FEDERATED MUNICIPAL TRUST, 485APOS, 1998-10-28

FEDERATED MUNICIPAL TRUST
485APOS, 1998-10-28

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1933 Act File No. 33-31259
1940 Act File No. 811-5911

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 x

Pre-Effective Amendment No. ........................

Post-Effective Amendment No. 47 ...................... x

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 x

Amendment No. 47 .................................... x

FEDERATED MUNICIPAL TRUST

(Exact Name of Registrant as Specified in Charter)

Federated Investors Funds
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7000

(412) 288-1900
(Registrant's Telephone Number)

John W. McGonigle, Esquire,
Federated Investors Tower,
1001 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3779
(Name and Address of Agent for Service)

It is proposed that this filing will become effective:

immediately upon filing pursuant to paragraph (b) on _________________
pursuant to paragraph (b) 60 days after filing pursuant to paragraph (a) (i)
x on December 31, 1998, pursuant to paragraph (a) (i). 75 days after filing
pursuant to paragraph (a)(ii) on _________________ pursuant to paragraph
(a)(ii) of Rule 485.

If appropriate, check the following box:

This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.

Copies To:

Matthew G. Maloney, Esquire
Dickstein Shapiro Morin & Oshinsky LLP
2101 L Street, N.W.
Washington, D.C. 20037

Prospectus December 31, 1998

MASSACHUSETTS MUNICIPAL CASH TRUST
INSTITUTIONAL SERVICE SHARES

A money market mutual fund seeking to provide current income exempt from federal
regular income tax and Massachusetts state income tax by investing primarily in
short-term Massachusetts municipal securities.

Fund Shares are not bank deposits, federally insured, or guaranteed, and may
lose value. As with all mutual funds, the Securities and Exchange Commission has
not approved or disapproved these securities or passed upon the adequacy of this
prospectus, and any representation to the contrary is a criminal offense.

Contents

Risk/Return Summary What are the Fund's Fees and Expenses? What are the Fund's
Investment Strategies?
What are the Principal Securities in Which the Fund Invests? What are the
Specific Risks of Investing in the Fund?
What do Shares Cost?
How is the Fund Sold?
How to Purchase Shares
How to Redeem Shares
Account and Share Information
Who Manages the Fund?
Financial Information

<PAGE>

RISK/RETURN SUMMARY

WHAT IS THE FUND'S INVESTMENT OBJECTIVE?

The Fund is a money market fund which seeks to maintain a stable net asset value
of $1.00. The Fund's investment objective is current income exempt from federal
regular income tax and Massachusetts state income tax consistent with stability
of principal.

WHAT ARE THE FUND'S MAIN INVESTMENT STRATEGIES?

WHAT ARE THE MAIN RISKS OF INVESTING IN THE FUND?

Although the Fund seeks to maintain a stable net asset value, it is possible to
lose money investing in the Fund. Because the Fund may invest a significant
portion of its assets in securities of a single issuer, an investment in the
Fund may involve additional risks compared to a fully diversified money market
fund.

The shares offered by this prospectus are not deposits or obligations of any
bank, are not endorsed or guaranteed by any bank and are not insured or
guaranteed by the U.S. government, the Federal Deposit Insurance Corporation,
the Federal Reserve Board, or any other government agency.

RISK/RETURN BAR CHART AND TABLE

The graphic presentation displayed here consists of a bar chart representing the
annual total returns of Institutional Service Shares as of the calendar year-end
for each of seven years.

The `y' axis reflects the "% Total Return" beginning with 0.00% and increasing
in increments of 0.50% up to 4.50%.

The `x' axis represents calculation periods from the earliest calendar year end
of the Fund's Institutional Service Shares start of business through the
calendar year ended December 31, 1997. The light gray shaded chart features
seven distinct vertical bars, each shaded in charcoal, and each visually
representing by height the total return percentages for the calendar year stated
directly at its base. The calculated total return percentage for the Fund's
Institutional Service Shares for each calendar year is stated directly at the
top of each respective bar, for the calendar years 1991 through 1997, are:
4.32%, 2.60%, 1.92%, 2.34%, 3.40%, 3.00% and 3.13%, respectively.

The bar chart shows the variability of the Fund's Institutional Service Shares
on a yearly basis.

The Fund's Institutional Service Shares are not sold subject to a sales charge
(load). Hence, the total returns displayed above are based upon the net asset
value.

7-Day Net Yield as of (12/31/97)* was 3.35%.

The Fund's total return from January 1, 1998 to September 30, 1998 was 0.81%.

Within the period shown in the Chart, the Fund's highest quarterly return was
1.14% (quarter ended September 30, 1991). Its lowest quarterly return was 0.46%
(quarter ended March 31, 1994).

* Investors may call the Fund to acquire the current 7-Day Net Yield by calling
1-800-341-7400.

While past performance does not necessarily predict future performance, this
information provides you with historical performance information so that you can
analyze whether the Fund's investment risks are balanced by its potential
rewards.

<PAGE>

Massachusetts Municipal Cash Trust
Fees and Expenses

This table describes the fees and expenses that you may pay if you buy and hold
shares of the Massachusetts Municipal Cash Trust's Institutional Service Shares.

<S> <C>

Shareholder Fees ( fees paid directly from your investment)

Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) None
Maximum Deferred Sales Charge (Load) (as a percentage of original purchase
price or redemption proceeds, as applicable)................... None
Maximum Sales Charge (Load) Imposed on Reinvested Dividends (and other Distributions)
( as a percentage of offering price)........................... None
Redemption Fee (as a percentage of amount redeemed, if applicable) None
Exchange Fee................................................... None
Maximum Account Fee............................................................................None
</TABLE>

Annual Fund Operating Expenses (expenses that are deducted from Fund assets) (as
a percentage of average net assets)

Management Fee (1).............................................0.50%
Shareholder Services Fee (2)...................................0.25%
Distribution (12b-1) Fee.......................................None
Other Expenses ................................................0.__%
Total Annual Fund Operating Expenses (before waivers).......... 0.__%
- --------------------------------------------------------------------------------

Although not contractually obligated to do so, the adviser waived and
distributor reimbursed certain amounts. These are shown below along with the net
expenses the Fund ACTUALLY paid for the fiscal year ended October 31, 1998.
WAIVER of Fund expenses (1)(2).................................__%
Total Actual Annual Fund Operating Expenses (after waivers)....__%

(1)The adviser voluntarily waived a portion of the management fee. The adviser
can terminate this voluntary waiver at any time. The management fee paid by
the Fund (after the voluntary waiver) was ___% for the year ended October 31,
1998.

(2)The shareholder services fee has been voluntarily waived. This voluntary
waiver can be terminated at any time. The shareholder services fee paid by
the Fund (after the voluntary waiver) was ___% for the year ended October 31,
1998.

Example

The following Example is intended to help you compare the cost of investing in
the Massachusetts Municipal Cash Trust's Institutional Service Shares with the
cost of investing in other mutual funds.

The Example assumes that you invest $10,000 in the Massachusetts Municipal Cash
Trust's Institutional Service Shares for the time periods indicated and then
redeem all of your shares at the end of those periods. The Example also assumes
that your investment has a 5% return each year and that the Massachusetts
Municipal Cash Trust's Institutional Service Shares operating expenses are
before waivers as estimated above and remain the same. Although your actual
costs may be higher or lower, based on these assumptions your costs would be:

1 Year 3 Years 5 Years 10 Years
Payment of the maximum sales charge.
Expenses assuming no redemption..... $__ $__ $__ $__

<PAGE>

WHAT ARE THE FUND'S INVESTMENT STRATEGIES?

The Fund invests in a portfolio of high-quality municipal securities maturing in
13 months or less. The average maturity of the Fund's portfolio, computed on a
dollar-weighted basis, will be 90 days or less.

The Fund's Adviser performs a fundamental credit analysis to develop an approved
list of issuers and securities that meet the Adviser's minimum credit standards.
The Adviser targets an average portfolio maturity based upon its interest rate
outlook and the municipal securities available. The Adviser structures the
portfolio by combining variable rate demand instruments and municipal notes.
Depending on the supply of municipal securities, the Adviser generally shortens
the portfolio's maturity when it expects interest rates to rise and extends the
maturity when it expects interest rates to fall.

WHAT ARE THE PRINCIPAL SECURITIES IN WHICH THE FUND INVESTS?

Tax exempt securities are fixed income securities that pay interest exempt from
regular federal income taxes. States, counties, cities and other political
subdivisions and authorities typically issue tax exempt securities. Tax exempt
securities are generally differentiated by their source of repayment. Fixed
Income securities pay interest, dividends or distributions at a specified rate.
The rate may be fixed or adjusted periodically. The issuer must also repay the
principal amount of the security, normally within a specified time.

Variable rate demand instruments are tax exempt securities that require the
issuer or a third party, such as a dealer or bank, to repurchase the security
for its face value upon demand. The securities also bear interest at a
variable rate intended to cause the securities to trade at their face value.
The Fund treats demand instruments as short-term securities, even though
their stated maturity may extend beyond thirteen months.

Municipal notes are short-term tax exempt securities. Many municipalities
issue such notes to fund their current operations prior collecting taxes or
other municipal revenues. Municipalities may also issue notes to fund capital
projects prior to issuing long-term bonds. The issuers typically repay the
notes at the end of their fiscal year, either with taxes, other revenues or
proceeds from newly issued notes or bonds.

Investment Ratings. The securities in which the Fund invests must be rated in
one of the two highest short-term rating categories by one or more nationally
recognized rating services or be of comparable quality to securities having such
ratings.

WHAT ARE THE SPECIFIC RISKS OF INVESTING IN THE FUND?

Although there are many factors which may effect an investment in the Fund, the
principal risks of investing in a municipal money market fund are described
below.

Credit Risk
Credit risk is the possibility that an issuer or a credit enhancer will
default (fails to repay interest and principal when due). If an issuer or
credit enhancer defaults, the Fund will lose money. Money market funds try to
minimize this risk by purchasing higher quality securities.
Many fixed income securities receive credit ratings from companies such as
Standard & Poor's and Moody's Investor Services. Fixed income securities
receive different credit ratings depending on the rating company's assessment
of the likelihood of default by the issuer. The lower the credit rating, the
greater the credit risk. If the security is unrated, greater reliance is
placed on the Adviser's credit assessment.

<PAGE>

Market Risk
Prices of fixed income securities rise and fall in response to interest rate
changes for similar securities. Generally, when interest rates rise, prices
of fixed income securities fall.
Interest rate changes have a greater effect on the price of fixed income
securities with longer maturities. Money market funds try to minimize this
risk by purchasing short-term securities.

Concentration Risk
Most of the Fund's securities will be invested in issuers located in
Massachusetts. In addition, a substantial part of the Fund's portfolio may be
comprised of municipal securities issued by companies in similar businesses
or with other similar characteristics. As a result, the Fund will be more
susceptible to any economic, business, political, or other developments which
generally affect these issuers.

Temporary Investments. The Fund may temporarily depart from its principal
investment strategies by investing in securities subject to federal regular
income tax and Massachusetts state income tax, all of comparable quality to
other securities in which the Fund invests. It may do this to minimize potential
losses and maintain liquidity to meet shareholder redemptions during adverse
market conditions. This may cause the Fund to give up greater investment returns
to maintain the safety of principal, that is, the original amount invested by
shareholders. This also may cause the Fund to receive and distribute taxable
income to investors.

WHAT DO SHARES COST?
You can purchase or redeem Shares any day the New York Stock Exchange (NYSE) is
open. When the Fund receives your transaction request in proper form, it is
processed at the next determined public offering price.

The public offering price is defined as the net asset value (NAV) plus any
applicable sales charge. Fund Shares are sold without a sales charge. The Fund
attempts to stabilize the net asset value of Shares at $1.00 by valuing the
portfolio securities using an accounting method called "amortized cost." NAV is
determined at 12:00 noon and 1:00 p.m. (Eastern time) and as of the end of
regular trading (normally 4:00 p.m. Eastern time) each day the NYSE is open.

The required minimum initial investment for Fund Shares is $25,000. There is no
required minimum subsequent investment amount.

