000 Stockton, CA, IDR Refunding Weekly VRDNs (Series 1993)/ (La Quinta Motor
Inns, Inc.)/(Nationsbank of Texas N.A. LOC) P-1 885,000
------------------------------------------------------------------------
l,000,000 Vallejo, CA, Commercial Development Refunding Weekly VRDNs (Series
1994A)/(Vallejo Center Associates)/(Bank of Tokyo Ltd. LOC) A-l 1,000,000
------------------------------------------------------------------------
3,000,000 West Basin and Central Financing Authority, CA, 3.40% CP (Municipal
Water District)/(Toronto Dominion Bank BPA), Mandatory Tender 11/28/94 A-1+ 3,000,000
------------------------------------------------------------------------
3,000,000 Yuba, CA, Community College District, 3.00% TRANs,
12/7/94 MIG1 3,001,006
------------------------------------------------------------------------ -------------
TOTAL INVESTMENTS, AT AMORTIZED COST $ 80,956,758+
------------------------------------------------------------------------ -------------
</TABLE>
(a) Denotes a restricted security which is subject to resale under Federal
Securities laws. This security has been determined to be liquid under
criteria established by the Board of Trustees.
(b) On December 6, 1994, Orange County, California filed for protection under
Chapter 9 with the U.S. Bankruptcy Court in Santa Ana, California. As a
result, S&P downgraded the VRNs to SP-3. On December 7, 1994, a letter of
credit was obtained from PNC Bank in the principal amount of $4,000,000
benefiting the Fund in the event that this issuer does not timely pay the
principal balance at maturity. PNC Bank has an A-1 rating from S&P. The VRNs
are the only Orange County issue held by the Fund that are affected by the
bankruptcy filing.
Also represents cost for federal tax purposes.
* See Notes to Portfolio of Investments on page 10. Current credit ratings are
unaudited.
Note: The categories of investments are shown as a percentage of net assets
($81,562,673) at October 31, 1994.
The following abbreviations are used in this portfolio:
AMBAC-- American Municipal Bond
Assurance Corporation
BPA-- Bond Purchase Agreement
COPs-- Certificates of Participation
CP-- Commercial Paper
FGIC-- Financial Guaranty Insurance Company
HFA-- Housing Finance Authority/Agency
IDA-- Industrial Development Authority
IDR-- Industrial Development Revenue
LOC(s)-- Letter(s) of Credit
MBIA-- Municipal Bond Investors Assurance
PLC-- Public Limited Company
RANs-- Revenue Anticipation Notes
TOBs-- Tender Option Bonds
TRANs-- Tax and Revenue Anticipation Notes
VRDCs/IVRCs-- Variable Rate Demand
Certificates/Inverse Variable
Rate Certificates
VRDNs-- Variable Rate Demand Notes
VRNs-- Variable Rate Notes
(See Notes which are an integral part of the Financial Statements)
CALIFORNIA MUNICIPAL CASH TRUST
NOTES TO PORTFOLIO OF INVESTMENTS
(UNAUDITED)
- --------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL OBLIGATION RATINGS
STANDARD & POOR'S RATINGS GROUP
A S&P 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.
SP-3 Speculative 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 ratings 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 & POOR'S RATINGS GROUP
S&P 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 long-
term and 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 as 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 & POOR'S RATINGS GROUP
A S&P 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 highest catagory indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong
safety characteristics are denoted with a plus (+) sign designation.
A-2 Capacity for timely payment on issues with this designation is satisfactory.
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. Prime-1
repayment capacity will normally be evidenced by the following
characteristics: leading market positions in well established industries,
high rates of return on funds employed, conservative capitalization
structure with moderate reliance on debt and ample asset protection, broad
margins in earning coverage of fixed financial charges and high internal
cash generation, well-established access to a range of financial markets and
assured sources of alternate liquidity.
P-2 Issuers rated PRIME-2 (or related supporting institutions) have a strong
capacity for repayment of short-term promissory obligations. This will
normally be evidenced by many of the characteristics cited above, but to a
lesser degree. Earnings trends and coverage ratios, while sound, will be
more subject to varation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.
LONG-TERM DEBT RATINGS
STANDARD & POOR'S RATINGS GROUP
AAA Debt rated "AAA" has the highest rating assigned by S&P. 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 highest 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.
MOODY'S INVESTORS SERVICE, INC.
Aaa Bonds that 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 edged." 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 that 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 that 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.
NR indicates that both the bonds and the obligor or credit enhancer are not
currently rated by S&P or Moody's 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 S&P or "Aaa" by Moody's.
NR(2) The underlying issuer/obligor/guarantor has other outstanding debt rated
"AA" by S&P or "Aa" Moody's.
NR(3) The underlying issuer/obligor/guarantor has other outstanding debt rated
"A" by S&P or Moody's.
CALIFORNIA MUNICIPAL CASH TRUST
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ---------------------------------------------------------------------------------------------------
Investments in securities, at amortized cost and value $ 80,956,758
- ---------------------------------------------------------------------------------------------------
Cash 345,255
- ---------------------------------------------------------------------------------------------------
Interest receivable 469,877
- ---------------------------------------------------------------------------------------------------
Receivable for Fund shares sold 92
- ---------------------------------------------------------------------------------------------------
Prepaid expenses 10,633
- --------------------------------------------------------------------------------------------------- -------------
Total assets 81,782,615
- ---------------------------------------------------------------------------------------------------
LIABILITIES:
- ---------------------------------------------------------------------------------------------------
Dividends payable $ 157,486
- ---------------------------------------------------------------------------------------
Payable for Fund shares redeemed 62,456
- --------------------------------------------------------------------------------------- ----------
Total liabilities 219,942
- --------------------------------------------------------------------------------------------------- -------------
NET ASSETS for 81,562,673 shares of beneficial interest outstanding $ 81,562,673
- --------------------------------------------------------------------------------------------------- -------------
NET ASSET VALUE, Offering Price, and Redemption Proceeds Per Share:
- ---------------------------------------------------------------------------------------------------
($81,562,673 / 81,562,673 shares of beneficial interest outstanding) $1.00
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
CALIFORNIA MUNICIPAL CASH TRUST
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED
10/31/94* 9/30/94
<S> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------------
Interest income $ 230,743 $ 2,453,713
- --------------------------------------------------------------------------------------- ----------- ------------
EXPENSES:
- ---------------------------------------------------------------------------------------
Investment advisory fee $ 34,909 $ 469,163
- ---------------------------------------------------------------------------------------
Trustees' fees -- 9,277
- ---------------------------------------------------------------------------------------
Administrative personnel and services 10,617 178,552
- ---------------------------------------------------------------------------------------
Custodian and portfolio accounting fees 4,589 61,140
- ---------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 906 25,339
- ---------------------------------------------------------------------------------------
Legal fees -- 22,741
- ---------------------------------------------------------------------------------------
Fund share registration costs 316 20,632
- ---------------------------------------------------------------------------------------
Auditing fees 2,619 19,760
- ---------------------------------------------------------------------------------------
Printing and postage 5,530 22,548
- ---------------------------------------------------------------------------------------
Insurance premiums -- 6,782
- ---------------------------------------------------------------------------------------
Shareholder services fee 12,567 74,107
- ---------------------------------------------------------------------------------------
Miscellaneous -- 8,568
- --------------------------------------------------------------------------------------- ----------- ------------
Total expenses 72,053 918,609
- ---------------------------------------------------------------------------------------
Deduct--Waiver of investment advisory fee 30,860 370,160
- --------------------------------------------------------------------------------------- ----------- ------------
Net expenses 41,193 548,449
- --------------------------------------------------------------------------------------- ----------- ------------
Net investment income $ 189,550 $ 1,905,264
- --------------------------------------------------------------------------------------- ----------- ------------
</TABLE>
*For the one month ended October 31, 1994.
(See Notes which are an integral part of the Financial Statements)
CALIFORNIA MUNICIPAL CASH TRUST
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED
10/31/94* 9/30/94 9/30/93
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ---------------------------------------------------------------
OPERATIONS--
- ---------------------------------------------------------------
Net investment income $ 189,550 $ 1,905,264 $ 2,163,015
- --------------------------------------------------------------- -------------- --------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ---------------------------------------------------------------
Dividends to shareholders from net investment income (189,550) (1,905,264) (2,163,015)
- --------------------------------------------------------------- -------------- --------------- ---------------
FUND SHARE (PRINCIPAL) TRANSACTIONS--
- ---------------------------------------------------------------
Proceeds from sale of shares 30,010,373 362,061,495 446,459,618
- ---------------------------------------------------------------
Net asset value of shares issued to shareholders
in payment of dividends declared 30,088 324,591 279,614
- ---------------------------------------------------------------
Cost of shares redeemed (23,185,135) (392,000,668) (402,126,423)
- --------------------------------------------------------------- -------------- --------------- ---------------
Change in net assets resulting from Fund share
transactions 6,855,326 (29,614,582) 44,612,809
- --------------------------------------------------------------- -------------- --------------- ---------------
Change in net assets 6,855,326 (29,614,582) 44,612,809
- ---------------------------------------------------------------
NET ASSETS:
- ---------------------------------------------------------------
Beginning of period 74,707,347 104,321,929 59,709,120
- --------------------------------------------------------------- -------------- --------------- ---------------
End of period $ 81,562,673 $ 74,707,347 $ 104,321,929
- --------------------------------------------------------------- -------------- --------------- ---------------
</TABLE>
*For the one month ended October 31, 1994.
(See Notes which are an integral part of the Financial Statements)
CALIFORNIA MUNICIPAL CASH TRUST
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31, SEPTEMBER 30,
1994* 1994 1993 1992 1991 1990 1989**
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.000 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------------
Net investment income 0.002 0.02 0.02 0.03 0.04 0.05 0.03
- ------------------------------------------ ------------- --------- --------- --------- --------- --------- -----------
LESS DISTRIBUTIONS
- ------------------------------------------
Dividends to shareholders from net
investment income (0.002) (0.02) (0.02) (0.03) (0.04) (0.05) (0.03)
- ------------------------------------------ ------------- --------- --------- --------- --------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 1.000 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ------------------------------------------ ------------- --------- --------- --------- --------- --------- -----------
TOTAL RETURN*** 0.23% 2.07% 2.03% 2.83% 4.30% 5.38% 2.95%
- ------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------------
Expenses 0.59%(a) 0.58% 0.54% 0.45% 0.35% 0.38% 0.40%(a)
- ------------------------------------------
Net investment income 2.71%(a) 2.03% 2.00% 2.76% 4.19% 5.27% 5.86%(a)
- ------------------------------------------
Expense waiver/reimbursement (b) 0.44%(a) 0.40% 0.35% 0.58% 0.75% 0.86% 0.89%(a)
- ------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------
Net assets, end of period (000 omitted) $81,563 $74,707 $104,322 $59,709 $56,754 $50,391 $36,628
- ------------------------------------------
</TABLE>
* For the one month ended October 31, 1994.
** Reflects operations for the period from March 15, 1989 (date of initial
public offering) to September 30, 1989.
*** Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(a) Computed on an annualized basis.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
CALIFORNIA MUNICIPAL CASH TRUST
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1994
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Effective August 13, 1994, California Municipal Cash Trust (the "Fund") was
reorganized into an investment portfolio of Federated Municipal Trust (the
"Trust"). The Trust is registered under the Investment Company Act of 1940, as
amended (the "Act"), as an open-end, management investment company. The Trust
consists of thirteen non-diversified portfolios. The financial statements
included herein are only those of the Fund. The financial statements of the
other portfolios are presented separately. The assets of each portfolio are
segregated and a shareholder's interest is limited to the portfolio in which
shares are held.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
A. INVESTMENT VALUATIONS--The Fund's use of the amortized cost method to value
its portfolio securities is in accordance with Rule 2a-7 under the Act.
B. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized
as required by the Internal Revenue Code, as amended (the "Code").
Distributions to shareholders are recorded on the ex-dividend date.
C. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its tax-exempt income.
Accordingly, no provisions for federal tax are necessary.
D. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
E. RESTRICTED SECURITIES--Restricted securities are securities that may only
be resold upon registration under Federal securities laws or in
transactions exempt from such registration. Many restricted securities may
be resold in the secondary market in transactions exempt from registration.
In some cases, the restricted securities may be resold without registration
upon exercise of a demand feature. Such restricted securities may be
determined to be liquid under criteria established by the Board of Trustees
(the "Trustees"). The Fund will not incur any registration costs upon such
resales. Restricted securities are valued at amortized cost in accordance
with
Rule 2a-7 under the Act. Additional information on each restricted security
held at October 31, 1994, is as follows:
<TABLE>
<CAPTION>
ACQUISITION ACQUISITION
SECURITY DATE COST
<S> <C> <C>
California VRDCs/IVRCs Trust Weekly
VRDNs (Series 1994C) 2/22/94 $ 5,000,000
</TABLE>
F. CONCENTRATION OF RISK--Since the Fund invests a substantial portion of its
assets in issuers located in one state, it will be more susceptible to
factors adversely affecting issuers of that state than would be a
comparable general tax-exempt mutual fund. In order to reduce the credit
risk associated with such factors, at October 31, 1994, 64.0% of the
securities in the portfolio of investments are backed by letters of credit
or bond insurance of various financial institutions and financial guaranty
assurance agencies. The value of investments insured by or supported
(backed) by a letter of credit for any one institution or agency did not
exceed 7.4% of total investments.
F. OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value). At
October 31, 1994, capital paid-in aggregated $81,562,673. Transactions in Fund
shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED
10/31/94* 9/30/94 9/30/93
<S> <C> <C> <C>
Shares sold 30,010,373 362,061,495 446,459,618
- -------------------------------------------------------------------
Shares issued to shareholders in payment of dividends declared 30,088 324,591 279,614
- -------------------------------------------------------------------
Shares redeemed (23,185,135) (392,000,668) (402,126,423)
- ------------------------------------------------------------------- ------------- -------------- --------------
Net change resulting from Fund share transactions 6,855,326 (29,614,582) 44,612,809
- ------------------------------------------------------------------- ------------- -------------- --------------
</TABLE>
* For the one month ended October 31, 1994.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Management, the Fund's investment adviser
(the "Adviser"), receives for its services an annual investment advisory fee
equal to .50 of 1% of the Fund's average daily net assets. The Adviser may
voluntarily choose to waive a portion of its fee. The Adviser can modify or
terminate this voluntary waiver and reimbursement at any time at its sole
discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Fund
with administrative personnel and services. Prior to March 1, 1994, these
services were provided at approximate cost. Effective March 1, 1994, the FAS fee
is based on the level of average aggregate daily net assets of all funds advised
by subsidiaries of Federated Investors for the period. The administrative fee
received during the period of the Administrative Services Agreement shall be at
least $125,000 per portfolio and $30,000 per each additional class of shares.
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement
with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to .25 of
1% of average daily net assets of the Fund for the period. This fee is to obtain
certain personal services for shareholders and to maintain the shareholder
accounts.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES--Federated Services Company
("FServ") serves as transfer and dividend disbursing agent for the Fund. The
FServ fee is based on the size, type and number of accounts and transactions
made by shareholders.
INTERFUND TRANSACTIONS--During the one month ended October 31, 1994, and the
year ended September 30, 1994, the Fund engaged in purchase and sale
transactions with other affiliated funds pursuant to Rule 17a-7 under the Act
amounting to $19,500,000 and $15,700,000, and $178,300,000 and $207,670,000
respectively.
Certain of the Officers and Trustees of the Trust are Officers and Directors or
Trustees of the above companies.
(5) CHANGE IN FISCAL YEAR END
The Fund has changed its fiscal year end from September 30 to October 31
beginning
September 30, 1994.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Trustees of
FEDERATED MUNICIPAL TRUST (California Municipal Cash Trust):
We have audited the accompanying statement of assets and liabilities of
California Municipal Cash Trust (an investment portfolio of Federated Municipal
Trust, a Massachusetts business trust), including the schedule of portfolio
investments, as of October 31, 1994, and the related statements of operations
and changes in net assets, and the financial highlights for the year ended
September 30, 1994, and for the period from October 1, 1994, to October 31,
1994. These financial statements and financial highlights are the responsibility
of the Trust's management. Our responsibility it to express an opinion on these
financial statements and financial highlights based on our audits. The financial
statements referred to above for California Municipal Cash Trust as of September
30, 1993, as well as the financial highlights for the periods ended September
30, 1989, through September 30, 1993, were audited by other auditors whose
report dated November 12, 1993, expressed an unqualified opinion on those
statements and financial highlights.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform our audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1994, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
California Municipal Cash Trust (an investment portfolio of Federated Municipal
Trust) as of October 31, 1994, and the results of its operations, the changes in
its net assets and its financial highlights for the year ended September 30,
1994, and for the period from October 1, 1994, to October 31, 1994, in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
December 14, 1994
TRUSTEES OFFICERS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
John F. Donahue John F. Donahue
John T. Conroy, Jr. Chairman
William J. Copeland Glen R. Johnson
James E. Dowd President
Lawrence D. Ellis, M.D. J. Christopher Donahue
Edward L. Flaherty, Jr. Vice President
Glen R. Johnson Richard B. Fisher
Peter E. Madden Vice President
Gregor F. Meyer Edward C. Gonzales
Wesley W. Posvar Vice President and Treasurer
Marjorie P. Smuts John W. McGonigle
Vice President and Secretary
David M. Taylor
Assistant Treasurer
G. Andrew Bonnewell
Assistant Secretary
</TABLE>
Mutual funds are not bank deposits or obligations, are not guaranteed
by any bank, and are not insured or guaranteed by the U.S. government,
the Federal Deposit Insurance Corporation, the Federal Reserve Board,
or any other governmental agency. Investment in mutual funds involves
investment risk, including possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Fund's prospectus which contains facts
concerning its objective and policies, management fees, expenses and
other information.
- --------------------------------------------------------------------------------
CONNECTICUT
- --------------------------------------------------------------------------------
MUNICIPAL
- --------------------------------------------------------------------------------
CASH
- --------------------------------------------------------------------------------
TRUST
- --------------------------------------------------------------------------------
ANNUAL REPORT
TO SHAREHOLDERS
October 31, 1994
FEDERATED SECURITIES CORP.
(LOGO)
- ---------------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
314229105
G00825-01 (12/94)
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the Annual Report to Shareholders for Connecticut
Municipal Cash Trust (the "Fund"), a portfolio of Federated Municipal Trust, for
the 12-month period ended October 31, 1994. The report begins with an interview
with portfolio manager Jeff Kozemchak about economic factors affecting the Fund,
followed by the Fund's Portfolio of Investments and Financial Statements.
The Fund gives Connecticut residents two ways to pursue tax-free income--its
earnings are exempt from federal regular income tax and Connecticut personal
income tax.* Its portfolio includes high-quality, short-term Connecticut
municipal securities of more than 21 issuers that use municipal bond financing
for projects as varied as housing, industrial development, education, and health
care.
During the report period, the Fund paid shareholders a total of $4.1 million in
dividends, or $0.02 per share. At the end of the report period, the Fund's net
assets stood at $190.4 million.
As a wise investor, you can count on the Fund to ease your tax burden by
pursuing competitive tax-free yields--with the additional advantages of daily
liquidity and stability of principal.**
Thank you for your confidence in Connecticut Municipal Cash Trust. We welcome
your comments and suggestions.
Sincerely,
Glen R. Johnson
President
December 15, 1994
* Income may be subject to the federal alternative minimum tax.
** No money market fund can guarantee that a stable net asset value will be
maintained. An investment in the Fund is neither insured nor guaranteed by
the U.S. government.
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
An Interview with Fund Portfolio Manager Jeff A. Kozemchak
Q Recently, there has been a lot of concern, as well as press coverage, about
the subject of derivatives. What are derivatives?
A The term "derivative" has been applied to many different types of
investments. In the context of money market funds, derivatives generally
refer to adjustable rate securities designed for speculation on changes
in interest rates. These speculative derivatives provide
above-market yields when interest rates fall or remain stable, or when the yield
curve is steep. They provide below-market yields, however, when interest rates
rise or become more volatile, or when the yield curve flattens. All three of
these conditions occurred in 1994. As a result, many of these speculative
securities lost a significant part of their value, enough to threaten the $1.00
per share price of some money market funds.
It is important to distinguish these speculative derivatives from adjustable
rate securities that are indexed to money market interest rates. These indexed
securities are designed to track changes in market rates, and should approximate
their par value in all reasonably foreseeable market conditions. Tax-exempt
money market funds like the Fund have the right to tender these securities for
purchase at their par value. Money market funds have used these securities for
decades, through several interest rate cycles, without jeopardizing their stable
net asset values.
Q Do Federated Investors' money market funds invest in the derivatives that
have been in the headlines recently?
A No. None of Federated Investors' money market funds has invested in any of
the types of derivatives that have been in the headlines lately. Our mutual
funds only invest in adjustable rate securities that track changes in money
market interest rates.
With respect to speculative derivatives, we determined from the outset that the
potential volatility of these securities was contrary to the intent of the rules
governing the use of variable rate securities by money market funds. We also
realized the potential for these securities to deviate significantly from par
and threaten the $1.00 per share price of a money market fund. We spoke out
against the use of these securities by money market funds at industry
conferences throughout 1993, when the securities still offered attractive
yields. Our views were vindicated when, in June, 1994, the Securities and
Exchange Commission sent a letter to the Investment Company Institute requiring
money market funds to divest themselves of these securities in an orderly
manner. This caused some investment advisers to buy these securities from their
funds.
- --------------------------------------------------------------------------------
Q What happened to short-term interest rates over the period covered by this
Annual Report?
A There was a dramatic shift in the monetary policy of the Federal Reserve
Board (the "Fed") during the 12-month reporting period that ended October
31, 1994.
Throughout the fourth quarter of 1993, the Fed kept the Federal funds rate (the
rate banks charge each other for overnight loans) steady at 3.00%, where it had
been for a year and a half. The Fed had maintained short-term interest rates at
these low levels in order to stimulate the economy. However, early 1994 reports
began to show stronger than anticipated economic growth. Real gross national
product grew at a 7.00% annual rate in the fourth quarter of 1993, and the
national unemployment rate declined to 6.00%. Concerned that these factors could
lead to an increase in wages and prices, the Fed took the first step on February
4, 1994, to fight future inflation by raising its Federal funds rate target to
3.25%. Since then, the Fed has continued to be aggressive, moving the Federal
funds rate target upward five more times from 3.25% to 5.50%.
Q How did municipal money market yields react to these rate increases?
A Municipal money market interest rates followed the upward movement in
taxable rates but to a slightly lesser degree, as they are affected by
federal, state and local tax factors as well as market supply and demand
imbalances.
The Fund's yields have proven to be quite responsive to the increases in money
market rates. For the 12-month reporting period ended October 31, 1994, the
Fund's tax-free, annualized seven-day net yields increased from 1.96% to 2.72%.*
At October 31, 1994, the seven-day yield was equivalent to a taxable yield of
4.72% for those investors subject to the highest federal and state tax
brackets.** These numbers illustrate the Fund's attractiveness relative to
taxable investments.
* Performance quoted represents past performance and is not indicative of
future results. Yields will vary.
** These numbers assume that state income taxes are fully deductible in
computing federal income tax liability.
- --------------------------------------------------------------------------------
Q What is your outlook for the markets and the Fund?
A The economy continues to show surprising resilience to the Fed's attempts
to bring growth under control. We expect that the Fed will act to tighten
monetary policy in late 1994 and possibly again in the first quarter of
1995. At that point in time, the Federal funds target could be as high as 6.50%.
As a result, we plan to maintain a conservative posture in the near future,
while attempting to maximize performance through ongoing relative value
analysis. However, we will continue to monitor changing economic and market
developments so as to serve our clients attracted to the short-term tax-exempt
securities market. In this environment, stable net asset value money market
funds like the Fund will continue to be an important component in preserving
capital, and should reflect rising short-term interest rates with increasing net
yields.
CONNECTICUT MUNICIPAL CASH TRUST
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ----------- ----------------------------------------------------- --------- ------------
<C> <C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--103.0%
- ------------------------------------------------------------------------
CONNECTICUT--98.0%
-----------------------------------------------------
$ 4,000,000 Ansonia, CT, 3.60% BANs, 12/15/94 NR(3) $ 4,002,351
-----------------------------------------------------
10,000,000 (a) Clipper Connecticut Tax Exempt Trust, Weekly VRDNs
(Series 1994-1) VMIG1 10,000,000
-----------------------------------------------------
11,000,000 Connecticut Development Authority Solid Waste
Disposal Facility Weekly VRDNs (Series A)/(Exeter
Energy)/(Sanwa Bank Ltd. LOC)/(Subject to AMT) A-1+ 11,000,000
-----------------------------------------------------
1,000,000 Connecticut Development Authority Solid Waste
Disposal Facility Weekly VRDNs (Series B)/(Exeter
Energy)/(Sanwa Bank Ltd. LOC)/(Subject to AMT) A-1+ 1,000,000
-----------------------------------------------------
7,499,000 Connecticut Development Authority Solid Waste
Disposal Facility Weekly VRDNs (Series C)/(Exeter
Energy)/(Sanwa Bank Ltd. LOC)/(Subject to AMT) A-1+ 7,499,000
-----------------------------------------------------
2,100,000 Connecticut Development Authority Weekly VRDNs
(C.E.M. Corp.)/(Barclays Bank PLC LOC)/
(Subject to AMT) P-1 2,100,000
-----------------------------------------------------
700,000 Connecticut Development Authority Weekly VRDNs
(Capital District Energy Center)/(Canadian Imperial
Bank of Commerce LOC)/(Subject to AMT) P-1 700,000
-----------------------------------------------------
4,400,000 Connecticut Development Authority Weekly VRDNs
(Capital District Energy Center)/(Canadian Imperial
Bank of Commerce LOC)/(Subject to AMT) P-1 4,400,000
-----------------------------------------------------
6,500,000 Connecticut Development Authority Weekly VRDNs
(Independence Living, Inc.)/(Credit Commercial
de France LOC) VMIG1 6,500,000
-----------------------------------------------------
2,675,000 Connecticut Development Authority Weekly VRDNs
(Jewish Community Center of Greater New Haven)/
(Fleet National Bank LOC) P-1 2,675,000
-----------------------------------------------------
</TABLE>
CONNECTICUT MUNICIPAL CASH TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ----------- ----------------------------------------------------- --------- ------------
<C> <C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------
CONNECTICUT--CONTINUED
-----------------------------------------------------
$ 1,612,800 Connecticut Development Authority Weekly VRDNs
(RSA Corp.)/(Barclays Bank PLC LOC)/
(Subject to AMT) P-1 $ 1,612,800
-----------------------------------------------------
2,000,000 Connecticut Development Authority Weekly VRDNs
(Series 1985)/(Airport Hotel)/(RK Bradley Associates
Ltd. Partnership)/(Daiwa Bank Ltd. and Royal Bank of
Canada LOCs) A-2 2,000,000
-----------------------------------------------------
2,880,000 Connecticut State Development Authority Weekly VRDNs
(Banta Associates)/(Marine Midland Bank N.A. and Hong
Kong Shang Hai Banking Corp. LOCs)/ (Subject to AMT) P-1 2,880,000
-----------------------------------------------------
8,000,000 Connecticut State Development Authority, PCR Weekly
VRDNs (Series 1993A)/(Connecticut Light & Power
Co.)/(Deutsche Bank AG LOC) A-1+ 8,000,000
-----------------------------------------------------
7,000,000 Connecticut State Development Authority, PCR Weekly
VRDNs (Series 1993A)/(Western Massachusetts
Electric Co.)/(Union Bank of Switzerland LOC) A-1+ 7,000,000
-----------------------------------------------------
5,000,000 Connecticut State Development Authority, Solid Waste
Disposal Weekly VRDNs (Series 1993)/(Rand-Whitney
Containerboard Ltd. Partnership)/(Chase Manhattan
Bank N.A. LOC)/(Subject to AMT) A-1 5,000,000
-----------------------------------------------------
1,900,000 Connecticut State Development Health Care Facilities
Weekly VRDNs (Independence Living, Inc.)/
(Daiwa Bank Ltd. LOC) VMIG2 1,900,000
-----------------------------------------------------
4,500,000 Connecticut State Economic Recovery Notes
Weekly VRDNs A-1+ 4,500,000
-----------------------------------------------------
1,700,000 Connecticut State HEFA Weekly VRDNs (Charlotte
Hungerfield Hospital)/(Mitsubishi Bank Ltd. LOC) VMIG1 1,700,000
-----------------------------------------------------
</TABLE>
CONNECTICUT MUNICIPAL CASH TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ----------- ----------------------------------------------------- --------- ------------
<C> <C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------
CONNECTICUT--CONTINUED
-----------------------------------------------------
$ 4,000,000 Connecticut State HEFA Weekly VRDNs (Series A)/
(Forman School Issue)/(National Westminster
Bank PLC LOC) A-1+ $ 4,000,000
-----------------------------------------------------
7,500,000 Connecticut State HEFA Weekly VRDNs (Series A)/
(Kent School)/(Barclays Bank PLC LOC) A-1+ 7,500,000
-----------------------------------------------------
5,000,000 Connecticut State HEFA, 3.00% CP (Windham Community
Memorial Hospital)/(Banque Paribas LOC),
Mandatory Tender 11/16/94 A-1 5,000,000
-----------------------------------------------------
3,875,000 Connecticut State HEFA, 3.15% CP (Series L)/
(Yale University), Mandatory Tender 12/20/94 A-1+ 3,875,000
-----------------------------------------------------
4,300,000 Connecticut State HEFA, 3.45% CP (Series N)/
(Yale University), Mandatory Tender 1/13/95 A-1+ 4,300,000
-----------------------------------------------------
4,000,000 Connecticut State HFA, 2.90% Annual TOBs
(Series 1993H-2)/(Subject to AMT),
Mandatory Tender 11/15/94 A-1+ 4,000,000
-----------------------------------------------------
6,000,000 Connecticut State HFA, 3.55% Annual TOBs
(Series G-1)/(Housing Mortgage Finance Program),
Mandatory Tender 5/15/95 A-1+ 6,000,000
-----------------------------------------------------
3,735,000 Connecticut State HFA, 3.65% Annual TOBs
(Series G-2)/(Housing Mortgage Finance Program)/
(Subject to AMT), Mandatory Tender 5/15/95 A-1+ 3,735,000
-----------------------------------------------------
4,750,000 Connecticut State HFA, 3.65% CP (Series 1990C)/
(Subject to AMT), Mandatory Tender 1/24/95 A-1+ 4,750,000
-----------------------------------------------------
3,245,000 Connecticut State HFA, 3.65% CP (Series 1990D)/
(Subject to AMT), Mandatory Tender 1/13/95 A-1+ 3,245,000
-----------------------------------------------------
3,250,000 Connecticut State HFA, 3.70% CP (Series 1990D)/
(Subject to AMT), Mandatory Tender 1/20/95 A-1+ 3,250,000
-----------------------------------------------------
6,750,000 (b) Connecticut State HFA, 4.40% Annual TOBs
(Series H-2), 9/1/95 A-1+ 6,750,000
-----------------------------------------------------
</TABLE>
CONNECTICUT MUNICIPAL CASH TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ----------- ----------------------------------------------------- --------- ------------
<C> <C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------
CONNECTICUT--CONTINUED
-----------------------------------------------------
$ 2,100,000 Connecticut State Resource Recovery Authority, 3.875%
RANs (Fleet National Bank BPA), 6/22/95 P-1 $ 2,103,549
-----------------------------------------------------
8,000,000 Connecticut State Special Assessment Unemployment
Compensation, 3.85% Annual TOBs (Series 1993C)/
(FGIC Insured), Mandatory Tender 7/1/95 A-1+ 8,000,000
-----------------------------------------------------
1,000,000 Connecticut State Transportation Infrastructure
Authority Weekly VRDNs (Industrial Bank of Japan,
Ltd. LOC) A-1 1,000,000
-----------------------------------------------------
2,000,000 (a) Connecticut State, GO Bonds Weekly VRDNs (PA-50) VMIG1 2,000,000
-----------------------------------------------------
4,815,000 East Lyme, CT, 4.25% BANs, 8/3/95 NR(3) 4,825,072
-----------------------------------------------------
5,500,000 Hartford, CT, Redevelopment Authority Weekly VRDNs
(Underwood Towers)/(FSA Insured) A-1+ 5,500,000
-----------------------------------------------------
4,550,000 Meriden, CT, 4.50% BANs (Lot C), 8/16/95 NR(3) 4,565,516
-----------------------------------------------------
8,442,000 Milford, CT, 2.61% BANs, 11/15/94 NR(3) 8,442,031
-----------------------------------------------------
5,000,000 New Haven, CT, 4.10% BANs (Fleet National Bank BPA),
3/1/95 P-1 5,009,762
-----------------------------------------------------
1,800,000 New Haven, CT, Weekly VRDNs (Starter Sportswear)/
(National Westminster Bank PLC LOC)/
(Subject to AMT) P-1 1,800,000
-----------------------------------------------------
2,500,000 Plainfield, CT, 4.60% TANs, 5/3/95 NR 2,504,900
----------------------------------------------------- ------------
Total $186,624,981
----------------------------------------------------- ------------
</TABLE>
CONNECTICUT MUNICIPAL CASH TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ----------- ----------------------------------------------------- --------- ------------
<C> <C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------
PUERTO RICO--5.0%
-----------------------------------------------------
$ 1,600,000 Government Development Bank of Puerto Rico Weekly
VRDNs (Credit Suisse and Sumitomo Bank Ltd. LOCs) A-1 $ 1,600,000
-----------------------------------------------------
8,000,000 Puerto Rico Maritime Shipping Authority, 2.70% CP
(Credit Suisse LOC), Mandatory Tender 11/30/94 P-1 8,000,000
----------------------------------------------------- ------------
Total 9,600,000
----------------------------------------------------- ------------
TOTAL INVESTMENTS, AT AMORTIZED COST $196,224,981+
----------------------------------------------------- ------------
</TABLE>
(a) Denotes restricted securities which are subject to resale under Federal
Securities laws. These securities have been determined to be liquid under
criteria established by the Board of Trustees.
(b) Denotes when-issued security.
* See Notes to Portfolio of Investments on page 11. Current credit ratings are
unaudited.
+ Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($190,423,202) at October 31, 1994.
CONNECTICUT MUNICIPAL CASH TRUST
- --------------------------------------------------------------------------------
The following abbreviations are used in this portfolio:
<TABLE>
<S> <C> <C>
AMT -- Alternative Minimum Tax
BANs -- Bond Anticipation Notes
BPA -- Bond Anticipation Agreement
CP -- Commercial Paper
FGIC -- Financial Guaranty Insurance Company
FSA -- Financial Security Assurance
GO -- General Obligation
HEFA -- Health and Education Facilities Authority
HFA -- Housing Finance Authority/Agency
LOC -- Letter of Credit
LOCs -- Letters of Credit
PCR -- Pollution Control Revenue
PLC -- Public Limited Company
RANs -- Revenue Anticipation Notes
TANs -- Tax Anticipation Notes
TOBs -- Tender Option Bonds
VRDNs -- Variable Rate Demand Notes
</TABLE>
(See Notes which are an integral part of the Financial Statements)
CONNECTICUT MUNICIPAL CASH TRUST
NOTES TO PORTFOLIO OF INVESTMENTS
(UNAUDITED)
- --------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL OBLIGATION RATINGS
STANDARD & POOR'S RATINGS GROUP
A S&P 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 ratings 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 & POOR'S RATINGS GROUP
S&P 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
long-term and 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 as payment upon periodic
demand rather than fixed maturity dates and payment relying on external
liquidity.
CONNECTICUT MUNICIPAL CASH TRUST
- --------------------------------------------------------------------------------
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 & POOR'S RATINGS GROUP
A S&P 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 highest category indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong
safety characteristics are denoted with a plus (+) sign designation.
A-2 Capacity for timely payment on issues with this designation is satisfactory.
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. Prime-1
repayment capacity will normally be evidenced by the following
characteristics: leading market positions in well established industries,
high rates of return on funds employed, conservative capitalization
structure with moderate reliance on debt and ample asset protection, broad
margins in earning coverage of fixed financial charges and high internal
cash generation, well-established access to a range of financial markets and
assured sources of alternate liquidity.
P-2 Issuers rated PRIME-2 (or related supporting institutions) have a strong
capacity for repayment of short-term promissory obligations. This will
normally be evidenced by many of the characteristics cited above, but to a
lesser degree. Earnings trends and coverage ratios, while sound, will be
more subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.
LONG-TERM DEBT RATINGS
STANDARD & POOR'S RATINGS GROUP
AAA Debt rated "AAA" has the highest rating assigned by S&P. 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 highest rated issues only in small degree.
CONNECTICUT MUNICIPAL CASH TRUST
- --------------------------------------------------------------------------------
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.
MOODY'S INVESTORS SERVICE, INC.
AAA Bonds that 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 edged." 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 that 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 that 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.
NR indicates that both the bonds and the obligor or credit enhancer are not
currently rated by S&P or Moody's 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 S&P or "Aaa" by Moody's.
NR(2) The underlying issuer/obligor/guarantor has other outstanding debt rated
"AA" by S&P or "Aa" Moody's.
NR(3) The underlying issuer/obligor/guarantor has other outstanding debt rated
"A" by S&P or Moody's.
CONNECTICUT MUNICIPAL CASH TRUST
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- --------------------------------------------------------------------------------
Investments in securities, at amortized cost and value $196,224,981
- --------------------------------------------------------------------------------
Cash 253,894
- --------------------------------------------------------------------------------
Interest receivable 1,103,064
- -------------------------------------------------------------------------------- ------------
Total assets 197,581,939
- --------------------------------------------------------------------------------
LIABILITIES:
- --------------------------------------------------------------------------------
Payable for investments purchased $6,750,000
- -------------------------------------------------------------------
Dividends payable 318,393
- -------------------------------------------------------------------
Payable for Fund shares redeemed 11,061
- -------------------------------------------------------------------
Accrued expenses 79,283
- ------------------------------------------------------------------- ----------
Total liabilities 7,158,737
- -------------------------------------------------------------------------------- ------------
NET ASSETS for 190,423,202 shares of beneficial interest outstanding $190,423,202
- -------------------------------------------------------------------------------- ------------
NET ASSET VALUE, Offering Price, and Redemption Proceeds Per Share:
($190,423,202 / 190,423,202 shares of beneficial interest outstanding) $1.00
- -------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
CONNECTICUT MUNICIPAL CASH TRUST
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ----------------------------------------------------------------------------------
Interest Income $5,206,206
- ----------------------------------------------------------------------------------
EXPENSES:
- ----------------------------------------------------------------------------------
Investment advisory fee $ 961,837
- ---------------------------------------------------------------------
Administrative personnel and services 198,789
- ---------------------------------------------------------------------
Custodian and portfolio accounting fees 60,797
- ---------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 22,703
- ---------------------------------------------------------------------
Trustees' fees 3,705
- ---------------------------------------------------------------------
Auditing fees 14,073
- ---------------------------------------------------------------------
Legal fees 14,433
- ---------------------------------------------------------------------
Printing and postage 10,472
- ---------------------------------------------------------------------
Fund share registration costs 40,835
- ---------------------------------------------------------------------
Shareholders services fee 128,719
- ---------------------------------------------------------------------
Taxes 1,725
- ---------------------------------------------------------------------
Insurance premiums 4,745
- ---------------------------------------------------------------------
Miscellaneous 11,715
- --------------------------------------------------------------------- ----------
Total expenses 1,474,548
- ---------------------------------------------------------------------
Deduct--Waiver of investment advisory fee 334,838
- --------------------------------------------------------------------- ----------
Net expenses 1,139,710
- ---------------------------------------------------------------------------------- ----------
Net investment income $4,066,496
- ---------------------------------------------------------------------------------- ----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
CONNECTICUT MUNICIPAL CASH TRUST
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
------------------------------
<S> <C> <C>
1994 1993
------------- -------------
INCREASE (DECREASE) IN NET ASSETS:
- --------------------------------------------------------------
OPERATIONS--
- --------------------------------------------------------------
Net investment income $ 4,066,496 $ 2,592,796
- -------------------------------------------------------------- ------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS--
- --------------------------------------------------------------
Dividends to shareholders from net investment income (4,066,496) (2,592,796)
- -------------------------------------------------------------- ------------- -------------
FUND SHARE (PRINCIPAL) TRANSACTIONS--
- --------------------------------------------------------------
Proceeds from sale of shares 486,727,225 299,253,615
- --------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of
dividends declared 1,166,410 931,684
- --------------------------------------------------------------
Cost of shares redeemed (437,916,644) (300,063,512)
- -------------------------------------------------------------- ------------- -------------
Change in net assets resulting from Fund share
transactions 49,976,991 121,787
- -------------------------------------------------------------- ------------- -------------
Change in net assets 49,976,991 121,787
- --------------------------------------------------------------
NET ASSETS:
- --------------------------------------------------------------
Beginning of period 140,446,211 140,324,424
- -------------------------------------------------------------- ------------- -------------
End of period $ 190,423,202 $ 140,446,211
- -------------------------------------------------------------- ------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
CONNECTICUT MUNICIPAL CASH TRUST
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SERVICE SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
-----------------------------------------------------
1994 1993 1992 1991 1990*
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00
- ------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------
Net investment income 0.02 0.02 0.03 0.04 0.05
- ------------------------------------ ----- ----- ----- ----- ----
LESS DISTRIBUTIONS
- ------------------------------------
Dividends to shareholders from net
investment income (0.02) (0.02) (0.03) (0.04) (0.05)
- ------------------------------------ ----- ----- ----- ----- ----
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00
- ------------------------------------ ----- ----- ----- ----- ----
TOTAL RETURN** 2.12% 1.96% 2.68% 4.04% 5.54 %
- ------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------
Expenses 0.59% 0.57% 0.56% 0.56% 0.48 %(b)
- ------------------------------------
Net investment income 2.11% 1.95% 2.66% 3.94% 5.32 %(b)
- ------------------------------------
Expense waiver/reimbursement (a) 0.18% 0.25% 0.30% 0.21% 0.28 %(b)
- ------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------
Net assets, end of period
(000 omitted) $190,423 $140,446 $140,118 $140,113 $138,378
- ------------------------------------
</TABLE>
* Reflects operations for the period from November 1, 1989 (date of initial
public investment), to October 31, 1990.
** Based on net asset value, which does not reflect the sales load or contingent
deferred sales charge, if applicable.
(a) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(b) Computed on an annualized basis.
(See Notes which are an integral part of the Financial Statements)
CONNECTICUT MUNICIPAL CASH TRUST
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1994
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Federated Municipal Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "Act"), as an open-end, management
investment company. The Trust consists of thirteen non-diversified portfolios.
The financial statements included herein present only those of Connecticut
Municipal Cash Trust (the "Fund"). The financial statements of the other
portfolios are presented separately. The assets of each portfolio are segregated
and a shareholder's interest is limited to the portfolio in which shares are
held. The Fund offers one class of shares, Institutional Service Shares.
Effective November 9, 1992, Cash Series Shares ceased operations.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles.
<TABLE>
<S> <C>
A. INVESTMENT VALUATIONS--The Fund's use of the amortized cost method to value its portfolio
securities is in accordance with Rule 2a-7 under the Act.
B. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses are accrued
daily. Bond premium and discount, if applicable, are amortized as required by the
Internal Revenue Code, as amended (the "Code"). Distributions to shareholders are
recorded on the ex-dividend date.
C. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the Code
applicable to regulated investment companies and to distribute to shareholders each year
substantially all of its tax-exempt income. Accordingly, no provisions for federal tax
are necessary.
D. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in when-issued or
delayed delivery transactions. The Fund records when-issued securities on the trade date
and maintains security positions such that sufficient liquid assets will be available to
make payment for the securities purchased. Securities purchased on a when-issued or
delayed delivery basis are marked to market daily and begin earning interest on the
settlement date.
E. CONCENTRATION OF CREDIT RISK--Since the Fund invests a substantial portion of its assets
in issuers located in one state, it will be more susceptible to factors adversely
affecting issuers of that state than would be a comparable general tax-exempt mutual
fund. In order to reduce the credit risk associated with such factors, at October 31,
1994, 55.2% of the securities in the portfolio of investments are backed by letters of
credit or bond insurance of various financial institutions and financial guaranty
assurance agencies. The value of investments insured by or supported (backed) by a letter
of credit for any one institution or agency did not exceed 9.9% of total investments.
</TABLE>
CONNECTICUT MUNICIPAL CASH TRUST
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
F. RESTRICTED SECURITIES--Restricted securities are securities that may only be resold upon
registration under Federal securities laws or in transactions exempt from such
registration. Many restricted securities may be resold in the secondary market in
transactions exempt from registration. In some cases, the restricted securities may be
resold without registration upon exercise of a demand feature. Such restricted securities
may be determined to be liquid under criteria established by the Board of Trustees (the
"Trustees"). The Fund will not incur any registration costs upon such resales. The Fund's
restricted securities are valued at amortized cost in accordance with Rule 2a-7 under the
Act. Additional information on each restricted security held at October 31, 1994 is as
follows:
</TABLE>
<TABLE>
<CAPTION>
ACQUISITION ACQUISITION
SECURITY DATE COST
------------------------------------------------------------ ----------- ------------
<S> <C> <C>
Clipper Connecticut Tax Exempt Trust, Weekly VRDNs 5/6/94 $10,000,000
Connecticut State General Obligation Bonds, Weekly VRDNs 12/27/93 $ 2,000,000
G. OTHER--Investment transactions are accounted for on the trade date.
</TABLE>
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares. At October 31, 1994, capital paid-in aggregated $190,423,202.
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
------------------------------
1994 1993
------------ ------------
<S> <C> <C>
INSTITUTIONAL SERVICE SHARES
- --------------------------------------------------------------
Shares sold 486,727,225 299,251,726
- --------------------------------------------------------------
Shares issued to shareholders in payment of dividends declared 1,166,410 931,684
- --------------------------------------------------------------
Shares redeemed (437,916,644) (299,854,992)
- -------------------------------------------------------------- ------------ ------------
Net change resulting from Institutional Service Share
transactions 49,976,991 328,418
- -------------------------------------------------------------- ------------ ------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
------------------------------
1994 1993
------------ ------------
<S> <C> <C>
CASH SERIES SHARES
- --------------------------------------------------------------
Shares sold -- 1,899
- --------------------------------------------------------------
Shares issued to shareholders in payment of dividends declared -- --
- --------------------------------------------------------------
Shares redeemed -- (208,520)
- -------------------------------------------------------------- ------------ ------------
Net change resulting from Cash Series Share transactions -- (206,621)
- -------------------------------------------------------------- ------------ ------------
Total net change resulting from Fund Share transactions 49,976,991 121,797
- -------------------------------------------------------------- ------------ ------------
</TABLE>
CONNECTICUT MUNICIPAL CASH TRUST
- --------------------------------------------------------------------------------
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Management, the Fund's investment adviser
(the "Adviser"), receives for its services an annual investment advisory fee
equal to .50 of 1% of the Fund's average daily net assets. The Adviser may
voluntarily choose to waive a portion of all of its fee and reimburse certain
operating expenses of the Fund. The Adviser can modify or terminate this
voluntary waiver and reimbursement at any time at its sole discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Fund
with administrative personnel and services. Prior to March 1, 1994, these
services were provided at approximate cost. Effective March 1, 1994, the FAS fee
is based on the level of average aggregate daily net assets of all funds advised
by subsidiaries of Federated Investors for the period. The administrative fee
received during the period of the Administrative Services Agreement shall be at
least $125,000 per portfolio and $30,000 per each additional class of shares.
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement
with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to .25 of
1% of average net assets of the Fund for the period. This fee is to obtain
certain personal services for shareholders and to maintain the shareholder
accounts.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES--Federated Services Company
("FServ") serves as transfer and dividend disbursing agent for the Fund. The
FServ fee is based on the size, type, and number of accounts and transactions
made by shareholders.
ORGANIZATIONAL EXPENSES--Organizational expenses ($41,950) were borne initially
by the Adviser. The Fund has agreed to reimburse the Adviser at an annual rate
of .005 of 1% of average daily net assets for organizational expenses until
expenses initially borne by the Adviser are fully reimbursed or the expiration
of five years after November 1, 1989 (the date the Fund's portfolio first became
effective), whichever occurs earlier. For the year ended October 31, 1994, the
Fund paid $9,380 pursuant to this agreement.
INTERFUND TRANSACTIONS--During the year ended October 31, 1994, the Fund engaged
in purchase and sale transactions with other affiliated funds at current value
pursuant to Rule 17a-7 under the Act amounting to $256,100,000 and $251,200,000,
respectively.
