SEMI-ANNUAL REPORT
President's Message
Dear Shareholder:
I am pleased to present the Semi-Annual Report to Shareholders of Alabama
Municipal Cash Trust, a portfolio of Federated Municipal Trust, which covers the
six-month period from November 1, 1998 through April 30, 1999. The report begins
with a discussion with the fund's portfolio manager, followed by a complete
listing of the fund's holdings and its financial statements.
The fund is a convenient way to keep your ready cash pursuing double tax-free
income-free from federal regular income tax and Alabama income tax 1- through a
portfolio concentrated in high-quality, short-term Alabama municipal securities.
At the end of the reporting period, the fund's holdings were diversified among
issuers that use municipal bond financing for projects as varied as health care,
housing, community development and transportation.
This double tax-free advantage means you have the opportunity to earn a greater
after-tax yield than you could in a comparable high-quality taxable investment.
Of course, the fund also brings you the added benefits of daily liquidity and
stability of principal. 2
During the reporting period, the fund paid double tax-free dividends totaling
$0.01 per share. The fund's net assets totaled $196.5 million at the end of the
reporting period.
Thank you for relying on Alabama Municipal Cash Trust to help your ready cash
pursue tax-free income every day. As always, we will continue to provide you
with the highest level of professional service. We invite your questions or
comments.
Sincerely,
[Graphic]
Glen R. Johnson
President
June 15, 1999
1 Income may be subject to the federal alternative minimum tax.
2 An investment in money market funds is neither insured nor guaranteed by the
Federal Deposit Insurance Corporation or any other government agency. Although
money market funds seek to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in the fund.
Investment Review
An interview with the fund's portfolio manager, Jeff A. Kozemchak, CFA, Senior
Vice President, Federated Investment Management Company.
WHAT ARE YOUR COMMENTS ON THE ECONOMY AND THE INTEREST RATE ENVIRONMENT DURING
THE FUND'S SIX-MONTH REPORTING PERIOD?
The economy remained robust over the reporting period, showing continued
strength in the fourth quarter of 1998 and into the first quarter of 1999. At
the same time, overall inflationary pressures were absent in spite of impressive
performance from the economy and historically low unemployment. However,
sustained growth in aggregate demand continued to stretch the labor markets, and
the potential for future inflation clearly concerned the Federal Reserve Board
(the "Fed"). Over the reporting period, the Fed maintained a neutral policy
stance toward the direction of short-term interest rates ("federal funds target
rate"). However, April's Consumer Price Index ("CPI") 1 rate was much larger
than expected and in May, shortly after the close of the reporting period, the
Fed adopted a tightening bias, or bias for higher rates in the future. The Fed
cited the strong U.S. economy in conjunction with record employment levels, the
improvement in foreign economic prospects, and rebounding U.S. financial
markets.
In addition to economic fundamentals, short-term municipal securities were
strongly influenced by technical factors over the reporting period, notably
calendar year end and income tax payment season. Variable rate demand notes
("VRDNs") started the reporting period in the 3.00% range, but moved sharply
higher to the 4.00% level in December as an imbalance between supply and demand
occurred. Yields then declined in January, as strong cash inflows from bond
maturities and coupon reinvestment occurred. The market continued to be strong
in February and March as yields trended at 3.00% or below, before rising to
4.00% in April because of traditional tax payment season pressures. Over the
six-month reporting period, VRDN yields averaged roughly 65% of taxable rates,
making them attractive for investors in the highest federal tax brackets.
The overall tone of the short-term municipal market was positive. Municipalities
across the country have benefited from a strong economy. This fact, coupled with
lower borrowing costs from low long-term rates, reduced short-term issuance. In
fact, annual municipal note issuance was at its lowest level in the last decade.
WHAT WERE YOUR STRATEGIES FOR THE FUND DURING THE REPORTING PERIOD?
The fund's average maturity at the beginning of the reporting period was
approximately 52 days. The fund remained in a 45 to 55-day average maturity
range in 1998, but the average maturity moved lower in 1999 and was at 32 days
on April 30, 1999. A shorter average maturity left the fund well positioned to
take advantage of increased rates that could have occurred. We continued to
emphasize a barbelled structure for the portfolio, combining a significant
position in 7-day VRDNs with purchases of longer-term securities with maturities
between 6 and 12 months. After an average maturity range was targeted, we
attempted to maximize performance through ongoing relative value analysis.
Relative value analysis includes the comparison of the richness or cheapness of
municipal securities to one another as well as municipal securities to taxable
instruments, such as Treasury securities. This portfolio structure continued to
pursue a competitive yield over time.
1 The CPI is a measure of change in consumer prices, as determined by a monthly
survey of the U.S. Bureau of Labor Statistics.
The 7-day net yield for the fund's shares on April 30, 1999, was 3.27%, 2
compared to 2.91%2 at the beginning of the reporting period, with the increase
in yield coming at the end of the reporting period due in large part to
technical factors relating to tax payment season. The latest yield was the
equivalent of a 5.58% taxable yield for investors in the highest federal and
state effective tax bracket.
AS WE APPROACH MID YEAR, WHAT IS YOUR OUTLOOK GOING FORWARD?
Although the Fed has adopted a tightening bias, it is not likely to raise
interest rates or take preemptive action until price or wage pressures
materialize. Accordingly, we plan to maintain a neutral average maturity range
for the fund over the near-term until further inflationary data becomes
available. In the near term, the short-term municipal market will likely reflect
technical as well as fundamental factors. In the summer months, we will likely
extend the maturity as new issuance and rollover of municipal notes occurs
during this period. As always, we will continue to watch, with great interest,
market developments in order to best serve our municipal clients.
2 Performance quoted represents past performance and is not indicative of future
results. Yields will vary. Yields quoted for money market funds most closely
reflect the fund's current earnings.
Portfolio of Investments
APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
SHORT-TERM MUNICIPALS-99.6% 1
ALABAMA-98.1%
$ 5,000,000 Alabama HFA, Multi Family Revenue Bonds
(Series 1997) Weekly VRDNs (YW Housing
Partners, Ltd. Project)/(Amsouth Bank
N.A., Birmingham LOC) $ 5,000,000
9,830,000 Alabama HFA, Variable Rate Certificates
(Series 1997J) Weekly VRDNs (GNMA
COL)/(Bank of America NT and SA, San
Francisco LIQ) 9,830,000
11,005,000 2 Alabama State Docks Department, PT-208,
3.70% TOBs (MBIA INS)/(Bayerische
Hypotheken-und Vereinsbank AG LIQ),
Optional Tender 6/10/1999 11,005,000
1,320,000 Alabama State IDA Weekly VRDNs (Sunshine
Homes, Inc.)/(Amsouth Bank N.A.,
Birmingham LOC) 1,320,000
4,755,000 Alabama State IDA, IDRB (Series 1994)
Weekly VRDNs (Decatur Aluminum
Corp.)/(Firstar Bank, N.A., Cincinnati
LOC) 4,755,000
3,250,000 Alabama State IDA, IDRBs (Series 1996)
Weekly VRDNs (IMI Cash Valve
Project)/(Regions Bank, Alabama LOC) 3,250,000
3,350,000 Alabama State IDA, IRBs Weekly VRDNs
(Kappler USA, Inc. Project)/(SouthTrust
Bank of Alabama, Birmingham LOC) 3,350,000
3,435,000 Alabama State IDA, Revenue Bonds Weekly
VRDNs (Southern Bag Corporation,
Ltd.)/(SouthTrust Bank of Alabama,
Birmingham LOC) 3,435,000
1,500,000 Alabama State, 6.00% Bonds, 3/1/2000 1,536,031
3,650,000 Arab, AL IDB, (Series 1989) Weekly VRDNs
(SCI Manufacturing, Inc.)/(Bank of
Tokyo-Mitsubishi Ltd. LOC) 3,650,000
1,100,000 Arab, AL IDB, Revenue Refunding Bonds
(Series 1989) Weekly VRDNs
(SCI Manufacturing, Inc.)/(Bank of
Tokyo-Mitsubishi Ltd. LOC) 1,100,000
1,475,000 Ashland, AL IDB, (Series 1996) Weekly
VRDNs (Tru-Wood Cabinets)/(Regions Bank,
Alabama LOC) 1,475,000
2,000,000 Birmingham, AL IDA Weekly VRDNs (Altec Industries,
Inc.)/(Wachovia Bank of NC,
N.A., Winston-Salem LOC) 2,000,000
3,000,000 Birmingham, AL IDA, (Series 1997) Weekly
VRDNs (Millcraft, AL, Inc.)/(Regions
Bank, Alabama LOC) 3,000,000
2,825,000 Birmingham, AL IDA, IDRB (Series 1997)
Weekly VRDNs (J. J. & W, IV,
Ltd.)/(Svenska Handelsbanken, Stockholm
LOC) 2,825,000
1,600,000 Birmingham, AL IDA, IDRB (Series 1999) Weekly VRDNs (Glasforms,
Inc.)/(Comerica
Bank, N.A., California LOC) 1,600,000
4,745,000 Birmingham, AL IDA, Revenue Bonds
(Series 1989) Weekly VRDNs (O'Neal
Steel, Inc.)/(SouthTrust Bank of
Alabama, Birmingham LOC) 4,745,000
2,165,000 Birmingham, AL IDA, Revenue Bonds
(Series 1996) Weekly VRDNs (American
FireLog Corp.)/(Comerica Bank, Detroit,
MI LOC) 2,165,000
650,000 Calhoun County, AL Economic Development
Council Weekly VRDNs (Food Ingredients
Tech. Co.)/(Nationsbank, N.A., Charlotte
LOC) 650,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
SHORT-TERM MUNICIPALS-continued 1
ALABAMA-CONTINUED
$ 2,850,000 Calhoun County, AL Economic Development
Council, Variable/Fixed Rate IDRBs
Weekly VRDNs (Fabarc Steel Co.)/(Regions
Bank, Alabama LOC) $ 2,850,000
1,600,000 Cullman, AL IDB, IRB (Series 1992)
Weekly VRDNs (Pressac Holdings PLC)/(NBD
Bank, Michigan LOC) 1,600,000
950,000 Cullman, AL IDB, (Series 1989) Weekly VRDNs (Pressac,
Inc.)/(NBD Bank,
Michigan LOC) 950,000
2,795,000 Cullman, AL IDB, Variable/Fixed Rate
IDRB Weekly VRDNs (National Bedding
Co.)/(Bank of America, IL LOC) 2,795,000
1,045,000 DCH Health Care Authority, Health Care
Facilities, 4.50% Bonds (MBIA INS),
6/1/1999 1,046,224
1,600,000 Dothan, AL IDB, Adjustable/Fixed Rate IRB (Series 1997) Weekly
VRDNs (Henderson Steel Erectors)/(Regions
Bank, Alabama LOC) 1,600,000
5,175,000 Fairfield, AL IDA, Variable Rate
Environmental Improvement Revenue Bonds (Series 1995), 3.00%
TOBs (USX Corp.)/(Wachovia Bank of NC, N.A., Winston-Salem
LOC), Optional Tender
6/1/1999 5,175,000
1,255,000 Fort Payne, AL IDB, IDRB Weekly VRDNs
(Ovalstrapping, Inc.)/(U.S. Bank, N.A.,
Minneapolis LOC) 1,255,000
7,400,000 Gadsen, AL IDB, IDRB (Series 1997)
Weekly VRDNs (Chicago Steel, (Alabama),
L.L.C)/(Marshall & Ilsley Bank,
Milwaukee LOC) 7,400,000
4,875,000 Geneva County, AL IDB, Adjustable Fixed
Rate IDRB (Series 1996) Weekly VRDNs
(Brooks AG Co., Inc.)/(Regions Bank,
Alabama LOC) 4,875,000
4,000,000 Guntersville, AL IDB, (Series 1995)
Weekly VRDNs (Hercules Rubber Co.
Project)/(SouthTrust Bank of Alabama,
Birmingham LOC) 4,000,000
3,075,000 Hamilton, AL IDB, Variable/Fixed Rate
IDRB Weekly VRDNs (Tennessee River,
Inc.)/(SouthTrust Bank of Alabama,
Birmingham LOC) 3,075,000
7,000,000 Hoover, AL Board of Education, Warrant
Anticipation Notes (Series 1999), 3.20%
BANs, 8/2/1999 7,000,000
2,180,000 Hoover, AL IDA Weekly VRDNs (Bud's Best Cookies,
Inc.)/(SouthTrust Bank of
Alabama, Birmingham LOC) 2,180,000
2,375,000 Huntsville, AL IDA Weekly VRDNs (Giles &
Kendall, Inc.)/(SouthTrust Bank of
Alabama, Birmingham LOC) 2,375,000
175,000 Huntsville, AL IDA Weekly VRDNs (Parkway
Project (Huntsville, AL))/(Regions Bank,
Alabama LOC) 175,000
1,185,000 Huntsville, AL, Warrants (Series A),
3.10% Bonds, 11/1/1999 1,185,000
2,290,000 Huntsville, AL, Warrants (Series B),
3.10% Bonds, 11/1/1999 2,290,000
930,000 Huntsville, AL, Warrants (Series D),
3.10% Bonds, 11/1/1999 930,000
8,000,000 Jefferson County, AL, (Series A), 3.45%
Bonds (Bayerische Landesbank
Girozentrale LOC), 10/1/1999 8,000,000
2,800,000 Lowndes County, AL IDB, (Series 1996)
Weekly VRDNs (Warren Oil Company
Project)/(First Union National Bank,
Charlotte, N.C. LOC) 2,800,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
SHORT-TERM MUNICIPALS-continued 1
ALABAMA-CONTINUED
$ 1,620,000 Marshall County, AL, Special Obligation
School Refunding Warrant (Series 1994)
Weekly VRDNs (Marshall County, AL Board
of Education)/(Regions Bank,
Alabama LOC) $ 1,620,000
2,360,000 Mobile, AL Downtown Redevelopment
Authority, (Series 1992) Weekly VRDNs
(Mitchell Project)/(SunTrust Bank,
Atlanta LOC) 2,360,000
2,000,000 Mobile, AL IDB Weekly VRDNs (American
Aero Crane)/(National Bank of Canada,
Montreal LOC) 2,000,000
3,000,000 Mobile, AL IDB, (1994 Series A), 3.90%
TOBs (International Paper Co.), Optional
Tender 6/1/1999 3,000,000
490,000 Mobile, AL, GO Warrants, 4.85% Bonds,
8/15/1999 492,056
3,000,000 Montgomery-Wynlakes Governmental Utility
Services Corp., Bonds (Series 1995-A)
Weekly VRDNs (Vaughn Road, L.L.C.,
Project)/(Amsouth Bank N.A., Birmingham
LOC) 3,000,000
2,435,000 Montgomery, AL IDB, (Series 1990-A)
Weekly VRDNs (Industrial
Partners)/(Wachovia Bank of NC, N.A.,
Winston-Salem LOC) 2,435,000
3,000,000 Montgomery, AL IDB, IDRBs (Series 1996)
Weekly VRDNs (CSC Fabrication, Inc.
Project)/(First Union National Bank,
Charlotte, N.C. LOC) 3,000,000
3,650,000 Montgomery, AL IDB, IDRBs (Series 1996A)
Weekly VRDNs (Jobs Co., L.L.C.
Project)/(Columbus Bank and Trust Co.,
GA LOC) 3,650,000
4,000,000 Perry County, AL IDB, Revenue Bonds
(Series 1998) Weekly VRDNs (Alabama
Catfish Feedmill, L.L.C.)/(Regions Bank,
Alabama LOC) 4,000,000
2,890,000 Phoenix City, AL, (Series 1998) Weekly
VRDNs (Kudzu, L.L.C)/(SunTrust Bank,
Atlanta LOC) 2,890,000
3,100,000 Piedmont, AL IDB Weekly VRDNs (Bostrom
Seating, Inc.)/(Chase Manhattan Bank
(USA) N.A., Wilmington LOC) 3,100,000
760,000 Piedmont, AL IDB Weekly VRDNs
(Industrial Partners)/(Wachovia Bank of
NC, N.A., Winston-Salem LOC) 760,000
3,415,000 Prattville, AL IDB, IDR Bonds Weekly
VRDNs (Kuhnash Properties/Arkay Plastics
Project)/(PNC Bank, N.A. LOC) 3,415,000
2,250,000 Scottsboro, AL IDB, (Series 1994) Weekly
VRDNs (Maples Industries, Inc.)/(Amsouth
Bank N.A., Birmingham LOC) 2,250,000
750,000 Scottsboro, AL IDB, IDRB (Series 1991)
Weekly VRDNs (Maples Industries,
Inc.)/(Amsouth Bank N.A., Birmingham
LOC) 750,000
5,000,000 Selma, AL IDB, Annual Tender PCR
Refunding Bonds (1993 Series B), 3.95%
TOBs (International Paper Co.), Optional
Tender 7/15/1999 5,000,000
1,560,000 Shelby County, AL Board of Education,
4.375% Bonds (AMBAC INS), 2/1/2000 1,573,409
900,000 Sumter County, AL IDA, Industrial
Revenue Bonds (Series 1995B) Weekly
VRDNs (Canal Chip Project)/(Regions
Bank, Alabama LOC) 900,000
2,470,000 Tallassee, AL IDB, (Series 1998) Weekly
VRDNs (Milstead Farm Group,
Inc.)/(Regions Bank, Alabama LOC) 2,470,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
SHORT-TERM MUNICIPALS-continued 1
ALABAMA-CONTINUED
$ 2,500,000 Troy, AL IDB, (Series 1997A) Weekly
VRDNs (Hudson Cos.)/(Amsouth Bank N.A.,
Birmingham LOC) $ 2,500,000
3,000,000 Troy, AL IDB, IRB (Series 1996A) Weekly
VRDNs (Hudson Sauces & Dressings,
Inc.)/(Amsouth Bank N.A., Birmingham
LOC) 3,000,000
1,245,000 Tuscaloosa County, AL Port Authority,
(Series 1989A) Weekly VRDNs (Capstone
Hotel Ltd.)/(SouthTrust Bank of Alabama,
Birmingham LOC) 1,245,000
2,000,000 Tuskegee, AL IDB, IDRB (Series 1995)
Weekly VRDNs (Concrete Company
(The))/(Columbus Bank and Trust Co., GA
LOC) 2,000,000
2,080,000 Vincent, AL IDB, (Series 1993) Weekly
VRDNs (Ebsco Industries, Inc.)/(National
Australia Bank, Ltd., Melbourne LOC) 2,080,000
3,060,000 Wetumpka, AL IDB, (Series 1997) Weekly
VRDNs (US Fabtec L.L.C.)/(Bank of Tokyo-
Mitsubishi Ltd. LOC) 3,060,000
TOTAL 192,797,720
PUERTO RICO-1.5%
2,000,000 Puerto Rico Industrial, Medical &
Environmental PCA, (Series 1983A), 2.90%
TOBs (Merck & Co., Inc.), Optional
Tender 12/1/1999 2,000,000
1,000,000 Puerto Rico Industrial, Medical &
Environmental PCA, (Series 1983A), 3.60% TOBs (Reynolds Metals
Co.)/(ABN AMRO Bank N.V., Amsterdam LOC), Optional
Tender 9/1/1999 1,000,000
TOTAL 3,000,000
TOTAL INVESTMENTS (AT AMORTIZED COST) 3 $ 195,797,720
</TABLE>
Securities that are subject to Alternative Minimum Tax represent 69.9% of the
portfolio based upon total portfolio market value.
1 The fund may only invest in securities rated in one of the two highest
short-term rating categories by nationally recognized statistical rating
organizations ("NRSROs") or unrated securities of comparable quality. An NRSRO's
two highest rating categories are determined without regard for sub-categories
and gradations. For example, securities rated SP-1+, SP-1 or SP-2 by Standard &
Poor's, MIG-1 or MIG-2 by Moody's Investors Service, Inc., F-1+, F-1 or F-2 by
Fitch IBCA, Inc. are all considered rated in one of the two highest short-term
rating categories.
Securities rated in the highest short-term rating category (and unrated
securities of comparable quality) are identified as First Tier securities.
Securities rated in the second highest short-term rating category (and unrated
securities of comparable quality) are identified as Second Tier securities. The
fund follows applicable regulations in determining whether a security is rated
and whether a security rated by multiple NRSROs in different rating categories
should be identified as a First or Second Tier security.
At April 30, 1999, the portfolio securities were rated as follows:
Tier Rating Based on Total Market Value
<TABLE>
<CAPTION>
FIRST TIER SECOND TIER
<S> <C>
95.9% 4.1%
</TABLE>
2 Denotes a restricted security which is subject to restrictions on resale under
Federal Securities laws. These securities have been deemed liquid based upon
criteria approved by the fund's Board of Trustees. At April 30, 1999, these
securities amounted to $11,005,000, which represents 5.6% of net assets.
3 Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($196,534,305) at April 30, 1999.
The following acronyms are used throughout this portfolio:
AMBAC -American Municipal Bond Assurance Corporation BANs -Bond Anticipation
Notes COL -Collateralized GNMA -Government National Mortgage Association GO
- -General Obligation HFA -Housing Finance Authority IDA -Industrial Development
Authority IDB -Industrial Development Bond IDR -Industrial Development Revenue
IDRB(s) -Industrial Development Revenue Bond(s) INS -Insured IRB(s) -Industrial
Revenue Bond(s) LIQ -Liquidity Agreement LOC -Letter of Credit MBIA -Municipal
Bond Investors Assurance PCA -Pollution Control Authority PCR -Pollution Control
Revenue TOBs -Tender Option Bonds VRDNs -Variable Rate Demand Notes
See Notes which are an integral part of the Financial Statements
Statement of Assets and Liabilities
APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Total investments in securities, at
amortized cost and value $ 195,797,720
Cash 376,365
Income receivable 916,978
TOTAL ASSETS 197,091,063
LIABILITIES:
Income distribution payable $ 512,838
Accrued expenses 43,920
TOTAL LIABILITIES 556,758
Net assets for 196,534,305 shares
outstanding $ 196,534,305
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PROCEEDS PER SHARE:
$196,534,305 / 196,534,305 shares
outstanding $1.00
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Operations
SIX MONTHS ENDED APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 3,338,470
EXPENSES:
Investment advisory fee $ 490,462
Administrative personnel and services fee 73,962
Custodian fees 6,495
Transfer and dividend disbursing agent
fees and expenses 20,600
Directors'/Trustees' fees 1,233
Auditing fees 6,049
Legal fees 7,496
Portfolio accounting fees 24,392
Shareholder services fee 245,231
Share registration costs 7,643
Printing and postage 10,614
Insurance premiums 10,126
Miscellaneous 3,761
TOTAL EXPENSES 908,064
WAIVERS:
Waiver of investment advisory fee $ (354,430)
Waiver of shareholder services fee (9,809)
TOTAL WAIVERS (364,239)
Net expenses 543,825
Net investment income $ 2,794,645
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR
(unaudited) ENDED
APRIL 30, OCTOBER 31,
1999 1998
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income $ 2,794,645 $ 6,019,791
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income (2,794,645) (6,019,791)
SHARE TRANSACTIONS:
Proceeds from sale of shares 250,378,357 436,920,174
Net asset value of shares issued to
shareholders in payment of
distributions declared 1,173,562 3,252,776
Cost of shares redeemed (244,842,223) (473,995,552)
CHANGE IN NET ASSETS RESULTING FROM
SHARE TRANSACTIONS 6,709,696 (33,822,602)
Change in net assets 6,709,696 (33,822,602)
NET ASSETS:
Beginning of period 189,824,609 223,647,211
End of period $ 196,534,305 $ 189,824,609
</TABLE>
See Notes which are an integral part of the Financial Statements
Financial Highlights
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(unaudited)
APRIL 30, YEAR ENDED OCTOBER 31,
1999 1998 1997 1996 1995 1994 1
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.01 0.03 0.03 0.03 0.04 0.02
LESS DISTRIBUTIONS:
Distributions from net investment income (0.01) (0.03) (0.03) (0.03) (0.04) (0.02)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN 2 1.41% 3.24% 3.26% 3.22% 3.66% 2.31%
RATIOS TO AVERAGE NET ASSETS:
Expenses 0.55% 3 0.55% 0.55% 0.55% 0.48% 0.36% 3
Net investment income 2.85% 3 3.19% 3.21% 3.18% 3.59% 2.67% 3
Expenses 4 0.92% 3 0.92% 0.91% 0.92% 0.92% 0.98% 3
Net investment income 4 2.48% 3 2.82% 2.85% 2.81% 3.15% 2.05% 3
SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $196,534 $189,825 $223,647 $233,720 $209,490 $142,804
</TABLE>
1 Reflects operations for the period from December 3, 1993 (date of initial
public investment) to October 31, 1994. For the period November 29, 1993 (start
of business) to December 3, 1993 the fund had no investment activity.
2 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
3 Computed on an annualized basis.
4 During the period, certain fees were voluntarily waived. If such voluntary
waivers had not occurred, the ratios would have been as indicated.
See Notes which are an integral part of the Financial Statements
Notes to Financial Statements
APRIL 30, 1999 (UNAUDITED)
ORGANIZATION
Federated Municipal Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "Act") as an open-end, management
investment company. The Trust consists of 17 portfolios. The financial
statements included herein are only those of Alabama Municipal Cash Trust (the
"Fund"). The financial statements of the other portfolios are presented
separately. The assets of each portfolio are segregated and a shareholder's
interest is limited to the portfolio in which shares are held. The investment
objective of the Fund is to provide current income exempt from federal regular
income tax and the income tax imposed by the State of Alabama consistent with
stability of principal.
SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS
The Fund uses the amortized cost method to value its portfolio securities in
accordance with Rule 2a-7 under the Act.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS
Interest income and expenses are accrued daily. Bond premium and discount, if
applicable, are amortized as required by the Internal Revenue Code, as amended
(the "Code"). Distributions to shareholders are recorded on the ex- dividend
date.
FEDERAL TAXES
It is the Fund's policy to comply with the provisions of the Code applicable to
regulated investment companies and to distribute to shareholders each year
substantially all of its income. Accordingly, no provisions for federal tax are
necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Fund may engage in when-issued or delayed delivery transactions. The Fund
records when-issued securities on the trade date and maintains security
positions such that sufficient liquid assets will be available to make payment
for the securities purchased. Securities purchased on a when- issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
RESTRICTED SECURITIES
Restricted securities are securities that may only be resold upon registration
under federal securities laws or in transactions exempt from such registration.
Many restricted securities may be resold in the secondary market in transactions
exempt from registration. In some cases, the restricted securities may be resold
without registration upon exercise of a demand feature. Such restricted
securities may be determined to be liquid under criteria established by the
Board of Trustees (the "Trustees"). The Fund will not incur any registration
costs upon such resales. Restricted securities are valued at amortized cost in
accordance with Rule 2a-7 under the Act.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts of assets, liabilities, expenses and revenues reported in the
financial statements. Actual results could differ from those estimated.
OTHER
Investment transactions are accounted for on the trade date.
SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value). At April
30, 1999, capital paid-in aggregated $196,534,305. Transactions in shares were
as follows:
<TABLE>
<CAPTION>
SIX MONTHS YEAR
ENDED ENDED
APRIL 30, OCTOBER 31,
1999 1998
<S> <C> <C>
Shares sold 250,378,357 436,920,174
Shares issued to shareholders in payment
of distributions declared 1,173,562 3,252,776
Shares redeemed (244,842,223) (473,995,552)
NET CHANGE RESULTING FROM SHARE
TRANSACTIONS 6,709,696 (33,822,602)
</TABLE>
INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE
Federated Investment Management Company, the Fund's investment adviser (the
"Adviser"), receives for its services an annual investment advisory fee equal to
0.50% of the Fund's average daily net assets. The Adviser may voluntarily choose
to waive any portion of its fee. The Adviser can modify or terminate this
voluntary waiver at any time at its sole discretion.
ADMINISTRATIVE FEE
Federated Services Company ("FServ"), under the Administrative Services
Agreement, provides the Fund with administrative personnel and services. The fee
paid to FServ is based on the level of average aggregate daily net assets of all
funds advised by subsidiaries of Federated Investors, Inc. for the period. The
administrative fee received during the period of the Administrative Services
Agreement shall be at least $125,000 per portfolio and $30,000 per each
additional class of shares.
SHAREHOLDER SERVICES FEE
Under the terms of a Shareholder Services Agreement with Federated Shareholder
Services Company ("FSSC"), the Fund will pay FSSC up to 0.25% of average daily
net assets of the Fund for the period. The fee paid to FSSC is used to finance
certain services for shareholders and to maintain shareholder accounts. FSSC may
voluntarily choose to waive any portion of its fee. FSSC can modify or terminate
this voluntary waiver at any time at its sole discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES
FServ, through its subsidiary FSSC, serves as transfer and dividend disbursing
agent for the Fund. The fee paid to FSSC is based on the size, type and number
of accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES
FServ maintains the Fund's accounting records for which it receives a fee. The
fee is based on the level of the Fund's average daily net assets for the period,
plus out-of-pocket expenses.
INTERFUND TRANSACTIONS
During the period ended April 30, 1999, the Fund engaged in purchase and sale
transactions with funds that have a common investment adviser (or affiliated
investment advisers), common Directors/Trustees, and/or common Officers. These
purchase and sale transactions were made at current market value pursuant to
Rule 17a-7 under the Act amounting to $198,755,508 and $176,595,000,
respectively.
GENERAL
Certain of the Officers and Trustees of the Trust are Officers and Directors or
Trustees of the above companies.
CONCENTRATION OF CREDIT RISK
Since the Fund invests a substantial portion of its assets in issuers located in
one state, it will be more susceptible to factors adversely affecting issuers of
that state than would be a comparable tax-exempt mutual fund that invests
nationally. In order to reduce the credit risk associated with such factors, at
April 30, 1999, 88.0% of the securities in the portfolio of investments are
backed by letters of credit or bond insurance of various financial institutions
and financial guaranty assurance agencies. The percentage of investments insured
by or supported (backed) by a letter of credit from any one institution or
agency did not exceed 13.3% of total investments.
YEAR 2000
Similar to other financial organizations, the Fund could be adversely affected
if the computer systems used by the Fund's service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. The Fund's Adviser and administrator are taking measures that they
believe are reasonably designed to address the Year 2000 issue with respect to
computer systems that they use and to obtain reasonable assurances that
comparable steps are being taken by each of the Fund's other service providers.
At this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact to the Fund.
Trustees
JOHN F. DONAHUE
THOMAS G. BIGLEY
JOHN T. CONROY, JR.
JOHN F. CUNNINGHAM
LAWRENCE D. ELLIS, M.D.
PETER E. MADDEN
CHARLES F. MANSFIELD, JR.
JOHN E. MURRAY, JR., J.D., S.J.D.
MARJORIE P. SMUTS
JOHN S. WALSH
Officers
JOHN F. DONAHUE
Chairman
GLEN R. JOHNSON
President
J. CHRISTOPHER DONAHUE
Executive Vice President
EDWARD C. GONZALES
Executive Vice President
JOHN W. MCGONIGLE
Executive Vice President and Secretary
RICHARD B. FISHER
Vice President
RICHARD J. THOMAS
Treasurer
ANTHONY R. BOSCH
Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment
risk, including the possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the fund's prospectus which contains facts concerning
its objective and policies, management fees, expenses, and other information.
[Graphic]
Federated
World-Class Investment Manager
SEMI-ANNUAL REPORT
Alabama Municipal Cash Trust
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
APRIL 30, 1999
[Graphic]
Federated
Alabama Municipal Cash Trust
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
1-800-341-7400
WWW.FEDERATEDINVESTORS.COM
Federated Securities Corp., Distributor
Cusip 314229790
G01120-01 (6/99)
[Graphic]
SEMI-ANNUAL REPORT
President's Message
Dear Shareholder:
I am pleased to present the Semi-Annual Report to Shareholders of Arizona
Municipal Cash Trust, a portfolio of Federated Municipal Trust, which covers the
six-month period from November 1, 1998 through April 30, 1999. The report begins
with a discussion with the fund's portfolio manager, followed by a complete
listing of the fund's holdings and its financial statements.
The fund is a convenient way to keep your ready cash pursuing double tax-free
income-free from federal regular income tax and Arizona income tax 1- through a
portfolio concentrated in high-quality, short-term Arizona municipal securities.
At the end of the reporting period, the fund's holdings were diversified among
issuers that use municipal bond financing for projects as varied as health care,
housing, community development and transportation.
This double tax-free advantage means you have the opportunity to earn a greater
after-tax yield than you could in a comparable high-quality taxable investment.
Of course, the fund also brings you the added benefits of daily liquidity and
stability of principal. 2
During the reporting period, the fund paid double tax-free dividends totaling
$0.01 per share. The fund's net assets totaled $28.5 million at the end of the
reporting period.
Thank you for relying on Arizona Municipal Cash Trust to help your ready cash
pursue tax-free income every day. As always, we will continue to provide you
with the highest level of professional service. We invite your questions or
comments.
Sincerely,
[Graphic]
Glen R. Johnson
President
June 15, 1999
1 Income may be subject to the federal alternative minimum tax.
2 An investment in money market funds is neither insured nor guaranteed by the
Federal Deposit Insurance Corporation or any other government agency. Although
money market funds seek to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in the fund.
Investment Review
An interview with the fund's portfolio manager,
Michael Sirianni, Vice President, Federated Investment Management Company.
WHAT ARE YOUR COMMENTS ON THE ECONOMY AND THE INTEREST RATE ENVIRONMENT DURING
THE FUND'S SIX-MONTH REPORTING PERIOD?
The economy remained robust over the reporting period, showing continued
strength in the fourth quarter of 1998 and into the first quarter of 1999. At
the same time, overall inflationary pressures were absent in spite of impressive
performance from the economy and historically low unemployment. Throughout the
reporting period, the Federal Reserve Board (the "Fed") focused on the
inflationary pressures created by a tight labor market. The Fed adopted a
neutral bias in monetary policy at its November 1998 meeting and maintained the
policy throughout the reporting period. Shortly after the close of the reporting
period, at its May 1999 meeting, the Fed changed to a tightening bias, citing
the strong U.S. economy in conjunction with record employment levels.
In addition to economic fundamentals, short-term municipal securities were
strongly influenced by technical factors over the reporting period, notably
calendar year end and income tax payment season. Variable rate demand notes
("VRDNs") started the reporting period in the 3.00% range, but moved sharply
higher to the 4.00% level in December as an imbalance between supply and demand
occurred. Yields declined in January, as investors looked to reinvest coupon
payments and year end selling pressures eased. Yields averaged slightly over
2.80% during February and March before rising to the 3.50% range in April due to
traditional tax season selling pressures. Over the six-month reporting period,
VRDN yields averaged roughly 65% of taxable rates, making them attractive for
investors in the highest federal tax brackets.
The overall tone of the short-term municipal market was strong. Municipalities
across the country have benefited from a strong economy. This fact, coupled with
lower borrowing costs from low long-term rates, has reduced short-term issuance.
In fact, annual municipal note issuance was at its lowest level in the last
decade. Lack of supply and heavy demand have kept short-term municipals,
relative to their taxable counterparts, very expensive.
WHAT WERE YOUR STRATEGIES FOR THE FUND DURING THE REPORTING PERIOD?
At the beginning of the reporting period, the fund's average maturity was
approximately 40 days. The fund remained in a 40 to 50-day average maturity
range over the reporting period, a neutral stance, and moved within that range
according to relative value opportunities. We continued to emphasize a barbelled
structure for the portfolio, combining a significant position in 7-day VRDNs
with purchases of longer-term securities with maturities between 6 and 12
months. After an average maturity range was targeted, we attempted to maximize
performance through ongoing relative value analysis. Relative value analysis
includes the comparison of the richness or cheapness of municipal securities to
one another as well as municipal securities to taxable instruments, such as
Treasury securities. This portfolio structure continued to pursue a competitive
yield over time.
AS WE APPROACH MID-YEAR, WHAT IS YOUR OUTLOOK GOING FORWARD?
The Fed, although certain to be troubled by persistent above-trend growth in an
environment where labor markets are tight, will likely remain on hold until
later in the year. Additionally, it is positioned for the next move to be a
tightening. In the near term, the short-term municipal market will likely
reflect technical as well as fundamental factors. These supply and demand
imbalances could very well present attractive investment opportunities for the
fund. We will continue to watch, with great interest, market developments in
order to best serve our municipal clients.
Portfolio of Investments
APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
98.3% 1
ARIZONA-92.0%
$ 1,000,000 Apache County, AZ IDA, 1983
(Series A) Weekly VRDNs
(Tucson Electric Power
Co.)/(Toronto-Dominion
Bank LOC) $ 1,000,000
1,000,000 Arizona Agricultural
Improvement & Power
District, 3.15% CP (Salt
River Project,
AZ Agricultural
Improvement & Power
District), Mandatory
Tender 6/18/1999 1,000,000
1,500,000 Arizona Educational Loan
Marketing Corp., (Senior
Series), 5.75% Bonds,
9/1/1999 1,512,331
800,000 Arizona Health Facilities
Authority Weekly VRDNs
(University Physicians,
Inc.)/
(Bank One, Arizona N.A.
LOC) 800,000
1,000,000 Arizona Health Facilities
Authority, Pooled Loan
Program Revenue Bonds
(Series 1985B) Weekly
VRDNs (FGIC INS)/(Chase
Manhattan Bank N.A., New
York LIQ) 1,000,000
150,000 Arizona State Development
Authority, (Series 1998),
5.50% Bonds
(MBIA INS), 8/1/1999 150,793
1,100,000 Arizona State, (Series A),
5.55% Bonds (AMBAC INS),
5/1/1999 1,100,000
500,000 Chandler, AZ Unified
School District No. 80,
(Series E), 3.75% Bonds
(FGIC INS), 7/1/1999 500,000
500,000 Cochise County, AZ
Pollution Control Corp.,
(Pooled Series 1994A),
2.90% TOBs (Arizona
Electric Power
Cooperative, Inc.
Project)/(National Rural
Utilities Cooperative
Finance Corp. GTD),
Optional Tender 9/1/1999 500,000
321,000 Flagstaff, AZ, (Series
1999) Weekly VRDNs (Joy
Cone Company)/
(Mellon Bank N.A.,
Pittsburgh LOC) 321,000
500,000 Maricopa County, AZ
Pollution Control Corp.,
(Series 1994F) Daily VRDNs
(Arizona Public Service
Co. - Palo Verde)/(Bank of
America NT and SA, San
Francisco LOC) 500,000
350,000 Maricopa County, AZ School
District No. 45, (Series
1998B), 5.50% Bonds
(FSA INS), 7/1/1999 351,143
500,000 Maricopa County, AZ
Unified School District
No. 48, 6.00% Bonds,
7/1/1999 501,826
3,740,000 Maricopa County, AZ, IDA
(Series 1984) Weekly VRDNs
(Gannett Co., Inc.) 3,740,000
1,250,000 Maricopa County, AZ, IDA,
(Series 1999) Weekly VRDNs
(Redman Homes, Inc.)/
(PNC Bank, N.A. LOC) 1,250,000
170,000 Maricopa County, AZ, IDA,
3.05% CP (Citizens
Utilities Co.),
Mandatory Tender 6/16/1999 170,000
750,000 Maricopa County, AZ, IDA,
3.20% CP (Citizens
Utilities Co.),
Mandatory Tender 8/13/1999 750,000
1,370,000 Mesa, AZ Municipal
Development Corp., (Series
1985), 3.10% CP
(Westdeutsche Landesbank
Girozentrale LOC),
Mandatory Tender 5/14/1999 1,370,000
700,000 Mesa, AZ Municipal
Development Corp., (Series
1985), 3.20% CP
(Westdeutsche Landesbank
Girozentrale LOC),
Mandatory Tender 8/11/1999 700,000
450,000 Phoenix, AZ IDA, (Series
1997) Weekly VRDNs
(Interface Data Systems,
Inc.)/
(Bank One, Arizona N.A.
LOC) 450,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
ARIZONA-CONTINUED
$ 500,000 Phoenix, AZ IDA, (Series
1998) Weekly VRDNs
(Standard Printing
Company, Inc.)/(Bank One,
Arizona N.A. LOC) $ 500,000
2,000,000 Phoenix, AZ Street &
Highway User Revenue,
5.75% Bonds, 7/1/1999 2,008,889
1,000,000 Phoenix, AZ, (Series B),
6.00% Bonds, 7/1/1999 1,004,753
300,000 Pima County, AZ IDA Weekly
VRDNs (Tucson Electric
Power Co.)/
(Toronto-Dominion Bank
LOC) 300,000
1,250,000 Pinal County, AZ IDA, PCR
Bonds Daily VRDNs (Magma
Copper Co.)/
(National Westminster
Bank, PLC, London LOC) 1,250,000
400,000 Prescott Valley, AZ, 3.50%
Bonds (MBIA INS), 1/1/2000 400,000
150,000 Scottsdale, AZ IDA Weekly
VRDNs (Scottsdale Memorial
Hospitals)/
(AMBAC INS)/(Credit Local
de France LIQ) 150,000
425,000 Sunnyside, AZ Unified School District No.12, 4.50% Bonds (FGIC
INS),
7/1/1999 425,550
1,250,000 Yavapai, AZ IDA, (Series
1997B) Weekly VRDNs
(Yavapai Regional Medical
Center)/(FSA INS)/(Credit
Local de France LIQ) 1,250,000
1,300,000 Yuma County, AZ Airport
Authority, Inc., (Series
1997A) Weekly VRDNs
(Bank One, Arizona N.A.
LOC) 1,300,000
TOTAL 26,256,285
PUERTO RICO-6.3%
1,224,726 Commonwealth of Puerto
Rico Municipal Revenues
Collection Center, 1997A
LeaseTOPS Trust Weekly
VRDNs (ABN AMRO Bank N.V.,
Amsterdam LIQ)/
(State Street Bank and
Trust Co. LOC) 1,224,726
575,000 Puerto Rico Telephone
Authority, (Series M),
4.50% Bonds (MBIA INS),
1/1/2000 580,392
TOTAL 1,805,118
TOTAL INVESTMENTS (AT
AMORTIZED COST) 2 $ 28,061,403
</TABLE>
Securities that are subject to Alternative Minimum Tax represent 24.1% of the
portfolio as calculated based on total portfolio market value.
1 The fund may only invest in securities rated in one of the two highest
short-term rating categories by nationally recognized statistical rating
organizations ("NRSROs") or unrated securities of comparable quality. An NRSRO's
two highest rating categories are determined without regard for sub-categories
and gradations. For example, securities rated SP-1+, SP-1 or SP-2 by Standard &
Poor's, MIG-1 or MIG-2 by Moody's Investors Service, Inc., F-1+, F-1 and F-2 by
Fitch IBCA, Inc. are all considered rated in one of the two highest short-term
rating categories.
Securities rated in the highest short-term rating category (and unrated
securities of comparable quality) are identified as First Tier securities.
Securities rated in the second highest short-term rating category (and unrated
securities of comparable quality) are identified as Second Tier securities. The
fund follows applicable regulations in determining whether a security is rated
and whether a security rated by multiple NRSROs in different rating categories
should be identified as a First or Second Tier security.
At April 30, 1999, the portfolio securities were rated as follows:
Tier Rating Based on Total Market Value (Unaudited)
FIRST TIER SECOND TIER
100.00% 0.00%
2 Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($28,544,687) at April 30, 1999.
The following acronyms are used throughout this portfolio:
AMBAC -American Municipal Bond Assurance Corporation CP -Commercial Paper FGIC
- -Financial Guaranty Insurance Company FSA -Financial Security Assurance GTD
- -Guaranty IDA -Industrial Development Authority INS -Insured LIQ -Liquidity
Agreement LOC -Letter of Credit MBIA -Municipal Bond Investors Assurance PCR
- -Pollution Control Revenue TOBs -Tender Option Bonds VRDNs -Variable Rate Demand
Notes
See Notes which are an integral part of the Financial Statements
Statement of Assets and Liabilities
APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Total investments in
securities, at amortized
cost and value $ 28,061,403
Cash 275,634
Income receivable 257,722
Prepaid expenses 14,832
TOTAL ASSETS 28,609,591
LIABILITIES:
Income distribution
payable 64,904
Net assets for 28,544,687
shares outstanding $ 28,544,687
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PROCEEDS PER SHARE:
$28,544,687 / 28,544,687
shares outstanding $1.00
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Operations
SIX MONTHS ENDED APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 513,050
EXPENSES:
Investment advisory fee $ 80,531
Administrative personnel
and services fee 61,987
Custodian fees 952
Transfer and dividend
disbursing agent fees and
expenses 7,720
Directors'/Trustees' fees 700
Auditing fees 5,526
Legal fees 3,607
Portfolio accounting fees 20,342
Shareholder services fee 40,266
Share registration costs 16,621
Printing and postage 4,904
Insurance premiums 2,600
Miscellaneous 1,261
TOTAL EXPENSES 247,017
WAIVER AND REIMBURSEMENT:
Waiver of investment
advisory fee $ (80,531)
Reimbursement of other
operating expenses (73,988)
TOTAL WAIVER AND
REIMBURSEMENT (154,519)
Net expenses 92,498
Net investment income $ 420,552
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
SIX MONTHS
ENDED PERIOD
(unaudited) ENDED
APRIL 30, OCTOBER 31,
1999 1998 1
<S> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net investment income $ 420,552 $ 155,579
DISTRIBUTIONS TO
SHAREHOLDERS:
Distributions from net
investment income (420,552) (155,579)
SHARE TRANSACTIONS:
Proceeds from sale of
shares 28,435,859 46,101,572
Net asset value of shares
issued to shareholders in
payment of
distributions declared 164,408 98,402
Cost of shares redeemed (34,783,326) (11,472,228)
CHANGE IN NET ASSETS
RESULTING FROM SHARE
TRANSACTIONS (6,183,059) 34,727,746
Change in net assets (6,183,059) 34,727,746
NET ASSETS:
Beginning of period 34,727,746 -
End of period $ 28,544,687 $ 34,727,746
</TABLE>
1 Reflects operations for the period from June 10, 1998 (date of initial public
investment) to October 31, 1998.
See Notes which are an integral part of the Financial Statements
Financial Highlights
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(unaudited) PERIOD ENDED
APRIL 30, OCTOBER 31,
1999 1998 1
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.01 0.01
LESS DISTRIBUTIONS:
Distributions from net investment income (0.01) (0.01)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00
TOTAL RETURN 2 1.30% 1.28%
RATIOS TO AVERAGE NET ASSETS:
Expenses 0.57% 3 0.32% 3
Net investment income 2.61% 3 3.24% 3
Expenses 4 1.53% 3 2.53% 3
Net investment income 4 1.65% 3 1.03% 3
SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $28,545 $34,728
</TABLE>
1 Reflects operations for the period from June 10, 1998 (date of initial public
investment) to October 31, 1998.
2 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
3 Computed on an annualized basis.
4 During the period, certain fees were voluntarily waived and reimbursed. If
such voluntary waivers and reimbursements had not occurred, the ratios would
have been as indicated.
See Notes which are an integral part of the Financial Statements
Notes to Financial Statements
APRIL 30, 1999 (UNAUDITED)
ORGANIZATION
Federated Municipal Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "Act") as an open-end, management
investment company. The Trust consists of 17 portfolios. The financial
statements included herein are only those of Arizona Municipal Cash Trust (the
"Fund"). The financial statements of the other portfolios are presented
separately. The assets of each portfolio are segregated and a shareholder's
interest is limited to the portfolio in which shares are held. The investment
objective of the Fund is current income exempt from federal regular income tax
and the personal income taxes imposed by the State of Arizona consistent with
stability of principal and liquidity.
SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS
The Fund uses the amortized cost method to value its portfolio securities in
accordance with Rule 2a-7 under the Act.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS
Interest income and expenses are accrued daily. Bond premium and discount, if
applicable, are amortized as required by the Internal Revenue Code, as amended
(the "Code"). Distributions to shareholders are recorded on the ex- dividend
date.
FEDERAL TAXES
It is the Fund's policy to comply with the provisions of the Code applicable to
regulated investment companies and to distribute to shareholders each year
substantially all of its income. Accordingly, no provisions for federal tax are
necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Fund may engage in when-issued or delayed delivery transactions. The Fund
records when-issued securities on the trade date and maintains security
positions such that sufficient liquid assets will be available to make payment
for the securities purchased. Securities purchased on a when- issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts of assets, liabilities, expenses and revenues reported in the
financial statements. Actual results could differ from those estimated.
OTHER
Investment transactions are accounted for on the trade date.
SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Board of Trustees (the "Trustees") to issue
an unlimited number of full and fractional shares of beneficial interest
(without par value). At April 30, 1999, capital paid-in aggregated $28,544,687.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS PERIOD
ENDED ENDED
APRIL 30, OCTOBER 31,
1999 1998 1
<S> <C> <C>
Shares sold 28,435,859 46,101,572
Shares issued to
shareholders in payment of
distributions declared 164,408 98,402
Shares redeemed (34,783,326) (11,472,228)
NET CHANGE RESULTING FROM
SHARE TRANSACTIONS (6,183,059) 34,727,746
</TABLE>
1 Reflects operations for the period from June 10, 1998 (date of initial public
investment) to October 31, 1998.
INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE
Federated Investment Management Company, the Fund's investment adviser (the
"Adviser"), receives for its services an annual investment advisory fee equal to
0.50% of the Fund's average daily net assets. The Adviser may voluntarily choose
to waive any portion of its fee and/or reimburse certain expenses of the Fund.
The Adviser can modify or terminate this voluntary waiver and/or reimbursement
at any time at its sole discretion.
ADMINISTRATIVE FEE
Federated Services Company ("FServ"), under the Administrative Services
Agreement, provides the Fund with administrative personnel and services. The fee
paid to FServ is based on the level of average aggregate daily net assets of all
funds advised by subsidiaries of Federated Investors, Inc. for the period. The
administrative fee received during the period of the Administrative Services
Agreement shall be at least $125,000 per portfolio and $30,000 per each
additional class of shares.
SHAREHOLDER SERVICES FEE
Under the terms of a Shareholder Services Agreement with Federated Shareholder
Services Company ("FSSC"), the Fund will pay FSSC up to 0.25% of average daily
net assets of the Fund for the period. The fee paid to FSSC is used to finance
certain services for shareholders and to maintain shareholder accounts. FSSC may
voluntarily choose to waive any portion of its fee. FSSC can modify or terminate
this voluntary waiver at any time at its sole discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES
FServ, through its subsidiary FSSC, serves as transfer and dividend disbursing
agent for the Fund. The fee paid to FSSC is based on the size, type and number
of accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES
FServ maintains the Fund's accounting records for which it receives a fee. The
fee is based on the level of the Fund's average daily net assets for the period,
plus out-of-pocket expenses.
INTERFUND TRANSACTIONS
During the period ended April 30, 1999, the Fund engaged in purchase and sale
transactions with funds that have a common investment adviser (or affiliated
investment advisers), common Directors/Trustees, and/or common Officers. These
purchase and sale transactions were made at current market value pursuant to
Rule 17a-7 under the Act amounting to $28,029,000 and $44,299,000, respectively.
GENERAL
Certain of the Officers and Trustees of the Trust are Officers and Directors or
Trustees of the above companies.
CONCENTRATION OF CREDIT RISK
Since the Fund invests a substantial portion of its assets in issuers located in
one state, it will be more susceptible to factors adversely affecting issuers of
that state than would be a comparable tax-exempt mutual fund that invests
nationally. In order to reduce the credit risk associated with such factors, at
April 30, 1999, 61.9% of the securities in the portfolio of investments are
backed by letters of credit or bond insurance of various financial institutions
and financial guaranty assurance agencies. The percentage of investments insured
by or supported (backed) by a letter of credit from any one institution or
agency did not exceed 10.9% of total investments.
YEAR 2000
Similar to other financial organizations, the Fund could be adversely affected
if the computer systems used by the Fund's service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. The Fund's Adviser and administrator are taking measures that they
believe are reasonably designed to address the Year 2000 issue with respect to
computer systems that they use and to obtain reasonable assurances that
comparable steps are being taken by each of the Fund's other service providers.
At this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact to the Fund.
Trustees
JOHN F. DONAHUE
THOMAS G. BIGLEY
JOHN T. CONROY, JR.
JOHN F. CUNNINGHAM
LAWRENCE D. ELLIS, M.D.
PETER E. MADDEN
CHARLES F. MANSFIELD, JR.
JOHN E. MURRAY, JR., J.D., S.J.D.
MARJORIE P. SMUTS
JOHN S. WALSH
Officers
JOHN F. DONAHUE
Chairman
GLEN R. JOHNSON
President
J. CHRISTOPHER DONAHUE
Executive Vice President
EDWARD C. GONZALES
Executive Vice President
JOHN W. MCGONIGLE
Executive Vice President and Secretary
RICHARD B. FISHER
Vice President
RICHARD J. THOMAS
Treasurer
ANTHONY R. BOSCH
Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment
risk, including the possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the fund's prospectus which contains facts concerning
its objective and policies, management fees, expenses and other information.
[Graphic]
Federated
World-Class Investment Manager
SEMI-ANNUAL REPORT
Arizona Municipal Cash Trust
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
APRIL 30, 1999
[Graphic]
Federated
Arizona Municipal Cash Trust
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
1-800-341-7400
WWW.FEDERATEDINVESTORS.COM
Federated Securities Corp., Distributor
Cusip G02372-04
314229626 (6/99)
[Graphic]
SEMI-ANNUAL REPORT
President's Message
Dear Shareholder:
I am pleased to present the Semi-Annual Report to Shareholders of California
Municipal Cash Trust, a portfolio of Federated Municipal Trust, which covers the
six-month period from November 1, 1998 through April 30, 1999. The report begins
with a discussion with the fund's portfolio manager, followed by a complete
listing of the fund's holdings and its financial statements. Financial
highlights tables are provided for the fund's Institutional Service Shares and
Institutional Shares.
The fund is a convenient way to keep your ready cash pursuing double tax-free
income-free from federal regular income tax and California income tax 1-through
a portfolio concentrated in high-quality, short-term California municipal
securities. At the end of the reporting period, the fund's holdings were
diversified among issuers that use municipal bond financing for projects as
varied as health care, housing, community development and transportation.
This double tax-free advantage means you have the opportunity to earn a greater
after-tax yield than you could in a comparable high-quality taxable investment.
Of course, the fund also brings you the added benefits of daily liquidity and
stability of principal. 2
During the reporing period, the fund paid double tax-free dividends totaling
$0.01 per share for both Institutional Service Shares and Institutional Shares.
The fund's net assets totaled $459 million at the end of the reporting period.
Thank you for relying on California Municipal Cash Trust to help your ready cash
pursue tax-free income every day. As always, we will continue to provide you
with the highest level of professional service. We invite your questions or
comments.
Sincerely,
[Graphic]
Glen R. Johnson
President
June 15, 1999
1 Income may be subject to the federal alternative minimum tax.
2 An investment in money market funds is neither insured nor guaranteed by the
Federal Deposit Insurance Corporation or any other government agency. Although
money market funds seek to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in the fund.
Investment Review
An interview with the fund's portfolio manager,
Michael Sirianni, Vice President, Federated Investment Management Company.
WHAT ARE YOUR COMMENTS ON THE ECONOMY AND THE INTEREST RATE ENVIRONMENT DURING
THE FUND'S SIX-MONTH REPORTING PERIOD?
The economy remained robust over the reporting period, showing continued
strength in the fourth quarter of 1998 and into the first quarter of 1999. At
the same time, overall inflationary pressures were absent in spite of impressive
performance from the economy and historically low unemployment. Throughout the
reporting period, the Federal Reserve Board (the "Fed") focused on the
inflationary pressures created by a tight labor market. The Fed adopted a
neutral bias in monetary policy at its November 1998 meeting and maintained the
policy throughout the reporting period. Shortly after the close of the reporting
period, at its May 1999 meeting, the Fed changed to a tightening bias, citing
the strong U.S. economy in conjunction with record employment levels.
In addition to economic fundamentals, short-term municipal securities were
strongly influenced by technical factors over the reporting period, notably
calendar year end and income tax payment season. Variable rate demand notes
("VRDNs") started the period in the 3.00% range, but moved sharply higher to the
4.00% level in December as an imbalance between supply and demand occurred.
Yields declined in January, as investors looked to reinvest coupon payments and
year end selling pressures eased. Yields averaged slightly over 2.80% during
February and March before rising to the 3.50% range in April due to traditional
tax season selling pressures. Over the six-month reporting period, VRDN yields
averaged roughly 65% of taxable rates, making them attractive for investors in
the highest federal tax brackets.
The overall tone of the short-term municipal market was positive. Municipalities
across the country have benefited from a strong economy. This fact, coupled with
lower borrowing costs from low long-term rates, has reduced short-term issuance.
In fact, annual municipal note issuance was at its lowest level in the last
decade. Lack of supply and heavy demand have kept short-term municipals,
relative to their taxable counterparts, very expensive.
WHAT WERE YOUR STRATEGIES FOR THE FUND DURING THE REPORTING PERIOD?
At the beginning of the reporting period, the fund's average maturity was
approximately 55 days. The fund remained in a 55 to 65-day average maturity
range in 1998, but the average maturity moved lower in 1999, and was at 42 days
on April 30, 1999. A shorter average maturity left the fund well positioned to
take advantage of increased rates that could have occurred. We continued to
emphasize a barbelled structure for the portfolio, combining a significant
position in 7-day VRDNs with purchases of longer-term securities with maturities
between 6 and 12 months. After an average maturity range was targeted, we
attempted to maximize performance through ongoing relative value analysis.
Relative value analysis includes the comparison of the richness or cheapness of
municipal securities to one another as well as municipal securities to taxable
instruments, such as Treasury securities. This portfolio structure continued to
pursue a competitive yield over time.
AS WE APPROACH MID-YEAR, WHAT IS YOUR OUTLOOK GOING FORWARD?
The Fed, although certain to be troubled by persistent above-trend growth in an
environment where labor markets are tight, will likely remain on hold until
later in the year. Additionally, it is positioned for the next move to be a
tightening. In the near term, the short-term municipal market will likely
reflect technical as well as fundamental factors. These supply and demand
imbalances could very well present attractive investment opportunities for the
fund. We will continue to watch, with great interest, market developments in
order to best serve our municipal clients.
Portfolio of Investments
APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
99.2% 1
CALIFORNIA-92.5%
$ 9,200,000 ABAG Finance Authority for
Non-Profit Corporations
Weekly VRDNs
(Lucile Salter Packard
Children's Hospital at
Stanford)/(AMBAC INS)/
(Bayerische Landesbank
Girozentrale LIQ) $ 9,200,000
5,420,000 ABAG Finance Authority for
Non-Profit Corporations,
(Series 1998) Weekly VRDNs
(The Harker School
Foundation)/(U.S. Bank,
N.A., Minneapolis LOC) 5,420,000
15,705,000 ABN AMRO MuniTOPS
Certificates Trust
(California Non-AMT)
Series 1998-10 Weekly
VRDNs (San Diego, CA Water
Utility Fund)/(FGIC INS)/
(ABN AMRO Bank N.V.,
Amsterdam LIQ) 15,705,000
4,800,000 ABN AMRO MuniTOPS
Certificates Trust
(California Non-AMT)
Series 1998-17 Weekly
VRDNs (Sacramento County,
CA Airport System)/(FGIC
INS)/
(ABN AMRO Bank N.V.,
Amsterdam LIQ) 4,800,000
10,000,000 2 ABN AMRO MuniTOPS
Certificates Trust (California Non-AMT) Series 1998-25, 3.1%
TOBs (Los Angeles, CA Wastewater System)/(FGIC INS)/(ABN AMRO
Bank N.V., Amsterdam LIQ),
Optional Tender 6/2/1999 10,000,000
6,300,000 Alameda, CA Community
Facilities District, 7.75%
Bonds (United States
Treasury PRF), 9/1/1999
(@102) 6,529,787
16,500,000 2 California Community
College Financing
Authority, Trust Receipts
(Series 1998 FR/RI-A24),
3.35% TOBs (FSA INS)/(Bank
of New York, New York LIQ)
9/30/1999 16,500,000
1,785,000 2 California HFA, Home Mortgage (Series 1989F), 3.00% TOBs
(Citibank N.A., New York LIQ), Optional
Tender 8/1/1999 1,785,000
14,800,000 2 California HFA, Variable
Rate Certificates (Series 1998E), 3.25% TOBs (Bank of America
NT and SA, San Francisco LIQ),
Optional Tender 5/6/1999 14,800,000
2,500,000 California PCFA, (Series
1996 E) Daily VRDNs
(Pacific Gas & Electric
Co.)/
(Morgan Guaranty Trust
Co., New York LOC) 2,500,000
10,500,000 California PCFA, Series A
Daily VRDNs (Southern
California Edison Co.) 10,500,000
2,005,000 California State
Department of Water
Resources, (Series 1),
2.80% CP (Canadian
Imperial Bank of Commerce
and UBS AG LIQs), Mandatory
Tender 6/24/1999 2,005,000
4,800,000 California State, CDC
Municipal Products, Inc.
(Series 1996L) Weekly
VRDNs
(FGIC INS)/(CDC Municipal
Products, Inc. LIQ) 4,800,000
1,000,000 California State, Floater
Certificates (Series 1998-
55) Weekly VRDNs (FGIC
INS)/(Morgan Stanley, Dean
Witter Municipal Funding,
Inc. LIQ) 1,000,000
3,700,000 California State, GO Tax
Exempt Notes, 2.90% CP (Bank of Nova Scotia, Toronto,
Bayerische Landesbank Girozentrale, Caisse Nationale De Credit
Agricole, Paris, Commerzbank AG, Frankfurt, Credit Local de
France, Landesbank Hessen- Thueringen, Frankfurt, Morgan
Guaranty Trust Co., New York, State Street Bank and Trust Co.,
Toronto- Dominion Bank and Westdeutsche Landesbank Girozentrale
LIQs),
Mandatory Tender 6/29/1999 3,700,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
CALIFORNIA-CONTINUED
$ 7,930,000 California State, Tender
Option Certificates
(Series 1998A) Weekly
VRDNs
(MBIA INS)/(First National
Bank of Chicago LIQ) $ 7,930,000
2,800,000 California Statewide
Communities Development
Authority, (Series A)
Weekly VRDNs (Barton
Memorial Hospital)/(Banque
Nationale de Paris LOC) 2,800,000
4,000,000 Clipper, CA Tax-Exempt
Trust, (1996 Issue A)
Weekly VRDNs (California
Rural Home Mortgage
Finance Authority)/(MBIA
INS)/(State Street Bank
and Trust Co. LIQ) 4,000,000
21,330,000 2 Clipper, CA Tax-Exempt,
3.15% TOBs (California
HFA)/(MBIA INS)/
(State Street Bank and
Trust Co. LIQ), Optional
Tender 8/19/1999 21,330,000
23,000,000 Contra Costa County, CA,
Trust Receipts (1998 A-27)
Weekly VRDNs
(Bank of New York, New York
LIQ) 23,000,000
8,000,000 Cupertino, CA Union School
District, 3.90% TRANs,
6/30/1999 8,002,532
3,300,000 East Bay Municipal Utility
District, CA, 2.60% CP
(Westdeutsche Landesbank
Girozentrale LIQ),
Mandatory Tender 6/14/1999 3,300,000
4,900,000 East Bay Municipal Utility
District, CA, 3.05% CP
(Westdeutsche Landesbank
Girozentrale LIQ),
Mandatory Tender 7/22/1999 4,900,000
7,100,000 Glendale, CA, (Series
1984A) Monthly VRDNs (Reliance Development Co., Inc.)/(Barclays
Bank PLC, London LOC) 7,100,000
500,000 Golden West Schools, CA
Financing Authority,
(Series A), 4.70% Bonds
(MBIA INS), 2/1/2000 505,491
1,085,000 Golden West Schools, CA
Financing Authority,
(Series A), 5.55% Bonds
(MBIA INS), 8/1/1999 1,089,919
8,500,000 Long Beach, CA, 4.00%
TRANs, 10/5/1999 8,529,770
16,000,000 Los Angeles County, CA
Metropolitan
Transportation Authority,
2.70% CP (Bayerische
Hypotheken-und Vereinsbank
AG, Canadian Imperial Bank
of Commerce and National
Westminster Bank, PLC,
London LOCs), Mandatory
Tender 5/13/1999 16,000,000
10,000,000 Los Angeles County, CA
Metropolitan Transportation Authority, Municipal Securities
Trust Receipts (Series 1998-CMC2) Weekly VRDNs (AMBAC INS)/
(Chase Manhattan Corp.
LIQ) 10,000,000
5,750,000 Los Angeles County, CA,
(Series A), 4.50% TRANs,
6/30/1999 5,764,480
1,500,000 Los Angeles, CA Unified
School District, Floater
Certificates (Series 1998-
60) Weekly VRDNs (FGIC
INS)/(Morgan Stanley, Dean
Witter Municipal Funding,
Inc. LIQ) 1,500,000
1,075,000 Los Angeles, CA, (Series
A), 6.50% Bonds, 9/1/1999 1,087,810
32,195,000 Monterey Peninsula, CA
Water Management District,
Trust Receipts (Series
1998 FR/RI-C7) Weekly
VRDNs (Wastewater
Reclaimation)/(Bank of
America NT and SA, San
Francisco SWAP) 32,195,000
3,000,000 Moreland, CA Elementary
School District, 3.90%
TRANs, 6/30/1999 3,000,949
6,000,000 Oceanside, CA Community
Development Commission,
(Series 1985) Weekly VRDNs
(Shadow Way
Apartments)/(Bank One,
Arizona N.A. LOC) 6,000,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
CALIFORNIA-CONTINUED
$ 5,400,000 Orange County, CA Housing
Authority, (Issue I of
1998) Weekly VRDNs
(Oasis
Martinique)/(Federal
National Mortgage
Association LOC) $ 5,400,000
7,800,000 Orange County, CA IDA,
(Series 1991A) Weekly
VRDNs (Casden Lakes LP)/
(Federal Home Loan
Mortgage Corp. LOC) 7,800,000
15,000,000 Orange County, CA Local
Transportation Authority,
Sales Tax Revenue Notes,
2.80% CP (UBS AG LOC),
Mandatory Tender 6/21/1999 15,000,000
10,330,000 2 Oxnard Harbor District,
CA, (Series 1995 II), PT- 105, 3.85% TOBs (Asset Guaranty
INS)/(Credit Suisse First Boston LIQ), Mandatory
Tender 8/12/1999 10,330,000
42,144,842 PBCC LeaseTOPS Trust
(California Non-AMT)
Series 1998-1 Weekly VRDNs
(AMBAC INS)/(Pitney Bowes
Credit Corp. LIQ) 42,144,842
4,500,000 Perris, CA Union High
School District, 3.50%
TRANs, 10/26/1999 4,511,069
1,570,000 Placer County, CA Office of
Education, 4.00% TRANs,
9/21/1999 1,573,713
6,000,000 Pleasanton, CA Unified
School District, 3.90%
TRANs, 6/30/1999 6,001,899
2,400,000 Redding, CA School
District, 3.90% TRANs,
6/30/1999 2,400,760
8,000,000 Regents of University of
California, (Series A),
2.90% CP (Bank of America
NT and SA, San Francisco,
Bank of Montreal, Caisse
Nationale De Credit
Agricole, Paris, Canadian
Imperial Bank of Commerce
and Societe Generale,
Paris LIQs), Mandatory
Tender 5/13/1999 8,000,000
1,000,000 Regents of University of
California, (Series A), 2.90% CP (Bank of America NT and SA,
San Francisco, Bank of Montreal, Caisse Nationale De Credit
Agricole, Paris, Canadian Imperial Bank of Commerce and Societe
Generale, Paris LIQs), Mandatory
Tender 5/13/1999 1,000,000
3,455,000 Riverside, CA, Municipal
Securities Trust Receipts
(Series 1998-CMC5)
Weekly VRDNs (AMBAC
INS)/(Chase Manhattan
Corp. LIQ) 3,455,000
3,510,000 Roseville, CA Joint Union
High School District,
4.00% TRANs, 9/21/1999 3,518,301
850,000 Roseville, CA, Hospital
Facilities Authority,
(Series 1989A) Weekly
VRDNs (Toronto-Dominion
Bank LOC) 850,000
5,000,000 Sacramento, CA, (Series
1985B) Weekly VRDNs (Woodbridge - 301 LLC)/ (Bank One, Arizona
N.A.
LOC) 5,000,000
3,000,000 2 San Diego, CA Area Local
Governments, Trust
Receipts (Series FR/RI-
A25),
3.30% TOBs (Bank of New
York, New York LIQ),
Mandatory Tender 9/30/1999 3,000,000
4,000,000 San Francisco, CA City &
County Airport Commission, Floater Certificates (Series
1998-31) Weekly VRDNs (FGIC INS)/(Bank of America NT and SA,
San Francisco LIQ) 4,000,000
3,060,000 San Francisco, CA
Redevelopment Finance Agency, (PT-125) Weekly VRDNs (Northridge
Cooperative Homes)/(MBIA INS)/(Merrill Lynch Capital Services,
Inc.
LIQ) 3,060,000
3,880,000 San Francisco, CA
Redevelopment Finance
Agency, CDC Municipal
Products, Inc. (Series
1997T) Weekly VRDNs
(Northridge Cooperative
Homes)/(MBIA INS)/
(CDC Municipal Products,
Inc. LIQ) 3,880,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
CALIFORNIA-CONTINUED
$ 2,000,000 San Francisco, CA Unified
School District, 4.50%
TRANs, 9/22/1999 $ 2,008,445
3,250,000 Santa Barbara County, CA,
4.50% TRANs, 10/1/1999 3,270,669
6,000,000 Stanislaus County, CA
Office of Education, 4.50%
TRANs, 7/30/1999 6,012,105
230,000 Stockton, CA, (Series
1993) Weekly VRDNs (La
Quinta Inns, Inc.)/
(Nationsbank, N.A.,
Charlotte LOC) 230,000
2,895,000 Vallejo, CA Unified School
District, 7.60% Bonds
(FGIC INS), 8/1/1999 2,928,763
1,930,000 Western Placer, CA Unified
School District, 4.00%
TRANs, 9/21/1999 1,934,565
TOTAL 424,590,869
PUERTO RICO-6.7%
4,529,612 Commonwealth of Puerto
Rico Municipal Revenues
Collection Center, 1997A
LeaseTOPS Trust Weekly
VRDNs (ABN AMRO Bank N.V.,
Amsterdam LIQ)/
(State Street Bank and
Trust Co. LOC) 4,529,612
15,000,000 Commonwealth of Puerto Rico, (Series 1992A) PT- 140 Weekly
VRDNs (FSA INS)/(Commerzbank AG, Frankfurt LIQ) 15,000,000
6,500,000 Commonwealth of Puerto
Rico, (Series 1999A),
3.50% TRANs, 7/30/1999 6,510,280
3,790,000 Commonwealth of Puerto
Rico, Municipal Securities
Trust Receipts,
(Series 1998-CMC4) Weekly
VRDNs (MBIA INS)/(Chase
Manhattan Corp. LIQ) 3,790,000
1,115,000 Puerto Rico Industrial,
Medical & Environmental PCA, (1983 Series A), 2.90% TOBs (Merck
& Co., Inc.),
Optional Tender 12/1/1999 1,115,000
TOTAL 30,944,892
TOTAL INVESTMENTS (AT
AMORTIZED COST) 3 $ 455,535,761
</TABLE>
1 The fund may only invest in securities rated in one of the two highest
short-term rating categories by nationally recognized statistical rating
organizations ("NRSROs") or unrated securities of comparable quality. An NRSRO's
two highest rating categories are determined without regard for sub-categories
and gradations. For example, securities rated SP-1+, SP-1 or SP-2 by Standard &
Poor's, MIG-1 or MIG-2 by Moody's Investors Service, Inc., F-1+, F-1 and F-2 by
Fitch IBCA, Inc. are all considered rated in one of the two highest short-term
rating categories.
Securities rated in the highest short-term rating category (and unrated
securities of comparable quality) are identified as First Tier securities.
Securities rated in the second highest short-term rating category (and unrated
securities of comparable quality) are identified as Second Tier securities. The
fund follows applicable regulations in determining whether a security is rated
and whether a security rated by multiple NRSROs in different rating categories
should be identified as a First or Second Tier security.
At April 30, 1999, the portfolio securities were rated as follows:
Tier Rating Based on Total Market Value (Unaudited)
FIRST TIER SECOND TIER
100.00% 0.00%
2 Denotes a restricted security which is subject to restrictions on resale under
Federal securities laws. These securities have been deemed liquid based upon
criteria approved by the fund's Board of Trustees. At April 30, 1999, these
securities amounted to $77,745,000 which represents 16.9% of net assets.
3 Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($459,019,300) at April 30, 1999.
