ANNUAL REPORT
President's Message
Dear Shareholder:
I am pleased to present the Annual Report to Shareholders of Alabama Municipal
Cash Trust, which covers the 12-month period from November 1, 1998 through
October 31, 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- through a
portfolio concentrated in high-quality, short-term Alabama 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
$0.03 per share. The fund's net assets totaled $239 million at the end of the
reporting period.
Thank you for relying on Alabama Municipal Cash Trust to help your ready cash
earn 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
December 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 REPORTING PERIOD?
Perhaps the biggest issues threatening the U.S. economy in the latter half of
1998 were alleviated by the second quarter of 1999. The improvements in
international economies, particularly Asia, and calm foreign markets laid the
foundation for the Federal Reserve Board (the "Fed") to focus on U.S. economic
releases as a better indicator of the inflation picture. The Fed became
increasingly concerned with inflationary pressures from tighter labor markets
and rising equity wealth. For the most part inflationary forces remained tame
during 1999 with increases in some commodity prices, such as oil. Nevertheless,
the Fed began a series of three rate increases, citing tighter labor markets,
shrinking productivity gains and growth in demand. The moves came in June,
August and November; each time, the Fed voted to raise the federal funds target
rate by a quarter point.
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"), which comprise more than 50% of the fund's assets, started the period
in the 3.00% range, but moved sharply higher in December to the 4.00% level as
supply and demand imbalances occurred. Yields then declined in January, as
investors looked to reinvest coupon payments and year end selling pressures
eased. Yields averaged slightly over 2.75% during February and March before
rising to the 4.00% range in April due to traditional tax season payment
pressures. Over the summer months, yields remained mostly in a band between
3.00% and 3.50%, but rose sharply in September as cash outflows in the municipal
markets pushed rates as high as 3.85%. VRDN yields ended the reporting period at
3.50%. Over the reporting period, VRDN yields averaged roughly 66% of taxable
rates, making them attractive for investors in the highest two 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, have 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 municipal
securities, relative to their taxable counterparts, relatively expensive.
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 53 days. In 1999, the fund's average maturity declined to as low
as 25 days by June before we were able to take advantage of fixed-rate note
opportunities in July that increased it to 55 days by the end of July. Asset
inflows in August and September caused the maturity to again move downward as
the percentage of fixed-rate note fell in the portfolio. At the end of the
reporting period, the average maturity stood at 31 days. 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. Once an average maturity range was targeted taking into
account Federal Reserve monetary policy, the portfolio maximized 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 municipals to taxable instruments, such as treasury securities. This
portfolio structure continued to provide a competitive yield over time.
WHAT IS YOUR OUTLOOK GOING FORWARD?
The Fed, concerned by persistent above-trend growth in an environment where
labor markets are constrained and productivity gains are narrowing, will likely
remain on hold until the first quarter of 2000. It is likely that we will see
one and possibly two interest rate increases in the first half of 2000. 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
OCTOBER 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
99.5% 1
ALABAMA-98.7%
$ 5,000,000 Alabama HFA, Multifamily
Revenue Bonds (Series
1997) Weekly VRDNs (YW
Housing Partners, Ltd.
Project)/(Amsouth Bank
N.A., Birmingham LOC) $ 5,000,000
9,590,000 Alabama HFA, Variable Rate
Certificates (Series
1997J) Weekly VRDNs (GNMA
COL)/(Bank of America,
N.A. LIQ) 9,590,000
1,100,000 Alabama State IDA, Weekly
VRDNs (Sunshine Homes,
Inc.)/(Amsouth Bank N.A.,
Birmingham LOC) 1,100,000
4,755,000 Alabama State IDA, IDRB
(Series 1994) Weekly VRDNs
(Decatur Aluminum
Corp.)/(Firstar Bank,
N.A., Cincinnati LOC) 4,755,000
3,150,000 Alabama State IDA, IDRB
(Series 1996) Weekly VRDNs
(IMI Cash Valve
Project)/(Regions Bank,
Alabama LOC) 3,150,000
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
14,765,000 Alabama State Public
School & College
Authority, (PT-1195),
3.90% TOBs (Merrill Lynch
Capital Services, Inc.
LIQ), Optional Tender
10/26/2000 14,765,000
1,500,000 Alabama State, 6.00%
Bonds, 3/1/2000 1,514,294
4,355,000 Alabama State, Series A
5.50% Bonds, 10/1/2000 4,422,814
2,000,000 Anniston, AL, IDB, (Series
1989-A) Weekly VRDNs
(Union Foundry
Co.)/(Amsouth Bank,
Birmingham LOC) 2,000,000
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
3,000,000 Auburn, AL IDB, (Series
1999) Weekly VRDNs
(Donaldson Company,
Inc.)/(Bank of America,
N.A. LOC) 3,000,000
2,000,000 Birmingham, AL IDA Weekly VRDNs (Altec Industries,
Inc.)/(Wachovia Bank of
NC, N.A. LOC) 2,000,000
6,000,000 Birmingham, AL IDA,
(Series 1997) Weekly VRDNs
(Millcraft, AL,
Inc.)/(Regions Bank,
Alabama LOC) 6,000,000
2,825,000 Birmingham, AL IDA, IDRBs
(Series 1997) Weekly VRDNs
(J. J. & W, IV,
Ltd.)/(Svenska
Handelsbanken, Stockholm
LOC) 2,825,000
7,010,000 Birmingham, AL IDA, IDRBs
(Series 1999) Weekly VRDNs
(Glasforms,
Inc.)/(Comerica Bank -
California LOC) 7,010,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
ALABAMA-CONTINUED
$ 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 LOC) 2,165,000
4,440,000 Birmingham, AL IDA,
Revenue Refunding Bonds
Weekly VRDNs (S.P. Hotel
Co.)/(Amsouth Bank N.A.,
Birmingham LOC) 4,440,000
400,000 Calhoun County, AL
Economic Development
Council Weekly VRDNs (Food
Ingredients Tech.
Co.)/(Bank of America,
N.A. LOC) 400,000
2,770,000 Calhoun County, AL
Economic Development
Council, Variable/Fixed
Rate IDRBs Weekly VRDNs
(Fabarc Steel
Co.)/(Regions Bank,
Alabama LOC) 2,770,000
1,200,000 Cullman, AL IDB, IRBs
(Series 1992) Weekly VRDNs
(Pressac Holdings
PLC)/(Bank One, Michigan
LOC) 1,200,000
800,000 Cullman, AL IDB, Series 1989 Weekly VRDNs (Pressac, Inc.)/(Bank
One,
Michigan LOC) 800,000
2,685,000 Cullman, AL IDB, Variable/
Fixed Rate IDRB Weekly
VRDNs (National Bedding
Co.)/(Bank of America,
N.A. LOC) 2,685,000
3,000,000 Decatur, AL IDB, Revenue
Refunding Bonds (Series
1993) Weekly VRDNs
(Allied-Signal, Inc.) 3,000,000
1,400,000 Dothan, AL IDB,
Adjustable/Fixed Rate IRBs
(Series 1997) Weekly VRDNs
(Henderson Steel
Erectors)/(Regions Bank,
Alabama LOC) 1,400,000
1,120,000 Fort Payne, AL IDB, IDRB
Weekly VRDNs
(Ovalstrapping,
Inc.)/(U.S. Bank, N.A.,
Minneapolis LOC) 1,120,000
7,400,000 Gadsen, AL IDB, IDRBs
(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
IDRBs (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
2,735,000 Hamilton, AL IDB,
Variable/Fixed Rate IDRBs
Weekly VRDNs (Tennessee
River, Inc.)/(SouthTrust
Bank of Alabama,
Birmingham LOC) 2,735,000
8,000,000 Hoover, AL Board of
Education, Warrant
Anticipation Notes (Series
1999A), 3.80% BANs,
8/1/2000 8,000,000
2,180,000 Hoover, AL IDB Weekly VRDNs (Bud's Best Cookies,
Inc.)/(SouthTrust Bank of
Alabama, Birmingham LOC) 2,180,000
1,170,000 Huntsville Madison County,
AL Airport Authority,
4.30% Bonds (MBIA INS),
7/1/2000 1,172,600
2,250,000 Huntsville, AL IDB Weekly VRDNs (Giles & Kendall,
Inc.)/(SouthTrust Bank of
Alabama, Birmingham LOC) 2,250,000
125,000 Huntsville, AL IDB Weekly
VRDNs (Parkway Project
(Huntsville, AL))/(Regions
Bank, Alabama LOC) 125,000
1,185,000 Huntsville, AL, Warrants
(Series A), 3.10% Bonds,
11/1/1999 1,185,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
ALABAMA-CONTINUED
$ 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
1,000,000 Jefferson County, AL,
Warrants (Series 1999)
Weekly VRDNs (Bayerische
Landesbank Girozentrale
LOC) 1,000,000
1,500,000 Jefferson County, AL, GO
Warrants (Series 1996)
Weekly VRDNs (Bayerische
Landesbank Girozentrale
LOC) 1,500,000
2,800,000 Lowndes County, AL IDB,
(Series 1996) Weekly VRDNs
(Warren Oil Company
Project)/(First Union
National Bank, Charlotte,
NC LOC) 2,800,000
270,000 Marshall County, AL,
Special Obligation School
Refunding Warrant (Series
1994) Weekly VRDNs
(Marshall County, AL Board
of Education)/(Regions
Bank, Alabama LOC) 270,000
2,360,000 Mobile, AL Downtown
Redevelopment Authority,
(Series 1992) Weekly VRDNs
(Mitchell
Project)/(SunTrust Bank,
Atlanta LOC) 2,360,000
2,500,000 Mobile, AL IDA Weekly VRDNs
(McRae's Industries,
Inc.)/(Bank of America,
N.A. LOC) 2,500,000
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), 3.95% TOBs
(International Paper Co.),
Optional Tender 12/1/1999 3,000,000
1,500,000 Mobile, AL IDB, PCR (Series
1993B) Weekly VRDNs
(Alabama Power Co.) 1,500,000
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
2,305,000 Montgomery, AL IDB,
(Series 1990-A) Weekly
VRDNs (Industrial
Partners)/(Wachovia Bank
of NC, N.A. LOC) 2,305,000
6,000,000 Montgomery, AL IDB, IDRBs
(Series 1996) Weekly VRDNs
(CSC Fabrication, Inc.
Project)/(Chase Bank of
Texas LOC) 6,000,000
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
7,000,000 Perry County, AL IDB,
Revenue Bonds (Series
1998) Weekly VRDNs
(Alabama Catfish Feedmill,
L.L.C.)/(Regions Bank,
Alabama LOC) 7,000,000
2,785,000 Phoenix City, AL, (Series
1998) Weekly VRDNs (Kudzu,
L.L.C.)/(SunTrust Bank,
Atlanta LOC) 2,785,000
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. LOC) 760,000
4,415,000 Prattville, AL IDB, IDR
Bonds Weekly VRDNs
(Kuhnash Properties/Arkay
Plastics Project)/(PNC
Bank, N.A. LOC) 4,415,000
2,250,000 Scottsboro, AL IDB,
(Series 1994) Weekly VRDNs
(Maples Industries,
Inc.)/(Amsouth Bank N.A.,
Birmingham LOC) 2,250,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
ALABAMA-CONTINUED
$ 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), 4.30% TOBs
(International Paper Co.),
Optional Tender 7/15/2000 5,000,000
1,560,000 Shelby County, AL Board of
Education Warrants, 4.375%
Bonds, Series B, (AMBAC
INS), 2/1/2000 1,564,469
2,500,000 Shelby County, AL EDA
Weekly VRDNs (Saginaw Pipe
of Illinois,
Inc.)/(Regions Bank,
Alabama LOC) 2,500,000
7,575,000 St. Clair County, AL IDB,
(Series 1993) Weekly VRDNs
(Ebsco Industries,
Inc.)/(National Australia
Bank, Ltd., Melbourne LOC) 7,575,000
4,100,000 Sumter County, AL IDA, IRBs
(Series 1995A) Weekly
VRDNs (Fulghum Fibres
Project (AL))/(Regions
Bank, Alabama LOC) 4,100,000
900,000 Sumter County, AL IDA, IRBs
(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
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, IRBs (Series
1996A) Weekly VRDNs
(Hudson Sauces &
Dressings, Inc.)/(Amsouth
Bank N.A., Birmingham LOC) 3,000,000
55,000 Tuscaloosa County, AL Port
Authority, (Series 1989A)
Weekly VRDNs (Capstone
Hotel Ltd.)/(SouthTrust
Bank of Alabama,
Birmingham LOC) 55,000
2,000,000 Tuskegee, AL IDB, IDRB
(Series 1995) Weekly VRDNs
(Concrete Company
(The)/(Columbus Bank and
Trust Co., GA LOC) 2,000,000
4,295,000 Vincent, AL IDB, Weekly
VRDNs (Headquarters
Partnership
Project)/(National
Australia Bank, Ltd.,
Melbourne LOC) 4,295,000
1,910,000 Vincent, AL IDB, (Series
1993) Weekly VRDNs (Ebsco
Industries,
Inc.)/(National Australia
Bank, Ltd., Melbourne LOC) 1,910,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
ALABAMA-CONTINUED
$ 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 235,884,177
PUERTO RICO-0.8%
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
TOTAL INVESTMENTS (AT
AMORTIZED COST) 2 $ 237,884,177
</TABLE>
Securities that are subject to alternative minimum tax represent 70.5% 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, 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 October 31, 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>
96.64% 3.36%
</TABLE>
2 Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($239,000,750) at October 31, 1999.
The following acronyms are used throughout this portfolio:
AMBAC -American Municipal Bond Assurance Corporation BANs -Bond Anticipation
Notes COL -Collateralized EDA -Economic Development Authority 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 -Industrial Development Revenue Bond
INS -Insured IRB's -Industrial Revenue Bonds 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
OCTOBER 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Total investments in
securities, at amortized
cost and value $ 237,884,177
Cash 363,764
Income receivable 1,130,606
TOTAL ASSETS 239,378,547
LIABILITIES:
Payable for shares
redeemed $ 2,718
Income distribution
payable 291,459
Accrued expenses 83,620
TOTAL LIABILITIES 377,797
Net assets for 239,000,750
shares outstanding $ 239,000,750
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PROCEEDS PER SHARE:
$239,000,750 / 239,000,750
shares outstanding $1.00
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Operations
YEAR ENDED OCTOBER 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 7,361,031
EXPENSES:
Investment advisory fee $ 1,050,119
Administrative personnel
and services fee 158,358
Custodian fees 9,909
Transfer and dividend
disbursing agent fees and
expenses 56,891
Directors'/Trustees' fees 1,941
Auditing fees 12,534
Legal fees 9,460
Portfolio accounting fees 48,851
Shareholder services fee 525,060
Share registration costs 26,224
Printing and postage 14,397
Insurance premiums 14,115
Miscellaneous 2,942
TOTAL EXPENSES 1,930,801
WAIVERS:
Waiver of investment
advisory fee $ (745,427)
Waiver of shareholder
services fee (21,002)
TOTAL WAIVERS (766,429)
Net expenses 1,164,372
Net investment income 6,196,659
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31 1999 1998
<S> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net investment income $ 6,196,659 $ 6,019,791
DISTRIBUTIONS TO
SHAREHOLDERS:
Distributions from net
investment income (6,196,659) (6,019,791)
SHARE TRANSACTIONS:
Proceeds from sale of
shares 605,959,818 436,920,174
Net asset value of shares
issued to shareholders in
payment of
distributions declared 3,430,339 3,252,776
Cost of shares redeemed (560,214,016) (473,995,552)
CHANGE IN NET ASSETS
RESULTING FROM SHARE
TRANSACTIONS 49,176,141 (33,822,602)
Change in net assets 49,176,141 (33,822,602)
NET ASSETS:
Beginning of period 189,824,609 223,647,211
End of period $ 239,000,750 $ 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>
YEAR ENDED OCTOBER 31 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.03 0.03 0.03 0.03 0.04
LESS DISTRIBUTIONS:
Distributions from net investment income (0.03) (0.03) (0.03) (0.03) (0.04)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN 1 2.98% 3.24% 3.26% 3.22% 3.66%
RATIOS TO AVERAGE NET ASSETS:
Expenses 2 0.91% 0.92% 0.91% 0.92% 0.92%
Net investment income 2 2.59% 2.82% 2.85% 2.81% 3.15%
Expenses (after waivers) 0.55% 0.55% 0.55% 0.55% 0.48%
Net investment income (after waivers) 2.95% 3.19% 3.21% 3.18% 3.59%
SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $239,001 $189,825 $223,647 $233,720 $209,490
</TABLE>
1 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
2 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
OCTOBER 31, 1999
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
October 31, 1999, capital paid-in aggregated $239,000,750. Transactions in
shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31 1999 1998
<S> <C> <C>
Shares sold 605,959,818 436,920,174
Shares issued to
shareholders in payment of
distributions declared 3,430,339 3,252,776
Shares redeemed (560,214,016) (473,995,552)
NET CHANGE RESULTING FROM
SHARE TRANSACTIONS 49,176,141 (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.
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 October 31, 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 and amounted to $448,880,508 and $373,040,000,
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
October 31, 1999, 77.19% 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 15.6% of total investments.
YEAR 2000 (UNAUDITED)
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.
CHANGE OF INDEPENDENT AUDITOR (UNAUDITED)
On May 19, 1999, the Fund's Trustees, upon the recommendation of its Audit
Committee, requested and subsequently accepted the resignation of Arthur
Andersen LLP ("AA") as the Fund's independent auditors. AA's reports on the
Fund's financial statements for the fiscal years ended October 31, 1997 and
October 31, 1998 contained no adverse opinion or disclaimer of opinion nor were
they qualified or modified as to uncertainty, audit scope or accounting
principles. During the Fund's fiscal years ended October 31, 1997 and October
31, 1998: (i) there were no disagreements with AA on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure, which disagreements, if not resolved to the satisfaction of AA, would
have caused it to make reference to the subject matter of the disagreements in
connection with its reports on the financial statements for such years; and (ii)
there were no reportable events of the kind described in Item 304(a)(1)(v) of
Regulation S-K under the Securities Exchange Act of 1934, as amended.
The Fund, by action of its Trustees, upon the recommendation of the Audit
Committee, has engaged Ernst & Young LLP ("E&Y") as the independent auditors to
audit the Fund's financial statements for the fiscal year ended October 31,
1999. During the Fund's fiscal years ended October 31, 1997 and October 31,
1998, neither the Fund nor anyone on its behalf has consulted E&Y on items which
(i) concerned the application of accounting principles to a specified
transaction, either completed or proposed, or the type of audit opinion that
might be rendered on the Fund's financial statements; or (ii) concerned the
subject of a disagreement (as defined in paragraph (a)(1)(iv) of Item 304 of
Regulation S-K) of reportable events (as described in paragraph (a)(1)(v) of
said Item 304).
Report of Ernst & Young LLP, Independent Auditors
TO THE BOARD OF TRUSTEES OF FEDERATED MUNICIPAL TRUST AND SHAREHOLDERS OF
ALABAMA MUNICIPAL CASH TRUST:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of the Alabama Municipal Cash Trust (one of the
portfolios constituting the Federated Municipal Trust) as of October 31, 1999,
and the related statement of operations, the statement of changes in net assets,
and the financial highlights for the year then ended. These financial statements
and financial highlights are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit. The statement of changes in net assets
for the year ended October 31, 1998 and the financial highlights for each of the
periods indicated therein for the period then ended were audited by other
auditors whose report, dated December 23, 1998, expressed an unqualified opinion
on that statement and those financial highlights.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in financial statements and
financial highlights. Our procedures included confirmation of securities owned
as of October 31, 1999, by correspondence with the custodian. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Alabama Municipal Cash Trust of the Federated Municipal Trust at October 31,
1999, and the results of its operations, changes in its net assets and financial
highlights for the year then ended, in conformity with generally accepted
accounting principles.
[Graphic]
Boston, Massachusetts
December 16, 1999
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
LESLIE K. ROSS
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
ANNUAL REPORT
Alabama Municipal Cash Trust
ANNUAL REPORT TO SHAREHOLDERS
OCTOBER 31, 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
G01120-02 (12/99)
[Graphic]
ANNUAL REPORT
President's Message
Dear Shareholder:
I am pleased to present the Annual Report to Shareholders of Arizona Municipal
Cash Trust, which covers the 12-month period from November 1, 1998 through
October 31, 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-- through a
portfolio concentrated in high-quality, short-term Arizona 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
$0.03 per share. The fund's net assets totaled $33.9 million at the end of the
reporting period.
Thank you for relying on Arizona Municipal Cash Trust to help your ready cash
earn 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,
[Graphic]
Glen R. Johnson
President
December 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, Jr., Vice
President, Federated Investment Management Company.
WHAT ARE YOUR COMMENTS ON THE ECONOMY AND THE INTEREST RATE ENVIRONMENT DURING
THE FUND'S REPORTING PERIOD?
Perhaps the biggest issues threatening the U.S. economy in the latter half of
1998 were alleviated by the second quarter of 1999. The improvements in
international economies, particularly Asia, and calm foreign markets laid the
foundation for the Federal Reserve Board (the "Fed") to focus on U.S. economic
releases as a better indicator of the inflation picture. The Fed became
increasingly concerned with inflationary pressures from tighter labor markets
and rising equity wealth. For the most part inflationary forces remained tame
during 1999 with increases in some commodity prices, such as oil. Nevertheless,
the Fed began a series of three rate increases, citing tighter labor markets,
shrinking productivity gains and growth in demand. The moves came in June,
August and November; each time, the Fed voted to raise the federal funds target
rate by a quarter point.
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"), which comprise more than 50% of the fund's assets, started the period
in the 3.00% range, but moved sharply higher in December to the 4.00% level as
supply and demand imbalances occurred. Yields then declined in January, as
investors looked to reinvest coupon payments and year end selling pressures
eased. Yields averaged slightly over 2.75% during February and March before
rising to the 4.00% range in April due to traditional tax season payment
pressures. Over the summer months, yields remained mostly in a band between
3.00% and 3.50%, but rose sharply in September as cash outflows in the municipal
markets pushed rates as high as 3.85%. VRDN yields ended the reporting period at
3.50%. Over the reporting period, VRDN yields averaged roughly 66% of taxable
rates, making them attractive for investors in the highest two 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, have 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 municipal
securities, relative to their taxable counterparts, relatively expensive.
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 55 days. The fund remained in a 45- to 50-day average maturity
range over the reporting period 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.
Once an average maturity range was targeted, the portfolio maximized 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 municipals to taxable instruments, such as treasury securities. This
portfolio structure continued to provide a competitive yield over time.
WHAT IS YOUR OUTLOOK GOING FORWARD?
The Fed, concerned by persistent above-trend growth in an environment where
labor markets are constrained and productivity gains are narrowing, will likely
remain on hold until the first quarter of 2000. It is likely that we will see
one and possibly two interest rate increases in the first half of 2000. 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
OCTOBER 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS--
99.2% 1
ARIZONA--94.2%
$ 750,000 Apache County, AZ IDA
(Series 1983A) Weekly
VRDNs (Tucson Electric
Power Co.)/(Toronto-
Dominion Bank LOC) $ 750,000
1,500,000 Chandler, AZ IDA (Series
1999A) Weekly VRDNs (South
Bay Circuits,
Inc.)/(Comerica Bank,
California LOC) 1,500,000
500,000 Cochise County, AZ
Pollution Control Corp.
(Pooled Series 1994A)
3.65% TOBs (Arizona
Electric Power
Cooperative, Inc.
Project)/(National Rural
Utilities Cooperative
Finance Corp. GTD)
Optional Tender 3/1/2000 500,000
1,250,000 Coconino County, AZ
Pollution Control Corp.
(Series 1998) Daily VRDNs
(Arizona Public Service
Co.)/(KBC Bank N.V. LOC) 1,250,000
1,500,000 Eloy, AZ IDA (Series 1996)
Weekly VRDNs (The Marley
Cooling Tower Co.)/(First
Union National Bank,
Charlotte, N.C. LOC) 1,500,000
3,121,000 Flagstaff, AZ (Series
1999) Weekly VRDNs (Joy
Cone Co.)/(Mellon Bank
N.A., Pittsburgh LOC) 3,121,000
1,300,000 Maricopa County, AZ
Pollution Control Corp.
(Series 1984) Weekly VRDNs
(El Paso Electric
Co.)/(Barclays Bank PLC,
London LOC) 1,300,000
1,000,000 Maricopa County, AZ School
District No. 28, Kyrene
Elementary, Second Series
Bonds (FGIC INS) 7/1/2000 976,409
3,740,000 Maricopa County, AZ, IDA
(Series 1984) Weekly VRDNs
(Gannett Co., Inc.) 3,740,000
1,400,000 Maricopa County, AZ, IDA (Series 1999) Weekly VRDNs (Redman
Homes, Inc.)/(PNC
Bank, N.A. LOC) 1,400,000
750,000 Maricopa County, AZ, IDA,
3.85% CP (Citizens
Utilities Co.), Mandatory
Tender 12/17/1999 750,000
750,000 Maricopa County, AZ, IDA,
3.85% CP (Citizens
Utilities Co.), Mandatory
Tender 12/17/1999 750,000
1,370,000 Mesa, AZ Municipal
Development Corp. (Series
1985) 3.60% CP
(Westdeutsche Landesbank
Girozentrale LOC)
Mandatory Tender 2/10/2000 1,370,000
1,000,000 Mesa, AZ, 5.35% Bonds (FGIC
INS), 7/1/2000 1,011,831
1,200,000 Phoenix, AZ IDA (Series
1997) Weekly VRDNs
(Interface Data Systems,
Inc.)/(Bank One, Arizona
N.A. LOC) 1,200,000
1,300,000 Phoenix, AZ IDA (Series
1998) Weekly VRDNs
(Standard Printing
Company, Inc.)/(Bank One,
Arizona N.A. LOC) 1,300,000
2,390,000 2 Pima County, AZ IDA, Single
Family Mortgage (PA-159) 3.60% TOBs (GNMA COL)/(Merrill Lynch
Capital Services, Inc.
LIQ) 2/10/2000 2,390,000
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
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS--
continued 1
ARIZONA--CONTINUED
$ 1,110,000 Scottsdale, AZ IDA Weekly
VRDNs (Scottsdale
(Memorial
Hospitals))/(AMBAC
INS)/(Credit Local de
France LIQ) $ 1,110,000
1,000,000 Tempe, AZ IDA (Series 1992)
3.75% TOBs (Safeway,
Inc.)/(Bankers Trust Co.,
New York LOC), Mandatory
Tender 4/17/2000 1,000,000
1,000,000 Tolleson, AZ Municipal
Finance Corp., Revenue
Refunding Bonds (Series of
1998) Weekly VRDNs
(Citizens Utilities Co.) 1,000,000
1,400,000 Yavapai, AZ IDA (Series
1997B) Weekly VRDNs
(Yavapai Regional Medical
Center)/(FSA INS)/(Credit
Local de France LIQ) 1,400,000
1,000,000 Yuma County, AZ Airport
Authority, Inc. (Series
1997A) Weekly VRDNs (Bank
One, Arizona N.A. LOC) 1,000,000
TOTAL 31,969,240
PUERTO RICO--5.0%
1,106,219 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) 1,106,219
575,000 Puerto Rico Telephone
Authority (Series M) 4.50%
Bonds (MBIA INS), 1/1/2000 576,343
TOTAL 1,682,562
TOTAL INVESTMENTS (AT
AMORTIZED COST) 3 $ 33,651,802
</TABLE>
Securities that are subject to alternative minimum tax represent 49.5% 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, or 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 October 31, 1999, the portfolio securities were rated as follows:
Tier Rating Based on Total Market Value (Unaudited)
<TABLE>
<CAPTION>
FIRST TIER SECOND TIER
<S> <C>
100% 0.00%
</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 October 31, 1999, these
securities amounted to $2,390,000 which represents 7.0% of net assets.
3 Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($33,933,321) at October 31, 1999.
The following acronyms are used throughout this portfolio:
AMBAC --American Municipal Bond Assurance Corporation COL --Collateralized CP
- --Commercial Paper FGIC --Financial Guaranty Insurance Company FSA --Financial
Security Assurance GNMA --Government National Mortgage Association GTD
- --Guaranteed 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
OCTOBER 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Total investments in
securities, at amortized
cost and value $ 33,651,802
Cash 149,111
Income receivable 179,597
Receivable for shares sold 27,396
TOTAL ASSETS 34,007,906
LIABILITIES:
Payable for shares
redeemed $ 20,000
Income distribution
payable 41,295
Accrued expenses 13,290
TOTAL LIABILITIES 74,585
Net assets for 33,933,321
shares outstanding $ 33,933,321
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PROCEEDS PER SHARE:
$33,933,321 / 33,933,321
shares outstanding $1.00
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Operations
YEAR ENDED OCTOBER 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 1,043,629
EXPENSES:
Investment advisory fee $ 157,652
Administrative personnel
and services fee 125,000
Custodian fees 2,172
Transfer and dividend
disbursing agent fees and
expenses 24,387
Directors'/Trustees' fees 438
Auditing fees 8,183
Legal fees 1,536
Portfolio accounting fees 43,638
Shareholder services fee 78,826
Share registration costs 25,151
Printing and postage 9,945
Insurance premiums 3,013
Miscellaneous 924
TOTAL EXPENSES 480,865
WAIVER AND REIMBURSEMENT:
Waiver of investment
advisory fee $ (157,652)
Reimbursement of other
operating expenses (139,034)
TOTAL WAIVERS AND
REIMBURSEMENTS (296,686)
Net expenses 184,179
Net investment income $ 859,450
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
YEAR PERIOD
ENDED ENDED
OCTOBER 31, OCTOBER 31,
1999 1998 1
<S> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net investment income $ 859,450 $ 155,579
DISTRIBUTIONS TO
SHAREHOLDERS:
Distributions from net
investment income (859,450) (155,579)
SHARE TRANSACTIONS:
Proceeds from sale of
shares 59,795,359 46,101,572
Net asset value of shares
issued to shareholders in
payment of
distributions declared 402,943 98,402
Cost of shares redeemed (60,992,727) (11,472,228)
CHANGE IN NET ASSETS
RESULTING FROM SHARE
TRANSACTIONS (794,425) 34,727,746
Change in net assets (794,425) 34,727,746
NET ASSETS:
Beginning of period 34,727,746 --
End of period $ 33,933,321 $ 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>
YEAR PERIOD
ENDED ENDED
OCTOBER 31, 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 0.03 0.01
LESS DISTRIBUTIONS:
Distributions from net
investment income (0.03) (0.01)
NET ASSET VALUE, END OF
PERIOD $ 1.00 $ 1.00
TOTAL RETURN 2 2.76% 1.28 %
RATIOS TO AVERAGE NET
ASSETS:
Expenses 3 1.53% 2.53% 4
Net investment income 3 1.78% 1.03% 4
Expenses(after waivers and
reimbursements) 0.58% 0.32% 4
Net investment
income(after waivers and
reimbursements) 2.73% 3.24% 4
SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $33,933 $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 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.
4 Computed on an annualized basis.
See Notes which are an integral part of the Financial Statements
Notes to Financial Statements
OCTOBER 31, 1999
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 Arizona income taxes 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.
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 Investment Company Act of 1940.
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
October 31, 1999, capital paid-in aggregated $33,933,321. Transactions in shares
were as follows:
<TABLE>
<CAPTION>
YEAR PERIOD
ENDED ENDED
OCTOBER 31, OCTOBER 31,
1999 1998 1
<S> <C> <C>
Shares sold 59,795,359 46,101,572
Shares issued to
shareholders in payment of
distributions declared 402,943 98,402
Shares redeemed (60,992,727) (11,472,228)
NET CHANGE RESULTING FROM
SHARE TRANSACTIONS (794,425) 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 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.
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 Trust 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 October 31, 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 and amounted to $65,829,000 and $71,449,000,
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
October 31, 1999, 72.9% 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 10.4% of total investments.
YEAR 2000 (UNAUDITED)
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.
CHANGE OF INDEPENDENT AUDITORS (UNAUDITED)
On May 19, 1999, the Fund's Trustees upon the recommendation of its Audit
Committee, requested and subsequently accepted the resignation of Arthur
Andersen LLP ("AA") as the Fund's independent auditors. AA's reports on the
Fund's financial statements for the fiscal years ended October 31, 1997 and
October 31, 1998 contained no adverse opinion or disclaimer of opinion nor were
they qualified or modified as to uncertainty, audit scope or accounting
principles. During the Fund's fiscal years ended October 31, 1997 and October
31, 1998: (i) there were no disagreements with AA on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure, which disagreements, if not resolved to the satisfaction of AA, would
have caused it to make reference to the subject matter of the disagreements in
connection with its reports on the financial statements for such years; and (ii)
there were no reportable events of the kind described in Items 304(a)(1)(v) of
Regulation S-K under the Securities Exchange Act of 1934, as amended.
The Fund, by action of its Trustees, upon the recommendation of the Audit
Committee, has engaged Ernst & Young LLP ("E&Y") as the independent auditors to
audit the Fund's financial statements for the fiscal year ended October 31,
1999. During the Fund's fiscal years ended October 31, 1997 and October 31,
1998, neither the Fund nor anyone on its behalf has consulted E&Y on items which
(i) concerned the application of accounting principles to a specified
transaction, either completed or proposed, or the type of audit opinion that
might be rendered on the Fund's financial statements or (ii) concerned the
subject of a disagreement (as defined in paragraph (a)(1)(iv) of Item 304 of
Regulation S-K) of reportable events (as described in paragraph (a)(1)(v) of
said Item 304).
Report of Ernst & Young LLP, Independent Auditors
TO THE BOARD OF TRUSTEES OF FEDERATED MUNICIPAL TRUST AND
SHAREHOLDERS OF ARIZONA MUNICIPAL CASH TRUST:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of the Arizona Municipal Cash Trust (one of the
portfolios constituting the Federated Municipal Trust) as of October 31, 1999,
and the related statement of operations, the statement of changes in net assets,
and the financial highlights for the year then ended. These financial statements
and financial highlights are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit. The statement of changes in net assets
and the financial highlights for the period June 10, 1998 to October 31, 1998
were audited by other auditors whose report, dated December 23, 1998, expressed
an unqualified opinion on that statement and those financial highlights.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in financial statements and
financial highlights. Our procedures included confirmation of securities owned
as of October 31, 1999, by correspondence with the custodian. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Arizona Municipal Cash Trust of the Federated Municipal Trust at October 31,
1999, and the results of its operations, changes in its net assets and financial
highlights for the year then ended, in conformity with generally accepted
accounting principles.
[Graphic]
Boston, Massachusetts
December 16, 1999
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
JOHN W. MCGONIGLE
Executive Vice President and Secretary
EDWARD C. GONZALES
Executive Vice President
RICHARD B. FISHER
Vice President
RICHARD J. THOMAS
Treasurer
LESLIE K. ROSS
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
ANNUAL REPORT
Arizona Municipal Cash Trust
ANNUAL REPORT TO SHAREHOLDERS
OCTOBER 31, 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 314229626
G02372-05 (12/99)
[Graphic]
ANNUAL REPORT
President's Message
Dear Shareholder:
I am pleased to present the Annual Report to Shareholders of California
Municipal Cash Trust, which covers the 12-month period from November 1, 1998
through October 31, 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 California personal income tax
- - through a portfolio concentrated in high-quality, short-term California
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
$0.03 per share for both Institutional Shares and Institutional Service Shares.
The fund's net assets totaled $557.2 million at the end of the reporting period.
Thank you for relying on California Municipal Cash Trust to help your ready cash
earn 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
December 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, Jr., Vice
President, Federated Investment Management Company.
WHAT ARE YOUR COMMENTS ON THE ECONOMY AND THE INTEREST RATE ENVIRONMENT DURING
THE FUND'S REPORTING PERIOD?
Perhaps the biggest issues threatening the U.S. economy in the latter half of
1998 were alleviated by the second quarter of 1999. The improvements in
international economies, particularly Asia, and calm foreign markets laid the
foundation for the Federal Reserve Board (the "Fed") to focus on U.S. economic
releases as a better indicator of the inflation picture. The Fed became
increasingly concerned with inflationary pressures from tighter labor markets
and rising equity wealth. For the most part inflationary forces remained tame
during 1999 with increases in some commodity prices, such as oil. Nevertheless,
the Fed began a series of three interest rate increases, citing tighter labor
markets, shrinking productivity gains and growth in demand. The moves came in
June, August and November; each time, the Fed voted to raise the federal funds
target rate by a quarter point.
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"), which comprise more than 50% of the fund's assets, started the period
in the 3.00% range, but moved sharply higher in December to the 4.00% level as
supply and demand imbalances occurred. Yields then declined in January, as
investors looked to reinvest coupon payments and year end selling pressures
eased. Yields averaged slightly over 2.75% during February and March before
rising to the 4.00% range in April due to traditional tax season payment
pressures. Over the summer months, yields remained mostly in a band between
3.00% and 3.50%, but rose sharply in September as cash outflows in the municipal
markets pushed rates as high as 3.85%. VRDN yields ended the reporting period at
3.50%. Over the reporting period, VRDN yields averaged roughly 66% of taxable
rates, making them attractive for investors in the two highest federal tax
brackets.
The overall tone of the short-term municipal market was positive. Municipalities
across the country 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 of the decade. Lack
of supply and heavy demand have kept short-term municipal securities, relative
to their taxable counterparts, relatively 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 45- to 50-day average maturity
range over the reporting period, 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 municipals to taxable instruments, such as U.S. Treasury
securities. This portfolio structure continued to provide a competitive yield
over time.
WHAT IS YOUR OUTLOOK GOING FORWARD?
The Fed, concerned by persistent above-trend growth in an environment where
labor markets are constrained and productivity gains are narrowing, will likely
remain on hold until the first quarter of 2000. It is likely that we will see
one and possibly two interest rate increases in the first and second quarters of
2000. 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
OCTOBER 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
SHORT-TERM MUNICIPALS-
99.5% 1
CALIFORNIA-86.1%
$ 9,000,000 ABAG Finance Authority for
Non-Profit Corporations
Weekly VRDNs (Lucile
Salter Packard Children's
Hospital at
Stanford)/(AMBAC
INS)/(Bayerische
Landesbank Girozentrale
LIQ) $ 9,000,000
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
4,000,000 ABAG Finance Authority for
Non-Profit Corporations
(Series 1999) Weekly VRDNs
(Marin Academy)/(Allied
Irish Banks PLC LOC) 4,000,000
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
6,500,000 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) 6,500,000
12,000,000 2 ABN AMRO MuniTOPS
Certificates Trust (California Non-AMT) (Series 1998-25) 3.2%
TOBs (Los Angeles, CA Wastewater System)/(FGIC INS)/(ABN AMRO
Bank N.V., Amsterdam LIQ), Optional
Tender 3/1/2000 12,000,000
6,500,000 ABN AMRO MuniTOPS
Certificates Trust
(California Non-AMT)
(Series 1999-7) Weekly
VRDNs (Los Angeles, CA
Unified School
District)/(MBIA INS)/(ABN
AMRO Bank N.V., Amsterdam
LIQ) 6,500,000
4,356,000 2 ABN AMRO MuniTOPS Certificates Trust (California Non-AMT)
(Series 1999-8) 3.5% TOBs (Contra Costa, CA Water
District)/(FGIC INS)/(ABN AMRO Bank N.V., Amsterdam LIQ),
Mandatory Tender
4/26/2000 4,356,000
5,000,000 California Educational
Facilities Authority,
Floater Certificates
(Series 1998-147) Weekly
VRDNs (University of
Southern
California)/(Morgan
Stanley, Dean Witter
Municipal Funding, Inc.