An account may be opened with a smaller minimum amount as long as the $25,000
minimum is reached within 90 days. An institutional investor's minimum is
calculated by combining all accounts it maintains with the Fund. Accounts
established through investment professionals may be subject to higher or lower
minimum investment requirements than those imposed by the Fund. Keep in mind
that investment professionals may charge you fees for their services in
connection with your Share transactions.

HOW IS THE FUND SOLD?
The Fund offers two share classes: Institutional Service Shares and Boston 1784
Funds Shares each representing interests in a single portfolio of securities.

This prospectus relates only to Institutional Service Shares. Each share class
has different expenses, which affect their performance. Contact your investment
professional or call 1-800-341-7400 for more information concerning the other
class.

The Fund's distributor markets the Shares described in this prospectus to
institutions acting in a fiduciary or agency capacity or to individuals directly
or through investment professionals. The Fund may not be a suitable investment
for non-Massachusetts taxpayers because it invests in Massachusetts municipal
securities. The Distributor and its affiliates may pay out of their assets
amounts (including items of material value) to investment professionals for
marketing and servicing Shares. The Distributor is a subsidiary of Federated
Investors, Inc. (Federated). In connection with any sale, the Distributor may
from time to time offer certain items of nominal value to any shareholder or
investor.

<PAGE>

HOW TO PURCHASE SHARES

You may purchase Shares through an investment professional or directly from the
Fund. The Fund reserves the right to reject any request to purchase Shares.

THROUGH AN INVESTMENT PROFESSIONAL
oEstablish an account with the investment professional; and
oSubmit your purchase order to the investment professional before 1:00 p.m.
Eastern time.

You will receive that day's dividend if the investment professional forwards the
order to the Fund and the Fund receives payment by 3:00 p.m. on the same day.
You will become the owner of Shares and receive dividends when the Fund receives
your payment.

Investment professionals should send payments according to the instructions in
the sections "By Wire" or "By Check."

DIRECTLY FROM THE FUND
w Establish your account with the Fund by submitting a completed New Account
Form; and w Send your payment to the Fund by Federal Reserve wire or check.

You will become the owner of Shares on the day the Fund receives your wire or
your check. If your check does not clear, your purchase will be canceled and you
could be liable for any losses or fees the Fund or its transfer agent incurs.

An institution may establish an account and place an order by calling the Fund
and will become a shareholder on the day the Fund receives the order.

By Wire. Send your wire to:
State Street Bank and Trust Company, Boston, MA
Dollar Amount of Wire
ABA Number 011000028
Attention: EDGEWIRE
Wire Order Number, Dealer Number, or Group Number; Nominee/Institution Name;
Fund Name and Number and Account Number.

You cannot purchase Shares by wire on holidays when wire transfers are
restricted.

By Check. Make your check payable to The Federated Funds, note your account
number on the check, and mail it to:
Federated Shareholder Services Company
P.O. Box 8600, Boston, MA 02266-8600.

If you send your check by a private courier or overnight delivery service that
requires a street address, mail it to:
Federated Shareholder Services Company
1099 Hingham Street, Rockland, MA 02370-3317.

Payment should be made in U.S. dollars and drawn on a U.S. bank. The Fund will
not accept third-party checks (checks originally payable to someone other than
you or The Federated Funds). Orders by mail are considered received when payment
by check is converted into federal funds (normally the business day after the
check is received) and Shares begin earning dividends the next day.

<PAGE>

BY AUTOMATED CLEARING HOUSE (ACH)
Once you have opened an account, you may purchase additional Shares through a
depository institution that is an ACH member. This purchase option can be
established by completing the appropriate sections of the New Account Form.

HOW TO REDEEM SHARES

You should redeem Shares:
w through an investment professional if you purchased Shares through an
investment professional; or w directly from the Fund if you purchased Shares
directly from the Fund.

THROUGH AN INVESTMENT PROFESSIONAL
Submit your redemption request to your investment professional by the end of
regular trading on the NYSE (normally 4 p.m. Eastern time). The redemption
amount you will receive is based upon the NAV on the day the Fund receives the
order from your investment professional. Redemption requests received by the
Fund before 12:00 noon (Eastern time) will not include that day's dividend.

DIRECTLY FROM THE FUND

By Telephone. You may redeem Shares by calling the Fund once you have completed
the appropriate authorization form for telephone transactions.

If you call before 12:00 noon (Eastern time) you will receive a redemption
amount based on that day's NAV without that day's dividend. This amount will be
wired to you the same day.

If you call after 12:00 noon (Eastern time) you will receive a redemption amount
based on that day's NAV and will receive that day's dividend. This amount will
be wired to you the following business day. Under limited circumstances,
arrangements may be made with the Distributor for same-day payment of redemption
proceeds, without that day's dividend, for redemption requests received before
2:00 p.m. (Eastern time).

By Mail. You may redeem Shares by mailing a written request to the Fund.
You will receive a redemption amount based on the NAV on the day the Fund
receives your written request in proper form. Dividends are paid up to and
including the day that a redemption request is processed.

Send requests by mail to:
Federated Shareholder Services Company
P.O. Box 8600, Boston, MA 02266-8600.

Send requests by private courier or overnight delivery to: Federated Shareholder
Services Company 1099 Hingham Street, Rockland, MA 02370-3317.

All requests must include:
w Fund Name and Share Class, account number and account registration; w amount
to be redeemed or exchanged; and w signatures of all Shareholders exactly as
registered.

Call your investment professional or the Fund if you need special instructions.

Signature Guarantees. Signatures must be guaranteed if:
w your redemption will be sent to an address other than the address of record;
w your redemption will be sent to an address of record that was changed within
the last thirty days; or w a redemption is payable to someone other than the
shareholder(s) of record.

Your signature can be guaranteed by any federally insured financial institution
(such as a bank or trust company, savings association or credit union) or a
broker/dealer that is a domestic stock exchange member, but not by a notary
public.

<PAGE>

PAYMENT METHODS FOR REDEMPTIONS
Your redemption proceeds will be mailed by check to your address of record. The
following payment options are available if you complete the appropriate section
of the New Account Form or an Account Service Options Form. These payment
options require a signature guarantee if they were not established prior to
redeeming Shares:

w an electronic transfer to your account at a financial institution that is an
ACH member; or w wire payment to your account at a domestic commercial bank that
is a Federal Reserve System member.

Redemption in Kind. Although the Fund intends to pay Share redemptions in cash,
it reserves the right to pay the redemption price in whole or in part by a
distribution of the Fund's portfolio securities.

LIMITATIONS ON REDEMPTION PROCEEDS
Redemption proceeds normally are wired or mailed within one business day after
receiving a request in proper form. Payment may be delayed up to seven days:

w to allow your purchase to clear;
w during periods of market volatility; or
w when a shareholder's trade activity or amount adversely impacts the Fund's
ability to manage its assets.

You will not accrue interest or dividends on uncashed checks from the Fund. If
those checks are undeliverable and returned to the Fund, the proceeds will be
reinvested in Shares.

SYSTEMATIC WITHDRAWAL PROGRAM
You may automatically redeem or exchange Shares on a regular basis by completing
the appropriate section of the New Account Form or an Account Service Options
Form or by contacting your investment professional or the Fund. Your account
value must meet the minimum initial investment amount at the time the program is
established. This program may reduce, and eventually deplete, your account.
Payments should not be considered yield or income.

CHECKWRITING
You may request a checking account to redeem your Fund Shares. Your account will
continue to receive the daily dividend declared on the Shares to be redeemed
until the check is presented for payment. Checks may be made payable only to
third-parties and may not be used to redeem Shares or to close your account.

DEBIT CARD
You may request a debit card account which will permit you to redeem Shares for
purchases. A fee will be charge to your account for this service.

ADDITIONAL CONDITIONS

Telephone Transactions. The Fund will record your telephone instructions. If the
Fund does not follow reasonable procedures, it may be liable for losses due to
unauthorized or fraudulent telephone instructions. The Fund will notify you if
it changes telephone transaction privileges.

Share Certificates. The Fund no longer issues share certificates. If you are
redeeming Shares represented by certificates previously issued by the Fund, you
must return the certificates with your written redemption or exchange request.
For your protection, send your certificates by registered or certified mail, but
do not endorse them.

<PAGE>

ACCOUNT AND SHARE INFORMATION

ACCOUNT STATEMENTS
You will receive periodic statements reporting all account activity, including
systematic transactions, dividends and capital gains paid.

DIVIDENDS AND CAPITAL GAINS
The Fund declares any dividends daily and pays them monthly to shareholders. If
you purchase shares by wire, you begin earning dividends on the day your wire is
received. If you purchase shares by check, you begin earning dividends on the
business day after the Fund receives your check. In either case, you earn
dividends through the day your redemption request is received.

In addition, the Fund pays any capital gains at least annually. Your dividends
and capital gains distributions will be automatically reinvested in additional
Shares without a sales charge, unless you elect cash payments. If you elect cash
payments and the payment is returned as undeliverable, your cash payment will be
reinvested in Shares and your distribution option will convert to automatic
reinvestment. If any distribution check remains uncashed for six months the
check will no longer be honored, the check amount will be reinvested in Shares,
and you will not accrue any interest or dividends on this amount prior to the
reinvestment.

Contact your investment professional or the Fund for information concerning when
dividends and capital gains will be paid.

ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, accounts may be
closed if redemptions cause the account balance to fall below the minimum
initial investment amount. Before an account is closed, the shareholder will be
notified and allowed 30 days to purchase additional Shares to meet the minimum.

TAX INFORMATION
The Fund sends an annual statement of your account activity to assist you in
completing your federal, state and local tax returns. It is anticipated that
Fund distributions will be primarily dividends that are exempt from federal
income tax, although a portion of the Fund's dividends may not be exempt.
Dividends may be subject to state and local taxes, although the Fund's dividends
will be exempt from Massachusetts state personal income tax to the extent they
are derived from interest on obligations exempt from Massachusetts personal
income taxes. Capital gains and non-exempt dividends are taxable whether paid in
cash or reinvested in the Fund. Redemptions and exchanges are taxable sales.
Please consult your tax preparer regarding your federal, state and local tax
liability.

WHO MANAGES THE FUND?

The Board of Trustees governs the Fund. The Board selects and oversees the
Adviser, Federated Management. The Adviser manages the Fund's assets, including
buying and selling portfolio securities. The Adviser's address is Federated
Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA 15222-3779.

The Adviser and other subsidiaries of Federated advise and/or provide
administrative services to more than 300 mutual funds and private accounts,
which totaled over $120 billion in assets as of December 31, 1997. Federated was
established in 1955 and is one of the largest mutual fund investment managers in
the United States with more than 2,000 employees. Over 4,000 investment
professionals make Federated Funds available to their customers.

Advisory Fees. The Adviser receives an annual investment advisory fee of .50% of
the Fund's average daily net assets. The Adviser may voluntarily waive a portion
of its fee or reimburse the Fund for certain operating expenses.

<PAGE>

Year 2000 Readiness. The "Year 2000" issue is the potential for computer errors
or failures on or about January 1, 2000, because certain date-sensitive computer
systems may read the year "2000" as "1900" or not at all. This inability to
recognize or properly treat the year 2000 may cause systems to process critical
financial and operational information incorrectly and could disrupt businesses
or entities that rely on computers, like the Fund.

While it is impossible to determine in advance all of the risks to the Fund, the
Fund could experience interruptions in basic functions, such as:

w calculating net asset value;
w redeeming shares; or
w delivering account statements and providing other information to
shareholders.

In addition, issuers of securities in which the Fund invests may have computer
system problems that could cause their securities to decline in value or be
undesirable to the Fund. At this time, the Fund cannot predict the impact of the
Year 2000 issue on its portfolio of investments. To the extent the impact on a
portfolio holding is negative, the Fund's performance could be adversely
affected.

The financial impact of making these changes for the Fund is still being
determined. However, based on management's identification of resource
requirements for both plan implementation and overall project management, it is
anticipated that the Year 2000 costs will be, at a minimum, $10 million for
internal systems. There can be no assurance that potential systems interruptions
or the cost necessary to update software would not have a material adverse
effect on the Fund.

FINANCIAL INFORMATION

FINANCIAL HIGHLIGHTS
The following financial highlights will help you understand the Fund's financial
performance for its past five fiscal years, or since inception, if the life of
the Fund is shorter. Some of the information is presented on a per share basis.
Total returns represent the rate an investor would have earned (or lost) on an
investment in the Fund, assuming reinvestment of all dividends and
distributions.