Certain of the Officers and Trustees of the Trust are Officers and Directors or
Trustees of the above companies.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
FEDERATED MUNICIPAL TRUST (Connecticut Municipal Cash Trust):
We have audited the accompanying statement of assets and liabilities of
Connecticut Municipal Cash Trust (an investment portfolio of Federated Municipal
Trust, a Massachusetts business trust), including the schedule of portfolio
investments, as of October 31, 1994, the related statement of operations for the
year then ended, and the statement of changes in net assets for each of the two
years in the period then ended, and the financial highlights for the periods
presented. These financial statements and financial highlights are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1994, by correspondence with the custodian and broker. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Connecticut Municipal Cash Trust (an investment portfolio of Federated Municipal
Trust) as of October 31, 1994, and the results of its operations for the year
then ended, the changes in its net assets for each of the two years in the
period then ended, and the financial highlights for the periods presented, in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
December 14, 1994
<TABLE>
<S> <C>
TRUSTEES OFFICERS
- ---------------------------------------------------------------------------------------------
John F. Donahue John F. Donahue
John T. Conroy, Jr. Chairman
William J. Copeland Glen R. Johnson
James E. Dowd President
Lawrence D. Ellis, M.D. J. Christopher Donahue
Edward L. Flaherty, Jr. Vice President
Glen R. Johnson Richard B. Fisher
Peter E. Madden Vice President
Gregor F. Meyer Edward C. Gonzales
Wesley W. Posvar Vice President and Treasury
Marjorie P. Smuts John W. McGonigle
Vice President and Secretary
David M. Taylor
Assistant Treasurer
John W. McGonigle
Secretary
G. Andrew Bonnewell
Assistant Secretary
</TABLE>
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risk,
including possible loss of principal. Although money market funds seek to
maintain a stable net asset value of $1.00 per share, there is no assurance that
they will be able to do so.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Fund's prospectus which contains facts concerning
its objective and policies, management fees, expenses and other information.
- --------------------------------------------------------------------------------
FLORIDA
- --------------------------------------------------------------------------------
MUNICIPAL
- --------------------------------------------------------------------------------
CASH
- --------------------------------------------------------------------------------
TRUST
ANNUAL REPORT
TO SHAREHOLDERS
OCTOBER 31, 1994
[LOGO] ----------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS _________________________
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779 __________________________________
[LOGO]
RECYCLED
PAPER
814229758
G00827-01 (12/94) _________________________
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the Annual Report to Shareholders for Florida Municipal
Cash Trust (the "Fund"), a portfolio of Federated Municipal Trust, for the
period from the Fund's start of business date of September 12, 1994, through the
Fund's fiscal year-end on October 31, 1994. The report begins with an interview
with portfolio manager Jeff Kozemchak about economic factors affecting the Fund,
followed by the Fund's Portfolio of Investments and Financial Statements.
The Fund gives Florida residents two ways to pursue tax advantages--its earnings
are exempt from federal regular income tax and Fund shares are exempt from the
Florida intangibles tax.* Its portfolio includes high-quality, short-term
Florida municipal securities of more than 25 issuers that use municipal bond
financing for projects as varied as housing, industrial development, education,
and health care.
During the report period, the Fund paid shareholders a total of $165,156 in
dividends, or $0.004 per share. At the end of the report period, the Fund's net
assets stood at $53.97 million.
As a wise investor, you can count on the Fund to ease your tax burden by
pursuing competitive federally tax-free yields through an investment exempt from
the Florida intangibles tax--with the additional advantages of daily liquidity
and stability of principal.**
Thank you for your confidence in Florida Municipal Cash Trust. We welcome your
comments and suggestions.
Sincerely,
Glen R. Johnson
President
December 15, 1994
*INCOME MAY BE SUBJECT TO THE FEDERAL ALTERNATIVE MINIMUM TAX.
**NO MONEY MARKET FUND CAN GUARANTEE THAT A STABLE NET ASSET VALUE WILL BE
MAINTAINED. AN INVESTMENT IN THE FUND IS NEITHER INSURED NOR GUARANTEED BY THE
U.S. GOVERNMENT.
1
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
AN INTERVIEW WITH FUND PORTFOLIO MANAGER JEFF A. KOZEMCHAK
Q Recently, there has been a lot of concern, as well as press coverage, about
the subject of derivatives. What are derivatives?
A The term "derivative" has been applied to many different types of
investments. In the context of money market funds, derivatives generally
refer to adjustable rate securities designed for speculation on changes in
interest rates. These speculative derivatives provide above-market yields when
interest rates fall or remain stable, or when the yield curve is steep. They
provide below-market yields, however, when interest rates rise or become more
volatile, or when the yield curve flattens. All three of these conditions
occurred in 1994. As a result, many of these speculative securities lost a
significant part of their value, enough to threaten the $1.00 per share price of
some money market funds.
It is important to distinguish these speculative derivatives from adjustable
rate securities that are indexed to money market interest rates. These indexed
securities are designed to track changes in market rates, and should approximate
their par value in all reasonably foreseeable market conditions. Tax-exempt
money market funds like the Fund have the right to tender these securities for
purchase at their par value. Money market funds have used these securities for
decades, through several interest rate cycles, without jeopardizing their stable
net asset values.
Q Do Federated Investors' money market funds invest in the derivatives that
have been in the headlines recently?
A NO. NONE OF FEDERATED INVESTORS' MONEY MARKET FUNDS HAS INVESTED IN ANY OF
THE TYPES OF DERIVATIVES THAT HAVE BEEN IN THE HEADLINES LATELY. Our mutual
funds only invest in adjustable rate securities that track changes in money
market interest rates.
With respect to speculative derivatives, we determined from the outset that the
potential volatility of these securities was contrary to the intent of the rules
governing the use of variable rate securities by money market funds. We also
realized the potential for these securities to deviate significantly from par
and threaten the $1.00 per share price of a money market fund. We spoke out
against the use of these securities by money market funds at industry
conferences throughout 1993, when the securities still offered attractive
yields. Our views were vindicated when, in June, 1994, the Securities and
Exchange Commission sent a letter to the Investment Company Institute requiring
money market funds to divest themselves of these securities in an orderly
manner. This caused some investment advisers to buy these securities from their
funds.
2
- --------------------------------------------------------------------------------
Q
What happened to short-term interest rates over the period covered by this
Annual Report?
A There was a dramatic shift in the monetary policy of the Federal Reserve
Board (the "Fed") during the reporting period that ended October 31, 1994.
Throughout the fourth quarter of 1993, the Fed kept the Federal funds rate (the
rate banks charge each other for overnight loans) steady at 3.00%, where it had
been for a year and a half. The Fed had maintained short-term interest rates at
these low levels in order to stimulate the economy. However, in early 1994,
reports began to show stronger than anticipated economic growth. Real gross
national product grew at a 7.00% annual rate in the fourth quarter of 1993 and
the national unemployment rate declined to 6.00%. Concerned that these factors
could lead to an increase in wages and prices, the Fed took the first step on
February 4, 1994, to fight future inflation by raising its Federal funds rate
target to 3.25%. Since then, the Fed has continued to be aggressive, moving the
Federal funds rate target upward five more times from 3.25% to 5.50%.
Q
How did municipal money market yields react to these rate increases?
A Municipal money market interest rates followed the upward movement in
taxable rates but to a slightly lesser degree, as they are affected by
federal, state and local tax factors as well as market supply and demand
imbalances.
The Fund's yields have proven to be quite responsive to the increases in money
market rates. At October 31, 1994, the Fund's seven-day net yield was equivalent
to a taxable yield of 5.17% for those investors subject to the highest federal
tax brackets.* In addition, the Fund intends to qualify for 100% exemption from
the state intangibles tax at year end. This illustrates the Fund's
attractiveness relative to taxable investments.
* PERFORMANCE QUOTED REPRESENTS PAST PERFORMANCE AND IS NOT INDICATIVE OF FUTURE
RESULTS. YIELDS WILL VARY. THESE NUMBERS ASSUME THAT STATE INCOME TAXES ARE
FULLY DEDUCTIBLE IN COMPUTING FEDERAL INCOME TAX LIABILITY.
3
- --------------------------------------------------------------------------------
Q
What is your outlook for the markets and the Fund?
A The economy continues to show surprising resilience to the Fed's attempts to
bring growth under control. We expect that the Fed will act to tighten
monetary policy in late 1994 and possibly again in the first quarter of
1995. At that point in time, the Federal funds target could be as high as 6.50%.
As a result, we plan to maintain a conservative posture in the near future,
while attempting to maximize performance through ongoing relative value
analysis. However, we will continue to monitor changing economic and market
developments so as to serve our clients attracted to the short-term tax-exempt
securities market. In this environment, stable net asset value money market
funds like the Fund will continue to be an important component in preserving
capital, and should reflect rising short-term interest rates with increasing net
yields.
4
FLORIDA MUNICIPAL CASH TRUST
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ---------- -------------------------------------------------- ------- -----------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--88.9%
- --------------------------------------------------------------
$1,600,000 Clay County, FL, Industrial Development Revenue
Bonds Weekly VRDNs (Series 1994)/(Trust Company
Bank LOC) P-1 $ 1,600,000
--------------------------------------------------
1,420,000 Dade County, FL, IDA Weekly VRDNs (Smith Terminal
Warehouse Co.)/(First Union National Bank LOC) P-1 1,420,000
--------------------------------------------------
1,600,000 Dade County, FL, Water & Sewer System Revenue
Bonds Weekly VRDNs (Series 1994)/(FGIC Insured) A-1+ 1,600,000
--------------------------------------------------
1,500,000 Eustis Health Facilities Authority, FL, Weekly
VRDNs (Series 1985)/(Waterman Medical Center,
Inc.)/(Banque Paribas LOC) P-1 1,500,000
--------------------------------------------------
1,000,000 First Municipal Loan Counsel, FL, 3.55% CP (Series
1985-1)/ (Florida League of Cities)/(Sumitomo Bank
Ltd. LOC), Mandatory Tender 12/7/94 VMIG1 1,000,000
--------------------------------------------------
2,000,000 Florida HFA Weekly VRDNs (Cornerstone)/(Provident
National Bank LOC) A-1 2,000,000
--------------------------------------------------
1,600,000 Florida HFA Weekly VRDNs (Series 1985A)/(Parrot's
Landing)/(Citibank N.A. LOC) A-1 1,600,000
--------------------------------------------------
2,000,000 (a)Florida State Board of Education, Weekly VRDNs
Capital Outlay Puttable Tax-exempt Receipts
(Series 10)/(Morgan Guaranty Trust Co. LOC) VMIG1 2,000,000
--------------------------------------------------
3,000,000 Hillsborough County, FL, Aviation Authority, 3.75%
CP (Tampa International Airport)/(National
Westminster Bank PLC LOC)/(Subject to AMT),
Mandatory Tender 2/10/95 A-1+ 3,000,000
--------------------------------------------------
2,000,000 Hillsborough County, FL, IDA Weekly VRDNs
(Ringhaver Equipment Co.)/(Mellon Bank N.A.
LOC)/(Subject to AMT) P-1 2,000,000
--------------------------------------------------
</TABLE>
5
FLORIDA MUNICIPAL CASH TRUST
- ---------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ---------- -------------------------------------------------- ------- -----------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- --------------------------------------------------------------
$2,000,000 Hillsborough County, FL, IDA Weekly VRDNs (SIFCO
Turbine Component Service)/(Series 1992)/(National
City Bank, Cleveland LOC)/(Subject to AMT) P-1 $ 2,000,000
--------------------------------------------------
450,000 Indian River County School District, FL, 4.50%
TANs, (Series 1994), 6/30/95 MIG1 451,202
--------------------------------------------------
1,500,000 Jacksonville, FL, Electric Authority System, 3.50%
CP (Series D-1), Mandatory Tender 12/12/94 A-1+ 1,500,000
--------------------------------------------------
2,000,000 Jacksonville, FL, Hospital Revenue Bonds Weekly
VRDNs (Series 1989)/(Baptist Medical
Center)/(First Union National Bank of North
Carolina LOC) A-1 2,000,000
--------------------------------------------------
1,300,000 Jacksonville, FL, Weekly VRDNs (Metal Sales
Manufacturing)/ (First National Bank, Louisville
LOC)/(Subject to AMT) P-1 1,300,000
--------------------------------------------------
1,500,000 Key West, FL, Community Redevelopment Authority
Weekly VRDNs (Pier House Joint Venture)/(PNC Bank
N.A. LOC) P-1 1,500,000
--------------------------------------------------
2,000,000 Martin County, FL, IDA Weekly VRDNs Revenue Bonds
(Series 1992B)/(Indiantown Cogeneration)/(Credit
Suisse LOC)/(Subject to AMT) A-1+ 2,000,000
--------------------------------------------------
1,000,000 Mount Dora, FL, Health Facility Authority Weekly
VRDNs (Series 1989)/(Waterman Village)/(Sumitomo
Bank Ltd. LOC) A-1 1,000,000
--------------------------------------------------
1,000,000 Orange County, FL, 3.35% CP, Mandatory Tender
11/14/94 A-1+ 1,000,000
--------------------------------------------------
2,000,000 Pinellas County, FL, HFA Weekly VRDNs (Series
1987)/(St. Mark Village)/(NationsBank of Florida
N.A. LOC) A-1 2,000,000
--------------------------------------------------
800,000 Pinellas County, FL, Pooled HFA Daily VRDNs
(Chemical Bank LOC) A-1 800,000
--------------------------------------------------
2,000,000 Saint Lucie County, FL, IDR Bonds Weekly VRDNs
(Series 1985)/(Savannah Hospital)/(NationsBank of
Georgia N.A. LOC) P-1 2,000,000
--------------------------------------------------
2,000,000 Saint Lucie County, FL, PCR, 3.55% CP (Series
1994A)/ (Florida Power and Light Co.), Mandatory
Tender 1/25/95 A-1 2,000,000
--------------------------------------------------
</TABLE>
6
FLORIDA MUNICIPAL CASH TRUST
- ---------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ---------- -------------------------------------------------- ------- -----------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- --------------------------------------------------------------
$2,000,000 Seminole County, FL, Health Facility Authority IDA
Weekly VRDNs (Series 1991)/(Florida Living Nursing
Center)/(Barnett Bank of Central Florida N.A. LOC) VMIG1 $ 2,000,000
--------------------------------------------------
1,450,000 Sumter County, FL, IDA Weekly VRDNs (Great
Southern Wood of Florida, Inc.)/(SouthTrust Bank
of Alabama LOC)/ (Subject to AMT) VMIG1 1,450,000
--------------------------------------------------
3,000,000 Sunshine State Governmental Finance Commission,
FL, 3.20% CP (Morgan Guaranty Trust Co., National
Westminster Bank, PLC and Union Bank of
Switzerland LOCs), Mandatory Tender 12/13/94 VMIG1 3,000,000
--------------------------------------------------
1,100,000 Suwannee County, FL, Weekly VRDNs (Series
1989)/(Advent Christian Village)/(Barnett Bank of
Jacksonville LOC) VMIG1 1,100,000
--------------------------------------------------
1,175,000 Volusia County, FL, HFA, Weekly VRDNs (Fisherman's
Landing)/(Mellon Bank N.A. LOC) P-1 1,175,000
--------------------------------------------------
2,000,000 Volusia County, FL, IDA, Weekly VRDNs (Series
1994)/ (Southern States Utilities, Inc.)/(Sun Bank
N.A. LOC) VMIG1 2,000,000
-------------------------------------------------- -----------
TOTAL INVESTMENTS, AT AMORTIZED COST $47,996,202+
-------------------------------------------------- -----------
<FN>
(a) Denotes a restricted security which is subject to resale under Federal
Securities laws. This security has been determined to be liquid under
criteria established by the Board of Trustees.
+ Also represents cost for federal tax purposes.
* See Notes to Portfolio of Investments on page 9. Current credit ratings
are unaudited.
Note: The categories of investments are shown as a percentage of net assets
($53,966,187) at October 31, 1994.
</TABLE>
7
FLORIDA MUNICIPAL CASH TRUST
- ---------------------------------------------------------
The following abbreviations are used in this portfolio:
<TABLE>
<S> <C>
AMT --Alternative Minimum Tax
CP --Commercial Paper
FGIC --Financial Guaranty Insurance Company
HFA --Housing Finance Authority/Agency
IDA --Industrial Development Authority
IDR --Industrial Development Revenue
LOC --Letter of Credit
LOCs --Letters of Credit
PCR --Pollution Control Revenue
TANs --Tax Anticipation Notes
VRDNs --Variable Rate Demand Notes
</TABLE>
(See Notes which are an integral part of the Financial Statements)
8
FLORIDA MUNICIPAL CASH TRUST
NOTES TO PORTFOLIO OF INVESTMENTS
(UNAUDITED)
- --------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL OBLIGATION RATINGS
STANDARD & POOR'S RATINGS GROUP
A S&P 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 ratings 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 & POOR'S RATINGS GROUP
S&P 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
long-term and 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 as 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
9
FLORIDA MUNICIPAL CASH TRUST
- ---------------------------------------------------------
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 & POOR'S RATINGS GROUP
A S&P 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 highest category designation indicates that the degree of safety
regarding timely payment is strong. Those issues determined to possess extremely
strong safety characteristics are denoted with a plus (+) sign designation.
A-2--Capacity for timely payment on issues with this designation is
satisfactory. 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. Prime-1 repayment
capacity will normally be evidenced by the following characteristics: leading
market positions in well established industries, high rates of return on funds
employed, conservative capitalization structure with moderate reliance on debt
and ample asset protection, broad margins in earning coverage of fixed financial
charges and high internal cash generation, well-established access to a range of
financial markets and assured sources of alternate liquidity.
P-2--Issuers rated Prime-2 (or related supporting institutions) have a strong
capacity for repayment of short-term promissory obligations. This will normally
be evidenced by many of the characteristics cited above, but to a lesser degree.
Earnings trends and coverage ratios, while sound, will be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
10
FLORIDA MUNICIPAL CASH TRUST
- ---------------------------------------------------------
LONG-TERM DEBT RATINGS
STANDARD & POOR'S RATINGS GROUP
AAA--Debt rated "AAA" has the highest rating assigned by S&P. 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 highest 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.
MOODY'S INVESTORS SERVICE, INC.
Aaa--Bonds that 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
edged." 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 that 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 that 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.
NR--indicates that both the bonds and the obligor or credit enhancer are not
currently rated by S&P or Moody's 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 S&P or "Aaa" by Moody's.
NR(2)--The underlying issuer/obligor/guarantor has other outstanding debt rated
"AA" by S&P or "Aa" Moody's.
NR(3)--The underlying issuer/obligor/guarantor has other outstanding debt rated
"A" by S&P or Moody's.
11
FLORIDA MUNICIPAL CASH TRUST
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ------------------------------------------------------------------------------------------
Investments in securities, at amortized cost and value $47,996,202
- ------------------------------------------------------------------------------------------
Cash 96,403
- ------------------------------------------------------------------------------------------
Receivable for Fund shares sold 5,698,923
- ------------------------------------------------------------------------------------------
Interest receivable 219,097
- ------------------------------------------------------------------------------------------
Deferred expenses 26,446
- ------------------------------------------------------------------------------------------ -----------
Total assets 54,037,071
- ------------------------------------------------------------------------------------------
LIABILITIES:
- ------------------------------------------------------------------------------------------
Dividends payable $20,845
- --------------------------------------------------------------------------------
Accrued expenses 50,039
- -------------------------------------------------------------------------------- -------
Total liabilities 70,884
- ------------------------------------------------------------------------------------------ -----------
NET ASSETS for 53,966,187 shares of beneficial interest outstanding $53,966,187
- ------------------------------------------------------------------------------------------ -----------
NET ASSET VALUE, Offering Price, and Redemption Proceeds Per Share:
($53,966,187 DIVIDED BY 53,966,187 shares of beneficial interest outstanding) $ 1.00
- ------------------------------------------------------------------------------------------ -----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
12
FLORIDA MUNICIPAL CASH TRUST
STATEMENT OF OPERATIONS
PERIOD ENDED OCTOBER 31, 1994*
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- --------------------------------------------------------------------------------
Interest income $179,046
- --------------------------------------------------------------------------------
EXPENSES:
- --------------------------------------------------------------------------------
Investment advisory fee $20,127
- ----------------------------------------------------------------------
Custodian and portfolio accounting fees 12,537
- ----------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 3,673
- ----------------------------------------------------------------------
Shareholder services fee 12,579
- ----------------------------------------------------------------------
Administrative personnel and services 13,699
- ----------------------------------------------------------------------
Fund share registration costs 728
- ----------------------------------------------------------------------
Legal fees 1,000
- ----------------------------------------------------------------------
Printing and postage 1,000
- ----------------------------------------------------------------------
Miscellaneous 400
- ---------------------------------------------------------------------- -------
Total expenses 65,743
- ----------------------------------------------------------------------
Deduct--
- ------------------------------------------------------------
Waiver of investment advisory fee $20,127
- ------------------------------------------------------------
Reimbursement of other operating expenses 31,726 51,853
- ------------------------------------------------------------ ------- -------
Net expenses 13,890
- -------------------------------------------------------------------------------- --------
Net investment income $165,156
- -------------------------------------------------------------------------------- --------
<FN>
* For the period from September 12, 1994 (start of business) to October 31,
1994.
</TABLE>
(See Notes which are an integral part of the Financial Statements)
13
FLORIDA MUNICIPAL CASH TRUST
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD ENDED
OCTOBER 31, 1994*
-------------------
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ---------------------------------------------------------------------------
OPERATIONS--
- ---------------------------------------------------------------------------
Net investment income $ 165,156
- --------------------------------------------------------------------------- -------------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ---------------------------------------------------------------------------
Dividends to shareholders from net investment income (165,156)
- --------------------------------------------------------------------------- -------------------
FUND SHARE (PRINCIPAL) TRANSACTIONS--
- ---------------------------------------------------------------------------
Proceeds from sale of shares 134,110,437
- ---------------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of dividends
declared 92,846
- ---------------------------------------------------------------------------
Cost of shares redeemed (80,237,096)
- --------------------------------------------------------------------------- -------------------
Change in net assets resulting from Fund share transactions 53,966,187
- --------------------------------------------------------------------------- -------------------
Change in net assets 53,966,187
- ---------------------------------------------------------------------------
NET ASSETS:
- ---------------------------------------------------------------------------
Beginning of period --
- --------------------------------------------------------------------------- -------------------
End of period $ 53,966,187
- --------------------------------------------------------------------------- -------------------
<FN>
* For the period from September 12, 1994 (start of business) to October 31,
1994.
</TABLE>
(See Notes which are an integral part of the Financial Statements)
14
FLORIDA MUNICIPAL CASH TRUST
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
PERIOD ENDED
OCTOBER 31,
1994*
----------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $1.000
- ----------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------
Net investment income 0.004
- ----------------------------------------------------------------------
LESS DISTRIBUTIONS
- ----------------------------------------------------------------------
Dividends to shareholders from net investment income (0.004)
- ---------------------------------------------------------------------- -------
NET ASSET VALUE, END OF PERIOD $1.000
- ---------------------------------------------------------------------- -------
TOTAL RETURN** 0.35%
- ----------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------------
Expenses 0.28%(b)
- ----------------------------------------------------------------------
Net investment income 3.28%(b)
- ----------------------------------------------------------------------
Expense waiver/reimbursement (a) 1.03%(b)
- ----------------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------------
Net assets, end of period (000 omitted) $53,966
- ----------------------------------------------------------------------
<FN>
* Reflects operations for the period from September 21, 1994 (date of initial
public investment) to October 31, 1994. For the period from September 12,
1994 (start of business) to September 21, 1994 the Fund had no investment
activity.
** Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(a) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(b) Computed on an annualized basis.
</TABLE>
(See Notes which are an integral part of the Financial Statements)
15
FLORIDA MUNICIPAL CASH TRUST
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1994
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Federated Municipal Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "Act"), as an open-end, management
investment company. The Trust consists of thirteen non-diversified portfolios.
The financial statements included herein are only those of Florida Municipal
Cash Trust (the "Fund"). The financial statements of the other portfolios are
presented separately. The assets of each portfolio are segregated and a
shareholder's interest is limited to the portfolio in which shares are held.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
A. INVESTMENT VALUATIONS--The Fund's use of the amortized cost method to value
its portfolio securities is in accordance with Rule 2a-7 under the Act.
B. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized
as required by the Internal Revenue Code, as amended (the "Code").
Distributions to shareholders are recorded on the ex-dividend date.
C. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its tax-exempt income.
Accordingly, no provisions for federal tax are necessary.
D. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
E. DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering the shares, have been deferred and are being
amortized using the straight-line method not to exceed a period of five
years from the Fund's commencement date.
F. RESTRICTED SECURITIES--Restricted securities are securities that may only be
resold upon registration under Federal securities laws or in transactions
exempt from such registration. Many restricted securities may be resold in
the secondary market in transactions exempt from
16
FLORIDA MUNICIPAL CASH TRUST
- ---------------------------------------------------------
registration. In some cases, the restricted securities may be resold without
registration upon exercise of a demand feature. Such restricted securities
may be determined to be liquid under criteria established by the Board of
Trustees. The Fund will not incur any registration costs upon such resales.
Restricted securities are valued at amortized cost in accordance with Rule
2a-7 under the Act. Additional information on each restricted security held
at October 31, 1994 is as follows:
<TABLE>
<CAPTION>
ACQUISITION ACQUISITION
SECURITY DATE COST
- ----------------------------------------------------- ----------- ------------
<S> <C> <C>
Florida State Board of Education, Weekly VRDNs 9/29/94 $2,000,000
Capital Outlay Puttable Tax-exempt Receipts (Series
10)
</TABLE>
G. CONCENTRATION OF CREDIT RISK--Since the Fund invests a substantial portion
of its assets in issuers located in one state, it will be more susceptible
to factors adversely affecting issuers of that state than would be a
comparable general tax-exempt mutual fund. In order to reduce the credit
risk associated with such factors, at October 31, 1994, 89.7% of the
securities in the portfolio of investments are backed by letters of credit
or bond insurance of various financial institutions and financial guaranty
assurance agencies. The value of investments insured by or supported
(backed) by a letter of credit for any one institution or agency did not
exceed 6.6% of total investments.
H. OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Board of Trustees to issue an unlimited
number of full and fractional shares of beneficial interest (without par value).
At October 31, 1994, capital paid-in aggregated $53,966,187. Transactions in
Fund shares were as follows:
<TABLE>
<CAPTION>
PERIOD ENDED
OCTOBER 31, 1994*
- ---------------------------------------------------------------------- -----------------
<S> <C>
Shares sold 134,110,437
- ----------------------------------------------------------------------
Shares issued to shareholders in payment of dividends declared 92,846
- ----------------------------------------------------------------------
Shares redeemed (80,237,096)
- ---------------------------------------------------------------------- -----------------
Net change resulting from Fund share transactions 53,966,187
- ---------------------------------------------------------------------- -----------------
<FN>
* For the period from September 12, 1994 (start of business) to
October 31, 1994.
</TABLE>
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Management, the Fund's investment adviser
(the "Adviser"), receives for its services an annual investment advisory fee
equal to .40 of 1% of the Fund's average daily net assets. The Adviser may
voluntarily choose to waive its fee and reimburse certain operating
17
FLORIDA MUNICIPAL CASH TRUST
- ---------------------------------------------------------
expenses of the Fund. The Adviser can modify or terminate this voluntary waiver
and reimbursement at any time at its sole discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Fund
with administrative personnel and services. The FAS fee is based on the level of
average aggregate daily net assets of all funds advised by subsidiaries of
Federated Investors for the period. The administrative fee received during the
period of the Administrative Services Agreement shall be at least $125,000 per
portfolio and $30,000 per each additional class of shares.
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement
with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to .25 of
1% of average net assets of the Fund for the period. This fee is to obtain
certain personal services for shareholders and to maintain shareholder accounts.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES--Federated Services Company
("FServ") serves as transfer and dividend disbursing agent for the Fund. The
FServ fee is based on the size, type, and number of accounts and transactions
made by shareholders.
ORGANIZATIONAL EXPENSES--Organizational expenses ($15,374) were borne initially
by the Adviser. The Fund has agreed to reimburse the Adviser for the
organizational expenses during the five year period following September 19, 1994
(date the Fund first became effective). For the year ended October 31, 1994, the
Fund paid $1,110 pursuant to this agreement.
INTERFUND TRANSACTIONS--During the year ended October 31, 1994, the Fund engaged
in purchase and sale transactions with other affiliated funds at current value
pursuant to Rule 17a-7 under the Act amounting to $93,060,000, and $63,815,000,
respectively.
Certain of the Officers and Trustees of the Trust are Officers and Directors or
Trustees of the above companies.
18
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- ---------------------------------------------------------
To the Shareholders and Board of Trustees of
FEDERATED MUNICIPAL TRUST
(Florida Municipal Cash Trust):
We have audited the accompanying statement of assets and liabilities of Florida
Municipal Cash Trust (an investment portfolio of Federated Municipal Trust, a
Massachusetts business trust), including the schedule of portfolio investments,
as of October 31, 1994, and the related statement of operations and changes in
net assets, and financial highlights for the period from September 12, 1994
(start of business) to October 31, 1994. These financial statements and
financial highlights are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of October 31, 1994, by
correspondence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Florida Municipal Cash Trust (an investment portfolio of Federated Municipal
Trust) as of October 31, 1994, and the results of its operations, the changes in
its net assets and its financial highlights for the period from September 12,
1994 (start of business) to October 31, 1994, in conformity with generally
accepted accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
December 14, 1994
19
<TABLE>
<CAPTION>
TRUSTEES OFFICERS
- ---------------------------------------------------------
<S> <C>
John F. Donahue John F. Donahue
John T. Conroy, Jr. CHAIRMAN
William J. Copeland Glen R. Johnson
James E. Dowd PRESIDENT
Lawrence D. Ellis, M.D. J. Christopher Donahue
Edward L. Flaherty, Jr. VICE PRESIDENT
Glen R. Johnson Richard B. Fisher
Peter E. Madden VICE PRESIDENT
Gregor F. Meyer Edward C. Gonzales
Wesley W. Posvar VICE PRESIDENT AND TREASURER
Marjorie P. Smuts John W. McGonigle
VICE PRESIDENT AND SECRETARY
David M. Taylor
ASSISTANT TREASURER
G. Andrew Bonnewell
ASSISTANT SECRETARY
</TABLE>
Mutual funds are not bank deposits or obligations, are not
guaranteed by any bank, and are not insured or guaranteed by the
U.S. government, the Federal Deposit Insurance Corporation, the
Federal Reserve Board, or any other government agency. Investment
in mutual funds involves investment risk, including possible loss
of principal. Although money market funds seek to maintain a
stable net asset value of $1.00 per share, there is no assurance
that they will be able to do so.
This report is authorized for distribution to prospective
investors only when preceded or accompanied by the Fund's
prospectus which contains facts concerning its objective and
policies, management fees, expenses and other information.
- --------------------------------------------------------------------------------
MARYLAND
- --------------------------------------------------------------------------------
MUNICIPAL
- --------------------------------------------------------------------------------
CASH
- --------------------------------------------------------------------------------
TRUST
ANNUAL REPORT
TO SHAREHOLDERS
OCTOBER 31, 1994
[LOGO] ------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS ____________________________________
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779 [LOGO] ____________________________________
RECYCLED
PAPER
314229774
007231 (12/94) ____________________________________
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the Annual Report to Shareholders for Maryland Municipal
Cash Trust (the "Fund"), a portfolio of Federated Municipal Trust, for the
period from the Fund's start of business date of April 25, 1994, through the
Fund's fiscal year-end on October 31, 1994. The report begins with an interview
with portfolio manager Jeff Kozemchak about economic factors affecting the Fund,
followed by the Fund's Portfolio of Investments and Financial Statements.
The Fund gives Maryland residents three ways to pursue tax-free income--its
earnings are exempt from federal regular income tax, Maryland state taxes, and
Maryland county taxes.* Its portfolio includes high-quality, short-term Maryland
municipal securities of more than 16 issuers that use municipal bond financing
for projects as varied as housing, industrial development, education, and health
care.
During the report period, the Fund paid shareholders a total of $735,164 in
dividends, or $0.01 per share. At the end of the report period, the Fund's net
assets stood at $56.3 million.
As a wise investor, you can count on the Fund to ease your tax burden by
pursuing competitive tax-free yields--with the additional advantages of daily
liquidity and stability of principal.**
Thank you for your confidence in Maryland Municipal Cash Trust. We welcome your
comments and suggestions.
Sincerely,
Glen R. Johnson
President
December 15, 1994
*INCOME MAY BE SUBJECT TO THE FEDERAL ALTERNATIVE MINIMUM TAX.
**NO MONEY MARKET MUTUAL FUND CAN GUARANTEE THAT A STABLE NET ASSET VALUE WILL
BE MAINTAINED. AN INVESTMENT IN THE FUND IS NEITHER INSURED NOR GUARANTEED BY
THE U.S. GOVERNMENT.
1
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
AN INTERVIEW WITH FUND PORTFOLIO MANAGER JEFF A. KOZEMCHAK
Q Recently, there has been a lot of concern, as well as press coverage, about
the subject of derivatives. What are derivatives?
A The term "derivative" has been applied to many different types of
investments. In the context of money market funds, derivatives generally
refer to adjustable rate securities designed for speculation on changes in
interest rates. These speculative derivatives provide above-market yields when
interest rates fall or remain stable, or when the yield curve is steep. They
provide below-market yields, however, when interest rates rise or become more
volatile, or when the yield curve flattens. All three of these latter conditions
occurred in 1994. As a result, many of these speculative securities lost a
significant part of their value, enough to threaten the $1.00 per share price of
some money market funds.
It is important to distinguish these speculative derivatives from adjustable
rate securities that are indexed to money market interest rates. These indexed
securities are designed to track changes in market rates, and should approximate
their par value in reasonably foreseeable market conditions. Tax-exempt money
market funds like the Fund have the right to tender many of these securities for
purchase at their par value. Money market funds have used these securities for
decades, through several interest rate cycles, without jeopardizing their stable
net asset values.
Q Do Federated Investors' money market funds invest in the derivatives that
have been in the headlines recently?
A NO. NONE OF FEDERATED INVESTORS' MONEY MARKET FUNDS HAS INVESTED IN ANY OF
THE TYPES OF DERIVATIVES THAT HAVE BEEN IN THE HEADLINES LATELY. Our mutual
funds only invest in adjustable rate securities that track changes in money
market interest rates.
With respect to speculative derivatives, we determined from the outset that the
potential volatility of these securities was contrary to the intent of the rules
governing the use of variable rate securities by money market funds. We also
realized the potential for these securities to deviate significantly from par
and threaten the $1.00 per share price of a money market fund. We spoke out
against the use of these securities by money market funds at industry
conferences throughout 1993, when the securities still offered attractive
yields. Our views were vindicated when, in June, 1994, the Securities and
Exchange Commission sent a letter to the Investment Company Institute requiring
money market funds to divest themselves of these securities in an orderly
manner. This caused some investment advisers to buy these securities from their
funds.
2
- --------------------------------------------------------------------------------
Q What happened to short-term interest rates over the period covered by this
Annual Report?
A There was a dramatic shift in the monetary policy of the Federal Reserve
Board (the "Fed") during the reporting period that ended October 31, 1994.
Throughout the fourth quarter of 1993, the Fed kept the Federal funds rate (the
rate banks charge each other for overnight loans) steady at 3.00%, where it had
been for a year and a half. The Fed had maintained short-term interest rates at
these low levels in order to stimulate the economy. However, in early 1994,
reports began to show stronger than anticipated economic growth. Real gross
national product grew at a 7.00% annual rate in the fourth quarter of 1993, and
the national unemployment rate declined to 6.00%. Concerned that these factors
could lead to an increase in wages and prices, the Fed took the first step on
February 4, 1994, to fight future inflation by raising its Federal funds rate
target to 3.25%. Since then, the Fed has continued to be aggressive, moving the
Federal funds rate target upward five more times from 3.25% to 5.50%.
Q How did municipal money market yields react to these rate increases?
A Municipal money market interest rates followed the upward movement in
taxable rates but to a slightly lesser degree, as they are affected by
federal, state and local tax factors as well as market supply and demand
imbalances.
The Fund's yields have proven to be responsive to the increases in money market
rates. At October 31, 1994, the Fund's seven-day net yield of 2.81% was
equivalent to a taxable yield of 5.11% for those investors subject to the
highest federal, state and county tax brackets.* This number illustrates the
Fund's attractiveness relative to taxable investments.
* PERFORMANCE QUOTED REPRESENTS PAST PERFORMANCE AND IS NOT INDICATIVE OF FUTURE
RESULTS. YIELDS WILL VARY. THESE NUMBERS ASSUME THAT STATE INCOME TAXES ARE
FULLY DEDUCTIBLE IN COMPUTING FEDERAL INCOME TAX LIABILITY.
3
- --------------------------------------------------------------------------------
Q What is your outlook for the markets and the Fund?
A The economy continues to show surprising resilience to the Fed's attempts to
bring growth under control. We expect that the Fed will act again to tighten
monetary policy in the first quarter of 1995. At that point in time, the
Federal funds target could be as high as 6.50%. As a result, we plan to maintain
a conservative posture in the near future, while attempting to maximize
performance through ongoing relative value analysis. However, we will continue
to monitor changing economic and market developments so as to serve our clients
attracted to the short-term tax-exempt securities market. In this environment,
stable net asset value money market funds like the Fund will continue to be an
important component in preserving capital, and should reflect rising short-term
interest rates with increasing net yields.
4
MARYLAND MUNICIPAL CASH TRUST
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ------------- ------------------------------------------------------------ ------- -------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--106.5%
- ----------------------------------------------------------------------------
MARYLAND--101.1%
------------------------------------------------------------
$1,760,000 Anne Arundel County, MD, EDRB, 3.40% CP (Series
1988)/(Baltimore Gas & Electric Co. Guaranty)/ (Subject to
AMT), Mandatory Tender 11/17/94 A-1 $ 1,760,000
------------------------------------------------------------
2,000,000 Anne Arundel County, MD, EDRB, 3.65% CP (Series
1988)/(Baltimore Gas & Electric Co. Guaranty)/ (Subject to
AMT), Mandatory Tender 1/12/95 A-1 2,000,000
------------------------------------------------------------
2,575,000 Baltimore County, MD, EDRB Weekly VRDNs (Series
1994A)/(Pitts Realty Ltd. L.P.)/(PNC Bank, Delaware
LOC)/(Subject to AMT) P-1 2,575,000
------------------------------------------------------------
2,900,000 Baltimore County, MD, IDA Weekly VRDNs (Mine Safety
Appliances Co.)/(Sanwa Bank Ltd. LOC) P-1 2,900,000
------------------------------------------------------------
2,100,000 Baltimore County, MD, Port Facility Weekly VRDNs (Occidental
Petroleum)/(National Westminister Bank LOC) A-1+ 2,100,000
------------------------------------------------------------
3,000,000 Baltimore County, MD, Weekly VRDNs (Series 1994)/ (Direct
Marketing Associates, Inc., Facility)/(First National Bank
of Maryland, Baltimore LOC)/(Subject to AMT) A-1 3,000,000
------------------------------------------------------------
3,000,000(a) Baltimore County, MD, Weekly VRDNs (Series 20
Putters)/(Morgan Guaranty Trust Co. BPA) VMIG1 3,000,000
------------------------------------------------------------
1,000,000 Baltimore County, MD, Weekly VRDNs (Sheppard & Enoch Pratt
Hospital Facility)/(Societe Generale LOC) VMIG1 1,000,000
------------------------------------------------------------
2,000,000 Baltimore, MD, 5.00% Highway User RANs (Series 1994), 6/9/95 SP-1+ 2,010,220
------------------------------------------------------------
700,000 Baltimore, MD, PCR Weekly VRDNs (SCM Plants, Inc.)/
(Barclays Bank, PLC LOC) A-1+ 700,000
------------------------------------------------------------
1,500,000 Cecil County, MD, County Commissioners EDRB Weekly VRDNs
(Series 1988S)/(Williams Mobile Offices, Inc.)/(First
National Bank of Maryland, Baltimore LOC)/(Subject to AMT) A-1 1,500,000
------------------------------------------------------------
</TABLE>
5
MARYLAND MUNICIPAL CASH TRUST
- ---------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ------------- ------------------------------------------------------------ ------- -------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ----------------------------------------------------------------------------
MARYLAND--CONTINUED
------------------------------------------------------------
$1,080,000 Elkton, MD Weekly VRDNs (Series 1992S)/(Highway Service
Ventures, Inc. Facility)/(First Union National Bank,
Charlotte LOC) A-1 $ 1,080,000
------------------------------------------------------------
3,141,000 Hartford County, MD Weekly VRDNs (Series 1989)/ (Hartford
Commons Associates Facility)/(Nationsbank of Virginia N.A.
LOC)/(Subject to AMT) P-1 3,141,000
------------------------------------------------------------
1,200,000 Maryland IDFA Weekly VRDNs (Series 1994)/(Johnson Controls,
Inc. Guaranty) VMIG1 1,200,000
------------------------------------------------------------
2,800,000 Maryland State CDA Weekly VRDNs (Series 1990B)/ (Cherry Hill
Apartment Ltd.)/(Nationsbank of Maryland LOC)/(Subject to
AMT) P-1 2,800,000
------------------------------------------------------------
1,000,000 Maryland State CDA 3.65% Multi-Family Housing Revenue Bonds
(Series 1984B), Optional Tender 11/15/94 NR(2) 1,000,000
------------------------------------------------------------
3,000,000 Maryland State Energy Financing Administration IDRB Weekly
VRDNs (Series 1988)/(Morningstar Foods, Inc.)/ (Long Term
Credit Bank of Japan Ltd. LOC)/(Subject to AMT) A-2 3,000,000
------------------------------------------------------------
2,000,000 Maryland State HEFA Weekly VRDNs (Series 1985B)/ (Pooled
Loan Program)/(Sanwa Bank Ltd. LOC) VMIG1 2,000,000
------------------------------------------------------------
1,000,000 Maryland State HEFA Weekly VRDNs Revenue Bonds (Series
1992B)/(North Arundel Hospital)/(Mellon Bank N.A. LOC) VMIG1 1,000,000
------------------------------------------------------------
3,245,000 Maryland State HEFA, 9.25% Prerefunded Bonds (Series
1985A)/(John Hopkins University), 7/1/95 AAA 3,426,083
------------------------------------------------------------
750,000(a) Maryland State Weekly VRDNs GO Bonds P-Floats (First Series,
1993) VMIG1 750,000
------------------------------------------------------------
1,000,000 Montgomery County, MD, 6.80% Public Improvement Bonds
(Series A), 4/1/95 AAA 1,014,345
------------------------------------------------------------
2,000,000 Montgomery County, MD, EDA Weekly VRDNs (Howard Hughes
Medical Institute Guaranty) A-1+ 2,000,000
------------------------------------------------------------
</TABLE>
6
MARYLAND MUNICIPAL CASH TRUST
- ---------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ------------- ------------------------------------------------------------ ------- -------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ----------------------------------------------------------------------------
MARYLAND--CONTINUED
------------------------------------------------------------
$2,500,000 Montgomery County, MD, EDA Weekly VRDNs (U.S. Pharmacopeial
Convention Facility)/(Chemical Bank LOC) VMIG1 $ 2,500,000
------------------------------------------------------------
2,000,000 Montgomery County, MD, Housing Opportunities Commission SFM,
4.35% Annual TOBs (Series 1994C), Optional Tender 10/25/95 VMIG1 2,000,000
------------------------------------------------------------
2,000,000 Montgomery County, MD, Multi-Family Weekly VRDNs (Series
1991A)/(South Bay Club Apartments-Van Nuys, G.P.)/(General
Electric Capital Corp. LOC) A-1+ 2,000,000
------------------------------------------------------------
1,000,000 Northeast, MD, Waste Disposal Authority, 3.40% Semi-Annual
TOBs (Southwest Resource Recovery Facility)/ (MBIA Insured),
Optional Tender 1/1/95 NR(1) 1,000,000
------------------------------------------------------------
1,950,000 Washington County, Sanitary District, 4.00% BANs (Series
1994), 4/18/95 SP-1 1,952,988
------------------------------------------------------------
2,500,000 Wicomico County, MD, EDRB Weekly VRDNs (Series 1994)/(Field
Container Co. L.P.)/(Northern Trust Co. LOC)/(Subject to
AMT) SP-1+ 2,500,000
------------------------------------------------------------ -------------
Total 56,909,636
------------------------------------------------------------ -------------
PUERTO RICO--5.4%
------------------------------------------------------------
1,600,000 Puerto Rico Industrial Medical and Environment PCA Weekly
VRDNs (Ana G. Mendez Educational Foundation)/(Bank of Tokyo
Ltd. LOC) A-1 1,600,000
------------------------------------------------------------
1,400,000 Puerto Rico Industrial, Medical & Environmental PCA, 4.00%
Annual TOBs (Series 1983A)/(Reynolds Metals Co.)/ (ABN AMRO
Bank N.A. LOC), Optional Tender 9/1/95 VMIG1 1,401,131
------------------------------------------------------------ -------------
Total 3,001,131
------------------------------------------------------------ -------------
TOTAL INVESTMENTS, AT AMORTIZED COST $ 59,910,767+
------------------------------------------------------------ -------------
<FN>
(a) Denotes restricted securities which are subject to resale under Federal
Securities laws. These securities have been determined to be liquid under
criteria established by the Board of Trustees.
* See Notes to Portfolio of Investments on page 9. Current credit ratings all
unaudited.
+ Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($56,275,239) at October 31, 1994.
</TABLE>
7
MARYLAND MUNICIPAL CASH TRUST
- ---------------------------------------------------------
The following abbreviations are used in this portfolio:
<TABLE>
<S> <C>
AMT --Alternative Minimum Tax
BANs --Bond Anticipation Notes
BPA --Bond Purchase Agreement
CDA --Community Development Administration
CP --Commerical Paper
EDA --Economic Development Authority
EDRB --Economic Development Revenue Bonds
GO --General Obligations
HEFA --Health and Education Facilities Authority
IDA --Industrial Development Authority
IDFA --Industrial Development Finance Authority
IDRB --Industrial Development Revenue Bonds
LOC --Letter of Credit
MBIA --Municipal Bond Investors Assurance
PCA --Pollution Control Authority
PCR --Pollution Control Revenue
RANs --Revenue Anticipation Notes
SFM --Single Family Mortgage
TOBs --Tender Option Bonds
VRDNs --Variable Rate Demand Notes
</TABLE>
(See Notes which are an integral part of the Financial Statements)
8
MARYLAND MUNICIPAL CASH TRUST
NOTES TO PORTFOLIO OF INVESTMENTS
(UNAUDITED)
- --------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL OBLIGATION RATINGS
STANDARD & POOR'S RATINGS GROUP
A S&P 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 ratings 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 & POOR'S RATINGS GROUP
S&P 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
long-term and 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 as 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
9
MARYLAND MUNICIPAL CASH TRUST
- ---------------------------------------------------------
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 & POOR'S RATINGS GROUP
A S&P 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 highest category indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong safety
characteristics are denoted with a plus (+) sign designation.
A-2--Capacity for timely payment on issues with this designation is
satisfactory. 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. Prime-1 repayment
capacity will normally be evidenced by the following characteristics: leading
market positions in well established industries, high rates of return on funds
employed, conservative capitalization structure with moderate reliance on debt
and ample asset protection, broad margins in earning coverage of fixed financial
charges and high internal cash generation, well-established access to a range of
financial markets and assured sources of alternate liquidity.
P-2--Issuers rated PRIME-2 (or related supporting institutions) have a strong
capacity for repayment of short-term promissory obligations. This will normally
be evidenced by many of the characteristics cited above, but to a lesser degree.
Earnings trends and coverage ratios, while sound, will be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
LONG-TERM DEBT RATINGS
STANDARD & POOR'S RATINGS GROUP
AAA--Debt rated "AAA" has the highest rating assigned by S&P. 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 highest rated issues only in small degree.
10
MARYLAND MUNICIPAL CASH TRUST
- ---------------------------------------------------------
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.
MOODY'S INVESTORS SERVICES, INC.
Aaa--Bonds that 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
edged." 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 that 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 that 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.
NR--indicates that both the bonds and the obligor or credit enhancer are not
currently rated by S&P or Moody's 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 S&P or "Aaa" by Moody's.
NR(2)--The underlying issuer/obligor/guarantor has other outstanding debt rated
"AA" by S&P or "Aa" Moody's.
NR(3)--The underlying issuer/obligor/guarantor has other outstanding debt rated
"A" by S&P or Moody's.
11
MARYLAND MUNICIPAL CASH TRUST
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ---------------------------------------------------------------------------------------------
Investments in securities, at amortized cost and value $59,910,767
- ---------------------------------------------------------------------------------------------
Cash 63,264
- ---------------------------------------------------------------------------------------------
Interest receivable 353,999
- ---------------------------------------------------------------------------------------------
Deferred expenses 16,280
- --------------------------------------------------------------------------------------------- -----------
Total assets 60,344,310
- ---------------------------------------------------------------------------------------------
LIABILITIES:
- ---------------------------------------------------------------------------------------------
Payable for investments purchased $4,010,494
- --------------------------------------------------------------------------------
Dividends payable 6,326
- --------------------------------------------------------------------------------
Accrued expenses 52,251
- -------------------------------------------------------------------------------- ----------
Total liabilities 4,069,071
- --------------------------------------------------------------------------------------------- -----------
NET ASSETS for 56,275,239 shares of beneficial interest outstanding $56,275,239
- --------------------------------------------------------------------------------------------- -----------
NET ASSET VALUE, Offering Price, and Redemption Proceeds Per Share:
($56,275,239 DIVIDED BY 56,275,239 shares of beneficial interest outstanding) $1.00
- --------------------------------------------------------------------------------------------- -----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
12
MARYLAND MUNICIPAL CASH TRUST
STATEMENT OF OPERATIONS
PERIOD ENDED OCTOBER 31, 1994*
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ----------------------------------------------------------------------------------
Interest income $862,087
- ----------------------------------------------------------------------------------
EXPENSES:
- ----------------------------------------------------------------------------------
Investment advisory fee $137,219
- -----------------------------------------------------------------------
Custodian and portfolio accounting fees 27,453
- -----------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 4,666
- -----------------------------------------------------------------------
Shareholder services fee 68,610
- -----------------------------------------------------------------------
Administrative personnel and services 20,890
- -----------------------------------------------------------------------
Fund share registration costs 3,503
- -----------------------------------------------------------------------
Legal fees 1,495
- -----------------------------------------------------------------------
Printing and postage 2,993
- -----------------------------------------------------------------------
Insurance premiums 4,964
- -----------------------------------------------------------------------
Miscellaneous 1,690
- ----------------------------------------------------------------------- --------
Total expenses 273,483
- -----------------------------------------------------------------------
Deduct--
- ------------------------------------------------------------
Waiver of investment advisory fee $137,147
- ------------------------------------------------------------
Reimbursement of other operating expenses 9,413 146,560
- ------------------------------------------------------------ -------- --------
Net expenses 126,923
- ---------------------------------------------------------------------------------- --------
Net investment income $735,164
- ---------------------------------------------------------------------------------- --------
* For the period from April 25, 1994 (start of business) to October 31, 1994.