LIQ) 5,000,000
1,335,000 2 California HFA, Home Mortgage (Series 1989F) 3.4% TOBs
(Citibank N.A., New York LIQ), Optional
Tender 2/1/2000 1,335,000
3,135,000 California HFA, Variable
Rate Certificates (Series
1998E) Weekly VRDNs (Bank
of America, N.A. LIQ) 3,135,000
11,750,000 California PCFA, (Series
1996 E) Daily VRDNs
(Pacific Gas & Electric
Co.)/(Morgan Guaranty
Trust Co., New York LOC) 11,750,000
9,400,000 California PCFA, PCR
(Series D) Daily VRDNs
(Southern California
Edison Co.) 9,400,000
5,200,000 California PCFA, Series A
Daily VRDNs (Southern
California Edison Co.) 5,200,000
2,500,000 California State
Department of Water
Resources, PA-562R Weekly
VRDNs (Merrill Lynch
Capital Services, Inc.
LIQ) 2,500,000
6,000,000 California State, Floater Certificates (Series 1998- 55) Weekly
VRDNs (FGIC INS)/(Morgan Stanley, Dean Witter Municipal
Funding, Inc.
LIQ) 6,000,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
SHORT-TERM MUNICIPALS-
continued 1
CALIFORNIA-CONTINUED
$ 5,000,000 California State, GO Tax
Exempt Notes, 3.3% CP
(Bayerische Landesbank
Girozentrale, Commerzbank
AG, Frankfurt, Credit
Agricole Indosuez, 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 11/8/1999 $ 5,000,000
10,000,000 California State, GO Tax
Exempt Notes, 3.4% CP (Bayerische Landesbank Girozentrale,
Commerzbank AG, Frankfurt, Credit Agricole Indosuez, 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 12/1/1999 10,000,000
10,000,000 California State, GO Tax
Exempt Notes, 3.4% CP (Bayerische Landesbank Girozentrale,
Commerzbank AG, Frankfurt, Credit Agricole Indosuez, 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
11/19/1999 10,000,000
7,860,000 California State, Tender
Option Certificates
(Series 1998A) Weekly
VRDNs (MBIA INS)/(Bank
One, N.A. LIQ) 7,860,000
10,000,000 California State, Trust
Receipts (Series 1999
FR/RI-A39) Weekly VRDNs
(Bank of New York, New York
LIQ) 10,000,000
2,800,000 California Statewide
Communities Development
Authority, (Series A)
Weekly VRDNs (Barton
Memorial Hospital)/(Banque
Nationale de Paris LOC) 2,800,000
4,715,000 California Statewide
Communities Development
Authority, MERLOT's
(Series 1999E) Weekly
VRDNs (Sutter Health)/(FSA
INS)/(First Union National
Bank, Charlotte, NC LIQ) 4,715,000
4,000,000 Clipper Tax-Exempt Trust
(California Non-AMT)
(Series 1996 Issue A)
Weekly VRDNs (California
Rural Home Mortgage
Finance Authority)/(MBIA
INS)/(State Street Bank
and Trust Co. LIQ) 4,000,000
19,900,000 2 Clipper Tax-Exempt Trust
(California Non-AMT)
(Series A) 3.6% TOBs
(California HFA)/(MBIA
INS)/(State Street Bank
and Trust Co. LIQ) Optional
Tender 2/24/2000 19,900,000
1,120,000 Dry Creek, CA Joint
Elementary School
District, 4.1% TRANs,
10/1/2000 1,124,720
3,300,000 East Bay Municipal Utility
District, CA, 3.2% CP
(Westdeutsche Landesbank
Girozentrale LIQ)
Mandatory Tender
11/10/1999 3,300,000
4,900,000 East Bay Municipal Utility
District, CA, 3.4% CP
(Westdeutsche Landesbank
Girozentrale LIQ)
Mandatory Tender 3/15/2000 4,900,000
6,200,000 East Bay Municipal Utility
District, CA, 3.5% CP
(Westdeutsche Landesbank
Girozentrale LIQ)
Mandatory Tender 1/25/2000 6,200,000
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) 4.7% Bonds
(MBIA INS), 2/1/2000 501,830
27,380,000 Grand Terrace, CA
Community Redevelopment
Agency, Trust Receipts
(Series 1999 FR/RI-C1)
Weekly VRDNs (Mt. Vernon
Villas)/(Bank of America,
N.A. SWP) 27,380,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
SHORT-TERM MUNICIPALS-
continued 1
CALIFORNIA-CONTINUED
$ 5,000,000 Long Beach, CA, 4.5% TRANs,
10/20/2000 $ 5,051,403
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
10,200,000 Los Angeles County, CA
(Series A) 4.0% TRANs,
6/30/2000 10,244,364
1,800,000 Los Angeles, CA Department of Water & Power, Trust Receipts
(Series 1998 FR/RI-18) Weekly VRDNs (FGIC INS)/(Bank of New
York, New York LIQ) 1,800,000
34,500,000 Los Angeles, CA Unified
School District (Series
FR/RI-A19) Weekly VRDNs
(Bank of New York, New York
LIQ) 34,500,000
2,600,000 Los Angeles, CA Unified
School District, Floater
Certificates (Series 1998-
60) Weekly VRDNs (FGIC
INS)/(Morgan Stanley, Dean
Witter Municipal Funding,
Inc. LIQ) 2,600,000
15,700,000 Monterey Peninsula, CA
Water Management District
Weekly VRDNs (Wastewater
Reclaimation)/(Bank of
America, N.A. LOC) 15,700,000
6,000,000 Oceanside, CA Community
Development Commission
(Series 1985) Weekly VRDNs
(Shadow Way
Apartments)/(Bank One,
Arizona N.A. LOC) 6,000,000
11,900,000 Orange County, CA Housing
Authority (Issue 1998 I)
Weekly VRDNs (Oasis
Martinique)/(Federal
National Mortgage
Association LOC) 11,900,000
7,800,000 Orange County, CA IDA
(Series 1991A) Weekly
VRDNs (Casden Lakes
LP)/(Federal Home Loan
Mortgage Corp. LOC) 7,800,000
8,860,000 Oxnard Harbor District, CA
(Series 1995 II) PT-105
Weekly VRDNs (Asset
Guaranty INS)/(Merrill
Lynch Capital Services,
Inc. LIQ) 8,860,000
36,474,339 PBCC LeaseTOPS Trust
(California Non-AMT)
(Series 1998-1) Weekly
VRDNs (AMBAC INS)/(Pitney
Bowes Credit Corp. LIQ) 36,474,339
8,787,966 2 PBCC LeaseTOPS Trust
(California Non-AMT)
(Series 1999-1) 3.8% TOBs
(AMBAC INS)/(Pitney Bowes
Credit Corp. LIQ),
Optional Tender 7/12/2000 8,787,966
920,000 Pasadena, CA Unified
School District (Election
of 1997, Series B) 6.0%
Bonds (FGIC INS), 7/1/2000 935,475
1,000,000 Placer County, CA Office of
Education, 4.1% TRANs,
10/1/2000 1,004,214
4,000,000 Ravenswood, CA City School
District, 4.0% TRANs,
7/6/2000 4,013,073
9,000,000 Regents of University of
California (Series A) 3.2%
CP, Mandatory Tender
11/16/1999 9,000,000
2,000,000 Regents of University of
California (Series A) 3.5%
CP, Mandatory Tender
1/24/2000 2,000,000
2,000,000 Riverside County, CA
Public Financing
Authority, 3.6% Bonds
(Reassessment-Rancho
Village)/(AMBAC INS),
9/2/2000 2,000,000
3,455,000 Riverside, CA, Municipal
Securities Trust Receipts
(Series 1998-CMC5) Weekly
VRDNs (AMBAC INS)/(Chase
Manhattan Corp. LIQ) 3,455,000
1,000,000 Roseville, CA City School
District, 4.1% TRANs,
10/1/2000 1,004,214
2,680,000 Roseville, CA Joint Union
High School District, 4.1%
TRANs, 10/1/2000 2,691,294
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
SHORT-TERM MUNICIPALS-
continued 1
CALIFORNIA-CONTINUED
$ 800,000 Roseville, CA, Hospital
Facilities Authority
(Series 1989A) Weekly
VRDNs (Toronto-Dominion
Bank LOC) $ 800,000
5,000,000 Sacramento, CA (Series
1985B) Weekly VRDNs (Woodbridge - 301 LLC)/(Bank One, Arizona
N.A. LOC) 5,000,000
2,940,000 San Francisco, CA
Redevelopment Finance
Agency (PT-125) Weekly
VRDNs (Northridge
Cooperative Homes)/(MBIA
INS)/(Merrill Lynch
Capital Services,
Inc. LIQ) 2,940,000
16,500,000 San Francisco, CA
Redevelopment Finance
Agency (Series B1) Weekly
VRDNs (Fillmore
Center)/(Credit Suisse
First Boston LOC) 16,500,000
3,680,000 San Francisco, CA
Redevelopment Finance
Agency, CDC Municipal
Products, Inc. (Series
1997T) Weekly VRDNs
(Northridge Cooperative
Homes)/(MBIA INS)/(CDC
Municipal Products, Inc.
LIQ) 3,680,000
15,000,000 Southern California
Metropolitan Water
District, CA, Commercial
Paper Notes (Series B) 3.4%
CP (Westdeutsche
Landesbank Girozentrale
LIQ), Mandatory Tender
12/1/1999 15,000,000
5,000,000 Southern California
Metropolitan Water
District, CA, PUTTERs
(Series 116) Weekly VRDNs
(Morgan Guaranty Trust
Co., New York LIQ) 5,000,000
12,295,000 Stanislaus County, CA
Office of Education, 4.0%
TRANs, 8/1/2000 12,340,297
230,000 Stockton, CA, (Series
1993) Weekly VRDNs (La
Quinta Inns, Inc.)/(Bank
of America, N.A. LOC) 230,000
TOTAL 479,894,189
PUERTO RICO-13.4%
4,091,320 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) 4,091,320
15,000,000 Commonwealth of Puerto
Rico (Series 1992A) PT-140
Weekly VRDNs (FSA
INS)/(Commerzbank AG,
Frankfurt LIQ) 15,000,000
16,750,000 Commonwealth of Puerto
Rico, Floating Rate Trust
Receipts (Series 1997)
Weekly VRDNs (Commerzbank
AG, Frankfurt
LIQ)/(Commerzbank AG,
Frankfurt LOC) 16,750,000
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
4,935,000 2 Puerto Rico Commonwealth
Infrastructure Financing
Authority, Floater
Certificates (Series 1998-
86) 3.2% TOBs (AMBAC
INS)/(Morgan Stanley, Dean
Witter Municipal Funding,
Inc. LIQ), Optional Tender
1/20/2000 4,935,000
4,072,000 Puerto Rico Government
Development Bank (GDB)
3.3% CP, Mandatory Tender
11/10/1999 4,072,000
3,550,000 Puerto Rico Government
Development Bank (GDB)
3.4% CP, Mandatory Tender
2/1/2000 3,550,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
SHORT-TERM MUNICIPALS-
continued 1
PUERTO RICO-CONTINUED
$ 10,000,000 Puerto Rico Government
Development Bank (GDB)
3.4% CP, Mandatory Tender
2/8/2000 $ 10,000,000
6,000,000 Puerto Rico Government
Development Bank (GDB)
3.5% CP, Mandatory Tender
12/14/1999 6,000,000
2,600,000 Puerto Rico Government
Development Bank (GDB)
3.5% CP, Mandatory Tender
2/1/2000 2,600,000
1,115,000 Puerto Rico Industrial,
Medical & Environmental
PCA (1983 Series A) 2.9%
TOBs (Merck & Co., Inc.),
Optional Tender 12/1/1999 1,115,000
2,665,000 2 Puerto Rico Public Finance
Corp., PA-579, 3.5% TOBs
(AMBAC INS)/(Merrill Lynch
Capital Services, Inc.
LIQ), Optional Tender
1/27/2000 2,665,000
TOTAL 74,568,320
TOTAL INVESTMENTS (AT
AMORTIZED COST) 3 $ 554,462,509
</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, or 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 October 31, 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 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 October 31, 1999, these
securities amounted to $53,978,966 which represents 9.7% of net assets.
3 Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($557,183,944) at October 31, 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 INS -Insured LIQ -Liquidity Agreement LLC -Limited Liability
Corporation LOC -Letter of Credit LP -Limited Partnership MBIA -Municipal Bond
Investors Assurance PCA -Pollution Control Authority PCR -Pollution Control
Revenue PCFA -Pollution Control Finance Authority PLC -Public Limited Company
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
OCTOBER 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Total investments in
securities, at amortized
cost and value $ 554,462,509
Cash 606,677
Income receivable 2,771,915
Receivable for shares sold 53,467
TOTAL ASSETS 557,894,568
LIABILITIES:
Payable for shares
redeemed $ 78,624
Income distribution
payable 468,102
Accrued expenses 163,898
TOTAL LIABILITIES 710,624
Net assets for 557,183,944
shares outstanding $ 557,183,944
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PROCEEDS PER SHARE
INSTITUTIONAL SERVICE
SHARES:
$482,813,498 / 482,813,498
shares outstanding $1.00
INSTITUTIONAL SHARES:
$74,370,446 / 74,370,446
shares outstanding $1.00
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Operations
YEAR ENDED OCTOBER 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 15,867,328
EXPENSES:
Investment advisory fee $ 2,488,373
Administrative personnel
and services fee 375,247
Custodian fees 29,429
Transfer and dividend
disbursing agent fees and
expenses 105,049
Directors'/Trustees' fees 3,372
Auditing fees 12,667
Legal fees 85,029
Portfolio accounting fees 91,016
Shareholder services fee-
Institutional Service
Shares 1,086,577
Shareholder services fee-
Institutional Shares 157,608
Share registration costs 74,049
Printing and postage 18,655
Insurance premiums 31,550
Miscellaneous 5,500
TOTAL EXPENSES 4,564,121
WAIVERS:
Waiver of investment
advisory fee $ (2,053,851)
Waiver of shareholder
services fee-Institutional
Shares (157,608)
TOTAL WAIVERS (2,211,459)
Net expenses 2,352,662
Net investment income $ 13,514,666
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31 1999 1998
<S> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net investment income $ 13,514,666 $ 10,607,951
DISTRIBUTIONS TO
SHAREHOLDERS:
Distributions from net
investment income
Institutional Service
Shares (11,666,323) (9,261,806)
Institutional Shares (1,848,343) (1,346,145)
CHANGE IN NET ASSETS
RESULTING FROM
DISTRIBUTIONS
TO SHAREHOLDERS (13,514,666) (10,607,951)
SHARE TRANSACTIONS:
Proceeds from sale of
shares 2,051,500,217 1,401,854,420
Net asset value of shares
issued to shareholders in
payment of
distributions declared 8,375,448 5,742,314
Cost of shares redeemed (1,907,468,103) (1,279,540,519)
CHANGE IN NET ASSETS
RESULTING FROM SHARE
TRANSACTIONS 152,407,562 128,056,215
Change in net assets 152,407,562 128,056,215
NET ASSETS:
Beginning of period 404,776,382 276,720,167
End of period $ 557,183,944 $ 404,776,382
</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>
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 0.03 0.03 0.03 0.02
LESS DISTRIBUTIONS:
Distributions from net investment income (0.03) (0.03) (0.03) (0.02)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN 2 2.97% 3.31% 3.44% 2.24%
RATIOS TO AVERAGE NET ASSETS:
Expenses 3 0.91% 0.92% 0.95% 1.10% 4
Net investment income 3 2.27% 2.58% 2.71% 2.43% 4
Expenses (after waivers) 0.25% 0.25% 0.21% 0.20% 4
Net investment income (after waivers) 2.93% 3.25% 3.45% 3.33% 4
SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $74,370 $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 During the period, certain fees were voluntarily waived. If such voluntary
waivers had not occurred, the ratios would have been as indicated.
4 Computed on an annualized basis.
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>
YEAR ENDED OCTOBER 31 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.03 0.03 0.03 0.03 0.03
Net realized loss on investment - - - - (0.01)
TOTAL FROM INVESTMENT OPERATIONS 0.03 0.03 0.03 0.03 0.02
CAPITAL CONTRIBUTIONS - - - - 0.01
LESS DISTRIBUTIONS:
Distributions from net investment income (0.03) (0.03) (0.03) (0.03) (0.03)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN 1 2.71% 3.05% 3.19% 3.22% 3.37%
RATIOS TO AVERAGE NET ASSETS:
Expenses 2 0.91% 0.93% 0.95% 1.11% 1.09%
Net investment income 2 2.27% 2.56% 2.64% 2.55% 2.83%
Expenses (after waivers) 0.50% 0.50% 0.46% 0.49% 0.59%
Net investment income (after waivers) 2.68% 2.99% 3.13% 3.17% 3.33%
SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $482,813 $363,202 $234,764 $132,159 $96,534
</TABLE>
1 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
2 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
OCTOBER 31, 1999
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
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.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31 1999 1998
<S> <C> <C>
INSTITUTIONAL SHARES:
Shares sold 338,179,396 117,311,375
Shares issued to
shareholders in Payment of
distributions declared 38,331 11,638
Shares redeemed (305,421,476) (117,704,612)
NET CHANGE RESULTING FROM
INSTITUTIONAL SHARE
TRANSACTIONS 32,796,251 (381,599)
<CAPTION>
YEAR ENDED OCTOBER 31 1999 1998
<S> <C> <C>
INSTITUTIONAL SERVICE
SHARES:
Shares sold 1,713,320,821 1,284,543,045
Shares issued to
shareholders in payment of
distributions declared 8,337,117 5,730,676
Shares redeemed (1,602,046,627) (1,161,835,907)
NET CHANGE RESULTING FROM
INSTITUTIONAL SERVICE
SHARE TRANSACTIONS 119,611,311 128,437,814
NET CHANGE RESULTING FROM
SHARE TRANSACTIONS 152,407,562 128,056,215
</TABLE>
At October 31, 1999, capital paid-in aggregated $557,183,944.
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 October 31, 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 and amounted to $688,210,390 and $572,609,000,
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
October 31, 1999, 57.9% 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 13.9% of total investments.
YEAR 2000 (UNAUDITED)
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.
CHANGE OF INDEPENDENT AUDITORS (UNAUDITED)
On May 19, 1999, the Fund's Board of Trustees, upon the recommendation of its
Audit Committee, requested and subsequently accepted the resignation of Arthur
Andersen LLP ("AA") as the Fund's independent auditors. AA's reports on the
Fund's financial statements for the fiscal years ended October 31, 1997 and
October 31, 1998, contained no adverse opinion or disclaimer of opinion nor were
they qualified or modified as to uncertainty, audit scope or accounting
principles. During the Fund's fiscal years ended October 31, 1997 and October
31, 1998: (i) there were no disagreements with AA on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure, which disagreements, if not resolved to the satisfaction of AA, would
have caused it to make reference to the subject matter of the disagreements in
connection with its reports on the financial statements for such years; and (ii)
there were no reportable events of the kind described in Item 304(a)(1)(v) of
Regulation S-K under the Securities Exchange Act of 1934, as amended.
The Fund, by action of its Trustees, upon the recommendation of the Audit
Committee, has engaged Ernst & Young LLP ("E&Y") as the independent auditors to
audit the Fund's financial statements for the fiscal year ended October 31,
1999. During the Fund's fiscal years ended October 31, 1997 and October 31,
1998, neither the Fund nor anyone on its behalf has consulted E&Y on items which
(i) concerned the application of accounting principles to a specified
transaction, either completed or proposed, or the type of audit opinion that
might be rendered on the Fund's financial statements, or (ii) concerned the
subject of a disagreement (as defined in paragraph (a)(1)(iv) of Item 304 of
Regulation S-K) of reportable events (as described in paragraph (a)(1)(v) of
said Item 304).
Report of Ernst & Young LLP, Independent Auditors
TO THE BOARD OF TRUSTEES OF FEDERATED MUNICIPAL TRUST
AND SHAREHOLDERS OF CALIFORNIA MUNICIPAL CASH TRUST:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of the California Municipal Cash Trust (one of the
portfolios constituting the Federated Municipal Trust) as of October 31, 1999,
and the related statement of operations, the statement of changes in net assets,
and the financial highlights for the year then ended. These financial statements
and financial highlights are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit. The statement of changes in net assets
for the year ended October 31, 1998 and the financial highlights for each of the
periods indicated therein for the period then ended were audited by other
auditors whose report, dated December 23, 1998, expressed an unqualified opinion
on that statement and those financial highlights.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in financial statements and
financial highlights. Our procedures included confirmation of securities owned
as of October 31, 1999, by correspondence with the custodian. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
California Municipal Cash Trust of the Federated Municipal Trust at October 31,
1999, and the results of its operations, changes in its net assets and financial
highlights for the year then ended, in conformity with generally accepted
accounting principles.
[Graphic]
Boston, Massachusetts
December 16, 1999
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
LESLIE K. ROSS
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
ANNUAL REPORT
California Municipal Cash Trust
ANNUAL REPORT TO SHAREHOLDERS
OCTOBER 31, 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 314229766
Cusip 314229675
G00655-01 (12/99)
[Graphic]
ANNUAL REPORT
President's Message
Dear Shareholder:
I am pleased to present the Annual Report to Shareholders of Connecticut
Municipal Cash Trust, which covers the 12-month period from November 1, 1998
through October 31, 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- through a portfolio concentrated in high-quality,
short-term Connecticut 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
$0.03 per share. The fund's net assets reached $279.1 million at the end of the
reporting period.
Thank you for relying on Connecticut Municipal Cash Trust to help your ready
cash earn 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
December 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, Jr., Vice
President, Federated Investment Management Company.
WHAT ARE YOUR COMMENTS ON THE ECONOMY AND THE INTEREST RATE ENVIRONMENT DURING
THE FUND'S REPORTING PERIOD?
Perhaps the biggest issues threatening the U.S. economy in the latter half of
1998 were alleviated by the second quarter of 1999. The improvements in
international economies, particularly Asia, and calm foreign markets laid the
foundation for the Federal Reserve Board (the "Fed") to focus on U.S. economic
releases as a better indicator of the inflation picture. The Fed became
increasingly concerned with inflationary pressures from tighter labor markets
and rising equity wealth. For the most part inflationary forces remained tame
during 1999, with increases in some commodity prices, such as oil. Nevertheless,
the Fed began a series of three rate increases, citing tighter labor markets,
shrinking productivity gains and growth in demand. The moves came in June,
August and November; each time, the Fed voted to raise the federal funds target
rate by a quarter point.
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"), which comprise more than 50% of the fund's assets, started the period
in the 3.00% range, but moved sharply higher in December to the 4.00% level as
supply and demand imbalances occurred. Yields then declined in January, as
investors looked to reinvest coupon payments and year end selling pressures
eased. Yields averaged slightly over 2.75% during February and March before
rising to the 4.00% range in April due to traditional tax season payment
pressures. Over the summer months, yields remained mostly in a band between
3.00% and 3.50%, but rose sharply in September as cash outflows in the municipal
markets pushed rates as high as 3.85%. VRDN yields ended the reporting period at
3.50%. Over the reporting period, VRDN yields averaged roughly 66% of taxable
rates, making them attractive for investors in the highest two 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, have 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 municipal
securities, relative to their taxable counterparts, relatively expensive.
WHAT WERE YOUR STRATEGIES FOR THE FUND DURING THE REPORTING PERIOD? The fund's
average maturity at the beginning of the period was approximately 63 days. The
Trust remained in a 50 to 60-day average maturity range over the reporting
period, 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. Once a average maturity range is
targeted, the portfolio maximizes 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 municipals to
taxable instruments, such as treasury securities. This portfolio structure
continues to provide a competitive yield over time.
WHAT IS YOUR OUTLOOK GOING FORWARD?
The Fed, concerned by persistent above-trend growth in an environment where
labor markets are constrained and productivity gains are narrowing, will likely
remain on hold until the first quarter of 2000. It is likely that we will see
one and possibly two interest rate increases in the first half of 2000. 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
OCTOBER 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
SHORT-TERM MUNICIPALS-
102.2% 1
CONNECTICUT-89.8%
$ 2,713,000 Bethel, CT, 4.00% BANs,
7/7/2000 $ 2,723,708
5,000,000 Bridgeport, CT, 3.95%
BANs, 1/18/2000 5,000,000
9,175,000 Connecticut Development
Authority Health Care
Revenue Weekly VRDNs
(Corporation for
Independent Living)/(Chase
Manhattan Bank N.A., New
York LOC) 9,175,000
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
1,680,000 Connecticut Development
Authority Weekly VRDNs
(Banta Associates)/(HSBC
Bank USA LOC) 1,680,000
878,800 Connecticut Development
Authority Weekly VRDNs
(RSA Corp.)/(Barclays Bank
PLC, London LOC) 878,800
10,500,000 Connecticut Development
Authority, (Series 1996A)
Weekly VRDNs (Connecticut
Light & Power Co.)/(AMBAC
INS)/(Societe Generale,
Paris LIQ) 10,500,000
2,355,000 Connecticut Development
Authority, (Series 1997)
Weekly VRDNs (Porcelen
Ltd., CT LLC)/(Firstar
Bank, N.A., Cincinnati
LOC) 2,355,000
5,700,000 Connecticut Development
Authority, (Series 1997A)
Weekly VRDNs (Bradley
Airport Hotel
Project)/(KBC Bank N.V.
LOC) 5,700,000
1,485,000 Connecticut Development
Authority, (Series 1999)
Weekly VRDNs (Pierce
Memorial Baptist Home,
Inc.)/(Lasalle National
Bank, Chicago LOC) 1,485,000
3,500,000 Connecticut Development
Authority, (Series 1999),
3.55% CP (New England Power
Co.), Mandatory Tender
11/9/1999 3,500,000
26,594,000 Connecticut Development
Authority, Trust Receipts
(Series 1998 C-6) Reg D
Weekly VRDNs (Exeter
Energy)/(Bank of America,
N.A. SWP) 26,594,000
13,495,000 2 Connecticut State Airport,
Trust Receipts (Series
1997A), 3.50% TOBs
(Bradley International
Airport)/(FGIC
INS)/(National Westminster
Bank, PLC, London LIQ),
Optional Tender 11/1/1999 13,495,000
4,845,000 2 Connecticut State Clean
Water Fund, (Series 1999)
Floats PA-547R, TOBs
(Merrill Lynch Capital
Services, Inc. LIQ)
7/15/2012 4,845,000
1,400,000 Connecticut State HEFA,
(1999 Series U-1) Weekly
VRDNs (Yale University) 1,400,000
3,200,000 Connecticut State HEFA,
(1999 Series U-2) Weekly
VRDNs (Yale University) 3,200,000
8,400,000 Connecticut State HEFA,
(Series 1999B), 3.65% TOBs
(Ascension Health Credit
Group), Mandatory Tender
1/26/2000 8,400,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
SHORT-TERM MUNICIPALS-
continued 1
CONNECTICUT-CONTINUED
$ 3,000,000 Connecticut State HEFA,
(Series A) Weekly VRDNs
(Forman School
Issue)/(National
Westminster Bank, PLC,
London LOC) $ 3,000,000
18,000,000 Connecticut State HEFA,
(Series B) Weekly VRDNs
(Edgehill)/(Paribas, Paris
LOC) 18,000,000
1,715,000 Connecticut State HEFA,
(Series C) Weekly VRDNs
(Charlotte Hungerfield
Hospital)/(Bank of Boston,
Connecticut LOC) 1,715,000
2,500,000 Connecticut State HEFA,
(Series J) Weekly VRDNs (Hospital of Saint Raphael)/(KBC Bank
N.V.
LOC) 2,500,000
1,900,000 Connecticut State HEFA,
(Series K) Weekly VRDNs (Hospital of Saint Raphael)/(KBC Bank
N.V.
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) 3.60% CP (Yale
University), Mandatory
Tender 2/15/2000 6,575,000
3,865,000 Connecticut State HFA,
(Series 1996) P-Floats PT-
81 Weekly VRDNs (Merrill
Lynch Capital Services,
Inc. LIQ) 3,865,000
1,075,000 Connecticut State HFA,
(Series 1990C), 3.60% CP
(Morgan Guaranty Trust
Co., New York LIQ),
Mandatory Tender 11/8/1999 1,075,000
7,325,000 Connecticut State HFA,
(Series 1990C), 3.65% CP
(Morgan Guaranty Trust
Co., New York LIQ),
Mandatory Tender 3/10/2000 7,325,000
3,245,000 Connecticut State HFA,
(Series 1990D), 3.55% CP
(Morgan Guaranty Trust
Co., New York LIQ),
Mandatory Tender 12/1/1999 3,245,000
7,315,000 Connecticut State HFA,
(Series A) Weekly VRDNs
(Elm Haven Rental Limited
Partnership I)/(Fleet
National Bank,
Springfield, MA LOC) 7,315,000
11,570,000 Connecticut State HFA,
(Series 1997) P-Floats PT-
1003 Weekly VRDNs (Merrill
Lynch Capital Services,
Inc. LIQ) 11,570,000
9,745,000 2 Connecticut State HFA,
Variable Rate Certificates
(Series 1998S), 3.70% TOBs
(Bank of America, N.A.
LIQ), Optional Tender
8/17/2000 9,745,000
2,300,000 Connecticut State Resource
Recovery Authority,
(Series A) 5.60% Bonds
(Connecticut State GTD),
11/15/1999 2,302,198
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
SHORT-TERM MUNICIPALS-
continued 1
CONNECTICUT-CONTINUED
$ 4,325,000 Connecticut State Special
Assessment Unemployment
Compensation Advance Fund,
(Series A) 5.50% Bonds
(AMBAC INS), 11/15/2000 $ 4,396,689
2,000,000 Connecticut State
Transportation
Infrastructure Authority,
(Series 1990) Weekly VRDNs
(Commerzbank AG, Frankfurt
LOC) 2,000,000
2,000,000 Connecticut State
Transportation
Infrastructure Authority,
(Series 1995A) 5.10% Bonds
(FGIC INS), 6/1/2000 2,020,940
2,125,000 Connecticut State
Transportation
Infrastructure Authority,
Floater Certificates
(Series 1998-52) Weekly
VRDNs (FSA INS)/(Morgan
Stanley, Dean Witter
Municipal Funding, Inc.
LIQ) 2,125,000
8,400,000 Connecticut State, Special
Assessment Second Injury
Fund, 3.60% CP (Caisse
Nationale De Credit
Agricole, Paris and Credit
Communal de Belgique,
Brussles LIQs), Mandatory
Tender 1/26/2000 8,400,000
10,000,000 Connecticut State, Special
Assessment Unemployment
Compensation Advance Fund,
Revenue Bonds (Series
1993C), 3.38% TOBs (FGIC
INS)/(FGIC Securities
Purchase, Inc. LIQ),
Optional Tender 7/1/2000 10,000,000
8,100,000 Coventry, CT, 3.25% BANs,
12/14/1999 8,103,244
3,650,000 East Hartford, CT, 3.10%
BANs, 1/20/2000 3,651,548
3,900,000 Hartford, CT Redevelopment
Authority Weekly VRDNs
(Underwood Towers)/(FSA
INS)/(Societe Generale,
Paris LIQ) 3,900,000
2,300,000 New Britain, CT, (Series
1999) Weekly VRDNs (AMBAC
INS)/(Bank of Nova Scotia,
Toronto LIQ) 2,300,000
1,400,000 New Haven, CT Weekly VRDNs
(Starter
Sportswear)/(Fleet Bank
N.A. LOC) 1,400,000
4,000,000 New Haven, CT, 4.00% BANs,
7/12/2000 4,010,642
2,050,000 New Haven, CT, UT GO, 5.00%
Bonds (FGIC INS),
2/15/2000 2,062,226
2,870,000 Plymouth, CT, 4.25% BANs,
10/18/2000 2,883,291
1,800,000 Shelton, CT Housing
Authority, (Series 1998)
Weekly VRDNs (Crosby
Commons)/(First Union
National Bank, Charlotte,
NC LOC) 1,800,000
5,850,000 Somers, CT, 3.60% BANs,
7/14/2000 5,859,889
TOTAL 250,542,175
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
SHORT-TERM MUNICIPALS-
continued 1
PUERTO RICO-12.4%
$ 14,178,789 Commonwealth of Puerto
Rico Municipal Revenues
Collection Center, (Series
1997A) LeaseTOPS Trust
Weekly VRDNs (ABN AMRO Bank
N.V., Amsterdam
LIQ)/(State Street Bank
and Trust Co. LOC) $ 14,178,790
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
5,000,000 2 Puerto Rico Commonwealth
Infrastructure Financing
Authority, Floater
Certificates (Series 1999-
86), TOBs (AMBAC
INS)/(Morgan Stanley, Dean
Witter Municipal Funding,
Inc. LIQ), Optional Tender
1/20/2000 5,000,000
8,000,000 Puerto Rico Government
Development Bank (GDB),
3.30% CP, Mandatory Tender
11/10/1999 8,000,000
TOTAL 34,678,790
TOTAL SHORT-TERM
MUNICIPALS 285,220,965
TOTAL INVESTMENTS (AT
AMORTIZED COST) 3 $ 285,220,965
</TABLE>
Securities that are subject to alternative minimum tax represent 27.9% 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, or 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.
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 October 31, 1999, these
securities amount to $33,085,000, which represents 11.9% of net assets.
At October 31, 1999, the portfolio securities were rated as follows:
Tier Rating Percentage Based on Total Market Value
<TABLE>
<CAPTION>
FIRST TIER SECOND TIER
<S> <C>
98.25% 1.75%
</TABLE>
3 Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($279,134,626) at October 31, 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 -Guaranteed HEFA
- -Health and Education Facilities Authority HFA -Housing Finance Authority INS
- -Insured LIQ -Liquidity Agreement LLC -Limited Liability Corporation LOC -Letter
of Credit MBIA -Municipal Bond Investors Assurance PLC -Public Limited Company
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
OCTOBER 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Total investments in
securities, at amortized
cost and value $ 285,220,965
Cash 500,494
Income receivable 2,252,743
Receivable for shares sold 3,617
Prepaid expenses 6,865
TOTAL ASSETS 287,984,684
LIABILITIES:
Payable for investments
purchased $ 8,400,000
Payable for shares
redeemed 8,387
Income distribution
payable 379,593
Accrued expenses 62,078
TOTAL LIABILITIES 8,850,058
Net assets for 279,134,626
shares outstanding $ 279,134,626
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PROCEEDS PER SHARE
$279,134,626 / 279,134,626
shares outstanding $1.00
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Operations
YEAR ENDED OCTOBER 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 10,273,558
EXPENSES:
Investment advisory fee $ 1,600,781
Administrative personnel
and services fee 241,398
Custodian fees 18,429
Transfer and dividend
disbursing agent fees and
expenses 88,892
Directors'/Trustees' fees 3,690
Auditing fees 12,064
Legal fees 8,946
Portfolio accounting fees 66,225
Shareholder services fee 800,391
Share registration costs 9,479
Printing and postage 16,035
Insurance premiums 26,408
Miscellaneous 4,793
TOTAL EXPENSES 2,897,531
WAIVERS:
Waiver of investment
advisory fee $ (610,335)
Waiver of shareholder
services fee (352,172)
TOTAL WAIVERS (962,507)
Net expenses 1,935,024
Net investment income $ 8,338,534
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31 1999 1998
<S> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net investment income $ 8,338,534 $ 9,525,808
DISTRIBUTIONS TO
SHAREHOLDERS:
Distributions from net
investment income (8,338,534) (9,525,808)
SHARE TRANSACTIONS:
Proceeds from sale of
shares 936,586,293 1,057,554,443
Net asset value of shares
issued to shareholders in
payment of
distributions declared 2,685,053 3,189,470
Cost of shares redeemed (999,703,365) (992,493,610)
CHANGE IN NET ASSETS
RESULTING FROM SHARE
TRANSACTIONS (60,432,019) 68,250,303
Change in net assets (60,432,019) 68,250,303
NET ASSETS:
Beginning of period 339,566,645 271,316,342
End of period $ 279,134,626 $ 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>
YEAR ENDED OCTOBER 31 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.03 0.03 0.03 0.03 0.03
LESS DISTRIBUTIONS:
Distributions from net investment income (0.03) (0.03) (0.03) (0.03) (0.03)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN 1 2.64% 2.98% 3.01% 3.02% 3.31%
RATIOS TO AVERAGE NET ASSETS:
Expenses 2 0.90% 0.89% 0.91% 0.92% 0.90%
Net investment income 2 2.30% 2.64% 2.66% 2.65% 2.96%
Expenses (after waivers) 0.60% 0.60% 0.60% 0.60% 0.60%
Net investment income (after waivers) 2.60% 2.93% 2.97% 2.97% 3.26%
SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $279,135 $339,567 $271,316 $227,089 $184,718
</TABLE>
1 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
2 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
OCTOBER 31, 1999
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 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
October 31, 1999, capital paid-in aggregated $279,134,626. Transactions in
shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31 1999 1998
<S> <C> <C>
Shares sold 936,586,293 1,057,554,443
Shares issued to
shareholders in payment of
distributions declared 2,685,053 3,189,470
Shares redeemed (999,703,365) (992,493,610)
NET CHANGE RESULTING FROM
SHARE TRANSACTIONS (60,432,019) 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 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 October 31, 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 and amounted to $407,599,762 and $464,450,000
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
October 31, 1999, 51.2% 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 9.9% of total investments.
YEAR 2000 (UNAUDITED)
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.
CHANGE OF INDEPENDENT AUDITORS (UNAUDITED)
On May 19, 1999, the Fund's Trustees, upon the recommendation of its Audit
Committee, requested and subsequently accepted the resignation of Arthur
Andersen ("AA") as the Fund's independent auditors. AA's reports on the Fund's
financial statements for the fiscal years ended October 31, 1997 and October 31,
1998 contained no adverse opinion or disclaimer of opinion nor were they
qualified or modified as to uncertainty, audit scope or accounting principles.
During the Fund's fiscal years ended October 31, 1997 and October 31, 1998: (i)
there were no disagreements with AA on any matter of accounting principles or
practices, financial statement disclosure or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of AA, would have caused it
to make reference to the subject matter of the disagreements in connection with
its reports on the financial statements for such years; and (ii) there were no
reportable events of the kind described in Item 304 (a)(1)(v) of Regulation S-K
under the Securities Exchange Act of 1934, as amended.
The Fund, by action of its Trustees, upon the recommendation of the Audit
Committee, has engaged Ernst & Young LLP ("E&Y") as the independent auditors to
audit the Fund's financial statements for the fiscal year ended October 31,
1999. During the Fund's fiscal years ended October 31, 1997 and October 31,
1998, neither the Fund nor anyone on its behalf has consulted E&Y on items which
(i) concerned the application of accounting principles to a specified
transaction, either completed or proposed, or the type of audit opinion that
might be rendered on the Fund's financial statements, or (ii) concerned the
subject of a disagreement (as defined in paragraph (a)(1)(iv) of Item 304 of
Regulation S-K) of reportable events (as described in the paragraph (a)(1)(v) of
said Item 304).
Report of Ernst & Young LLP, Independent Auditors
TO THE BOARD OF TRUSTEES OF FEDERATED MUNICIPAL TRUST AND SHAREHOLDERS OF
CONNECTICUT MUNICIPAL CASH TRUST:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of the Connecticut Municipal Cash Trust (one of
the portfolios constituting the Federated Municipal Trust) as of October 31,
1999, and the related statement of operations, the statement of changes in net
assets, and the financial highlights for the year then ended. These financial
statements and financial highlights are the responsibility of the Trust's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audit. The statement of changes
in net assets for the year ended October 31, 1998 and the financial highlights
for each of the periods indicated therein for the period then ended were audited
by other auditors whose report, dated December 29, 1998, expressed an
unqualified opinion on that statement and those financial highlights.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in financial statements and
financial highlights. Our procedures included confirmation of securities owned
as of October 31, 1999, by correspondence with the custodian and brokers or
other appropriate auditing procedures where replies from brokers were not
received. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Connecticut Municipal Cash Trust of the Federated Municipal Trust at October 31,
1999, and the results of its operations, changes in its net assets and financial
highlights for the year then ended, in conformity with generally accepted
accounting principles.