The following acronyms are used throughout this portfolio:
AMBAC -American Municipal Bond Assurance Corporation AMT -Alternative Minimum
Tax CP -Commercial Paper FGIC -Financial Guaranty Insurance Company FSA
- -Financial Security Assurance GO -General Obligation HFA -Housing Finance
Authority IDA -Industrial Development Authority INS -Insured LIQ(s) -Liquidity
Agreement(s) LOC(s) -Letter(s) of Credit MBIA -Municipal Bond Investors
Assurance PCA -Pollution Control Authority PCFA -Pollution Control Finance
Authority PRF -Prerefunded TOBs -Tender Option Bonds TRANs -Tax and Revenue
Anticipation Notes VRDNs -Variable Rate Demand Notes
See Notes which are an integral part of the Financial Statements
Statement of Assets and Liabilities
APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Total investments in
securities, at amortized
cost and value $ 455,535,761
Cash 39,246
Income receivable 4,531,175
TOTAL ASSETS 460,106,182
LIABILITIES:
Income distribution
payable $ 1,051,002
Accrued expenses 35,880
TOTAL LIABILITIES 1,086,882
Net assets for 459,019,300
shares outstanding $ 459,019,300
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PROCEEDS PER SHARE:
INSTITUTIONAL SERVICE
SHARES:
$402,667,233 / 402,667,233
shares outstanding $1.00
INSTITUTIONAL SHARES:
$56,352,067 / 56,352,067
shares outstanding $1.00
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Operations
SIX MONTHS ENDED APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 6,806,113
EXPENSES:
Investment advisory fee $ 1,086,367
Administrative personnel
and services fee 163,824
Custodian fees 11,142
Transfer and dividend
disbursing agent fees and
expenses 46,698
Directors'/Trustees' fees 1,507
Auditing fees 6,408
Legal fees 13,702
Portfolio accounting fees 48,957
Shareholder services fee-
Institutional Service
Shares 472,090
Shareholder services fee-
Institutional Shares 71,094
Share registration costs 17,688
Printing and postage 12,893
Insurance premiums 20,898
Miscellaneous 1,053
TOTAL EXPENSES 1,974,321
WAIVERS:
Waiver of investment
advisory fee $ (878,393)
Waiver of shareholder
services fee-Institutional
Shares (71,094)
TOTAL WAIVERS (949,487)
Net expenses 1,024,834
Net investment income $ 5,781,279
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
SIX
MONTHS
ENDED YEAR
(unaudited) ENDED
APRIL 30, OCTOBER 31,
1999 1998
<S> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net investment income $ 5,781,279 $ 10,607,951
DISTRIBUTIONS TO
SHAREHOLDERS:
Distributions from net
investment income
Institutional Service
Shares (4,967,270) (9,261,806)
Institutional Shares (814,009) (1,346,145)
CHANGE IN NET ASSETS
RESULTING FROM
DISTRIBUTIONS
TO SHAREHOLDERS (5,781,279) (10,607,951)
SHARE TRANSACTIONS:
Proceeds from sale of
shares 845,602,289 1,401,854,420
Net asset value of shares
issued to shareholders in
payment of
distributions declared 2,764,895 5,742,314
Cost of shares redeemed (794,124,266) (1,279,540,519)
CHANGE IN NET ASSETS
RESULTING FROM SHARE
TRANSACTIONS 54,242,918 128,056,215
Change in net assets 54,242,918 128,056,215
NET ASSETS:
Beginning of period 404,776,382 276,720,167
End of period $ 459,019,300 $ 404,776,382
</TABLE>
See Notes which are an integral part of the Financial Statements
Financial Highlights-Institutional Service Shares
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX
MONTHS
ENDED
(unaudited)
APRIL 30, YEAR ENDED OCTOBER 31,
1999 1998 1997 1996 1995 1994 1
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM
INVESTMENT OPERATIONS:
Net investment income 0.01 0.03 0.03 0.03 0.03 0.002
Net realized loss
on investment - - - - (0.01) -
Total from
investment operations 0.01 0.03 0.03 0.03 0.02 0.002
CAPITAL CONTRIBUTIONS: - - - - 0.01 -
LESS DISTRIBUTIONS:
Distributions from net investment income (0.01) (0.03) (0.03) (0.03) (0.03) (0.002)
NET ASSET VALUE,
END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN 2 1.31% 3.05% 3.19% 3.22% 3.37% 0.23%
RATIOS TO AVERAGE
NET ASSETS:
Expenses 0.50% 3 0.50% 0.46% 0.49% 0.59% 0.59% 3
Net investment income 2.63% 3 2.99% 3.13% 3.17% 3.33% 2.71% 3
Expenses 4 0.90% 3 0.93% 0.95% 1.11% 1.09% 1.03% 3
Net investment income 4 2.23% 3 2.56% 2.64% 2.55% 2.83% 2.27% 3
SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $402,667 $363,202 $234,764 $132,159 $96,534 $81,563
</TABLE>
1 For the one month ended October 31, 1994. The fund changed its fiscal year end
from September 30, to October 31, beginning September 30, 1994.
2 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
3 Computed on an annualized basis.
4 During the period, certain fees were voluntarily waived. If such voluntary
waivers had not occurred, the ratios would have been as indicated.
See Notes which are an integral part of the Financial Statements
Financial Highlights-Institutional Shares
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(unaudited)
APRIL 30, YEAR ENDED OCTOBER 31,
1999 1998 1997 1996 1
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.01 0.03 0.03 0.02
LESS DISTRIBUTIONS:
Distributions from net investment income (0.01) (0.03) (0.03) (0.02)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN 2 1.44% 3.31% 3.44% 2.24%
RATIOS TO AVERAGE NET ASSETS:
Expenses 0.25% 3 0.25% 0.21% 0.20% 3
Net investment income 2.86% 3 3.25% 3.45% 3.33% 3
Expenses 4 0.90% 3 0.92% 0.95% 1.10% 3
Net investment income 4 2.21% 3 2.58% 2.71% 2.43% 3
SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $56,352 $41,574 $41,956 $20,089
</TABLE>
1 Reflects operations for the period from March 4, 1996 (date of initial public
investment) to October 31, 1996.
2 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
3 Computed on an annualized basis.
4 During the period, certain fees were voluntarily waived. If such voluntary
waivers had not occurred, the ratios would have been as indicated.
See Notes which are an integral part of the Financial Statements
Notes to Financial Statements
APRIL 30, 1999 (UNAUDITED)
ORGANIZATION
Federated Municipal Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "Act") as an open-end, management
investment company. The Trust consists of 17 portfolios. The financial
statements included herein are only those of California Municipal Cash Trust
(the "Fund"). The financial statements of the other portfolios are presented
separately. The assets of each portfolio are segregated and a shareholder's
interest is limited to the portfolio in which shares are held. The Fund offers
two classes of shares: Institutional Service Shares and Institutional Shares.
The investment objective of the Fund is current income exempt from federal
regular income tax and the personal income taxes imposed by the State of
California consistent with stability of principal.
SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS
The Fund uses the amortized cost method to value its portfolio securities in
accordance with Rule 2a-7 under the Act.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS
Interest income and expenses are accrued daily. Bond premium and discount, if
applicable, are amortized as required by the Internal Revenue Code, as amended
(the "Code"). Distributions to shareholders are recorded on the ex- dividend
date.
FEDERAL TAXES
It is the Fund's policy to comply with the provisions of the Code applicable to
regulated investment companies and to distribute to shareholders each year
substantially all of its income. Accordingly, no provisions for federal tax are
necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Fund may engage in when-issued or delayed delivery transactions. The Fund
records when-issued securities on the trade date and maintains security
positions such that sufficient liquid assets will be available to make payment
for the securities purchased. Securities purchased on a when- issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
RESTRICTED SECURITIES
Restricted securities are securities that may only be resold upon registration
under federal securities laws or in transactions exempt from such registration.
Many restricted securities may be resold in the secondary market in transactions
exempt from registration. In some cases, the restricted securities may be resold
without registration upon exercise of a demand feature. Such restricted
securities may be determined to be liquid under criteria established by the
Board of Trustees (the "Trustees"). The Fund will not incur any registration
costs upon such resales. Restricted securities are valued at amortized cost in
accordance with Rule 2a-7 under the Act.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts of assets, liabilities, expenses and revenues reported in the
financial statements. Actual results could differ from those estimated.
OTHER
Investment transactions are accounted for on the trade date.
SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares. At April 30, 1999, capital paid-in aggregated $459,019,300.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS YEAR
ENDED ENDED
APRIL 30, OCTOBER 31,
1999 1998
<S> <C> <C>
INSTITUTIONAL SERVICE
SHARES:
Shares sold 720,525,062 1,284,543,045
Shares issued to
shareholders in payment of
distributions declared 2,759,409 5,730,676
Shares redeemed (683,819,425) (1,161,835,907)
NET CHANGE RESULTING FROM
INSTITUTIONAL SERVICE
SHARE TRANSACTIONS 39,465,046 128,437,814
<CAPTION>
SIX MONTHS YEAR
ENDED ENDED
APRIL 30, OCTOBER 31,
1999 1998
<S> <C> <C>
INSTITUTIONAL SHARES:
Shares sold 125,077,227 117,311,375
Shares issued to
shareholders in payment of
distributions declared 5,486 11,638
Shares redeemed (110,304,841) (117,704,612)
NET CHANGE RESULTING FROM
INSTITUTIONAL SHARE
TRANSACTIONS 14,777,872 (381,599)
NET CHANGE RESULTING FROM
SHARE TRANSACTIONS 54,242,918 128,056,215
</TABLE>
INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE
Federated Investment Management Company, the Fund's investment adviser (the
"Adviser"), receives for its services an annual investment advisory fee equal to
0.50% of the Fund's average daily net assets. The Adviser may voluntarily choose
to waive any portion of its fee. The Adviser can modify or terminate this
voluntary waiver at any time at its sole discretion.
ADMINISTRATIVE FEE
Federated Services Company ("FServ"), under the Administrative Services
Agreement, provides the Fund with administrative personnel and services. The fee
paid to FServ is based on the level of average aggregate daily net assets of all
funds advised by subsidiaries of Federated Investors, Inc. for the period. The
administrative fee received during the period of the Administrative Services
Agreement shall be at least $125,000 per portfolio and $30,000 per each
additional class of shares.
SHAREHOLDER SERVICES FEE
Under the terms of a Shareholder Services Agreement with Federated Shareholder
Services Company ("FSSC"), the Fund will pay FSSC up to 0.25% of average daily
net assets of the Fund for the period. The fee paid to FSSC is used to finance
certain services for shareholders and to maintain shareholder accounts. FSSC may
voluntarily choose to waive any portion of its fee. FSSC can modify or terminate
this voluntary waiver at any time at its sole discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES
FServ, through its subsidiary FSSC, serves as transfer and dividend disbursing
agent for the Fund. The fee paid to FSSC is based on the size, type and number
of accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES
FServ maintains the Fund's accounting records for which it receives a fee. The
fee is based on the level of the Fund's average daily net assets for the period,
plus out-of-pocket expenses.
INTERFUND TRANSACTIONS
During the period ended April 30, 1999, the Fund engaged in purchase and sale
transactions with funds that have a common investment adviser (or affiliated
investment advisers), common Directors/Trustees, and/or common Officers. These
purchase and sale transactions were made at current market value pursuant to
Rule 17a-7 under the Act amounting to $231,850,390 and $293,264,000,
respectively.
GENERAL
Certain of the Officers and Trustees of the Trust are Officers and Directors or
Trustees of the above companies.
CONCENTRATION OF CREDIT RISK
Since the Fund invests a substantial portion of its assets in issuers located in
one state, it will be more susceptible to factors adversely affecting issuers of
that state than would be a comparable tax-exempt mutual fund that invests
nationally. In order to reduce the credit risk associated with such factors, at
April 30, 1999, 60.5% of the securities in the portfolio of investments are
backed by letters of credit or bond insurance of various financial institutions
and financial guaranty assurance agencies. The percentage of investments insured
by or supported (backed) by a letter of credit from any one institution or
agency did not exceed 17.5% of total investments.
YEAR 2000
Similar to other financial organizations, the Fund could be adversely affected
if the computer systems used by the Fund's service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. The Fund's Adviser and administrator are taking measures that they
believe are reasonably designed to address the Year 2000 issue with respect to
computer systems that they use and to obtain reasonable assurances that
comparable steps are being taken by each of the Fund's other service providers.
At this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact to the Fund.
Trustees
JOHN F. DONAHUE
THOMAS G. BIGLEY
JOHN T. CONROY, JR.
JOHN F. CUNNINGHAM
LAWRENCE D. ELLIS, M.D.
PETER E. MADDEN
CHARLES F. MANSFIELD, JR.
JOHN E. MURRAY, JR., J.D., S.J.D.
MARJORIE P. SMUTS
JOHN S. WALSH
Officers
JOHN F. DONAHUE
Chairman
GLEN R. JOHNSON
President
J. CHRISTOPHER DONAHUE
Executive Vice President
EDWARD C. GONZALES
Executive Vice President
JOHN W. MCGONIGLE
Executive Vice President and Secretary
RICHARD B. FISHER
Vice President
RICHARD J. THOMAS
Treasurer
ANTHONY R. BOSCH
Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment
risk, including the possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the fund's prospectus which contains facts concerning
its objective and policies, management fees, expenses, and other information.
[Graphic]
Federated
World-Class Investment Manager
SEMI-ANNUAL REPORT
California Municipal Cash Trust
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
APRIL 30, 1999
[Graphic]
Federated
California Municipal Cash Trust
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
1-800-341-7400
WWW.FEDERATEDINVESTORS.COM
Federated Securities Corp., Distributor
Cusip 314229675
Cusip 314229766
0041609 (6/99)
[Graphic]
SEMI-ANNUAL REPORT
President's Message
Dear Shareholder:
I am pleased to present the Semi-Annual Report to Shareholders of Connecticut
Municipal Cash Trust, a portfolio of Federated Municipal Trust, which covers the
six-month period from November 1, 1998 through April 30, 1999. The report begins
with a discussion with the fund's portfolio manager, followed by a complete
listing of the fund's holdings
and its financial statements.
The fund is a convenient way to keep your ready cash pursuing double tax-free
income-free from federal regular income tax and Connecticut dividend and
interest income tax 1-through a portfolio concentrated in high-quality,
short-term Connecticut municipal securities. At the end of the reporting period,
the fund's holdings were diversified among issuers that use municipal bond
financing for projects as varied as health care, housing, community development
and transportation.
This double tax-free advantage means you have the opportunity to earn a greater
after-tax yield than you could in a comparable high-quality taxable investment.
Of course, the fund also brings you the added benefits of daily liquidity and
stability of principal. 2
During the reporting period, the fund paid double tax-free dividends totaling
$0.01 per share. The fund's net assets reached $303.7 million at the end of the
reporting period.
Thank you for relying on Connecticut Municipal Cash Trust to help your ready
cash pursue tax-free income every day. As always, we will continue to provide
you with the highest level of professional service. We invite your questions or
comments.
Sincerely,
[Graphic]
Glen R. Johnson
President
June 15, 1999
1 Income may be subject to the federal alternative minimum tax.
2 An investment in money market funds is neither insured nor guaranteed by the
Federal Deposit Insurance Corporation or any other government agency. Although
money market funds seek to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in the fund.
Investment Review
An interview with the fund's portfolio manager, Michael Sirianni, Vice
President, Federated Investment Management Company.
WHAT ARE YOUR COMMENTS ON THE ECONOMY AND THE INTEREST RATE ENVIRONMENT DURING
THE FUND'S SIX-MONTH REPORTING PERIOD?
The economy remained robust over the reporting period, showing continued
strength in the fourth quarter of 1998 and into the first quarter of 1999. At
the same time, overall inflationary pressure was absent in spite of impressive
performance from the economy and historically low unemployment. Throughout the
reporting period, the Federal Reserve Board (the "Fed") focused on inflationary
pressures created by a tight labor market. The Fed adopted a neutral bias in
monetary policy at its November 1998 meeting and maintained the policy
throughout the reporting period. Shortly after the close of the reporting
period, at its May 1999 meeting, the Fed changed to a tightening bias, citing
the strong U.S. economy in conjunction with record employment levels.
In addition to economic fundamentals, short-term municipal securities were
strongly influenced by technical factors over the reporting period, notably
calendar year end and income tax payment season. Variable rate demand notes
("VRDNs") started the reporting period in the 3.00% range, but moved sharply
higher to the 4.00% level in December as an imbalance between supply and demand
occurred. Yields declined in January, as investors looked to reinvest coupon
payments and year end selling pressures eased. Yields averaged slightly over
2.80% during February and March before rising to the 3.50% range in April due to
traditional tax season selling pressures. Over the six-month reporting period,
VRDN yields averaged roughly 65% of taxable rates, making them attractive for
investors in the highest federal tax brackets.
The overall tone of the short-term municipal market was positive. Municipalities
across the country have benefited from a strong economy. This fact, coupled with
lower borrowing costs from low long-term rates, has reduced short-term issuance.
In fact, annual municipal note issuance was at its lowest level in the last
decade. Lack of supply and heavy demand have kept short-term municipals,
relative to their taxable counterparts, very expensive.
WHAT WERE YOUR STRATEGIES FOR THE FUND DURING THE REPORTING PERIOD?
At the beginning of the reporting period, the fund's average maturity was
approximately 60 days. The fund remained in a 55 to 60-day average maturity
range over the reporting period, a neutral stance, and moved within that range
according to relative value opportunities. We continued to emphasize a barbelled
structure for the portfolio, combining a significant position in 7-day VRDNs
with purchases of longer-term securities with maturities between 6 and 12
months. After an average maturity range was targeted, we attempted to maximize
performance through ongoing relative value analysis. Relative value analysis
includes the comparison of the richness or cheapness of municipal securities to
one another as well as municipal securities to taxable instruments, such as
Treasury securities. This portfolio structure continued to pursue a competitive
yield over time.
The 7-day net yield for the fund's Institutional Service Shares on April 30,
1999 was 2.85% 1 compared to 2.63% at the beginning of the reporting period with
the increase in yield coming at the end of the reporting period due in large
part to technical factors relating to tax payment season. The latest yield was
the equivalent of a 4.94% taxable yield for investors in the highest federal and
state effective tax bracket.
AS WE APPROACH MID-YEAR, WHAT IS YOUR OUTLOOK GOING FORWARD?
The Fed, although certain to be troubled by persistent above-trend growth in an
environment where labor markets are tight, will likely remain on hold until
later in the year. Additionally, it is positioned for the next move to be a
tightening. In the near term, the short-term municipal market will likely
reflect technical as well as fundamental factors. These supply and demand
imbalances could very well present attractive investment opportunities for the
fund. We will continue to watch, with great interest, market developments in
order to best serve our municipal clients.
1 Performance quoted represents past performance and is not indicative of future
results. Yields will vary. Yields quoted for money market funds most closely
reflect the fund's current earnings.
Portfolio of Investments
APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
SHORT-TERM MUNICIPALS-99.2% 1
CONNECTICUT-82.8%
$ 1,155,000 Bridgeport, CT, UT GO,
5.25% Bonds (AMBAC INS),
9/1/1999 $ 1,163,233
1,000,000 Connecticut Development
Authority Health Care
Revenue Weekly VRDNs
(Corporation for
Independent Living)/(Chase
Manhattan Bank N.A., New
York LOC) 1,000,000
2,400,000 Connecticut Development
Authority Health Care
Revenue Weekly VRDNs
(Corporation for
Independent
Living)/(Credit Local de
France LOC) 2,400,000
2,565,000 Connecticut Development
Authority Health Care
Revenue, (Series 1999)
Weekly VRDNs (Corporation
for Independent
Living)/(Credit Local de
France LOC) 2,565,000
1,920,000 Connecticut Development
Authority Weekly VRDNs
(Banta Associates)/(HSBC
Bank USA LOC) 1,920,000
952,200 Connecticut Development
Authority Weekly VRDNs
(RSA Corp.)/(Barclays Bank
PLC, London LOC) 952,200
2,300,000 Connecticut Development
Authority, (Series 1993)
Weekly VRDNs (Rand-Whitney
Containerboard LP)/(Chase
Manhattan Bank N.A., New
York LOC) 2,300,000
10,500,000 Connecticut Development
Authority, (Series 1996A)
Weekly VRDNs (Connecticut
Light & Power Co.)/(AMBAC
INS)/(Societe Generale,
Paris LIQ) 10,500,000
2,455,000 Connecticut Development
Authority, (Series 1997)
Weekly VRDNs (Porcelen
Ltd., CT LLC)/(Firstar
Bank, N.A., Cincinnati
LOC) 2,455,000
7,200,000 Connecticut Development
Authority, (Series 1997A)
Weekly VRDNs (Bradley
Airport Hotel
Project)/(KBC
Bancassurance Holding LOC) 7,200,000
4,000,000 Connecticut Development
Authority, (Series 1998)
Weekly VRDNs (Capital
District Energy
Center)/(Fleet National
Bank, Springfield, MA LOC) 4,000,000
1,500,000 Connecticut Development
Authority, (Series 1999)
Weekly VRDNs (Pierce
Memorial Baptist Home,
Inc.)/(LaSalle National
Bank, Chicago LOC) 1,500,000
26,594,000 Connecticut Development
Authority, Trust Receipts
(Series 1998 FR/RI-C6)
Weekly VRDNs (Exeter
Energy)/(Bank of America
NT and SA, San Francisco
Swap) 26,594,000
9,000,000 Connecticut Municipal
Electric Energy
Cooperative, Power Supply
System Revenue Bonds,
(1995 Series A), 3.00% CP
(Fleet National Bank,
Springfield, MA LOC),
Mandatory Tender 7/19/1999 9,000,000
3,605,000 2 Connecticut State Airport,
Trust Receipts (Series
1998 FR/RI-A60), 3.45%
TOBs (Bradley
International
Airport)/(FGIC INS)/(Bank
of New York, New York LIQ),
Optional Tender 5/1/1999 3,605,000
3,100,000 Connecticut State HEFA,
(Series A) Weekly VRDNs
(Forman School
Issue)/(National
Westminster Bank, PLC,
London LOC) 3,100,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
SHORT-TERM MUNICIPALS-
continued 1
CONNECTICUT-CONTINUED
$ 13,200,000 Connecticut State HEFA,
(Series B) Weekly VRDNs
(Edgehill)/(Paribas, Paris
LOC) $ 13,200,000
1,800,000 Connecticut State HEFA,
(Series C) Weekly VRDNs
(Charlotte Hungerfield
Hospital)/(Bank of Boston,
Connecticut LOC) 1,800,000
11,500,000 Connecticut State HEFA,
(Series J) Weekly VRDNs
(Hospital of Saint
Raphael)/(KBC
Bancassurance Holding LOC) 11,500,000
1,900,000 Connecticut State HEFA,
(Series K) Weekly VRDNs
(Hospital of Saint
Raphael)/(KBC
Bancassurance Holding LOC) 1,900,000
1,000,000 Connecticut State HEFA,
Revenue Bonds, (Series A)
Weekly VRDNs (Pomfret
School Issue)/(Credit
Local de France LOC) 1,000,000
1,000,000 Connecticut State HEFA,
(Series A) Weekly VRDNs
(Sharon
Hospital)/(BankBoston,
N.A. LOC) 1,000,000
6,575,000 Connecticut State HEFA,
(Series S), 3.10% CP (Yale
University), Mandatory
Tender 5/18/1999 6,575,000
3,900,000 Connecticut State HFA,
(PT-81) Weekly VRDNs
(Merrill Lynch Capital
Services, Inc. LIQ) 3,900,000
1,075,000 Connecticut State HFA,
(Series 1990C), 3.00% CP
(Morgan Guaranty Trust
Co.,
New York LIQ), Mandatory
Tender 6/25/1999 1,075,000
7,025,000 Connecticut State HFA,
(Series 1990C), 3.15% CP
(Morgan Guaranty Trust
Co.,
New York LIQ), Mandatory
Tender 6/23/1999 7,025,000
3,245,000 Connecticut State HFA,
(Series 1990D), 3.15% CP
(Morgan Guaranty Trust
Co.,
New York LIQ), Mandatory
Tender 6/23/1999 3,245,000
7,315,000 Connecticut State HFA,
(Series A) Weekly VRDNs
(Elm Haven Rental LP
I)/(Fleet National Bank,
Springfield, MA LOC) 7,315,000
12,100,000 Connecticut State HFA, PT-
1003 Weekly VRDNs (Merrill
Lynch Capital
Services, Inc. LIQ) 12,100,000
2,100,000 Connecticut State HFA,
Trust Receipts (Series
1998 FR/RI-A4) Weekly
VRDNs (Bayerische
Hypotheken-und Vereinsbank
AG LIQ) 2,100,000
9,745,000 2 Connecticut State HFA,
Variable Rate Certificates (Series 1998S), 3.50% TOBs (Bank of
America NT and SA, San Francisco LIQ),
Optional Tender 8/20/1999 9,745,000
2,300,000 Connecticut State Resource
Recovery Authority, Series
A, 5.60% Bonds
(Connecticut State GTD),
11/15/1999 2,331,083
2,650,000 Connecticut State Special
Assessment Unemployment
Compensation Advance Fund,
(Series A), 4.50% Bonds
(AMBAC INS), 5/15/1999 2,651,512
2,000,000 Connecticut State
Transportation
Infrastructure Authority,
(Series B), 5.25% Bonds
(FGIC INS), 10/1/1999 2,018,466
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
SHORT-TERM MUNICIPALS-
continued 1
CONNECTICUT-CONTINUED
$ 8,130,000 Connecticut State
Transportation
Infrastructure Authority,
Floater Certificates
(Series 1998-52) Weekly
VRDNs (FSA INS)/(Morgan
Stanley, Dean Witter
Municipal Funding, Inc.
LIQ) $ 8,130,000
11,700,000 Connecticut State, Special
Assessment Second Injury
Fund, 2.95% CP (Caisse
Nationale De Credit
Agricole, Paris and Credit
Communal de Belgique,
Brussles LIQs), Mandatory
Tender 5/11/1999 11,700,000
11,000,000 Connecticut State, Special
Assessment Unemployment
Compensation Advance Fund,
Revenue Bonds (Series
1993C), 3.60% TOBs (FGIC
INS)/(FGIC LIQ), Mandatory
Tender 7/1/1999 11,000,000
8,100,000 Coventry, CT, 3.25% BANs,
12/14/1999 8,117,124
2,330,000 East Granby, CT, 3.75%
BANs, 8/12/1999 2,330,949
3,650,000 East Hartford, CT, 3.10%
BANs, 1/20/2000 3,655,109
7,900,000 East Haven, CT, 3.65% BANs,
7/15/1999 7,901,867
1,900,000 Hartford, CT Redevelopment
Authority Weekly VRDNs
(Underwood Towers)/(FSA
INS)/(Societe Generale,
Paris LIQ) 1,900,000
8,000,000 Meriden, CT, 3.00% BANs,
8/10/1999 8,002,379
1,400,000 New Haven, CT Weekly VRDNs
(Starter
Sportswear)/(Fleet Bank
N.A. LOC) 1,400,000
2,050,000 New Haven, CT, UT GO, 5.00%
Bonds (FGIC INS),
2/15/2000 2,083,449
3,335,000 Plymouth, CT, 3.75% BANs,
8/5/1999 3,336,267
1,500,000 Rocky Hill, CT, 3.50% BANs,
6/15/1999 1,500,537
1,800,000 Shelton, CT Housing
Authority, (Series 1998)
Weekly VRDNs (Crosby
Commons)/(First Union
National Bank, Charlotte,
NC LOC) 1,800,000
8,000,000 South Central CT Regional
Water Authority, 4.00%
BANs, 7/28/1999 8,007,736
TOTAL 251,600,911
PUERTO RICO-16.4%
15,697,725 Commonwealth of Puerto
Rico Municipal Revenues
Collection Center,
LeaseTOPS (Series 1997A)
Trust Weekly VRDNs (ABN
AMRO Bank N.V., Amsterdam
LIQ)/(State Street Bank
and Trust Co. LOC) 15,697,725
8,500,000 Commonwealth of Puerto
Rico, (Series 1999A),
3.50% TRANs, 7/30/1999 8,513,444
6,500,000 Commonwealth of Puerto
Rico, Floating Rate Trust
Receipts (Series 1997)
Weekly VRDNs (Commerzbank
AG, Frankfurt
LIQ)/(Commerzbank AG,
Frankfurt LOC) 6,500,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
SHORT-TERM MUNICIPALS-
continued 1
PUERTO RICO-CONTINUED
$ 7,500,000 Commonwealth of Puerto
Rico, Municipal Securities
Trust Receipts, (Series
1998-CMC4) Weekly VRDNs
(MBIA INS)/(Chase
Manhattan Corp. LIQ) $ 7,500,000
6,495,000 Puerto Rico Commonwealth
Infrastructure Financing
Authority, Floater
Certificates (Series 1998-
79) Weekly VRDNs (AMBAC
INS)/(Morgan Stanley, Dean
Witter Municipal Funding,
Inc. LIQ) 6,495,000
5,000,000 Puerto Rico Commonwealth
Infrastructure Financing
Authority, Floater
Certificates (Series 1998-
86) Weekly VRDNs (AMBAC
INS)/(Morgan Stanley, Dean
Witter Municipal Funding,
Inc. LIQ) 5,000,000
TOTAL 49,706,169
TOTAL INVESTMENTS (AT
AMORTIZED COST) 3 $ 301,307,080
</TABLE>
Securities that are subject to Alternative Minimum Tax represent 28.1% of the
portfolio as calculated based upon total portfolio market value.
1 The fund may only invest in securities rated in one of the two highest
short-term rating categories by nationally recognized statistical rating
organizations ("NRSROs") or unrated securities of comparable quality. An NRSRO's
two highest rating categories are determined without regard for sub-categories
and gradations. For example, securities rated SP-1+, SP-1 or SP-2 by Standard &
Poor's, MIG-1 or MIG-2 by Moody's Investors Service, Inc., F-1+, F-1 and F-2 by
Fitch IBCA, Inc. are all considered rated in one of the two highest short-term
rating categories.
Securities rated in the highest short-term rating category (and unrated
securities of comparable quality) are identified as First Tier securities.
Securities rated in the second highest short-term rating category (and unrated
securities of comparable quality) are identified as Second Tier securities. The
fund follows applicable regulations in determining whether a security is rated
and whether a security rated by multiple NRSROs in different rating categories
should be identified as a First or Second Tier security.
At April 30, 1999, the portfolio securities were rated as follows:
Tier Rating Percentage Based on Total Market Value (Unaudited)
<TABLE>
<CAPTION>
FIRST TIER Second Tier
<S> <C>
97.34% 2.66%
</TABLE>
2 Denotes a restricted security which is subject to restrictions on resale under
Federal securities laws. These securities have been deemed liquid based upon
criteria approved by the fund's Board of Trustees. At April 30, 1999, these
securities amounted to $13,350,000, which represents 4.4% of net assets.
3 Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($303,675,992) at April 30, 1999.
The following acronyms are used throughout this portfolio:
AMBAC -American Municipal Bond Assurance Corporation BANs -Bond Anticipation
Notes CP -Commercial Paper FGIC -Financial Guaranty Insurance Company FSA
- -Financial Security Assurance GO -General Obligation GTD -Guaranty HEFA -Health
and Education Facilities Authority HFA -Housing Finance Authority INS -Insured
LIQ -Liquidity Agreement LLC -Limited Liability Company LOC -Letter of Credit
MBIA -Municipal Bond Investors Assurance PLC -Public Limited Company SA -Support
Agreement TOBs -Tender Option Bonds TRANs -Tax and Revenue Anticipation Notes UT
- -Unlimited Tax VRDNs -Variable Rate Demand Notes
See Notes which are an integral part of the Financial Statements
Statement of Assets and Liabilities
APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Total investments in
securities, at amortized
cost and value $ 301,307,080
Cash 547,926
Income receivable 2,515,672
TOTAL ASSETS 304,370,678
LIABILITIES:
Income distribution
payable $ 662,512
Accrued expenses 32,174
TOTAL LIABILITIES 694,686
Net assets for 303,675,992
shares outstanding $ 303,675,992
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PROCEEDS PER SHARE:
$303,675,992 / 303,675,992
shares outstanding $1.00
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Operations
SIX MONTHS ENDED APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 5,429,222
EXPENSES:
Investment advisory fee $ 861,079
Administrative personnel
and services fee 129,851
Custodian fees 10,092
Transfer and dividend
disbursing agent fees and
expenses 26,630
Directors'/Trustees' fees 1,486
Auditing fees 6,167
Legal fees 8,899
Portfolio accounting fees 36,760
Shareholder services fee 430,539
Share registration costs 10,510
Printing and postage 10,935
Insurance premiums 17,572
Miscellaneous 2,251
TOTAL EXPENSES 1,552,771
WAIVERS:
Waiver of investment
advisory fee $ (322,461)
Waiver of shareholder
services fee (189,437)
TOTAL WAIVERS (511,898)
Net expenses 1,040,873
Net investment income $ 4,388,349
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR
(unaudited) ENDED
APRIL 30, OCTOBER 31,
1999 1998
<S> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net investment income $ 4,388,349 $ 9,525,808
DISTRIBUTIONS TO
SHAREHOLDERS:
Distributions from net
investment income (4,388,349) (9,525,808)
SHARE TRANSACTIONS:
Proceeds from sale of
shares 547,440,120 1,057,554,443
Net asset value of shares
issued to shareholders in
payment of
distributions declared 1,116,642 3,189,470
Cost of shares redeemed (584,447,415) (992,493,610)
CHANGE IN NET ASSETS
RESULTING FROM SHARE
TRANSACTIONS (35,890,653) 68,250,303
Change in net assets (35,890,653) 68,250,303
NET ASSETS:
Beginning of period 339,566,645 271,316,342
End of period $ 303,675,992 $ 339,566,645
</TABLE>
See Notes which are an integral part of the Financial Statements
Financial Highlights
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(unaudited)
APRIL 30, YEAR ENDED OCTOBER 31,
1999 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.01 0.03 0.03 0.03 0.03 0.02
LESS DISTRIBUTIONS:
Distributions from net investment income (0.01) (0.03) (0.03) (0.03) (0.03) (0.02)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN 1 1.27% 2.98% 3.01% 3.02% 3.31% 2.12%
RATIOS TO AVERAGE NET ASSETS:
Expenses 0.60% 2 0.60% 0.60% 0.60% 0.60% 0.59%
Net investment income 2.55% 2 2.93% 2.97% 2.97% 3.26% 2.11%
Expenses 3 0.90% 2 0.89% 0.91% 0.92% 0.90% 0.77%
Net investment income 3 2.25% 2 2.64% 2.66% 2.65% 2.96% 1.93%
SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $303,676 $339,567 $271,316 $227,089 $184,718 $190,423
</TABLE>
1 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
2 Computed on an annualized basis.
3 During the period, certain fees were voluntarily waived or reimbursed. If such
voluntary waivers or reimbursements had not occurred, the ratios would have been
as indicated.
See Notes which are an integral part of the Financial Statements
Notes to Financial Statements
APRIL 30, 1999 (UNAUDITED)
ORGANIZATION
Federated Municipal Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "Act") as an open-end, management
investment company. The Trust consists of 17 portfolios. The financial
statements included herein are only those of Connecticut Municipal Cash Trust
(the "Fund"). The financial statements of the other portfolios are presented
separately. The assets of each portfolio are segregated and a shareholder's
interest is limited to the portfolio in which shares are held.
The investment objective of the Fund is current income exempt from federal
regular income tax and Connecticut dividend and interest income tax consistent
with stability of principal.
SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS
The Fund uses the amortized cost method to value its portfolio securities in
accordance with Rule 2a-7 under the Act.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS
Interest income and expenses are accrued daily. Bond premium and discount, if
applicable, are amortized as required by the Internal Revenue Code, as amended
(the "Code"). Distributions to shareholders are recorded on the ex- dividend
date.
FEDERAL TAXES
It is the Fund's policy to comply with the provisions of the Code applicable to
regulated investment companies and to distribute to shareholders each year
substantially all of its income. Accordingly, no provisions for federal tax are
necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Fund may engage in when-issued or delayed delivery transactions. The Fund
records when-issued securities on the trade date and maintains security
positions such that sufficient liquid assets will be available to make payment
for the securities purchased. Securities purchased on a when- issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
RESTRICTED SECURITIES
Restricted securities are securities that may only be resold upon registration
under federal securities laws or in transactions exempt from such registration.
Many restricted securities may be resold in the secondary market in transactions
exempt from registration. In some cases, the restricted securities may be resold
without registration upon exercise of a demand feature. Such restricted
securities may be determined to be liquied under criteria established by the
Board of Trustees (the "Trustees"). The Fund will not incur any registration
costs upon such resales. Restricted securities are valued at amortized cost in
accordance with Rule 2a-7 under the Act.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts of assets, liabilities, expenses and revenues reported in the
financial statements. Actual results could differ from those estimated.
OTHER
Investment transactions are accounted for on the trade date.
SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value). At April
30,1999, capital paid-in aggregated $303,675,992.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS YEAR
ENDED ENDED
APRIL 30, OCTOBER 31,
1999 1998
<S> <C> <C>
Shares sold 547,440,120 1,057,554,443
Shares issued to
shareholders in payment of
distributions declared 1,116,642 3,189,470
Shares redeemed (584,447,415) (992,493,610)
NET CHANGE RESULTING FROM
SHARE TRANSACTIONS (35,890,653) 68,250,303
</TABLE>
INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE
Federated Investment Management Company, the Fund's investment adviser (the
"Adviser"), receives for its services an annual investment advisory fee equal to
0.50% of the Fund's average daily net assets. The Adviser may voluntarily choose
to waive any portion any portion of its fee. The Adviser can modify or terminate
this voluntary waiver at any time at its sole discretion.
ADMINISTRATIVE FEE
Federated Services Company ("FServ"), under the Administrative Services
Agreement, provides the Fund with administrative personnel and services. The fee
paid to FServ is based on the level of average aggregate daily net assets of all
funds advised by subsidiaries of Federated Investors, Inc. for the period. The
administrative fee received during the period of the Administrative Services
Agreement shall be at least $125,000 per portfolio and $30,000 per each
additional class of shares.
SHAREHOLDER SERVICES FEE
Under the terms of a Shareholder Services Agreement with Federated Shareholder
Services Company ("FSSC"), the Fund will pay FSSC up to 0.25% of average daily
net assets of the Fund for the period. The fee paid to FSSC is used to finance
certain services for shareholders and to maintain shareholder accounts. FSSC may
voluntarily choose to waive any portion of its fee. FSSC can modify or terminate
this voluntary waiver at any time at its sole discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES
FServ, through its subsidiary FSSC, serves as transfer and dividend disbursing
agent for the Fund. The fee paid to FSSC is based on the size, type and number
of accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES
FServ maintains the Fund's accounting records for which it receives a fee. The
fee is based on the level of the Fund's average daily net assets for the period,
plus out-of-pocket expenses.
INTERFUND TRANSACTIONS
During the period ended April 30, 1999, the Fund engaged in purchase and sale
transactions with funds that have a common investment adviser (or affiliated
investment advisors), common Directors/Trustees, and/or common Officers. These
purchase and sale transactions were made at current market value pursuant to
Rule 17a-7 under the Act amounting to $242,994,762 and $277,055,000,
respectively.
GENERAL
Certain of the Officers and/or Trustees of the Trust are Officers and Directors
or Trustees of the above companies.
CONCENTRATION OF CREDIT RISK
Since the Fund invests a substantial portion of its assets in issuers located in
one state, it will be more susceptible to factors adversely affecting issuers of
that state than would be a comparable tax-exempt mutual fund that invests
nationally. In order to reduce the credit risk associated with such factors, at
April 30, 1999, 54.6% of the securities in the portfolio of investments are
backed by letters of credit or bond insurance of various financial institutions
and financial guaranty assurance agencies. The percentage of investments insured
by or supported (backed) by a letter of credit from any one institution or
agency did not exceed 8.5% of total investments.
YEAR 2000
Similar to other financial organizations, the Fund could be adversely affected
if the computer systems used by the Fund's service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. The Fund's Adviser and administrator are taking measures that they
believe are reasonably designed to address the Year 2000 issue with respect to
computer systems that they use and to obtain reasonable assurances that
comparable steps are being taken by each of the Fund's other service providers.
At this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact to the Fund.
Trustees
JOHN F. DONAHUE
THOMAS G. BIGLEY
JOHN T. CONROY, JR.
JOHN F. CUNNINGHAM
LAWRENCE D. ELLIS, M.D.
PETER E. MADDEN
CHARLES F. MANSFIELD, JR.
JOHN E. MURRAY, JR., J.D., S.J.D.
MARJORIE P. SMUTS
JOHN S. WALSH
Officers
JOHN F. DONAHUE
Chairman
GLEN R. JOHNSON
President
J. CHRISTOPHER DONAHUE
Executive Vice President
EDWARD C. GONZALES
Executive Vice President
JOHN W. MCGONIGLE
Executive Vice President and Secretary
RICHARD B. FISHER
Vice President
RICHARD J. THOMAS
Treasurer
ANTHONY R. BOSCH
Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment
risk, including the possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the fund's prospectus which contains facts concerning
its objective and policies, management fees, expenses, and other information.
[Graphic]
Federated
World-Class Investment Manager
SEMI-ANNUAL REPORT
Connecticut Municipal Cash Trust
SEMI-ANNUAL REPORT TO SHAREHOLDERS
APRIL 30, 1999
[Graphic]
Federated
Connecticut Municipal Cash Trust
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
1-800-341-7400
WWW.FEDERATEDINVESTORS.COM
Federated Securities Corp., Distributor
Cusip 314229105
0052406 (6/99)
[Graphic]
SEMI-ANNUAL REPORT
President's Message
Dear Shareholder:
I am pleased to present the Semi-Annual Report to Shareholders of Florida
Municipal Cash Trust, a portfolio of Federated Municipal Trust, which covers the
six-month period from November 1, 1998 through April 30, 1999. The report begins
with a discussion with the fund's portfolio manager, followed by a complete
listing of the fund's holdings and its financial statements. Financial
highlights tables are provided for the fund's Institutional Shares and Cash II
Shares.
The fund is a convenient way to put your ready cash to work pursuing income free
from federal regular income tax. In addition, the fund pursues income free from
the Florida intangibles tax. 1 At the end of the reporting period, the fund's
holdings were diversified among issuers that use municipal bond financing for
projects as varied as health care, housing, community development and
transportation.
This tax-free advantage means you have the opportunity to earn a greater
after-tax yield than you could in a comparable high-quality taxable investment.
Of course, the fund also brings you the added benefits of daily liquidity and
stability of principal. 2
During the reporting period, the fund paid tax-free dividends of $0.01 per share
for both Institutional Shares and Cash II Shares. The fund's net assets totaled
$185.3 million at the end of the reporting period.
Thank you for relying on Florida Municipal Cash Trust to help your ready cash
pursue tax-free income every day. As always, we will continue to provide you
with the highest level of professional service. We invite your questions or
comments.
Sincerely,
[Graphic]
Glen R. Johnson
President
June 15, 1999
1 Income may be subject to the federal alternative minimum tax.
2 An investment in money market funds is neither insured nor guaranteed by the
Federal Deposit Insurance Corporation or any other government agency. Although
money market funds seek to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in the fund.
Investment Review
An interview with the fund's portfolio manager, Jeff A. Kozemchak, CFA, Senior
Vice President, Federated Investment Management Company.
WHAT ARE YOUR COMMENTS ON THE ECONOMY AND
THE INTEREST RATE ENVIRONMENT DURING THE FUND'S SIX-MONTH REPORTING
PERIOD?
The economy remained robust over the reporting period, showing continued
strength in the fourth quarter of 1998 and into the first quarter of 1999. At
the same time, overall inflationary pressures were absent in spite of impressive
performance from the economy and historically low unemployment. However,
sustained growth in aggregate demand continued to stretch the labor markets, and
the potential for future inflation clearly concerned the Federal Reserve Board
(the "Fed"). Over the reporting period, the Fed maintained a neutral policy
stance toward the direction of short-term interest rates (federal funds target
rate). However, April's Consumer Price Index ("CPI") 1 rate was much larger than
expected and in May, shortly after the close of the reporting period, the Fed
adopted a tightening bias, or bias for higher rates in the future. The Fed cited
the strong U.S. economy in conjunction with record employment levels, the
improvement in foreign economic prospects, and rebounding U.S. financial
markets.
In addition to economic fundamentals, short-term municipal securities were
strongly influenced by technical factors over the reporting period, notably
calendar year end and income tax payment season. Variable rate demand notes
("VRDNs") started the reporting period in the 3.00% range, but moved sharply
higher to the 4.00% level in December as an imbalance between supply and demand
occurred. Yields declined in January, as strong cash inflows from bond
maturities and coupon reinvestment occurred. The market continued to be strong
in February and March as yields trended at 3.00% or below, before rising to
4.00% in April because of traditional tax payment season pressures. Over the
six-month reporting period, VRDN yields averaged roughly 65% of taxable rates,
making them attractive for investors in the highest federal tax brackets.
The overall tone of the short-term municipal market was positive. Municipalities
across the country have benefited from a strong economy. This fact, coupled with
lower borrowing costs from low long-term rates, has reduced short-term issuance.
In fact, annual municipal note issuance was at its lowest level in the last
decade.
1 The CPI is a measure of change in consumer prices, as determined by a monthly
survey of the U.S. Bureau of Labor Statistics.
WHAT WERE YOUR STRATEGIES FOR THE FUND DURING THE REPORTING PERIOD?
The fund's average maturity at the beginning of the reporting period was 49
days, reflecting our expectation of strong year-end cash inflows. By early
January, the average maturity had fallen to only 18 days, as the fund's assets
quadrupled in December as investors used the fund to avoid Florida intangibles
taxes. At the end of the reporting period, the fund's average maturity was at 45
days, a neutral stance. This average maturity left the fund well positioned to
take advantage of increased rates that could have occurred. We continued to
emphasize a barbelled structure for the portfolio, combining a significant
position in 7-day VRDNs with purchases of longer-term securities with maturities
between 6 and 12 months. After an average maturity range was targeted, we
attempted to maximize performance through ongoing relative value analysis.
Relative value analysis includes the comparison of the richness or cheapness of
municipal securities to one another as well as municipal securities to taxable
instruments, such as Treasury securities. This portfolio structure continued to
pursue a competitive yield over time.
The 7-day net yields for the fund's Institutional Shares and Cash II Shares were
3.07% 2 and 2.81%,2 respectively, on April 30, 1999. These yields were higher
relative to the beginning of the reporting period with most of the increase in
yield coming at the end of the reporting period due in large part to technical
factors relating to tax payment season. The latest yields were the equivalent of
taxable yields of 5.08% for Institutional Shares and 4.65% for Cash II Shares
for investors in the highest federal tax bracket.
AS WE APPROACH MID-YEAR, WHAT IS YOUR OUTLOOK GOING FORWARD?
Although the Fed has adopted a tightening bias, it is not likely to raise
interest rates or take preemptive action until price or wage pressures
materialize. Accordingly, we plan to maintain a neutral average maturity range
for the fund over the near term until further inflationary data becomes
available. In the near term, the short-term municipal market will likely reflect
technical as well as fundamental factors. In the summer months, we will likely
extend the maturity as new issuance and rollover of municipal notes occurs
during this period. As always, we will continue to watch, with great interest,
market developments in order to best serve our municipal clients.
2 Performance quoted represents past performance and is not indicative of future
results. Yields will vary. Yields quoted for money market funds most closely
reflect the fund's current earnings.
Portfolio of Investments
APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-99.7% 1
ALABAMA-1.9%
$ 3,575,000 St. Clair County, AL IDB,
(Series 1993) Weekly VRDNs
(Ebsco Industries,
Inc.)/(National Australia
Bank, Ltd., Melbourne LOC) $ 3,575,000
ARKANSAS-0.9%
1,700,000 Hope, AR, Solid Waste
Disposal Revenue Bonds
(Series 1994), 4.20% CP
(Temple-Inland Forest
Products Corp.)/(Temple-
Inland, Inc. GTD),
Mandatory Tender 5/11/1999 1,700,000
FLORIDA-70.6%
550,000 Brevard County, FL,
Greywater Investments II,
Ltd. (Series 1997) Weekly
VRDNs (Greywater
Investments)/(Huntington
National Bank, Columbus,
OH LOC) 550,000
1,950,000 Brevard County, FL Weekly
VRDNs (Greywater
Investments)/(Huntington
National Bank, Columbus,
OH LOC) 1,950,000
1,000,000 Broward County, FL, IDRBs
(Series 1997) Weekly VRDNs
(Fast Real Estate
Partners, Ltd.)/(SunTrust
Bank, Central Florida LOC) 1,000,000
1,130,000 Broward County, FL, IDRBs
(Series 1993) Weekly VRDNs
(American Whirlpool
Products Corp.
Project)/(Nationsbank,
N.A., Charlotte LOC) 1,130,000
2,000,000 Dade County, FL IDA, IDRBs
(Series 1996A) Weekly
VRDNs (U.S. Holdings,
Inc.)/(First Union
National Bank, Charlotte,
NC LOC) 2,000,000
2,000,000 Escambia County, FL HFA, PT 1017 Weekly VRDNs (GNMA
COL)/(Merrill Lynch Capital Services, Inc.
LIQ) 2,000,000
1,540,000 Escambia County, FL HFA, P-
Floats PA-129 Weekly VRDNs (GNMA COL)/(Merrill Lynch Capital
Services, Inc.
LIQ) 1,540,000
4,000,000 Escambia County, FL HFA,
Variable Rate
Certificates, (Series
1997E) Weekly VRDNs (GNMA
COL)/(Bank of America NT
and SA, San Francisco LIQ) 4,000,000
50,000 Eustis Health Facilities
Authority, FL, (Series
1985) Weekly VRDNs
(Waterman Medical
Center)/(SunTrust Bank,
Central Florida LOC) 50,000
6,570,000 Florida HFA, Multifamily
Housing Revenue Bonds
(1995 Series M) Weekly
VRDNs (Bainbridge Club
Apartments Project)/(PNC
Bank, N.A. LOC) 6,570,000
4,415,000 Florida HFA, Trust
Receipts, (Series 1998
FR/RI-12) Weekly VRDNs
(MBIA INS)/(Bank of New
York, New York LIQ) 4,415,000
5,870,000 Florida Housing Finance
Corp., MERLOTs (Series
1998B) Weekly VRDNs (MBIA
INS)/(First Union National
Bank, Charlotte, NC LIQ) 5,870,000
1,375,000 Greater Orlando (FL)
Aviation Authority,
Adjustable Rate (Series
1997), 3.25% TOBs
(Signature Flight Support
Corp.)/(Bayerische
Landesbank Girozentrale
LOC), Optional Tender
6/1/1999 1,375,000
3,000,000 Greater Orlando (FL)
Aviation Authority,
Airport Facilities
Subordinated CP Notes
(Series B), 3.45% CP,
Mandatory Tender 5/20/1999 3,000,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
FLORIDA-CONTINUED
$ 4,500,000 Hillsborough County, FL
Aviation Authority, Bond
Anticipation CP Notes,
3.15% CP (Tampa
International
Airport)/(National
Westminster Bank, PLC,
London LOC), Mandatory
Tender 6/14/1999 $ 4,500,000
1,390,000 Hillsborough County, FL
IDA, IDRBs (Series 1996)
Weekly VRDNs (VIGO
Importing Company
Project)/(Nationsbank,
N.A., Charlotte LOC) 1,390,000
1,005,000 Hillsborough County, FL
IDA, Variable Rate Demand
IRDBs (Series 1996) Weekly
VRDNs (Trident Yacht
Building Partnership
Project)/(First Union
National Bank, Charlotte,
NC LOC) 1,005,000
4,100,000 Hillsborough County, FL
IDA, Variable Rate IDRBs
(Series 1998) Weekly VRDNs
(SIFCO Industries,
Inc.)/(National City Bank,
Ohio LOC) 4,100,000
4,000,000 Hillsborough County, FL
IDA Weekly VRDNs
(Ringhager Equipment
Co.)/(SunTrust Bank,
Atlanta LOC) 4,000,000
5,995,000 Hillsborough County, FL
HFA, (PT-259), 3.05% TOBs
(GNMA COL)/(Commerzbank
AG, Frankfurt LIQ),
Optional Tender 1/13/2000 5,995,000
4,080,000 Indian River County, FL,
IDRBs (Series 1997) Weekly
VRDNs (Ocean Spray
Cranberries,
Inc.)/(Wachovia Bank of
NC, N.A., Winston-Salem
LOC) 4,080,000
1,500,000 Jacksonville, FL IDA,
IDRBs (Series 1996) Weekly
VRDNs (Portion Pac,
Inc.)/(Heinz (H.J.) Co.
GTD) 1,500,000
600,000 Jacksonville, FL Weekly
VRDNs (Metal
Sales)/(National City
Bank, Kentucky LOC) 600,000
2,375,000 Lee County, FL HFA, (Series
1999A-3), 3.15% BANs,
11/15/1999 2,375,000
3,200,000 Lee County, FL IDA, IDRBs (Series 1994) Weekly VRDNs (Baader
North America Corp.)/(Deutsche Bank, AG
LOC) 3,200,000
1,500,000 Lynn Haven, FL, (Series
1998A) Weekly VRDNs
(Merrick Industries,
Inc.)/(Bank One, Ohio,
N.A. LOC) 1,500,000
2,700,000 Manatee County, FL,
Variable/Fixed Rate IDRBs
(Series 1998) Weekly VRDNs
(Mader Electric,
Inc.)/(SouthTrust Bank of
Alabama, Birmingham LOC) 2,700,000
5,500,000 Manatee County, FL,
(Series 1998A) Weekly
VRDNs (CFI Manufacturing,
Inc. Project)/(Huntington
National Bank, Columbus,
OH LOC) 5,500,000
2,400,000 Martin County, FL IDA,
Tender Industrial Revenue
Bonds (Series 1986) Weekly
VRDNs (Tampa Farm Service,
Inc. Project)/(SunTrust
Bank, Central Florida LOC) 2,400,000
1,800,000 Okeechobee County, FL,
(Series 1992) Weekly VRDNs
(Morgan Guaranty Trust
Co., New York LOC) 1,800,000
5,893,000 Orange County, FL HFA,
(Series 1997A) Weekly
VRDNs (Regal Pointe
Apartments
Project)/(Nationsbank,
N.A., Charlotte LOC) 5,893,000
26,300,000 Orange County, FL School
District, (Series 1998),
3.10% TANs, 9/15/1999 26,312,473
2,400,000 Osceola County, FL HFA,
Multifamily Housing
Revenue Bonds (Series
1998A) Weekly VRDNs (Arrow
Ridge Apartments)/(Amsouth
Bank N.A., Birmingham LOC) 2,400,000
1,055,000 Pinellas County, FL Health
Facility Authority, SFM Revenue Bonds (Series PA- 92) Weekly
VRDNs (GNMA COL)/(Merrill Lynch Capital Services, Inc.
LIQ) 1,055,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
FLORIDA-CONTINUED
$ 3,500,000 Pinellas County Industry
Council, FL, IDRBs (Series
1994) Weekly VRDNs (Genca
Corporation Project)/(PNC
Bank, N.A. LOC) $ 3,500,000
2,358,000 Pinellas County Industry
Council, FL, IDRBs (Series
1995) Weekly VRDNs (ATR
International Inc.,
Project)/(First Union
National Bank, Charlotte,
NC LOC) 2,358,000
265,000 Pinellas County Industry
Council, FL Weekly VRDNs
(Loulourgas
Properties)/(First Union
National Bank, Charlotte,
NC LOC) 265,000
3,300,000 Tamarac, FL, IDRBs (Series
1995) Weekly VRDNs (Arch
Aluminum & Glass Co., Inc.
Project)/(Mellon Bank
N.A., Pittsburgh LOC) 3,300,000
1,000,000 Sumter County, FL IDA
Weekly VRDNs (Great
Southern Wood Preserving
Co.)/(SouthTrust Bank of
Alabama, Birmingham LOC) 1,000,000
2,600,000 Wakulla County, FL IDA
Weekly VRDNs (Winco
Utilities, Inc.
Project)/(Nationsbank,
N.A., Charlotte LOC) 2,600,000
TOTAL 130,778,473
INDIANA-2.7%
5,000,000 Huntington County, IN
Community School Corp.,
Tax Anticipation Warrants,
3.35% Bonds, 12/31/1999 5,006,496
MINNESOTA-2.2%
4,000,000 Coon Rapids, MN, (Series
1999) Weekly VRDNs
(Assurance Mfg. Co.,
Inc.)/(Norwest Bank
Minnesota, N.A. LOC) 4,000,000
MULTI STATE-14.0%
26,000,000 Charter Mac Floater
Certificates Trust I,
(First Tranche) Weekly
VRDNs (MBIA
INS)/(Bayerische
Landesbank Girozentrale,
Commerzbank AG, Frankfurt
and Credit Communal de
Belgique, Brussles LIQs) 26,000,000
NEW MEXICO-0.8%
1,500,000 New Mexico Mortgage
Finance Authority, (Series
1999 Issue 1), 3.125% Bonds
(Trinity Funding Co. INV),
8/3/1999 1,500,000
OHIO-0.5%
1,000,000 Stark County, OH IDRB
Weekly VRDNs (Shearer's
Foods, Inc.)/(Bank One,
Ohio, N.A. LOC) 1,000,000
OKLAHOMA-0.4%
700,000 Broken Arrow, OK EDA Weekly
VRDNs (Blue Bell
Creameries)/(Banque
Nationale de Paris LOC) 700,000
TENNESSEE-1.1%
2,000,000 Dickson County, TN IDB,
(Series 1996) Weekly VRDNs (Tennessee Bun Co., LLC
Project)/(PNC Bank, N.A.
LOC) 2,000,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
TEXAS-4.6%
$ 7,500,000 Harris County, TX HFDC,
Revenue Refunding Bonds
(Series 1986), 4.95% CP
(Young Men's Christian
Association of the Greater
Houston Area)/(Bank of
Tokyo-Mitsubishi Ltd.
LOC), Mandatory Tender
5/4/1999 $ 7,500,000
1,000,000 Angelina and Neches River
Authority, Texas, Solid
Waste Disposal Revenue
Bonds (Series 1993), 3.85%
CP (Temple-Eastex,
Inc.)/(Temple-Inland, Inc.
GTD), Mandatory Tender
6/9/1999 1,000,000
TOTAL 8,500,000
TOTAL INVESTMENTS (AT
AMORTIZED COST) 2 $ 184,759,969
</TABLE>
Securities that are subject to Alternative Minimum Tax represent 74.3% of the
portfolio as calculated based upon total portfolio market value.
1 The fund may only invest in securities rated in one of the two highest
short-term rating categories by nationally recognized statistical rating
organizations "NRSROs'" or unrated securities of comparable quality. An NRSRO's
two highest rating categories are determined without regard for sub-categories
and gradations. For example, securities rated SP-1+, SP-1 or SP-2 by Standard &
Poor's, MIG-1 or MIG-2 by Moody's Investors Service, Inc., F-1+, F-1 and F-2 by
Fitch IBCA, Inc. are all considered rated in one of the two highest short-term
rating categories.
Securities rated in the highest short-term rating category (and unrated
securities of comparable quality) are identified as First Tier securities.
Securities rated in the second highest short-term rating category (and unrated
securities of comparable quality) are identified as Second Tier securities. The
fund follows applicable regulations in determining whether a security is rated
and whether a security rated by multiple NRSROs in different rating categories
should be identified as a First or Second Tier security.
At April 30, 1999, the portfolio securities were rated as follows:
Tier Rating Based on Total Market Value (Unaudited)
FIRST TIER SECOND TIER
98.54% 1.46%
2 Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($185,281,754) at April 30, 1999.
The following acronyms are used throughout this portfolio:
BANs -Bond Anticipation Notes
COL -Collateralized
CP -Commercial Paper
EDA -Economic Development Authority
GNMA -Government National Mortgage Association
GTD -Guaranty
HFA -Housing Finance Authority
HFDC -Health Facility Development Corporation
IDA -Industrial Development Authority
IDB -Industrial Development Bond
IDRBs -Industrial Development Revenue Bonds
INS -Insured
INV -Investment Agreement
LIQ -Liquidity Agreement
LLC -Limited Liability Company
LOC -Letter of Credit
MBIA -Municipal Bond Investors Assurance
MERLOTS -Municipal Exempt Receipts - Liquidity Optional Tender Series
PAC -Planned Amortization Class
PLC -Public Limited Company
SA -Support Agreement
SFM -Single Family Mortgage
TANs -Tax Anticipation Notes
TOBs -Tender Option Bonds
VRDNs -Variable Rate Demand Notes
See Notes which are an integral part of the Financial Statements
Statement of Assets and Liabilities
APRIL 30, 1999 (UNAUDITED)
<TABLE>
<S> <C> <C>
ASSETS:
Total investments in
securities, at amortized
cost and value $ 184,759,969
Cash 576,431
Income receivable 982,727
TOTAL ASSETS 186,319,127
LIABILITIES:
Payable for shares
redeemed $ 564,000
Income distribution
payable 428,153
Accrued expenses 45,220
TOTAL LIABILITIES 1,037,373
Net assets for 185,281,754
shares outstanding $ 185,281,754
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PROCEEDS PER SHARE
INSTITUTIONAL SHARES:
$135,880,668 / 135,880,668
shares outstanding $1.00
CASH II SHARES:
$49,401,086 / 49,401,086
shares outstanding $1.00
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Operations
SIX MONTHS ENDED APRIL 30, 1999 (UNAUDITED)
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 5,883,204
EXPENSES:
Investment advisory fee $ 715,208
Administrative personnel
and services fee 134,817
Custodian fees 8,148
Transfer and dividend
disbursing agent fees and
expenses 42,681
Directors'/Trustees' fees 2,544
Auditing fees 6,182
Legal fees 8,153
Portfolio accounting fees 51,905
Distribution services fee-
Cash II Shares 230,921
Shareholder services fee-
Institutional Shares 216,084
Shareholder services fee-
Cash II Shares 230,921
Share registration costs 18,841
Printing and postage 17,372
Insurance premiums 41,792
Miscellaneous 5,598
TOTAL EXPENSES 1,731,167
WAIVERS:
Waiver of investment
advisory fee $ (330,165)
Waiver of distribution
services fee-Cash II
Shares (46,184)
Waiver of shareholder
services fee-Institutional
Shares (51,860)
TOTAL WAIVERS (428,209)
Net expenses 1,302,958
Net investment income $ 4,580,246
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(unaudited) YEAR ENDED
APRIL 30, OCTOBER 31,
1999 1998
<S> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net investment income $ 4,580,246 $ 15,157,508
DISTRIBUTIONS TO
SHAREHOLDERS:
Distributions from net
investment income
Institutional Shares (2,295,932) (11,792,073)
Cash II Shares (2,284,314) (3,365,435)
CHANGE IN NET ASSETS
RESULTING FROM
DISTRIBUTIONS
TO SHAREHOLDERS (4,580,246) (15,157,508)
SHARE TRANSACTIONS:
Proceeds from sale of
shares 986,484,084 2,197,187,196
Net asset value of shares
issued to shareholders in
payment of
distributions declared 905,010 7,838,269
Cost of shares redeemed (1,031,140,330) (2,518,608,888)
CHANGE IN NET ASSETS
RESULTING FROM SHARE
TRANSACTIONS (43,751,236) (313,583,423)
Change in net assets (43,751,236) (313,583,423)
NET ASSETS:
Beginning of period 229,032,990 542,616,413
End of period $ 185,281,754 $ 229,032,990
</TABLE>
See Notes which are an integral part of the Financial Statements
Financial Highlights-Institutional Shares
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(unaudited)
APRIL 30, YEAR ENDED OCTOBER 31,
1999 1998 1997 1996 1995 1994 1
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM
INVESTMENT OPERATIONS:
Net investment income 0.01 0.03 0.03 0.03 0.04 0.004
LESS DISTRIBUTIONS:
Distributions from
net investment income (0.01) (0.03) (0.03) (0.03) (0.04) (0.004)
NET ASSET VALUE,
END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN 2 1.32% 3.09% 3.20% 3.20% 3.60% 0.35%
RATIOS TO
AVERAGE NET ASSETS:
Expenses 0.60% 3 0.58% 0.54% 0.49% 0.45% 0.28% 3
Net investment income 2.66% 3 2.96% 3.15% 3.17% 3.58% 3.28% 3
Expenses 4 0.85% 3 0.77% 0.79% 0.83% 0.87% 1.31% 3
Net investment income 4 2.41% 3 2.77% 2.90% 2.83% 3.16% 2.25% 3
SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $135,881 $157,194 $479,860 $500,993 $153,347 $53,966
</TABLE>
1 Reflects operations for the period from September 21, 1994 (date of initial
public investment) to October 31, 1994. For the period from September 12, 1994
(start of business) to September 21, 1994 the fund had no investment activity.
2 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
3 Computed on an annualized basis
4 During the period, certain fees were voluntarily waived or reimbursed. If such
voluntary waivers or reimbursements had not occurred, the ratios would have been
as indicated.
See Notes which are an integral part of the Financial Statements
Financial Highlights-Cash II Shares
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(unaudited)
APRIL 30, YEAR ENDED OCTOBER 31,
1999 1998 1997 1996 1
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.01 0.03 0.03 0.03
LESS DISTRIBUTIONS:
Distributions from net
investment income (0.01) (0.03) (0.03) (0.03)
NET ASSET VALUE,
END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN 2 1.19% 2.83% 2.94% 2.80%
RATIOS TO AVERAGE NET ASSETS:
Expenses 0.85% 3 0.85% 0.80% 0.65% 3
Net investment income 2.47% 3 2.83% 2.88% 3.07% 3
Expenses 4 1.08% 3 1.04% 1.04% 1.09% 3
Net investment income 4 2.24% 3 2.64% 2.64% 2.64% 3
SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $49,401 $71,839 $62,756 $31,824
</TABLE>
1 Reflects operations for the period from November 27, 1995 (date of initial
public investment) to October 31, 1996.
2 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
3 Computed on an annualized basis.
4 During the period, certain fees were voluntarily waived or reimbursed. If such
voluntary waivers or reimbursements had not occurred, the ratios would have been
as indicated.
See Notes which are an integral part of the Financial Statements
Notes to Financial Statements
APRIL 30, 1999 (UNAUDITED)
ORGANIZATION
Federated Municipal Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "Act") as an open-end, management
investment company. The Trust consists of 17 portfolios. The financial
statements included herein are only those of Florida Municipal Cash Trust (the
"Fund"). The financial statements of the other portfolios are presented
separately. The assets of each portfolio are segregated and a shareholder's
interest is limited to the portfolio in which shares are held.
The Fund offers two classes of shares: Institutional Shares and Cash II
Shares.
The investment objective of the Fund is current income exempt from federal
regular income tax consistent with stability of principal and liquidity and to
maintain an investment portfolio that will cause its shares to be exempt from
the Florida intangibles tax.
SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS
The Fund uses the amortized cost method to value its portfolio securities in
accordance with Rule 2a-7 under the Act.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS
Interest income and expenses are accrued daily. Bond premium and discount, if
applicable, are amortized as required by the Internal Revenue Code, as amended
(the "Code"). Distributions to shareholders are recorded on the ex- dividend
date.
FEDERAL TAXES
It is the Fund's policy to comply with the provisions of the Code applicable to
regulated investment companies and to distribute to shareholders each year
substantially all of its income. Accordingly, no provisions for federal tax are
necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Fund may engage in when-issued or delayed delivery transactions. The Fund
records when-issued securities on the trade date and maintains security
positions such that sufficient liquid assets will be available to make payment
for the securities purchased. Securities purchased on a when- issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts of assets, liabilities, expenses and revenues reported in the
financial statements. Actual results could differ from those estimated.
OTHER
Investment transactions are accounted for on the trade date.
SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Board of Trustees (the "Trustees") to issue
an unlimited number of full and fractional shares of beneficial interest
(without par value) for each class of shares. At April 30, 1999, capital paid-in
aggregated $185,281,754.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
APRIL 30, OCTOBER 31,
1999 1998
<S> <C> <C>
INSTITUTIONAL SHARES:
Shares sold 453,852,014 1,551,253,164
Shares issued to
shareholders in payment of
distributions declared 828,027 7,690,503
Shares redeemed (475,992,956) (1,881,610,584)
NET CHANGE RESULTING FROM
INSTITUTIONAL SHARE
TRANSACTIONS (21,312,915) (322,666,917)
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
APRIL 30, OCTOBER 31,
1999 1998
<S> <C> <C>
CASH II SHARES:
Shares sold 532,632,070 645,934,032
Shares issued to
shareholders in payment of
distributions declared 76,983 147,766
Shares redeemed (555,147,374) (636,998,304)
NET CHANGE RESULTING FROM
CASH II SHARE TRANSACTIONS (22,438,321) 9,083,494
NET CHANGE RESULTING FROM
SHARE TRANSACTIONS (43,751,236) (313,583,423)
</TABLE>
INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE
Federated Investment Management Company, the Fund's investment adviser (the
"Adviser"), receives for its services an annual investment advisory fee equal to
0.40% of the Fund's average daily net assets. The Adviser may voluntarily choose
to waive any portion of its fee. The Adviser can modify or terminate this
voluntary waiver at any time at its sole discretion.
ADMINISTRATIVE FEE
Federated Services Company ("FServ"), under the Administrative Services
Agreement, provides the Fund with administrative personnel and services. The fee
paid to FServ is based on the level of average aggregate daily net assets of all
funds advised by subsidiaries of Federated Investors, Inc. for the period. The
administrative fee received during the period of the Administrative Services
Agreement shall be at least $125,000 per portfolio and $30,000 per each
additional class of shares.
DISTRIBUTION SERVICES FEE
The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b- 1
under the Act. Under the terms of the Plan, the Fund will compensate Federated
Securities Corp. ("FSC"), the principal distributor, from the net assets of the
Fund to finance activities intended to result in the sale of the Fund's
Institutional Shares and Class II Shares. The Plan provides that the Fund may
incur distribution expenses according to the following schedule annually, to
compensate FSC.
PERCENTAGE OF
AVERAGE DAILY
NET ASSETS
SHARE CLASS OF CLASS
Institutional Shares 0.25%
Class II Shares 0.25%
The distributor may voluntarily choose to waive any portion of its fee. The
distributor can modify or terminate this voluntary waiver at any time at its
sole discretion. For the period ended April 30, 1999, Institutional Shares did
not incur a distribution services fee.
SHAREHOLDER SERVICES FEE
Under the terms of a Shareholder Services Agreement with Federated Shareholder
Services Company ("FSSC"), the Fund will pay FSSC up to 0.25% of average daily
net assets of the Fund for the period. The fee paid to FSSC is used to finance
certain services for shareholders and to maintain shareholder accounts. FSSC may
voluntarily choose to waive any portion of its fee. FSSC can modify or terminate
this voluntary waiver at any time at its sole discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES
FServ, through its subsidiary FSSC, serves as transfer and dividend disbursing
agent for the Fund. The fee paid to FSSC is based on the size, type and number
of accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES
FServ maintains the Fund's accounting records for which it receives a fee. The
fee is based on the level of the Fund's average daily net assets for the period,
plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES
Organizational expenses of $15,374 were borne initially by the Adviser. The Fund
has reimbursed the Adviser for these expenses. These expenses have been deferred
and are being amortized over the five-year period following effective date.
INTERFUND TRANSACTIONS
During the period ended April 30, 1999, the Fund engaged in purchase and sale
transactions with funds that have a common investment adviser (or affiliated
investment advisers), common Directors/Trustees, and/or common Officers. These
purchase and sale transactions were made at current market value pursuant to
Rule 17a-7 under the Act amounting to $779,850,000 and $853,850,000,
respectively.
GENERAL
Certain of the Officers and Trustees of the Trust are Officers and Directors or
Trustees of the above companies.
CONCENTRATION OF CREDIT RISK
Since the Fund invests a substantial portion of its assets in issuers located in
one state, it will be more susceptible to factors adversely affecting issuers of
that state than would be a comparable tax-exempt mutual fund that invests
nationally. In order to reduce the credit risk associated with such factors, at
April 30, 1999, 69.2% of the securities in the portfolio of investments are
backed by letters of credit or bond insurance of various financial institutions
and financial guaranty assurance agencies. The percentage of investments insured
by or supported (backed) by a letter of credit from any one institution or
agency did not exceed 6.5% of total investments.
YEAR 2000
Similar to other financial organizations, the Trust could be adversely affected
if the computer systems used by the Trust's service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. The Trust's Adviser and administrator are taking measures that they
believe are reasonably designed to address the Year 2000 issue with respect to
computer systems that they use and to obtain reasonable assurances that
comparable steps are being taken by each of the Trust's other service providers.
At this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact to the Trust.
Trustees
JOHN F. DONAHUE
THOMAS G. BIGLEY
JOHN T. CONROY, JR.
JOHN F. CUNNINGHAM
LAWRENCE D. ELLIS, M.D.
PETER E. MADDEN
CHARLES F. MANSFIELD, JR.
JOHN E. MURRAY, JR., J.D., S.J.D.
MARJORIE P. SMUTS
JOHN S. WALSH
Officers
JOHN F. DONAHUE
Chairman
GLEN R. JOHNSON
President
J. CHRISTOPHER DONAHUE
Executive Vice President
EDWARD C. GONZALES
Executive Vice President
JOHN W. MCGONIGLE
Executive Vice President and Secretary
RICHARD B. FISHER
Vice President
RICHARD J. THOMAS
Treasurer
ANTHONY R. BOSCH
Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment
risk, including the possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the fund's prospectus which contains facts concerning
its objective and policies, management fees, expenses and other information.
[Graphic]
Federated
World-Class Investment Manager
SEMI-ANNUAL REPORT
Florida Municipal Cash Trust
SEMI-ANNUAL REPORT TO SHAREHOLDERS
APRIL 30, 1999
[Graphic]
Federated
Florida Municipal Cash Trust
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
1-800-341-7400
WWW.FEDERATEDINVESTORS.COM
Federated Securities Corp., Distributor
Cusip 314229758
Cusip 314229683
G00827-02 (6/99)
[Graphic]
SEMI-ANNUAL REPORT
President's Message
Dear Shareholder:
I am pleased to present the Semi-Annual Report to Shareholders of Georgia
Municipal Cash Trust, a portfolio of Federated Municipal Trust, which covers the
six-month period from November 1, 1998 through April 30, 1999. The report begins
with a discussion with the fund's portfolio manager, followed by a complete
listing of the fund's holdings and its financial statements.
The fund is a convenient way to keep your ready cash pursuing double tax-free
income-free from federal regular income tax and Georgia income tax 1- through a
portfolio concentrated in high-quality, short-term Georgia municipal securities.
At the end of the reporting period, the fund's holdings were diversified among
issuers that use municipal bond financing for projects as varied as health care,
housing, community development and transportation.
This double tax-free advantage means you have the opportunity to earn a greater
after-tax yield than you could in a comparable high-quality taxable investment.
Of course, the fund also brings you the added benefits of daily liquidity and
stability of principal. 2
During the reporting period, the fund paid double tax-free dividends totaling
$0.01 per share. The fund's net assets totaled $193.7 million at the end of the
reporting period.
Thank you for relying on Georgia Municipal Cash Trust to help your ready cash
pursue tax-free income every day. As always, we will continue to provide you
with the highest level of professional service. We invite your questions or
comments.
Sincerely,
[Graphic]
Glen R. Johnson
President
June 15, 1999
1 Income may be subject to the federal alternative minimum tax.
2 An investment in money market funds is neither insured nor guaranteed by the
Federal Deposit Insurance Corporation or any other government agency. Although
money market funds seek to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in the fund.
Investment Review
An interview with the fund's portfolio manager Jeff A. Kozemchak, CFA, Senior
Vice President, Federated Investment Management Company.
WHAT ARE YOUR COMMENTS ON THE ECONOMY AND THE INTEREST RATE ENVIRONMENT DURING
THE FUND'S SIX-MONTH REPORTING PERIOD?