</TABLE>
(See Notes which are an integral part of the Financial Statements)
13
MARYLAND MUNICIPAL CASH TRUST
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD ENDED
OCTOBER 31, 1994*
-----------------
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ---------------------------------------------------------------------------
OPERATIONS--
- ---------------------------------------------------------------------------
Net investment income $ 735,164
- --------------------------------------------------------------------------- -----------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ---------------------------------------------------------------------------
Dividends to shareholders from net investment income (735,164)
- --------------------------------------------------------------------------- -----------------
FUND SHARE (PRINCIPAL) TRANSACTIONS--
- ---------------------------------------------------------------------------
Proceeds from sale of shares 231,266,672
- ---------------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of dividends
declared 596,061
- ---------------------------------------------------------------------------
Cost of shares redeemed (175,587,494)
- --------------------------------------------------------------------------- -----------------
Change in net assets resulting from Fund share transactions 56,275,239
- --------------------------------------------------------------------------- -----------------
Change in net assets 56,275,239
- ---------------------------------------------------------------------------
NET ASSETS:
- ---------------------------------------------------------------------------
Beginning of period --
- --------------------------------------------------------------------------- -----------------
End of period $ 56,275,239
- --------------------------------------------------------------------------- -----------------
<FN>
* For the period from April 25, 1994 (start of business) to October 31, 1994.
</TABLE>
(See Notes which are an integral part of the Financial Statements)
14
MARYLAND MUNICIPAL CASH TRUST
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31,
1994*
----------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00
- ----------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------
Net investment income 0.01
- ---------------------------------------------------------------------- -------
LESS DISTRIBUTIONS
- ----------------------------------------------------------------------
Dividends to shareholders from net investment income (0.01)
- ---------------------------------------------------------------------- -------
NET ASSET VALUE, END OF PERIOD $ 1.00
- ---------------------------------------------------------------------- -------
TOTAL RETURN** 1.30%
- ----------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------------
Expenses 0.46%(b)
- ----------------------------------------------------------------------
Net investment income 2.68%(b)
- ----------------------------------------------------------------------
Expense waiver/reimbursement (a) 0.53%(b)
- ----------------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------------
Net assets, end of period (000 omitted) $56,275
- ----------------------------------------------------------------------
<FN>
* Reflects operations for the period from May 9, 1994 (date of initial public
investment) to October 31, 1994. For the period from April 25, 1994 (start
of business) to May 9, 1994, the Fund had no investment activity.
** Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(a) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(b) Computed on an annualized basis.
</TABLE>
(See Notes which are an integral part of the Financial Statements)
15
MARYLAND MUNICIPAL CASH TRUST
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1994
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Federated Municipal Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "Act"), as an open-end, management
investment company. The Trust consists of thirteen non-diversified portfolios.
The financial statements included herein present only those of Maryland
Municipal Cash Trust (the "Fund"). The financial statements of the other
portfolios are presented separately. The assets of each portfolio are segregated
and a shareholder's interest is limited to the portfolio in which shares are
held.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
A. INVESTMENT VALUATIONS--The Fund's use of the amortized cost method to value
its portfolio securities is in accordance with Rule 2a-7 under the Act.
B. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized
as required by the Internal Revenue Code, as amended (the "Code").
Distributions to shareholders are recorded on the ex-dividend date.
C. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its tax-exempt income.
Accordingly, no provisions for federal tax are necessary.
D. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
E. DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering its shares, have been deferred and are being
amortized using the straight-line method not to exceed a period of five
years from the Fund's commencement date.
F. CONCENTRATION OF CREDIT RISK--Since the Fund invests a substantial portion
of its assets in issuers located in one state, it will be more susceptible
to factors adversely affecting issuers of that state than would be a
comparable general tax-exempt mutual fund. In order to reduce the credit
16
MARYLAND MUNICIPAL CASH TRUST
- ---------------------------------------------------------
risk associated with such factors, at October 31, 1994, 74.7% of the
securities in the portfolio of investments are backed by letters of credit
or bond insurance of various financial institutions and financial guaranty
assurance agencies. The value of investments insured by or supported
(backed) by a letter of credit for any one institution or agency did not
exceed 8.2% of total investments.
G. RESTRICTED SECURITIES--Restricted securities are securities that may only be
resold upon registration under Federal securities laws or in transactions
exempt from such registration. Many restricted securities may be resold in
the secondary market in transactions exempt from registration. In some
cases, the restricted securities may be resold without registration upon
exercise of a demand feature. Such restricted securities may be determined
to be liquid under criteria established by the Board of Trustees (the
"Trustees"). The Fund will not incur any registration costs upon such
resales. The Fund's restricted securities are valued at amortized cost in
accordance with Rule 2a-7 under the Act. Additional information on each
restricted security held at October 31, 1994 is as follows:
<TABLE>
<CAPTION>
ACQUISITION ACQUISITION
SECURITY DATE COST
- ---------------------------------------------------------------------- ----------- -----------
<S> <C> <C>
Baltimore County, MD, Weekly VRDNs (Series 20 Putters) 7/1/94 $3,000,000
Maryland State Weekly VRDNs GO Bonds P-Floats (First Series, 1993) 2/1/94 $ 750,000
</TABLE>
H. OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value). At
October 31, 1994, capital paid-in aggregated $56,275,239. Transactions in Fund
shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31,
1994*
- ---------------------------------------------------------------------- ------------
<S> <C>
Shares sold 231,266,672
- ----------------------------------------------------------------------
Shares issued to shareholders in payment of dividends declared 596,061
- ----------------------------------------------------------------------
Shares redeemed (175,587,494)
- ---------------------------------------------------------------------- ------------
Net change resulting from Fund share transactions 56,275,239
- ---------------------------------------------------------------------- ------------
<FN>
* For the period from April 25, 1994 (start of business) to October 31, 1994.
</TABLE>
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Management, the Fund's investment adviser
(the "Adviser"), receives for its services an annual investment advisory fee
equal to .50 of 1% of the Fund's average
17
MARYLAND MUNICIPAL CASH TRUST
- ---------------------------------------------------------
daily net assets. The Adviser may voluntarily choose to waive a portion of its
fee and reimburse certain operating expenses of the Fund. The Adviser can modify
or terminate this voluntary waiver and reimbursement at any time at its sole
discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Fund
with administrative personnel and services. The FAS fee is based on the level of
average aggregate daily net assets of all funds advised by subsidiaries of
Federated Investors for the period. The administrative fee received during the
period of the Administrative Services Agreement shall be at least $125,000 per
portfolio and $30,000 per each additional class of shares.
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement
with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to .25 of
1% of average net assets of the Fund for the period. This fee is to obtain
certain personal services for shareholders and to maintain shareholder accounts.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES--Federated Services Company
("FServ") serves as transfer and dividend disbursing agent for the Fund. The
FServ fee is based on the size, type, and number of accounts and transactions
made by shareholders.
ORGANIZATIONAL EXPENSES--Organizational expenses ($14,426) and start-up
administrative service expenses ($31,506) were borne initially by the Adviser.
The Fund has agreed to reimburse the Adviser for the organizational expenses and
start-up administrative expenses during the five year period following May 4,
1994 (the date the Fund first became effective). For the period ended October
31, 1994, the Fund paid $561 and $1,225 respectively, pursuant to this
agreement.
INTERFUND TRANSACTIONS--During the period ended October 31, 1994, the Fund
engaged in purchase and sale transactions with other affiliated funds at current
value pursuant to Rule 17a-7 under the Act amounting to $132,185,000 and
$113,185,000, respectively.
Certain of the Officers and Trustees of the Trust are Officers and Directors or
Trustees of the above companies.
18
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- ---------------------------------------------------------
To the Shareholders and Board of Trustees of
FEDERATED MUNICIPAL TRUST
(MARYLAND MUNICIPAL CASH TRUST):
We have audited the accompanying statement of assets and liabilities of Maryland
Municipal Cash Trust (an investment portfolio of Federated Municipal Trust, a
Massachusetts business trust) including the schedule of portfolio investments,
as of October 31, 1994, and the related statements of operations and changes in
net assets, and the financial highlights for the period from April 25, 1994
(start of business) to October 31, 1994. These financial statements and
financial highlights are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of October 31, 1994, by
correspondence with the custodian and brokers. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Maryland Municipal Cash Trust (an investment portfolio of Federated Municipal
Trust) as of October 31, 1994, and the results of its operations, the changes in
its net assets, and its financial highlights for the period from April 25, 1994
(start of business) to October 31, 1994, in conformity with generally accepted
accounting principles.
Pittsburgh, Pennsylvania ARTHUR ANDERSEN LLP
December 14, 1994
19
<TABLE>
<CAPTION>
TRUSTEES OFFICERS
- ---------------------------------------------------------
<S> <C>
John F. Donahue John F. Donahue
John T. Conroy, Jr. CHAIRMAN
William J. Copeland Glen R. Johnson
James E. Dowd PRESIDENT
Lawrence D. Ellis, M.D. J. Christopher Donahue
Edward L. Flaherty, Jr. VICE PRESIDENT
Glen R. Johnson Richard B. Fisher
Peter E. Madden VICE PRESIDENT
Gregor F. Meyer Edward C. Gonzales
Wesley W. Posvar VICE PRESIDENT AND TREASURER
Marjorie P. Smuts John W. McGonigle
VICE PRESIDENT AND SECRETARY
David M. Taylor
ASSISTANT TREASURER
G. Andrew Bonnewell
ASSISTANT SECRETARY
</TABLE>
Mutual funds are not bank deposits or obligations, are not
guaranteed by any bank, and are not insured or guaranteed by the
U.S. government, the Federal Deposit Insurance Corporation, the
Federal Reserve Board, or any other government agency. Investment
in mutual funds involves investment risk, including possible loss
of principal. Although money market funds seek to maintain a
stable net asset value of $1.00 per share, there is no assurance
that they will be able to do so.
This report is authorized for distribution to prospective
investors only when preceded or accompanied by the Fund's
prospectus which contains facts concerning its objective and
policies, management fees, expenses and other information.
- --------------------------------------------------------------------------------
MINNESOTA
- --------------------------------------------------------------------------------
MUNICIPAL
- --------------------------------------------------------------------------------
CASH
- --------------------------------------------------------------------------------
TRUST
- --------------------------------------------------------------------------------
ANNUAL REPORT
TO SHAREHOLDERS
OCTOBER 31, 1994
FEDERATED SECURITIES CORP.
(LOGO) --------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
314229873
342298402
G00198-01 (12/94)
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the Annual Report to Shareholders for Minnesota
Municipal Cash Trust (the "Fund"), a portfolio of Federated Municipal Trust, for
the 12-month period ended October 31, 1994. The Fund consists of two classes of
shares known as Institutional Shares and Cash Series Shares. The report begins
with an interview with portfolio manager Mary Jo Ochson about economic factors
affecting the Fund, followed by the Fund's Portfolio of Investments and
Financial Statements. In addition, Financial Highlights tables have been
included for Institutional Shares and Cash Series Shares.
The Fund gives Minnesota residents two ways to pursue tax-free income--its
earnings are exempt from federal regular income tax and Minnesota personal
income tax.* Its portfolio includes high-quality, short-term Minnesota municipal
securities of more than 50 issuers that use municipal bond financing for
projects as varied as housing, industrial development, education, and health
care.
During the report period, the Fund paid shareholders a total of $6.2 million in
dividends. At the end of the report period, the Fund's net assets stood at $254
million.
As a wise investor, you can count on the Fund to ease your tax burden by
pursuing competitive tax-free yields--with the additional advantages of daily
liquidity and stability of principal.**
Thank you for your confidence in Minnesota Municipal Cash Trust. We welcome your
comments and suggestions.
Sincerely,
Glen R. Johnson
President
December 15, 1994
* Income may be subject to the federal alternative minimum tax.
** No money market fund can guarantee that a stable net asset value will be
maintained. An investment in the Fund is neither insured nor guaranteed by
the U.S. government.
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
An Interview with Fund Portfolio Manager Mary Jo Ochson
Q Recently, there has been a lot of concern, as well as press coverage, about
the subject of derivatives. What are derivatives?
A The term "derivative" has been applied to many different types of
investments. In the context of money market funds, derivatives generally
refer to adjustable rate securities designed for speculation on changes
in interest rates. These speculative derivatives provide above-market yields
when interest rates fall or remain stable, or when the yield curve is steep.
They provide below-market yields, however, when interest rates rise or become
more volatile, or when the yield curve flattens. All three of these latter
conditions occurred in 1994. As a result, many of these speculative securities
lost a significant part of their value, enough to threaten the $1.00 per share
price of some money market funds.
It is important to distinguish these speculative derivatives from adjustable
rate securities that are indexed to money market interest rates. These indexed
securities are designed to track changes in market rates, and should approximate
their par value in reasonably foreseeable market conditions. Tax-exempt money
market funds like the Fund have the right to tender many of these securities for
purchase at their par value. Money market funds have used these securities for
decades, through several interest rate cycles, without jeopardizing their stable
net asset values.
Q Do Federated Investors' money market funds invest in the derivatives that
have been in the headlines recently?
A No. None of Federated Investors' money market funds has invested in any of
the types of derivatives that have been in the headlines lately. Our mutual
funds only invest in adjustable rate securities that track changes in money
market interest rates.
With respect to speculative derivatives, we determined from the outset that the
potential volatility of these securities was contrary to the intent of the rules
governing the use of variable rate securities by money market funds. We also
realized the potential for these securities to deviate significantly from par
and threaten the $1.00 per share price of a money market fund. We spoke out
against the use of these securities by money market funds at industry
conferences throughout 1993, when the securities still offered attractive
yields. Our views were vindicated when, in June, 1994, the Securities and
Exchange Commission sent a letter to the Investment Company Institute requiring
money market funds to divest themselves of these securities in an orderly
manner. This caused some investment advisers to buy these securities from their
funds.
- --------------------------------------------------------------------------------
Q What happened to short-term interest rates over the period covered by this
Annual Report?
A There was a dramatic shift in the monetary policy of the Federal Reserve
Board (the "Fed") during the 12-month reporting period that ended October
31, 1994.
Throughout the fourth quarter of 1993, the Fed kept the Federal funds rate (the
rate banks charge each other for overnight loans) steady at 3.00%, where it had
been for a year and a half. The Fed had maintained short-term interest rates at
these low levels in order to stimulate the economy. However, in early 1994,
reports began to show stronger than anticipated economic growth. Real gross
national product grew at a 7.00% annual rate in the fourth quarter of 1993, and
the national unemployment rate declined to 6.00%. Concerned that these factors
could lead to an increase in wages and prices, the Fed took the first step on
February 4, 1994, to fight future inflation by raising its Federal funds rate
target to 3.25%. Since then, the Fed has continued to be aggressive, moving the
Federal funds rate target upward five more times from 3.25% to 5.50%.
Q How did municipal money market yields react to these rate increases?
A Municipal money market interest rates followed the upward movement in
taxable rates but to a slightly lesser degree, as they are affected by
federal, state and local tax factors as well as market supply and demand
imbalances.
The Fund's yields have proven to be responsive to the increases in money market
rates. For the 12-month reporting period ended October 31, 1994, the Fund's
tax-free, annualized seven-day net yields increased from 1.98% and 2.38% to
2.65% and 3.05% for the Cash Series Shares and Institutional Shares,
respectively.* At October 31, 1994, these seven-day yields were equivalent to
taxable yields of 4.79% (Cash Series Shares) and 5.52% (Institutional Shares)
for those investors subject to the highest federal and state tax brackets.**
These numbers illustrate the Fund's attractiveness relative to taxable
investments.
* Performance quoted represents past performance and is not indicative of
future results. Yields will vary.
** These numbers assume that state income taxes are fully deductible in
computing federal income tax liability.
- --------------------------------------------------------------------------------
Q What is your outlook for the markets and the Fund?
A The economy continues to show surprising resilience to the Fed's attempts
to bring growth under control. We expect that the Fed will act again to
tighten monetary policy in the first quarter of 1995. At that point in
time, the Federal funds target could be as high as 6.50%. As a result, we plan
to maintain a conservative posture in the near future, while attempting to
maximize performance through ongoing relative value analysis. However, we will
continue to monitor changing economic and market developments so as to serve our
clients attracted to the short-term tax-exempt securities market. In this
environment, stable net asset value money market funds like the Fund will
continue to be an important component in preserving capital, and should reflect
rising short-term interest rates with increasing net yields.
MINNESOTA MUNICIPAL CASH TRUST
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ---------- ----------------------------------------------------- -------- ------------
<C> <C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--99.6%
- ------------------------------------------------------------------------
$4,365,000 Albert Lea, MN, ISD #241, 2.70% TANs
(State of Minnesota Guaranty), 3/1/95 NR(2) $ 4,365,000
-----------------------------------------------------
5,000,000 Anoka City, MN, 3.40% CP Solid Waste Disposal
Authority (United Power Associates)/(Subject to
AMT)/(NRUCFC Guaranty), Mandatory Tender 11/7/94 A-1+ 5,000,000
-----------------------------------------------------
5,000,000 Bass Brook, MN, PCR, 3.40% CP (Minnesota Power and
Light Co.)/(Mellon Bank N.A. LOC), Mandatory Tender
12/16/94 P-1 5,000,000
-----------------------------------------------------
3,100,000 Baudette, MN, IDR Weekly VRDNs (Series 1989)/
(Reid-Rowell, Inc.)/(NationsBank of Georgia N.A.
LOC)/(Subject to AMT) P-1 3,100,000
-----------------------------------------------------
5,000,000 Becker, MN, PCR, 3.30% CP (Series 1992A)/(Northern
States Power Company Guaranty), Mandatory Tender
11/21/94 A-1+ 5,000,000
-----------------------------------------------------
4,000,000 Becker, MN, PCR, 3.70% CP (Northern States Power
Company Guaranty), Mandatory Tender 1/24/95 A-1+ 4,000,000
-----------------------------------------------------
1,200,000 Beltrami & Clearwater Counties, MN, ISD #38, 4.08%
RANs GO Aid Anticipation Certificates of Indebtedness
(Series 1994)/(State of Minnesota Guaranty), 9/14/95 NR(2) 1,200,292
-----------------------------------------------------
5,000,000 Bloomington, MN, Multi-Family Housing Weekly VRDNs
(Crow/Bloomington Apartments)/(Citibank N.A. LOC) P-1 5,000,000
-----------------------------------------------------
8,175,000 Burnsville, MN, Multi-Family Housing Weekly VRDNs
(Berkshire of Burnsville)/(Sumitomo Bank Ltd. LOC) A-1 8,175,000
-----------------------------------------------------
800,000 Byron, MN, IDB Weekly VRDNs (Schmidt Printing,
Inc.)/(Norwest Bank Minnesota LOC)/(Subject to AMT) A-1+ 800,000
-----------------------------------------------------
1,325,000 Chaska, MN, IDA Weekly VRDNs (Aeration
Industries)/(Norwest Bank Minnesota LOC)/
(Subject to AMT) A-1+ 1,325,000
-----------------------------------------------------
</TABLE>
MINNESOTA MUNICIPAL CASH TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ---------- ----------------------------------------------------- -------- ------------
<C> <C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------
$1,500,000 Coleraine, MN, IDS #316, 4.30% RANs GO Aid
Anticipation Certificates of Indebtedness (Series
1994)/ (State of Minnesota Guaranty), 9/28/95 NR(2) $ 1,500,000
-----------------------------------------------------
2,000,000 Coon Rapids, MN, Hospital Authority Weekly VRDNs
(Series 1985)/(The Health Central System)/(First Bank
N.A. LOC) A-1 2,000,000
-----------------------------------------------------
5,350,000 Crystal, MN, IDA Weekly VRDNs (Crystal Gallery
Mall)/(Citibank N.A. LOC) P-1 5,350,000
-----------------------------------------------------
2,320,000 Dakota County, MN, Housing & Redevelopment Authority,
3.75% Semi-Annual TOBs (Custodial Receipts)/(GNMA
Collateralized)/(Subject to AMT)/ (Meredian Bank
BPA), Optional Tender 3/1/95 NR(1) 2,320,000
-----------------------------------------------------
3,000,000 Dakota County, Washington County & Anoka City, MN,
Housing & Redevelopment Authority, 3.25% Annual TOBs
(Custodial Receipts)/(Series 1988)/(GNMA
Collateralized)/(Subject to AMT)/(Meredian Bank BPA),
Optional Tender 3/1/95 NR(1) 3,000,000
-----------------------------------------------------
3,500,000 Eagan, MN, Multi-Family Housing Weekly VRDNs (Series
1992A)/(Cinnamon Ridge)/(Mellon Bank N.A. LOC) VMIG1 3,500,000
-----------------------------------------------------
229,534 Eden Prairie, MN, IDA Weekly VRDNs
(Series 1987)/(Minnesota Supply Company)/
(Norwest Bank Minnesota LOC) P-1 229,534
-----------------------------------------------------
880,000 Eden Prairie, MN, IDR #S-93 Weekly VRDNs
(Richard W. Cohen)/(Norwest Bank Minnesota LOC) P-1 880,000
-----------------------------------------------------
1,300,000 Elk River, MN, Weekly VRDNs (Tescom Corp. Project)/
(Norwest Bank Minnesota LOC)/(Subject to AMT) P-1 1,300,000
-----------------------------------------------------
</TABLE>
MINNESOTA MUNICIPAL CASH TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ---------- ----------------------------------------------------- -------- ------------
<C> <C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------
$5,000,000 Fairbault, MN, IDA Weekly VRDNs (Series 1988)/(Jerome
Foods, Inc.)/(Norwest Bank Minnesota LOC) P-1 $ 5,000,000
-----------------------------------------------------
2,500,000 Hubbard County, MN, Solid Waste Disposal Weekly VRDNs
(Series 1990)/(Potlatch Corp.)/(Credit Suisse
LOC)/(Subject to AMT) A-1+ 2,500,000
-----------------------------------------------------
4,000,000 Maple Grove, MN, IDA Weekly VRDNs (Series
1991A)/(Eagle Ridge Apartment)/(Sumitomo Bank Ltd.
LOC) A-1 4,000,000
-----------------------------------------------------
3,000,000 Maple Grove, MN, Weekly VRDNs (Series 1991B)/(Eagle
Ridge Apartment)/(First Bank N.A. LOC) A-1 3,000,000
-----------------------------------------------------
2,025,000 Maplewood, MN, Multi-Family Housing Weekly VRDNs
(Series 1993)/(Silver Ridge)/(Federal Home Loan Bank
of Chicago LOC) A-1+ 2,025,000
-----------------------------------------------------
2,670,000 Mendota Heights, MN, Multi Family Revenue Bonds
Weekly VRDNs (Lexington Heights Apartments)/
(Sumitomo Bank Ltd. LOC) A-1 2,670,000
-----------------------------------------------------
1,500,000 Minneapolis, MN, 5.25% GO Bonds (Escrowed in
Treasuries), 11/1/94 NR(1) 1,500,000
-----------------------------------------------------
730,000 Minneapolis, MN, IDA Weekly VRDNs (JTJ Company)/
(First Bank N.A. LOC) P-1 730,000
-----------------------------------------------------
3,000,000 Minneapolis, MN, Special School District #1, 3.75% GO
Serial Bonds 2/1/95 NR(2) 3,002,539
-----------------------------------------------------
1,450,000 Minneapolis, MN, Weekly VRDNs (Series 1989)/(MT.
Sinai Medical Building Association)/(Norwest Bank
Minnesota LOC) A-1+ 1,450,000
-----------------------------------------------------
2,410,000 Minnesota State Aid Anticipation Pooled Borrowing
Program, 4.05% RANs GO Aid Anticipation Certificates
(Series 1994H)/(State of Minnesota Guaranty), 9/22/95 NR(2) 2,410,000
-----------------------------------------------------
</TABLE>
MINNESOTA MUNICIPAL CASH TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ---------- ----------------------------------------------------- -------- ------------
<C> <C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------
$2,000,000 Minnesota State Commissioner of Iron
Range Resources &
Rehabilitation Weekly VRDNs (Series 1991)/(Louisiana
Pacific Corp.)/(Wachovia Bank & Trust Co. LOC) P-1 $ 2,000,000
-----------------------------------------------------
4,165,000 Minnesota State HFA, 2.60% Annual TOBs (Series 1993)/
(Societe Generale, Paris LOC)/(Subject to AMT),
Mandatory Tender 1/12/95 A-1 4,165,000
-----------------------------------------------------
4,500,000 Minnesota State Higher Education Coordinating Board
Weekly VRDNs (Series 1992A)/(Supplemental Student
Loan Program)/(First Bank BPA)/(Subject to AMT) VMIG1 4,500,000
-----------------------------------------------------
6,000,000 Minnesota State Higher Education Coordinating Board
Weekly VRDNs (Series 1993)/(Supplemental Student Loan
Program)/(First Bank BPA)/(Subject to AMT) VMIG1 6,000,000
-----------------------------------------------------
7,000,000 Minnesota State Higher Education Coordinating Board
Weekly VRDNs (Series 1992B)/(Student Loan Program)/
(First Bank BPA)/(Subject to AMT) VMIG1 7,000,000
-----------------------------------------------------
6,500,000 Minnesota State Higher Education Coordinating Board
Weekly VRDNs (Series 1992C)/(Student Loan Program)/
(First Bank BPA)/(Subject to AMT) VMIG1 6,500,000
-----------------------------------------------------
5,870,000 Minnesota State Higher Education Facility Authority
Weekly VRDNs (Supplemental Student Loan Program)/
(Mitsubishi Bank Ltd. LOC) VMIG1 5,870,000
-----------------------------------------------------
1,120,000 (a) Minnesota State Weekly VRDNs P-Floats
(Merrill Lynch Capital Services BPA) VMIG1 1,120,000
-----------------------------------------------------
1,000,000 Minnesota State 8.20% GO Bonds (Prerefunded), 8/1/95 NR(1) 1,030,530
-----------------------------------------------------
3,700,000 Minnetonka, MN, Multi-Family Housing Revenue Bonds
Weekly VRDNs (Cliffs at Ridgedale)/(Citibank N.A.
LOC) A-1 3,700,000
-----------------------------------------------------
2,160,000 Moorehead, MN, ISD, 2.96% GO TANs
(State of Minnesota Guaranty), 3/24/95 NR(2) 2,160,079
-----------------------------------------------------
1,300,000 New Brighton, MN, IDR Weekly VRDNs (Unicare Home,
Inc.)/(Banque Paribas LOC) A-1 1,300,000
-----------------------------------------------------
</TABLE>
MINNESOTA MUNICIPAL CASH TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ---------- ----------------------------------------------------- -------- ------------
<C> <C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------
$1,000,000 New Hope, MN, IDRB Weekly VRDNs (Series 1994)/
(Gaines & Hanson Printing Company, Inc.)/(Norwest
Bank Minnesota LOC)/(Subject to AMT) A-1+ $ 1,000,000
-----------------------------------------------------
4,000,000 New Hope, MN, Weekly VRDNs (Paddock Labs)/ (Norwest
Bank Minnesota LOC)/(Subject to AMT) P-1 4,000,000
-----------------------------------------------------
3,300,000 Perham, MN, IDA Weekly VRDNs (Land' O Lakes, Inc.)/
(Rabobank Nederland LOC)/(Subject to AMT) A-1+ 3,300,000
-----------------------------------------------------
1,420,000 Plymouth, MN, Weekly VRDNs (Nuaire, Inc.)/(Norwest
Bank Minnesota LOC)/(Subject to AMT) P-1 1,420,000
-----------------------------------------------------
1,945,000 Port of Austin, MN, Weekly VRDNs (Mower House Color
Co.)/(Norwest Bank Minnesota LOC)/(Subject to AMT) P-1 1,945,000
-----------------------------------------------------
1,200,000 Prior Lake, MN, ISD #719, 3.28% TANs (Series 1994A),
3/29/95 NR 1,200,141
-----------------------------------------------------
1,000,000 Rochester, MN, Health Care Facility Authority Weekly
VRDNs (Mayo Clinic Foundation) VMIG1 1,000,000
-----------------------------------------------------
4,000,000 Rochester, MN, Health Care Facility Authority Weekly
VRDNs (Mayo Clinic Foundation) VMIG1 4,000,000
-----------------------------------------------------
5,200,000 Rochester, MN, Health Care Facility Authority, 3.50%
CP (Series C)/(Mayo Clinic Foundation), Mandatory
Tender 1/12/95 A-1+ 5,200,000
-----------------------------------------------------
5,920,000 Rochester, MN, ISD #535, 4.125% GO RANs, 9/7/95 NR(1) 5,923,620
-----------------------------------------------------
1,500,000 Rogers, MN, IDA Weekly VRDNs (Metal Sales
Manufacturing Corp.)/(Union Bank of Switzerland
LOC)/(Subject to AMT) P-1 1,500,000
-----------------------------------------------------
3,500,000 Rosemount, MN, PCR Weekly VRDNs (Series 1984)/ (Koch
Refining Co. Guaranty) A-1+ 3,500,000
-----------------------------------------------------
12,000,000 Saint Cloud, MN, Hospital Facility Authority Weekly
VRDNs (Series 1990A)/(St. Cloud Hospital)/
(Kredeitbank N.V. LOC) A-1+ 12,000,000
-----------------------------------------------------
</TABLE>
MINNESOTA MUNICIPAL CASH TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ---------- ----------------------------------------------------- -------- ------------
<C> <C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------
$ 300,000 Saint Louis Park, MN, GO Weekly VRDNs
(Series 1987C) VMIG1 $ 300,000
-----------------------------------------------------
4,600,000 Saint Paul Port Authority, MN, Tax Increment Weekly
VRDNs (Series 1991)/(First Bank N.A. LOC) A-1 4,600,000
-----------------------------------------------------
5,000,000 Saint Paul, MN, Housing & Redevelopment Authority
Weekly VRDNs (District Cooling, Inc.)(Credit Local de
France LOC)/(Subject to AMT) A-1+ 5,000,000
-----------------------------------------------------
4,450,000 Saint Paul, MN, Housing & Redevelopment Authority
Weekly VRDNs (Series 1994)/(Minnesota Children's
Museum)/(First Bank N.A. LOC) A-1 4,450,000
-----------------------------------------------------
500,000 Saint Paul, MN, Housing & Redevelopment Authority
Weekly VRDNs (United Way)/(First Bank N.A. LOC) A-1 500,000
-----------------------------------------------------
15,000,000 Saint Paul, MN, ISD #625, 3.25% TANs (Series 1994A),
3/1/95 NR(2) 15,026,473
-----------------------------------------------------
6,000,000 Shakopee, MN, Hospital Finance Authority Weekly VRDNs
(St. Francis Regional Medical Center)/(Citibank N.A.
LOC) A-1 6,000,000
-----------------------------------------------------
1,500,000 Shakopee, MN, ISD #720, 3.29% TANS (Series 1994),
3/30/95 NR 1,500,233
-----------------------------------------------------
5,000,000 University of Minnesota, 3.30% CP (Series H)/(Regents
of University of Minnesota), Mandatory Tender
11/10/94 A-1+ 5,000,000
-----------------------------------------------------
6,500,000 University of Minnesota, 3.60% Semi-Annual TOBs
(Series F), Optional Tender 2/1/95 VMIG1 6,500,000
-----------------------------------------------------
10,000,000 Washington County, MN, Housing & Redevelopment
Authority Weekly VRDNs (Series 90)/(Granada Pond
Apartments)/(Sumitomo Bank Ltd. LOC) A-1 10,000,000
-----------------------------------------------------
</TABLE>
MINNESOTA MUNICIPAL CASH TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ---------- ----------------------------------------------------- -------- ------------
<C> <C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------
$1,350,000 Wells, MN, 3.875% Semi-Annual TOBs (Stokely USA,
Inc.)/(National Bank of Detroit N.A. LOC)/
(Subject to AMT), Mandatory Tender 12/1/94 P-1 $ 1,350,000
-----------------------------------------------------
5,580,000 White Bear, MN, Weekly VRDNs (Thermoform
Plastics, Inc.)/(Norwest Bank Minnesota LOC)/
(Subject to AMT) A-1+ 5,580,000
-----------------------------------------------------
2,500,000 Willmar, MN, ISD #347, 4.12% RANs GO Aid Anticipation
Certificates of Indebtedness (Series 1994B)/ (State
of Minnesota Guaranty), 9/28/95 NR(2) 2,500,431
-----------------------------------------------------
2,000,000 Winsted, MN, IDA Weekly VRDNs (Sterner Lighting
Systems)/(Fleet National Bank LOC)/(Subject to AMT) A-1 2,000,000
----------------------------------------------------- ------------
TOTAL INVESTMENTS, AT AMORTIZED COST $252,973,872+
----------------------------------------------------- ------------
</TABLE>
(a) Denotes a restricted security which is subject to resale under Federal
Securities laws. This security has been determined to be liquid under
criteria established by the Board of Trustees.
* See Notes to Portfolio of Investments on page 13. Current credit ratings are
unaudited.
+ Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($254,038,679) at October 31, 1994.
MINNESOTA MUNICIPAL CASH TRUST
- --------------------------------------------------------------------------------
The following abbreviations are used in this portfolio:
<TABLE>
<S> <C>
AMT -- Alternative Minimum Tax
BPA -- Bond Purchase Agreement
CP -- Commercial Paper
GNMA -- Government National Mortgage Association
GO -- General Obligation
HFA -- Housing Finance Authority/Agency
IDA -- Industrial Development Authority
IDB -- Industrial Development Bond
IDR -- Industrial Development Revenue
IDRB -- Industrial Development Revenue Bonds
ISD -- Independent School District
LOC -- Letter of Credit
NRUCFC -- National Rural Utilities Cooperative Finance Corporation
PCR -- Pollution Control Revenue
RANs -- Revenue Anticipation Notes
TANs -- Tax Anticipation Notes
TOBs -- Tender Option Bonds
VRDNs -- Variable Rate Demand Notes
</TABLE>
(See Notes which are an integral part of the Financial Statements)
MINNESOTA MUNICIPAL CASH TRUST
NOTES TO PORTFOLIO OF INVESTMENTS
(UNAUDITED)
- --------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL OBLIGATION RATINGS
STANDARD & POOR'S RATINGS GROUP
A S&P 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 ratings 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 & POOR'S RATINGS GROUP
S&P 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
long-term and 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 as 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 & POOR'S RATINGS GROUP
A S&P 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 highest category indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong
safety characteristics are denoted with a plus (+) sign designation.
A-2 Capacity for timely payment on issues with this designation is satisfactory.
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. Prime-1
repayment capacity will normally be evidenced by the following
characteristics: leading market positions in well established industries,
high rates of return on funds employed, conservative capitalization
structure with moderate reliance on debt and ample asset protection, broad
margins in earning coverage of fixed financial charges and high internal
cash generation, well-established access to a range of financial markets and
assured sources of alternate liquidity.
P-2 Issuers rated PRIME-2 (or related supporting institutions) have a strong
capacity for repayment of short-term promissory obligations. This will
normally be evidenced by many of the characteristics cited above, but to a
lesser degree. Earnings trends and coverage ratios, while sound, will be
more subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.
LONG-TERM DEBT RATINGS
STANDARD & POOR'S RATINGS GROUP
AAA Debt rated "AAA" has the highest rating assigned by S&P. 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 highest 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.
MOODY'S INVESTORS SERVICE, INC.
AAA Bonds that 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 edged." Interest payments are protected by a large or by
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes is can be
visualized are most unlikely to impair the fundamentally strong position
of such issues.
AA Bonds that 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 that 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.
NR indicates that both the bonds and the obligor or credit enhancer are not
currently rated by S&P or Moody's 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 S&P or "Aaa" by Moody's.
NR(2) The underlying issuer/obligor/guarantor has other outstanding debt rated
"AA" by S&P or "Aa" Moody's.
NR(3) The underlying issuer/obligor/guarantor has other outstanding debt rated
"A" by S&P or Moody's.
MINNESOTA MUNICIPAL CASH TRUST
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -------------------------------------------------------------------------------
Investments, in securities, at amortized cost and value $252,973,872
- -------------------------------------------------------------------------------
Cash 591,574
- -------------------------------------------------------------------------------
Interest receivable 1,509,061
- -------------------------------------------------------------------------------
Receivable for Fund shares sold 19,051
- -------------------------------------------------------------------------------
Deferred expenses 3,502
- ------------------------------------------------------------------------------- ------------
Total assets 255,097,060
- -------------------------------------------------------------------------------
LIABILITIES:
- -------------------------------------------------------------------------------
Payable for Fund shares redeemed $544,462
- --------------------------------------------------------------------
Dividends payable 395,818
- --------------------------------------------------------------------
Accrued expenses 118,101
- -------------------------------------------------------------------- --------
Total liabilities 1,058,381
- ------------------------------------------------------------------------------- ------------
NET ASSETS for 254,038,679 shares of beneficial interest outstanding $254,038,679
- ------------------------------------------------------------------------------- ------------
NET ASSET VALUE, Offering Price, and Redemption Proceeds Per Share:
- -------------------------------------------------------------------------------
Institutional Shares ($159,703,946 / 159,703,946 shares of
beneficial interest outstanding) $1.00
- ------------------------------------------------------------------------------- ------------
Cash Series Shares ($94,334,733 / 94,334,733 shares of beneficial
interest outstanding) $1.00
- ------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
MINNESOTA MUNICIPAL CASH TRUST
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ------------------------------------------------------------------------------------
Interest income $7,331,414
- ------------------------------------------------------------------------------------
EXPENSES:
- ------------------------------------------------------------------------------------
Investment advisory fee $1,025,614
- ----------------------------------------------------------------------
Administrative personnel and services 249,373
- ----------------------------------------------------------------------
Custodian and portfolio accounting fees 109,699
- ----------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 92,010
- ----------------------------------------------------------------------
Fund share registration costs 92,846
- ----------------------------------------------------------------------
Shareholder services fee 137,111
- ----------------------------------------------------------------------
Trustees' fees 3,840
- ----------------------------------------------------------------------
Auditing fees 15,631
- ----------------------------------------------------------------------
Legal fees 12,966
- ----------------------------------------------------------------------
Printing and postage 28,358
- ----------------------------------------------------------------------
Distribution services fee 402,958
- ----------------------------------------------------------------------
Insurance premiums 9,847
- ----------------------------------------------------------------------
Miscellaneous 9,941
- ---------------------------------------------------------------------- ----------
Total expenses 2,190,194
- ----------------------------------------------------------------------
Deduct--
- ----------------------------------------------------------------------
Waiver of investment advisory fee $868,068
- -----------------------------------------------------------
Waiver of distribution services fee 217,702 1,085,770
- ----------------------------------------------------------- -------- ----------
Net expenses 1,104,424
- ------------------------------------------------------------------------------------ ----------
Net investment income $6,226,990
- ------------------------------------------------------------------------------------ ----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
MINNESOTA MUNICIPAL CASH TRUST
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
------------------------------
1994 1993
------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- --------------------------------------------------------------
OPERATIONS--
- --------------------------------------------------------------
Net investment income $ 6,226,990 $ 6,180,605
- -------------------------------------------------------------- ------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS--
- --------------------------------------------------------------
Dividends to shareholders from net investment income:
- --------------------------------------------------------------
Institutional Shares (4,475,720) (4,723,866)
- --------------------------------------------------------------
Cash Series Shares (1,751,270) (1,456,739)
- -------------------------------------------------------------- ------------- -------------
Change in net assets from distributions to shareholders (6,226,990) (6,180,605)
- -------------------------------------------------------------- ------------- -------------
FUND SHARE (PRINCIPAL) TRANSACTIONS--
- --------------------------------------------------------------
Net proceeds from sale of shares 931,933,710 856,352,639
- --------------------------------------------------------------
Net asset value of shares issued to shareholders
in payment of dividends declared 1,945,475 1,606,041
- --------------------------------------------------------------
Cost of shares redeemed (913,227,051) (944,784,209)
- -------------------------------------------------------------- ------------- -------------
Change in net assets resulting from Fund share
transactions 20,652,134 (86,825,529)
- -------------------------------------------------------------- ------------- -------------
Change in net assets 20,652,134 (86,825,529)
- --------------------------------------------------------------
NET ASSETS:
- --------------------------------------------------------------
Beginning of period 233,386,545 320,212,074
- -------------------------------------------------------------- ------------- -------------
End of period $ 254,038,679 $ 233,386,545
- -------------------------------------------------------------- ------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
MINNESOTA MUNICIPAL CASH TRUST
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
------------------------------------------------
1994 1993 1992 1991 1990*
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00
- ------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------------
Net investment income 0.03 0.02 0.03 0.05 0.01
- ------------------------------------------
LESS DISTRIBUTIONS
- ------------------------------------------
Dividends to shareholders from net
investment income (0.03) (0.02) (0.03) (0.05) (0.01)
- ------------------------------------------ ----- ----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00
- ------------------------------------------ ----- ----- ----- ----- -----
TOTAL RETURN** 2.58% 2.43% 3.19% 4.89% 0.90%
- ------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------------
Expenses 0.31% 0.31% 0.31% 0.30% 0.01%(b)
- ------------------------------------------
Net investment income 2.55% 2.40% 3.10% 4.73% 6.45%(b)
- ------------------------------------------
Expense waiver/reimbursement (a) 0.34% 0.34% 0.33% 0.43% 0.69%(b)
- ------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------
Net assets, end of period (000 omitted) $159,704 $165,865 $245,168 $124,603 $75,904
- ------------------------------------------
</TABLE>
* Reflects operations for the period from September 10, 1990 (date of initial
public investment) to October 31, 1990.
** Based on net asset value, which does not reflect the sales load or contingent
deferred sales charge, if applicable.
(a) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(b) Computed on an annualized basis.
(See Notes which are an integral part of the Financial Statements)
MINNESOTA MUNICIPAL CASH TRUST
FINANCIAL HIGHLIGHTS--CASH SERIES SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
-----------------------------------
1994 1993 1992 1991*
----- ----- ----- -----
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00
- ------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------------------------
Net investment income 0.02 0.02 0.03 0.04
- ------------------------------------------------------
LESS DISTRIBUTIONS
- ------------------------------------------------------
Dividends to shareholders from net investment income (0.02) (0.02) (0.03) (0.04)
- ------------------------------------------------------ ----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00
- ------------------------------------------------------ ----- ----- ----- -----
TOTAL RETURN** 2.17% 2.02% 2.78% 3.60%
- ------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------------------------
Expenses 0.71% 0.71% 0.71% 0.64%(b)
- ------------------------------------------------------
Net investment income 2.15% 2.01% 2.75% 4.11%(b)
- ------------------------------------------------------
Expense waiver/reimbursement (a) 0.61% 0.44% 0.44% 0.59%(b)
- ------------------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------------------
Net assets, end of period (000 omitted) $94,335 $67,521 $75,044 $69,747
- ------------------------------------------------------
</TABLE>
* Reflects operations for the period from January 7, 1991 (date of initial
public investment) to October 31, 1991.
** Based on net asset value, which does not reflect the sales load or contingent
deferred sales charge, if applicable.
(a) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(b) Computed on an annualized basis.
(See Notes which are an integral part of the Financial Statements)
MINNESOTA MUNICIPAL CASH TRUST
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1994
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Federated Municipal Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "Act"), as an open-end, management
investment company. The Trust consists of thirteen non-diversified portfolios.
The financial statements included herein are only those of Minnesota Municipal
Cash Trust (the "Fund"). The financial statements of the other portfolios are
presented separately. The assets of each portfolio are segregated and a
shareholder's interest is limited to the portfolio in which shares are held. The
Fund offers two classes of shares, Institutional Shares and Cash Series Shares.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
<TABLE>
<S> <C>
A. INVESTMENT VALUATIONS--The Fund's use of the amortized cost method to value its portfolio
securities is in accordance with Rule 2a-7 under the Act.
B. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses are accrued
daily. Bond premium and discount, if applicable, are amortized as required by the
Internal Revenue Code, as amended (the "Code"). Distributions to shareholders are
recorded on the ex-dividend date.
C. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the Code
applicable to regulated investment companies and to distribute to shareholders each year
substantially all of its tax-exempt income. Accordingly, no provisions for federal tax
are necessary.
D. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in when-issued or
delayed delivery transactions. The Fund records when-issued securities on the trade date
and maintains security positions such that sufficient liquid assets will be available to
make payment for the securities purchased. Securities purchased on a when-issued or
delayed delivery basis are marked to market daily and begin earning interest on the
settlement date.
E. CONCENTRATION OF CREDIT RISK--Since the Fund invests a substantial portion of its assets
in issuers located in one state, it will be more susceptible to factors adversely
affecting issuers of that state than would be a comparable general tax-exempt mutual
fund. In order to reduce the credit risk associated with such factors, at October 31,
1994, 67.7% of the securities in the portfolio of investments are backed by letters of
credit or bond insurance of various financial institutions and financial guaranty
assurance agencies. The value of investments insured by or supported (backed) by a letter
of credit for any one institution or agency did not exceed 9.9% of total investments.
</TABLE>
MINNESOTA MUNICIPAL CASH TRUST
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
F. DEFERRED EXPENSES--The costs incurred by the Fund with respect to registration of its
shares in its first fiscal year, excluding the initial expense of registering the shares,
have been deferred and are being amortized using the straight-line method not to exceed a
period of five years from the Fund's commencement date.
G. RESTRICTED SECURITIES--Restricted securities are securities that may only be resold upon
registration under Federal securities laws or in transactions exempt from such
registration. Many restricted securities may be resold in the secondary market in
transactions exempt from registration. In some cases, the restricted securities may be
resold without registration upon exercise of a demand feature. Such restricted securities
may be determined to be liquid under criteria established by the Board of Trustees (the
"Trustees"). Restricted securities are valued at amortized cost in accordance with Rule
2a-7 under the Act. Additional information on each restricted security held at October
31, 1994 is as follows:
</TABLE>
<TABLE>
<CAPTION>
ACQUISITION ACQUISITION
SECURITY DATE COST
------------------------------------------------------- ------------- ------------
<S> <C> <C>
Minnesota State Weekly VRDNs 10/4/93 $1,120,000
H. OTHER--Investment transactions are accounted for on the trade date.
</TABLE>
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares. At October 31, 1994, capital paid-in aggregated $254,038,679.
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
-----------------------------
INSTITUTIONAL SHARES 1994 1993
- --------------------------------------------------------------- ------------ ------------
<S> <C> <C>
Shares sold 554,305,186 610,443,315
- ---------------------------------------------------------------
Shares issued to shareholders in payment of dividends declared 266,557 190,482
- ---------------------------------------------------------------
Shares redeemed (560,732,943) (689,936,437)
- --------------------------------------------------------------- ------------ ------------
Net change resulting from Institutional Share transactions (6,161,200) (79,302,640)
- --------------------------------------------------------------- ------------ ------------
</TABLE>
MINNESOTA MUNICIPAL CASH TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
-----------------------------
CASH SERIES SHARES 1994 1993
- --------------------------------------------------------------- ------------ ------------
<S> <C> <C>
Shares sold 377,628,524 245,909,324
- ---------------------------------------------------------------
Shares issued to shareholders in payment of dividends declared 1,678,918 1,415,559
- ---------------------------------------------------------------
Shares redeemed (352,494,108) (254,847,772)
- --------------------------------------------------------------- ------------ ------------
Net change resulting from Cash Series Share transactions 26,813,334 (7,522,889)
- --------------------------------------------------------------- ------------ ------------
Net change resulting from Fund Share transactions 20,652,134 (86,825,529)
- --------------------------------------------------------------- ------------ ------------
</TABLE>
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Management, the Fund's investment adviser
(the "Adviser"), receives for its services an annual investment advisory fee
equal to .40 of 1% of the Fund's average daily net assets. The Adviser may
voluntarily choose to waive its fee and reimburse certain operating expenses of
the Fund. The Adviser can modify or terminate this voluntary waiver and
reimbursement at any time at its sole discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Fund
with administrative personnel and services. Prior to March 1, 1994, these
services were provided at approximate cost. Effective March 1, 1994, the FAS fee
is based on the level of average aggregate daily net assets of all funds advised
by subsidiaries of Federated Investors for the period. The administrative fee
received during the period of the Administrative Services Agreement shall be at
least $125,000 per portfolio and $30,000 per each additional class of shares.