Financial statements will be filed by amendment.

<PAGE>

MASSACHUSETTS MUNICIPAL CASH TRUST
INSTITUTIONAL SERVICE SHARES

[A Portfolio of Federated Municipal Trust]

A Statement of Additional Information (SAI) dated December 31, 1998, is
incorporated by reference into this prospectus. Additional information about the
Fund's investments is available in the Fund's semi-annual report to
shareholders. To obtain the SAI and semi-annual report and other information
without charge call your investment professional or the Fund at 1-800-341-7400.

Internet Address: www.federatedinvestors.com

You can obtain information about the Fund by visiting or writing the Public
Reference Room of the Securities and Exchange Commission in Washington, D.C.
20549-6009 or from the Commission's Internet site at http://www.sec.gov. You can
call 1-800-SEC-0330 for information on the Public Reference Room's operations
and copying charges.

Investment Company Act File No. 811-5911

Cusip 314229840

FEDERATED
World-Class Investment Manager

Federated Investors, Inc.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
1-800-341-7400
www.federatedinvestors.com

Statement of Additional Information December 31, 1998

Massachusetts Municipal Cash Trust
[A Portfolio of Federated Municipal Trust]
Institutional Service Shares

This Statement of Additional Information (SAI) is not a prospectus. Read
this SAI in conjunction with the prospectuses for Massachusetts Municipal
Cash Trust dated December 31,1998. Obtain the prospectus without charge by
calling 1-800-341-7400.

Contents

How is the Fund Organized?
Securities in Which the Fund Invests
What Do Shares Cost?
How is the Fund Sold?
Subaccounting Services
Redemption in Kind
Account and Share Information
Tax Information
Who Manages and Provides
Services to the Fund?
How Does the Fund Measure Performance?
Who is Federated Investors, Inc.?
Investment Ratings

[Federated Investors Logo]
Federated Securities Corp., Distributor,
subsidiary of Federated Investors, Inc.
CUSIP 314229303
0032603B-ISS (12/98)

<PAGE>

HOW IS THE FUND ORGANIZED?

The Fund is a portfolio of Federated Municipal Trust (Trust). The Trust is an
open-end, management investment company that was established under the laws of
the Commonwealth of Massachusetts on September 1, 1989. The Corporation may
offer separate series of shares representing interests in separate portfolios of
securities.

The Board of Trustees (the Board) has established two classes of shares of the
Fund, known as Institutional Service Shares and Boston 1784 Funds Shares
(Shares). This SAI relates to Institutional Service Shares.

SECURITIES IN WHICH THE FUND INVESTS

In pursuing its investment strategy, the Fund may invest in the following
securities for any purpose that is consistent with its investment objective.

SECURITIES DESCRIPTIONS, TECHNIQUES AND RISKS

The Fund invests in tax-exempt securities so that at least 80% of the Fund's
annual interest income is exempt from federal regular income tax (excluding
federal alternative minimum tax for individuals and corporations) and
Massachusetts state income tax. This policy is fundamental and cannot be changed
without shareholder approval.

In order to be tax-exempt, municipal securities must meet certain legal
requirements. Failure to meet such requirements may cause the interest received
and distributed by the Fund to shareholders to be taxable.

Other tax exempt securities in which the Fund invests include:

General obligation bonds are supported by the issuer's full faith and credit.
The issuer must levy and collect taxes sufficient to pay principal and interest
on the bonds. However, the issuer's authority to levy additional taxes may be
limited by its charter or state law.

Special revenue bonds are payable solely from specific revenues received by the
issuer. The revenues may consist of specific taxes, assessments, tolls, fees or
other types of municipal revenues. For example, a municipality may issue bonds
to build a toll road, and pledge the tolls to repay the bonds. Bondholders could
not collect from the municipality's general taxes or revenues. Therefore, any
shortfall in the tolls normally would result in a default on the bonds.

Private activity bonds are special revenue bonds used to finance private
entities. For example, a municipality may issue bonds to finance a new factory
to improve its local economy. The municipality would lend the proceeds to the
company using the factory, and the company would agree make loan payments
sufficient to repay the bonds. The bonds would be payable solely from the
company's loan payments, not from any other revenues of the municipality.
Therefore, any default on the loan normally would result in a default on the
bonds.

Municipal leases. Municipalities frequently enter into leases for equipment or
facilities. In order to comply with state public financing laws, these lease are
typically subject to annual appropriation. In other words, a municipality may
end a lease, without penalty, by failing to include the lease payments in its
annual budget. However, upon such an event, the lessor may repossess and resell
the equipment or facility.

The Fund typically invests in securities supported by pools of municipal leases.
The most common type of lease backed securities are certificates of
participation ("COPs"). However, the Fund may also invest directly in individual
leases.

Investment Ratings. A nationally recognized rating service's two highest rating
categories are determined without regard for sub-categories and gradations. For
example, securities rated SP-1+, SP-1, or SP-2 by Standard & Poor's Ratings
Group ("S&P"), MIG-1 or MIG-2 by Moody's Investors Service, Inc. ("Moody's"), or
F-1+, F-1, or F-2 by Fitch Investors Service, Inc. ("Fitch") are all considered
rated in one of the two highest short-term rating categories. The Fund will
follow applicable regulations in determining whether a security rated by more
than one rating service can be treated as being in one of the two highest
short-term rating categories; currently, such securities must be rated by two
rating services in one of their two highest rating categories. See "Regulatory
Compliance."

INVESTMENT LIMITATIONS

Selling Short and Buying on Margin
The Fund will not sell any securities short or purchase any securities on margin
but may obtain such short-term credits as are necessary for the clearance of
transactions.

Issuing Senior Securities and Borrowing Money
The Fund will not issue senior securities except that the Fund may borrow money
in amounts up to one-third of the value of its total assets, including the
amounts borrowed. The Fund will not borrow money for investment leverage, but
rather as a temporary, extraordinary, or emergency measure or to facilitate
management of the portfolio by enabling the Fund to meet redemption requests
when the liquidation of portfolio securities is deemed to be inconvenient or
disadvantageous. The Fund will not purchase any securities while borrowings in
excess of 5% of its total assets are outstanding.

Pledging Assets
The Fund will not mortgage, pledge, or hypothecate any assets except to secure
permitted borrowings. In those cases, it may pledge assets having a market value
not exceeding the lesser of the dollar amounts borrowed or 15% of the value of
total assets at the time of the pledge.

Lending Cash or Securities
The Fund will not lend any of its assets except that it may acquire publicly or
non publicly issued Massachusetts municipal securities or temporary investments
or enter into repurchase agreements, in accordance with its investment
objective, policies and limitations or Declaration of Trust.

Investing in Commodities
The Fund will not purchase or sell commodities, commodity contracts, or
commodity futures contracts.

Investing in Real Estate
The Fund will not purchase or sell real estate or real estate limited
partnerships, although it may invest in securities of issuers whose business
involves the purchase or sale of real estate or in securities which are secured
by real estate or interests in real estate.

Underwriting
The Fund will not underwrite any issue of securities, except as it may be deemed
to be an underwriter under the Securities Act of 1933 in connection with the
sale of securities in accordance with its investment objective, policies, and
limitations.

<PAGE>

Concentration of Investments
The Fund will not purchase securities if, as a result of such purchase, 25% or
more of the value of its total assets would be invested in any one industry or
in industrial development bonds or other securities, the interest upon which is
paid from revenues of similar types of projects. However, the Fund may invest as
temporary investments more than 25% of the value of its assets in cash or cash
items, (including instruments issued by a U.S. branch of a domestic bank or
savings and loan having capital, surplus, and undivided profits in excess of
$100,000,000 at the time of the investment), securities issued or guaranteed by
the U.S. government, its agencies, or instrumentalities, or instruments secured
by these money market instruments, such as repurchase agreements.

The above limitations cannot be changed without shareholder approval. The
following limitations, however, may be changed by the Trustees without
shareholder approval. Shareholders will be notified before any material change
in these limitations becomes effective.

Investing in Restricted and Illiquid Securities
The Fund may invest in restricted securities. Restricted securities are any
securities in which the Fund may invest pursuant to its investment objective and
policies but which are subject to restrictions on resale under federal
securities law. Under criteria established by the Trustees certain restricted
securities are determined to be liquid. To the extent that restricted securities
are not determined to be liquid the Fund will limit their purchase, together
with other illiquid securities, to 10% of its net assets.

Investing for Control
The Fund will not invest in securities of a company for the purpose of
exercising control or management.

Investing in Options
The Fund will not invest in puts, calls, straddles, spreads, or any combination
of them.

For purposes of the above limitations, the Fund considers certificates of
deposit and demand and time deposits issued by a U.S. branch of a domestic bank
or savings association having capital, surplus, and undivided profits in excess
of $100,000,000 at the time of investment to be "cash items." Except with
respect to borrowing money, if a percentage limitation is adhered to at the time
of investment, a later increase or decrease in percentage resulting from any
change in value or net assets will not result in a violation of such limitation.

The Fund did not borrow money or pledge securities in excess of 5% of the value
of its net assets during the last fiscal year and has no present intent to do so
during the coming fiscal year.

Regulatory Compliance
The Fund may follow non-fundamental operational policies that are more
restrictive than its fundamental investment limitations, as set forth in the
prospectus and this Statement of Additional Information, in order to comply with
applicable laws and regulations, including the provisions of and regulations
under the Investment Company Act of 1940. In particular, the Fund will comply
with the various requirements of Rule 2a-7, which regulates money market mutual
funds. The Fund will determine the effective maturity of its investments, as
well as its ability to consider a security as having received the requisite
short-term ratings by NRSROs, according to Rule 2a-7. The Fund may change these
operational policies to reflect changes in the laws and regulations without the
approval of its shareholders.

<PAGE>

DETERMINING MARKET VALUE OF SECURITIES
The Trustees have decided that the best method for determining the value of
portfolio instruments is amortized cost. Under this method, portfolio
instruments are valued at the acquisition cost as adjusted for amortization of
premium or accumulation of discount rather than at current market value.
Accordingly, neither the amount of daily income nor the net asset value is
affected by any unrealized appreciation or depreciation of the portfolio. In
periods of declining interest rates, the indicated daily yield on shares of the
Fund computed by dividing the annualized daily income on the Fund's portfolio by
the net asset value computed as above may tend to be higher than a similar
computation made by using a method of valuation based upon market prices and
estimates. In periods of rising interest rates, the opposite may be true.

The Fund's use of the amortized cost method of valuing portfolio instruments
depends on its compliance with certain conditions in Rule 2a-7 (the "Rule")
promulgated by the Securities and Exchange Commission under the Investment
Company Act of 1940. Under the Rule, the Trustees must establish procedures
reasonably designed to stabilize the net asset value per share, as computed for
purposes of distribution and redemption, at $1.00 per share, taking into account
current market conditions and the Fund's investment objective. The procedures
include monitoring the relationship between the amortized cost value per share
and the net asset value per share based upon available indications of market
value. The Trustees will decide what, if any, steps should be taken if there is
a difference of more than 0.5 of 1% between the two values. The Trustees will
take any steps they consider appropriate (such as redemption in kind or
shortening the average portfolio maturity) to minimize any material dilution or
other unfair results arising from differences between the two methods of
determining net asset value.

WHAT DO SHARES COST?

The Fund attempts to stabilize the net asset value of Shares at $1.00 by valuing
the portfolio securities using the amortized cost method.

HOW IS THE FUND SOLD?

Under the Distributor's Contract with the Fund, the Distributor (Federated
Securities Corp.), located at Federated Investors Tower, 1001 Liberty Avenue,
Pittsburgh, PA 15222-3779, offers Shares on a continuous, best-efforts basis.

SHAREHOLDER SERVICES

The Fund may pay Federated Shareholder Services, a subsidiary of Federated, for
providing shareholder services and maintaining shareholder accounts. Federated
Shareholder Services may select others to perform these services for their
customers and may pay them fees.

SUPPLEMENTAL PAYMENTS
Investment professional may be paid fees out of the assets of the Distributor
and/or Federated Shareholder Services (but not out of Fund assets). The
Distributor and/or Federated Shareholder Services may be reimbursed by the
Adviser or its affiliates.