The economy remained robust over the reporting period, showing continued
strength in the fourth quarter of 1998 and into the first quarter of 1999. At
the same time, overall inflationary pressures were absent in spite of impressive
performance from the economy and historically low unemployment. However,
sustained growth in aggregate demand continued to stretch the labor markets, and
the potential for future inflation clearly concerned the Federal Reserve Board
(the "Fed"). Over the reporting period, the Fed maintained a neutral policy
stance toward the direction of short-term interest rates (federal funds target
rate). However, April's Consumer Price Index ("CPI") 1 rate was much larger than
expected and in May, shortly after the close of the reporting period, the Fed
adopted a tightening bias, or bias for higher rates in the future. The Fed cited
the strong U.S. economy in conjunction with record employment levels, the
improvement in foreign economic prospects, and rebounding U.S. financial
markets.
In addition to economic fundamentals, short-term municipal securities were
strongly influenced by technical factors over the reporting period, notably
calendar year end and income tax payment season. Variable rate demand notes
("VRDNs") started the reporting period in the 3.00% range, but moved sharply
higher to the 4.00% level in December as an imbalance between supply and demand
occurred. Yields declined in January, as strong cash inflows from bond
maturities and coupon reinvestment occurred. The market continued to be strong
in February and March as yields trended at 3.00% or below, before rising to
4.00% in April because of traditional tax payment season pressures. Over the
six-month reporting period, VRDN yields averaged roughly 65% of taxable rates,
making them attractive for investors in the highest federal tax brackets.
The overall tone of the short-term municipal market was positive. Municipalities
across the country have benefited from a strong economy. This fact, coupled with
lower borrowing costs from low long-term rates, has reduced short-term issuance.
In fact, annual municipal note issuance was at its lowest level in the last
decade.
1 The CPI is a measure of change in consumer prices, as determined by a monthly
survey of the U.S. Bureau of Labor Statistics.
WHAT WERE YOUR STRATEGIES FOR THE FUND DURING THE REPORTING PERIOD?
The fund's average maturity at the beginning of the period was 51 days,
reflecting declining interest rates that occurred last fall. Over the reporting
period, the fund's average maturity ranged from 45 to 60 days reflecting the
relative value found in fixed-rate notes over the period. At the end of the
reporting period the fund's average maturity was at 46 days, a neutral stance.
This average maturity left the fund well positioned to take advantage of
increased rates that could have occurred. We continued to emphasize a barbelled
structure for the portfolio, combining a significant position in 7-day VRDNs
with purchases of longer-term securities with maturities between 6 and 12
months. After an average maturity range was targeted, we attempted to maximize
performance through ongoing relative value analysis. Relative value analysis
includes the comparison of the richness or cheapness of municipal securities to
one another as well as municipal securities to taxable instruments, such as
Treasury securities. This portfolio structure continued to pursue a competitive
yield over time.
The 7-day net yield for the fund's shares was 3.22% 2 on April 30, 1999 compared
to 3.01% on November 1, 1998. Most of the increase in yield came at the end of
the reporting period due in large part to technical factors relating to tax
payment season. The latest yield was the equivalent of a 5.33% taxable yield for
investors in the highest federal and state effective tax brackets.
AS WE APPROACH MID-YEAR, WHAT IS YOUR OUTLOOK GOING FORWARD?
Although the Fed has adopted a tightening bias, it is not likely to raise
interest rates or take preemptive action until price or wage pressures
materialize. Accordingly, we plan to maintain a neutral average maturity range
for the fund over the near-term until further inflationary data becomes
available. In the near term, the short-term municipal market will likely reflect
technical as well as fundamental factors. In the summer months, we will likely
extend the maturity as new issuance and rollover of municipal notes occurs
during this period. As always, we will continue to watch, with great interest,
market developments in order to best serve our municipal clients.
2 Performance quoted represents past performance and is not indicative of future
results. Yields will vary. Yields quoted for money market funds most closely
reflect the fund's current earnings.
Portfolio of Investments
APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
SHORT-TERM MUNICIPALS-
99.5% 1
GEORGIA-99.5%
$ 4,500,000 Athens-Clarke County, GA
IDA, (Series 1988), 2.85%
CP (Rhone Merieux, Inc.
Project)/(Societe
Generale, Paris LOC),
Mandatory Tender 5/18/1999 $ 4,500,000
1,400,000 Athens-Clarke County, GA
IDA, (Series 1997) Weekly
VRDNs (Armagh Capital
Resource, LLC)/(Wachovia
Bank of NC, N.A., Winston-
Salem LOC) 1,400,000
1,600,000 Atlanta, GA, Urban
Residential Finance
Authority, Multi-Family
Housing Revenue Bonds
(Series 1995) Weekly VRDNs
(West End Housing
Development
Project)/(First Union
National Bank, Charlotte,
NC LOC) 1,600,000
2,000,000 Bibb County, GA, PT-199,
3.70% TOBs (Georgia State
GTD)/(Bayerische
Hypotheken-und Vereinsbank
AG LIQ), Optional Tender
5/20/1999 2,000,000
3,730,000 Brunswick, GA, Housing
Authority, (Series S93)
Weekly VRDNs (Island
Square
Apartments)/(Columbus Bank
and Trust Co., GA LOC) 3,730,000
2,860,000 Cedartown, GA Development
Authority, (Series 1998)
Weekly VRDNs
(Rome Plow Co.)/(SunTrust
Bank, Miami LOC) 2,860,000
1,345,000 Cherokee County, GA
Development Authority,
IDRB Weekly VRDNs
(Morrison Products,
GA)/(KeyBank, N.A. LOC) 1,345,000
500,000 Clayton County, GA
Development Authority,
(Series 1994) Weekly VRDNs
(Lear Seating
Corp.)/(Chase Manhattan
Bank N.A., New York LOC) 500,000
550,000 Clayton County, GA Housing
Authority, Revenue
Refunding Bonds (Series
1992) Weekly VRDNs (Oxford
Townhomes
Project)/(Amsouth Bank
N.A., Birmingham LOC) 550,000
1,635,000 Cobb County, GA IDA Weekly
VRDNs (Atlanta RDC
Co.)/(First Union National
Bank, Charlotte, NC LOC) 1,635,000
1,600,000 Cobb County, GA IDA, IDRB
(Series 1995) Weekly VRDNs
(Consolidated Engineering
Co., Inc.
Project)/(Nationsbank,
N.A., Charlotte LOC) 1,600,000
770,000 Columbia County, GA
Development Authority,
(Series 1991) Weekly VRDNs
(Augusta Sportswear,
Inc.)/(Wachovia Bank of
NC, N.A., Winston-Salem
LOC) 770,000
560,000 Columbus, GA IDA, (Series
1990) Weekly VRDNs (R. P.
Real Estate,
Inc.)/(Columbus Bank and
Trust Co., GA LOC) 560,000
3,000,000 Coweta County, GA IDA,
(Series 1995) Weekly VRDNs
(Lanelco L.L.C.
Project)/(NBD Bank,
Michigan LOC) 3,000,000
6,000,000 Crisp County, GA
Development Authority,
(Series B), 4.20% TOBs
(Masonite
Corp.)/(International
Paper Co. GTD), Optional
Tender 9/1/1999 6,000,000
9,000,000 Crisp County, GA Solid
Waste Management
Authority, (Series 1998)
Weekly VRDNs (FSA
INS)/(First Union National
Bank, Charlotte, NC LIQ) 9,000,000
1,250,000 De Kalb County, GA
Development Authority
Weekly VRDNs (Rock-Tenn
Company, Inc.
Project)/(SunTrust Bank,
Atlanta LOC) 1,250,000
1,275,000 De Kalb County, GA
Development Authority,
(Series 1992) Weekly VRDNs
(House of Cheatham, Inc.
Project)/(Nationsbank,
N.A., Charlotte LOC) 1,275,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
GEORGIA-CONTINUED
$ 600,000 De Kalb County, GA
Development Authority,
(Series 1993) Weekly VRDNs
(Pet, Inc.)/(PNC Bank,
N.A. LOC) $ 600,000
2,000,000 De Kalb County, GA
Development Authority,
(Series 1995) Weekly VRDNs
(Rock-Tenn Converting
Co.)/(SunTrust Bank,
Atlanta LOC) 2,000,000
1,180,000 De Kalb County, GA
Development Authority,
(Series 1996) Weekly VRDNs
(DeKalb Steel,
Inc.)/(SouthTrust Bank of
Georgia, Atlanta LOC) 1,180,000
4,000,000 De Kalb County, GA Multi-
Family Housing Authority,
Multi-Family Housing
Revenue Bonds (Series
1996) Weekly VRDNs (Bryton
Hill Apartments)/(PNC
Bank, N.A. LOC) 4,000,000
5,000,000 Doughery County, GA School
System, 3.62% TANs,
12/30/1999 5,011,933
3,000,000 Douglas County, GA
Development Authority,
(Series 1997) Weekly VRDNs
(Austral Insulated
Products, Inc.)/(Regions
Bank, Alabama LOC) 3,000,000
740,000 Douglas County, GA
Development Authority,
(Series 1997) Weekly VRDNs
(Paul B. Goble)/(Wachovia
Bank of NC, N.A., Winston-
Salem LOC) 740,000
5,585,000 Douglas County, GA
Development Authority,
(Series 1998A) Weekly
VRDNs
(Heritage Bag)/(Wachovia
Bank of NC, N.A., Winston-
Salem LOC) 5,585,000
2,000,000 Douglas County, GA School
District, 4.75% Bonds,
1/1/2000 2,020,310
2,000,000 Forsythe County, GA
Development Authority,
IDRB (Series 1995) Weekly
VRDNs (American BOA, Inc.
Project)/(Dresdner Bank
AG, Frankfurt LOC) 2,000,000
1,240,000 Franklin County, GA
Industrial Building
Authority, (Series 1995)
Weekly VRDNs
(Bosal Industries,
Inc.)/(Bank of New York,
New York LOC) 1,240,000
3,400,000 Fulton County, GA
Development Authority,
(Series 1998) Weekly VRDNs
(Morehouse School of
Medicine)/(SunTrust Bank,
Atlanta LOC) 3,400,000
2,200,000 Fulton County, GA IDA
Weekly VRDNs (Automatic
Data Processing, Inc.) 2,200,000
2,550,000 Fulton County, GA IDA
Weekly VRDNs (C.K.S.
Packaging,
Inc.)/(SouthTrust Bank of
Georgia, Atlanta LOC) 2,550,000
2,000,000 Fulton County, GA IDA,
(Series 1997) Weekly VRDNs
(In-Store Media
Corp.)/(SunTrust Bank,
Atlanta LOC) 2,000,000
3,000,000 Gainesville, GA
Redevelopment Authority,
Downtown Developments, Ltd.
(Series 1987) Weekly VRDNs
(Downtown Developments,
Ltd.)/(Regions Bank,
Alabama LOC) 3,000,000
300,000 Gainesville, GA
Redevelopment Authority,
IDRB (Series 1986) Weekly
VRDNs (Hotel of
Gainesville Associates
Project)/(Regions Bank,
Alabama LOC) 300,000
5,000,000 Georgia Municipal Electric
Authority, (Series A),
5.50% Bonds (AMBAC INS),
1/1/2000 5,079,392
5,675,000 Georgia Municipal Electric
Authority, (Series Z),
4.50% Bonds, 1/1/2000 5,719,207
1,800,000 Georgia Ports Authority,
(Series 1996A) Weekly
VRDNs (Colonel's Island
Terminal)/(SunTrust Bank,
Atlanta LOC) 1,800,000
5,200,000 Georgia State HFA, (Series
1990C), 3.20% TOBs (First
National Bank of Chicago
LIQ), Optional Tender
6/1/1999 5,200,000
4,690,000 Georgia State, UT GO, 5.25%
Bonds, 10/1/1999 4,731,628
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
GEORGIA-CONTINUED
$ 2,970,000 Gwinnett County, GA IDA,
(Series 1996) Weekly VRDNs
(Sidel, Inc. Project)/
(Nationsbank, N.A.,
Charlotte LOC) $ 2,970,000
630,000 Gwinnett County, GA IDA,
(Series 1997) Weekly VRDNs
(Virgil R. Williams, Jr.)/
(Wachovia Bank of NC, N.A.,
Winston-Salem LOC) 630,000
2,200,000 Gwinnett County, GA IDA,
(Series 1998) Weekly VRDNs
(Pace Manufacturing,
Inc.)/ (Amsouth Bank N.A.,
Birmingham LOC) 2,200,000
1,500,000 Hart County, GA IDA,
Revenue Bonds (Series
1996) Weekly VRDNs (Rock-
Tenn Converting Co.
Project)/(SunTrust Bank,
Atlanta LOC) 1,500,000
6,750,000 Jackson County, GA IDA,
(Series 1996) Weekly VRDNs
(Buhler Quality Yarns
Corp. Project)/(UBS AG
LOC) 6,750,000
1,250,000 Jackson County, GA IDA,
(Series 1997) Weekly VRDNs
(Mullett Co.)/(Wachovia
Bank of NC, N.A., Winston-
Salem LOC) 1,250,000
1,200,000 Jefferson, GA Development
Authority, (Series 1997)
Weekly VRDNs (Ringwood
Containers,
L.P.)/(Wachovia Bank of
NC, N.A., Winston-Salem
LOC) 1,200,000
3,145,000 La Grange, GA, Multi-
Family Housing Authority,
Revenue Bonds, 4.00% TOBs
(Lee's Crossing Project
Phase II)/(Columbus Bank
and Trust Co., GA LOC),
Optional Tender 5/1/1999 3,145,000
2,965,000 La Grange, GA, Multi-
Family Housing Authority,
Revenue Bonds, 4.00% TOBs
(Lee's Crossing Project
Phase I)/(Columbus Bank
and Trust Co., GA LOC),
Optional Tender 5/1/1999 2,965,000
3,630,000 La Grange, GA Housing
Authority, Multi-Family
Refunding Revenue Bonds
(Series 1997) Weekly VRDNs
(Greenwood Park)/(Columbus
Bank and Trust Co., GA LOC) 3,630,000
3,465,000 La Grange, GA Housing
Authority, Multi-Family
Refunding Revenue Bonds
(Series 1997) Weekly VRDNs
(Meadow Terrace)/(Columbus
Bank and Trust Co., GA LOC) 3,465,000
300,000 Macon-Bibb County, GA
Industrial Authority, IDRB
(Series 1990) Weekly VRDNs
(Diamond Plastics Corp.
Project)/(Nationsbank,
N.A., Charlotte LOC) 300,000
1,280,000 Macon-Bibb County, GA
Urban Development
Authority, Refunding
Revenue Bonds (Series
1995) Weekly VRDNs (Macon
Hotel Investors
Project)/(NBD Bank,
Michigan LOC) 1,280,000
4,470,000 Marietta, GA Housing
Authority, Multi-Family
Housing Revenue Bonds
(Series 1995) Weekly VRDNs
(Chalet Apartments
Project)/(General Electric
Capital Corp. LOC) 4,470,000
2,000,000 McDuffie County, GA
Development Authority,
(Series 1998), 3.90% CP
(Temple-Inland Forest
Products Corp.)/(Temple-
Inland, Inc. GTD),
Mandatory Tender 5/11/1999 2,000,000
2,500,000 Metropolitan Atlanta Rapid
Transit Authority, Floater
Certificates (Series 1998-
59) Weekly VRDNs (MBIA
INS)/(Morgan Stanley, Dean
Witter Municipal
Funding, Inc. LIQ) 2,500,000
565,000 Milledgeville & Baldwin
County, GA Development
Authority, (Series 1997)
Weekly VRDNs (Oconee Area
Properties,
Inc.)/(Wachovia Bank of
NC, N.A.,
Winston-Salem LOC 565,000
2,900,000 Rockdale County, GA
Development Authority,
(Series 1995) Weekly VRDNs
(Great Southern Wood
Preserving Co.)/(SunTrust
Bank, Central Florida LOC) 2,900,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
GEORGIA-CONTINUED
$ 1,840,000 Rockdale County, GA
Hospital Authority,
Revenue Anticipation
Certificates (Series 1994)
Weekly VRDNs (Rockdale
Hospital)/(SunTrust Bank,
Atlanta LOC) $ 1,840,000
4,000,000 Rome, GA, 3.25% TANs,
12/31/1999 4,002,073
4,600,000 Roswell, GA Housing
Authority, Multi-Family
Housing Refunding Revenue
Bonds (Series 1988A)
Weekly VRDNs (Belcourt
Ltd. Project)/(Northern
Trust Co.,
Chicago, IL LOC) 4,600,000
6,550,000 Savannah, GA EDA, (Series
1995A) Weekly VRDNs (Home
Depot, Inc.) 6,550,000
6,000,000 Screven County, GA IDA,
(Series 1995) Weekly VRDNs
(Sylvania Yarn Systems,
Inc. Project)/(SunTrust
Bank, Atlanta LOC) 6,000,000
3,350,000 Stephens County, GA
Development Authority,
(Series 1999) Weekly VRDNs
(Toccoa Packaging,
Inc.)/(SouthTrust Bank of
Alabama, Birmingham LOC) 3,350,000
5,000,000 Summerville, GA
Development Authority,
(Series 1997) Weekly VRDNs
(Image Industries,
Inc.)/(First Union
National Bank, Charlotte,
NC LOC) 5,000,000
3,450,000 Upson County, GA, 3.63%
TANs, 12/31/1999 3,453,338
1,410,000 Walker County, GA, (Series
1998), 4.00% Bonds,
8/1/1999 1,410,852
1,000,000 Wayne County, GA, IDA,
Revenue Bonds, (Series
1995) Weekly VRDNs
(Harsco Corp.)/(Nationsban
k, N.A., Charlotte LOC) 1,000,000
3,335,000 Whitfield County, GA
Development Authority
Weekly VRDNs (Franklin
Industries Inc.,
Project)/(Nationsbank,
N.A., Charlotte LOC) 3,335,000
1,645,000 Whitfield County, GA
Development Authority,
(Series 1996) Weekly VRDNs
(AMC International, Inc.
Project)/(SouthTrust Bank
of Alabama, Birmingham
LOC) 1,645,000
TOTAL 192,838,733
TOTAL INVESTMENTS (AT
AMORTIZED COST) 2 $ 192,838,733
</TABLE>
Securities that are subject to Alternative Minimum Tax represent 68.7% of the
portfolio as calculated based upon total portfolio market value.
1 The fund may only invest in securities rated in one of the two highest
short-term rating categories by nationally recognized statistical rating
organizations ("NRSROs") or unrated securities of comparable quality. An NRSRO's
two highest rating categories are determined without regard for sub-categories
and gradations. For example, securities rated SP-1+, SP-1 or SP-2 by Standard &
Poor's, MIG-1 or MIG-2 by Moody's Investors Service, Inc., F-1+, F-1 and F-2 by
Fitch IBCA are all considered rated in one of the two highest short-term rating
categories. Securities rated in the highest short-term rating category (and
unrated securities of comparable quality) are identified as First Tier
securities. Securities rated in the second highest short-term rating category
(and unrated securities of comparable quality) are identified as Second Tier
securities. The fund follows applicable regulations in determining whether a
security is rated and whether a security rated by multiple NRSROs in different
rating categories should be identified as a First or Second Tier security.
At April 30, 1999, the portfolio securities were rated as follows:
Tier Rating Based on Total Market Value (Unaudited)
<TABLE>
<CAPTION>
FIRST TIER SECOND TIER
<S> <C>
92.89% 7.11%
</TABLE>
2 Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($193,720,797) at April 30, 1999.
The following acronyms are used throughout this portfolio:
AMBAC -American Municipal Bond Assurance Corporation CP -Commercial Paper EDA
- -Economic Development Authority FSA -Financial Security Assurance GO -General
Obligation GTD -Guaranty HFA -Housing Finance Authority IDA -Industrial
Development Authority IDRB -Industrial Development Revenue Bond INS -Insured LIQ
- -Liquidity Agreement LLC -Limited Liability Company LOC -Letter of Credit MBIA
- -Municipal Bond Investors Assurance TANs -Tax Anticipation Notes TOBs -Tender
Option Bonds UT -Unlimited Tax VRDNs -Variable Rate Demand Notes
See Notes which are an integral part of the Financial Statements
Statement of Assets and Liabilities
APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Total investments in
securities, at amortized
cost and value $ 192,838,733
Cash 371,377
Income receivable 1,049,573
Deferred organizational
costs 8,307
Other assets 11,400
TOTAL ASSETS 194,279,390
LIABILITIES:
Payable for shares
redeemed $ 30,000
Income distribution
payable 475,505
Accrued expenses 53,088
TOTAL LIABILITIES 558,593
Net assets for 193,720,797
shares outstanding $ 193,720,797
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PROCEEDS PER SHARE:
$193,720,797 / 193,720,797
shares outstanding $1.00
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Operations
SIX MONTHS ENDED APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 3,551,859
EXPENSES:
Investment advisory fee $ 537,884
Administrative personnel
and services fee 81,113
Custodian fees 5,185
Transfer and dividend
disbursing agent fees and
expenses 14,136
Directors'/Trustees' fees 1,065
Auditing fees 5,951
Legal fees 4,464
Portfolio accounting fees 27,503
Shareholder services fee 268,942
Share registration costs 15,387
Printing and postage 7,392
Insurance premiums 9,582
Miscellaneous 5,054
TOTAL EXPENSES 983,658
WAIVERS:
Waiver of investment
advisory fee $ (391,986)
Waiver of shareholder
services fee (64,546)
TOTAL WAIVERS (456,532)
Net expenses 527,126
Net investment income $ 3,024,733
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR
(unaudited) ENDED
APRIL 30, OCTOBER 31,
1999 1998
<S> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net investment income $ 3,024,733 $ 5,625,121
DISTRIBUTIONS TO
SHAREHOLDERS:
Distributions from net
investment income (3,024,733) (5,625,121)
SHARE TRANSACTIONS:
Proceeds from sale of
shares 360,159,368 632,771,755
Net asset value of shares
issued to shareholders in
payment of
distributions declared 1,394,580 3,758,781
Cost of shares redeemed (335,930,936) (590,290,954)
CHANGE IN NET ASSETS
RESULTING FROM SHARE
TRANSACTIONS 25,623,012 46,239,582
Change in net assets 25,623,012 46,239,582
NET ASSETS:
Beginning of period 168,097,785 121,858,203
End of period $ 193,720,797 $ 168,097,785
</TABLE>
See Notes which are an integral part of the Financial Statements
Financial Highlights
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(unaudited)
APRIL 30, YEAR ENDED OCTOBER 31,
1999 1998 1997 1996 1995 1
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.01 0.03 0.03 0.03 0.01
LESS DISTRIBUTIONS:
Distributions from net investment income (0.01) (0.03) (0.03) (0.03) (0.01)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN 2 1.41% 3.33% 3.38% 3.37% 0.73%
RATIOS TO AVERAGE NET ASSETS:
Expenses 0.49% 3 0.49% 0.49% 0.46% 0.25% 3
Net investment income 2.81% 3 3.28% 3.33% 3.31% 3.81% 3
Expenses 4 0.91% 3 0.93% 0.92% 0.98% 1.00% 3
Net investment income 4 2.39% 3 2.84% 2.90% 2.79% 3.06% 3
SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $193,721 $168,098 $121,858 $122,940 $111,278
</TABLE>
1 Reflects operations for the period from August 22, 1995 (date of initial
public investment) to October 31, 1995.
2 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
3 Computed on an annualized basis.
4 During the period, certain fees were voluntarily waived or reimbursed. If such
waivers or reimbursements had not occurred, the ratios would have been as
indicated.
See Notes which are an integral part of the Financial Statements
Notes to Financial Statements
APRIL 30, 1999 (UNAUDITED)
ORGANIZATION
Federated Municipal Cash Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "Act") as an open-end, management
investment company. The Trust consists of 17 portfolios. The financial
statements included herein are only those of Georgia Municipal Cash Trust (the
"Fund"). The financial statements of the other portfolios are presented
separately. The assets of each portfolio are segregated and a shareholder's
interest is limited to the portfolio in which shares are held. The investment
objective of the Fund is current income exempt from federal regular income tax
and the income tax imposed by the State of Georgia consistent with stability of
principal and liquidity.
SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS
The Fund uses the amortized cost method to value its portfolio securities in
accordance with Rule 2a-7 under the Act.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS
Interest income and expenses are accrued daily. Bond premium and discount, if
applicable, are amortized as required by the Internal Revenue Code, as amended
(the "Code"). Distributions to shareholders are recorded on the ex- dividend
date.
FEDERAL TAXES
It is the Fund's policy to comply with the provisions of the Code applicable to
regulated investment companies and to distribute to shareholders each year
substantially all of its income. Accordingly, no provisions for federal tax are
necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Fund may engage in when-issued or delayed delivery transactions. The Fund
records when-issued securities on the trade date and maintains security
positions such that sufficient liquid assets will be available to make payment
for the securities purchased. Securities purchased on a when- issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts of assets, liabilities, expenses and revenues reported in the
financial statements. Actual results could differ from those estimated.
OTHER
Investment transactions are accounted for on the trade date.
SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Board of Trustees (the "Trustees") to issue
an unlimited number of full and fractional shares of beneficial interest
(without par value). At April 30, 1999, capital paid-in aggregated $193,720,797.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS YEAR
ENDED ENDED
APRIL 30, OCTOBER 31,
1999 1998
<S> <C> <C>
Shares sold 360,159,368 632,771,755
Shares issued to
shareholders in payment of
distributions declared 1,394,580 3,758,781
Shares redeemed (335,930,936) (590,290,954)
NET CHANGE RESULTING FROM
SHARE TRANSACTIONS 25,623,012 46,239,582
</TABLE>
INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE
Federated Investment Management Company, the Fund's investment adviser (the
"Adviser"), receives for its services an annual investment advisory fee equal to
0.50% of the Fund's average daily net assets. The Adviser may voluntarily choose
to waive any portion of its fee. The Adviser can modify or terminate this
voluntary waiver at any time at its sole discretion.
ADMINISTRATIVE FEE
Federated Services Company ("FServ"), under the Administrative Services
Agreement, provides the Fund with administrative personnel and services. The fee
paid to FServ is based on the level of average aggregate daily net assets of all
funds advised by subsidiaries of Federated Investors, Inc. for the period. The
administrative fee received during the period of the Administrative Services
Agreement shall be at least $125,000 per portfolio and $30,000 per each
additional class of shares.
SHAREHOLDER SERVICES FEE
Under the terms of a Shareholder Services Agreement with Federated Shareholder
Services Company ("FSSC"), the Fund will pay FSSC up to 0.25% of average daily
net assets of the Fund for the period. The fee paid to FSSC is used to finance
certain services for shareholders and to maintain shareholder accounts. FSSC may
voluntarily choose to waive any portion of its fee. FSSC can modify or terminate
this voluntary waiver at any time at its sole discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES
FServ, through its subsidiary FSSC, serves as transfer and dividend disbursing
agent for the Fund. The fee paid to FSSC is based on the size, type and number
of accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES
FServ maintains the Fund's accounting records for which it receives a fee. The
fee is based on the level of the Fund's average daily net assets for the period,
plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES
Organizational expenses of $13,648 were borne initially by the Adviser. The Fund
has reimbursed the Adviser for these expenses. These expenses have been deferred
and are being amortized during the five-year period following the Fund's
effective date.
INTERFUND TRANSACTIONS
During the period ended April 30, 1999, the Fund engaged in purchase and sale
transactions with funds that have a common investment adviser (or affiliated
investment advisers), common Director/Trustees, and/or common Officers. These
purchase and sale transactions were made at current market value pursuant to
Rule 17a-7 under the Act amounting to $261,765,000 and $207,890,000,
respectively.
GENERAL
Certain of the Officers and Trustees of the Trust are Officers and Directors or
Trustees of the above companies.
CONCENTRATION OF CREDIT RISK
Since the Fund invests a substantial portion of its assets in issuers located in
one state, it will be more susceptible to factors adversely affecting issuers of
that state than would be a comparable tax-exempt mutual fund that invests
nationally. In order to reduce the credit risk associated with such factors, at
April 30, 1999, 75.6% of the securities in the portfolio of investments are
backed by letters of credit or bond insurance of various financial institutions
and financial guaranty assurance agencies. The percentage of investments insured
by or supported (backed) by a letter of credit from any one institution or
agency did not exceed 11.7% of total investments.
YEAR 2000
Similar to other financial organizations, the Fund could be adversely affected
if the computer systems used by the Fund's service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. The Fund's Adviser and administrator are taking measures that they
believe are reasonably designed to address the Year 2000 issue with respect to
computer systems that they use and to obtain reasonable assurances that
comparable steps are being taken by each of the Fund's other service providers.
At this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact to the Fund.
Trustees
JOHN F. DONAHUE
THOMAS G. BIGLEY
JOHN T. CONROY, JR.
JOHN F. CUNNINGHAM
LAWRENCE D. ELLIS, M.D.
PETER E. MADDEN
CHARLES F. MANSFIELD, JR.
JOHN E. MURRAY, JR., J.D., S.J.D.
MARJORIE P. SMUTS
JOHN S. WALSH
Officers
JOHN F. DONAHUE
Chairman
GLEN R. JOHNSON
President
J. CHRISTOPHER DONAHUE
Executive Vice President
EDWARD C. GONZALES
Executive Vice President
JOHN W. MCGONIGLE
Executive Vice President and Secretary
RICHARD B. FISHER
Vice President
RICHARD J. THOMAS
Treasurer
ANTHONY R. BOSCH
Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment
risk, including the possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the fund's prospectus which contains facts concerning
its objective and policies, management fees, expenses and other information.
[Graphic]
Federated
World-Class Investment Manager
SEMI-ANNUAL REPORT
Georgia Municipal Cash Trust
SEMI-ANNUAL REPORT TO SHAREHOLDERS
APRIL 30, 1999
[Graphic]
Federated
Georgia Municipal Cash Trust
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
1-800-341-7400
WWW.FEDERATEDINVESTORS.COM
Federated Securities Corp., Distributor
Cusip 314229691
G01478-01 (6/99)
[Graphic]
SEMI-ANNUAL REPORT
President's Message
Dear Shareholder:
I am pleased to present the Semi-Annual Report to Shareholders of Massachusetts
Municipal Cash Trust, a portfolio of Federated Municipal Trust, which covers the
six-month period from November 1, 1998 through April 30, 1999. The report begins
with a discussion with the fund's portfolio manager, followed by a complete
listing of the fund's holdings and its financial statements. Financial data is
included for the fund's Institutional Service Shares and Boston 1784 Funds SM
Shares.
The fund is a convenient way to keep your ready cash pursuing double tax-free
income-free from federal regular income tax and Massachusetts state income tax
1-through a portfolio concentrated in high-quality, short-term Massachusetts
municipal securities. At the end of the reporting period, the fund's holdings
were diversified among issuers that use municipal bond financing for projects as
varied as health care, housing, community development, and transportation.
This double tax-free advantage means you have the opportunity to earn a greater
after-tax yield than you could in a comparable high-quality taxable investment.
Of course, the fund also brings you the added benefits of daily liquidity and
stability of principal. 2
During the reporting period, the fund paid double tax-free dividends totaling
$0.01 per share for both Institutional Service Shares and Boston 1784 Funds
Shares. The fund's total net assets reached $478.2 million at the end of the
reporting period.
Thank you for relying on Massachusetts Municipal Cash Trust to help your ready
cash pursue tax-free income every day. As always, we will continue to provide
you with the highest level of professional service. We invite your questions or
comments.
Sincerely,
[Graphic]
Glen R. Johnson
President
June 15, 1999
1 Income may be subject to the federal alternative minimum tax.
2 An investment in money market funds is neither insured nor guaranteed by the
Federal Deposit Insurance Corporation or any other government agency. Although
money market funds seek to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in the fund.
Investment Review
An interview with the fund's portfolio manager, Mary Jo Ochson, CFA, Senior Vice
President, Federated Investment Management Company.
WHAT ARE YOUR COMMENTS ON THE ECONOMY AND THE INTEREST RATE ENVIRONMENT DURING
THE FUND'S SIX-MONTH REPORTING PERIOD?
The economy remained robust over the reporting period, showing continued
strength in the fourth quarter of 1998 and into the first quarter of 1999. At
the same time, overall inflationary pressure was absent in spite of impressive
performance from the economy and historically low unemployment. Throughout the
reporting period, the Federal Reserve Board (the "Fed") focused on the
inflationary pressures created by a tight labor market. The Fed adopted a
neutral bias in monetary policy at its November 1998 meeting and maintained the
policy throughout the reporting period. Shortly after the close of the reporting
period, at its May 1999 meeting, the Fed changed to a tightening bias, citing
the strong U.S. economy in conjuction with record employment levels.
In addition to economic fundamentals, short-term municipal securities were
strongly influenced by technical factors over the reporting period, notably
calendar year end and income tax payment season. Variable rate demand notes
("VRDNs") started the reporting period in the 3.00% range, but moved sharply
higher to the 4.00% level in December as an imbalance between supply and demand
occurred. Yields declined in January, as investors looked to reinvest coupon
payments and year end selling pressures eased. Yields averaged slightly over
2.80% during February and March before rising to the 3.50% range in April due to
traditional tax season selling pressures. Over the six month reporting period,
VRDN yields averaged roughly 65% of taxable rates, making them attractive for
investors in the highest federal tax brackets.
The overall tone of the short-term municipal market was positive. Municipalities
across the country have benefited from a strong economy. This fact, coupled with
lower borrowing costs from low long-term rates, reduced short-term issuance. In
fact, annual municipal note issuance was at its lowest level in the last decade.
Lack of supply and heavy demand have kept short-term municipals, relative to
their taxable counterparts, very expensive.
WHAT WERE YOUR STRATEGIES FOR THE FUND DURING THE REPORTING PERIOD?
At the beginning of the reporting period, the fund's average maturity was
approximately 60 days. The fund remained in a 55 to 60-day average maturity
range over the reporting period, a neutral stance, and moved within that range
according to relative value opportunities. We continued to emphasize a barbelled
structure for the portfolio, combining a significant position in 7-day VRDNs
with purchases of longer-term securities with maturities between 6 and 12
months. After an average maturity range was targeted, we attempted to maximize
performance through ongoing relative value analysis. Relative value analysis
includes the comparison of the richness or cheapness of municipal securities to
one another as well as municipal securities to taxable instruments, such as
Treasury securities. This portfolio structure continued to pursue a competitive
yield over time.
AS WE APPROACH MID-YEAR, WHAT IS YOUR OUTLOOK GOING FORWARD?
The Fed, although certain to be troubled by persistent above-trend growth in an
environment where labor markets are tight, will likely remain on hold until
later in the year. Additionally, it is positioned for the next move to be a
tightening. In the near term, the short-term municipal market will likely
reflect technical as well as fundamental factors. These supply and demand
imbalances could very well present attractive investment opportunities for the
fund. We will continue to watch, with great interest, market developments in
order to best serve our municipal clients.
Portfolio of Investments
APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
SHORT-TERM MUNICIPALS-
99.3% 1
MASSACHUSETTS-95.5%
$ 7,000,000 ABN AMRO MuniTOPS
Certificates Trust
(Massachusetts Non-AMT)
Series 1998-12 Weekly
VRDNs (Massachusetts Water
Resources Authority)/
(MBIA INS)/(ABN AMRO Bank
N.V., Amsterdam LIQ) $ 7,000,000
6,128,000 Attleboro, MA, 3.80% BANs,
7/2/1999 6,128,994
39,867,984 Clipper Tax-Exempt Trust,
(Series A) Weekly VRDNs
(Massachusetts State
Lottery Commission)/(AMBAC
Financial Group, Inc.
INS)/(State Street Bank
and Trust Co. LIQ) 39,867,984
3,000,000 Commonwealth of
Massachusetts Weekly VRDNs
(AMBAC Financial Group,
Inc. INS)/(Citibank N.A.,
New York LIQ) 3,000,000
14,300,000 Commonwealth of
Massachusetts, (1997
Series B) Weekly VRDNs
(Landesbank Hessen-
Thueringen, Frankfurt LIQ) 14,300,000
7,675,000 Commonwealth of
Massachusetts, (Series 1998 FR/RI-A20) Weekly VRDNs (MBIA
INS)/(National Westminster Bank, PLC, London LIQ) 7,675,000
3,200,000 Framingham, MA IDA Weekly
VRDNs (Perini
Corp.)/(Barclays Bank PLC,
London LOC) 3,200,000
2,430,000 Gloucester, MA, 3.75%
BANs, 8/5/1999 2,434,054
3,000,000 Littleton, MA, 3.70% BANs,
10/16/1999 3,008,648
2,190,000 Mansfield, MA, 3.40% BANs,
10/28/1999 2,193,130
23,000,000 Massachusetts Bay Transit
Authority, BOCM Municipal
Trust Certificate MTC #34
Weekly VRDNs (FGIC
INS)/(Bank One Capital
Holdings Corp. LIQ) 23,000,000
3,000,000 Massachusetts Development
Finance Agency, (1998
Series A) Weekly VRDNs
(Shady Hill School)/(State
Street Bank and Trust Co.
LOC) 3,000,000
1,750,000 Massachusetts HEFA,
(Series 1999) Weekly VRDNs
(CIL Realty of
Massachusetts)/(Credit
Local de France LOC) 1,750,000
15,800,000 Massachusetts HEFA,
(Series A) Weekly VRDNs
(Brigham & Women's
Hospital)/(Landesbank
Hessen-Thueringen,
Frankfurt LOC) 15,800,000
3,020,000 Massachusetts HEFA,
(Series A) Weekly VRDNs
(New England Home For
Little
Wanderers)/(BankBoston,
N.A. LOC) 3,020,000
1,800,000 Massachusetts HEFA,
(Series B) Weekly VRDNs
(Clark University)/(Fleet
Bank N.A. LOC) 1,800,000
4,725,000 Massachusetts HEFA,
(Series B) Weekly VRDNs
(Endicott
College)/(BankBoston, N.A.
LOC) 4,725,000
9,915,000 Massachusetts HEFA,
(Series B) Weekly VRDNs
(Hallmark Health System)/
(FSA INS)/(Fleet National
Bank, Springfield, MA LIQ) 9,915,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
SHORT-TERM MUNICIPALS-
continued 1
MASSACHUSETTS-CONTINUED
$ 12,015,000 Massachusetts HEFA,
(Series F) Weekly VRDNs
(Children's Hospital of
Boston) $ 12,015,000
13,200,000 Massachusetts HEFA,
(Series I) Weekly VRDNs
(Harvard University) 13,200,000
6,250,000 Massachusetts HEFA, 3.00%
CP (Harvard University),
Mandatory Tender 5/17/1999 6,250,000
1,800,000 Massachusetts IFA, (Series
1992) Weekly VRDNs
(Holyoke Water Power Co.)/
(Canadian Imperial Bank of
Commerce LOC) 1,800,000
17,100,000 Massachusetts IFA, (Series
1992B), 2.75% CP (New
England Power Co.),
Mandatory Tender 5/13/1999 17,100,000
19,000,000 Massachusetts IFA, (Series
1992B), 3.05% CP (New
England Power Co.),
Mandatory Tender 5/17/1999 19,000,000
5,900,000 Massachusetts IFA, (Series
1994) Weekly VRDNs (Nova
Realty Trust)/(Fleet
National Bank,
Springfield, MA LOC) 5,900,000
5,925,000 Massachusetts IFA, (Series
1995) Weekly VRDNs
(Goddard House)/
(Fleet Bank N.A. LOC) 5,925,000
5,800,000 Massachusetts IFA, (Series
1995) Weekly VRDNs
(Whitehead Institute for
Biomedical Research) 5,800,000
7,009,000 Massachusetts IFA, (Series
1996) Weekly VRDNs (Newbury College)/(BankBoston, N.A.
LOC) 7,009,000
2,500,000 Massachusetts IFA, (Series 1997) Weekly VRDNs (Massachusetts
Society for the Prevention of Cruelty to Animals)/(Fleet
National Bank,
Springfield, MA LOC) 2,500,000
5,885,000 Massachusetts IFA, (Series
1997) Weekly VRDNs (Mount Ida College)/(Credit Local de
France LOC) 5,885,000
4,800,000 Massachusetts IFA, (Series
1998A) Weekly VRDNs (JHC
Assisted Living
Corp.)/(Fleet National
Bank, Springfield, MA LOC) 4,800,000
1,325,000 Massachusetts IFA, (Series
A) Weekly VRDNs (Hockomock
YMCA)/(Bank of Nova
Scotia, Toronto LOC) 1,325,000
9,740,000 Massachusetts IFA, (Series
B) Weekly VRDNs (Williston
North Hampton
School)/(Fleet National
Bank, Springfield, MA LOC) 9,740,000
14,000,000 Massachusetts Municipal
Wholesale Electric Co.,
Power Supply System
Revenue Bonds (1994 Series
C) Weekly VRDNs (Canadian
Imperial Bank of Commerce
LOC) 14,000,000
9,000,000 Massachusetts Port Authority, PT-1073 (Series 1998-D) Weekly
VRDNs (Bank of America NT and SA, San Francisco LIQ)
9,000,000
5,000,000 Massachusetts State HFA,
Multi-Family Refunding
Revenue Bonds (1995 Series
A) Weekly VRDNs (Republic
National Bank of New York
LIQ) 5,000,000
9,290,000 2 Massachusetts State HFA,
PT-162, 3.25% TOBs (MBIA
INS)/(Banque Nationale de
Paris LIQ), Optional
Tender 2/10/2000 9,290,000
27,545,000 Massachusetts Turnpike
Authority, Variable Rate
Certificates (Series
1997N) Weekly VRDNs (MBIA
INS)/(Bank of America NT
and SA, San Francisco LIQ) 27,545,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
SHORT-TERM MUNICIPALS-
continued 1
MASSACHUSETTS-CONTINUED
$ 9,200,000 Massachusetts Water
Resources Authority,
(Series 1994), 3.00% CP
(Morgan Guaranty Trust
Co., New York LOC),
Mandatory Tender 5/14/1999 $ 9,200,000
6,000,000 Massachusetts Water
Resources Authority,
(Series 1999A) Weekly
VRDNs (AMBAC Financial
Group, Inc. INS)/(Bank of
Nova Scotia, Toronto,
Commerzbank AG, Frankfurt
and Credit Local de France
LIQs) 6,000,000
3,700,000 Massachusetts Water
Resources Authority,
(Series A), 6.00% Bonds
(United States Treasury
PRF), 4/1/2000 (@100) 3,794,769
8,000,000 Massachusetts Water Resources Authority, PT- 1078 Weekly
VRDNs (MBIA INS)/(Bank of America NT
and SA, San Francisco LIQ) 8,000,000
1,940,000 Medway, MA, 3.32% BANs,
3/14/2000 1,941,132
6,205,000 Melrose, MA, 3.80% BANs,
8/19/1999 6,207,689
9,300,000 Middleborough, MA, 3.25%
BANs, 9/21/1999 9,309,608
5,025,000 New England Educational
Loan Marketing Corp.,
(Series H), 4.75% Bonds,
12/1/1999 5,068,730
1,117,500 Newbury, MA, 4.00% BANs,
8/13/1999 1,118,111
7,044,000 Paxton, MA, 4.00% BANs,
6/18/1999 7,045,783
2,220,000 Plymouth, MA, 3.25% BANs,
10/21/1999 2,222,448
1,257,000 Randolph, MA, 4.00% BANs,
6/18/1999 1,257,305
5,000,000 Randolph, MA, 4.00% BANs,
7/13/1999 5,001,920
1,595,000 Randolph, MA, 4.00% BANs,
8/20/1999 1,596,401
2,980,000 Springfield, MA, 4.00%
BANs (Fleet National Bank,
Springfield, MA LOC),
6/25/1999 2,981,297
2,141,500 Stoughton, MA, 3.20% BANs,
12/16/1999 2,143,359
1,424,000 Stow, MA, 3.50% BANs,
2/15/2000 1,427,281
1,993,818 Stow, MA, 3.50% BANs,
2/4/2000 1,999,717
5,768,000 Stow, MA, 3.80% BANs,
8/20/1999 5,768,842
2,000,000 Topsfield, MA, 3.75% BANs,
9/23/1999 2,003,444
1,540,000 Ware, MA, 4.00% BANs,
6/26/1999 1,540,567
3,200,000 Westfield, MA, 3.75% BANs,
10/22/1999 3,210,358
11,000,000 Westford, MA, 3.50% BANs,
4/14/2000 11,035,550
6,120,000 2 Weymouth, MA Housing
Authority, PT 1062, 3.80%
TOBs (Queen Ann
Apartments)/(Merrill Lynch
Capital Services, Inc.
LIQ)/(Merrill Lynch
Capital Services, Inc.
LOC), Optional Tender
8/5/1999 6,120,000
3,300,000 Weymouth, MA, 3.50% BANs,
4/12/2000 3,310,602
5,000,000 Woods Hole, MA Marthas
Vineyard Steamship
Authority, 3.00% BANs
(Commonwealth of
Massachusetts GTD),
5/18/1999 5,000,472
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
SHORT-TERM MUNICIPALS-
continued 1
MASSACHUSETTS-CONTINUED
$ 7,375,000 Worcester, MA, 4.00% BANs,
8/26/1999 $ 7,379,535
TOTAL 456,586,730
PUERTO RICO-3.8%
18,250,000 Commonwealth of Puerto
Rico, Floating Rate Trust
Receipts (Series 1997)
Weekly VRDNs (Commerzbank
AG, Frankfurt
LIQ)/(Commerzbank AG,
Frankfurt LOC) 18,250,000
TOTAL INVESTMENTS (AT
AMORTIZED COST) 3 $ 474,836,730
</TABLE>
1 The fund may only invest in securities rated in one of the two highest
short-term rating categories by nationally recognized statistical rating
organizations ("NRSROs") or unrated securities of comparable quality. An NRSRO's
two highest rating categories are determined without regard for sub-categories
and gradations. For example, securities rated SP-1+, SP-1 or SP-2 by Standard &
Poor's, MIG-1 or MIG-2 by Moody's Investors Service, Inc., F-1+, F-1 and F-2 by
Fitch IBCA, Inc. are all considered rated in one of the two highest short-term
rating categories.
Securities rated in the highest short-term rating category (and unrated
securities of comparable quality) are identified as First Tier securities.
Securities rated in the second highest short-term rating category (and unrated
securities of comparable quality) are identified as Second Tier securities. The
fund follows applicable regulations in determining whether a security is rated
and whether a security rated by multiple NRSROs in different rating categories
should be identified as a First or Second Tier security.
At April 30, 1999, the portfolio securities were rated as follows:
Tier Rating Based on Total Market Value (Unaudited)
<TABLE>
<CAPTION>
FIRST TIER Second Tier
<S> <C>
98.48% 1.52%
</TABLE>
2 Denotes a restricted security which is subject to restrictions on resale under
Federal securities laws. These securities have been deemed liquid based upon
criteria approved by the fund's Board of Trustees. At April 30, 1999, these
securities amounted to $15,410,000, which represents 3.2% of net assets.
3 Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($478,157,229) at April 30, 1999.
The following acronyms are used throughout this portfolio:
AMBAC -American Municipal Bond Assurance Corporation AMT -Alternative Minimum
Tax BANs -Bond Anticipation Notes CP -Commercial Paper FGIC -Financial Guaranty
Insurance Company FSA -Financial Security Assurance GTD -Guaranty HEFA -Health
and Education Facilities Authority HFA -Housing Finance Authority IDA
- -Industrial Development Authority IFA -Industrial Finance Authority INS -Insured
LIQ -Liquidity Agreement LOC -Letter of Credit MBIA -Municipal Bond Investors
Assurance PLC -Public Limited Company PRF -Prerefunded SA -Support Agreement
TOBs -Tender Option Bonds VRDNs -Variable Rate Demand Notes
See Notes which are an integral part of the Financial Statements
Statement of Assets and Liabilities
APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Total investments in
securities, at amortized
cost and value $ 474,836,730
Cash 392,828
Income receivable 3,921,778
TOTAL ASSETS 479,151,336
LIABILITIES:
Income distribution
payable $ 978,145
Accrued expenses 15,962
TOTAL LIABILITIES 994,107
Net assets for 478,157,229
shares outstanding $ 478,157,229
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PROCEEDS PER SHARE
INSTITUTIONAL SERVICE
SHARES:
$290,811,748 / 290,811,748
shares outstanding $1.00
BOSTON 1784 FUNDS SHARES:
$187,345,481 / 187,345,481
shares outstanding $1.00
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Operations
SIX MONTHS ENDED APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 7,303,949
EXPENSES:
Investment advisory fee $ 1,161,059
Administrative personnel
and services fee 175,088
Custodian fees 9,093
Transfer and dividend
disbursing agent fees and
expenses 52,430
Directors'/Trustees' fees 1,778
Auditing fees 6,705
Legal fees 6,478
Portfolio accounting fees 50,994
Shareholder services fee-
Institutional Service
Shares 350,340
Shareholder services fee-
Boston 1784 Funds Shares 230,189
Share registration costs 21,621
Printing and postage 13,896
Insurance premiums 17,460
Miscellaneous 2,024
TOTAL EXPENSES 2,099,155
WAIVERS:
Waiver of investment
advisory fee $ (222,180)
Waiver of shareholder
services fee-Institutional
Service Shares (345,903)
Waiver of shareholder
services fee-Boston 1784
Funds Shares (230,189)
TOTAL WAIVERS (798,272)
Net expenses 1,300,883
Net investment income $ 6,003,066
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR
(unaudited) ENDED
APRIL 30, OCTOBER 31,
1999 1998
<S> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net investment income $ 6,003,066 $ 10,788,205
DISTRIBUTIONS TO
SHAREHOLDERS:
Distributions from net
investment income
Institutional Service
Shares (3,629,598) (6,723,838)
Boston 1784 Funds Shares (2,373,468) (4,064,367)
CHANGE IN NET ASSETS
RESULTING FROM
DISTRIBUTIONS
TO SHAREHOLDERS (6,003,066) (10,788,205)
SHARE TRANSACTIONS:
Proceeds from sale of
shares 712,490,639 1,191,190,660
Net asset value of shares
issued to shareholders in
payment of
distributions declared 2,770,559 5,640,601
Cost of shares redeemed (656,047,060) (993,594,809)
CHANGE IN NET ASSETS
RESULTING FROM SHARE
TRANSACTIONS 59,214,138 203,236,452
Change in net assets 59,214,138 203,236,452
NET ASSETS:
Beginning of period 418,943,091 215,706,639
End of period $ 478,157,229 $ 418,943,091
</TABLE>
See Notes which are an integral part of the Financial Statements
Financial Highlights-Institutional Service Shares
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(unaudited)
APRIL 30, YEAR ENDED OCTOBER 31,
1999 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.01 0.03 0.03 0.03 0.03 0.02
LESS DISTRIBUTIONS:
Distributions from net investment income (0.01) (0.03) (0.03) (0.03) (0.03) (0.02)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN 1 1.30% 3.04% 3.09% 3.07% 3.34% 2.14%
RATIOS TO AVERAGE NET ASSETS:
Expenses 0.56% 2 0.55% 0.55% 0.55% 0.55% 0.55%
Net investment income 2.59% 2 2.98% 3.05% 3.02% 3.30% 2.12%
Expenses 3 0.90% 2 0.91% 0.95% 0.97% 1.00% 0.90%
Net investment income 3 2.25% 2 2.62% 2.65% 2.60% 2.85% 1.77%
SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $290,812 $256,386 $141,869 $119,739 $99,628 $90,013
</TABLE>
1 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
2 Computed on an annualized basis.
3 During the period, certain fees were voluntarily waived. If such voluntary
waivers had not occurred, the ratios would have been as indicated.
See Notes which are an integral part of the Financial Statements
Financial Highlights-Boston 1784 Funds Shares
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(unaudited)
APRIL 30, YEAR ENDED OCTOBER 31,
1999 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.01 0.03 0.03 0.03 0.03 0.02
LESS DISTRIBUTIONS:
Distributions from net investment income (0.01) (0.03) (0.03) (0.03) (0.03) (0.02)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN 1 1.30% 3.03% 3.07% 3.05% 3.30% 2.05%
RATIOS TO AVERAGE NET ASSETS:
Expenses 0.56% 2 0.57% 0.57% 0.58% 0.60% 0.64%
Net investment income 2.58% 2 2.97% 3.03% 3.01% 3.25% 2.09%
Expenses 3 0.91% 2 0.93% 0.96% 1.00% 1.05% 0.99%
Net investment income 3 2.23% 2 2.61% 2.64% 2.59% 2.80% 1.74%
SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $187,345 $162,557 $73,837 $54,667 $46,580 $41,912
</TABLE>
1 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
2 Computed on an annualized basis.
3 During the period, certain fees were voluntarily waived. If such voluntary
waivers had not occurred, the ratios would have been as indicated.
See Notes which are an integral part of the Financial Statements
Notes to Financial Statements
APRIL 30, 1999 (UNAUDITED)
ORGANIZATION
Federated Municipal Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "Act") as an open-end, management
investment company. The Trust consists of 17 portfolios. The financial
statements included herein are only those of Massachusetts Municipal Cash Trust
(the "Fund"). The financial statements of the other portfolios are presented
separately. The assets of each portfolio are segregated and a shareholder's
interest is limited to the portfolio in which shares are held. The Fund offers
two classes of shares: Institutional Service Shares and Boston 1784 Funds
Shares. The investment objective of the Fund is to provide current income exempt
from federal regular income tax and Massachusetts state income tax consistent
with stability of principal.
SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS
The Fund uses the amortized cost method to value its portfolio securities in
accordance with Rule 2a-7 under the Act.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS
Interest income and expenses are accrued daily. Bond premium and discount, if
applicable, are amortized as required by the Internal Revenue Code, as amended
(the "Code"). Distributions to shareholders are recorded on the ex- dividend
date.
FEDERAL TAXES
It is the Fund's policy to comply with the provisions of the Code applicable to
regulated investment companies and to distribute to shareholders each year
substantially all of its income. Accordingly, no provisions for federal tax are
necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Fund may engage in when-issued or delayed delivery transactions. The Fund
records when-issued securities on the trade date and maintains security
positions such that sufficient liquid assets will be available to make payment
for the securities purchased. Securities purchased on a when- issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
RESTRICTED SECURITIES
Restricted securities are securities that may only be resold upon registration
under federal securities laws or in transactions exempt from such registration.
Many restricted securities may be resold in the secondary market in transactions
exempt from registration. In some cases, the restricted securities may be resold
without registration upon exercise of a demand feature. Such restricted
securities may be determined to be liquid under criteria established by the
Board of Trustees ("Trustees"). The Fund will not incur any registration costs
upon such resales. Restricted securities are valued at amortized cost in
accordance with Rule 2a-7 under the Act.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts of assets, liabilities, expenses and revenues reported in the
financial statements. Actual results could differ from those estimated.
OTHER
Investment transactions are accounted for on the trade date.
SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares. At April 30, 1999, capital paid-in aggregated $478,157,229.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS YEAR
ENDED ENDED
APRIL 30, OCTOBER 31,
1999 1998
<S> <C> <C>
INSTITUTIONAL SERVICE
SHARES:
Shares sold 588,874,817 943,828,322
Shares issued to
shareholders in payment of
distributions declared 791,942 1,573,009
Shares redeemed (555,240,651) (830,885,045)
NET CHANGE RESULTING FROM
INSTITUTIONAL SERVICE
SHARE TRANSACTIONS 34,426,108 114,516,286
<CAPTION>
SIX MONTHS YEAR
ENDED ENDED
APRIL 30, OCTOBER 31,
1999 1998
<S> <C> <C>
BOSTON 1784 FUNDS SHARES:
Shares sold 123,615,822 247,362,338
Shares issued to
shareholders in payment of
distributions declared 1,978,617 4,067,592
Shares redeemed (100,806,409) (162,709,764)
NET CHANGE RESULTING FROM
BOSTON 1784 FUNDS SHARE
TRANSACTIONS 24,788,030 88,720,166
NET CHANGE RESULTING FROM
SHARE TRANSACTIONS 59,214,138 203,236,452
</TABLE>
INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE
Federated Investment Management Company, the Fund's investment adviser (the
"Adviser"), receives for its services an annual investment advisory fee equal to
0.50% of the Fund's average daily net assets. The Adviser may voluntarily choose
to waive any portion of its fee. The Adviser can modify or terminate this
voluntary waiver at any time at its sole discretion.
ADMINISTRATIVE FEE
Federated Services Company ("FServ"), under the Administrative Services
Agreement, provides the Fund with administrative personnel and services. The fee
paid to FServ is based on the level of average aggregate daily net assets of all
funds advised by subsidiaries of Federated Investors, Inc. for the period. The
administrative fee received during the period of the Administrative Services
Agreement shall be at least $125,000 per portfolio and $30,000 per each
additional class of shares.
SHAREHOLDER SERVICES FEE
Under the terms of a Shareholder Services Agreement with Federated Shareholder
Services Company ("FSSC"), the Fund will pay FSSC up to 0.25% of average daily
net assets of the Institutional Service Share for the period. Under the terms of
a Shareholder Services Agreement with BankBoston, N.A., the fund will pay
BankBoston, N.A., up to 0.25% of average daily net assets of Boston 1784 Funds
Shares for the period. These fees are used to finance certain services for
shareholders and to maintain shareholder accounts. FSSC and BankBoston, N.A. may
voluntarily choose to waive any portion of their fees. FSSC and BankBoston, N.A.
can modify or terminate these voluntary waivers at any time at their sole
discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES
FServ, through its subsidiary FSSC, serves as transfer and dividend disbursing
agent for the Fund. The fee paid to FSSC is based on the size, type and number
of accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES
FServ maintains the Fund's accounting records for which it receives a fee. The
fee is based on the level of the Fund's average daily net assets for the period,
plus out-of-pocket expenses.
INTERFUND TRANSACTIONS
During the period ended April 30, 1999, the Fund engaged in purchase and sale
transactions with funds that have a common investment adviser (or affiliated
investment advisers), common Directors/Trustees, and/or common Officers. These
purchase and sale transactions were made at current market value pursuant to
Rule 17a-7 under the Act amounting to $341,174,132 and $101,540,000,
respectively.
GENERAL
Certain of the Officers and Trustees of the Trust are Officers and Directors or
Trustees of the above companies.
CONCENTRATION OF CREDIT RISK
Since the Fund invests a substantial portion of its assets in issuers located in
one state, it will be more susceptible to factors adversely affecting issuers of
that state than would be a comparable tax-exempt mutual fund that invests
nationally. In order to reduce the credit risk associated with such factors, at
April 30, 1999, 56.9% of the securities in the portfolio of investments are
backed by letters of credit or bond insurance of various financial institutions
and financial guaranty assurance agencies. The percentage of investments insured
by or supported (backed) by a letter of credit from any one institution or
agency did not exceed 12.5% of total investments.
YEAR 2000
Similar to other financial organizations, the Fund could be adversely affected
if the computer systems used by the Fund's service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. The Fund's Adviser and administrator are taking measures that they
believe are reasonably designed to address the Year 2000 issue with respect to
computer systems that they use and to obtain reasonable assurances that
comparable steps are being taken by each of the Fund's other service providers.
At this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact to the Fund.
Trustees
JOHN F. DONAHUE
THOMAS G. BIGLEY
JOHN T. CONROY, JR.
JOHN F. CUNNINGHAM
LAWRENCE D. ELLIS, M.D.
PETER E. MADDEN
CHARLES F. MANSFIELD, JR.
JOHN E. MURRAY, JR., J.D., S.J.D.
MARJORIE P. SMUTS
JOHN S. WALSH
Officers
JOHN F. DONAHUE
Chairman
GLEN R. JOHNSON
President
J. CHRISTOPHER DONAHUE
Executive Vice President
EDWARD C. GONZALES
Executive Vice President
JOHN W. MCGONIGLE
Executive Vice President and Secretary
RICHARD B. FISHER
Vice President
RICHARD J. THOMAS
Treasurer
ANTHONY R. BOSCH
Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment
risk, including the possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the fund's prospectus which contains facts concerning
its objective and policies, management fees, expenses, and other information.
[Graphic]
Federated
World-Class Investment Manager
SEMI-ANNUAL REPORT
Massachusetts Municipal Cash Trust
SEMI-ANNUAL REPORT TO SHAREHOLDERS
APRIL 30, 1999
[Graphic]
Federated
Massachusetts Municipal Cash Trust
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
1-800-341-7400
WWW.FEDERATEDINVESTORS.COM
Federated Securities Corp., Distributor
Cusip 314229832
Cusip 314229303
1052806 (6/99)
[Graphic]
President's Message
Dear Shareholder:
I am pleased to present the Semi-Annual Report to Shareholders of Massachusetts
Municipal Cash Trust, a portfolio of Federated Municipal Trust, which covers the
six month period from November 1, 1998 through April 30, 1999. The report begins
with a discussion with the Fund's portfolio manager, followed by a complete
listing of the Fund's holdings and its financial statements. Financial data is
included for the Fund's Institutional Service Shares and Boston 1784 Funds/(SM)/
Shares.
The Fund is a convenient way to keep your ready cash pursuing double tax-free
income -- free from federal regular income tax and Massachusetts state income
tax* -- through a portfolio concentrated in high-quality, short-term
Massachusetts municipal securities. At the end of the reporting period, the
Fund's holdings were diversified among issuers that use municipal bond financing
for projects as varied as health care, housing, community development and
transportation.
This double tax-free advantage means you have the opportunity to earn a greater
after-tax yield than you could in a comparable high-quality taxable investment.
Of course, the Fund also brings you the added benefits of daily liquidity and
stability of principal.**
During the reporting period, the Fund paid double tax-free dividends totaling
$0.01 per share for both Institutional Service Shares and Boston 1784 Funds
Shares. The Fund's total net assets reached $478.2 million at the end of the
reporting period.
Thank you for relying on Massachusetts Municipal Cash Trust to help your ready
cash pursue tax-free income every day. As always, we'll continue to provide you
with the highest level of professional service. We invite your questions or
comments.
Sincerely,
/s/ Glen R. Johnson
Glen R. Johnson
President
June 15, 1999
*Income may be subject to the federal alternative minimum tax.
**An investment in money market funds is neither insured nor guaranteed by the
Federal Deposit Insurance Corporation or any other government agency. Although
money market funds seek to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in the fund.
Investment Review
An interview with the Fund's portfolio manager, Mary Jo Ochson, CFA, Senior Vice
President, Federated Investment Management Company.
Q. What are your comments on the economy and the interest rate environment
during the Fund's six month reporting period?
The economy remained robust over the reporting period, showing continued
strength in the fourth quarter of 1998 and into the first quarter of 1999. At
the same time, overall inflationary pressure was absent in spite of impressive
performance from the economy and historically low unemployment. Throughout the
reporting period, the Federal Reserve Board (the "Fed") focused on the
inflationary pressures created by a tight labor market. The Fed adopted a
neutral stance in monetary policy at its November 1998 meeting and maintained
the policy throughout the reporting period. Shortly after the close of the
reporting period, at its May 1999 meeting, the Fed changed to a tightening bias,
citing the strong U.S. economy in conjunction with record employment levels.
In addition to economic fundamentals, short-term municipal securities were
strongly influenced by technical factors over the reporting period, notably
calendar year end and income tax payment season. Variable rate demand notes
("VRDNs") started the reporting period in the 3.00% range, but moved sharply
higher to the 4.00% level in December as an imbalance between supply and demand
occurred. Yields declined in January as investors looked to reinvest coupon
payments and year end selling pressures eased. Yields averaged slightly over
2.80% during February and March before rising to the 3.50% range in April due to
traditional tax season selling pressures. Over the six month reporting period,
VRDN yields averaged roughly 65% of taxable rates, making them attractive for
investors in the highest federal income tax brackets.
The overall tone of the short-term municipal market was positive. Municipalities
across the country have benefited from a strong economy. This fact, coupled with
lower borrowing costs from low long-term rates, reduced short-term issuance. In
fact, annual municipal note issuance was at its lowest level in the last decade.
Lack of supply and heavy demand have kept short-term municipals, relative to
their taxable counterparts, very expensive.
Q. What were your strategies for the Fund during the reporting period?
At the beginning of the reporting period, the Fund's average maturity was
approximately 60 days. The Fund remained in a 55 to 60-day average maturity
range over the reporting period, a neutral stance, and moved within that range
according to relative value opportunities. We continued to emphasize a barbelled
structure for the portfolio, combining a significant position in 7-day VRDNs
with purchases of longer-term securities with maturities between 6 and 12
months. After an average maturity range was targeted, we attempted to maximize
performance through ongoing relative value analysis. Relative value analysis
includes the comparison of the richness or cheapness of municipal securities to
one another as well as municipal securities to taxable instruments, such as
Treasury securities. This portfolio structure continued to pursue a competitive
yield over time.
Q. As we approach mid-year, what is your outlook going forward?
The Fed, although certain to be troubled by persistent above-trend growth in an
environment where labor markets are tight, will likely remain on hold until
later in the year. Additionally, it is positioned for the next move to be a
tightening. In the near term, the short-term municipal market will likely
reflect technical as well as fundamental factors. These supply and demand
imbalances could very well present attractive investment opportunities for the
Fund. We will continue to watch, with great interest, market developments in
order to best serve our municipal fund clients.
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Net Net
Asset Distributions Asset Net Net Assets
Value Net from Net Value Net Investment End of
Beginning Investment Investment End Total Investment Expenses Income Period
of Period Income Income of Period Return(1) Expenses Income (2) (2) (000)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Boston 1784
Funds Shares
Six Months Ended
April 30, 1999
(unaudited) $1.00 0.01 (0.01) $1.00 1.30% 0.56%* 2.58%* 0.91%* 2.23%* $187,345
For the Year Ended
October 31, 1998 $1.00 0.03 (0.03) $1.00 3.03% 0.57% 2.97% 0.93% 2.61% $162,557
For the Year Ended
October 31, 1997 $1.00 0.03 (0.03) $1.00 3.07% 0.57% 3.03% 0.96% 2.64% $ 73,837
For the Year Ended
October 31, 1996 $1.00 0.03 (0.03) $1.00 3.05% 0.58% 3.01% 1.00% 2.59% $ 54,667
For the Year Ended
October 31, 1995 $1.00 0.03 (0.03) $1.00 3.30% 0.60% 3.25% 1.05% 2.80% $ 46,580
For the Year Ended
October 31, 1994 $1.00 0.02 (0.02) $1.00 2.05% 0.64% 2.09% 0.99% 1.74% $ 41,912
Institutional
Service Shares
Six Months Ended
April 30, 1999
(unaudited) $1.00 0.01 (0.01) $1.00 1.30% 0.56%* 2.59%* 0.90%* 2.25%* $290,812
For the Year Ended
October 31, 1998 $1.00 0.03 (0.03) $1.00 3.04% 0.55% 2.98% 0.91% 2.62% $256,386
For the Year Ended
October 31, 1997 $1.00 0.03 (0.03) $1.00 3.09% 0.55% 3.05% 0.95% 2.65% $141,869
For the Year Ended
October 31, 1996 $1.00 0.03 (0.03) $1.00 3.07% 0.55% 3.02% 0.97% 2.60% $119,739
For the Year Ended
October 31, 1995 $1.00 0.03 (0.03) $1.00 3.34% 0.55% 3.30% 1.00% 2.85% $ 99,628
For the Year Ended
October 31, 1994 $1.00 0.02 (0.02) $1.00 2.14% 0.55% 2.12% 0.90% 1.77% $ 90,013
</TABLE>
* Computed on an annualized basis.
(1) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(2) During the period indicated certain fees were voluntarily waived. If such
voluntary waivers had not occurred, the ratios would have been as indicated.
(See Notes which are an integral part of the Financial Statements)
Massachusetts Municipal Cash Trust
April 30, 1999 (unaudited)
<TABLE>
<CAPTION>
Principal
Amount
(1) Short-Term Municipals--99.3%
Massachusetts--95.5%
<S> <C> <C> <C> <C>
$ 7,000,000 ABN AMRO MuniTOPS Certificates Trust $ 7,000,000
(Massachusetts Non-AMT) Series 1998-12 Weekly VRDNs
(Massachusetts Water Resources Authority)/(MBIA INS)/(ABN
AMRO Bank N.V., Amsterdam LIQ)
6,128,000 Attleboro, MA, 3.80% BANs, 7/2/1999 6,128,994
39,867,984 Clipper Tax-Exempt Trust, (Series A) Weekly 39,867,984
VRDNs (Massachusetts State Lottery
Commission)/(AMBAC Financial Group, Inc. INS)/
(State Street Bank and Trust Co. LIQ)
3,000,000 Commonwealth of Massachusetts Weekly VRDNs 3,000,000
(AMBAC Financial Group, Inc. INS)/(Citibank NA,
New York LIQ)
14,300,000 Commonwealth of Massachusetts, (1997 Series B) 14,300,000
Weekly VRDNs (Landesbank Hessen-Thueringen,
Frankfurt LIQ)
7,675,000 Commonwealth of Massachusetts, (Series 1998 7,675,000
FR/RI-A20) Weekly VRDNs (MBIA INS)/(National
Westminster Bank, PLC, London LIQ)
3,200,000 Framingham, MA IDA Weekly VRDNs (Perini 3,200,000
Corp.)/(Barclays Bank PLC, London LOC)
2,430,000 Gloucester, MA, 3.75% BANs, 8/5/1999 2,434,054
3,000,000 Littleton, MA, 3.70% BANs, 10/16/1999 3,008,648
2,190,000 Mansfield, MA, 3.40% BANs, 10/28/1999 2,193,130
23,000,000 Massachusetts Bay Transit Authority, BOCM 23,000,000
Municipal Trust Certificate MTC #34 Weekly VRDNs
(FGIC INS)/(Bank One Capital Holdings Corp. LIQ)
3,000,000 Massachusetts Development Finance Agency, (1998 3,000,000
Series A) Weekly VRDNs (Shady Hill
School)/(State Street Bank and Trust Co. LOC)
1,750,000 Massachusetts HEFA, (Series 1999) Weekly VRDNs 1,750,000
(CIL Realty of Massachusetts)/(Credit Local de
France LOC)
15,800,000 Massachusetts HEFA, (Series A) Weekly VRDNs 15,800,000
(Brigham & Women's Hospital)/(Landesbank
Hessen-Thueringen, Frankfurt LOC)
3,020,000 Massachusetts HEFA, (Series A) Weekly VRDNs (New 3,020,000
England Home For Little Wanderers)/(BankBoston,
N.A. LOC)
1,800,000 Massachusetts HEFA, (Series B) Weekly VRDNs 1,800,000
(Clark University)/(Fleet Bank N.A. LOC)
4,725,000 Massachusetts HEFA, (Series B) Weekly VRDNs 4,725,000
(Endicott College)/(BankBoston, N.A. LOC)
9,915,000 Massachusetts HEFA, (Series B) Weekly VRDNs 9,915,000
(Hallmark Health System)/(FSA INS)/(Fleet
National Bank, Springfield, MA LIQ)
12,015,000 Massachusetts HEFA, (Series F) Weekly VRDNs 12,015,000
(Children's Hospital of Boston)
13,200,000 Massachusetts HEFA, (Series I) Weekly VRDNs 13,200,000
(Harvard University)
6,250,000 Massachusetts HEFA, 3.00% CP (Harvard 6,250,000
University), Mandatory Tender 5/17/1999
1,800,000 Massachusetts IFA, (Series 1992) Weekly VRDNs 1,800,000
(Holyoke Water Power Co.)/(Canadian Imperial
Bank of Commerce LOC)
17,100,000 Massachusetts IFA, (Series 1992B), 2.75% CP (New 17,100,000
England Power Co.), Mandatory Tender 5/13/1999
19,000,000 Massachusetts IFA, (Series 1992B), 3.05% CP (New 19,000,000
England Power Co.), Mandatory Tender 5/17/1999
5,900,000 Massachusetts IFA, (Series 1994) Weekly VRDNs 5,900,000
(Nova Realty Trust)/(Fleet National Bank,
Springfield, MA LOC)
5,925,000 Massachusetts IFA, (Series 1995) Weekly VRDNs 5,925,000
(Goddard House)/(Fleet Bank N.A. LOC)
5,800,000 Massachusetts IFA, (Series 1995) Weekly VRDNs 5,800,000
(Whitehead Institute for Biomedical Research)
7,009,000 Massachusetts IFA, (Series 1996) Weekly VRDNs 7,009,000
(Newbury College)/(BankBoston, N.A. LOC)
2,500,000 Massachusetts IFA, (Series 1997) Weekly VRDNs 2,500,000
(Massachusetts Society for the Prevention of
Cruelty to Animals)/(Fleet National Bank,
Springfield, MA LOC)
5,885,000 Massachusetts IFA, (Series 1997) Weekly VRDNs 5,885,000
(Mount Ida College)/(Credit Local de France LOC)
4,800,000 Massachusetts IFA, (Series 1998A) Weekly VRDNs 4,800,000
(JHC Assisted Living Corp.)/(Fleet National
Bank, Springfield, MA LOC)
1,325,000 Massachusetts IFA, (Series A) Weekly VRDNs 1,325,000
(Hockomock YMCA)/(Bank of Nova Scotia, Toronto
LOC)
9,740,000 Massachusetts IFA, (Series B) Weekly VRDNs 9,740,000
(Williston North Hampton School)/(Fleet National
Bank, Springfield, MA LOC)
14,000,000 Massachusetts Municipal Wholesale Electric Co., 14,000,000
Power Supply System Revenue Bonds (1994 Series
C) Weekly VRDNs (Canadian Imperial Bank of
Commerce LOC)
9,000,000 Massachusetts Port Authority, PT-1073 (Series 9,000,000
1998-D) Weekly VRDNs (Bank of America NT and SA,
San Francisco LIQ)
5,000,000 Massachusetts State HFA, Multi-Family Refunding 5,000,000
Revenue Bonds (1995 Series A) Weekly VRDNs
(Republic National Bank of New York LIQ)
9,290,000 (2)Massachusetts State HFA, PT-162, 3.25% TOBs 9,290,000
(MBIA INS)/(Banque Nationale de Paris LIQ),
Optional Tender 2/10/2000
27,545,000 Massachusetts Turnpike Authority, Variable Rate 27,545,000
Certificates (Series 1997N) Weekly VRDNs (MBIA
INS)/(Bank of America NT and SA, San Francisco
LIQ)
9,200,000 Massachusetts Water Resources Authority, (Series 9,200,000
1994), 3.00% CP (Morgan Guaranty Trust Co., New
York LOC), Mandatory Tender 5/14/1999
6,000,000 Massachusetts Water Resources Authority, (Series 6,000,000
1999A) Weekly VRDNs (AMBAC Financial Group, Inc.