DISTRIBUTION AND SHAREHOLDER SERVICES FEE--The Fund has adopted a Distribution
Plan (the "Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the
Plan, the Fund will compensate Federated Securities Corp. ("FSC"), the principal
distributor, from the net assets of the Fund to finance activities intended to
result in the sale of the Fund's Cash Series Shares. The Plan provides that the
Fund may incur distribution expenses up to .50 of 1% of the average daily net
assets of the Cash Series Shares, annually, to compensate FSC.
Under the terms of a Shareholder Services Agreement with Federated Shareholder
Services ("FSS"), the Fund will pay FSS up to .25 of 1% of average net assets of
each class of shares for the period. This fee is to obtain certain personal
services for shareholders and to maintain shareholder accounts. For the fiscal
year ended October 31, 1994, Institutional Shares did not incur a shareholder
services fee.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES--Federated Services Company
("FServ") serves as transfer agent and dividend disbursing agent for the Fund.
The FServ fee is based on the size, type, and number of accounts and
transactions made by shareholders.
ORGANIZATIONAL EXPENSES--Organizational expenses ($40,733) were borne initially
by the Adviser. The Fund has agreed to reimburse the Adviser for the
organizational expenses and start-up administra-
MINNESOTA MUNICIPAL CASH TRUST
- --------------------------------------------------------------------------------
tive expenses during the five year period following August 31, 1990 (date the
Fund first became effective). For the year ended October 31, 1994, the Fund paid
$13,252, pursuant to this agreement.
INTERFUND TRANSACTIONS--During the year ended October 31, 1994, the Fund engaged
in purchase and sale transactions with other affiliated funds at current value
pursuant to Rule 17a-7 under the Act amounting to $441,550,000 and $399,530,000,
respectively.
Certain of the Officers and Trustees of the Trust are Officers and Directors or
Trustees of the above companies.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
FEDERATED MUNICIPAL TRUST
(Minnesota Municipal Cash Trust):
We have audited the accompanying statement of assets and liabilities of
Minnesota Municipal Cash Trust (an investment portfolio of Federated Municipal
Trust, a Massachusetts business trust), including the schedule of portfolio
investments, as of October 31, 1994, the related statement of operations for the
year then ended, the statement of changes in net assets for each of the two
years in the period then ended, and the financial highlights for the periods
presented. These financial statements and financial highlights are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1994, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Minnesota Municipal Cash Trust (an investment portfolio of Federated Municipal
Trust) as of October 31, 1994, and the results of its operations for the year
then ended, the changes in its net assets for each of the two years in the
period then ended, and the financial highlights for the periods presented, in
conformity with generally accepted accounting principles.
Pittsburgh, Pennsylvania ARTHUR ANDERSEN LLP
December 14, 1994
<TABLE>
<S> <C>
TRUSTEES OFFICERS
- --------------------------------------------------------------------------------
John F. Donahue John F. Donahue
John T. Conroy, Jr. Chairman
William J. Copeland Glen R. Johnson
James E. Dowd President
Lawrence D. Ellis, M.D. J. Christopher Donahue
Edward L. Flaherty, Jr. Vice President
Glen R. Johnson Richard B. Fisher
Peter E. Madden Vice President
Gregor F. Meyer Edward C. Gonzales
Wesley W. Posvar Vice President and Treasurer
Marjorie P. Smuts John W. McGonigle
Vice President and Secretary
David M. Taylor
Assistant Treasurer
G. Andrew Bonnewell
Assistant Secretary
</TABLE>
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risk,
including possible loss of principal. Although money market funds seek to
maintain a stable net asset value of $1.00 per share, there is no assurance that
they will be able to do so.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Fund's prospectus which contains facts concerning
its objective and policies, management fees, expenses and other information.
- --------------------------------------------------------------------------------
NEW JERSEY
- --------------------------------------------------------------------------------
MUNICIPAL
- --------------------------------------------------------------------------------
CASH
- --------------------------------------------------------------------------------
TRUST
- --------------------------------------------------------------------------------
ANNUAL REPORT
TO SHAREHOLDERS
October 31, 1994
FEDERATED SECURITIES CORP.
(LOGO) --------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
314229600
314229709
G00203-01 (12/94)
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the Annual Report to Shareholders for New Jersey
Municipal Cash Trust (the "Fund"), a portfolio of Federated Municipal Trust, for
the 12-month period ended October 31, 1994. The Fund consists of two classes of
shares known as Institutional Shares and Institutional Service Shares. The
report begins with an interview with portfolio manager Jeff Kozemchak about
economic factors affecting the Fund, followed by the Fund's Portfolio of
Investments and Financial Statements. In addition, Financial Highlights tables
have been included for Institutional Shares and Institutional Service Shares.
The Fund gives New Jersey residents two ways to pursue tax-free income--its
earnings are exempt from federal regular income tax and New Jersey personal
income tax.* Its portfolio includes high-quality, short-term New Jersey
municipal securities of more than 20 issuers that use municipal bond financing
for projects as varied as housing, industrial development, education, and health
care.
During the report period, the Fund paid shareholders a total of $2.2 million in
dividends, or $0.02 per share. At the end of the report period, the Fund's net
assets stood at $99.7 million.
As a wise investor, you can count on the Fund to ease your tax burden by
pursuing competitive tax-free yields--with the additional advantages of daily
liquidity and stability of principal.**
Thank you for your confidence in New Jersey Municipal Cash Trust. We welcome
your comments and suggestions.
Sincerely,
Glen R. Johnson
President
December 15, 1994
* Income may be subject to the federal alternative minimum tax.
** No money market fund can guarantee that a stable net asset value will be
maintained. An investment in the Fund is neither insured nor guaranteed by
the U.S. government.
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
An Interview with Fund Portfolio Manager Jeff A. Kozemchak
Q Recently, there has been a lot of concern, as well as press coverage, about
the subject of derivatives. What are derivatives?
A The term "derivative" has been applied to many different types of
investments. In the context of money market funds, derivatives generally
refer to adjustable rate securities designed for spec-
ulation on changes in interest rates. These speculative derivatives provide
above-market yields when interest rates fall or remain stable, or when the yield
curve is steep. They provide below-market yields, however, when interest rates
rise or become more volatile, or when the yield curve flattens. All three of
these latter conditions occurred in 1994. As a result, many of these speculative
securities lost a significant part of their value, enough to threaten the $1.00
per share price of some money market funds.
It is important to distinguish these speculative derivatives from adjustable
rate securities that are indexed to money market interest rates. These indexed
securities are designed to track changes in market rates, and should approximate
their par value in reasonably foreseeable market conditions. Tax-exempt money
market funds like the Fund have the right to tender many of these securities for
purchase at their par value. Money market funds have used these securities for
decades, through several interest rate cycles, without jeopardizing their stable
net asset values.
Q Do Federated Investors' money market funds invest in the derivatives that
have been in the headlines recently?
A No. None of Federated Investors' money market funds has invested in any of
the types of derivatives that have been in the headlines lately. Our mutual
funds only invest in adjustable rate securities that track changes in money
market interest rates.
With respect to speculative derivatives, we determined from the outset that the
potential volatility of these securities was contrary to the intent of the rules
governing the use of variable rate securities by money market funds. We also
realized the potential for these securities to deviate significantly from par
and threaten the $1.00 per share price of a money market fund. We spoke out
against the use of these securities by money market funds at industry
conferences throughout 1993, when the securities still offered attractive
yields. Our views were vindicated when, in June, 1994, the Securities and
Exchange Commission sent a letter to the Investment Company Institute requiring
money market funds to divest themselves of these securities in an orderly
manner. This caused some investment advisers to buy these securities from their
funds.
- --------------------------------------------------------------------------------
Q What happened to short-term interest rates over the period covered by this
Annual Report?
A There was a dramatic shift in the monetary policy of the Federal Reserve
Board (the "Fed") during the 12-month reporting period that ended October
31, 1994.
Throughout the fourth quarter of 1993, the Fed kept the Federal funds rate (the
rate banks charge each other for overnight loans) steady at 3.00%, where it had
been for a year and a half. The Fed had maintained short-term interest rates at
these low levels in order to stimulate the economy. However, in early 1994,
reports began to show stronger than anticipated economic growth. Real gross
national product grew at a 7.00% annual rate in the fourth quarter of 1993, and
the national unemployment rate declined to 6.00%. Concerned that these factors
could lead to an increase in wages and prices, the Fed took the first step on
February 4, 1994, to fight future inflation by raising its Federal funds rate
target to 3.25%. Since then, the Fed has continued to be aggressive, moving the
Federal funds rate target upward five more times from 3.25% to 5.50%.
Q How did municipal money market yields react to these rate increases?
A Municipal money market interest rates followed the upward movement in
taxable rates but to a slightly lesser degree, as they are affected by
federal, state and local tax factors as well as market supply and demand
imbalances.
The Fund's yields have proven to be responsive to the increases in money market
rates. For the 12-month reporting period ended October 31, 1994, the Fund's
tax-free, annualized seven-day net yields increased from 2.11% and 2.01% to
2.85% and 2.75% for the Institutional Shares and Institutional Service Shares,
respectively.* At October 31, 1994, these seven-day yields were equivalent to
taxable yields of 5.05% (Institutional Shares) and 4.88% (Institutional Service
Shares) for those investors subject to the highest federal and state tax
brackets.** These numbers illustrate the Fund's attractiveness relative to
taxable investments.
* Performance quoted represents past performance and is not indicative of
future results. Yields will vary.
** These numbers assume that state income taxes are fully deductible in
computing federal income tax liability.
- --------------------------------------------------------------------------------
Q What is your outlook for the markets and the Fund?
A The economy continues to show surprising resilience to the Fed's attempts
to bring growth under control. We expect that the Fed will act again to
tighten monetary policy in the first quarter of 1995. At that point in
time, the Federal funds target could be as high as 6.50%. As a result, we plan
to maintain a conservative posture in the near future, while attempting to
maximize performance through ongoing relative value analysis. However, we will
continue to monitor changing economic and market developments so as to serve our
clients attracted to the short-term tax-exempt securities market. In this
environment, stable net asset value money market funds like the Fund will
continue to be an important component in preserving capital, and should reflect
rising short-term interest rates with increasing net yields.
NEW JERSEY MUNICIPAL CASH TRUST
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ----------- ------------------------------------------------------ --------- -----------
<C> <C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--99.2%
- -------------------------------------------------------------------------
$ 700,000 Atlantic County, NJ, Improvement Authority Weekly
VRDNs (Marine Midland Bank N.A. LOC) VMIG1 $ 700,000
------------------------------------------------------
1,750,000 Bordentown, NJ, Regional School District Board of
Education, 4.35% RANs, 6/30/95 NR(3) 1,753,328
------------------------------------------------------
2,700,000 Cape May County, NJ, Municipal Utilities Authority
Solid Waste Resource Recovery Revenue Bonds, 2.80%
Annual TOBs (Series 1991)/(Societe Generale, Paris
LOC)/(Subject to AMT), Mandatory Tender 11/30/94 SP-1+ 2,700,000
------------------------------------------------------
5,000,000 Cherry Hill, NJ, 3.00% BANs, 12/14/94 NR 5,001,314
------------------------------------------------------
3,148,239 Haddonfield, NJ, 4.12% BANs, 6/9/95 NR 3,152,254
------------------------------------------------------
463,307 Haddonfield, NJ, 4.16% BANs, 6/9/95 NR 464,004
------------------------------------------------------
3,000,000 Hamilton Township, NJ, 4.25% TANs, 12/15/94 NR(3) 3,003,591
------------------------------------------------------
1,113,750 Highland Park, NJ, 4.125% BANs, 2/15/95 MIG1 1,115,387
------------------------------------------------------
2,000,000 Hudson County, NJ, 4.55% BANs, 10/11/95 NR 2,002,703
------------------------------------------------------
3,322,025 Lawrence Township, NJ, 3.00% BANs, 2/10/95 NR 3,325,601
------------------------------------------------------
2,500,000 Mercer County, NJ, Improvement Authority Weekly VRDNs
(Credit Suisse LOC) A-1+ 2,500,000
------------------------------------------------------
1,500,000 Middlesex County, NJ, Pollution Control Finance
Authority Weekly VRDNs (FMC Corporation)/
(Wachovia Bank & Trust Co. N.A. LOC) P-1 1,500,000
------------------------------------------------------
3,000,000 New Jersey EDA Weekly VRDNs (Center for Aging,
Inc.)/(Banque Paribas LOC) A-1 3,000,000
------------------------------------------------------
2,400,000 New Jersey EDA Weekly VRDNs (Church & Dwight
Co.)/(Bank of Nova Scotia LOC) VMIG1 2,400,000
------------------------------------------------------
2,500,000 New Jersey EDA Weekly VRDNs (Franciscan Oaks)/
(Bank of Scotland LOC) A-1+ 2,500,000
------------------------------------------------------
</TABLE>
NEW JERSEY MUNICIPAL CASH TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ----------- ------------------------------------------------------ --------- -----------
<C> <C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- -------------------------------------------------------------------------
$ 5,698,000 New Jersey EDA Weekly VRDNs (Meridian
Healthcare)/(First National Bank of Maryland LOC)/
(Subject to AMT) P-1 $ 5,698,000
------------------------------------------------------
4,473,000 New Jersey EDA Weekly VRDNs (Mulins Machines)/
(Sovran Bank N.A. LOC) P-1 4,473,000
------------------------------------------------------
1,550,000 New Jersey EDA Weekly VRDNs (Nash Group)/
(Chemical Bank LOC)/(Subject to AMT) A-1 1,550,000
------------------------------------------------------
4,300,000 New Jersey EDA Weekly VRDNs (Series 1986)/
(Ridgefield Associates)/(Bank of Tokyo Ltd. LOC)/
(Subject to AMT) P-1 4,300,000
------------------------------------------------------
350,000 New Jersey EDA Weekly VRDNs (Series 1987G)/
(W.Y. Urban Renewal)/(National Westminster
Bank PLC LOC)/(Subject to AMT) VMIG1 350,000
------------------------------------------------------
2,400,000 New Jersey EDA Weekly VRDNs (Series 1988F)/
(Lamington Corners Association)/
(First Fidelity Bank LOC)/(Subject to AMT) VMIG1 2,400,000
------------------------------------------------------
1,310,000 New Jersey EDA Weekly VRDNs (Series 1992Q)/
(Physical Acoustics, Inc.)/(Banque Nationale de Paris
LOC)/(Subject to AMT) VMIG1 1,310,000
------------------------------------------------------
1,300,000 New Jersey EDA Weekly VRDNs (Series 1992Z)/
(West-Ward Pharmaceuticals)/(Banque Nationale de Paris
LOC)/(Subject to AMT) VMIG1 1,300,000
------------------------------------------------------
1,115,000 New Jersey EDA Weekly VRDNs (Series 1992D-1)/
(Danlin Corp.)/(Banque Nationale de Paris LOC)/
(Subject to AMT) VMIG1 1,115,000
------------------------------------------------------
2,465,000 New Jersey EDA Weekly VRDNs (Series 1992I-1)/
(Geshem Realty)/(Banque Nationale de Paris LOC)/
(Subject to AMT) VMIG1 2,465,000
------------------------------------------------------
1,940,000 New Jersey EDA Weekly VRDNs (Series 1992L)/(Kent Place
School)/(Banque Nationale de Paris LOC) VMIG1 1,940,000
------------------------------------------------------
</TABLE>
NEW JERSEY MUNICIPAL CASH TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ----------- ------------------------------------------------------ --------- -----------
<C> <C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- -------------------------------------------------------------------------
$ 1,250,000 New Jersey EDA Weekly VRDNs (Series 1993I)/(Holt
Hauling and Warehousing Systems)/(Meridan Bank
LOC)/(Subject to AMT) P-1 $ 1,250,000
------------------------------------------------------
1,500,000 New Jersey EDA Weekly VRDNs (United Jewish Community
Center of Bergen County)/(Bank of New York LOC) P-1 1,500,000
------------------------------------------------------
2,100,000 New Jersey EDA Weekly VRDNs (YM-MWHA of Bergen
County)/(Bank of New York LOC) VMIG1 2,100,000
------------------------------------------------------
1,500,000 New Jersey EDA, 3.65% CP (Series 1991)/(Chambers
Cogeneration L.P.)/(Swiss Bank Corp. LOC)/(Subject to
AMT), Mandatory Tender 2/17/95 A-1+ 1,500,000
------------------------------------------------------
3,000,000 New Jersey HFA, 3.40% Semi-Annual TOBs (Series
1992A)/(Citibank N.A. BPA), Optional Tender 11/1/94 NR(2) 3,000,000
------------------------------------------------------
820,000 New Jersey HFA, 3.90% Semi-Annual TOBs (MBIA Insured),
Optional Tender 4/1/95 NR(2) 820,000
------------------------------------------------------
3,030,000 New Jersey HFA, 4.00% Semi-Annual TOBs (Series
1989D)/(MBIA Insured)/(Subject to AMT), Optional
Tender 4/1/95 NR(2) 3,030,000
------------------------------------------------------
1,000,000 New Jersey Turnpike Authority Weekly VRDNs (Series
1991D)/(FGIC Insured) A-1+ 1,000,000
------------------------------------------------------
2,000,000 North Brunswick Township, NJ, 3.75% BANs, 2/9/95 NR(2) 2,001,598
------------------------------------------------------
1,750,000 North Brunswick Township, NJ, 4.00% TANs, 12/1/94 NR(2) 1,751,126
------------------------------------------------------
1,275,000 Oradell Borough, NJ, 4.24% BANs (Series 1994B),
8/17/95 NR 1,275,863
------------------------------------------------------
2,000,000 Pennsauken Township, NJ, 4.00% BANs, 1/10/95 NR 2,000,552
------------------------------------------------------
9,000,000 Port Authority of New York and New Jersey Weekly VRDNs
(Series 1991-4)/(Subject to AMT) P-1 9,000,000
------------------------------------------------------
</TABLE>
NEW JERSEY MUNICIPAL CASH TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ----------- ------------------------------------------------------ --------- -----------
<C> <C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- -------------------------------------------------------------------------
$ 2,000,000 Port Authority of New York and New Jersey Weekly VRDNs
(Series 3)/(KIAC Partners)/(Deutsche Bank AG
LOC)/(Subject to AMT) A-1+ $ 2,000,000
------------------------------------------------------
1,000,000 Salem County, NJ, PCA, 3.50% CP (Series
1988A)/(Philadelphia Electric Co.)/(FGIC Insured),
Mandatory Tender 1/24/95 A-1+ 1,000,000
------------------------------------------------------
2,000,000 Sussex Borough, NJ, 3.75% BANs, 2/27/95 NR(3) 2,002,494
------------------------------------------------------
1,639,000 Woodbury, NJ, 4.15% GO BANs, 4/15/95 NR 1,642,927
------------------------------------------------------ -----------
TOTAL INVESTMENTS, AT AMORTIZED COST $98,893,742+
------------------------------------------------------ -----------
</TABLE>
+ Also represents cost for federal tax purposes.
* See Notes to Portfolio of Investments on page 9. Current credit ratings are
unaudited.
Note: The categories of investments are shown as a percentage of net assets
($99,688,142) at October 31, 1994.
The following abbreviations are used in this portfolio:
<TABLE>
<S> <C> <C>
AMT -- Alternative Minimum Tax
BANs -- Bond Anticipation Notes
BPA -- Bond Purchase Agreement
CP -- Commercial Paper
EDA -- Economic Development Authority
FGIC -- Financial Guaranty Insurance Company
GO -- General Obligation
HFA -- Housing Finance Authority/Agency
LOC -- Letter of Credit
MBIA -- Municipal Bond Investors Assurance
PCA -- Pollution Control Authority
RANs -- Revenue Anticipation Notes
TANs -- Tax Anticipation Notes
TOBs -- Tender Option Bonds
VRDNs -- Variable Rate Demand Notes
</TABLE>
(See Notes which are an integral part of the Financial Statements)
NEW JERSEY MUNICIPAL CASH TRUST
NOTES TO PORTFOLIO OF INVESTMENTS
(UNAUDITED)
- --------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL OBLIGATION RATINGS
STANDARD & POOR'S RATINGS GROUP
A S&P 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 ratings 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 & POOR'S RATINGS GROUP
S&P 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
long-term and 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 as 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 & POOR'S RATINGS GROUP
A S&P 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 highest category indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong
safety characteristics are denoted with a plus (+) sign designation.
A-2 Capacity for timely payment on issues with this designation is satisfactory.
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. Prime-1
repayment capacity will normally be evidenced by the following
characteristics: leading market positions in well established industries,
high rates of return on funds employed, conservative capitalization
structure with moderate reliance on debt and ample asset protection, broad
margins in earning coverage of fixed financial charges and high internal
cash generation, well-established access to a range of financial markets and
assured sources of alternate liquidity.
P-2 Issuers rated PRIME-2 (or related supporting institutions) have a strong
capacity for repayment of short-term promissory obligations. This will
normally be evidenced by many of the characteristics, cited above, but to a
lesser degree. Earnings trends and coverage ratios, while sound, will be
more subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.
LONG-TERM DEBT RATINGS
STANDARD & POOR'S RATINGS GROUP
AAA Debt rated "AAA" has the highest rating assigned by S&P. 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 highest 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.
MOODY'S INVESTORS SERVICE, INC.
AAA Bonds that 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 edged." 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 that 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 that 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.
NR indicates that both the bonds and the obligor or credit enhancer are not
currently rated by S&P or Moody's 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 S&P or "Aaa" by Moody's.
NR(2) The underlying issuer/obligor/guarantor has other outstanding debt rated
"AA" by S&P or "Aa" Moody's.
NR(3) The underlying issuer/obligor/guarantor has other outstanding debt rated
"A" by S&P or Moody's.
NEW JERSEY MUNICIPAL CASH TRUST
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- --------------------------------------------------------------------------------
Investments in securities, at amortized cost and value $98,893,742
- --------------------------------------------------------------------------------
Cash 244,490
- --------------------------------------------------------------------------------
Interest receivable 777,247
- --------------------------------------------------------------------------------
Deferred expenses 11,451
- -------------------------------------------------------------------------------- -----------
Total assets 99,926,930
- --------------------------------------------------------------------------------
LIABILITIES:
- --------------------------------------------------------------------------------
Dividends payable $173,397
- ---------------------------------------------------------------------
Payable for Fund shares redeemed 8,046
- ---------------------------------------------------------------------
Accrued expenses 57,345
- --------------------------------------------------------------------- --------
Total liabilities 238,788
- -------------------------------------------------------------------------------- -----------
NET ASSETS for 99,688,142 shares of beneficial interest outstanding $99,688,142
- -------------------------------------------------------------------------------- -----------
NET ASSET VALUE, Offering Price, and Redemption Proceeds Per Share:
- --------------------------------------------------------------------------------
Institutional Shares ($62,983,664 / 62,983,664 shares of beneficial interest
outstanding) $1.00
- -------------------------------------------------------------------------------- -----------
Institutional Service Shares ($36,704,478 / 36,704,478 shares of beneficial
interest outstanding) $1.00
- -------------------------------------------------------------------------------- -----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
NEW JERSEY MUNICIPAL CASH TRUST
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- -----------------------------------------------------------------------------------
Interest Income $2,717,427
- -----------------------------------------------------------------------------------
EXPENSES:
- -----------------------------------------------------------------------------------
Investment advisory fee $390,387
- -----------------------------------------------------------------------
Administrative personnel and services 203,429
- -----------------------------------------------------------------------
Custodian and portfolio accounting fees 109,837
- -----------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 17,989
- -----------------------------------------------------------------------
Shareholder services fee--Institutional Shares 44,322
- -----------------------------------------------------------------------
Shareholder services fee--Institutional Service Shares 37,396
- -----------------------------------------------------------------------
Fund share registration costs 40,479
- -----------------------------------------------------------------------
Trustees' fees 2,829
- -----------------------------------------------------------------------
Auditing fees 15,666
- -----------------------------------------------------------------------
Legal fees 13,540
- -----------------------------------------------------------------------
Printing and postage 23,976
- -----------------------------------------------------------------------
Distribution services fee 23,471
- -----------------------------------------------------------------------
Insurance premiums 13,247
- -----------------------------------------------------------------------
Taxes 2,176
- -----------------------------------------------------------------------
Miscellaneous 7,796
- ----------------------------------------------------------------------- --------
Total expenses 946,540
- -----------------------------------------------------------------------
Deduct--
- -----------------------------------------------------------------------
Waiver of investment advisory fee $380,881
- ------------------------------------------------------------
Waiver of distribution services fee 5,348 386,229
- ------------------------------------------------------------ -------- --------
Net expenses 560,311
- ----------------------------------------------------------------------------------- ----------
Net investment income $2,157,116
- ----------------------------------------------------------------------------------- ----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
NEW JERSEY MUNICIPAL CASH TRUST
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
------------------------------
<S> <C> <C>
1994 1993
------------- -------------
INCREASE (DECREASE) IN NET ASSETS:
- --------------------------------------------------------------
OPERATIONS--
- --------------------------------------------------------------
Net investment income $ 2,157,116 $ 2,157,015
- -------------------------------------------------------------- ------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS--
- --------------------------------------------------------------
Dividends to shareholders from net investment income:
- --------------------------------------------------------------
Institutional Shares (1,478,776) (1,458,805)
- --------------------------------------------------------------
Institutional Service Shares (678,340) (602,534)
- --------------------------------------------------------------
Cash Series Shares -- (95,676)
- -------------------------------------------------------------- ------------- -------------
Change in net assets from distributions to shareholders (2,157,116) (2,157,015)
- -------------------------------------------------------------- ------------- -------------
FUND SHARE (PRINCIPAL) TRANSACTIONS--
- --------------------------------------------------------------
Proceeds from sale of shares 344,046,340 344,229,882
- --------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of
dividends declared 426,614 213,366
- --------------------------------------------------------------
Cost of shares redeemed (332,135,904) (346,170,580)
- -------------------------------------------------------------- ------------- -------------
Change in net assets resulting from Fund share
transactions 12,337,050 (1,727,332)
- -------------------------------------------------------------- ------------- -------------
Change in net assets 12,337,050 (1,727,332)
- --------------------------------------------------------------
NET ASSETS:
- --------------------------------------------------------------
Beginning of period 87,351,092 89,078,424
- -------------------------------------------------------------- ------------- -------------
End of period $ 99,688,142 $ 87,351,092
- -------------------------------------------------------------- ------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
NEW JERSEY MUNICIPAL CASH TRUST
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
-----------------------------------------
1994 1993 1992 1991*
----- ----- ----- -----
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00
- -----------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -----------------------------------------------
Net investment income 0.02 0.02 0.03 0.04
- ----------------------------------------------- ----- ----- ----- ----
LESS DISTRIBUTIONS
- -----------------------------------------------
Dividends to shareholders from net investment
income (0.02) (0.02) (0.03) (0.04)
- ----------------------------------------------- ----- ----- ----- ----
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00
- ----------------------------------------------- ----- ----- ----- ----
TOTAL RETURN** 2.26% 2.22% 2.96% 3.87 %
- -----------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -----------------------------------------------
Expenses 0.54% 0.46% 0.45% 0.27 %(b)
- -----------------------------------------------
Net investment income 2.22% 2.19% 2.86% 4.19 %(b)
- -----------------------------------------------
Expense waiver/reimbursement (a) 0.39% 0.45% 0.51% 0.67 %(b)
- -----------------------------------------------
SUPPLEMENTAL DATA
- -----------------------------------------------
Net assets, end of period
(000 omitted) $62,984 $66,346 $57,657 $39,423
- -----------------------------------------------
</TABLE>
* Reflects operations for the period from December 13, 1990 (date of initial
public investment) to October 31, 1991.
** Based on net asset value, which does not reflect the sales load or contingent
deferred sales charge, if applicable.
(a) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(b) Computed on an annualized basis.
(See Notes which are an integral part of the Financial Statements)
NEW JERSEY MUNICIPAL CASH TRUST
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SERVICE SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
-----------------------------------------
1994 1993 1992 1991*
----- ----- ----- -----
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00
- -----------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -----------------------------------------------
Net investment income 0.02 0.02 0.03 0.04
- ----------------------------------------------- ----- ----- ----- ----
LESS DISTRIBUTIONS
- -----------------------------------------------
Dividends to shareholders from net investment
income (0.02) (0.02) (0.03) (0.04)
- ----------------------------------------------- ----- ----- ----- ----
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00
- ----------------------------------------------- ----- ----- ----- ----
TOTAL RETURN** 2.16% 2.12% 2.86% 3.82 %
- -----------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -----------------------------------------------
Expenses 0.65% 0.56% 0.55% 0.35 %(b)
- -----------------------------------------------
Net investment income 2.19% 2.08% 2.69% 4.11 %(b)
- -----------------------------------------------
Expense waiver/reimbursement (a) 0.41% 0.45% 0.51% 0.69 %(b)
- -----------------------------------------------
SUPPLEMENTAL DATA
- -----------------------------------------------
Net assets, end of period
(000 omitted) $36,704 $21,005 $26,844 $17,709
- -----------------------------------------------
</TABLE>
* Reflects operations for the period from December 13, 1990 (date of initial
public investment) to October 31, 1991.
** Based on net asset value, which does not reflect the sales load or contingent
deferred sales charge, if applicable.
(a) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(b) Computed on an annualized basis.
(See Notes which are an integral part of the Financial Statements)
NEW JERSEY MUNICIPAL CASH TRUST
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1994
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Federated Municipal Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "Act"), as an open-end, management
investment company. The Trust consists of thirteen non-diversified portfolios.
The financial statements included herein are only those of New Jersey Municipal
Cash Trust (the "Fund"). The financial statements of the other portfolios are
presented separately. The assets of each portfolio are segregated and a
shareholder's interest is limited to the portfolio in which shares are held. The
Fund offers two classes of shares, Institutional Shares and Institutional
Service Shares. Effective October 6, 1993, Cash Series Shares ceased operations.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
<TABLE>
<S> <C>
A. INVESTMENT VALUATIONS--The Fund's use of the amortized cost method to value its portfolio
securities is in accordance with Rule 2a-7 under the Act.
B. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses are accrued
daily. Bond premium and discount, if applicable, are amortized as required by the
Internal Revenue Code, as amended (the "Code"). Distributions to shareholders are
recorded on the ex-dividend date.
C. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the Code
applicable to regulated investment companies and to distribute to shareholders each year
substantially all of its tax-exempt income. Accordingly, no provisions for federal tax
are necessary.
D. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in when-issued or
delayed delivery transactions. The Fund records when-issued securities on the trade date
and maintains security positions such that sufficient liquid assets will be available to
make payment for the securities purchased. Securities purchased on a when-issued or
delayed delivery basis are marked to market daily and begin earning interest on the
settlement date.
E. CONCENTRATION OF CREDIT RISK--Since the Fund invests a substantial portion of its assets
in issuers located in one state, it will be more susceptible to factors adversely
affecting issuers of that state than would be a comparable general tax-exempt mutual
fund. In order to reduce the credit risk associated with such factors, at October 31,
1994, 57.0% of the securities in the portfolio of investments are backed by letters of
credit or bond insurance of various financial institutions and financial guaranty
assurance agencies. The value of investments insured by or supported (backed) by a letter
of credit for any one institution or agency did not exceed 8.2% of total investments.
</TABLE>
NEW JERSEY MUNICIPAL CASH TRUST
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
F. DEFERRED EXPENSES--The costs incurred by the Fund with respect to registration of its
shares in its first fiscal year, excluding the initial expense of registering the shares,
have been deferred and are being amortized using the straight-line method not to exceed a
period of five years from the Fund's commencement date.
G. OTHER--Investment transactions are accounted for on the trade date.
</TABLE>
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Board of Trustees to issue an unlimited
number of full and fractional shares of beneficial interest (without par value)
for each class of shares. At October 31, 1994, capital paid-in aggregated
$99,688,142. Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
------------------------------
1994 1993
------------ ------------
<S> <C> <C>
INSTITUTIONAL SHARES
- --------------------------------------------------------------
Shares sold 240,111,228 184,549,947
- --------------------------------------------------------------
Shares issued to shareholders in payment of dividends declared 2,995 2,221
- --------------------------------------------------------------
Shares redeemed (243,476,200) (175,863,610)
- -------------------------------------------------------------- ------------ ------------
Net change resulting from Institutional Share transactions (3,361,977) 8,688,558
- -------------------------------------------------------------- ------------ ------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
------------------------------
1994 1993
------------ ------------
<S> <C> <C>
INSTITUTIONAL SERVICE SHARES
- --------------------------------------------------------------
Shares sold 103,935,112 141,401,508
- --------------------------------------------------------------
Shares issued to shareholders in payment of dividends declared 423,619 134,265
- --------------------------------------------------------------
Shares redeemed (88,659,704) (147,373,988)
- -------------------------------------------------------------- ------------ ------------
Net change resulting from Institutional Service Share
transactions 15,699,027 (5,838,215)
- -------------------------------------------------------------- ------------ ------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
------------------------------
1994 1993
------------ ------------
<S> <C> <C>
CASH SERIES SHARES
- --------------------------------------------------------------
Shares sold -- 18,278,427
- --------------------------------------------------------------
Shares issued to shareholders in payment of dividends declared -- 76,880
- --------------------------------------------------------------
Shares redeemed -- (22,932,982)
- -------------------------------------------------------------- ------------ ------------
Net change resulting from Cash Series Share transactions -- (4,577,675)
- -------------------------------------------------------------- ------------ ------------
Net change resulting from Fund Share transactions 12,337,050 (1,727,332)
- -------------------------------------------------------------- ------------ ------------
</TABLE>
NEW JERSEY MUNICIPAL CASH TRUST
- --------------------------------------------------------------------------------
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Management, the Fund's investment adviser
(the "Adviser"), receives for its services an annual investment advisory fee
equal to .40 of 1% of the Fund's average daily net assets. The Adviser may
voluntarily choose to waive a portion of its fee. The Adviser can modify or
terminate this voluntary waiver and reimbursement at any time at its sole
discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Fund
with administrative personnel and services. Prior to March 1, 1994, these
services were provided at approximate cost. Effective March 1, 1994, the FAS fee
is based on the level of average aggregate daily net assets of all funds advised
by subsidiaries of Federated Investors for the period. The administrative fee
received during the period of the Administrative Services Agreement shall be at
least $125,000 per portfolio and $30,000 per each additional class of shares.
DISTRIBUTION AND SHAREHOLDER SERVICES FEE--The Fund has adopted a Distribution
Plan (the "Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the
Plan, the Fund will compensate Federated Securities Corp. ("FSC"), the principal
distributor, from the net assets of the Fund to finance activities intended to
result in the sale of the Fund's Institutional Service Shares. The Plan provides
that the Fund may incur distribution expenses up to .10 of 1% of the average
daily net assets of the Institutional Service Shares, annually, to compensate
FSC.
Under the terms of a Shareholder Services Agreement with Federated Shareholder
Services ("FSS"), the Fund will pay FSS up to .25 of 1% of average net assets of
each class of shares for the period. This fee is to obtain certain personal
services for shareholders and to maintain shareholder accounts.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES--Federated Services Company
("FServ") serves as transfer and dividend disbursing agent for the Fund. The
FServ fee is based on the size, type, and number of accounts and transactions
made by shareholders.
ORGANIZATIONAL EXPENSES--Organizational expenses ($61,531) and start-up
administrative service expenses ($16,639) were borne initially by the Adviser.
The Fund has agreed to reimburse the Adviser at an annual rate of .005 of 1% of
average daily net assets and .01 of 1% of average daily net assets for the
organizational and start-up administrative expenses, respectively, until
expenses initially borne by the Adviser are fully reimbursed or the expiration
of five years after December 10, 1990 (date the Fund first became effective),
whichever occurs earlier. For the year ended October 31, 1994, the Fund paid
$4,810 and $0, respectively, pursuant to this agreement.
INTERFUND TRANSACTIONS--During the year ended October 31, 1994, the Fund engaged
in purchase and sale transactions with other affiliated funds at current value
pursuant to Rule 17a-7 under the Act amounting to $131,500,000, and
$124,350,000, respectively.
Certain of the Officers and Trustees of the Trust are Officers and Directors or
Trustees of the above companies.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
FEDERATED MUNICIPAL TRUST (New Jersey Municipal Cash Trust):
We have audited the accompanying statement of assets and liabilities of New
Jersey Municipal Cash Trust (an investment portfolio of Federated Municipal
Trust, a Massachusetts business trust), including the schedule of portfolio
investments, as of October 31, 1994, the related statement of operations for the
year then ended, the statement of changes in net assets for each of the two
years in the period then ended, and the financial highlights for the periods
presented. These financial statements and financial highlights are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1994, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of New
Jersey Municipal Cash Trust (an investment portfolio of Federated Municipal
Trust) as of October 31, 1994, and the results of its operations for the year
then ended, the changes in its net assets for each of the two years in the
period then ended, and the financial highlights for the periods presented, in
conformity with generally accepted accounting principles.
Pittsburgh, Pennsylvania ARTHUR ANDERSEN LLP
December 14, 1994
<TABLE>
<S> <C>
TRUSTEES OFFICERS
- --------------------------------------------------------------------------------
John F. Donahue John F. Donahue
John T. Conroy, Jr. Chairman
William J. Copeland Glen R. Johnson
James E. Dowd President
Lawrence D. Ellis, M.D. J. Christopher Donahue
Edward L. Flaherty, Jr. Vice President
Glen R. Johnson Richard B. Fisher
Peter E. Madden Vice President
Gregor F. Meyer Edward C. Gonzales
Wesley W. Posvar Vice President and Treasurer
Marjorie P. Smuts John W. McGonigle
Vice President and Secretary
David M. Taylor
Assistant Treasurer
G. Andrew Bonnewell
Assistant Secretary
</TABLE>
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risk,
including possible loss of principal. Although money market funds seek to
maintain a stable net asset value of $1.00 per share, there is no assurance that
they will be able to do so.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Fund's prospectus which contains facts concerning
its objective and policies, management fees, expenses and other information.
- --------------------------------------------------------------------------------
NEW YORK
- --------------------------------------------------------------------------------
MUNICIPAL
- --------------------------------------------------------------------------------
CASH
- --------------------------------------------------------------------------------
TRUST
- --------------------------------------------------------------------------------
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
October 31, 1994
FEDERATED SECURITIES CORP.
(LOGO) ---------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
649606209
649606100
G00207-01 (12/94)
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the Annual Report to Shareholders for New York Municipal
Cash Trust (the "Fund"), a portfolio of Federated Municipal Trust, for the
12-month period ended October 31, 1994. The Fund consists of two classes of
shares known as Institutional Service Shares and Cash II Shares. The report
begins with an interview with portfolio manager Jeff Kozemchak about economic
factors affecting the Fund, followed by the Fund's Portfolio of Investments and
Financial Statements. In addition, Financial Highlights tables have been
included for Institutional Service Shares and Cash II Shares.
The Fund gives New York residents three ways to pursue tax-free income--its
earnings are exempt from federal regular income tax, New York personal income
tax, and New York local taxes.* Its portfolio includes high-quality, short-term
New York municipal securities of more than 20 issuers that use municipal bond
financing for projects as varied as housing, industrial development, education,
and health care.
During the report period, the Fund paid shareholders a total of $7.9 million in
dividends, or $0.02 per share. At the end of the report period, the Fund's net
assets stood at $370.6 million.
As a wise investor, you can count on the Fund to ease your tax burden by
pursuing competitive tax-free yields - with the additional advantages of daily
liquidity and stability of principal.**
Thank you for your confidence in New York Municipal Cash Trust. We welcome your
comments and suggestions.
Sincerely,
Glen R. Johnson
President
December 15, 1994
* Income may be subject to the federal alternative minimum tax.
** No money market fund can guarantee that a stable net asset value will be
maintained. An investment in the Fund is neither insured nor guaranteed by
the U.S. government.
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
An Interview with Fund Portfolio Manager Jeff A. Kozemchak
Q Recently, there has been a lot of concern, as well as press coverage, about
the subject of derivatives. What are derivatives?
A The term "derivative" has been applied to many different types of
investments. In the context of money market funds, derivatives generally
refer to adjustable rate securities designed for speculation on changes
in interest rates. These speculative derivatives provide above-market yields
when interest rates fall or remain stable, or when the yield curve is steep.
They provide below-market yields, however, when interest rates rise or become
more volatile, or when the yield curve flattens. All three of these conditions
occurred in 1994. As a result, many of these speculative securities lost a
significant part of their value, enough to threaten the $1.00 per share
price of some money market funds.
It is important to distinguish these speculative derivatives from adjustable
rate securities that are indexed to money market interest rates. These indexed
securities are designed to track changes in market rates, and should approximate
their par value in all reasonably foreseeable market conditions. Tax-exempt
money market funds like the Fund have the right to tender these securities for
purchase at their par value. Money market funds have used these securities for
decades, through several interest rate cycles, without jeopardizing their stable
net asset values.
Q Do Federated Investors' money market funds invest in the derivatives that
have been in the headlines recently?
A No. None of Federated Investors' money market funds has invested in any of
the types of derivatives that have been in the headlines lately. Our mutual
funds only invest in adjustable rate securities that track changes in money
market interest rates.
With respect to speculative derivatives, we determined from the outset that the
potential volatility of these securities was contrary to the intent of the rules
governing the use of variable rate securities by money market funds. We also
realized the potential for these securities to deviate significantly from par
and threaten the $1.00 per share price of a money market fund. We spoke out
against the use of these securities by money market funds at industry
conferences throughout 1993, when the securities still offered attractive
yields. Our views were vindicated when, in June, 1994, the Securities and
Exchange Commission sent a letter to the Investment Company Institute requiring
money market funds to divest themselves of these securities in an orderly
manner. This caused some investment advisers to buy these securities from their
funds.
- --------------------------------------------------------------------------------
Q What happened to short-term interest rates over the period covered by this
Annual Report?
A There was a dramatic shift in the monetary policy of the Federal Reserve
Board (the "Fed") during the 12-month reporting period that ended October
31, 1994.
Throughout the fourth quarter of 1993, the Fed kept the Federal funds rate (the
rate banks charge each other for overnight loans) steady at 3.00%, where it had
been for a year and a half. The Fed had maintained short-term interest rates at
these low levels in order to stimulate the economy. However, in early 1994,
reports began to show stronger than anticipated economic growth. Real gross
national product grew at a 7.00% annual rate in the fourth quarter of 1993, and
the national unemployment rate declined to 6.00%. Concerned that these factors
could lead to an increase in wages and prices, the Fed took the first step on
February 4, 1994, to fight future inflation by raising its Federal funds rate
target to 3.25%. Since then, the Fed has continued to be aggressive, moving the
Federal funds rate target upward five more times from 3.25% to 5.50%.
Q How did municipal money market yields react to these rate increases?
A Municipal money market interest rates followed the upward movement in
taxable rates but to a slightly lesser degree, as they are affected by
federal, state and local tax factors as well as market supply and demand
imbalances.
The Fund's yields have proven to be quite responsive to the increases in money
market rates. For the 12-month reporting period ended October 31, 1994, the
Fund's tax-free, annualized seven-day net yields increased from 1.89% and 2.06%
to 2.85% and 3.04% for the Cash II Shares and Institutional Service Shares,
respectively.* At October 31, 1994, these seven-day yields were equivalent to
taxable yields of 5.12% (Cash II Shares) and 5.46% (Institutional Service
Shares) for those investors subject to the highest federal and state tax
brackets.** These numbers illustrate the Fund's attractiveness relative to
taxable investments.
* Performance quoted represents past performance and is not indicative of
future results. Yields will vary.
** These numbers assume that state income taxes are fully deductible in
computing federal income tax liability.
- --------------------------------------------------------------------------------
Q What is your outlook for the markets and the Fund?
A The economy continues to show surprising resilience to the Fed's attempts
to bring growth under control. We expect that the Fed will act to tighten
monetary policy in late 1994 and possibly again in the first quarter of
1995. At that point in time, the Federal funds target could be as high as 6.50%.
As a result, we plan to maintain a conservative posture in the near future,
while attempting to maximize performance through ongoing relative value
analysis. However, we will continue to monitor changing economic and market
developments so as to serve our clients attracted to the short-term tax-exempt
securities market. In this environment, stable net asset value money market
funds like the Fund will continue to be an important component in preserving
capital, and should reflect rising short-term interest rates with increasing net
yields.
NEW YORK MUNICIPAL CASH TRUST
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ----------- ---------------------------------------------------- -------- ------------
<C> <C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--99.5%
- ------------------------------------------------------------------------
NEW YORK--95.5%
----------------------------------------------------
$ 715,000 Amherst, NY, IDA Weekly VRDNs (Nanhardt Alexander,
Inc.)/(Marine Midland Bank LOC)/
(Subject to AMT) A-2 $ 715,000
----------------------------------------------------
540,000 Babylon, NY, IDA Weekly VRDNs (M. Goldfarb-My
Florist)/(Dai-Ichi Kangyo Bank, Ltd. LOC), Ford
Motor Credit BPA) P-1 540,000
----------------------------------------------------
1,000,000 Babylon, NY, IDA Weekly VRDNs (Series 1994)/
(J. D'Addario & Company, Inc.)/(National Westminster
Bank, PLC LOC)/(Subject to AMT) VMIG1 1,000,000
----------------------------------------------------
5,000,000 Brentwood, NY, Union Free School District, 4.50%
TANs, 6/30/95 NR 5,019,071
----------------------------------------------------
1,122,000 Buffalo, NY, General Improvement, 4.75% SB (Series
1994A)/(MBIA Insured), 2/1/95 NR(1) 1,127,158
----------------------------------------------------
6,000,000 Central Islip, NY, 4.50% TANs, 6/30/95 NR 6,019,024
----------------------------------------------------
7,400,000 Chautauqua County, NY, 3.00% TANs, 12/22/94 NR(3) 7,403,026
----------------------------------------------------
4,000,000 Chautauqua County, NY, IDA Weekly VRDNs (Cliffstar
Corp.)/(Society Bank, N.A. LOC)/(Subject to AMT) P-1 4,000,000
----------------------------------------------------
3,900,000 Chautauqua County, NY, IDA Weekly VRDNs
(Mogen David Wine Corp.)/(Mellon Bank N.A. LOC)/
(Subject to AMT) P-1 3,900,000
----------------------------------------------------
1,220,000 Colonie, NY, IDA Weekly VRDNs (Herbert S. Ellis)/
(Marine Midland Bank N.A. LOC)/(Subject to AMT) A-2 1,220,000
----------------------------------------------------
875,000 Colonie, NY, IDA Weekly VRDNs (Series 1988)/ (13
Green Mountain Drive)/(Marine Midland Bank N.A.
LOC)/(Subject to AMT) A-2 875,000
----------------------------------------------------
1,750,000 Cortland County, NY, IDA Weekly VRDNs (General
Signal Corp.)/(Wachovia Bank of Georgia N.A. LOC) A-1+ 1,750,000
----------------------------------------------------
</TABLE>
NEW YORK MUNICIPAL CASH TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ----------- ---------------------------------------------------- -------- ------------
<C> <C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------
NEW YORK--CONTINUED
----------------------------------------------------
$ 1,280,000 Erie County, NY, IDA Weekly VRDNs (Data-Rex, Inc.)/
(Marine Midland Bank N.A. LOC)/(Subject to AMT) A-2 $ 1,280,000
----------------------------------------------------
1,800,000 Franklin County, NY, IDA Weekly VRDNs (Series
1991A)/(KES Chateaugay)/
(Bank of Tokyo, Ltd. LOC) A-1 1,800,000
----------------------------------------------------
1,500,000 Guilderland, NY, IDA Weekly VRDNs (Series 1993A)/
(Northeastern Industrial Park, Inc.)/(Chemical Bank
LOC) P-1 1,500,000
----------------------------------------------------
1,700,000 Herkimer County, NY, IDA Weekly VRDNs
(Granny's Kitchens, Ltd.)/(Chemical Bank LOC)/
(Subject to AMT) A-1 1,700,000
----------------------------------------------------
5,500,000 Huntington Union Free School District, NY, 3.50%
BANs, 12/15/94 NR(3) 5,503,001
----------------------------------------------------
10,000,000 Longwood, NY, Central School District, 4.25% TANs,
6/23/95 NR 10,030,228
----------------------------------------------------
2,225,000 Madison County, NY, IDA Monthly VRDNs (Series
1989A)/(Upstate Metals Corp.)/(Fleet Bank of New
York N.A. LOC)/(Subject to AMT) A-1 2,225,000
----------------------------------------------------
15,000,000 Marine Midland, NY, Premium Tax-Exempt Bond & Loan
Trust Weekly VRDNs (Marine Midland Bank N.A. and
Hong Kong Shanghai Bank LOCs) P-1 15,000,000
----------------------------------------------------
3,295,000 Mechanicville and Town of Stillwater, NY, IDA Weekly
VRDNs (1987 Tagsons Paper, Inc.)/(Marine Midland
Bank N.A. LOC)/(Subject to AMT) A-2 3,295,000
----------------------------------------------------
629,000 Nassau County, NY, IDA Weekly VRDNs (465 Endo
Associates)/(Dai-Ichi Kangyo Bank Ltd. LOC, Ford
Motor Credit BPA) P-1 629,000
----------------------------------------------------
1,262,499 Nassau County, NY, IDA Weekly VRDNs
(D.L. Blair Corp.)/(Dai-Ichi Kangyo Bank Ltd. LOC,
Ford Motor Credit Co. BPA) P-1 1,262,499
----------------------------------------------------
</TABLE>
NEW YORK MUNICIPAL CASH TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ----------- ---------------------------------------------------- -------- ------------
<C> <C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------
NEW YORK--CONTINUED
----------------------------------------------------
$ 1,750,000 Nassau County, NY, IDA Weekly VRDNs
(R.M. Pascucci Corp.)/(Dai-Ichi Kangyo Bank, Ltd.