[Graphic]
Boston, Massachusetts
December 16, 1999
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
JOHN W. MCGONIGLE
Executive Vice President and Secretary
EDWARD C. GONZALES
Executive Vice President
RICHARD B. FISHER
Vice President
RICHARD J. THOMAS
Treasurer
LESLIE K. ROSS
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
ANNUAL REPORT
Connecticut Municipal Cash Trust
ANNUAL REPORT TO SHAREHOLDERS
OCTOBER 31, 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
G00825-01 (12/99)
[Graphic]
ANNUAL REPORT
President's Message
Dear Shareholder:
I am pleased to present the Annual Report to Shareholders of Florida Municipal
Cash Trust, which covers the 12-month period from November 1, 1998 through
October 31, 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 keep your cash pursuing double tax-free
income-free from federal regular income tax and Florida intangibles tax- through
a portfolio concentrated in high-quality, short-term Florida 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 of $0.03
per share for Institutional Shares and $0.02 per share for Cash II Shares. The
fund's net assets totaled $353.8 million at the end of the reporting period.
Thank you for relying on Florida Municipal Cash Trust to help your ready cash
earn 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
December 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 REPORTING PERIOD?
Perhaps the biggest issues threatening the U.S. economy in the latter half of
1998 were alleviated by the second quarter of 1999. The improvements in
international economies, particularly Asia, and calm foreign markets laid the
foundation for the Federal Reserve Board (the "Fed") to focus on U.S. economic
releases as a better indicator of the inflation picture. The Fed became
increasingly concerned with inflationary pressures from tighter labor markets
and rising equity wealth. For the most part inflationary forces remained tame
during 1999 with increases in some commodity prices, such as oil. Nevertheless,
the Fed began a series of three rate increases, citing tighter labor markets,
shrinking productivity gains and growth in demand. The moves came in June,
August and November; each time, the Fed voted to raise the federal funds target
rate by a quarter point.
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"), which comprise more than 50% of the fund's assets, started the period
in the 3.00% range, but moved sharply higher in December to the 4.00% level as
supply and demand imbalances occurred. Yields then declined in January, as
investors looked to reinvest coupon payments and year end selling pressures
eased. Yields averaged slightly over 2.75% during February and March before
rising to the 4.00% range in April due to traditional tax season payment
pressures. Over the summer months, yields remained mostly in a band between
3.00% and 3.50%, but rose sharply in September as cash outflows in the municipal
markets pushed rates as high as 3.85%. VRDN yields ended the reporting period at
3.50%. Over the reporting period, VRDN yields averaged roughly 66% of taxable
rates, making them attractive for investors in the highest two 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, have 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 municipal
securities, relative to their taxable counterparts, relatively expensive.
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 42 days. At the end of 1998, the fund's average maturity declined
to as low as 19 days in late December as assets in the fund more than quadrupled
from the start of the period. Outflows in January and February moved the
maturity to over 40 days in February, and it remained mostly in a 35-45 day
range over the remainder of the reporting period. 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. Once an average maturity range was targeted taking into account Federal
Reserve monetary policy, the portfolio maximized 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
municipals to taxable instruments, such as treasury securities. This portfolio
structure continued to provide a competitive yield over time.
WHAT IS YOUR OUTLOOK GOING FORWARD?
The Fed, concerned by persistent above-trend growth in an environment where
labor markets are constrained and productivity gains are narrowing, will likely
remain on hold until the first quarter of 2000. It is likely that we will see
one and possibly two interest rate increases in the first half of 2000. 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
OCTOBER 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
99.6% 1
ALABAMA-0.8%
$ 3,000,000 Hoover, AL Board of
Education, (Series 1999A),
3.80% BANs, 8/1/2000 $ 3,000,000
ARKANSAS-0.5%
1,700,000 Hope, AR, Solid Waste
Disposal Revenue Bonds
(Series 1994), 4.15% CP
(Temple-Inland Forest
Products Corp.)/(Temple-
Inland, Inc. GTD),
Mandatory Tender
11/10/1999 1,700,000
FLORIDA-81.9%
5,000,000 2 ABN AMRO MuniTOPS Certificates Trust (Florida Non-AMT)
(Series 1998-8) Weekly VRDNs (Dade County, FL Water & Sewer
System)/(FGIC INS)/(ABN AMRO Bank N.V., Amsterdam
LIQ) 5,000,000
8,000,000 2 ABN AMRO MuniTOPS Certificates Trust (Florida Non-AMT)
(Series 1999-11), 3.85% TOBs (Tampa Bay Water Utility System,
FL)/(FGIC INS)/(ABN AMRO Bank N.V., Amsterdam LIQ), Optional
Tender 3/8/2000 8,000,000
1,400,000 Alachua County, FL Health
Facilities Authority,
Health Facilities Revenue
Bonds (Series 1996B)
Weekly VRDNs (Shands
Teaching Hospital and
Clinics, Inc.)/
(MBIA INS)/(SunTrust Bank,
Central Florida LIQ) 1,400,000
4,000,000 Alachua County, FL IDRBs
(Series 1997) Weekly VRDNs
(Florida Rock
Industries, Inc.)/(Bank of
America, N.A. LOC) 4,000,000
1,130,000 Broward County, FL IDRB
(Series 1993) Weekly VRDNs
(American Whirlpool
Products Corp.
Project)/(Bank of America,
N.A. LOC) 1,130,000
1,000,000 Broward County, FL IDRBs
(Series 1997) Weekly VRDNs
(Fast Real Estate
Partners Ltd.)/(SunTrust
Bank, Central Florida LOC) 1,000,000
4,000,000 Clay County, FL HFA,
Variable Rate Certificates
(Series 1999O) Weekly
VRDNs (GNMA COL)/(Bank of
America, N.A. LIQ) 4,000,000
6,510,000 Clipper, FL Tax-Exempt
Trust, (Series 1996-3B)
Class A Certificates of
Participation, Weekly
VRDNs (Escambia County, FL
HFA)/(State Street Bank
and Trust Co. LOC) 6,510,000
1,870,000 Coral Springs, FL (Series
1996) Weekly VRDNs (Royal
Plastics Group Ltd.)/
(SunTrust Bank, Atlanta
LOC) 1,870,000
3,620,000 Dade County, FL IDA Weekly
VRDNs (Futernick
Associates, Inc.)/(First
Union National Bank,
Charlotte, N.C. LOC) 3,620,000
1,300,000 Dade County, FL IDA,
(Series 1985D) Weekly
VRDNs (Dolphins Stadium)/
(Societe Generale, Paris
LOC) 1,300,000
1,200,000 Dade County, FL IDA,
(Series 1993) Daily VRDNs,
Exempt Facilities Revenue
Refunding Bonds (Florida
Power & Light Co.) 1,200,000
2,000,000 Dade County, FL IDA, IDRBs
(Series 1996A) Weekly
VRDNs (U.S. Holdings,
Inc.)/(First Union
National Bank, Charlotte,
N.C. LOC) 2,000,000
8,300,000 Dade County, FL Water &
Sewer System Weekly VRDNs
(FGIC INS)/
(Commerzbank AG, Frankfurt
LIQ) 8,300,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
FLORIDA-CONTINUED
$ 840,000 Dade County, FL Airport
Revenue Bonds (Series A)
Weekly VRDNs (Morgan
Guaranty Trust Co., New
York LOC) $ 840,000
5,925,000 Escambia County, FL HFA, PT
1017 Weekly VRDNs (GNMA
COL)/(Merrill Lynch
Capital Services, Inc.
LIQ) 5,925,000
5,000,000 2 Escambia County, FL HFA,
PT-121(GNMA COL)/(Banco
Santander Central
Hispano, S.A. LIQ) 5,000,000
4,000,000 Escambia County, FL HFA,
Variable Rate
Certificates, (Series
1997D) Weekly VRDNs (GNMA
COL)/(Bank of America,
N.A. 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
4,525,000 Florida HFA, Homeowner
Mortgage Revenue Bonds,
PT-88 (Series 1996-3)
Weekly VRDNs (Banco
Santander Central Hispano,
S.A. LIQ) 4,525,000
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 1998-12)
FRN Weekly VRDNs
(MBIA INS)/(Bank of New
York, New York LIQ) 4,415,000
5,645,000 Florida Housing Finance
Corp., MERLOTS (Series
1998 B) Weekly VRDNs
(MBIA INS)/(First Union
National Bank, Charlotte,
N.C. LIQ) 5,645,000
8,100,000 Gainesville, FL Utilities
Systems, (Series C), 3.80%
CP (Bank of America, N.A.
and SunTrust Bank, Atlanta
LIQs), Mandatory Tender
1/27/2000 8,100,000
4,100,000 Greater Orlando FL
Aviation Authority,
Adjustable Rate (Series
1997), 3.35% TOBs
(Signature Flight Support
Corp.)/(Bayerische
Landesbank Girozentrale
LOC), Optional Tender
12/1/1999 4,100,000
14,135,000 Highlands County, FL
Health Facilities,
Variable Rate Demand
Revenue Bonds (Series
1996A) Weekly VRDNs
(Adventist Health
System)/(SunTrust Bank,
Central Florida LOC) 14,135,000
5,995,000 2 Hillsborough County, FL
HFA, PT-259, 3.05% TOBs
(GNMA COL)/(Commerzbank
AG, Frankfurt LIQ),
Optional Tender 1/13/2000 5,995,000
4,500,000 Hillsborough County, FL
IDA Weekly VRDNs
(Ringhager Equipment Co.)/
(SunTrust Bank, Atlanta
LOC) 4,500,000
1,305,000 Hillsborough County, FL IDA, IDRBs (Series 1996) Weekly VRDNs
(VIGO Importing Company Project)/(Bank of America,
N.A. LOC) 1,305,000
895,000 Hillsborough County, FL
IDA, Variable Rate Demand
IRDBs (Series 1996) Weekly
VRDNs (Trident Yacht
Building Partnership
Project)/(First Union
National Bank, Charlotte,
N.C. LOC) 895,000
3,900,000 Hillsborough County, FL
IDA, Variable Rate IDRBs
(Series 1998) Weekly VRDNs
(SIFCO Industries,
Inc.)/(National City Bank,
Ohio LOC) 3,900,000
4,080,000 Indian River County, FL
IDRBs (Series 1997) Weekly
VRDNs (Ocean Spray
Cranberries,
Inc.)/(Wachovia Bank of
NC, N.A. LOC) 4,080,000
28,100,000 Jacksonville, FL Electric
Authority, (Series E),
3.65% CP (Landesbank
Hessen-Thueringen,
Frankfurt LIQ), Mandatory
Tender 12/9/1999 28,100,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
FLORIDA-CONTINUED
$ 6,650,000 Jacksonville, FL Electric
Authority, (Series C-1),
3.65% CP (Morgan Guaranty
Trust Co., New York LIQ),
Mandatory Tender 1/10/2000 $ 6,650,000
5,500,000 Jacksonville, FL IDA,
(Series 1996) Weekly VRDNs
(Portion PAC, Inc.)/
(Heinz (H.J.) Co. GTD) 5,500,000
400,000 Jacksonville, FL Weekly
VRDNs (Metal
Sales)/(National City
Bank, Kentucky LOC) 400,000
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, IDRB (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
1,300,000 Manatee County, FL HFA,
Weekly Adjustable/Fixed
Rate Multifamily Housing
Revenue Refunding Bonds
(1990 Series A) Weekly
VRDNs (Harbour Pointe)/
(HSBC Bank USA LOC) 1,300,000
5,400,000 Manatee County, FL (Series
1998A) Project B Weekly
VRDNs (CFI Manufacturing,
Inc. Project)/(Huntington
National Bank, Columbus,
OH LOC) 5,400,000
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
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
3,900,000 Martin County, FL, (Series
1994) Daily VRDNs (Florida
Power & Light Co.) 3,900,000
1,800,000 Okeechobee County, FL
(Series 1992) Weekly VRDNs
(Morgan Guaranty Trust
Co., New York LOC) 1,800,000
3,750,000 Orange County, FL HFA,
(Series 1999 A-3), 3.40%
TOBs, Mandatory Tender
6/1/2000 3,750,000
5,000,000 Orange County, FL HFA,
(Series 1997A) Weekly
VRDNs (Regal Pointe
Apartments Project)/(Bank
of America, N.A. LOC) 5,000,000
5,000,000 Orange County, FL HFA,
(Series 1998 D) Weekly
VRDNs (Falcon Trace
Apartments)/(Amsouth Bank
N.A., Birmingham LOC) 5,000,000
2,200,000 Orange County, FL HFA,
Variable Rate Certificates
(Series 1997D) Weekly
VRDNs (GNMA COL)/(Bank of
America, N.A. LIQ) 2,200,000
13,400,000 Osceola County, FL HFA,
Multifamily Housing
Revenue Bonds (Series
1998A) Weekly VRDNs (Arrow
Ridge Apartments)/(Amsouth
Bank N.A., Birmingham LOC) 13,400,000
2,895,000 Palm Beach County, FL
(Series 1985) Daily VRDNs
(AMBAC INS)/(First Union
National Bank, Charlotte,
NC LIQ) 2,895,000
1,000,000 Pasco County, FL Solid
Waste Authority, 5.25%
Bonds (AMBAC INS),
4/1/2000 1,008,084
255,000 Pinellas County Industry
Council, FL Weekly VRDNs
(Loulourgas Properties)/
(First Union National
Bank, Charlotte, NC LOC) 255,000
3,500,000 Pinellas County Industry
Council, FL IDRB (Series 1994) Weekly VRDNs (Genca Corporation
Project)/(PNC Bank, N.A.
LOC) 3,500,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
FLORIDA-CONTINUED
$ 2,258,000 Pinellas County Industry
Council, FL IDRB (Series
1995) Weekly VRDNs (ATR
International Inc.,
Project)/(First Union
National Bank, Charlotte,
N.C. LOC) $ 2,258,000
5,700,000 Pinellas County, FL Health
Facility Authority Daily
VRDNs (Chase Manhattan
Bank N.A., New York LOC) 5,700,000
395,000 Pinellas County, FL Health
Facility Authority, SFM Revenue Bonds Floats (Series PA-92)
Weekly VRDNs (GNMA COL)/(Merrill Lynch Capital Services, Inc.
LIQ) 395,000
7,950,000 Putnam County, FL
Development Authority, PCR
Bonds (Series 1984 H)
Weekly VRDNs (Seminole
Electric Cooperative, Inc.
(National Rural Utilities
Cooperative Finance Corp.
LOC) 7,950,000
1,500,000 St. Lucie County, FL PCR
Daily VRDNs (Florida Power
& Light Co.) 1,500,000
1,000,000 Sumter County, FL IDA
Weekly VRDNs (Great
Southern Wood Preserving
Co.)/(SouthTrust Bank of
Alabama, Birmingham LOC) 1,000,000
16,990,000 Sunshine State
Governmental Finance Commission, FL 3.75% CP (AMBAC
INS)/(Toronto- Dominion Bank and UBS AG LIQs), Mandatory Tender
1/21/2000 16,990,000
7,880,000 Sunshine State Governmental Finance Commission, FL 3.80% CP
(AMBAC INS)/(Toronto- Dominion Bank and UBS AG LIQs), Mandatory
Tender
1/18/2000 7,880,000
3,300,000 Tamarac, FL IDRB (Series
1995) Weekly VRDNs (Arch
Aluminum & Glass Co., Inc.
Project)/(Mellon Bank
N.A., Pittsburgh LOC) 3,300,000
3,400,000 Tampa, FL Occupational
License Tax Bonds (Series 1996A) Weekly VRDNs (FGIC INS)/(FGIC
Securities Purchase, Inc.
LIQ) 3,400,000
1,425,000 Volusia County, FL IDA
Weekly VRDNs (Crane
Cams)/(Deutsche Bank AG
LOC) 1,425,000
2,500,000 Wakulla County, FL IDRB Weekly VRDNs (Winco Utilities, Inc.
Project)/(Bank of America,
N.A. LOC) 2,500,000
TOTAL 289,841,084
GEORGIA-3.6%
775,000 Crisp County, GA
Development Authority,
(Series B), 4.35% TOBs
(Masonite Corp.)/(Internat
ional Paper Co. GTD),
Optional Tender 9/1/2000 775,000
5,000,000 Glynn County, GA 3.61%
TANs, 12/31/1999 5,000,884
6,900,000 Rockdale County, GA 3.48%
TANs, 12/31/1999 6,900,874
TOTAL 12,676,758
INDIANA-1.4%
5,000,000 Huntington County, IN
Community School Corp.,
Tax Anticipation Warrants,
3.35% Bonds, 12/31/1999 5,001,598
MULTI STATE-7.4%
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
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
NEW HAMPSHIRE-0.5%
$ 1,741,000 Dover, NH, 4.10% BANs,
12/28/1999 $ 1,742,067
TEXAS-0.3%
1,000,000 Angelina and Neches River
Authority, Texas, Solid
Waste Disposal Revenue
Bonds (Series 1993), 4.40%
CP (Temple-Eastex,
Inc.)/(Temple-Inland, Inc.
GTD), Mandatory Tender
12/8/1999 1,000,000
WISCONSIN-3.2%
4,800,000 Chippewa Falls WI, Unified
School District, 4.25%
TRANs, 9/29/2000 4,812,996
3,500,000 Lodi, WI School District,
4.20% TRANs, 10/30/2000 3,510,707
3,100,000 Neenah, WI Joint School
District, 4.02% TRANs,
8/30/2000 3,101,733
TOTAL 11,425,436
TOTAL INVESTMENTS (AT
AMORTIZED COST) 3 $ 352,386,943
</TABLE>
Securities that are subject to alternative minimum tax represent 48.7% 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, 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 October 31, 1999, the portfolio securities were rated as follows:
Tier Rating Based on Total Market Value
<TABLE>
<CAPTION>
FIRST TIER SECOND TIER
<S> <C>
99.01% 0.99%
</TABLE>
2 Denotes a restricted security which is subject to restrictions on resale under
federal securities laws. These securities have been deemed liquid upon criteria
approved by the fund's Board of Trustees. At October 31, 1999, these securities
amounted to $23,995,000, which represents 6.8% of net assets.
3 Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($353,767,060) at October 31, 1999.
The following acronyms are used throughout this portfolio:
AMBAC -American Municipal Bond Assurance Corporation AMT -Alternative Minimum
Tax BANs -Bond Anticipation Notes COL -Collateralized CP -Commercial Paper FGIC
- -Financial Guaranty Insurance Company FRN -Floating Rate Note GNMA -Government
National Mortgage Association GTD -Guaranteed HFA -Housing Finance Authority IDA
- -Industrial Development Authority IDRBs -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 PAC
- -Planned Amortization Class PCR -Pollution Control Revenue 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
OCTOBER 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Total investments in
securities, at amortized
cost and value $ 352,386,943
Cash 587,694
Income receivable 1,378,625
Receivable for shares sold 42,667
TOTAL ASSETS 354,395,929
LIABILITIES:
Payable for shares
redeemed $ 39,891
Income distribution
payable 465,250
Accrued expenses 123,728
TOTAL LIABILITIES 628,869
Net assets for 353,767,060
shares outstanding $ 353,767,060
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PROCEEDS PER SHARE
INSTITUTIONAL SHARES:
$136,841,321 / 136,841,321
shares outstanding $1.00
CASH II SHARES:
$216,925,739 / 216,925,739
shares outstanding $1.00
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Operations
YEAR ENDED OCTOBER 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 9,396,929
EXPENSES:
Investment advisory fee $ 1,118,018
Administrative personnel
and services fee 210,746
Custodian fees 18,971
Transfer and dividend
disbursing agent fees and
expenses 158,819
Directors'/Trustees' fees 2,257
Auditing fees 12,975
Legal fees 13,086
Portfolio accounting fees 67,159
Distribution services fee-
Cash II Shares 307,114
Shareholder services fee-
Institutional Shares 391,648
Shareholder services fee-
Cash II Shares 307,114
Share registration costs 32,966
Printing and postage 19,149
Insurance premiums 34,058
Miscellaneous 8,706
TOTAL EXPENSES 2,702,786
WAIVERS:
Waiver of investment
advisory fee $ (566,594)
Waiver of distribution
services fee-Cash II
Shares (61,423)
Waiver of shareholder
services fee-Institutional
Shares (93,995)
TOTAL WAIVERS (722,012)
Net expenses 1,980,774
Net investment income $ 7,416,155
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31 1999 1998
<S> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net investment income $ 7,416,155 $ 15,157,508
DISTRIBUTIONS TO
SHAREHOLDERS:
Distributions from net
investment income
Institutional Shares (4,318,011) (11,792,073)
Cash II Shares (3,098,144) (3,365,435)
CHANGE IN NET ASSETS
RESULTING FROM
DISTRIBUTIONS
TO SHAREHOLDERS (7,416,155) (15,157,508)
SHARE TRANSACTIONS:
Proceeds from sale of
shares 1,426,334,652 2,197,187,196
Net asset value of shares
issued to shareholders in
payment of
distributions declared 1,899,046 7,838,269
Cost of shares redeemed (1,303,499,628) (2,518,608,888)
CHANGE IN NET ASSETS
RESULTING FROM SHARE
TRANSACTIONS 124,734,070 (313,583,423)
Change in net assets 124,734,070 (313,583,423)
NET ASSETS:
Beginning of period 229,032,990 542,616,413
End of period $ 353,767,060 $ 229,032,990
</TABLE>
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>
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 0.02 0.03 0.03 0.03
LESS DISTRIBUTIONS:
Distributions from net investment income (0.02) (0.03) (0.03) (0.03)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN 2 2.53% 2.83% 2.94% 2.80%
RATIOS TO AVERAGE NET ASSETS:
Expenses 3 1.10% 1.04% 1.04% 1.09% 4
Net investment income 3 2.28% 2.64% 2.64% 2.64% 4
Expenses (after waivers) 0.86% 0.85% 0.80% 0.65% 4
Net investment income (after waivers) 2.52% 2.83% 2.88% 3.07% 4
SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $216,926 $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 During the period, certain fees were voluntarily waived. If such voluntary
waivers had not occurred, the ratios would have been as indicated.
4 Computed on an annualized basis
See Notes which are an integral part of the Financial Statements
Financial Highlights-Institutional Shares
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.03 0.03 0.03 0.03 0.04
LESS DISTRIBUTIONS:
Distributions from net investment income (0.03) (0.03) (0.03) (0.03) (0.04)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN 1 2.79% 3.09% 3.20% 3.20% 3.60%
RATIOS TO AVERAGE NET ASSETS:
Expenses 2 0.85% 0.77% 0.79% 0.83% 0.87%
Net investment income 2 2.49% 2.77% 2.90% 2.83% 3.16%
Expenses (after waivers) 0.58% 0.58% 0.54% 0.49% 0.45%
Net investment income (after waivers) 2.76% 2.96% 3.15% 3.17% 3.58%
SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $136,841 $157,194 $479,860 $500,993 $153,347
</TABLE>
1 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
2 During the period, certain fees were voluntarily waived. If such voluntary
waivers had not occurred, the ratios would gave been as indicated.
See Notes which are an integral part of the Financial Statements
Notes to Financial Statements
OCTOBER 31, 1999
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 to provide 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.
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 Investment Company Act of 1940.
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 October 31, 1999, capital paid-in aggregated $353,767,060.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31 1999 1998
<S> <C> <C>
INSTITUTIONAL SHARES:
Shares sold 669,367,832 1,551,253,164
Shares issued to
shareholders in payment of
distributions declared 1,698,610 7,690,503
Shares redeemed (691,418,704) (1,881,610,584)
NET CHANGE RESULTING FROM
INSTITUTIONAL SHARE
TRANSACTIONS (20,352,262) (322,666,917)
<CAPTION>
YEAR ENDED OCTOBER 31 1999 1998
<S> <C> <C>
CASH II SHARES:
Shares sold 756,966,820 645,934,032
Shares issued to
shareholders in payment of
distributions declared 200,436 147,766
Shares redeemed (612,080,924) (636,998,304)
NET CHANGE RESULTING FROM
CASH II SHARE TRANSACTIONS 145,086,332 9,083,494
NET CHANGE RESULTING FROM
SHARE TRANSACTIONS 124,734,070 (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 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.
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.
<TABLE>
<CAPTION>
PERCENTAGE OF AVERAGE
SHARE CLASS DAILY NET ASSETS OF CLASS
<S> <C>
Institutional Shares 0.25%
Class II Shares 0.25%
</TABLE>
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 fiscal year ended October 31, 1999, the fund's Institutional Shares did
not incur a distribution service 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 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 October 31, 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 and amounted to $1,068,010,000 and $1,123,788,000,
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
October 31, 1999, 85.9% 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 5.2% of total investments.
YEAR 2000 (UNAUDITED)
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.
CHANGE OF INDEPENDENT AUDITOR (UNAUDITED)
On May 19, 1999, the Fund's Trustees, upon the recommendation of its Audit
Committee, requested and subsequently accepted the resignation of Arthur
Andersen ("AA") as the Fund's independent auditors. AA's reports on the Fund's
financial statements for the fiscal years ended October 31, 1997 and October 31,
1998 contained no adverse opinion or disclaimer of opinion nor were they
qualified or modified as to uncertainty, audit scope or accounting principles.
During the Fund's fiscal years ended October 31, 1997 and October 31, 1998: (i)
there were no disagreements with AA on any matter of accounting principles or
practices, financial statement disclosure or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of AA, would have caused it
to make reference to the subject matter of the disagreements in connection with
its reports on the financial statements for such years; and (ii) there were no
reportable events of the kind described in Item 304 (a)(1)(v) of Regulation S-K
under the Securities Exchange Act of 1934, as amended.
The Fund, by action of its Trustees, upon the recommendation of the Audit
Committee, has engaged Ernst & Young LLP ("E&Y") as the independent auditors to
audit the Fund's financial statements for the fiscal year ended October 31,
1999. During the Fund's fiscal years ended October 31, 1997 and October 31,
1998, neither the Fund nor anyone on its behalf has consulted E&Y on items which
(i) concerned the application of accounting principles to a specified
transaction, either completed or proposed, or the type of audit opinion that
might be rendered on the Fund's financial statements, or (ii) concerned the
subject of a disagreement (as defined in paragraph (a)(1)(iv) of Item 304 of
Regulation S-K) of reportable events (as described in the paragraph (a)(1)(v) of
said Item 304).
Report of Ernst & Young LLP, Independent Auditors
TO THE BOARD OF TRUSTEES OF FEDERATED MUNICIPAL TRUST
AND SHAREHOLDERS OF FLORIDA MUNICIPAL CASH TRUST:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of the Florida Municipal Cash Trust (one of the
portfolios constituting the Federated Municipal Trust) as of October 31, 1999,
and the related statement of operations, the statement of changes in net assets,
and the financial highlights for the year then ended. These financial statements
and financial highlights are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit. The statement of changes in net assets
for the year ended October 31, 1998, and the financial highlights for each of
the periods indicated therein for the period then ended were audited by other
auditors whose report, dated December 23, 1998, expressed an unqualified opinion
on that statement and those financial highlights.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in financial statements and
financial highlights. Our procedures included confirmation of securities owned
as of October 31, 1999, by correspondence with the custodian. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Florida Municipal Cash Trust of the Federated Municipal Trust at October 31,
1999, and the results of its operations, changes in its net assets and financial
highlights for the year then ended, in conformity with generally accepted
accounting principles.
[Graphic]
Boston, Massachusetts
December 16, 1999
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
JOHN W. MCGONIGLE
Executive Vice President and Secretary
EDWARD C. GONZALES
Executive Vice President
RICHARD B. FISHER
Vice President
RICHARD J. THOMAS
Treasurer
LESLIE K. ROSS
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
ANNUAL REPORT
Florida Municipal Cash Trust
ANNUAL REPORT
TO SHAREHOLDERS
OCTOBER 31, 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
G00827-01 (12/99)
[Graphic]
ANNUAL REPORT
President's Message
Dear Shareholder:
I am pleased to present the Annual Report to Shareholders of Georgia Municipal
Cash Trust, which covers the 12-month period from November 1, 1998 through
October 31, 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 pursuing double tax-free
income-free from federal regular income tax and Georgia income tax- through a
portfolio concentrated in high-quality, short-term Georgia 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
$0.03 per share. The fund's net assets totaled $267.1 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
December 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, Senior
Vice President, Federated Investment Management Company.
WHAT ARE YOUR COMMENTS ON THE ECONOMY AND THE INTEREST RATE ENVIRONMENT DURING
THE REPORTING PERIOD?
Perhaps the biggest issues threatening the U.S. economy in the latter half of
1998 were alleviated by the second quarter of 1999. The improvements in
international economies, particularly Asia, and calm foreign markets laid the
foundation for the Federal Reserve Board (the "Fed") to focus on U.S. economic
releases as a better indicator of the inflation picture. The Fed became
increasingly concerned with inflationary pressures from tighter labor markets
and rising equity wealth. For the most part inflationary forces remained tame
during 1999 with increases in some commodity prices, such as oil. Nevertheless,
the Fed began a series of three rate increases, citing tighter labor markets,
shrinking productivity gains and growth in demand. The moves came in June,
August and November. Each time the Fed voted to raise the federal funds target
rate by a quarter point, bringing the federal funds target rate to 5.50%.
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"), which comprise more than 50% of the fund's assets, started the
reporting period in the 3.00% range, but moved sharply higher in December to the
4.00% level as supply and demand imbalances occurred. Yields then declined in
January as investors looked to reinvest coupon payments and year end selling
pressures eased. Yields averaged slightly over 2.75% during February and March
before rising to 4.00% in April due to traditional tax season payment pressures.
Over the summer months, yields remained mostly in a band between 3.00% and
3.50%, but rose sharply in September as cash outflows in the municipal markets
pushed rates as high as 3.85%. VRDN yields ended the reporting period at 3.50%.
Over the reporting period, VRDN yields averaged roughly 66% of taxable rates,
making them attractive for investors in the highest two federal tax brackets.
The overall tone of the short-term municipal market was positive. Municipalities
across the country have benefited from an expanding 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 municipal
securities, relative to their taxable counterparts, relatively expensive.
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 51 days. In 1999, the fund's average maturity declined to as low
as 34 days in July before we were able to take advantage of fixed-rate note
opportunities in August that increased it to 49 days. Cash inflows in October
decreased the allocation of the portfolio to fixed-rate notes and the maturity
subsequently declined to end the reporting period at 35 days. 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, taking
into account Fed monetary policy, the portfolio maximized 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 U.S. Treasury securities.
This portfolio structure continued to provide a competitive yield over time.
WHAT IS YOUR OUTLOOK GOING FORWARD?
The Fed, concerned by persistent above-trend growth in an environment where
labor markets are constrained and productivity gains are narrowing, will likely
remain on hold until the first quarter of 2000. It is likely that we will see
one and possibly two interest rate increases in the first half of 2000. 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
OCTOBER 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
99.3% 1
GEORGIA-99.3%
$ 4,500,000 Athens-Clarke County, GA,
IDA, (Series 1988), 3.85%
CP (Rhone Merieux, Inc.
Project)/(Societe
Generale, Paris LOC),
Mandatory Tender 2/17/2000 $ 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. LOC) 1,400,000
1,500,000 Atlanta, GA, Urban
Residential Finance
Authority, Multifamily
Housing Revenue Bonds
(Series 1995) Weekly VRDNs
(West End Housing
Development
Project)/(First Union
National Bank, Charlotte,
NC LOC) 1,500,000
3,730,000 Brunswick, GA, Housing
Authority, (Series S93)
Weekly VRDNs (Island
Square
Apartments)/(Columbus Bank
and Trust Co., GA LOC) 3,730,000
3,000,000 Burke County, GA,
Development Authority,
PCRB's (Series 1998A),
3.50% CP (Oglethorpe Power
Corp. Vogtle
Project)/(AMBAC
INS)/(Rabobank Nederland,
Utrecht LIQ), Mandatory
Tender 1/25/2000 3,000,000
2,860,000 Cedartown, GA, Development
Authorithy, (Series 1998)
Weekly VRDNs (Rome
Plow Co.)/(SunTrust Bank,
Miami LOC) 2,860,000
1,075,000 Cherokee County, GA,
Development Authority,
IDRB Weekly VRDNs
(Morrison Products,
GA)/(KeyBank, N.A. LOC) 1,075,000
9,500,000 Clayton County, GA,
Development Authority,
(Series 1994) Weekly VRDNs
(Lear Seating
Corp.)/(Chase Manhattan
Bank N.A., New York LOC) 9,500,000
550,000 Clayton County, GA,
Housing Authority, Revenue
Refunding Bonds (Series
1992) Weekly VRDNs (Oxford
Townhomes)/(Amsouth Bank
N.A., Birmingham LOC) 550,000
1,305,000 Cobb County, GA, IDA Weekly
VRDNs (Atlanta RDC
Co.)/(First Union National
Bank, Charlotte, NC LOC) 1,305,000
8,000,000 Cobb County, GA, IDA,
(Series 1997) Weekly VRDNs
(Wyndham Gardens)/(Bankers
Trust Co., New York LOC) 8,000,000
1,400,000 Cobb County, GA, IDA, IDRB
(Series 1995) Weekly VRDNs
(Consolidated Engineering
Company, Inc.
Project)/(Bank of America,
N.A. LOC) 1,400,000
770,000 Columbia County, GA,
Development Authority,
(Series 1991) Weekly VRDNs
(Augusta Sportswear,
Inc.)/(Wachovia Bank of
NC, N.A. LOC) 770,000
2,100,000 Columbus, GA, Housing
Authority Weekly VRDNs
(Ralston Towers)/(Columbus
Bank and Trust Co., GA LOC) 2,100,000
3,000,000 Coweta County, GA, IDA,
(Series 1995) Weekly VRDNs
(Lanelco L.L.C.
Project)/(Bank One,
Michigan LOC) 3,000,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
GEORGIA-CONTINUED
$ 3,925,000 Coweta County, GA,
Residential Care
Facilities for the
Elderly, First Lien
Revenue Bonds (Series
1996B) Weekly VRDNs
(Wesley Woods of Newman-
Peachtree City, Inc.
Project)/(Paribas, Paris
LOC) $ 3,925,000
6,000,000 Crisp County, GA,
Development Authority,
(Series B), 4.35% TOBs
(Masonite
Corp.)/(International
Paper Co. GTD), Optional
Tender 9/1/2000 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
1,165,000 De Kalb County, GA,
Development Authority,
(Series 1992) Weekly VRDNs
(House of Cheatham, Inc.
Project)/(Bank of America,
N.A. LOC) 1,165,000
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,
Multifamily Housing
Authority, Multifamily
Housing Revenue Bonds
(Series 1996) Weekly VRDNs
(Bryton Hill
Apartments)/(PNC Bank,
N.A. LOC) 4,000,000
4,000,000 De Kalb County, GA, Water &
Sewer, 7.00% Bonds (United
States Treasury PRF),
10/1/2000 (@102) 4,182,389
1,000,000 De Kalb County, GA, Water &
Sewer, 7.00% Bonds (United
States Treasury PRF),
10/1/2000 (@102) 1,047,316
5,000,000 Doughery County, GA,
School System, 3.62% TANs,
12/30/1999 5,002,897
2,700,000 Douglas County, GA,
Development Authority,
(Series 1997) Weekly VRDNs
(Austral Insulated
Products, Inc.)/(Regions
Bank, Alabama LOC) 2,700,000
740,000 Douglas County, GA,
Development Authority,
(Series 1997) Weekly VRDNs
(Paul B. Goble)/(Wachovia
Bank of NC, N.A. LOC) 740,000
5,585,000 Douglas County, GA,
Development Authority,
(Series 1998A) Weekly
VRDNs (Heritage
Bag)/(Wachovia Bank of NC,
N.A. LOC) 5,585,000
2,000,000 Douglas County, GA, School
District, 4.75% Bonds,
1/1/2000 2,005,057
5,000,000 Forsythe County, GA,
Development Authority,
IDRB (Series 1995) Weekly
VRDNs (American BOA, Inc.
Project)/(Dresdner Bank
AG, Frankfurt LOC) 5,000,000
9,240,000 Franklin County, GA,
Industrial Building
Authority, (Series 1995)
Weekly VRDNs (Bosal
Industries, Inc.)/(Bank of
New York, New York LOC) 9,240,000
4,500,000 Fulton County, GA, Housing
Authority, (Series 1999)
Weekly VRDNs (Walton Falls
Apartments)/(Wachovia Bank
of NC, N.A. LOC) 4,500,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
GEORGIA-CONTINUED
$ 5,000,000 Fulton County, GA, Housing
Authority, Multifamily
Housing Revenue Refunding
Bonds (Series 1994) Weekly
VRDNs (Spring Creek
Crossing
Project)/(Wachovia Bank of
NC, N.A. LOC) $ 5,000,000
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
1,700,000 Fulton County, GA, IDA,
(Series 1997) Weekly VRDNs
(In-Store Media
Corp.)/(SunTrust Bank,
Atlanta LOC) 1,700,000
2,800,000 Gainesville, GA,
Redevelopment Authority,
Downtown Developments,
Ltd. (Series 1987) Weekly
VRDNs (Downtown
Developments,
Ltd.)/(Regions Bank,
Alabama LOC) 2,800,000
2,460,000 Gainesville, GA,
Redevelopment Authority,
IDRB (Series 1986) Weekly
VRDNs (Hotel of
Gainesville Associates
Project)/(Regions Bank,
Alabama LOC) 2,460,000
5,000,000 Georgia Municipal Electric
Authority, Series A, 5.50%
Bonds (AMBAC INS),
1/1/2000 5,019,767
5,675,000 Georgia Municipal Electric
Authority, Series Z, 4.50%
Bonds, 1/1/2000 5,686,007
1,700,000 Georgia Port Authority,
(Series 1996A) Weekly
VRDNs (Colonel's Island
Terminal)/(SunTrust Bank,
Atlanta LOC) 1,700,000
4,900,000 Georgia State, PUTTERS
(Series 128) Weekly VRDNs
(J.P. Morgan & Co., Inc.
LIQ) 4,900,000
1,500,000 Georgia State, UT GO, 5.75%
Bonds, 7/1/2000 1,520,346
2,970,000 Gwinnett County, GA, IDA,
(Series 1996) Weekly VRDNs
(Sidel, Inc.