INS)/(Bank of Nova Scotia, Toronto, Commerzbank
AG, Frankfurt and Credit Local de France LIQs)
3,700,000 Massachusetts Water Resources Authority, (Series 3,794,769
A), 6.00% Bonds (United States Treasury PRF),
4/1/2000 (@100)
8,000,000 Massachusetts Water Resources Authority, PT-1078 8,000,000
Weekly VRDNs (MBIA INS)/(Bank of America NT and
SA, San Francisco LIQ)
1,940,000 Medway, MA, 3.32% BANs, 3/14/2000 1,941,132
6,205,000 Melrose, MA, 3.80% BANs, 8/19/1999 6,207,689
9,300,000 Middleborough, MA, 3.25% BANs, 9/21/1999 9,309,608
5,025,000 New England Educational Loan Marketing Corp., 5,068,730
(Series H), 4.75% Bonds, 12/1/1999
1,117,500 Newbury, MA, 4.00% BANs, 8/13/1999 1,118,111
7,044,000 Paxton, MA, 4.00% BANs, 6/18/1999 7,045,783
2,220,000 Plymouth, MA, 3.25% BANs, 10/21/1999 2,222,448
1,257,000 Randolph, MA, 4.00% BANs, 6/18/1999 1,257,305
5,000,000 Randolph, MA, 4.00% BANs, 7/13/1999 5,001,920
1,595,000 Randolph, MA, 4.00% BANs, 8/20/1999 1,596,401
2,980,000 Springfield, MA, 4.00% BANs (Fleet National 2,981,297
Bank, Springfield, MA LOC), 6/25/1999
2,141,500 Stoughton, MA, 3.20% BANs, 12/16/1999 2,143,359
1,424,000 Stow, MA, 3.50% BANs, 2/15/2000 1,427,281
1,993,818 Stow, MA, 3.50% BANs, 2/4/2000 1,999,717
5,768,000 Stow, MA, 3.80% BANs, 8/20/1999 5,768,842
2,000,000 Topsfield, MA, 3.75% BANs, 9/23/1999 2,003,444
1,540,000 Ware, MA, 4.00% BANs, 6/26/1999 1,540,567
3,200,000 Westfield, MA, 3.75% BANs, 10/22/1999 3,210,358
11,000,000 Westford, MA, 3.50% BANs, 4/14/2000 11,035,550
6,120,000 (2)Weymouth, MA Housing Authority, PT 1062, 6,120,000
3.80% TOBs (Queen Ann Apartments)/(Merrill Lynch
Capital Services, Inc. LIQ)/(Merrill Lynch
Capital Services, Inc. LOC), Optional Tender
8/5/1999
3,300,000 Weymouth, MA, 3.50% BANs, 4/12/2000 3,310,602
5,000,000 Woods Hole, MA, Martha's Vineyard Steamship 5,000,472
Authority, 3.00% BANs (Commonwealth of
Massachusetts GTD), 5/18/1999
7,375,000 Worcester, MA, 4.00% BANs, 8/26/1999 7,379,535
Total 456,586,730
Puerto Rico--3.8%
18,250,000 Commonwealth of Puerto Rico, Floating Rate Trust 18,250,000
Receipts (Series 1997) Weekly VRDNs (Commerzbank
AG, Frankfurt LIQ)/(Commerzbank AG, Frankfurt
LOC)
Total Investments (at amortized cost)(3) $ 474,836,730
</TABLE>
(1) The Fund may only invest in securities rated in one of the two highest
short-term rating categories by nationally recognized statistical rating
organizations ("NRSROs") or unrated securities of comparable quality. An
NRSRO's two highest rating categories are determined without regard for sub-
categories and gradations. For example, securities rated SP-1+, SP-1 or SP-2
by Standard & Poor's, MIG-1 or MIG-2 by Moody's Investors Service, Inc., F-
1+, F-1 and F-2 by Fitch IBCA, Inc. are all considered rated in one of the
two highest short-term rating categories.
Securities rated in the highest short-term rating category (and unrated
securities of comparable quality) are identified as First Tier securities.
Securities rated in the second highest short-term rating category (and
unrated securities of comparable quality) are identified as Second Tier
securities. The Fund follows applicable regulations in determining whether a
security is rated and whether a security rated by multiple NRSROs in
different rating categories should be identified as a First or Second Tier
security.
At April 30, 1999, the portfolio's securities were rated as follows:
TIER RATING BASED ON TOTAL MARKET VALUE (UNAUDITED)
First Tier Second Tier
98.48% 1.52%
(2) Denotes a restricted security which is subject to restrictions on resale
under Federal securities laws. These securities have been deemed liquid
based upon criteria approved by the Fund's Board of Trustees. At April 30,
1999, these securities amounted to $15,410,000, which represents 3.2% of net
assets.
(3) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($478,157,229) at April 30, 1999.
The following acronyms are used throughout this portfolio: AMBAC--American
Municipal Bond Assurance Corporation AMT--Alternative Minimum Tax BANs--Bond
Anticipation Notes CP--Commercial Paper FGIC--Financial Guaranty Insurance
Company FSA--Financial Security Assurance GTD--Guaranty HEFA--Health and
Education Facilities Authority HFA--Housing Finance Authority IDA--Industrial
Development Authority IFA--Industrial Finance Authority INS--Insured
LIQ--Liquidity Agreement LOC--Letter of Credit MBIA--Municipal Bond Investors
Assurance PLC--Public Limited Company PRF--Prerefunded SA--Support Agreement
TOBs--Tender Option Bonds (See Notes which are an integral part of the Financial
Statements)
Massachusetts Municipal Cash Trust
Statement of Assets and Liabilities
April 30, 1999 (unaudited)
<TABLE>
<CAPTION>
Assets:
<S> <C> <C>
Total investments in securities, at amortized cost and value $474,836,730
Cash 392,828
Income receivable 3,921,778
Total Assets 479,151,336
Liabilities:
Income distribution payable $978,145
Accrued expenses 15,962
Total liabilities 994,107
Net Assets for 478,157,229 shares outstanding $478,157,229
Net Asset Value, Offering Price and Redemption Proceeds Per Share:
Institutional Service Shares:
$290,811,748 / 290,811,748 shares outstanding $1.00
Boston 1784 Funds Shares:
$187,345,481 / 187,345,481 shares outstanding $1.00
</TABLE>
(See Notes which are an integral part of the Financial Statements)
Massachusetts Municipal Cash Trust
Statement of Operations
Six Months Ended April 30, 1999 (unaudited)
<TABLE>
<CAPTION>
Investment Income:
<S> <C> <C> <C>
Interest $7,303,949
Expenses:
Investment advisory fee $1,161,059
Administrative personnel and services fee 175,088
Custodian fees 9,093
Transfer and dividend disbursing agent fees and expenses 52,430
Directors'/Trustees' fees 1,778
Auditing fees 6,705
Legal fees 6,478
Portfolio accounting fees 50,994
Shareholder services fee--Institutional Service Shares 350,340
Shareholder services fee--Boston 1784 Funds Shares 230,189
Share registration costs 21,621
Printing and postage 13,896
Insurance premiums 17,460
Miscellaneous 2,024
Total expenses 2,099,155
Waivers--
Waiver of investment advisory fee $(222,180)
Waiver of shareholder services fee--Institutional
Service Shares (345,903)
Waiver of shareholder services fee--Boston 1784
Funds Shares (230,189)
Total waivers (798,272)
Net expenses 1,300,883
Net investment income $6,003,066
</TABLE>
(See Notes which are an integral part of the Financial Statements)
Massachusetts Municipal Cash Trust
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months Ended Year Ended
April 30, 1999 October 31, 1998
<S> <C> <C>
(unaudited)
Increase (Decrease) in Net Assets:
Operations--
Net investment income $ 6,003,066 $ 10,788,205
Distributions to shareholders--
Distributions from net investment income
Institutional Service Shares (3,629,598) (6,723,838)
Boston 1784 Funds Shares (2,373,468) (4,064,367)
Change in net assets resulting from distributions to
shareholders (6,033,066) (10,788,205)
Share Transactions--
Proceeds from sale of shares 712,490,639 1,191,190,660
Net asset value of shares issued to shareholders in payment of
distributions declared 2,770,559 5,640,601
Cost of shares redeemed (656,047,060) (993,594,809)
Change in net assets resulting from share
transactions 59,214,138 203,236,452
Change in net assets 59,214,138 203,236,452
Net Assets:
Beginning of period 418,943,091 215,706,639
End of period $ 478,157,229 $ 418,943,091
</TABLE>
(See Notes which are an integral part of the Financial Statements)
Massachusetts Municipal Cash Trust
Notes to Financial Statements
April 30, 1999 (unaudited)
(1) Organization
Federated Municipal Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "Act") as an open-end, management
investment company. The Trust consists of 17 portfolios. The financial
statements included herein are only those of Massachusetts Municipal Cash Trust
(the "Fund"). The financial statements of the other portfolios are presented
separately. The assets of each portfolio are segregated and a shareholder's
interest is limited to the portfolio in which shares are held. The Fund offers
two classes of shares: Institutional Service Shares and Boston 1784 Funds
Shares. The investment objective of the Fund is to provide current income exempt
from federal regular income tax and Massachusetts state income tax consistent
with stability of principal.
(2) Significant Accounting Policies
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
Investment Valuations
The Fund uses the amortized cost method to value its portfolio securities in
accordance with Rule 2a-7 under the Act.
Investment Income, Expenses and Distributions
Interest income and expenses are accrued daily. Bond premium and discount, if
applicable, are amortized as required by the Internal Revenue Code, as amended
(the "Code"). Distributions to shareholders are recorded on the ex-dividend
date.
Federal Taxes
It is the Fund's policy to comply with the provisions of the Code applicable to
regulated investment companies and to distribute to shareholders each year
substantially all of its income. Accordingly, no provisions for federal tax are
necessary.
When-Issued and Delayed Delivery Transactions
The Fund may engage in when-issued or delayed delivery transactions. The Fund
records when-issued securities on the trade date and maintains security
positions such that sufficient liquid assets will be available to make payment
for the securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
Restricted Securities
Restricted securities are securities that may only be resold upon registration
under federal securities laws or in transactions exempt from such registration.
Many restricted securities may be resold in the secondary market in transactions
exempt from registration. In some cases, the restricted securities may be resold
without registration upon exercise of a demand feature. Such restricted
securities may be determined to be liquid under criteria established by the
Board of Trustees ( the "Trustees"). The Fund will not incur any registration
costs upon such resales. Restricted securities are valued at amortized cost in
accordance with Rule 2a-7 under the Act.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts of assets, liabilities, expenses and revenues reported in the
financial statements. Actual results could differ from those estimated.
Other
Investment transactions are accounted for on the trade date.
(3) Shares of Beneficial Interest
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares. At April 30, 1999, capital paid-in aggregated $478,157,229.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
April 30, 1999 October 31, 1998
<S> <C> <C>
Institutional Service Shares
Shares sold 588,874,817 943,828,322
Shares issued to shareholders in payment 791,942 1,573,009
of distributions declared
Shares redeemed (555,240,651) (830,885,045)
Net change resulting from Institutional 34,426,108 114,516,286
Service Share transactions
Six Months
Ended Year Ended
April 30, 1999 October 31, 1998
<S> <C> <C>
Boston 1784 Funds Shares
Shares sold 123,615,822 247,362,338
Shares issued to shareholders in payment 1,978,617 4,067,592
of distributions declared
Shares redeemed (100,806,409) (162,709,764)
Net change resulting from Boston 1784 24,788,030 88,720,166
Funds Share transactions
Net change resulting from share 59,214,138 203,236,452
transactions
</TABLE>
(4) Investment Advisory Fee and Other Transactions with Affiliates
Investment Advisory Fee
Federated Investment Management Company, the Fund's investment adviser (the
"Adviser"), receives for its services an annual investment advisory fee equal to
0.50% of the Fund's average daily net assets. The Adviser may voluntarily choose
to waive any portion of its fee. The Adviser can modify or terminate this
voluntary waiver at any time at its sole discretion.
Administrative Fee
Federated Services Company ("FServ"), under the Administrative Services
Agreement, provides the Fund with administrative personnel and services. The fee
paid to FServ is based on the level of average aggregate daily net assets of all
funds advised by subsidiaries of Federated Investors, Inc. for the period. The
administrative fee received during the period of the Administrative Services
Agreement shall be at least $125,000 per portfolio and $30,000 per each
additional class of shares.
Shareholder Services Fee
Under the terms of a Shareholder Services Agreement with Federated Shareholder
Services Company ("FSSC"), the Fund will pay FSSC up to 0.25% of average daily
net assets of the Institutional Service Shares for the period. Under the terms
of a Shareholder Services Agreement with BankBoston, N.A., the fund will pay
BankBoston, N.A. up to 0.25% of average daily net assets of Boston 1784 Funds
Shares for the period. These fees are used to finance certain services for
shareholders and to maintain shareholder accounts. FSSC and BankBoston, N.A. may
voluntarily choose to waive any portion of their fees. FSSC and BankBoston, N.A.
can modify or terminate these voluntary waivers at any time at their sole
discretion.
Transfer and Dividend Disbursing Agent Fees and Expenses
FServ, through its subsidiary FSSC, serves as transfer and dividend disbursing
agent for the Fund. The fee paid to FSSC is based on the size, type and number
of accounts and transactions made by shareholders.
Portfolio Accounting Fees
FServ maintains the Fund's accounting records for which it receives a fee. The
fee is based on the level of the Fund's average daily net assets for the period,
plus out-of-pocket expenses.
Interfund Transactions
During the period ended April 30, 1999, the Fund engaged in purchase and sale
transactions with funds that have a common investment adviser (or affiliated
investment advisers), common Directors/Trustees, and/or common Officers. These
purchase and sale transactions were made at current market value pursuant to
Rule 17a-7 under the Act amounting to $341,174,132 and $101,540,000,
respectively.
General
Certain of the Officers and Trustees of the Trust are Officers and Directors or
Trustees of the above companies.
(5) Concentration of Credit Risk
Since the Fund invests a substantial portion of its assets in issuers located in
one state, it will be more susceptible to factors adversely affecting issuers of
that state than would be a comparable tax-exempt mutual fund that invests
nationally. In order to reduce the credit risk associated with such factors, at
April 30, 1999, 56.9% of the securities in the portfolio of investments were
backed by letters of credit or bond insurance of various financial institutions
and financial guaranty assurance agencies. The percentage of investments insured
by or supported (backed) by a letter of credit from any one institution or
agency did not exceed 12.5% of total investments.
(6) Year 2000
Similar to other financial organizations, the Fund could be adversely affected
if the computer systems used by the Fund's service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. The Fund's Adviser and administrator are taking measures that they
believe are reasonably designed to address the Year 2000 issue with respect to
computer systems that they use and to obtain reasonable assurances that
comparable steps are being taken by each of the Fund's other service providers.
At this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact on the Fund.
Trustees
John F. Donahue
Thomas G. Bigley
John T. Conroy, Jr.
John F. Cunningham
Lawrence D. Ellis, M.D.
Peter E. Madden
Charles F. Mansfield, Jr.
John E. Murray, Jr., J.D., S.J.D.
Marjorie P. Smuts
John S. Walsh
Officers
John F. Donahue
Chairman
Glen R. Johnson
President
J. Christopher Donahue
Executive Vice President
Edward C. Gonzales
Executive Vice President
John W. McGonigle
Executive Vice President and Secretary
Richard B. Fisher
Vice President
Richard J. Thomas
Treasurer
Anthony R. Bosch
Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risk,
including possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Fund's prospectus which contains facts concerning
its objective and policies, management fees, expenses, and other information.
Massachusetts Municipal
Cash Trust
[logo of Boston 1784 Funds]
Boston 1784 Funds Shares
Semi-Annual
Report
to Shareholders
April 30, 1999
Money Market Funds
. Boston 1784 Tax-Free Money Market Fund
. Boston 1784 U.S. Treasury Money
Market Fund
. Boston 1784 Institutional U.S. Treasury
Money Market Fund
. Boston 1784 Prime Money Market Fund
. Boston 1784 Institutional Prime Money
Market Fund
. Massachusetts Municipal Cash Trust-Boston 1784 Funds Shares
Bond Funds
. Boston 1784 Short-Term Income Fund
. Boston 1784 Income Fund
. Boston 1784 U.S. Government Medium-
Term Income Fund
Tax-Exempt Income Funds
. Boston 1784 Tax-Exempt Medium-Term
Income Fund
. Boston 1784 Connecticut Tax-Exempt
Income Fund
. Boston 1784 Florida Tax-Exempt
Income Fund
. Boston 1784 Massachusetts Tax-Exempt
Income Fund
. Boston 1784 Rhode Island Tax-Exempt
Income Fund
Stock Funds
. Boston 1784 Asset Allocation Fund
. Boston 1784 Growth and Income Fund
. Boston 1784 Growth Fund
. Boston 1784 International Equity Fund
For more complete information about other Boston 1784 Funds, please call 1-800-
BKB-1784 for a prospectus, which you should read carefully before investing.
Boston 1784 Funds
P.O. Box 8524
Boston, MA 02266-8524
1-800-BKB-1784
www.boston1784funds.com
Federated Securities Corp. is the
distributor for this Fund.
Cusip 314229832
(Federated use only) G00191-02 (6/99)
MF-0158 (6-99)
SEMI-ANNUAL REPORT
President's Message
Dear Shareholder:
I am pleased to present the Semi-Annual Report to Shareholders of Maryland
Municipal Cash Trust, a portfolio of Federated Municipal Trust, which covers the
six-month period from November 1, 1998 through April 30, 1999. The report begins
with a discussion with the fund's portfolio manager, followed by a complete
listing of the fund's holdings and its financial statements.
The fund is a convenient way to put your ready cash to work pursuing double
tax-free income-free from federal regular income tax and Maryland personal
income tax 1-through a portfolio concentrated in high-quality, short-term
Maryland municipal securities. At the end of the reporting period, the fund's
holdings were diversified among issuers that use municipal bond financing for
projects as varied as health care, housing, community development and
transportation.
This double tax-free advantage means you have the opportunity to earn a greater
after-tax yield than you could in a comparable high-quality taxable investment.
Of course, the fund also brings you the added benefits of daily liquidity and
stability of principal. 2
During the reporting period, the fund paid double tax-free dividends totaling
$0.01 per share. The fund's net assets reached $69.2 million at the end of the
reporting period.
Thank you for relying on Maryland Municipal Cash Trust to help your ready cash
pursue tax-free income every day. As always, we will continue to provide you
with the highest level of professional service. We invite your questions or
comments.
Sincerely,
[Graphic]
Glen R. Johnson
President
June 15, 1999
1 Income may be subject to the federal alternative minimum tax.
2 An investment in money market funds is neither insured nor guaranteed by the
Federal Deposit Insurance Corporation or any other government agency. Although
money market funds seek to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in the fund.
Investment Review
An interview with the fund's portfolio manager, Michael Sirianni, Vice
President, Federated Investment Management Company.
WHAT ARE YOUR COMMENTS ON THE ECONOMY AND THE INTEREST RATE ENVIRONMENT DURING
THE FUND'S SIX-MONTH REPORTING PERIOD?
The economy remained robust over the reporting period, showing continued
strength in the fourth quarter of 1998 and into the first quarter of 1999. At
the same time, overall inflationary pressures were absent in spite of impressive
performance from the economy and historically low unemployment. Throughout the
reporting period, the Federal Reserve Board (the "Fed") focused on the
inflationary pressures created by a tight labor market. The Fed adopted a
neutral bias in monetary policy at its November 1998 meeting and maintained the
policy throughout the reporting period. Shortly after the close of the reporting
period, at its May 1999 meeting, the Fed changed to a tightening bias, citing
the strong U.S. economy in conjunction with record employment levels.
In addition to economic fundamentals, short-term municipal securities were
strongly influenced by technical factors over the reporting period, notably
calendar year end and income tax payment season. Variable rate demand notes
("VRDNs") started the reporting period in the 3.00% range, but moved sharply
higher to the 4.00% level in December as an imbalance between supply and demand
occurred. Yields declined in January, as investors looked to reinvest coupon
payments and year end selling pressures eased. Yields averaged slightly over
2.80% during February and March before rising to the 3.50% range in April due to
traditional tax season selling pressures. Over the six-month reporting period,
VRDN yields averaged roughly 65% of taxable rates, making them attractive for
investors in the highest federal tax brackets.
The overall tone of the short-term municipal market was positive. Municipalities
across the country have benefited from a strong economy. This fact, coupled with
lower borrowing costs from low long-term rates, has reduced short-term issuance.
In fact, annual municipal note issuance was at its lowest level in the last
decade. Lack of supply and heavy demand have kept short-term municipals,
relative to their taxable counterparts, very expensive.
WHAT WERE YOUR STRATEGIES FOR THE FUND DURING THE REPORTING PERIOD?
At the beginning of the reporting period, the fund's average maturity was
approximately 54 days. The fund remained in a 40 to 45-day average maturity
range over the reporting period, a neutral stance, and moved within that range
according to relative value opportunities. We continued to emphasize a barbelled
structure for the portfolio, combining a significant position in 7-day VRDNs
with purchases of longer-term securities with maturities between 6 and 12
months. After an average maturity range was targeted, we attempted to maximize
performance through ongoing relative value analysis. Relative value analysis
includes the comparison of the richness or cheapness of municipal securities to
one another as well as municipal securities to taxable instruments, such as
Treasury securities. This portfolio structure continued to pursue a competitive
yield over time.
AS WE APPROACH MID-YEAR, WHAT IS YOUR OUTLOOK GOING FORWARD?
The Fed, although certain to be troubled by persistent above-trend growth in an
environment where labor markets are tight, will likely remain on hold until
later in the year. Additionally, it is positioned for the next move to be a
tightening. In the near term, the short-term municipal market will likely
reflect technical as well as fundamental factors. These supply and demand
imbalances could very well present attractive investment opportunities for the
fund. We will continue to watch, with great interest, market developments in
order to best serve our municipal clients.
Portfolio of Investments
APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
SHORT-TERM MUNICIPALS-99.0% 1
MARYLAND-97.0%
$ 2,000,000 Anne Arundel County, MD,
3.65% TOBs (Baltimore
Gas & Electric Co.),
Optional Tender
6/30/1999 $ 2,000,000
2,000,000 Anne Arundel County, MD,
EDRB (Series 1988),
3.15% CP (Baltimore Gas &
Electric Co.), Mandatory
Tender 8/11/1999 2,000,000
3,175,000 Anne Arundel County, MD,
EDRBs (Series 1996)
Weekly VRDNs (Atlas
Container Corp.
Project)/(Mellon Bank
N.A., Pittsburgh LOC) 3,175,000
2,175,000 Baltimore County, MD
IDA, (Series 1994A)
Weekly VRDNs (Pitts
Realty Limited
Partnership)/(PNC Bank,
Delaware LOC) 2,175,000
3,000,000 Baltimore County, MD
Metropolitan District,
(Series 1995), 3.00% CP
(Westdeutsche Landesbank
Girozentrale LIQ),
Mandatory Tender
9/10/1999 3,000,000
800,000 Baltimore County, MD,
(Series 1992) Weekly
VRDNs (Sheppard & Enoch
Pratt Hospital
Facility)/(Societe
Generale, Paris LOC) 800,000
1,750,000 Baltimore County, MD,
Revenue Bonds (1994
Issue) Weekly VRDNs
(Direct Marketing
Associates, Inc.
Facility)/(FMB Bank LOC) 1,750,000
1,700,000 Baltimore, MD PCR Weekly
VRDNs (SCM Plants,
Inc.)/(Barclays Bank
PLC, London LOC) 1,700,000
650,000 Baltimore, MD, 8.90%
Bonds (MBIA INS),
10/15/1999 666,551
1,100,000 Carroll County, MD,
Variable Rate Economic
Development Refunding
Revenue Bonds (Series
1995B) Weekly VRDNs
(Evapco, Inc.
Project)/(Nationsbank,
N.A., Charlotte LOC) 1,100,000
910,000 Elkton, MD, Revenue
Refunding Bonds (Series
1992) Weekly VRDNs
(Highway Service
Ventures, Inc.
Facility)/(First Union
National Bank,
Charlotte, NC LOC) 910,000
1,500,000 Frederick County, MD,
Revenue Bonds (Series
1995) Weekly VRDNs
(Sheppard Pratt
Residential Treatment
Facility)/(Societe
Generale, Paris LOC) 1,500,000
4,300,000 Harford County, MD,
(Series 1989) Weekly
VRDNs (Harford Commons
Associates
Facility)/(FMB Bank LOC) 4,300,000
2,170,000 Harford County, MD, EDRB
(Series 1996) Weekly
VRDNs (Citrus and Allied
Essences Ltd.)/(FMB Bank
LOC) 2,170,000
2,750,000 Maryland EDC, Tax Exempt
Adjustable Mode IDRBs
(Series 1998) Weekly
VRDNs (Morrison Health
Care, Inc.)/(Wachovia
Bank of NC, N.A.,
Winston-Salem LOC) 2,750,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
SHORT-TERM MUNICIPALS-continued 1
MARYLAND-CONTINUED
$ 4,375,000 Maryland Industrial
Development Financing
Authority, Special
Facility Airport Revenue
Bonds (Series 1999),
3.30% TOBs (Signature
Flight Support
Corp.)/(Bayerische
Landesbank Girozentrale
LOC), Optional Tender
6/1/1999 $ 4,375,000
1,920,000 Maryland State Community
Development
Administration, (Series
1990A) Weekly VRDNs
(College Estates)/(FMB
Bank LOC) 1,920,000
5,000,000 Maryland State Community
Development
Administration, (Series
1990B) Weekly VRDNs
(Cherry Hill Apartment
Ltd.)/(Nationsbank,
N.A., Charlotte LOC) 5,000,000
1,800,000 Maryland State Energy
Financing
Administration, Annual
Tender Solid Waste
Disposal Revenue
Refunding Bonds, 4.20%
TOBs (Nevamar
Corp.)/(International
Paper Co. GTD), Optional
Tender 9/1/1999 1,800,000
3,000,000 Maryland State Energy
Financing
Administration, IDRB
(Series 1988) Weekly
VRDNs (Morningstar
Foods, Inc.)/(First
Union National Bank,
Charlotte, NC LOC) 3,000,000
2,275,000 Maryland State Energy
Financing
Administration, Limited
Obligation Variable Rate
Demand Revenue Bonds
(Series 1996) Weekly
VRDNs (Keywell
L.L.C.)/(Bank of
America, IL LOC) 2,275,000
1,000,000 Maryland State IDFA,
EDRBs (Series 1996)
Weekly VRDNs (Townsend
Culinary,
Inc.)/(SunTrust Bank,
Atlanta LOC) 1,000,000
3,300,000 Maryland State IDFA,
Economic Development
Revenue Refunding Bonds
(Series 1994) Weekly
VRDNs (Johnson Controls,
Inc.) 3,300,000
1,000,000 Maryland State IDFA,
Limited Obligation EDRBs
(Series 1994) Weekly
VRDNs (Rock-Tenn
Converting
Co.)/(SunTrust Bank,
Atlanta LOC) 1,000,000
1,370,000 Montgomery County, MD
Weekly VRDNs
(Information Systems and
Networks Corp.)/(PNC
Bank, N.A. LOC) 1,370,000
1,000,000 Montgomery County, MD,
EDR Weekly VRDNs (Howard
Hughes Medical Center) 1,000,000
1,095,000 Montgomery County, MD,
Public Improvement
(Series A), 5.10% Bonds,
4/1/2000 1,114,086
1,345,000 Prince George's County,
MD, Equipment
Acquisition Program,
3.50% Bonds (MBIA INS),
11/1/1999 1,346,652
1,100,000 Prince George's County,
MD, IDRB (Series 1993),
3.90% TOBs
(International Paper
Co.), Optional Tender
7/15/1999 1,100,000
2,500,000 Queen Annes County, MD EDR, (Series 1994), 3.05% TOBs (Safeway,
Inc.)/(Bankers Trust Co., New York LOC), Mandatory Tender
6/1/1999 2,500,000
2,000,000 University of Maryland,
Revolving Equipment Loan
Program VRDNs (Series B)
Weekly VRDNs (Student
Loan Marketing
Association LOC) 2,000,000
3,000,000 Wicomico County, MD,
EDRB (Series 1994)
Weekly VRDNs (Field
Container Co.
L.P.)/(Northern Trust
Co., Chicago, IL LOC) 3,000,000
TOTAL 67,097,289
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
SHORT-TERM MUNICIPALS-continued 1
PUERTO RICO-2.0%
$ 1,400,000 Puerto Rico Industrial,
Medical & Environmental
PCA, (Series 1983A),
3.60% TOBs (Reynolds
Metals Co.)/(ABN AMRO
Bank N.V., Amsterdam
LOC), Optional Tender
9/1/1999 $ 1,400,000
TOTAL INVESTMENTS (AT
AMORTIZED COST) 2 $ 68,497,289
</TABLE>
Securities that are subject to Alternative Minimum Tax represent 51.0% of the
portfolio as calculated based upon total portfolio market value.
1 The fund may only invest in securities rated in one of the two highest
short-term rating categories by nationally recognized statistical rating
organizations ("NRSROs") or unrated securities of comparable quality. An NRSRO's
two highest rating categories are determined without regard for sub-categories
and gradations. For example, securities rated SP-1+, SP-1 or SP-2 by Standard &
Poor's, MIG-1 or MIG-2 by Moody's Investors Service, Inc., F-1+, F-1 and F-2 by
Fitch IBCA, Inc. are all considered rated in one of the two highest short-term
rating categories.
Securities rated in the highest short-term rating category (and unrated
securities of comparable quality) are identified as First Tier securities.
Securities rated in the second highest short-term rating category (and unrated
securities of comparable quality) are identified as Second Tier securities. The
fund follows applicable regulations in determining whether a security is rated
and whether a security rated by multiple NRSROs in different rating categories
should be identified as a First or Second Tier security.
At April 30, 1999, the portfolio securities were rated as follows:
Tier Rating Based on Total Market Value (Unaudited)
<TABLE>
<CAPTION>
FIRST TIER SECOND TIER
<S> <C>
98.48% 1.52%
</TABLE>
2 Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($69,211,139) at April 30, 1999.
The following acronyms are used throughout this portfolio:
CP -Commercial Paper EDC -Economic Development Commission EDR -Economic
Development Revenue EDRB -Economic Development Revenue Bonds GTD -Guaranty IDA
- -Industrial Development Authority IDRBs -Industrial Development Revenue Bond
IDFA -Industrial Development Finance Authority INS -Insured LIQ -Liquidity
Agreement LLC -Limited Liability Company LOC -Letter of Credit MBIA -Municipal
Bond Investors Assurance PCA -Pollution Control Authority PCR -Pollution Control
Revenue PLC -Public Limited Company TOBs -Tender Option Bonds VRDNs -Variable
Rate Demand Notes
See Notes which are an integral part of the Financial Statements
Statement of Assets and Liabilities
APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Total investments in
securities, at amortized
cost and value $ 68,497,289
Cash 578,408
Income receivable 276,704
Deferred organizational
costs 6,616
Other assets 3,661
TOTAL ASSETS 69,362,678
LIABILITIES:
Income distribution
payable $ 136,048
Accrued expenses 15,491
TOTAL LIABILITIES 151,539
Net assets for
69,211,139 shares
outstanding $ 69,211,139
NET ASSET VALUE,
OFFERING PRICE AND
REDEMPTION PROCEEDS PER
SHARE:
$69,211,139 / 69,211,139
shares outstanding $1.00
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Operations
SIX MONTHS ENDED APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 1,091,757
EXPENSES:
Investment advisory fee $ 166,652
Administrative personnel
and services fee 61,987
Custodian fees 1,560
Transfer and dividend
disbursing agent fees
and expenses 11,348
Directors'/Trustees'
fees 530
Auditing fees 6,375
Legal fees 4,508
Portfolio accounting
fees 20,499
Shareholder services fee 83,326
Share registration costs 10,867
Printing and postage 6,896
Insurance premiums 3,736
Miscellaneous 4,567
TOTAL EXPENSES 382,851
WAIVERS:
Waiver of investment
advisory fee $ (144,738)
Waiver of shareholder
services fee (3,333)
TOTAL WAIVERS (148,071)
Net expenses 234,780
Net investment income $ 856,977
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR
(unaudited) ENDED
APRIL 30, OCTOBER 31,
1999 1998
<S> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS
OPERATIONS:
Net investment income $ 856,977 $ 1,724,927
DISTRIBUTIONS TO
SHAREHOLDERS:
Distributions from net
investment income (856,977) (1,724,927)
SHARE TRANSACTIONS:
Proceeds from sale of
shares 87,818,191 162,453,813
Net asset value of shares
issued to shareholders
in payment of
distributions declared 568,537 1,432,310
Cost of shares redeemed (85,311,909) (143,324,566)
CHANGE IN NET ASSETS
RESULTING FROM SHARE
TRANSACTIONS 3,074,819 20,561,557
Change in net assets 3,074,819 20,561,557
NET ASSETS:
Beginning of period 66,136,320 45,574,763
End of period $ 69,211,139 $ 66,136,320
</TABLE>
See Notes which are an integral part of the Financial Statements
Financial Highlights
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(unaudited)
APRIL 30, YEAR ENDED OCTOBER 31,
1999 1998 1997 1996 1995 1994 1
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.01 0.03 0.03 0.03 0.03 0.01
LESS DISTRIBUTIONS:
Distributions from net investment income (0.01) (0.03) (0.03) (0.03) (0.03) (0.01)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN 2 1.28% 3.05% 3.10% 3.11% 3.36% 1.30%
RATIOS TO AVERAGE NET ASSETS:
Expenses 0.70% 3 0.70% 0.69% 0.65% 0.65% 0.46% 3
Net investment income 2.57% 3 3.00% 3.05% 3.09% 3.30% 2.68% 3
Expenses 4 1.14% 3 1.21% 1.32% 1.30% 1.15% 0.99% 3
Net investment income 4 2.13% 3 2.49% 2.42% 2.44% 2.80% 2.15% 3
SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $69,211 $66,136 $45,575 $54,286 $51,400 $56,275
</TABLE>
1 Reflects operations for the period from May 9, 1994 (date of initial public
investment) to October 31, 1994. For the period from April 25, 1994 (start of
business) to May 9, 1994, the Fund had no investment activity.
2 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
3 Computed on an annualized basis.
4 During the period, certain fees were voluntarily waived. If such voluntary
waivers had not occurred, the ratios would have been as indicated.
See Notes which are an integral part of the Financial Statements
Notes to Financial Statements
APRIL 30, 1999 (UNAUDITED)
ORGANIZATION
Federated Municipal Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "Act") as an open-end, management
investment company. The Trust consists of 17 portfolios. The financial
statements included herein are only those of Maryland Municipal Cash Trust (the
"Fund"). The financial statements of the other portfolios are presented
separately. The assets of each portfolio are segregated and a shareholder's
interest is limited to the portfolio in which shares are held. The investment
objective of the Fund is current income exempt from federal regular income tax
and the personal income taxes imposed by the State of Maryland and Maryland
municipalities consistent with stability of principal and liquidity.
SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS
The Fund uses the amortized cost method to value its portfolio securities in
accordance with Rule 2a-7 under the Act.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS
Interest income and expenses are accrued daily. Bond premium and discount, if
applicable, are amortized as required by the Internal Revenue Code, as amended
(the "Code"). Distributions to shareholders are recorded on the ex- dividend
date.
FEDERAL TAXES
It is the Fund's policy to comply with the provisions of the Code applicable to
regulated investment companies and to distribute to shareholders each year
substantially all of its income. Accordingly, no provisions for federal tax are
necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Fund may engage in when-issued or delayed delivery transactions. The Fund
records when-issued securities on the trade date and maintains security
positions such that sufficient liquid assets will be available to make payment
for the securities purchased. Securities purchased on a when- issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts of assets, liabilities, expenses and revenues reported in the
financial statements. Actual results could differ from those estimated.
OTHER
Investment transactions are accounted for on the trade date.
SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Board of Trustees (the "Trustees") to issue
an unlimited number of full and fractional shares of beneficial interest
(without par value). At April 30, 1999, capital paid-in aggregated $69,211,139.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
APRIL 30, OCTOBER 31,
1999 1998
<S> <C> <C>
Shares sold 87,818,191 162,453,813
Shares issued to
shareholders in payment
of distributions
declared 568,537 1,432,310
Shares redeemed (85,311,909) (143,324,566)
NET CHANGE RESULTING
FROM SHARE TRANSACTIONS 3,074,819 20,561,557
</TABLE>
INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE
Federated Investment Management Company, the Fund's investment adviser (the
"Adviser"), receives for its services an annual investment advisory fee equal to
0.50% of the Fund's average daily net assets. The Adviser may voluntarily choose
to waive any portion of its fee. The Adviser can modify or terminate this
voluntary waiver at any time at its sole discretion.
ADMINISTRATIVE FEE
Federated Services Company ("FServ"), under the Administrative Services
Agreement, provides the Fund with administrative personnel and services. The fee
paid to FServ is based on the level of average aggregate daily net assets of all
funds advised by subsidiaries of Federated Investors, Inc. for the period. The
administrative fee received during the period of the Administrative Services
Agreement shall be at least $125,000 per portfolio and $30,000 per each
additional class of shares.
SHAREHOLDER SERVICES FEE
Under the terms of a Shareholder Services Agreement with Federated Shareholder
Services Company ("FSSC"), the Fund will pay FSSC up to 0.25% of average daily
net assets of the Fund for the period. The fee paid to FSSC is used to finance
certain services for shareholders and to maintain shareholder accounts. FSSC may
voluntarily choose to waive any portion of its fee. FSSC can modify or terminate
this voluntary waiver at any time at its sole discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES
FServ, through its subsidiary FSSC, serves as transfer dividend disbursing agent
for the Fund. The fee paid to FSSC is based on the size, type and number of
accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES
FServ maintains the Fund's accounting records for which it receives a fee. The
fee is based on the level of the Fund's average daily net assets for the period,
plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES
Organizational expenses of $45,952 were borne initially by the Adviser. The fund
has reimbursed the Adviser for these expenses. These expenses have been deferred
and are being amortized over the five-year period following the Fund's effective
date.
INTERFUND TRANSACTIONS
During the period ended April 30, 1999, the Fund engaged in purchase and sale
transactions with funds that have a common investment adviser (of affiliated
investment advisers), common Directors/Trustees, and/or common Officers. These
purchase and sale transactions were made at current market value pursuant to
Rule 17a-7 under the Act amounting to $781,880,000 and $81,145,000,
respectively.
GENERAL
Certain of the Officers and Trustees of the Trust are Officers and Directors or
Trustees of the above companies.
CONCENTRATION OF CREDIT RISK
Since the Fund invests a substantial portion of its assets in issuers located in
one state, it will be more susceptible to factors adversely affecting issuers of
that state than would be a comparable tax-exempt mutual fund that invests
nationally. In order to reduce the credit risk associated with such factors, at
April 30, 1999, 75% of the securities in the portfolio of investments are backed
by letters of credit or bond insurance of various financial institutions and
financial guaranty assurance agencies. The percentage of investments insured by
or supported (backed) by a letter of credit from any one institution or agency
did not exceed 15% of total investments.
YEAR 2000
Similar to other financial organizations, the Fund could be adversely affected
if the computer systems used by the Fund's service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. The Fund's Adviser and administrator are taking measures that they
believe are reasonably designed to address the Year 2000 issue with respect to
computer systems that they use and to obtain reasonable assurances that
comparable steps are being taken by each of the Fund's other service providers.
At this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact to the Fund.
Trustees
JOHN F. DONAHUE
THOMAS G. BIGLEY
JOHN T. CONROY, JR.
JOHN F. CUNNINGHAM
LAWRENCE D. ELLIS, M.D.
PETER E. MADDEN
CHARLES F. MANSFIELD, JR.
JOHN E. MURRAY, JR., J.D., S.J.D.
MARJORIE P. SMUTS
JOHN S. WALSH
Officers
JOHN F. DONAHUE
Chairman
GLEN R. JOHNSON
President
J. CHRISTOPHER DONAHUE
Executive Vice President
EDWARD C. GONZALES
Executive Vice President
JOHN W. MCGONIGLE
Executive Vice President and Secretary
RICHARD B. FISHER
Vice President
RICHARD J. THOMAS
Treasurer
ANTHONY R. BOSCH
Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment
risk, including the possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the fund's prospectus which contains facts concerning
its objective and policies, management fees, expenses and other information.
[Graphic]
Federated
World-Class Investment Manager
SEMI-ANNUAL REPORT
Maryland Municipal Cash Trust
SEMI-ANNUAL REPORT TO SHAREHOLDERS
APRIL 30, 1999
[Graphic]
Federated
Maryland Municipal Cash Trust
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
1-800-341-7400
WWW.FEDERATEDINVESTORS.COM
Federated Securities Corp., Distributor
Cusip 314229774
G01175-01 (6/99)
[Graphic]
SEMI-ANNUAL REPORT
President's Message
Dear Shareholder:
I am pleased to present the Semi-Annual Report to Shareholders of Michigan
Municipal Cash Trust, a portfolio of Federated Municipal Trust, which covers the
six-month period from November 1, 1998 through April 30, 1999. The report begins
with a discussion with the fund's portfolio manager, followed by a complete
listing of the fund's holdings and its financial statements. Financial
highlights tables are provided for the fund's Institutional Shares and
Institutional Service Shares.
The fund is a convenient way to put your ready cash to work pursuing double
tax-free income-free from federal regular income tax and Michigan personal
income tax 1-through a portfolio concentrated in high-quality, short-term
Michigan municipal securities. At the end of the reporting period, the fund's
holdings were diversified among issuers that use municipal bond financing for
projects as varied as health care, housing, community development and
transportation.
This double tax-free advantage means you have the opportunity to earn a greater
after-tax yield than you could in a comparable high-quality taxable investment.
Of course, the fund also brings you the added benefits of daily liquidity and
stability of principal. 2
During the reporting period, the fund paid double tax-free dividends totaling
$0.01 per share for both Institutional Shares and Institutional Service Shares.
The fund's net assets totaled $191.3 million at the end of the reporting period.
Thank you for relying on Michigan Municipal Cash Trust to help your ready cash
pursue tax-free income every day. As always, we will continue to provide you
with the highest level of professional service. We invite your questions or
comments.
Sincerely,
[Graphic]
Glen R. Johnson
President
June 15, 1999
1 Income may be subject to the federal alternative minimum tax.
2 An investment money market funds is neither insured nor guaranteed by the
Federal Deposit Insurance Corporation or any other government agency. Although
money market funds seek to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in the fund.
Investment Review
An interview with the fund's portfolio manager, Michael Sirianni, Vice
President, Federated Investment Management Company.
WHAT ARE YOUR COMMENTS ON THE ECONOMY AND THE INTEREST RATE ENVIRONMENT DURING
THE FUND'S SIX-MONTH REPORTING PERIOD?
The economy remained robust over the reporting period, showing continued
strength in the fourth quarter of 1998 and into the first quarter of 1999. At
the same time, overall inflationary pressures were absent in spite of impressive
performance from the economy and historically low unemployment. Throughout the
reporting period, the Federal Reserve Board (the "Fed") focused on the
inflationary pressures created by a tight labor market. The Fed adopted a
neutral bias in monetary policy at its November 1998 meeting and maintained the
policy throughout the reporting period. Shortly after the close of the reporting
period, at its May 1999 meeting, the Fed changed to a tightening bias, citing
the strong U.S. economy in conjunction with record employment levels.
In addition to economic fundamentals, short-term municipal securities were
strongly influenced by technical factors over the reporting period, notably
calendar year end and income tax payment season. Variable rate demand notes
("VRDNs") started the reporting period in the 3.00% range, but moved sharply
higher to the 4.00% level in December as an imbalance between supply and demand
occurred. Yields declined in January, as investors looked to reinvest coupon
payments and year end selling pressures eased. Yields averaged slightly over
2.80% during February and March before rising to the 3.50% range in April due to
traditional tax season selling pressures. Over the six-month reporting period,
VRDN yields averaged roughly 65% of taxable rates, making them attractive for
investors in the highest federal tax brackets.
The overall tone of the short-term municipal market was positive. Municipalities
across the country have benefited from a strong economy. This fact, coupled with
lower borrowing costs from low long- term rates, has reduced short-term
issuance. In fact, annual municipal note issuance was at its lowest level in the
last decade. Lack of supply and heavy demand have kept short-term municipals,
relative to their taxable counterparts, very expensive.
WHAT WERE YOUR STRATEGIES FOR THE FUND DURING THE REPORTING PERIOD?
At the beginning of the reporting period, the fund's average maturity was
approximately 40 days. The fund remained in a 40 to 50-day average maturity
range over the reporting period, a neutral stance, and moved within that range
according to relative value opportunities. We continued to emphasize a barbelled
structure for the portfolio, combining a significant position in 7-day VRDNs
with purchases of longer-term securities with maturities between 6 and 12
months. After an average maturity range was targeted, we attempted to maximize
performance through ongoing relative value analysis. Relative value analysis
includes the comparison of the richness or cheapness of municipal securities to
one another as well as municipal securities to taxable instruments, such as
Treasury securities. This portfolio structure continued to pursue a competitive
yield over time.
AS WE APPROACH MID-YEAR, WHAT IS YOUR OUTLOOK GOING FORWARD?
The Fed, although certain to be troubled by persistent above-trend growth in an
environment where labor markets are tight, will likely remain on hold until
later in the year. Additionally, it is positioned for the next move to be a
tightening. In the near term, the short-term municipal market will likely
reflect technical as well as fundamental factors. These supply and demand
imbalances could very well present attractive investment opportunities for the
fund. We will continue to watch, with great interest, market developments in
order to best serve our municipal clients.
Portfolio of Investments
APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-98.8% 1
MICHIGAN-97.8%
$ 975,000 Allendale, MI Public
School District, 3.41%
TANs, 8/20/1999 $ 975,607
2,000,000 Ann Arbor, MI Public School
District, 4.75% Bonds
(Michigan State GTD),
5/1/1999 2,000,000
1,085,000 Ann Arbor, MI Public School
District, 7.00% Bonds
(Michigan State GTD),
5/1/2000 1,125,773
1,375,000 Bedford Township, MI EDC,
EDRB (Series 1985) Weekly
VRDNs (Form-Tech Steel,
Inc.)/(KeyBank, N.A. LOC) 1,375,000
2,285,000 Berrien County, MI EDC,
Economic Development
Refunding Revenue Bond
(Series 1992) Weekly VRDNs
(Arlington Metals
Corp.)/(American National
Bank, Chicago LOC) 2,285,000
1,000,000 Brighton, MI Area School
District, 3.50% Bonds (FSA
INS), 5/1/2000 1,003,401
4,475,000 Bruce Township, MI
Hospital Finance
Authority, Adjustable Rate
Tender Securities (Series
1988B), 2.90% TOBs
(Sisters of Charity Health
Care System)/(MBIA INS)/
(Morgan Guaranty Trust
Co., New York LIQ),
Optional Tender 5/3/1999 4,475,000
1,375,000 Clarkston Community
Schools, MI, 5.50% Bonds,
5/1/1999 1,375,000
3,800,000 Cornell, MI EDC,
Industrial Development
Revenue Refunding Bonds
(Series 1990), 3.20% CP
(Mead-Escanaba Paper Co.
Project)/(Credit Suisse
First Boston LOC),
Mandatory Tender 8/11/1999 3,800,000
650,000 Dearborn, MI EDC, (Series
1990) Weekly VRDNs
(Exhibit Productions, Inc.
Project)/(National City
Bank, Michigan/Illinois
LOC) 650,000
2,850,000 Detroit, MI, (Series A),
8.70% Bonds (United States
Treasury PRF), 4/1/2000
(@102) 3,046,805
500,000 Dexter, MI Community
Schools, School Building
and Site Bonds (1998),
3.80% Bonds (FGIC INS),
5/1/1999 500,000
1,500,000 Jackson County, MI Public
Schools, State Aid Note
(Series 1998B), 4.25%
Bonds (Comerica Bank,
Detroit, MI LOC), 7/2/1999 1,501,473
5,850,000 Kalamazoo, MI City School
District, State Aid Note,
(Series 1998C), 3.75% BANs
(National City Bank,
Michigan/Illinois LOC),
9/16/1999 5,857,474
30,000 Kalamazoo, MI EDC, 1995
Limited Obligation Revenue
Refunding Bonds Weekly
VRDNs (Wyndham Project,
MI)/(National City Bank,
Michigan/Illinois LOC) 30,000
5,000,000 2 Kalamazoo, MI Hospital
Finance Authority, PT-189,
3.70% TOBs (Bronson
Methodist Hospital)/(MBIA
INS)/(Bayerische
Hypotheken-und Vereinsbank
AG LIQ), Optional Tender
5/13/1999 5,000,000
500,000 Lansing, MI Sewer Disposal
System, 3.35% Bonds (FSA
INS), 5/1/1999 500,000
1,400,000 Macomb County, MI
Community College
District, (Series 1998)
Community College Bonds,
3.70% Bonds, 5/1/1999 1,400,000
3,400,000 Michigan Higher Education
Student Loan Authority,
(Series XII-D) Weekly
VRDNs (AMBAC INS)/(KBC
Bancassurance Holding LIQ) 3,400,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
MICHIGAN-CONTINUED
$ 1,400,000 Michigan Higher Education
Student Loan Authority,
Refunding Revenue Bonds
(Series X11-B) Weekly
VRDNs (AMBAC INS)/(KBC
Bancassurance Holding LIQ) $ 1,400,000
3,100,000 Michigan Job Development
Authority, Limited
Obligation Revenue Bonds
Weekly VRDNs (Andersons
Project)/(Credit Lyonnais,
Paris LOC) 3,100,000
2,575,000 Michigan State Building
Authority, (Series 1),
3.15% CP (Canadian
Imperial Bank of Commerce
LOC), Mandatory Tender
8/5/1999 2,575,000
4,950,000 2 Michigan State Hospital
Finance Authority, (Series
1993A) PT-169, 3.80% TOBs
(St. John Hospital,
MI)/(AMBAC INS)/(Banco
Santander SA LIQ),
Mandatory
Tender 5/6/1999 4,950,000
775,000 Michigan State Hospital
Finance Authority, (Series
1998A), 4.10% Bonds
(Hackley Hospital
Obligated Group), 5/1/1999 775,000
3,150,000 Michigan State Housing
Development Authority,
(Series 1990Q) Weekly
VRDNs
(FSA INS)/(CDC Municipal
Products, Inc. LIQ) 3,150,000
3,695,000 Michigan State Housing
Development Authority,
MERLOTS (Series G) Weekly
VRDNs (MBIA INS)/(First
Union National Bank,
Charlotte, NC LIQ) 3,796,419
6,000,000 2 Michigan State Housing
Development Authority, PA-
497R, 3.20% TOBs (Merrill
Lynch Capital Services,
Inc. LIQ), Mandatory
Tender 3/9/2000 6,000,000
2,100,000 Michigan State Housing
Development Authority,
Revenue Bonds (Series A),
3.00% CP (Landesbank
Hessen-Thueringen,
Frankfurt LOC), Mandatory
Tender 6/10/1999 2,100,000
6,000,000 Michigan State Housing
Development Authority,
Series B, 3.00% TOBs,
Mandatory Tender 12/1/1999 6,000,000
3,300,000 Michigan State Trunk Line,
(Series A), 7.00% Bonds
(United States Treasury
PRF), 8/15/1999 (@102) 3,401,545
2,600,000 Michigan Strategic Fund
Weekly VRDNs (Ace Hi
Displays, Inc.)/(Firstar
Bank, Milwaukee LOC) 2,600,000
5,300,000 Michigan Strategic Fund
Weekly VRDNs (Tesco
Engineering)/(Bank of
Tokyo-Mitsubishi Ltd. LOC) 5,300,000
1,895,000 Michigan Strategic Fund
Weekly VRDNs (United
Fixtures Co.)/(Bankers
Trust Co., New York LOC) 1,895,000
6,000,000 Michigan Strategic Fund,
(Series 1989) Weekly VRDNs
(Hi-Lex Controls,
Inc.)/(Bank of Tokyo-
Mitsubishi Ltd. LOC) 6,000,000
5,620,000 Michigan Strategic Fund,
(Series 1991) Weekly VRDNs
(AGA Gas, Inc.)/(Svenska
Handelsbanken, Stockholm
LOC) 5,620,000
800,000 Michigan Strategic Fund,
(Series 1995) Weekly VRDNs
(Rood Industries, Inc.
Project)/(NBD Bank,
Michigan LOC) 800,000
2,200,000 Michigan Strategic Fund,
(Series 1998) Weekly VRDNs
(Wolverine
Printing)/(Huntington
National Bank, Columbus,
OH LOC) 2,200,000
3,000,000 Michigan Strategic Fund,
(Series 1999) Weekly VRDNs
(Fab-All Manufacturing,
Inc.)/(Norwest Bank
Minnesota, N.A. LOC) 3,000,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
MICHIGAN-CONTINUED
$ 1,400,000 Michigan Strategic Fund,
Adjustable Rate Demand
IDRBs Weekly VRDNs (Bruin
Land Holdings
LLC)/(Huntington National
Bank, Columbus, OH LOC) $ 1,400,000
1,530,000 Michigan Strategic Fund,
Adjustable Rate Demand
Notes (Series 1998) Weekly
VRDNs (Wolverine
Leasing)/(Huntington
National Bank, Columbus,
OH LOC) 1,530,000
2,500,000 Michigan Strategic Fund,
Adjustable Rate Limited
Obligation Revenue and
Revenue Refunding Bonds
(Series 1996) Weekly VRDNs
(C-Tec, Inc.)/(SunTrust
Bank, Atlanta LOC) 2,500,000
770,000 Michigan Strategic Fund,
Limited Obligation Revenue
Bonds (Series 1995) Weekly
VRDNs (Rowe Thomas Company
Project)/(Comerica Bank,
Detroit, MI LOC) 770,000
1,300,000 Michigan Strategic Fund,
Limited Obligation Revenue
Bonds (Series 1994) Weekly
VRDNs (Wilkie Metal
Products, Inc.)/(Norwest
Bank Minnesota, N.A. LOC) 1,300,000
3,945,000 Michigan Strategic Fund,
Limited Obligation Revenue
Bonds (Series 1995) Weekly
VRDNs (Bear Lake
Associates Project)/(Old
Kent Bank & Trust Co.,
Grand Rapids LOC) 3,945,000
775,000 Michigan Strategic Fund,
Limited Obligation Revenue
Bonds (Series 1995) Weekly
VRDNs (Hercules Drawn
Steel Corporation
Project)/(KeyBank, N.A.
LOC) 775,000
3,675,000 Michigan Strategic Fund,
Limited Obligation Revenue
Bonds (Series 1995) Weekly
VRDNs (J.R. Automation
Technologies Project)/(Old
Kent Bank & Trust Co.,
Grand Rapids LOC) 3,675,000
910,000 Michigan Strategic Fund,
Limited Obligation Revenue
Bonds (Series 1995) Weekly
VRDNs (RSR Project)/(Old
Kent Bank & Trust Co.,
Grand Rapids LOC) 910,000
4,710,000 Michigan Strategic Fund,
Limited Obligation Revenue
Bonds (Series 1995) Weekly
VRDNs (Wayne Disposal-
Oakland, Inc.
Project)/(Comerica Bank,
Detroit, MI LOC) 4,710,000
700,000 Michigan Strategic Fund,
Limited Obligation Revenue
Bonds (Series 1996) Weekly
VRDNs (ACI Properties,
L.L.C. Project)/(Comerica
Bank, Detroit, MI LOC) 700,000
830,000 Michigan Strategic Fund,
Limited Obligation Revenue
Bonds (Series 1996) Weekly
VRDNs (Akemi,
Inc.)/(Comerica Bank,
Detroit, MI LOC) 830,000
950,000 Michigan Strategic Fund,
Limited Obligation Revenue
Bonds (Series 1996) Weekly
VRDNs (Echo Properties,
L.L.C. Project)/(Comerica
Bank, Detroit, MI LOC) 950,000
2,300,000 Michigan Strategic Fund,
Limited Obligation Revenue
Bonds (Series 1996) Weekly
VRDNs (G & T Real Estate
Investments Co.,
L.L.C.)/(NBD Bank,
Michigan LOC) 2,300,000
920,000 Michigan Strategic Fund,
Limited Obligation Revenue
Bonds (Series 1996) Weekly
VRDNs (Inalfa-Hollandia,
Inc.)/(Comerica Bank,
Detroit, MI LOC) 920,000
3,000,000 Michigan Strategic Fund,
Limited Obligation Revenue
Bonds (Series 1996) Weekly
VRDNs (RMT Woodworth,
Inc.)/(Comerica Bank,
Detroit, MI LOC) 3,000,000
3,675,000 Michigan Strategic Fund,
Limited Obligation Revenue
Bonds (Series 1997) Weekly
VRDNs (Enprotech
Mechanical Services,
Inc.)/(Michigan National
Bank, Farmington Hills
LOC) 3,675,000
1,350,000 Michigan Strategic Fund,
Limited Obligation Revenue
Bonds (Series 1997A)
Weekly VRDNs (EPI
Printers, Inc.)/(Comerica
Bank, Detroit, MI LOC) 1,350,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
MICHIGAN-CONTINUED
$ 5,250,000 Michigan Strategic Fund,
Limited Obligation Revenue
Bonds Weekly VRDNs (Hess
Industries, Inc.)/(Norwest
Bank Minnesota, N.A. LOC) $ 5,250,000
1,610,000 Michigan Strategic Fund,
Limited Obligation Revenue
Bonds, (Series 1995)
Weekly VRDNs (Welch
Properties Project)/(Old
Kent Bank & Trust Co.,
Grand Rapids LOC) 1,610,000
1,825,000 Michigan Strategic Fund,
Variable Rate Demand
Limited Obligation Revenue
Bonds (Series 1996) Weekly
VRDNs (R.H. Wyner
Associates, Inc.)/(State
Street Bank and Trust Co.
LOC) 1,825,000
2,425,000 Michigan Strategic Fund,
Variable Rate Demand
Limited Obligation Revenue
Bonds (Series 1998) Weekly
VRDNs (Monroe Publishing
Co.)/(Comerica Bank,
Detroit, MI LOC) 2,425,000
3,995,000 Monroe County, MI PCA, (PT-
143) Weekly VRDNs (Detroit
Edison Co.)/(FGIC
INS)/(Merrill Lynch
Capital Services, Inc.
LIQ) 3,995,000
3,420,000 Monroe County, MI PCA,
(Series CDC-1997M) Weekly
VRDNs (Detroit Edison
Co.)/(AMBAC INS)/(CDC
Municipal Products, Inc.
LIQ) 3,420,000
7,275,000 Monroe County, MI PCA, (PT-
108) Weekly VRDNs (Detroit
Edison Co.)/(FGIC
INS)/(Merrill Lynch
Capital Services, Inc.
LIQ) 7,275,000
3,000,000 Oakland County, MI EDC,
Limited Obligation Revenue
Bonds (Series 1997) Weekly
VRDNs (Stone Soap Company,
Inc.)/(Michigan National
Bank, Farmington Hills
LOC) 3,000,000
1,000,000 Rochester, MI Community
School District, 4.75%
Bonds (Michigan State
GTD), 5/1/2000 1,015,120
3,000,000 Royal Oak, MI Hospital
Finance Authority, 7.75%
Bonds (William Beaumont
Hospital, MI)/(United
States Treasury PRF),
1/1/2000 (@100) 3,090,442
8,500,000 Wayne County, MI, (Series
1998-68) Weekly VRDNs
(Detroit Metropolitan
Wayne County
Airport)/(MBIA
INS)/(Morgan Stanley, Dean
Witter Municipal Funding,
Inc. LIQ) 8,500,000
5,500,000 Wayne County, MI, (PT-
1061) Weekly VRDNs (Detroit Metropolitan Wayne County
Airport)/(MBIA INS)/(Bank of America NT and SA, San
Francisco LIQ) 5,500,000
TOTAL 187,109,059
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
PUERTO RICO-1.0%
$ 2,000,000 Puerto Rico Industrial,
Medical & Environmental
PCA, (1983 Series A), 2.90%
TOBs (Merck & Co., Inc.),
Optional Tender 12/1/1999 $ 2,000,000
TOTAL INVESTMENTS (AT
AMORTIZED COST) 3 $ 189,109,059
</TABLE>
Securities that are subject to Alternative Minimum Tax represent 68.9% of the
portfolio as calculated based upon total portfolio market value.
1 The fund may only invest in securities rated in one of the two highest
short-term rating categories by nationally recognized statistical rating
organizations ("NRSROs") or unrated securities of comparable quality. An NRSRO's
two highest rating categories are determined without regard for sub-categories
and gradations. For example, securities rated SP-1+, SP-1 or SP-2 by Standard &
Poor's, MIG-1 or MIG-2 by Moody's Investors Service, Inc., F-1+, F-1 and F-2 by
Fitch IBCA, Inc. are all considered rated in one of the two highest short-term
rating categories.
Securities rated in the highest short-term rating category (and unrated
securities of comparable quality) are identified as First Tier securities.
Securities rated in the second highest short-term rating category (and unrated
securities of comparable quality) are identified as Second Tier securities. The
fund follows applicable regulations in determining whether a security is rated
and whether a security rated by multiple NRSROs in different rating categories
should be identified as a First or Second Tier security.
At April 30, 1999, the portfolio securities were rated as follows:
Tier Rating Based on Total Market Value (Unaudited)
FIRST TIER SECOND TIER
100.00% 0.00%
2 Denotes a restricted security which is subject to restrictions on resale under
Federal securities laws. At April 30, 1999, these securities amounted to
$15,950,000, which represents 8.3% of net assets.
3 Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($191,334,504) at April 30, 1999.
The following acronyms are used throughout this portfolio:
AMBAC -American Municipal Bond Assurance Corporation BANs -Bond Anticipation
Notes CP -Commercial Paper EDC -Economic Development Corporation EDRB -Economic
Development Revenue Bonds FGIC -Financial Guaranty Insurance Company FSA
- -Financial Security Assurance GTD -Guaranty IDRBs -Industrial Development
Revenue Bonds INS -Insured LIQ -Liquidity Agreement LLC -Limited Liability
Company LOC -Letter of Credit MBIA -Municipal Bond Investors Assurance MERLOTS
- -Municipal Exempt Receipts-Liquidity Optional Tender Series PCA -Pollution
Control Authority PRF -Prerefunded SA -Support Agreement TANs -Tax Anticipation
Notes TOBs -Tender Option Bonds VRDNs -Variable Rate Demand Notes
See Notes which are an integral part of the Financial Statements
Statement of Assets and Liabilities
APRIL 30, 1999 (UNAUDITED)
<TABLE>
<S> <C> <C>
ASSETS:
Total investments in
securities, at amortized
cost and value $ 189,109,059
Cash 1,119,885
Income receivable 1,575,263
Deferred organizational
costs 9,219
Other assets 2,053
TOTAL ASSETS 191,815,479
LIABILITIES:
Income distribution
payable $ 453,197
Accrued expenses 27,778
TOTAL LIABILITIES 480,975
Net assets for 191,334,504
shares outstanding $ 191,334,504
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PROCEEDS PER SHARE:
INSTITUTIONAL SERVICE
SHARES:
$177,507,165 / 177,507,165
shares outstanding $1.00
INSTITUTIONAL SHARES:
$13,827,339 / 13,827,339
shares outstanding $1.00
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Operations
SIX MONTHS ENDED APRIL 30, 1999 (UNAUDITED)
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest $ 3,398,420
EXPENSES:
Investment advisory fee $ 515,791
Administrative personnel
and services fee 76,585
Custodian fees 7,186
Transfer and dividend
disbursing agent fees and
expenses 65,313
Directors'/Trustees' fees 963
Auditing fees 6,501
Legal fees 6,764
Portfolio accounting fees 31,438
Shareholder services fee-
Institutional Service
Shares 235,383
Shareholder services fee-
Institutional Shares 22,513
Share registration costs 17,968
Printing and postage 10,428
Insurance premiums 9,498
Miscellaneous 4,902
TOTAL EXPENSES 1,011,233
WAIVERS:
Waiver of investment
advisory fee $ (336,165)
Waiver of shareholder
services fee-Institutional
Service Shares (84,738)
Waiver of shareholder
services fee-Institutional
Shares (22,513)
TOTAL WAIVERS (443,416)
Net expenses 567,817
Net investment income $ 2,830,603
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR
(unaudited) ENDED
APRIL 30, OCTOBER 31,
1999 1998
<S> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net investment income $ 2,830,603 $ 5,952,588
DISTRIBUTIONS TO
SHAREHOLDERS:
Distributions from net
investment income
Institutional Service
Shares (2,568,320) (5,412,823)
Institutional Shares (262,283) (539,765)
CHANGE IN NET ASSETS
RESULTING FROM
DISTRIBUTIONS
TO SHAREHOLDERS (2,830,603) (5,952,588)
SHARE TRANSACTIONS:
Proceeds from sale of
shares 334,773,157 846,148,992
Net asset value of shares
issued to shareholders in
payment of
distributions declared 1,497,352 4,227,137
Cost of shares redeemed (349,488,935) (806,298,824)
CHANGE IN NET ASSETS
RESULTING FROM SHARE
TRANSACTIONS (13,218,426) 44,077,305
Change in net assets (13,218,426) 44,077,305
NET ASSETS:
Beginning of period 204,552,930 160,475,625
End of period $ 191,334,504 $ 204,552,930
</TABLE>
See Notes which are an integral part of the Financial Statements
Financial Highlights-Institutional Shares
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(unaudited)
APRIL 30, YEAR ENDED OCTOBER 31,
1999 1998 1997 1996 1
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.01 0.03 0.03 0.02
LESS DISTRIBUTIONS:
Distributions from net investment income (0.01) (0.03) (0.03) (0.02)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN 2 1.44% 3.36% 3.43% 2.19%
RATIOS TO AVERAGE NET ASSETS:
Expenses 0.40% 3 0.40% 0.40% 0.37% 3
Net investment income 2.92% 3 3.31% 3.39% 3.40% 3
Expenses 4 0.98% 3 0.98% 1.06% 1.26% 3
Net investment income 4 2.34% 3 2.73% 2.73% 2.51% 3
SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $13,827 $19,564 $13,370 $11,614
</TABLE>
1 Reflects operations for the period from March 2, 1996 (date of initial public
investment) to October 31, 1996.
2 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
3 Computed on an annualized basis.
4 During the period, certain fees were voluntarily waived. If such voluntary
waivers had not occurred, the ratios would have been as indicated.
See Notes which are an integral part of the Financial Statements
Financial Highlights-Institutional Service Shares
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(unaudited)
APRIL 30, YEAR ENDED OCTOBER 31,
1999 1998 1997 1996 1995 1
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.01 0.03 0.03 0.03 0.01
LESS DISTRIBUTIONS:
Distributions from net investment income (0.01) (0.03) (0.03) (0.03) (0.01)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN 2 1.36% 3.20% 3.27% 3.26% 1.35%
RATIOS TO AVERAGE NET ASSETS:
Expenses 0.56% 3 0.56% 0.55% 0.50% 0.32% 3
Net investment income 2.73% 3 3.16% 3.22% 3.21% 3.67% 3
Expenses 4 0.98% 3 0.98% 1.06% 1.26% 1.95% 3
Net investment income 4 2.31% 3 2.74% 2.71% 2.45% 2.04% 3
SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $177,507 $184,989 $147,105 $92,275 $30,133
</TABLE>
1 Reflects operations for the period from June 20, 1995 (date of initial public
investment) to October 31, 1995.
2 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
3 Computed on an annualized basis.
4 During the period, certain fees were voluntarily waived. If such voluntary
waivers had not occurred, the ratios would have been as indicated.
See Notes which are an integral part of the Financial Statements
Notes to Financial Statements
APRIL 30, 1999 (UNAUDITED)
ORGANIZATION
Federated Municipal Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "Act") as an open-end, management
investment company. The Trust consists of 17 portfolios. The financial
statements included herein are only those of Michigan Municipal Cash Trust (the
"Fund"). The financial statements of the other portfolios are presented
separately. The assets of each portfolio are segregated and a shareholder's
interest is limited to the portfolio in which shares are held. The Fund offers
two classes of shares: Institutional Service Shares and Institutional Shares.
The investment objective of the Fund is current income exempt from federal
regular income tax and the personal income tax imposed by the State of Michigan
consistent with the stability of principal and liquidity.
SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS
The Fund uses the amortized cost method to value its portfolio securities in
accordance with Rule 2a-7 under the Act.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS
Interest income and expenses are accrued daily. Bond premium and discount, if
applicable, are amortized as required by the Internal Revenue Code, as amended
(the "Code"). Distributions to shareholders are recorded on the ex- dividend
date.
FEDERAL TAXES
It is the Fund's policy to comply with the provisions of the Code applicable to
regulated investment companies and to distribute to shareholders each year
substantially all of its income. Accordingly, no provisions for federal tax are
necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Fund may engage in when-issued or delayed delivery transactions. The Fund
records when-issued securities on the trade date and maintains security
positions such that sufficient liquid assets will be available to make payment
for the securities purchased. Securities purchased on a when- issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
RESTRICTED SECURITIES
Restricted securities are securities that may only be resold upon registration
under federal securities laws or in transactions exempt from such registration.
Many restricted securities may be resold in the secondary market in transactions
exempt from registration. In some cases, the restricted securities may be resold
without registration upon exercise of a demand feature. Such restricted
securities may be determined to be liquid under criteria established by the
Board of Trustees (the "Trustees"). The Fund will not incur any registration
costs upon such resales. Restricted securities are valued at amortized cost in
accordance with Rule 2a-7 under the Act.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts of assets, liabilities, expenses and revenues reported in the
financial statements. Actual results could differ from those estimated.
OTHER
Investment transactions are accounted for on the trade date.
SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares. At April 30, 1999, capital paid-in aggregated $191,334,504.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS YEAR
ENDED ENDED
APRIL 30, OCTOBER 31,
1999 1998
<S> <C> <C>
INSTITUTIONAL SHARES:
Shares sold 42,391,017 78,879,030
Shares issued to
shareholders in payment of
distributions declared 15,873 34,996
Shares redeemed (48,143,375) (72,720,480)
NET CHANGE RESULTING FROM
INSTITUTIONAL SHARE
TRANSACTIONS (5,736,485) 6,193,546
<CAPTION>
SIX MONTHS YEAR
ENDED ENDED
APRIL 30, OCTOBER 31,
1999 1998
<S> <C> <C>
INSTITUTIONAL SERVICE
SHARES:
Shares sold 292,382,140 767,269,962
Shares issued to
shareholders in payment of
distributions declared 1,481,479 4,192,141
Shares redeemed (301,345,560) (733,578,344)
NET CHANGE RESULTING FROM
INSTITUTIONAL SERVICE
SHARE TRANSACTIONS (7,481,941) 37,883,759
NET CHANGE RESULTING FROM
SHARE TRANSACTIONS (13,218,426) 44,077,305
</TABLE>
INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE
Federated Investment Management Company, the Fund's investment adviser (the
"Adviser"), receives for its services an annual investment advisory fee equal to
0.50% of the Fund's average daily net assets. The Adviser may voluntarily choose
to waive any portion of its fee and/or reimburse certain operating expenses of
the Fund. The Adviser can modify or terminate this voluntary waiver and/or
reimbursement at any time at its sole discretion.
ADMINISTRATIVE FEE
Federated Services Company ("FServ"), under the Administrative Services
Agreement, provides the Fund with administrative personnel and services. The fee
paid to FServ is based on the level of average aggregate daily net assets of all
funds advised by subsidiaries of Federated Investors, Inc. for the period. The
administrative fee received during the period of the Administrative Services
Agreement shall be at least $125,000 per portfolio and $30,000 per each
additional class of shares.
SHAREHOLDER SERVICES FEE
Under the terms of a Shareholder Services Agreement with Federated Shareholder
Services Company ("FSSC"), the Fund will pay FSSC up to 0.25% of average daily
net assets of the Fund for the period. The fee paid to FSSC is used to finance
certain services for shareholders and to maintain shareholder accounts. FSSC may
voluntarily choose to waive any portion of its fee. FSSC can modify or terminate
this voluntary waiver at any time at its sole discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES
Fserv, through its subsidiary FSSC, serves as transfer and dividend disbursing
agent for the Fund. The fee paid to FSSC is based on the size, type and number
of accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES
FServ maintains the Fund's accounting records for which it receives a fee. The
fee is based on the level of the Fund's average daily net assets for the period,
plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES
Organizational expenses of $18,618 were borne initially by the Adviser. The Fund
has reimbursed the Adviser for these expenses. These expenses have been deferred
and are being amortized over the five-year period following the fund's effective
date.
INTERFUND TRANSACTIONS
During the period ended April 30, 1999, the Fund engaged in purchase and sale
transactions with funds that have a common investment adviser (or affiliated
investment advisers), common Directors/Trustees, and/or common Officers. These
purchase and sale transactions were made at current market value pursuant to
Rule 17a-7 under the Act amounting to $147,105,000 and $192,691,000,
respectively.
GENERAL
Certain of the Officers and Trustees of the Trust are Officers and Directors or
Trustees of the above companies.
CONCENTRATION OF CREDIT RISK
Since the Fund invests a substantial portion of its assets in issuers located in
one state, it will be more susceptible to factors adversely affecting issuers of
that state than would be a comparable tax-exempt mutual fund that invests
nationally. In order to reduce the credit risk associated with such factors, at
April 30, 1999, 83.0% of the securities in the portfolio of investments are
backed by letters of credit or bond insurance of various financial institutions
and financial guaranty assurance agencies. The percentage of investments insured
by or supported (backed) by a letter of credit from any one institution or
agency did not exceed 14.4% of total investments.
YEAR 2000
Similar to other financial organizations, the Fund could be adversely affected
if the computer systems used by the Fund's service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. The Fund's Adviser and administrator are taking measures that they
believe are reasonably designed to address the Year 2000 issue with respect to
computer systems that they use and to obtain reasonable assurances that
comparable steps are being taken by each of the Fund's other service providers.
At this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact to the Fund.
Trustees
JOHN F. DONAHUE
THOMAS G. BIGLEY
JOHN T. CONROY, JR.
JOHN F. CUNNINGHAM
LAWRENCE D. ELLIS, M.D.
PETER E. MADDEN
CHARLES F. MANSFIELD, JR.
JOHN E. MURRAY, JR., J.D., S.J.D.