LOC, Ford Motor Credit BPA) P-1 $ 1,750,000
----------------------------------------------------
7,131,000 New Rochelle, NY, Urban Renewal Notes, 3.55% BANs
(Series 1994)/(Subject to AMT), 3/22/95 NR(3) 7,132,322
----------------------------------------------------
2,100,000 New York City, NY, Daily VRDNs (Series 1994)/
(Chemical Bank LOC) A-1 2,100,000
----------------------------------------------------
1,900,000 New York City, NY, Daily VRDNs (Series 1994A)/
(Chemical Bank LOC) A-1 1,900,000
----------------------------------------------------
3,700,000 New York City, NY, Housing Development Corp. Weekly
VRDNs (Series 1993A)/(Columbus Gardens)/ (Citibank
N.A. LOC) A-1 3,700,000
----------------------------------------------------
2,000,000 New York City, NY, Housing Development Corp. Weekly
VRDNs (Series A)/(East 96th Street Project)/
(Mitsubishi Bank Ltd. LOC) VMIG1 2,000,000
----------------------------------------------------
9,000,000 New York City, NY, IDA Daily VRDNs (Japan Airlines
Company)/(Morgan Guaranty Trust Co. LOC)/
(Subject to AMT) A-1+ 9,000,000
----------------------------------------------------
350,000 New York City, NY, IDA Weekly VRDNs (David Rosen
Bakers Supply, Inc.)/(Dai-Ichi Kangyo Bank Ltd. LOC,
Ford Motor Credit BPA) P-1 350,000
----------------------------------------------------
400,024 New York City, NY, IDA Weekly VRDNs (Feature
Enterprise)/(Dai-Ichi Kangyo Bank Ltd. LOC, Ford
Motor Credit BPA) P-1 400,024
----------------------------------------------------
546,668 New York City, NY, IDA Weekly VRDNs (Lomar
Development Corp.)/(Dai-Ichi Kangyo Bank Ltd. LOC,
Ford Motor Credit BPA) P-1 546,668
----------------------------------------------------
900,000 New York City, NY, IDA Weekly VRDNs (Mindel
Associates)/(Chemical Bank LOC)/(Subject to AMT) A-1 900,000
----------------------------------------------------
</TABLE>
NEW YORK MUNICIPAL CASH TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ----------- ---------------------------------------------------- -------- ------------
<C> <C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------
NEW YORK--CONTINUED
----------------------------------------------------
$ 189,597 New York City, NY, IDA Weekly VRDNs (MLN
Associates)/(Dai-Ichi Kangyo Bank, Ltd. LOC, Ford
Motor Credit BPA) P-1 $ 189,597
----------------------------------------------------
1,900,000 New York City, NY, IDA Weekly VRDNs Special Facility
Revenue Bonds (Series 1990)/(Air France)/ (Societe
Generale LOC)/(Subject to AMT) A-1+ 1,900,000
----------------------------------------------------
20,000,000 New York City, NY, Monthly VRNs (Series B) SP-1 20,000,000
----------------------------------------------------
6,000,000 New York City, NY, Municipal Water Finance Authority
Weekly VRDNs (Series 1992A)/(MBIA Insured) VMIG1 6,000,000
----------------------------------------------------
2,000,000 (a) New York City, NY, VRDC/IVRC Trust Weekly VRDNs
(Series 1992A)/(MBIA Insured)/(Hong Kong & Shanghai
Banking Corp. BPA) A-1 2,000,000
----------------------------------------------------
10,000,000 New York City, NY, Weekly VRNs (Series B) SP-1 10,000,000
----------------------------------------------------
5,475,000 (a) New York State Dormitory Authority Weekly VRDNs
PA-60 (Series 1993)/(Rochester General Hospital)/
(FHA Insured)/(Merrill Lynch Capital
Services, Inc. BPA) A-1+ 5,475,000
----------------------------------------------------
2,800,000 New York State Dormitory Authority, 3.40% CP (Series
1989A)/(Sloan-Kettering Memorial Cancer Center),
Mandatory Tender 1/13/95 A-1 2,800,000
----------------------------------------------------
6,850,000 New York State Dormitory Authority, 3.60% CP (Series
1989B)/(Sloan-Kettering Memorial Cancer Center),
Mandatory Tender 1/26/95 A-1 6,850,000
----------------------------------------------------
6,000,000 New York State Energy Research & Development
Authority Weekly VRDNs (Series 1993A)/(Long Island
Lighting Co.)/(Toronto-Dominion Bank LOC) VMIG1 6,000,000
----------------------------------------------------
5,000,000 New York State Energy Research & Development
Authority, 2.85% Annual TOBs (Series 1993B)/(Long
Island Lighting Co.)/(Toronto-Dominion Bank LOC),
Mandatory Tender 11/1/94 VMIG1 5,000,000
----------------------------------------------------
</TABLE>
NEW YORK MUNICIPAL CASH TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ----------- ---------------------------------------------------- -------- ------------
<C> <C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------
NEW YORK--CONTINUED
----------------------------------------------------
$ 6,100,000 New York State Energy Research & Development
Authority, 3.00% TOBs (Series 1985A)/(Long Island
Lighting Co.)/(Deutsche Bank AG LOC), Mandatory
Tender 3/1/95 VMIG1 $ 6,100,000
----------------------------------------------------
8,000,000 (a) New York State Floating Rate Trust Certificate
Weekly VRDNs (Series 144A)/(AMBAC Insured) A-1+ 8,000,000
----------------------------------------------------
1,000,000 New York State HFA Weekly VRDNs (Normandie
Corp.)/(Bankers Trust Company LOC)/(Subject to AMT) VMIG1 1,000,000
----------------------------------------------------
2,000,000 New York State HFA Weekly VRDNs (Special Surgery
Hospital)/(Chemical Bank LOC) VMIG1 2,000,000
----------------------------------------------------
1,365,000 New York State Job Development Authority Weekly
VRDNs (New York State, Guaranty)/(Subject to AMT) VMIG1 1,365,000
----------------------------------------------------
1,680,000 New York State Job Development Authority Weekly
VRDNs (Sumitomo Bank, Ltd. LOC)/(Subject to AMT) VMIG1 1,680,000
----------------------------------------------------
8,000,000 (a) New York State Medical Care Facilities Finance
Agency Weekly VRDNs (Series 1993G)/(St.
Luke's-Rossevelt Hospital Center)/(FHA Insured, Hong
Kong & Shanghai Banking Corp. BPA) A-1+ 8,000,000
----------------------------------------------------
3,700,000 New York State Mortgage Agency Weekly VRDNs (Series
PA-29) VMIG1 3,700,000
----------------------------------------------------
5,000,000 (a) New York State Mortgage Agency Weekly VRDNs (Series
PA-87)/(Merrill Lynch Capital Services, Inc.
BPA)/(Subject to AMT) VMIG1 5,000,000
----------------------------------------------------
7,980,000 (a) New York State Mortgage Agency Weekly VRDNs
Homeowner Mortgage Revenue (Series PT-15B) VMIG1 7,980,000
----------------------------------------------------
4,750,000 New York State Mortgage Agency, 3.30% Semi-Annual
TOBs Homeowner Mortgage Revenue Bonds
(Series 40-C)/(Collateralized in U.S. Treasuries)/
(Subject to AMT), Mandatory Tender 12/1/94 VMIG1 4,750,000
----------------------------------------------------
</TABLE>
NEW YORK MUNICIPAL CASH TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ----------- ---------------------------------------------------- -------- ------------
<C> <C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------
NEW YORK--CONTINUED
----------------------------------------------------
$16,000,000 (a) New York State Power Authority VRDC Trust
Certificates Weekly VRDNs (Series 1993H) A-1+ $ 16,000,000
----------------------------------------------------
10,000,000 New York State Thruway Authority, 4.09% BANs
(Series 1994), 4/14/95 SP-1 10,000,000
----------------------------------------------------
10,000,000 New York State Thruway Authority, 4.19% BANs (Series
1994), 4/14/95 SP-1 10,000,000
----------------------------------------------------
1,728,000 Niagara County, NY, 3.00% GO BANs, 12/9/94 NR(3) 1,728,423
----------------------------------------------------
5,000,000 Niagara County, NY, IDA Weekly VRDNs
(Allegheny Ludlum Corp.)/(PNC Bank N.A. LOC) A-1 5,000,000
----------------------------------------------------
1,725,000 Onondaga County, NY, IDA Weekly VRDNs (W.W.
Grainger, Inc.) A-1+ 1,725,000
----------------------------------------------------
1,030,000 Onondaga County, NY, IDA Weekly VRDNs
(Beverage Corp.)/(Marine Midland Bank N.A. LOC)/
(Subject to AMT) A-2 1,030,000
----------------------------------------------------
1,175,000 Onondaga County, NY, IDA Weekly VRDNs (Series
1987)/(Southern Container Corp.)/
(Chemical Bank LOC)/(Subject to AMT) VMIG1 1,175,000
----------------------------------------------------
1,550,000 Ontario, NY, IDA Weekly VRDNs (Hillcrest
Enterprises/Buckey Corrugated, Inc.
Facility)/(National City Bank, Cleveland
LOC)/(Subject to AMT) P-1 1,550,000
----------------------------------------------------
5,700,000 Oswego County, NY, IDA Weekly VRDNs
(Copperweld Co.)/(PNC Bank N.A. LOC) P-1 5,700,000
----------------------------------------------------
8,000,000 Plainview-Old Bethpage Central School District,
4.50% TANs, 6/30/95 NR 8,023,894
----------------------------------------------------
15,000,000 Port Authority of New York and New Jersey Weekly
VRDNs A-1+ 15,000,000
----------------------------------------------------
1,000,000 Port Authority of New York and New Jersey Weekly
VRDNs (Series 1991-4)/(Subject to AMT) P-1 1,000,000
----------------------------------------------------
</TABLE>
NEW YORK MUNICIPAL CASH TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ----------- ---------------------------------------------------- -------- ------------
<C> <C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------
NEW YORK--CONTINUED
----------------------------------------------------
$ 3,000,000 Port Authority of New York and New Jersey Weekly
VRDNs (Series 3)/(KIAC Partners)/(Deutsche Bank AG
LOC)/(Subject to AMT) A-1+ $ 3,000,000
----------------------------------------------------
15,000,000 Port Authority of New York and New Jersey Weekly
VRDNs (Subject to AMT) A-1+ 15,000,000
----------------------------------------------------
2,000,000 Rotterdam, NY, IDA Weekly VRDNs (Series 1993A)/
(Rotterdam Industrial Park)/(Chemical Bank LOC) P-1 2,000,000
----------------------------------------------------
776,964 Schenectady, NY, IDA Weekly VRDNs (McClellan Street
Associates)/(Dai-Ichi Kangyo Bank, Ltd. LOC, Ford
Motor Credit BPA) P-1 776,964
----------------------------------------------------
5,000,000 South Country, NY, Central School District, 4.50%
TANs, 6/29/95 NR 5,011,357
----------------------------------------------------
1,800,000 Suffolk County, NY, 4.7125% Semi-Annual TOBs (W.W.
Grainger, Inc. Guaranty), Optional Tender 12/1/94 P-1 1,800,000
----------------------------------------------------
3,600,000 Suffolk County, NY, IDA Weekly VRDNs (C & J Reality
Corp.)/(Dai-Ichi Kangyo Bank, Ltd. LOC, Ford Motor
Credit BPA) P-1 3,600,000
----------------------------------------------------
619,167 Suffolk County, NY, IDA Weekly VRDNs (CS Property/
Tara Toy, Inc.)/(Dai-Ichi Kangyo Bank, Ltd. LOC,
Ford Motor Credit BPA) P-1 619,167
----------------------------------------------------
568,000 Suffolk County, NY, IDA Weekly VRDNs (D.A. Yaron)/
(Dai-Ichi Kangyo Bank, Ltd. LOC, Ford Motor Credit
BPA)/(Subject to AMT) P-1 568,000
----------------------------------------------------
1,200,000 Suffolk County, NY, IDA Weekly VRDNs (Poly Research
Corp.)/(Marine Midland Bank N.A. LOC)/ (Subject to
AMT) A-2 1,200,000
----------------------------------------------------
7,500,000 Walden Village, NY, IDRB Weekly VRDNs
(Series 1994)/(Spence Engineering Co.)/
(First Union National Bank LOC) P-1 7,500,000
----------------------------------------------------
</TABLE>
NEW YORK MUNICIPAL CASH TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ----------- ---------------------------------------------------- -------- ------------
<C> <C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------
NEW YORK--CONTINUED
----------------------------------------------------
$ 6,090,000 Warren & Washington Counties, NY, IDA Monthly VRDNs
(Sandy Hill Corp.)/(Fleet Bank of New York N.A.
LOC)/(Subject to AMT) A-1 $ 6,090,000
----------------------------------------------------
1,510,000 Yates County, NY, IDA, Weekly VRDNs (Series 1992A)/
(Clearplass Containers, Inc.)/(Norstar Bank of
Upstate NY LOC)/(Subject to AMT) A-1 1,510,000
----------------------------------------------------
3,900,000 Yonkers, NY, IDA Weekly VRDNs (Consumers Union
Facility)/(Industrial Bank of Japan, Ltd. LOC) VMIG1 3,900,000
---------------------------------------------------- ------------
Total 353,869,423
---------------------------------------------------- ------------
PUERTO RICO--4.0%
----------------------------------------------------
14,800,000 Government Development Bank of Puerto Rico Weekly
VRDNs (Credit Suisse and Sumitomo Bank Ltd., LOCs) A-1+ 14,800,000
---------------------------------------------------- ------------
TOTAL INVESTMENTS, AT AMORTIZED COST $368,669,423+
---------------------------------------------------- ------------
</TABLE>
(a) Denotes a restricted security which is subject to resale under Federal
Securities laws. This security has been determined to be liquid under
criteria established by the Board of Trustees.
* See Notes to Portfolio of Investments on page 14. Current credit ratings are
unaudited.
+ Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($370,631,120) at October 31, 1994.
NEW YORK MUNICIPAL CASH TRUST
- --------------------------------------------------------------------------------
The following abbreviations are used in this portfolio:
<TABLE>
<S> <C>
AMBAC -- American Municipal Bond Assurance Corporation
AMT -- Alternative Minimum Tax
BANs -- Bond Anticipation Notes
BPA -- Bond Purchase Agreement
CP -- Commercial Paper
FHA -- Federal Housing Administration
GO -- General Obligation
HFA -- Housing Finance Authority/Agency
IDA -- Industrial Development Authority
IDRB -- Industrial Development Revenue Bonds
IVRC -- Inverse Variable Rate Certificates
LOC -- Letter of Credit
LOCs -- Letters of Credit
MBIA -- Municipal Bond Investors Assurance
SB -- Serial Bond
TANs -- Tax Anticipation Notes
TOBs -- Tender Option Bonds
VRDC -- Variable Rate Demand Certificates
VRDNs -- Variable Rate Demand Notes
VRNs -- Variable Rate Note
</TABLE>
(See Notes which are an integral part of the Financial Statements)
NEW YORK MUNICIPAL CASH TRUST
NOTES TO PORTFOLIO OF INVESTMENTS
(UNAUDITED)
- --------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL OBLIGATION RATINGS
STANDARD & POOR'S RATINGS GROUP
A S&P 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 ratings 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 & POOR'S RATINGS GROUP
S&P 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
long-term and 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 as 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 &POOR'S RATINGS GROUP
A S&P 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 highest category indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong
safety characteristics are denoted with a plus (+) sign designation.
A-2 Capacity for timely payment on issues with this designation is satisfactory.
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. Prime-1
repayment capacity will normally be evidenced by the following
characteristics: leading market positions in well established industries,
high rates of return on funds employed, conservative capitalization
structure with moderate reliance on debt and ample asset protection, broad
margins in earning coverage of fixed financial charges and high internal
cash generation, well-established access to a range of financial markets and
assured sources of alternate liquidity.
P-2 Issuers rated PRIME-2 (or related supporting institutions) have a strong
capacity for repayment of short-term promissory obligations. This will
normally be evidenced by many of the characteristics, cited above, but to a
lesser degree. Earnings trends and coverage ratios, while sound, will be
more subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.
LONG-TERM DEBT RATINGS
STANDARD & POOR'S RATINGS GROUP
AAA Debt rated "AAA" has the highest rating assigned by S&P. 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 highest 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.
- --------------------------------------------------------------------------------
MOODY'S INVESTORS SERVICE, INC.
AAA Bonds that 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 edged." 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 that 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 that 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.
NR indicates that both the bonds and the obligor or credit enhancer are not
currently rated by S&P or Moody's 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 S&P or "Aaa" by Moody's.
NR(2) The underlying issuer/obligor/guarantor has other outstanding debt rated
"AA" by S&P or "Aa" Moody's.
NR(3) The underlying issuer/obligor/guarantor has other outstanding debt rated
"A" by S&P or Moody's.
NEW YORK MUNICIPAL CASH TRUST
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -------------------------------------------------------------------------------
Investments in securities, at amortized cost and value $368,669,423
- -------------------------------------------------------------------------------
Cash 245,944
- -------------------------------------------------------------------------------
Interest receivable 2,417,722
- ------------------------------------------------------------------------------- ------------
Total assets 371,333,089
- -------------------------------------------------------------------------------
LIABILITIES:
- -------------------------------------------------------------------------------
Dividends payable $685,086
- --------------------------------------------------------------------
Payable for Fund shares redeemed 5,481
- --------------------------------------------------------------------
Accrued expenses 11,402
- -------------------------------------------------------------------- --------
Total liabilities 701,969
- ------------------------------------------------------------------------------- ------------
NET ASSETS for 370,648,729 shares of beneficial interest outstanding $370,631,120
- ------------------------------------------------------------------------------- ------------
NET ASSETS CONSIST OF:
- -------------------------------------------------------------------------------
Paid-in capital $370,648,729
- -------------------------------------------------------------------------------
Accumulated net realized loss on investments (17,609)
- ------------------------------------------------------------------------------- ------------
Total $370,631,120
- ------------------------------------------------------------------------------- ------------
NET ASSET VALUE, Offering Price, and Redemption Proceeds Per Share:
- -------------------------------------------------------------------------------
Institutional Service Shares ($236,579,842 / 236,597,763 shares of beneficial
interest outstanding) $1.00
- ------------------------------------------------------------------------------- ------------
Cash II Shares ($134,051,278 / 134,050,966 shares of beneficial interest
outstanding) $1.00
- ------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
NEW YORK MUNICIPAL CASH TRUST
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ------------------------------------------------------------------------------------
Interest Income $9,869,611
- ------------------------------------------------------------------------------------
EXPENSES:
- ------------------------------------------------------------------------------------
Investment advisory fee $1,383,576
- ----------------------------------------------------------------------
Trustees' fees 6,927
- ----------------------------------------------------------------------
Administrative personnel and services 292,612
- ----------------------------------------------------------------------
Custodian and portfolio accounting fees 109,696
- ----------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 27,696
- ----------------------------------------------------------------------
Distribution services fee--Institutional Service Shares 148,378
- ----------------------------------------------------------------------
Distribution services fee--Cash II Shares 255,897
- ----------------------------------------------------------------------
Shareholder services fee--Institutional Service Shares 47,966
- ----------------------------------------------------------------------
Shareholder services fee--Cash II Shares 105,575
- ----------------------------------------------------------------------
Fund share registration costs 26,724
- ----------------------------------------------------------------------
Legal fees 28,644
- ----------------------------------------------------------------------
Auditing fees 16,099
- ----------------------------------------------------------------------
Printing and postage 40,820
- ----------------------------------------------------------------------
Taxes 420
- ----------------------------------------------------------------------
Insurance premiums 10,432
- ----------------------------------------------------------------------
Miscellaneous 4,997
- ---------------------------------------------------------------------- ----------
Total expenses 2,506,459
- ----------------------------------------------------------------------
Deduct--
- ----------------------------------------------------------------------
Waiver of investment advisory fee $364,783
- -----------------------------------------------------------
Waiver of distribution services fee--
Institutional Service Shares 47,624
- -----------------------------------------------------------
Waiver of distribution services fee--Cash II Shares 105,575 517,982
- ----------------------------------------------------------- -------- ----------
Net expenses 1,988,477
- ------------------------------------------------------------------------------------ ----------
Net investment income 7,881,134
- ------------------------------------------------------------------------------------
Net realized gain (loss) on investments--identified cost basis 322
- ------------------------------------------------------------------------------------ ----------
Change in net assets resulting from operations $7,881,456
- ------------------------------------------------------------------------------------ ----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
NEW YORK MUNICIPAL CASH TRUST
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
------------------------------
1994 1993
------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- --------------------------------------------------------------
OPERATIONS--
- --------------------------------------------------------------
Net investment income $ 7,881,134 $ 5,644,182
- --------------------------------------------------------------
Net realized gain (loss) on investments--identified cost basis 322 1,437
- -------------------------------------------------------------- ------------- -------------
Change in net assets resulting from operations 7,881,456 5,645,619
- -------------------------------------------------------------- ------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS--
- --------------------------------------------------------------
Dividends to shareholders from net investment income:
- --------------------------------------------------------------
Institutional Service Shares (5,630,675) (4,957,980)
- --------------------------------------------------------------
Cash Series Shares -- (2,054)
- --------------------------------------------------------------
Cash II Shares (2,250,459) (684,148)
- -------------------------------------------------------------- ------------- -------------
Change in net assets from distributions to shareholders (7,881,134) (5,644,182)
- -------------------------------------------------------------- ------------- -------------
FUND SHARE (PRINCIPAL) TRANSACTIONS--
- --------------------------------------------------------------
Proceeds from sale of shares 918,756,952 705,610,755
- --------------------------------------------------------------
Net asset value of shares issued to shareholders
in payment of dividends declared 2,705,999 903,326
- --------------------------------------------------------------
Cost of shares redeemed (884,074,127) (553,583,683)
- -------------------------------------------------------------- ------------- -------------
Change in net assets resulting from Fund share
transactions 37,388,824 152,930,398
- -------------------------------------------------------------- ------------- -------------
Change in net assets 37,389,146 152,931,835
- --------------------------------------------------------------
NET ASSETS:
- --------------------------------------------------------------
Beginning of period 333,241,974 180,310,139
- -------------------------------------------------------------- ------------- -------------
End of period $ 370,631,120 $ 333,241,974
- -------------------------------------------------------------- ------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
NEW YORK MUNICIPAL CASH TRUST
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SERVICE SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
--------------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988 1987 1986 1985
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- ---------------------
INCOME FROM
INVESTMENT
OPERATIONS
- ---------------------
Net investment
income 0.02 0.02 0.03 0.04 0.05 0.06 0.05 0.04 0.04 0.05
- ---------------------
LESS DISTRIBUTIONS
- ---------------------
Dividends to
shareholders from
net investment
income (0.02) (0.02) (0.03) (0.04) (0.05) (0.06) (0.05) (0.04) (0.04) (0.05)
- --------------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
NET ASSET VALUE, END
OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- --------------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
TOTAL RETURN* 2.35% 2.16% 3.01% 4.59% 5.51% 5.70% 4.66% 3.90% 4.35% 4.88%
- ---------------------
RATIOS TO AVERAGE NET
ASSETS
- ---------------------
Expenses 0.52% 0.54% 0.57% 0.52% 0.54% 0.55% 0.51% 0.47% 0.47% 0.47%
- ---------------------
Net investment
income 2.31% 2.14% 2.99% 4.48% 5.36% 5.56% 4.57% 3.81% 4.18% 4.75%
- ---------------------
Expense waiver/
reimbursement(a) 0.13% 0.17% -- -- -- -- -- -- -- --
- ---------------------
SUPPLEMENTAL DATA
- ---------------------
Net assets, end of
period (000 omitted) $236,580 $274,357 $164,492 $191,616 $197,213 $245,542 $212,786 $141,040 $183,941
$83,085
- ---------------------
</TABLE>
* Based on net asset value, which does not reflect the sales load or contingent
deferred sales charge, if applicable.
(a) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
NEW YORK MUNICIPAL CASH TRUST
FINANCIAL HIGHLIGHTS--CASH II SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
-----------------------------------------
1994 1993 1992 1991*
----- ----- ----- -----
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00
- ------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------------------
Net investment income 0.02 0.02 0.03 0.02
- ------------------------------------------------
LESS DISTRIBUTIONS
- ------------------------------------------------
Dividends to shareholders from net
investment income (0.02) (0.02) (0.03) (0.02)
- ------------------------------------------------ ----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00
- ------------------------------------------------ ----- ----- ----- -----
TOTAL RETURN** 2.15% 1.98% 2.86% 2.20%
- ------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------------------
Expenses 0.71% 0.71% 0.73% 0.46%(a)
- ------------------------------------------------
Net investment income 2.19% 1.96% 2.46% 4.08%(a)
- ------------------------------------------------
Expense waiver/reimbursement(b) 0.21% 0.17% -- --
- ------------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------------
Net assets, end of period (000 omitted) $134,051 $58,884 $4,641 $56
- ------------------------------------------------
</TABLE>
* For the period from April 25, 1991 (date of initial public investment) to
October 31, 1991.
** Based on net asset value, which does not reflect the sales load or contingent
deferred sales charge, if applicable.
(a) Computed on an annualized basis.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
NEW YORK MUNICIPAL CASH TRUST
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1994
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Federated Municipal Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "Act"), as an open-end, management
investment company. The Trust consists of thirteen non-diversified investment
portfolios. The financial statements included herein are only those of New York
Municipal Cash Trust (the "Fund"). The financial statements of the other
portfolios are presented separately. The assets of each portfolio are segregated
and a shareholder's interest is limited to the portfolio in which shares are
held. The Fund offers two classes of shares, Institutional Service Shares and
Cash II Shares. Effective November 9, 1992, Cash Series Shares were combined
with Cash II Shares.
On August 26, 1994, shareholders of the Fund approved the reorganization of the
Fund into a portfolio of the Trust. The information included in the financial
statements includes data from the period of time preceding the reorganization.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
<TABLE>
<S> <C>
A. INVESTMENT VALUATIONS--The Fund's use of the amortized cost method to value its
portfolio securities is in accordance with Rule 2a-7 under the Act.
B. INVESTMENT INCOME, EXPENSES, AND DISTRIBUTIONS--Interest income and expenses are accrued
daily. Bond premium and discount, if applicable, are amortized as required by the
Internal Revenue Code, as amended (the "Code"). Distributions to shareholders are
recorded on the ex-dividend date.
C. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the Code
applicable to regulated investment companies and to distribute to shareholders each year
substantially all of its tax-exempt income. Accordingly, no provisions for federal tax
are necessary. At October 31, 1994, the Fund, for federal tax purposes, had a capital
loss carryforward of $17,609, which will reduce the Fund's taxable income arising from
future net realized gain on investments, if any, to the extent permitted by the Code,
and thus will reduce the amount of the distributions to shareholders which would
otherwise be necessary to relieve the Fund of any liability for federal tax. Pursuant to
the Code, such capital loss carryforward will expire in 1996.
D. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in when-issued or
delayed delivery transactions. The Fund records when-issued securities on the trade date
and maintains security positions such that sufficient liquid assets will be available to
make payment for
</TABLE>
NEW YORK MUNICIPAL CASH TRUST
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
the securities purchased. Securities purchased on a when-issued or delayed delivery
basis are marked to market daily and begin earning interest on the settlement date.
E. CONCENTRATION OF CREDIT RISK--Since the Fund invests a substantial portion of its assets
in issuers located in one state, it will be more susceptible to factors adversely
affecting issuers of that state than would be a comparable general tax-exempt mutual
fund. In order to reduce the credit risk associated with such factors, at October 31,
1994, 42.9% of the securities in the portfolio of investments are backed by letters of
credit or bond insurance of various financial institutions and financial guaranty
assurance agencies. The value of investments insured by or supported (backed) by a
letter of credit for any one institution or agency did not exceed 6.7% of total
investments.
F. RESTRICTED SECURITIES--Restricted securities are securities that may only be resold upon
registration under Federal securities laws or in transactions exempt from such
registration. Many restricted securities may be resold in the secondary market in
transactions exempt from registration. In some cases, the restricted securities may be
resold without registration upon exercise of a demand feature. Such restricted
securities may be determined to be liquid under criteria established by the Board of
Trustees of the Trust (the "Trustees"). The Fund will not incur any registration costs
upon such resales. Restricted securities are valued at amortized cost in accordance with
Rule 2a-7 under the Act. Additional information on each restricted security held at
October 31, 1994 is as follows:
</TABLE>
<TABLE>
<CAPTION>
ACQUISITION ACQUISITION
SECURITY DATE COST
---------------------------------------------------- -------------------- ------------
<S> <C> <C>
New York City, NY, VRDC/IVRC Trust Weekly VRDNs 10/7/94 2,000,000
New York State Dormitory Authority Weekly VRDNs
PA-60 4/11/94 5,475,000
New York State Floating Rate Trust Certificate
Weekly VRDNs 4/12/93-7/2/93 8,000,000
New York State Medical Care Facilities Finance
Agency Weekly VRDNs 9/10/93 8,000,000
New York State Mortgage Agency Weekly VRDNs 9/30/94 5,000,000
New York State Mortgage Agency Weekly VRDNs
Homeowner Mortgage Revenue 12/30/93-3/4/94 7,980,000
New York State Power Authority VRDC Trust
Certificates Weekly VRDNs 9/10/93-6/7/94 16,000,000
G. OTHER--Investment transactions are accounted for on the trade date.
</TABLE>
NEW YORK MUNICIPAL CASH TRUST
- --------------------------------------------------------------------------------
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares. At October 31, 1994, capital paid in aggregated $370,648,729.
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
----------------------------
1994 1993
------------ ------------
<S> <C> <C>
INSTITUTIONAL SERVICE SHARES
- ----------------------------------------------------------------
Shares sold 548,493,561 547,195,442
- ----------------------------------------------------------------
Shares issued to shareholders in payment of dividends declared 758,005 399,406
- ----------------------------------------------------------------
Shares redeemed (587,029,347) (437,710,908)
- ---------------------------------------------------------------- ------------ ------------
Net change resulting from Institutional Service Shares share
transactions (37,777,781) 109,883,940
- ---------------------------------------------------------------- ------------ ------------
CASH SERIES SHARES
- ----------------------------------------------------------------
Shares sold -- 34,712
- ----------------------------------------------------------------
Shares issued to shareholders in payment of dividends declared -- --
- ----------------------------------------------------------------
Shares redeemed -- --
- ----------------------------------------------------------------
Shares exchanged for Cash II Shares -- (11,231,551)
- ---------------------------------------------------------------- ------------ ------------
Net change resulting from Cash Series Shares share
transactions -- (11,196,839)
- ---------------------------------------------------------------- ------------ ------------
CASH II SHARES
- ----------------------------------------------------------------
Shares sold 370,263,391 147,149,050
- ----------------------------------------------------------------
Shares issued in exchange for Cash Series Shares -- 11,231,551
- ----------------------------------------------------------------
Shares issued to shareholders in payment of dividends declared 1,947,994 503,920
- ----------------------------------------------------------------
Shares redeemed (297,044,780) (104,641,224)
- ---------------------------------------------------------------- ------------ ------------
Net change resulting from Cash II Shares share transactions 75,166,605 54,243,297
- ---------------------------------------------------------------- ------------ ------------
Net change resulting from Fund Share Transactions 37,388,824 152,930,398
- ---------------------------------------------------------------- ------------ ------------
</TABLE>
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Management, the Fund's investment adviser
(the "Adviser"), receives for its services an annual investment advisory fee
equal to .40 of 1% of the Fund's average daily net assets. The Adviser may
voluntarily choose to waive a portion of its fee. The Adviser can modify or
terminate this voluntary waiver at any time at its sole discretion. As of
September 2, 1994, the Fund changed its expense cap from contractual to
voluntary.
NEW YORK MUNICIPAL CASH TRUST
- --------------------------------------------------------------------------------
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Fund
with administrative personnel and services. Prior to March 1, 1994, these
services were provided at approximate cost. Effective March 1, 1994, the FAS fee
is based on the level of average aggregate daily net assets of all funds advised
by subsidiaries of Federated Investors for the period. The administrative fee
received during the period of the Administrative Services Agreement shall be at
least $125,000 per portfolio and $30,000 per each additional class of shares.
DISTRIBUTION AND SHAREHOLDER SERVICES FEE--The Fund has adopted a Distribution
Plan (the "Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the
Plan, the Fund will reimburse Federated Securities Corp. ("FSC"), the principal
distributor, from the net assets of the Fund to finance activities intended to
result in the sale of the Fund's Institutional Service Shares and Cash II
Shares. The Plan provides that the Fund may incur distribution expenses up to
.25 of 1% of the average daily net assets of the Institutional Service Shares
and Cash II Shares, respectively, annually, to reimburse FSC.
Under the terms of a Shareholder Services Agreement with Federated Shareholder
Services ("FSS"), the Fund will pay FSS a fee of up to .25 of 1% of average net
assets of the Fund for the period. This fee is to obtain certain personal
services for shareholders and to maintain shareholder accounts.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES--Federated Services Company
("FServ") serves as transfer and dividend disbursing agent for the Fund. The
FServ fee is based on the size, type, and number of accounts and transactions
made by shareholders.
INTERFUND TRANSACTIONS--During the year ended October 31, 1994, the Fund engaged
in purchase and sale transactions with other affiliated funds at current value
pursuant to Rule 17a-7 under the Act amounting to $342,760,000 and $367,980,000,
respectively.
Certain of the Officers and Trustees of the Trust are Officers and Directors or
Trustees of the above companies.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
FEDERATED MUNICIPAL TRUST (New York Municipal Cash Trust):
We have audited the accompanying statement of assets and liabilities of New York
Municipal Cash Trust (an investment portfolio of Federated Municipal Trust, a
Massachusetts business trust), including the schedule of portfolio investments,
as of October 31, 1994, and the related statements of operations and changes in
net assets, and the financial highlights for the year then ended. These
financial statements and financial highlights are the responsibility of the
Trust's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audit. The financial
statements referred to above for New York Municipal Cash Trust as of October 31,
1993, as well as the financial highlights for the periods ended October 31,
1985, through October 31, 1993, were audited by other auditors whose report
dated December 17, 1993, expressed an unqualified opinion on those statements
and financial highlights.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform our audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of October 31, 1994, by
correspondence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of New
York Municipal Cash Trust (an investment portfolio of Federated Municipal Trust)
as of October 31, 1994, and the results of its operations, changes in its net
assets and the financial highlights for the year then ended, in conformity with
generally accepted accounting principles.
Pittsburgh, Pennsylvania ARTHUR ANDERSEN LLP
December 14, 1994
TRUSTEES OFFICERS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
John F. Donahue John F. Donahue
John T. Conroy, Jr. Chairman
William J. Copeland Glen R. Johnson
James E. Dowd President
Lawrence D. Ellis, M.D. J. Christopher Donahue
Edward L. Flaherty, Jr. Vice President
Glen R. Johnson Richard B. Fisher
Peter E. Madden Vice President
Gregor F. Meyer Edward C. Gonzales
Wesley W. Posvar Vice President and Treasurer
Marjorie P. Smuts John W. McGonigle
Vice President and Secretary
David M. Taylor
Assistant Treasurer
G. Andrew Bonnewell
Assistant Secretary
</TABLE>
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risk,
including possible loss of principal. Although money market funds seek to
maintain a stable net asset value of $1.00 per share, there is no assurance that
they will be able to do so.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Fund's prospectus which contains facts concerning
its objective and policies, management fees, expenses and other information.
- -----------------------------------------------------------------------------
NORTH CAROLINA
- -----------------------------------------------------------------------------
MUNICIPAL
- -----------------------------------------------------------------------------
CASH
- -----------------------------------------------------------------------------
TRUST
- -----------------------------------------------------------------------------
ANNUAL REPORT
TO SHAREHOLDERS
October 31, 1994
FEDERATED SECURITIES CORP.
(LOGO)
---------------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
314229782
007232 (12/94)
PRESIDENT'S MESSAGE
- -------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the Annual Report to Shareholders for North Carolina
Municipal Cash Trust (the "Fund"), a portfolio of Federated Municipal Trust, for
the 10-month period from the Fund's start of business date of November 29, 1993,
through the Fund's fiscal year-end on October 31, 1994. The report begins with
an interview with portfolio manager Jeff Kozemchak about economic factors
affecting the Fund, followed by the Fund's Portfolio of Investments and
Financial Statements.
The Fund gives North Carolina residents two ways to pursue tax-free income--its
earnings are exempt from federal regular income tax and North Carolina personal
income tax.* Its portfolio includes high-quality, short-term North Carolina
municipal securities of more than 25 issuers that use municipal bond financing
for projects as varied as housing, industrial development, education, and health
care.
During the report period, the Fund paid shareholders a total of $1.5 million in
dividends, or $0.02 per share. At the end of the report period, the Fund's net
assets stood at $85.2 million.
As a wise investor, you can count on the Fund to ease your tax burden by
pursuing competitive tax-free yields--with the additional advantages of daily
liquidity and stability of principal.**
Thank you for your confidence in North Carolina Municipal Cash Trust. We welcome
your comments and suggestions.
Sincerely,
Glen R. Johnson
President
December 15, 1994
* Income may be subject to the federal alternative minimum tax.
** No money market fund can guarantee that a stable net asset value will be
maintained. An investment in the Fund is neither insured nor guaranteed by
the U.S. government.
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
An Interview with Fund Portfolio Manager Jeff A. Kozemchak
Q Recently, there has been a lot of concern, as well as press coverage, about
the subject of derivatives. What are derivatives?
A The term "derivative" has been applied to many different types of
investments. In the context of money market funds, derivatives generally
refer to adjustable rate securities designed for spec-
ulation on changes in interest rates. These speculative derivatives provide
above-market yields when interest rates fall or remain stable, or when the yield
curve is steep. They provide below-market yields, however, when interest rates
rise or become more volatile, or when the yield curve flattens. All three of
these latter conditions occurred in 1994. As a result, many of these speculative
securities lost a significant part of their value, enough to threaten the $1.00
per share price of some money market funds.
It is important to distinguish these speculative derivatives from adjustable
rate securities that are indexed to money market interest rates. These indexed
securities are designed to track changes in market rates, and should approximate
their par value in reasonably foreseeable market conditions. Tax-exempt money
market funds like the Fund have the right to tender many of these securities for
purchase at their par value. Money market funds have used these securities for
decades, through several interest rate cycles, without jeopardizing their stable
net asset values.
Q Do Federated Investors' money market funds invest in the derivatives that
have been in the headlines recently?
A No. None of Federated Investors' money market funds has invested in any of
the types of derivatives that have been in the headlines lately. Our mutual
funds only invest in adjustable rate securities that track changes in money
market interest rates.
With respect to speculative derivatives, we determined from the outset that the
potential volatility of these securities was contrary to the intent of the rules
governing the use of variable rate securities by money market funds. We also
realized the potential for these securities to deviate significantly from par
and threaten the $1.00 per share price of a money market fund. We spoke out
against the use of these securities by money market funds at industry
conferences throughout 1993, when the securities still offered attractive
yields. Our views were vindicated when, in June, 1994, the Securities and
Exchange Commission sent a letter to the Investment Company Institute requiring
money market funds to divest themselves of these securities in an orderly
manner. This caused some investment advisers to buy these securities from their
funds.
Q What happened to short-term interest rates over the period covered by this
Annual Report?
A There was a dramatic shift in the monetary policy of the Federal Reserve
Board (the "Fed") during the reporting period that ended October 31, 1994.
- --------------------------------------------------------------------------------
Throughout the fourth quarter of 1993, the Fed kept the Federal funds rate (the
rate banks charge each other for overnight loans) steady at 3.00%, where it had
been for a year and a half. The Fed had maintained short-term interest rates at
these low levels in order to stimulate the economy. However, in early 1994,
reports began to show stronger than anticipated economic growth. Real gross
national product grew at a 7.00% annual rate in the fourth quarter of 1993, and
the national unemployment rate declined to 6.00%. Concerned that these factors
could lead to an increase in wages and prices, the Fed took the first step on
February 4, 1994, to fight future inflation by raising its Federal funds rate
target to 3.25%. Since then, the Fed has continued to be aggressive, moving the
Federal funds rate target upward five more times from 3.25% to 5.50%.
Q How did municipal money market yields react to these rate increases?
A Municipal money market interest rates followed the upward movement in
taxable rates but to a slightly lesser degree, as they are affected by
federal, state and local tax factors as well as market supply and demand
imbalances.
The Fund's yields have proven to be responsive to the increases in money market
rates. For the period from February 1, 1994 (when the Fed began increasing
rates) to October 31, 1994, the Fund's tax-free, annualized seven-day net yield
increased from 2.09% to 2.94%.* At October 31, 1994, the seven-day yield was
equivalent to a taxable yield of 5.28% for those investors subject to the
highest federal and state tax brackets.** These numbers illustrate the Fund's
attractiveness relative to taxable investments.
Q What is your outlook for the markets and the Fund?
A The economy continues to show surprising resilience to the Fed's attempts
to bring growth under control. We expect that the Fed will act again to
tighten monetary policy in the first quarter of 1995. At that point in
time, the Federal funds target could be as high as 6.50%. As a result, we plan
to maintain a conservative posture in the near future, while attempting to
maximize performance through ongoing relative value analysis. However, we will
continue to monitor changing economic and market developments so as to serve our
clients attracted to the short-term tax-exempt securities market. In this
environment, stable net asset value money market funds like the Fund will
continue to be an important component in preserving capital, and should reflect
rising short-term interest rates with increasing net yields.
* Performance quoted represents past performance and is not indicative of
future results. Yields will vary.
** These numbers assume that state income taxes are fully deductible in
computing federal income tax liability.
NORTH CAROLINA MUNICIPAL CASH TRUST
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
---------- ------------------------------------------------------- --------- -----------
<C> <C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--99.3%
-------------------------------------------------------------------------
NORTH CAROLINA--94.6%
-------------------------------------------------------
$1,755,000 Alamance County, NC, IDA Weekly VRDNs (Series B)/
(Culp, Inc.)/(First Union National Bank LOC) P-1 $ 1,755,000
-------------------------------------------------------
2,000,000 Bladen County, NC, Industrial Facilities & Pollution
Control Financing Authority Weekly VRDNs
(Series 1993)/(BCH Energy, L.P.)/(Bank of Tokyo Ltd.
LOC)/(Subject to AMT) VMIG1 2,000,000
-------------------------------------------------------
1,000,000 Bladen County, NC, Industrial Facilities & Pollution
Control Financing Authority Weekly VRDNs (Series 1993)/
(Harriet & Henderson Yarns, Inc.)/(NationsBank of
North Carolina N.A. LOC)/(Subject to AMT) A-1 1,000,000
-------------------------------------------------------
1,600,000 Buncombe County, NC, Industrial Facilities & Pollution
Control Financing Authority Weekly VRDNs (Series
1991)/(Rich Mount, Inc.)/(Bank of Tokyo Ltd.
LOC)/(Subject to AMT) A-1 1,600,000
-------------------------------------------------------
2,280,000 Burke County, NC, Industrial Facilities & Pollution
Control Financing Authority Weekly VRDNs
(Norwalk Furniture Corp, Hickory Hill)/(Branch Banking
& Trust Co. LOC)/(Subject to AMT) P-1 2,280,000
-------------------------------------------------------
1,000,000 Catawba County, NC, Industrial Facilities & Pollution
Control Financing Authority Weekly VRDNs
(Series 1992)/(WSMP, Inc.)/(NationsBank of North
Carolina N.A. LOC)/(Subject to AMT) A-1 1,000,000
-------------------------------------------------------
4,600,000 Catawba County, NC, Industrial Facilities & Pollution
Control Financing Authority Weekly VRDNs (Series 1994)/
(Ethan Allen, Inc.)/(Bankers Trust Co. LOC) P-1 4,600,000
-------------------------------------------------------
900,000 Charlotte, NC, COPs 4.15% SB (Series 1994E)/
(New Charlotte Corp.)/(City of Charlotte Guaranty)/
(Subject to AMT), 9/1/95 AA 900,000
-------------------------------------------------------
</TABLE>
NORTH CAROLINA MUNICIPAL CASH TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
---------- ------------------------------------------------------- --------- -----------
<C> <C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
-------------------------------------------------------------------------
NORTH CAROLINA--CONTINUED
-------------------------------------------------------
$2,459,292 (a) Charlotte, NC, Weekly VRDNs Floating Rate Trust
Certificate (Series 1992)/(Credit Suisse Financial
Products BPA) P-1 $ 2,459,292
-------------------------------------------------------
1,500,000 Franklin County, NC, Industrial Facilities & Pollution
Control Financing Authority Weekly VRDNs
(Series 1992)/(Doninger Metals Corp.)/(Branch Banking &
Trust Co., Wilson LOC)/(Subject to AMT) P-1 1,500,000
-------------------------------------------------------
1,800,000 Guilford County, NC, Industrial Facilities & Pollution
Control Financing Authority Weekly VRDNs
(Series 1989)/(Bonset America Corp.)/(Industrial Bank
of Japan Ltd. LOC)/(Subject to AMT) A-1 1,800,000
-------------------------------------------------------
2,000,000 Guilford County, NC, Industrial Facilities & Pollution
Control Financing Authority Weekly VRDNs
(Series 1989)/(Culp, Inc.)/(Wachovia Bank of NC, N.A.
LOC)/(Subject to AMT) P-1 2,000,000
-------------------------------------------------------
2,545,000 Halifax County, NC, Industrial Facilities & Pollution
Control Financing Authority Daily VRDNs
(Series 1993)/(Westmoreland-LG&E Partners)/
(Credit Suisse LOC)/(Subject to AMT) A-1+ 2,545,000
-------------------------------------------------------
2,000,000 Lee County, NC, Industrial Facilities & Pollution
Control Financing Authority Weekly VRDNs (Series 1989)/
(Avondale Mills, Inc.)/(Trust Company Bank LOC) P-1 2,000,000
-------------------------------------------------------
2,000,000 Mecklenberg County, NC, Industrial Facilities &
Pollution Control Financing Authority Weekly VRDNs
(Manhasset Bay Associates)/(Bank of Tokyo Ltd. LOC)/
(Subject to AMT) A-1 2,000,000
-------------------------------------------------------
500,000 North Carolina Eastern Municipal Power Agency, 3.25% CP
(Series 1988)/(Morgan Guaranty Trust Co. and Union Bank
of Switzerland LOCs), Mandatory Tender 11/21/94 P-1 500,000
-------------------------------------------------------
</TABLE>
NORTH CAROLINA MUNICIPAL CASH TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
---------- ------------------------------------------------------- --------- -----------
<C> <C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
-------------------------------------------------------------------------
NORTH CAROLINA--CONTINUED
-------------------------------------------------------
$2,718,000 North Carolina Eastern Municipal Power Agency, 3.30% CP
(Industrial Bank of Japan Ltd. LOC), Mandatory Tender
11/18/94 A-1 $ 2,718,000
-------------------------------------------------------
1,000,000 North Carolina Eastern Municipal Power Agency, 3.30% CP
(Series 1988)/(Morgan Guaranty Trust Co. and Union Bank
of Switzerland LOCs), Mandatory Tender 11/28/94 P-1 1,000,000
-------------------------------------------------------
1,000,000 North Carolina Medical Care Commission Hospital Revenue
Bonds Weekly VRDNs (Series 1993)/
(Moses H. Cone Memorial Hospital) A-1+ 1,000,000
-------------------------------------------------------
2,520,000 North Carolina Municipal Power Agency #1, 3.30% CP,
Mandatory Tender 11/17/94 A-1 2,520,000
-------------------------------------------------------
7,100,000 North Carolina Municipal Power Agency #1, 9.50% SB,
(Catawba Electric)/(Prerefunded), Mandatory Tender
1/1/95 @103 AAA 7,380,026
-------------------------------------------------------
4,000,000 North Carolina State Capital Improvement, 4.60%, GO
Bonds (Series A), 2/1/95 AAA 4,014,738
-------------------------------------------------------
500,000 Onslow County, NC, Industrial Facilities & Pollution
Control Financing Authority Weekly VRDNs
(Mine Safety Appliances Co.)/(Sanwa Bank Ltd. LOC) A-1+ 500,000
-------------------------------------------------------
3,710,000 Orange County, NC, Industrial Facilities & Pollution
Control Financing Authority Weekly VRDNs
(Mebane Packaging Corp.)/(First Union
National Bank LOC)/(Subject to AMT) A-1+ 3,710,000
-------------------------------------------------------
1,400,000 Piedmont Triad Airport Authority Weekly VRDNs
(Triad International Maintenance Corp.)/
(Mellon Bank N.A. LOC)/(Subject to AMT) P-1 1,400,000
-------------------------------------------------------
2,200,000 Randolph County, NC, Industrial Facilities & Pollution
Control Financing Authority Weekly VRDNs
(Series 1990)/(Wayne Steel, Inc.)/(Bank One,
Akron LOC)/(Subject to AMT) P-1 2,200,000
-------------------------------------------------------
</TABLE>
NORTH CAROLINA MUNICIPAL CASH TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
---------- ------------------------------------------------------- --------- -----------
<C> <C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
-------------------------------------------------------------------------
NORTH CAROLINA--CONTINUED
-------------------------------------------------------
$3,000,000 Richmond County, NC, Industrial Facilities & Pollution
Control Financing Authority Weekly VRDNs
(Series 1991)/(Bibb Company)/(Citibank, N.A. LOC)/
(Subject to AMT) A-1 $ 3,000,000
-------------------------------------------------------
2,800,000 Rutherford County, NC, Industrial Facilities &
Pollution Control Financing Authority Weekly VRDNs
(Spring Ford Knitting Co.)/(Branch Banking & Trust Co.