Project)/(Bank of America,
N.A. LOC) 2,970,000
630,000 Gwinnett County, GA, IDA,
(Series 1997) Weekly VRDNs
(Virgil R. Williams,
Jr.)/(Wachovia Bank of NC,
N.A. 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
5,000,000 2 Gwinnett County, GA, Water
and Sewer Authority, (PT-
1169), 3.62% TOBs
(Gwinnett County,
GA)/(Merrill Lynch Capital
Services, Inc. LIQ),
Optional Tender 7/20/2000 5,000,000
7,000,000 Gwinnett County, GA, Water
and Sewer Authority,
Floater Certificates
(Series 1998-70) Weekly
VRDNs (Gwinnett County,
GA)/(Morgan Stanley,
Dean Witter Municipal
Funding, Inc. LIQ) 7,000,000
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
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
GEORGIA-CONTINUED
$ 1,150,000 Jackson County, GA, IDA,
(Series 1997) Weekly VRDNs
(Mullett Co.)/(Wachovia
Bank of NC, N.A. LOC) $ 1,150,000
1,100,000 Jefferson, GA, Development
Authority, (Series 1997)
Weekly VRDNs (Ringwood
Containers,
L.P.)/(Wachovia Bank of
NC, N.A. LOC) 1,100,000
3,110,000 La Grange, GA, Multifamily
Housing Authority, Revenue
Bonds, 4.25% TOBs (Lee's
Crossing Project Phase
II)/(Columbus Bank and
Trust Co., GA LOC),
Optional Tender 11/1/1999 3,110,000
2,930,000 La Grange, GA, Multifamily
Housing Authority, Revenue
Bonds, 4.25% TOBs (Lee's
Crossing Project Phase
I)/(Columbus Bank and
Trust Co., GA LOC),
Optional Tender 11/1/1999 2,930,000
3,630,000 LaGrange, GA, Housing
Authority, Multifamily
Refunding Revenue Bonds
(Series 1997) Weekly VRDNs
(Greenwood Park)/(Columbus
Bank and Trust Co., GA LOC) 3,630,000
3,465,000 LaGrange, GA, Housing
Authority, Multifamily
Refunding Revenue Bonds
(Series 1997) Weekly VRDNs
(Meadow Terrace)/(Columbus
Bank and Trust Co., GA LOC) 3,465,000
140,000 Macon-Bibb County, GA,
Industrial Authority, IDRB
(Series 1990) Weekly VRDNs
(Diamond Plastics Corp.
Project)/(Bank of America,
N.A. LOC) 140,000
4,470,000 Marietta, GA, Housing
Authority, Multifamily
Housing Revenue Bonds
(Series 1995) Weekly VRDNs
(Chalet Apartments
Project)/(General Electric
Capital Corp. LOC) 4,470,000
2,085,000 McDuffie County, GA,
Development Authority
Weekly VRDNs (Thomson
Plastics)/(SouthTrust Bank
of Alabama, Birmingham
LOC) 2,085,000
2,000,000 McDuffie County, GA,
Development Authority,
(Series 1998), 4.60% CP
(Temple-Inland Forest
Products Corp.)/(Temple-
Inland, Inc. GTD),
Mandatory Tender 1/19/2000 2,000,000
565,000 Milledgeville & Baldwin
County, GA, Development
Authority, (Series 1997)
Weekly VRDNs (Oconee Area
Properties,
Inc.)/(Wachovia Bank of
NC, N.A. LOC) 565,000
4,500,000 Rabun County, GA,
Development Authority,
(Series 1999) Weekly VRDNs
(Rabun Gap-Nacoochee,
Inc.)/(SunTrust Bank,
Atlanta LOC) 4,500,000
2,500,000 Richmond County, GA,
Development Authority,
(Series 1999) Weekly VRDNs
(Rock-Tenn Converting
Co.)/(SunTrust Bank,
Atlanta LOC) 2,500,000
9,000,000 Richmond County, GA,
Development Authority,
Solid Waste Disposal
Revenue Bonds, (Series
1995) Weekly VRDNs
(Federal Paper Board Co.,
Inc.)/(Wachovia Bank of
NC, N.A. LOC) 9,000,000
2,800,000 Rockdale County, GA,
Development Authority,
(Series 1995) Weekly VRDNs
(Great Southern Wood
Preserving Co.)/(SunTrust
Bank, Central Florida LOC) 2,800,000
4,000,000 Rockdale County, GA, Water
& Sewer, Capital Outlay
Notes, 3.75%
BANs, 12/15/1999 4,001,414
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
GEORGIA-CONTINUED
$ 4,000,000 Rome, GA, 3.25% TANs,
12/31/1999 $ 4,000,510
11,250,000 Savannah, GA, EDA, (Series
1995A) Weekly VRDNs (Home
Depot, Inc.) 11,250,000
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 Authorithy,
(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 3,450,821
1,000,000 Wayne County, GA, IDA,
Revenue Bonds, (Series
1995) Weekly VRDNs
(Harsco Corp.)/(Bank of
America, N.A. LOC) 1,000,000
3,335,000 Whitfield County, GA,
Development Authority
Weekly VRDNs (Franklin
Industries Inc.,
Project)/(Bank of America,
N.A. 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
3,500,000 Whitfield County, GA,
School System, 3.60% TANs,
12/31/1999 3,501,965
TOTAL INVESTMENTS (AT
AMORTIZED COST) 3 $ 265,378,489
</TABLE>
Securities that are subject to alternative minimum tax represent 64.7% 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, 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 October 31, 1999, the portfolio securities were rated as follows:
Tier Rating Percentage Based on Total Market Value (Unaudited)
FIRST TIER SECOND TIER
94.84% 5.16%
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 Directors. At October 31, 1999, these
securities amounted to $5,000,000 which represents 1.9% of net assets.
3 Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($267,132,329) at October 31, 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 FSA -Financial
Security Assurance GO -General Obligation GTD -Guaranteed IDA -Industrial
Development Authority IDRB -Industrial Development Revenue Bond INS -Insured LIQ
- -Liquidity Agreement LOC -Letter of Credit PCRB -Pollution Control Revenue Bonds
PRF -Prerefunded 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
OCTOBER 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Total investments in
securities, at amortized
cost and value $ 265,378,489
Cash 534,616
Income receivable 1,622,462
Deferred organizational
costs 3,657
Other assets 5,700
TOTAL ASSETS 267,544,924
LIABILITIES:
Payable for shares
redeemed $ 31,901
Income distribution
payable 298,170
Accrued expenses 82,524
TOTAL LIABILITIES 412,595
Net assets for 267,132,329
shares outstanding $ 267,132,329
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PROCEEDS PER SHARE:
$267,132,329 / 267,132,329
shares outstanding $1.00
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Operations
YEAR ENDED OCTOBER 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 7,796,901
EXPENSES:
Investment advisory fee $ 1,149,248
Administrative personnel
and services fee 173,307
Custodian fees 5,517
Transfer and dividend
disbursing agent fees and
expenses 42,291
Directors'/Trustees' fees 1,488
Auditing fees 12,210
Legal fees 9,327
Portfolio accounting fees 54,575
Shareholder services fee 574,624
Share registration costs 33,094
Printing and postage 11,752
Insurance premiums 17,716
Miscellaneous 6,041
TOTAL EXPENSES 2,091,190
WAIVERS:
Waiver of investment
advisory fee $ (828,457)
Waiver of shareholder
services fee (137,910)
TOTAL WAIVERS (966,367)
Net expenses 1,124,823
Net investment income $ 6,672,078
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31 1999 1998
<S> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net investment income $ 6,672,078 $ 5,625,121
DISTRIBUTIONS TO
SHAREHOLDERS:
Distributions from net
investment income (6,672,078) (5,625,121)
SHARE TRANSACTIONS:
Proceeds from sale of
shares 720,843,748 632,771,755
Net asset value of shares
issued to shareholders in
payment of
distributions declared 3,573,586 3,758,781
Cost of shares redeemed (625,382,790) (590,290,954)
CHANGE IN NET ASSETS
RESULTING FROM SHARE
TRANSACTIONS 99,034,544 46,239,582
Change in net assets 99,034,544 46,239,582
NET ASSETS:
Beginning of period 168,097,785 121,858,203
End of period $ 267,132,329 $ 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>
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 0.03 0.03 0.03 0.03 0.01
LESS DISTRIBUTIONS:
Distributions from net investment income (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
TOTAL RETURN 2 2.94% 3.33% 3.38% 3.37% 0.73%
RATIOS TO AVERAGE NET ASSETS:
Expenses 3 0.91% 0.93% 0.92% 0.98% 1.00% 4
Net investment income 3 2.48% 2.84% 2.90% 2.79% 3.06% 4
Expenses (after waivers) 0.49% 0.49% 0.49% 0.46% 0.25% 4
Net investment income (after waivers) 2.90% 3.28% 3.33% 3.31% 3.81% 4
SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $ 267,132 $ 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 During the period, certain fees were voluntarily waived. If such voluntary
waivers had not occurred, the ratios would have been as indicated.
4 Computed on an annualized basis.
Notes to Financial Statements
OCTOBER 31, 1999
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.
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 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
October 31, 1999, capital paid-in aggregated $267,132,329. Transactions in
shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31 1999 1998
<S> <C> <C>
Shares sold 720,843,748 632,771,755
Shares issued to
shareholders in payment of
distributions declared 3,573,586 3,758,781
Shares redeemed (625,382,790) (590,290,954)
NET CHANGE RESULTING FROM
SHARE TRANSACTIONS 99,034,544 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 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 October 31, 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 and amounted to $469,585,000 and $377,685,000,
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
October 31, 1999, 72.6% 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 11.5% of total investments.
YEAR 2000 (UNAUDITED)
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.
CHANGE OF INDEPENDENT AUDITORS (UNAUDITED)
On May 19, 1999, the Fund's Trustees, upon the recommendation of its Audit
Committee, requested and subsequently accepted the resignation of Arthur
Andersen LLP ("AA") as the Fund's independent auditors. AA's reports on the
Fund's financial statements for the fiscal years ended October 31, 1997 and
October 31, 1998 contained no adverse opinion or disclaimer of opinion nor were
they qualified or modified as to uncertainty, audit scope or accounting
principles. During the Fund's fiscal years ended October 31, 1997 and October
31, 1998: (i) there were no disagreements with AA on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure, which disagreements, if not resolved to the satisfaction of AA, would
have caused it to make reference to the subject matter of the disagreements in
connection with its reports on the financial statements for such years, and (ii)
there were no reportable events of the kind described in Item 304(a)(1)(v) of
Regulation S-K under the Securities Exchange Act of 1934, as amended.
The Fund, by action of its Trustees, upon the recommendation of the Audit
Committee, has engaged Ernst & Young LLP ("E&Y") as the independent auditors to
audit the Fund's financial statements for the fiscal year ended October 31,
1999. During the Fund's fiscal years ended October 31, 1997 and October 31,
1998, neither the Fund nor anyone on its behalf has consulted E&Y on items which
(i) concerned the application of accounting principles to a specified
transaction, either completed or proposed, or the type of audit opinion that
might be rendered on the Fund's financial statements, or (ii) concerned the
subject of a disagreement (as defined in paragraph (a)(1)(iv) of Item 304 of
Regulation S-K) of reportable events (as described in paragraph (a)(1)(v) of
said Item 304).
Report of Ernst & Young LLP, Independent Auditors
TO THE BOARD OF TRUSTEES OF FEDERATED MUNICIPAL TRUST AND SHAREHOLDERS OF
GEORGIA MUNICIPAL CASH TRUST:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of the Georgia Municipal Cash Trust (one of the
portfolios constituting the Federated Municipal Trust) as of October 31, 1999,
and the related statement of operations, the statement of changes in net assets,
and the financial highlights for the year then ended. These financial statements
and financial highlights are the responsibility of the Trusts' management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit. The statement of changes in net assets
for the year ended October 31, 1998 and the financial highlights for each of the
periods indicated therein for the period then ended were audited by other
auditors whose report, dated December 23, 1998, expressed an unqualified opinion
on that statement and those financial highlights.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in financial statements and
financial highlights. Our procedures included confirmation of securities owned
as of October 31, 1999 by correspondence with the custodian. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Georgia Municipal Cash Trust of the Federated Municipal Trust at October 31,
1999, and the results of its operations, changes in its net assets and financial
highlights for the year then ended, in conformity with generally accepted
accounting principles.
[Graphic]
Boston, Massachusetts
December 16, 1999
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
JOHN W. MCGONIGLE
Executive Vice President and Secretary
EDWARD C. GONZALES
Executive Vice President
RICHARD B. FISHER
Vice President
RICHARD J. THOMAS
Treasurer
LESLIE K. ROSS
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
Georgia Municipal Cash Trust
ANNUAL REPORT
TO SHAREHOLDERS
ANNUAL REPORT
OCTOBER 31, 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
G01478-02 (12/99)
[Graphic]
President's Message
Dear Shareholder:
I am pleased to present your Annual Report to Shareholders of Massachusetts
Municipal Cash Trust--Boston 1784 Funds/SM/ Shares, which covers the 12-month
reporting period from November 1, 1998 through October 31, 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 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
$0.03 per share for Boston 1784 Funds/SM/ Shares. The Fund's total net assets
reached $611.1 million at the end of the reporting period.
Thank you for relying on Massachusetts Municipal Cash Trust to help your ready
cash earn 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
December 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 reporting period?
Perhaps the biggest issues threatening the U.S. economy in the latter half of
1998 were alleviated by the second quarter of 1999. The improvements in
international economies, particularly in Asia, and calm foreign markets laid the
foundation for the Federal Reserve Board (the "Fed") to focus on U.S. economic
releases as a better indicator of the inflation picture. The Fed became
increasingly concerned with inflationary pressures from tighter labor markets
and rising equity wealth. For the most part, inflationary forces remained tame
during 1999 with increases in some commodity prices, such as oil. Nevertheless,
the Fed began a series of three rate increases, citing tighter labor markets,
shrinking productivity gains and growth in demand. The moves came in June,
August and November; each time the Fed voted to raise the federal funds target
rate by a quarter point.
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"), which comprise more than 50% of the Fund's assets, started the period
in the 3.00% range, but moved sharply higher in December to the 4.00% level as
supply and demand imbalances occurred. Yields then declined in January, as
investors looked to reinvest coupon payments and year end selling pressures
eased. Yields averaged slightly over 2.75% during February and March before
rising to the 4.00% range in April due to traditional tax season payment
pressures. Over the summer months, yields remained mostly in a band between
3.00% and 3.50%, but rose sharply in September as cash outflows in the municipal
markets pushed rates as high as 3.85%. VRDN yields ended the reporting period at
3.50%. Over the reporting period, VRDN yields averaged roughly 66% of taxable
rates, making them attractive for investors in the highest two 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, have 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 municipal
securities, relative to their taxable counterparts, relatively 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 55 days. The Fund remained in a 45- to 50-day average maturity
range over the reporting period, 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 municipals to taxable instruments, such as U.S. Treasury
securities. This portfolio structure continues to provide a competitive yield
over time.
Q. What is your outlook going forward?
The Fed, concerned by persistent above-trend growth in an environment where
labor markets are constrained and productivity gains are narrowing, will likely
remain on hold until the first quarter of 2000. It is likely that we will see
one and possibly two interest rate increases in the first and second quarters of
2000. 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.
Financial Highlights--
Boston 1784 Funds Shares
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Ended October 31,
- -------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -------------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income 0.03 0.03 0.03 0.03 0.03
- -------------------------------------------------------------------------------------------------------------------------------
Less Distributions:
- -------------------------------------------------------------------------------------------------------------------------------
Distributions from net investment income (0.03) (0.03) (0.03) (0.03) (0.03)
- -------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -------------------------------------------------------------------------------------------------------------------------------
Total Return (1) 2.70% 3.03% 3.07% 3.05% 3.30%
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
- -------------------------------------------------------------------------------------------------------------------------------
Expenses (2) 0.91% 0.93% 0.96% 1.00% 1.05%
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income (2) 2.32% 2.61% 2.64% 2.59% 2.80%
- -------------------------------------------------------------------------------------------------------------------------------
Expenses (after waivers) 0.56% 0.57% 0.57% 0.58% 0.60%
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income (after waivers) 2.67% 2.97% 3.03% 3.01% 3.25%
- -------------------------------------------------------------------------------------------------------------------------------
Supplemental Data:
- -------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $199,860 $162,557 $73,837 $54,667 $46,580
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable. (2) 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)
Massachusetts Municipal Cash Trust
Portfolio of Investments
October 31, 1999
<TABLE>
<CAPTION>
Principal
- -----------------------------------------------------------------------------------------------------------------------
Amount Value
- -----------------------------------------------------------------------------------------------------------------------
(1) Short-Term Municipals--99.5%
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Massachusetts--98.2%
- ----------------------------------------------------------------------------------------------------------
$ 23,166,000 ABN AMRO MuniTOPS Certificates Trust (Massachusetts Non-AMT) (Series $ 23,166,000
1998-12) Weekly VRDNs (Massachusetts Water Resources
Authority)/(MBIA INS)/(ABN AMRO Bank N.V., Amsterdam LIQ)
- ----------------------------------------------------------------------------------------------------------
3,089,067 Carlisle, MA, 4.00% BANs, 7/3/2000 3,099,062
- ----------------------------------------------------------------------------------------------------------
14,940,000 Clipper Tax-Exempt Certificates Trust (Massachusetts Non-AMT) 14,940,000
(Series 1999-1) Weekly VRDNs (Massachusetts State HFA)/ (MBIA
INS)/(State Street Bank and Trust Co. LIQ)
- ----------------------------------------------------------------------------------------------------------
46,213,470 Clipper Tax-Exempt Trust (Series A) Weekly VRDNs (Massachusetts 46,213,470
State Lottery Commission)/(AMBAC INS)/ (State Street Bank and Trust
Co. LIQ)
- ----------------------------------------------------------------------------------------------------------
3,000,000 Commonwealth of Massachusetts, Weekly VRDNs (AMBAC INS)/(Citibank 3,000,000
NA, New York LIQ)
- ----------------------------------------------------------------------------------------------------------
15,200,000 Commonwealth of Massachusetts (Series 1997 B) Weekly VRDNs 15,200,000
(Landesbank Hessen-Thueringen, Frankfurt LIQ)
- ----------------------------------------------------------------------------------------------------------
1,245,000 Commonwealth of Massachusetts, Floater Certificates (Series 1,245,000
1998-132) Weekly VRDNs (FSA INS)/(Morgan Stanley, Dean Witter
Municipal Funding, Inc. LIQ)
- ----------------------------------------------------------------------------------------------------------
4,600,000 Commonwealth of Massachusetts Trust Receipts (FR/RI-A36) Weekly 4,600,000
VRDNs (MBIA INS)/(Bayerische Hypotheken-und Vereinsbank AG LIQ)
- ----------------------------------------------------------------------------------------------------------
4,181,000 Danvers, Massachusetts, 4.00% BANs, 7/13/2000 4,195,920
- ----------------------------------------------------------------------------------------------------------
3,000,000 Dighton-Rehobeth, MA Regional School District, 3.53% BANs, 7/6/2000 3,002,548
- ----------------------------------------------------------------------------------------------------------
9,800,000 Freetown-Lakeville, MA Regional School District, 4.10% BANs, 9,823,557
9/28/2000
- ----------------------------------------------------------------------------------------------------------
4,000,000 Gardner, MA, 3.36% BANs, 12/15/1999 4,000,377
- ----------------------------------------------------------------------------------------------------------
5,000,000 Gardner, MA, 3.75% BANs, 12/15/1999 5,002,937
- ----------------------------------------------------------------------------------------------------------
10,000,000 Holden, MA, 4.25% BANs, 3/15/2000 10,019,960
- ----------------------------------------------------------------------------------------------------------
10,500,000 Holliston, MA, 4.00% BANs, 12/15/1999 10,509,450
- ----------------------------------------------------------------------------------------------------------
8,000,000 Marshfield, MA, 3.75% BANs, 11/2/1999 8,000,048
- ----------------------------------------------------------------------------------------------------------
6,885,000 Massachusetts Bay Transit Authority (Series 1999) Weekly VRDNs 6,885,000
(Commerzbank AG, Frankfurt LIQ)
- ----------------------------------------------------------------------------------------------------------
7,200,000 Massachusetts Bay Transit Authority (Series A) 3.50% BANs, 2/25/2000 7,201,260
- ----------------------------------------------------------------------------------------------------------
11,000,000 Massachusetts Bay Transit Authority (Series D) 3.60% CP (Commerzbank 11,000,000
AG, Frankfurt and Morgan Guaranty Trust Co., New York LIQs),
Mandatory Tender 12/1/1999
- ----------------------------------------------------------------------------------------------------------
34,000,000 Massachusetts Bay Transit Authority (Series 1999 FR/RI-A36) Weekly 34,000,000
VRDNs (Bank of New York, New York LIQ)
- ----------------------------------------------------------------------------------------------------------
24,750,000 Massachusetts Bay Transit Authority BOCM Municipal Trust
Certificate 24,750,000 MTC #34, Weekly VRDNs (FGIC
INS)/(Bank One Capital Holdings Corp.
LIQ)
- ----------------------------------------------------------------------------------------------------------
3,000,000 Massachusetts Development Finance Agency (Series 1998A) Weekly VRDNs 3,000,000
(Shady Hill School)/(State Street Bank and Trust Co. LOC)
- ----------------------------------------------------------------------------------------------------------
2,400,000 Massachusetts HEFA, Weekly VRDNs (Harvard University) 2,400,000
- ----------------------------------------------------------------------------------------------------------
1,750,000 Massachusetts HEFA (Series 1999) Weekly VRDNs (CIL Realty of 1,750,000
Massachusetts)/(Credit Local de France LOC)
- ----------------------------------------------------------------------------------------------------------
15,400,000 Massachusetts HEFA (Series A) Weekly VRDNs (Brigham & Women's 15,400,000
Hospital)/(Landesbank Hessen-Thueringen, Frankfurt LOC)
- ----------------------------------------------------------------------------------------------------------
1,800,000 Massachusetts HEFA (Series B) Weekly VRDNs (Clark University)/(Fleet 1,800,000
Bank N.A. LOC)
- ----------------------------------------------------------------------------------------------------------
4,525,000 Massachusetts HEFA (Series B) Weekly VRDNs (Endicott 4,525,000
College)/(BankBoston, N.A. LOC)
- ----------------------------------------------------------------------------------------------------------
12,545,000 Massachusetts HEFA (Series B) Weekly VRDNs (Hallmark Health 12,545,000
System)/(FSA INS)/(Fleet National Bank, Springfield, MA LIQ)
- ----------------------------------------------------------------------------------------------------------
10,000,000 Massachusetts HEFA (Series F) Weekly VRDNs (Children's Hospital of 10,000,000
Boston)/(Landesbank Hessen-Thueringen, Frankfurt LIQ)
- ----------------------------------------------------------------------------------------------------------
9,420,000 Massachusetts HEFA (Series I) Weekly VRDNs (Harvard University) 9,420,000
- ----------------------------------------------------------------------------------------------------------
7,000,000 Massachusetts HEFA, 3.50% CP (Harvard University) Mandatory Tender 7,000,000
11/1/1999
- ----------------------------------------------------------------------------------------------------------
2,450,000 Massachusetts HEFA, Floater Certificates (Series 1998-80) Weekly 2,450,000
VRDNs (Stonehill College)/(MBIA INS)/(Morgan Stanley, Dean Witter
Municipal Funding, Inc. LIQ)
- ----------------------------------------------------------------------------------------------------------
1,800,000 Massachusetts IFA (Series 1992) Weekly VRDNs (Holyoke Water Power 1,800,000
Co.)/(Canadian Imperial Bank of Commerce LOC)
- ----------------------------------------------------------------------------------------------------------
10,000,000 Massachusetts IFA (Series 1992B) 3.40% CP (New England Power Co.) 10,000,000
Mandatory Tender 11/17/1999
- ----------------------------------------------------------------------------------------------------------
10,000,000 Massachusetts IFA (Series 1992B) 3.70% CP (New England Power Co.) 10,000,000
Mandatory Tender 2/28/2000
- ----------------------------------------------------------------------------------------------------------
6,000,000 Massachusetts IFA (Series 1992B) 3.70% CP (New England Power Co.) 6,000,000
Mandatory Tender 2/29/2000
- ----------------------------------------------------------------------------------------------------------
5,900,000 Massachusetts IFA (Series 1994) Weekly VRDNs (Nova Realty 5,900,000
Trust)/(Fleet National Bank, Springfield, MA LOC)
- ----------------------------------------------------------------------------------------------------------
5,925,000 Massachusetts IFA (Series 1995) Weekly VRDNs (Goddard House)/(Fleet 5,925,000
Bank N.A. LOC)
- ----------------------------------------------------------------------------------------------------------
7,200,000 Massachusetts IFA (Series 1995) Weekly VRDNs (Whitehead Institute 7,200,000
for Biomedical Research)
- ----------------------------------------------------------------------------------------------------------
6,919,000 Massachusetts IFA (Series 1996) Weekly VRDNs (Newbury 6,919,000
College)/(BankBoston, N.A. LOC)
- ----------------------------------------------------------------------------------------------------------
2,500,000 Massachusetts IFA (Series 1997) Weekly VRDNs (Massachusetts Society 2,500,000
for the Prevention of Cruelty to Animals)/(Fleet National Bank,
Springfield, MA LOC)
- ----------------------------------------------------------------------------------------------------------
5,885,000 Massachusetts IFA (Series 1997) Weekly VRDNs (Mount Ida 5,885,000
College)/(Credit Local de France LOC)
- ----------------------------------------------------------------------------------------------------------
5,965,000 Massachusetts IFA (Series 1998A) Weekly VRDNs (JHC Assisted Living 5,965,000
Corp.)/(Fleet National Bank, Springfield, MA LOC)
- ----------------------------------------------------------------------------------------------------------
1,225,000 Massachusetts IFA (Series A) Weekly VRDNs (Hockomock YMCA)/(Bank of 1,225,000
Nova Scotia, Toronto LOC)
- ----------------------------------------------------------------------------------------------------------
9,740,000 Massachusetts IFA (Series B) Weekly VRDNs (Williston North Hampton 9,740,000
School)/(Fleet National Bank, Springfield, MA LOC)
- ----------------------------------------------------------------------------------------------------------
14,000,000 Massachusetts Municipal Wholesale Electric Co., Power Supply System 14,000,000
Revenue Bonds (Series 1994 C) Weekly VRDNs (Canadian Imperial Bank
of Commerce LOC)
- ----------------------------------------------------------------------------------------------------------
9,290,000 (2)Massachusetts State HFA, PT-162, 3.25% TOBs (MBIA INS)/ (Banque 9,290,000
Nationale de Paris LIQ), Optional Tender 2/10/2000
- ----------------------------------------------------------------------------------------------------------
3,255,000 Massachusetts State (Series 1999 SG 126) Weekly VRDNs (Societe 3,255,000
Generale, Paris LIQ)
- ----------------------------------------------------------------------------------------------------------
27,545,000 Massachusetts Turnpike Authority, Variable Rate Certificates (Series 27,545,000
1997N) Weekly VRDNs (MBIA INS)/(Bank of America, N.A. LIQ)
- ----------------------------------------------------------------------------------------------------------
4,090,000 (2)Massachusetts Water Pollution Abatement Trust Pool (PT-1185) 4,090,000
3.80% TOBs (Merrill Lynch Capital Services, Inc. LIQ) Optional
Tender 9/7/2000
- ----------------------------------------------------------------------------------------------------------
10,000,000 Massachusetts Water Resources Authority (Series 1994) 3.50% CP 10,000,000
(Morgan Guaranty Trust Co., New York LOC) Mandatory Tender 1/20/2000
- ----------------------------------------------------------------------------------------------------------
4,200,000 Massachusetts Water Resources Authority (Series 1994) 3.60% CP 4,200,000
(Morgan Guaranty Trust Co., New York LOC) Mandatory Tender 1/27/2000
- ----------------------------------------------------------------------------------------------------------
5,500,000 Massachusetts Water Resources Authority (Series 1999B) Weekly VRDNs 5,500,000
(Landesbank Hessen-Thueringen, Frankfurt LOC)
- ----------------------------------------------------------------------------------------------------------
2,110,000 Massachusetts Water Resources Authority (Series A) Bonds (United 2,168,408
States Treasury PRF) 7.625%, 4/1/2000 (@102)
- ----------------------------------------------------------------------------------------------------------
4,403,100 Maynard, MA, 4.25% BANs, 9/29/2000 4,418,526
- ----------------------------------------------------------------------------------------------------------
1,940,000 Medway, MA, 3.32% BANs, 3/14/2000 1,940,477
- ----------------------------------------------------------------------------------------------------------
15,000,000 Middleborough, MA, 4.00% BANs, 12/29/1999 15,016,050
- ----------------------------------------------------------------------------------------------------------
14,662,345 Middleborough, MA, 4.05% BANs, 12/29/1999 14,672,653
- ----------------------------------------------------------------------------------------------------------
5,025,000 New England Educational Loan Marketing Corp., Series H, Bonds, 4.75% 5,031,130
12/1/1999
- ----------------------------------------------------------------------------------------------------------
2,426,250 Newbury, MA, 4.00% BANs, 8/11/2000 2,432,611
- ----------------------------------------------------------------------------------------------------------
3,350,000 Norwood, MA, 4.00% BANs, 8/16/2000 3,358,910
- ----------------------------------------------------------------------------------------------------------
8,000,000 Pittsfield, MA, 4.25% BANs, 9/15/2000 8,031,970
- ----------------------------------------------------------------------------------------------------------
2,651,000 Randolph, MA, 4.00% BANs, 6/16/2000 2,654,996
- ----------------------------------------------------------------------------------------------------------
3,500,000 Richmond, MA, 3.75% BANs, 6/1/2000 3,507,496
- ----------------------------------------------------------------------------------------------------------
5,270,000 South Hadley, MA, 4.15% BANs, 8/11/2000 5,287,763
- ----------------------------------------------------------------------------------------------------------
6,250,000 Springfield, MA , 4.25% BANs (Fleet National Bank, Springfield, MA 6,263,365
LOC) 3/2/2000
- ----------------------------------------------------------------------------------------------------------
9,300,000 Sterling, MA, 3.75% BANs, 2/25/2000 9,307,192
- ----------------------------------------------------------------------------------------------------------
2,141,500 Stoughton, MA, 3.20% BANs, 12/16/1999 2,141,865
- ----------------------------------------------------------------------------------------------------------
1,424,000 Stow, MA, 3.50% BANs, 2/15/2000 1,425,199
- ----------------------------------------------------------------------------------------------------------
1,993,818 Stow, MA, 3.50% BANs, 2/4/2000 1,995,827
- ----------------------------------------------------------------------------------------------------------
7,000,000 Topsfield, MA, 4.25% BANs, 9/22/2000 7,034,261
- ----------------------------------------------------------------------------------------------------------
3,000,000 Westfield, MA, 4.00% BANs, 2/1/2000 3,003,302
- ----------------------------------------------------------------------------------------------------------
11,000,000 Westford, MA, 3.50% BANs, 4/14/2000 11,016,807
- ----------------------------------------------------------------------------------------------------------
6,120,000 Weymouth, MA Housing Authority, PT 1062, Weekly VRDNs (Queen Ann 6,120,000
Apartments)/(Merrill Lynch Capital Services, Inc. LIQ)/(Merrill
Lynch Capital Services, Inc. LOC)
- ----------------------------------------------------------------------------------------------------------
3,300,000 Weymouth, MA, 3.50% BANs, 4/12/2000 3,304,980
- ----------------------------------------------------------------------------------------------------------
2,733,000 Yarmouth, MA, 3.50% BANs, 11/19/1999 2,733,330
- ----------------------------------------------------------------------------------------------------------
Total 599,950,707
- ----------------------------------------------------------------------------------------------------------
Puerto Rico--1.3%
- ----------------------------------------------------------------------------------------------------------
8,000,000 Commonwealth of Puerto Rico, Floating Rate Trust Receipts (Series 8,000,000
1997) Weekly VRDNs (Commerzbank AG, Frankfurt LIQ)/ (Commerzbank AG,
Frankfurt LOC)
- ----------------------------------------------------------------------------------------------------------
Total Investments (at amortized cost)(3) $ 607,950,707
- ----------------------------------------------------------------------------------------------------------
</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, or 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 October 31, 1999, the portfolio securities were rated as follows:
TIER RATING BASED ON TOTAL MARKET VALUE (UNAUDITED)
First Tier Second Tier
100% 0%
(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 October 31,
1999, these securities amounted to $13,380,000, which represents 2.2% of net
assets.
(3) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($611,151,273) at October 31, 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 HEFA--Health and Education Facilities
Authority HFA--Housing Finance Authority IFA--Industrial Finance Authority
INS--Insured LIQ(s)--Liquidity Agreement(s) LOC--Letter of Credit
MBIA--Municipal Bond Investors Assurance PRF--Prerefunded TOBs--Tender Option
Bonds
<TABLE>
<S> <C> <C>
Assets:
Total investments in securities, at amortized cost and value $ 607,950,707
- --------------------------------------------------------------------------------------------------------------
Cash 224,818
- --------------------------------------------------------------------------------------------------------------
Income receivable 3,683,267
- --------------------------------------------------------------------------------------------------------------
Receivable for shares sold 25,372
- --------------------------------------------------------------------------------------------------------------
Prepaid expenses 64,519
- --------------------------------------------------------------------------------------------------------------
Total Assets 611,948,683
- --------------------------------------------------------------------------------------------------------------
Liabilities:
- --------------------------------------------------------------------------------------------------------------
Payable for shares redeemed $ 56,198
- --------------------------------------------------------------------------------------------------------------
Income distribution payable 690,364
- --------------------------------------------------------------------------------------------------------------
Payable for transfer and dividend disbursing agent fees and expenses 17,992
- --------------------------------------------------------------------------------------------------------------
Accrued expenses 32,856
- --------------------------------------------------------------------------------------------------------------
Total Liabilities 797,410
- --------------------------------------------------------------------------------------------------------------
Net Assets for 611,151,273 shares outstanding $ 611,151,273
- --------------------------------------------------------------------------------------------------------------
Net Asset Value, Offering Price and Redemption Proceeds Per Share:
- --------------------------------------------------------------------------------------------------------------
Institutional Service Shares:
- --------------------------------------------------------------------------------------------------------------
$411,291,550 / 411,291,550 shares outstanding $ 1.00
- --------------------------------------------------------------------------------------------------------------
Boston 1784 Funds Shares:
- --------------------------------------------------------------------------------------------------------------
$199,859,723 / 199,859,723 shares outstanding $ 1.00
- --------------------------------------------------------------------------------------------------------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
Massachusetts Municipal Cash Trust
Statement of Operations
Year Ended October 31, 1999
<TABLE>
<CAPTION>
Investment Income:
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest $16,698,245
- ----------------------------------------------------------------------------------------------------------------------------------
Expenses:
- ----------------------------------------------------------------------------------------------------------------------------------
Investment advisory fee $ 2,574,407
- ----------------------------------------------------------------------------------------------------------------------------------
Administrative personnel and services fee 388,221
- ----------------------------------------------------------------------------------------------------------------------------------
Custodian fees 27,162
- ----------------------------------------------------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 104,820
- ----------------------------------------------------------------------------------------------------------------------------------
Directors'/Trustees' fees 3,894
- ----------------------------------------------------------------------------------------------------------------------------------
Auditing fees 12,669
- ----------------------------------------------------------------------------------------------------------------------------------
Legal fees 6,676
- ----------------------------------------------------------------------------------------------------------------------------------
Portfolio accounting fees 117,376
- ----------------------------------------------------------------------------------------------------------------------------------
Shareholder services fee--Institutional Service Shares 813,784
- ----------------------------------------------------------------------------------------------------------------------------------
Shareholder services fee--Boston 1784 Funds Shares 473,469
- ----------------------------------------------------------------------------------------------------------------------------------
Share registration costs 10,315
- ----------------------------------------------------------------------------------------------------------------------------------
Printing and postage 29,332
- ----------------------------------------------------------------------------------------------------------------------------------
Insurance premiums 25,814
- ----------------------------------------------------------------------------------------------------------------------------------
Miscellaneous 2,542
- ----------------------------------------------------------------------------------------------------------------------------------
Total expenses 4,590,481
- ----------------------------------------------------------------------------------------------------------------------------------
Waivers--
- ----------------------------------------------------------------------------------------------------------------------------------
Waiver of investment advisory fee $(493,904)
- ----------------------------------------------------------------------------------------------------------------------------------
Waiver of shareholder services fee--Institutional
- ----------------------------------------------------------------------------------------------------------------------------------
Service Shares (790,809)
- ----------------------------------------------------------------------------------------------------------------------------------
Waiver of shareholder services fee--Boston 1784
- ----------------------------------------------------------------------------------------------------------------------------------
Funds Shares (473,469)
- ----------------------------------------------------------------------------------------------------------------------------------
Total waivers (1,758,182)
- ----------------------------------------------------------------------------------------------------------------------------------
Net expenses 2,832,299
- ----------------------------------------------------------------------------------------------------------------------------------
Net investment income $13,865,946
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
Massachusetts Municipal Cash Trust
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended October 31,
- ---------------------------------------------------------------------------------------------------------------
1999 1998
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (Decrease) in Net Assets:
- ---------------------------------------------------------------------------------------------------------------
Operations--
- ---------------------------------------------------------------------------------------------------------------
Net investment income $ 13,865,946 $ 10,788,205
- ---------------------------------------------------------------------------------------------------------------
Distributions to Shareholders--
- ---------------------------------------------------------------------------------------------------------------
Distributions from net investment
income
- ---------------------------------------------------------------------------------------------------------------
Institutional Service Shares (8,784,162) (6,723,838)
- ---------------------------------------------------------------------------------------------------------------
Boston 1784 Funds Shares (5,081,784) (4,064,367)
- ---------------------------------------------------------------------------------------------------------------
CHANGE IN NET ASSETS RESULTING FROM
- ---------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS (13,865,946) (10,788,205)
- ---------------------------------------------------------------------------------------------------------------
Share Transactions--
- ---------------------------------------------------------------------------------------------------------------
Proceeds from sale of shares 1,530,820,679 1,191,190,660
- ---------------------------------------------------------------------------------------------------------------
Net asset value of shares issued to
shareholders in payment of
- ---------------------------------------------------------------------------------------------------------------
distributions declared 8,213,858 5,640,601
- ---------------------------------------------------------------------------------------------------------------
Cost of shares redeemed (1,346,826,355) (993,594,809)
- ---------------------------------------------------------------------------------------------------------------
Change in net assets resulting from 192,208,182 203,236,452
share transactions
- ---------------------------------------------------------------------------------------------------------------
Change in net assets 192,208,182 203,236,452
- ---------------------------------------------------------------------------------------------------------------
Net Assets:
- ---------------------------------------------------------------------------------------------------------------
Beginning of period 418,943,091 215,706,639
- ---------------------------------------------------------------------------------------------------------------
End of period $ 611,151,273 $ 418,943,091
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
Massachusetts Municipal Cash Trust
Notes to Financial Statements
October 31, 1999
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 provision for federal tax is
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.
(3) Shares of Beneficial Interest
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares. At October 31, 1999, capital paid-in aggregated $611,151,273.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
Year Ended October 31,
- ----------------------------------------------------------------------------------------------------
1999 1998
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------
Institutional Service Shares: Shares Shares
- ----------------------------------------------------------------------------------------------------
Shares sold 1,280,366,882 943,828,322
- ----------------------------------------------------------------------------------------------------
Shares issued to shareholders in
payment of distributions declared 3,158,407 1,573,009
- ----------------------------------------------------------------------------------------------------
Shares redeemed (1,128,619,379) (830,885,045)
- ----------------------------------------------------------------------------------------------------
Net Change Resulting From
Institutional Service Share
Transactions 154,905,910 114,516,286
- ----------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Year Ended October 31,
- ----------------------------------------------------------------------------------------------------
1999 1998
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------
Boston 1784 Funds Shares: Shares Shares
- ----------------------------------------------------------------------------------------------------
Shares sold 250,453,797 247,362,338
- ----------------------------------------------------------------------------------------------------
Shares issued to shareholders
in payment of distributions
declared 5,055,451 4,067,592
- ----------------------------------------------------------------------------------------------------
Shares redeemed (218,206,976) (162,709,764)
- ----------------------------------------------------------------------------------------------------
Net Change Resulting from
Boston 1784 Funds Share
Transactions 37,302,272 88,720,166
- ----------------------------------------------------------------------------------------------------
Net Change Resulting from
Share Transactions 192,208,182 203,236,452
- ----------------------------------------------------------------------------------------------------
</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 year ended October 31, 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 and amounted to $714,240,341 and $677,099,000,
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
October 31, 1999, 48.7% 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 13.5% of total investments.