MARJORIE P. SMUTS
JOHN S. WALSH
Officers
JOHN F. DONAHUE
Chairman
GLEN R. JOHNSON
President
J. CHRISTOPHER DONAHUE
Executive Vice President
EDWARD C. GONZALES
Executive Vice President
JOHN W. MCGONIGLE
Executive Vice President and Secretary
RICHARD B. FISHER
Vice President
RICHARD J. THOMAS
Treasurer
ANTHONY R. BOSCH
Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment
risk, including the possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the fund's prospectus which contains facts concerning
its objective and policies, management fees, expenses and other information.
[Graphic]
Federated
World-Class Investment Manager
SEMI-ANNUAL REPORT
Michigan Municipal Cash Trust
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
APRIL 30, 1999
[Graphic]
Federated
Michigan Municipal Cash Trust
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
1-800-341-7400
WWW.FEDERATEDINVESTORS.COM
Federated Securities Corp., Distributor
Cusip 314229667
Cusip 314229725
G01456-02 (6/99)
[Graphic]
SEMI-ANNUAL REPORT
President's Message
Dear Shareholder:
I am pleased to present the Semi-Annual Report to Shareholders of Minnesota
Municipal Cash Trust, a portfolio of Federated Municipal Trust, which covers the
six-month period from November 1, 1998 through April 30, 1999. The report begins
with a discussion with the fund's portfolio manager, followed by a complete
listing of the fund's holdings and its financial statements. Financial
highlights tables are provided for the fund's Cash Series Shares and
Institutional Shares.
The fund is a convenient way to put your ready cash to work pursuing double
tax-free income-free from federal regular income tax and Minnesota personal
income tax 1-through a portfolio concentrated in high-quality, short-term
Minnesota municipal securities. At the end of the reporting period, the fund's
holdings were diversified among issuers that use municipal bond financing for
projects as varied as health care, housing, community development and
transportation.
This double tax-free advantage means you have the opportunity to earn a greater
after-tax yield than you could in a comparable high-quality taxable investment.
Of course, the fund also brings you the added benefits of daily liquidity and
stability of principal. 2
During the reporting period, the fund paid double tax-free dividends totaling
$0.01 per share for both Cash Series Shares and Institutional Shares. The fund's
net assets totaled $491.3 million at the end of the reporting period.
Thank you for relying on Minnesota Municipal Cash Trust to help your ready cash
pursue tax-free income every day. As always, we will continue to provide you
with the highest level of professional service. We invite your questions or
comments.
Sincerely,
[Graphic]
Glen R. Johnson
President
June 15, 1999
1 Income may be subject to the federal alternative minimum tax.
2 An investment in money market funds is neither insured nor guaranteed by the
Federal Deposit Insurance Corporation or any other government agency. Although
money market funds seek to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in the fund.
Investment Review
An interview with the fund's portfolio manager, Mary Jo Ochson, CFA, Senior Vice
President, Federated Investment Management Company.
WHAT ARE YOUR COMMENTS ON THE ECONOMY AND THE INTEREST RATE ENVIRONMENT DURING
THE FUND'S SIX-MONTH REPORTING PERIOD?
The economy remained robust over the reporting period, showing continued
strength in the fourth quarter of 1998 and into the first quarter of 1999. At
the same time, overall inflationary pressure was absent in spite of impressive
performance from the economy and historically low unemployment. Throughout the
reporting period, the Federal Reserve Board (the "Fed") focused on the
inflationary pressures created by a tight labor market. The Fed adopted a
neutral bias in monetary policy at its November 1998 meeting and maintained the
policy throughout the reporting period. Shortly after the close of the reporing
period, at its May 1999 meeting, the Fed changed to a tightening bias, citing
the strong U.S. economy in conjunction with record employment levels.
In addition to economic fundamentals, short-term municipal securities were
strongly influenced by technical factors over the reporting period, notably
calendar year end and income tax payment season. Variable rate demand notes
("VRDNs") started the reporting period in the 3.00% range, but moved sharply
higher to the 4.00% level in December as an imbalance between supply and demand
occurred. Yields declined in January, as investors looked to reinvest coupon
payments and year end selling pressures eased. Yields averaged slightly over
2.80% during February and March before rising to the 3.50% range in April due to
traditional tax season selling pressures. Over the six-month reporting period,
VRDN yields averaged roughly 65% of taxable rates, making them attractive for
investors in the highest federal tax brackets.
The overall tone of the short-term municipal market was positive. Municipalities
across the country have benefited from a strong economy. This fact, coupled with
lower borrowing costs from low long-term rates, has reduced short-term issuance.
In fact, annual municipal note issuance was at its lowest level in the last
decade. Lack of supply and heavy demand have kept short-term municipals,
relative to their taxable counterparts, very expensive.
WHAT WERE YOUR STRATEGIES FOR THE FUND DURING THE REPORTING PERIOD?
At the beginning of the reporting period, the fund's average maturity was
approximately 45 days. The fund remained in a 45 to 50-day average maturity
range over the reporting period, a neutral stance, and moved within that range
according to relative value opportunities. We continued to emphasize a barbelled
structure for the portfolio, combining a significant position in 7-day VRDNs
with purchases of longer-term securities with maturities between 6 and 12
months. After an average maturity range was targeted, we attempted to maximize
performance through ongoing relative value analysis. Relative value analysis
includes the comparison of the richness or cheapness of municipal securities to
one another as well as municipal securities to taxable instruments, such as
Treasury securities. This portfolio structure continued to pursue a competitive
yield over time.
AS WE APPROACH MID-YEAR, WHAT IS YOUR OUTLOOK GOING FORWARD?
The Fed, although certain to be troubled by persistent above-trend growth in an
environment where labor markets are tight, will likely remain on hold until
later in the year. Additionally, it is positioned for the next move to be a
tightening. In the near term, the short-term municipal market will likely
reflect technical as well as fundamental factors. These supply and demand
imbalances could very well present attractive investment opportunities for the
fund. We will continue to watch, with great interest, market developments in
order to best serve our municipal clients.
Portfolio of Investments
APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
99.0% 1
MINNESOTA-99.0%
$ 24,029,000 ABN AMRO MuniTOPS
Certificates Trust
(Minnesota Non-AMT) Series
1998-6 Weekly VRDNs
(Minneapolis/St. Paul, MN
Airport Commission)/(AMBAC
Financial Group, Inc.
INS)/(ABN AMRO Bank N.V.,
Amsterdam LIQ) $ 24,029,000
1,550,000 Albert Lea, MN Independent
School District No. 241,
3.35% RANs
(Minnesota State GTD),
9/20/1999 1,550,992
5,600,000 Anoka City, MN Solid Waste Disposal Authority, 3.15% CP
(United Power Associates)/(National Rural Utilities
Cooperative Finance Corp.
GTD),
Mandatory Tender 6/14/1999 5,600,000
3,575,000 Apple Valley, MN, IDRB
(Series 1995) Weekly VRDNs
(AV Development Co.
Project)/(Firstar Bank,
Minnesota LOC) 3,575,000
7,225,000 Avon, MN, (Series 1998)
Weekly VRDNs (Vesper
Corp.)/(KeyBank, N.A. LOC) 7,225,000
14,400,000 Becker, MN, PCR (Series
1993-B), 3.15% CP
(Northern States Power
Co.), Mandatory Tender
6/18/1999 14,400,000
9,500,000 Becker, MN, PCR (Series 1993A & B), 2.85% CP (Northern States
Power Co.), Mandatory Tender
7/29/1999 9,500,000
6,700,000 Becker, MN, PCR (Series 1993A & B), 3.05% CP (Northern States
Power Co.), Mandatory Tender
7/16/1999 6,700,000
9,000,000 Becker, MN, PCR (Series 1993A & B), 3.10% CP (Northern States
Power Co.), Mandatory Tender
5/20/1999 9,000,000
2,855,000 Blaine, MN, IDRBs (Series
1996) Weekly VRDNs (S & S
of Minnesota,
LLC Project)/(Norwest Bank
Minnesota, N.A. LOC) 2,855,000
300,000 Bloomington, MN Port
Authority, Special Tax
Revenue Refunding Bonds
(Series 1996B) Weekly
VRDNs (Mall of
America)/(FSA INS)/(Credit
Local de France LIQ) 300,000
2,500,000 Bloomington, MN, IDRB
(Series 1995) Weekly VRDNs
(Now Technologies, Inc.
Project)/(Norwest Bank
Minnesota, N.A. LOC) 2,500,000
1,000,000 Bloomington, MN, Multi-
Family Housing Weekly
VRDNs
(Crow/Bloomington
Apartments)/(Citibank
N.A., New York LOC) 1,000,000
10,300,000 Burnsville, MN, Variable
Rate Demand Revenue Bonds
(Series 1996) Weekly VRDNs
(YMCA Projects)/(Norwest
Bank Minnesota, N.A. LOC) 10,300,000
3,300,000 Burnsville, MN, Adjustable
Rate IDRB (Series 1996)
Weekly VRDNs
(Caire, Inc.
Project)/(BankBoston, N.A.
LOC 3,300,000
3,550,000 Byron, MN Weekly VRDNs
(Schmidt
Printing)/(Norwest Bank
Minnesota, N.A. LOC) 3,550,000
1,205,000 Chanhassen, MN IDA,
(Series 1995) Weekly VRDNs
(Building Management
Group, L.L.C.
Project)/(Norwest Bank
Minnesota, N.A. LOC) 1,205,000
5,000,000 Cloquet, MN, Industrial
Facilities Revenue Bonds
(Series 1996A) Weekly
VRDNs (Potlatch
Corp.)/(Credit Suisse
First Boston LOC) 5,000,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
MINNESOTA-CONTINUED
$ 3,700,000 Coon Rapids, MN Hospital
Authority, (Series 1985)
Weekly VRDNs
(Health Central
System)/(Norwest Bank
Minnesota, N.A. LOC) $ 3,700,000
3,080,000 Coon Rapids, MN, (Series
1996) Weekly VRDNs
(Medical Enterprise
Associates
Project)/(Norwest Bank
Minnesota, N.A. LOC) 3,080,000
2,350,000 Cottage Grove, MN, IDR
Refunding Bonds (Series
1995) Weekly VRDNs
(Supervalu,
Inc.)/(Wachovia Bank of
NC, N.A., Winston-Salem
LOC) 2,350,000
3,300,000 DDSB Municipal Securities
Trusts, Series 1994O
Weekly VRDNs
(Richfield, MN ISD
280)/(U.S. Bank, N.A.,
Minneapolis LIQ) 3,300,000
6,390,000 DDSB Municipal Securities
Trusts, Series 1994T
Weekly VRDNs
(Osseo, MN ISD
279)/(U.S. Bank, N.A.,
Minneapolis LIQ) 6,390,000
10,745,000 2 Dakota County & Washington
County MN Housing &
Redevelopment Authority,
MERLOTs (Series J), 3.15%
TOBs (United States
Treasury COL)/(First Union
National Bank, Charlotte,
NC LIQ), Optional Tender
6/1/1999 10,745,000
6,250,000 Dakota County, MN Housing &
Redevelopment Authority,
(Series C), 3.20% BANs,
4/25/2000 6,250,000
3,000,000 2 Dakota County, Washington
County & Anoka City, MN
Housing & Redevelopment
Authority, MERLOTs (Series
H), 3.15% TOBs (United
States Treasury COL)/
(First Union National
Bank, Charlotte, NC LIQ),
Optional Tender 6/1/1999 3,000,000
2,900,000 Duluth, MN, (Series 1985)
Weekly VRDNs (Wachovia
Bank of NC, N.A.,
Winston-Salem LOC) 2,900,000
9,000,000 Duluth, MN, GO Tax and Aid
Anticipation Certificates
of Indebtedness
(Series 1999), 3.10% TANs,
12/31/1999 9,007,596
785,000 Eden Prairie, MN IDA, #194
Weekly VRDNs (Richard W.
Cohen Project)/
(Norwest Bank Minnesota,
N.A. LOC) 785,000
1,170,000 Eden Prairie, MN IDA,
(Series 1996) Weekly VRDNs
(Challenge Printing, Inc.
Project)/(Norwest Bank
Minnesota, N.A. LOC) 1,170,000
1,310,000 Eden Prairie, MN IDA,
(Series 1995) Weekly VRDNs
(Robert Lothenbach
Project)/(Norwest Bank
Minnesota, N.A. LOC) 1,310,000
675,000 Elk River, MN Weekly VRDNs
(Tescom Corp.)/(Norwest
Bank Minnesota, N.A. LOC) 675,000
5,000,000 Faribault, MN IDA, (Series
1988) Weekly VRDNs (Jerome
Foods)/
(Norwest Bank Minnesota,
N.A. LOC) 5,000,000
2,945,000 Farmington, MN, (Series
1996) Weekly VRDNs
(Lexington Standard
Corporation
Project)/(Norwest Bank
Minnesota, N.A. LOC) 2,945,000
3,500,000 Fridley, MN ISD 14, 3.20%
TANs (Minnesota State
GTD), 2/11/2000 3,500,000
3,000,000 Hennepin Co. MN, (Series
1995C) Weekly VRDNs 3,000,000
6,550,000 Hennepin Co. MN, (Series
1996C) Weekly VRDNs 6,550,000
7,100,000 Hubbard County, MN, Solid
Waste Disposal (Series
1990) Weekly VRDNs
(Potlatch Corp.)/(Credit
Suisse First Boston LOC) 7,100,000
5,200,000 Lino Lakes, MN, Variable
Rate Demand IDRBs (Series
1997) Weekly VRDNs
(Taylor Corp.)/(Norwest
Bank Minnesota, N.A. LOC) 5,200,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
MINNESOTA-CONTINUED
$ 1,000,000 MN Insured Municipal
Securities Trust, Series
1996A, Floating Rate
Certificates Weekly VRDNs
(Eden Prairie, MN ISD
272)/(MBIA INS)/
(Norwest Bank Minnesota,
N.A. LIQ) $ 1,000,000
1,125,000 MN Insured Municipal
Securities Trust, Series
1996B, Floating Rate
Certificates Weekly VRDNs
(Eden Prairie, MN ISD
272)/(MBIA INS)/
(Norwest Bank Minnesota,
N.A. LIQ) 1,125,000
2,500,000 MN Insured Municipal
Securities Trust, Series
1996H, Floating Rate
Certificates Weekly VRDNs
(St. Louis Park, MN Health
Care Facilities)/
(AMBAC Financial Group,
Inc. INS)/(Norwest Bank
Minnesota, N.A. LIQ) 2,500,000
2,250,000 MN Municipal Securities
Trust, Series 1996D,
Floating Rate Certificates
Weekly VRDNs (North St.
Paul-Maplewood, MN School
District 622)/
(Norwest Bank Minnesota,
N.A. LIQ) 2,250,000
3,500,000 MN Municipal Securities
Trust, Series 1996F,
Floating Rate Certificates
Weekly VRDNs (Lakeville,
MN ISD 194)/(Minnesota
State GTD)/
(Norwest Bank Minnesota,
N.A. LIQ) 3,500,000
5,000,000 MN Municipal Securities Trust, Series 1996F, Floating Rate
Certificates Weekly VRDNs (Benedictine Health System)/ (AMBAC
Financial Group, Inc.
INS)/
(Norwest Bank Minnesota,
N.A. LIQ) 5,000,000
4,000,000 MN Municipal Securities
Trust, Series 1996H,
Floating Rate Certificates
Weekly VRDNs (Rosemount,
MN ISD 196)/(FSA
INS)/(Norwest Bank
Minnesota, N.A. LIQ) 4,000,000
3,165,000 Maple Grove, MN, Variable
Rate Demand IDRBs (Series
1998) Weekly VRDNs
(Spancrete Midwest
Co.)/(Norwest Bank
Minnesota, N.A. LOC) 3,165,000
950,000 Maplewood, MN, (Series
1997) Weekly VRDNs (Camada
Ltd. Partnership)/
(Norwest Bank Minnesota,
N.A. LOC) 950,000
4,525,000 Maplewood, MN, Multi-
Family Housing (Series
1993) Weekly VRDNs
(Silver Ridge
Project)/(Federal Home
Loan Bank of Chicago LOC) 4,525,000
10,495,000 Minneapolis CDA, (Series
1998 FR/RI-C8) Weekly
VRDNs (Riverplace Project
(The Pinnacle
Apartments))/(Bank of
America NT and SA, San
Francisco SWAP) 10,495,000
660,000 Minneapolis, MN IDA Weekly
VRDNs (JTJ
Co.)/(U.S. Bank, N.A.,
Minneapolis LOC) 660,000
1,000,000 Minneapolis, MN, 7.00%
Bonds (Lifespan Inc.-
Abbott Northwestern)/
(United States Treasury
PRF), 12/1/1999 1,041,681
1,000,000 Minneapolis, MN, Housing
Development Revenue
Refunding Bonds (Series
1988) Weekly VRDNs
(Symphony Place)/
(Citibank N.A., New York
LOC) 1,000,000
900,000 Minneapolis, MN, Variable
Rate Demand Commercial
Development Revenue
Refunding Bonds (Series
1996) Weekly VRDNs (WNB &
Company
Project)/(U.S. Bank, N.A.,
Minneapolis LOC) 900,000
10,165,000 Minneapolis, MN, Variable
Rate Housing Revenue Bonds
Weekly VRDNs
(One Ten Grant
Project)/(U.S. Bank, N.A.,
Minneapolis LOC) 10,165,000
2,540,000 2 Minneapolis/St. Paul MN
Housing Finance Board, SFM
Revenue Bonds,
MERLOTs (Series D), 3.40%
TOBs (GNMA COL)/(First
Union National Bank,
Charlotte, NC LIQ),
Optional Tender 7/1/1999 2,540,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
MINNESOTA-CONTINUED
$ 8,000,000 Minnesota Agricultural and
Economic Development
Board, (Series 1996)
Weekly VRDNs (Evangelical
Lutheran Good Samaritan
Society)/
(Rabobank Nederland,
Utrecht LOC) $ 8,000,000
8,000,000 Minnesota State
Commissioner of Iron Range
Resources &
Rehabilitation,
(Series 1991) Weekly VRDNs
(Louisiana-Pacific
Corp.)/(Wachovia Bank of
NC, N.A., Winston-Salem
LOC) 8,000,000
4,995,000 2 Minnesota State HFA,
(Series 1998C) PT-204,
3.70% TOBs
(Bayerische Hypotheken-und
Vereinsbank AG LIQ),
Optional Tender 5/19/1999 4,995,000
3,800,000 Minnesota State Higher
Education Coordinating
Board, (Series 1992A)
Weekly VRDNs (U.S. Bank,
N.A., Minneapolis LIQ) 3,800,000
7,000,000 Minnesota State Higher
Education Coordinating
Board, 1992 (Series B)
Weekly VRDNs (U.S. Bank,
N.A., Minneapolis LIQ) 7,000,000
12,700,000 Minnesota State Higher
Education Coordinating
Board, 1992 (Series C)
Weekly VRDNs (U.S. Bank,
N.A., Minneapolis LIQ) 12,700,000
6,500,000 Minnesota State Higher
Education Coordinating
Board, 1992 (Series C)
Weekly VRDNs (U.S. Bank,
N.A., Minneapolis LIQ) 6,500,000
5,750,000 Minnesota State Higher
Education Facility
Authority, (Series Four-S)
Weekly VRDNs (Bethel
College and
Seminary)/(Allied Irish
Banks PLC LOC) 5,750,000
4,310,000 Minnesota State, (Series
A), 5.00% Bonds (AMBAC
Financial Group,
Inc. INS), 6/30/1999 4,323,190
21,475,000 Minnesota State, 3.15%
Bonds, 11/1/1999 21,504,522
1,000,000 Minnesota State, 5.00%
Bonds, 8/1/1999 1,004,385
5,000,000 Minnesota Tax and Aid
Anticipation Borrowing
Program, (Series 1998B),
3.625% TANs (Minnesota
State GTD), 8/27/1999 5,000,000
3,250,000 Minnesota Tax and Aid
Anticipation Borrowing
Program, (Series 1998A),
3.67% TANs (Minnesota
State GTD), 8/20/1999 3,250,000
2,000,000 Minnesota Tax and Aid
Anticipation Borrowing
Program, (Series 1999A),
3.00% TANs (Minnesota
State GTD), 2/3/2000 2,000,000
12,500,000 Minnesota Tax and Aid
Anticipation Borrowing
Program, (Series 1999B),
2.95% TANs (Minnesota
State GTD), 2/24/2000 12,500,000
870,000 Minnetonka, MN, IDRB
(Series 1996) Weekly VRDNs
(PGI Cos., Inc.)/
(Norwest Bank Minnesota,
N.A. LOC) 870,000
5,900,000 Minnetonka, MN,
Multifamily Housing
Revenue Refunding Bonds
(Series 1995) Weekly VRDNs
(Southampton Apartments
Project (MN))/
(National Bank of Canada,
Montreal LOC) 5,900,000
6,500,000 Minnetonka, MN, Rental
Housing Revenue Bonds
(Series 1998), 4.03% TOBs
(Bayerische Landesbank
Girozentrale), Mandatory
Tender 5/1/1999 6,500,000
1,300,000 New Brighton, MN, IDR
Weekly VRDNs (Unicare
Homes, Inc.)/(Paribas,
Paris LOC) 1,300,000
1,000,000 New Hope, MN IDRB, (Series
1994) Weekly VRDNs (Gaines
and Hanson
Printing Co.)/(Norwest
Bank Minnesota, N.A. LOC) 1,000,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
MINNESOTA-CONTINUED
$ 3,020,000 New Hope, MN Weekly VRDNs
(Paddock Labs)/(U.S. Bank,
N.A., Minneapolis LOC) $ 3,020,000
15,000,000 Oak Park Heights, MN,
Elderly Housing Revenue
Bonds (Series 1998B),
4.2625% TOBs (Bayerische
Landesbank Girozentrale),
Mandatory Tender 12/1/1999 15,000,000
4,650,000 Olmsted County, MN
Building Authority,
Certificates of
Participation Weekly VRDNs
(Human Services
Infrastructure)/(Toronto-
Dominion Bank LOC) 4,650,000
1,190,000 Plymouth, MN Weekly VRDNs
(Nuaire, Inc.)/(Norwest
Bank Minnesota, N.A. LOC) 1,190,000
3,000,000 Plymouth, MN, IDRB (Series
1994) Weekly VRDNs
(Olympic Steel, Inc.)/
(National City Bank, Ohio
LOC) 3,000,000
1,200,000 Port Authority of Saint
Paul, MN, (Series 1998A)
Weekly VRDNs
(Bix Fruit Co.)/(Firstar
Bank, Milwaukee LOC) 1,200,000
2,500,000 Port Authority of Saint
Paul, MN, Variable Rate
Demand IDRBs (Series
1998A) Weekly VRDNs
(National Checking
Co.)/(U.S. Bank, N.A.,
Minneapolis LOC) 2,500,000
670,000 Port of Austin, MN Weekly
VRDNs (Mower House Color)/
(Norwest Bank Minnesota,
N.A. LOC) 670,000
8,600,000 Rochester, MN Health Care
Facility Authority,
(Series B), 3.10% CP
(Mayo Foundation),
Mandatory Tender 5/10/1999 8,600,000
1,650,000 Rocori, MN ISD No. 750,
(Series 1998), 4.25% Bonds
(Minnesota State GTD),
9/3/1999 1,652,818
250,000 Rogers, MN IDA Weekly VRDNs
(Metal Sales Manufacturing
Corp.)/(KeyBank, N.A. LOC) 250,000
2,485,000 Rogers, MN IDA, IDRB Weekly
VRDNs (DAC Development,
LLC Project)/
(Norwest Bank Minnesota,
N.A. LOC) 2,485,000
7,100,000 Southern Minnesota
Municipal Power Agency,
3.05% CP,
Mandatory Tender 5/12/1999 7,100,000
1,025,000 St. Cloud, MN Housing &
Redevelopment Authority,
Revenue Refunding
Bonds (Series 1994A)
Weekly VRDNs (Coborn's,
Inc.)/(Norwest Bank
Minnesota, N.A. LOC) 1,025,000
2,125,000 St. Cloud, MN Housing &
Redevelopment Authority,
Revenue Refunding
Bonds (Series 1994B)
Weekly VRDNs (Coborn's,
Inc.)/(Norwest Bank
Minnesota, N.A. LOC) 2,125,000
7,100,000 St. Cloud, MN, (Series
1997-A) Weekly VRDNs (The
Saint Cloud
Hospital)/(Rabobank
Nederland, Utrecht LOC) 7,100,000
9,400,000 St. Louis Park, MN Health
Care Facilities, Floating
Rate Monthly Demand IDRBs
(Series 1984) Weekly VRDNs
(Unicare Homes,
Inc.)/(Paribas, Paris LOC) 9,400,000
4,500,000 St. Paul, MN Housing &
Redevelopment Authority
Weekly VRDNs
(District Cooling St Paul,
Inc.)/(Credit Local de
France LOC) 4,500,000
400,000 St. Paul, MN Housing &
Redevelopment Authority
Weekly VRDNs
(United Way)/(U.S. Bank,
N.A., Minneapolis LOC) 400,000
2,000,000 St. Paul, MN Housing &
Redevelopment Authority,
(1995 Series I)
Weekly VRDNs (District
Cooling St. Paul,
Inc.)/(Credit Local de
France LOC) 2,000,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
MINNESOTA-CONTINUED
$ 2,625,000 St. Paul, MN Housing &
Redevelopment Authority,
Hampden Square Apartments
(Series A), 3.937% TOBs
(Bayerische Landesbank
Girozentrale), Mandatory
Tender 7/1/1999 $ 2,625,000
1,000,000 St. Paul, MN Port
Authority, (Series 1991)
Weekly VRDNs
(West Gate
Office)/(U.S. Bank, N.A.,
Minneapolis LOC) 1,000,000
1,000,000 Steele County, MN, IDRB
(Series 1994) Weekly VRDNs
(Blount, Inc.)/
(Nationsbank, N.A.,
Charlotte LOC) 1,000,000
10,000,000 VRDC/IVRC Trust, Tax-
Exempt Variable Rate
Demand Certificates
(Series 1997A) Weekly
VRDNs (University of
Minnesota)/(Citibank N.A.,
New York LIQ) 10,000,000
2,695,000 Victoria, MN, IDRB,
(Series 1996A) Weekly
VRDNs (HEI, Inc. Project)/
(Norwest Bank Minnesota,
N.A. LOC) 2,695,000
1,140,000 Victoria, MN, IDRBs,
(Series 1996B) Weekly
VRDNs (HEI, Inc. Project)/
(Norwest Bank Minnesota,
N.A. LOC) 1,140,000
1,935,000 Waseca, MN ISD #829, 3.25%
TANs, 3/31/2000 1,938,431
5,440,000 Washington County, MN
Housing & Redevelopment
Authority, Trust Receipts
(Series 1998 FR/RI-C9)
Weekly VRDNs (Granada Pond
Apartments)/
(Bank of America NT and SA,
San Francisco SWP) 5,440,000
1,950,000 Wells, MN, 3.30% TOBs
(Stokely, Inc.)/(First
Union National Bank,
Charlotte, NC LOC),
Optional Tender 6/1/1999 1,950,000
835,000 White Bear, MN Weekly VRDNs
(Thermoform Plastic,
Inc.)/
(Norwest Bank Minnesota,
N.A. LOC) 835,000
1,950,000 White Bear, MN, Variable
Rate Demand Industrial
Revenue Bonds Weekly VRDNs
(N.A. Ternes
Project)/(Firstar Bank,
Minnesota LOC) 1,950,000
1,935,000 Winona, MN ISD 381, 3.75%
RANs (Minnesota State
GTD), 9/22/1999 1,936,985
TOTAL INVESTMENTS (AT
AMORTIZED COST) 3 $ 486,639,600
</TABLE>
Securities that are subject to Alternative Minimum Tax represent 32.4% of the
portfolio based upon total portfolio market value.
1 The fund may only invest in securities rated in one of the two highest
short-term rating categories by nationally recognized statistical rating
organizations ("NRSROs") or unrated securities of comparable quality. An NRSRO's
two highest rating categories are determined without regard for sub-categories
and gradations. For example, securities rated SP-1+, SP-1 or SP-2 by Standard &
Poor's, MIG-1 or MIG-2 by Moody's Investors Service, Inc., F-1+, F-1 and F-2 by
Fitch IBCA, Inc. are all considered rated in one of the two highest short-term
rating categories.
Securities rated in the highest short-term rating category (and unrated
securities of comparable quality) are identified as First Tier securities.
Securities rated in the second highest short-term rating category (and unrated
securities of comparable quality) are identified as Second Tier securities. The
fund follows applicable regulations in determining whether a security is rated
and whether a security rated by multiple NRSROs in different rating categories
should be identified as a First or Second Tier security.
At April 30, 1999, the portfolio securities were rated as follows:
Tier Rating Based on Total Market Value (Unaudited)
FIRST TIER SECOND TIER
100.00% 0.00%
2 Denotes a restricted security which is subject to restrictions on resale under
Federal securities laws. These securities have been deemed liquid based upon
criteria approved by the fund's Board of Trustees. At April 30, 1999, these
securities amounted to $21,280,000, which represents 4.3% of net assets.
3 Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($491,308,291) at April 30, 1999.
The following acronyms are used throughout this portfolio:
AMBAC -American Municipal Bond Assurance Corporation AMT -Alternative Minimum
Tax BANs -Bond Anticipation Notes CDA -Community Development Administration COL
- -Collateralized CP -Commercial Paper FSA -Financial Security Assurance GNMA
- -Government National Mortgage Association GO -General Obligation GTD -Guaranty
HFA -Housing Finance Authority IDA -Industrial Development Authority IDR
- -Industrial Development Revenue IDRB -Industrial Development Revenue Bond INS
- -Insured ISD -Independent School District LIQ -Liquidity Agreement LLC -Limited
Liability Company LOC -Letter of Credit MBIA -Municipal Bond Investors Assurance
MERLOTS -Municipal Exempt Receipts Liquidity Optional Tender Series PCR
- -Pollution Control Revenue PLC -Public Limited Company PRF -Prerefunded RANs
- -Revenue Anticipation Notes SA -Support Agreement SFM -Single Family Mortgage
TANs -Tax Anticipation Notes TOBs -Tender Option Bonds TRANs -Tax and Revenue
Anticipation Notes VRDNs -Variable Rate Demand Notes
See Notes which are an integral part of the Financial Statements
Statement of Assets and Liabilities
APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Total investments in
securities, at amortized
cost and value $ 486,639,600
Cash 872,033
Income receivable 2,565,760
Receivable for shares sold 2,614,392
TOTAL ASSETS 492,691,785
LIABILITIES:
Income distribution
payable $ 1,263,898
Accrued expenses 119,596
TOTAL LIABILITIES 1,383,494
Net assets for 491,308,291
shares outstanding $ 491,308,291
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PROCEEDS PER SHARE:
INSTITUTIONAL SHARES:
$280,514,178 / 280,514,178
shares outstanding $1.00
CASH SERIES SHARES:
$210,794,113 / 210,794,113
shares outstanding $1.00
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Operations
SIX MONTHS ENDED APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 9,252,101
EXPENSES:
Investment advisory fee $ 1,153,989
Administrative personnel
and services fee 217,527
Custodian fees 10,247
Transfer and dividend
disbursing agent fees and
expenses 48,875
Directors'/Trustees' fees 2,211
Auditing fees 6,248
Legal fees 9,449
Portfolio accounting fees 53,452
Distribution services fee-
Cash Series Shares 627,958
Shareholder services fee-
Institutional Shares 407,264
Shareholder services fee-
Cash Series Shares 313,979
Share registration costs 26,103
Printing and postage 15,878
Insurance premiums 32,335
Miscellaneous 1,747
TOTAL EXPENSES 2,927,262
WAIVERS:
Waiver of investment
advisory fee $ (703,914)
Waiver of distribution
services fee-Cash Series
Shares (313,979)
Waiver of shareholder
services fee-Institutional
Shares (407,264)
TOTAL WAIVERS (1,425,157)
Net expenses 1,502,105
Net investment income $ 7,749,996
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR
(unaudited) ENDED
APRIL 30, OCTOBER 31,
1999 1998
<S> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net investment income $ 7,749,996 $ 17,164,545
DISTRIBUTIONS TO
SHAREHOLDERS:
Distributions from net
investment income
Institutional Shares (4,727,328) (10,155,213)
Cash Series Shares (3,022,668) (7,009,332)
CHANGE IN NET ASSETS
RESULTING FROM
DISTRIBUTIONS
TO SHAREHOLDERS (7,749,996) (17,164,545)
SHARE TRANSACTIONS:
Proceeds from sale of
shares 788,398,760 1,392,083,828
Net asset value of shares
issued to shareholders in
payment of
distributions declared 2,623,472 7,214,822
Cost of shares redeemed (835,820,153) (1,292,784,856)
CHANGE IN NET ASSETS
RESULTING FROM SHARE
TRANSACTIONS (44,797,921) 106,513,794
Change in net assets (44,797,921) 106,513,794
NET ASSETS:
Beginning of period 536,106,212 429,592,418
End of period $ 491,308,291 $ 536,106,212
</TABLE>
See Notes which are an integral part of the Financial Statements
Financial Highlights-Institutional Shares
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX
MONTHS
ENDED
(unaudited)
APRIL 30, YEAR ENDED OCTOBER 31,
1999 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM
INVESTMENT OPERATIONS:
Net investment income 0.01 0.03 0.03 0.03 0.04 0.03
LESS DISTRIBUTIONS:
Distributions from net investment income (0.01) (0.03) (0.03) (0.03) (0.04) (0.03)
NET ASSET VALUE,
END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN 1 1.47% 3.44% 3.48% 3.49% 3.82% 2.58%
RATIOS TO AVERAGE
NET ASSETS:
Expenses 0.30% 2 0.30% 0.30% 0.30% 0.30% 0.31%
Net investment income 2.90% 2 3.39% 3.42% 3.43% 3.77% 2.55%
Expenses 3 0.79% 2 0.80% 0.81% 0.81% 0.82% 0.65%
Net investment income 3 2.41% 2 2.89% 2.91% 2.92% 3.25% 2.21%
SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $280,514 $328,507 $208,365 $217,443 $212,392 $159,704
</TABLE>
1 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
2 Computed on an annualized basis.
3 During the period, certain fees were voluntarily waived. If such voluntary
waivers had not occurred, the ratios would have been as indicated.
See Notes which are an integral part of the Financial Statements
Financial Highlights-Cash Series Shares
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX
MONTHS
ENDED
(unaudited)
APRIL 30, YEAR ENDED OCTOBER 31,
1999 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM
INVESTMENT OPERATIONS:
Net investment income 0.01 0.03 0.03 0.03 0.03 0.02
LESS DISTRIBUTIONS:
Distributions from net investment income (0.01) (0.03) (0.03) (0.03) (0.03) (0.02)
NET ASSET VALUE,
END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN 1 1.21% 2.93% 2.97% 2.97% 3.41% 2.17%
RATIOS TO AVERAGE
NET ASSETS:
Expenses 0.80% 2 0.80% 0.80% 0.80% 0.70% 0.71%
Net investment income 2.40% 2 2.89% 2.92% 2.93% 3.37% 2.15%
Expenses 3 1.29% 2 1.30% 1.31% 1.31% 1.32% 1.32%
Net investment income 3 1.91% 2 2.39% 2.41% 2.42% 2.75% 1.54%
SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $210,794 $207,599 $221,227 $235,614 $131,471 $94,335
</TABLE>
1 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
2 Computed on an annualized basis.
3 During the period, certain fees were voluntarily waived. If such voluntary
waivers had not occurred, the ratios would have been as indicated.
See Notes which are an integral part of the Financial Statements
Notes to Financial Statements
APRIL 30, 1999 (UNAUDITED)
ORGANIZATION
Federated Municipal Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "Act") as an open-end, management
investment company. The Trust consists of 17 portfolios. The financial
statements included herein are only those of Minnesota Municipal Cash Trust (the
"Fund"). The financial statements of the other portfolios are presented
separately. The assets of each portfolio are segregated and a shareholder's
interest is limited to the portfolio in which shares are held. The Fund offers
two classes of shares: Institutional Shares and Cash Series Shares. The
investment objective of the Fund is current income exempt from federal regular
income tax and the regular personal income taxes imposed by the State of
Minnesota consistent with stability of principal.
SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS
The Fund uses the amortized cost method to value its portfolio securities in
accordance with Rule 2a-7 under the Act.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS
Interest income and expenses are accrued daily. Bond premium and discount, if
applicable, are amortized as required by the Internal Revenue Code, as amended
(the "Code"). Distributions to shareholders are recorded on the ex- dividend
date.
FEDERAL TAXES
It is the Fund's policy to comply with the provisions of the Code applicable to
regulated investment companies and to distribute to shareholders each year
substantially all of its income. Accordingly, no provisions for federal tax are
necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Fund may engage in when-issued or delayed delivery transactions. The Fund
records when-issued securities on the trade date and maintains security
positions such that sufficient liquid assets will be available to make payment
for the securities purchased. Securities purchased on a when- issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts of assets, liabilities, expenses and revenues reported in the
financial statements. Actual results could differ from those estimated.
RESTRICTED SECURITIES
Restricted securities are securities that may only be resold upon registration
under federal securities laws or in transactions exempt from such registration.
Many restricted securities may be resold in the secondary market in transactions
exempt from registration. In some cases, the restricted securities may be resold
without registration upon exercise of a demand feature. Such restricted
securities may be determined to be liquid under criteria established by the
Board of Trustees (the "Trustees"). The Fund will not incur any registration
costs upon such resales. Restricted securities are valued at amortized cost in
accordance with Rule 2a-7 under the Act.
OTHER
Investment transactions are accounted for on the trade date.
SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares. At April 30, 1999, capital paid-in aggregated $491,308,291.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS YEAR
ENDED ENDED
APRIL 30, OCTOBER 31,
1999 1998
<S> <C> <C>
CASH SERIES SHARES:
Shares sold 382,792,192 648,659,025
Shares issued to
shareholders in payment of
distributions declared 2,508,048 6,851,690
Shares redeemed (382,105,114) (669,138,653)
NET CHANGE RESULTING FROM
CASH SERIES SHARE
TRANSACTIONS 3,195,126 (13,627,938)
<CAPTION>
SIX MONTHS YEAR
ENDED ENDED
APRIL 30, OCTOBER 31,
1999 1998
<S> <C> <C>
INSTITUTIONAL SHARES:
Shares sold 405,606,568 743,424,803
Shares issued to
shareholders in payment of
distributions declared 115,424 363,132
Shares redeemed (453,715,039) (623,646,203)
NET CHANGE RESULTING FROM
INSTITUTIONAL SHARE
TRANSACTIONS (47,993,047) 120,141,732
NET CHANGE RESULTING FROM
SHARE TRANSACTIONS (44,797,921) 106,513,794
</TABLE>
INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE
Federated Investment Management Company, the Fund's investment adviser (the
"Adviser"), receives for its services an annual investment advisory fee equal to
0.40% of the Fund's average daily net assets. The Adviser may voluntarily choose
to waive any portion of its fee. The Adviser can modify or terminate this
voluntary waiver at any time at its sole discretion.
ADMINISTRATIVE FEE
Federated Services Company ("FServ"), under the Administrative Services
Agreement, provides the Fund with administrative personnel and services. The fee
paid to FServ is based on the level of average aggregate daily net assets of all
funds advised by subsidiaries of Federated Investors, Inc. for the period. The
administrative fee received during the period of the Administrative Services
Agreement shall be at least $125,000 per portfolio and $30,000 per each
additional class of shares.
DISTRIBUTION SERVICES FEE
The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b- 1
under the Act. Under the terms of the Plan, the Fund will compensate Federated
Securities Corp. ("FSC"), the principal distributor, from the net assets of the
Fund to finance activities intended to result in the sale of the Fund's Cash
Series Shares. The Plan provides that the Fund may incur distribution expenses
up to 0.50% of the average daily net assets of the Cash Series, annually, to
compensate FSC. FSC may voluntarily choose to waive any portion of its fee. FSC
can modify or terminate this voluntary waiver at any time at its sole
discretion.
SHAREHOLDER SERVICES FEE
Under the terms of a Shareholder Services Agreement with Federated Shareholder
Services Company ("FSSC"), the Fund will pay FSSC up to 0.25% of average daily
net assets of the Fund shares for the period. The fee paid to FSSC is used to
finance certain services for shareholders and to maintain shareholder accounts.
FSSC may voluntarily choose to waive any portion of its fee. FSSC can modify or
terminate this voluntary waiver at any time at its sole discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES
FServ, through its subsidiary FSSC, serves as transfer and dividend disbursing
agent for the Fund. The fee paid to FSSC is based on the size, type and number
of accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES
FServ maintains the Fund's accounting records for which it receives a fee. The
fee is based on the level of the Fund's average daily net assets for the period,
plus out-of-pocket expenses.
INTERFUND TRANSACTIONS
During the period ended April 30, 1999, the Fund engaged in purchase and sale
transactions with funds that have a common investment adviser (or affiliated
investment advisers), common Directors/Trustees, and/or common Officers. These
purchase and sale transactions were made at current market value pursuant to
Rule 17a-7 under the Act amounting to $391,935,000 and $441,988,390,
respectively.
GENERAL
Certain of the Officers and Trustees of the Trust are Officers and Directors or
Trustees of the above companies.
CONCENTRATION OF CREDIT RISK
Since the Fund invests a substantial portion of its assets in issuers located in
one state, it will be more susceptible to factors adversely affecting issuers of
that state than would be a comparable tax-exempt mutual fund that invests
nationally. In order to reduce the credit risk associated with such factors, at
April 30, 1999, 46.7% of the securities in the portfolio of investments are
backed by letters of credit or bond insurance of various financial institutions
and financial guaranty assurance agencies. The percentage of investments insured
by or supported (backed) by a letter of credit from any one institution or
agency did not exceed 12.8% of total investments.
YEAR 2000
Similar to other financial organizations, the Fund could be adversely affected
if the computer systems used by the Fund's service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. The Fund's Adviser and administrator are taking measures that they
believe are reasonably designed to address the Year 2000 issue with respect to
computer systems that they use and to obtain reasonable assurances that
comparable steps are being taken by each of the Fund's other service providers.
At this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact to the Fund.
Trustees
JOHN F. DONAHUE
THOMAS G. BIGLEY
JOHN T. CONROY. JR.
JOHN F. CUNNINGHAM
LAWRENCE D. ELLIS, M.D.
PETER E. MADDEN
CHARLES F. MANSFIELD, JR.
JOHN E. MURRAY, JR., J.D., S.J.D.
MARJORIE P. SMUTS
JOHN S. WALSH
Officers
JOHN F. DONAHUE
Chairman
GLEN R. JOHNSON
President
J. CHRISTOPHER DONAHUE
Executive Vice President
EDWARD C. GONZALES
Executive Vice President
JOHN W. MCGONIGLE
Executive Vice President and Secretary
RICHARD B. FISHER
Vice President
RICHARD J. THOMAS
Treasurer
ANTHONY R. BOSCH
Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment
risk, including the possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the fund's prospectus which contains facts concerning
its objective and policies, management fees, expenses, and other information.
[Graphic]
Federated
World-Class Investment Manager
SEMI-ANNUAL REPORT
Minnesota Municipal Cash Trust
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
APRIL 30, 1999
[Graphic]
Federated
Minnesota Municipal Cash Trust
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
1-800-341-7400
WWW.FEDERATEDINVESTORS.COM
Federated Securities Corp., Distributor
314229873
314229402
1052807 (6/99)
[Graphic]
SEMI-ANNUAL REPORT
President's Message
Dear Shareholder:
I am pleased to present the Semi-Annual Report to Shareholders of North Carolina
Municipal Cash Trust, a portfolio of Federated Municipal Trust, which covers the
six-month period from November 1, 1998 through April 30, 1999. The report begins
with a discussion with the fund's portfolio manager, followed by a complete
listing of the fund's holdings and its financial statements.
The fund is a convenient way to keep your ready cash pursuing double tax-free
income-free from federal regular income tax and North Carolina state income tax
1-through a portfolio concentrated in high-quality, short-term North Carolina
municipal securities. At the end of the reporting period, the fund's holdings
were diversified among issuers that use municipal bond financing for projects as
varied as health care, housing, community development, and transportation.
This double tax-free advantage means you have the opportunity to earn a greater
after-tax yield than you could in a comparable high-quality taxable investment.
Of course, the fund also brings you the added benefits of daily liquidity and
stability of principal. 2
During the reporting period, the fund paid double tax-free dividends of $0.01
per share. The fund's net assets reached $157.3 million at the end of the
reporting period.
You can count on North Carolina Municipal Cash Trust to help your ready cash
pursue tax-free income every day. As always, we will continue to provide you
with the highest level of professional service. We invite your questions or
comments.
Sincerely,
[Graphic]
Glen R. Johnson
President
June 15, 1999
1 Income may be subject to the federal alternative minimum tax.
2 An investment in money market funds is neither insured nor guaranteed by the
Federal Deposit Insurance Corporation or any other government agency. Although
money market funds seek to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in the fund.
Investment Review
An interview with the fund's portfolio manager, Jeff A. Kozemchak, CFA, Senior
Vice President, Federated Investment Management Company.
WHAT ARE YOUR COMMENTS ON THE ECONOMY AND THE INTEREST RATE ENVIRONMENT DURING
THE SIX-MONTH REPORTING PERIOD?
The economy remained robust over the reporting period, showing continued
strength in the fourth quarter of 1998 and into the first quarter of 1999. At
the same time, overall inflationary pressures were absent in spite of impressive
performance from the economy and historically low unemployment. However,
sustained growth in aggregate demand continued to stretch the labor markets, and
the potential for future inflation clearly concerned the Federal Reserve Board
(the "Fed"). Over the reporting period, the Fed maintained a neutral policy
stance toward the direction of short-term interest rates ("federal funds target
rate"). However, April's Consumer Price Index ("CPI") 1 rate was much larger
than expected and in May, shortly after the close of the reporting period, the
Fed adopted a tightening bias, or bias for higher rates in the future. The Fed
cited the strong U.S. economy in conjunction with record employment levels, the
improvement in foreign economic prospects, and rebounding U.S. financial
markets.
In addition to economic fundamentals, short-term municipal securities were
strongly influenced by technical factors over the reporting period, notably
calendar year end and income tax payment season. Variable rate demand notes
("VRDNs") started the reporting period in the 3.00% range, but moved sharply
higher to the 4.00% level in December as an imbalance between supply and demand
occurred. Yields then declined in January, as strong cash inflows from bond
maturities and coupon reinvestment occurred. The market continued to be strong
in February and March as yields trended at 3.00% or below, before rising to
4.00% in April because of traditional tax payment season pressures. Over the
six-month reporting period, VRDN yields averaged roughly 65% of taxable rates,
making them attractive for investors in the highest federal tax brackets.
The overall tone of the short-term municipal market was positive. Municipalities
across the country have benefited from a strong economy. This fact, coupled with
lower borrowing costs from low long term rates, reduced short-term issuance. In
fact, annual municipal note issuance was at its lowest level in the last decade.
1 The CPI is a measure of change in consumer prices, as determined by a monthly
survey of the U.S. Bureau of Labor Statistics.
WHAT WERE YOUR STRATEGIES FOR THE FUND DURING THE REPORTING PERIOD?
The fund's average maturity at the beginning of the reporting period was 39
days. The fund remained in a 30 to 45-day average maturity range over the
reporting period, and ended the reporting period at 43 days, a neutral stance. A
shorter average maturity left the fund well positioned to take advantage of
increased rates that could have occurred. We continued to emphasize a barbelled
structure for the portfolio, combining a significant position in 7-day VRDNs
with purchases of longer-term securities with maturities between 6 and 12
months. After an average maturity range was targeted, we attempted to maximize
performance through ongoing relative value analysis. Relative value analysis
includes the comparison of the richness or cheapness of municipal securities to
one another as well as municipal securities to taxable instruments, such as
Treasury securities. This portfolio structure continued to pursue a competitive
yield over time.
The 7-day net yield for the fund's shares on April 30, 1999 was 3.07%, 2
compared to 2.81%2 at the beginning of the reporting period, with the increase
in yield coming at the end of the reporting period due in large part to
technical factors relating to tax payment season. The latest yield was the
equivalent of a 5.51% taxable yield for investors in the highest federal and
state effective tax bracket.
AS WE APPROACH MID YEAR, WHAT IS YOUR OUTLOOK GOING FORWARD?
Although the Fed has adopted a tightening bias, it is not likely to raise
interest rates or take preemptive action until price or wage pressures
materialize. Accordingly, we plan to maintain a neutral average maturity range
for the fund over the near-term until further inflationary data becomes
available. In the near term, the short-term municipal market will likely reflect
technical as well as fundamental factors. In the summer months, we will likely
extend the maturity as new issuance and rollover of municipal notes occurs
during this period. As always, we will continue to watch, with great interest,
market developments in order to best serve our municipal clients.
2 Performance quoted represents past performance and is not indicative of future
results. Yields will vary. Yields quoted for money market funds most closely
reflect the fund's current earnings.
Portfolio of Investments
APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-100% 1
NORTH CAROLINA-96.8%
$ 10,819,000 2 ABN AMRO MuniTOPS Certificates Trust (North
Carolina Non-Amt) Series 1998-23, 3.25% TOBs (Mission St.
Josephs Health System)/(MBIA INS)/(ABN AMRO Bank N.V.,
Amsterdam LIQ), Optional
Tender 6/2/1999 $ 10,819,000
1,755,000 Alamance County, NC
Industrial Facilities &
PCFA, (Series B) Weekly
VRDNs (Culp,
Inc.)/(Wachovia Bank of
NC, N.A., Winston-Salem
LOC) 1,755,000
5,785,000 Alexander County, NC
Industrial Facilities &
PCFA, (Series 1997) Weekly
VRDNs (Mitchell Gold
Company, Inc.)/(SouthTrust
Bank of Alabama,
Birmingham LOC) 5,785,000
1,600,000 Buncombe County, NC
Industrial Facilities &
PCFA, (Series 1991) Weekly
VRDNs (Rich Mount,
Inc.)/(Bank of Tokyo-
Mitsubishi Ltd. LOC) 1,600,000
615,000 Burke County, NC
Industrial Facilities &
PCFA Weekly VRDNs (Norwalk
Furniture Corp & Hickory
Furniture)/(Branch Banking
& Trust Co., Wilson LOC) 615,000
640,000 Catawba County, NC
Industrial Facilities &
PCFA, (Series 1992) Weekly
VRDNs (WSMP,
Inc.)/(Nationsbank, N.A.,
Charlotte LOC) 640,000
4,000,000 Catawba County, NC
Industrial Facilities &
PCFA, (Series 1998) Weekly
VRDNs (Centro,
Inc.)/(Norwest Bank
Minnesota, N.A. LOC) 4,000,000
3,115,000 Cleveland County, NC
Industrial Facilities & PCFA, IDRB (Series 1990) Weekly VRDNs
(MetalsAmerica, Inc. Project)/(BankBoston, N.A.
LOC) 3,115,000
1,310,000 Cleveland County, NC
Industrial Facilities &
PCFA, Pollution Control
Revenue Bonds (Series
1995) Weekly VRDNs (Grover
Industries, Inc.
Project)/(Bank of America,
IL LOC) 1,310,000
2,200,000 Clipper, NC Tax-Exempt Trust Weekly VRDNs (North Carolina
State)/(State Street Bank and Trust Co.
LIQ) 2,200,000
6,000,000 Gaston County, NC
Industrial Facilities &
PCFA, (Series 1997) Weekly
VRDNs (Thermoform Plastic,
Inc.)/(Norwest Bank
Minnesota, N.A. LOC) 6,000,000
2,360,000 Guilford County, NC
Industrial Facilities & PCFA, (Series 1996) Weekly VRDNs
(South/Win Ltd.)/(Branch Banking &
Trust Co, Wilson LOC) 2,360,000
7,600,000 Halifax County, NC
Industrial Facilities &
PCFA Weekly VRDNs
(Flambeau Airmold
Project)/(Norwest Bank
Minnesota, N.A. LOC) 7,600,000
600,000 Iredell County, NC
Industrial Facilities &
PCFA, Industrial Revenue
Bonds Weekly VRDNs (Jet
Corr, Inc.
Project)/(National Bank of
Canada, Montreal LOC) 600,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
NORTH CAROLINA-CONTINUED
$ 1,000,000 Johnson County, NC
Industrial Facilities &
PCFA, (Series 1996) Weekly
VRDNs (Inolex Chemical
Company Project)/(PNC
Bank, N.A. LOC) $ 1,000,000
2,500,000 Lee County, NC Industrial
Facility & PCFA, (Series
1989) Weekly VRDNs
(Avondale Mills,
Inc.)/(SunTrust Bank,
Atlanta LOC) 2,500,000
1,800,000 Lincoln County, NC
Industrial Facilities &
PCFA, Industrial Revenue
Bonds Weekly VRDNs
(Leucadia, Inc
Project)/(National Bank of
Canada, Montreal LOC) 1,800,000
2,600,000 Martin County, NC IFA,
(Series 1993) Weekly VRDNs
(Weyerhaeuser Co.) 2,600,000
4,800,000 McDowell County, NC
Industrial Facilities &
PCFA, (Series 1997) Weekly
VRDNs (Parker Hosiery,
Inc.)/(First Union
National Bank, Charlotte,
NC LOC) 4,800,000
2,400,000 Mecklenberg County, NC Industrial Facilities & PCFA, (Series
1996) Weekly VRDNs (SteriGenics International
Project)/(Comerica Bank,
Detroit, MI LOC) 2,400,000
3,680,000 Mecklenberg County, NC
Industrial Facility & PCFA, (Series 1988) Weekly VRDNs (Florida
Steel Corp.)/(Nationsbank, N.A.,
Charlotte LOC) 3,680,000
900,000 Mecklenburg County, NC,
(Series 1996) Weekly VRDNs
(YMCA of Greater Charlotte
Project)/(Wachovia Bank of
NC, N.A., Winston-Salem
LOC) 900,000
3,000,000 Mecklenburg County, NC,
3.75% Bonds, 4/1/2000 3,018,735
2,765,000 New Hanover County, NC PCFA
Weekly VRDNs (Efson,
Inc.)/(Branch Banking &
Trust Co, Wilson LOC) 2,765,000
1,225,000 New Hanover County, NC
PCFA, (Series 1990) Weekly
VRDNs (Wilmington
Machinery, Inc.
Project)/(Branch Banking &
Trust Co, Wilson LOC) 1,225,000
2,250,000 New Hanover County, NC, GO
School Bonds, (Series
1995) Weekly VRDNs
(Wachovia Bank of NC, N.A.,
Winston-Salem LIQ) 2,250,000
2,250,000 New Hanover County, NC, GO
School Bonds, (Series
1995) Weekly VRDNs
(Wachovia Bank of NC, N.A.,
Winston-Salem LIQ) 2,250,000
5,000,000 North Carolina Eastern
Municipal Power Agency,
3.15% CP (Canadian
Imperial Bank of Commerce
LOC), Mandatory Tender
6/1/1999 5,000,000
1,165,000 North Carolina Eastern
Municipal Power Agency,
PT-132 Weekly VRDNs (MBIA
INS)/(Credit Suisse First
Boston LIQ) 1,165,000
2,000,000 North Carolina Educational
Facilities Finance Agency,
(Series 1999) Weekly VRDNs
(Catawba
College)/(Wachovia Bank of
NC, NA, Winston-Salem LOC) 2,000,000
12,000,000 2 North Carolina HFA,
Variable Rate Certificates (Series 1998L), 3.80% TOBs (Bank of
America NT and SA, San Francisco LIQ),
Optional Tender 7/15/1999 12,000,000
3,455,000 North Carolina Medical
Care Commission, (Series
A), 4.25% Bonds (Pitt
County Memorial Hospital),
12/1/1999 3,481,617
1,325,000 North Carolina Medical
Care Commission, 3.10%
Bonds (Mission St. Josephs
Health System), 10/1/1999 1,325,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
SHORT-TERM MUNICIPALS-
continued 1
NORTH CAROLINA-CONTINUED
$ 7,327,000 North Carolina Municipal
Power Agency No. 1, (Series
A), 3.10% CP (Morgan
Guaranty Trust Co., New
York and UBS AG LOCs),
Mandatory Tender 7/22/1999 $ 7,327,000
4,400,000 North Carolina Municipal
Power Agency No. 1, (Series
A), 3.15% CP (Morgan
Guaranty Trust Co., New
York and UBS AG LOCs),
Mandatory Tender 6/18/1999 4,400,000
2,798,000 North Carolina Municipal
Power Agency No. 1, (Series
A), 3.15% CP (Morgan
Guaranty Trust Co., New
York and UBS AG LOCs),
Mandatory Tender 7/22/1999 2,798,000
2,500,000 North Carolina State,
(Series 1998A) PA-342
Weekly VRDNs (Merrill
Lynch Capital Services,
Inc. LIQ) 2,500,000
3,280,000 Orange County, NC
Industrial Facilities &
PCFA Weekly VRDNs (Mebane
Packaging Corp.)/(First
Union National Bank,
Charlotte, NC LOC) 3,280,000
1,300,000 Piedmont, NC Airport
Authority Weekly VRDNs
(Triad International
Maintenance Corp.)/(Mellon
Bank N.A., Pittsburgh LOC) 1,300,000
1,000,000 Pitt County, NC, Series A,
6.20% Bonds (Pitt County
Memorial Hospital)/(United
States Treasury COL),
12/1/1999 1,018,337
1,500,000 Randolph County, NC IDA,
(Series 1990) Weekly VRDNs
(Wayne Steel, Inc.)/(Bank
One, Ohio, N.A. LOC) 1,500,000
4,385,000 Robeson County, NC
Industrial Facilities &
PCFA, (Series 1999) Weekly
VRDNs (Rempac Foam
Corp.)/(Chase Manhattan
Bank N.A., New York LOC) 4,385,000
1,000,000 Rowan County, NC
Industrial Facilities &
PCFA, (Series 1999) Weekly
VRDNs (SouthTrust Bank of
Alabama, Birmingham LOC) 1,000,000
1,200,000 Rutherford County, NC,
Industrial Facilities &
PCFA Weekly VRDNs (Spring-
Ford Knitting Co.)/(Branch
Banking & Trust Co, Wilson
LOC) 1,200,000
1,500,000 Sampson County, NC
Industrial Facilities &
PCFA, (Series 1997) Weekly
VRDNs (DuBose Strapping,
Inc.)/(First Union
National Bank, Charlotte,
NC LOC) 1,500,000
3,500,000 Wake County, NC Housing
Authority Weekly VRDNs
(Chandler Ridge
Apartments)/(PNC Bank,
N.A. LOC) 3,500,000
1,900,000 Wake County, NC, 4.50%
Bonds, 3/1/2000 1,920,854
2,596,795 Wayne County, NC PCFA
Weekly VRDNs (Cooper
Industries, Inc.) 2,596,795
7,600,000 Wilson County, NC PCA,
(Series 1994) Weekly VRDNs
(Granutec, Inc.)/(Branch
Banking & Trust Co, Wilson
LOC) 7,600,000
TOTAL 152,385,338
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
PUERTO RICO-3.2%
$ 2,000,000 Puerto Rico Industrial,
Medical & Environmental
PCA, (1983 Series A), 2.90%
TOBs (Merck & Co., Inc.),
Optional Tender 12/1/1999 $ 2,000,000
3,000,000 Puerto Rico Industrial,
Medical & Environmental PCA, (Series 1983A), 3.60% TOBs
(Reynolds Metals Co.)/(ABN AMRO Bank N.V., Amsterdam LOC),
Optional
Tender 9/1/1999 3,000,000
TOTAL 5,000,000
TOTAL INVESTMENTS (AT
AMORTIZED COST) 3 $ 157,385,338
</TABLE>
Securities that are subject to Alternative Minimum Tax represent 55.1% of the
portfolio as calculated based upon total portfolio market value.
1 The fund may only invest in securities rated in one of the two highest
short-term rating categories by nationally recognized statistical rating
organizations ("NRSROs") or unrated securities of comparable quality. An NRSRO's
two highest rating categories are determined without regard for sub-categories
and gradations. For example, securities rated SP-1+, SP-1 or SP-2 by Standard &
Poor's, MIG-1 or MIG-2 by Moody's Investors Service, Inc., F-1+, F-1 and F-2 by
Fitch IBCA, Inc. are all considered rated in one of the two highest short-term
rating categories.
Securities rated in the highest short-term rating category (and unrated
securities of comparable quality) are identified as First Tier securities.
Securities rated in the second highest short-term rating category (and unrated
securities of comparable quality) are identified as Second Tier securities. The
fund follows applicable regulations in determining whether a security is rated
and whether a security rated by multiple NRSROs in different rating categories
should be identified as a First or Second Tier security.
At April 30, 1999, the portfolio securities were rated as follows:
Tier Rating Based on Total Market Value (Unaudited)
FIRST TIER SECOND TIER
100.00% 0.00%
2 Denotes a restricted security which is subject to restrictions on resale under
Federal Securities laws. These securities have been deemed liquid based upon
criteria approved by the fund's Board of Trustees. At April 30, 1999 these
securities amounted to $22,819,000 which represents 14.5% of net assets.
3 Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($157,329,613) at April 30, 1999.
The following acronyms are used throughout this portfolio:
AMT -Alternative Minimum Tax
COL -Collateralized
CP -Commercial Paper
GO -General Obligation
HFA -Housing Finance Authority
IDA -Industrial Development Authority IDRB -Industrial Development Revenue Bond
IFA -Industrial Finance Authority INS -Insured LIQ -Liquidity Agreement LOCs
- -Letter(s) of Credit MBIA -Municipal Bond Investors Assurance PCA -Pollution
Control Authority PCFA -Pollution Control Finance Authority SA -Support
Agreement TOBs -Tender Option Bonds VRDNs -Variable Rate Demand Notes
See Notes which are an integral part of the Financial Statements
Statement of Assets and Liabilities
APRIL 30, 1999 (UNAUDITED)
<TABLE>
<S> <C> <C>
ASSETS:
Total investments in
securities, at amortized
cost and value $ 157,385,338
Income receivable 790,272
TOTAL ASSETS 158,175,610
LIABILITIES:
Income distribution
payable $ 359,827
Payable to Bank 443,847
Accrued expenses 42,323
TOTAL LIABILITIES 845,997
Net assets for 157,329,613
shares outstanding $ 157,329,613
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PROCEEDS PER SHARE:
$157,329,613 /157,329,613
shares outstanding $1.00
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Operations
SIX MONTHS ENDED APRIL 30, 1999 (UNAUDITED)
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest $ 3,270,287
EXPENSES:
Investment advisory fee $ 498,680
Administrative personnel
and services fee 75,201
Custodian fees 4,776
Transfer and dividend
disbursing agent fees and
expenses 27,196
Directors'/Trustees' fees 789
Auditing fees 6,375
Legal fees 5,046
Portfolio accounting fees 24,967
Shareholder services fee 249,340
Share registration costs 11,652
Printing and postage 8,504
Insurance premiums 10,167
Miscellaneous 2,575
TOTAL EXPENSES 925,268
WAIVER:
Waiver of investment
advisory fee (332,437)
Net expenses 592,831
Net investment income $ 2,677,456
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR
(unaudited) ENDED
APRIL 30, OCTOBER 31,
1999 1998
<S> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net investment income $ 2,677,456 $ 5,603,680
DISTRIBUTIONS TO
SHAREHOLDERS:
Distributions from net
investment income (2,677,456) (5,603,680)
SHARE TRANSACTIONS:
Proceeds from sale of
shares 384,495,429 1,078,743,485
Net asset value of shares
issued to shareholders in
payment of
distributions declared 1,867,408 4,634,347
Cost of shares redeemed (441,143,927) (1,043,902,913)
CHANGE IN NET ASSETS
RESULTING FROM SHARE
TRANSACTIONS (54,781,090) 39,474,919
Change in net assets (54,781,090) 39,474,919
NET ASSETS:
Beginning of period 212,110,703 172,635,784
End of period $ 157,329,613 $ 212,110,703
</TABLE>
See Notes which are an integral part of the Financial Statements
Financial Highlights
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(unaudited)
APRIL 30, YEAR ENDED OCTOBER 31,
1999 1998 1997 1996 1995 1994 1
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.01 0.03 0.03 0.03 0.04 0.02
LESS DISTRIBUTIONS:
Distributions from net investment income (0.01) (0.03) (0.03) (0.03) (0.04) (0.02)
NET ASSET VALUE,
END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN 2 1.34% 3.17% 3.24% 3.23% 3.51% 2.06%
RATIOS TO AVERAGE NET ASSETS:
Expenses 0.59% 3 0.59% 0.59% 0.59% 0.59% 0.49% 3
Net investment income 2.68% 3 3.09% 3.19% 3.17% 3.46% 2.54% 3
Expenses 4 0.92% 3 0.94% 0.99% 1.01% 0.99% 0.93% 3
Net Investment Income 4 2.35% 3 2.74% 2.79% 2.75% 3.06% 2.10% 3
SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $157,330 $212,111 $172,636 $137,749 $97,602 $85,249
</TABLE>
1 Reflects operations for the period from December 31, 1993 (date of initial
public investment) to October 31, 1994. For the period from November 29, 1993
(start of business) to December 31, 1993, the fund had no investment activity.
2 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
3 Computed on an annualized basis.
4 During the period certain fees were voluntarily waived. If such voluntary
waivers had not occurred, the ratios would have been as indicated.
See Notes which are an integral part of the Financial Statements
Notes to Financial Statements
APRIL 30, 1999 (UNAUDITED)
ORGANIZATION
Federated Municipal Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "Act") as an open-end, management
investment company. The Trust consists of 17 portfolios. The financial
statements included herein are only those of North Carolina Municipal Cash Trust
(the "Fund"). The financial statements of the other portfolios are presented
separately. The assets of each portfolio are segregated and a shareholder's
interest is limited to the portfolio in which shares are held. The investment
objective of the Fund is current income exempt from federal regular income tax
and the income tax imposed by the State of North Carolina consistent with
stability of principal.
SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS
The Fund uses the amortized cost method to value its portfolio securities in
accordance with Rule 2a-7 under the Act.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS
Interest income and expenses are accrued daily. Bond premium and discount, if
applicable, are amortized as required by the Internal Revenue Code, as amended
(the "Code"). Distributions to shareholders are recorded on the ex- dividend
date.
FEDERAL TAXES
It is the Fund's policy to comply with the provisions of the Code applicable to
regulated investment companies and to distribute to shareholders each year
substantially all of its income. Accordingly, no provisions for federal tax are
necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Fund may engage in when-issued or delayed delivery transactions. The Fund
records when-issued securities on the trade date and maintains security
positions such that sufficient liquid assets will be available to make payment
for the securities purchased. Securities purchased on a when- issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
RESTRICTED SECURITIES
Restricted securities are securities that may only be resold upon registration
under federal securities laws or in transactions exempt from such registration.
Many restricted securities may be resold in the secondary market in transactions
exempt from registration. In some cases, the restricted securities may be resold
without registration upon exercise of a demand feature. Such restricted
securities may be determined to be liquid under criteria established by the
Board of Trustees (the "Trustees"). The Fund will not incur any registration
costs upon such resales. Restricted securities are valued at amortized cost in
accordance with Rule 2a-7 under the Act.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts of assets, liabilities, expenses and revenues reported in the
financial statements. Actual results could differ from those estimated.
OTHER
Investment transactions are accounted for on the trade date.
SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value). At April
30, 1999, capital paid-in aggregated $157,329,613. Transactions in shares were
as follows:
<TABLE>
<CAPTION>
SIX-MONTHS YEAR
ENDED ENDED
APRIL 30, OCTOBER 31,
1999 1998
<S> <C> <C>
Shares sold 384,495,429 1,078,743,485
Shares issued to
shareholders in payment of
distributions declared 1,867,408 4,634,347
Shares redeemed (441,143,927) (1,043,902,913)
NET CHANGE RESULTING FROM
SHARE TRANSACTIONS (54,781,090) 39,474,919
</TABLE>
INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE
Federated Investment Management Company, the Fund's investment adviser, (the
"Adviser"), receives for its services an annual investment advisory fee equal to
0.50% of the Fund's average daily net assets. The Adviser may voluntarily choose
to waive any portion of its fee. The Adviser can modify or terminate this
voluntary waiver at any time at its sole discretion.
ADMINISTRATIVE FEE
Federated Services Company ("FServ"), under the Administrative Services
Agreement, provides the Fund with administrative personnel and services. The fee
paid to FServ is based on the level of average aggregate daily net assets of all
funds advised by subsidiaries of Federated Investors for the period. The
administrative fee received during the period of the Administrative Services
Agreement shall be at least $125,000 per portfolio and $30,000 per each
additional class of shares.
SHAREHOLDER SERVICES FEE
Under the terms of a Shareholder Services Agreement with Federated Shareholder
Services Company ("FSSC"), the Fund will pay FSSC up to 0.25% of average daily
net assets of the Fund for the period. The fee paid to FSSC is used to finance
certain services for shareholders and to maintain shareholder accounts. FSSC may
voluntarily choose to waive any portion of its fee. FSSC can modify or terminate
this voluntary waiver at any time at its sole discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES
FServ, through its subsidiary FSSC, serves as transfer and dividend disbursing
agent for the Fund. The fee paid to FSSC is based on the size, type and number
of accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES
FServ maintains the Fund's accounting records for which it receives a fee. The
fee is based on the level of the Fund's average daily net assets for the period,
plus out-of-pocket expenses.
INTERFUND TRANSACTIONS
During the period ended April 30, 1999, the Fund engaged in purchase and sale
transactions with funds that have a common investment adviser (or affiliated
investment advisers), common Directors/Trustees, and/or common Officers. These
purchase and sale transactions were made at current market value pursuant to
Rule 17a-7 under the Act amounting to $135,500,000 and $218,166,000,
respectively.
GENERAL
Certain of the Officers and Trustees of the Trust are Officers and Directors or
Trustees of the above companies.
CONCENTRATION OF CREDIT RISK
Since the Fund invests a substantial portion of its assets in issuers located in
one state, it will be more susceptible to factors adversely affecting issuers of
that state than would be a comparable tax-exempt mutual fund that invests
nationally. In order to reduce the credit risk associated with such factors, at
April 30, 1999, 75.1% of the securities in the portfolio of investments are
backed by letters of credit or bond insurance of various financial institutions
and financial guaranty assurance agencies. The percentage of investments insured
by or supported (backed) by a letter of credit from any one institution or
agency did not exceed 11.2% of total investments.
YEAR 2000
Similar to other financial organizations, the Fund could be adversely affected
if the computer systems used by the Fund's service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. The Fund's Adviser and administrator are taking measures that they
believe are reasonably designed to address the Year 2000 issue with respect to
computer systems that they use and to obtain reasonable assurances that
comparable steps are being taken by each of the Fund's other service providers.
At this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact to the Fund.
Trustees
JOHN F. DONAHUE
THOMAS G. BIGLEY
JOHN T. CONROY, JR.
JOHN F. CUNNINGHAM
LAWRENCE D. ELLIS, M.D.
PETER E. MADDEN
CHARLES F. MANSFIELD, JR.
JOHN E. MURRAY, JR., J.D., S.J.D.
MARJORIE P. SMUTS
JOHN S. WALSH
Officers
JOHN F. DONAHUE
Chairman
GLEN R. JOHNSON
President
J. CHRISTOPHER DONAHUE
Executive Vice President
EDWARD C. GONZALES
Executive Vice President
JOHN W. MCGONIGLE
Executive Vice President and Secretary
RICHARD B. FISHER
Vice President
RICHARD J. THOMAS
Treasurer
ANTHONY R. BOSCH
Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment
risk, including the possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the fund's prospectus which contains facts concerning
its objective and policies, management fees, expenses, and other information.
[Graphic]
Federated
World-Class Investment Manager
SEMI-ANNUAL REPORT
North Carolina Municipal Cash Trust
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
APRIL 30, 1999
[Graphic]
Federated
North Carolina Municipal Cash Trust
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
1-800-341-7400
WWW.FEDERATEDINVESTORS.COM
Federated Securities Corp., Distributor
Cusip 314229782
G01177-01 (6/99)
[Graphic]
SEMI-ANNUAL REPORT
President's Message
Dear Shareholder:
I am pleased to present the Semi-Annual Report to Shareholders of New Jersey
Municipal Cash Trust, a portfolio of Federated Municipal Trust, which covers the
six-month period from November 1, 1998 through April 30, 1999. The report begins
with a discussion with the fund's portfolio manager, followed by a complete
listing of the fund's holdings and its financial statements. Financial
highlights tables are provided for the fund's Institutional Shares and
Institutional Service Shares.
The fund is a convenient way to put your ready cash to work pursuing double
tax-free income-free from federal regular income tax and New Jersey personal
income tax 1-through a portfolio concentrated in high-quality, short-term New
Jersey municipal securities. At the end of the reporting period, the fund's
holdings were diversified among issuers that use municipal bond financing for
projects as varied as health care, housing, community development and
transportation.
This double tax-free advantage means you have the opportunity to earn a greater
after-tax yield than you could in a comparable high-quality taxable investment.
Of course, the fund also brings you the added benefits of daily liquidity and
stability of principal. 2
During the reporting period, the fund paid double tax-free dividends totaling
$0.01 per share for both Institutional Shares and Institutional Service Shares.
The fund's net assets reached $198.5 million at the end of the reporting period.
Thank you for relying on New Jersey Municipal Cash Trust to help your ready cash
pursue tax-free income every day. As always, we will continue to provide you
with the highest level of professional service. We invite your questions or
comments.
Sincerely,
[Graphic]
Glen R. Johnson
President
June 15, 1999
1 Income may be subject to the federal alternative minimum tax.
2 An investment in money market funds is neither insured nor guaranteed by the
Federal Deposit Insurance Corporation or any other government agency. Although
money market funds seek to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in the fund.
Investment Review
An interview with the fund's portfolio manager, Jeff A. Kozemchak, CFA, Senior
Vice President, Federated Investment Management Company.
WHAT ARE YOUR COMMENTS ON THE ECONOMY AND THE INTEREST RATE ENVIRONMENT DURING
THE FUND'S SIX-MONTH REPORTING PERIOD?
The economy remained robust over the reporting period, showing continued
strength in the fourth quarter of 1998 and into the first quarter of 1999. At
the same time, overall inflationary pressures were absent in spite of impressive
performance from the economy and historically low unemployment. However,
sustained growth in aggregate demand continued to stretch the labor markets, and
the potential for future inflation clearly concerned the Federal Reserve Board
(the "Fed"). Over the reporting period, the Fed maintained a neutral policy
stance toward the direction of short-term interest rates (federal funds target
rate). However, April's Consumer Price Index ("CPI") 1 rate was much larger than
expected and in May, shortly after the close of the reporting period, the Fed
adopted a tightening bias, or bias for higher rates in the future. The Fed cited
the strong U.S. economy in conjunction with record employment levels, the
improvement in foreign economic prospects, and rebounding U.S. financial
markets.