LOC)/(Subject to AMT) A-1+ 2,800,000
-------------------------------------------------------
2,750,000 University of North Carolina, 3.25% CP (Series 1989)/
(University of NC at Chapel Hill General Alumni
Assoc.)/ (Credit Suisse LOC), 11/10/94 A-1+ 2,750,000
-------------------------------------------------------
4,000,000 University of North Carolina, 3.60% CP (Series 1990)/
(University of NC at Chapel Hill School of Medicine
Ambulatory Care Clinic), Mandatory Tender 1/12/95 A-1+ 4,000,000
-------------------------------------------------------
1,000,000 Wake County, NC, Industrial Facilities & Pollution
Control Financing Authority, 3.50% CP
(Series 1990A)/(Carolina Power & Light Company)/
(Fuji Bank Ltd. LOC), Mandatory Tender 1/19/95 A-1 1,000,000
-------------------------------------------------------
5,000,000 Wake County, NC, Industrial Facilities & Pollution
Control Financing Authority, 3.70% CP
(Series 1990B)/(Carolina Power & Light Company)/
(Fuji Bank Ltd. LOC), Mandatory Tender 2/9/95 A-1 5,000,000
-------------------------------------------------------
4,721,434 Wayne County, NC, Pollution Control Finance
Authority Weekly VRDNs (Cooper Industries)/
(Sanwa Bank Ltd. LOC) A-1+ 4,721,434
-------------------------------------------------------
1,000,000 Wilson County, NC, PCA, IDRB, Weekly VRDNs
(Series 1994)/(Granutec, Inc.)/(Branch Banking &
Trust Co. LOC)/(Subject to AMT) P-1 1,000,000
------------------------------------------------------- -----------
Total $80,653,490
------------------------------------------------------- -----------
</TABLE>
NORTH CAROLINA MUNICIPAL CASH TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
---------- ------------------------------------------------------- --------- -----------
<C> <C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
-------------------------------------------------------------------------
PUERTO RICO--4.7%
-------------------------------------------------------
$1,000,000 Puerto Rico Industrial Medical and Environment PCA
Weekly VRDNs (Ana G. Mendez Educational Fountain)/(Bank
of Tokyo Ltd. LOC) A-1 $ 1,000,000
-------------------------------------------------------
3,000,000 Puerto Rico Industrial, Medical & Environment PCA 4.00%
Annual TOBs (Series 1983A)/(Reynolds Metal Co.)/
(ABN AMRO Bank N.A. LOC), Optional Tender 9/1/95 VMIG1 3,002,424
------------------------------------------------------- -----------
Total 4,002,424
------------------------------------------------------- -----------
TOTAL INVESTMENTS, AT AMORTIZED COST $84,655,914+
------------------------------------------------------- -----------
</TABLE>
(a) Denotes restricted securities which are subject to resale under Federal
Securities laws. These securities have been determined to be liquid under
criteria established by the Board of Trustees.
* See Notes to Portfolio of Investments on page 9. Current credit ratings are
unaudited.
+ Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($85,249,020) at October 31, 1994.
The following abbreviations are used in this portfolio:
<TABLE>
<S> <C> <C>
AMT -- Alternative Minimum Tax
BPA -- Bond Purchase Agreement
COPs -- Certificates of Participation
CP -- Commercial Paper
GO -- General Obligation
IDA -- Industrial Development Authority
IDRB -- Industrial Development Revenue Bonds
LOC -- Letter of Credit
LOCs -- Letters of Credit
PCA -- Pollution Control Authority
SB -- Serial Bond
TOBs -- Tender Option Bonds
VRDNs -- Variable Rate Demand Notes
</TABLE>
(See Notes which are an integral part of the Financial Statements)
NORTH CAROLINA MUNICIPAL CASH TRUST
NOTES TO PORTFOLIO OF INVESTMENTS
(UNAUDITED)
- --------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL OBLIGATION RATINGS
STANDARD & POOR'S RATINGS GROUP
A Standard & Poor's note rating reflects the liquidity concerns and market
access risks unique to notes.
SP-1Very 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 SERVICES, INC.
Moody's short-term ratings are designated Moody's Investment Grade (MIG or VMIG
(see below)). The purpose of the MIG or VMIG ratings is to provide investors
with a simple system by which the relative investment qualities of short-term
obligations may be evaluated.
MIG1This 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.
MIG2This 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 & POOR'S RATINGS GROUP
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 long-term and the short-term ratings are provided below.)
MOODY'S INVESTORS SERVICES, INC.
Short-term ratings on issues with demand features are differentiated by the use
of the VMIG symbol to reflect such characteristics as 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 & POOR'S RATINGS GROUP
A S&P 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 highest category indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong
safety characteristics are denoted with a plus (+) sign designation.
A-2 Capacity for timely payment on issues with this designation is satisfactory.
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. Prime-1
repayment capacity will normally be evidenced by the following
characteristics: leading market positions in well established industries,
high rates of return on funds employed, conservative capitalization
structure with moderate reliance on debt and ample asset protection, broad
margins in earning coverage of fixed financial charges and high internal
cash generation, well-established access to a range of financial markets and
assured sources of alternate liquidity.
P-2 Issuers rated PRIME-2 (or related supporting institutions) have a strong
capacity for repayment of short-term promissory obligations. This will
normally be evidenced by many of the characteristics cited above, but to a
lesser degree. Earnings trends and coverage ratios, while sound, will be
more subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.
LONG-TERM DEBT RATINGS
STANDARD & POOR'S RATINGS GROUP
AAA Debt rated "AAA" has the highest rating assigned by S&P. 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 highest 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.
MOODY'S INVESTORS SERVICE, INC.
AAA Bonds that 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 edged." 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 that 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 that 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.
NR indicates that both the bonds and the obligor or credit enhancer are not
currently rated by S&P or Moody's 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 S&P or "Aaa" by Moody's.
NR(2) The underlying issuer/obligor/guarantor has other outstanding debt rated
"AA" by S&P or "Aa" Moody's.
NR(3) The underlying issuer/obligor/guarantor has other outstanding debt rated
"A" by S&P or Moody's.
NORTH CAROLINA MUNICIPAL CASH TRUST
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
--------------------------------------------------------------------------------
Investments in securities, at amortized cost and value $84,655,914
--------------------------------------------------------------------------------
Cash 159,832
--------------------------------------------------------------------------------
Interest receivable 539,073
--------------------------------------------------------------------------------
Deferred expenses 42,785
-------------------------------------------------------------------------------- -----------
Total assets 85,397,604
--------------------------------------------------------------------------------
LIABILITIES:
--------------------------------------------------------------------------------
Dividends payable $69,369
----------------------------------------------------------------------
Accrued expenses 79,215
---------------------------------------------------------------------- -------
Total liabilities 148,584
-------------------------------------------------------------------------------- -----------
NET ASSETS for 85,249,020 shares of beneficial interest outstanding $85,249,020
-------------------------------------------------------------------------------- -----------
NET ASSET VALUE, Offering Price, and Redemption Proceeds Per Share:
($85,249,020 / 85,249,020 shares of beneficial interest outstanding) $1.00
-------------------------------------------------------------------------------- -----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
NORTH CAROLINA MUNICIPAL CASH TRUST
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1994*
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
---------------------------------------------------------------------------------
Interest Income $1,791,005
---------------------------------------------------------------------------------
EXPENSES:
---------------------------------------------------------------------------------
Investment advisory fee $296,066
----------------------------------------------------------------------
Administrative personnel and services 52,447
----------------------------------------------------------------------
Custodian and portfolio accounting fees 57,523
----------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 14,824
----------------------------------------------------------------------
Fund share registration costs 7,470
----------------------------------------------------------------------
Shareholder services fee 110,145
----------------------------------------------------------------------
Legal fees 1,387
----------------------------------------------------------------------
Printing and postage 2,387
----------------------------------------------------------------------
Insurance premiums 5,051
----------------------------------------------------------------------
Miscellaneous 3,398
---------------------------------------------------------------------- --------
Total expenses 550,698
----------------------------------------------------------------------
Deduct--Waiver of investment advisory fee 261,597
---------------------------------------------------------------------- --------
Net expenses 289,101
--------------------------------------------------------------------------------- ----------
Net investment income $1,501,904
--------------------------------------------------------------------------------- ----------
</TABLE>
* For the period from November 29, 1993 (start of business) to October 31, 1994.
(See Notes which are an integral part of the Financial Statements)
NORTH CAROLINA MUNICIPAL CASH TRUST
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD ENDED
OCTOBER 31, 1994*
------------------
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
------------------------------------------------------------------------
OPERATIONS--
------------------------------------------------------------------------
Net investment income $ 1,501,904
------------------------------------------------------------------------ -----------------
DISTRIBUTIONS TO SHAREHOLDERS--
------------------------------------------------------------------------
Dividends to shareholders from net investment income (1,501,904)
------------------------------------------------------------------------ -----------------
FUND SHARE (PRINCIPAL) TRANSACTIONS--
------------------------------------------------------------------------
Proceeds from sale of shares 539,042,342
------------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of dividends
declared 1,065,423
------------------------------------------------------------------------
Cost of shares redeemed (454,858,745)
------------------------------------------------------------------------ -----------------
Change in net assets resulting from Fund share transactions 85,249,020
------------------------------------------------------------------------ -----------------
Change in net assets 85,249,020
------------------------------------------------------------------------
NET ASSETS:
------------------------------------------------------------------------
Beginning of period --
------------------------------------------------------------------------ -----------------
End of period $ 85,249,020
------------------------------------------------------------------------ -----------------
</TABLE>
* For the period from November 29, 1993 (start of business) to October 31, 1994.
(See Notes which are an integral part of the Financial Statements)
NORTH CAROLINA MUNICIPAL CASH TRUST
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
PERIOD ENDED
OCTOBER 31, 1994*
------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00
-------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
-------------------------------------------------------------------------
Net investment income 0.02
------------------------------------------------------------------------- -----------
LESS DISTRIBUTIONS
-------------------------------------------------------------------------
Dividends to shareholders from net investment income (0.02)
------------------------------------------------------------------------- -----------
NET ASSET VALUE, END OF PERIOD $ 1.00
------------------------------------------------------------------------- -----------
TOTAL RETURN** 2.06%
-------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
-------------------------------------------------------------------------
Expenses 0.49%(b)
-------------------------------------------------------------------------
Net investment income 2.54%(b)
-------------------------------------------------------------------------
Expense waiver/reimbursement (a) 0.44%(b)
-------------------------------------------------------------------------
SUPPLEMENTAL DATA
-------------------------------------------------------------------------
Net assets, end of period (000 omitted) $85,249
-------------------------------------------------------------------------
</TABLE>
* Reflects operations for the period from December 31, 1993 (date of initial
public investment), to October 31, 1994. For the period from November 29,
1993 (start of business) to December 31, 1993 the Fund had no investment
activity.
** Based on net asset value, which does not reflect the sales load or contingent
deferred sales charge, if applicable.
(a) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(b) Computed on an annualized basis.
(See Notes which are an integral part of the Financial Statements)
NORTH CAROLINA MUNICIPAL CASH TRUST
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1994
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Federated Municipal Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "Act"), as an open-end, management
investment company. The Trust consists of thirteen non-diversified portfolios.
The financial statements included herein are only those of North Carolina
Municipal Cash Trust (the "Fund"). The financial statements of the other
portfolios are presented separately. The assets of each portfolio are segregated
and a shareholder's interest is limited to the portfolio in which shares are
held.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles.
<TABLE>
<S> <C>
A. INVESTMENT VALUATIONS--The Fund's use of the amortized cost method to
value its portfolio
securities is in accordance with Rule 2a-7 under the Act.
B. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and
expenses are accrued
daily. Bond premium and discount, if applicable, are amortized as
required by the
Internal Revenue Code, as amended (the "Code"). Distributions to
shareholders are
recorded on the ex-dividend date.
C. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of
the Code
applicable to regulated investment companies and to distribute to
shareholders each year
substantially all of its tax-exempt income. Accordingly, no provisions
for federal tax
are necessary.
D. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or
delayed delivery transactions. The Fund records when-issued securities
on the trade date
and maintains security positions such that sufficient liquid assets will
be available to
make payment for the securities purchased. Securities purchased on a
when-issued or
delayed delivery basis are marked to market daily and begin earning
interest on the
settlement date.
E. DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its
shares in its first fiscal year, excluding the initial expense of
registering the shares,
have been deferred and are now being amortized using the straight-line
method over a
period of five years from the Fund's commencement date.
F. CONCENTRATION OF CREDIT RISK--Since the Fund invests a substantial
portion of its assets
in issuers located in one state, it will be more susceptible to factors
adversely
affecting issuers of that state than would be a comparable general tax-
exempt mutual
fund. In order to reduce the credit risk associated with such factors,
at October 31,
1994, 75% of the securities in the portfolio of investments
</TABLE>
NORTH CAROLINA MUNICIPAL CASH TRUST
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
are backed by letters of credit or bond insurance of various financial institutions and
financial guaranty assurance agencies. The value of investments insured by or supported
(backed) by a letter of credit for any one institution or agency did not exceed 8% of
total investments.
G. RESTRICTED SECURITIES--Restricted securities are securities that may only be resold upon
registration under Federal securities laws or in transactions exempt from such
registration. Many restricted securities may be resold in the secondary market in
transactions exempt from registration. In some cases, the restricted securities may be
resold without registration upon exercise of a demand feature. Such restricted securities
may be determined to be liquid under criteria established by the Board of Trustees (the
"Trustees"). The Fund will not incur any registration costs upon such resales. Restricted
securities are valued at amortized cost in accordance with Rule 2a-7 under the Act.
Additional information on each restricted security held at October 31, 1994 report date
is as follows:
</TABLE>
<TABLE>
<CAPTION>
ACQUISITION ACQUISITION
SECURITY DATE COST
----------------------------------------------------------- ------------- ------------
<S> <C> <C>
Charlotte, NC, Weekly VRDNs Floating Rate Trust
Certificates 3/2/94 $2,459,292
H. OTHER--Investment transactions are accounted for on the trade date.
</TABLE>
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value). At
October 31, 1994, capital paid-in aggregated $85,249,020. Transactions in Fund
shares were as follows:
<TABLE>
<CAPTION>
PERIOD ENDED
OCTOBER 31, 1994*
------------------------------------------------------------------------- ------------------
<S> <C>
Shares sold 539,042,342
-------------------------------------------------------------------------
Shares issued to shareholders in payment of dividends declared 1,065,423
-------------------------------------------------------------------------
Shares redeemed (454,858,745)
------------------------------------------------------------------------- ----------------
Net change resulting from Fund share transactions 85,249,020
------------------------------------------------------------------------- ----------------
</TABLE>
* For the period from November 29, 1993 (start of business) to October 31, 1994.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Management, the Fund's investment adviser
(the "Adviser"), receives for its services an annual investment advisory fee
equal to .50 of 1% of the Fund's average daily net assets. The Adviser may
voluntarily choose to waive its fee and reimburse certain operating expenses of
the Fund. The Adviser can modify or terminate this voluntary waiver and
reimbursement at any time at its sole discretion.
NORTH CAROLINA MUNICIPAL CASH TRUST
- --------------------------------------------------------------------------------
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Fund
with administrative personnel and services. Prior to March 1, 1994, these
services were provided at approximate cost. Effective March 1, 1994, the FAS fee
is based on the level of average aggregate daily net assets of all funds advised
by subsidiaries of Federated Investors for the period. The administrative fee
received during the period of the Administrative Services Agreement shall be at
least $125,000 per portfolio and $30,000 per each additional class of shares.
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement
with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to .25 of
1% of average net assets of the Fund for the period. This fee is to obtain
certain personal services for shareholders and to maintain shareholder accounts.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES--Federated Services Company
("FServ") serves as transfer and dividend disbursing agent for the Fund. The
FServ fee is based on the size, type, and number of accounts and transactions
made by shareholders.
ORGANIZATIONAL EXPENSES--Organizational expenses and start-up administrative
service expenses were borne initially by the Adviser. The Fund has agreed to
reimburse the Adviser for the organizational expenses and start-up
administrative expenses during the five year period following December 1, 1993
(date the Fund first became effective). For the year ended October 31, 1994, the
Fund paid $2,796 and $4,026, respectively, pursuant to this agreement.
INTERFUND TRANSACTIONS--During the year ended October 31, 1994, the Fund engaged
in purchase and sale transactions with other affiliated funds at current value
pursuant to Rule 17a-7 under the Act amounting to $244,234,292, and
$245,780,000, respectively.
Certain of the Officers and Trustees of the Trust are Officers and Directors or
Trustees of the above companies.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
FEDERATED MUNICIPAL TRUST (North Carolina Municipal Cash Trust):
We have audited the accompanying statement of assets and liabilities of North
Carolina Municipal Cash Trust (an investment portfolio of Federated Municipal
Trust, a Massachusetts business trust), including the schedule of portfolio
investments, as of October 31, 1994, and the related statements of operations
and changes in net assets, and the financial highlights for the period from
November 29, 1993 (start of business) to October 31, 1994. These financial
statements and financial highlights are the responsibility of the Trust's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform our audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of October 31, 1994, by
correspondence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of North
Carolina Municipal Cash Trust (an investment portfolio of Federated Municipal
Trust) as of October 31, 1994, and the results of its operations, the changes in
its net assets, and its financial highlights for the period from November 29,
1993 (start of business) to October 31, 1994, in conformity with generally
accepted accounting principles.
Pittsburgh, Pennsylvania ARTHUR ANDERSEN LLP
December 14, 1994
<TABLE>
<S> <C>
TRUSTEES OFFICERS
---------------------------------------------------------------------------------------------
John F. Donahue John F. Donahue
John T. Conroy, Jr. Chairman
William J. Copeland Glen R. Johnson
James E. Dowd President
Lawrence D. Ellis, M.D. J. Christopher Donahue
Edward L. Flaherty, Jr. Vice President
Glen R. Johnson Richard B. Fisher
Peter E. Madden Vice President
Gregor F. Meyer Edward C. Gonzales
Wesley W. Posvar Vice President and Treasurer
Marjorie P. Smuts John W. McGonigle
Vice President and Secretary
David M. Taylor
Assistant Treasurer
G. Andrew Bonnewell
Assistant Secretary
</TABLE>
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risk,
including possible loss of principal. Although money market funds seek to
maintain a stable net asset value of $1.00 per share, there is no assurance that
they will be able to do so.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Fund's prospectus which contains facts concerning
its objective and policies, management fees, expenses and other information.
- --------------------------------------------------------------------------------
OHIO
- --------------------------------------------------------------------------------
MUNICIPAL
- --------------------------------------------------------------------------------
CASH
- --------------------------------------------------------------------------------
TRUST
- --------------------------------------------------------------------------------
ANNUAL REPORT
TO SHAREHOLDERS
OCTOBER 31, 1994
FEDERATED SECURITIES CORP.
(LOGO)
- ---------------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
314229840
314229857
G00829-01 (12/94)
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the Annual Report to Shareholders for Ohio Municipal
Cash Trust (the "Fund"), a portfolio of Federated Municipal Trust, for the
12-month period ended October 31, 1994. The Fund consists of two classes of
shares known as Cash II Shares and Institutional Shares. The report begins with
an interview with portfolio manager Jeff Kozemchak about economic factors
affecting the Fund, followed by the Fund's Portfolio of Investments and
Financial Statements. In addition, Financial Highlights tables have been
included for Cash II Shares and Institutional Shares.
The Fund gives Ohio residents two ways to pursue tax-free income--its earnings
are exempt from federal regular income tax and Ohio personal income tax.* Its
portfolio includes high-quality, short-term Ohio municipal securities of more
than 60 issuers that use municipal bond financing for projects as varied as
housing, industrial development, education, and health care.
During the report period, the Fund paid shareholders a total of $4.5 million in
dividends, or $0.02 per share. At the end of the report period, the Fund's net
assets stood at $218.5 million.
As a wise investor, you can count on the Fund to ease your tax burden by
pursuing competitive tax-free yields--with the additional advantages of daily
liquidity and stability of principal.**
Thank you for your confidence in Ohio Municipal Cash Trust. We welcome your
comments and suggestions.
Sincerely,
Glen R. Johnson
President
December 15, 1994
* Income may be subject to the federal alternative minimum tax.
** No money market mutual fund can guarantee that a stable net asset value will
be maintained. An investment in the Fund is neither insured nor guaranteed by
the U.S. government.
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
An Interview with Fund Portfolio Manager Jeff A. Kozemchak
Q Recently, there has been a lot of concern, as well as press coverage, about
the subject of derivatives. What are derivatives?
A The term "derivative" has been applied to many different types of
investments. In the context of money market funds, derivatives generally
refer to adjustable rate securities designed for speculation on changes
in interest rates. These speculative derivatives provide
above-market yields when interest rates fall or remain stable, or when the yield
curve is steep. They provide below-market yields, however, when interest rates
rise or become more volatile, or when the yield curve flattens. All three of
these latter conditions occurred in 1994. As a result, many of these speculative
securities lost a significant part of their value, enough to threaten the $1.00
per share price of some money market funds.
It is important to distinguish these speculative derivatives from adjustable
rate securities that are indexed to money market interest rates. These indexed
securities are designed to track changes in market rates, and should approximate
their par value in reasonably foreseeable market conditions. Tax-exempt money
market funds like the Fund have the right to tender many of these securities for
purchase at their par value. Money market funds have used these securities for
decades, through several interest rate cycles, without jeopardizing their stable
net asset values.
Q Do Federated Investors' money market funds invest in the derivatives that
have been in the headlines recently?
A No. None of Federated Investors' money market funds has invested in any of
the types of derivatives that have been in the headlines lately. Our mutual
funds only invest in adjustable rate securities that track changes in money
market interest rates.
With respect to speculative derivatives, we determined from the outset that the
potential volatility of these securities was contrary to the intent of the rules
governing the use of variable rate securities by money market funds. We also
realized the potential for these securities to deviate significantly from par
and threaten the $1.00 per share price of a money market fund. We spoke out
against the use of these securities by money market funds at industry
conferences throughout 1993, when the securities still offered attractive
yields. Our views were vindicated when, in June, 1994, the Securities and
Exchange Commission sent a letter to the Investment Company Institute requiring
money market funds to divest themselves of these securities in an orderly
manner. This caused some investment advisers to buy these securities from their
funds.
- --------------------------------------------------------------------------------
Q What happened to short-term interest rates over the period covered by this
Annual Report?
A There was a dramatic shift in the monetary policy of the Federal Reserve
Board (the "Fed") during the 12-month reporting period that ended October
31, 1994.
Throughout the fourth quarter of 1993, the Fed kept the Federal funds rate (the
rate banks charge each other for overnight loans) steady at 3.00%, where it had
been for a year and a half. The Fed had maintained short-term interest rates at
these low levels in order to stimulate the economy. However, in early 1994,
reports began to show stronger than anticipated economic growth. Real gross
national product grew at a 7.00% annual rate in the fourth quarter of 1993, and
the national unemployment rate declined to 6.00%. Concerned that these factors
could lead to an increase in wages and prices, the Fed took the first step on
February 4, 1994, to fight future inflation by raising its Federal funds rate
target to 3.25%. Since then, the Fed has continued to be aggressive, moving the
Federal funds rate target upward five more times from 3.25% to 5.50%.
Q How did municipal money market yields react to these rate increases?
A Municipal money market interest rates followed the upward movement in
taxable rates but to a slightly lesser degree, as they are affected by
federal, state and local tax factors as well as market supply and demand
imbalances.
The Fund's yields have proven to be responsive to the increases in money market
rates. For the 12-month reporting period ended October 31, 1994, the Fund's
tax-free, annualized seven-day net yields increased from 2.24% and 1.94% to
2.94% and 2.64% for the Institutional Shares and Cash II Shares, respectively.*
At October 31, 1994, these seven-day yields were equivalent to a taxable yields
of 5.26% (Institutional Shares) and 4.73% (Cash II Shares) for those investors
subject to the highest federal and state tax brackets.** These numbers
illustrate the Fund's attractiveness relative to taxable investments.
* Performance quoted represents past performance and is not indicative of
future results. Yields will vary.
** These numbers assume that state income taxes are fully deductible in
computing federal income tax liability.
- --------------------------------------------------------------------------------
Q What is your outlook for the markets and the Fund?
A The economy continues to show surprising resilience to the Fed's attempts
to bring growth under control. We expect that the Fed will act again to
tighten monetary policy in the first quarter of 1995. At that point in
time, the Federal funds target could be as high as 6.50%. As a result, we plan
to maintain a conservative posture in the near future, while attempting to
maximize performance through ongoing relative value analysis. However, we will
continue to monitor changing economic and market developments so as to serve our
clients attracted to the short-term tax-exempt securities market. In this
environment, stable net asset value money market funds like the Fund will
continue to be an important component in preserving capital, and should reflect
rising short-term interest rates with increasing net yields.
OHIO MUNICIPAL CASH TRUST
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ----------- ------------------------------------------------------ -------- ------------
<C> <C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--102.6%
- ------------------------------------------------------------------------
OHIO--100.8%
------------------------------------------------------
$ 3,000,000 Akron, OH, Sanitary Sewer System Weekly VRDNs (Credit
Suisse LOC) VMIG1 $ 3,000,000
------------------------------------------------------
1,575,000 Akron, OH, Street Improvement Notes, 2.93% BANs
(Series 1993), 12/15/94 NR(3) 1,575,332
------------------------------------------------------
500,000 Allen County, OH, IDR Weekly VRDNs (Nickles Bakery of
Ohio, Inc.)/(Society Bank LOC)/
(Subject to AMT) P-1 500,000
------------------------------------------------------
2,300,000 Belmont County, OH, 4.55% County Jail Improvement BANs
(Third Series), 9/1/95 NR 2,306,390
------------------------------------------------------
5,875,000 Belmont County, OH, Weekly VRDNs (Lesco, Inc.)/
(PNC Bank N.A. LOC)/(Subject to AMT) A-1 5,875,000
------------------------------------------------------
2,000,000 Brook Park County, OH, 4.21% General Ltd. Tax City
Services Buildings BANs, 3/30/95 NR(3) 2,002,491
------------------------------------------------------
2,100,000 Brooklyn, OH, 3.875% BANs, 2/9/95 NR(3) 2,101,243
------------------------------------------------------
4,000,000 Cincinnati-Hamilton County, OH, Port Authority
Weekly VRDNS (4th Street Limited Partnership)/
(PNC Bank, Kentucky LOC) P-1 4,000,000
------------------------------------------------------
200,000 Cleveland, OH, IDA Weekly VRDNs (Garland Company)/
(Society National Bank LOC) P-1 200,000
------------------------------------------------------
4,000,000 Cleveland, OH, IDA, 4.00% Public Power System Revenue
BANs (Cleveland Public Power Guaranty), 12/29/94 MIG1 4,003,757
------------------------------------------------------
1,900,000 Clinton County, OH, Hospital Authority Weekly VRDNs
(Clinton Memorial Hospital)/(BancOhio National Bank
LOC) P-1 1,900,000
------------------------------------------------------
2,000,000 Columbiana County, OH, Adjustable Rate IDRB Weekly
VRDNs (C & S Land Company)/(Bank One, Youngstown NA
LOC)/(Subject to AMT) P-1 2,000,000
------------------------------------------------------
</TABLE>
OHIO MUNICIPAL CASH TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ----------- ------------------------------------------------------ -------- ------------
<C> <C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------
OHIO--CONTINUED
------------------------------------------------------
$ 1,185,000 Crawford County, OH, IDA, 3.90% TOBs (United
Photographic, Industries)/(Bank One, Columbus N.A.
LOC), Optional Tender 3/1/95 P-1 $ 1,185,000
------------------------------------------------------
900,000 Cuyahoga County, OH, IDA Weekly VRDNs
(Animal Protection League)/(Society Bank N.A. LOC) P-1 900,000
------------------------------------------------------
740,000 Cuyahoga County, OH, IDA Weekly VRDNs (Parma-Commerce
Parkway-West)/(Society Bank N.A. LOC) P-1 740,000
------------------------------------------------------
1,400,000 Cuyahoga County, OH, IDA Weekly VRDNs (Premier
Manufacturing)/(First National Bank, Louisville LOC)/
(Subject to AMT) P-1 1,400,000
------------------------------------------------------
1,950,000 Cuyahoga County, OH, IDR Weekly VRDNs (East Park
Retirement Community, Inc.)/(Society Bank N.A. LOC)/
(Subject to AMT) P-1 1,950,000
------------------------------------------------------
750,000 Cuyahoga County, OH, IDR Weekly VRDNs (Interstate
Diesel Service, Inc.)/(Huntington National Bank LOC)/
(Subject to AMT) P-1 750,000
------------------------------------------------------
3,215,000 Cuyahoga Falls, OH, 2.82% BANs, 1/18/95 NR(3) 3,216,470
------------------------------------------------------
3,000,000 Dayton, OH, Weekly VRDNs (Series 1993E)/(Emery Air
Freight Corp.)/(Mellon Bank N.A. LOC) VMIG1 3,000,000
------------------------------------------------------
3,255,000 Franklin County, OH, IDA Weekly VRDNs (Unicorn Leasing
Co.)/(Fifth Third Bank LOC)/(Subject to AMT) P-1 3,255,000
------------------------------------------------------
4,500,000 Franklin County, OH, IDR Weekly VRDNs
(Heekin Can, Inc.)/(PNC Bank N.A. LOC) P-1 4,500,000
------------------------------------------------------
2,000,000 Franklin County, OH, IDRB Weekly VRDNs (Tigerpoly
Manufacturing, Inc.)/(Mitsubishi Bank Ltd. LOC)/
(Subject to AMT) P-1 2,000,000
------------------------------------------------------
3,000,000 Greene County, OH, 4.25% GO BANs (Series B), 7/19/95 NR(3) 3,004,083
------------------------------------------------------
3,000,000 Greene County, OH, 4.32% Variable Purpose Water &
Sewer BANs, 7/19/95 NR(3) 3,004,537
------------------------------------------------------
</TABLE>
OHIO MUNICIPAL CASH TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ----------- ------------------------------------------------------ -------- ------------
<C> <C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------
OHIO--CONTINUED
------------------------------------------------------
$ 6,000,000 Hamilton County, OH, Health Care System Weekly VRDNs
(West Park Retirement Community, Inc.)/
(Fifth Third Bank LOC) VMIG1 $ 6,000,000
------------------------------------------------------
7,500,000 Hamilton County, OH, Hospital Authority Revenue
Bonds Weekly VRDNs (Series 1986A)/
(Good Samaritan Hospital Guaranty) A-1 7,500,000
------------------------------------------------------
2,260,000 (a) Hamilton County, OH, Sewer System Improvement and
Revenue Bonds Weekly VRDNs (P-FLOATS)/
(FGIC Insured) VMIG1 2,260,000
------------------------------------------------------
2,375,000 Hamilton, OH, Municipal Golf Course Improvement Notes,
3.79% GO BANs (Series D), 5/12/95 NR(3) 2,375,471
------------------------------------------------------
760,000 Hillsboro, OH, IDR Weekly VRDNs (Series 1987)/
(TD Manufacturing Ltd.)/(Sanwa Bank Ltd. LOC)/
(Subject to AMT) VMIG1 760,000
------------------------------------------------------
2,000,000 Holmes County, OH, IDA Weekly VRDNs (Poultry
Processing, Inc.)/(Rabobank Nederland LOC)/
(Subject to AMT) A-1+ 2,000,000
------------------------------------------------------
4,830,000 Indian Valley, OH, Local School District, 4.125%
School Improvement BANs, 4/12/95 NR 4,832,599
------------------------------------------------------
300,000 Kettering, OH, IDA Weekly VRDNs (Center-Plex Venture,
Inc.)/(Society National Bank LOC) P-1 300,000
------------------------------------------------------
4,730,000 Lorain, OH, Port Authority Weekly VRDNs (Series 1994)/
(Spitzer Great Lakes Ltd. Inc.)/(Bank One, Cleveland
LOC)/(Subject to AMT) P-1 4,730,000
------------------------------------------------------
3,570,000 Lucas County, OH, 3.60% GO BANs, 12/15/94 NR(4) 3,571,665
------------------------------------------------------
325,000 Lucas County, OH, Health Care Improvement Weekly VRDNs
(Sunshine Children's Home)/(National City Bank,
Cleveland LOC) P-1 325,000
------------------------------------------------------
</TABLE>
OHIO MUNICIPAL CASH TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ----------- ------------------------------------------------------ -------- ------------
<C> <C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------
OHIO--CONTINUED
------------------------------------------------------
$ 2,030,000 Lucas County, OH, Hospital Facility Improvement
Revenue Bonds Weekly VRDNs (Series 93)/(Lott
Industries, Inc.)/(National City Bank LOC) P-1 $ 2,030,000
------------------------------------------------------
2,000,000 Lucas County, OH, IDA Weekly VRDNs (Kuhlman
Corp.)/(Society Bank N.A. LOC) P-1 2,000,000
------------------------------------------------------
120,000 Mahoning County, OH, IDR Weekly VRDNs (Tru-Cut Die
Corp.)/(PNC Bank, Ohio N.A. LOC)/(Subject to AMT) P-1 120,000
------------------------------------------------------
5,325,000 Mahoning County, OH, Multifamily HFA Weekly VRDNs
(International Towers Inc.)/(PNC Bank N.A. LOC)/
(Subject to AMT) A-1 5,325,000
------------------------------------------------------
1,390,000 Mansfield, OH, IDR Weekly VRDNs (Designed Metal
Products, Inc.)/(Bank One, Indianapolis LOC)/
(Subject to AMT) P-1 1,390,000
------------------------------------------------------
1,750,000 Massillon, OH, 4.84% BANs, 10/5/95 NR(3) 1,757,600
------------------------------------------------------
350,000 Medina County, OH, IDA Weekly VRDNs (National Metal
Abrasive, Inc.)/(Society Bank N.A. LOC) P-1 350,000
------------------------------------------------------
490,000 Medina County, OH, IDR, 3.95% TOBs (Bopco)/(Bank One,
Akron N.A. LOC)/(Subject to AMT), Optional Tender
3/1/95 P-1 490,000
------------------------------------------------------
500,000 Muskingham County, OH, Hospital Facilities
Authority Weekly VRDNs (Bethesda Care Systems)/
(BancOhio National Bank LOC) VMIG1 500,000
------------------------------------------------------
3,350,000 North Olmsted, OH, 4.20% GO BANs (Series 1994C),
6/22/95 NR(3) 3,356,159
------------------------------------------------------
395,000 North Olmsted, OH, IDA Weekly VRDNs
(Bryant & Stratton Corp.)/(Society Bank N.A. LOC)/
(Subject to AMT) P-1 395,000
------------------------------------------------------
775,000 North Olmsted, OH, IDA, 3.70% TOBs (Therm-All)/
(National City Bank, Cleveland LOC)/(Subject to AMT),
Mandatory Tender 2/1/95 P-1 775,000
------------------------------------------------------
</TABLE>
OHIO MUNICIPAL CASH TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ----------- ------------------------------------------------------ -------- ------------
<C> <C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------
OHIO--CONTINUED
------------------------------------------------------
$ 6,430,000 (a) Ohio HFA Single Family Mortgage Weekly VRDNs (Series
PT-8)/(GNMA Collateralized)/(Subject to AMT) A-1+ $ 6,430,000
------------------------------------------------------
2,285,000 Ohio HFA Weekly VRDNs (Westchester Village)/(Society
Bank LOC) P-1 2,285,000
------------------------------------------------------
7,575,000 Ohio HFA 3.20% TOBs (Lincoln Park
Association)/(Comerica, Inc. LOC), 11/1/94 P-1 7,575,000
------------------------------------------------------
7,405,000 Ohio HFA 3.95% TOBs (Comerica, Inc. LOC), Optional
Tender 5/1/95 P-1 7,405,000
------------------------------------------------------
3,800,000 Ohio State Air Quality Development Authority Weekly
VRDNs (Series 1998A)/(PPG Industries, Inc. Guaranty) P-1 3,800,000
------------------------------------------------------
2,500,000 Ohio State Air Quality Development Authority, 3.35% CP
(Cincinnati Gas and Electric Co.)/(Morgan Bank
(Delaware)/(Wilmington LOC), Mandatory Tender 12/12/94 A-1+ 2,500,000
------------------------------------------------------
3,500,000 Ohio State Air Quality Development Authority, 3.65% CP
(Cleveland Electric Illuminating Company)/(FGIC
Insured), Mandatory Tender 1/17/95 A-1+ 3,500,000
------------------------------------------------------
1,520,000 Ohio State IDR Weekly VRDNs (Series 1991)/
(Standby Screw, Inc.)/(BancOhio National Bank LOC)/
(Subject to AMT) A-1+ 1,520,000
------------------------------------------------------
1,500,000 Ohio State IDR Weekly VRDNs (Series 1994)/
(Anomatic Corporate)/(National City Bank LOC)/
(Subject to AMT) P-1 1,500,000
------------------------------------------------------
2,500,000 Ohio State Multimodal Water Development Authority
Weekly VRDNs (Series 1993)/(Timken Company)/
(Wachovia Bank of Georgia N.A. LOC) A-1+ 2,500,000
------------------------------------------------------
5,000,000 Ohio State Water Development Authority, PCR Weekly
VRDNs (Series 1989)/(Duquesne Light Power Company)/
(Barclays Bank PLC LOC)/(Subject to AMT) A-1+ 5,000,000
------------------------------------------------------
</TABLE>
OHIO MUNICIPAL CASH TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ----------- ------------------------------------------------------ -------- ------------
<C> <C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------
OHIO--CONTINUED
------------------------------------------------------
$ 1,260,000 (a) Ohio State Water Development Authority, Pure Water
Refunding & Improvement Bonds Weekly VRDNs (Series
PA-56)/(AMBAC Insured) VMIG1 $ 1,260,000
------------------------------------------------------
2,500,000 Ohio State Water Development Authority, 3.25% CP
(Series A)/(Cleveland Electric Illuminating Co.)/
(FGIC Insured), Mandatory Tender 11/7/94 A-1+ 2,500,000
------------------------------------------------------
1,750,000 Ohio State Water Development Authority, PCR 4.25% TOBs
(Series 1998B)/(Ohio Edison Co.)/
(Barclays Bank PLC LOC)/(Subject to AMT), Optional
Tender 9/1/95 A-1+ 1,750,000
------------------------------------------------------
1,000,000 Ohio State Water PCR Bonds Weekly VRDNs
(PPG Industries) P-1 1,000,000
------------------------------------------------------
700,000 Ohio State Weekly VRDNs (John Carroll University)/
(PNC Bank N.A. LOC) P-1 700,000
------------------------------------------------------
1,500,000 Orrville, OH, IDA Weekly VRDNs (O.S. Associates)/
(National City Bank LOC)/(Subject to AMT) A-1 1,500,000
------------------------------------------------------
1,000,000 Pickaway County, OH, IDA Weekly VRDNs
(PPG Industries) P-1 1,000,000
------------------------------------------------------
1,000,000 Portage County, OH, IDA Adjustable Rate Industries
Revenue Bonds Weekly VRDNs (Lovejoy Industries)/
(Starbank N.A. LOC)/(Subject to AMT) P-1 1,000,000
------------------------------------------------------
310,000 Portage County, OH, IDA Weekly VRDNs
(D & W Associates)/(Society National Bank N.A. LOC) P-1 310,000
------------------------------------------------------
430,000 Portage County, OH, IDA, 3.95% TOBs (Neidlinger
Industries)/(Society National Bank LOC)/(Subject to
AMT), Optional Tender 3/1/95 P-1 430,000
------------------------------------------------------
5,500,000 Richenbacker County, OH, Weekly VRDNs
(Series 1992)/(Richenbacker Holdings, Inc.)/
(Bank One, Columbus N.A. LOC) P-1 5,500,000
------------------------------------------------------
</TABLE>
OHIO MUNICIPAL CASH TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ----------- ------------------------------------------------------ -------- ------------
<C> <C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------
OHIO--CONTINUED
------------------------------------------------------
$ 1,600,000 Sharonville, OH, IDR Weekly VRDNs (Xtek, Inc.)/
(Fifth Third Bank LOC)/(Subject to AMT) VMIG1 $ 1,600,000
------------------------------------------------------
880,000 Solon, OH, IDR Weekly VRDNs (Graphic Laminating,
Inc.)/(Society Bank N.A. LOC) P-1 880,000
------------------------------------------------------
1,600,000 Stark County, OH, IDR Weekly VRDNs
(Sancap Abrasives)/(Society Bank N.A. LOC) P-1 1,600,000
------------------------------------------------------
1,000,000 Stark County, OH, IDR Weekly VRDNs
(Series 1994)/(Wilkof Morris)/(Society Bank N.A. LOC)/
(Subject to AMT) P-1 1,000,000
------------------------------------------------------
600,000 Student Loan Funding Corp. of Cincinnati, OH, Weekly
VRDNs (Series 1991A)/(National Westminster
Bank PLC LOC)/(Subject to AMT) VMIG1 600,000
------------------------------------------------------
5,220,000 Summit County, OH, 3.55% BANs (Series 1994), 12/12/94 SP-1 5,221,132
------------------------------------------------------
1,250,000 Summit County, OH, 3.85% BANs (Series 1994C), 3/9/95 SP-1 1,251,067
------------------------------------------------------
1,000,000 Summit County, OH, IDB Weekly VRDNs (Series 1994)/
(Austin Printing Co., Inc.)/(Bank One, Akron N.A.
LOC)/ (Subject to AMT) P-1 1,000,000
------------------------------------------------------
4,500,000 Summit County, OH, IDB Weekly VRDNs (Series 1994)/
(Harry London Candies, Inc.)/(Bank One, Akron N.A.
LOC)/(Subject to AMT) P-1 4,500,000
------------------------------------------------------
1,345,000 Summit County, OH, IDB 3.70% TOBs (Matech Machine Tool
Co.)/(Bank One, Akron N.A. LOC)/(Subject to AMT),
Mandatory Tender 2/1/95 P-1 1,345,000
------------------------------------------------------
950,000 Summit County, OH, IDB 3.75% TOBs (S.D. Meyers, Inc.)/
(Bank One, Akron N.A. LOC)/(Subject to AMT), Optional
Tender 2/15/95 P-1 950,000
------------------------------------------------------
825,000 Summit County, OH, IDB 3.90% TOBs (Universal Rack &
Equipment Co.)/(National City Bank, Cleveland LOC)/
(Subject to AMT), Optional Tender 3/1/95 P-1 825,000
------------------------------------------------------
</TABLE>
OHIO MUNICIPAL CASH TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ----------- ------------------------------------------------------ -------- ------------
<C> <C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------
OHIO--CONTINUED
------------------------------------------------------
$ 410,000 Summit County, OH, IDB 3.95% TOBs (Keltec Industries)/
(Bank One, Akron N.A. LOC)/(Subject to AMT), Optional
Tender 3/1/95 P-1 $ 410,000
------------------------------------------------------
3,100,000 Summit County, OH, IDR Weekly VRDNs (Maison Aine
Limited Partnership)/(Society Bank N.A. LOC)/
(Subject to AMT) P-1 3,100,000
------------------------------------------------------
1,155,000 Summit County, OH, IDR, 3.40% TOBs (Rogers Industrial
Products, Inc.)/(Bank One, Akron N.A. LOC), 11/1/94 P-1 1,155,000
------------------------------------------------------
850,000 Summit County, OH, IDR, 3.50% Semi-Annual TOBs
(Bechmer-Boyce)/(Society National Bank LOC), 1/15/95 P-1 850,000
------------------------------------------------------
1,740,000 Toledo, OH, City Service Special Assessment Notes,
4.15% BANs, 6/1/95 MIG1 1,741,904
------------------------------------------------------
1,000,000 Toledo-Lucas County, OH, Port Authority IDA Weekly
VRDNs (Medusa Corporation)/(Bayerische Vereinsbank
AG LOC)/(Subject to AMT) AAA 1,000,000
------------------------------------------------------
2,400,000 Toledo-Lucas County, OH, Port Authority IDA, 3.40% CP
(CSX Corp.)/(Bank of Nova Scotia LOC), Mandatory
Tender 12/14/94 A-1+ 2,400,000
------------------------------------------------------
2,000,000 Toledo-Lucas County, OH, Port Authority IDA, 3.55% CP
(CSX Corp.)/(Bank of Nova Scotia LOC), Mandatory
Tender 1/12/95 A-1+ 2,000,000
------------------------------------------------------
800,000 Trumbull County, OH, IDA Weekly VRDNs (Series 1989)/
(McDonald Steel, Inc.)/(PNC Bank N.A. LOC)/
(Subject to AMT) A-1 800,000
------------------------------------------------------
1,380,000 Trumbull County, OH, IDA Weekly VRDNs (Series 1994)/
(Churchill Downs, Inc.)/(Bank One, Columbus N.A.
LOC)/(Subject to AMT) P-1 1,380,000
------------------------------------------------------
3,000,000 University of Cincinnati, OH, 4.75% BANs (Series T),
8/30/95 MIG1 3,016,722
------------------------------------------------------
1,300,000 West Carrollton City, OH, 2.87% BANs, 11/17/94 NR 1,300,039
------------------------------------------------------
</TABLE>
OHIO MUNICIPAL CASH TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ----------- ------------------------------------------------------ -------- ------------
<C> <C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------
OHIO--CONTINUED
------------------------------------------------------
$ 4,300,000 Westlake, OH, IDR Weekly VRDNs (Kahal Limited
Partnership)/(Society Bank LOC)/(Subject to AMT) P-1 $ 4,300,000
------------------------------------------------------
1,800,000 Wood County, OH, Weekly VRDNs (Principle Business
Enterprises)/(National City Bank LOC)/(Subject to AMT) P-1 1,800,000
------------------------------------------------------
1,800,000 Worthington, OH, City School Dist., 3.17% BANs,
11/15/94 NR(3) 1,800,047
------------------------------------------------------ ------------
Total 220,303,708
------------------------------------------------------ ------------
PUERTO RICO--1.8%
------------------------------------------------------
4,000,000 Government Development Bank of Puerto Rico Weekly
VRDNs (Credit Suisse and Sumitomo Bank Ltd. LOCs) A-1+ 4,000,000
------------------------------------------------------ ------------
TOTAL INVESTMENTS, AT AMORTIZED COST $224,303,708+
------------------------------------------------------ ------------
</TABLE>
(a) Denotes restricted securities which are subject to resale under Federal
Securities laws. These securities have been determined to be liquid under
criteria established by the Board of Trustees.
+ Also represents cost for federal tax purposes.
* See notes to Portfolio of Investments on page 15. Current credit ratings are
unaudited.
Note: The categories of investments are shown as a percentage of net assets
($218,549,472) at October 31, 1994.
OHIO MUNICIPAL CASH TRUST
- --------------------------------------------------------------------------------
The following abbreviations are used in this portfolio:
<TABLE>
<S> <C>
AMBAC -- American Municipal Bond Assurance Corporation
AMT -- Alternative Minimum Tax
BANs -- Bond Anticipation Notes
CP -- Commercial Paper
FGIC -- Financial Guaranty Insurance Company
GNMA -- Government National Mortgage Association
GO -- General Obligation
HFA -- Housing Finance Authority/Agency
IDA -- Industrial Development Authority
IDB -- Industrial Development Bond
IDR -- Industrial Development Revenue
IDRB -- Industrial Development Revenue Bonds
LOC -- Letter of Credit
LOCs -- Letters of Credit
PCR -- Pollution Control Revenue
TOBs -- Tender Option Bonds
VRDNs -- Variable Rate Demand Notes
</TABLE>
(See Notes which are an integral part of the Financial Statements)
OHIO MUNICIPAL CASH TRUST
NOTES TO PORTFOLIO OF INVESTMENTS
(UNAUDITED)
- --------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL OBLIGATION RATINGS
STANDARD & POOR'S RATINGS GROUP
A S&P 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 ratings 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 & POOR'S RATINGS GROUP
S&P 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
long-term and the short-term ratings are provided below.)
MOODY'S INVESTORS SERVICE
Short-term ratings on issues with demand features are differentiated by the use
of the VMIG symbol to reflect such characteristics as 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 & POOR'S RATINGS GROUP
A S&P 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 highest category indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong
safety characteristics are denoted with a plus (+) sign designation.
A-2 Capacity for timely payment on issues with this designation is satisfactory.
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. Prime-1
repayment capacity will normally be evidenced by the following
characteristics: leading market positions in well established industries,
high rates of return on funds employed, conservative capitalization
structure with moderate reliance on debt and ample asset protection, broad
margins in earning coverage of fixed financial charges and high internal
cash generation, well-established access to a range of financial markets and
assured sources of alternate liquidity.