(6) Year 2000 (Unaudited)
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.
(7) Change of Independent Auditors (Unaudited)
On May 19, 1999, the Fund's Trustees, upon the recommendation of its Audit
Committee, requested and subsequently accepted the resignation of Arthur
Andersen LLP ("AA") as the Fund's independent auditors. AA's reports on the
Fund's financial statements for the fiscal years ended October 31, 1997 and
October 31, 1998 contained no adverse opinion or disclaimer of opinion nor were
they qualified or modified as to uncertainty, audit scope or accounting
principles. During the Fund's fiscal years ended October 31, 1997 and October
31, 1998, (i) there were no disagreements with AA on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure, which disagreements, if not resolved to the satisfaction of AA, would
have caused it to make reference to the subject matter of the disagreements in
connection with its reports on the financial statements for such years; and (ii)
there were no reportable events of the kind described in Item 304(a)(1)(v) of
Regulation S-K under the Securities Exchange Act of 1934, as amended.
The Fund, by action of its Trustees, upon the recommendation of the Audit
Committee, has engaged Ernst & Young LLP ("E&Y") as the independent auditors to
audit the Fund's financial statements for the fiscal year ended October 31,
1999. During the Fund's fiscal years ended October 31, 1997 and October 31,
1998, neither the Fund nor anyone on its behalf has consulted E&Y on items which
(i) concerned the application of accounting principles to a specified
transaction, either completed or proposed, or the type of audit opinion that
might be rendered on the Fund's financial statements, or (ii) concerned the
subject of a disagreement (as defined in paragraph (a)(1)(iv) of Item 304 of
Regulation S-K) of reportable events (as described in paragraph (a)(1)(v) of
said Item 304).
Report of Ernst & Young LLP,
Independent Auditors
TO THE BOARD OF TRUSTEES OF FEDERATED MUNICIPAL TRUST AND SHAREHOLDERS OF
MASSACHUSETTS MUNICIPAL CASH TRUST:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of the Massachusetts Municipal Cash Trust (one of
the portfolios constituting Federated Municipal Trust) as of October 31, 1999,
and the related statement of operations, the statement of changes in net assets,
and the financial highlights for the year then ended. These financial statements
and financial highlights are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit. The statement of changes in net assets
for the year ended October 31, 1998 and the financial highlights for each of the
periods indicated therein for the period then ended were audited by other
auditors whose report, dated December 23, 1998, expressed an unqualified opinion
on that statement and those financial highlights.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in financial statements and
financial highlights. Our procedures included confirmation of securities owned
as of October 31, 1999, by correspondence with the custodian. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Massachusetts Municipal Cash Trust of the Federated Municipal Trust at October
31, 1999, and the results of its operations, changes in its net assets and
financial highlights for the year then ended, in conformity with generally
accepted accounting principles.
/s/ Ernst & Young LLP
Boston, Massachusetts
December 16, 1999
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
Leslie K. Ross
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.
Annual Report
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/S/M
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) G00191-03 (12/99)
MF-0192 (12/99)
Massachusetts Municipal
Cash Trust
[Boston funds logo]
Boston 1784 Funds Shares
Annual
Report
to Shareholders
October 31, 1999
ANNUAL REPORT
President's Message
Dear Shareholder:
I am pleased to present the Annual Report to Shareholders of Massachusetts
Municipal Cash Trust, which covers the 12-month period from November 1, 1998
through October 31, 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 Boston 1784 Funds 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. 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
$0.03 per share for both Institutional Service Shares and Boston 1784 Funds
Shares. The fund's total net assets reached $611.2 million at the end of the
reporting period.
Thank you for relying on Massachusetts Municipal Cash Trust to help your ready
cash earn 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
December 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 REPORTING PERIOD?
Perhaps the biggest issues threatening the U.S. economy in the latter half of
1998 were alleviated by the second quarter of 1999. The improvements in
international economies, particularly Asia, and calm foreign markets laid the
foundation for the Federal Reserve Board (the "Fed") to focus on U.S. economic
releases as a better indicator of the inflation picture. The Fed became
increasingly concerned with inflationary pressures from tighter labor markets
and rising equity wealth. For the most part inflationary forces remained tame
during 1999 with increases in some commodity prices, such as oil. Nevertheless,
the Fed began a series of three rate increases, citing tighter labor markets,
shrinking productivity gains and growth in demand. The moves came in June,
August and November; each time, the Fed voted to raise the federal funds target
rate by a quarter point.
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"), which comprise more than 50% of the fund's assets, started the period
in the 3.00% range, but moved sharply higher in December to the 4.00% level as
supply and demand imbalances occurred. Yields then declined in January, as
investors looked to reinvest coupon payments and year end selling pressures
eased. Yields averaged slightly over 2.75% during February and March before
rising to the 4.00% range in April due to traditional tax season payment
pressures. Over the summer months, yields remained mostly in a band between
3.00% and 3.50%, but rose sharply in September as cash outflows in the municipal
markets pushed rates as high as 3.85%. VRDN yields ended the reporting period at
3.50%. Over the reporting period, VRDN yields averaged roughly 66% of taxable
rates, making them attractive for investors in the highest two 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, have 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 municipal
securities, relative to their taxable counterparts, relatively 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 45- to 50-day average maturity
range over the reporting period, 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 municipals to taxable instruments, such as U.S. Treasury
securities. This portfolio structure continued to provide a competitive yield
over time.
WHAT IS YOUR OUTLOOK GOING FORWARD?
The Fed, concerned by persistent above-trend growth in an environment where
labor markets are constrained and productivity gains are narrowing, will likely
remain on hold until the first quarter of 2000. It is likely that we will see
one and possibly two interest rate increases in the first and second quarters of
2000. 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
OCTOBER 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
99.5% 1
MASSACHUSETTS-98.2%
$ 23,166,000 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) $ 23,166,000
3,089,067 Carlisle, MA, 4.00% BANs,
7/3/2000 3,099,062
14,940,000 Clipper Tax-Exempt
Certificates Trust
(Massachusetts Non-AMT)
(Series 1999-1) Weekly
VRDNs (Massachusetts State
HFA)/(MBIA INS)/(State
Street Bank and Trust Co.
LIQ) 14,940,000
46,213,470 Clipper Tax-Exempt Trust
(Series A) Weekly VRDNs
(Massachusetts State
Lottery Commission)/(AMBAC
INS)/(State Street Bank
and Trust Co. LIQ) 46,213,470
3,000,000 Commonwealth of
Massachusetts, Weekly
VRDNs (AMBAC
INS)/(Citibank N.A., New
York LIQ) 3,000,000
15,200,000 Commonwealth of
Massachusetts (Series 1997
B) Weekly VRDNs
(Landesbank Hessen-
Thueringen, Frankfurt LIQ) 15,200,000
1,245,000 Commonwealth of
Massachusetts, Floater
Certificates (Series 1998-
132) Weekly VRDNs (FSA
INS)/(Morgan Stanley, Dean
Witter Municipal Funding,
Inc. LIQ) 1,245,000
4,600,000 Commonwealth of
Massachusetts Trust
Receipts (FR/RI-A36)
Weekly VRDNs (MBIA
INS)/(Bayerische
Hypotheken-und Vereinsbank
AG LIQ) 4,600,000
4,181,000 Danvers, Massachusetts,
4.00% BANs, 7/13/2000 4,195,920
3,000,000 Dighton-Rehobeth, MA
Regional School District,
3.53% BANs, 7/6/2000 3,002,548
9,800,000 Freetown-Lakeville, MA
Regional School District,
4.10% BANs, 9/28/2000 9,823,557
4,000,000 Gardner, MA, 3.36% BANs,
12/15/1999 4,000,377
5,000,000 Gardner, MA, 3.75% BANs,
12/15/1999 5,002,937
10,000,000 Holden, MA, 4.25% BANs,
3/15/2000 10,019,960
10,500,000 Holliston, MA, 4.00% BANs,
12/15/1999 10,509,450
8,000,000 Marshfield, MA, 3.75%
BANs, 11/2/1999 8,000,048
6,885,000 Massachusetts Bay Transit
Authority (Series 1999)
Weekly VRDNs
(Commerzbank AG, Frankfurt
LIQ) 6,885,000
7,200,000 Massachusetts Bay Transit
Authority (Series A) 3.50%
BANs, 2/25/2000 7,201,260
11,000,000 Massachusetts Bay Transit
Authority (Series D) 3.60%
CP (Commerzbank AG,
Frankfurt and Morgan
Guaranty Trust Co., New
York LIQs), Mandatory
Tender 12/1/1999 11,000,000
34,000,000 Massachusetts Bay Transit
Authority (Series 1999
FR/RI-A36) Weekly VRDNs
(Bank of New York, New York
LIQ) 34,000,000
24,750,000 Massachusetts Bay Transit
Authority BOCM Municipal
Trust Certificate MTC #34,
Weekly VRDNs (FGIC
INS)/(Bank One Capital
Holdings Corp. LIQ) 24,750,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
MASSACHUSETTS-CONTINUED
$ 3,000,000 Massachusetts Development
Finance Agency (Series
1998A) Weekly VRDNs (Shady
Hill School)/(State Street
Bank and Trust Co. LOC) $ 3,000,000
2,400,000 Massachusetts HEFA, Weekly
VRDNs (Harvard University) 2,400,000
1,750,000 Massachusetts HEFA (Series
1999) Weekly VRDNs (CIL
Realty of
Massachusetts)/(Credit
Local de France LOC) 1,750,000
15,400,000 Massachusetts HEFA (Series
A) Weekly VRDNs (Brigham &
Women's
Hospital)/(Landesbank
Hessen-Thueringen,
Frankfurt LOC) 15,400,000
1,800,000 Massachusetts HEFA (Series
B) Weekly VRDNs (Clark
University)/
(Fleet Bank N.A. LOC) 1,800,000
4,525,000 Massachusetts HEFA (Series
B) Weekly VRDNs (Endicott
College)/
(BankBoston, N.A. LOC) 4,525,000
12,545,000 Massachusetts HEFA (Series
B) Weekly VRDNs (Hallmark
Health System)/
(FSA INS)/(Fleet National
Bank, Springfield, MA LIQ) 12,545,000
10,000,000 Massachusetts HEFA (Series
F) Weekly VRDNs
(Children's Hospital of
Boston)/(Landesbank
Hessen-Thueringen,
Frankfurt LIQ) 10,000,000
9,420,000 Massachusetts HEFA (Series
I) Weekly VRDNs (Harvard
University) 9,420,000
7,000,000 Massachusetts HEFA, 3.50%
CP (Harvard University)
Mandatory Tender 11/1/1999 7,000,000
2,450,000 Massachusetts HEFA,
Floater Certificates
(Series 1998-80) Weekly
VRDNs (Stonehill
College)/(MBIA
INS)/(Morgan Stanley, Dean
Witter Municipal Funding,
Inc. LIQ) 2,450,000
1,800,000 Massachusetts IFA (Series
1992) Weekly VRDNs
(Holyoke Water Power
Co.)/(Canadian Imperial
Bank of Commerce LOC) 1,800,000
10,000,000 Massachusetts IFA (Series
1992B) 3.40% CP (New
England Power Co.)
Mandatory Tender
11/17/1999 10,000,000
10,000,000 Massachusetts IFA (Series
1992B) 3.70% CP (New
England Power Co.)
Mandatory Tender 2/28/2000 10,000,000
6,000,000 Massachusetts IFA (Series
1992B) 3.70% CP (New
England Power Co.)
Mandatory Tender 2/29/2000 6,000,000
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
7,200,000 Massachusetts IFA (Series
1995) Weekly VRDNs
(Whitehead Institute for
Biomedical Research) 7,200,000
6,919,000 Massachusetts IFA (Series
1996) Weekly VRDNs
(Newbury College)/
(BankBoston, N.A. LOC) 6,919,000
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
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
MASSACHUSETTS-CONTINUED
$ 5,965,000 Massachusetts IFA (Series
1998A) Weekly VRDNs (JHC
Assisted Living
Corp.)/(Fleet National
Bank, Springfield, MA LOC) $ 5,965,000
1,225,000 Massachusetts IFA (Series
A) Weekly VRDNs (Hockomock
YMCA)/(Bank of Nova
Scotia, Toronto LOC) 1,225,000
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 (Series 1994
C) Weekly VRDNs (Canadian
Imperial Bank of Commerce
LOC) 14,000,000
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
3,255,000 Massachusetts State
(Series 1999 SG 126) Weekly
VRDNs (Societe Generale,
Paris LIQ) 3,255,000
27,545,000 Massachusetts Turnpike
Authority, Variable Rate
Certificates (Series
1997N) Weekly VRDNs (MBIA
INS)/(Bank of America,
N.A. LIQ) 27,545,000
4,090,000 2 Massachusetts Water
Pollution Abatement Trust
Pool (PT-1185) 3.80% TOBs
(Merrill Lynch Capital
Services, Inc. LIQ)
Optional Tender 9/7/2000 4,090,000
10,000,000 Massachusetts Water
Resources Authority
(Series 1994) 3.50% CP
(Morgan Guaranty Trust
Co., New York LOC)
Mandatory Tender 1/20/2000 10,000,000
4,200,000 Massachusetts Water
Resources Authority
(Series 1994) 3.60% CP
(Morgan Guaranty Trust
Co., New York LOC)
Mandatory Tender 1/27/2000 4,200,000
5,500,000 Massachusetts Water
Resources Authority
(Series 1999B) Weekly
VRDNs (Landesbank Hessen-
Thueringen, Frankfurt LOC) 5,500,000
2,110,000 Massachusetts Water
Resources Authority
(Series A) Bonds (United
States Treasury PRF)
7.625%, 4/1/2000 (@102) 2,168,408
4,403,100 Maynard, MA, 4.25% BANs,
9/29/2000 4,418,526
1,940,000 Medway, MA, 3.32% BANs,
3/14/2000 1,940,477
15,000,000 Middleborough, MA, 4.00%
BANs, 12/29/1999 15,016,050
14,662,345 Middleborough, MA, 4.05%
BANs, 12/29/1999 14,672,653
5,025,000 New England Educational
Loan Marketing Corp.,
Series H, Bonds, 4.75%
12/1/1999 5,031,130
2,426,250 Newbury, MA, 4.00% BANs,
8/11/2000 2,432,611
3,350,000 Norwood, MA, 4.00% BANs,
8/16/2000 3,358,910
8,000,000 Pittsfield, MA, 4.25%
BANs, 9/15/2000 8,031,970
2,651,000 Randolph, MA, 4.00% BANs,
6/16/2000 2,654,996
3,500,000 Richmond, MA, 3.75% BANs,
6/1/2000 3,507,496
5,270,000 South Hadley, MA, 4.15%
BANs, 8/11/2000 5,287,763
6,250,000 Springfield, MA, 4.25%
BANs (Fleet National Bank,
Springfield, MA LOC)
3/2/2000 6,263,365
9,300,000 Sterling, MA, 3.75% BANs,
2/25/2000 9,307,192
2,141,500 Stoughton, MA, 3.20% BANs,
12/16/1999 2,141,865
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
MASSACHUSETTS-CONTINUED
$ 1,424,000 Stow, MA, 3.50% BANs,
2/15/2000 $ 1,425,199
1,993,818 Stow, MA, 3.50% BANs,
2/4/2000 1,995,827
7,000,000 Topsfield, MA, 4.25% BANs,
9/22/2000 7,034,261
3,000,000 Westfield, MA, 4.00% BANs,
2/1/2000 3,003,302
11,000,000 Westford, MA, 3.50% BANs,
4/14/2000 11,016,807
6,120,000 Weymouth, MA Housing
Authority, PT 1062, Weekly
VRDNs (Queen Ann
Apartments)/(Merrill Lynch
Capital Services, Inc.
LIQ)/(Merrill Lynch
Capital Services, Inc.
LOC) 6,120,000
3,300,000 Weymouth, MA, 3.50% BANs,
4/12/2000 3,304,980
2,733,000 Yarmouth, MA, 3.50% BANs,
11/19/1999 2,733,330
TOTAL 599,950,707
PUERTO RICO-1.3%
8,000,000 Commonwealth of Puerto
Rico, Floating Rate Trust
Receipts (Series 1997)
Weekly VRDNs (Commerzbank
AG, Frankfurt
LIQ)/(Commerzbank AG,
Frankfurt LOC) 8,000,000
TOTAL INVESTMENTS (AT
AMORTIZED COST) 3 $ 607,950,707
</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, or 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 October 31, 1999, the portfolio securities were rated as follows:
Tier Rating Based on Total Market Value (Unaudited)
<TABLE>
<CAPTION>
FIRST TIER SECOND TIER
<S> <C>
100% 0%
</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 October 31, 1999, these
securities amounted to $13,380,000, which represents 2.2% of net assets.
3 Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($611,151,273) at October 31, 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 HEFA -Health and Education
Facilities Authority HFA -Housing Finance Authority IFA -Industrial Finance
Authority INS -Insured LIQ(s) -Liquidity Agreement(s) LOC -Letter of Credit MBIA
- -Municipal Bond Investors Assurance PRF -Prerefunded 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
OCTOBER 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Total investments in
securities, at amortized
cost and value $ 607,950,707
Cash 224,818
Income receivable 3,683,267
Receivable for shares sold 25,372
Prepaid expenses 64,519
TOTAL ASSETS 611,948,683
LIABILITIES:
Payable for shares
redeemed $ 56,198
Income distribution
payable 690,364
Payable for transfer and
dividend disbursing agent
fees and expenses 17,992
Accrued expenses 32,856
TOTAL LIABILITIES 797,410
Net assets for 611,151,273
shares outstanding $ 611,151,273
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PROCEEDS PER SHARE
INSTITUTIONAL SERVICE
SHARES:
$411,291,550 / 411,291,550
shares outstanding $1.00
BOSTON 1784 FUNDS SHARES:
$199,859,723 / 199,859,723
shares outstanding $1.00
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Operations
YEAR ENDED OCTOBER 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 16,698,245
EXPENSES:
Investment advisory fee $ 2,574,407
Administrative personnel
and services fee 388,221
Custodian fees 27,162
Transfer and dividend
disbursing agent fees and
expenses 104,820
Directors'/Trustees' fees 3,894
Auditing fees 12,669
Legal fees 6,676
Portfolio accounting fees 117,376
Shareholder services fee -
Institutional Service
Shares 813,784
Shareholder services fee -
Boston 1784 Funds Shares 473,469
Share registration costs 10,315
Printing and postage 29,332
Insurance premiums 25,814
Miscellaneous 2,542
TOTAL EXPENSES 4,590,481
WAIVERS:
Waiver of investment
advisory fee $ (493,904)
Waiver of shareholder
services fee -
Institutional Service
Shares (790,809)
Waiver of shareholder
services fee - Boston 1784
Funds Shares (473,469)
TOTAL WAIVERS (1,758,182)
Net expenses 2,832,299
Net investment income $ 13,865,946
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31 1999 1998
<S> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net investment income $ 13,865,946 $ 10,788,205
DISTRIBUTIONS TO
SHAREHOLDERS:
Distributions from net
investment income
Institutional Service
Shares (8,784,162) (6,723,838)
Boston 1784 Funds Shares (5,081,784) (4,064,367)
CHANGE IN NET ASSETS
RESULTING FROM
DISTRIBUTIONS
TO SHAREHOLDERS (13,865,946) (10,788,205)
SHARE TRANSACTIONS:
Proceeds from sale of
shares 1,530,820,679 1,191,190,660
Net asset value of shares
issued to shareholders in
payment of
distributions declared 8,213,858 5,640,601
Cost of shares redeemed (1,346,826,355) (993,594,809)
CHANGE IN NET ASSETS
RESULTING FROM SHARE
TRANSACTIONS 192,208,182 203,236,452
Change in net assets 192,208,182 203,236,452
NET ASSETS:
Beginning of period 418,943,091 215,706,639
End of period $ 611,151,273 $ 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>
YEAR ENDED OCTOBER 31 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.03 0.03 0.03 0.03 0.03
LESS DISTRIBUTIONS:
Distributions from net investment income (0.03) (0.03) (0.03) (0.03) (0.03)
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00
TOTAL RETURN 1 2.71% 3.04% 3.09% 3.07% 3.34%
RATIOS TO AVERAGE NET ASSETS:
Expenses 2 0.90% 0.91% 0.95% 0.97% 1.00%
Net investment income 2 2.35% 2.62% 2.65% 2.60% 2.85%
Expenses (after waivers) 0.56% 0.55% 0.55% 0.55% 0.55%
Net investment income (after waivers) 2.69% 2.98% 3.05% 3.02% 3.30%
SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $411,292 $256,386 $141,869 $119,739 $99,628
</TABLE>
1 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
2 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>
YEAR ENDED OCTOBER 31 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.03 0.03 0.03 0.03 0.03
LESS DISTRIBUTIONS:
Distributions from net investment income (0.03) (0.03) (0.03) (0.03) (0.03)
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00
TOTAL RETURN 1 2.70% 3.03% 3.07% 3.05% 3.30%
RATIOS TO AVERAGE NET ASSETS:
Expenses 2 0.91% 0.93% 0.96% 1.00% 1.05%
Net investment income 2 2.32% 2.61% 2.64% 2.59% 2.80%
Expenses (after waivers) 0.56% 0.57% 0.57% 0.58% 0.60%
Net investment income (after waivers) 2.67% 2.97% 3.03% 3.01% 3.25%
SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $199,860 $162,557 $73,837 $54,667 $46,580
</TABLE>
1 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
2 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
OCTOBER 31, 1999
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 provision for federal tax is
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 October 31, 1999, capital paid-in aggregated $611,151,273.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31 1999 1998
<S> <C> <C>
INSTITUTIONAL SERVICE
SHARES:
Shares sold 1,280,366,882 943,828,322
Shares issued to
shareholders in payment of
distributions declared 3,158,407 1,573,009
Shares redeemed (1,128,619,379) (830,885,045)
NET CHANGE RESULTING FROM
INSTITUTIONAL SERVICE
SHARE TRANSACTIONS 154,905,910 114,516,286
<CAPTION>
YEAR ENDED OCTOBER 31 1999 1998
<S> <C> <C>
BOSTON 1784 FUNDS SHARES:
Shares sold 250,453,797 247,362,338
Shares issued to
shareholders in payment of
distributions declared 5,055,451 4,067,592
Shares redeemed (218,206,976) (162,709,764)
NET CHANGE RESULTING FROM
BOSTON 1784 FUNDS SHARE
TRANSACTIONS 37,302,272 88,720,166
NET CHANGE RESULTING FROM
SHARE TRANSACTIONS 192,208,182 203,236,452
</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 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 the 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 year ended October 31, 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 and amounted to $714,240,341 and $677,099,000,
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
October 31, 1999, 48.7% 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 13.5% of total investments.
YEAR 2000 (UNAUDITED)
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.
CHANGE OF INDEPENDENT AUDITORS (UNAUDITED)
On May 19, 1999, the Fund's Trustees, upon the recommendation of its Audit
Committee, requested and subsequently accepted the resignation of Arthur
Andersen LLP ("AA") as the Fund's independent auditors. AA's reports on the
Fund's financial statements for the fiscal years ended October 31, 1997 and
October 31, 1998 contained no adverse opinion or disclaimer of opinion nor were
they qualified or modified as to uncertainty, audit scope or accounting
principles. During the Fund's fiscal years ended October 31, 1997 and October
31, 1998: (i) there were no disagreements with AA on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure, which disagreements, if not resolved to the satisfaction of AA, would
have caused it to make reference to the subject matter of the disagreements in
connection with its reports on the financial statements for such years; and (ii)
there were no reportable events of the kind described in Item 304(a)(1)(v) of
Regulation S-K under the Securities Exchange Act of 1934, as amended.
The Fund, by action of its Trustees, upon the recommendation of the Audit
Committee, has engaged Ernst & Young LLP ("E&Y") as the independent auditors to
audit the Fund's financial statements for the fiscal year ended October 31,
1999. During the Fund's fiscal years ended October 31, 1997 and October 31,
1998, neither the Fund nor anyone on its behalf has consulted E&Y on items which
(i) concerned the application of accounting principles to a specified
transaction, either completed or proposed, or the type of audit opinion that
might be rendered on the Fund's financial statements, or (ii) concerned the
subject of a disagreement (as defined in paragraph (a)(1)(iv) of Item 304 of
Regulation S-K) of reportable events (as described in paragraph (a)(1)(v) of
said Item 304).
Report of Ernst & Young LLP, Independent Auditors
TO THE BOARD OF TRUSTEES OF FEDERATED MUNICIPAL TRUST
AND SHAREHOLDERS OF MASSACHUSETTS MUNICIPAL CASH TRUST:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of the Massachusetts Municipal Cash Trust (one of
the portfolios constituting the Federated Municipal Trust) as of October 31,
1999, and the related statement of operations, the statement of changes in net
assets, and the financial highlights for the year then ended. These financial
statements and financial highlights are the responsibility of the Trust's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audit. The statement of changes
in net assets for the year ended October 31, 1998 and the financial highlights
for each of the periods indicated therein for the period then ended were audited
by other auditors whose report, dated December 23, 1998, expressed an
unqualified opinion on that statement and those financial highlights.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in financial statements and
financial highlights. Our procedures included confirmation of securities owned
as of October 31, 1999, by correspondence with the custodian. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Massachusetts Municipal Cash Trust of the Federated Municipal Trust at October
31, 1999, and the results of its operations, changes in its net assets and
financial highlights for the year then ended, in conformity with generally
accepted accounting principles.
[Graphic]
Boston, Massachusetts
December 16, 1999
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
LESLIE K. ROSS
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
ANNUAL REPORT
Massachusetts Municipal Cash Trust
ANNUAL REPORT
TO SHAREHOLDERS
OCTOBER 31, 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 314229303
Cusip 314229832
G00191-04 (12/99)
[Graphic]
ANNUAL REPORT
President's Message
Dear Shareholder:
I am pleased to present the Annual Report to Shareholders of Maryland Municipal
Cash Trust, which covers the 12-month period from November 1, 1998 through
October 31, 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 - through a portfolio concentrated in high-quality, short-term
Maryland 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 of $0.03
per share.
The fund's net assets reached $46.7 million at the end of the reporting period.
Thank you for relying on Maryland Municipal Cash Trust to help your ready cash
earn 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
December 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, Jr., Vice
President, Federated Investment Management Company.
WHAT ARE YOUR COMMENTS ON THE ECONOMY AND THE INTEREST RATE ENVIRONMENT DURING
THE FUND'S REPORTING PERIOD?
Perhaps the biggest issues threatening the U.S. economy in the latter half of
1998 were alleviated by the second quarter of 1999. The improvements in
international economies, particularly Asia, and calm foreign markets laid the
foundation for the Federal Reserve Board (the "Fed") to focus on U.S. economic
releases as a better indicator of the inflation picture. The Fed became
increasingly concerned with inflationary pressures from tighter labor markets
and rising equity wealth. For the most part inflationary forces remained tame
during 1999 with increases in some commodity prices, such as oil. Nevertheless,
the Fed began a series of three rate increases, citing tighter labor markets,
shrinking productivity gains and growth in demand. The moves came in June,
August and November; each time, the Fed voted to raise the federal funds target
rate by a quarter point.
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"), which comprise more than 50% of the fund's assets, started the period
in the 3.00% range, but moved sharply higher in December to the 4.00% level as
supply and demand imbalances occurred. Yields then declined in January, as
investors looked to reinvest coupon payments and year end selling pressures
eased. Yields averaged slightly over 2.75% during February and March before
rising to the 4.00% range in April due to traditional tax season payment
pressures. Over the summer months, yields remained mostly in a band between
3.00% and 3.50%, but rose sharply in September as cash outflows in the municipal
markets pushed rates as high as 3.85%. VRDN yields ended the reporting period at
3.50%. Over the reporting period, VRDN yields averaged roughly 66% of taxable
rates, making them attractive for investors in the highest two 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, have 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 municipal
securities, relative to their taxable counterparts, relatively 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 47 days. The fund remained in a 45- to 50-day average maturity
range over the reporting period, 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 municipals to taxable instruments, such as U.S. Treasury
securities. This portfolio structure continued to provide a competitive yield
over time.
WHAT IS YOUR OUTLOOK GOING FORWARD?
The Fed, concerned by persistent above-trend growth in an environment where
labor markets are constrained and productivity gains are narrowing, will likely
remain on hold until the first quarter of 2000. It is likely that we will see
one and possibly two interest rate increases in the first and second quarters of
2000. 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
OCTOBER 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
SHORT-TERM MUNICIPALS-
99.1% 1
MARYLAND-99.1%
$ 2,000,000 Anne Arundel County, MD,
EDRB (Series 1988) 3.80% CP
(Baltimore Gas & Electric
Co.), Mandatory Tender
2/11/2000 $ 2,000,000
2,075,000 Baltimore County, MD IDA
(Series 1994A) Weekly
VRDNs (Pitts Realty
Limited Partnership)/(PNC
Bank, Delaware LOC) 2,075,000
2,100,000 Baltimore County, MD Port
Facility Monthly VRDNs
(Occidental Petroleum
Corp.)/(Morgan Guaranty
Trust Co., New York LOC) 2,100,000
1,450,000 Baltimore County, MD,
Revenue Bonds (1994 Issue)
Weekly VRDNs (Direct
Marketing Associates, Inc.
Facility)/(Allfirst LOC) 1,450,000
1,000,000 Baltimore, MD PCR Weekly
VRDNs (SCM Plants,
Inc.)/(Barclays Bank PLC,
London LOC) 1,000,000
500,000 Baltimore, MD Wastewater
(Series A) 6.50% Bonds
(United States Treasury
PRF), 7/1/2000 508,901
2,000,000 Baltimore, MD Water
Utility (Series A) 6.50%
Bonds (United States
Treasury PRF), 7/1/2000 2,034,399
1,000,000 Carroll County, MD,
Variable Rate Economic
Development Refunding
Revenue Bonds (Series
1995B) Weekly VRDNs
(Evapco, Inc.
Project)/(Bank of America,
N.A. LOC) 1,000,000
1,000,000 Frederick County, MD
(Series 1997E) Weekly
VRDNs (Buckinghams Choice,
Inc.)/(LaSalle National
Bank, Chicago LOC) 1,000,000
2,170,000 Harford County, MD, EDRB
(Series 1996) Weekly VRDNs
(Citrus and Allied
Essences Ltd.)/(Allfirst
LOC) 2,170,000
1,750,000 Maryland EDC, Tax Exempt
Adjustable Mode IDRBs
(Series 1998) Weekly VRDNs
(Morrison Health Care,
Inc.)/(Wachovia Bank of
NC, N.A. LOC) 1,750,000
840,000 Maryland EDC, Variable
Rate Demand/Fixed Rate
Refunding Revenue Bonds
(1997 Issue) Weekly VRDNs
(Jenkins Memorial Nursing
Home, Inc.
Facility)/(Allfirst LOC) 840,000
1,000,000 Maryland Health & Higher
Educational Facilities
Authority, 6.75% Bonds
(Francis Scott Key Medical
Center)/(United States
Treasury PRF), 7/1/2000 1,042,167
4,375,000 Maryland Industrial
Development Financing
Authority, Special
Facility Airport Revenue
Bonds (Series 1999) 3.35%
TOBs (Signature Flight
Support Corp.)/(Bayerische
Landesbank Girozentrale
LOC), Optional Tender
12/1/1999 4,375,000
1,920,000 Maryland State Community
Development
Administration, (Series
1990A) Weekly VRDNs
(College
Estates)/(Allfirst LOC) 1,920,000
1,950,000 Maryland State Community
Development
Administration, (Series
1990B) Weekly VRDNs
(Cherry Hill Apartment
Ltd.)/(Bank of America,
N.A. LOC) 1,950,000
1,800,000 Maryland State Energy
Financing Administration,
Annual Tender Solid Waste
Disposal Revenue Refunding
Bonds, 4.35% TOBs (Nevamar
Corp.)/(International
Paper Co. GTD), Optional
Tender 9/1/2000 1,800,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
SHORT-TERM MUNICIPALS-
continued 1
MARYLAND-CONTINUED
$ 2,125,000 Maryland State Energy
Financing Administration,
Limited Obligation
Variable Rate Demand
Revenue Bonds (Series
1996) Weekly VRDNs
(Keywell LLC)/(Bank of
America, N.A. LOC) $ 2,125,000
1,740,000 Maryland State IDFA, (1994
Issue) Weekly VRDNs
(Baltimore International
Culinary College
Foundation, Inc.)/(Crestar
Bank of Virginia, Richmond
LOC) 1,740,000
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
1,170,000 Montgomery County, MD
Weekly VRDNs (Information
Systems and Networks
Corp.)/(PNC Bank, N.A.
LOC) 1,170,000
1,345,000 Prince George's County,
MD, Equipment Acquisition
Program, 3.50% Bonds
(MBIA INS) 11/1/1999 1,345,000
2,500,000 Queen Annes County, MD EDR
(Series 1994) 3.35% TOBs
(Safeway,
Inc.)/(Bankers Trust Co.,
New York LOC) Mandatory
Tender 12/1/1999 2,500,000
1,000,000 Washington Suburban
Sanitation District, MD,
6.90% Bonds (United States
Treasury PRF) 6/1/2000 1,040,241
1,000,000 Washington Suburban
Sanitation District, MD,
6.90% Bonds (United States
Treasury PRF) 6/1/2000 1,040,060
1,000,000 Wicomico County, MD, EDRB
(Series 1994) Weekly VRDNs
(Field Container
Co. LP)/(Northern Trust
Co., Chicago, IL LOC) 1,000,000
TOTAL INVESTMENTS (AT
AMORTIZED COST) 2 $ 46,275,768
</TABLE>
Securities that are subject to alternative minimum tax represent 57.9% 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, MIG1-1 or MIG-2 by Moody's Investors Service, or 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 October 31, 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>
96.1% 3.9%
</TABLE>
2 Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($46,707,257) at October 31, 1999.
The following acronyms are used throughout this portfolio:
CP -Commercial Paper EDC -Economic Development Commission EDR -Economic
Development Revenue EDRB(s) -Economic Development Revenue Bond(s) GTD
- -Guaranteed IDA -Industrial Development Authority IDRBs -Industrial Development
Revenue Bonds IDFA -Industrial Development Finance Authority INS -Insured LOC
- -Letter of Credit MBIA -Municipal Bond Investors Assurance PCR -Pollution
Control Revenue PRF -Prerefunded 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
OCTOBER 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Total investments in
securities, at amortized
cost and value $ 46,275,768
Cash 113,864
Income receivable 360,932
Receivable for shares sold 74
TOTAL ASSETS 46,750,638
LIABILITIES:
Payable for shares
redeemed $ 2,401
Income distribution
payable 15,053
Accrued expenses 25,927
TOTAL LIABILITIES 43,381
Net assets for 46,707,257
shares outstanding $ 46,707,257
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PROCEEDS PER SHARE:
$46,707,257 / 46,707,257
shares outstanding $1.00
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Operations
YEAR ENDED OCTOBER 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 1,996,040
EXPENSES:
Investment advisory fee $ 296,658
Administrative personnel
and services fee 125,000
Custodian fees 3,232
Transfer and dividend
disbursing agent fees and
expenses 35,777
Directors'/Trustees' fees 1,885
Auditing fees 12,236
Legal fees 5,136
Portfolio accounting fees 40,171
Shareholder services fee 148,329
Share registration costs 19,435
Printing and postage 10,976
Insurance premiums 5,360
Miscellaneous 7,519
TOTAL EXPENSES 711,714
WAIVERS:
Waiver of investment
advisory fee $ (287,632)
Waiver of shareholder
services fee (5,933)
TOTAL WAIVERS (293,565)
Net expenses 418,149
Net investment income $ 1,577,891
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31 1999 1998
<S> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net investment income $ 1,577,891 $ 1,724,927
DISTRIBUTIONS TO
SHAREHOLDERS:
Distributions from net
investment income (1,577,891) (1,724,927)
SHARE TRANSACTIONS:
Proceeds from sale of
shares 192,137,306 162,453,813
Net asset value of shares
issued to shareholders in
payment of
distributions declared 1,216,922 1,432,310
Cost of shares redeemed (212,783,291) (143,324,566)
CHANGE IN NET ASSETS
RESULTING FROM SHARE
TRANSACTIONS (19,429,063) 20,561,557
Change in net assets (19,429,063) 20,561,557
NET ASSETS:
Beginning of period 66,136,320 45,574,763
End of period $ 46,707,257 $ 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>
YEAR ENDED OCTOBER 31 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income 0.03 0.03 0.03 0.03 0.03
LESS DISTRIBUTIONS:
Distributions from net
investment income (0.03) (0.03) (0.03) (0.03) (0.03)
NET ASSET VALUE, END OF
PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN 1 2.69% 3.05% 3.10% 3.11% 3.36%
RATIOS TO AVERAGE NET
ASSETS:
Expenses 2 1.20% 1.21% 1.32% 1.30% 1.15%
Net investment income 2 2.16% 2.49% 2.42% 2.44% 2.80%
Expenses (after waivers
and reimbursements) 0.70% 0.70% 0.69% 0.65% 0.65%
Net investment income
(after waivers
and reimbursements) 2.66% 3.00% 3.05% 3.09% 3.30%
SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $46,707 $66,136 $45,575 $54,286 $51,400
</TABLE>
1 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
2 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
OCTOBER 31, 1999
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"), a 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 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 October 31, 1999, capital paid-in aggregated
$46,707,257.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31 1999 1998
<S> <C> <C>
Shares sold 192,137,306 162,453,813
Shares issued to
shareholders in payment of
distributions declared 1,216,922 1,432,310
Shares redeemed (212,783,291) (143,324,566)
NET CHANGE RESULTING FROM
SHARE TRANSACTIONS (19,429,063) 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.
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 Trust 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 October 31, 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 and amounted to $162,495,000 and $184,301,000,
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
October 31, 1999, 76.3% 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 13.8% of total investments.
YEAR 2000 (UNAUDITED)
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.
CHANGE OF INDEPENDENT AUDITORS (UNAUDITED)
On May 19, 1999, the Fund's Trustees, upon the recommendation of its Audit
Committee, requested and subsequently accepted the resignation of Arthur
Andersen LLP ("AA") as the Fund's independent auditors. AA's reports on the
Fund's financial statements for the fiscal years ended October 31, 1997 and
October 31, 1998 contained no adverse opinion or disclaimer of opinion nor were
they qualified or modified as to uncertainty, audit scope or accounting
principles. During the Fund's fiscal years ended October 31, 1997 and October
31, 1998: (i) there were no disagreements with AA on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure, which disagreements, if not resolved to the satisfaction of AA, would
have caused it to make reference to the subject matter of the disagreements in
connection with its reports on the financial statements for such years; and (ii)
there were no reportable events of the kind described in Items 304(a)(1)(v) of
Regulation S-K under the Securities Exchange Act of 1934, as amended.
The Fund, by action of its Trustees, upon the recommendation of the Audit
Committee, has engaged Ernst & Young LLP ("E&Y") as the independent auditors to
audit the Fund's financial statements for the fiscal year ended October 31,
1999. During the Fund's fiscal years ended October 31, 1997 and October 31,
1998, neither the Fund nor anyone on its behalf has consulted E&Y on items which
(i) concerned the application of accounting principles to a specified
transaction, either completed or proposed, or the type of audit opinion that
might be rendered on the Fund's financial statements, or (ii) concerned the
subject of a disagreement (as defined in paragraph (a)(1)(iv) of Item 304 of
Regulation S-K) of reportable events (as described in paragraph (a)(1)(v) of
said Item 304).