In addition to economic fundamentals, short-term municipal securities were
strongly influenced by technical factors over the reporting period, notably
calendar year end and income tax payment season. Variable rate demand notes
("VRDNs") started the reporting period in the 3.00% range, but moved sharply
higher to the 4.00% level in December as an imbalance between supply and demand
occurred. Yields declined in January, as strong cash inflows from bond
maturities and coupon reinvestment occurred. The market continued to be strong
in February and March as yields trended at 3.00% or below, before rising to
4.00% in April because of traditional tax payment season pressures. Over the
six-month reporting period, VRDN yields averaged roughly 65% of taxable rates,
making them attractive for investors in the highest federal tax brackets.
The overall tone of the short-term municipal market was positive. Municipalities
across the country have benefited from a strong economy. This fact, coupled with
lower borrowing costs from low long-term rates, reduced short-term issuance. In
fact, annual municipal note issuance was at its lowest level in the last decade.
1 The CPI is a measure of change in consumer prices, as determined by a monthly
survey of the U.S. Bureau of Labor Statistics.
WHAT WERE YOUR STRATEGIES FOR THE FUND DURING THE REPORTING PERIOD?
The fund's average maturity at the beginning of the reporting period was 65
days, reflecting the declining interest rate environment in the fall of 1998.
Over the reporting period, the fund's average maturity was maintained in a band
of 55 to 65 days until April where we let it decline to 45 days, a neutral
stance. A shorter average maturity left the fund well positioned to take
advantage of increased rates that could have occurred. We continued to emphasize
a barbelled structure for the portfolio, combining a significant position in
7-day VRDNs with purchases of longer-term securities with maturities between 6
and 12 months. After an average maturity range was targeted, we attempted to
maximize performance through ongoing relative value analysis. Relative value
analysis includes the comparison of the richness or cheapness of municipal
securities to one another as well as municipal securities to taxable
instruments, such as Treasury securities. This portfolio structure continued to
pursue a competitive yield over time.
The 7-day net yields for the fund's Institutional Shares and Institutional
Service Shares were 2.98% 2 and 2.88%,2 respectively, on April 30, 1999. These
yields were higher relative to six months ago with most of the increase in yield
coming at the end of the reporting period due in large part to technical factors
relating to tax payment season. The latest yields are the equivalent of taxable
yields of 5.27% for Institutional Shares and 5.09% for Institutional Service
Shares for investors in the highest federal and state effective tax brackets.
AS WE APPROACH MID-YEAR, WHAT IS YOUR OUTLOOK GOING FORWARD?
Although the Fed has adopted a tightening bias, it is not likely to raise
interest rates or take preemptive action until price or wage pressures
materialize. Accordingly, we plan to maintain a neutral average maturity range
for the fund over the near-term until further inflationary data becomes
available. In the near term, the short-term municipal market will likely reflect
technical as well as fundamental factors. In the summer months, we will likely
extend the maturity as new issuance and rollover of municipal notes occurs
during this period. As always, we will continue to watch, with great interest,
market developments in order to best serve our municipal clients.
2 Performance quoted represents past performance and is not indicative of future
results. Yields will vary. Yields quoted for money market funds most closely
reflect the fund's current earnings.
Portfolio of Investments
APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-99.4 1
NEW JERSEY-99.4%
$ 1,625,000 Atlantic Highlands, NJ,
3.625% BANs, 8/20/1999 $ 1,627,054
2,685,000 Atlantic Highlands, NJ,
3.625% BANs, 1/21/2000 2,693,972
1,700,000 Atlantic Highlands, NJ,
4.00% BANs, 8/20/1999 1,701,493
3,293,116 Barnegat, NJ, 3.50% BANs,
8/30/1999 3,296,603
1,445,000 Camden County, NJ
Improvement Authority,
(Series 1995) Weekly VRDNs
(Jewish Federation of
Southern Jersey,
Inc.)/(National
Westminster Bank, PLC,
London LOC) 1,445,000
900,000 Camden County, NJ
Improvement Authority, (Series 1996) Weekly VRDNs (Parkview
Redevelopment Housing Project)/(General Electric Capital Corp.
LOC) 900,000
4,080,000 Clipper, NJ Tax-Exempt
Trust, (Series 1996-2)
Weekly VRDNs (New Jersey
Housing & Mortgage
Financing Authority)/(MBIA
INS)/(State Street Bank
and Trust Co. LIQ) 4,080,000
2,154,750 Flemington Borough, NJ,
4.00% BANs, 8/26/1999 2,156,745
2,900,000 Hammonton, NJ, 3.75% BANs,
1/27/2000 2,910,407
5,116,503 High Bridge Borough, NJ,
3.60% BANs, 9/3/1999 5,117,307
1,150,000 Jersey City, NJ Municipal
Utilities Authority,
(Series 1998), 4.00% Bonds
(FSA INS), 12/1/1999 1,156,252
2,603,610 Lavallette Borough, NJ,
3.50% BANs, 4/28/2000 2,609,842
1,587,750 Little Egg Harbor
Township, NJ, 3.75% BANs,
3/10/2000 1,594,338
3,040,000 Lumberton Township, NJ,
3.84% BANs, 9/23/1999 3,042,797
1,820,000 Manchester Township, NJ,
3.50% BANs, 11/4/1999 1,822,711
1,500,000 Middlesex County, NJ PCFA
Weekly VRDNs (FMC Gold
Co.)/(Wachovia Bank of NC,
N.A., Winston-Salem LOC) 1,500,000
12,200,000 New Jersey EDA Weekly VRDNs
(Center-For-Aging-
Applewood Estates)/(Fleet
National Bank,
Springfield, MA LOC) 12,200,000
5,268,000 New Jersey EDA Weekly VRDNs
(Meridan Health Care)/(FMB
Bank LOC) 5,268,000
2,400,000 New Jersey EDA Weekly VRDNs
(U.S. Golf
Association)/(PNC Bank,
N.A. LOC) 2,400,000
3,850,000 New Jersey EDA Weekly VRDNs
(YM-YWHA of Bergen County,
NJ)/(Bank of New York, New
York LOC) 3,850,000
1,720,000 New Jersey EDA, (1994
Series A), 4.20% TOBs
(A.F.L. Quality,
Inc.)/(Fleet Bank N.A.
LOC), Optional Tender
7/1/1999 1,720,000
385,000 New Jersey EDA, (1994
Series B), 4.20% TOBs (Two
Univac, L.L.C.)/(Fleet
Bank N.A. LOC), Optional
Tender 7/1/1999 385,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
NEW JERSEY-CONTINUED
$ 4,100,000 New Jersey EDA, (Series
1985) Weekly VRDNs (Seton
Co.)/(First Union National
Bank, Charlotte, NC LOC) $ 4,100,000
3,800,000 New Jersey EDA, (Series
1986) Weekly VRDNs
(Ridgefield
Associates)/(Bank of New
York, New York LOC) 3,800,000
300,000 New Jersey EDA, (Series
1987G) Weekly VRDNs (W.Y.
Urban Renewal)/(National
Westminster Bank, PLC,
London LOC) 300,000
2,300,000 New Jersey EDA, (Series
1990) Weekly VRDNs
(Genlyte Camden
County)/(Bank of America
NT and SA, San Francisco
LOC) 2,300,000
955,000 New Jersey EDA, (Series
1992D-1) Weekly VRDNs
(Danlin Corp.)/(Banque
Nationale de Paris LOC) 955,000
2,610,000 New Jersey EDA, (Series
1992L) Weekly VRDNs (Kent
Place School)/(Banque
Nationale de Paris LOC) 2,610,000
2,145,000 New Jersey EDA, (Series
1995) Weekly VRDNs
(International Vitamin
Corporation
Project)/(National
Westminster Bank, PLC,
London LOC) 2,145,000
4,185,000 New Jersey EDA, (Series
1996) Weekly VRDNs (R.
Realty Co.)/(First Union
National Bank, Charlotte,
NC LOC) 4,185,000
2,325,000 New Jersey EDA, (Series
1997) Weekly VRDNs
(Lauffer Building
Associates, Ltd.)/(Credit
Suisse First Boston LOC) 2,325,000
1,775,000 New Jersey EDA, (Series
1997) Weekly VRDNs
(Oakland Building
Associates, Ltd.)/(Credit
Suisse First Boston LOC) 1,775,000
1,800,000 New Jersey EDA, (Series
1997) Weekly VRDNs
(Oakland Industrial
Associates, Ltd.)/(Credit
Suisse First Boston LOC) 1,800,000
2,500,000 New Jersey EDA, (Series
1997) Weekly VRDNs (Okner
Parkway Associates Ltd.
Partnership)/(Credit
Suisse First Boston LOC) 2,500,000
3,500,000 New Jersey EDA, (Series
1997) Weekly VRDNs
(Phoenix Realty
Partners)/(First Union
National Bank, Charlotte,
NC LOC) 3,500,000
1,600,000 New Jersey EDA, (Series
1997) Weekly VRDNs (UJA
Federation of Bergan
County and North Hudson,
Inc.)/(Bank of New York,
New York LOC) 1,600,000
2,400,000 New Jersey EDA, (Series
1997) Weekly VRDNs (Wood
Hollow Associates,
L.L.C.)/(First Union
National Bank, Charlotte,
NC LOC) 2,400,000
2,800,000 New Jersey EDA, (Series
1998) Weekly VRDNs
(Deutscher Realty Co.
LLC)/(Chase Manhattan Bank
N.A., New York LOC) 2,800,000
1,300,000 New Jersey EDA, (Series
1998) Weekly VRDNs (St.
James Preparatory School &
St. James Social Service
Corp.)/(First Union
National Bank, Charlotte,
NC LOC) 1,300,000
2,000,000 New Jersey EDA, (Series
1998A) Weekly VRDNs
(Bayshore Health Care
Center)/(KBC Bancassurance
Holding LOC) 2,000,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
NEW JERSEY-CONTINUED
$ 9,430,000 New Jersey EDA, (Series
1998A) Weekly VRDNs
(Jewish Home at
Rockleigh)/(Allied Irish
Banks PLC LOC) $ 9,430,000
5,690,000 New Jersey EDA, (Series
1999) Weekly VRDNs (VOADV Property, Inc.)/(Commerce Bank, N.A.,
Cherry Hill, NJ
LOC) 5,690,000
1,080,000 New Jersey EDA, (Series A)
Weekly VRDNs (325 Midland
Avenue, LLC & Wearbest Sil-
Tex, Ltd.)/(Bank of New
York, New York LOC) 1,080,000
335,000 New Jersey EDA, (Series B)
Weekly VRDNs (325 Midland
Avenue, LLC & Wearbest Sil-
Tex, Ltd.)/(Bank of New
York, New York LOC) 335,000
560,000 New Jersey EDA, (Series W)
Weekly VRDNs (Datatec
Industries, Inc.)/(Banque
Nationale de Paris LOC) 560,000
2,815,000 New Jersey EDA, Economic
Development Bonds Weekly
VRDNs (Atlantic States
Cast Iron Pipe
Co.)/(Amsouth Bank N.A.,
Birmingham LOC) 2,815,000
4,800,000 New Jersey EDA, Port
Facility Revenue Bonds
(Series 1983) Weekly VRDNs
(Trailer Marine Transport
Corp.)/(Chase Manhattan
Bank N.A., New York LOC) 4,800,000
8,500,000 New Jersey EDA, Trust
Receipts (Series 1998
FR/RI-34) Weekly VRDNs
(New Jersey-American Water
Co., Inc.)/(FGIC
INS)/(Bank of New York, New
York LIQ) 8,500,000
7,710,000 New Jersey Housing &
Mortgage Financing
Authority, CDC Municipal
Products Class A
Certificates (Series
1996B) Weekly VRDNs (MBIA
INS)/(CDC Municipal
Products, Inc. LIQ) 7,710,000
2,000,000 New Jersey State
Educational Facilities
Authority, (Series 1998)
FR/RI-A33 Trust Receipts
Weekly VRDNs (AMBAC
INS)/(National Westminster
Bank, PLC, London LIQ) 2,000,000
1,300,000 New Jersey State
Transportation Trust Fund
Agency, (Series 1998
FR/RI-A21) Weekly VRDNs
(AMBAC INS)/(National
Westminster Bank, PLC,
London LIQ) 1,300,000
7,500,000 New Jersey State
Transportation Trust Fund
Agency, Trust Receipts
(Series 1996-1) Weekly
VRDNs (MBIA INS)/(Bank of
New York, New York LIQ) 7,500,000
4,000,000 New Jersey State
Transportation Trust Fund
Agency, Trust Receipts
(FR/RI-A37) Weekly VRDNs
(AMBAC INS)/(National
Westminster Bank, PLC,
London LIQ) 4,000,000
3,940,000 New Jersey State, (CDC
Series 1997L) Weekly VRDNs
(CDC Municipal Products,
Inc. LIQ) 3,940,000
4,500,000 New Jersey State, (Series
1999A), 3.20% CP,
Mandatory Tender 6/14/1999 4,500,000
2,453,950 Pine Hill Borough, NJ,
3.84% BANs, 8/6/1999 2,454,505
10,000,000 Port Authority of New York
and New Jersey, (Series
1991-4) Weekly VRDNs 10,000,000
2,175,000 Riverdale Borough, NJ,
3.50% BANs, 5/24/1999 2,175,406
3,227,500 Union Beach, NJ, 3.75%
BANs, 1/20/2000 3,239,917
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
NEW JERSEY-CONTINUED
$ 3,200,000 Union County, NJ Utilities
Authority, Trust Receipts
FR/RI-38 Weekly VRDNs
(Ogden Martin Systems Of
Union, Inc.)/(AMBAC
INS)/(Bank of New York,
New York LIQ) $ 3,200,000
5,200,000 Washington Borough, NJ,
3.30% BANs, 12/10/1999 5,203,058
1,000,000 Washington Township
(Mercer County), NJ, 4.00%
BANs, 8/6/1999 1,000,638
TOTAL INVESTMENTS (AT
AMORTIZED COST) 2 $197,306,045
</TABLE>
Securities that are subject to Alternative Minimum Tax represent 26.6% of the
portfolio as calculated based upon total portfolio market value.
1 The fund may only invest in securities rated in one of the two highest
short-term rating categories by nationally recognized statistical rating
organizations ("NRSROs") or unrated securities of comparable quality. An NRSRO's
two highest rating categories are determined without regard for sub-categories
and gradations. For example, securities rated SP-1+, SP-1 or SP-2 by Standard &
Poor's, MIG-1 or MIG-2 by Moody's Investors Service, Inc., F-1+, F-1 and F-2 by
Fitch IBCA, Inc. are all considered rated in one of the two highest short-term
rating categories.
Securities rated in the highest short-term rating category (and unrated
securities of comparable quality) are identified as First Tier securities.
Securities rated in the second highest short-term rating category (and unrated
securities of comparable quality) are identified as Second Tier securities. The
fund follows applicable regulations in determining whether a security is rated
and whether a security rated by multiple NRSROs in different rating categories
should be identified as a First or Second Tier security.
At April 30, 1999, the portfolio securities were rated as follows:
Tier Rating Based on Total Market Value (Unaudited)
FIRST TIER SECOND TIER
94.37% 5.63%
2 Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($198,486,181) at April 30, 1999.
The following acronyms are used throughout this portfolio:
AMBAC -American Municipal Bond Assurance Corporation BANs -Bond Anticipation
Notes CP -Commercial Paper EDA -Economic Development Authority FGIC -Financial
Guaranty Insurance Company FSA -Financial Security Assurance INS -Insured LIQ
- -Liquidity Agreement LLC -Limited Liability Company LOC -Letter of Credit MBIA
- -Municipal Bond Investors Assurance PCFA -Pollution Control Finance Authority
PLC -Public Limited Company SA -Support Agreement TOBs -Tender Option Bonds
VRDNs -Variable Rate Demand Notes
See Notes which are an integral part of the Financial Statements
Statement of Assets and Liabilities
APRIL 30, 1999 (UNAUDITED)
<TABLE>
<S> <C> <C>
ASSETS:
Total investments in
securities, at amortized
cost and value $ 197,306,045
Cash 162,336
Income receivable 1,449,021
TOTAL ASSETS 198,917,402
LIABILITIES:
Income distribution
payable $ 418,289
Accrued expenses 12,932
TOTAL LIABILITIES 431,221
Net assets for 198,486,181
shares outstanding $ 198,486,181
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PROCEEDS PER SHARE
INSTITUTIONAL SHARES:
$130,029,262 / 130,029,262
shares outstanding $1.00
INSTITUTIONAL SERVICE
SHARES:
$68,456,919 / 68,456,919
shares outstanding $1.00
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Operations
SIX MONTHS ENDED APRIL 30, 1999 (UNAUDITED)
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 2,996,336
EXPENSES:
Investment advisory fee $ 370,029
Administrative personnel
and services fee 69,918
Custodian fees 4,825
Transfer and dividend
disbursing agent fees and
expenses 22,180
Directors'/Trustees' fees 1,240
Auditing fees 6,447
Legal fees 5,939
Portfolio accounting fees 27,801
Distribution services fee-
Institutional Service
Shares 34,783
Shareholder services fee-
Institutional Shares 144,311
Shareholder services fee-
Institutional Service
Shares 86,957
Share registration costs 14,304
Printing and postage 10,896
Insurance premiums 12,004
Miscellaneous 1,108
TOTAL EXPENSES 812,742
WAIVERS:
Waiver of investment
advisory fee $ (80,080)
Waiver of distribution
services fee-Institutional
Service Shares (34,783)
Waiver of shareholder
services fee-Institutional
Shares (115,449)
Waiver of shareholder
services fee-Institutional
Service Shares (34,783)
TOTAL WAIVERS (265,095)
Net expenses 547,647
Net investment income $ 2,448,689
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(unaudited) YEAR ENDED
APRIL 30, OCTOBER 31,
1999 1998
<S> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net investment income $ 2,448,689 $ 6,304,513
DISTRIBUTIONS TO
SHAREHOLDERS:
Distributions from net
investment income
Institutional Shares (1,544,575) (4,351,312)
Institutional Service
Shares (904,114) (1,953,201)
CHANGE IN NET ASSETS
RESULTING FROM
DISTRIBUTIONS
TO SHAREHOLDERS (2,448,689) (6,304,513)
SHARE TRANSACTIONS:
Proceeds from sale of
shares 307,511,930 670,567,607
Net asset value of shares
issued to shareholders in
payment of
distributions declared 450,835 1,275,927
Cost of shares redeemed (280,749,469) (667,515,788)
CHANGE IN NET ASSETS
RESULTING FROM SHARE
TRANSACTIONS 27,213,296 4,327,746
Change in net assets 27,213,296 4,327,746
NET ASSETS:
Beginning of period 171,272,885 166,945,139
End of period $ 198,486,181 $ 171,272,885
</TABLE>
See Notes which are an integral part of the Financial Statements
Financial Highlights-Institutional Shares
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(unaudited)
APRIL 30, YEAR ENDED OCTOBER 31,
1999 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM
INVESTMENT OPERATIONS:
Net investment income 0.01 0.03 0.03 0.03 0.03 0.02
LESS DISTRIBUTIONS:
Distributions from
net investment income (0.01) (0.03) (0.03) (0.03) (0.03) (0.02)
NET ASSET VALUE,
END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN 1 1.32% 3.12% 3.18% 3.17% 3.46% 2.26%
RATIOS TO AVERAGE
NET ASSETS:
Expenses 0.55% 2 0.55% 0.55% 0.55% 0.55% 0.54%
Net investment income 2.69% 2 3.07% 3.13% 3.13% 3.41% 2.22%
Expenses 3 0.83% 2 0.83% 0.86% 0.92% 0.96% 0.93%
Net investment income 3 2.41% 2 2.79% 2.82% 2.76% 3.00% 1.83%
SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $130,029 $106,032 $112,407 $115,722 $86,944 $62,984
</TABLE>
1 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
2 Computed on an annualized basis.
3 During the period, certain fees were waived. If such voluntary waivers had not
occurred, the ratios would have been as indicated.
See Notes which are an integral part of the Financial Statements
Financial Highlights-Institutional Service Shares
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(unaudited)
APRIL 30, YEAR ENDED OCTOBER 31,
1999 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM
INVESTMENT OPERATIONS:
Net investment income 0.01 0.03 0.03 0.03 0.03 0.02
LESS DISTRIBUTIONS:
Distributions from
net investment income (0.01) (0.03) (0.03) (0.03) (0.03) (0.02)
NET ASSET VALUE,
END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN 1 1.27% 3.01% 3.08% 3.07% 3.36% 2.16%
RATIOS TO AVERAGE
NET ASSETS:
Expenses 0.65% 2 0.65% 0.65% 0.65% 0.65% 0.65%
Net investment income 2.59% 2 2.95% 3.08% 3.03% 3.28% 2.19%
Expenses 3 0.93% 2 0.93% 0.96% 1.02% 1.06% 1.06%
Net investment income 3 2.31% 2 2.67% 2.77% 2.66% 2.87% 1.78%
SUPPLEMENTAL DATA:
Net assets,
end of period
(000 omitted) $68,457 $65,240 $54,538 $28,807 $29,817 $36,704
</TABLE>
1 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
2 Computed on an annualized basis.
3 During the period, certain fees were wavied. If such voluntary waivers had not
occurred, the ratios would have been as indicated.
See Notes which are an integral part of the Financial Statements
Notes to Financial Statements
APRIL 30, 1999 (UNAUDITED)
ORGANIZATION
Federated Municipal Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "Act") as an open-end, management
investment company. The Trust consists of 17 portfolios. The financial
statements included herein are only those of New Jersey Municipal Cash Trust
(the "Fund"), a non-diversified portfolio. The financial statements of the other
portfolios are presented separately. The assets of each portfolio are segregated
and a shareholder's interest is limited to the portfolio in which shares are
held. The Fund offers two classes of shares: Institutional Shares and
Institutional Service Shares. The investment objective of the Fund is to provide
current income which is exempt from federal regular income tax and New Jersey
state income tax imposed upon non-corporate taxpayers consistent with stability
of principal.
SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS
The Fund uses the amortized cost method to value its portfolio securities in
accordance with Rule 2a-7 under the Act.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS
Interest income and expenses are accrued daily. Bond premium and discount, if
applicable, are amortized as required by the Internal Revenue Code, as amended
(the "Code"). Distributions to shareholders are recorded on the ex- dividend
date.
FEDERAL TAXES
It is the Fund's policy to comply with the provisions of the Code applicable to
regulated investment companies and to distribute to shareholders each year
substantially all of its income. Accordingly, no provisions for federal tax are
necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Fund may engage in when-issued or delayed delivery transactions. The Fund
records when-issued securities on the trade date and maintains security
positions such that sufficient liquid assets will be available to make payment
for the securities purchased. Securities purchased on a when- issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts of assets, liabilities, expenses and revenues reported in the
financial statements. Actual results could differ from those estimated.
OTHER
Investment transactions are accounted for on the trade date.
SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Board of Trustees (the "Trustees") to issue
an unlimited number of full and fractional shares of beneficial interest
(without par value) for each class of shares. At April 30, 1999, capital paid-in
aggregated $198,486,181.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
APRIL 30, OCTOBER 31,
1999 1998
<S> <C> <C>
INSTITUTIONAL SHARES:
Shares sold 220,263,410 453,405,235
Shares issued to
shareholders in payment of
distributions declared 12,681 43,111
Shares redeemed (196,279,267) (459,822,649)
NET CHANGE RESULTING FROM
INSTITUTIONAL SHARE
TRANSACTIONS 23,996,824 (6,374,303)
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
APRIL 30, OCTOBER 31,
1999 1998
<S> <C> <C>
INSTITUTIONAL SERVICE
SHARES:
Shares sold 87,248,520 217,162,372
Shares issued to
shareholders in payment of
distributions declared 438,154 1,232,816
Shares redeemed (84,470,202) (207,693,139)
NET CHANGE RESULTING FROM
INSTITUTIONAL SERVICE
SHARE TRANSACTIONS 3,216,472 10,702,049
NET CHANGE RESULTING FROM
SHARE TRANSACTIONS 27,213,296 4,327,746
</TABLE>
INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE
Federated Investment Management Company, the Fund's investment adviser (the
"Adviser"), receives for its services an annual investment advisory fee equal to
0.40% of the Fund's average daily net assets. The Adviser may voluntarily choose
to waive any portion of its fee. The Adviser can modify or terminate this
voluntary waiver at any time at its sole discretion.
ADMINISTRATIVE FEE
Federated Services Company ("FServ"), under the Administrative Services
Agreement, provides the Fund with administrative personnel and services. The fee
paid to FServ is based on the level of average aggregate daily net assets of all
funds advised by subsidiaries of Federated Investors, Inc. for the period. The
administrative fee received during the period of the Administrative Services
Agreement shall be at least $125,000 per portfolio and $30,000 per each
additional class of shares.
DISTRIBUTION SERVICES FEE
The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b- 1
under the Act. Under the terms of the Plan, the Fund will compensate Federated
Securities Corp. ("FSC"), the principal distributor, from the net assets of the
Fund to finance activities intended to result in the sale of the Fund's
Institutional Service Shares. The Plan provides that the Fund may incur
distribution expenses up to 0.10% of the average daily net assets of the
Institutional Service Shares, annually, to compensate FSC. FSC may voluntarily
choose to waive any portion of its fee. FSC can modify or terminate this
voluntary waiver at any time at its sole discretion.
SHAREHOLDER SERVICES FEE
Under the terms of a Shareholder Services Agreement with Federated Shareholder
Services Company ("FSSC"), the Fund will pay FSSC up to 0.25% of average daily
net assets of the Fund for the period. The fee paid to FSSC is used to finance
certain services for shareholders and to maintain shareholder accounts. FSSC may
voluntarily choose to waive any portion of its fee. FSSC can modify or terminate
this voluntary waiver at any time at its sole discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES
FServ, through its subsidiary FSSC, serves as transfer and dividend disbursing
agent for the Fund. The fee paid to FSSC is based on the size, type and number
of accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES
FServ maintains the Fund's accounting records for which it receives a fee. The
fee is based on the level of the Fund's average daily net assets for the period,
plus out-of-pocket expenses.
INTERFUND TRANSACTIONS
During the period ended April 30, 1999, the Fund engaged in purchase and sale
transactions with funds that have a common investment adviser (or affiliated
investment advisers), common Directors/Trustees, and/or common Officers. These
purchase and sale transactions were made at current market value pursuant to
Rule 17a-7 under the Act amounting to $210,190,000 and $139,794,762,
respectively.
GENERAL
Certain of the Officers and Trustees of the Trust are Officers and Directors or
Trustees of the above companies.
CONCENTRATION OF CREDIT RISK
Since the Fund invests a substantial portion of its assets in issuers located in
one state, it will be more susceptible to factors adversely affecting issuers of
that state than would be a comparable tax-exempt mutual fund that invests
nationally. In order to reduce the credit risk associated with such factors, at
April 30, 1999, 69.0% of the securities in the portfolio of investments are
backed by letters of credit or bond insurance of various financial institutions
and financial guaranty assurance agencies. The percentage of investments insured
by or supported (backed) by a letter of credit from any one institution or
agency did not exceed 9.8% of total investments.
YEAR 2000
Similar to other financial organizations, the Fund could be adversely affected
if the computer systems used by the Fund's service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. The Fund's Adviser and administrator are taking measures that they
believe are reasonably designed to address the Year 2000 issue with respect to
computer systems that they use and to obtain reasonable assurances that
comparable steps are being taken by each of the Fund's other service providers.
At this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact to the Fund.
Trustees
JOHN F. DONAHUE
THOMAS G. BIGLEY
JOHN T. CONROY, JR.
JOHN F. CUNNINGHAM
LAWRENCE D. ELLIS, M.D.
PETER E. MADDEN
CHARLES F. MANSFIELD, JR.
JOHN E. MURRAY, JR., J.D., S.J.D.
MARJORIE P. SMUTS
JOHN S. WALSH
Officers
JOHN F. DONAHUE
Chairman
GLEN R. JOHNSON
President
J. CHRISTOPHER DONAHUE
Executive Vice President
EDWARD C. GONZALES
Executive Vice President
JOHN W. MCGONIGLE
Executive Vice President and Secretary
RICHARD B. FISHER
Vice President
RICHARD J. THOMAS
Treasurer
ANTHONY R. BOSCH
Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment
risk, including the possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the fund's prospectus which contains facts concerning
its objective and policies, management fees, expenses and other information.
[Graphic]
Federated
World-Class Investment Manager
SEMI-ANNUAL REPORT
New Jersey Municipal Cash Trust
SEMI-ANNUAL REPORT TO SHAREHOLDERS
APRIL 30, 1999
[Graphic]
Federated
New Jersey Municipal Cash Trust
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
1-800-341-7400
WWW.FEDERATEDINVESTORS.COM
Federated Securities Corp., Distributor
Cusip 314229600
Cusip 314229709
2052902 (6/99)
[Graphic]
SEMI-ANNUAL REPORT
President's Message
Dear Shareholder:
I am pleased to present the Semi-Annual Report to Shareholders of New York
Municipal Cash Trust, a portfolio of Federated Municipal Trust, which covers the
six-month period from November 1, 1998 through April 30, 1999. The report begins
with a discussion with the fund's portfolio manager, followed by a complete
listing of the fund's holdings and its financial statements. Financial
highlights tables are provided for the fund's Institutional Service Shares and
Cash II Shares.
The fund is a convenient way to put your ready cash to work pursuing double or
triple tax-free income-free from federal regular income tax, New York state
income tax, and New York City local income tax 1-through a portfolio
concentrated in high-quality, short-term New York municipal securities. At the
end of the reporting period, the fund's holdings were diversified among issuers
that use municipal bond financing for projects as varied as health care,
housing, community development and transportation.
This double or triple tax-free advantage means you can earn a greater after-tax
yield than you could in a comparable high-quality taxable investment. Of course,
the fund also brings you the added benefits of daily liquidity and stability of
principal. 2
During the reporting period, the fund paid tax-free dividends totaling $0.01 per
share for both Institutional Service Shares and Cash II Shares. The fund's total
net assets totaled $690.5 million at the end of the reporting period.
Thank you for relying on New York Municipal Cash Trust to help your ready cash
pursue tax free income every day. As always, we will continue to provide you
with the highest level of professional service. We invite your questions or
comments.
Sincerely,
[Graphic]
Glen R. Johnson
President
June 15, 1999
1 Income may be subject to the federal alternative minimum tax.
2 An investment in money market funds is neither insured nor guaranteed by the
Federal Deposit Insurance Corporation or any other government agency. Although
money market funds seek to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in the fund.
Investment Review
An interview with the fund's portfolio manager, Jeff A. Kozemchak, CFA, Senior
Vice President, Federated Investment Management Company.
WHAT ARE YOUR COMMENTS ON THE ECONOMY AND THE INTEREST RATE ENVIRONMENT DURING
THE FUND'S SIX-MONTH REPORTING PERIOD?
The economy remained robust over the reporting period, showing continued
strength in the fourth quarter of 1998 and into the first quarter of 1999. At
the same time, overall inflationary pressures were absent in spite of impressive
performance from the economy and historically low unemployment. However,
sustained growth in aggregate demand continued to stretch the labor markets, and
the potential for future inflation clearly concerned the Federal Reserve Board
(the "Fed"). Over the reporting period, the Fed maintained a neutral policy
stance toward the direction of short-term interest rates (federal funds target
rate). However, April's Consumer Price Index ("CPI") 1 rate was much larger than
expected and in May, shortly after the close of the reporting period, the Fed
adopted a tightening bias, or bias for higher rates in the future. The Fed cited
the strong U.S. economy in conjunction with record unemployment levels, the
improvement in foreign economic prospects, and rebounding U.S. financial
markets.
In addition to economic fundamentals, short-term municipal securities were
strongly influenced by technical factors over the reporting period, notably
calendar year end and income tax payment season. Variable rate demand notes
("VRDNs") started the reporting period in the 3.00% range, but moved sharply
higher to the 4.00% level in December as an imbalance between supply and demand
occurred. Yields declined in January, as strong cash inflows from bond
maturities and coupon reinvestment occurred. The market continued to be strong
in February and March as yields trended at 3.00% or below, before rising to
4.00% in April because of traditional tax payment season pressures. Over the
six-month reporting period, VRDN yields averaged roughly 65% of taxable rates,
making them attractive for investors in the highest federal tax brackets.
The overall tone of the short-term municipal market was positive. Municipalities
across the country have benefited from a strong economy. This fact, coupled with
lower borrowing costs from low long-term rates, reduced short-term issuance. In
fact, annual municipal note issuance was at its lowest level in the last decade.
1 The CPI is a measure of change in consumer prices, as determined by a monthly
survey of the U.S. Bureau of Labor Statistics.
WHAT WERE YOUR STRATEGIES FOR THE FUND DURING THE REPORTING PERIOD?
The fund's average maturity at the beginning of the reporting period was 69
days. The fund's average maturity declined steadily over the reporting period,
which was characterized by a general lack of fixed-rate note supply, and ended
the reporting period at 45 days, a neutral stance. A shorter average maturity
left the fund well positioned to take advantage of increased rates that could
have occurred. We continued to emphasize a barbelled structure for the
portfolio, combining a significant position in 7-day VRDNs with purchases of
longer-term securities with maturities between 6 and 12 months. After an average
maturity range was targeted, we attempted to maximize performance through
ongoing relative value analysis. Relative value analysis includes the comparison
of the richness or cheapness of municipal securities to one another as well as
municipal securities to taxable instruments, such as Treasury securities. This
portfolio structure continued to pursue a competitive yield over time.
The 7-day net yields for the fund's Institutional Service Shares and Cash II
Shares, were 3.09% 2 and 2.93%,2 respectively, on April 30, 1999. These yields
were higher relative to the beginning of the reporting period with most of the
increase in yield coming at the end of the reporting period due in large part to
technical factors relating to tax payment season. The latest yields were the
equivalent of taxable yields 5.49% for Institutional Service Shares and 5.21%
for Cash II Shares for investors in the highest federal and state effective tax
brackets.
AS WE APPROACH MID-YEAR, WHAT IS YOUR OUTLOOK GOING FORWARD?
Although the Fed has adopted a tightening bias, it is not likely to raise
interest rates or take preemptive action until price or wage pressures
materialize. Accordingly, we plan to maintain a neutral average maturity range
for the fund over the near-term until further inflationary data becomes
available. In the near term, the short-term municipal market will likely reflect
technical as well as fundamental factors. In the summer months, we will likely
extend the maturity as new issuance and rollover of municipal notes occurs
during this period. As always, we will continue to watch, with great interest,
market developments in order to best serve our municipal clients.
2 Performance quoted represents past performance and is not indicative of future
results. Yields will vary. Yields quoted for money market funds most closely
reflect the fund's current earnings.
Portfolio of Investments
APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
99.3% 1
NEW YORK-99.1%
$ 9,195,000 Albany County Airport
Authority, NY, Trust
Receipts (Series 1997
FR/RI-7) Weekly VRDNs (FSA
INS)/(Bank of New York, New
York LIQ) $ 9,195,000
4,940,000 Argyle, NY Central School
District, 3.35% BANs,
12/1/1999 4,944,200
7,115,000 Canandaigua, NY City
School District, 3.35%
BANs, 3/30/2000 7,127,600
3,500,000 Cayuga County, NY IDA,
(Series 1998) Weekly VRDNs
(NFR Northeast, Inc.)/
(KeyBank, N.A. LOC) 3,500,000
950,000 Chautauqua County, NY IDA
Weekly VRDNs (Cliffstar
Corp.)/(KeyBank, N.A. LOC) 950,000
3,900,000 Chautauqua County, NY IDA
Weekly VRDNs (Mogen David
Wine Corp.)/(Wells Fargo
Bank, N.A. LOC) 3,900,000
12,995,000 Clipper Tax-Exempt Trust
(New York AMT) Series 1998-
10 Weekly VRDNs (New York
State Mortgage
Agency)/(State Street Bank
and Trust Co. LIQ) 12,995,000
820,000 Colonie, NY IDA Weekly
VRDNs (Herbert S.
Ellis)/(HSBC Bank USA LOC) 820,000
600,000 Colonie, NY IDA, (Series
1988) Weekly VRDNs
(Specialty Retailers,
Inc.)/(HSBC Bank USA LOC) 600,000
2,800,000 Colonie, NY IDA, 3.35% TOBs
(800 North Pearl
Associates)/(Fleet Bank
N.A. LOC), Optional Tender
12/1/1999 2,800,000
2,475,000 Columbia County, NY IDA,
(Series 1998A) Weekly
VRDNs (Empire Homes,
LLC)/(KeyBank, N.A. LOC) 2,475,000
5,200,000 Corinth, NY IDA, Solid
Waste Disposal Revenue
Bonds (Series A), 3.85%
TOBs (International Paper
Co.), Optional Tender
3/1/2000 5,200,000
8,000,000 Dalton-Nunda, NY Central
School District, 3.40%
BANs, 11/24/1999 8,008,756
1,200,000 Dutchess County, NY IDA,
Series 1995 Weekly VRDNs
(Laerdal Medical
Corp.)/(Bank of New York,
New York LOC) 1,200,000
5,000,000 Erie County, NY IDA,
(Series 1998) Weekly VRDNs
(Alden Scientific
Corp.)/(KeyBank, N.A. LOC) 5,000,000
2,140,000 Erie County, NY IDA,
(Series A) Weekly VRDNs
(Gemcor)/(HSBC Bank USA
LOC) 2,140,000
5,000,000 Erie County, NY IDA, IDRB (Series 1994) Weekly VRDNs
(Servotronics, Inc. Project)/(Fleet Bank N.A.
LOC) 5,000,000
485,000 Fulton County, NY IDA,
3.40% TOBs (Gates Mills,
Inc.)/(Fleet Bank N.A.
LOC), Optional Tender
12/1/1999 485,000
2,000,000 Groton Central School
District, NY, 3.35% BANs,
3/30/2000 2,002,646
1,300,000 Guilderland, NY IDA,
(Series 1993A) Weekly VRDNs (Northeastern Industrial Park,
Inc.)/(Fleet Bank N.A.
LOC) 1,300,000
3,740,000 Herkimer County, NY IDA,
1994 IDRB Weekly VRDNs
(Granny's Kitchen)/(Bank
of New York, New York LOC) 3,740,000
5,000,000 Levittown Union Free
School District, NY, 3.80%
TANs, 6/23/1999 5,000,694
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
NEW YORK-CONTINUED
$ 3,850,000 Liverpool Central School
District, NY, 4.00% RANs,
8/3/1999 $ 3,853,727
16,300,000 Long Island Power
Authority, Electric System
Subordinated Revenue Bonds
(Series 1) Weekly VRDNs
(Bayerische Landesbank
Girozentrale and
Westdeutsche Landesbank
Girozentrale LOCs) 16,300,000
2,330,000 Long Island Power
Authority, Floater
Certificates (Series 1998-
66) Weekly VRDNs (MBIA
INS)/(Morgan Stanley, Dean
Witter Municipal Funding,
Inc. LIQ) 2,330,000
1,600,000 Madison County, NY IDA,
(Series 1989A) Weekly VRDNs (Madison, NY Upstate Metals)/(Fleet
Bank N.A.
LOC) 1,600,000
4,100,000 Madison County, NY IDA,
(Series A) Weekly VRDNs
(Owl Wire and
Cable)/(KeyBank, N.A. LOC) 4,100,000
7,000,000 Madrid-Waddington NY
Central School District,
3.40% BANs, 10/29/1999 7,002,326
6,000,000 Mayfield, NY Central
School District, 3.45%
BANs, 10/15/1999 6,001,318
34,395,000 Metropolitan
Transportation Authority,
New York, MERLOTS (Series
1997 C-2) Weekly VRDNs
(FGIC INS)/(First Union
National Bank, Charlotte,
N.C. LIQ) 34,395,000
4,265,000 Metropolitan
Transportation Authority,
New York, Trust Receipts
(Series 1997 FR/RI-9)
Weekly VRDNs (FGIC
INS)/(Bank of New York, New
York LIQ) 4,265,000
2,170,000 Miller Place, NY Union Free
School District, 3.80%
TANs, 6/30/1999 2,170,446
12,000,000 New Paltz, NY Central
School District, 3.95%
BANs, 6/15/1999 12,002,130
4,740,000 New York City Housing
Development Corp.,
Municipal Securities Trust
Receipts (Series 1996-
CMC1A) Weekly VRDNs (Chase
Manhattan Corp. LIQ) 4,740,000
4,735,000 New York City Housing
Development Corp.,
Municipal Securities Trust
Receipts (Series 1996-
CMC1B) Weekly VRDNs (Chase
Manhattan Corp. LIQ) 4,735,000
7,000,000 New York City Municipal
Water Finance Authority,
(PT-243) Weekly VRDNs
(FSA INS)/(Bayerische
Hypotheken-und Vereinsbank
AG LIQ) 7,000,000
15,000,000 New York City Municipal
Water Finance Authority,
3.25% CP (Bank of Nova
Scotia, Toronto,
Commerzbank AG, Frankfurt
and Toronto-Dominion Bank
LOCs), Mandatory Tender
8/19/1999 15,000,000
23,000,000 New York City Municipal
Water Finance Authority,
Trust Receipts (Series
1997 FR/RI-6) Weekly VRDNs
(MBIA INS)/(Bank of New
York, New York LIQ) 23,000,000
8,270,000 New York City Municipal
Water Finance Authority,
Trust Receipts, (Series
1998 FR/RI-10) Weekly
VRDNs (FSA INS)/(Bank of
New York, New York LIQ) 8,270,000
10,000,000 New York City Municipal
Water Finance Authority,
Trust Receipts, (Series
1998 FR/RI-11) Weekly
VRDNs (FSA INS)/(Bank of
New York, New York LIQ) 10,000,000
6,300,000 2 New York City Municipal
Water Finance Authority, Variable Rate Certificates (Series
1997A-1), 3.15% TOBs (MBIA INS)/(Bank of America NT and SA, San
Francisco LIQ),
Optional Tender 12/16/1999 6,300,000
9,345,000 2 New York City Municipal
Water Finance Authority, Variable Rate Certificates (Series
1997A-2), 3.15% TOBs (MBIA INS)/(Bank of America NT and SA, San
Francisco LIQ),
Optional Tender 12/16/1999 9,345,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
NEW YORK-CONTINUED
$ 50,001 New York City, NY IDA,
Weekly VRDNs (David Rosen
Bakers Supply)/(Ford Motor
Credit Corp. LIQ)/(Chase
Manhattan Bank N.A., New
York LOC) $ 50,001
7,035,000 New York City, NY IDA, CDC
1997H - Class A Certificates Weekly VRDNs (Japan Airlines
Co.)/(FSA INS)/(CDC Municipal
Products, Inc. LIQ) 7,035,000
8,020,000 New York City, NY IDA, CDC
Municipal Products, Inc.
(Series 1998D) Weekly
VRDNs (Japan Airlines
Co.)/(FSA INS)/(CDC
Municipal Products, Inc.
LIQ) 8,020,000
3,380,000 New York City, NY IDA, CDC Municipal Products, Inc. (Series
1996H) Weekly VRDNs (Japan Airlines Co.)/(FSA INS)/(CDC
Municipal Products, Inc.
LIQ) 3,380,000
8,690,000 New York City, NY IDA,
Class A Certificates (Series CDC-1997E) Weekly VRDNs (Japan
Airlines Co.)/(FSA INS)/(CDC Municipal Products, Inc.
LIQ) 8,690,000
7,100,000 New York City, NY
Transitional Finance
Authority, (1998 Subseries
A-1) Weekly VRDNs
(Commerzbank AG, Frankfurt
LIQ) 7,100,000
16,595,000 New York City, NY
Transitional Finance
Authority, PT-1047 Weekly
VRDNs (Bank of America NT
and SA, San Francisco LIQ) 16,595,000
14,300,000 New York City, NY, (PA-156)
Weekly VRDNs (Merrill
Lynch Capital Services,
Inc. LIQ)/(Merrill Lynch
Capital Services, Inc.
LOC) 14,300,000
3,200,000 New York City, NY, Series B Daily VRDNs (FGIC INS)/(FGIC
Securities
Purchase, Inc. LIQ) 3,200,000
11,445,000 New York City, NY, UT GO
(Series A), 4.25% Bonds,
8/1/1999 11,460,344
6,000,000 New York City, NY, UT GO (Series G), 3.90% Bonds,
8/1/1999 6,001,464
10,475,000 New York State Dormitory
Authority, PA-60 (Series
1993) Weekly VRDNs
(Rochester General
Hospital)/(FHA
INS)/(Merrill Lynch
Capital Services, Inc.
LIQ) 10,475,000
6,245,000 2 New York State Dormitory Authority, PT-128 (Series 1997),
3.90% TOBs (Rosalind & Joseph Gurwin Jewish Geriatric Center of
Long Island, Inc.)/(AMBAC INS)/(Credit Suisse First Boston
LIQ), Optional
Tender 8/5/1999 6,245,000
5,980,000 New York State Dormitory
Authority, PT-130 (Series
1997) Weekly VRDNs (United
Health Services Hospitals,
Inc.)/(AMBAC INS)/(Credit
Suisse First Boston LIQ) 5,980,000
10,800,000 New York State Energy
Research & Development
Authority Daily VRDNs
(Niagara Mohawk Power
Corp.)/(Toronto-Dominion
Bank LOC) 10,800,000
5,445,000 New York State Energy
Research & Development
Authority, (PA-144) Weekly
VRDNs (Long Island
Lighting Co.)/(Merrill
Lynch Capital Services,
Inc. LIQ)/(Merrill Lynch
Capital Services, Inc.
LOC) 5,445,000
12,200,000 New York State
Environmental Facilities
Corp., Trust Receipts
(Series 1997 FR/RI-4)
Weekly VRDNs (New York City
Municipal Water Finance
Authority)/(Bank of New
York, New York LIQ) 12,200,000
795,000 New York State Job
Development Authority
Weekly VRDNs (Bayerische
Landesbank Girozentrale
and Morgan Guaranty Trust
Co., New York LOCs) 795,000
3,105,000 New York State Job
Development Authority
Weekly VRDNs (Bayerische
Landesbank Girozentrale
and Morgan Guaranty Trust
Co., New York LOCs) 3,105,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
NEW YORK-CONTINUED
$ 2,320,000 New York State Job
Development Authority,
(Series C-1) Monthly VRDNs
(Bayerische Landesbank
Girozentrale and Morgan
Guaranty Trust Co.,
New York LOCs) $ 2,320,000
30,200,000 New York State Local
Government Assistance
Corp., (Series E) Weekly
VRDNs (Canadian Imperial
Bank of Commerce LOC) 30,200,000
3,160,000 New York State Medical Care
Facilities Finance Agency,
Hospital Insured Mortgage
Revenue Bonds (PT-154)
Weekly VRDNs (FHA
INS)/(Banco Santander SA
LIQ) 3,160,000
14,495,000 New York State Mortgage
Agency, (Series PA-422)
Weekly VRDNs (Merrill
Lynch Capital Services,
Inc. LIQ) 14,495,000
3,700,000 New York State Mortgage
Agency, (Series PA-29)
Weekly VRDNs (Merrill
Lynch Capital Services,
Inc. LIQ) 3,700,000
2,400,000 New York State Mortgage
Agency, Homeowner Mortgage
Revenue Bonds (Series PA-
87) Weekly VRDNs (Merrill
Lynch Capital Services,
Inc. LIQ) 2,400,000
3,670,000 New York State Mortgage
Agency, Homeowner Mortgage
Revenue Bonds (Series PT-
15B) Weekly VRDNs
(Commerzbank AG, Frankfurt
LIQ) 3,670,000
8,645,000 New York State Mortgage
Agency, (Series PA-406)
Weekly VRDNs (Merrill
Lynch Capital Services,
Inc. LIQ) 8,645,000
5,000,000 2 New York State Mortgage
Agency, (PT-164), 3.25%
TOBs (Banque Nationale de
Paris LIQ), Optional
Tender 3/9/2000 5,000,000
6,500,000 New York State Thruway
Authority, (PA-172) Weekly
VRDNs (Merrill Lynch
Capital Services, Inc.
LIQ)/(Merrill Lynch
Capital Services, Inc.
LOC) 6,500,000
9,555,000 2 New York State Thruway
Authority, (Series E) PT-
1141,% TOBs (Merrill Lynch
Capital Services, Inc.
LIQ), Optional Tender
3/2/2000 9,555,000
8,400,000 New York State Urban
Development Corp.,
Municipal Securities Trust
Receipts (Series 1996-
CMC6) Weekly VRDNs (Chase
Manhattan Corp. LIQ) 8,400,000
1,600,000 Odessa-Montour, NY Central
School District, 3.25%
BANs, 11/17/1999 1,600,763
1,160,000 Onondaga County, NY IDA,
(Series 1997) Weekly VRDNs (General Super Plating Co.,
Inc.)/(KeyBank, N.A.
LOC) 1,160,000
1,725,000 Onondaga County, NY Weekly
VRDNs (Grainger (W.W.),
Inc.) 1,725,000
1,300,000 Ontario, NY IDA Weekly
VRDNs (Hillcrest
Enterprises/Buckeye
Corrugated)/(National City
Bank, Ohio LOC) 1,300,000
5,700,000 Oswego County, NY IDA
Weekly VRDNs (Copperweld
Corp.)/(Credit Lyonnais,
Paris LOC) 5,700,000
9,900,000 Perry Central School
District, NY, 3.80% BANs,
6/15/1999 9,901,526
15,000,000 Port Authority of New York
and New Jersey Weekly VRDNs 15,000,000
15,000,000 Port Authority of New York
and New Jersey Weekly VRDNs 15,000,000
3,000,000 Portville, NY Central
School District, 3.50%
BANs, 10/20/1999 3,001,357
4,500,000 Riverhead, NY IDA, IDRB
(Series 1998) Weekly VRDNs
(Altaire Pharmaceuticals,
Inc.)/(Mellon Bank N.A.,
Pittsburgh LOC) 4,500,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
NEW YORK-CONTINUED
$ 1,000,000 Rotterdam, NY IDA, (Series
1993A) Weekly VRDNs
(Rotterdam Industrial
Park)/(Fleet Bank N.A.
LOC) $ 1,000,000
60,546 Schenectady, NY IDA,
Weekly VRDNs (McClellan
Street Associates)/(Ford
Motor Credit Corp.
LIQ)/(Chase Manhattan Bank
N.A., New York LOC) 60,546
1,425,000 Schenectady, NY IDA, IDRB
(Series 1995A) Weekly
VRDNs (Fortitech Holding
Corporation
Project)/(Fleet Bank N.A.
LOC) 1,425,000
1,332,500 Solvay, NY, (Series A),
3.40% BANs, 10/14/1999 1,332,792
3,997,500 Solvay, NY, (Series B),
3.45% BANs, 10/14/1999 3,998,377
2,720,000 Southeast, NY IDA, IDRB
(Series 1995) Weekly VRDNs
(Dairy Conveyor Corp.
Project)/(Chase Manhattan
Bank N.A., New York LOC) 2,720,000
3,540,000 Southeast, NY IDA,
Variable Rate IDRB 1996
Weekly VRDNs (The Rawplug
Company, Inc.)/(Bank of
New York, New York LOC) 3,540,000
2,500,000 St. Lawrence County, NY
IDA, (Series 1998A) Weekly
VRDNs (Alcoa, Inc.) 2,500,000
900,000 Suffolk County, NY IDA
Weekly VRDNs (C & J Realty
Corp.)/(Ford Motor Credit
Corp. LIQ)/(Chase
Manhattan Bank N.A., New
York LOC) 900,000
750,000 Suffolk County, NY IDA
Weekly VRDNs (YM-YWHA of
Suffolk)/(European
American Bank, New York
LOC) 750,000
6,495,000 Suffolk County, NY IDA,
(Series 1997B) Weekly
VRDNs (Maryhaven Center of
Hope)/(KeyBank, N.A. LOC) 6,495,000
5,000,000 Suffolk County, NY IDA,
(Series 1998A) Weekly
VRDNs (Episcopal Health
Services, Inc. Civic
Facility)/(Paribas, Paris
LOC) 5,000,000
1,800,000 Suffolk County, NY IDA,
5.0375% TOBs (Grainger
(W.W.), Inc.), Optional
Tender 6/1/1999 1,800,000
8,000,000 Syracuse, NY IDA Syracuse
Weekly VRDNs (Crouse
Health Hospital
Cardiology)/(Manufacturer's
& Traders Trust Co.,
Buffalo, NY LOC) 8,000,000
10,640,000 Triborough Bridge & Tunnel
Authority, NY, Floater
Certificates (Series 1998-
72) Weekly VRDNs (FGIC
INS)/(Morgan Stanley, Dean
Witter Municipal Funding,
Inc. LIQ) 10,640,000
18,990,000 Triborough Bridge & Tunnel
Authority, NY, Trust
Receipts (Series 1998
FR/RI-A1) Weekly VRDNs
(Bayerische Hypotheken-und
Vereinsbank AG LIQ) 18,990,000
2,400,000 United Nations, NY
Development Corp., (PA-
155) Weekly VRDNs (Merrill
Lynch Capital Services,
Inc. LIQ)/(Merrill Lynch
Capital Services, Inc.
LOC) 2,400,000
11,500,000 VRDC/IVRC Trust, (Series
1993B) Weekly VRDNs
(Metropolitan
Transportation Authority,
New York)/(AMBAC Financial
Group, Inc. INS)/(Hong
Kong & Shanghai Banking
Corp. LIQ) 11,500,000
14,800,000 VRDC/IVRC Trust, (Series
1993G) Weekly VRDNs (St.
Lukes Roosevelt Hospital
Center)/(FHA INS)/(Hong
Kong & Shanghai Banking
Corp. LIQ) 14,800,000
7,500,000 Walden Village, NY IDA,
IDRB (Series 1994) Weekly
VRDNs (Spence Engineering
Co.)/(First Union National
Bank, Charlotte, N.C. LOC) 7,500,000
3,650,000 Wallkill, NY, 3.40% BANs,
4/28/2000 3,655,242
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
NEW YORK-CONTINUED
$ 4,470,000 Warren & Washington
Counties, NY IDA Weekly
VRDNs (Sandy Hill
Corp.)/(First Union
National Bank, Charlotte,
N.C. LOC) $ 4,470,000
2,100,000 Wyandanch, NY Union Free
School District, 3.50%
TANs, 6/29/1999 2,100,832
TOTAL 684,182,087
PUERTO RICO-0.2%
1,550,976 Commonwealth of Puerto
Rico Municipal Revenues
Collection Center, 1997A
LeaseTOPS Trust Weekly
VRDNs (ABN AMRO Bank N.V.,
Amsterdam LIQ)/(State
Street Bank and Trust Co.
LOC) 1,550,976
TOTAL INVESTMENTS (AT
AMORTIZED COST) 3 $ 685,733,063
</TABLE>
Securities that are subject to Alternative Minimum Tax represents 25.5% of the
portfolio based upon total portfolio market value.
1 The fund may only invest in securities rated in one of the two highest
short-term rating categories by nationally recognized statistical rating
organizations ("NRSROs") or unrated securities of comparable quality. An NRSRO's
two highest rating categories are determined without regard for sub-categories
and gradations. For example, securities rated SP-1+, SP-1 or SP-2 by Standard &
Poor's, MIG-1 or MIG-2 by Moody's Investors Service, Inc., F-1+, F-1 and F-2 by
Fitch IBCA, Inc. are all considered rated in one of the two highest short-term
rating categories. Securities rated in the highest short-term rating category
(and unrated securities of comparable quality) are identified as First Tier
securities. Securities rated in the second highest short-term rating category
(and unrated securities of comparable quality) are identified as Second Tier
securities. The fund follows applicable regulations in determining whether a
security is rated and whether a security rated by multiple NRSROs in different
rating categories should be identified as a First or Second Tier security.
At April 30, 1999, the portfolio securities were rated as follows:
Tier Rating Based on Total Market Value (Unaudited)
<TABLE>
<CAPTION>
FIRST TIER SECOND TIER
<S> <C>
91.41% 8.59%
</TABLE>
2 Denotes a restricted security which is subject to restrictions on resale under
Federal securities laws. These securities have been deemed liquid by criteria
approved by the fund's Board of Trustees. At April 30, 1999, these securities
amounted to $36,445,000, which represents 5.3% of net assets.
3 Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($690,546,040) at April 30, 1999.
The following acronyms are used throughout this portfolio:
AMBAC -American Municipal Bond Assurance Corporation AMT -Alternative Minimum
Tax BANs -Bond Anticipation Notes CP -Commercial Paper FGIC -Financial Guaranty
Insurance Company FHA -Federal Housing Administration FSA -Financial Security
Assurance GO -General Obligation IDA -Industrial Development Authority IDRB
- -Industrial Development Revenue Bond INS -Insured LIQ -Liquidity Agreement LOCs
- -Letter(s) of Credit MBIA -Municipal Bond Investors Assurance
MERLOTS -Municipal Exempt Receipts - Liquidity Optional Tender Series RANs
- -Revenue Anticipation Notes SA -Support Agreement TANs -Tax Anticipation Notes
TOBs -Tender Option Bonds UT -Unlimited Tax VRDNs -Variable Rate Demand Notes
See Notes which are an integral part of the Financial Statements
Statement of Assets and Liabilities
APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Total investments in
securities, at amortized
cost and value $ 685,733,063
Cash 214,144
Income receivable 6,103,939
TOTAL ASSETS 692,051,146
LIABILITIES:
Income distribution
payable $ 1,439,042
Accrued expenses 66,064
TOTAL LIABILITIES 1,505,106
Net assets for 690,546,040
shares outstanding $ 690,546,040
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PROCEEDS PER SHARE
INSTITUTIONAL SERVICE
SHARES:
$631,532,531 / 631,532,531
shares outstanding $1.00
CASH II SHARES:
$59,013,509 / 59,013,509
shares outstanding $1.00
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Operations
SIX MONTHS ENDED APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 10,386,427
EXPENSES:
Investment advisory fee $ 1,260,770
Administrative personnel
and services fee 237,655
Custodian fees 13,996
Transfer and dividend
disbursing agent fees and
expenses 56,511
Directors'/Trustees' fees 2,480
Auditing fees 6,215
Legal fees 8,173
Portfolio accounting fees 57,193
Distribution services fee-
Institutional Service
Shares 718,372
Distribution services fee-
Cash II Shares 69,609
Shareholder services fee-
Institutional Service
Shares 718,372
Shareholder services fee-
Cash II Shares 69,609
Share registration costs 20,432
Printing and postage 16,324
Insurance premiums 24,823
Miscellaneous 1,757
TOTAL EXPENSES 3,282,291
WAIVERS:
Waiver of investment
advisory fee $ (256,444)
Waiver of distribution
services fee-Institutional
Service Shares (718,372)
Waiver of distribution
services fee-Cash II
Shares (69,609)
Waiver of shareholder
services fee-Institutional
Service Shares (459,758)
TOTAL WAIVERS (1,504,183)
Net expenses 1,778,108
Net investment income $ 8,608,319
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR
(unaudited) ENDED
APRIL 30, OCTOBER 31,
1999 1998
<S> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net investment income $ 8,608,319 $ 17,525,524
DISTRIBUTIONS TO
SHAREHOLDERS:
Distributions from net
investment income
Institutional Service
Shares (7,890,645) (16,632,253)
Cash II Shares (717,674) (893,271)
CHANGE IN NET ASSETS
RESULTING FROM
DISTRIBUTIONS
TO SHAREHOLDERS (8,608,319) (17,525,524)
SHARE TRANSACTIONS:
Proceeds from sale of
shares 1,224,148,105 2,229,397,824
Net asset value of shares
issued to shareholders in
payment of
distributions declared 3,256,152 7,306,584
Cost of shares redeemed (1,093,826,373) (2,125,311,852)
CHANGE IN NET ASSETS
RESULTING FROM SHARE
TRANSACTIONS 133,577,884 111,392,556
Change in net assets 133,577,884 111,392,556
NET ASSETS:
Beginning of period 556,968,156 445,575,600
End of period $ 690,546,040 $ 556,968,156
</TABLE>
See Notes which are an integral part of the Financial Statements
Financial Highlights-Institutional Service Shares
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(unaudited)
APRIL 30, YEAR ENDED OCTOBER 31,
1999 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.01 0.03 0.03 0.03 0.04 0.02
LESS DISTRIBUTIONS:
Distributions from net investment income (0.01) (0.03) (0.03) (0.03) (0.04) (0.02)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN 1 1.37% 3.19% 3.26% 3.24% 3.56% 2.35%
RATIOS TO AVERAGE NET ASSETS:
Expenses 0.55% 2 0.55% 0.53% 0.53% 0.54% 0.52%
Net investment income 2.75% 2 3.12% 3.21% 3.18% 3.49% 2.31%
Expenses 3 1.04% 2 1.05% 1.05% 1.07% 1.07% 0.65%
Net investment income 3 2.26% 2 2.62% 2.69% 2.64% 2.96% 2.18%
SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $631,533 $513,011 $424,174 $305,533 $276,149 $236,580
</TABLE>
1 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
2 Computed on an annualized basis.
3 During the period, certain fees were voluntarily waived. If such voluntary
waivers had not occurred, the ratios would have been as indicated.
See Notes which are an integral part of the Financial Statements
Financial Highlights-Cash II Shares
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(unaudited)
APRIL 30, YEAR ENDED OCTOBER 31,
1999 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.01 0.03 0.03 0.03 0.03 0.02
LESS DISTRIBUTIONS:
Distributions from net investment income (0.01) (0.03) (0.03) (0.03) (0.03) (0.02)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN 1 1.29% 3.02% 3.07% 3.05% 3.37% 2.15%
RATIOS TO AVERAGE NET ASSETS:
Expenses 0.71% 2 0.71% 0.71% 0.71% 0.71% 0.71%
Net investment income 2.59% 2 2.98% 3.01% 3.02% 3.20% 2.19%
Expenses 3 1.04% 2 1.05% 1.05% 1.07% 1.07% 0.92%
Net investment income 3 2.26% 2 2.64% 2.67% 2.66% 2.84% 1.98%
SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $59,013 $43,957 $21,402 $25,571 $14,439 $134,051
</TABLE>
1 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
2 Computed on an annualized basis.
3 During the period, certain fees were voluntarily waived. If such voluntary
waivers had not occurred, the ratios would have been as indicated.
See Notes which are an integral part of the Financial Statements
Notes to Financial Statements
APRIL 30, 1999 (UNAUDITED)
ORGANIZATION
Federated Municipal Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "Act") as an open-end, management
investment company. The Trust consists of 17 portfolios. The financial
statements included herein are only those of New York Municipal Cash Trust (the
"Fund"). The financial statements of the other portfolios are presented
separately. The assets of each portfolio are segregated and a shareholder's
interest is limited to the portfolio in which shares are held. The Fund offers
two classes of shares: Institutional Service Shares and Cash II Shares. The
investment objective of the Fund is current income exempt from federal regular
income tax and the personal income taxes imposed by the New York State and New
York municipalities consistent with stability of principal.
SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS
The Fund uses the amortized cost method to value its portfolio securities in
accordance with Rule 2a-7 under the Act.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS
Interest income and expenses are accrued daily. Bond premium and discount, if
applicable, are amortized as required by the Internal Revenue Code, as amended
(the "Code"). Distributions to shareholders are recorded on the ex- dividend
date.
FEDERAL TAXES
It is the Fund's policy to comply with the provisions of the Code applicable to
regulated investment companies and to distribute to shareholders each year
substantially all of its income. Accordingly, no provisions for federal tax are
necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Fund may engage in when-issued or delayed delivery transactions. The Fund
records when-issued securities on the trade date and maintains security
positions such that sufficient liquid assets will be available to make payment
for the securities purchased. Securities purchased on a when- issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
RESTRICTED SECURITIES
Restricted securities are securities that may only be resold upon registration
under federal securities laws or in transactions exempt from such registration.
Many restricted securities may be resold in the secondary market in transactions
exempt from registration. In some cases, the restricted securities may be resold
without registration upon exercise of a demand feature. Such restricted
securities may be determined to be liquid under criteria established by the
Board of Trustees ("Trustees"). The Fund will not incur any registration costs
upon such resales. Restricted securities are valued at amortized cost in
accordance with Rule 2a-7 under the Act.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts of assets, liabilities, expenses and revenues reported in the
financial statements. Actual results could differ from those estimated.
OTHER
Investment transactions are accounted for on the trade date.
SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares. At April 30, 1999, capital paid-in aggegated $690,546,040.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS YEAR
ENDED ENDED
APRIL 30, OCTOBER 31,
1999 1998
<S> <C> <C>
INSTITUTIONAL SERVICE
SHARES:
Shares sold 1,107,659,124 2,064,643,976
Shares issued to
shareholders in payment of
distributions declared 2,735,111 6,586,980
Shares redeemed (991,873,169) (1,982,393,236)
NET CHANGE RESULTING FROM
INSTITUTIONAL SERVICE
SHARE TRANSACTIONS 118,521,066 88,837,720
<CAPTION>
SIX MONTHS YEAR
ENDED ENDED
APRIL 30, OCTOBER 31,
1999 1998
<S> <C> <C>
CASH II SHARES:
Shares sold 116,488,981 164,753,848
Shares issued to
shareholders in payment of
distributions declared 521,041 719,604
Shares redeemed (101,953,204) (142,918,616)
NET CHANGE RESULTING FROM
CASH II SHARE TRANSACTIONS 15,056,818 22,554,836
NET CHANGE RESULTING FROM
SHARE TRANSACTIONS 133,577,884 111,392,556
</TABLE>
INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE
Federated Investment Management Company, the Fund's investment adviser (the
"Adviser"), receives for its services an annual investment advisory fee equal to
0.40% of the Fund's average daily net assets. The Adviser may voluntarily choose
to waive any portion of its fee. The Adviser can modify or terminate this
voluntary waiver at any time at its sole discretion.
ADMINISTRATIVE FEE
Federated Services Company ("FServ"), under the Administrative Services
Agreement, provides the Fund with administrative personnel and services. The fee
paid to FServ is based on the level of average aggregate daily net assets of all
funds advised by subsidiaries of Federated Investors, Inc. for the period. The
administrative fee received during the period of the Administrative Services
Agreement shall be at least $125,000 per portfolio and $30,000 per each
additional class of shares.
DISTRIBUTION SERVICES FEE
The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b- 1
under the Act. Under the terms of the Plan, the Fund will reimburse Federated
Securities Corp. ("FSC"), the principal distributor, from the net assets of the
Fund to finance activities intended to result in the sale of the Fund's
Institutional Service Shares and Cash II Shares. The Plan provides that the Fund
may incur distribution expenses up to 0.25% of the average daily net assets of
the Institutional Service Shares and Cash II Shares, annually, to reimburse FSC.
The distributor may voluntarily choose to waive any portion of its fee. The
distributor can modify or terminate this voluntary waiver at any time at its
sole discretion.
SHAREHOLDER SERVICES FEE
Under the terms of a Shareholder Services Agreement with Federated Shareholder
Services Company ("FSSC"), the Fund will pay FSSC up to 0.25% of average daily
net assets of the Fund shares for the period. The fee paid to FSSC is used to
finance certain services for shareholders and to maintain shareholder accounts.
FSSC may voluntarily choose to waive any portion of its fee. FSSC can modify or
terminate this voluntary waiver at any time at its sole discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES
FServ, through its subsidiary FSSC, serves as transfer and dividend disbursing
agent for the Fund. The fee paid to FSSC is based on the size, type and number
of accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES
FServ maintains the Fund's accounting records for which it receives a fee. The
fee is based on the level of the Fund's average daily net assets for the period,
plus out-of-pocket expenses.
INTERFUND TRANSACTIONS
During the period ended April 30, 1999, the Fund engaged in purchase and sale
transactions with funds that have a common investment adviser (or affiliated
investment advisers), common Directors/Trustees, and/or common Officers. These
purchase and sale transactions were made at current market value pursuant to
Rule 17a-7 under the Act amounting to $433,534,000 and $270,655,000,
respectively.
GENERAL
Certain of the Officers and Trustees of the Trust are Officers and Directors or
Trustees of the above companies.
CONCENTRATION OF CREDIT RISK
Since the Fund invests a substantial portion of its assets in issuers located in
one state, it will be more susceptible to factors adversely affecting issuers of
that state than would be a comparable tax-exempt mutual fund that invests
nationally. In order to reduce the credit risk associated with such factors, at
April 30, 1999, 59.8% of the securities in the portfolio of investments are
backed by letters of credit or bond insurance of various financial institutions
and financial guaranty assurance agencies. The percentage of investments insured
by or supported (backed) by a letter of credit from any one institution or
agency did not exceed 9.0% of total investments.
YEAR 2000
Similar to other financial organizations, the Fund could be adversely affected
if the computer systems used by the Fund's service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. The Fund's Adviser and administrator are taking measures that they
believe are reasonably designed to address the Year 2000 issue with respect to
computer systems that they use and to obtain reasonable assurances that
comparable steps are being taken by each of the Fund's other service providers.
At this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact to the Fund.
Trustees
JOHN F. DONAHUE
THOMAS G. BIGLEY
JOHN T. CONROY, JR.
JOHN F. CUNNINGHAM
LAWRENCE D. ELLIS, M.D.
PETER E. MADDEN
CHARLES F. MANSFIELD, JR.
JOHN E. MURRAY, JR., J.D., S.J.D.
MARJORIE P. SMUTS
JOHN S. WALSH
Officers
JOHN F. DONAHUE
Chairman
GLEN R. JOHNSON
President
J. CHRISTOPHER DONAHUE
Executive Vice President
EDWARD C. GONZALES
Executive Vice President
JOHN W. MCGONIGLE
Executive Vice President and Secretary
RICHARD B. FISHER
Vice President
RICHARD J. THOMAS
Treasurer
ANTHONY R. BOSCH
Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment
risk, including the possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the fund's prospectus which contains facts concerning
its objective and policies, management fees, expenses and other information.
[Graphic]
Federated
World-Class Investment Manager
SEMI-ANNUAL REPORT
New York Municipal Cash Trust
SEMI-ANNUAL REPORT TO SHAREHOLDERS
APRIL 30, 1999
[Graphic]
Federated
New York Municipal Cash Trust
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
1-800-341-7400
WWW.FEDERATEDINVESTORS.COM
Federated Securities Corp., Distributor
Cusip 314229733
Cusip 314229741
8060106 (6/99)
[Graphic]
SEMI-ANNUAL REPORT
President's Message
Dear Shareholder:
I am pleased to present the Semi-Annual Report to Shareholders of Ohio Municipal
Cash Trust, a portfolio of Federated Municipal Trust, which covers the six-month
period from November 1, 1998 through April 30, 1999. The report begins with a
discussion with the fund's portfolio manager, followed by a complete listing of
the fund's holdings and its financial statements. Financial highlights tables
are provided for the fund's Institutional Shares, Institutional Service Shares
and Cash II Shares.
The fund is a convenient way to keep your ready cash pursuing double tax-free
income-free from federal regular income tax and Ohio state income tax 1-through
a portfolio concentrated in high-quality, short-term Ohio municipal securities.
At the end of the reporting period, the fund's holdings were diversified among
issuers that use municipal bond financing for projects as varied as health care,
housing, community development and transportation.
This double tax-free advantage means you have the opportunity to earn a greater
after-tax yield than you could in a comparable high-quality taxable investment.
Of course, the fund also brings you the added benefits of daily liquidity and
stability of principal. 2
During the reporting period, the fund paid double tax-free dividends totaling
$0.01 per share for Institutional Shares, Institutional Service Shares and Cash
II Shares. The fund's net assets totaled $285.4 million at the end of the
reporting period.
You can count on Ohio Municipal Cash Trust to help your ready cash pursue
tax-free income every day. As always, we will continue to provide you with the
highest level of professional service. We invite your questions or comments.
Sincerely,
[Graphic]
Glen R. Johnson
President
June 15, 1999
1 Income may be subject to the federal alternative minimum tax.
2 An investment in money market funds is neither insured nor guaranteed by the
Federal Deposit Insurance Corporation or any other government agency. Although
money market funds seek to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in the fund.
Investment Review
An interview with the fund's portfolio manager, Jeff A. Kozemchak, CFA, Senior
Vice President, Federated Investment Management Company.
WHAT ARE YOUR COMMENTS ON THE ECONOMY AND THE INTEREST RATE ENVIRONMENT DURING
THE FUND'S SIX-MONTH REPORTING PERIOD?
The economy remained robust over the reporting period, showing continued
strength into the fourth quarter of 1998 and into the first quarter of 1999. At
the same time, overall inflationary pressures were absent in spite of impressive
performance from the economy and historically low unemployment. However,
sustained growth in aggregate demand continued to stretch the labor markets, and
the potential for future inflation clearly concerned the Federal Reserve Board
(the "Fed"). Over the reporting period, the Fed maintained a neutral policy
stance toward the direction of short-term interest rates (federal funds target
rate). However, April's Consumer Price Index ("CPI") 1 rate was much larger than
expected and in May, shortly after the close of the reporting period, the Fed
adopted a tightening bias, or bias for higher rates in the future. The Fed cited
the strong U.S. economy in conjunction with record unemployment levels, the
improvement in foreign economic prospects, and rebounding U.S. financial
markets.
In addition to economic fundamentals, short-term municipal securities were
strongly influenced by technical factors over the reporting period, notably
calendar year end and income tax payment season. Variable rate demand notes
("VRDNs") started the reporting period in the 3.00% range, but moved sharply
higher to the 4.00% level in December as an imbalance between supply and demand
occurred. Yields declined in January, as strong cash inflows from bond
maturities and coupon reinvestment occurred. The market continued to be strong
in February and March as yields trended at 3.00% or below, before rising to
4.00% in April because of traditional tax payment season pressures. Over the
six-month reporting period, VRDN yields averaged roughly 65% of taxable rates,
making them attractive for investors in the highest federal tax brackets.
The overall tone of the short-term municipal market was positive. Municipalities
across the country have benefited from a strong economy. This fact, coupled with
lower borrowing costs from low long-term rates, reduced short-term issuance. In
fact, annual municipal note issuance was at its lowest level in the last decade.
1 The CPI is a measure of change in consumer prices as determined by a monthly
survey of the U.S. Bureau of Labor Statistics.