P-2 Issuers rated PRIME-2 (or related supporting institutions) have a strong
capacity for repayment of short-term promissory obligations. This will
normally be evidenced by many of the characteristics cited above, but to a
lesser degree. Earnings trends and coverage ratios, while sound, will be
more subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.
LONG-TERM DEBT RATINGS
STANDARD & POOR'S RATINGS GROUP
AAA Debt rated "AAA" has the highest rating assigned by S&P. 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 highest 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.
MOODY'S INVESTORS SERVICE, INC.
AAA Bonds that are rated AAA are judged to be of the best quality. They carry
to smallest degree of investment risk and are generally referred to as
"gilt edged." 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 that 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 that 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.
NR indicates that both the bonds and the obligor or credit enhancer are not
currently rated by S&P or Moody's 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 S&P or "Aaa" by Moody's.
NR(2) The underlying issuer/obligor/guarantor has other outstanding debt rated
"AA" by S&P or "Aa" Moody's.
NR(3) The underlying issuer/obligor/guarantor has other outstanding debt rated
"A" by S&P or Moody's.
NR(4) The underlying issuer/obligor/guarantor has other outstanding debt rated
"BBB" by S&P or "Baa" by Moody's.
OHIO MUNICIPAL CASH TRUST
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- --------------------------------------------------------------------------------
Investments in securities, at amortized cost and value $224,303,708
- --------------------------------------------------------------------------------
Cash 329,622
- --------------------------------------------------------------------------------
Interest receivable 1,563,945
- --------------------------------------------------------------------------------
Receivable for Fund shares sold 1,001
- --------------------------------------------------------------------------------
Deferred expenses 21,755
- -------------------------------------------------------------------------------- ------------
Total assets 226,220,031
- --------------------------------------------------------------------------------
LIABILITIES:
- --------------------------------------------------------------------------------
Payable for investments purchased $7,405,000
- -------------------------------------------------------------------
Dividends payable 139,503
- -------------------------------------------------------------------
Payable for fund shares redeemed 54,561
- -------------------------------------------------------------------
Accrued expenses 71,495
- ------------------------------------------------------------------- ----------
Total liabilities 7,670,559
- -------------------------------------------------------------------------------- ------------
NET ASSETS for 218,549,472 shares of beneficial interest outstanding $218,549,472
- -------------------------------------------------------------------------------- ------------
NET ASSET VALUE, Offering Price, and Redemption Proceeds Per Share:
- --------------------------------------------------------------------------------
Institutional Shares ($62,498,880 / 62,498,880 shares of beneficial interest
outstanding) $1.00
- -------------------------------------------------------------------------------- ------------
Cash II Shares ($156,050,592 / 156,050,592 shares of beneficial interest
outstanding) $1.00
- -------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
OHIO MUNICIPAL CASH TRUST
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ------------------------------------------------------------------------------------
Interest income $6,002,451
- ------------------------------------------------------------------------------------
EXPENSES:
- ------------------------------------------------------------------------------------
Investment advisory fee $ 818,742
- ----------------------------------------------------------------------
Administrative personnel and services 209,077
- ----------------------------------------------------------------------
Custodian and portfolio accounting fees 81,684
- ----------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 45,762
- ----------------------------------------------------------------------
Fund share registration costs 40,098
- ----------------------------------------------------------------------
Trustees' fees 2,891
- ----------------------------------------------------------------------
Auditing fees 16,324
- ----------------------------------------------------------------------
Legal fees 10,788
- ----------------------------------------------------------------------
Printing and postage 20,515
- ----------------------------------------------------------------------
Distribution services fees 415,490
- ----------------------------------------------------------------------
Shareholder service fee-Cash II Shares 234,497
- ----------------------------------------------------------------------
Miscellaneous 17,255
- ---------------------------------------------------------------------- ----------
Total expenses 1,913,123
- ----------------------------------------------------------------------
Deduct--
- ----------------------------------------------------------------------
Waiver of investment advisory fee $133,035
- -----------------------------------------------------------
Waiver of distribution service fee Cash II Shares 234,497 367,532
- ----------------------------------------------------------- -------- ----------
Net expenses 1,545,591
- ------------------------------------------------------------------------------------ ----------
Net investment income $4,456,860
- ------------------------------------------------------------------------------------ ----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
OHIO MUNICIPAL CASH TRUST
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
------------------------------
1994 1993
------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- --------------------------------------------------------------
OPERATIONS--
- --------------------------------------------------------------
Net investment income $ 4,456,860 $ 4,284,001
- -------------------------------------------------------------- ------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS--
- --------------------------------------------------------------
Dividends to shareholders from net investment income:
- --------------------------------------------------------------
Institutional Shares (1,561,810) (1,570,539)
- --------------------------------------------------------------
Cash II Shares (2,895,050) (2,713,462)
- -------------------------------------------------------------- ------------- -------------
Change in net assets from distributions to shareholders (4,456,860) (4,284,001)
- -------------------------------------------------------------- ------------- -------------
FUND SHARE (PRINCIPAL) TRANSACTIONS--
- --------------------------------------------------------------
Proceeds from sale of shares 809,574,268 647,552,523
- --------------------------------------------------------------
Net asset value of shares issued to shareholders in payment
of dividends declared 2,932,696 2,703,916
- --------------------------------------------------------------
Cost of shares redeemed (802,723,017) (649,710,289)
- -------------------------------------------------------------- ------------- -------------
Change in net assets resulting from Fund share
transactions 9,783,947 546,150
- -------------------------------------------------------------- ------------- -------------
Change in net assets 9,783,947 546,150
- --------------------------------------------------------------
NET ASSETS:
- --------------------------------------------------------------
Beginning of period 208,765,525 208,219,375
- -------------------------------------------------------------- ------------- -------------
End of period $ 218,549,472 $ 208,765,525
- -------------------------------------------------------------- ------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
OHIO MUNICIPAL CASH TRUST
FINANCIAL HIGHLIGHTS--CASH II SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
-----------------------------------------
1994 1993 1992 1991*
----- ----- ----- -----
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00
- -------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -------------------------------------------------
Net investment income 0.02 0.02 0.03 0.02
- ------------------------------------------------- ----- ----- ----- ----
LESS DISTRIBUTIONS
- -------------------------------------------------
Dividends to shareholders from net investment
income (0.02) (0.02) (0.03) (0.02)
- ------------------------------------------------- ----- ----- ----- ----
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00
- ------------------------------------------------- ----- ----- ----- ----
TOTAL RETURN** 2.10% 2.02% 2.90% 2.27 %
- -------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -------------------------------------------------
Expenses 0.85% 0.78% 0.76% 0.63 %(b)
- -------------------------------------------------
Net investment income 2.09% 2.01% 2.86% 4.18 %(b)
- -------------------------------------------------
Expense waiver/reimbursement(a) 0.24% 0.19% 0.25% 0.34 %(b)
- -------------------------------------------------
SUPPLEMENTAL DATA
- -------------------------------------------------
Net assets, end of period (000 omitted) $156,051 $127,017 $133,877 $94,081
- -------------------------------------------------
</TABLE>
* Reflects operations for the period from April 22, 1991 (date of initial
public investment) to October 31, 1991.
** Based on net asset value, which does not reflect the sales load or contingent
deferred sales charge, if applicable.
(a) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(b) Computed on an annualized basis.
(See Notes which are an integral part of the Financial Statements)
OHIO MUNICIPAL CASH TRUST
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
-----------------------------------------
1994 1993 1992 1991*
----- ----- ----- -----
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00
- -------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -------------------------------------------------
Net investment income 0.02 0.02 0.03 0.02
- ------------------------------------------------- ----- ----- ----- ----
LESS DISTRIBUTIONS
- -------------------------------------------------
Dividends to shareholders from net investment
income (0.02) (0.02) (0.03) (0.02)
- ------------------------------------------------- ----- ----- ----- ----
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00
- ------------------------------------------------- ----- ----- ----- ----
TOTAL RETURN** 2.41% 2.33% 3.21% 2.40 %
- -------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -------------------------------------------------
Expenses 0.55% 0.48% 0.46% 0.35 %(b)
- -------------------------------------------------
Net investment income 2.36% 2.30% 3.10% 4.46 %(b)
- -------------------------------------------------
Expense waiver/reimbursement (a) 0.07% 0.19% 0.25% 0.32 %(b)
- -------------------------------------------------
SUPPLEMENTAL DATA
- -------------------------------------------------
Net assets, end of period (000 omitted) $62,499 $81,748 $74,342 $44,771
- -------------------------------------------------
</TABLE>
* Reflects operations for the period from April 22, 1991 (date of initial
public investment) to October 31, 1991.
** Based on net asset value, which does not reflect the sales load or contingent
deferred sales charge, if applicable.
(a) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(b) Computed on an annualized basis.
(See Notes which are an integral part of the Financial Statements)
OHIO MUNICIPAL CASH TRUST
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1994
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Federated Municipal Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "Act"), as an open-end, management
investment company. The Trust consists of thirteen, non-diversified portfolios.
The financial statements included herein are only those of Ohio Municipal Cash
Trust (the "Fund"). The financial statements of the other portfolios are
presented separately. The assets of each portfolio are segregated and a
shareholder's interest is limited to the portfolio in which shares are held. The
Fund offers two classes of shares, Institutional Shares and Cash II Shares.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
<TABLE>
<S> <C>
A. INVESTMENT VALUATIONS--The Fund's use of the amortized cost method to value its
portfolio securities is in accordance with Rule 2a-7 under the Act.
B. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses are accrued
daily. Bond premium and discount, if applicable, are amortized as required by the
Internal Revenue Code, as amended (the "Code"). Distributions to shareholders are
recorded on the ex-dividend date.
C. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the Code
applicable to regulated investment companies and to distribute to shareholders each year
substantially all of its tax-exempt income. Accordingly, no provisions for federal tax
are necessary.
D. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in when-issued or
delayed delivery transactions. The Fund records when-issued securities on the trade date
and maintains security positions such that sufficient liquid assets will be available to
make payment for the securities purchased. Securities purchased on a when-issued or
delayed delivery basis are marked to market daily and begin earning interest on the
settlement date.
E. DEFERRED EXPENSES--The cost incurred by the Fund with respect to registration of its
shares in its first fiscal year, excluding the initial expense of registering the share,
have been deferred and are being amortized using the straight-line method over a period
of five years from the Fund's commencement date.
F. CONCENTRATION OF CREDIT RISK--Since the Fund invests a substantial portion of its assets
in issuers located in one state, it will be more susceptible to factors adversely
affecting issuers of that state than would be a comparable general tax-exempt mutual
fund. In order to reduce the credit risk associated with such factors, at
October 31, 1994, 78% of the securities in the portfolio of investments are
backed by letters of credit or bond insurance of various financial institutions
and financial guaranty assurance agencies. The value of investments insured by or
supported (backed) by a letter of credit for any one
institution or agency did not exceed 8% of total investments.
</TABLE>
OHIO MUNICIPAL CASH TRUST
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
G. RESTRICTED SECURITIES--Restricted securities are securities that may only be resold upon
registration under Federal securities laws or in transactions exempt from such
registration. Many restricted securities may be resold in the secondary market in
transactions exempt from registration. In some cases, the restricted securities may be
resold without registration upon exercise of a demand feature. Such restricted
securities may be determined to be liquid under criteria established by the Board of
Trustees (the "Trustees"). The Fund will not incur any registration costs upon such
resales. Restricted securities are valued at amortized cost in accordance with Rule 2a-7
under the Act. Additional information on each restricted security held at October 31,
1994 report date is as follows:
</TABLE>
<TABLE>
<CAPTION>
ACQUISITION ACQUISITION
SECURITY DATE COST
----------------------------------------------------------- ------------- ------------
<S> <C> <C>
Hamilton County, Ohio, Sewer System Improvement
and Revenue Bonds Weekly VRDNs (P-FLOATS)/
(FGIC Insured) 7/1/93 $2,260,000
Ohio HFA Single Family Mortgage Weekly VRDNs
(Series PT-8)/(GNMA Collateralized)/(Subject to AMT) 3/1/94 6,430,000
Ohio State Water Development Authority
Pure Water Refunding & Improvement Bonds Weekly VRDN
(Series PA-56)/(AMBAC Insured) 12/22/93 1,260,000
H. OTHER--Investment transactions are accounted for on the trade date.
</TABLE>
OHIO MUNICIPAL CASH TRUST
- --------------------------------------------------------------------------------
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares. At October 31, 1994, capital paid-in aggregated $218,549,472.
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
----------------------------
1994 1993
------------ ------------
<S> <C> <C>
INSTITUTIONAL SHARES
- ----------------------------------------------------------------
Shares sold 275,545,260 222,190,842
- ----------------------------------------------------------------
Shares issued to shareholders in payment of dividends declared 99,198 60,099
- ----------------------------------------------------------------
Shares redeemed (294,893,757) (214,844,892)
- ---------------------------------------------------------------- ------------ ------------
Net change resulting from Institutional share transactions (19,249,299) 7,406,049
- ---------------------------------------------------------------- ------------ ------------
CASH II SHARES
- ----------------------------------------------------------------
Shares sold 534,029,008 425,361,681
- ----------------------------------------------------------------
Shares issued to shareholders in payment of dividends declared 2,833,498 2,643,817
- ----------------------------------------------------------------
Shares redeemed (507,829,260) (434,865,397)
- ---------------------------------------------------------------- ------------ ------------
Net change resulting from Cash II share transactions 29,033,246 (6,859,899)
- ---------------------------------------------------------------- ------------ ------------
Net change resulting from Fund share transactions 9,783,947 546,150
- ---------------------------------------------------------------- ------------ ------------
</TABLE>
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Management, the Fund's investment adviser
(the "Adviser"), receives for its services an annual investment advisory fee
equal to .40 of 1% of the Fund's average daily net assets. The Adviser may
voluntarily choose to waive its fee and reimburse certain operating expenses of
the Fund. The Adviser can modify or terminate this voluntary waiver and
reimbursement at any time at its sole discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Fund
with administrative personnel and services. Prior to March 1, 1994, these
services were provided at approximate cost. Effective March 1, 1994, the FAS fee
is based on the level of average aggregate daily net assets of all funds advised
by subsidiaries of Federated Investors for the period. The administrative fee
received during the period of the Administrative Services Agreement shall be at
least $125,000 per portfolio and $30,000 per each additional class of shares.
DISTRIBUTION AND SHAREHOLDER SERVICES FEE--The Fund has adopted a Distribution
Plan (the "Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the
Plan, the Fund will compensate Federated Securities Corp. ("FSC"), the principal
distributor, from the net assets of the Fund to finance
OHIO MUNICIPAL CASH TRUST
- --------------------------------------------------------------------------------
activities intended to result in the sale of the Fund's Cash II Shares. The Plan
provides that the Fund may incur distribution expenses up to .30 of 1% of the
average daily net assets of the Cash II shares, annually, to compensate FSC. The
distributor may voluntary choose to waive a portion of its fee. The distributor
can modify or terminate this voluntarily waiver at any time at its sole
discretion. Under the terms of a Shareholder Services Agreement with Federated
Shareholder Services ("FSS"), the Fund will pay FSS up to .25 of 1% of average
net assets of the Fund for the period. This fee is to obtain certain personal
services for shareholders and to maintain shareholder accounts. For the fiscal
year end October 31, 1994 Institutional Shares did not incur a shareholder
services fee.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES--Federated Services Company
("FServ") serves as transfer and dividend disbursing agent for the Fund. The
FServ fee is based on the size, type, and number of accounts and transactions
made by shareholders.
ORGANIZATIONAL EXPENSES--Organizational expenses and start-up administrative
service expenses were borne initially by the Adviser. The Fund has agreed to
reimburse the Adviser at an annual rate of .005 of 1% of average daily net
assets and .01 of 1% of average daily net assets for organizational and start-up
administrative expenses, respectively, until expenses initially borne by Adviser
are fully reimbursed or the expiration of five years after April 24, 1991 (the
date the Fund first became effective), whichever occurs earlier. For the year
ended October 31, 1994, the Fund paid $10,226 and $3,896, respectively, pursuant
to this agreement.
INTERFUND TRANSACTIONS--During the year ended October 31, 1994, the Fund engaged
in purchase and sale transactions with other affiliated funds at current value
pursuant to Rule 17a-7 under the Act amounting to $274,120,000 and $257,900,000,
respectively.
Certain of the Officers and Trustees of the Trust are Officers and Directors or
Trustees of the above companies.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
FEDERATED MUNICIPAL TRUST (Ohio Municipal Cash Trust):
We have audited the accompanying statement of assets and liabilities of Ohio
Municipal Cash Trust (an investment portfolio of Federated Municipal Trust, a
Massachusetts business trust), including the schedule of portfolio investments,
as of October 31, 1994, the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in the
period then ended, and the financial highlights for the periods presented. These
financial statements and financial highlights are the responsibility of the
Trust's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1994, by correspondence with the custodian and broker. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Ohio
Municipal Cash Trust (an investment portfolio of Federated Municipal Trust) as
of October 31, 1994, and the results of its operations for the year then ended,
the changes in its net assets for each of the two years in the period then
ended, and the financial highlights for the periods presented, in conformity
with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
December 14, 1994
<TABLE>
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TRUSTEES OFFICERS
- -----------------------------------------------------------------------------
John F. Donahue John F. Donahue
John T. Conroy, Jr. Chairman
William J. Copeland Glen R. Johnson
James E. Dowd President
Lawrence D. Ellis, M.D. J. Christopher Donahue
Edward L. Flaherty, Jr. Vice President
Glen R. Johnson Richard B. Fisher
Peter E. Madden Vice President
Gregor F. Meyer Edward C. Gonzales
Wesley W. Posvar Vice President and Treasurer
Marjorie P. Smuts John W. McGonigle
Vice President and Secretary
David M. Taylor
Assistant Treasurer
G. Andrew Bonnewell
Assistant Secretary
</TABLE>
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risk,
including possible loss of principal. Although money market funds seek to
maintain a stable net asset value of $1.00 per share, there is no assurance that
they will be able to do so.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Fund's prospectus which contains facts concerning
its objective and policies, management fees, expenses and other information.
PENNSYLVANIA
MUNICIPAL
CASH
TRUST
ANNUAL REPORT
TO SHAREHOLDERS
OCTOBER 31, 1994
[LOGO] FEDERATED SECURITIES CORP.
--------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
314229881
314229204
G00830-01 (12/94)
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the Annual Report to Shareholders for Pennsylvania
Municipal Cash Trust (the "Fund"), a portfolio of Federated Municipal Trust, for
the 12-month period ended October 31, 1994. The Fund consists of two classes of
shares known as Institutional Service Shares and Cash Series Shares. The report
begins with an interview with portfolio manager Jeff Kozemchak about economic
factors affecting the Fund, followed by the Fund's Portfolio of Investments and
Financial Statements. In addition, Financial Highlights tables have been
included for Institutional Service Shares and Cash Series Shares.
The Fund gives Pennsylvania residents three ways to pursue tax-free income--its
earnings are exempt from federal regular income tax, Pennsylvania personal
income tax, and Pennsylvania local taxes.* Its portfolio includes high-quality,
short-term Pennsylvania municipal securities of more than 53 issuers that use
municipal bond financing for projects as varied as housing, industrial
development, education, and health care.
Over the 12-month report period, the Fund paid shareholders a total of $7.0
million in dividends, or $0.02 per share. At the end of the report period, the
Fund's net assets stood at $247.5 million.
As a wise investor, you can count on the Fund to ease your tax burden by
pursuing competitive tax-free yields--with the additional advantages of daily
liquidity and stability of principal.**
Thank you for your confidence in Pennsylvania Municipal Cash Trust. We welcome
your comments and suggestions.
Sincerely,
Glen R. Johnson
President
December 15, 1994
- ---------
*Income may be subject to the federal alternative minimum tax.
**No money market mutual fund can guarantee that a stable net asset value will
be maintained. An investment in the Fund is neither insured nor guaranteed by
the U.S. government.
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
An Interview with Fund Portfolio Manager Jeff A. Kozemchak
Q Recently, there has been a lot of concern, as well as press coverage, about
the subject of derivatives. What are derivatives?
A The term "derivative" has been applied to many different types of
investments. In the context of money market funds, derivatives generally
refer to adjustable rate securities designed for speculation on changes in
interest rates. These speculative derivatives provide above-market yields when
interest rates fall or remain stable, or when the yield curve is steep. They
provide below-market yields, however, when interest rates rise or become more
volatile, or when the yield curve flattens. All three of these latter conditions
occurred in 1994. As a result, many of these speculative securities lost a
significant part of their value, enough to threaten the $1.00 per share price of
some money market funds.
It is important to distinguish these speculative derivatives from adjustable
rate securities that are indexed to money market interest rates. These indexed
securities are designed to track changes in market rates, and should approximate
their par value in reasonably foreseeable market conditions. Tax-exempt money
market funds like the Fund have the right to tender many of these securities for
purchase at their par value. Money market funds have used these securities for
decades, through several interest rate cycles, without jeopardizing their stable
net asset values.
Q Do Federated Investors' money market funds invest in the derivatives that
have been in the headlines recently?
A No. None of Federated Investors' money market funds has invested in any of
the types of derivatives that have been in the headlines lately. Our mutual
funds only invest in adjustable rate securities that track changes in money
market interest rates.
With respect to speculative derivatives, we determined from the outset that the
potential volatility of these securities was contrary to the intent of the rules
governing the use of variable rate securities by money market funds. We also
realized the potential for these securities to deviate significantly from par
and threaten the $1.00 per share price of a money market fund. We spoke out
against the use of these securities by money market funds at industry
conferences throughout 1993, when the
securities still offered attractive yields. Our views were vindicated when, in
June, 1994, the Securities and Exchange Commission sent a letter to the
Investment Company Institute requiring money market funds to divest themselves
of these securities in an orderly manner. This caused some investment advisers
to buy these securities from their funds.
Q What happened to short-term interest rates over the period covered by this
Annual Report?
A There was a dramatic shift in the monetary policy of the Federal Reserve
Board (the "Fed") during the 12-month reporting period that ended October
31, 1994.
Throughout the fourth quarter of 1993, the Fed kept the Federal funds rate (the
rate banks charge each other for overnight loans) steady at 3.00%, where it had
been for a year and a half. The Fed had maintained short-term interest rates at
these low levels in order to stimulate the economy. However, in early 1994,
reports began to show stronger than anticipated economic growth. Real gross
national product grew at a 7.00% annual rate in the fourth quarter of 1993, and
the national unemployment rate declined to 6.00%. Concerned that these factors
could lead to an increase in wages and prices, the Fed took the first step on
February 4, 1994, to fight future inflation by raising its Federal funds rate
target to 3.25%. Since then, the Fed has continued to be aggressive, moving the
Federal funds rate target upward five more times from 3.25% to 5.50%.
Q How did municipal money market yields react to these rate increases?
A Municipal money market interest rates followed the upward movement in
taxable rates but to a slightly lesser degree, as they are affected
federal, state and local tax factors as well as market supply and demand
imbalances.
The Fund's yields have proven to be responsive to the increases in money market
rates. For the 12-month reporting period ended October 31, 1994, the Fund's
tax-free, annualized seven-day net yields increased from 2.08% and 1.68% to
2.87% and 2.47% for the Institutional Service Shares and Cash Series Shares,
respectively.* At October 31, 1994, these seven-day yields were equivalent to
taxable yields of 4.89% (Institutional Service Shares) and 4.21% (Cash Series
Shares) for those investors subject to the highest federal and state tax
brackets.** These numbers illustrate the Fund's attractiveness relative to
taxable investments.
*Performance quoted represents past performance and is not indicative of future
results. Yields will vary.
**These numbers assume that state income taxes are fully deductible in computing
federal income tax liability.
Q What is your outlook for the markets and the Fund?
A The economy continues to show surprising resilience to the Fed's attempts
to bring growth under control. We expect that the Fed will act again to
tighten monetary policy in the first quarter of 1995. At that point in
time, the Federal funds target could be as high as 6.50%. As a result, we plan
to maintain a conservative posture in the near future, while attempting to
maximize performance through ongoing relative value analysis. However, we will
continue to monitor changing economic and market developments so as to serve our
clients attracted to the short-term tax-exempt securities market. In this
environment, stable net asset value money market funds like the Fund will
continue to be an important component in preserving capital, and should reflect
rising short-term interest rates with increasing net yields.
PENNSYLVANIA MUNICIPAL CASH TRUST
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1994
- --------------------------------------------------------------------------------
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SHORT-TERM MUNICIPAL SECURITIES--103.0%
- ------------------------------------------------------------------------------------
PENNSYLVANIA--102.4%
----------------------------------------------------------------------
$ 1,100,000 Allegheny County, PA, HDA Daily VRDNs (Presbyterian University
Hospital)/(Credit Suisse LOC) A-1+ $ 1,100,000
----------------------------------------------------------------------
3,000,000 Allegheny County, PA, IDA Pollution Control Revenue Bonds, 3.45%
Semi-Annual TOBs (Series 1992A)/(Duquesne Light Co.)/(Canadian
Imperial Bank of Commerce LOC), Mandatory Tender 1/18/95 P-1 3,000,000
----------------------------------------------------------------------
1,000,000 Allegheny County, PA, IDA Weekly VRDNs (Series 1991)/ (Mine Safety
Appliances Co.)/(Sanwa Bank Ltd. LOC) P-1 1,000,000
----------------------------------------------------------------------
1,700,000 Allegheny County, PA, IDA Weekly VRDNs (Series 1991B)/ (Shandon,
Inc.)/(PNC Bank N.A. LOC)/(Subject to AMT) P-1 1,700,000
----------------------------------------------------------------------
3,290,000 Allegheny County, PA, IDA Weekly VRDNs, Adjustable Rate Commercial
Development Revenue Bonds (Series 1992)/(Eleven Parkway Center
Associates)/(Mellon Bank N.A. LOC) A-1 3,290,000
----------------------------------------------------------------------
6,500,000 Allegheny County, PA, IDA, 3.70% CP (Duquesne Light Power
Co.)/(Barclays Bank PLC LOC), Mandatory Tender 2/22/95 A-1+ 6,500,000
----------------------------------------------------------------------
7,500,000 Allegheny County, PA, IDA, 4.00% CP (USX Marathon Group)/(Long Term
Credit Bank of Japan Ltd.), Mandatory Tender 1/12/95 A-2 7,500,000
----------------------------------------------------------------------
3,000,000 Beaver County, PA, IDA Pollution Control Revenue Bonds, 3.20% CP
(Series 1992E)/(Toledo Edison Co.)/(Toronto Dominion Bank LOC),
Mandatory Tender 11/9/94 P-1 3,000,000
----------------------------------------------------------------------
2,800,000 Berks County, PA, 2.70% GO TRANs (Series 1993), 12/30/94 NR(3) 2,800,000
----------------------------------------------------------------------
1,920,000 Berks County, PA, IDA Weekly VRDNs (Beacon Container)/(Corestates Bank
N.A., Philadelphia LOC)/
(Subject to AMT) P-1 1,920,000
----------------------------------------------------------------------
</TABLE>
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SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------
PENNSYLVANIA--CONTINUED
----------------------------------------------------------------------
$ 1,320,000 Berks County, PA, IDA Weekly VRDNs (Quaker Maid Meats, Inc.)/(Meridian
Bank LOC)/(Subject to AMT) VMIG1 $ 1,320,000
----------------------------------------------------------------------
2,100,000 Berks County, PA, IDA Weekly VRDNs (Series 1988)/
(Arrow International, Inc.)/(Corestates Bank N.A.,
Philadelphia LOC)/(Subject to AMT) P-1 2,100,000
----------------------------------------------------------------------
2,000,000 Bethel Park, PA, 2.74% TANs, 12/30/94 NR(3) 2,000,362
----------------------------------------------------------------------
3,080,000 Bucks County, PA, IDA Weekly VRDNs (Pennsylvania Associates)/(Meridian
Bank LOC) P-1 3,080,000
----------------------------------------------------------------------
1,000,000 Bucks County, PA, IDA Weekly VRDNs (Series 1986)/ (Winks Lane,
Inc.)/(Mellon Bank N.A. LOC) P-1 1,000,000
----------------------------------------------------------------------
5,305,000 Bucks County, PA, IDA Weekly VRDNs (Series 1991)/ (Cabot Medical
Corp.)/(Meridian Bank LOC)/(Subject to AMT) VMIG1 5,305,000
----------------------------------------------------------------------
2,445,000 Bucks County, PA, IDA Weekly VRDNs (Series 1993)/ (Double Plastics,
Inc.)/(Meridian Bank LOC)/(Subject to AMT) VMIG1 2,445,000
----------------------------------------------------------------------
1,000,000 Butler County, PA, IDA Weekly VRDNs (Mine Safety Appliances
Co.)/(Sanwa Bank Ltd. LOC) P-1 1,000,000
----------------------------------------------------------------------
3,000,000 Butler County, PA, IDA Weekly VRDNs (Mine Safety Appliances
Co.)/(Sanwa Bank Ltd. LOC)/(Subject to AMT) P-1 3,000,000
----------------------------------------------------------------------
1,000,000 Butler County, PA, IDA Weekly VRDNs (Series 1992B)/ (Mine Safety
Appliances Co.)/(Sanwa Bank Ltd. LOC)/
(Subject to AMT) P-1 1,000,000
----------------------------------------------------------------------
700,000 Cambria County, PA, IDA Weekly VRDNs (Cambria Cogeneration
Corp.)/(Fuji Bank Ltd. LOC)/(Subject to AMT) A-1 700,000
----------------------------------------------------------------------
1,620,000 Carbon County, PA, IDA Resource Recovery Bonds, 3.65% CP (Panther
Creek)/(National Westminster Bank PLC LOC)/(Subject to AMT), Mandatory
Tender 1/17/95 A-1+ 1,620,000
----------------------------------------------------------------------
</TABLE>
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SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------
PENNSYLVANIA--CONTINUED
----------------------------------------------------------------------
$ 2,100,000 Carbon County, PA, IDA Weekly VRDNs (Summit Management & Utilities,
Inc.)/(PNC Bank N.A. LOC)/(Subject to AMT) A-1 $ 2,100,000
----------------------------------------------------------------------
7,300,000 Clearfield County, PA, IDA Weekly VRDNs (Penn Traffic Co.)/(ABN AMRO
Bank N.V. LOC)/(Subject to AMT) P-1 7,300,000
----------------------------------------------------------------------
3,000,000 Clinton County, PA, IDA Weekly VRDNs (Armstrong World
Industries)/(Mellon Bank N.A. LOC) P-1 3,000,000
----------------------------------------------------------------------
10,000,000 Clinton County, PA, IDA, Solid Waste Disposal Revenue Bonds, 2.90%
Annual TOBs (Series 1992A)/(International Paper Co. Guaranty)/(Subject
to AMT), Optional Tender
1/15/95 A-2 10,000,000
----------------------------------------------------------------------
2,185,000 Clinton County, PA, Municipal Authority Weekly VRDNs (Series A)/(Lock
Haven Hospital)/(Mellon Bank N.A. LOC) P-1 2,185,000
----------------------------------------------------------------------
1,600,000 Cumberland County, PA, IDA Weekly VRDNs (Series 1994)/(Lane
Enterprises, Inc.)/(Meridian Bank LOC)/
(Subject to AMT) P-1 1,600,000
----------------------------------------------------------------------
1,200,000 Delaware County, PA, PCR, 3.15% CP (Philadelphia Electric Co.)/(FGIC
Insured), Mandatory Tender 11/10/94 A-1 1,200,000
----------------------------------------------------------------------
5,000,000 Downingtown, PA, Area School District 4.50% TRANs (Series 1994),
6/30/95 NR(2) 5,028,669
----------------------------------------------------------------------
700,000 Erie County, PA, IDA Weekly VRDNs (P.H.B., Inc.)/(PNC Bank N.A.
LOC)/(Subject to AMT) P-1 700,000
----------------------------------------------------------------------
525,000 Erie County, PA, IDA Weekly VRDNs (Series 1985)/(R. P-C Value,
Inc.)/(PNC Bank N.A. LOC) P-1 525,000
----------------------------------------------------------------------
700,000 Erie County, PA, IDA Weekly VRDNs (Series B)/(P.H.B., Inc.)/(PNC Bank
N.A. LOC)/(Subject to AMT) P-1 700,000
----------------------------------------------------------------------
1,725,000 Erie County, PA, IDA Weekly VRDNs Multi-Mode Revenue Reference Bonds
(Corry Manor, Inc.)/(PNC Bank N.A. LOC) A-1 1,725,000
----------------------------------------------------------------------
</TABLE>
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SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------
PENNSYLVANIA--CONTINUED
----------------------------------------------------------------------
$ 600,000 Forest County, PA, IDA Weekly VRDNs (Industrial Timber and Land
Co.)/(National City Bank LOC) P-1 $ 600,000
----------------------------------------------------------------------
1,405,000 Forest County, PA, IDA Weekly VRDNs (Marienville Healthcare
Facility)/(PNC Bank N.A. LOC) P-1 1,405,000
----------------------------------------------------------------------
2,000,000 Franklin County, PA, IDR Weekly VRDNs (Guarriello Limited
Partnership)/(PNC Bank N.A. LOC)/(Subject to AMT) P-1 2,000,000
----------------------------------------------------------------------
2,000,000 Governor Mifflin School District, PA, 3.85% TRANs (Series 1994),
6/30/95 NR(3) 2,001,271
----------------------------------------------------------------------
2,900,000 Lackawanna County, PA, IDA Weekly VRDNs (Series 1992)/(HEM
Project)/(Corestate Bank N.A. LOC)/(Subject to AMT) P-1 2,900,000
----------------------------------------------------------------------
3,356,092 Lawrence County, PA, IDA Weekly VRDNs (Series 1989A)/ (Ellwood
Uddeholm Steel Co.)/(Society National Bank LOC) P-1 3,356,092
----------------------------------------------------------------------
4,840,000 Lehigh County, PA, General Purpose Authority Revenue Bonds Weekly
VRDNs (Series 1990)/(Phoebe Terrace, Inc.)/ (Meridian Bank LOC) P-1 4,840,000
----------------------------------------------------------------------
3,350,000 Lehigh County, PA, IDA Weekly VRDNs (Cedar Crest
College)/(PNC Bank N.A. LOC) A-1 3,350,000
----------------------------------------------------------------------
3,100,000 Lehigh County, PA, IDA Weekly VRDNs (Series 1989A)/ (Hershey Pizza
Co., Inc.)/(PNC Bank N.A. LOC)/ (Subject to AMT) A-1 3,100,000
----------------------------------------------------------------------
1,200,000 McKean County, PA, IDA Weekly VRDNs Multi-Mode Revenue Reference Bonds
(Bradford Manor, Inc.)/(Marine Bank LOC) A-1 1,200,000
----------------------------------------------------------------------
3,300,000 Monroe County, PA, IDA PCR Weekly VRDNs (Cooper Industries)/(Sanwa
Bank Ltd. LOC) A-1+ 3,300,000
----------------------------------------------------------------------
</TABLE>
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SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------
PENNSYLVANIA--CONTINUED
----------------------------------------------------------------------
$ 2,700,000 Montgomery County, PA, Higher Education and Health Authority Weekly
VRDNs (Pooled Loan Program)/(AMBAC Insured) A-1+ $ 2,700,000
----------------------------------------------------------------------
1,400,000 Montgomery County, PA, IDA Weekly VRDNs (Series 1992)/(RJI Limited
Partnership)/(Meridian Bank LOC)/
(Subject to AMT) VMIG1 1,400,000
----------------------------------------------------------------------
4,630,000 Montgomery County, PA, IDA Weekly VRDNs Commercial Development Revenue
Bonds (Series 1992)/(Hickory Pointe)/(First Fidelity Bank N.A., New
Jersey LOC) P-1 4,630,000
----------------------------------------------------------------------
3,500,000 Montgomery County, PA, IDR Weekly VRDNs (Series 84)/ (Seton
Company)/(Banque Paribas LOC) A-1 3,500,000
----------------------------------------------------------------------
2,625,000 Moon Township, PA, IDA Weekly VRDNs (Airport Hotel
Associates)/(ABN-AMRO Bank N.V., Amsterdam LOC) A-1+ 2,625,000
----------------------------------------------------------------------
5,000,000 North Lebanon Township, PA, Municipal Authority Mortgage Weekly VRDNs
(Grace Community, Inc.)/(Meridian Bank LOC) VMIG1 5,000,000
----------------------------------------------------------------------
2,000,000 Northampton County, PA, IDA, 3.25% CP (Citizens Utilities
Company)/(Subject to AMT), Mandatory Tender 11/8/94 A-1+ 2,000,000
----------------------------------------------------------------------
5,000,000 Northampton County, PA, IDA, 3.60% CP (Citizens Utilities
Co.)/(Subject to AMT), Mandatory Tender 1/12/95 A-1+ 5,000,000
----------------------------------------------------------------------
4,000,000 Northampton County, PA, IDA, 3.70% CP (Citizens Utilities
Co.)/(Subject to AMT), Mandatory Tender 1/20/95 A-1+ 4,000,000
----------------------------------------------------------------------
1,950,000 Pennsylvania EDA Revenue Bonds Weekly VRDNs
(Cyrogenics, Inc.)/(PNC Bank N.A. LOC)/(Subject to AMT) Aa3 1,950,000
----------------------------------------------------------------------
350,000 Pennsylvania EDA Revenue Bonds Weekly VRDNs
(D.D.I., Inc. )/(PNC Bank N.A. LOC)/(Subject to AMT) Aa3 350,000
----------------------------------------------------------------------
725,000 Pennsylvania EDA Revenue Bonds Weekly VRDNs (Ram Forest Products)/(PNC
Bank N.A. LOC)/(Subject to AMT) Aa3 725,000
----------------------------------------------------------------------
</TABLE>
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SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------
PENNSYLVANIA--CONTINUED
----------------------------------------------------------------------
$ 1,525,000 Pennsylvania EDA Revenue Bonds Weekly VRDNs (Series G4)/(Metamura
Products, Inc.)/(PNC Bank N.A. LOC)/
(Subject to AMT) Aa3 $ 1,525,000
----------------------------------------------------------------------
750,000 Pennsylvania EDA Weekly VRDNs (PNC Bank N.A. LOC) P-1 750,000
----------------------------------------------------------------------
3,600,000 Pennsylvania EDA Weekly VRDNs (Industrial Scientific Corp.)/(Mellon
Bank N.A. LOC)/(Subject to AMT) P-1 3,600,000
----------------------------------------------------------------------
1,300,000 Pennsylvania EDA Weekly VRDNs (Joseph J. Brunner,
Inc.)/(PNC Bank N.A. LOC)/(Subject to AMT) A-1+ 1,300,000
----------------------------------------------------------------------
800,000 Pennsylvania EDA Weekly VRDNs (Pioneer Fluid)/
(PNC Bank N.A. LOC)/(Subject to AMT) Aa3 800,000
----------------------------------------------------------------------
925,000 Pennsylvania EDA Weekly VRDNs (Reale Associates)/(PNC Bank N.A.
LOC)/(Subject to AMT) Aa3 925,000
----------------------------------------------------------------------
550,000 Pennsylvania EDA Weekly VRDNs (Series B8)/(Payne Printing Co.)/(PNC
Bank N.A. LOC)/(Subject to AMT) Aa3 550,000
----------------------------------------------------------------------
1,000,000 Pennsylvania EDA Weekly VRDNs (Walnut & Craig Street Associates)/(PNC
Bank N.A. LOC)/(Subject to AMT) P-1 1,000,000
----------------------------------------------------------------------
7,300,000 Pennsylvania HFA, 3.90% Semi-Annual TOBs, Optional Tender 4/1/95 NR(2) 7,300,000
----------------------------------------------------------------------
995,000 Pennsylvania HFA, Section 8 Assisted Residential Development Refunding
Bonds Weekly VRDNs (Series 1992A)/ (Capital Guaranty Insured, Citibank
N.A. BPA) NR(1) 995,000
----------------------------------------------------------------------
3,000,000 Pennsylvania Higher Education Assistance Agency Weekly VRDNs (Fuji
Bank Ltd. LOC)/(Subject to AMT) VMIG1 3,000,000
----------------------------------------------------------------------
3,000,000 Pennsylvania Higher Education Assistance Agency Weekly VRDNs (Fuji
Bank Ltd. LOC)/(Subject to AMT) VMIG1 3,000,000
----------------------------------------------------------------------
9,625,000 Pennsylvania State Higher Education Facilities Authority, 2.85% Annual
TOBs (Carnegie Mellon University), Optional Tender 11/1/94 A-1 9,625,000
----------------------------------------------------------------------
</TABLE>
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SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------
PENNSYLVANIA--CONTINUED
----------------------------------------------------------------------
$ 9,405,000 Pennsylvania State Higher Education Facilities Authority, 4.20% Annual
TOBs (Carnegie Mellon University), Optional Tender 11/1/95 A-1 $ 9,405,000
----------------------------------------------------------------------
3,000,000 Pennsylvania State University, 3.00% BANs (Series 1993B),
12/5/94 SP-1+ 3,000,734
----------------------------------------------------------------------
3,000,000 Pennsylvania State University, 4.00% BANs (Series 1994),
5/4/95 NR(2) 3,007,294
----------------------------------------------------------------------
5,000,000 Philadelphia, PA, 4.75% TRANs (Series A)/(Canadian
Imperial Bank of Commerce LOC), 6/15/95 SP-1+ 5,025,367
----------------------------------------------------------------------
1,000,000 Philadelphia, PA, 4.75% TRANs (Series B)/(Corestates Bank N.A. LOC),
6/15/95 SP-1 1,005,074
----------------------------------------------------------------------
3,750,000 Philadelphia, PA, IDA Commercial Development Revenue Bonds, 3.95%
Annual TOBs (Series A)/(Economy Inn)/(First National Bank of Boston
LOC), Optional Tender 7/1/95 P-1 3,750,000
----------------------------------------------------------------------
1,700,000 Philadelphia, PA, IDA Commercial Development Revenue Bonds, 3.95%
Annual TOBs (Series B)/(Economy Inn)/(First National Bank of Boston
LOC), Optional Tender 7/1/95 P-1 1,700,000
----------------------------------------------------------------------
7,000,000 Philadelphia, PA, IDA, 4.00% Annual TOBs (Suite Hotel)/ (First
National Bank of Boston LOC), Optional Tender
6/1/95 P-1 7,000,000
----------------------------------------------------------------------
700,000 Philadelphia, PA, IDR Weekly VRDNs (Series 93)/(Sackett
Development)/(Mellon Bank N.A. LOC) P-1 700,000
----------------------------------------------------------------------
1,750,000 Phoenixville, PA, School District, 4.50% TRANs (Series 1994), 6/30/95 NR(3) 1,758,342
----------------------------------------------------------------------
1,700,000 Sayre, PA, Health Care Facilities Authority Weekly VRDNs (VHA of
Pennsylvania Capital Asset Finance Program)/ (AMBAC Insured) A-1+ 1,700,000
----------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
<C> <S> <C> <C>
- ------------ ---------------------------------------------------------------------- ---------- --------------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------
PENNSYLVANIA--CONTINUED
----------------------------------------------------------------------
$ 620,000 Sayre, PA, Health Care Facilities Authority Weekly VRDNs (VHA of
Pennsylvania Capital Asset Finance Program)/ (AMBAC Insured) A-1+ $ 620,000
----------------------------------------------------------------------
2,530,000 Sewickley Valley, PA, 3.00% Hospital Authority Revenue Bonds (PNC Bank
N.A. LOC), 12/15/94 P-1 2,531,104
----------------------------------------------------------------------
2,500,000 Temple University, PA, Commonwealth System of Higher Education, 4.50%
BANs (Series 1994), 5/24/95 SP-1+ 2,508,743
----------------------------------------------------------------------
3,785,000 Venango, PA, IDA, 3.15% CP (Series A)/(Scrubgrass Power
Corp.)/(National Westminster Bank PLC LOC)/(Subject to AMT), Mandatory
Tender 11/15/94 A-1+ 3,785,000
----------------------------------------------------------------------
4,000,000 Venango, PA, IDA, 3.70% CP (Series 1993)/(Scrubgrass Power
Corp.)/(National Westminster Bank PLC LOC)/
(Subject to AMT), Mandatory Tender 2/16/95 A-1+ 4,000,000
----------------------------------------------------------------------
2,000,000 Washington County, PA, HDA Weekly VRDNs (Keystone Diversified
Management Corp.)/(Mellon Bank N.A. LOC) A-1 2,000,000
----------------------------------------------------------------------
1,500,000 Washington County, PA, IDA Weekly VRDNs (Series 1988)/ (Cameron
Coca-Cola, Inc.)/(Mellon Bank N.A. LOC) P-1 1,500,000
----------------------------------------------------------------------
1,045,000 Washington County, PA, IDA Weekly VRDNs (Series 1990)/ (Mac Plastics,
Inc.)/(National City Bank LOC)/(Subject to AMT) AA 1,045,000
----------------------------------------------------------------------
5,700,000 Washington County, PA, Weekly VRDNs (Series 1985A)/ (Pooled Equipment
Lease)/(Sanwa Bank Ltd. LOC) VMIG1 5,700,000
----------------------------------------------------------------------
3,000,000 York County, PA, IDA Weekly VRDNs (West Manchester Inn
Associates)/(Mellon Bank N.A. LOC) P-1 3,000,000
---------------------------------------------------------------------- --------------
Total 253,488,052
---------------------------------------------------------------------- --------------
</TABLE>
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
<C> <S> <C> <C>
- ------------ ---------------------------------------------------------------------- ---------- --------------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------
PUERTO RICO--0.6%
----------------------------------------------------------------------
$ 1,500,000 Government Development Bank of Puerto Rico Weekly VRDNs (Credit Suisse
and Sumitomo Bank Ltd. LOCs) A-1 $ 1,500,000
---------------------------------------------------------------------- --------------
TOTAL INVESTMENTS, AT AMORTIZED COST $ 254,988,052+
---------------------------------------------------------------------- --------------
</TABLE>
* See Notes to Portfolio of Investments on page 14. Current credit ratings an
unaudited.
+ Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($247,512,411) at October 31, 1994.
The following abbreviations are used in this portfolio:
AMBAC-- American Municipal Bond
Assurance Corporation
AMT-- Alternative Minimum Tax
BANs-- Bond Anticipation Notes
BPA-- Bond Purchase Agreement
CP-- Commercial Paper
EDA-- Economic Development Authority
FGIC-- Financial Guaranty Insurance Company
GO-- General Obligation
HDA-- Hospital Development Authority
HFA-- Housing Finance Authority/Agency
IDA-- Industrial Development Authority
IDR-- Industrial Development Revenue
LOC-- Letter of Credit
LOCs-- Letters of Credit
PCR-- Pollution Control Revenue
PLC-- Public Limited Company
TANs-- Tax Anticipation Notes
TOBs-- Tender Option Bonds
TRANs-- Tax and Revenue Anticipation Notes
VHA-- Voluntary Hospitals of America
VRDNs-- Variable Rate Demand Notes
(See Notes which are an integral part of the Financial Statements)
PENNSYLVANIA MUNICIPAL CASH TRUST
NOTES TO PORTFOLIO OF INVESTMENTS
(UNAUDITED)
- --------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL OBLIGATION RATINGS
STANDARD & POOR'S RATINGS GROUP
A S&P 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 ratings 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 & POOR'S RATINGS GROUP
S&P 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 long-
term and 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 as 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 & POOR'S RATINGS GROUP
A S&P 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 highest category indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong
safety characteristics are denoted with a plus (+) sign designation.
A-2 Capacity for timely payment on issues with this designation is satisfactory.
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. Prime-1
repayment capacity will normally be evidenced by the following
characteristics: leading market positions in well established industries,
high rates of return on funds employed, conservative capitalization
structure with moderate reliance on debt and ample asset protection, broad
margins in earning coverage of fixed financial charges and high internal
cash generation, well-established access to a range of financial markets and
assured sources of alternate liquidity.
P-2 Issuers rated PRIME-2 (or related supporting institutions) have a strong
capacity for repayment of short-term promissory obligations. This will
normally be evidenced by many of the characteristics cited above, but to a
lesser degree. Earnings trends and coverage ratios, while sound, will be
more subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.
LONG-TERM DEBT RATINGS
STANDARD & POOR'S RATINGS GROUP
AAA Debt rated "AAA" has the highest rating assigned by S&P. 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 highest 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.
MOODY'S INVESTORS SERVICE, INC.
Aaa Bonds that 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 edged." 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 that 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 that 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.
NR indicates that both the bonds and the obligor or credit enhancer are not
currently rated by S&P or Moody's 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 S&P or "Aaa" by Moody's.
NR(2) The underlying issuer/obligor/guarantor has other outstanding debt rated
"AA" by S&P or "Aa" Moody's.
NR(3) The underlying issuer/obligor/guarantor has other outstanding debt rated
"A" by S&P or Moody's.