Report of Ernst & Young LLP, Independent Auditors
TO THE BOARD OF TRUSTEES OF FEDERATED MUNICIPAL TRUST
AND SHAREHOLDERS OF MARYLAND MUNICIPAL CASH TRUST:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of the Maryland Municipal Cash Trust (one of the
portfolios constituting the Federated Municipal Trust) as of October 31, 1999,
and the related statement of operations, the statement of changes in net assets,
and the financial highlights for the year then ended. These financial statements
and financial highlights are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit. The statement of changes in net assets
for the year ended October 31, 1998 and the financial highlights for each of the
periods indicated therein for the period then ended were audited by other
auditors whose report, dated December 23, 1998, expressed an unqualified opinion
on that statement and those financial highlights.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in financial statements and
financial highlights. Our procedures included confirmation of securities owned
as of October 31, 1999, by correspondence with the custodian. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Maryland Municipal Cash Trust of the Federated Municipal Trust at October 31,
1999, and the results of its operations, changes in its net assets and financial
highlights for the year then ended, in conformity with generally accepted
accounting principles.
[Graphic]
Boston, Massachusetts
December 16, 1999
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
LESLIE K. ROSS
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
ANNUAL REPORT
Maryland Municipal Cash Trust
ANNUAL REPORT TO SHAREHOLDERS
OCTOBER 31, 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
G01175-02 (12/99)
[Graphic]
ANNUAL REPORT
President's Message
Dear Shareholder:
I am pleased to present the Annual Report to Shareholders of Michigan Municipal
Cash Trust, which covers the 12-month period from November 1, 1998 through
October 31, 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-through a portfolio concentrated in high-quality, short-term Michigan
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
$0.03 per share to shareholders of the fund's Institutional Shares and
Institutional Service Shares. The fund's net assets totaled $201.5 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
December 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 REPORTING PERIOD?
Perhaps the biggest issues threatening the U.S. economy in the latter half of
1998 were alleviated by the second quarter of 1999. The improvements in
international economies, particularly Asia, and calm foreign markets laid the
foundation for the Federal Reserve Board (the "Fed") to focus on U.S. economic
releases as a better indicator of the inflation picture. The Fed became
increasingly concerned with inflationary pressures from tighter labor markets
and rising equity wealth. For the most part inflationary forces remained tame
during 1999 with increases in some commodity prices, such as oil. Nevertheless,
the Fed began a series of three rate increases, citing tighter labor markets,
shrinking productivity gains and growth in demand. The moves came in June,
August and November. Each time the Fed voted to raise the federal funds target
rate by a quarter point.
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"), which comprise more than 50% of the fund's assets, started the
reporting period in the 3.00% range, but moved sharply higher in December to the
4.00% level as supply and demand imbalances occurred. Yields then declined in
January, as investors looked to reinvest coupon payments and year end selling
pressures eased. Yields averaged slightly over 2.75% during February and March
before rising to the 3.50% range in April due to traditional tax season selling
pressures. Over the reporting period, VRDN yields averaged roughly 66% of
taxable rates, making them attractive for investors in the highest two 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, have 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 municipal
securities, relative to their taxable counterparts, relatively 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 46 days. The fund remained in a 45- to 50-day average maturity
target range over the reporting period, 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 U.S.
Treasury securities. This portfolio structure continued to provide a competitive
yield over time.
WHAT IS YOUR OUTLOOK GOING FORWARD?
The Fed, concerned by persistent above-trend growth in an environment where
labor markets are tight and productivity gains are narrowing, will likely remain
on hold until the first quarter of the new 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
OCTOBER 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
SHORT-TERM MUNICIPALS-
99.3% 1
MICHIGAN-98.3%
$ 800,000 ABN AMRO MuniTOPS
Certificates Trust
(Michigan Non-AMT) (Series
1998-11) Weekly VRDNs
(DeWitt, MI Public
Schools)/(FSA INS)/(ABN
AMRO Bank N.V., Amsterdam
LIQ) $ 800,000
4,000,000 ABN AMRO MuniTOPS Certificates Trust (Michigan Non-AMT) (Series
1998-13) Weekly VRDNs (Michigan State Trunk Line)/(MBIA
INS)/(ABN AMRO
Bank N.V., Amsterdam LIQ) 4,000,000
1,085,000 Ann Arbor, MI Public School
District, 7.00% Bonds
(Michigan State GTD),
5/1/2000 1,105,275
3,600,000 Auburn Hills, MI EDC,
Limited Obligation Multi-
Option Revenue Bonds
(Series 1995) Weekly VRDNs
(Suburban Tool,
Inc.)/(Huntington National
Bank, Columbus, OH LOC) 3,600,000
1,000,000 Brighton, MI Area School
District, 3.50% Bonds (FSA
INS) 5/1/2000 1,001,691
5,700,000 Bruce Township, MI
Hospital Finance
Authority, Adjustable Rate
Tender Securities (Series
1988B) 3.15% TOBs (Sisters
of Charity Health Care
System)/(MBIA INS)/(Morgan
Guaranty Trust Co., New
York LIQ), Optional Tender
11/1/1999 5,700,000
3,800,000 Cornell, MI EDC,
Industrial Development
Revenue Refunding Bonds
(Series 1990) 3.55% CP
(Mead-Escanaba Paper Co.
Project)/(Credit Suisse
First Boston LOC)
Mandatory Tender 2/14/2000 3,800,000
1,200,000 Dearborn, MI EDC (Series
1990) Weekly VRDNs
(Exhibit Productions, Inc.
Project)/(Comerica Bank
LOC) 1,200,000
5,000,000 Detroit, MI City School
District (Series 1999)
4.00% TANs (Michigan State
GTD) 6/1/2000 5,022,543
2,850,000 Detroit MI (Series A) 8.70%
Bonds (United States
Treasury PRF), 4/1/2000
(@102) 2,970,245
1,500,000 Grand Rapids, MI EDC,
Economic Development
Revenue Refunding Bonds
(Series 1991-A) Weekly
VRDNs (Amway Hotel
Corp.)/(Michigan National
Bank, Farmington Hills
LOC) 1,500,000
3,000,000 Grand Rapids, MI IDR
(Series 1999) Weekly VRDNs
(Kent Quality Foods,
Inc.)/(Firstar Bank,
Milwaukee LOC) 3,000,000
1,500,000 Michigan Higher Education
Facilities Authority
(Series 1999) Daily VRDNs
(Concordia College, Ann
Arbor MI)/(Allied Irish
Banks PLC LOC) 1,500,000
3,400,000 Michigan Higher Education
Student Loan Authority
(Series XII-D) Weekly
VRDNs (AMBAC INS)/(KBC
Bancassurance Holding LIQ) 3,400,000
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
2,420,000 Michigan State Building
Authority (Series 1) 3.90%
CP (Canadian Imperial Bank
of Commerce LOC) Mandatory
Tender 1/12/2000 2,420,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
SHORT-TERM MUNICIPALS-
continued 1
MICHIGAN-CONTINUED
$ 5,000,000 Michigan State Hospital
Finance Authority, MERLOTS
(Series X) Weekly VRDNs
(Detroit Medical Center
Obligated Group)/(AMBAC
INS)/(First Union National
Bank, Charlotte, NC LIQ) $ 5,000,000
4,950,000 2 Michigan State Hospital
Finance Authority (Series
1993A) PT-169, 3.25% TOBs
(St. John Hospital,
MI)/(AMBAC INS)/(Banco
Santander SA LIQ),
Optional Tender 4/6/2000 4,950,000
3,110,000 Michigan State Housing
Development Authority (Series 1990N) Weekly VRDNs (FSA
INS)/(CDC Municipal Products, Inc.
LIQ) 3,110,000
3,835,000 Michigan State Housing
Development Authority
(Series 1999A) 3.20% TOBs,
Mandatory Tender 6/1/2000 3,835,000
7,695,000 Michigan State Housing
Development Authority,
MERLOTS (Series G) Weekly
VRDNs (MBIA INS)/(First
Union National Bank,
Charlotte, NC LIQ) 7,896,532
5,640,000 2 Michigan State Housing
Development Authority, PA-
497R, 3.20% TOBs (Merrill
Lynch Capital Services,
Inc. LIQ) Mandatory Tender
3/9/2000 5,640,000
2,100,000 Michigan State Housing
Development Authority,
Revenue Bonds (Series A)
3.60% CP (Landesbank
Hessen-Thueringen,
Frankfurt LOC) Mandatory
Tender 3/8/2000 2,100,000
6,000,000 Michigan State Housing
Development Authority
(Series B) 3.00% TOBs,
Mandatory Tender 12/1/1999 6,000,000
2,600,000 Michigan Strategic Fund
Weekly VRDNs (Ace Hi
Displays, Inc.)/(Firstar
Bank, Milwaukee LOC) 2,600,000
4,500,000 Michigan Strategic Fund
Weekly VRDNs (DSP
Technology,
Inc.)/(Comerica Bank LOC) 4,500,000
5,300,000 Michigan Strategic Fund
Weekly VRDNs (Tesco
Engineering)/(Bank of
Tokyo-Mitsubishi Ltd. LOC) 5,300,000
5,495,000 Michigan Strategic Fund
Weekly VRDNs (United
Fixtures Co.)/(Bankers
Trust Co., New York LOC) 5,495,000
6,835,000 Michigan Strategic Fund
(Series 1991) Weekly VRDNs
(AGA Gas, Inc.)/(Svenska
Handelsbanken, Stockholm
LOC) 6,835,000
700,000 Michigan Strategic Fund
(Series 1995) Weekly VRDNs
(Rood Industries, Inc.
Project)/(Bank One,
Michigan LOC) 700,000
2,025,000 Michigan Strategic Fund
(Series 1998) Weekly VRDNs
(Wolverine
Printing)/(Huntington
National Bank, Columbus,
OH LOC) 2,025,000
5,400,000 Michigan Strategic Fund
(Series 1999) Weekly VRDNs
(DW Aluminum,
LLC)/(KeyBank, N.A. LOC) 5,400,000
3,000,000 Michigan Strategic Fund
(Series 1999) Weekly VRDNs
(Fab-All Manufacturing,
Inc.)/(Norwest Bank
Minnesota, N.A. LOC) 3,000,000
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
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
SHORT-TERM MUNICIPALS-
continued 1
MICHIGAN-CONTINUED
$ 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
1,000,000 Michigan Strategic Fund,
Limited Obligation Revenue
Bonds (Series 1994) Weekly
VRDNs (Wilkie Metal
Products, Inc.)/(Norwest
Bank Minnesota, N.A. LOC) 1,000,000
3,440,000 Michigan Strategic Fund,
Limited Obligation Revenue
Bonds (Series 1995) Weekly
VRDNs (Bear Lake
Associates Project)/(Old
Kent Bank & Trust Co.,
Grand Rapids LOC) 3,440,000
640,000 Michigan Strategic Fund,
Limited Obligation Revenue
Bonds (Series 1995) Weekly
VRDNs (Hercules Drawn
Steel Corporation
Project)/(KeyBank, N.A.
LOC) 640,000
3,460,000 Michigan Strategic Fund,
Limited Obligation Revenue
Bonds (Series 1995) Weekly
VRDNs (J.R. Automation
Technologies Project)/(Old
Kent Bank & Trust Co.,
Grand Rapids LOC) 3,460,000
850,000 Michigan Strategic Fund,
Limited Obligation Revenue
Bonds (Series 1995) Weekly
VRDNs (RSR Project)/(Old
Kent Bank & Trust Co.,
Grand Rapids LOC) 850,000
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, LLC
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
895,000 Michigan Strategic Fund,
Limited Obligation Revenue
Bonds (Series 1996) Weekly
VRDNs (Echo Properties,
LLC Project)/(Comerica
Bank, Detroit, MI LOC) 895,000
2,100,000 Michigan Strategic Fund,
Limited Obligation Revenue
Bonds (Series 1996) Weekly
VRDNs (G & T Real Estate
Investments Co.,
LLC)/(Bank One, Michigan
LOC) 2,100,000
840,000 Michigan Strategic Fund,
Limited Obligation Revenue
Bonds (Series 1996) Weekly
VRDNs (Inalfa-Hollandia,
Inc.)/(Comerica Bank,
Detroit, MI LOC) 840,000
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
3,350,000 Michigan Strategic Fund,
Limited Obligation Revenue
Bonds (Series 1997) Weekly
VRDNs (Enprotech
Mechanical Services,
Inc.)/(Michigan National
Bank, Farmington Hills
LOC) 3,350,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
SHORT-TERM MUNICIPALS-
continued 1
MICHIGAN-CONTINUED
$ 4,000,000 Michigan Strategic Fund,
Limited Obligation Revenue
Bonds (Series 1999) Weekly
VRDNs (J. G. Kern
Enterprises,
Inc.)/(Michigan National
Bank, Farmington
Hills LOC) $ 4,000,000
5,040,000 Michigan Strategic Fund,
Limited Obligation Revenue
Bonds Weekly VRDNs (Hess
Industries, Inc.)/(Lasalle
National Bank, Chicago
LOC) 5,040,000
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
1,600,000 Michigan Strategic Fund,
Multifamily Housing
Revenue Bonds (Series
1999) Weekly VRDNs (Globe
Apartments)/(Federal Home
Loan Bank of Indianapolis
LOC) 1,600,000
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
7,180,000 Monroe County, MI PCA (PT-
1018) Weekly VRDNs
(Detroit Edison Co.)/(FGIC
INS)/(Merrill Lynch
Capital Services, Inc.
LIQ) 7,180,000
2,160,000 Oakland County, MI EDC
(Series 1998) Weekly VRDNs
(Fox Manor, Inc.)/(Allied
Irish Banks PLC LOC) 2,160,000
2,085,000 Oakland County, MI EDC
(Series 1998) Weekly VRDNs
(Lourdes Assisted Living,
Inc.)/(Allied Irish Banks
PLC LOC) 2,085,000
2,940,000 Oakland County, MI EDC,
Limited Obligation Revenue
Bonds (Series 1997) Weekly
VRDNs (Stone Soap Company,
Inc.)/(Michigan National
Bank, Farmington Hills
LOC) 2,940,000
1,150,000 Parchment, MI School
District, State Aid Notes,
4.25% TRANs, 8/26/2000 1,154,522
1,000,000 Rochester, MI Community
School District, 4.75%
Bonds (Michigan State
GTD), 5/1/2000 1,007,518
3,000,000 Royal Oak, MI Hospital
Finance Authority, 7.75%
Bonds (William Beaumont
Hospital, MI)/(United
States Treasury PRF)
1/1/2000 (@100) 3,022,519
10,050,000 Wayne County, MI (PT-1061)
Weekly VRDNs (Detroit
Metropolitan Wayne County
Airport)/(MBIA
INS)/(Morgan Stanley, Dean
Witter Municipal Funding,
Inc. LIQ) 10,050,000
TOTAL 198,020,845
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
SHORT-TERM MUNICIPALS-
continued 1
PUERTO RICO-1.0%
$ 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
TOTAL INVESTMENTS (AT
AMORTIZED COST) 3 $ 200,020,845
</TABLE>
Securities that are subject to alternative minimum tax represent 66.3% of the
porfolio 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, or 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 October 31, 1999, the portfolio securities were rated as follows:
Tier Rating Based on Total Market Value (Unaudited)
<TABLE>
<CAPTION>
FIRST TIER Second Tier
<S> <C>
100.0% 0.0%
</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 October 31, 1999, these
securities amounted to $10,590,000 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
($201,499,937) at October 31, 1999.
The following acronyms are used throughout this portfolio:
AMBAC -American Municipal Bond Assurance Corporation AMT -Alternative Minimum
Tax CP -Commercial Paper EDC -Economic Development Commission FGIC -Financial
Guaranty Insurance Company FSA -Financial Security Assurance GTD -Guaranteed IDR
- -Industrial Development Revenue IDRB(s) -Industrial Development Revenue Bond(s)
INS -Insured LIQ -Liquidity Agreement LOC -Letter of Credit MBIA -Municipal Bond
Investors Assurance MERLOTS -Municipal Exempt Receipts - Liquidity Optional
Tender Series PCA -Pollution Control Authority PRF -Prerefunded 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
OCTOBER 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Total investments in
securities, at amortized
cost and value $ 200,020,845
Cash 413,251
Income receivable 1,349,983
Receivable for shares sold 78,672
Deferred organizational
costs 3,457
TOTAL ASSETS 201,866,208
LIABILITIES:
Payable for shares
redeemed $ 192,983
Income distribution
payable 135,072
Accrued expenses 38,216
TOTAL LIABILITIES 366,271
Net assets for 201,499,937
shares outstanding $ 201,499,937
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PROCEEDS PER SHARE
INSTITUTIONAL SERVICE
SHARES:
$182,609,985 / 182,609,985
shares outstanding $1.00
INSTITUTIONAL SHARES:
$18,889,952 / 18,889,952
shares outstanding $1.00
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Operations
YEAR ENDED OCTOBER 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 7,308,354
EXPENSES:
Investment advisory fee $ 1,085,080
Administrative personnel
and services fee 162,511
Custodian fees 12,119
Transfer and dividend
disbursing agent fees and
expenses 132,233
Directors'/Trustees' fees 2,736
Auditing fees 12,549
Legal fees 10,786
Portfolio accounting fees 61,740
Shareholder services fee-
Institutional Service
Shares 497,072
Shareholder services fee-
Institutional Shares 45,722
Share registration costs 27,989
Printing and postage 19,648
Insurance premiums 13,227
Miscellaneous 8,889
TOTAL EXPENSES 2,092,301
WAIVERS:
Waiver of investment
advisory fee $ (681,608)
Waiver of shareholder
services fee-Institutional
Service Shares (178,945)
Waiver of shareholder
services fee-Institutional
Shares (45,722)
TOTAL WAIVERS (906,275)
Net expenses 1,186,026
Net investment income $ 6,122,328
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31 1999 1998
<S> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net investment income $ 6,122,328 $ 5,952,588
DISTRIBUTIONS TO
SHAREHOLDERS:
Distributions from net
investment income
Institutional Service
Shares (5,575,919) (5,412,823)
Institutional Shares (546,409) (539,765)
CHANGE IN NET ASSETS
RESULTING FROM
DISTRIBUTIONS
TO SHAREHOLDERS (6,122,328) (5,952,588)
SHARE TRANSACTIONS:
Proceeds from sale of
shares 789,450,916 846,148,992
Net asset value of shares
issued to shareholders in
payment of
distributions declared 3,835,666 4,227,137
Cost of shares redeemed (796,339,575) (806,298,824)
CHANGE IN NET ASSETS
RESULTING FROM SHARE
TRANSACTIONS (3,052,993) 44,077,305
Change in net assets (3,052,993) 44,077,305
NET ASSETS:
Beginning of period 204,552,930 160,475,625
End of period $ 201,499,937 $ 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>
FOR 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 0.03 0.03 0.03 0.02
LESS DISTRIBUTIONS:
Distributions from net investment income (0.03) (0.03) (0.03) (0.02)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN 2 3.00% 3.36% 3.43% 2.19%
RATIOS TO AVERAGE NET ASSETS:
Expenses 3 0.97% 0.98% 1.06% 1.26% 4
Net investment income 3 2.42% 2.73% 2.73% 2.51% 4
Expenses (after waivers and reimbursements) 0.40% 0.40% 0.40% 0.37% 4
Net investment income (after waivers) 2.99% 3.31% 3.39% 3.40% 4
SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $18,890 $19,564 $13,370 $11,614
</TABLE>
1 Reflects operations for the period 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 During the period, certain fees were voluntarily waived. If such waivers had
not occurred, the ratios would have been as indicated.
4 Computed on an annualized basis.
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>
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 0.03 0.03 0.03 0.03 0.01
LESS DISTRIBUTIONS:
Distributions from net investment income (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
TOTAL RETURN 2 2.84% 3.20% 3.27% 3.26% 1.35%
RATIOS TO AVERAGE NET ASSETS:
Expenses 3 0.96% 0.98% 1.06% 1.26% 1.95% 4
Net investment income 3 2.40% 2.74% 2.71% 2.45% 2.04% 4
Expenses (after waivers) 0.56% 0.56% 0.55% 0.50% 0.32% 4
Net investment income (after waivers) 2.80% 3.16% 3.22% 3.21% 3.67% 4
SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $182,610 $184,989 $147,105 $92,275 $30,133
</TABLE>
1 Reflects operations for the period 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 During the period, certain fees were voluntarily waived. If such waivers had
not occurred, the ratios would have been as indicated.
4 Computed on an annualized basis.
See Notes which are an integral part of the Financial Statements
Notes to Financial Statements
OCTOBER 31, 1999
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 October 31, 1999, capital paid-in aggregated $201,499,937.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31 1999 1998
<S> <C> <C>
INSTITUTIONAL SHARES:
Shares sold 94,227,271 78,879,030
Shares issued to
shareholders in payment of
distributions declared 35,163 34,996
Shares redeemed (94,936,306) (72,720,480)
NET CHANGE RESULTING FROM
INSTITUTIONAL SHARE
TRANSACTIONS (673,872) 6,193,546
<CAPTION>
YEAR ENDED OCTOBER 31 1999 1998
<S> <C> <C>
INSTITUTIONAL SERVICE
SHARES:
Shares sold 695,223,645 767,269,962
Shares issued to
shareholders in payment of
distributions declared 3,800,503 4,192,141
Shares redeemed (701,403,269) (733,578,344)
NET CHANGE RESULTING FROM
INSTITUTIONAL SERVICE
SHARE TRANSACTIONS (2,379,121) 37,883,759
NET CHANGE RESULTING FROM
SHARE TRANSACTIONS (3,052,993) 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 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 their fees. 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 agreed to reimburse the Adviser for the organizational expenses during the
five-year period following the effective date.
INTERFUND TRANSACTIONS
During the period ended October 31, 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 and amounted to $411,142,761 and $421,815,001
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
October 31, 1999, 84.1% 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 9.9% of total investments.
YEAR 2000 (UNAUDITED)
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.
CHANGE OF INDEPENDENT AUDITOR (UNAUDITED)
On May 19, 1999, the Fund's Trustees, upon the recommendation of its Audit
Committee, requested and subsequently accepted the resignation of Arthur
Andersen LLP ("AA") as the Fund's independent auditors. AA's report on the
Fund's financial statements for the fiscal years ended October 31, 1997, and
October 31, 1998 contained no adverse opinion or disclaimer of opinion, nor was
it qualified or modified as to uncertainty, audit scope or accounting
principles. During the Fund's fiscal years ended October 31, 1997 and October
31, 1998: (i) there were no disagreements with AA on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure, which disagreements, if not resolved to the satisfaction of AA, would
have caused it to make reference to the subject matter of the disagreements in
connection with its report on the financial statements for such period; and (ii)
there were no reportable events of the kind described in Item 304(a)(1)(v) of
Regulation S-K under the Securities Exchange Act of 1934, as amended.
The Fund, by action of its Trustees, upon the recommendation of the Audit
Committee, has engaged Ernst & Young LLP ("E&Y") as the independent auditors to
audit the Fund's financial statements for the fiscal year ended October 31,
1999. During the Fund's fiscal years ended October 31, 1997 and October 31,
1998, neither the Fund, nor anyone on its behalf has consulted E&Y on items
which (i) concerned the application of accounting principles to a specified
transaction, either completed or proposed, or the type of audit opinion that
might be rendered on the Fund's financial statements, or (ii) concerned the
subject of a disagreement (as defined in paragraph (a)(1)(iv) of Item 304 of
Regulation S-K) or reportable events (as described in paragraph (a)(1)(v) of
said Item 304).
Report of Ernst & Young LLP, Independent Auditors
TO THE BOARD OF TRUSTEES OF FEDERATED MUNICIPAL TRUST
AND SHAREHOLDERS OF MICHIGAN MUNICIPAL CASH TRUST:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of the Michigan Municipal Cash Trust (one of the
portfolios constituting the Federated Municipal Trust) as of October 31, 1999,
and the related statement of operations, the statement of changes in net assets,
and the financial highlights for the year then ended. These financial statements
and financial highlights are the responsibility of the Trusts' management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit. The statement of changes in net assets
for the year ended October 31, 1998 and the financial highlights for each of the
periods indicated therein for the period then ended were audited by other
auditors whose report, dated December 23, 1998, expressed an unqualified opinion
on that statement and those financial highlights.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in financial statements and
financial highlights. Our procedures included confirmation of securities owned
as of October 31, 1999 by correspondence with the custodian. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Michigan Municipal Cash Trust of the Federated Municipal Trust at October 31,
1999, and the results of its operations, changes in its net assets and financial
highlights for the year then ended, in conformity with generally accepted
accounting principles.
[Graphic]
Boston, Massachusetts
December 16, 1999
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
JOHN W. MCGONIGLE
Executive Vice President and Secretary
EDWARD C. GONZALES
Executive Vice President
RICHARD B. FISHER
Vice President
RICHARD J. THOMAS
Treasurer
LESLIE K. ROSS
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
ANNUAL REPORT
Michigan Municipal Cash Trust
ANNUAL REPORT TO SHAREHOLDERS
OCTOBER 31, 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 314229725
Cusip 314229667
G01456-03 (12/99)
[Graphic]
ANNUAL REPORT
President's Message
Dear Shareholder:
I am pleased to present the Annual Report to Shareholders of Minnesota Municipal
Cash Trust, which covers the 12-month period from November 1, 1998 through
October 31, 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 Series Shares.
The fund is a convenient way to put your ready cash pursuing double tax-free
income-free from federal regular income tax and Minnesota personal income
tax-through a portfolio concentrated in high-quality, short-term Minnesota
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
$0.03 per share for Institutional Shares and $0.03 per share for Cash Series
Shares. The fund's net assets totaled $535.8 million at the end of the reporting
period.
Thank you for relying on Minnesota Municipal Cash Trust to help your ready cash
earn 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
December 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 REPORTING PERIOD?
Perhaps the biggest issues threatening the U.S. economy in the latter half of
1998 were alleviated by the second quarter of 1999. The improvements in
international economies, particularly Asia, and calm foreign markets laid the
foundation for the Federal Reserve Board (the "Fed") to focus on U.S. economic
releases as a better indicator of the inflation picture. The Fed became
increasingly concerned with inflationary pressures from tighter labor markets
and rising equity wealth. For the most part inflationary forces remained tame
during 1999, with increases in some commodity prices, such as oil. Nevertheless,
the Fed began a series of three rate increases, citing tighter labor markets,
shrinking productivity gains and growth in demand. The moves came in June,
August and November; each time, the Fed voted to raise the federal funds target
rate by a quarter point.
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"), which comprise more than 50% of the fund's assets, started the period
in the 3.00% range, but moved sharply higher in December to the 4.00% level as
supply and demand imbalances occurred. Yields then declined in January, as
investors looked to reinvest coupon payments and year end selling pressures
eased. Yields averaged slightly over 2.75% during February and March before
rising to the 4.00% range in April due to traditional tax season payment
pressures. Over the summer months, yields remained mostly in a band between
3.00% and 3.50%, but rose sharply in September as cash outflows in the municipal
markets pushed rates as high as 3.85%. VRDN yields ended the reporting period at
3.50%. Over the reporting period, VRDN yields averaged roughly 66% of taxable
rates, making them attractive for investors in the highest two 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, have 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 municipal
securities, relative to their taxable counterparts, relatively expensive.
WHAT WERE YOUR STRATEGIES FOR THE FUND DURING THE REPORTING PERIOD?
The fund's average maturity at the beginning of the period was approximately 42
days. The Trust remained in a 45 to 50-day average maturity target range over
the reporting period, and moved within that range according to relative value
opportunities. We continue 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. Once an average maturity
range is targeted, the portfolio maximizes 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 municipals to
taxable instruments, such as treasury securities. This portfolio structure
continues to provide a competitive yield over time.
WHAT IS YOUR OUTLOOK GOING FORWARD?
The Fed, concerned by persistent above-trend growth in an environment where
labor markets are constrained and productivity gains are narrowing, will likely
remain on hold until the first quarter of 2000. It is likely that we will see
one and possibly two interest rate increases in the first and second quarters of
2000. 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
OCTOBER 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
99.9% 1
MINNESOTA-99.9%
$ 26,029,000 ABN AMRO MuniTOPS
Certificates Trust
(Minnesota Non-AMT)
(Series 1998-6) Weekly
VRDNs (Minneapolis/St.
Paul, MN Airport
Commission)/(AMBAC
INS)/(ABN AMRO Bank N.V.,
Amsterdam LIQ) $ 26,029,000
500,000 Anoka City, MN Solid Waste
Disposal Authority, 3.65%
CP (United Power
Associates)/(National
Rural Utilities
Cooperative Finance Corp.
GTD), Mandatory Tender
12/1/1999 500,000
5,100,000 Anoka City, MN Solid Waste
Disposal Authority, 3.75%
CP (United Power
Associates)/(National
Rural Utilities
Cooperative Finance Corp.
GTD), Mandatory Tender
2/10/2000 5,100,000
3,460,000 Apple Valley, MN, IDRB (Series 1995) Weekly VRDNs (AV
Development Co. Project)/(Firstar Bank, Minnesota LOC)
3,460,000
7,225,000 Avon, MN (Series 1998)
Weekly VRDNs (Vesper
Corp.)/(KeyBank, N.A. LOC) 7,225,000
5,000,000 Becker, MN, PCR (Series
1993-A) 3.45% CP (Northern
States Power Co.),
Mandatory Tender
11/10/1999 5,000,000
9,500,000 Becker, MN, PCR (Series 1993-A) 3.47% CP (Northern States
Power Co.),
Mandatory Tender 1/21/2000 9,500,000
9,000,000 Becker, MN, PCR (Series
1993-A) 3.75% CP (Northern
States Power Co.),
Mandatory Tender 2/10/2000 9,000,000
6,700,000 Becker, MN, PCR (Series
1993-A) 3.75% CP (Northern
States Power Co.),
Mandatory Tender 2/9/2000 6,700,000
3,900,000 Becker, MN, PCR (Series
1993-A) 3.80% CP (Northern
States Power Co.),
Mandatory Tender 2/14/2000 3,900,000
14,400,000 Becker, MN, PCR (Series
1993-B) 3.60% CP (Northern
States Power Co.),
Mandatory Tender 1/28/2000 14,400,000
2,855,000 Blaine, MN, IDRBs (Series
1996) Weekly VRDNs (S & S
of Minnesota,
LLC)/(Norwest Bank
Minnesota, N.A. LOC) 2,855,000
2,300,000 Bloomington, MN, IDRB
(Series 1995) Weekly VRDNs
(Now Technologies,
Inc.)/(Norwest Bank
Minnesota, N.A. LOC) 2,300,000
1,000,000 Bloomington, MN,
Multifamily Housing Weekly
VRDNs (Crow/Bloomington
Apartments)/(Citibank
N.A., New York LOC) 1,000,000
3,600,000 Brooklyn Center, MN,
Shingle Creek Tower
(Series 1999) 4.79% TOBs
(Bank of America, N.A.),
Mandatory Tender 4/1/2000 3,600,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
MINNESOTA-CONTINUED
$ 9,900,000 Burnsville, MN, Variable
Rate Demand Revenue Bonds
(Series 1996) Weekly VRDNs
(YMCA)/(Norwest Bank
Minnesota, N.A. LOC) $ 9,900,000
3,080,000 Burnsville, MN, Adjustable
Rate IDRB (Series 1996)
Weekly VRDNs (Caire,
Inc.)/(Chase Manhattan
Bank N.A., New York LOC) 3,080,000
3,175,000 Byron, MN Weekly VRDNs
(Schmidt
Printing)/(Norwest Bank
Minnesota, N.A. LOC) 3,175,000
1,170,000 Chanhassen, MN IDA (Series
1995) Weekly VRDNs
(Building Management
Group, LLC)/(Norwest Bank
Minnesota, N.A. LOC) 1,170,000
2,990,000 Coon Rapids, MN (Series
1996) Weekly VRDNs
(Medical Enterprise
Associates
Project)/(Norwest Bank
Minnesota, N.A. LOC) 2,990,000
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)/(FGIC INS)/(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)/(Minnesota State
GTD)/(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) 3.80%
TOBs (United States
Treasury COL)/(First Union
National Bank, Charlotte,
NC LIQ) Optional Tender
11/1/1999 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) 3.80% TOBs (United
States Treasury
COL)/(First Union National
Bank, Charlotte, NC LIQ)
Optional Tender 11/1/1999 3,000,000
2,600,000 Duluth, MN (Series 1985)
Weekly VRDNs (Wachovia
Bank of NC, N.A., LOC) 2,600,000
9,000,000 Duluth, MN, GO Tax and Aid Anticipation Certificates of
Indebtedness (Series 1999) 3.10% TANs,
12/31/1999 9,001,868
785,000 Eden Prairie, MN IDA, #194
Weekly VRDNs (Richard W.
Cohen)/(Norwest Bank
Minnesota, N.A. LOC) 785,000
1,080,000 Eden Prairie, MN IDA
(Series 1996) Weekly VRDNs
(Challenge Printing, Inc.
Project)/(Norwest Bank
Minnesota, N.A. LOC) 1,080,000
1,310,000 Eden Prairie, MN IDA
(Series 1995) Weekly VRDNs
(Robert
Lothenbach)/(Norwest Bank
Minnesota, N.A. LOC) 1,310,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
MINNESOTA-CONTINUED
$ 500,000 Elk River, MN Weekly VRDNs
(Tescom Corp.)/(Norwest
Bank Minnesota, N.A. LOC) $ 500,000
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%
TRANs (Minnesota State
GTD), 2/11/2000 3,500,000
5,800,000 Hennepin Co. MN (Series
1995C) Weekly VRDNs 5,800,000
6,550,000 Hennepin Co. MN (Series
1996C) Weekly VRDNs 6,550,000
10,495,000 Lehman Bros Inc. - Pooled
Trust Receipts (Series
1998 FR/RI-C8) Weekly
VRDNs (Riverplace Project
(The Pinnacle
Apartments))/(Bank of
America NT and SA
San Franciso SWAP) 10,495,000
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
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
900,000 Maplewood, MN (Series
1997) Weekly VRDNs (Camada
Ltd. Partnership)/(Norwest
Bank Minnesota, N.A. LOC) 900,000
635,000 Minneapolis, MN IDA Weekly
VRDNs (JTJ
Co.)/(U.S. Bank, N.A.,
Minneapolis LOC) 635,000
5,000,000 Minneapolis, MN (Series
1993) Weekly VRDNs (Market
Square Real Estate,
Inc.)/(Norwest Bank
Minnesota, N.A. LOC) 5,000,000
8,600,000 Minneapolis, MN (Series
1999) Daily VRDNs
(Bayerische Hypotheken-und
Vereinsbank AG LIQ) 8,600,000
1,000,000 Minneapolis, MN, 4.50%
Bonds, 3/1/2000 1,002,377
1,000,000 Minneapolis, MN, 7.00%
Bonds (Lifespan Inc.-
Abbott
Northwestern)/(United
States Treasury PRF)
12/1/1999 (@102) 1,023,039
7,000,000 Minneapolis, MN, Housing
Development Revenue
Refunding Bonds (Series
1988) Weekly VRDNs
(SymphonyPlace)/(Citibank
N.A., New York LOC) 7,000,000
800,000 Minneapolis, MN, Variable
Rate Demand Commercial
Development Revenue
Refunding Bonds (Series
1996) Weekly VRDNs (WNB &
Company)/(U.S. Bank, N.A.,
Minneapolis LOC) 800,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
MINNESOTA-CONTINUED
$ 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
2,100,000 2 Minneapolis/St. Paul MN
Housing Finance Board, SFM
Revenue Bonds, MERLOTs
(Series D) 3.75% TOBs (GNMA
COL)/(First Union National
Bank, Charlotte, NC LIQ)
Optional Tender 7/26/2000 2,100,000
6,000,000 2 Minneapolis/St. Paul MN
Metropolitan Airports
Commission (PT-1174) 3.60%
TOBs (FGIC INS)/(Merrill
Lynch Capital Services,
Inc. LIQ) Optional Tender
2/10/2000 6,000,000
3,000,000 Minneapolis/St. Paul, MN
Metropolitan Airports
Commission, Floating Rate
Trust Receipts (FR/RI-A33)
Weekly VRDNs (FGIC
INS)/(Bank of New York,
New York LIQ) 3,000,000
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
10,975,000 2 Minnesota Public
Facilities Authority (PT-
1175) 3.75% TOBs (Merrill
Lynch Capital Services,
Inc. LIQ) Optional Tender
8/10/2000 10,975,000
5,000,000 Minnesota Public
Facilities Authority,
Morgan Stanley Floater
Certificate (Series 1998-
73) Weekly VRDNs (Morgan
Stanley, Dean Witter
Municipal
Funding, Inc. LIQ) 5,000,000
8,000,000 Minnesota State
Commissioner of Iron Range
Resources & Rehabilitation
(Series 1991) Weekly VRDNs
(Louisiana-Pacific
Corp.)/(Wachovia Bank of
NC, N.A. LOC) 8,000,000
7,495,000 Minnesota State HFA (Series 1991A) PT-235 Weekly VRDNs
(Commerzbank
AG, Frankfurt LIQ) 7,495,000
4,995,000 2 Minnesota State HFA
(Series 1998C) PT-204,
3.30% TOBs (Bayerische
Hypotheken-und Vereinsbank
AG LIQ), Optional Tender
5/11/2000 4,995,000
3,380,000 Minnesota State HFA
(Series 1999 F) 3.20% TOBs,
Mandatory Tender 6/1/2000 3,380,000
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 (Series 1992B)
Weekly VRDNs (U.S. Bank,
N.A., Minneapolis LIQ) 7,000,000
12,700,000 Minnesota State Higher
Education Coordinating
Board (Series 1992C)
Weekly VRDNs (U.S. Bank,
N.A., Minneapolis LIQ) 12,700,000
6,500,000 Minnesota State Higher
Education Coordinating
Board (Series 1992 C)
Weekly VRDNs (U.S. Bank,
N.A., Minneapolis LIQ) 6,500,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
MINNESOTA-CONTINUED
$ 5,000,000 Minnesota State Higher
Education Facility
Authority (Series Five-C)
Weekly VRDNs (University
of St. Thomas)/(Allied
Irish Banks PLC LOC) $ 5,000,000
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
21,475,000 Minnesota State, 3.15%
Bonds, 11/1/1999 21,475,000
2,615,000 Minnesota State, 7.00%
Bonds (United States
Treasury PRF) 8/1/2000
(@100) 2,675,853
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
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
2,850,000 New Hope, MN Weekly VRDNs
(Paddock Labs)/(U.S. Bank,
N.A., Minneapolis LOC) 2,850,000
6,760,000 2 Northern Municipal Power
Agency, MN, Floater
Certificates (Series 1998-
46) 3.50% TOBs (FSA
INS)/(Morgan Stanley, Dean
Witter Municipal Funding,
Inc. LIQ), Optional Tender
2/17/2000 6,760,000
11,000,000 Oak Park Heights, MN,
Elderly Housing Revenue
Bonds (Series 1998B) 4.54%
TOBs (Bayerische
Landesbank Girozentrale)
Mandatory Tender 12/1/1999 11,000,000
4,150,000 Olmsted County, MN
Building Authority,
Certificates of
Participation Weekly VRDNs
(Human Services
Infrastructure)/(Toronto-
Dominion Bank LOC) 4,150,000
1,140,000 Plymouth, MN Weekly VRDNs
(Nuaire, Inc.)/(Norwest
Bank Minnesota, N.A. LOC) 1,140,000
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
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
MINNESOTA-CONTINUED
$ 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
1,000,000 Rochester, MN Health Care
Facility Authority Weekly
VRDNs (Mayo Foundation) 1,000,000
2,500,000 Rochester, MN Health Care
Facility Authority Weekly
VRDNs (Mayo Foundation) 2,500,000
3,000,000 Rochester, MN Health Care
Facility Authority (Series 1998-177) Weekly VRDNs (Mayo
Foundation)/(Morgan Stanley, Dean Witter Municipal Funding,
Inc.