Investment professionals receive such fees for providing distribution-related or
shareholder services such as sponsoring sales, providing sales literature,
conducting training seminars for employees, and engineering sales-related
computer software programs and systems. Also, investment professional may be
paid cash or promotional incentives, such as reimbursement of certain expenses
of qualified employees and their spouses to attend informational meetings about
the Fund or other special events at recreational-type facilities, or items of
material value. These payments will be based upon the amount of Shares the
investment professional sells or may sell and/or upon the type and nature of
sales or marketing support furnished by the investment professional.

SUBACCOUNTING SERVICES
Investment professional are encouraged to open single master accounts. However,
certain investment professionals may wish to use the transfer agent's
subaccounting system to minimize their internal recordkeeping requirements. The
transfer agent may charge a fee based on the level of subaccounting services
rendered. Investment professional holding Shares in a fiduciary, agency,
custodial, or similar capacity may charge or pass through subaccounting fees as
part of or in addition to normal trust or agency account fees. They may also
charge fees for other services they provide that may be related to the ownership
of Shares. This information should, therefore, be read together with any
agreement between the customer and the financial intermediary with regard to the
services provided, the fees charged for those services, and any restrictions and
limitations imposed.

REDEMPTION IN KIND

Although the Fund intends to pay Share redemptions in cash, it reserves the
right, as described below, to pay the redemption price in whole or in part by a
distribution of the Fund's portfolio securities.

Because the Fund has elected to be governed by Rule 18f-1 under the Investment
Company Act of 1940, the Fund is obligated to pay Share redemptions to any one
shareholder in cash only up to the lesser of $250,000 or 1% of the net assets
represented by such Share class during any 90-day period.

Any Share redemption payment greater than this amount will also be in cash
unless the Fund's Board determines that payment should be in kind. In such a
case, the Fund will pay all or a portion of the remainder of the redemption in
portfolio securities, valued in the same way as the Fund determines its NAV. The
portfolio securities will be selected in a manner that the Fund's Board deems
fair and equitable and, to the extent available, such securities will be readily
marketable.

Redemption in kind is not as liquid as a cash redemption. If redemption is made
in kind, shareholders receiving the portfolio securities and selling them before
their maturity could receive less than the redemption value of the securities
and could incur certain transaction costs.

ACCOUNT AND SHARE INFORMATION

VOTING RIGHTS
Each share of the Fund gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All Shares of the Trust have
equal voting rights, except that in matters affecting only a particular Fund or
class, only Shares of that Fund or class are entitled to vote.

Trustees may be removed by the Trustees or by shareholders at a special meeting.
A special meeting of shareholders will be called by the Trustees upon the
written request of shareholders who own at least 10% of the Trust's outstanding
shares of all series entitled to vote.

As of October 9, 1998, the following shareholders owned of record, beneficially,
or both, 5% or more of outstanding Institutional Service Shares: Cambridge Trust
Company, Cambridge, Massachusetts, owned approximately 15,653,400 shares
(6.00%); Bob and Company, Boston, Massachusetts, owned approximately 20,216,404
shares (7.75%); State Street Bank and Trust, North Quincy, Massachusetts, owned
approximately 36,084,728 shares (13.82%); and State Street Bank and Trust, North
Quincy, Massachusetts owned approximately 77,381,927 shares (29.65%).

As of October 9, 1998, the following shareholders owned of record, beneficially,
or both, 5% or more of outstanding Boston 1784 Funds Shares: BankBoston, Boston,
Massachusetts, owned approximately 165,678,970 shares (100.00%)

Shareholders owning 25% or more of outstanding Shares may be in control and be
able to affect the outcome of certain matters presented for a vote of
shareholders.

<PAGE>

TAX INFORMATION

FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet requirements
of Subchapter M of the Internal Revenue Code (Code) applicable to regulated
investment companies and to receive the special tax treatment afforded such
companies.

The Fund will be treated as a single, separate entity for federal income tax
purposes so that income earned and capital gains and losses realized by the
Trust's other portfolios will be separate from those realized by the Fund.

STATE TAXES

Massachusetts Taxes

Under existing Massachusetts laws, distributions made by the Fund will not be
subject to Massachusetts personal income taxes to the extent that such dividends
qualify as exempt interest dividends under the Internal Revenue Code, and
represent (i) interest or gain on obligations issued by the Commonwealth of
Massachusetts, its political subdivisions or agencies; or (ii) interest on
obligations of the United States, its territories or possessions to the extent
exempt from taxation by the states pursuant to federal law. Conversely, to the
extent that the distributions made by the Fund are derived from other types of
obligations, such dividends will be subject to Massachusetts personal income
taxes.

Shareholders subject to the Massachusetts corporate excise tax must include all
dividends paid by the Fund in their net income, and the value of their shares of
stock in the Fund in their net worth, when computing the Massachusetts excise
tax.

WHO MANAGES AND PROVIDES SERVICES TO THE FUND?

BOARD OF TRUSTEES

The Board is responsible for managing the Trust's business affairs and for
exercising all the Trust's powers except those reserved for the shareholders.
Information about each Board member is provided below and includes the following
data: name, address, birthdate, present position(s) held with the Trust,
principal occupations for the past five years, total compensation received as a
Trustee from the Trust for its most recent fiscal year, and the total
compensation received from the Federated Fund Complex for the most recent
calendar year. The Trust is comprised of 17 Funds and the Federated Fund Complex
is comprised of 56 investment companies, whose investment advisers are
affiliated with the Fund's Adviser.As of October 9, 1998, the Fund's Board and
Officers as a group owned less than 1% of the Fund's outstanding Institutional
Service Shares.

<PAGE>

An asterisk (*) denotes a Trustee who is deemed to be an interested person as
defined in the Investment Company Act of 1940. The following symbol (#) denotes
a Member of the Board's Executive Committee, which handles the Board's
responsibilities between its meetings.

John F. Donahue*#
Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA
Birthdate: July 28, 1924

Chairman and Trustee

Chief Executive Officer and Director or Trustee of the Federated Fund Complex.
Chairman and Director, Federated Investors, Inc.; Chairman and Trustee,
Federated Advisers, Federated Management, and Federated Research; Chairman and
Director, Federated Research Corp., and Federated Global Research Corp.;
Chairman, Passport Research, Ltd. Mr. Donahue is the father of J. Christopher
Donahue, Executive Vice President of the Trust.

Compensation from Trust $0
Compensation from Federated Fund Complex $0

Thomas G. Bigley
15 Old Timber Trail, Pittsburgh, PA
Birthdate: February 3, 1934

Trustee

Director or Trustee of the Federated Fund Complex; Director, Member of Executive
Committee, Children's Hospital of Pittsburgh; formerly: Senior Partner, Ernst &
Young LLP; Director, MED 3000 Group, Inc.; Director, Member of Executive
Committee, University of Pittsburgh.

Compensation from Trust $______
Compensation from Federated Fund Complex $______

John T. Conroy, Jr.
Wood/IPC Commercial Department, John R. Wood and Associates, Inc., Realtors
3255 Tamiami Trail North, Naples, FL
Birthdate: June 23, 1937

Trustee

Director or Trustee of the Federated Fund Complex; President, Investment
Properties Corporation; Senior Vice President, John R. Wood and Associates,
Inc., Realtors; Partner or Trustee in private real estate ventures in Southwest
Florida; formerly, President, Naples Property Management, Inc. and Northgate
Village Development Corporation.

Compensation from Trust $______
Compensation from Federated Fund Complex $______

William J. Copeland
One PNC Plaza - 23rd Floor, Pittsburgh, PA
Birthdate: July 4, 1918

Trustee

Director or Trustee of the Federated Fund Complex; Director and Member of the
Executive Committee, Michael Baker, Inc.; formerly: Vice Chairman and Director,
PNC Bank, N.A., and PNC Bank Corp.; Director, Ryan Homes, Inc.; Director, United
Refinery; Chairman, Pittsburgh Foundation; Director, Forbes Fund; Chairman,
Pittsburgh Civic Light Opera.

Compensation from Trust $______
Compensation from Federated Fund Complex $______

<PAGE>

James E. Dowd, Esq.
571 Hayward Mill Road, Concord, MA
Birthdate: May 18, 1922

Trustee

Director or Trustee of the Federated Fund Complex; Attorney-at-law; Director,
The Emerging Germany Fund, Inc.; formerly: President, Boston Stock Exchange,
Inc.; Regional Administrator, United States Securities and Exchange Commission.

Compensation from Trust $______
Compensation from Federated Fund Complex $______

Lawrence D. Ellis, M.D.*
3471 Fifth Avenue, Suite 1111, Pittsburgh, PA
Birthdate: October 11, 1932

Trustee

Director or Trustee of the Federated Fund Complex; Professor of Medicine,
University of Pittsburgh; Medical Director, University of Pittsburgh Medical
Center - Downtown; Hematologist, Oncologist, and Internist, Presbyterian and
Montefiore Hospitals; formerly, Member, National Board of Trustees, Leukemia
Society of America.

Compensation from Trust $______
Compensation from Federated Fund Complex $______

Edward L. Flaherty, Jr., Esq.#
Miller, Ament, Henny & Kochuba, 205 Ross Street, Pittsburgh, PA
Birthdate: June 18, 1924

Trustee

Director or Trustee of the Federated Fund Complex; Attorney, Of Counsel, Miller,
Ament, Henny & Kochuba; Director, Eat'N Park Restaurants, Inc.; formerly:
Counsel, Horizon Financial, F.A., Western Region; Partner, Meyer and Flaherty.

Compensation from Trust $______
Compensation from Federated Fund Complex $______

Peter E. Madden
One Royal Palm Way, 100 Royal Palm Way, Palm Beach, FL
Birthdate: March 16, 1942

Trustee

Director or Trustee of the Federated Fund Complex; formerly: Representative,
Commonwealth of Massachusetts General Court; President, State Street Bank and
Trust Company and State Street Corporation; Director, VISA USA and VISA
International; Chairman and Director, Massachusetts Banker Association;
Director, Depository Trust Corporation.

Compensation from Trust $______
Compensation from Federated Fund Complex $______

<PAGE>

John E. Murray, Jr., J.D., S.J.D.
President, Duquesne University, Pittsburgh, PA
Birthdate: December 20, 1932

Trustee

Director or Trustee of the Federated Fund Complex; President, Law Professor,
Duquesne University; Consulting Partner, Mollica & Murray; formerly: Dean and
Professor of Law, University of Pittsburgh School of Law; Dean and Professor of
Law, Villanova University School of Law.

Compensation from Trust $______
Compensation from Federated Fund Complex $______

Wesley W. Posvar
1202 Cathedral of Learning, University of Pittsburgh, Pittsburgh, PA
Birthdate: September 14, 1925

Trustee

Director or Trustee of the Federated Fund Complex; President, World Society of
Ekistics, Athens; Professor, International Politics; Management Consultant;
Trustee, Carnegie Endowment for International Peace, RAND Corporation, Online
Computer Library Center, Inc., National Defense University and U.S. Space
Foundation; President Emeritus, University of Pittsburgh; Founding Chairman,
National Advisory Council for Environmental Policy and Technology, Federal
Emergency Management Advisory Board and Czech Management Center, Prague;
formerly: Professor, United States Military Academy; Professor, United States
Air Force Academy.

Compensation from Trust $______
Compensation from Federated Fund Complex $______

Marjorie P. Smuts
4905 Bayard Street, Pittsburgh, PA
Birthdate: June 21, 1935

Trustee

Director or Trustee of the Federated Fund Complex; Public
Relations/Marketing/Conference Planning; formerly: National Spokesperson,
Aluminum Company of America ; business owner.

Compensation from Trust $______
Compensation from Federated Fund Complex $______

Glen R. Johnson *
Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA
Birthdate: May 2, 1929

President and Trustee

Trustee, Federated Investors, Inc.; staff member, Federated Securities Corp.

Compensation from Trust $______
Compensation from Federated Fund Complex $______

<PAGE>

J. Christopher Donahue
Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA
Birthdate: April 11, 1949

Executive Vice President

President or Executive Vice President of the Federated Fund Complex; Director or
Trustee of some of the Funds in the Federated Fund Complex; President and
Director, Federated Investors, Inc.; President and Trustee, Federated Advisers,
Federated Management, and Federated Research; President and Director, Federated
Research Corp. and Federated Global Research Corp.; President, Passport
Research, Ltd.; Trustee, Federated Shareholder Services Company, and Federated
Shareholder Services; Director, Federated Services Company. Mr. Donahue is the
son of John F. Donahue, Chairman and Trustee of the Trust.