WHAT WERE YOUR STRATEGIES FOR THE FUND DURING THE REPORTING PERIOD?
The fund's average maturity at the beginning of the reporting period was 46
days. Over the reporting period, the fund's average maturity generally declined
steadily and ended the reporting period at 43 days, a neutral stance. A shorter
average maturity left the fund well positioned to take advantage of increased
rates that could have occurred. We continued to emphasize a barbelled structure
for the portfolio, combining a significant position in 7-day VRDNs with
purchases of longer-term securities with maturities between 6 and 12 months.
After an average maturity range was targeted, we attempted to maximize
performance through ongoing relative value analysis. Relative value analysis
includes the comparison of the richness or cheapness of municipal securities to
one another as well as municipal securities to taxable instruments, such as
Treasury securities. This portfolio structure continued to pursue a competitive
yield over time.
The 7-day net yields for the fund's Institutional Shares, Institutional Service
Shares and Cash II Shares, were 3.32%, 2 3.12%2 and 2.82%,2 respectively, on
April 30, 1999. These yields were higher relative to six months ago, with most
of the increase in yield coming at the end of the reporting period due in large
part to technical factors relating to tax payment season. The latest yields were
the equivalent of taxable yields of 5.90% for Institutional Shares, 5.54% for
Institutional Service Shares and 5.01% for Cash II Shares for investors in the
highest federal and state effective tax brackets.
AS WE APPROACH MID-YEAR, WHAT IS YOUR OUTLOOK GOING FORWARD?
Although the Fed has adopted a tightening bias, it is not likely to raise
interest rates or take preemptive action until price or wage pressures
materialize. Accordingly, we plan to maintain a neutral average maturity range
for the fund over the near-term until further inflationary data becomes
available. In the near term, the short-term municipal market will likely reflect
technical as well as fundamental factors. In the summer months, we will likely
extend the fund's maturity as new issuance and rollover of municipal notes
occurs during this period. As always, we will continue to watch, with great
interest, market developments in order to best serve our municipal clients.
2 Performance quoted represents past performance and is not indicative of future
results. Yield will vary. Yields quoted for money market funds most closely
reflect the fund's current earnings.
Portfolio of Investments
APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-98.8% 1
OHIO-98.8%
$ 2,250,000 Akron, Bath & Copley, OH
Joint Township Weekly
VRDNs
(Visiting Nurses)/(National City
Bank, Cleveland, OH LOC) $ 2,250,000
3,000,000 American Municipal Power-
Ohio, Inc., Electric
System Improvement Revenue
Bonds, 3.85% BANs (Bryan,
OH), 8/27/1999 3,000,000
1,750,000 Ashland, OH, 3.95% TANs,
7/15/1999 1,750,865
45,000 Banc One Capital Higher
Education Tax-Exempt
Income Trust,
(Series 2 Certificates of
Ownership) Weekly VRDNs
(Bank One, Kentucky LOC) 45,000
5,875,000 Belmont County, OH Weekly
VRDNs (Lesco, Inc.)/(PNC
Bank, N.A. LOC) 5,875,000
1,400,000 Belmont County, OH, 3.52%
BANs, 11/23/1999 1,402,066
3,140,000 Bowling Green, OH, (Series
1998), 3.80% BANs,
6/17/1999 3,140,194
4,000,000 Brookville, OH, (Series
1988) Weekly VRDNs (Green
Tokai)/
(Bank of Tokyo-Mitsubishi
Ltd. LOC) 4,000,000
1,500,000 Butler County, OH, 4.10%
BANs, 8/5/1999 1,501,519
500,000 Clermont County, OH,
Variable Rate IDRBs
(Series 1997) Weekly VRDNs
(Buriot International,
Inc.)/(KeyBank, N.A. LOC) 500,000
4,000,000 Cleveland, OH IDA, (Series
B), 4.50% BANs, 10/1/1999 4,021,086
2,335,000 Cleveland, OH Parking
Facilities, PA-182 (Series 1996) Weekly VRDNs (MBIA
INS)/(Merrill Lynch Capital Services, Inc.
LIQ) 2,335,000
1,500,000 Clinton County, OH
Hospital Authority Weekly
VRDNs
(Clinton Memorial
Hospital)/(National City
Bank, Ohio LOC) 1,500,000
1,590,000 Columbiana County, OH, IDRBs Weekly VRDNs (C & S Land Company
Project)/(Bank One, Ohio,
N.A. LOC) 1,590,000
400,000 Cuyahoga County, OH IDA
Weekly VRDNs (Animal
Protection League
(Cuyahoga
County))/(KeyBank, N.A.
LOC) 400,000
1,200,000 Cuyahoga County, OH IDA
Weekly VRDNs (East Park
Community, Inc.)/
(KeyBank, N.A. LOC) 1,200,000
135,000 Cuyahoga County, OH IDA
Weekly VRDNs (Interstate
Diesel Service,
Inc.)/(Huntington National
Bank, Columbus, OH LOC) 135,000
2,500,000 Cuyahoga County, OH IDA,
(Series 1988) Weekly VRDNs
(Trebmal
Landerhaven)/(Firstar
Bank, N.A., Cincinnati
LOC) 2,500,000
2,980,000 Cuyahoga County, OH IDA,
(Series 1997) Weekly VRDNs
(Northstar Plastics,
Inc.)/(Bank One, Ohio,
N.A. LOC) 2,980,000
1,630,000 Cuyahoga County, OH IDA,
IDRB (Series 1995) Weekly
VRDNs
(Avalon Precision Casting
Co. Project)/(KeyBank,
N.A. LOC) 1,630,000
3,500,000 Dayton, OH Department of
Aviation, (Series 1998),
3.65% BANs, 6/15/1999 3,500,756
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-continued 1
OHIO-CONTINUED
$ 1,585,000 Delaware County, OH, IDRB
(Series 1995) Weekly VRDNs
(Air Waves, Inc.
Project)/(KeyBank, N.A.
LOC) $ 1,585,000
1,755,000 Delaware, OH, LT GO (Street
Improvement), 4.00% BANs,
7/28/1999 1,756,223
2,000,000 Edgewood City, OH School
District, 3.80% BANs,
6/30/1999 2,001,970
1,150,000 Fairfield County, OH,
4.45% BANs, 7/27/1999 1,151,982
4,500,000 Franklin County, OH IDA
Weekly VRDNs (Heekin Can,
Inc.)/(PNC Bank, N.A. LOC) 4,500,000
2,690,000 Franklin County, OH IDA
Weekly VRDNs (Unicorn
Leasing Corp.)/
(Fifth Third Bank,
Cincinnati LOC) 2,690,000
3,130,000 Franklin County, OH IDA,
(Series 1995) Weekly VRDNs
(Fabcon L.L.C.
Project)/(Norwest Bank
Minnesota, N.A. LOC) 3,130,000
4,900,000 Franklin County, OH IDA,
Adjustable Rate Demand
IDRBs (Series 1996A)
Weekly VRDNs (Carams,
Ltd.)/(Huntington National
Bank, Columbus, OH LOC) 4,900,000
1,815,000 Franklin County, OH IDA,
Adjustable Rate Demand
IDRBs (Series 1996B)
Weekly VRDNs (Carams,
Ltd.)/(Huntington National
Bank, Columbus, OH LOC) 1,815,000
1,810,000 Franklin County, OH,
Adjustable Rate Demand
Economic Development
Revenue Refunding Bonds
(Series 1996) Weekly VRDNs
(CPM Investments)/
(Huntington National Bank,
Columbus, OH LOC) 1,810,000
4,995,000 2 Franklin County, OH, PT-
156, 3.10% TOBs (Riverside United Methodist Hospital)/(AMBAC
INS)/(Bayerische Hypotheken-und Vereinsbank AG LIQ), Optional
Tender
11/9/1999 4,995,000
1,650,000 Geauga County, OH Park
District, 3.48% BANs,
12/9/1999 1,652,234
1,620,000 Genoa Village, OH, (Series
1999) Weekly VRDNs (Genoa
Health Care Center)/
(Fifth Third Bank of
Northwestern OH LOC) 1,620,000
1,600,000 Hamilton County, OH
Hospital Facilities
Authority, (Series 1997A)
Weekly VRDNs (Health
Alliance of Greater
Cincinnati)/(MBIA
INS)/(Credit Suisse First
Boston LIQ) 1,600,000
2,000,000 Hamilton, OH, (Issue I &
IV), 3.75% BANs, 6/11/1999 2,000,000
1,305,000 Hamilton, OH, 3.49% BANs,
10/22/1999 1,306,142
3,600,000 Hilliard, OH, Adjustable
Rate IDRBs (Series 1996)
Weekly VRDNs
(Medex, Inc.)/(Bank One,
Ohio, N.A. LOC) 3,600,000
1,600,000 Holmes County, OH IDA
Weekly VRDNs (Poultry
Processing)/
(Rabobank Nederland,
Utrecht LOC) 1,600,000
1,045,000 Huber Heights, OH, IDRB
(Series 1994) Weekly VRDNs
(Lasermike, Inc.
Project)/(KeyBank, N.A.
LOC) 1,045,000
1,500,000 Kent, OH, Adjustable Rate
IDRBs (Series 1994) Weekly
VRDNs
(Raven's Metal Products,
Inc. Project)/(FirstMerit
Bank, N.A. LOC) 1,500,000
2,990,000 Lake County, OH,
Adjustable Rate IDRBs
(Series 1996) Weekly VRDNs
(Apsco Properties,
LTD.)/(FirstMerit Bank,
N.A. LOC) 2,990,000
3,740,000 Lorain Port Authority, OH,
(Series 1994) Weekly VRDNs
(Spitzer Great
Lakes Ltd., Inc.)/(Bank
One, Ohio, N.A. LOC) 3,740,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
OHIO-CONTINUED
$ 1,105,000 Lorain Port Authority, OH,
Adjustable Rate Demand
Port Development
Refunding Revenue Bonds
(Series 1996) Weekly VRDNs
(Spitzer Project)/
(Bank One, Ohio, N.A. LOC) $ 1,105,000
8,305,000 Lorain Port Authority, OH,
IDRB (Series 1996) Weekly
VRDNs
(Brush Wellman,
Inc.)/(National City Bank,
Cleveland, OH LOC) 8,305,000
1,100,000 Louisville City, OH, 4.25%
BANs, 5/3/1999 1,100,017
1,510,000 Lucas County, OH, Hospital
Facility Improvement
Revenue Bonds (Series 93)
Weekly VRDNs (Lott
Industries,
Inc.)/(National City Bank,
Cleveland, OH LOC) 1,510,000
190,000 Lucas County, OH, Hospital
Improvement Revenue Weekly
VRDNs
(Sunshine Children's
Home)/(National City Bank,
Cleveland, OH LOC) 190,000
5,325,000 Mahoning County, OH
Multifamily HFA Weekly
VRDNs (International
Towers, Inc.)/(PNC Bank,
N.A. LOC) 5,325,000
175,000 Mansfield, OH, IDR Weekly
VRDNs (Designed Metal
Products, Inc.)/
(Bank One, Ohio, N.A. LOC) 175,000
1,500,000 Marion County, OH Health
Care Facilities Weekly
VRDNs (Marion Area
Counseling Center,
Inc.)/(Huntington National
Bank, Columbus, OH LOC) 1,500,000
835,000 Marion County, OH Hospital
Authority, (Series 1991)
Weekly VRDNs (Marion
County, OH Pooled Hospital
Program)/(Bank One, Ohio,
N.A. LOC) 835,000
3,000,000 Marysville Exempted
Village School District,
OH, 3.685% BANs, 6/30/1999 3,002,596
3,250,000 Mayfield Village, OH IDA
Weekly VRDNs (Beta Campus
Co.)/(KeyBank, N.A. LOC) 3,250,000
2,870,000 Medina County, OH, (Series
1998) Weekly VRDNs
(Michael Day
Enterprises)/(KeyBank,
N.A. LOC) 2,870,000
4,000,000 Medina County, OH, Solid Waste Disposal Revenue Bonds (Series
1995) Weekly VRDNs (Valley City Steel Company
Project)/(KeyBank, N.A.
LOC) 4,000,000
1,750,000 Mentor Village, OH School
District, 3.95% BANs,
5/6/1999 1,750,016
4,500,000 Miami County, OH, 3.90%
BANs, 7/15/1999 4,501,962
1,645,000 Montgomery County, OH,
Adjustable Rate Economic
Development Revenue
Refunding Bonds (Series
1997) Weekly VRDNs (Cross
Country Inns, Inc.)/
(Bank One, Ohio, N.A. LOC) 1,645,000
730,000 North Olmsted, OH IDA,
3.50% TOBs (Therm-
All)/(National City Bank,
Ohio LOC), Optional Tender
8/1/1999 730,000
1,055,000 Ohio HFA Weekly VRDNs
(Westchester
Village)/(KeyBank, N.A.
LOC) 1,055,000
6,705,000 2 Ohio HFA, (Series 1990-C)
PT-239, 3.15% TOBs (GNMA
COL)/(Credit Suisse First
Boston LIQ), Optional
Tender 9/8/1999 6,705,000
6,620,000 Ohio HFA, 3.60% TOBs
(Lincoln Park
Associates)/(Bank One,
Ohio, N.A. LOC), Optional
Tender 5/1/1999 6,620,000
2,655,000 Ohio HFA, PT-122 Weekly
VRDNs (GNMA COL)/(Banco
Santander SA LIQ) 2,655,000
4,645,000 2 Ohio HFA, Single Family
Mortgage (Series PT-71),
3.175% TOBs
(GNMA COL)/(Commerzbank
AG, Frankfurt LIQ),
Optional Tender 2/17/2000 4,645,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
$ 2,000,000 Ohio HFA, Trust Receipts,
(Series 1996 FR/RI-5)
Weekly VRDNs
(GNMA COL)/(Bank of New
York, New York LIQ) $ 2,000,000
20,000,000 2 Ohio HFA, Variable Rate
Certificates (Series 1998Q), 3.75% TOBs (GNMA COL)/(Bank of
America NT and SA, San Francisco LIQ),
Optional Tender 8/4/1999 20,000,000
3,000,000 Ohio State Air Quality
Development Authority,
(Series C), 4.20% TOBs
(Ohio Edison
Co.)/(Barclays Bank PLC,
London LOC), Optional
Tender 9/1/1999 3,003,571
1,000,000 Ohio State Building
Authority, Local Jail
Improvements (Series A),
7.30% Bonds (United States
Treasury PRF), 4/1/2000
(@102) 1,056,070
1,565,000 Ohio State Higher
Education Facility,
Revenue Bonds Weekly VRDNs
(Notre Dame College
Project)/(National City
Bank, Ohio LOC) 1,565,000
1,000,000 Ohio State Public
Facilities Commission,
(Series II A), 5.20% Bonds
(AMBAC INS), 5/1/1999 1,000,000
400,000 Ohio State Weekly VRDNs
(John Carroll University,
OH)/(PNC Bank, N.A. LOC) 400,000
3,635,000 Ohio State, Environmental
Improvement Revenue Bonds
(Series 1996)
Weekly VRDNs (Newark Group
Industries, Inc.)/(Chase
Manhattan Bank N.A.,
New York LOC) 3,635,000
930,000 Ohio State, IDR (Series
1991) Weekly VRDNs
(Standby Screw, Inc.)/
(National City Bank,
Columbus, OH LOC) 930,000
1,200,000 Ohio State, IDRB (Series
1994) Weekly VRDNs
(Anomatic Corp.)/
(National City Bank,
Columbus, OH LOC) 1,200,000
1,000,000 Orrville, OH IDA Weekly
VRDNs (O.S.
Associates/Contours,
Inc.)/
(National City Bank,
Cleveland, OH LOC) 1,000,000
4,825,000 Perrysburg, OH, 3.78%
BANs, 6/14/1999 4,828,614
35,000 Portage County, OH IDA
Weekly VRDNs (D & W
Associates)/(Bank One,
Ohio,
N.A. LOC) 35,000
305,000 Portage County, OH IDA,
3.35% TOBs
(Neidlinger)/(KeyBank,
N.A. LOC),
Optional Tender 9/1/1999 305,000
3,960,000 Portage County, OH IDA,
Adjustable Rate IDRBs
(Series 1996) Weekly VRDNs
(Barnette
Project)/(National City
Bank, Ohio LOC) 3,960,000
735,000 Portage County, OH IDA,
Industries Revenue Bonds
Weekly VRDNs
(Lovejoy
Industries)/(Firstar Bank,
N.A., Cincinnati LOC) 735,000
1,500,000 Seneca County, OH Hospital
Facility Authority Weekly
VRDNs
(St. Francis
Home)/(National City Bank,
Ohio LOC) 1,500,000
400,000 Solon, OH, IDR Weekly VRDNs
(Graphic
Laminating)/(KeyBank, N.A.
LOC) 400,000
1,055,000 Springfield, OH, 4.15%
BANs, 6/15/1999 1,056,020
600,000 Stark County, OH IDR Weekly
VRDNs (Sancap Abrasives,
Inc.)/
(KeyBank, N.A. LOC) 600,000
5,600,000 Stark County, OH IDR Weekly
VRDNs (Shearer's Foods,
Inc.)/
(Bank One, Ohio, N.A. LOC) 5,600,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-continued 1
OHIO-CONTINUED
$ 1,895,000 Stark County, OH IDR,
(Series 1994) Weekly VRDNs
(Wilkof Morris)/
(KeyBank, N.A. LOC) $ 1,895,000
1,180,000 Stark County, OH IDR, IDRB
(Series 1996) Weekly VRDNs
(Foundations Systems and
Anchors, Inc.
Project)/(Bank One, Ohio,
N.A. LOC) 1,180,000
1,140,000 Strongsville, OH, IDRB
(Series 1994) Weekly VRDNs
(Nutro Machinery Corp.,
Project)/(Huntington
National Bank, Columbus,
OH LOC) 1,140,000
2,000,000 Summit County, OH IDR
Weekly VRDNs (Maison Aine
Limited
Partnership)/(KeyBank,
N.A. LOC) 2,000,000
4,500,000 Summit County, OH IDR,
(Series 1994) Weekly VRDNs
(Harry London Candies,
Inc.)/(Bank One, Ohio,
N.A. LOC) 4,500,000
1,300,000 Summit County, OH IDR,
(Series 1997) Weekly VRDNs
(Baker McMillen
Co.)/(National City, LOC) 1,300,000
3,030,000 Summit County, OH IDR,
(Series 1997) Weekly VRDNs
(Malco Products, Inc.)/
(Bank One, Ohio, N.A. LOC) 3,030,000
1,985,000 Summit County, OH IDR,
(Series 1998) Weekly VRDNs (Waldonia Investment)/(KeyBank,
N.A.
LOC) 1,985,000
745,000 Summit County, OH IDR,
3.05% TOBs (S.D. Meyers,
Inc.)/(Bank One, Ohio,
N.A. LOC), Optional Tender
8/15/1999 745,000
290,000 Summit County, OH IDR,
3.35% TOBs (Keltec
Industries)/(Bank One,
Ohio, N.A. LOC), Optional
Tender 9/1/1999 290,000
690,000 Summit County, OH IDR,
3.40% TOBs (Universal
Rack)/(National City Bank,
Cleveland, OH LOC),
Optional Tender 9/1/1999 690,000
500,000 Summit County, OH IDR,
3.50% TOBs (Bechmer-Boyce
Project)/
(KeyBank, N.A. LOC),
Mandatory Tender 7/15/1999 500,000
905,000 Summit County, OH IDR,
3.50% TOBs (Matech Machine
Tool Co.)/
(Bank One, Ohio, N.A. LOC),
Optional Tender 8/1/1999 905,000
915,000 Summit County, OH IDR,
3.55% TOBs (Rogers
Industrial Products,
Inc.)/
(Bank One, Ohio, N.A. LOC),
Optional Tender 5/1/1999 915,000
1,300,000 Summit County, OH IDR,
Adjustable Rate IDRBs
(Series 1996) Weekly VRDNs
(Fomo Products,
Inc.)/(FirstMerit Bank,
N.A. LOC) 1,300,000
710,000 Summit County, OH IDR,
Bonds (Series 1994) Weekly
VRDNs
(Austin Printing Co.,
Inc.)/(Bank One, Ohio,
N.A. LOC) 710,000
2,365,000 Summit County, OH IDR, IDRB
(Series 1994B) Weekly
VRDNs
(Harry London Candies,
Inc.)/(Bank One, Ohio,
N.A. LOC) 2,365,000
685,000 Summit County, OH IDR, IDRB
(Series 1995) Weekly VRDNs
(Cardtech Project
(OH))/(KeyBank, N.A. LOC) 685,000
1,145,000 Summit County, OH IDR,
Industrial Development
Bonds (Series 1996)
Weekly VRDNs (Creative
Screen Print
Project)/(National City
Bank, Ohio LOC) 1,145,000
935,000 Summit County, OH IDR,
Multi-Mode Variable Rate I
Weekly VRDNs
(Mastergraphics, Inc.
Project)/(KeyBank, N.A.
LOC) 935,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
OHIO-CONTINUED
$ 2,145,000 Summit County, OH IDR,
Variable Rate IDRBs
(Series 1998A) Weekly
VRDNs (Wintek
Ltd.)/(FirstMerit Bank,
N.A. LOC) $ 2,145,000
6,000,000 Summit County, OH, (Series
A), 4.50% BANs, 6/3/1999 6,003,917
3,330,000 Summit County, OH,
Adjustable Rate Healthcare
Facilities Revenue Bonds
(Series 1996) Weekly VRDNs
(United Disability
Services,
Inc.)/(FirstMerit Bank,
N.A. LOC) 3,330,000
4,000,000 Toledo-Lucas County, OH
Port Authority, Airport
Development Revenue Bonds
(Series 1996-1) Weekly
VRDNs (Burlington Air
Express, Inc.)/(ABN AMRO
Bank N.V., Amsterdam LOC) 4,000,000
1,000,000 Toledo-Lucas County, OH
Port Authority, IDA Weekly
VRDNs
(Medusa Corp.)/(Bayerische
Hypotheken-und Vereinsbank
AG LOC) 1,000,000
2,100,000 Trumbull County, OH IDA,
(Series 1989) Weekly VRDNs (McSonald Steel Corp.)/(PNC Bank,
N.A.
LOC) 2,100,000
1,270,000 Trumbull County, OH IDA,
IDR Refunding Bonds
(Series 1994)
Weekly VRDNs (Churchill
Downs, Inc.)/(Bank One,
Ohio, N.A. LOC) 1,270,000
1,510,000 Tuscarawas County, OH,
Adjustable Rate IDRBs
(Series 1995)
Weekly VRDNs (Primary
Packaging,
Inc.)/(FirstMerit Bank,
N.A. LOC) 1,510,000
1,925,000 Valley View, OH, 3.70%
BANs, 3/16/2000 1,930,280
1,695,000 Wayne County, OH, Health
Care Facility Revenue
Bonds (Series 1995)
Weekly VRDNs (D & M Realty
Project)/(Bank One, Ohio,
N.A. LOC) 1,695,000
2,650,000 Williams County, OH,
Multi-Mode Variable Rate
IDRB's (Series 1996)
Weekly VRDNs (Allied
Moulded Products,
Inc.)/(KeyBank, N.A. LOC) 2,650,000
1,005,000 Willoughby City, OH, IDR
Refunding Bonds (Series
1995A) Weekly VRDNs (Pine
Ridge Shopping Center
Company Project)/(Firstar
Bank, N.A., Cincinnati
LOC) 1,005,000
1,065,000 Willoughby City, OH, IDR
Revenue Bonds (Series 1995
B) Weekly VRDNs (Pine Ridge
Shopping Center Company
Project)/(Firstar Bank,
N.A., Cincinnati LOC) 1,065,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-continued 1
OHIO-CONTINUED
$ 800,000 Wood County, OH Weekly
VRDNs (Principle Business
Enterprises)/
(National City Bank,
Cleveland, OH LOC) $ 800,000
1,935,000 Wood County, OH, EDRB
Weekly VRDNs (Roe Inc.
Project)/
(Huntington National Bank,
Columbus, OH LOC) 1,935,000
980,000 Wood County, OH, Williams
Industriesl Service Inc.,
Project Weekly VRDNs
(Williams Industrial
Service, Inc.)/(Huntington
National Bank, Columbus,
OH LOC) 980,000
3,950,000 Youngstown, OH, Adjustable
Rate Demand IDRBs (Series
1996A) Weekly VRDNs
(Cantar/Polyair
Corp./Performa
Corp.)/(HSBC Bank USA LOC) 3,950,000
TOTAL INVESTMENTS (AT
AMORTIZED COST) 3 $ 282,113,100
</TABLE>
Securities that are subject to Alternative Minimum Tax represent 65.2% of the
portfolio based upon total portfolio market value.
1 The fund may only invest in securities rated in one of the two highest
short-term rating categories by nationally recognized statistical rating
organizations ("NRSROs") or unrated securities of comparable quality. An NRSRO's
two highest rating categories are determined without regard for sub-categories
and gradations. For example, securities rated SP-1+, SP-1 or SP-2 by Standard &
Poor's, MIG-1 or MIG-2 by Moody's Investors Service, Inc., F-1+, F-1 and F-2 by
Fitch IBCA, Inc. are all considered rated in one of the two highest short-term
rating categories.
Securities rated in the highest short-term rating category (and unrated
securities of comparable quality) are identified as First Tier securities.
Securities rated in the second highest short-term rating category (and unrated
securities of comparable quality) are identified as Second Tier securities. The
fund follows applicable regulations in determining whether a security is rated
and whether a security rated by multiple NRSROs in different rating categories
should be identified as a First or Second Tier security.
At April 30, 1999, the portfolio securities were rated as follows:
Tier Rating Based on Total Market Value (Unaudited)
FIRST TIER SECOND TIER
99.61% 0.39%
2 Denotes a restricted security which is subject to restrictions on resale under
Federal securities laws. At April 30, 1999, these securities amounted to
$36,345,000, which represents 12.7% of net assets. These securities have been
deemed liquid based upon criteria approved by the fund's Board of Trustees.
3 Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($285,402,255) at April 30, 1999.
The following acronyms are used throughout this portfolio:
AMBAC -American Municipal Bond Assurance Corporation BANs -Bond Anticipation
Notes COL -Collateralized EDRB -Economic Development Revenue Bonds GNMA
- -Government National Mortgage Association GO -General Obligation HFA -Housing
Finance Authority IDA -Industrial Development Authority IDR -Industrial
Development Revenue IDRB -Industrial Development Revenue Bond INS -Insured LIQ
- -Liquidity Agreement LOC -Letter of Credit LT -Limited Tax MBIA -Municipal Bond
Investors Assurance PLC -Public Limited Company PRF -Prerefunded SA -Support
Agreement TANs -Tax Anticipation Notes TOBs -Tender Option Bonds VRDNs -Variable
Rate Demand Notes
See Notes which are an integral part of the Financial Statements
Statement of Assets and Liabilities
APRIL 30, 1999 (UNAUDITED)
<TABLE>
<S> <C> <C>
ASSETS:
Total investments in
securities, at amortized
cost and value $ 282,113,100
Cash 1,566,745
Income receivable 2,509,450
TOTAL ASSETS 286,189,295
LIABILITIES:
Income distribution
payable $ 710,612
Accrued expenses 76,428
TOTAL LIABILITIES 787,040
Net assets for 285,402,255
shares outstanding $ 285,402,255
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PROCEEDS PER SHARE:
INSTITUTIONAL SERVICE
SHARES:
$91,528,907 / 91,528,907
shares outstanding $1.00
CASH II SHARES:
$76,998,050 / 76,998,050
shares outstanding $1.00
INSTITUTIONAL SHARES:
$116,875,298 / 116,875,298
shares outstanding $1.00
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Operations
SIX MONTHS ENDED APRIL 30, 1999 (UNAUDITED)
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 7,027,173
EXPENSES:
Investment advisory fee $ 830,756
Administrative personnel
and services fee 156,597
Custodian fees 8,970
Transfer and dividend
disbursing agent fees and
expenses 140,316
Directors'/Trustees' fees 1,294
Auditing fees 6,461
Legal fees 7,439
Portfolio accounting fees 51,677
Distribution services fee-
Cash II Shares 264,060
Shareholder services fee-
Institutional Service
Shares 121,714
Shareholder services fee-
Cash II Shares 220,050
Shareholder services fee-
Institutional Shares 177,459
Share registration costs 17,931
Printing and postage 16,819
Insurance premiums 19,926
Miscellaneous 2,232
TOTAL EXPENSES 2,043,701
WAIVERS:
Waiver of investment
advisory fee $ (482,831)
Waiver of distribution
services fee-Cash II
Shares (44,010)
Waiver of shareholder
services fee-Institutional
Service Shares (24,343)
Waiver of shareholder
services fee-Institutional
Shares (177,459)
TOTAL WAIVERS (728,643)
Net expenses 1,315,058
Net investment income $ 5,712,115
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR
(unaudited) ENDED
APRIL 30, OCTOBER 31,
1999 1998
<S> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net investment income $ 5,712,115 $ 13,532,686
DISTRIBUTIONS TO
SHAREHOLDERS:
Distributions from net
investment income
Institutional Service
Shares (1,379,700) (2,641,476)
Cash II Shares (2,178,892) (8,076,502)
Institutional Shares (2,153,523) (2,814,708)
CHANGE IN NET ASSETS
RESULTING FROM
DISTRIBUTIONS
TO SHAREHOLDERS (5,712,115) (13,532,686)
SHARE TRANSACTIONS:
Proceeds from sale of
shares 797,700,426 2,158,852,726
Net asset value of shares
issued to shareholders in
payment of
distributions declared 2,167,436 8,564,300
Cost of shares redeemed (1,083,702,982) (1,979,838,390)
CHANGE IN NET ASSETS
RESULTING FROM SHARE
TRANSACTIONS (283,835,120) 187,578,636
Change in net assets (283,835,120) 187,578,636
NET ASSETS:
Beginning of period 569,237,375 381,658,739
End of period $ 285,402,255 $ 569,237,375
</TABLE>
See Notes which are an integral part of the Financial Statements
Financial Highlights-Institutional Service Shares
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(unaudited)
APRIL 30, YEAR ENDED OCTOBER 31,
1999 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM
INVESTMENT OPERATIONS:
Net investment income 0.01 0.03 0.03 0.03 0.04 0.02
LESS DISTRIBUTIONS:
Distributions from net
investment income (0.01) (0.03) (0.03) (0.03) (0.04) (0.02)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN 1 1.39% 3.22% 3.29% 3.27% 3.61% 2.41%
RATIOS TO AVERAGE NET ASSETS:
Expenses 0.57% 2 0.57% 0.57% 0.57% 0.57% 0.55%
Net investment income 2.84% 2 3.17% 3.25% 3.23% 3.56% 2.36%
Expenses 3 0.85% 2 0.85% 0.85% 0.88% 0.86% 0.62%
Net investment income 3 2.56% 2 2.89% 2.97% 2.92% 3.27% 2.29%
SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $91,529 $94,896 $80,619 $59,721 $72,931 $62,499
</TABLE>
1 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
2 Computed on an annualized basis.
3 During the period, certain fees were voluntarily waived. If such voluntary
waivers had not occurred, the ratios would have been as indicated.
See Notes which are an integral part of the Financial Statements
Financial Highlights-Cash II Shares
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(unaudited)
APRIL 30, YEAR ENDED OCTOBER 31,
1999 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM
INVESTMENT OPERATIONS:
Net investment income 0.01 0.03 0.03 0.03 0.03 0.02
LESS DISTRIBUTIONS:
Distributions from
net investment income (0.01) (0.03) (0.03) (0.03) (0.03) (0.02)
NET ASSET VALUE,
END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN 1 1.24% 2.91% 2.98% 2.96% 3.30% 2.10%
RATIOS TO AVERAGE
NET ASSETS:
Expenses 0.87% 2 0.87% 0.87% 0.87% 0.87% 0.85%
Net investment income 2.47% 2 2.86% 2.94% 2.92% 3.25% 2.09%
Expenses 3 1.15% 2 1.15% 1.15% 1.18% 1.16% 1.09%
Net investment income 3 2.19% 2 2.58% 2.66% 2.61% 2.96% 1.85%
SUPPLEMENTAL DATA:
Net assets,
end of period
(000 omitted) $76,998 $342,946 $245,329 $206,149 $188,234 $156,051
</TABLE>
1 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
2 Computed on an annualized basis.
3 During the period, certain fees were voluntarily waived. If such voluntary
waivers had not occurred, the ratios would have been as indicated.
See Notes which are an integral part of the Financial Statements
Financial Highlights-Institutional Shares
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(unaudited)
APRIL 30, YEAR ENDED OCTOBER 31,
1999 1998 1997 1996 1
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.01 0.03 0.03 0.02
LESS DISTRIBUTIONS:
Distributions from net investment income (0.01) (0.03) (0.03) (0.02)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN 2 1.49% 3.43% 3.49% 2.22%
RATIOS TO AVERAGE NET ASSETS:
Expenses 0.37% 3 0.38% 0.37% 0.37% 3
Net investment income 3.04% 3 3.39% 3.40% 3.38% 3
Expenses 4 0.85% 3 0.86% 0.85% 0.88% 3
Net investment income 4 2.56% 3 2.91% 2.92% 2.87% 3
SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $116,875 $131,395 $55,710 $72,680
</TABLE>
1 Reflects operations for the period from March 5, 1996 (date of initial public
investment) to October 31, 1996.
2 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
3 Computed on an annualized basis.
4 During the period, certain fees were voluntarily waived. If such voluntary
waivers had not occurred, the ratios would have been as indicated.
See Notes which are an integral part of the Financial Statements
Notes to Financial Statements
APRIL 30, 1999 (UNAUDITED)
ORGANIZATION
Federated Municipal Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "Act") as an open-end, management
investment company. The Trust consists of 17 portfolios. The financial
statements included herein are only those of Ohio Municipal Cash Trust (the
"Fund"). The financial statements of the other portfolios are presented
separately. The assets of each portfolio are segregated and a shareholder's
interest is limited to the portfolio in which shares are held. The Fund offers
three classes of shares: Institutional Service Shares, Cash II Shares and
Institutional Shares. The investment objective of the Fund is current income
which is exempt from federal regular income tax and the personal income taxes
imposed by the State of Ohio and Ohio municipalities consisent with stability of
principal.
SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS
The Fund uses the amortized cost method to value its portfolio securities in
accordance with Rule 2a-under the Act.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS
Interest income and expenses are accrued daily. Bond premium and discount, if
applicable, are amortized as required by the Internal Revenue Code, as amended
(the "Code"). Distributions to shareholders are recorded on the ex- dividend
date.
FEDERAL TAXES
It is the Fund's policy to comply with the provisions of the Code applicable to
regulated investment companies and to distribute to shareholders each year
substantially all of its income. Accordingly, no provisions for federal tax are
necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Fund may engage in when-issued or delayed delivery transactions. The Fund
records when-issued securities on the trade date and maintains security
positions such that sufficient liquid assets will be available to make payment
for the securities purchased. Securities purchased on a when- issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
RESTRICTED SECURITIES
Restricted securities are securities that may only be resold upon registration
under federal securities laws or in transactions exempt from such registration.
Many restricted securities may be resold in the secondary market in transactions
exempt from registration. In some cases, the restricted securities may be resold
without registration upon exercise of a demand feature. Such restricted
securities may be determined to be liquid under criteria established by the
Board of Trustees (the "Trustees"). The Fund will not incur any registration
costs upon such resales. Restricted securities are valued at amortized cost in
accordance with Rule 2a-7 under the Act.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts of assets, liabilities, expenses and revenues reported in the
financial statements. Actual results could differ from those estimated.
OTHER
Investment transactions are accounted for on the trade date.
SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares. At April 30, 1999, capital paid-in aggregated $285,402,255.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS YEAR
ENDED ENDED
APRIL 30, OCTOBER 31,
1999 1998
<S> <C> <C>
INSTITUTIONAL SERVICE
SHARES:
Shares sold 134,518,682 311,583,533
Shares issued to
shareholders in payment of
distributions declared 219,608 576,992
Shares redeemed (138,105,327) (297,884,069)
NET CHANGE RESULTING FROM
INSTITUTIONAL SERVICE
SHARE TRANSACTIONS (3,367,037) 14,276,456
<CAPTION>
SIX MONTHS YEAR
ENDED ENDED
APRIL 30, OCTOBER 31,
1999 1998
<S> <C> <C>
CASH II SHARES:
Shares sold 276,992,580 1,005,297,220
Shares issued to
shareholders in payment of
distributions declared 1,903,926 7,890,344
Shares redeemed (544,844,954) (915,569,899)
NET CHANGE RESULTING FROM
CASH II SHARE TRANSACTIONS (265,948,448) 97,617,665
<CAPTION>
SIX MONTHS YEAR
ENDED ENDED
APRIL 30, OCTOBER 31,
1999 1998
<S> <C> <C>
INSTITUTIONAL SHARES:
Shares sold 386,189,164 841,971,973
Shares issued to
shareholders in payment of
distributions declared 43,902 96,964
Shares redeemed (400,752,701) (766,384,422)
NET CHANGE RESULTING FROM
INSTITUTIONAL SHARE
TRANSACTIONS (14,519,635) 75,684,515
NET CHANGE RESULTING FROM
SHARE TRANSACTIONS (283,835,120) 187,578,636
</TABLE>
INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE
Federated Investment Management Company, the Fund's investment adviser (the
"Adviser"), receives for its services an annual investment advisory fee equal to
0.40% of the Fund's average daily net assets. The Adviser may voluntarily choose
to waive any portion of its fee. The Adviser can modify or terminate this
voluntary waiver at any time at its sole discretion.
ADMINISTRATIVE FEE
Federated Services Company ("FServ"), under the Administrative Services
Agreement, provides the Fund with administrative personnel and services. The fee
paid to FServ is based on the level of average aggregate daily net assets of all
funds advised by subsidiaries of Federated Investors, Inc. for the period. The
administrative fee received during the period of the Administrative Services
Agreement shall be at least $125,000 per portfolio and $30,000 per each
additional class of shares.
DISTRIBUTION SERVICES FEE
The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b- 1
under the Act. Under the terms of the Plan, the Fund will compensate Federated
Securities Corp. ("FSC"), the principal distributor, from the net assets of the
Fund to finance activities intended to result in the sale of the Fund's Class II
shares. The Plan provides that the Fund may incur distribution expenses up to
0.30% of the average daily net assets of Cash II Shares, annually, to compensate
FSC. The distributor may voluntarily choose to waive any portion of its fee. The
distributor can modify or terminate this voluntary waiver at any time at its
sole discretion.
SHAREHOLDER SERVICES FEE
Under the terms of a Shareholder Services Agreement with Federated Shareholder
Services Company ("FSSC"), the Fund will pay FSSC up to 0.25% of average daily
net assets of the Fund for the period. The fee paid to FSSC is used to finance
certain services for shareholders and to maintain shareholder accounts. FSSC may
voluntarily choose to waive any portion of its fee. FSSC can modify or terminate
this voluntary waiver at any time at its sole discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES
FServ, through its subsidiary FSSC, serves as transfer and dividend disbursing
agent for the Fund. The fee paid to FSSC is based on the size, type and number
of accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES
FServ maintains the Fund's accounting records for which it receives a fee. The
fee is based on the level of the Fund's average daily net assets for the period,
plus out-of-pocket expenses.
INTERFUND TRANSACTIONS
During the period ended April 30, 1999, the Fund engaged in purchase and sale
transactions with funds that have a common investment adviser (or affiliated
investment advisers), common Directors/Trustees, and/or common Officers. These
purchase and sale transactions were made at current market value pursuant to
Rule 17a-7 under the Act amounting to $225,150,000 and $505,893,000,
respectively.
GENERAL
Certain of the Officers and Trustees of the Trust are Officers and Directors or
Trustees of the above companies.
CONCENTRATION OF CREDIT RISK
Since the Fund invests a substantial portion of its assets in issuers located in
one state, it will be more susceptible to factors adversely affecting issuers of
that state than would be a comparable tax-exempt mutual fund that invests
nationally. In order to reduce the credit risk associated with such factors, at
April 30, 1999, 66.5% of the securities in the portfolio of investments are
backed by letters of credit or bond insurance of various financial institutions
and financial guaranty assurance agencies. The percentage of investments insured
by or supported (backed) by a letter of credit from any one institution or
agency did not exceed 16.1% of total investments.
YEAR 2000
Similar to other financial organizations, the Fund could be adversely affected
if the computer systems used by the Fund's service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. The Fund's Adviser and administrator are taking measures that they
believe are reasonably designed to address the Year 2000 issue with respect to
computer systems that they use and to obtain reasonable assurances that
comparable steps are being taken by each of the Fund's other service providers.
At this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact to the Fund.
Trustees
JOHN F. DONAHUE
THOMAS G. BIGLEY
JOHN T. CONROY, JR.
JOHN F. CUNNINGHAM
LAWRENCE D. ELLIS, M.D.
PETER E. MADDEN
CHARLES F. MANSFIELD, JR.
JOHN E. MURRAY, JR., J.D., S.J.D.
MARJORIE P. SMUTS
JOHN S. WALSH
Officers
JOHN F. DONAHUE
Chairman
GLEN R. JOHNSON
President
J. CHRISTOPHER DONAHUE
Executive Vice President
EDWARD C. GONZALES
Executive Vice President
JOHN W. MCGONIGLE
Executive Vice President and Secretary
RICHARD B. FISHER
Vice President
RICHARD J. THOMAS
Treasurer
ANTHONY R. BOSCH
Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment
risk, including the possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the fund's prospectus which contains facts concerning
its objective and policies, management fees, expenses and other information.
[Graphic]
Federated
World-Class Investment Manager
SEMI-ANNUAL REPORT
Ohio Municipal Cash Trust
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
APRIL 30, 1999
[Graphic]
Federated
Ohio Municipal Cash Trust
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
1-800-341-7400
WWW.FEDERATEDINVESTORS.COM
Federated Securities Corp., Distributor
Cusip 314229659
Cusip 314229857
Cusip 314229840
2052903 (6/99)
[Graphic]
SEMI-ANNUAL REPORT
President's Message
Dear Shareholder:
I am pleased to present the Semi-Annual Report to Shareholders of Pennsylvania
Municipal Cash Trust, a portfolio of Federated Municipal Trust, which covers the
six-month period from November 1, 1998 through April 30, 1999. The report begins
with a discussion with the fund's portfolio manager, followed by a complete
listing of the fund's holdings and its financial statements. Financial
highlights tables are provided for the fund's Institutional Shares,
Institutional Service Shares and Cash Series Shares.
The fund is a convenient way to keep your ready cash pursuing double tax-free
income-free from federal regular income tax and Pennsylvania state income
tax-through a portfolio concentrated in high-quality, short-term Pennsylvania
municipal securities. 1 At the end of the reporting period, the fund's holdings
were diversified among issuers that use municipal bond financing for projects as
varied as health care, housing, community development and transportation.
This double tax-free advantage means you have the opportunity to earn a greater
after-tax yield than you could in a comparable high-quality taxable investment.
Of course, the fund also brings you the added benefits of daily liquidity and
stability of principal. 2
During the reporting period, the fund paid double tax-free dividends totaling
$0.01 per share for Institutional Shares, Institutional Service Shares and Cash
Series Shares. The fund's net assets totaled $428.6 million at the end of the
reporting period.
You can count on Pennsylvania Municipal Cash Trust to help your ready cash
pursue tax-free income every day. As always, we will continue to provide you
with the highest level of professional service. We invite your questions or
comments.
Sincerely,
[Graphic]
Glen R. Johnson
President
June 15, 1999
1 Income may be subject to the federal alternative minimum tax.
2 An investment in money market funds is neither insured nor guaranteed by the
Federal Deposit Insurance Corporation or any other government agency. Although
money market funds seek to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in the fund.
Investment Review
An interview with the fund's portfolio manager, Jeff A. Kozemchak, CFA, Senior
Vice President, Federated Investment Management Company.
WHAT ARE YOUR COMMENTS ON THE ECONOMY AND THE INTEREST RATE ENVIRONMENT DURING
THE FUND'S SIX-MONTH REPORTING PERIOD?
The economy remained robust over the reporting period, showing continued
strength in the fourth quarter of 1998 and into the first quarter of 1999. At
the same time, overall inflationary pressures were absent in spite of impressive
performance from the economy and historically low unemployment. However,
sustained growth in aggregate demand continued to stretch the labor markets, and
the potential for future inflation clearly concerned the Federal Reserve Board
(the "Fed"). Over the reporting period, the Fed maintained a neutral policy
stance toward the direction of short-term interest rates (federal funds target
rate). However, April's Consumer Price Index ("CPI") 1 rate was much larger than
expected and in May, shortly after the close of the reporting period, the Fed
adopted a tightening bias, or bias for higher rates in the future. The Fed cited
the strong U.S. economy in conjunction with record employment levels, the
improvement in foreign economic prospects, and rebounding U.S. financial
markets.
In addition to economic fundamentals, short-term municipal securities were
strongly influenced by technical factors over the reporting period, notably
calendar year end and income tax payment season. Variable rate demand notes
("VRDNs") started the reporting period in the 3.00% range, but moved sharply
higher to the 4.00% level in December as an imbalance between supply and demand
occurred. Yields declined in January, as strong cash inflows from bond
maturities and coupon reinvestment occurred. The market continued to be strong
in February and March as yields trended at 3.00% or below, before rising to
4.00% in April because of traditional tax payment season pressures. Over the
six-month reporting period, VRDN yields averaged roughly 65% of taxable rates,
making them attractive for investors in the highest federal tax brackets.
The overall tone of the short-term municipal market was positive. Municipalities
across the country have benefited from a strong economy. This fact, coupled with
lower borrowing costs from low long-term rates, reduced short-term issuance. In
fact, annual municipal note issuance was at its lowest level in the last decade.
1 The CPI is a measure of change in consumer prices as determined by a monthly
survey of the U.S. Bureau of Labor Statistics.
WHAT WERE YOUR STRATEGIES FOR THE FUND DURING THE REPORTING PERIOD?
The fund's average maturity at the beginning of the reporting period was 41
days, reflecting a lack of supply and strong cash inflows. Over the reporting
period, the fund's average maturity ranged mostly from 50 to 70 days, reflecting
value found in fixed-rate note positions relative to shorter paper. At the end
of the reporting period, the fund's average maturity was at 53 days. A shorter
average maturity left the fund well positioned to take advantage of increased
rates that could have occurred. We continued to emphasize a barbelled structure
for the portfolio, combining a significant position in 7-day VRDNs with
purchases of longer-term securities with maturities between 6 and 12 months.
After an average maturity range was targeted, we attempted to maximize
performance through ongoing relative value analysis. Relative value analysis
includes the comparison of the richness or cheapness of municipal securities to
one another as well as municipal securities to taxable instruments, such as
Treasury securities. This portfolio structure continued to pursue a competitive
yield over time.
The 7-day net yields for the fund's Institutional Shares, Institutional Service
Shares, and Cash Series Shares were 3.18% 2, 2.98%2 and 2.58%,2 respectively, on
April 30, 1999. These yields were higher relative to the beginning of the
reporting period, with most of the increase in yield coming at the end of the
reporting period due in large part to technical factors relating to tax payment
season. The latest yields were the equivalent of taxable yields of 5.42% for
Institutional Shares, 5.08% for Institutional Service Shares and 4.39% for Cash
Series Shares for investors in the highest federal and state effective tax
brackets.
AS WE APPROACH MID-YEAR, WHAT IS YOUR OUTLOOK GOING FORWARD?
Although the Fed has adopted a tightening bias, it is not likely to raise
interest rates or take preemptive action until price or wage pressures
materialize. Accordingly, we plan to maintain a neutral average maturity range
for the fund over the near-term until further inflationary data becomes
available. In the near term, the short-term municipal market will likely reflect
technical as well as fundamental factors. In the summer months, we will likely
extend the fund's maturity as new issuance and rollover of municipal notes
occurs during this period. As always, we will continue to watch, with great
interest, market developments in order to best serve our municipal clients.
2 Performance quoted represents past performance and is not indicative of future
results. Yields will vary. Yields quoted for money market funds most closely
reflect the fund's current earnings.
Portfolio of Investments
APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-99.3% 1
PENNSYLVANIA-99.3%
$ 2,650,000 Allegheny County, PA HDA,
Health Center Revenue
Refunding Bonds (Series
1999A) Weekly VRDNs
(Riverside Nursing
Centers, Inc.)/(Bank One,
Ohio, N.A. LOC) $ 2,650,000
5,000,000 Allegheny County, PA HDA,
Variable Rate Demand
Hospital Revenue Bonds
(Series B of 1998), 3.15%
TOBs (South Hills Health
System)/(PNC Bank, N.A.
LOC), Mandatory Tender
3/31/2000 5,000,000
1,010,000 Allegheny County, PA HDA,
6.40% Bonds (Children's
Hospital of
Pittsburgh)/(MBIA INS),
7/1/1999 1,014,956
6,000,000 Allegheny County, PA IDA,
(Series 1986) Weekly VRDNs
(Dowty Corp.)/(U.S. Bank,
N.A., Minneapolis LOC) 6,000,000
4,400,000 Allegheny County, PA IDA,
Commercial Development
Revenue Bonds (Series
1992) Weekly VRDNs (Eleven
Parkway Center
Associates)/(Mellon Bank
N.A., Pittsburgh LOC) 4,400,000
2,910,000 Allegheny County, PA IDA,
Variable Rate Demand
Revenue Bonds (Series A of
1997) Weekly VRDNs (Jewish
Community
Center)/(National City,
Pennsylvania LOC) 2,910,000
5,000,000 Beaver County, PA IDA, PCR
Refunding Bonds (1992
Series-E), 3.05% CP
(Toledo Edison
Co.)/(Toronto-Dominion
Bank LOC), Mandatory
Tender 5/19/1999 5,000,000
5,000,000 Bensalem Township School
District, PA, 3.97% TRANs,
6/30/1999 5,000,231
1,055,000 Berks County, PA IDA Weekly
VRDNs (ADC Quaker Maid
Meats)/(First Union
National Bank, Charlotte,
NC LOC) 1,055,000
240,000 Berks County, PA IDA Weekly
VRDNs (Beacon
Container)/(First Union
National Bank, Charlotte,
NC LOC) 240,000
520,000 Berks County, PA IDA, (1996
Series A) Weekly VRDNs
(Lebanon Valley Mall
Co.)/(Corestates Bank N.A.
Philadelphia, PA LOC) 520,000
1,300,000 Berks County, PA IDA,
(Series 1988) Weekly VRDNs
(Arrow Electronics,
Inc.)/(First Union
National Bank, Charlotte,
NC LOC) 1,300,000
6,000,000 Berks County, PA IDA,
(Series 1998) Weekly VRDNs
(Eastern Industries,
Inc.)/(FMB LOC) 6,000,000
3,155,000 Berks County, PA IDA,
Manufacturing Facilities
Revenue Bonds (Series
1996) Weekly VRDNs (Ram
Industries,
Inc.)/(Corestates Bank
N.A. Philadelphia, PA LOC) 3,155,000
1,585,000 Berks County, PA IDA,
Manufacturing Facilities
Revenue Bonds (Series
1995) Weekly VRDNs
(Grafika Commercial
Printing, Inc.)/(First
Union National Bank,
Charlotte, NC LOC) 1,585,000
235,000 Berks County, PA IDA,
Revenue Bonds (Series
1995A/Subseries A) Weekly
VRDNs (First Union
National Bank, Charlotte,
NC LOC) 235,000
910,000 Berks County, PA IDA,
Revenue Bonds (Series
1995A/Subseries B) Weekly
VRDNs (First Union
National Bank, Charlotte,
NC LOC) 910,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-continued 1
PENNSYLVANIA-CONTINUED
$ 1,000,000 Bethlehem, PA Area School
District, UT GO Bonds,
6.35% Bonds (AMBAC INS),
9/1/1999 $ 1,009,745
2,375,000 Boyertown, PA Area School District, (Series of 1998/99), 4.00%
TRANs,
6/30/1999 2,375,566
1,665,000 Boyertown, PA Area School
District, 3.30% Bonds (FSA
INS), 2/1/2000 1,665,425
1,855,000 Bucks County, PA IDA Weekly
VRDNs (Double H Plastics,
Inc.)/(First Union
National Bank, Charlotte,
NC LOC) 1,855,000
2,410,000 Bucks County, PA IDA Weekly
VRDNs (Pennsylvania
Associates)/(First Union
National Bank, Charlotte,
NC LOC) 2,410,000
2,575,000 Bucks County, PA IDA,
(Series 1991) Weekly VRDNs
(Cabot Medical
Corp.)/(First Union
National Bank, Charlotte,
NC LOC) 2,575,000
3,205,000 Bucks County, PA IDA,
Variable Rate Demand/Fixed
Rate Revenue Bonds
(Series 1997) Weekly VRDNs
(Boekel Industries,
Inc.)/(First Union
National Bank, Charlotte,
NC LOC) 3,205,000
1,200,000 Butler County, PA IDA,
(Series 1996A) Weekly
VRDNs (Armco, Inc.)/(Chase
Manhattan Bank N.A., New
York LOC) 1,200,000
6,185,000 Butler County, PA IDA,
Variable Rate Demand
Revenue Bonds, (Series
1996A), 2.95% TOBs
(Lutheran Welfare)/(PNC
Bank, N.A. LOC), Mandatory
Tender 11/1/1999 6,185,000
2,095,000 Butler County, PA IDA,
(Series 1998) Weekly VRDNs
(Allegheny Metalworking
Corp.)/(National City,
Pennsylvania LOC) 2,095,000
1,500,000 Butler County, PA IDA, (Series 1998B), 2.95% TOBs (Lutheran
Welfare)/(PNC Bank, N.A. LOC), Mandatory
Tender 11/1/1999 1,500,000
2,205,000 Butler County, PA IDA, IDRB
(Series 1994) Weekly VRDNs
(Lue-Rich Holding Company,
Inc. Project)/(ABN AMRO
Bank N.V., Amsterdam LOC) 2,205,000
2,250,000 Butler County, PA IDA,
IDRBs (Series 1997) Weekly
VRDNs (Wise Business
Forms, Inc.)/(SouthTrust
Bank of Alabama,
Birmingham LOC) 2,250,000
1,100,000 Carbon County, PA IDA
Weekly VRDNs (Summit
Management & Utilities,
Inc.)/(PNC Bank, N.A. LOC) 1,100,000
5,000,000 Carbon County, PA IDA,
Resource Recovery Bonds
(Series B), 3.20% CP
(Panther Creek)/(National
Westminster Bank, PLC,
London LOC), Mandatory
Tender 6/18/1999 5,000,000
6,000,000 2 Carbon County, PA IDA,
Solid Waste Disposal
Revenue Bonds, 3.50% RANs
(Horsehead Resource
Development, Inc.)/(Chase
Manhattan Bank N.A., New
York LOC), 12/3/1999 6,000,000
3,000,000 Chartiers Valley
Industrial & Commercial
Development Authority,
Nursing Home Revenue
Refunding Bonds (Series
1997A) Weekly VRDNs
(Woodhaven Convalescent
Center)/(Bank One, Ohio,
N.A. LOC) 3,000,000
7,300,000 Clearfield County, PA IDA Weekly VRDNs (Penn Traffic
Co.)/(Fleet Bank N.A. LOC) (ABN AMRO Bank N.V.
Amsterdam LOC) 7,300,000
4,500,000 Clinton County, PA IDA,
Solid Waste Disposal
Revenue Bonds (Series
1992A), 3.95% TOBs
(International Paper Co.),
Optional Tender 1/15/2000 4,500,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-continued 1
PENNSYLVANIA-CONTINUED
$ 5,000,000 Clinton County, PA, IDA
Weekly VRDNs (Armstrong
World Industries,
Inc.)/(Mellon Bank N.A.,
Pittsburgh LOC) $ 5,000,000
2,500,000 Coatsville, PA School
District, 4.05% TRANs,
6/30/1999 2,500,589
1,770,000 Commonwealth of
Pennsylvania, (Series A),
7.00% Bonds (United States
Treasury PRF), 5/1/2000
(@101.5) 1,861,384
1,210,000 Commonwealth of
Pennsylvania, First
Series, 5.00% Bonds (AMBAC
INS), 3/15/2000 1,229,772
1,000,000 Commonwealth of
Pennsylvania, GO UT
Refunding Bonds (First
Series A), 6.60% Bonds,
6/1/1999 1,002,874
15,495,000 Commonwealth of Pennsylvania, TOCs Trust Series 1999-3 Weekly
VRDNs (FGIC INS)/(Chase Manhattan Bank N.A., New
York LIQ) 15,495,000
1,000,000 Cumberland County, PA IDA,
Industrial Development
Bonds (Series 1994) Weekly
VRDNs (Lane Enterprises,
Inc. Project)/(First Union
National Bank, Charlotte,
NC LOC) 1,000,000
2,445,000 Cumberland County, PA Municipal Authority, (Series 1996A),
2.95% TOBs (Dickinson College)/(Mellon Bank N.A., Pittsburgh
LOC),
Mandatory Tender 11/1/1999 2,445,000
4,750,000 Cumberland County, PA
Municipal Authority,
Variable Rate Revenue
Bonds (Series 1996 B),
2.95% TOBs (Dickinson
College)/(Mellon Bank
N.A., Pittsburgh LOC),
Mandatory Tender 11/1/1999 4,750,000
1,000,000 Dallastown Area School
District, PA, GO Bonds (Series 1998) Weekly VRDNs (FGIC
INS)/(FGIC Securities Purchase, Inc.
LIQ) 1,000,000
2,000,000 Dauphin County, PA General
Authority, (Education and
Health Loan Program,
Series 1997) Weekly VRDNs
(AMBAC INS) /(Chase
Manhattan Bank N.A.,
New York LIQ) 2,000,000
6,500,000 Dauphin County, PA General
Authority, (Series A of
1997) Weekly VRDNs
(Allhealth Pooled
Financing Program)/(FSA
INS)/(Credit Suisse First
Boston LIQ) 6,500,000
3,000,000 Dauphin County, PA IDA,
Variable Rate EDRBs
(Series 1998-B) Weekly
VRDNs (Key Ingredients,
Inc.)/(Mellon Bank N.A.,
Pittsburgh LOC) 3,000,000
1,000,000 Delaware County, PA
Authority, Hospital
Revenue Bonds (Series of
1996) Weekly VRDNs
(Crozer-Chester Medical
Center)/(KBC Bancassurance
Holding LOC) 1,000,000
2,500,000 Delaware Valley, PA
Regional Finance
Authority, Lehman Trust
Receipts (Series FR/RI-
A74) Daily VRDNs (AMBAC
INS)/(Bank of New York, New
York LIQ) 2,500,000
3,000,000 Downington Area School
District, (Series of
1998/99), 4.04% TRANs,
6/30/1999 3,000,663
3,500,000 Doylestown Hospital
Authority, PA, Doylestown
Hospital Revenue Bonds
Weekly VRDNs (AMBAC
INS)/(PNC Bank, N.A. LIQ) 3,500,000
5,000,000 Doylestown Hospital
Authority, PA, Hospital
Revenue Bonds (Series
1998C) Weekly VRDNs
(Doylestown Hospital,
PA)/(AMBAC INS)/(PNC Bank,
N.A. LIQ) 5,000,000
1,800,000 East Hempfield Township,
PA IDA, (Series 1985) Weekly VRDNs (Yellow Freight
System)/(Wachovia Bank of NC, N.A., Winston-
Salem LOC) 1,800,000
500,000 East Hempfield Township,
PA IDA, (Series 1985) Weekly VRDNs (Yellow Freight
System)/(Wachovia Bank of NC, N.A., Winston-
Salem LOC) 500,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-continued 1
PENNSYLVANIA-CONTINUED
$ 2,700,000 Erie County, PA Hospital
Authority Weekly VRDNs
(St. Mary's Hospital Erie,
PA)/(PNC Bank, N.A. LOC) $ 2,700,000
1,000,000 Erie County, PA Hospital
Authority Weekly VRDNs
(St. Vincent Health
System)/(Mellon Bank N.A.,
Pittsburgh LOC) 1,000,000
125,000 Erie County, PA IDA,
(Series 1985) Weekly VRDNs
(R. P-C Value, Inc.)/(PNC
Bank, N.A. LOC) 125,000
4,000,000 Erie County, PA, 3.65%
TRANs (PNC Bank, N.A. LOC),
12/30/1999 4,014,229
100,000 Forest County, PA IDA
Weekly VRDNs (Industrial
Timber & Land
Co.)/(National City Bank,
Cleveland, OH LOC) 100,000
2,900,000 Franconia Township, PA
IDA, IDRBs (Series 1997A)
Weekly VRDNs (Asher's
Chocolates)/(Mellon Bank
N.A., Pittsburgh LOC) 2,900,000
1,470,000 Franklin County, PA IDA
Weekly VRDNs (The
Guarriello Limited
Partnership)/(PNC Bank,
N.A. LOC) 1,470,000
2,400,000 Gettysburg Area IDA,
(Series A of 1998) Weekly
VRDNs (Hanover Lantern,
Inc.)/(FMB Bank LOC) 2,400,000
3,440,000 Lancaster County, PA
Hospital Authority, Health
Center Revenue Bonds
(Series 1996) Weekly VRDNs
(Masonic Homes) 3,440,000
2,195,000 Lancaster, PA IDA, (1998
Series A) Weekly VRDNs
(Henry Molded Products,
Inc.)/(Dauphin Deposit
Bank and Trust LOC) 2,195,000
3,385,000 Lancaster, PA IDA, (1988
Series C) Weekly VRDNs
(Henry Molded Products,
Inc.)/(Dauphin Deposit
Bank and Trust LOC) 3,385,000
1,000,000 Lehigh County, PA IDA,
Variable Rate Demand
Revenue Bonds (Series
1997) Weekly VRDNs
(American Manufacturing
Co., Inc.)/(Mellon Bank
N.A., Pittsburgh LOC) 1,000,000
6,840,000 McKean County, PA IDA,
EDRBs (Series 1997) Weekly
VRDNs (Keystone Powdered
Metal Co.)/(Mellon Bank
N.A., Pittsburgh LOC) 6,840,000
3,300,000 Monroe County, PA IDA, PCR
Weekly VRDNs (Cooper
Industries, Inc.) (Sanwa
Bank Ltd., Osaka LOC) 3,300,000
3,500,000 Montgomery County, PA IDA,
(Series 1984) Weekly VRDNs
(Seton Co.)/(First Union
National Bank, Charlotte,
NC LOC) 3,500,000
1,200,000 Montgomery County, PA IDA,
(Series 1992) Weekly VRDNs
(RJI Limited
Partnership)/(First Union
National Bank, Charlotte,
NC LOC) 1,200,000
1,000,000 Montgomery County, PA IDA,
(Series A) Weekly VRDNs
(Vari Corp.)/(Dauphin
Deposit Bank and Trust LOC) 1,000,000
4,250,000 Montgomery County, PA IDA,
(Series C) Weekly VRDNs
(Vari Corp.)/(Dauphin
Deposit Bank and Trust LOC) 4,250,000
1,920,000 Montgomery County, PA IDA,
EDRBs (Series 1997) Weekly
VRDNs (Palmer
International,
Inc.)/(Mellon Bank N.A.,
Pittsburgh LOC) 1,920,000
4,775,000 Moon Township, PA IDA
Weekly VRDNs (Airport
Hotel
Associates)/(National
City, Pennsylvania LOC) 4,775,000
3,500,000 Norristown, PA, (Series
1999), 3.35% TRANs,
12/30/1999 3,500,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-continued 1
PENNSYLVANIA-CONTINUED
$ 3,000,000 North Penn Health,
Hospital and Education
Authority, PA, Hospital
Revenue Bonds (Series
1998) Weekly VRDNs (North
Penn Hospital, PA)/(First
Union National Bank,
Charlotte, NC LOC) $ 3,000,000
12,850,000 Northampton County, PA
IDA, 3.25% CP (Citizens
Utilities Co.), Mandatory
Tender 6/22/1999 12,850,000
2,542,000 Northampton County, PA
IDA, Variable Rate Revenue Bonds (Series 1997) Weekly VRDNs
(Ultra-Poly Corp.)/(PNC Bank, N.A.
LOC) 2,542,000
1,590,000 Northumberland County PA
IDA, Revenue Bonds (Series
A of 1995) Weekly VRDNs
(Furman Farms, Inc.
Project)/(First Union
National Bank, Charlotte,
NC LOC) 1,590,000
1,550,000 Pennsylvania EDFA Weekly
VRDNs (Cyrogenics,
Inc.)/(PNC Bank, N.A. LOC) 1,550,000
2,400,000 Pennsylvania EDFA Weekly
VRDNs (Industrial
Scientific Corp.)/(Mellon
Bank N.A., Pittsburgh LOC) 2,400,000
450,000 Pennsylvania EDFA Weekly
VRDNs (ProMinent Fluid)/(PNC Bank, N.A.
LOC) 450,000
450,000 Pennsylvania EDFA Weekly
VRDNs (RMF
Associates)/(PNC Bank,
N.A. LOC) 450,000
2,300,000 Pennsylvania EDFA, (Series
1996 E) Weekly VRDNs
(Adelphoi, Inc.)/(PNC
Bank, N.A. LOC) 2,300,000
4,600,000 Pennsylvania EDFA, (Series
1998), 3.25% Bonds
(Bayerische Landesbank
Girozentrale), 12/15/1999 4,600,000
3,000,000 Pennsylvania EDFA, (Series
1998A) Weekly VRDNs
(Fourth Generation Realty,
LLC)/(PNC Bank, N.A. LOC) 3,000,000
2,700,000 Pennsylvania EDFA, (Series
B1) Weekly VRDNs (Erie
Plating Co.)/(PNC Bank,
N.A. LOC) 2,700,000
3,000,000 Pennsylvania EDFA, EDRBs
(1996 Series D6) Weekly
VRDNs (Toyo Tanso
Specialty Materials,
Inc.)/(PNC Bank, N.A. LOC) 3,000,000
2,890,000 Pennsylvania EDFA, EDRBs
(Series 1996C) Weekly
VRDNs (Napco, Inc.
Project)/(Mellon Bank
N.A., Pittsburgh LOC) 2,890,000
400,000 Pennsylvania EDFA, Revenue
Bonds (Series G4) Weekly
VRDNs (Metamora
Products)/(PNC Bank, N.A.
LOC) 400,000
225,000 Pennsylvania EDFA, Revenue
Bonds Weekly VRDNs (DDI
Pharmaceuticals,
Inc.)/(PNC Bank, N.A. LOC) 225,000
125,000 Pennsylvania EDFA, Revenue
Bonds Weekly VRDNs (RAM
Forest Products)/(PNC
Bank, N.A. LOC) 125,000
13,665,000 2 Pennsylvania Housing
Finance Authority, (Series 1997-58A), PT-149, 3.15% TOBs
(Commerzbank AG, Frankfurt LIQ), Mandatory
Tender 10/7/1999 13,665,000
14,430,000 Pennsylvania Housing
Finance Authority, MERLOTS
(Series K) Weekly VRDNs
(First Union National
Bank, Charlotte, NC LIQ) 14,430,000
2,290,000 Pennsylvania Housing
Finance Authority, PT-119B
(Series 1997-56B) Weekly
VRDNs (Credit Suisse First
Boston LIQ) 2,290,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-continued 1
PENNSYLVANIA-CONTINUED
$ 915,000 Pennsylvania Housing
Finance Authority, Section
8 Assisted Residential
Development Refunding
Bonds (Series 1992A)
Weekly VRDNs (CGIC INS)/
(Citibank N.A., New York
LIQ) $ 915,000
12,100,000 Pennsylvania Housing
Finance Authority,
Variable Rate Certificates
(Series 1999-65A) Weekly
VRDNs (Bank of America NT
and SA, San Francisco LIQ) 12,100,000
7,000,000 2 Pennsylvania Housing
Finance Authority,
Variable Rate Certificates
1998-Y, 3.20% TOBs (Bank of
America NT and SA, San
Francisco LIQ), Optional
Tender 5/15/1999 7,000,000
10,500,000 Pennsylvania State Higher
Education Assistance
Agency, Student Loan
Adjustable Rate Revenue
Bonds (Series 1997A)
Weekly VRDNs (Student Loan
Marketing Association LOC) 10,500,000
4,500,000 Pennsylvania State Higher
Education Facilities
Authority, (Series 1997
B7), 2.95% TOBs (Saint
Francis College,
PA)/(Allied Irish Banks
PLC LOC), Mandatory Tender
11/1/1999 4,500,000
2,950,000 Pennsylvania State Higher
Education Facilities
Authority, (Series 1997
B8), 2.95% TOBs (Wilkes
University)/(PNC Bank,
N.A. LOC), Mandatory
Tender 11/1/1999 2,950,000
1,760,000 Philadelphia, PA Airport
System, 5.25% Bonds (FGIC
INS), 6/15/1999 1,763,161
10,900,000 Philadelphia, PA Gas
Works, (Series C), 3.15% CP
(Canadian Imperial Bank of
Commerce LOC), Mandatory
Tender 5/21/1999 10,900,000
6,650,000 Philadelphia, PA IDA,
(Series 93) Weekly VRDNs
(Sackett
Development)/(Mellon Bank
N.A., Pittsburgh LOC) 6,650,000
2,175,000 Philadelphia, PA IDA,
Refunding Revenue Bonds
(Series 1991) Weekly VRDNs
(Tom James Co.)/(SunTrust
Bank, Nashville LOC) 2,175,000
10,000,000 2 Philadelphia, PA IDA,
Variable Rate Certificates (Series 1998P-1), 3.75% TOBs
(Philadelphia Airport System)/(FGIC INS)/(Bank of America NT
and SA, San Francisco LIQ), Optional
Tender 8/4/1999 10,000,000
4,000,000 Philadelphia, PA School
District, (Series B), 4.25% TRANs (PNC Bank, N.A.
LOC), 6/30/1999 4,003,934
5,000,000 Philadelphia, PA, 4.25%
TRANs, 6/30/1999 5,004,871
540,000 Pittsburgh, PA School
District, (Series B),
4.10% Bonds (FGIC INS),
9/1/1999 541,503
4,000,000 Pittsburgh, PA Urban
Redevelopment Authority,
Mortgage Revenue Bonds
(Series 1998C), 3.20%
TOBs, Mandatory Tender
12/1/1999 4,000,000
2,500,000 Red Lion, PA Area School
District, 4.05% TRANs,
6/30/1999 2,500,589
1,050,000 Sayre, PA, Health Care
Facilities Authority,
Series A, 6.50% Bonds
(Guthrie Healthcare
System, PA)/(AMBAC INS),
3/1/2000 1,078,212
1,425,000 Schuylkill County, PA IDA,
Manufacturing Facilities
Revenue Bonds (Series
1995) Weekly VRDNs (Prime
Packing, Inc.
Project)/(First Union
National Bank, Charlotte,
NC LOC) 1,425,000
1,800,000 Schuylkill County, PA IDA,
Variable Rate Demand/Fixed
Rate Manufacturing
Facilities Revenue Bonds
(Series of 1996) Weekly
VRDNs (Craftex Mills,
Inc.)/(First Union
National Bank, Charlotte,
NC LOC) 1,800,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-continued 1
PENNSYLVANIA-CONTINUED
$ 1,000,000 Southeastern, PA
Transportation Authority,
6.00% Bonds (Canadian
Imperial Bank of Commerce,
Toronto LOC), 6/1/1999 $ 1,002,391
6,000,000 Temple University,
Refunding Bonds (Series
B), 4.50% Bonds, 5/14/1999 6,001,543
4,245,000 Upper Darby School
District, PA, (Drexel
Hill), 3.94% TRANs,
6/30/1999 4,245,938
4,000,000 Venango, PA IDA, Resource
Recovery Bonds (Series
1993), 3.20% CP
(Scrubgrass Power
Corp.)/(National
Westminster Bank, PLC,
London LOC), Mandatory
Tender 6/18/1999 4,000,000
2,700,000 Washington County, PA
Authority, (Series 1985A)
Weekly VRDNs (1985-A
Pooled Equipment Lease
Program)/(First Union
National Bank, Charlotte,
NC LOC) 2,700,000
1,900,000 Washington County, PA
Hospital Authority Weekly
VRDNs (Keystone
Diversified Management
Corp.)/(Mellon Bank N.A.,
Pittsburgh LOC) 1,900,000
10,700,000 Washington County, PA IDA,
Solid Waste Disposal
Revenue Bonds (Series
1995) Weekly VRDNs
(American Iron Oxide Co.
Project)/(Bank of Tokyo-
Mitsubishi Ltd. LOC) 10,700,000
745,000 West Cornwall Township, PA
Municipal Authority,
Revenue Bonds (Series
1995) Weekly VRDNs
(Lebanon Valley Brethren
Home Project (PA))/(First
Union National Bank,
Charlotte, NC LOC) 745,000
250,000 Westmoreland County, PA
IDA, Guaranteed Variable Rate Revenue Bonds (Series of 1993)
Weekly VRDNs (USA Waste Services, Inc.)/(Fleet Bank N.A.
LOC) 250,000
2,500,000 York County, PA IDA,
Limited Obligation Revenue
Bonds (Series 1997) Weekly
VRDNs (Metal Exchange
Corp.)/(Comerica Bank,
Detroit, MI LOC) 2,500,000
2,750,000 York County, PA IDA,
Variable Rate Demand
Limited Obligation Revenue
Bonds (Series 1996) Weekly
VRDNs (Metal Exchange
Corp.)/(Comerica Bank,
Detroit, MI LOC) 2,750,000
TOTAL INVESTMENTS (AT
AMORTIZED COST) 3 $ 425,564,576
</TABLE>
Securities that are subject to Alternative Minimum Tax represent 49.9% of the
portfolio based upon total portfolio market value.
1 The fund may only invest in securities rated in one of the two highest
short-term rating categories by nationally recognized statistical rating
organizations ("NRSROs") or unrated securities of comparable quality. An NRSRO's
two highest rating categories are determined without regard for sub-categories
and gradations. For example, securities rated SP-1+, SP-1 or SP-2 by Standard &
Poor's, MIG-1 or MIG-2 by Moody's Investors Service, Inc., F-1+, F-1 and F-2 by
Fitch IBCA, Inc. are all considered rated in one of the two highest short-term
rating categories. Securities rated in the highest short-term rating category
(and unrated securities of comparable quality) are identified as First Tier
securities.
Securities rated in the second highest short-term rating category (and unrated
securities of comparable quality) are identified as Second Tier securities. The
fund follows applicable regulations in determining whether a security is rated
and whether a security rated by multiple NRSROs in different rating categories
should be identified as a First or Second Tier security.