LIQ) 3,000,000
250,000 Rogers, MN IDA Weekly VRDNs
(Metal Sales Manufacturing
Corp.)/(KeyBank, N.A. LOC) 250,000
2,415,000 Rogers, MN IDA, IDRB Weekly
VRDNs (DAC Development,
LLC Project)/(Norwest Bank
Minnesota, N.A. LOC) 2,415,000
19,450,000 Rosemount, MN, PCR (Series
1984) Weekly VRDNs (Koch
Refining Co.)/(Koch
Industries, Inc. GTD) 19,450,000
6,500,000 Shakopee, MN Hospital
Finance Authority Weekly
VRDNs (St. Francis
Regional Medical
Center)/(Citibank N.A.,
New York LOC) 6,500,000
907,500 St. Cloud, MN Housing &
Redevelopment Authority,
Revenue Refunding
Bonds (Series 1994A)
Weekly VRDNs (Coborn's,
Inc.)/(Norwest Bank
Minnesota, N.A. LOC) 907,500
1,977,500 St. Cloud, MN Housing &
Redevelopment Authority,
Revenue Refunding
Bonds (Series 1994B)
Weekly VRDNs (Coborn's,
Inc.)/(Norwest Bank
Minnesota, N.A. LOC) 1,977,500
9,500,000 St. Cloud, MN (Series 1997-
A) Weekly VRDNs (The Saint
Cloud Hospital)/(Rabobank
Nederland, Utrecht LOC) 9,500,000
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
2,625,000 St. Paul, MN Housing &
Redevelopment Authority,
Hampden Square
Apartments (Series A)
4.19% TOBs (Bayerische
Landesbank Girozentrale)
Mandatory Tender 7/1/2000 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
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
MINNESOTA-CONTINUED
$ 16,800,000 University of Minnesota
(Series 1999A) Weekly
VRDNs $ 16,800,000
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.)/(Norwest
Bank Minnesota, N.A. LOC) 1,140,000
1,935,000 Waseca, MN ISD #829, 3.25%
TANs, 3/31/2000 1,936,546
1,950,000 Wells, MN, 3.30% TOBs
(Stokely, Inc.)/(First
Union National Bank,
Charlotte, NC LOC)
Optional Tender 12/1/1999 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
4,100,000 Winnebago, MN (Series
1999) Weekly VRDNs (Dixie
Carbonic, Inc.)/(Bank One,
Illinois, N.A. LOC) 4,100,000
TOTAL INVESTMENTS (AT
AMORTIZED COST) 3 $ 535,493,683
</TABLE>
Securities that are subject to alternative minimum tax represent 30.3% 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, or 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 October 31, 1999, the portfolio securities were rated as follows:
Tier Rating Based on Total Market Value (Unaudited)
FIRST TIER SECOND TIER
100.0% 0.0%
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 October 31, 1999, these
securities amounted to $44,575,000 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
($535,765,640) at October 31, 1999.
The following acronyms are used throughout this portfolio:
AMBAC -American Municipal Bond Assurance Corporation AMT -Alternative Minimum
Tax BANs -Bond Anticipation Notes COL -Collateralized CP -Commercial Paper FGIC
- -Financial Guaranty Insurance Company FSA -Financial Security Assurance GNMA
- -Government National Mortgage Association GO -General Obligation GTD -Guaranteed
HFA -Housing Finance Authority IDA -Industrial Development Authority IDR
- -Industrial Development Revenue IDRB(s) -Industrial Development Revenue Bond(s)
INS -Insured ISD -Independent School District LIQ -Liquidity Agreement LOC
- -Letter of Credit MERLOTS -Municipal Exempt Receipts Liquidity Optional Tender
Series PCR -Pollution Control Revenue PRF -Prerefunded 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
OCTOBER 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Total investments in
securities, at amortized
cost and value $ 535,493,683
Cash 118,640
Income receivable 3,372,380
Receivable for shares sold 105,382
Prepaid expenses 13,090
TOTAL ASSETS 539,103,175
LIABILITIES:
Payable for investments
purchased $ 2,400,000
Payable for shares
redeemed 20,019
Income distribution
payable 754,561
Accrued expenses 162,955
TOTAL LIABILITIES 3,337,535
Net assets for 535,765,640
shares outstanding $ 535,765,640
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PROCEEDS PER SHARE
INSTITUTIONAL SHARES:
$285,540,032 / 285,540,032
shares outstanding $1.00
CASH SERIES SHARES:
$250,225,608 / 250,225,608
shares outstanding $1.00
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Operations
YEAR ENDED OCTOBER 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 18,537,539
EXPENSES:
Investment advisory fee $ 2,234,444
Administrative personnel
and services fee 421,193
Custodian fees 18,112
Transfer and dividend
disbursing agent fees and
expenses 179,115
Directors'/Trustees' fees 4,136
Auditing fees 13,000
Legal fees 10,432
Portfolio accounting fees 108,256
Distribution services fee-
Cash Series Shares 1,223,139
Shareholder services fee-
Institutional Shares 786,822
Shareholder services fee-
Cash Series Shares 611,569
Share registration costs 2,307
Printing and postage 25,300
Insurance premiums 46,228
Miscellaneous 3,593
TOTAL EXPENSES 5,687,646
WAIVERS:
Waiver of investment
advisory fee $ (1,373,358)
Waiver of distribution
services fee-Cash Series
Shares (611,569)
Waiver of shareholder
services fee-Institutional
Shares (786,822)
TOTAL WAIVERS (2,771,749)
Net expenses 2,915,897
Net investment income $ 15,621,642
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
YEAR ENDER OCTOBER 31 1999 1998
<S> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net investment income $ 15,621,642 $ 17,164,545
DISTRIBUTIONS TO
SHAREHOLDERS:
Distributions from net
investment income
Institutional Shares (9,461,048) (10,155,213)
Cash Series Shares (6,160,594) (7,009,332)
CHANGE IN NET ASSETS
RESULTING FROM
DISTRIBUTIONS
TO SHAREHOLDERS (15,621,642) (17,164,545)
SHARE TRANSACTIONS:
Proceeds from sale of
shares 1,431,126,325 1,392,083,828
Net asset value of shares
issued to shareholders in
payment of
distributions declared 6,502,602 7,214,822
Cost of shares redeemed (1,437,969,499) (1,292,784,856)
CHANGE IN NET ASSETS
RESULTING FROM SHARE
TRANSACTIONS (340,572) 106,513,794
Change in net assets (340,572) 106,513,794
NET ASSETS:
Beginning of period 536,106,212 429,592,418
End of period $ 535,765,640 $ 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>
YEAR ENDED OCTOBER 31 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.03 0.03 0.03 0.03 0.04
LESS DISTRIBUTIONS:
Distributions from net investment income (0.03) (0.03) (0.03) (0.03) (0.04)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN 1 3.08% 3.44% 3.48% 3.49% 3.82%
RATIOS TO AVERAGE NET ASSETS:
Expenses 2 0.80% 0.80% 0.81% 0.81% 0.82%
Net investment income 2 2.52% 2.89% 2.91% 2.92% 3.25%
Expenses (after waivers) 0.30% 0.30% 0.30% 0.30% 0.30%
Net investment income (after waivers) 3.02% 3.39% 3.42% 3.43% 3.77%
SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted ) $285,540 $328,507 $208,365 $217,443 $212,392
</TABLE>
1 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
2 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>
YEAR ENDED OCTOBER 31 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.03 0.03 0.03 0.03 0.03
LESS DISTRIBUTIONS:
Distributions from net investment income (0.03) (0.03) (0.03) (0.03) (0.03)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN 1 2.57% 2.93% 2.97% 2.97% 3.41%
RATIOS TO AVERAGE NET ASSETS:
Expenses 2 1.30% 1.30% 1.31% 1.31% 1.32%
Net investment income 2 2.02% 2.39% 2.41% 2.42% 2.75%
Expenses (after waivers) 0.80% 0.80% 0.80% 0.80% 0.70%
Net investment income (after waivers) 2.52% 2.89% 2.92% 2.93% 3.37%
SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $250,226 $207,599 $221,227 $235,614 $131,471
</TABLE>
1 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
2 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
OCTOBER 31, 1999
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 provision for federal tax is
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 October 31, 1999, capital paid-in aggregated $535,765,640.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31 1999 1998
<S> <C> <C>
INSTITUTIONAL SHARES:
Shares sold 761,059,176 743,424,803
Shares issued to
shareholders in payment of
distributions declared 429,923 363,132
Shares redeemed (804,456,292) (623,646,203)
NET CHANGE RESULTING FROM
INSTITUTIONAL SHARE
TRANSACTIONS (42,967,193) 120,141,732
<CAPTION>
YEAR ENDED OCTOBER 31 1999 1998
<S> <C> <C>
CASH SERIES SHARES:
Shares sold 670,067,149 648,659,025
Shares issued to
shareholders in payment of
distributions declared 6,072,679 6,851,690
Shares redeemed (633,513,207) (669,138,653)
NET CHANGE RESULTING FROM
CASH SERIES SHARE
TRANSACTIONS 42,626,621 (13,627,938)
NET CHANGE RESULTING FROM
SHARE TRANSACTIONS (340,572) 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 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 year ended October 31, 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 and amounted to $825,430,000 and $798,038,390,
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
October 31, 1999, 43.8% 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 11.6% of total investments.
YEAR 2000 (UNAUDITED)
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.
CHANGE OF INDEPENDENT AUDITORS (UNAUDITED)
On May 19, 1999, the Fund's Trustees, upon the recommendation of its Audit
Committee, requested and subsequently accepted the resignation of Arthur
Andersen LLP ("AA") as the Fund's independent auditors. AA's reports on the
Fund's financial statements for the fiscal years ended October 31, 1997 and
October 31, 1998 contained no adverse opinion or disclaimer of opinion nor were
they qualified or modified as to uncertainty, audit scope or accounting
principles. During the Fund's fiscal years ended October 31, 1997 and October
31, 1998: (i) there were no disagreements with AA on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure, which disagreements, if not resolved to the satisfaction of AA, would
have caused it to make reference to the subject matter of the disagreements in
connection with its reports on the financial statements for such years; and (ii)
there were no reportable events of the kind described in Item 304(a)(1)(v) of
Regulation S-K under the Securities Exchange Act of 1934, as amended.
The Fund, by action of its Trustees, upon the recommendation of the Audit
Committee, has engaged Ernst & Young LLP ("E&Y") as the independent auditors to
audit the Fund's financial statements, for the fiscal year ended October 31,
1999. During the Fund's fiscal years ended October 31, 1997 and October 31,
1998, neither the Fund nor anyone on its behalf has consulted E&Y on items which
(i) concerned the application of accounting principles to a specified
transaction, either completed or proposed, or the type of audit opinion that
might be rendered on the Fund's financial statements, or (ii) concerned the
subject of a disagreement (as defined in paragraph (a)(1)(iv) of Item 304 of
Regulation S-K) of reportable events (as described in paragraph (a)(1)(v) of
said Item 304).
Report of Ernst & Young LLP, Independent Auditors
TO THE BOARD OF TRUSTEES OF FEDERATED MUNICIPAL TRUST AND SHAREHOLDERS OF
MINNESOTA MUNICIPAL CASH TRUST:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of the Minnesota Municipal Cash Trust (one of the
portfolios constituting the Federated Municipal Trust) as of October 31, 1999,
and the related statement of operations, the statement of changes in net assets,
and the financial highlights for the year then ended. These financial statements
and financial highlights are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit. The statement of changes in net assets
for the year ended October 31, 1998 and the financial highlights for each of the
periods indicated therein for the period then ended were audited by other
auditors whose report, dated December 23, 1998, expressed an unqualified opinion
on that statement and those financial highlights.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in financial statements and
financial highlights. Our procedures included confirmation of securities owned
as of October 31, 1999, by correspondence with the custodian and brokers or
other appropriate auditing procedures where replies from brokers were not
received. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Minnesota Municipal Cash Trust of the Federated Municipal Trust at October 31,
1999, and the results of its operations, changes in its net assets and financial
highlights for the year then ended, in conformity with generally accepted
accounting principles.
[Graphic]
Boston, Massachusetts
December 16, 1999
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
JOHN W. MCGONIGLE
Executive Vice President and Secretary
EDWARD C. GONZALES
Executive Vice President
RICHARD B. FISHER
Vice President
RICHARD J. THOMAS
Treasurer
LESLIE K. ROSS
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
Minnesota Municipal Cash Trust
ANNUAL REPORT
TO SHAREHOLDERS
ANNUAL REPORT
OCTOBER 31, 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
Cusip 314229873
Cusip 314229402
G00198-01 (12/99)
[Graphic]
ANNUAL REPORT
President's Message
Dear Shareholder:
I am pleased to present the Annual Report to Shareholders of North Carolina
Municipal Cash Trust, which covers the 12-month period from November 1, 1998
through October 31, 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 North Carolina state
income tax-through a portfolio concentrated in high-quality, short-term North
Carolina 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 of $0.03
per share. The fund's net assets totaled $185.3 million at the end of the
reporting period.
Thank you for relying 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
December 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 REPORTING PERIOD?
Perhaps the biggest issues threatening the U.S. economy in the latter half of
1998 were alleviated by the second quarter of 1999. The improvements in
international economies, particularly Asia, and calm foreign markets laid the
foundation for the Federal Reserve Board (the "Fed") to focus on U.S. economic
releases as a better indicator of the inflation picture. The Fed became
increasingly concerned with inflationary pressures from tighter labor markets
and rising equity wealth. For the most part inflationary forces remained tame
during 1999 with increases in some commodity prices, such as oil. Nevertheless,
the Fed began a series of three rate increases, citing tighter labor markets,
shrinking productivity gains and growth in demand. The moves came in June,
August and November. Each time the Fed voted to raise the federal funds target
rate by a quarter point, bringing the federal funds target rate to 5.50%.
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"), which comprise more than 50% of the fund's assets, started the
reporting period in the 3.00% range, but moved sharply higher in December to the
4.00% level as supply and demand imbalances occurred. Yields then declined in
January, as investors looked to reinvest coupon payments and year end selling
pressures eased. Yields averaged slightly over 2.75% during February and March
before rising to the 4.00% range in April due to traditional tax season payment
pressures. Over the summer months, yields remained mostly in a band between
3.00% and 3.50%, but rose sharply in September as cash outflows in the municipal
markets pushed rates as high as 3.85%. VRDN yields ended the reporting period at
3.50%. Over the reporting period, VRDN yields averaged roughly 66% of taxable
rates, making them attractive for investors in the highest two 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, have 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 municipal
securities, relative to their taxable counterparts, relatively expensive.
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 34 days. The fund remained in a 35- to 45-day average maturity
range over most of the reporting period, 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 taking into account Federal Reserve
monetary policy, the portfolio maximized 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 municipals to
taxable instruments, such as U.S. Treasury securities. This portfolio structure
continued to provide a competitive yield over time.
WHAT IS YOUR OUTLOOK GOING FORWARD?
The Fed, concerned by persistent above-trend growth in an environment where
labor markets are constrained and productivity gains are narrowing, will likely
remain on hold until the first quarter of 2000. It is likely that we will see
one and possibly two interest rate increases in the first and second quarters of
2000. 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
OCTOBER 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-99.5% 1
NORTH CAROLINA-98.4%
$ 10,819,000 2 ABN AMRO MuniTOPS Certificates Trust (North
Carolina Non-AMT) (Series 1998-23) 3.30% TOBs (Mission St.
Josephs Health System)/(MBIA INS)/ (ABN AMRO Bank N.V.,
Amsterdam LIQ), Optional
Tender 2/23/2000 $ 10,819,000
1,755,000 Alamance County, NC
Industrial Facilities &
PCFA (Series B) Weekly
VRDNs
(Culp, Inc.)/(Wachovia
Bank of NC, N.A. 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
3,735,000 Catawba County, NC
Industrial Facilities &
PCFA (Series 1998) Weekly
VRDNs (Centro,
Inc.)/(Norwest Bank
Minnesota, N.A. LOC) 3,735,000
2,865,000 Cleveland County, NC
Industrial Facilities and
PCFA, IDRB (Series 1990)
Weekly VRDNs
(MetalsAmerica, Inc.
Project)/(BankBoston,
N.A. LOC) 2,865,000
1,250,000 Cleveland County, NC
Industrial Facilities and
PCFA, PCR Bonds (Series
1995) Weekly VRDNs (Grover
Industries, Inc.
Project)/(Bank of America,
N.A. LOC) 1,250,000
1,000,000 Durham, NC, 7.10% Bonds
(United States Treasury
PRF) 5/1/2000 1,035,335
5,590,000 Gaston County, NC
Industrial Facilities and
PCFA (Series 1997) Weekly
VRDNs (Thermoform Plastic,
Inc.)/(Norwest Bank
Minnesota, N.A. LOC) 5,590,000
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
5,000,000 Guilford County, NC
Industrial Facilities &
PCFA (Series 1999) Weekly
VRDNs
(FFNC, Inc.)/(Norwest Bank
Minnesota, N.A. LOC) 5,000,000
7,600,000 Halifax County, NC
Industrial Facilities &
PCFA Weekly VRDNs
(Flambeau Airmold
Project)/(Norwest Bank
Minnesota, N.A. LOC) 7,600,000
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
1,750,000 Lee County, NC Industrial
Facility & PCFA (Series
1989) Weekly VRDNs
(Avondale Mills,
Inc.)/(SunTrust Bank,
Atlanta LOC) 1,750,000
2,600,000 Martin County, NC IFA
(Series 1993) Weekly VRDNs
(Weyerhaeuser Co.) 2,600,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
NORTH CAROLINA-CONTINUED
$ 4,600,000 McDowell County, NC
Industrial Facilities and
PCFA (Series 1997) Weekly
VRDNs (Parker Hosiery,
Inc.)/(First Union
National Bank, Charlotte,
NC LOC) $ 4,600,000
2,400,000 Mecklenberg County, NC Industrial Facilities and PCFA (Series
1996) Weekly VRDNs (SteriGenics International
Project)/(Comerica Bank
LOC) 2,400,000
3,680,000 Mecklenberg County, NC
Industrial Facility & PCFA
(Series 1988) Weekly VRDNs
(Florida Steel
Corp.)/(Bank of America,
N.A. LOC) 3,680,000
900,000 Mecklenburg County, NC
(Series 1996) Weekly VRDNs
(YMCA of Greater
Charlotte)/(Wachovia Bank
of NC, N.A. LOC) 900,000
3,000,000 Mecklenburg County, NC,
3.75% Bonds, 4/1/2000 3,008,475
2,520,000 New Hanover County, NC PCR
Financial Authority Weekly
VRDNs (Efson,
Inc.)/(Branch Banking &
Trust Co, Wilson LOC) 2,520,000
5,200,000 New Hanover County, NC PCR
Financial Authority
(Series 1984) Weekly VRDNs
(American Hoist & Derrick
Co. Project)/(BankBoston,
N.A. LOC) 5,200,000
1,090,000 New Hanover County, NC PCR
Financial Authority
(Series 1990) Weekly VRDNs
(Wilmington Machinery,
Inc. Project)/(Branch
Banking & Trust Co, Wilson
LOC) 1,090,000
4,000,000 North Carolina Eastern
Municipal Power Agency,
3.60% CP (Canadian
Imperial Bank of Commerce
LOC) Mandatory Tender
11/17/1999 4,000,000
6,665,000 North Carolina Eastern Municipal Power Agency, PT-132 Weekly
VRDNs (MBIA INS)/(Merrill Lynch Capital Services, Inc.
LIQ) 6,665,000
2,700,000 North Carolina Educational
Facilities Finance Agency
(Series 1990) Weekly VRDNs
(Bowman Gray School of
Medicine)/(Wachovia Bank
of NC, N.A. LOC) 2,700,000
2,000,000 North Carolina Educational
Facilities Finance Agency
(Series 1999) Weekly VRDNs
(Catawba
College)/(Wachovia Bank of
NC, N.A. LOC) 2,000,000
7,000,000 2 North Carolina HFA,
Variable Rate Certificates
(Series 1998L) 3.55% TOBs
(Bank of America, N.A. LIQ)
Optional Tender 6/1/2000 7,000,000
4,000,000 North Carolina Medical
Care Commission (Series
1996) Weekly VRDNs (Adult
CommunitiesTotal Services,
Inc.)/(Lasalle National
Bank, Chicago LOC) 4,000,000
3,300,000 North Carolina Medical
Care Commission (Series
1996) Weekly VRDNs (North
Carolina Baptist) 3,300,000
7,500,000 North Carolina Medical
Care Commission (Series
1998) Weekly VRDNs
(Cornelia Nixon Davis
Nursing Home,
Inc.)/(Wachovia Bank of
NC, N.A. LOC) 7,500,000
5,700,000 North Carolina Medical
Care Commission (Series
1999) Weekly VRDNs (Cross
Road Rest and Retirement
Center, Inc.)/(Centura
Bank, Rocky Mount, NC LOC) 5,700,000
3,455,000 North Carolina Medical
Care Commission (Series A)
4.25% Bonds (Pitt County
Memorial Hospital)
12/1/1999 3,458,732
1,000,000 North Carolina Medical
Care Commission, 7.30%
Bonds (Presbyterian
Hospital)/(United States
Treasury PRF) 10/1/2000
(@102) 1,047,877
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
NORTH CAROLINA-CONTINUED
$ 2,100,000 North Carolina Medical
Care Commission, Revenue
Bonds (Series 1993) Weekly
VRDNs (Moses H. Cone
Memorial) $ 2,100,000
14,745,000 2 North Carolina Municipal
Power Agency No. 1, PT-288,
3.80% TOBs (AMBAC
INS)/(Landesbank Hessen-
Thueringen, Frankfurt LIQ)
Optional Tender 10/5/2000 14,745,000
1,000,000 North Carolina State
(Series 1998A) PA-342
Weekly VRDNs (Merrill
Lynch Capital Services,
Inc. LIQ) 1,000,000
4,895,000 North Carolina State,
Floater Certificates
(Series 1998-38) Weekly
VRDNs (Morgan Stanley,
Dean Witter Municipal
Funding, Inc. LIQ) 4,895,000
3,280,000 Orange County, NC
Industrial Facilities &
PCFA Weekly VRDNs (Mebane
Packaging Corp.)/(First
Union National Bank,
Charlotte, NC LOC) 3,280,000
5,000,000 Person County, NC
Industrial Facilities &
PCFA Daily VRDNs (Carolina
Power &
Light Co.)/(SunTrust Bank,
Atlanta LOC) 5,000,000
1,200,000 Piedmont Triad Airport
Authority, NC Weekly VRDNs
(Triad International
Maintenance Corp.)/(Mellon
Bank N.A., Pittsburgh LOC) 1,200,000
1,000,000 Pitt County, NC (Series A)
6.20% Bonds (Pitt County
Memorial Hospital)/(United
States Treasury COL),
12/1/1999 1,002,571
1,200,000 Randolph County, NC IDA
(Series 1990) Weekly VRDNs
(Wayne Steel, Inc.)/(Bank
One, Ohio, N.A. LOC) 1,200,000
4,155,000 Robeson County, NC
Industrial Facilities and
PCFA (Series 1999) Weekly
VRDNs (Rempac Foam
Corp.)/(Chase Manhattan
Bank N.A., New York LOC) 4,155,000
4,210,000 Rowan County, NC
Industrial Facilities PCFA
(Series 1999) Weekly VRDNs
(PHC, LLC)/(SouthTrust
Bank of Alabama,
Birmingham LOC) 4,210,000
800,000 Rutherford County, NC,
Industrial Facilities PCFA
Weekly VRDNs (Spring-Ford
Knitting Co.)/(Branch
Banking & Trust Co, Wilson
LOC) 800,000
1,400,000 Sampson County, NC
Industrial Facilities and
PCFA (Series 1997) Weekly
VRDNs (DuBose Strapping,
Inc.)/(First Union
National Bank, Charlotte,
NC LOC) 1,400,000
1,900,000 Wake County, NC, 4.50%
Bonds, 3/1/2000 1,908,273
2,360,724 Wayne County, NC PCFA
Weekly VRDNs (Cooper
Industries, Inc.) 2,360,724
7,100,000 Wilson County, NC PCA
(Series 1994) Weekly VRDNs
(Granutec, Inc.)/(Branch
Banking & Trust Co, Wilson
LOC) 7,100,000
TOTAL 182,485,987
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
PUERTO RICO-1.1%
$ 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
TOTAL INVESTMENTS (AT
AMORTIZED COST) 3 $ 184,485,987
</TABLE>
Securities that are subject to alternative minimum tax represent 46.1% 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, or 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 October 31, 1999, the portfolio securities were rated as follows:
Tier Rating based on Total Market Value (Unaudited)
<TABLE>
<CAPTION>
FIRST TIER SECOND TIER
<S> <C>
96.9% 3.1%
</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 October 31, 1999, these
securities amounted to $32,564,000 which represents 17.6% of net assets.
3 Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($185,347,630) at October 31, 1999.
The following acronyms are used throughout this portfolio:
AMBAC -American Municipal Bond Assurance Corporation AMT -Alternative Minimum
Tax COL -Collateralized CP -Commercial Paper HFA -Housing Finance Authority IDA
- -Industrial Development Authority IDRB -Industrial Development Revenue Bond IFA
- -Industrial Finance Authority INS -Insured LIQ -Liquidity Agreement LOC -Letter
of Credit MBIA -Municipal Bond Investors Assurance PCA -Pollution Control
Authority PCR -Pollution Control Revenue PCFA -Pollution Control Finance
Authority PRF -Prerefunded 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
OCTOBER 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Total investments in
securities, at amortized
cost and value $ 184,485,987
Cash 228,451
Income receivable 933,242
Receivable for shares sold 11,985
TOTAL ASSETS 185,659,665
LIABILITIES:
Payable for shares
redeemed $ 115,767
Income distribution
payable 136,389
Accrued expenses 59,879
TOTAL LIABILITIES 312,035
Net assets for 185,347,630
shares outstanding $ 185,347,630
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PROCEEDS PER SHARE:
$185,347,630 / 185,347,630
shares outstanding $1.00
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Operations
YEAR ENDED OCTOBER 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME:
Interest $ 6,363,487
EXPENSES:
Investment advisory fee $ 946,083
Administrative personnel
and services fee 142,669
Custodian fees 12,450
Transfer and dividend
disbursing agent fees and
expenses 53,283
Directors'/Trustees' fees 2,187
Auditing fees 12,132
Legal fees 8,868
Portfolio accounting fees 45,336
Shareholder services fee 473,042
Share registration costs 23,083
Printing and postage 14,399
Insurance premiums 14,009
Miscellaneous 4,842
TOTAL EXPENSES 1,752,383
WAIVER:
Waiver of investment
advisory fee (627,679)
Net expenses 1,124,704
Net investment income $ 5,238,783
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31 1999 1998
<S> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net investment income $ 5,238,783 $ 5,603,680
DISTRIBUTIONS TO
SHAREHOLDERS:
Distributions from net
investment income (5,238,783) (5,603,680)
SHARE TRANSACTIONS:
Proceeds from sale of
shares 684,100,031 1,078,743,485
Net asset value of shares
issued to shareholders in
payment of
distributions declared 4,072,608 4,634,347
Cost of shares redeemed (714,935,712) (1,043,902,913)
CHANGE IN NET ASSETS
RESULTING FROM SHARE
TRANSACTIONS (26,763,073) 39,474,919
Change in net assets (26,763,073) 39,474,919
NET ASSETS:
Beginning of period 212,110,703 172,635,784
End of period $ 185,347,630 $ 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>
YEAR ENDED OCTOBER 31 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.03 0.03 0.03 0.03 0.04
LESS DISTRIBUTIONS:
Distributions from net investment income (0.03) (0.03) (0.03) (0.03) (0.04)
NET ASSET VALUE, END OF PERIOD: $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN 1 2.81% 3.17% 3.24% 3.23% 3.51%
RATIOS TO AVERAGE NET ASSETS:
Expenses 2 0.92% 0.94% 0.99% 1.01% 0.99%
Net investment income 2 2.44% 2.74% 2.79% 2.75% 3.06%
Expenses (after waivers) 0.59% 0.59% 0.59% 0.59% 0.59%
Net investment income (after waivers) 2.77% 3.09% 3.19% 3.17% 3.46%
SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $185,348 $212,111 $172,636 $137,749 $97,602
</TABLE>
1 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
2 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
OCTOBER 31, 1999
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 provision for federal tax is
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
October 31, 1999, capital paid-in aggregated $185,347,630. Transactions in
shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31 1999 1998
<S> <C> <C>
Shares sold 684,100,031 1,078,743,485
Shares issued to
shareholders in payment of
distributions declared 4,072,608 4,634,347
Shares redeemed (714,935,712) (1,043,902,913)
NET CHANGE RESULTING FROM
SHARE TRANSACTIONS (26,763,073) 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, 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.
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 year ended October 31, 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 and amounted to $289,605,000 and $340,116,000,
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
October 31, 1999, 80.1% 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 11.9% of total investments.
YEAR 2000 (UNAUDITED)
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.
CHANGE OF INDEPENDENT AUDITORS (UNAUDITED)
On May 19, 1999, the Fund's Trustees, upon the recommendation of its Audit
Committee, requested and subsequently accepted the resignation of Arthur
Anderson LLP ("AA") as the Fund's independent auditors. AA's reports on the
Fund's financial statements for the fiscal years ended October 31, 1997 and
October 31, 1998 contained no adverse opinion or disclaimer of opinion nor were
they qualified or modified as to uncertainty, audit scope or accounting
principles. During the Fund's fiscal years ended October 31, 1997 and October
31, 1998: (i) there were no disagreements with AA on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure, which disagreements, if not resolved to the satisfaction of AA, would
have caused it to make reference to the subject matter of the disagreements in
connection with its reports on the financial statements for such years; and (ii)
there were no reportable events of the kind described in Item 304(a)(1)(v) of
Regulation S-K under the Securities Exchange Act of 1934, as amended.
The Fund, by action of its Trustees, upon the recommendation of the Audit
Committee, has engaged Ernst & Young LLP ("E&Y") as the independent auditors to
audit the Fund's financial statements for the fiscal year ended October 31,
1999. During the Fund's fiscal years ended October 31, 1997 and October 31,
1998, neither the Fund nor anyone on its behalf has consulted E&Y on items which
(i) concerned the application of accounting principles to a specified
transaction, either completed or proposed, or the type of audit opinion that
might be rendered on the Fund's financial statements, or (ii) concerned the
subject of a disagreement (as defined in paragraph (a)(1)(iv) of Item 304 of
Regulation S-K) of reportable events (as described in paragraph (a)(1)(v) of
said Item 304).
Report of Ernst & Young LLP, Independent Auditors
TO THE BOARD OF TRUSTEES OF FEDERATED MUNICIPAL TRUST
AND SHAREHOLDERS OF NORTH CAROLINA MUNICIPAL CASH TRUST:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of the North Carolina Municipal Cash Trust (one of
the portfolios constituting the Federated Municipal Trust) as of October 31,
1999, and the related statement of operations, the statement of changes in net
assets, and the financial highlights for the year then ended. These financial
statements and financial highlights are the responsibility of the Trust's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audit. The statement of changes
in net assets for the year ended October 31, 1998 and the financial highlights
for each of the periods indicated therein for the period then ended were audited
by other auditors whose report, dated December 23, 1998, expressed an
unqualified opinion on that statement and those financial highlights.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in financial statements and
financial highlights. Our procedures included confirmation of securities owned
as of October 31, 1999 by correspondence with the custodian. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
North Carolina Municipal Cash Trust of the Federated Municipal Trust at October
31, 1999, and the results of its operations, changes in its net assets and
financial highlights for the year then ended, in conformity with generally
accepted accounting principles.
[Graphic]
Boston, Massachusetts
December 16, 1999
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
JOHN W. MCGONIGLE
Executive Vice President and Secretary
EDWARD C. GONZALES
Executive Vice President
RICHARD B. FISHER
Vice President
RICHARD J. THOMAS
Treasurer
LESLIE K. ROSS
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
ANNUAL REPORT
North Carolina Municipal Cash Trust
ANNUAL REPORT
TO SHAREHOLDERS
OCTOBER 31, 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
G01177-02 (12/99)
[Graphic]
ANNUAL REPORT
President's Message
Dear Shareholder:
I am pleased to present the Annual Report to Shareholders of New Jersey
Municipal Cash Trust, which covers the 12-month period from November 1, 1998
through October 31, 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-through a portfolio concentrated in high-quality, short-term New
Jersey 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
$0.03 per share for both Institutional Shares and Institutional Service Shares.
The fund's net assets totaled $170.5 million at the end of the reporting period.
Thank you for relying on New Jersey Municipal Cash Trust to help your ready cash
earn 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
December 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 REPORTING PERIOD?
Perhaps the biggest issues threatening the U.S. economy in the latter half of
1998 were alleviated by the second quarter of 1999. The improvements in
international economies, particularly Asia, and calm foreign markets laid the
foundation for the Federal Reserve Board (the "Fed") to focus on U.S. economic
releases as a better indicator of the inflation picture. The Fed became
increasingly concerned with inflationary pressures from tighter labor markets
and rising equity wealth. For the most part inflationary forces remained tame
during 1999 with increases in some commodity prices, such as oil. Nevertheless,
the Fed began a series of three interest rate increases, citing tighter labor
markets, shrinking productivity gains and growth in demand. The moves came in
June, August and November. Each time the Fed voted to raise the federal funds
target rate by a quarter point, bringing the target rate to 5.50%.
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"), which comprise more than half of the fund's assets, started the
reporting period in the 3.00% range, but moved sharply higher in December to the
4.00% level as supply and demand imbalances occurred. Yields then declined in
January, as investors looked to reinvest coupon payments and year-end selling
pressures eased. Yields averaged slightly over 2.75% during February and March
before rising to the 4.00% in April due to traditional tax season payment
pressures. Over the summer months, yields remained mostly in a band between
3.00% and 3.50%, but rose sharply in September as cash outflows in the municipal
markets pushed rates as high as 3.85%. VRDN yields ended the reporting period at
3.50%. Over the reporting period, VRDN yields averaged roughly 66% of taxable
rates, making them attractive for investors in the two highest federal tax
brackets.
The overall tone of the short-term municipal market was positive. Municipalities
across the country benefited from an expanding 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 of the decade. Lack
of supply and heavy demand kept short-term municipal securities, relative to
their taxable counterparts, relatively expensive.
WHAT WERE YOUR STRATEGIES FOR THE FUND DURING THE REPORTING PERIOD?
The fund's average maturity at the beginning of the period was approximately 65
days. The Trust remained in a 45 to 65-day average maturity range over the
reporting period, and moved within that range according to relative value
opportunities. We continue 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. Once an average maturity
range is targeted taking into account Federal Reserve monetary policy, the
portfolio maximizes 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 municipals to taxable
instruments, such as treasury securities. This portfolio structure continues to
provide a competitive yield over time.
WHAT IS YOUR OUTLOOK GOING FORWARD?
The Fed, concerned by persistent above-trend growth in an environment where
labor markets are constrained and productivity gains are narrowing, will likely
remain on hold until the first quarter of 2000. It is probable that we will see
one or possibly two interest rate increases in the first and second quarters of
2000. In the near future, 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 market developments with great interest in order to best
serve our municipal clients.
Portfolio of Investments
OCTOBER 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
99.7% 1
NEW JERSEY-99.7%
$ 2,685,000 Atlantic Highlands, NJ,
3.63% BANs, 1/21/2000 $ 2,687,742
1,265,000 Camden County, NJ
Improvement Authority
(Series 1995) Weekly VRDNs
(Jewish Federation of
Southern Jersey,
Inc.)/(National
Westminster Bank, PLC,
London LOC) 1,265,000
900,000 Camden County, NJ
Improvement Authority
(Series 1996) Weekly VRDNs
(Parkview Redevelopment
Housing Project)/(General
Electric Capital Corp.
LOC) 900,000
7,125,000 Clipper Tax-Exempt Trust
(New Jersey Non-AMT)
(Series 1998-6) Weekly
VRDNs (New Jersey Housing &
Mortgage Financing
Authority)/(MBIA
INS)/(State Street Bank
and Trust Co. LIQ) 7,125,000
3,120,000 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) 3,120,000
2,185,000 Deptford Township, NJ,
4.25% BANs, 8/11/2000 2,193,984
6,830,000 Gloucester County, NJ,
4.13% BANs, 8/1/2000 6,848,456
2,900,000 Hammonton, NJ, 3.75% BANs,
1/27/2000 2,903,341
2,785,250 Hammonton, NJ, 4.00% BANs,
7/28/2000 2,789,206
4,771,442 High Bridge Borough, NJ,
4.13% BANs, 9/1/2000 4,786,281
1,150,000 Jersey City, NJ Municipal
Utilities Authority
(Series 1998) 4.00% Bonds
(FSA INS), 12/1/1999 1,150,877
2,603,610 Lavallette Borough, NJ,
3.50% BANs, 4/28/2000 2,606,683
1,587,750 Little Egg Harbor
Township, NJ, 3.75% BANs,
3/10/2000 1,590,478
1,820,000 Manchester Township, NJ,
3.50% BANs, 11/4/1999 1,820,043
4,661,000 Mercer County, NJ
Improvement Authority
(Series 1999) 3.60% BANs
(Parking Facility)/(Mercer
County, NJ GTD), 1/12/2000 4,661,000
1,500,000 Middlesex County, NJ PCFA
Weekly VRDNs (FMC Gold
Co.)/(Wachovia Bank of NC,
N.A. Winston-Salem LOC) 1,500,000
2,500,000 New Jersey EDA Weekly VRDNs
(Center-For-Aging -
Applewood Estates)/(Fleet
National Bank,
Springfield, MA LOC) 2,500,000
2,450,000 New Jersey EDA Weekly VRDNs
(Maroukian Realty,
LLC)/(Commerce Bank, N.A.,
Cherry Hill, NJ LOC) 2,450,000
5,268,000 New Jersey EDA Weekly VRDNs
(Meridan Health
Care)/(Allfirst LOC) 5,268,000
2,400,000 New Jersey EDA Weekly VRDNs
(U.S. Golf
Association)/(PNC Bank,
N.A. LOC) 2,400,000
1,460,000 New Jersey EDA (Series
1994A) 4.00% TOBs (A.F.L.
Quality, Inc.)/(Fleet Bank
N.A. LOC), Optional Tender
7/1/2000 1,460,000
330,000 New Jersey EDA (Series
1994B) 4.00% TOBs (Two
Univac, LLC)/(Fleet Bank
N.A. LOC), Optional Tender
7/1/2000 330,000
<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
280,000 New Jersey EDA (Series
1987G) Weekly VRDNs (W.Y.