Compensation from Trust $______
Compensation from Federated Fund Complex $______

Edward C. Gonzales
Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA
Birthdate: October 22, 1930

Executive Vice President

Trustee or Director of some of the Funds in the Federated Fund Complex;
President, Executive Vice President and Treasurer of some of the Funds in the
Federated Fund Complex; Vice Chairman, Federated Investors, Inc.; Vice
President, Federated Advisers, Federated Management, Federated Research,
Federated Research Corp., Federated Global Research Corp. and Passport Research,
Ltd.; Executive Vice President and Director, Federated Securities Corp.;
Trustee, Federated Shareholder Services Company.

Compensation from Trust $______
Compensation from Federated Fund Complex $______

John W. McGonigle
Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA
Birthdate: October 26, 1938

Executive Vice President, Secretary and Treasurer

Executive Vice President and Secretary of the Federated Fund Complex; Treasurer
of some of the Funds in the Federated Fund Complex; Executive Vice President,
Secretary, and Director, Federated Investors, Inc.; Trustee, Federated Advisers,
Federated Management, and Federated Research; Director, Federated Research Corp.
and Federated Global Research Corp.; Trustee, Federated Shareholder Services
Company; Director, Federated Services Company; President and Trustee, Federated
Shareholder Services; Director, Federated Securities Corp.

Compensation from Trust $______
Compensation from Federated Fund Complex $______

Richard B. Fisher
Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA
Birthdate: May 17, 1923

Vice President

President or Vice President of some of the Funds in the Federated Fund Complex;
Director or Trustee of some of the Funds in the Federated Fund Complex;
Executive Vice President, Federated Investors, Inc.; Chairman and Director,
Federated Securities Corp.

Compensation from Trust $______
Compensation from Federated Fund Complex $______

<PAGE>

INVESTMENT ADVISER
The Adviser conducts investment research and makes investment decisions for the
Fund. The Adviser is a wholly-owned subsidiary of Federated Investors.

The Adviser shall not be liable to the Trust, the Fund, or any Fund shareholder
for any losses that may be sustained in the purchase, holding, or sale of any
security or for anything done or omitted by it, except acts or omissions
involving willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties imposed upon it by its contract with the Trust.

Other Related Services. Affiliates of the Adviser may, from time to time,
provide certain electronic equipment and software to institutional customers in
order to facilitate the purchase of Fund Shares offered by the Distributor.

BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of portfolio
instruments, the Adviser looks for prompt execution of the order at a favorable
price. The Adviser will generally use those who are recognized dealers in
specific portfolio instruments, except when a better price and execution of the
order can be obtained elsewhere. The Adviser may select brokers and dealers
based on whether they also offer research services (as described below). In
selecting among firms believed to meet these criteria, the Adviser may give
consideration to those firms which have sold or are selling Shares of the Fund
and other funds distributed by the Distributor and its affiliates. The Adviser
makes decisions on portfolio transactions and selects brokers and dealers
subject to review by the Fund's Board.

Research Services. Research services may include advice as to the advisability
of investing in securities; security analysis and reports; economic studies;
industry studies; receipt of quotations for portfolio evaluations; and similar
services. Research services may be used by the Adviser or by affiliates of
Federated Investors in advising other accounts. To the extent that receipt of
these services may replace services for which the Adviser or its affiliates
might otherwise have paid, it would tend to reduce their expenses. The Adviser
and its affiliates exercise reasonable business judgment in selecting those
brokers who offer brokerage and research services to execute securities
transactions. They determine in good faith that commissions charged by such
persons are reasonable in relationship to the value of the brokerage and
research services provided.

Investment decisions for the Fund are made independently from those of other
accounts managed by the Adviser. When the Fund and one or more of those accounts
invests in, or disposes of, the same security, available investments or
opportunities for sales will be allocated among the Fund and the account(s) in a
manner believed by the Adviser to be equitable. While the coordination and
ability to participate in volume transactions may benefit the Fund, it is
possible that this procedure could adversely impact the price paid or received
and/or the position obtained or disposed of by the Fund.

ADMINISTRATOR
Federated Services Company, a subsidiary of Federated Investors, provides
administrative personnel and services (including certain legal and financial
reporting services) necessary to operate the Fund. Federated Services Company
provides these at the following annual rate of the average aggregate daily net
assets of all Federated Funds as specified below:

Maximum Average Aggregate Daily Net
Administrative Fee Assets of the Federated Funds
.15 of 1% on the first $250 million
.125 of 1% on the next $250 million
.10 of 1% on the next $250 million
.075 of 1% on assets in excess of $750 million

The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of Shares.
Federated Services Company may voluntarily waive a portion of its fee and may
reimburse the Fund for expenses.

Federated Services Company also provides certain accounting and recordkeeping
services with respect to the Fund's portfolio investments for a fee based on
Fund assets plus out-of-pocket expenses.

CUSTODIAN
State Street Bank and Trust Company, Boston, Massachusetts, is custodian for the
securities and cash of the Fund. Foreign instruments purchased by the Fund are
held by foreign banks participating in a network coordinated by State Street
Bank.

TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Federated Services Company, through its registered transfer agent subsidiary,
Federated Shareholder Services Company, maintains all necessary shareholder
records. The Funds pays the transfer agent a fee based on the size, type, and
number of accounts and transactions made by shareholders.

INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Anderson LLP is the independent public accountant for the Fund.

FEES PAID BY THE FUND FOR SERVICES

Institutional Service Shares
For the Year ended
October 31, 1998
Advisory Fee Earned............$.............
Advisory Fee Reduction.........$.............
Brokerage Commissions..........$.............
Administrative Fee.............$.............
12b-1 Fee......................$.............
Shareholder Services Fee.......$.............

For the Year ended
October 31, 1997
Advisory Fee Earned............$.............
Advisory Fee Reduction.........$.............
Brokerage Commissions..........$.............
Administrative Fee.............$.............

For the Year ended
October 31, 1996
Advisory Fee Earned............$.............
Advisory Fee Reduction.........$.............
Brokerage Commissions..........$.............
Administrative Fee.............$.............

Fees are allocated among Classes based on their pro rata share of Fund assets,
except for marketing (Rule 12b-1) fees and shareholder services fees, which are
borne only by the applicable Class of Shares.

If the Fund's expenses are capped at a particular level, the cap does not
include reimbursement to the Fund of any expenses incurred by shareholders who
use the transfer agent's subaccounting facilities.

HOW DOES THE FUND MEASURE PERFORMANCE?

The Fund may advertise Share performance by using the Securities and Exchange
Commission's (SEC) standard method for calculating performance applicable to all
mutual funds. The SEC also permits this standard performance information to be
accompanied by non-standard performance information.

Unless otherwise stated, any quoted Share performance reflects the effect of
non-recurring charges, such as maximum sales charges, which, if excluded, would
increase the total return and yield. The performance of Shares depends upon such
variables as: portfolio quality; average portfolio maturity; type and value of
portfolio securities; changes in interest rates; changes or differences in the
Fund's or any class of Shares' expenses; and various other factors.

Share performance fluctuates on a daily basis largely because net earnings and
offering price per Share fluctuate daily. Both net earnings and offering price
per Share are factors in the computation of yield and total return.

CHART TO BE REPLACED
Average Annual Total Returns and Yield
Total returns given for the [one-, five- and ten-year or since inception
periods] ended [date]. Yield [,Effective Yield][and] [Tax-Equivalent Yield]
given for the
30-day period ended [date].
- -------------------------------------------------------
Class Name Class Name Class Name Class Name

- -------------------------------------------------------
- -------------------------------------------------------
Total Return
- -------------------------------------------------------
- -------------------------------------------------------
One Year: N/A % N/A
Five Year: N/A % N/A
Since Inception: % % %
- -------------------------------------------------------
- -------------------------------------------------------
Yield
- -------------------------------------------------------
- -------------------------------------------------------

- -------------------------------------------------------
- -------------------------------------------------------
Effective Yield
- -------------------------------------------------------
- -------------------------------------------------------

- -------------------------------------------------------
- -------------------------------------------------------
Tax-Equivalent Yield
- -------------------------------------------------------
- -------------------------------------------------------

- -------------------------------------------------------

*Insert Inception Dates as applicable.

TOTAL RETURN
Total return represents the change (expressed as a percentage) in the value of
Shares over a specific period of time, and includes the investment of income and
capital gains distributions.

The average annual total return for Shares is the average compounded rate of
return for a given period that would equate a $1,000 initial investment to the
ending redeemable value of that investment. The ending redeemable value is
computed by multiplying the number of Shares owned at the end of the period by
the NAV per Share at the end of the period. The number of Shares owned at the
end of the period is based on the number of Shares purchased at the beginning of
the period with $1,000, less any applicable sales charge, adjusted over the
period by any additional Shares, assuming the annual reinvestment of all
dividends and distributions.

YIELD
The yield of Shares is calculated by dividing: (i) the net investment income per
Share earned by the Shares over a thirty-day period; by (ii) the maximum
offering price per Share on the last day of the period. This number is then
annualized using semi-annual
compounding. This means that the amount of income generated during the
thirty-day period is assumed to be generated each month over a 12-month period
and is reinvested every six months. The effective yield is calculated by
compounding the unannualized base-period return by: adding 1 to the base-period
return, raising the sum to the 365/7th power; and subtracting 1 from the result.
The tax- equivalent yield of Shares is calculated similarly to the yield, but is
adjusted to reflect the taxable yield that Shares would have had to earn to
equal the actual yield, assuming a specific tax rate. The yield, effective yield
and tax-equivalent yield do not necessarily reflect income actually earned by
Shares because of certain adjustments required by the SEC and, therefore, may
not correlate to the dividends or other distributions paid to shareholders.

To the extent investment professional and broker/dealers charge fees in
connection with services provided in conjunction with an investment in Shares,
the Share performance is lower for shareholders paying those fees.

TAX EQUIVALENCY TABLE
Set forth below is a sample of a tax-equivalency table that may be used in
advertising and sales literature. This table is for illustrative purposes only
and is not representative of past or future performance of the Fund. The
interest earned by the municipal securities owned by the Fund generally remains
free from federal regular income tax and is often free from state and local
taxes as well. However, some of the Fund's income may be subject to the federal
alternative minimum tax and state and/or local taxes.

TAXABLE YIELD EQUIVALENT FOR 1997
STATE OF MASSACHUSETTS

FEDERAL TAX BRACKET:

15.00% 28.00% 31.00% 36.00% 39.60%

COMBINED FEDERAL AND STATE

27.00% 40.00% 43.00% 48.00% 51.60%

JOINT $1- $41,201- $99,601- $151,751- OVER
RETURN 41,200 99,600 151,750 271,050 $271,050
SINGLE $1- $24,651- $59,751- $124,651- OVER
RETURN 24,650 59,750 124,650 271,050 $271,050

Tax-Exempt
Yield Table Yield Equivalent

1.50% 2.05% 2.50% 2.63% 2.88% 3.10%

2.00% 2.74% 3.33% 3.51% 3.85% 4.13%

2.50% 3.42% 4.17% 4.39% 4.81% 5.17%

3.00% 4.11% 5.00% 5.26% 5.77% 6.20%

3.50% 4.79% 5.83% 6.14% 6.73% 7.23%

4.00% 5.48% 6.67% 7.02% 7.69% 8.26%

4.50% 6.16% 7.50% 7.89% 8.65% 9.30%

5.00% 6.85% 8.33% 8.77% 9.62% 10.33%

5.50% 7.53% 9.17% 9.65% 10.58% 11.36%

6.00% 8.22% 10.00% 10.53% 11.54% 12.40%

Note: The maximum marginal tax rate for each bracket was used in calculating the
taxable yield equivalent. Furthermore, additional state and local taxes paid on
comparable taxable investments were not used to increase federal deductions.

The chart above is for illustrative purposes only. It is not an indicator of
past or future performance of the Fund.