At April 30, 1999, the portfolio securities were rated as follows:
Tier Rating Based on Total Market Value (Unaudited)
FIRST TIER SECOND TIER
98.94% 1.06%
2 Denotes a restricted security which is subject to restrictions on resale under
Federal securities laws. At April 30, 1999, these securities amounted to
$36,665,000 which represents 8.6% of net assets. These securities have been
deemed liquid by criteria approved by the fund's Board of Trustees.
3 Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($428,642,788) at April 30, 1999.
The following acronyms are used throughout this portfolio:
AMBAC -American Municipal Bond Assurance Corporation CGIC -Capital Guaranty
Insurance Corporation CP -Commercial Paper EDFA -Economic Development Financing
Authority EDRB -Economic Development Revenue Bonds FGIC -Financial Guaranty
Insurance Company FSA -Financial Security Assurance GO -General Obligation HDA
- -Hospital Development Authority IDA -Industrial Development Authority IDRB
- -Industrial Development Revenue Bond INS -Insured LIQ -Liquidity Agreement LOC
- -Letter of Credit MBIA -Municipal Bond Investors Assurance
MERLOTS -Municipal Exempt Receipts - Liquidity Optional Tender Series PCR
- -Pollution Control Revenue PLC -Public Limited Company PRF -Prerefunded RANs
- -Revenue Anticipation Notes SA -Support Agreement TOBs -Tender Option Bonds
TRANs -Tax and Revenue Anticipation Notes UT -Unlimited Tax VRDNs -Variable Rate
Demand Notes
See Notes which are an integral part of the Financial Statements
Statement of Assets and Liabilities
APRIL 30, 1999 (UNAUDITED)
<TABLE>
<S> <C> <C>
ASSETS:
Total investments in
securities, at amortized
cost and value $ 425,564,576
Cash 931,669
Income receivable 3,216,090
TOTAL ASSETS 429,712,335
LIABILITIES:
Income distribution
payable $ 1,015,223
Accrued expenses 54,324
TOTAL LIABILITIES 1,069,547
Net assets for 428,642,788
shares outstanding $ 428,642,788
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PROCEEDS PER SHARE
INSTITUTIONAL SERVICE
SHARES:
$272,418,249 / 272,418,249
shares outstanding $1.00
CASH SERIES SHARES:
$50,011,592 / 50,011,592
shares outstanding $1.00
INSTITUTIONAL SHARES:
$106,212,947 / 106,212,947
shares outstanding $1.00
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Operations
SIX MONTHS ENDED APRIL 30, 1999 (UNAUDITED)
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 7,928,716
EXPENSES:
Investment advisory fee $ 1,213,883
Administrative personnel
and services fee 183,054
Custodian fees 12,658
Transfer and dividend
disbursing agent fees and
expenses 48,588
Directors'/Trustees' fees 1,512
Auditing fees 5,882
Legal fees 5,266
Portfolio accounting fees 52,110
Distribution services fee-
Cash Series Shares 103,076
Shareholder services fee-
Institutional Service
Shares 437,260
Shareholder services fee-
Cash Series Shares 64,422
Shareholder services fee-
Institutional Shares 105,259
Share registration costs 25,751
Printing and postage 16,601
Insurance premiums 18,498
Miscellaneous 2,615
TOTAL EXPENSES 2,296,435
WAIVERS:
Waiver of investment
advisory fee $ (483,242)
Waiver of distribution
services fee-Cash Series
Shares (12,884)
Waiver of shareholder
services fee-Institutional
Service Shares (87,452)
Waiver of shareholder
services fee-Institutional
Shares (105,259)
TOTAL WAIVERS (688,837)
Net expenses 1,607,598
Net investment income $ 6,321,118
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR
(unaudited) ENDED
APRIL 30, OCTOBER 31,
1999 1998
<S> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net investment income $ 6,321,118 $ 12,841,417
DISTRIBUTIONS TO
SHAREHOLDERS:
Distributions from net
investment income
Institutional Service
Shares (4,565,639) (9,813,298)
Cash Series Shares (566,485) (1,215,221)
Institutional Shares (1,188,994) (1,812,898)
CHANGE IN NET ASSETS
RESULTING FROM
DISTRIBUTIONS
TO SHAREHOLDERS (6,321,118) (12,841,417)
SHARE TRANSACTIONS:
Proceeds from sale of
shares 866,541,541 1,771,726,568
Net asset value of shares
issued to shareholders in
payment of
distributions declared 1,566,469 4,355,879
Cost of shares redeemed (944,067,116) (1,623,039,093)
CHANGE IN NET ASSETS
RESULTING FROM SHARE
TRANSACTIONS (75,959,106) 153,043,354
Change in net assets (75,959,106) 153,043,354
NET ASSETS:
Beginning of period 504,601,894 351,558,540
End of period $ 428,642,788 $ 504,601,894
</TABLE>
See Notes which are an integral part of the Financial Statements
Financial Highlights-Institutional Service Shares
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(unaudited)
APRIL 30, YEAR ENDED OCTOBER 31,
1999 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.01 0.03 0.03 0.03 0.03 0.02
LESS DISTRIBUTIONS:
Distributions from net investment income (0.01) (0.03) (0.03) (0.03) (0.03) (0.02)
NET ASSET VALUE,
END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN 1 1.30% 3.15% 3.18% 3.16% 3.44% 2.25%
RATIOS TO AVERAGE NET ASSETS:
Expenses 0.65% 2 0.65% 0.65% 0.65% 0.65% 0.64%
Net investment income 2.61% 2 3.09% 3.14% 3.12% 3.38% 2.19%
Expenses 3 0.90% 2 0.91% 0.92% 0.92% 0.92% 0.66%
Net investment income 3 2.36% 2 2.83% 2.87% 2.85% 3.11% 2.17%
SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $272,418 $392,381 $264,634 $221,851 $276,407 $229,160
</TABLE>
1 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
2 Computed on an annualized basis.
3 During the period, certain fees were voluntarily waived. If such voluntary
waivers had not occurred, the ratios would have been as indicated.
See Notes which are an integral part of the Financial Statements
Financial Highlights-Cash Series Shares
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(unaudited)
APRIL 30, YEAR ENDED OCTOBER 31,
1999 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.01 0.03 0.03 0.03 0.03 0.02
LESS DISTRIBUTIONS:
Distributions from net investment income (0.01) (0.03) (0.03) (0.03) (0.03) (0.02)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN 1 1.10% 2.74% 2.77% 2.75% 3.02% 1.84%
RATIOS TO AVERAGE NET ASSETS:
Expenses 1.05% 2 1.05% 1.05% 1.05% 1.05% 1.04%
Net investment income 2.21% 2 2.70% 2.72% 2.72% 2.98% 1.73%
Expenses 3 1.30% 2 1.31% 1.32% 1.32% 1.33% 1.22%
Net investment income 3 1.96% 2 2.44% 2.45% 2.45% 2.70% 1.55%
SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $50,012 $47,940 $23,777 $19,825 $28,255 $18,352
</TABLE>
1 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
2 Computed on an annualized basis.
3 During the period, certain fees were voluntarily waived. If such voluntary
waivers had not occurred, the ratios would have been as indicated.
See Notes which are an integral part of the Financial Statements
Financial Highlights-Institutional Shares
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(unaudited)
APRIL 30, YEAR ENDED OCTOBER 31,
1999 1998 1997 1996 1995 1
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.01 0.03 0.03 0.03 0.01
LESS DISTRIBUTIONS:
Distributions from net investment income (0.01) (0.03) (0.03) (0.03) (0.01)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN 2 1.40% 3.36% 3.38% 3.37% 1.03%
RATIOS TO AVERAGE NET ASSETS:
Expenses 0.45% 3 0.45% 0.45% 0.45% 0.45% 3
Net investment income 2.81% 3 3.31% 3.35% 3.27% 3.81% 3
Expenses 4 0.90% 3 0.91% 0.92% 0.92% 0.91% 3
Net investment income 4 2.36% 3 2.85% 2.88% 2.80% 3.35% 3
SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $106,213 $64,281 $63,148 $37,076 $2,529
</TABLE>
1 Reflects operations for the period from August 23, 1995 (date of initial
public investment) to October 31, 1995.
2 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
3 Computed on an annualized basis.
4 During the period, certain fees were voluntarily waived. If such voluntary
waivers had not occurred, the ratios would have been as indicated.
See Notes which are an integral part of the Financial Statements
Notes to Financial Statements
APRIL 30, 1999 (UNAUDITED)
ORGANIZATION
Federated Municipal Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "Act") as an open-end, management
investment company. The Trust consists of 17 portfolios. The financial
statements included herein are only those of Pennsylvania Municipal Cash Trust
(the "Fund"). The financial statements of the other portfolios are presented
separately. The assets of each portfolio are segregated and a shareholder's
interest is limited to the portfolio in which shares are held. The Fund offers
three classes of shares: Institutional Service Shares, Cash Series Shares, and
Institutional Shares. The investment objective of the Fund is current income
exempt from federal regular income tax and the personal income taxes imposed by
the Commonwealth of Pennsylvania consistent with stability of principal.
SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS
The Fund uses the amortized cost method to value its portfolio securities in
accordance with Rule 2a-7 under the Act.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS
Interest income and expenses are accrued daily. Bond premium and discount, if
applicable, are amortized as required by the Internal Revenue Code, as amended
(the "Code"). Distributions to shareholders are recorded on the ex- dividend
date.
FEDERAL TAXES
It is the Fund's policy to comply with the provisions of the Code applicable to
regulated investment companies and to distribute to shareholders each year
substantially all of its income. Accordingly, no provisions for federal tax are
necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Fund may engage in when-issued or delayed delivery transactions. The Fund
records when-issued securities on the trade date and maintains security
positions such that sufficient liquid assets will be available to make payment
for the securities purchased. Securities purchased on a when- issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
RESTRICTED SECURITIES
Restricted securities are securities that may only be resold upon registration
under federal securities laws or in transactions exempt from such registration.
Many restricted securities may be resold in the secondary market in transactions
exempt from registration. In some cases, the restricted securities may be resold
without registration upon exercise of a demand feature. Such restricted
securities may be determined to be liquid under criteria established by the
Board of Trustees ("Trustees"). The Fund will not incur any registration costs
upon such resales. Restricted securities are valued at amortized cost in
accordance with Rule 2a-7 under the Act.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts of assets, liabilities, expenses and revenues reported in the
financial statements. Actual results could differ from those estimated.
OTHER
Investment transactions are accounted for on the trade date.
SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares. At April 30, 1999, capital paid-in aggregated $428,642,788.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS YEAR
ENDED ENDED
APRIL 30, OCTOBER 31,
1999 1998
<S> <C> <C>
INSTITUTIONAL SERVICE
SHARES:
Shares sold 492,014,421 1,209,407,656
Shares issued to
shareholders in payment of
distributions declared 1,000,985 3,071,889
Shares redeemed (612,977,962) (1,084,732,294)
NET CHANGE RESULTING FROM
INSTITUTIONAL SERVICE
SHARE TRANSACTIONS (119,962,556) 127,747,251
<CAPTION>
SIX MONTHS YEAR
ENDED ENDED
APRIL 30, OCTOBER 31,
1999 1998
<S> <C> <C>
CASH SERIES SHARES:
Shares sold 81,839,063 158,966,434
Shares issued to
shareholders in payment of
distributions declared 439,893 1,162,158
Shares redeemed (80,207,381) (135,965,506)
NET CHANGE RESULTING FROM
CASH SERIES SHARE
TRANSACTIONS 2,071,575 24,163,086
<CAPTION>
SIX MONTHS YEAR
ENDED ENDED
APRIL 30, OCTOBER 31,
1999 1998
<S> <C> <C>
INSTITUTIONAL SHARES:
Shares sold 292,688,057 403,352,478
Shares issued to
shareholders in payment of
distributions declared 125,591 121,832
Shares redeemed (250,881,773) (402,341,293)
NET CHANGE RESULTING FROM
INSTITUTIONAL SHARE
TRANSACTIONS 41,931,875 1,133,017
NET CHANGE RESULTING FROM
SHARE TRANSACTIONS (75,959,106) 153,043,354
</TABLE>
INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE
Federated Investment Management Company, the Fund's investment adviser (the
"Adviser"), receives for its services an annual investment advisory fee equal to
0.50% of the Fund's average daily net assets. The Adviser may voluntarily choose
to waive any portion of its fee. The Adviser can modify or terminate this
voluntary waiver at any time at its sole discretion.
ADMINISTRATIVE FEE
Federated Services Company ("FServ"), under the Administrative Services
Agreement, provides the Fund with administrative personnel and services. The fee
paid to FServ is based on the level of average aggregate daily net assets of all
funds advised by subsidiaries of Federated Investors, Inc. for the period. The
administrative fee received during the period of the Administrative Services
Agreement shall be at least $125,000 per portfolio and $30,000 per each
additional class of shares.
DISTRIBUTION SERVICES FEE
The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b- 1
under the Act. Under the terms of the Plan, the Fund will compensate Federated
Securities Corp. ("FSC"), the principal distributor, from the net assets of the
Fund to finance activities intended to result in the sale of the Fund's Cash
Series Shares. The Plan provides that the Fund may incur distribution expenses
up to 0.40% of the average daily net assets of the Cash Series Shares, annually,
to compensate FSC. The distributor may voluntarily choose to waive any portion
of its fee. The distributor can modify or terminate this voluntary waiver at any
time at its sole discretion.
SHAREHOLDER SERVICES FEE
Under the terms of a Shareholder Services Agreement with Federated Shareholder
Services Company ("FSSC"), the Fund will pay FSSC up to 0.25% of average daily
net assets of the Fund for the period. The fee paid to FSSC is used to finance
certain services for shareholders and to maintain shareholder accounts. FSSC may
voluntarily choose to waive any portion of its fee. FSSC can modify or terminate
this voluntary waiver at any time at its sole discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES
FServ, through its subsidiary FSSC, serves as transfer and dividend disbursing
agent for the Fund. The fee paid to FSSC is based on the size, type and number
of accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES
FServ maintains the Fund's accounting records for which it receives a fee. The
fee is based on the level of the Fund's average daily net assets for the period,
plus out-of-pocket expenses.
INTERFUND TRANSACTIONS
During the period ended April 30, 1999, the Fund engaged in purchase and sale
transactions with funds that have a common investment adviser (or affiliated
investment advisers), common Directors/Trustees, and/or common Officers. These
purchase and sale transactions were made at current market value pursuant to
Rule 17a-7 under the Act amounting to $373,510,000 and $383,090,000,
respectively.
GENERAL
Certain of the Officers and Trustees of the Trust are Officers and Directors or
Trustees of the above companies.
CONCENTRATION OF CREDIT RISK
Since the fund invests a substantial portion of its assets in issuers located in
one state, it will be more susceptible to factors adversely affecting issuers of
that state than would be a comparable tax-exempt mutual fund that invests
nationally. In order to reduce the credit risk associated with such factors, at
April 30, 1999, 72.1% of the securities in the portfolio of investments are
backed by letters of credit or bond insurance of various financial institutions
and financial guaranty assurance agencies. The percentage of investments insured
by or supported (backed) by a letter of credit from any one institution or
agency did not exceed 11.1% of total investments.
YEAR 2000
Similar to other financial organizations, the Fund could be adversely affected
if the computer systems used by the Fund's service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. The Fund's Adviser and administrator are taking measures that they
believe are reasonably designed to address the Year 2000 issue with respect to
computer systems that they use and to obtain reasonable assurances that
comparable steps are being taken by each of the Fund's other service providers.
At this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact to the Fund.
Trustees
JOHN F. DONAHUE
THOMAS G. BIGLEY
JOHN T. CONROY, JR.
JOHN F. CUNNINGHAM
LAWRENCE D. ELLIS, M.D.
PETER E. MADDEN
CHARLES F. MANSFIELD, JR.
JOHN E. MURRAY, JR., J.D., S.J.D.
MARJORIE P. SMUTS
JOHN S. WALSH
Officers
JOHN F. DONAHUE
Chairman
GLEN R. JOHNSON
President
J. CHRISTOPHER DONAHUE
Executive Vice President
EDWARD C. GONZALES
Executive Vice President
JOHN W. MCGONIGLE
Executive Vice President and Secretary
RICHARD B. FISHER
Vice President
RICHARD J. THOMAS
Treasurer
ANTHONY R. BOSCH
Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment
risk, including the possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the fund's prospectus which contains facts concerning
its objective and policies, management fees, expenses and other information.
[Graphic]
Federated
World-Class Investment Manager
SEMI-ANNUAL REPORT
Pennsylvania Municipal Cash Trust
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
APRIL 30, 1999
[Graphic]
Federated
Pennsylvania Municipal Cash Trust
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
1-800-341-7400
WWW.FEDERATEDINVESTORS.COM
Federated Securities Corp., Distributor
Cusip 314229717
Cusip 314229881
Cusip 314229204
0052405 (6/99)
[Graphic]
SEMI-ANNUAL REPORT
President's Message
Dear Shareholder:
I am pleased to present the Semi-Annual Report to Shareholders of Tennessee
Municipal Cash Trust, a portfolio of Federated Municipal Trust, which covers the
six-month period from November 1, 1998 through April 30, 1999. The report begins
with a discussion with the fund's portfolio manager, followed by a complete
listing of the fund's holdings and its financial statements. Financial
highlights tables are provided for the fund's Institutional Shares and
Institutional Service Shares.
The fund is a convenient way to keep your ready cash pursuing double tax-free
income-free from federal regular income tax and Tennessee state income tax
1-through a portfolio concentrated in high-quality, short-term Tennessee
municipal securities. At the end of the reporting period, the fund's holdings
were diversified among issuers that use municipal bond financing for projects as
varied as health care, housing, community development and transportation.
This double tax-free advantage means you have the opportunity to earn a greater
after-tax yield than you could in a comparable high-quality taxable investment.
Of course, the fund also brings you the added benefits of daily liquidity and
stability of principal. 2
During the reporting period, the fund paid double tax-free dividends totaling
$0.01 per share for both Institutional Shares and Institutional Service Shares.
The fund's net assets totaled $57.8 million at the end of the reporting period.
Thank you for relying on Tennessee Municipal Cash Trust to help your ready cash
pursue tax-free income every day. As always, we will continue to provide you
with the highest level of professional service. We invite your questions or
comments.
Sincerely,
[Graphic]
Glen R. Johnson
President
June 15, 1999
1 Income may be subject to the federal alternative minimum tax.
2 An investment in money market funds is neither insured nor guaranteed by the
Federal Deposit Insurance Corporation or any other government agency. Although
money market funds seek to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in the fund.
Investment Review
An interview with the fund's portfolio manager, Jeff A. Kozemchak, CFA, Senior
Vice President, Federated Investment Management Company.
WHAT ARE YOUR COMMENTS ON THE ECONOMY AND THE INTEREST RATE ENVIRONMENT DURING
THE FUND'S SIX-MONTH REPORTING PERIOD?
The economy remained robust over the reporting period, showing continued
strength in the fourth quarter of 1998 and into the first quarter of 1999. At
the same time, overall inflationary pressures were absent in spite of impressive
performance from the economy and historically low unemployment. However,
sustained growth in aggregate demand continued to stretch the labor markets, and
the potential for future inflation clearly concerned the Federal Reserve Board
(the "Fed"). Over the reporting period, the Fed maintained a neutral policy
stance toward the direction of short-term interest rates ("federal funds target
rate"). However, April's Consumer Price Index ("CPI") 1 rate was much larger
than expected and in May, shortly after the close of the reporting period, the
Fed adopted a tightening bias, or bias for higher rates in the future. The Fed
cited the strong U.S. economy in conjunction with record employment levels, the
improvement in foreign economic prospects, and rebounding U.S. financial
markets.
In addition to economic fundamentals, short-term municipal securities were
strongly influenced by technical factors over the reporting period, notably
calendar year end and April income tax payment season. Variable rate demand
notes ("VRDNs") which comprise more than 50% of the fund's assets, started the
reporting period in the 3.00% range, but moved sharply higher to the 4.00% level
in December as an imbalance between supply and demand occurred. Yields declined
in January, as strong cash inflows from bond maturities and coupon reinvestment
occurred. The market continued to be strong in February and March as yields
trended at 3.00% or below, before rising to 4.00% in April because of
traditional tax payment season pressures. Over the six-month reporting period,
VRDN yields averaged roughly 65% of taxable rates, making them attractive for
investors in the highest federal tax brackets.
The overall tone of the short-term municipal market was positive. Municipalities
across the country have benefited from a strong economy. This fact, coupled with
lower borrowing costs from low long- term rates, has reduced short-term
issuance. In fact, annual municipal note issuance was at its lowest level in the
last decade.
1 The CPI is a measure of change in consumer prices, as determined by a monthly
survey of the U.S. Bureau of Labor Statistics.
WHAT WERE YOUR STRATEGIES FOR THE FUND DURING THE REPORTING PERIOD?
The fund's average maturity at the beginning of the reporting period was 29
days, reflecting a lack of fixed-rate note supply. Over the reporting period,
the fund's average maturity ranged from 25 to 45 days and ended the period at 44
days, a neutral stance. This average maturity left the fund well positioned to
take advantage of increased rates that could have occurred. We continued to
emphasize a barbelled structure for the portfolio, combining a significant
position in 7-day VRDNs with purchases of longer-term securities with maturities
between 6 and 12 months. After an average maturity range was targeted, we
attempted to maximize performance through ongoing relative value analysis.
Relative value analysis includes the comparison of the richness or cheapness of
municipal securities to one another as well as municipal securities to taxable
instruments, such as Treasury securities. This portfolio structure continued to
pursue a competitive yield over time.
The 7-day net yields for the fund's Institutional Shares and Institutional
Service Shares were 3.32% 2 and 3.07%,2 respectively, on April 30, 1999. These
yields were higher relative to the beginning of the reporting period with most
of the increase in yield coming at the end of the reporting period due in large
part to technical factors relating to tax payment season. The latest yields were
the equivalent of taxable yields of 5.85% for Institutional Shares and 5.41% for
Institutional Service Shares for investors in the highest federal and state
effective tax brackets.
AS WE APPROACH MID-YEAR, WHAT IS YOUR OUTLOOK GOING FORWARD?
Although the Fed has adopted a tightening bias, it is not likely to raise
interest rates or take preemptive action until price or wage pressures
materialize. Accordingly, we plan to maintain a neutral average maturity range
for the fund over the near-term until further inflationary data becomes
available. In the near term, the short-term municipal market will likely reflect
technical as well as fundamental factors. In the summer months, we will likely
extend the maturity as new issuance and rollover of municipal notes occurs
during this period. As always, we will continue to watch, with great interest,
market developments in order to best serve our municipal clients.
2 Peformance quoted represents past performance and is not indicative of future
results. Yields will vary. Yields quoted for money market funds most closely
reflect the fund's current earnings.
Portfolio of Investments
APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
SHORT-TERM MUNICIPALS-
98.9% 1
TENNESSEE-98.9%
$ 2,560,000 Benton County, TN IDB,
(Series 1996) Weekly VRDNs
(Jones Plastic and
Engineering
Corp.)/(National City
Bank, Kentucky LOC) $ 2,560,000
1,000,000 Chattanooga, TN HEFA
Weekly VRDNs (Sisken
Hospital)/(Nationsbank of
Tennessee LOC) 1,000,000
2,000,000 Chattanooga, TN IDB,
Industrial Development
Variable Rate Demand
Revenue Bonds (Series
1997) Weekly VRDNs (JRB
Company, Inc.)/(National
City Bank, Ohio LOC) 2,000,000
2,550,000 Chattanooga, TN IDB,
Revenue Bonds (Series
1997) Weekly VRDNs (TB
Wood's Inc. Project)/(PNC
Bank, N.A. LOC) 2,550,000
1,800,000 Dickson County, TN IDB,
(Series 1996) Weekly VRDNs
(Tennessee Bun Company,
LLC Project)/(PNC Bank,
N.A. LOC) 1,800,000
2,700,000 Franklin County, TN IDB,
IDRB (Series 1997) Weekly
VRDNs (Hi-Tech)/(Regions
Bank, Alabama LOC) 2,700,000
1,120,000 Greenfield, TN IDB,
(Series 1995) Weekly VRDNs
(Plastic Products Co.
Project)/(Norwest Bank
Minnesota, N.A. LOC) 1,120,000
1,000,000 Hamilton County, TN IDB,
Weekly VRDNs (Pavestone
Co. L.P. Project)/(Bank
One, Texas N.A. LOC) 1,000,000
1,500,000 Hamilton County, TN, 5.00%
Bonds, 5/1/1999 1,500,000
1,500,000 Hamilton County, TN IDB,
(Series 1987) Weekly VRDNs
(Seaboard Farms
Project)/(SunTrust Bank,
Atlanta LOC) 1,500,000
4,200,000 Hawkins County, TN IDB,
(Series 1995) Weekly VRDNs
(Sekisui Ta Industries,
Inc. Project)/(Bank of
Tokyo-Mitsubishi Ltd. LOC) 4,200,000
2,900,000 Hendersonville, TN IDB,
(Series 1996) Weekly VRDNs
(Betty Machine Co.
Project)/(First Union
National Bank, Charlotte,
NC LOC) 2,900,000
609,000 McMinn County, TN IDB,
(Series 1995) Weekly VRDNs
(Creative Fabrication
Corp.)/(NBD Bank, Michigan
LOC) 609,000
1,100,000 Memphis, TN, (Series A),
3.50% TANs, 10/1/1999 1,101,793
2,000,000 Metropolitan Government
Nashville & Davidson
County, TN HEFA,
Educational Facilities
Revenue Bonds (Series
1997) Weekly VRDNs
(Belmont University
Project)/(SunTrust Bank,
Nashville LOC) 2,000,000
3,000,000 Metropolitan Government
Nashville & Davidson
County, TN HEFA, Revenue
Bonds (Series 1985A),
3.10% TOBs (Vanderbilt
University), Optional
Tender 1/15/2000 3,000,000
1,447,500 Metropolitan Government
Nashville & Davidson
County, TN HEFA Revenue
Bonds, (Series 1994)
Weekly VRDNs (Belmont
University Project)/(Sun
Trust Bank,
Nashville LOC) 1,447,500
2,500,000 Oak Ridge, TN IDB, Solid
Waste Facility Bonds
(Series 1996) Weekly VRDNs
(M4 Environmental L.P.
Project)/(SunTrust Bank,
Atlanta LOC) 2,500,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
SHORT-TERM MUNICIPALS-
continued 1
TENNESSEE-CONTINUED
$ 6,200,000 Roane, TN IDB, (Series
1982) Monthly VRDNs
(Fortafil Fibers, Inc.
Project)/(ABN AMRO Bank
N.V., Amsterdam LOC) $ 6,200,000
800,000 Sevier County, TN Public
Building Authority, Local
Government Improvement
Bonds, (Series II-G-2)
Weekly VRDNs (Knoxville,
TN)/(AMBAC INS)/(KBC Bank
N.V. Brussels LIQ) 800,000
1,000,000 Sevier County, TN Public
Building Authority, Local Government Public Improvement Bonds,
(Series II-G-3) Weekly VRDNs (Maryville, TN)/(AMBAC INS)/(KBC
Bank N.V.
Brussels LIQ) 1,000,000
2,600,000 Shelby County, TN Health
Education & Housing
Facilities Board,
Multifamily
Housing Revenue Bonds
(Series 1988) Weekly VRDNs
(Arbor Lake Project)/
(PNC Bank, N.A. LOC) 2,600,000
1,165,000 Shelby County, TN, (Series
A), 4.25% Bonds, 8/1/1999 1,167,286
400,000 Shelby County, TN, (Series
A), 5.625% Bonds, 6/1/1999 400,830
2,000,000 Shelby County, TN, (Series
B), 5.10% Bonds, 3/1/2000 2,032,892
1,300,000 Sumner County, IDB, TN,
(Series 1998-0), 4.05%
BANs, 6/15/1999 1,300,401
1,500,000 Tennessee Housing
Development Agency,
Homeownership Program
(Issue 1998-3C), 3.10%
TOBs, Mandatory Tender
11/18/1999 1,500,000
2,500,000 Union City, TN IDB, (Series 1995) Weekly VRDNs (Kohler
Co.)/(Wachovia Bank of NC,
N.A., Winston-Salem LOC) 2,500,000
2,200,000 Union County, TN IDB,
(Series 1995) Weekly VRDNs
(Cooper Container
Corporation
Project)/(SunTrust Bank,
Nashville LOC) 2,200,000
TOTAL INVESTMENTS (AT
AMORTIZED COST) 2 $ 57,189,702
</TABLE>
Securities that are subject to Alternative Minimum Tax represent 65.8% of the
portfolio as calculated based upon total portfolio market value.
1 The fund may only invest in securities rated in one of the two highest
short-term rating categories by nationally recognized statistical rating
organizations ("NRSROs") or unrated securities of comparable quality. An NRSRO's
two highest rating categories are determined without regard for sub-categories
and gradations. For example, securities rated SP-1+, SP-1 or SP-2 by Standard &
Poor's, MIG-1 or MIG-2 by Moody's Investors Service, Inc., F-1+, F-1 and F-2 by
Fitch IBCA, Inc. are all considered rated in one of the two highest short-term
rating categories.
Securities rated in the highest short-term rating category (and unrated
securities of comparable quality) are identified as First Tier securities.
Securities rated in the second highest short-term rating category (and unrated
securities of comparable quality) are identified as Second Tier securities. The
fund follows applicable regulations in determining whether a security is rated
and whether a security rated by multiple NRSROs in different rating categories
should be identified as a First or Second Tier security.
At April 30, 1999, the portfolio securities were rated as follows:
Tier Rating Based on Total Market Value (Unaudited)
<TABLE>
<CAPTION>
FIRST TIER SECOND TIER
<S> <C>
97.73% 2.27%
</TABLE>
2 Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($57,846,640) at April 30, 1999.
The following acronyms are used throughout this portfolio:
AMBAC -American Municipal Bond Assurance Corporation BANs -Bond Anticipation
Notes HEFA -Health and Education Facilities Authority IDB -Industrial
Development Bond IDRB -Industrial Development Revenue Bond INS -Insured LIQ
- -Liquidity Agreement LOC -Letter of Credit TANs -Tax Anticipation Notes TOBs
- -Tender Option Bonds VRDNs -Variable Rate Demand Notes
See Notes which are an integral part of the Financial Statements
Statement of Assets and Liabilities
APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Total investments in
securities, at amortized
cost and value $ 57,189,702
Cash 484,916
Income receivable 355,740
Deferred organizational
costs 9,391
TOTAL ASSETS 58,039,749
LIABILITIES:
Payable for shares
redeemed $ 35,000
Income distribution
payable 158,109
TOTAL LIABILITIES 193,109
Net assets for 57,846,640
shares outstanding $ 57,846,640
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PROCEEDS PER SHARE
INSTITUTIONAL SHARES:
$36,327,941 / 36,327,941
shares outstanding $1.00
INSTITUTIONAL SERVICE
SHARES:
$21,518,699 / 21,518,699
shares outstanding $1.00
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Operations
SIX MONTHS ENDED APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 1,245,301
EXPENSES:
Investment advisory fee $ 189,964
Administrative personnel
and services fee 76,863
Custodian fees 2,848
Transfer and dividend
disbursing agent fees and
expenses 23,423
Directors'/Trustees' fees 739
Auditing fees 5,666
Legal fees 7,994
Portfolio accounting fees 26,543
Shareholder services fee-
Institutional Shares 54,966
Shareholder services fee-
Institutional Service
Shares 40,016
Share registration costs 13,095
Printing and postage 10,998
Insurance premiums 3,843
Miscellaneous 6,511
TOTAL EXPENSES 463,469
WAIVERS AND
REIMBURSEMENTS:
Waiver of investment
advisory fee $ (189,964)
Waiver of shareholder
services fee-Institutional
Shares (54,966)
Reimbursement of other
operating expenses (43,877)
TOTAL WAIVERS AND
REIMBURSEMENTS (288,807)
Net expenses 174,662
Net investment income $ 1,070,639
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR
(unaudited) ENDED
APRIL 30, OCTOBER 31,
1999 1998
<S> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net investment income $ 1,070,639 $ 1,768,764
DISTRIBUTIONS TO
SHAREHOLDERS:
Distributions from net
investment income
Institutional Shares (644,195) (895,346)
Institutional Service
Shares (426,444) (873,418)
CHANGE IN NET ASSETS
RESULTING FROM
DISTRIBUTIONS
TO SHAREHOLDERS (1,070,639) (1,768,764)
SHARE TRANSACTIONS:
Proceeds from sale of
shares 102,644,300 236,176,586
Net asset value of shares
issued to shareholders in
payment of
distributions declared 498,216 704,085
Cost of shares redeemed (117,081,383) (212,767,088)
CHANGE IN NET ASSETS
RESULTING FROM SHARE
TRANSACTIONS (13,938,867) 24,113,583
Change in net assets (13,938,867) 24,113,583
NET ASSETS:
Beginning of period 71,785,507 47,671,924
End of period $ 57,846,640 $ 71,785,507
</TABLE>
See Notes which are an integral part of the Financial Statements
Financial Highlights-Institutional Shares
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(unaudited)
APRIL 30, YEAR ENDED OCTOBER 31,
1999 1998 1997 1996 1
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.01 0.03 0.03 0.01
LESS DISTRIBUTIONS:
Distributions from net investment income (0.01) (0.03) (0.03) (0.01)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN 2 1.47% 3.42% 3.47% 1.59 %
RATIOS TO AVERAGE NET ASSETS:
Expenses 0.35% 3 0.35% 0.35% 0.10% 3
Net investment income 2.93% 3 3.35% 3.40% 3.57% 3
Expenses 4 1.21% 3 1.33% 1.46% 1.72% 3
Net investment income 4 2.07% 3 2.37% 2.29% 1.95% 3
SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $36,328 $39,193 $23,048 $17,824
</TABLE>
1 Reflects operations for the period from May 22, 1996 (date of initial public
investment) to October 31, 1996.
2 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
3 Computed on an annualized basis.
4 During the period, certain fees were voluntarily waived. If such voluntary
waivers had not occurred, the ratios would have been as indicated.
See Notes which are an integral part of the Financial Statements
Financial Highlights-Institutional Service Shares
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(unaudited)
APRIL 30, YEAR ENDED OCTOBER 31,
1999 1998 1997 1996 1
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.01 0.03 0.03 0.01
LESS DISTRIBUTIONS:
Distributions from net investment income (0.01) (0.03) (0.03) (0.01)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN 2 1.34% 3.17% 3.21% 1.48%
RATIOS TO AVERAGE NET ASSETS:
Expenses 0.60% 3 0.60% 0.60% 0.39% 3
Net investment income 2.66% 3 3.09% 3.13% 3.26% 3
Expenses 4 1.21% 3 1.33% 1.46% 1.72% 3
Net investment income 4 2.05% 3 2.36% 2.27% 1.93% 3
SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $21,519 $32,593 $24,624 $29,824
</TABLE>
1 Reflects operations for the period from May 22, 1996 (date of initial public
investment) to October 31, 1996.
2 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
3 Computed on an annualized basis.
4 During the period, certain fees were voluntarily waived. If such voluntary
waivers had not occurred, the ratios would have been as indicated.
See Notes which are an integral part of the Financial Statements
Notes to Financial Statements
APRIL 30, 1999 (UNAUDITED)
ORGANIZATION
Federated Municipal Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "Act") as an open-end, management
investment company. The Trust consists of 17 portfolios. The financial
statements included herein are only those of Tennessee Municipal Cash Trust (the
"Fund"). The financial statements of the other portfolios are presented
separately. The assets of each portfolio are segregated and a shareholder's
interest is limited to the portfolio in which shares are held. The Fund offers
two classes of shares: Institutional Shares and Institutional Service Shares.
The investment objective of the Fund is current income exempt from federal
regular income tax and the personal income tax imposed by the State of Tennessee
consistent with stability of principal and liquidity.
SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS
The Fund uses the amortized cost method to value its portfolio securities in
accordance with Rule 2a-7 under the Act.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS
Interest income and expenses are accrued daily. Bond premium and discount, if
applicable, are amortized as required by the Internal Revenue Code, as amended
(the "Code"). Distributions to shareholders are recorded on the ex- dividend
date.
FEDERAL TAXES
It is the Fund's policy to comply with the provisions of the Code applicable to
regulated investment companies and to distribute to shareholders each year
substantially all of its income. Accordingly, no provisions for federal tax are
necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Fund may engage in when-issued or delayed delivery transactions. The Fund
records when-issued securities on the trade date and maintains security
positions such that sufficient liquid assets will be available to make payment
for the securities purchased. Securities purchased on a when- issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts of assets, liabilities, expenses and revenues reported in the
financial statements. Actual results could differ from those estimated.
OTHER
Investment transactions are accounted for on the trade date.
SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Board of Trustees (the "Trustees") to issue
an unlimited number of full and fractional shares of beneficial interest
(without par value) for each class of shares. At April 30, 1999, capital paid-in
aggregated $57,846,640.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS YEAR
ENDED ENDED
APRIL 30, OCTOBER 31,
1999 1998
<S> <C> <C>
INSTITUTIONAL SHARES:
Shares sold 62,019,395 141,723,370
Shares issued to
shareholders in payment of
distributions declared 178,093 31,344
Shares redeemed (65,062,099) (125,610,011)
NET CHANGE RESULTING FROM
INSTITUTIONAL SHARE
TRANSACTIONS (2,864,611) 16,144,703
<CAPTION>
SIX MONTHS YEAR
ENDED ENDED
APRIL 30, OCTOBER 31,
1999 1998
<S> <C> <C>
INSTITUTIONAL SERVICE
SHARES:
Shares sold 40,624,905 94,453,216
Shares issued to
shareholders in payment of
distributions declared 320,123 672,741
Shares redeemed (52,019,284) (87,157,077)
NET CHANGE RESULTING FROM
INSTITUTIONAL SERVICE
SHARE TRANSACTIONS (11,074,256) 7,968,880
NET CHANGE RESULTING FROM
SHARE TRANSACTIONS (13,938,867) 24,113,583
</TABLE>
INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE
Federated Investment Management Company, the Fund's investment adviser (the
"Adviser"), receives for its services an annual investment advisory fee equal to
0.50% of the Fund's average daily net assets. The Adviser may voluntarily choose
to waive any portion of its fee. The Adviser can modify or terminate this
voluntary waiver at any time at its sole discretion.
ADMINISTRATIVE FEE
Federated Services Company ("FServ"), under the Administrative Services
Agreement, provides the Fund with administrative personnel and services. The fee
paid to FServ is based on the level of average aggregate daily net assets of all
funds advised by subsidiaries of Federated Investors, Inc. for the period. The
administrative fee received during the period of the Administrative Services
Agreement shall be at least $125,000 per portfolio and $30,000 per each
additional class of shares.
SHAREHOLDER SERVICES FEE
Under the terms of a Shareholder Services Agreement with Federated Shareholder
Services Company ("FSSC"), the Fund will pay FSSC up to 0.25% of average daily
net assets of the Fund shares for the period. The fee paid to FSSC is used to
finance certain services for shareholders and to maintain shareholder accounts.
FSSC may voluntarily choose to waive any portion of its fee. FSSC can modify or
terminate this voluntary waiver at any time at its sole discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES
FServ, through its subsidiary FSSC, serves as transfer and dividend disbursing
agent for the Fund. The fee paid to FSSC is based on the size, type and number
of accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES
FServ maintains the Fund's accounting records for which it receives a fee. The
fee is based on the level of the Fund's average daily net assets for the period,
plus out-of-pocket expenses.
INTERFUND TRANSACTIONS
During the period ended April 30, 1999, the Fund engaged in purchase and sale
transactions with funds that have a common investment adviser (or affiliated
investment advisers), common Directors/Trustees, and/or common Officers. These
purchase and sale transactions were made at current market value pursuant to
Rule 17a-7 under the Act amounting to $40,647,500 and $59,025,000, respectively.
ORGANIZATIONAL EXPENSES
Organizational expenses of $24,645 were borne initially by the Adviser. The Fund
has reimbursed the Adviser for these expenses. These expenses have been deferred
and are being amortized over the five-year period following the Fund's effective
date.
GENERAL
Certain of the Officers and Trustees of the Trust are Officers and Directors or
Trustees of the above companies.
CONCENTRATION OF CREDIT RISK
Since the Fund invests a substantial portion of its assets in issuers located in
one state, it will be more susceptible to factors adversely affecting issuers of
that state than would be a comparable tax-exempt mutual fund that invests
nationally. In order to reduce the credit risk associated with such factors, at
April 30,1999, 78% of the securities in the portfolio of investments are backed
by letters of credit or bond insurance of various financial institutions and
financial guaranty assurance agencies. The percentage of investments insured by
or supported (backed) by a letter of credit from any one institution or agency
did not exceed 16.7% of total investments.
YEAR 2000
Similar to other financial organizations, the Fund could be adversely affected
if the computer systems used by the Fund's service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. The Fund's Adviser and administrator are taking measures that they
believe are reasonably designed to address the Year 2000 issue with respect to
computer systems that they use and to obtain reasonable assurances that
comparable steps are being taken by each of the Fund's other service providers.
At this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact to the Fund.
Trustees
JOHN F. DONAHUE
THOMAS G. BIGLEY
JOHN T. CONROY, JR.
JOHN F. CUNNINGHAM
LAWRENCE D. ELLIS, M.D.
PETER E. MADDEN
CHARLES F. MANSFIELD, JR.
JOHN E. MURRAY, JR., J.D., S.J.D.
MARJORIE P. SMUTS
JOHN S. WALSH
Officers
JOHN F. DONAHUE
Chairman
GLEN R. JOHNSON
President
J. CHRISTOPHER DONAHUE
Executive Vice President
EDWARD C. GONZALES
Executive Vice President
JOHN W. MCGONIGLE
Executive Vice President and Secretary
RICHARD B. FISHER
Vice President
RICHARD J. THOMAS
Treasurer
ANTHONY R. BOSCH
Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment
risk, including the possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the fund's prospectus which contains facts concerning
its objective and policies, management fees, expenses and other information.
[Graphic]
Federated
World-Class Investment Manager
SEMI-ANNUAL REPORT
Tennessee Municipal Cash Trust
SEMI-ANNUAL REPORT TO SHAREHOLDERS
APRIL 30, 1999
[Graphic]
Federated
Tennessee Municipal Cash Trust
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
1-800-341-7400
WWW.FEDERATEDINVESTORS.COM
Federated Securities Corp., Distributor
Cusip 314229634
Cusip 314229642
G01865-02 (6/99)
[Graphic]
SEMI-ANNUAL REPORT
President's Message
Dear Shareholder:
I am pleased to present the Semi-Annual Report to Shareholders of Virginia
Municipal Cash Trust, a portfolio of Federated Municipal Trust, which covers the
six-month period from November 1, 1998 through April 30, 1999. The report begins
with a discussion with the fund's portfolio manager, followed by a complete
listing of the fund's holdings and its financial statements. Financial
highlights tables are provided for the fund's Institutional Service Shares and
Institutional Shares.
The fund is a convenient way to put your ready cash to work pursuing double
tax-free income-free from federal regular income tax and Virginia personal
income tax 1-through a portfolio concentrated in high-quality, short-term
Virginia municipal securities. At the end of the reporting period, the fund's
holdings were diversified among issuers that use municipal bond financing for
projects as varied as health care, housing, community development and
transportation.
This double tax-free advantage means you have the opportunity to earn a greater
after-tax yield than you could in a comparable high-quality taxable investment.
Of course, the fund also brings you the added benefits of daily liquidity and
stability of principal. 2
During the reporting period, the fund paid double tax-free dividends totaling
$0.01 per share for both Institutional Service Shares and Institutional Shares.
The fund's net assets totaled $269.4 million at the end of the reporting period.
Thank you for relying on Virginia Municipal Cash Trust to help your ready cash
pursue tax-free income every day. As always, we will continue to provide you
with the highest level of professional service. We invite your questions or
comments.
Sincerely,
[Graphic]
Glen R. Johnson
President
June 15, 1999
1 Income may be subject to the federal alternative minimum tax.
2 An investment in money market funds is neither insured nor guaranteed by the
Federal Deposit Insurance Corporation or any other government agency. Although
money market funds seek to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in the fund.
Investment Review
An interview with the fund's portfolio manager, Jeff A. Kozemchak, CFA, Senior
Vice President, Federated Investment Management Company.
WHAT ARE YOUR COMMENTS ON THE ECONOMY AND THE INTEREST RATE ENVIRONMENT DURING
THE FUND'S SIX-MONTH REPORTING PERIOD?
The economy remained robust over the reporting period, showing continued
strength in the fourth quarter of 1998 and into the first quarter of 1999. At
the same time, overall inflationary pressures were absent in spite of impressive
performance from the economy and historically low unemployment. However,
sustained growth in aggregate demand continued to stretch the labor markets, and
the potential for future inflation clearly concerned the Federal Reserve Board
(the "Fed"). Over the reporting period, the Fed maintained a neutral policy
stance toward the direction of short-term interest rates (federal funds target
rate). However, April's Consumer Price Index ("CPI") 1 rate was much larger than
expected and in May, shortly after the close of the reporting period, the Fed
adopted a tightening bias, or bias for higher rates in the future. The Fed cited
the strong U.S. economy in conjunction with record employment levels, the
improvement in foreign economic prospects, and rebounding U.S. financial
markets.
In addition to economic fundamentals, short-term municipal securities were
strongly influenced by technical factors over the reporting period, notably
calendar year end and income tax payment season. Variable rate demand notes
("VRDNs") started the reporting period in the 3.00% range, but moved sharply
higher to the 4.00% level in December as an imbalance between supply and demand
occurred. Yields declined in January, as strong cash inflows from bond
maturities and coupon reinvestment occurred. The market continued to be strong
in February and March as yields trended at 3.00% or below, before rising to
4.00% in April because of traditional tax payment season pressures. Over the six
month reporting period, VRDN yields averaged roughly 65% of taxable rates,
making them attractive for investors in the highest federal tax brackets.
The overall tone of the short-term municipal market was positive. Municipalities
across the country have benefited from a strong economy. This fact, coupled with
lower borrowing costs from low long- term rates, reduced short-term issuance. In
fact, annual municipal note issuance was at its lowest level in the last decade.
1 The CPI is a measure of change in consumer prices, as determined by a monthly
survey of the U.S. Bureau of Labor Statistics.
WHAT WERE YOUR STRATEGIES FOR THE FUND DURING THE REPORTING PERIOD?
The fund's average maturity at the beginning of the reporting period was 37
days, reflecting a lack of supply and strong cash inflows. Over the reporting
period, the fund's average maturity ranged from 40 to 55 days and ended the
reporting period at 38 days, a neutral stance. A shorter average maturity left
the fund well positioned to take advantage of increased rates that could have
occurred. We continued to emphasize a barbelled structure for the portfolio,
combining a significant position in 7-day VRDNs with purchases of longer-term
securities with maturities between 6 and 12 months. After an average maturity
range was targeted, we attempted to maximize performance through ongoing
relative value analysis. Relative value analysis includes the comparison of the
richness or cheapness of municipal securities to one another as well as
municipal securities to taxable instruments, such as Treasury securities. This
portfolio structure continued to pursue a competitive yield over time.
The 7-day net yields for the fund's Institutional Shares, and Institutional
Service Shares were 3.10% 2 and 2.95%,2 respectively, on April 30, 1999. These
yields were higher relative to the beginning of the reporting period with most
of the increase in yield coming at the end of the reporting period due in large
part to technical factors relating to tax payment season. The latest yields are
the equivalent of 5.45% for Institutional Shares and 5.18% for Institutional
Service Shares for investors in the highest federal and state effective tax
brackets.
AS WE APPROACH MID-YEAR, WHAT IS YOUR OUTLOOK GOING FORWARD?
Although the Fed has adopted a tightening bias, it is not likely to raise
interest rates or take preemptive action until price or wage pressures
materialize. Accordingly, we plan to maintain a neutral average maturity range
for the fund over the near-term until further inflationary data becomes
available. In the near term, the short-term municipal market will likely reflect
technical as well as fundamental factors. In the summer months, we will likely
extend the maturity as new issuance and rollover of municipal notes occurs
during this period. As always, we will continue to watch, with great interest,
market developments in order to best serve our municipal clients.
2 Performance quoted represents past performance and is not indicative of future
results. Yields will vary. Yields quoted for money market funds most closely
reflect the fund's current earnings.
Portfolio of Investments
APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
SHORT-TERM MUNICIPALS-
99.5% 1
VIRGINIA-97.4%
$ 2,200,000 Amelia County, VA IDA,
(Series 1991) Weekly VRDNs
(Chambers Waste
System)/(Morgan Guaranty
Trust Co., New York LOC) $ 2,200,000
15,500,000 Campbell County, VA IDA,
Solid Waste Disposal
Facilities Revenue ACES
Weekly VRDNs (Georgia-
Pacific Corp.)/(SunTrust
Bank, Atlanta LOC) 15,500,000
7,675,000 Carroll County, VA IDA,
IDRB (Series 1995) Weekly
VRDNs (Kentucky Derby
Hosiery Co., Inc.
Project)/(Bank One,
Kentucky LOC) 7,675,000
1,540,000 Charlottesville, VA IDA,
IDR Refunding Bonds, 3.05%
TOBs (Safeway,
Inc.)/(Bankers Trust Co.,
New York LOC), Mandatory
Tender 6/1/1999 1,540,000
2,900,000 Chesapeake, VA IDA,
(Series 1986) Weekly VRDNs
(Volvo AB)/(UBS AG LOC) 2,900,000
5,995,000 Chesapeake, VA IDA, Trust
Receipts (Series 1998
FR/RI-C10) Weekly VRDNs
(Sumitomo Machinery Corp.
of America Corp.)/(Bank of
America NT and SA, San
Francisco SWP) 5,995,000
2,000,000 Chesterfield County, VA
IDA, (Series 1998) Weekly
VRDNs (Lumberg,
Inc.)/(Nationsbank, N.A.,
Charlotte LOC) 2,000,000
5,100,000 Chesterfield County, VA
IDA, 3.10% CP (Virginia
Electric Power Co.),
Mandatory Tender 8/13/1999 5,100,000
5,800,000 Danville, VA IDA, (Series
1997) Weekly VRDNs
(Diebold, Inc.)/(Bank One,
Ohio,
N.A. LOC) 5,800,000
226,000 Dinwiddie County, VA IDA,
IDRB (Series 1989) Weekly
VRDNs (Tindall Concrete
VA, Inc.)/(First Union
National Bank, Charlotte,
NC LOC) 226,000
5,298,975 Equity Trust III, (1996
Series) Weekly VRDNs
(Bayerische Hypotheken-und
Vereinsbank AG LOC) 5,298,975
945,000 Fairfax County, VA IDA,
1998 Trust Receipts FR/RI-
A35 Weekly VRDNs (Fairfax
Hospital System)/(National
Westminster Bank, PLC,
London LIQ)/(United States
Treasury PRF) 945,000
5,000,000 Fairfax County, VA Water
Authority, 7.25%, Bonds
(United States Treasury
PRF), 1/1/2000 (@102) 5,231,842
10,700,000 Falls Church, VA IDA,
(Series 1985), 3.60% TOBs
(Kaiser Permanente Medical
Center), Optional Tender
5/1/1999 10,700,000
580,000 Fauquier County, VA IDA,
Refunding Revenue Bonds
Weekly VRDNs (Warrenton
Development
Co.)/(Nationsbank, N.A.,
Charlotte LOC) 580,000
7,113,000 Fluvanna County, VA IDA,
(Series 1986) Weekly VRDNs
(Thomasville Furniture
Industries)/(UBS AG LOC) 7,113,000
6,170,000 Frederick County, VA IDA,
(Series 1997) Weekly VRDNs
(Jouan, Inc.)/(Wachovia
Bank of NC, N.A., Winston-
Salem LOC) 6,170,000
1,875,000 Halifax County, VA IDA,
(Series 1998) Weekly VRDNs
(Annin & Co., Inc.)/(Chase
Manhattan Bank N.A., New
York LOC) 1,875,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
SHORT-TERM MUNICIPALS-
continued 1
VIRGINIA-CONTINUED
$ 7,500,000 Halifax, VA IDA, MMMs, PCR,
2.90% CP (Virginia
Electric Power Co.),
Mandatory Tender 5/4/1999 $ 7,500,000
11,500,000 Halifax, VA IDA, MMMs, PCR,
3.15% CP (Virginia
Electric Power Co.),
Mandatory Tender 6/23/1999 11,500,000
3,000,000 Halifax, VA IDA, MMMs, PCR,
3.15% CP (Virginia
Electric Power Co.),
Mandatory Tender 8/13/1999 3,000,000
1,500,000 Hampton, VA Redevelopment
& Housing Authority,
(Series 1998) Weekly VRDNs
(Township
Apartments)/(Amsouth Bank
N.A., Birmingham LOC) 1,500,000
1,600,000 Hanover County, VA IDA
Weekly VRDNs (Fiber-Lam,
Inc.
Project)/(Nationsbank,
N.A., Charlotte LOC) 1,600,000
1,110,000 Henry County, VA Public
Service Authority, Water
and Sewer Revenue
Refunding Bonds, 5.50%
(FGIC INS), 11/15/1999 1,124,713
6,500,000 Loudoun County, VA,
(Series 1998), 3.25% TOBs
(Signature Flight Support
Corp.)/(Bayerische
Landesbank Girozentrale
LOC), Optional Tender
6/1/1999 6,500,000
2,905,000 Mecklenburg County, VA
IDA, IDRB Weekly VRDNs
(Harden Manufacturing
Corp.)/(Columbus Bank and
Trust Co., GA LOC) 2,905,000
2,725,000 Mecklenburg County, VA
IDA, IDRB Weekly VRDNs
(Smith Land Holdings,
L.L.C.)/(Columbus Bank and
Trust Co., GA LOC) 2,725,000
3,045,000 Metropolitan Washington,
DC Airports Authority,
(Series B), 5.25% Bonds,
10/1/1999 3,072,489
3,500,000 Metropolitan Washington,
DC Airports Authority,
3.25% CP (Nationsbank,
N.A., Charlotte LOC),
Mandatory Tender 6/18/1999 3,500,000
7,500,000 Metropolitan Washington,
DC Airports Authority,
3.35% CP (Nationsbank,
N.A., Charlotte LOC),
Mandatory Tender 7/23/1999 7,500,000
2,600,000 Newport News, VA EDA,
(Series 1998) Weekly VRDNs
(Jefferson Point
Development)/(Credit
Suisse First Boston LOC) 2,600,000
4,095,000 Newport News, VA IDA,
(Series 1997) Weekly VRDNs
(Iceland Seafood
Corp.)/(Crestar Bank of
Virginia, Richmond LOC) 4,095,000
4,000,000 Norfolk, VA, (Series A),
5.10% Bonds, 2/1/2000 4,055,887
9,900,000 Portsmouth, VA, 3.78%
BANs, 8/15/1999 9,900,998
1,145,000 Pulaski County, VA IDA,
(Series 1995) Weekly VRDNs
(Balogh Real Estate Ltd.
Partnership Mar-Bal Inc.
Project)/(Bank One, Ohio,
N.A. LOC) 1,145,000
895,000 Richmond, VA IDA, (Series
1997) Weekly VRDNs (PM
Beef)/(U.S. Bank, NA,
Minneapolis LOC) 895,000
10,500,000 Richmond, VA Redevelopment
& Housing Authority,
(Series B-1) Weekly VRDNs
(Richmond, VA Red Tobacco
Row)/(Credit Suisse First
Boston LOC) 10,500,000
6,000,000 Richmond, VA Redevelopment
& Housing Authority,
(Series B-2) Weekly VRDNs
(Richmond, VA Red Tobacco
Row)/(Bayerische
Landesbank Girozentrale
LOC) 6,000,000
1,500,000 Richmond, VA Redevelopment
& Housing Authority,
(Series B-3) Weekly VRDNs
(Richmond, VA Red Tobacco
Row)/(Bayerische
Landesbank Girozentrale
LOC) 1,500,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
SHORT-TERM MUNICIPALS-
continued 1
VIRGINIA-CONTINUED
$ 3,160,000 Richmond, VA Redevelopment
& Housing Authority,
(Series B-5) Weekly VRDNs
(Richmond, VA Red Tobacco
Row)/(Bayerische
Landesbank Girozentrale
LOC) $ 3,160,000
3,555,000 Richmond, VA Redevelopment
& Housing Authority,
(Series B-6) Weekly VRDNs
(Richmond, VA Red Tobacco
Row)/(Bayerische
Landesbank Girozentrale
LOC) 3,555,000
7,000,000 Richmond, VA Redevelopment
& Housing Authority,
(Series B-9) Weekly VRDNs
(Richmond, VA Red Tobacco
Row)/(Bayerische
Landesbank Girozentrale
LOC) 7,000,000
7,000,000 Richmond, VA Redevelopment
& Housing Authority,
(Series B-10) Weekly VRDNs
(Richmond, VA Red Tobacco
Row)/(Bayerische
Landesbank Girozentrale
LOC) 7,000,000
5,795,000 Richmond, VA Redevelopment
& Housing Authority,
Multi-Family Refunding
Revenue Bonds (Series
1997) Weekly VRDNs
(Newport Manor)/(Columbus
Bank and Trust Co., GA LOC) 5,795,000
2,610,000 South Hill, VA IDA, (Series
1997) Weekly VRDNs
(International Veneer Co.,
Inc.)/(Bank One, Indiana,
N.A. LOC) 2,610,000
2,500,000 Staunton, VA IDA, (Series 1997) Weekly VRDNs (Diebold,
Inc.)/(Bank One,
Ohio, N.A. LOC) 2,500,000
2,100,000 Tazewell County, VA IDA,
(Series 1993) Weekly VRDNs
(Seville Properties
Bluefield)/(Huntington
National Bank, Columbus,
OH LOC) 2,100,000
9,150,000 Virginia Peninsula Port
Authority, Facility
Revenue Refunding Bonds
(Series 1992), 3.00% CP
(CSX Corp.)/(Bank of Nova
Scotia, Toronto LOC),
Mandatory Tender 5/6/1999 9,150,000
9,920,000 Virginia Port Authority,
MERLOTS (Series 1997M)
Weekly VRDNs (MBIA
INS)/(First Union National
Bank, Charlotte, NC LIQ) 9,920,000
4,480,000 Virginia Small Business
Financing Authority Weekly
VRDNs (Moses Lake
Industries)/(KeyBank, N.A.
LOC) 4,480,000
13,500,000 Virginia State Housing Development Authority, (Series 1999)
FR/RI-A2 Weekly VRDNs (MBIA INS)/(Commerzbank AG,
Frankfurt LIQ) 13,500,000
2,620,000 Virginia State Public
School Authority, (Series
B), 5.70% Bonds, 1/1/2000 2,665,629
1,000,000 Virginia State Public
School Authority, 5.75%
Bonds, 1/1/2000 1,016,989
1,507,000 Williamsburg, VA IDA,
(Series 1988) Weekly VRDNs
(Colonial Williamsburg
Foundation
Museum)/(Nationsbank,
N.A., Charlotte LOC) 1,507,000
1,575,000 Winchester, VA IDA,
(Series 1995) Weekly VRDNs
(Midwesco Filter
Resources, Inc.
Project)/(Harris Trust &
Savings Bank, Chicago LOC) 1,575,000
5,000,000 York County, VA IDA,
(Series 1985), 3.15% CP
(Virginia Electric Power
Co.), Mandatory Tender
8/13/1999 5,000,000
TOTAL 262,503,522
PUERTO RICO-2.1%
2,000,000 Puerto Rico Industrial,
Medical & Environmental PCA, (1983 Series A), 2.90% TOBs (Merck
& Co., Inc.),
Optional Tender 12/1/1999 2,000,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
SHORT-TERM MUNICIPALS-
continued 1
PUERTO RICO-CONTINUED
$ 3,500,000 Puerto Rico Industrial,
Medical & Environmental PCA, (Series 1983A), 3.60% TOBs
(Reynolds Metals Co.)/(ABN AMRO Bank N.V., Amsterdam LOC),
Optional
Tender 9/1/1999 $ 3,500,000
TOTAL 5,500,000
TOTAL INVESTMENTS (AT
AMORTIZED COST) 2 $ 268,003,522
</TABLE>
Securites that are subject to Alternative Minimum Tax represent 71.8% of the
portfolio as calculated based upon total portfolio market value.
1 The fund may only invest in securities rated in one of the two highest
short-term rating categories by nationally recognized statistical rating
organizations ("NRSROs") or unrated securities of comparable quality. An NRSRO's
two highest rating categories are determined without regard for sub-categories
and gradations. For example, securities rated SP-1+, SP-1 or SP-2 by Standard &
Poor's, MIG-1 or MIG-2 by Moody's Investors Service, Inc., F-1+, F-1 and F-2 by
Fitch IBCA, Inc. are all considered rated in one of the two highest short-term
rating categories.
Securities rated in the highest short-term rating category (and unrated
securities of comparable quality) are identified as First Tier securities.
Securities rated in the second highest short-term rating category (and unrated
securities of comparable quality) are identified as Second Tier securities. The
fund follows applicable regulations in determining whether a security is rated
and whether a security rated by multiple NRSROs in different rating categories
should be identified as a First or Second Tier security.
At April 30, 1999, the portfolio securities were rated as follows:
Tier Rating Percentage Based on Total Market Value (Unaudited)
<TABLE>
<CAPTION>
FIRST TIER SECOND TIER
<S> <C>
100.00% 0.00%
</TABLE>
2 Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($269,403,826) at April 30, 1999.
The following acronyms are used throughout this portfolio:
ACES -Adjustable Convertible
Extendable Securities
BANs -Bond Anticipation Notes
CP -Commercial Paper
EDA -Economic Development
Authority
FGIC -Financial Guaranty
Insurance Company
IDA -Industrial Development
Authority
IDR -Industrial Development
Revenue
IDRB -Industrial Development
Revenue Bond
INS -Insured
LIQ -Liquidity Agreement
LOC -Letter of Credit
MBIA -Municipal Bond Investors
Assurance
MERLOTS -Municipal Exempt Receipts
- Liquidity Optional
Tender Series
MMMs -Money Market Municipals
PCA -Pollution Control
Authority
PCR -Pollution Control Revenue
PLC -Public Limited Company
PRF -Prerefunded
SA -Support Agreement
TOBs -Tender Option Bonds
VRDNs -Variable Rate Demand
Notes
See Notes which are an integral part of the Financial Statements
Statement of Assets and Liabilities
APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Total investments in
securities, at amortized
cost and value $ 268,003,522
Cash 364,646
Income receivable 1,683,367
TOTAL ASSETS 270,051,535
LIABILITIES:
Income distribution
payable $ 636,179
Accrued expenses 11,530
TOTAL LIABILITIES 647,709
Net assets for 269,403,826
shares outstanding $ 269,403,826
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PROCEEDS PER SHARE:
INSTITUTIONAL SHARES:
$32,880,666 / 32,880,666
shares outstanding $1.00
INSTITUTIONAL SERVICE
SHARES:
$236,523,160 / 236,523,160
shares outstanding $1.00
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Operations
SIX MONTHS ENDED APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 4,718,986
EXPENSES:
Investment advisory fee $ 579,513
Administrative personnel
and services fee 112,099
Custodian fees 5,209
Transfer and dividend
disbursing agent fees and
expenses 72,916
Directors'/Trustees' fees 1,233
Auditing fees 6,356
Legal fees 7,260
Portfolio accounting fees 42,142
Shareholder services fee-
Institutional Shares 39,248
Shareholder services fee-
Institutional Service
Shares 322,947
Share registration costs 16,266
Printing and postage 8,817
Insurance premiums 12,541
Miscellaneous 7,008
TOTAL EXPENSES 1,233,555
WAIVERS:
Waiver of investment
advisory fee $ (155,082)
Waiver of shareholder
services fee-Institutional
Shares (39,248)
Waiver of shareholder
services fee-Institutional
Service Shares (129,179)
TOTAL WAIVERS (323,509)
Net expenses 910,046
Net investment income $ 3,808,940
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR
(unaudited) ENDED
APRIL 30, OCTOBER 31,
1999 1998
<S> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net investment income $ 3,808,940 $ 7,956,244
DISTRIBUTIONS TO
SHAREHOLDERS:
Distributions from net
investment income
Institutional Shares (433,007) (1,199,300)
Institutional Service
Shares (3,375,933) (6,756,944)
CHANGE IN NET ASSETS
RESULTING FROM
DISTRIBUTIONS
TO SHAREHOLDERS (3,808,940) (7,956,244)
SHARE TRANSACTIONS:
Proceeds from sale of
shares 621,982,247 1,342,458,938
Net asset value of shares
issued to shareholders in
payment of
distributions declared 2,447,368 5,993,310
Cost of shares redeemed (626,732,845) (1,299,965,431)
CHANGE IN NET ASSETS
RESULTING FROM SHARE
TRANSACTIONS (2,303,230) 48,486,817
Change in net assets (2,303,230) 48,486,817
NET ASSETS:
Beginning of period 271,707,056 223,220,239
End of period $ 269,403,826 $ 271,707,056
</TABLE>
See Notes which are an integral part of the Financial Statements
Financial Highlights-Institutional Shares
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(unaudited)
APRIL 30, YEAR ENDED OCTOBER 31,
1999 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.01 0.03 0.03 0.03 0.04 0.03
LESS DISTRIBUTIONS:
Distributions from net investment income (0.01) (0.03) (0.03) (0.03) (0.04) (0.03)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN 1 1.38% 3.26% 3.31% 3.24% 3.56% 2.57%
RATIOS TO AVERAGE NET ASSETS:
Expenses 0.49% 2 0.49% 0.49% 0.49% 0.49% 0.33%
Net investment income 2.76% 2 3.23% 3.26% 3.19% 3.50% 2.56%
Expenses 3 0.85% 2 0.85% 0.85% 0.89% 0.91% 0.70%
Net investment income 3 2.40% 2 2.87% 2.90% 2.79% 3.08% 2.19%
SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $32,881 $24,559 $24,382 $26,302 $22,642 $20,360
</TABLE>
1 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
2 Computed on an annualized basis.
3 During the period, certain fees were voluntarily waived. If such voluntary
waivers had not occurred, the ratios would have been as indicated.
See Notes which are an integral part of the Financial Statements
Financial Highlights-Institutional Service Shares
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(unaudited)
APRIL 30, YEAR ENDED OCTOBER 31,
1999 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.01 0.03 0.03 0.03 0.03 0.02
LESS DISTRIBUTIONS:
Distributions from net investment income (0.01) (0.03) (0.03) (0.03) (0.03) (0.02)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN 1 1.31% 3.11% 3.17% 3.14% 3.46% 2.44%
RATIOS TO AVERAGE NET ASSETS:
Expenses 0.64% 2 0.64% 0.63% 0.59% 0.59% 0.40%
Net investment income 2.61% 2 3.06% 3.12% 3.10% 3.38% 2.42%
Expenses 3 0.85% 2 0.85% 0.86% 0.89% 0.91% 0.77%
Net investment income 3 2.40% 2 2.85% 2.89% 2.80% 3.06% 2.05%
SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $236,523 $247,149 $198,838 $177,575 $127,083 $100,084
</TABLE>
1 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
2 Computed on an annualized basis.
3 During the period, certain fees were voluntarily waived. If such voluntary
waivers had not occurred, the ratios would have been as indicated.
See Notes which are an integral part of the Financial Statements
Notes to Financial Statements
APRIL 30, 1999 (UNAUDITED)
ORGANIZATION
Federated Municipal Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "Act") as an open-end, management
investment company. The Trust consists of 17 portfolios. The financial
statements included herein are only those of Virginia Municipal Cash Trust (the
"Fund"). The financial statements of the other portfolios are presented
separately. The assets of each portfolio are segregated and a shareholder's
interest is limited to the portfolio in which shares are held. The Fund offers
two classes of shares: Institutional Shares and Institutional Service Shares.
The investment objective of the Fund is current income exempt from federal
regular income tax and the income tax imposed by the Commonwealth of Virginia
consistent with stability of principal.
SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS
The Fund uses the amortized cost method to value its portfolio securities in
accordance with Rule 2a-7 under the Act.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS
Interest income and expenses are accrued daily. Bond premium and discount, if
applicable, are amortized as required by the Internal Revenue Code, as amended
(the "Code"). Distributions to shareholders are recorded on the ex- dividend
date.
FEDERAL TAXES
It is the Fund's policy to comply with the provisions of the Code applicable to
regulated investment companies and to distribute to shareholders each year
substantially all of its income. Accordingly, no provisions for federal tax are
necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Fund may engage in when-issued or delayed delivery transactions. The Fund
records when-issued securities on the trade date and maintains security
positions such that sufficient liquid assets will be available to make payment
for the securities purchased. Securities purchased on a when- issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts of assets, liabilities, expenses and revenues reported in the
financial statements. Actual results could differ from those estimated.
OTHER
Investment transactions are accounted for on the trade date.
SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Board of Trustees (the "Trustees") to issue
an unlimited number of full and fractional shares of beneficial interest
(without par value) for each class of shares. At April 30, 1999, capital paid-in
aggregated $269,403,826.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS YEAR
ENDED ENDED
APRIL 30, OCTOBER 31,
1999 1998
<S> <C> <C>
INSTITUTIONAL SHARES:
Shares sold 50,536,741 140,689,593
Shares issued to
shareholders in payment of
distributions declared 25,648 292,839
Shares redeemed (42,240,228) (140,806,137)
NET CHANGE RESULTING FROM
INSTITUTIONAL SHARE
TRANSACTIONS 8,322,161 176,295
<CAPTION>
SIX MONTHS YEAR
ENDED ENDED
APRIL 30, OCTOBER 31,
1999 1998
<S> <C> <C>
INSTITUTIONAL SERVICE
SHARES:
Shares sold 571,445,506 1,201,769,345
Shares issued to
shareholders in payment of
distributions declared 2,421,720 5,700,471
Shares redeemed (584,492,617) (1,159,159,294)
NET CHANGE RESULTING FROM
INSTITUTIONAL SERVICE
SHARE TRANSACTIONS (10,625,391) 48,310,522
NET CHANGE RESULTING FROM
SHARE TRANSACTIONS (2,303,230) 48,486,817
</TABLE>
INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE
Federated Investment Management Company, the Fund's investment adviser (the
"Adviser"), receives for its services an annual investment advisory fee equal to
0.40% of the Fund's average daily net assets. The Adviser may voluntarily choose
to waive any portion of its fee. The Adviser can modify or terminate this
voluntary waiver at any time at its sole discretion.
ADMINISTRATIVE FEE
Federated Services Company ("FServ"), under the Administrative Services
Agreement, provides the Fund with administrative personnel and services. The fee
paid to FServ is based on the level of average aggregate daily net assets of all
funds advised by subsidiaries of Federated Investors, Inc. for the period. The
administrative fee received during the period of the Administrative Services
Agreement shall be at least $125,000 per portfolio and $30,000 per each
additional class of shares.
SHAREHOLDER SERVICES FEE
Under the terms of a Shareholder Services Agreement with Federated Shareholder
Services Company ("FSSC"), the Fund will pay FSSC up to 0.25% of average daily
net assets of the Fund for the period. The fee paid to FSSC is used to finance
certain services for shareholders and to maintain shareholder accounts. FSSC may
voluntarily choose to waive any portion of its fee. FSSC can modify or terminate
this voluntary waiver at any time at its sole discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES
FServ, through its subsidiary, FSSC serves as transfer and dividend disbursing
agent for the Fund. The fee paid to FSSC is based on the size, type, and number
of accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES
FServ maintains the Fund's accounting records for which it receives a fee. The
fee is based on the level of the Fund's average daily net assets for the period,
plus out-of-pocket expenses.
INTERFUND TRANSACTIONS
During the period ended April 30, 1999, the Fund engaged in purchase and sale
transactions with funds that have a common investment adviser (or affiliated
investment advisers), common Directors/Trustees, and/or common Officers. These
purchase and sale transactions were made at current market value pursuant to
Rule 17a-7 under the Act amounting to $285,925,000 and $247,035,000,
respectively.
GENERAL
Certain of the Officers and Trustees of the Trust are Officers and Directors or
Trustees of the above companies.
CONCENTRATION OF CREDIT RISK
Since the Fund invests a substantial portion of its assets in issuers located in
one state, it will be more susceptible to factors adversely affecting issuers of
that state than would be a comparable tax-exempt mutual fund that invests
nationally. In order to reduce the credit risk associated with such factors, at
April 30, 1999, 70.6% of the securities in the portfolio of investments are
backed by letters of credit or bond insurance of various financial institutions
and financial guaranty assurance agencies. The percentage of investments insured
by or supported (backed) by a letter of credit from any one institution or
agency did not exceed 12.9% of total investments.
YEAR 2000
Similar to other financial organizations, the Fund could be adversely affected
if the computer systems used by the Fund's service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. The Fund's Adviser and administrator are taking measures that they
believe are reasonably designed to address the Year 2000 issue with respect to
computer systems that they use and to obtain reasonable assurances that
comparable steps are being taken by each of the Fund's other service providers.
At this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact to the Fund.
Trustees
JOHN F. DONAHUE
THOMAS G. BIGLEY
JOHN T. CONROY, JR.
JOHN F. CUNNINGHAM
LAWRENCE D. ELLIS, M.D.
PETER E. MADDEN
CHARLES F. MANSFIELD, JR.
JOHN E. MURRAY, JR., J.D., S.J.D.
MARJORIE P. SMUTS
JOHN S. WALSH
Officers
JOHN F. DONAHUE
Chairman
GLEN R. JOHNSON
President
J. CHRISTOPHER DONAHUE
Executive Vice President
EDWARD C. GONZALES
Executive Vice President
JOHN W. MCGONIGLE
Executive Vice President and Secretary
RICHARD B. FISHER
Vice President
RICHARD J. THOMAS
Treasurer
ANTHONY R. BOSCH
Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment
risk, including the possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the fund's prospectus which contains facts concerning
its objective and policies, management fees, expenses, and other information.
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Federated
World-Class Investment Manager
SEMI-ANNUAL REPORT
Virginia Municipal Cash Trust
SEMI-ANNUAL REPORT TO SHAREHOLDERS
APRIL 30, 1999
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Federated
Virginia Municipal Cash Trust
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
1-800-341-7400
WWW.FEDERATEDINVESTORS.COM
Federated Securities Corp., Distributor
Cusip 314229816
Cusip 314229824
G00133-01 (6/99)
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