PENNSYLVANIA MUNICIPAL CASH TRUST
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -------------------------------------------------------------------------------------------------
Investments in securities, at amortized cost and value $ 254,988,052
- -------------------------------------------------------------------------------------------------
Cash 850,572
- -------------------------------------------------------------------------------------------------
Interest receivable 1,576,641
- -------------------------------------------------------------------------------------------------
Receivable for Fund shares sold 21,261
- ------------------------------------------------------------------------------------------------- --------------
Total assets 257,436,526
- -------------------------------------------------------------------------------------------------
LIABILITIES:
- -------------------------------------------------------------------------------------------------
Payable for investments purchased $ 9,405,000
- -----------------------------------------------------------------------------------
Dividends payable 462,643
- -----------------------------------------------------------------------------------
Payable for Fund shares redeemed 7,000
- -----------------------------------------------------------------------------------
Accrued expenses 49,472
- ----------------------------------------------------------------------------------- ------------
Total liabilities 9,924,115
- ------------------------------------------------------------------------------------------------- --------------
NET ASSETS for 247,512,411 shares of beneficial interest outstanding $ 247,512,411
- ------------------------------------------------------------------------------------------------- --------------
NET ASSET VALUE, Offering Price, and Redemption Proceeds Per Share:
- -------------------------------------------------------------------------------------------------
Institutional Service Shares ($229,160,256 / 229,160,256 shares
of beneficial interest outstanding) $1.00
- ------------------------------------------------------------------------------------------------- --------------
Cash Series Shares ($18,352,155 / 18,352,155 shares of
beneficial interest outstanding) $1.00
- ------------------------------------------------------------------------------------------------- --------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
PENNSYLVANIA MUNICIPAL CASH TRUST
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ----------------------------------------------------------------------------------------------------
Interest income $ 9,168,090
- ----------------------------------------------------------------------------------------------------
EXPENSES:
- ----------------------------------------------------------------------------------------------------
Investment advisory fee $ 1,617,472
- --------------------------------------------------------------------------------------
Administrative personnel and services 274,571
- --------------------------------------------------------------------------------------
Custodian and portfolio accounting fees 126,557
- --------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 12,673
- --------------------------------------------------------------------------------------
Fund share registration costs 44,601
- --------------------------------------------------------------------------------------
Trustees' fees 3,336
- --------------------------------------------------------------------------------------
Auditing fees 10,504
- --------------------------------------------------------------------------------------
Legal fees 12,504
- --------------------------------------------------------------------------------------
Printing and postage 22,177
- --------------------------------------------------------------------------------------
Shareholder services fee--Cash Series Shares 33,738
- --------------------------------------------------------------------------------------
Distribution services fee 86,023
- --------------------------------------------------------------------------------------
Insurance premiums 9,504
- --------------------------------------------------------------------------------------
Miscellaneous 3,886
- -------------------------------------------------------------------------------------- ------------
Total expenses 2,257,546
- --------------------------------------------------------------------------------------
Deduct--
- --------------------------------------------------------------------------------------
Waiver of investment advisory fee $ 53,564
- ---------------------------------------------------------------------------
Waiver of distribution services fee 33,738 87,302
- --------------------------------------------------------------------------- --------- ------------
Net expenses 2,170,244
- ---------------------------------------------------------------------------------------------------- ------------
Net investment income $ 6,997,846
- ---------------------------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
PENNSYLVANIA MUNICIPAL CASH TRUST
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
1994 1993
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -------------------------------------------------------------------------------
OPERATIONS--
- -------------------------------------------------------------------------------
Net investment income $ 6,997,846 $ 7,625,175
- ------------------------------------------------------------------------------- --------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -------------------------------------------------------------------------------
Dividends to shareholders from net investment income:
- -------------------------------------------------------------------------------
Institutional Service Shares (6,625,711) (7,195,929)
- -------------------------------------------------------------------------------
Cash Series Shares (372,135) (429,246)
- ------------------------------------------------------------------------------- --------------- ---------------
Change in net assets resulting from distributions to shareholders (6,997,846) (7,625,175)
- -------------------------------------------------------------------------------
FUND SHARE (PRINCIPAL) TRANSACTIONS--
- -------------------------------------------------------------------------------
Proceeds from sale of shares 800,515,592 932,887,176
- -------------------------------------------------------------------------------
Net asset value of shares issued to shareholders
in payment of dividends declared 1,321,124 1,613,211
- -------------------------------------------------------------------------------
Cost of shares redeemed (891,403,705) (930,314,734)
- ------------------------------------------------------------------------------- --------------- ---------------
Change in net assets resulting from Fund share transactions (89,566,989) 4,185,653
- ------------------------------------------------------------------------------- --------------- ---------------
Change in net assets (89,566,989) 4,185,653
- -------------------------------------------------------------------------------
NET ASSETS:
- -------------------------------------------------------------------------------
Beginning of period 337,079,400 332,893,747
- ------------------------------------------------------------------------------- --------------- ---------------
End of period $ 247,512,411 $ 337,079,400
- ------------------------------------------------------------------------------- --------------- ---------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
PENNSYLVANIA MUNICIPAL CASH TRUST
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SERVICE SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
1994 1993 1992 1991 1990*
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -------------------------------------------------------
Net investment income 0.02 0.02 0.03 0.05 0.05
- ------------------------------------------------------- --------- --------- --------- --------- ---------
LESS DISTRIBUTIONS
- -------------------------------------------------------
Dividends to shareholders from
net investment income (0.02) (0.02) (0.03) (0.05) (0.05)
- ------------------------------------------------------- --------- --------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ------------------------------------------------------- --------- --------- --------- --------- ---------
TOTAL RETURN** 2.25% 2.24% 3.08% 4.64% 5.78%
- -------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -------------------------------------------------------
Expenses 0.64% 0.57% 0.56% 0.55% 0.50%(b)
- -------------------------------------------------------
Net investment income 2.19% 2.21% 3.04% 4.53% 5.56%(b)
- -------------------------------------------------------
Expense waiver/reimbursement (a) 0.02% 0.12% 0.12% 0.11% 0.18%(b)
- -------------------------------------------------------
SUPPLEMENTAL DATA
- -------------------------------------------------------
Net assets, end of period (000 omitted) $229,160 $318,518 $308,200 $317,165 $275,882
- -------------------------------------------------------
</TABLE>
* Reflects operations for the period from November 21, 1989 (date of initial
public investment) to October 31, 1990.
** Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(a) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(b) Computed on an annualized basis.
(See Notes which are an integral part of the Financial Statements)
PENNSYLVANIA MUNICIPAL CASH TRUST
FINANCIAL HIGHLIGHTS--CASH SERIES SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
1994 1993 1992 1991*
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
- --------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- --------------------------------------------------------------------
Net investment income 0.02 0.02 0.03 0.03
- -------------------------------------------------------------------- --------- --------- --------- ---------
LESS DISTRIBUTIONS
- --------------------------------------------------------------------
Dividends to shareholders from net investment
income (0.02) (0.02) (0.03) (0.03)
- -------------------------------------------------------------------- --------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -------------------------------------------------------------------- --------- --------- --------- ---------
TOTAL RETURN** 1.84% 1.83% 2.67% 3.55%
- --------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- --------------------------------------------------------------------
Expenses 1.04% 0.97% 0.96% 0.78%(b)
- --------------------------------------------------------------------
Net investment income 1.73% 1.88% 2.64% 3.92%(b)
- --------------------------------------------------------------------
Expense waiver/reimbursement (a) 0.18% 0.12% 0.12% 0.28%(b)
- --------------------------------------------------------------------
SUPPLEMENTAL DATA
- --------------------------------------------------------------------
Net assets, end of period (000 omitted) $18,352 $18,561 $24,694 $19,846
- --------------------------------------------------------------------
</TABLE>
* Reflects operations for the period from January 25, 1991 (date of initial
public offering) to
October 31, 1991.
** Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(a) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(b) Computed on an annualized basis.
(See Notes which are an integral part of the Financial Statements)
PENNSYLVANIA MUNICIPAL CASH TRUST
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1994
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Federated Municipal Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "Act"), as an open-end, management
investment company. The Trust consists of thirteen non-diversified portfolios.
The financial statements included herein present only those of Pennsylvania
Municipal Cash Trust (the "Fund"). The financial statements of the other
portfolios are presented separately. The assets of each portfolio are segregated
and a shareholder's interest is limited to the portfolio in which shares are
held. The Fund offers two classes of shares, Institutional Service Shares and
Cash Series Shares.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
A. INVESTMENT VALUATIONS--The Fund's use of the amortized cost method to value
its portfolio securities is in accordance with Rule 2a-7 under the Act.
B. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized
as required by the Internal Revenue Code, as amended (the "Code").
Distributions to shareholders are recorded on the ex-dividend date.
C. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its tax-exempt income.
Accordingly, no provisions for federal tax are necessary.
D. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
E. CONCENTRATION OF CREDIT RISK--Since the Fund invests a substantial portion
of its assets in issuers located in one state, it will be more susceptible
to factors adversely affecting issuers of that state than would be a
comparable general tax-exempt mutual fund. In order to reduce the credit
risk associated with such factors, at October 31, 1994, 73.4% of the
securities in the portfolio of investments are backed by letters of credit
or bond insurance of various financial institutions and financial guaranty
assurance agencies. The value of investments insured by or
supported (backed) by a letter of credit for any one institution or agency
did not exceed 11.7% of total investments.
F. OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Board of Trustees to issue an unlimited
number of full and fractional shares of beneficial interest (without par value)
for each class of shares. At October 31, 1994, capital paid-in aggregated
$247,512,411. Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
INSTITUTIONAL SERVICE SHARES 1994 1993
<S> <C> <C>
Shares sold 749,671,233 889,559,906
- ----------------------------------------------------------------------------------
Shares issued to shareholders in payment of dividends declared 937,173 1,201,127
- ----------------------------------------------------------------------------------
Shares redeemed (839,966,777) (880,442,017)
- ---------------------------------------------------------------------------------- -------------- --------------
Net change resulting from Institutional Service Share transactions (89,358,371) 10,319,016
- ---------------------------------------------------------------------------------- -------------- --------------
<CAPTION>
YEAR ENDED OCTOBER 31,
CASH SERIES SHARES 1994 1993
<S> <C> <C>
Shares sold 50,844,359 43,327,270
- ----------------------------------------------------------------------------------
Shares issued to shareholders in payment of dividends declared 383,951 412,084
- ----------------------------------------------------------------------------------
Shares redeemed (51,436,928) (49,872,717)
- ---------------------------------------------------------------------------------- -------------- --------------
Net change resulting from Cash Series Share transactions (208,618) (6,133,363)
- ---------------------------------------------------------------------------------- -------------- --------------
Total net change resulting from Fund share transactions (89,566,989) 4,185,653
- ---------------------------------------------------------------------------------- -------------- --------------
</TABLE>
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Management, the Fund's investment adviser
(the "Adviser"), receives for its services an annual investment advisory fee
equal to .50 of 1% of the Fund's average daily net assets. The Adviser may
voluntarily choose to waive a portion of its fee and reimburse certain operating
expenses of the Fund. The Adviser can modify or terminate this voluntary waiver
and reimbursement at any time at its sole discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Fund
with administrative personnel and services. Prior to March 1, 1994, these
services were provided at approximate cost. Effective March 1, 1994, the FAS fee
is based on the level of average aggregate daily net assets of all funds advised
by subsidiaries of Federated Investors for the period. The administrative fee
received during the period of the Administrative Services Agreement shall be at
least $125,000 per portfolio and $30,000 per each additional class of shares.
DISTRIBUTION AND SHAREHOLDER SERVICES FEE--The Fund has adopted a Distribution
Plan (the "Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the
Plan, the Fund will compensate Federated Securities Corp. ("FSC"), the principal
distributor, from the net assets of the Fund to finance activities intended to
result in the sales of the Fund's Cash Series Shares. The Plan provides that the
Fund may incur distribution expenses up to .40 of 1% of the average daily net
assets of the Cash Series Shares, annually, to compensate FSC. The distributor
may voluntarily choose to waive a portion of its fee. The distributor can modify
or terminate this voluntary waiver at any time at its sole discretion.
Under the terms of a Shareholder Services Agreement with Federated Shareholder
Services ("FSS"), the Fund will pay FSS up to .25 of 1% of average net assets of
the Fund for the period. This fee is to obtain certain personal services for
shareholders and to maintain shareholder accounts. For the fiscal year ended
October 31, 1994, Institutional Service Shares did not incur a shareholder
services fee.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES--Federated Services Company
("FServ") serves as transfer and dividend disbursing agent for the Fund. The
FServ fee is based on the size, type, and number of accounts and transactions
made by shareholders.
INTERFUND TRANSACTIONS--During the year ended October 31, 1994, the Fund engaged
in purchase and sale transactions with other affiliated funds at current value
pursuant to Rule 17a-7 under the Act amounting to $374,380,000 and $423,000,000,
respectively.
Certain of the Officers and Trustees of the Trust are Officers and Directors or
Trustees of the above companies.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
FEDERATED MUNICIPAL TRUST (Pennsylvania Municipal Cash Trust):
We have audited the accompanying statement of assets and liabilities of
Pennsylvania Municipal Cash Trust (an investment portfolio of Federated
Municipal Trust, a Massachusetts business trust), including the schedule of
portfolio investments, as of October 31, 1994, the related statement of
operations for the year then ended, the statement of changes in net assets for
each of the two years in the period then ended, and the financial highlights for
the periods presented. These financial statements and financial highlights are
the responsibility of the Trust's management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1994, by correspondence with the custodian and broker. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Pennsylvania Municipal Cash Trust (an investment portfolio of Federated
Municipal Trust) as of October 31, 1994, and the results of its operations for
the year then ended, the changes in its net assets for each of the two years in
the period then ended, and the financial highlights for the periods presented,
in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
December 14, 1994
TRUSTEES OFFICERS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
John F. Donahue John F. Donahue
John T. Conroy, Jr. Chairman
William J. Copeland Glen R. Johnson
James E. Dowd President
Lawrence D. Ellis, M.D. J. Christopher Donahue
Edward L. Flaherty, Jr. Vice President
Glen R. Johnson Richard B. Fisher
Peter E. Madden Vice President
Gregor F. Meyer Edward C. Gonzales
Wesley W. Posvar Vice President and Treasurer
Marjorie P. Smuts John W. McGonigle
Vice President and Secretary
David M. Taylor
Assistant Treasurer
G. Andrew Bonnewell
Assistant Secretary
</TABLE>
Mutual funds are not bank deposits or obligations, are not guaranteed
by any bank, and are not insured or guaranteed by the U.S. government,
the Federal Deposit Insurance Corporation, the Federal Reserve Board, or
any other government agency. Investment in mutual funds involves
investment risk, including possible loss of principal. Although money market
funds seek to maintain a stable net asset value of $1.00 per share, there is
no assurance that they will be able to do so.
This report is authorized for distribution to prospective investors only when
preceded
or accompanied by the Fund's prospectus which contains facts concerning its
objective and policies, management fees, expenses and other information.
- --------------------------------------------------------------------------------
VIRGINIA
- --------------------------------------------------------------------------------
MUNICIPAL
- --------------------------------------------------------------------------------
CASH
- --------------------------------------------------------------------------------
TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ANNUAL REPORT
TO SHAREHOLDERS
OCTOBER 31, 1994
FEDERATED SECURITIES CORP.
(LOGO)
- ---------------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
314229816
34229824
G00133-02 (12/94)
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the Annual Report to Shareholders for Virginia Municipal
Cash Trust (the "Fund"), a portfolio of Federated Municipal Trust, for the
12-month period ended October 31, 1994. The Fund consists of two classes of
shares known as Institutional Shares and Institutional Service Shares. The
report begins with an interview with portfolio manager Jeff Kozemchak about
economic factors affecting the Fund, followed by the Fund's Portfolio of
Investments and Financial Statements. In addition, Financial Highlights tables
have been included for Institutional Shares and Institutional Service Shares.
The Fund gives Virginia residents two ways to pursue tax-free income--its
earnings are exempt from federal regular income tax and Virginia personal income
tax.* Its portfolio includes high-quality, short-term Virginia municipal
securities of more than 25 issuers that use municipal bond financing for
projects as varied as housing, industrial development, education, and health
care.
During the report period, the Fund paid shareholders a total of $2.9 million in
dividends. At the end of the report period, the Fund's net assets stood at
$120.4 million.
As a wise investor, you can count on the Fund to ease your tax burden by
pursuing competitive tax-free yields--with the additional advantages of daily
liquidity and stability of principal.**
Thank you for your confidence in Virginia Municipal Cash Trust. We welcome your
comments and suggestions.
Sincerely,
Glen R. Johnson
President
December 15, 1994
* Income may be subject to the federal alternative minimum tax.
** No money market mutual fund can guarantee that a stable net asset value will
be maintained. An investment in the Fund is neither insured nor guaranteed by
the U.S. government.
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
An Interview with Fund Portfolio Manager Jeff A. Kozemchak
Q Recently, there has been a lot of concern, as well as press coverage, about
the subject of derivatives. What are derivatives?
A The term "derivative" has been applied to many different types of
investments. In the context of money market funds, derivatives generally
refer to adjustable rate securities designed for speculation on changes
in interest rates. These speculative derivatives provide
above-market yields when interest rates fall or remain stable, or when the yield
curve is steep. They provide below-market yields, however, when interest rates
rise or become more volatile, or when the yield curve flattens. All three of
these conditions occurred in 1994. As a result, many of these speculative
securities lost a significant part of their value, enough to threaten the $1.00
per share price of some money market funds.
It is important to distinguish these speculative derivatives from adjustable
rate securities that are indexed to money market interest rates. These indexed
securities are designed to track changes in market rates, and should approximate
their par value in all reasonably foreseeable market conditions. Tax-exempt
money market funds like the Fund have the right to tender these securities for
purchase at their par value. Money market funds have used these securities for
decades, through several interest rate cycles, without jeopardizing their stable
net asset values.
Q Do Federated Investors' money market funds invest in the derivatives that
have been in the headlines recently?
A No. None of Federated Investors' money market funds has invested in any of
the types of derivatives that have been in the headlines lately. Our mutual
funds only invest in adjustable rate securities that track changes in money
market interest rates.
With respect to speculative derivatives, we determined from the outset that the
potential volatility of these securities was contrary to the intent of the rules
governing the use of variable rate securities by money market funds. We also
realized the potential for these securities to deviate significantly from par
and threaten the $1.00 per share price of a money market fund. We spoke out
against the use of these securities by money market funds at industry
conferences throughout 1993, when the securities still offered attractive
yields. Our views were vindicated when, in June, 1994, the Securities and
Exchange Commission sent a letter to the Investment Company Institute requiring
money market funds to divest themselves of these securities in an orderly
manner. This caused some investment advisers to buy these securities from their
funds.
- --------------------------------------------------------------------------------
Q What happened to short-term interest rates over the period covered by this
Annual Report?
A There was a dramatic shift in the monetary policy of the Federal Reserve
Board (the "Fed") during the 12-month reporting period that ended October
31, 1994.
Throughout the fourth quarter of 1993, the Fed kept the Federal funds rate (the
rate banks charge each other for overnight loans) steady at 3.00%, where it had
been for a year and a half. The Fed had maintained short-term interest rates at
these low levels in order to stimulate the economy. However, in early 1994,
reports began to show stronger than anticipated economic growth. Real gross
national product grew at a 7.00% annual rate in the fourth quarter of 1993, and
the national unemployment rate declined to 6.00%. Concerned that these factors
could lead to an increase in wages and prices, the Fed took the first step on
February 4, 1994, to fight future inflation by raising its Federal funds rate
target to 3.25%. Since then, the Fed has continued to be aggressive, moving the
Federal funds rate target upward five more times from 3.25% to 5.50%.
Q How did municipal money market yields react to these rate increases?
A Municipal money market interest rates followed the upward movement in
taxable rates but to a slightly lesser degree, as they are affected by
federal, state and local tax factors as well as market supply and demand
imbalances.
The Fund's yields have proven to be quite responsive to the increases in money
market rates. For the 12-month reporting period ended October 31, 1994, the
Fund's tax-free, annualized seven-day net yields increased from 2.53% and 2.43%
to 2.97% and 2.87% for the Institutional Shares and Institutional Service
Shares, respectively.* At October 31, 1994, these seven-day yields were
equivalent to taxable yields of 5.22% (Institutional Shares) and 5.04%
(Institutional Service Shares) for those investors subject to the highest
federal and state tax brackets.** These numbers illustrate the Fund's
attractiveness relative to taxable investments.
* Performance quoted represents past performance and is not indicative of
future results. Yields will vary.
** These numbers assume that state income taxes are fully deductible in
computing federal income tax liability.
- --------------------------------------------------------------------------------
Q What is your outlook for the markets and the Fund?
A The economy continues to show surprising resilience to the Fed's attempts
to bring growth under control. We expect that the Fed will act to tighten
monetary policy in late 1994 and possibly again in the first quarter of
1995. At that point in time, the Federal funds target could be as high as 6.50%.
As a result, we plan to maintain a conservative posture in the near future,
while attempting to maximize performance through ongoing relative value
analysis. However, we will continue to monitor changing economic and market
developments so as to serve our clients attracted to the short-term, tax-exempt
securities market. In this environment, stable net asset value money market
funds like the Fund will continue to be an important component in preserving
capital, and should reflect rising short-term interest rates with increasing net
yields.
VIRGINIA MUNICIPAL CASH TRUST
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ---------- ----------------------------------------------------- -------- ------------
<C> <C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--100.2%
- ------------------------------------------------------------------------
$1,000,000 Alexandria, VA, IDA Weekly VRDNs (American Red
Cross)/(Sanwa Bank Ltd. LOC) A-1+ $ 1,000,000
-----------------------------------------------------
8,800,000 Alexandria, VA, Redevelopment and Housing Authority
Weekly VRDNs (Crystal City Apartments)/(Safeco
Insurance Co. of America Insured)/(Sumitomo Bank
BPA)/(Subject to AMT) A-1 8,800,000
-----------------------------------------------------
2,400,000 Amelia County, VA, IDA Weekly VRDNs (Series 1991)/
(Chambers Waste Systems)/(NationsBank of North
Carolina N.A. LOC)/(Subject to AMT) VMIG1 2,400,000
-----------------------------------------------------
5,000,000 Arlington County, VA, Weekly VRDNs (Ballston Public
Parking)/(Citibank N.A. LOC) A-1 5,000,000
-----------------------------------------------------
1,900,000 Chesapeake, VA, IDA Weekly VRDNs (Series 1986)/
(Volvo of America, Inc.)/(Union Bank of Switzerland
LOC)/(Subject to AMT) P-1 1,900,000
-----------------------------------------------------
2,000,000 Chesapeake, VA, IDA Weekly VRDNs (Series 1988)/
(Sumitomo Machinery Corp. of America)/(Sumitomo Bank
Ltd. LOC)/(Subject to AMT) VMIG1 2,000,000
-----------------------------------------------------
2,350,000 Dinwiddie County, VA, IDA Weekly VRDNs (Tindall
Concrete VA Inc. Project)/(First Union National Bank,
Charlotte LOC)/(Subject to AMT) P-1 2,350,000
-----------------------------------------------------
3,515,000 Dinwiddie County, VA, IDA, IDRB Weekly VRDNs (Series
1991)/(Maclin-Zimmer-McGill Tobacco Co., Inc.)/
(Wachovia Bank & Trust Co. NA LOC)/(Subject to AMT) P-1 3,515,000
-----------------------------------------------------
1,375,000 Fairfax County, VA, EDA Weekly VRDNs (Series 1993)/
(Future Homemakers of America)/(NationsBank of
Virginia N.A. LOC) P-1 1,375,000
-----------------------------------------------------
1,050,000 Fairfax County, VA, EDA Weekly VRDNs (William Byrd
Press)/(NationsBank of Virginia N.A. LOC) VMIG1 1,050,000
-----------------------------------------------------
</TABLE>
VIRGINIA MUNICIPAL CASH TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ---------- ----------------------------------------------------- -------- ------------
<C> <C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------
$1,000,000 Fairfax County, VA, Housing Authority Weekly VRDNs
(Chase Commons Associates)/(Bankers Trust Company
LOC) VMIG1 $ 1,000,000
-----------------------------------------------------
5,000,000 Fairfax County, VA, IDA, 3.55% CP (Inova Health
System), Mandatory Tender 1/26/95 A-1+ 5,000,000
-----------------------------------------------------
4,000,000 Falls Church, VA, IDA, 3.15% Semi-Annual TOBs (Kaiser
Permanente Medical Care System), 11/01/94 P-1 4,000,000
-----------------------------------------------------
1,000,000 Falls Church, VA, IDA, 3.90% Semi-Annual TOBs (Series
1985)/(Kaiser Permanente Medical Care Program
System), Optional Tender 5/1/95 A-1+ 1,000,000
-----------------------------------------------------
3,100,000 Fauquier County, VA, IDA Weekly VRDNs (Warrenton
Development Co.)/(NationsBank of Maryland N.A. LOC) P-1 3,100,000
-----------------------------------------------------
7,113,000 Fluvanna County, VA, IDA Weekly VRDNs (Series
1986)/(Thomasville Furniture Industries)/(Union Bank
of Switzerland LOC)/(Subject to AMT) P-1 7,113,000
-----------------------------------------------------
3,500,000 Halifax County, VA, IDA, MMMs, 3.35% CP (Virginia
Electric Power Co. Guaranty)/(Subject to AMT),
Mandatory Tender 11/10/94 A-1 3,500,000
-----------------------------------------------------
3,500,000 Halifax County, VA, IDA, MMMs, PCR, 3.45% CP
(Virginia Electric Power Co.)/(Subject to AMT),
Mandatory Tender 12/9/94 A-1 3,500,000
-----------------------------------------------------
2,725,000 Lynchburg, VA, 3.80% BANs, 2/1/95 SP-1+ 2,729,650
-----------------------------------------------------
3,740,000 Newport News, VA, 4.10% UT GO Refunding Bonds (Series
1992B), 7/1/95 Aa 3,744,562
-----------------------------------------------------
2,225,000 Norfolk, VA, Redevelopment and Housing Authority
Weekly VRDNs (Series 1990)/(St. Paul's Associates,
L.P.)/(NationsBank of Virginia N.A. LOC) P-1 2,225,000
-----------------------------------------------------
1,070,000 Norfolk, VA, Water Revenue Bonds, 2.80% SB (Series
1993), 11/1/94 NR(3) 1,070,000
-----------------------------------------------------
</TABLE>
VIRGINIA MUNICIPAL CASH TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ---------- ----------------------------------------------------- -------- ------------
<C> <C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------
$1,000,000 Peninsula Ports Authority of Virginia, Facility
Revenue Refunding Bonds, 3.40% CP (CSX Corp.)/(Bank
of Nova Scotia LOC), Mandatory Tender 1/20/95 A-1+ $ 1,000,000
-----------------------------------------------------
1,500,000 Peninsula Ports Authority of Virginia, Facility
Revenue Refunding Bonds, 3.50% CP (CSX Corp.)/(Bank
of Nova Scotia LOC), Mandatory Tender 1/13/95 A-1+ 1,500,000
-----------------------------------------------------
3,500,000 Peninsula Ports Authority of Virginia, Facility
Revenue Refunding Bonds, 3.55% CP (CSX Corp.)/(Bank
of Nova Scotia LOC), Mandatory Tender 1/19/95 A-1+ 3,500,000
-----------------------------------------------------
1,000,000 Peninsula Ports Authority, VA, 3.35% CP (Dominion
Terminal Associates)/(National Westminster Bank LOC),
Mandatory Tender 12/14/94 P-1 1,000,000
-----------------------------------------------------
3,000,000 Richmond, VA, Redevelopment and Housing Authority
Weekly VRDNs (Series 1989)/(Belmont Apartments)/
(NationsBank of North Carolina N.A. LOC) P-1 3,000,000
-----------------------------------------------------
3,000,000 Richmond, VA, Redevelopment and Housing Authority
Weekly VRDNs (Series B-5)/(Red Tobacco Row)/
(Bayerische Landesbank LOC)/(Subject to AMT) VMIG1 3,000,000
-----------------------------------------------------
3,555,000 Richmond, VA, Redevelopment and Housing Authority
Weekly VRDNs (Series B-6)/(Red Tobacco Row)/
(Bayerische Landesbank LOC)/(Subject to AMT) VMIG1 3,555,000
-----------------------------------------------------
2,000,000 Richmond, VA, Redevelopment and Housing Authority
Weekly VRDNs (Series B-9)/(Red Tobacco Row)/
(Bayerische Landesbank LOC)/(Subject to AMT) VMIG1 2,000,000
-----------------------------------------------------
1,260,000 (a) Roanoke County, VA, Water System Revenue Weekly VRDNs
(P-Floats)/(FGIC Insured) A-1+ 1,260,000
-----------------------------------------------------
3,105,000 Suffolk, VA, Redevelopment and Housing Authority
Weekly VRDNs (Series 1994)/(Terry Peterson Associates
II)/(NationsBank of Virginia N.A. LOC) P-1 3,105,000
-----------------------------------------------------
</TABLE>
VIRGINIA MUNICIPAL CASH TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ---------- ----------------------------------------------------- -------- ------------
<C> <C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------
$1,955,000 Suffolk, VA, Redevelopment and Housing Authority
Weekly VRDNs (Terry/Peterson Development Corp.)/
(NationsBank of Virginia N.A. LOC) P-1 $ 1,955,000
-----------------------------------------------------
2,590,000 Tazewell County, VA, IDA Weekly VRDNs (Series
1993)/(Seville Properties Bluefield L.P.)/(Huntington
National Bank, Columbus LOC) P-1 2,590,000
-----------------------------------------------------
1,000,000 Virginia Education Loan Authority, 3.45% SB (Series
B), 3/1/95 AAA 1,000,000
-----------------------------------------------------
3,500,000 Virginia Education Loan Authority, 4.10% Annual TOBs
(Escrowed in Treasuries), 8/24/95 AAA 3,500,000
-----------------------------------------------------
1,500,000 Virginia Housing Development Authority Weekly VRDNs
(Series 1987A)/(AHC Service Corp.)/(Mitsubishi Bank
Ltd. LOC) P-1 1,500,000
-----------------------------------------------------
1,200,000 Virginia Peninsula Port Authority Coal Terminal
Revenue Refunding Bonds, 3.15% CP (Series
1987A)/(Dominion Terminal Associates)/(National
Westminster Bank, PLC, London LOC), Mandatory Tender
11/22/94 P-1 1,200,000
-----------------------------------------------------
1,200,000 Virginia Peninsula Port Authority Daily VRDNS (Kinyo
Virginia, Inc.)/(Industrial Bank of Japan Ltd.
LOC)/(Subject to AMT) A-1 1,200,000
-----------------------------------------------------
3,000,000 Virginia Peninsula Port Authority Facility Revenue
Refunding Bonds, 3.55% CP (Series 1992)/(CSX Corp.)/
(Bank of Nova Scotia LOC), Mandatory Tender 12/13/94 A-1+ 3,000,000
-----------------------------------------------------
</TABLE>
VIRGINIA MUNICIPAL CASH TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ---------- ----------------------------------------------------- -------- ------------
<C> <C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------
$5,000,000 Virginia State, HDA, 3.90% Annual TOBs (Series F),
Mandatory Tender 5/10/95 A-1+ $ 5,000,000
-----------------------------------------------------
4,000,000 Virginia State, HDA, 2.65% Annual TOBs, 12/15/94 A-1+ 4,000,000
-----------------------------------------------------
5,507,000 Williamsburg, VA, IDA Weekly VRDNs (Series 1988)/
(Colonial Williamsburg Foundation Museum)/(Sanwa Bank
Ltd. LOC) P-1 5,507,000
----------------------------------------------------- ------------
TOTAL INVESTMENTS, at amortized cost $120,744,212+
----------------------------------------------------- ------------
</TABLE>
(a) Denotes a restricted security which is subject to resale under Federal
Securities laws. This security has been determined to be liquid under
criteria established by the Board of Trustees.
* See Notes to Portfolio of Investments on page 11. Current credit ratings are
unaudited.
+ Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($120,444,233) at
October 31, 1994.
VIRGINIA MUNICIPAL CASH TRUST
- --------------------------------------------------------------------------------
The following abbreviations are used in this portfolio:
<TABLE>
<S> <C>
AMT -- Alternative Minimum Tax
BANs -- Bond Anticipation Notes
BPA -- Bond Purchase Agreement
CP -- Commercial Paper
EDA -- Economic Development Authority
FGIC -- Financial Guaranty Insurance Company
GO -- General Obligation
HDA -- Hospital Development Authority
IDA -- Industrial Development Authority
IDRB -- Industrial Development Revenue Bonds
LOC -- Letter of Credit
MMMs -- Money Market Municipals
PCR -- Pollution Control Revenue
SB -- Serial Bond
TOBs -- Tender Option Bonds
UT -- Unlimited Tax
VA -- Virginia
VRDNs -- Variable Rate Demand Notes
</TABLE>
VIRGINIA MUNICIPAL CASH TRUST
NOTES TO PORTFOLIO OF INVESTMENTS
(UNAUDITED)
- --------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL OBLIGATION RATINGS
STANDARD & POOR'S RATINGS GROUP
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 ratings 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 & POOR'S RATINGS GROUP
S&P 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
long-term and 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 as 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 & POOR'S RATINGS GROUP
A S&P 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 highest category indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong
safety characteristics are denoted with a plus (+) sign designation.
A-2 Capacity for timely payment on issues with this designation is satisfactory.
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. Prime-1
repayment capacity will normally be evidenced by the following
characteristics: leading market positions in well established industries,
high rates of return on funds employed, conservative capitalization
structure with moderate reliance on debt and ample asset protection, broad
margins in earning coverage of fixed financial charges and high internal
cash generation, well-established access to a range of financial markets and
assured sources of alternate liquidity.
P-2 Issuers rated PRIME-2 (or related supporting institutions) have a strong
capacity for repayment of short-term promissory obligations. This will
normally be evidenced by many of the characteristics cited above, but to a
lesser degree. Earnings trends and coverage ratios, while sound, will be
more subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.
LONG-TERM DEBT RATINGS
STANDARD & POOR'S RATINGS GROUP
AAA Debt rated "AAA" has the highest rating assigned by S&P. 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 highest 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.
MOODY'S INVESTORS SERVICE, INC.
AAA Bonds that 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 edged." 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 that 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 that 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.
NR indicates that both the bonds and the obligor or credit enhancer are not
currently rated by S&P or Moody's 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 S&P or "Aaa" by Moody's.
NR(2) The underlying issuer/obligor/guarantor has other outstanding debt rated
"AA" by S&P or "Aa" Moody's.
NR(3) The underlying issuer/obligor/guarantor has other outstanding debt rated
"A" by S&P or Moody's.
VIRGINIA MUNICIPAL CASH TRUST
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- --------------------------------------------------------------------------------
Investments in securities, at amortized cost and value $120,744,212
- --------------------------------------------------------------------------------
Cash 176,312
- --------------------------------------------------------------------------------
Interest receivable 644,525
- --------------------------------------------------------------------------------
Receivable for Fund shares sold 1,481
- --------------------------------------------------------------------------------
Deferred expenses 52,802
- -------------------------------------------------------------------------------- ------------
Total assets 121,619,332
- --------------------------------------------------------------------------------
LIABILITIES:
- --------------------------------------------------------------------------------
Payable for investments purchased $1,000,000
- -------------------------------------------------------------------
Dividends payable 92,302
- -------------------------------------------------------------------
Accrued expenses 82,797
- ------------------------------------------------------------------- ----------
Total liabilities 1,175,099
- -------------------------------------------------------------------------------- ------------
NET ASSETS for 120,444,233 shares of beneficial interest outstanding $120,444,233
- -------------------------------------------------------------------------------- ------------
NET ASSET VALUE, Offering Price, and Redemption Proceeds Per Share:
- --------------------------------------------------------------------------------
Institutional Service Shares ($100,084,027 / 100,084,027 shares of
beneficial interest outstanding) $1.00
- -------------------------------------------------------------------------------- ------------
Institutional Shares ($20,360,206 / 20,360,206 shares of beneficial
interest outstanding) $1.00
- -------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
VIRGINIA MUNICIPAL CASH TRUST
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------
Interest income $3,332,902
- ---------------------------------------------------------------------------------
EXPENSES:
- ---------------------------------------------------------------------------------
Investment advisory fee $470,783
- ----------------------------------------------------------------------
Administrative personnel and services 145,109
- ----------------------------------------------------------------------
Custodian and portfolio accounting fees 81,849
- ----------------------------------------------------------------------
Shareholder services fee 102,290
- ----------------------------------------------------------------------
Transfer agent and dividend disbursing agent fees and expenses 37,808
- ----------------------------------------------------------------------
Fund share registration costs 13,657
- ----------------------------------------------------------------------
Printing and postage 17,669
- ----------------------------------------------------------------------
Legal fees 15,795
- ----------------------------------------------------------------------
Miscellaneous 2,303
- ----------------------------------------------------------------------
Insurance premiums 6,955
- ---------------------------------------------------------------------- --------
Total expenses 894,218
- ----------------------------------------------------------------------
Deduct--Waiver of investment advisory fee $435,418
- ----------------------------------------------------------------------
---------
Net expenses 458,800
- --------------------------------------------------------------------------------- ----------
Net investment income $2,874,102
- --------------------------------------------------------------------------------- ----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
VIRGINIA MUNICIPAL CASH TRUST
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
-------------------------------
1994 1993*
--------------- ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- --------------------------------------------------------------
OPERATIONS--
- --------------------------------------------------------------
Net investment income $ 2,874,102 $ 139,261
- -------------------------------------------------------------- --------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS--
- --------------------------------------------------------------
Dividends to shareholders from net investment income:
- --------------------------------------------------------------
Institutional Service Shares (2,479,425) (124,823)
- --------------------------------------------------------------
Institutional Shares (394,677) (14,438)
- -------------------------------------------------------------- --------------- ------------
Change in net assets from distributions to shareholders (2,874,102) (139,261)
- -------------------------------------------------------------- --------------- ------------
FUND SHARE (PRINCIPAL) TRANSACTIONS--
- --------------------------------------------------------------
Proceeds from sale of shares 1,227,739,774 122,368,804
- --------------------------------------------------------------
Net asset value of shares issued to shareholders
in payment of dividends declared 2,081,737 95,476
- --------------------------------------------------------------
Cost of shares redeemed (1,162,235,549) (69,606,009)
- -------------------------------------------------------------- --------------- ------------
Change in net assets resulting from Fund share
transactions 67,585,962 52,858,271
- -------------------------------------------------------------- --------------- ------------
Change in net assets 67,585,962 52,858,271
- --------------------------------------------------------------
NET ASSETS:
- --------------------------------------------------------------
Beginning of period 52,858,271 --
- -------------------------------------------------------------- --------------- ------------
End of period $ 120,444,233 $ 52,858,271
- -------------------------------------------------------------- --------------- ------------
</TABLE>
*For the period from September 16, 1993 (date of initial public investment) to
October 31, 1993.
(See Notes which are an integral part of the Financial Statements)
VIRGINIA MUNICIPAL CASH TRUST
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER
31,
---------------------
1994 1993*
----- ------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00
- ----------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------
Net investment income 0.03 0.003
- ----------------------------------------------------------------
LESS DISTRIBUTIONS
- ----------------------------------------------------------------
Dividends to shareholders from net investment income (0.03) (0.003)
- ---------------------------------------------------------------- ----- -----
NET ASSET VALUE, END OF PERIOD $1.00 $1.00
- ---------------------------------------------------------------- ----- -----
TOTAL RETURN** 2.57% 0.35%
- ----------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------
Expenses 0.33% 0.09%(b)
- ----------------------------------------------------------------
Net investment income 2.56% 2.68%(b)
- ----------------------------------------------------------------
Expense waiver/reimbursement (a) 0.37% 1.04%(b)
- ----------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------
Net assets, end of period (000 omitted) $20,360 $7,210
- ----------------------------------------------------------------
</TABLE>
* Reflects operations for the period from September 16, 1993 (date of initial
public investment) to October 31, 1993.
** Based on net asset value, which does not reflect the sales load or contingent
deferred sales charge, if applicable.
(a) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(b) Computed on an annualized basis.
(See Notes which are an integral part of the Financial Statements)
VIRGINIA MUNICIPAL CASH TRUST
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SERVICE SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER
31,
---------------------
1994 1993*
----- ------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00
- ----------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------
Net investment income 0.02 0.003
- ----------------------------------------------------------------
LESS DISTRIBUTIONS
- ----------------------------------------------------------------
Dividends to shareholders from net investment income (0.02) (0.003)
- ---------------------------------------------------------------- ----- -----
NET ASSET VALUE, END OF PERIOD $1.00 $1.00
- ---------------------------------------------------------------- ----- -----
TOTAL RETURN** 2.44% 0.34%
- ----------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------
Expenses 0.40% 0.19%(b)
- ----------------------------------------------------------------
Net investment income 2.42% 2.67%(b)
- ----------------------------------------------------------------
Expense waiver/reimbursement (a) 0.37% 1.04%(b)
- ----------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------
Net assets, end of period (000 omitted) $100,084 $45,648
- ----------------------------------------------------------------
</TABLE>
* Reflects operations for the period from September 16, 1993 (date of initial
public investment) to October 31, 1993.
** Based on net asset value, which does not reflect the sales load or contingent
deferred sales charge, if applicable.
(a) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(b) Computed on an annualized basis.
(See Notes which are an integral part of the Financial Statements)
VIRGINIA MUNICIPAL CASH TRUST
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1994
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Federated Municipal Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "Act"), as an open-end, management
investment company. The Trust consists of thirteen non-diversified portfolios.
The financial statements included herein are only those of Virginia Municipal
Cash Trust (the "Fund"). The financial statements of the other portfolios are
presented separately. The assets of each portfolio are segregated and a
shareholder's interest is limited to the portfolio in which shares are held. The
Fund offers two classes of shares, Institutional Service Shares and
Institutional Shares.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
<TABLE>
<S> <C>
A. INVESTMENT VALUATIONS--The Fund's use of the amortized cost method to value its portfolio
securities is in accordance with Rule 2a-7 under the Act.
B. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses are accrued
daily. Bond premium and discount, if applicable, are amortized as required by the
Internal Revenue Code, as amended (the "Code"). Distributions to shareholders are
recorded on the ex-dividend date.
C. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the Code
applicable to regulated investment companies and to distribute to shareholders each year
substantially all of its tax-exempt income. Accordingly, no provisions for federal tax
are necessary.
D. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in when-issued or
delayed delivery transactions. The Fund records when-issued securities on the trade date
and maintains security positions such that sufficient liquid assets will be available to
make payment for the securities purchased. Securities purchased on a when-issued or
delayed delivery basis are marked to market daily and begin earning interest on the
settlement date.
E. CONCENTRATION OF CREDIT RISK--Since the Fund invests a substantial portion of its assets
in issuers located in one state, it will be more susceptible to factors adversely
affecting issuers of that state than would be a comparable general tax-exempt mutual
fund. In order to reduce the credit risk associated with such factors, at October 31,
1994, 71.4% of the securities in the portfolio of investments are backed by letters of
credit or bond insurance of various financial institutions and financial guaranty
assurance agencies. The value of investments insured by or supported (backed) by a letter
of credit for any one institution or agency did not exceed 8.0% of total investments.
</TABLE>
VIRGINIA MUNICIPAL CASH TRUST
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
F. DEFERRED EXPENSES--The costs incurred by the Fund with respect to registration of its
shares in its first fiscal year, excluding the initial expense of registering its shares,
have been deferred and are being amortized using the straight-line method not to exceed a
period of five years from the Fund's commencement date.
G. RESTRICTED SECURITIES--Restricted securities are securities that may only be resold upon
registration under Federal securities laws or in transactions exempt from such
registration. Many restricted securities may be resold in the secondary market in
transactions exempt from registration. In some cases, the restricted securities may be
resold without registration upon exercise of a demand feature. Such restricted securities
may be determined to be liquid under criteria established by the Board of Trustees (the
"Trustees"). The Fund will not incur any registration costs upon such resales. Restricted
securities are valued at amortized cost in accordance with Rule 2a-7 under the Act.
Additional information on each restricted security held at October 31, 1994, is as
follows:
</TABLE>
<TABLE>
<CAPTION>
ACQUISITION ACQUISITION
SECURITY DATE COST
----------------------------------------------------------- ------------- ------------
<S> <C> <C>
Roanoke County, VA,
Water System Revenue
Weekly VRDNs 08/03/94 $1,260,000
H. OTHER--Investment transactions are accounted for on the trade date.
</TABLE>
VIRGINIA MUNICIPAL CASH TRUST
- --------------------------------------------------------------------------------
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares. At October 31, 1994, capital paid-in aggregated $120,444,233.
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
-----------------------------
INSTITUTIONAL SERVICE SHARES 1994 1993*
- ---------------------------------------------------------------- -------------- -----------
<S> <C> <C>
Shares sold 1,161,511,893 113,204,248
- ----------------------------------------------------------------
Shares issued to shareholders in payment of dividends declared 2,053,372 95,476
- ----------------------------------------------------------------
Shares redeemed (1,109,129,007) (67,651,955)
- ---------------------------------------------------------------- -------------- -----------
Net change resulting from Institutional Service Share
transactions 54,436,258 45,647,769
- ---------------------------------------------------------------- -------------- -----------
</TABLE>
* For the period from September 16, 1993 (date of initial public investment) to
October 31, 1993.
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
----------------------------
INSTITUTIONAL SHARES 1994 1993*
- ----------------------------------------------------------------- -------------- ----------
<S> <C> <C>
Shares sold 66,227,881 9,164,556
- -----------------------------------------------------------------
Shares issued to shareholders in payment of dividends declared 28,365 --
- -----------------------------------------------------------------
Shares redeemed (53,106,542) (1,954,054)
- ----------------------------------------------------------------- ------------- ----------
Net change resulting from Institutional Share transactions 13,149,704 7,210,502
- ----------------------------------------------------------------- ------------- ----------
Net change resulting from Fund Share transactions 67,585,962 52,858,271
- ----------------------------------------------------------------- ------------- ----------
</TABLE>
* For the period from September 16, 1993 (date of initial public investment) to
October 31, 1993.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Management, the Fund's investment adviser
(the "Adviser"), receives for its services an annual investment advisory fee
equal to .40 of 1% of the Fund's average daily net assets. The Adviser may
voluntarily choose to waive its fee and reimburse certain operating expenses of
the Fund. The Adviser can modify or terminate this voluntary waiver and
reimbursement at any time at its sole discretion.
VIRGINIA MUNICIPAL CASH TRUST
- --------------------------------------------------------------------------------
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Fund
with administrative personnel and services. Prior to March 1, 1994, these
services were provided at approximate cost. Effective March 1, 1994, the FAS fee
is based on the level of average aggregate daily net assets of all funds advised
by subsidiaries of Federated Investors for the period. The administrative fee
received during the period of the Administrative Services Agreement, shall be at
least $125,000 per portfolio and $30,000 per each additional class of shares.
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement
with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to .25 of
1% of average net assets of each class of shares for the period. This fee is to
obtain certain personal services for shareholders and to maintain shareholder
accounts. For the fiscal year ended October 31, 1994, Institutional Shares did
not incur a shareholder services fee.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES--Federated Services Company
("FServ") serves as transfer agent and dividend disbursing agent for the Fund.
The FServ fee is based on the size, type, and number of accounts and
transactions made by shareholders.
ORGANIZATIONAL EXPENSES--Organizational expenses ($33,493) were borne initially
by the Adviser. The Fund has agreed to reimburse the Adviser for the
organizational expenses and start-up administrative expenses during the five
year period following August 30, 1993 (date the Fund first became effective).
For the year ended October 31, 1994, the Fund paid $4,466, pursuant to this
agreement.
INTERFUND TRANSACTIONS--During the year ended October 31, 1994, the Fund engaged
in purchase and sale transactions with other affiliated funds at current value
pursuant to Rule 17a-7 under the Act amounting to $450,216,919 and $453,289,999,
respectively.
Certain Officers and Trustees of the Trust are Officers and Directors or
Trustees of the above companies.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
FEDERATED MUNICIPAL TRUST
(Virginia Municipal Cash Trust):
We have audited the accompanying statement of assets and liabilities of Virginia
Municipal Cash Trust (an investment portfolio of Federated Municipal Trust, a
Massachusetts business trust), including the schedule of portfolio investments,
as of October 31, 1994, the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in the
period then ended, and the financial highlights for the periods presented. These
financial statements and financial highlights are the responsibility of the
Trust's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1994, by correspondence with the custodian and broker. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Virginia Municipal Cash Trust (an investment portfolio of Federated Municipal
Trust) as of October 31, 1994, and the results of its operations for the year
then ended, the changes in its net assets for each of the two years in the
period then ended, and the financial highlights for the periods presented, in
conformity with generally accepted accounting principles.
Pittsburgh, Pennsylvania, ARTHUR ANDERSEN LLP
December 14, 1994
<TABLE>
<S> <C>
TRUSTEES OFFICERS
- ---------------------------------------------------------------------------------------------
John F. Donahue John F. Donahue
John T. Conroy, Jr. Chairman
William J. Copeland Glen R. Johnson
James E. Dowd President
Lawrence D. Ellis, M.D. J. Christopher Donahue
Edward L. Flaherty, Jr. Vice President
Glen R. Johnson Richard B. Fisher
Peter E. Madden Vice President
Gregor F. Meyer Edward C. Gonzales
Wesley W. Posvar Vice President and Treasurer
Marjorie P. Smuts John W. McGonigle
Vice President and Secretary
David M. Taylor
Assistant Treasurer
G. Andrew Bonnewell
Assistant Secretary
</TABLE>
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risk,
including possible loss of principal. Although money market funds seek to
maintain a stable net asset value of $1.00 per share, there is no assurance that
they will be able to do so.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Fund's prospectus which contains facts concerning
its objective and policies, management fees, expenses and other information.