<PAGE>

PERFORMANCE COMPARISONS
Advertising and sales literature may include:

o references to ratings, rankings, and financial publications and/or performance
comparisons of Shares to certain indices; o charts, graphs and illustrations
using the Fund's returns, or returns in general, that demonstrate investment
concepts such as
tax-deferred compounding, dollar-cost averaging and systematic investment;
o discussions of economic, financial and political developments and their impact
on the securities market, including the portfolio manager's views on how such
developments could impact the Funds; and
o information about the mutual fund industry from sources such as the Investment
Company Institute.

The Fund may compare its performance, or performance for the types of securities
in which it invests, to a variety of other investments, including federally
insured bank products such as bank savings accounts, certificates of deposit,
and Treasury bills.

The Fund may quote information from reliable sources regarding individual
countries and regions, world stock exchanges, and economic and demographic
statistics.

You may use financial publications and/or indices to obtain a more complete view
of Share performance. When comparing performance, you should consider all
relevant factors such as the composition of the index used, prevailing market
conditions, portfolio compositions of other funds, and methods used to value
portfolio securities and compute offering price. The financial publications
and/or indices which the Fund uses in advertising may include:

Financial publications. The Wall Street Journal, Business Week, Changing Times,
Financial World, Forbes, Fortune and Money magazines, among others--provide
performance statistics over specified time periods.

Lipper Analytical Services, Inc. Ranks funds in various fund categories by
making comparative calculations using total return. Total return assumes the
reinvestment of all capital gains distributions and income dividends and takes
into account any change in net asset value over a specified period of time.

Moody's Investors Service, Inc., Fitch IBCA, Inc. and Standard & Poor's, various
publications.

IBC/Donoghue's Money Fund Report publishes annualized yields of money market
funds weekly. Donoghue's Money Market Insight publication reports monthly
12-month-to-date investment results for the same money funds.

WHO IS FEDERATED INVESTORS, INC.?

Federated Investors, Inc. is dedicated to meeting investor needs by making
structured, straightforward and consistent investment decisions. Federated
investment products have a history of competitive performance and have gained
the confidence of thousands of financial institutions and individual investors.

Federated's disciplined investment selection process is rooted in sound
methodologies backed by fundamental and technical research. At Federated,
success in investment management does not depend solely on the skill of a single
portfolio manager. It is the result of a process that combines the talents of
many individuals with the resources and tools they need. Investment decisions
are made by teams of portfolio managers and analysts which are executed by
traders dedicated to specific market sectors and who handle trillions of dollars
in annual trading volume.

<PAGE>

Municipal funds. In the municipal sector, as of December 31, 1997, Federated
managed 11 bond funds with approximately $2.1 billion in assets and 22 money
market funds with approximately $10.9 billion in total assets. In 1976,
Federated introduced one of the first municipal bond mutual funds in the
industry and is now one of the largest institutional buyers of municipal
securities. The Funds may quote statistics from organizations including The Tax
Foundation and the National Taxpayers Union regarding the tax obligations of
Americans.

Equity funds. In the equity sector, Federated has more than 27 years'
experience. As of December 31, 1997, Federated managed 29 equity funds totaling
approximately $11.7 billion in assets across growth, value, equity income,
international, index and sector (i.e. utility) styles. Federated's
value-oriented management style combines quantitative and qualitative analysis
and features a structured, computer-assisted composite modeling system that was
developed in the 1970s.

Corporate bond funds. In the corporate bond sector, as of December 31, 1997,
Federated managed 11 money market funds and 16 bond funds with assets
approximating $17.1 billion and $5.6 billion, respectively. Federated's
corporate bond decision making--based on intensive, diligent credit analysis--is
backed by over 22 years of experience in the corporate bond sector. In 1972,
Federated introduced one of the first high-yield bond funds in the industry. In
1983, Federated was one of the first fund managers to participate in the
asset-backed securities market, a market totaling more than $200 billion.

Government funds. In the government sector, as of December 31, 1997, Federated
manages 9 mortgage-backed, 6 government/ agency and 18 government money market
mutual funds, with assets approximating $5.9 billion, $1.5 billion and $35
billion, respectively. Federated trades approximately $400 million in U.S.
government and mortgage-backed securities daily and places approximately $23
billion in repurchase agreements each day. Federated introduced the first U.S.
government fund to invest in U.S. government bond securities in 1969. Federated
has been a major force in the short- and intermediate-term government markets
since 1982 and currently manages approximately $36 billion in government funds
within these maturity ranges.

Money market funds. In the money market sector, Federated gained prominence in
the mutual fund industry in 1974 with the creation of the first institutional
money market fund. Simultaneously, the company pioneered the use of the
amortized cost method of accounting for valuing shares of money market funds, a
principal means used by money managers today to value money market fund shares.
Other innovations include the first institutional tax-free money market fund. As
of December 31, 1997, Federated managed more than $63.1 billion in assets across
51 money market funds, including 18 government, 11 prime and 22 municipal with
assets approximating $35 billion, $17.1 billion and $10.9 billion, respectively.

The Chief Investment Officers responsible for oversight of the various
investment sectors within Federated are: U.S. equity and high
yield - J. Thomas Madden; U.S. fixed income -
William D. Dawson, III; and global equities and fixed income -
Henry A. Frantzen. The Chief Investment Officers are Executive Vice
Presidents of the Federated advisory companies.

Mutual Fund Market. Thirty-seven percent of American households are pursuing
their financial goals through mutual funds. These investors, as well as
businesses and institutions, have entrusted over $4 trillion to the more than
6,700 funds available, according to the Investment Company Institute.

Federated distributes mutual funds through its subsidiaries for a variety of
investment purposes. Specific markets include:

<PAGE>

Institutional Clients. Federated meets the needs of approximately 900
institutional clients nationwide by managing and servicing separate accounts and
mutual funds for a variety of purposes, including defined benefit and defined
contribution programs, cash management, and asset/liability management.
Institutional clients include corporations, pension funds, tax-exempt entities,
foundations/endowments, insurance companies, and investment and financial
advisers. The marketing effort to these institutional clients is headed by John
B. Fisher, President, Institutional Sales Division, Federated Securities Corp.

Bank Marketing. Other institutional clients include more than 1,600 banks and
trust organizations. Virtually all of the trust divisions of the top 100 bank
holding companies use Federated Funds in their clients' portfolios. The
marketing effort to trust clients is headed by Timothy C. Pillion, Senior Vice
President, Bank Marketing & Sales.

Broker/Dealers and Bank Broker/Dealer Subsidiaries. Federated Funds are
available to consumers through major brokerage firms nationwide--we have over
2,200 broker/dealer and bank broker/dealer relationships across the
country--supported by more wholesalers than any other mutual fund distributor.
Federated's service to financial professionals and institutions has earned it
high ratings in several surveys performed by DALBAR, Inc. DALBAR is recognized
as the industry benchmark for service quality measurement. The marketing effort
to these firms is headed by James F. Getz, President, Broker/Dealer Sales
Division, Federated Securities Corp.
INVESTMENT RATINGS

Standard and Poor's Long-Term Debt Rating Definitions
AAA--Debt rated AAA has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.

AA--Debt rated AA has a very strong capacity to pay interest and repay principal
and differs from the higher rated issues only in small degree.

A--Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.

BBB--Debt rated BBB is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.

BB--Debt rated BB has less near-term, vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB-rating.

B--Debt rated B has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal. The B rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied BB or BB-
rating.

CCC--Debt rated CCC has a currently identifiable vulnerability to default, and
is dependent upon favorable business, financial, and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial, or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The CCC rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
B or B-rating.

CC--The rating CC typically is applied to debt subordinated to senior debt that
is assigned an actual or implied CCC debt rating.

C--The rating C typically is applied to debt subordinated to senior debt which
is assigned an actual or implied CCC-debt rating. The C rating may be used to
cover a situation where a bankruptcy petition has been filed, but debt service
payments are continued.

Moody's Investors Service, Inc. Long-Term Bond Rating Definitions
AAA--Bonds which are rated AAA are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as gilt
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 which are rated AA are judged to be of high quality by all standards.
Together with the AAA group, they comprise what are generally known as high
grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in AAA securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in AAA securities.

A--Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.

BAA--Bonds which are rated BAA are considered as medium grade obligations,
(i.e., they are neither highly protected nor poorly secured). Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

BA--Bonds which are BA are judged to have speculative elements; their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded during
both good and bad times over the future. Uncertainty of position characterizes
bonds in this class.

B--Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.

CAA--Bonds which are rated CAA are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.

CA--Bonds which are rated CA represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.

C--Bonds which are rated C are the lowest rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.

Fitch IBCA, Inc. Long-Term Debt Rating Definitions
AAA--Bonds considered to be investment grade and of the highest credit quality.
The obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.

AA--Bonds considered to be investment grade and of very high credit quality. The
obligor's ability to pay interest and repay principal is very strong, although
not quite as strong as bonds rated AAA. Because bonds rated in the AAA and AA
categories are not significantly vulnerable to foreseeable future developments,
short-term debt of these issuers is generally rated F-1+.

A--Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.

BBB--Bonds considered to be investment grade and of satisfactory credit quality.
The obligor's ability to pay interest and repay principal is considered to be
adequate. Adverse changes in economic conditions and circumstances, however, are
more likely to have adverse impact on these bonds, and therefore impair timely
payment. The likelihood that the ratings of these bonds will fall below
investment grade is higher than for bonds with higher ratings.

BB--Bonds are considered speculative. The obligor's ability to pay interest and
repay principal may be affected over time by adverse economic changes. However,
business and financial alternatives can be identified which could assist the
obligor in satisfying its debt service requirements.

B--Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued timely
payment of principal and interest reflects the obligor's limited margin of
safety and the need for reasonable business and economic activity throughout the
life of the issue.

CCC--Bonds have certain identifiable characteristics which, if not remedied, may
lead to default. The ability to meet obligations requires an advantageous
business and economic environment.

CC--Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.

C--Bonds are imminent default in payment of interest or principal.

Moody's Investors Service, Inc. Commercial Paper Ratings
Prime-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:

o Leading market positions in well established industries.

o High rates of return on funds employed.

o Conservative capitalization structure with moderate reliance on debt and ample
asset protection.

o Broad margins in earning coverage of fixed financial charges and high internal
cash generation.

o Well established access to a range of financial markets and assured sources of
alternate liquidity.

Prime-2--Issuers rated Prime-1 (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.

Standard and Poor's Commercial Paper Ratings
A-1--This 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.

Fitch IBCA, Inc. Commercial Paper Rating Definitions
FITCH-1--(Highest Grade) Commercial paper assigned this rating is regarded as
having the strongest degree of assurance for timely payment.

FITCH-2--(Very Good Grade) Issues assigned this rating reflect an assurance of
timely payment only slightly less in degree than the strongest issues.

<PAGE>

ADDRESSES

Massachusetts Municipal Cash Trust
Institutional Service Shares Federated Investors Funds
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7000

Distributor
Federated Securities Corp. Federated Investors Tower
1001 Liberty Avenue,
Pittsburgh, Pennsylvania 15222-3779

Investment Adviser
Federated Management Federated Investors Tower
1001 Liberty Avenue,
Pittsburgh, Pennsylvania 15222-3779

Custodian
State Street Bank and Trust Company P.O. Box 8600
Boston, Massachusetts 02266-8600

Transfer Agent and Dividend Disbursing Agent
Federated Shareholder Services Company P.O. Box 8600
Boston, Massachusetts 02266-8600

Independent Auditors
Arthur Andersen LLP 2100 One PPG Place
Pittsburgh, PA 15222

Prospectus December 31, 1998

MASSACHUSETTS MUNICIPAL CASH TRUST
BOSTON 1784 FUNDS SHARES

Contents

Risk/Return Summary What are the Fund's Fees and Expenses? What are the Fund's
Investment Strategies?
What are the Principal Securities in Which the Fund Invests?
What are the Specific Risks of Investing in the Fund?
Shareholder Services
Pricing of Fund Shares
Distributions
Tax Information
Who Manages the Fund
Financial Information

<PAGE>

RISK/RETURN SUMMARY

WHAT IS THE FUND'S INVESTMENT OBJECTIVE?

WHAT ARE THE FUND'S MAIN INVESTMENT STRATEGIES?

WHAT ARE THE MAIN RISKS OF INVESTING IN THE FUND?

RISK/RETURN BAR CHART AND TABLE

The graphic presentation displayed here consists of a bar chart representing the
annual total returns of Boston 1784 Funds Shares as of the calendar year-end for
each of five years.

The `y' axis reflects the "% Total Return" beginning with ___% and increasing in
increments of ___% up to ___%.

The `x' axis represents calculation periods from the earliest calendar year end
of the Fund's Boston 1784 Funds Shares start of business through the calendar
year ended December 31, 1997. The light gray shaded chart features seven
distinct vertical bars, each shaded in charcoal, and each visually representing
by height the total return percentages for the calendar year stated directly at
its base. The calculated total return percentage for the Fund's Boston 1784
Funds Shares for each calendar year is stated directly at the top of each
respective bar, for the calendar years 1993 through 1997, are: ___%, ___%, ___%,
____% and ___%, respectively.

The bar chart shows the variability of the Fund's Boston 1784 Funds Shares on a
yearly basis.

The Fund's Boston 1784 Funds Shares are not sold subject to a sales charge
(load). Hence, the total returns displayed above are based upon the net asset
value.

7-Day Net Yield as of (12/31/97)* was ___%.

The Fund's total return from January 1, 1998 to September 30, 1998 was ___%.

Within the period shown in the Chart, the Fund's highest quarterly return was
___% (quarter ended September 30, 1991). Its lowest quarterly return was ___%
(quarter ended March 31, 1994).

* Investors may call the Fund to acquire the current 7-Day Net Yield by calling
1-800-341-7400.

<PAGE>

Massachusetts Municipal Cash Trust
Fees and Expenses ......

This table describes the fees and expenses that you may pay if you buy and hold
shares of the Massachusetts Municipal Cash Trust's Boston 1784 Funds Shares.

Shareholder Fees ( fees paid directly from your investment)
<TABLE>
<CAPTION>

<S> <C>

Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) None
Maximum Deferred Sales Charge (Load) (as a percentage of original purchase
price or redemption proceeds, as applicable)................... None
Maximum Sales Charge (Load) Imposed on Reinvested Dividends (and other Distributions)
( as a percentage of offering price)........................... None
Redemption Fee (as a percentage of amount redeemed, if applicable) None
Exchange Fee.................................................. None
Maximum Account Fee............................................................................None
</TABLE>

Annual Fund Operating Expenses (expenses that are deducted from Fund assets) (as
a percentage of average net assets)

Management Fee (1).............................................0.50%
Shareholder Services Fee (2)...................................0.25%
Distribution (12b-1) Fee.......................................None
Other Expenses ................................................0.__%
Total Annual Fund Operating Expenses (before waivers)........ 0.__%
- --------------------------------------------------------------------------------

Although not contractually obligated to do so, the adviser waived and
distributor reimbursed certain amounts. These are shown below along with the net
expenses the Fund ACTUALLY paid for the fiscal year ended October 31, 1998.
WAIVER of Fund expenses (1)(2).............................................__%
Total Actual Annual Fund Operating Expenses (after waivers)................__%

(1)The adviser voluntarily waived a portion of the management fee. The adviser
can terminate this voluntary waiver at any time. The management fee paid by
the Fund (after voluntary waiver) was ___% for the year
ended October 31, 1998.

(2)The shareholder services fee has been voluntarily waived. This voluntary
waiver can be terminated at any time. The shareholder services fee paid by
the Fund (after voluntary waiver) was ___% for the year ended October 31,
1998.

Example

The following Example is intended to help you compare the cost of investing in
the Massachusetts Municipal Cash Trust's Boston 1784 Funds Shares with the cost
of investing in other mutual funds.

The Example assumes that you invest $10,000 in the Massachusetts Municipal Cash
Trust's Boston 1784 Funds Shares for the time periods indicated and then redeem
all of your shares at the end of those periods. The Example also assumes that
your investment has a 5% return each year and that the Massachusetts Municipal
Cash Trust's Boston 1784 Funds Shares operating expenses are before waivers as
estimated above and remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:

1 Year 3 Years 5 Years 10 Years
Payment of the maximum sales charge.
Expenses assuming no redemption..... $__ $__ $__ $__

<PAGE>

WHAT ARE THE FUND'S INVESTMENT STRATEGIES?

WHAT ARE THE PRINCIPAL SECURITIES IN WHICH THE FUND INVESTS?

WHAT ARE THE SPECIFIC RISKS OF INVESTING IN THE FUND?

Although there are many factors which may effect an investment in the Fund, the
principal risks of investing in a municipal money market fund are described
below.

<PAGE>

How To Reach The Fund
By telephone 1-800-BKB-1784
Call for account or Fund
information Monday through Friday
8 a.m. to 8 p.m. or Saturday and
Sunday 9 a.m. to 4 p.m.
(Eastern time).

By regular mail Boston 1784 Funds
P.O. Box 8524
Boston, MA 02266-8524

By overnight Boston 1784 Funds
courier c/o Boston Financial Data Services
2 Heritage Drive
North Quincy, MA 02171

Types of Accounts
If you are investing in the Fund for the first time, you will need to establish
an account. You may establish the following types of accounts by completing an
account application. To obtain an application, call 1-800-BKB-1784.

o Individual or Joint Ownership. Individual accounts are owned by one person.
Joint accounts have two or more owners. The Fund will treat any individual
owner of a joint account as authorized to give instructions on purchases,
sales and exchanges of shares of a Fund without notice to the other owners,
except that for any transaction requiring a signature guarantee, the
signature guarantee of each account owner is required.

o Gift or Transfer to Minor (UGMA or UTMA). A UGMA (Uniform Gifts to Minors
Act) or UTMA (Uniform Transfers to Minors Act) account is maintained by a
custodian for the benefit of a minor. To open a UGMA or UTMA account, you
must include the minor's social security number on the application.

o Trust. A trust can open an account. The name of each trustee, the name of
the trust and the date of the trust agreement must be included on the
application.

o Corporations, Partnerships and Other Legal Entities. Corporations,
partnerships and other legal entities may also open an account. The
application and resolution form must be signed by a general partner of the
partnership or an authorized officer of the corporation or other legal
entity.

How To Open An Account
Complete and sign the appropriate account application. Please be sure to provide
your social security or taxpayer identification number on the application. Make
your check payable to Boston 1784 Funds. Send all items to one of the following
addresses:

By regular mail Boston 1784 Funds
P.O. Box 8524
Boston, MA 02266-8524

By overnight Boston 1784 Funds
courier c/o Boston Financial Data Services
2 Heritage Drive
North Quincy, MA 02171
You may also purchase shares through certain financial institutions, including
BankBoston. These institutions may have their own procedures for buying and
selling shares, and may charge fees. Contact your financial institution for more
information.

How To Purchase Shares
Shares of the Fund are sold on a continuous basis and may be purchased from the
Distributor or a broker-dealer or financial institution that has an agreement
with the Distributor. Purchases may be made Monday through Friday, except on
certain holidays.

The Fund's share price, called net asset value per share, is calculated every
business day. The Fund's shares are sold without a sales charge. Shares are
purchased at net asset value the next time it is calculated after your
investment is received and accepted by the Distributor. Your investment is
considered received when your check is converted into immediately available
funds. This normally happens within two business days.

New Purchases. If you are new to the Fund, complete and sign an account
application and mail it along with your check. To establish the telephone
purchase option on your new account, complete the "Telephone Privilege
Authorization" section on the application.

Additional Purchases. If you already have money invested in the Fund, you can
invest additional money in the Fund in the following ways:

By mail. Complete the remittance slip attached to the bottom of your
confirmation statement. Send your check and remittance slip or written
instructions to one of the addresses listed above under "How To Open An
Account".

By telephone. This service allows you to purchase additional shares quickly
and conveniently through an electronic transfer of money. If you have not
established the telephone purchase option, call 1-800-BKB-1784 to request the
appropriate form.

By wire. Purchases may also be made by wiring money from your bank account to
your Boston 1784 Fund account. Each time you wish to send a wire, you must
call 1-800-BKB-1784 to receive wiring instructions before you send money.

Automatic investment program. Automatic investing is an easy way to add to your
account on a regular basis. Boston 1784 Funds offer an automatic investment plan
to help you achieve your financial goals as simply and conveniently as possible.
Please note that minimum purchase amounts apply. Call 1-800-BKB-1784 for
information.

<PAGE>

Paying for shares. Please note the following:

o Purchases may be made by check, wire transfer and electronic transfer.

o All purchases must be made in U.S. dollars.
o Checks must be drawn on U.S. banks and must be payable to Boston 1784 Funds.
Checks that are not made payable directly to Boston 1784 Funds ("third party
checks") are not accepted.
o Cash and credit card checks are not accepted.
o If a check does not clear your bank, the Fund reserves the right to cancel
the purchase.
If your purchase is canceled, you will be responsible for any losses or fees
imposed by your bank and losses that may be incurred as a result of any decline
in the value of the canceled purchase. The Fund has the authority to redeem
shares in your account(s) to cover any losses due to changes in share price. The
Fund reserves the right to reject any specific purchase request.

Minimum investments. The following minimums apply unless they are waived by the
Distributor.
To open an account $1,000.00

To add to an account 250.00

Through automatic investment plans 50.00
Minimum account balance 1,000.00

How To Sell Shares
Selling your shares in a Fund is called a "redemption" because the Fund buys
back its shares. On any business day, you may sell (redeem) all or a portion of
your shares. If your redemption request is over $100,000, you will need a
signature guarantee (see below). If the shares being sold were recently
purchased by check, telephone or through an automatic investment program, the
Fund may delay the mailing of your redemption check for up to 10 business days
after purchase to allow the purchase to clear.

Your transaction will be processed at net asset value the next time it is
calculated after the Fund receive your redemption request in good order. You may
gain or lose money when you redeem your shares.

By mail. To redeem all or part of your shares by mail, please send your request
in writing to one of the addresses listed above under "How To Open An Account"
and include the following information:
o the name of the Fund,
o the account number(s),
o the amount of money or number of shares
being redeemed,
o the name(s) on the account,
o the signature of a registered account owner, and o your daytime telephone
number.
Signature requirements vary based on the type of account you have:

o Individual, Joint Tenants, Tenants in Common: Written instructions must be
signed by an individual shareholder, or in the case of joint accounts, one
of the shareholders (except where a signature guarantee is required, in
which case the signature guarantee of each account owner is required),
exactly as the name(s) appears on the account.

o UGMA or UTMA: Written instructions must be signed by the custodian as it
appears on the account.

o Sole Proprietor, General Partner: Written instructions must be signed by an
authorized individual as it appears on the account.

o Corporation, Association: Written instructions must be signed by the
person(s) authorized to act on the account. A resolution form, authorizing
the signer to act, must accompany the request, if not on file with the Fund.

o Trust: Written instructions must be signed by the trustee(s). If the name of
the current trustee(s) does not appear on the account, a certified
certificate of incumbency dated within 60 days must also be submitted.

By telephone. If you selected this option on your account application, you may
make redemptions from your account by calling 1-800-BKB-1784. The Fund requires
that requests for redemptions over $100,000 be in writing with signatures
guaranteed (see below). You may not close your account by telephone. If you
would like to establish this option on an existing account, please call
1-800-BKB-1784. See "Telephone transactions" below.

Payment of redemption proceeds. Payments may be made by check, wire transfer or
electronic transfer.

By Check Redemption proceeds will be sent to the shareholder(s) on our
records at the address on our records within seven days after
receipt of a valid redemption request.

By Wire If you have selected this option on your application, your
redemption proceeds will be wired directly into your designated bank
account, normally on the business day that your redemption request
is received. There is no limitation on redemptions by wire.

However, there is a $12 fee for each wire and your bank may charge
an additional fee to receive the wire. If you would like to
establish this option on an existing account, please call
1-800-BKB-1784 to sign up for this service. Wire redemptions are not
available for retirement accounts.

By Electronic If you have established this option, your redemption proceeds will
be transferred Transfer electronically to your predesignated bank account. To
establish this option on an existing account,
please call 1-800-BKB-1784 to request the appropriate form.

Signature guarantees. In addition to the signature requirements described above,
a signature guarantee is required if:

o You would like the check made payable to anyone other than the
shareholder(s) on our records.

o You would like the check mailed to an address other than the address on our
records.

o You would like the check mailed to an address on our records that has
changed in the past 30 days.

o Your redemption request is over $100,000.

The Fund may also require signature guarantees for other redemptions. A
signature guarantee assures that a signature is genuine and protects
shareholders from unauthorized account transfers. Banks, savings and loan
associations, trust companies, credit unions, broker-dealers and member firms of
a national securities exchange may guarantee signatures. Call your financial
institution to determine if it has this capability.

Shareholder Services And Policies
Exchanges. On any business day, you may exchange all or a portion of your shares
into any other Fund in the Boston 1784 Funds family. To make exchanges, please
follow the procedures under "How To Sell Shares." Exchanges are processed at the
net asset value next calculated after an exchange request in good order is
received and approved. Please read the prospectus for the Fund into which you
are exchanging. The Fund reserves the right to reject any exchange request or to
change or terminate the exchange privilege at any time. An exchange is the sale
of shares of one Fund and purchase of shares of another, and could result in
taxable gain or loss in a non-tax-sheltered account.

<PAGE>

Redemption proceeds. The Fund's policy is to pay redemption proceeds in cash,
but the Fund reserves the right to change this policy and to pay in kind in
certain cases by delivering to you investment securities equal to the redemption
price. In these cases, you might have to pay brokerage costs when converting the
securities to cash. The right of any shareholder to receive redemption proceeds
may be suspended, or payment may be postponed, in certain circumstances. These
circumstances include any period the New York Stock Exchange is closed (other
than weekends or holidays) or trading on the Exchange is restricted, any period
when an emergency exists and any time the Securities and Exchange Commission
allows mutual funds to delay payments for the protection of investors.

Taxpayer identification number. On the account application or other appropriate
form, you will be asked to certify that your social security or taxpayer
identification number is correct and that you are not subject to backup
withholding for failing to report income to the IRS. If you are subject to
backup withholding or you did not certify your taxpayer identification number,
the IRS requires the Fund to withhold 31% of any dividends and redemption or
exchange proceeds. The Fund reserves the right to reject any application that
does not include a certified social security or taxpayer identification number.

Share ownership. The Fund keeps a record of the ownership of their shares and
share certificates are not issued.

Involuntary redemptions. If your account balance falls below the minimum
required investment as a result of selling or exchanging shares, you will be
given 60 days to re-establish the minimum balance. If you do not, your account
may be closed and the proceeds sent to you.

Telephone transactions. You may buy, sell or exchange shares by telephone if you
selected this option on your account application or have completed the
appropriate form. The Fund and its agents will not be responsible for any losses
that may result from acting on wire or telephone instructions that it reasonably
believes to be genuine. The Fund and its agents will each follow reasonable
procedures to confirm that instructions received by telephone are genuine, which
may include taping telephone conversations. It may be difficult to reach the
Fund by telephone during periods of unusual market activity.

Address changes. A change in address on your account must be made in writing and
be signed by all account owners. Include the name of the Fund, the account
number(s), the name(s) on the account and both the old and new addresses. Call
1-800-BKB-1784 if you need more information.

Name/account ownership changes. To change the name on an account, the shares are
generally transferred to a new account. A signature guarantee must be provided
and, in some cases, certain legal documents may be required. For more
information, call 1-800-BKB-1784. If your shares are held by a financial
institution, contact that financial institution for ownership changes.

Statements and reports. The Fund will send you a confirmation statement after
every transaction that affects your account balance or registration. If you are
enrolled in an automatic investment program and invest on a monthly basis, you
will receive quarterly confirmations. Information about the tax status of income
dividends and capital gains distributions will be mailed to shareholders early
each year.

Financial reports for the Fund, which include a list of the Fund's portfolio
holdings, will be mailed twice each year to all shareholders.

Pricing of Fund Shares
The Fund's net asset value per share or NAV is calculated at 12:00 noon and 1:00
p.m. (Eastern time) and as of the end of regular trading (normally 4:00 p.m.
Eastern time) on each day the New York Stock Exchange is open, except for
Columbus Day and Veteran's Day.
The NAV is the value of a single share of a Fund.

<PAGE>

Distributions
As a Fund shareholder, you are entitled to your share of a Fund's net income and
gains on its investments. The Fund passes substantially all of its earnings
along to its investors as distributions. When the Fund earns interest from money
market instruments and other debt securities and distributes these earnings to
shareholders, it is called a dividend distribution. The Fund realizes capital
gains when it sells securities for a higher price than it paid. When these gains
are distributed to shareholders, it is called a capital gain distribution.

Your distributions are declared each day, starting on the day you purchase your
shares. They are paid to your account on the first business day of each month
that you are a shareholder. You will not receive a distribution for the day on
which you sell shares.

You will receive distributions from the Fund in additional shares of the Fund
unless you choose to receive your distributions in cash. If you wish to change
the way in which you receive distributions, you should call 1-800-BKB-1784 for
instructions. If you have elected to receive distributions in cash, and the
postal or other delivery service returns your check to the Fund as
undeliverable, you will not receive interest on amounts represented by the
uncashed checks.

Tax Information
The Fund sends an annual statement of your account activity to assist you in
completing your federal, state and local tax returns. It is anticipated that
Fund distributions will be primarily dividends that are exempt from federal
income tax, although a portion of the Fund's dividends may not be exempt.
Dividends may be subject to state and local taxes, although the Fund's dividends
will be exempt from Massachusetts state personal income tax to the extent they
are derived from interest on obligations exempt from Massachusetts personal
income taxes. Capital gains and non-exempt dividends are taxable whether paid in
cash or reinvested in the Fund. Redemptions and exchanges are taxable sales.
Please consult your tax preparer regarding your federal, state and local tax
liability.

WHO MANAGES THE FUND?

While it is impossible to determine in advance all of the risks to the Fund, the
Fund could experience interruptions in basic functions, such as:

w calculating net asset value;
w redeeming shares; or
w delivering account statements and providing other information to
shareholders.

FINANCIAL INFORMATION

Financial statements will be filed by amendment.

<PAGE>

MASSACHUSETTS MUNICIPAL CASH TRUST
BOSTON 1784 FUNDS SHARES

[A Portfolio of Federated Municipal Trust]

Internet Address: www.federatedinvestors.com

Investment Company Act File No. 811-5911

Cusip 314229832

FEDERATED
World-Class Investment Manager

Federated Investors, Inc.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
1-800-341-7400
www.federatedinvestors.com

Statement of Additional Information December 31, 1998

Massachusetts Municipal Cash Trust
[A Portfolio of Federated Municipal Trust]
Boston 1784 Funds Shares

Contents

[Federated Investors Logo]
Federated Securities Corp., Distributor,
subsidiary of Federated Investors, Inc.
CUSIP 314229832
0032603B (12/98)

<PAGE>

HOW IS THE FUND ORGANIZED?

SECURITIES IN WHICH THE FUND INVESTS

In pursuing its investment strategy, the Fund may invest in the following
securities for any purpose that is consistent with its investment objective.

SECURITIES DESCRIPTIONS, TECHNIQUES AND RISKS

Other tax exempt securities in which the Fund invests include:

INVESTMENT LIMITATIONS

Investing in Commodities
The Fund will not purchase or sell commodities, commodity contracts, or
commodity futures contracts.

<PAGE>

Investing for Control
The Fund will not invest in securities of a company for the purpose of
exercising control or management.

Investing in Options
The Fund will not invest in puts, calls, straddles, spreads, or any combination
of them.

The Fund did not borrow money or pledge securities in excess of 5% of the value
of its net assets during the last fiscal year and has no present intent to do so
during the coming fiscal year.

<PAGE>

WHAT DO SHARES COST?

The Fund attempts to stabilize the net asset value of Shares at $1.00 by valuing
the portfolio securities using the amortized cost method.

HOW IS THE FUND SOLD?

SHAREHOLDER SERVICES

REDEMPTION IN KIND

ACCOUNT AND SHARE INFORMATION

Shareholders owning 25% or more of outstanding Shares may be in control and be
able to affect the outcome of certain matters presented for a vote of
shareholders.

<PAGE>

TAX INFORMATION

STATE TAXES

Massachusetts Taxes

WHO MANAGES AND PROVIDES SERVICES TO THE FUND?

BOARD OF TRUSTEES

<PAGE>

John F. Donahue*#
Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA
Birthdate: July 28, 1924

Chairman and Trustee

Compensation from Trust $0
Compensation from Federated Fund Complex $0

Thomas G. Bigley
15 Old Timber Trail, Pittsburgh, PA
Birthdate: February 3, 1934

Trustee

Compensation from Trust $______
Compensation from Federated Fund Complex $______

John T. Conroy, Jr.
Wood/IPC Commercial Department, John R. Wood and Associates, Inc., Realtors
3255 Tamiami Trail North, Naples, FL
Birthdate: June 23, 1937

Trustee

Compensation from Trust $______
Compensation from Federated Fund Complex $______

William J. Copeland
One PNC Plaza - 23rd Floor, Pittsburgh, PA
Birthdate: July 4, 1918

Trustee

Compensation from Trust $______
Compensation from Federated Fund Complex $______

<PAGE>

James E. Dowd, Esq.
571 Hayward Mill Road, Concord, MA
Birthdate: May 18, 1922

Trustee

Compensation from Trust $______
Compensation from Federated Fund Complex $______

Lawrence D. Ellis, M.D.*
3471 Fifth Avenue, Suite 1111, Pittsburgh, PA
Birthdate: October 11, 1932

Trustee

Compensation from Trust $______
Compensation from Federated Fund Complex $______

Edward L. Flaherty, Jr., Esq.#
Miller, Ament, Henny & Kochuba, 205 Ross Street, Pittsburgh, PA
Birthdate: June 18, 1924

Trustee

Compensation from Trust $______
Compensation from Federated Fund Complex $______

Peter E. Madden
One Royal Palm Way, 100 Royal Palm Way, Palm Beach, FL
Birthdate: March 16, 1942

Trustee

Compensation from Trust $______
Compensation from Federated Fund Complex $______

<PAGE>

John E. Murray, Jr., J.D., S.J.D.
President, Duquesne University, Pittsburgh, PA
Birthdate: December 20, 1932

Trustee

Compensation from Trust $______
Compensation from Federated Fund Complex $______

Wesley W. Posvar
1202 Cathedral of Learning, University of Pittsburgh, Pittsburgh, PA
Birthdate: September 14, 1925

Trustee

Compensation from Trust $______
Compensation from Federated Fund Complex $______

Marjorie P. Smuts
4905 Bayard Street, Pittsburgh, PA
Birthdate: June 21, 1935

Trustee

Director or Trustee of the Federated Fund Complex; Public
Relations/Marketing/Conference Planning; formerly: National Spokesperson,
Aluminum Company of America ; business owner.

Compensation from Trust $______
Compensation from Federated Fund Complex $______

Glen R. Johnson *
Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA
Birthdate: May 2, 1929

President and Trustee

Trustee, Federated Investors, Inc.; staff member, Federated Securities Corp.

Compensation from Trust $______
Compensation from Federated Fund Complex $______

<PAGE>

J. Christopher Donahue
Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA
Birthdate: April 11, 1949

Executive Vice President

Compensation from Trust $______
Compensation from Federated Fund Complex $______

Edward C. Gonzales
Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA
Birthdate: October 22, 1930

Executive Vice President

Compensation from Trust $______
Compensation from Federated Fund Complex $______

John W. McGonigle
Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA
Birthdate: October 26, 1938

Executive Vice President, Secretary and Treasurer

Compensation from Trust $______
Compensation from Federated Fund Complex $______

Richard B. Fisher
Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA
Birthdate: May 17, 1923

Vice President

Compensation from Trust $______
Compensation from Federated Fund Complex $______

<PAGE>

INVESTMENT ADVISER
The Adviser conducts investment research and makes investment decisions for the
Fund. The Adviser is a wholly-owned subsidiary of Federated Investors.

Federated Services Company also provides certain accounting and recordkeeping
services with respect to the Fund's portfolio investments for a fee based on
Fund assets plus out-of-pocket expenses.

INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Anderson LLP is the independent public accountant for the Fund.

FEES PAID BY THE FUND FOR SERVICES

Boston 1784 Funds Shares
For the Year ended
October 31, 1998
Advisory Fee Earned............$.............
Advisory Fee Reduction.........$.............
Brokerage Commissions..........$.............
Administrative Fee.............$.............
12b-1 Fee......................$.............
Shareholder Services Fee.......$.............