Urban Renewal)/(National
Westminster Bank, PLC,
London LOC) 280,000
2,300,000 New Jersey EDA (Series
1990) Weekly VRDNs
(Genlyte Camden
County)/(Bank of America,
N.A. LOC) 2,300,000
910,000 New Jersey EDA (Series
1992D-1) Weekly VRDNs
(Danlin Corp.)/(Banque
Nationale de Paris LOC) 910,000
2,485,000 New Jersey EDA (Series
1992L) Weekly VRDNs (Kent
Place School)/(Banque
Nationale de Paris LOC) 2,485,000
1,710,000 New Jersey EDA (Series
1995) Weekly VRDNs
(International Vitamin
Corporation
Project)/(National
Westminster Bank, PLC,
London LOC) 1,710,000
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)/(Corestates Bank
N.A. Philadelphia, PA LOC) 3,500,000
1,500,000 New Jersey EDA (Series
1997) Weekly VRDNs (UJA
Federation of Bergan
County and North Hudson,
Inc.)/(Bank of New York,
New York LOC) 1,500,000
2,400,000 New Jersey EDA (Series
1997) Weekly VRDNs (Wood
Hollow Associates,
L.L.C.)/(Corestates Bank
N.A. Philadelphia, PA 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, North LOC) 1,300,000
1,975,000 New Jersey EDA (Series
1998A) Weekly VRDNs
(Bayshore Health Care
Center)/(KBC Bank N.V.
LOC) 1,975,000
3,750,000 New Jersey EDA (Series 1999) Weekly VRDNs (Richmond Industries,
Inc. and Richmond Realty, LLC)/(Commerce Bank, N.A.,
Cherry Hill, NJ LOC) 3,750,000
1,690,000 New Jersey EDA (Series
1999) Weekly VRDNs (VOADV Property, Inc.)/(Commerce Bank, N.A.,
Cherry Hill, NJ
LOC) 1,690,000
1,040,000 New Jersey EDA (Series A)
Weekly VRDNs (325 Midland
Avenue, LLC & Wearbest Sil-
Tex, Ltd.)/(Bank of New
York, New York LOC) 1,040,000
250,000 New Jersey EDA (Series B)
Weekly VRDNs (325 Midland
Avenue, LLC & Wearbest Sil-
Tex, Ltd.)/(Bank of New
York, New York LOC) 250,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
NEW JERSEY-CONTINUED $ 435,000 New Jersey EDA (Series W)
Weekly VRDNs (Datatec
Industries, Inc.)/(Banque
Nationale de Paris LOC) $ 435,000
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
2,410,000 New Jersey Health Care
Facilities Financing
Authority (Series B) 5.50%
Bonds (Kennedy Health
System)/(MBIA INS),
7/1/2000 2,441,170
8,240,000 New Jersey Housing &
Mortgage Financing
Authority, CDC Municipal
Products Class A
Certificates (Series
1996B) Weekly VRDNs (MBIA
INS)/(CDC Municipal
Products, Inc. LIQ) 8,240,000
3,530,000 New Jersey State
Transportation Trust Fund
Agency, Floater
Certificates (Series 1998-
54) Weekly VRDNs (FSA
INS)/(Morgan Stanley, Dean
Witter Municipal Funding,
Inc. LIQ) 3,530,000
2,500,000 New Jersey State
Transportation Trust Fund
Agency, TOC's Trust
(Series 1999-2) Weekly
VRDNs (FSA INS)/(Chase
Manhattan Bank N.A., New
York LIQ) 2,500,000
2,500,000 New Jersey State
Transportation Trust Fund
Agency, Trust Receipts
(Series 1996-2) Weekly
VRDNs (MBIA INS)/(Bank of
New York, New York LIQ) 2,500,000
1,000,000 New Jersey State
Transportation Trust Fund
Agency, Trust Receipts
FR/RI-A37 Weekly VRDNs
(AMBAC INS)/(Bayerische
Hypotheken-und Vereinsbank
AG LIQ) 1,000,000
2,535,000 2 New Jersey State (Series
1997L) 3.50% TOBs (CDC
Municipal Products, Inc.
LIQ), Optional Tender
6/8/2000 2,535,000
1,000,000 Passaic Valley, NJ Water
Commission (Series 1999)
Water Supply System
Subordinated Project
Notes, 4.50% BANs (PNC
Bank, N.A. LOC),
11/14/2000 1,006,530
2,233,500 Pleasantville, NJ, 3.75%
BANs, 4/29/2000 2,238,257
10,000,000 Port Authority of New York
and New Jersey (Series
1991-A) Weekly VRDNs 10,000,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
NEW JERSEY-CONTINUED
$ 3,000,000 Trenton, NJ, 4.25% BANs,
10/20/2000 $ 3,012,960
3,227,500 Union Beach, NJ, 3.75%
BANs, 1/20/2000 3,231,263
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 5,200,535
TOTAL INVESTMENTS (AT
AMORTIZED COST) 3 $ 169,931,806
</TABLE>
Securities that are subject to alternative minimum tax represent 31.4% 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, or 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 October 31, 1999, the portfolio securities were rated as follows:
Tier Rating Based on Total Market Value (Unaudited)
<TABLE>
<CAPTION>
FIRST TIER SECOND TIER
<S> <C>
92.1% 7.9%
</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 October 31, 1999, these
securities amounted to $2,535,000 which represents 1.5% of net assets.
3 Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($170,501,490) at October 31, 1999.
The following acronyms are used throughout this portfolio:
AMBAC -American Municipal Bond Assurance Corporation AMT -Alternative Minimum
Tax BANs -Bond Anticipation Notes EDA -Economic Development Authority FGIC
- -Financial Guaranty Insurance Company FSA -Financial Security Assurance GTD
- -Guaranteed INS -Insured LIQ -Liquidity Agreement LOC -Letter of Credit MBIA
- -Municipal Bond Investors Assurance PCFA -Pollution Control Finance Authority
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
OCTOBER 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Total investments in
securities, at amortized
cost and value $ 169,931,806
Cash 479,555
Income receivable 1,525,765
Receivable for shares sold 4,551
TOTAL ASSETS 171,941,677
LIABILITIES:
Payable for investments
purchased $ 1,006,530
Payable for shares
redeemed 25,107
Income distribution
payable 383,667
Accrued expenses 24,883
TOTAL LIABILITIES 1,440,187
Net assets for 170,501,490
shares outstanding $ 170,501,490
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PROCEEDS PER SHARE
INSTITUTIONAL SHARES:
$112,138,360 / 112,138,360
shares outstanding $1.00
INSTITUTIONAL SERVICE
SHARES:
$58,363,130 / 58,363,130
shares outstanding $1.00
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Operations
YEAR ENDED OCTOBER 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 6,310,577
EXPENSES:
Investment advisory fee $ 763,407
Administrative personnel
and services fee 155,000
Custodian fees 9,196
Transfer and dividend
disbursing agent fees and
expenses 37,478
Directors'/Trustees' fees 1,825
Auditing fees 12,615
Legal fees 9,664
Portfolio accounting fees 57,500
Distribution services fee-
Institutional Service
Shares 68,463
Shareholder services fee-
Institutional Shares 305,971
Shareholder services fee-
Institutional Service
Shares 171,158
Share registration costs 32,062
Printing and postage 22,571
Insurance premiums 12,481
Miscellaneous 2,455
TOTAL EXPENSES 1,661,846
WAIVERS:
Waiver of investment
advisory fee $ (155,083)
Waiver of distribution
services fee-Institutional
Service Shares (68,463)
Waiver of shareholder
services fee-Institutional
Shares (244,777)
Waiver of shareholder
services fee-Institutional
Service Shares (68,463)
TOTAL WAIVERS (536,786)
Net expenses 1,125,060
Net investment income $ 5,185,517
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31 1999 1998
<S> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net investment income $ 5,185,517 $ 6,304,513
DISTRIBUTIONS TO
SHAREHOLDERS:
Distributions from net
investment income
Institutional Shares (3,366,649) (4,351,312)
Institutional Service
Shares (1,818,868) (1,953,201)
CHANGE IN NET ASSETS
RESULTING FROM
DISTRIBUTIONS
TO SHAREHOLDERS (5,185,517) (6,304,513)
SHARE TRANSACTIONS:
Proceeds from sale of
shares 563,331,396 670,567,607
Net asset value of shares
issued to shareholders in
payment of
distributions declared 1,077,052 1,275,927
Cost of shares redeemed (565,179,843) (667,515,788)
CHANGE IN NET ASSETS
RESULTING FROM SHARE
TRANSACTIONS (771,395) 4,327,746
Change in net assets (771,395) 4,327,746
NET ASSETS:
Beginning of period 171,272,885 166,945,139
End of period $ 170,501,490 $ 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>
YEAR ENDED OCTOBER 31 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.03 0.03 0.03 0.03 0.03
LESS DISTRIBUTIONS:
Distributions from net investment income (0.03) (0.03) (0.03) (0.03) (0.03)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN 1 2.77% 3.12% 3.18% 3.17% 3.46%
RATIOS TO AVERAGE NET ASSETS:
Expenses 2 0.83% 0.83% 0.86% 0.92% 0.96%
Net investment income 2 2.47% 2.79% 2.82% 2.76% 3.00%
Expenses (after waivers) 0.55% 0.55% 0.55% 0.55% 0.55%
Net investment income (after waivers) 2.75% 3.07% 3.13% 3.13% 3.41%
SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $112,138 $106,032 $112,407 $115,722 $86,944
</TABLE>
1 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
2 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>
YEAR ENDED OCTOBER 31 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.03 0.03 0.03 0.03 0.03
LESS DISTRIBUTIONS:
Distributions from net investment income (0.03) (0.03) (0.03) (0.03) (0.03)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN 1 2.67% 3.01% 3.08% 3.07% 3.36%
RATIOS TO AVERAGE NET ASSETS:
Expenses 2 0.93% 0.93% 0.96% 1.02% 1.06%
Net investment income 2 2.37% 2.67% 2.77% 2.66% 2.87%
Expenses (after waivers) 0.65% 0.65% 0.65% 0.65% 0.65%
Net investment income (after waivers) 2.65% 2.95% 3.08% 3.03% 3.28%
SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $58,363 $65,240 $54,538 $28,807 $29,817
</TABLE>
1 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
2 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
OCTOBER 31, 1999
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"). 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 provision for federal tax is
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 October 31, 1999, capital paid-in aggregated $170,501,490.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31 1999 1998
<S> <C> <C>
INSTITUTIONAL SHARES:
Shares sold 401,625,092 453,405,235
Shares issued to
shareholders in payment of
distributions declared 26,129 43,111
Shares redeemed (395,545,299) (459,822,649)
NET CHANGE RESULTING FROM
INSTITUTIONAL SHARE
TRANSACTIONS 6,105,922 (6,374,303)
<CAPTION>
YEAR ENDED OCTOBER 31 1999 1998
<S> <C> <C>
INSTITUTIONAL SERVICE
SHARES:
Shares sold 161,706,304 217,162,372
Shares issued to
shareholders in payment of
distributions declared 1,050,923 1,232,816
Shares redeemed (169,634,544) (207,693,139)
NET CHANGE RESULTING FROM
INSTITUTIONAL SERVICE
SHARE TRANSACTIONS (6,877,317) 10,702,049
NET CHANGE RESULTING FROM
SHARE TRANSACTIONS (771,395) 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 year ended October 31, 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 and amounted to $352,651,530 and $306,799,762,
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
October 31, 1999, 65.2% 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 13.8% of total investments.
YEAR 2000 (UNAUDITED)
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.
CHANGE OF INDEPENDENT AUDITORS (UNAUDITED)
On May 19, 1999, the Fund's Trustees, upon the recommendation of its Audit
Committee, requested and subsequently accepted the resignation of Arthur
Andersen LLP ("AA") as the Fund's independent auditors. AA's reports on the
Fund's financial statements for the fiscal years ended October 31, 1997 and
October 31, 1998 contained no adverse opinion or disclaimer of opinion nor were
they qualified or modified as to uncertainty, audit scope or accounting
principles. During the Fund's fiscal years ended October 31, 1997 and October
31, 1998: (i) there were no disagreements with AA on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure, which disagreements, if not resolved to the satisfaction of AA, would
have caused it to make reference to the subject matter of the disagreements in
connection with its reports on the financial statements for such years; and (ii)
there were no reportable events of the kind described in Item 304(a)(1)(v) of
Regulation S-K under the Securities Exchange Act of 1934, as amended.
The Fund, by action of its Trustees, upon the recommendation of the Audit
Committee, has engaged Ernst & Young LLP ("E&Y") as the independent auditors to
audit the Fund's financial statements for the fiscal year ended October 31,
1999. During the Fund's fiscal years ended October 31, 1997 and October 31,
1998, neither the Fund nor anyone on its behalf has consulted E&Y on items which
(i) concerned the application of accounting principles to a specified
transaction, either completed or proposed, or the type of audit opinion that
might be rendered on the Fund's financial statements, or (ii) concerned the
subject of a disagreement (as defined in paragraph (a)(1)(iv) of Item 304 of
Regulation S-K) of reportable events (as described in paragraph (a)(1)(v) of
said Item 304).
Report of Ernst & Young LLP, Independent Auditors
TO THE BOARD OF TRUSTEES OF FEDERATED MUNICIPAL TRUST
AND SHAREHOLDERS OF NEW JERSEY MUNICIPAL CASH TRUST:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of the New Jersey Municipal Cash Trust (one of the
portfolios constituting the Federated Municipal Trust) as of October 31, 1999,
and the related statement of operations, the statement of changes in net assets,
and the financial highlights for the year then ended. These financial statements
and financial highlights are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit. The statement of changes in net assets
for the year ended October 31, 1998 and the financial highlights for each of the
periods indicated therein for the period then ended were audited by other
auditors whose report, dated December 23, 1998, expressed an unqualified opinion
on that statement and those financial highlights.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in financial statements and
financial highlights. Our procedures included confirmation of securities owned
as of October 31, 1999, by correspondence with the custodian and brokers or
other appropriate auditing procedures where replies from brokers were not
received. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
New Jersey Municipal Cash Trust of the Federated Municipal Trust at October 31,
1999, and the results of its operations, changes in its net assets and financial
highlights for the year then ended, in conformity with generally accepted
accounting principles.
[Graphic]
Boston, Massachusetts
December 16, 1999
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
JOHN W. MCGONIGLE
Executive Vice President and Secretary
EDWARD C. GONZALES
Executive Vice President
RICHARD B. FISHER
Vice President
RICHARD J. THOMAS
Treasurer
LESLIE K. ROSS
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
ANNUAL REPORT
New Jersey Municipal Cash Trust
ANNUAL REPORT TO SHAREHOLDERS
OCTOBER 31, 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
G00203-01 (12/99)
[Graphic]
ANNUAL REPORT
President's Message
Dear Shareholder:
I am pleased to present the Annual Report to Shareholders of New York Municipal
Cash Trust, which covers the 12-month reporting period from November 1, 1998
through October 31, 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 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-through a portfolio concentrated
in high-quality, short-term New York 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 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 double tax-free dividends totaling
$0.03 per share for Institutional Service Shares and $0.03 per share for Cash II
Shares. The fund's total net assets totaled $640.0 million at the end of the
reporting period.
Thank you for relying on New York Municipal Cash Trust to help your ready cash
earn 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,
[Graphic]
Glen R. Johnson
President
December 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 REPORTING PERIOD?
Perhaps the biggest issues threatening the U.S. economy in the latter half of
1998 were alleviated by the second quarter of 1999. The improvements in
international economies, particularly Asia, and calm foreign markets laid the
foundation for the Federal Reserve Board (the "Fed") to focus on U.S. economic
releases as a better indicator of the inflation picture. The Fed became
increasingly concerned with inflationary pressures from tighter labor markets
and rising equity wealth. For the most part inflationary forces remained tame
during 1999, with increases in some commodity prices, such as oil. Nevertheless,
the Fed began a series of three rate increases, citing tighter labor markets,
shrinking productivity gains and growth in demand. The moves came in June,
August and November; each time, the Fed voted to raise the federal funds target
rate by a quarter point.
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"), which comprise more than 50% of the fund's assets, started the period
in the 3.00% range, but moved sharply higher in December to the 4.00% level as
supply and demand imbalances occurred. Yields then declined in January, as
investors looked to reinvest coupon payments and year end selling pressures
eased. Yields averaged slightly over 2.75% during February and March before
rising to the 4.00% range in April due to traditional tax season payment
pressures. Over the summer months, yields remained mostly in a band between
3.00% and 3.50%, but rose sharply in September as cash outflows in the municipal
markets pushed rates as high as 3.85%. VRDN yields ended the reporting period at
3.50%. Over the reporting period, VRDN yields averaged roughly 66% of taxable
rates, making them attractive for investors in the highest two 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, have 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 municipal
securities, relative to their taxable counterparts, relatively expensive.
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 65 days. Despite our attempts to take advantage of the relative
value of fixed-rate notes to VRDNs, an influx of assets kept the fund's average
maturity in a 40-50 day range over most of the reporting period. At the end of
the period, the average maturity stood at 51 days. 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, taking into account
Federal Reserve monetary policy, the portfolio maximized 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
municipals to taxable instruments, such as U.S. Treasury securities. This
portfolio structure continued to provide a competitive yield over time.
WHAT IS YOUR OUTLOOK GOING FORWARD?
The Fed, concerned by persistent above-trend growth in an environment where
labor markets are constrained and productivity gains are narrowing, will likely
remain on hold until the first quarter of 2000. It is likely that we will see
one and possibly two interest rate increases in the first and second quarters of
2000. 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
OCTOBER 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
99.2% 1
NEW YORK-99.0%
$ 13,150,000 2 ABN AMRO Muni TOPS Certificates Trust (New York
Non-AMT) Series 1999- 2, 3.30% TOBs (Metropolitan
Transportation Authority, NY)/(FSA INS)/(ABN AMRO Bank N.V.,
Amsterdam LIQ),
Optional Tender 5/10/2000 $ 13,150,000
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 4,940,589
4,115,000 Canandaigua, NY City
School District, 3.35%
BANs, 3/30/2000 4,118,273
6,120,000 Cattaraugus County, NY
IDA, (Series 1999A) Weekly
VRDNs (Gernatt Asphalt
Products,
Inc.)/(Manufacturer's &
Traders Trust Co.,
Buffalo, NY LOC) 6,120,000
3,460,000 Cayuga County, NY IDA,
(Series 1998) Weekly VRDNs
(NFR Northeast,
Inc.)/(KeyBank, N.A. LOC) 3,460,000
7,500,000 Chateaugay, NY Central
School District, 4.25%
BANs, 9/29/2000 7,522,928
3,900,000 Chautauqua County, NY IDA
Weekly VRDNs (Mogen David
Wine Corp.)/(Wells Fargo
Bank, N.A. LOC) 3,900,000
12,850,000 Clipper Tax-Exempt Trust
(New York AMT) Series 1998-
10 Weekly VRDNs (New York
State Mortgage
Agency)/(State Street Bank
and Trust Co. LIQ) 12,850,000
2,250,000 Cobleskill-Richmondville,
NY Central School
District, 4.25% BANs,
6/15/2000 2,256,107
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
2,425,000 Columbia County, NY IDA,
(Series 1998A) Weekly
VRDNs (Empire Homes,
LLC)/(KeyBank, N.A. LOC) 2,425,000
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 8,000,973
1,100,000 Dutchess County, NY IDA,
Series 1995 Weekly VRDNs
(Laerdal Medical
Corp.)/(Bank of New York,
New York LOC) 1,100,000
4,000,000 Elba, NY Central School
District, 4.00% BANs,
7/7/2000 4,010,504
5,000,000 Erie County, NY IDA,
(Series 1998) Weekly VRDNs
(Alden Scientific
Corp.)/(KeyBank, N.A. LOC) 5,000,000
2,025,000 Erie County, NY IDA,
(Series A) Weekly VRDNs
(Gemcor)/(HSBC Bank USA
LOC) 2,025,000
5,000,000 Erie County, NY IDA, IDRB (Series 1994) Weekly VRDNs
(Servotronics, Inc. Project)/(Fleet Bank N.A.
LOC) 5,000,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
NEW YORK-CONTINUED
$ 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 2,001,189
1,300,000 Guilderland, NY IDA,
(Series 1993A) Weekly VRDNs (Northeastern Industrial Park,
Inc.)/(Fleet Bank N.A.
LOC) 1,300,000
3,400,000 Herkimer County, NY IDA,
1994 IDRB Weekly VRDNs
(Granny's Kitchen)/(Bank
of New York, New York LOC) 3,400,000
2,800,000 Lansing, NY Central School
District, 3.90% BANs,
8/10/2000 2,806,257
12,390,000 Long Island Power
Authority, Electric System
Subordinated Revenue Bonds
(Series 1) Weekly VRDNs
(Bayerische Landesbank
Girozentrale and
Westdeutsche Landesbank
Girozentrale LOCs) 12,390,000
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
7,595,000 Long Island Power
Authority, PA-513R, 3.25%
TOBs (FSA INS)/(Merrill
Lynch Capital Services,
Inc. LIQ), Optional Tender
4/6/2000 7,595,000
1,600,000 Madison County, NY IDA,
(Series 1989A) Weekly VRDNs (Madison, NY Upstate Metals)/(Fleet
Bank N.A.
LOC) 1,600,000
12,050,000 Madison County, NY IDA,
(Series 1999A) Weekly
VRDNs (Cazenovia
College)/(Manufacturer's &
Traders Trust Co.,
Buffalo, NY LOC) 12,050,000
3,400,000 Madison County, NY IDA,
(Series A) Weekly VRDNs
(Owl Wire and
Cable)/(KeyBank, N.A. LOC) 3,400,000
19,395,000 Metropolitan
Transportation Authority,
NY, MERLOTS (Series 1997 C-
2) Weekly VRDNs (FGIC
INS)/(First Union National
Bank, Charlotte, NC LIQ) 19,395,000
3,000,000 Metropolitan
Transportation Authority, NY, SSP29 (Series 1999) Weekly VRDNs
(FSA INS)/(Chase Manhattan Bank
N.A., New York LIQ) 3,000,000
4,265,000 Metropolitan
Transportation Authority, NY, Trust Receipts (Series 1997
FR/RI-9) Weekly VRDNs (FGIC INS)/(Bank of New
York, New York LIQ) 4,265,000
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
12,240,000 New York City Municipal
Water Finance Authority, (PA-523) Weekly VRDNs (FGIC
INS)/(Merrill Lynch Capital Services, Inc.
LIQ) 12,240,000
8,000,000 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) 8,000,000
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, N.A. LIQ),
Optional Tender 12/16/1999 6,300,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
NEW YORK-CONTINUED
$ 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, N.A. LIQ),
Optional Tender 12/16/1999 $ 9,345,000
22,223 New York City, NY IDA
Weekly VRDNs (David Rosen
Bakers Supply)/(Ford Motor
Credit Corp. LIQ)/(Chase
Manhattan Bank N.A., New
York LOC) 22,223
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
7,990,000 New York City, NY IDA, CDC
Municipal Products (Series
1998D) Weekly VRDNs (Japan
Airlines Co.)/(FSA
INS)/(CDC Municipal
Products, Inc. LIQ) 7,990,000
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
8,670,000 New York City, NY IDA,
Class A Certificates (Series CDC-1997E) Weekly VRDNs (Japan
Airlines Co.)/(FSA INS)/(CDC Municipal Products, Inc.
LIQ) 8,670,000
3,005,000 New York City, NY
Transitional Finance
Authority, (1998 Subseries
A-1) Weekly VRDNs
(Commerzbank AG, Frankfurt
LIQ) 3,005,000
10,000,000 New York City, NY
Transitional Finance
Authority, (Series 1999B)
MERLOTs Weekly VRDNs
(First Union National
Bank, Charlotte, NC LIQ) 10,000,000
16,595,000 New York City, NY
Transitional Finance
Authority, PT-1047 Weekly
VRDNs (Bank of America,
N.A. 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
5,000,000 New York City, NY, (Series
L), 5.25% Bonds, 8/1/2000 5,047,408
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, 3.70%
TOBs (Rosalind & Joseph
Gurwin Jewish Geriatric
Center of Long Island,
Inc.)/(AMBAC INS)/(Merrill
Lynch Capital Services,
Inc. LIQ), Optional Tender
7/27/2000 6,245,000
5,960,000 New York State Dormitory
Authority, PT-130 (Series
1997) Weekly VRDNs (United
Health Services Hospitals,
Inc.)/(AMBAC INS)/(Merrill
Lynch Capital
Services, Inc. LIQ) 5,960,000
7,780,000 2 New York State Dormitory
Authority, PT-75, 3.30%
TOBs (Ellis
Hospital)/(MBIA
INS)/(Merrill Lynch
Capital Services, Inc.
LIQ), Optional Tender
5/11/2000 7,780,000
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
5,000,000 New York State Energy
Research & Development
Authority, PCR Bonds
(1987 Series B) Daily
VRDNs (Niagara Mohawk
Power Corp.)/(Morgan
Guaranty Trust Co., New
York LOC) 5,000,000
4,190,000 New York State Energy
Research & Development
Authority, Poll Ctrl
Revenue Adj Rate Bonds
(1988 Series A) Daily VRDNs
(Niagara Mohawk Power
Corp.)/(Morgan Guaranty
Trust Co., New York LOC) 4,190,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
NEW YORK-CONTINUED
$ 3,800,000 New York State Energy
Research & Development
Authority, Trust Receipts,
Series 1998 FR/RI-9 Weekly
VRDNs (Brooklyn Union Gas
Co.)/(MBIA INS)/(Bank of
New York, New York LIQ) $ 3,800,000
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
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
5,000,000 New York State Local
Government Assistance
Corp., (Series B) Weekly
VRDNs (Bank of Nova Scotia,
Toronto LOC) 5,000,000
6,965,000 New York State Medical Care
Facilities Finance Agency, (Series 1992 B PT-100) Daily VRDNs
(FHA INS)/(Merrill Lynch Capital Services, Inc.
LIQ) 6,965,000
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, (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
1,455,000 New York State Mortgage
Agency, Homeowner Mortgage
Revenue Bonds (PA-87),
Weekly VRDNs (Merrill
Lynch Capital Services,
Inc. LIQ) 1,455,000
3,205,000 New York State Mortgage
Agency, Homeowner Mortgage
Revenue Bonds (Series PT-
15B) Weekly VRDNs
(Commerzbank AG, Frankfurt
LIQ) 3,205,000
8,645,000 New York State Mortgage
Agency, 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
4,880,000 New York State Power
Authority, 3.55% TOBs
(Bank of America, N.A.,
Bank of Tokyo-Mitsubishi
Ltd. and Morgan Guaranty
Trust Co., New York LIQs),
Optional Tender 3/1/2000 4,880,000
6,500,000 New York State Thruway
Authority, (PA-172),
Weekly VRDNs (Merrill
Lynch Capital Services,
Inc. LIQ)/(Merrill Lynch
Capital Services, Inc.
LOC), Optional Tender
1/27/2000 6,500,000
9,555,000 2 New York State Thruway
Authority, (Series E) PT-
1141, 3.25% 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 SecuritiesTrust
Receipts (Series 1996-
CMC6) Weekly VRDNs (Chase
Manhattan Corp. LIQ) 8,400,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
NEW YORK-CONTINUED
$ 4,500,000 Newfield, NY Central
School District, 4.00%
BANs, 7/14/2000 $ 4,512,151
9,520,000 Niagara County, NY IDA,
Solid Waste Disposal
Facility Revenue Bonds
(Series 1994 A) Weekly
VRDNs (American Ref-Fuel
Co.)/(Wachovia Bank of NC,
N.A. LOC) 9,520,000
1,600,000 Odessa-Montour, NY Central
School District, 3.25%
BANs, 11/17/1999 1,600,061
1,120,000 Onondaga County, NY IDA,
(Series 1997) Weekly VRDNs (General Super Plating Co.,
Inc.)/(KeyBank, N.A.
LOC) 1,120,000
3,500,000 Onondaga County, NY IDA,
(Series 1999A) Weekly
VRDNs (Christian Brothers
Academy of Syracuse,
NY)/(KeyBank, N.A. LOC) 3,500,000
1,725,000 Onondaga County, NY Weekly
VRDNs (Grainger (W.W.),
Inc.) 1,725,000
1,200,000 Ontario, NY IDA Weekly
VRDNs (Hillcrest
Enterprises/Buckeye
Corrugated)/(National City
Bank, Ohio LOC) 1,200,000
5,700,000 Oswego County, NY IDA
Weekly VRDNs (Copperweld
Corp.)/(Credit Lyonnais
Paris LOC) 5,700,000
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
5,000,000 Portville, NY Central
School District, 4.125%
BANs, 10/20/2000 5,012,767
6,500,000 Red Hook, NY Central School
District, 4.25% BANs,
10/27/2000 6,527,772
4,500,000 Riverhead, NY IDA, IDRB
(Series 1998) Weekly VRDNs
(Altaire Pharmaceuticals,
Inc.)/(Mellon Bank N.A.,
Pittsburgh LOC) 4,500,000
1,000,000 Rotterdam, NY IDA, (Series
1993A) Weekly VRDNs (Rotterdam Industrial Park)/(Fleet Bank
N.A.
LOC) 1,000,000
2,000,000 Rotterdam-Mohonasen
Central School District,
NY, 4.125% RANs, 6/30/2000 2,006,444
1,425,000 Schenectady, NY IDA, IDRB
(Series 1995A) Weekly
VRDNs (Fortitech Holding
Corporation
Project)/(Fleet Bank N.A.
LOC) 1,425,000
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
3,380,000 Southeast, NY IDA,
Variable Rate IDRB 1996
Weekly VRDNs (The Rawplug
Company, Inc.)/(Bank of
New York, New York LOC) 3,380,000
2,500,000 St. Lawrence County, NY
IDA, (Series 1998A) Weekly
VRDNs (Alcoa, Inc.) 2,500,000
600,000 Suffolk County, NY IDA
Weekly VRDNs (C & J Realty
Corp.)/(Ford Motor Credit
Corp. LIQ)/(Chase
Manhattan Bank N.A., New
York LOC) 600,000
750,000 Suffolk County, NY IDA
Weekly VRDNs (YM-YWHA of
Suffolk)/(European
American Bank, New York
LOC) 750,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
NEW YORK-CONTINUED
$ 2,870,000 Suffolk County, NY IDA,
(Series 1997B) Weekly
VRDNs (Maryhaven Center of
Hope)/(KeyBank, N.A. LOC) $ 2,870,000
680,000 Suffolk County, NY IDA,
(Series 1998A) Weekly
VRDNs (Episcopal Health
Services, Inc. Civic
Facility)/(Paribas, Paris
LOC) 680,000
1,800,000 Suffolk County, NY IDA,
5.0375% TOBs (Grainger
(W.W.), Inc.), Optional
Tender 12/1/1999 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
24,525,000 Triborough Bridge & Tunnel
Authority, NY, Floater
Certificates (Series 1998-
72) Weekly VRDNs (FGIC
INS)/(Morgan Stanley, Dean
Witter Municipal
Funding, Inc. LIQ) 24,525,000
4,000,000 Tupper Lake, NY Central
School District, 4.00%
BANs, 7/13/2000 4,010,757
4,685,000 United Nations, NY
Development Corp., (PA-
155), Weekly VRDNs
(Merrill Lynch Capital
Services, Inc.
LIQ)/(Merrill Lynch
Capital Services, Inc.
LOC) 4,685,000
5,200,000 VRDC/IVRC Trust, (Series 1993B) Weekly VRDNs (Metropolitan
Transportation Authority, NY)/(AMBAC INS)/(Citibank
N.A., New York LIQ) 5,200,000
11,700,000 VRDC/IVRC Trust, (Series
1993G) Weekly VRDNs (St.
Lukes Roosevelt Hospital
Center)/(FHA INS)/(Chase
Manhattan Bank N.A., New
York LIQ) 11,700,000
7,500,000 Walden Village, NY IDA,
IDRB (Series 1994) Weekly
VRDNs (Spence Engineering
Co.)/(First Union National
Bank, Charlotte, NC LOC) 7,500,000
3,650,000 Wallkill, NY, 3.40% BANs,
4/28/2000 3,652,585
4,065,000 Warren & Washington
Counties, NY IDA Weekly
VRDNs (Sandy Hill
Corp.)/(First Union
National Bank, Charlotte,
NC LOC) 4,065,000
3,800,000 Wayne County, NY IDA,
(Series 1999) Weekly VRDNs
(Paul T. Freund
Corporation
Facility)/(Chase Manhattan
Bank N.A., New York LOC) 3,800,000
5,000,000 William Floyd UFSD, NY,
(Series 1999), 4.00% TANs,
6/30/2000 5,013,559
6,700,000 Wyoming County, NY IDA, (Series 1999A) Weekly VRDNs (TPI
Arcade, Inc.)/(Manufacturer's & Traders Trust Co.,
Buffalo, NY LOC) 6,700,000
TOTAL 633,692,547
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
PUERTO RICO-0.2%
$ 1,400,901 Commonwealth of Puerto
Rico Municipal Revenues
Collection Center, 1997A
Lease TOPS Trust Weekly
VRDNs (ABN AMRO Bank N.V.,
Amsterdam LIQ)/(State
Street Bank and Trust Co.
LOC) $ 1,400,901
TOTAL INVESTMENTS (AT
AMORTIZED COST) 3 $ 635,093,448
</TABLE>
Securitites that are subject to alternative minimum tax represents 30.0% of the
portfolio based upon 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 Corporation, 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 October 31, 1999, the portfolio securities were rated as follows:
Tier Rating Based on Total Market Value (Unaudited)
<TABLE>
<CAPTION>
FIRST TIER SECOND TIER
<S> <C>
93.0% 7.0%
</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 October 31, 1999, these securities
amounted to $57,375,000 which represents 9.0% of net assets.
3 Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($639,981,712) at October 31, 1999.
The following acronyms are used throughout this portfolio:
AMBAC -American Municipal Bond Assurance Corporation AMT -Alternative Minimum
Tax BANs -Bond Anticipation Notes FGIC -Financial Guaranty Insurance Company FHA
- -Federal Housing Administration FSA -Financial Security Assurance 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 PCR -Pollution Control Revenue RANs -Revenue Anticipation Notes 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
OCTOBER 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Total investments in
securities, at amortized
cost and value $ 635,093,448
Cash 414,939
Income receivable 5,479,211
Receivable for shares sold 77,220
TOTAL ASSETS 641,064,818
LIABILITIES:
Payable for shares
redeemed $ 36,171
Income distribution
payable 923,676
Accrued expenses 123,259
TOTAL LIABILITIES 1,083,106
Net assets for 639,981,712
shares outstanding $ 639,981,712
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PROCEEDS PER SHARE
INSTITUTIONAL SERVICE
SHARES:
$577,268,569 / 577,268,569
shares outstanding $1.00
CASH II SHARES:
$62,713,143 / 62,713,143
shares outstanding $1.00
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Operations
YEAR ENDED OCTOBER 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 22,092,410
EXPENSES:
Investment advisory fee $ 2,640,056
Administrative personnel
and services fee 497,651
Custodian fees 21,707
Transfer and dividend
disbursing agent fees and
expenses 136,245
Directors'/Trustees' fees 5,947
Auditing fees 12,464
Legal fees 12,782
Portfolio accounting fees 122,445
Distribution services fee-
Institutional Service
Shares 1,501,680
Distribution services fee-
Cash II Shares 148,355
Shareholder services fee-
Institutional Service
Shares 1,501,680
Shareholder services fee-
Cash II Shares 148,355
Share registration costs 54,071
Printing and postage 26,131
Insurance premiums 37,716
Miscellaneous 4,726
TOTAL EXPENSES 6,872,011
WAIVERS:
Waiver of investment
advisory fee $ (535,876)
Waiver of distribution
services fee-Institutional
Service Shares (1,501,680)
Waiver of distribution
services fee-Cash II
Shares (148,355)
Waiver of shareholder
services fee-Institutional
Service Shares (961,075)
TOTAL WAIVERS (3,146,986)
Net expenses 3,725,025
Net investment income 18,367,385
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31 1999 1998
<S> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net investment income $ 18,367,385 $ 17,525,524
DISTRIBUTIONS TO
SHAREHOLDERS:
Distributions from net
investment income
Institutional Service
Shares (16,781,325) (16,632,253)
Cash II Shares (1,586,060) (893,271)
CHANGE IN NET ASSETS
RESULTING FROM
DISTRIBUTIONS
TO SHAREHOLDERS (18,367,385) (17,525,524)
SHARE TRANSACTIONS:
Proceeds from sale of
shares 2,350,986,100 2,229,397,824
Net asset value of shares
issued to shareholders in
payment of
distributions declared 8,127,626 7,306,584
Cost of shares redeemed (2,276,100,170) (2,125,311,852)
CHANGE IN NET ASSETS
RESULTING FROM SHARE
TRANSACTIONS 83,013,556 111,392,556
Change in net assets 83,013,556 111,392,556
NET ASSETS:
Beginning of period 556,968,156 445,575,600
End of period $ 639,981,712 $ 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>
YEAR ENDED OCTOBER 31 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.03 0.03 0.03 0.03 0.04
LESS DISTRIBUTIONS:
Distributions from net investment income (0.03) (0.03) (0.03) (0.03) (0.04)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN 1 2.83% 3.19% 3.26% 3.24% 3.56%
RATIOS TO AVERAGE NET ASSETS:
Expenses 2 1.04% 1.05% 1.05% 1.07% 1.07%
Net investment income 2 2.30% 2.62% 2.69% 2.64% 2.96%
Expenses (after waivers) 0.55% 0.55% 0.53% 0.53% 0.54%
Net investment income (after waivers) 2.79% 3.12% 3.21% 3.18% 3.49%
SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $577,269 $513,011 $424,174 $305,533 $276,149
</TABLE>
1 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
2 During the period, certain fees were voluntarily waived. If such 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>
YEAR ENDED OCTOBER 31 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.03 0.03 0.03 0.03 0.03
LESS DISTRIBUTIONS:
Distributions from net investment income (0.03) (0.03) (0.03) (0.03) (0.03)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN 1 2.67% 3.02% 3.07% 3.05% 3.37%
RATIOS TO AVERAGE NET ASSETS:
Expenses 2 1.04% 1.05% 1.05% 1.07% 1.07%
Net investment income 2 2.34% 2.64% 2.67% 2.66% 2.84%
Expenses (after waivers) 0.71% 0.71% 0.71% 0.71% 0.71%
Net investment income (after waivers) 2.67% 2.98% 3.01% 3.02% 3.20%
SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $62,713 $43,957 $21,402 $25,571 $14,439
</TABLE>
1 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
2 During the period, certain fees were voluntarily waived. If such 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
OCTOBER 31, 1999
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 investment
objective of the Fund is current income exempt from federal regular income tax,
personal income taxes imposed by New York State and New York municipalities
consistent with stability of principal. The Fund offers two classes of shares:
Institutional Service Shares and Cash II Shares.
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 provision for federal tax is
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 October 31, 1999, capital paid-in aggregated $639,981,712.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31 1999 1998
<S> <C> <C>
INSTITUTIONAL SERVICE
SHARES:
Shares sold 2,149,483,090 2,064,643,976
Shares issued to
shareholders in payment of
distributions declared 6,777,794 6,586,980
Shares redeemed (2,092,003,780) (1,982,393,236)
NET CHANGE RESULTING FROM
INSTITUTIONAL SERVICE
SHARE TRANSACTIONS 64,257,104 88,837,720
<CAPTION>
YEAR ENDED OCTOBER 31 1999 1998
<S> <C> <C>
CASH II SHARES:
Shares sold 201,503,010 164,753,848
Shares issued to
shareholders in payment of
distributions declared 1,349,832 719,604
Shares redeemed (184,096,390) (142,918,616)
NET CHANGE RESULTING FROM
CASH II SHARE TRANSACTIONS 18,756,452 22,554,836
NET CHANGE RESULTING FROM
SHARE TRANSACTIONS 83,013,556 111,392,556
</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 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 fiscal year ended October 31, 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 and amounted to $862,454,000 and
$698,325,000, 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
October 31, 1999, 62.6% 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 9.6% of total investments.
YEAR 2000 (UNAUDITED)
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.
CHANGE OF INDEPENDENT AUDITOR (UNAUDITED)
On May 19, 1999, the Fund's Trustees upon the recommendation of its Audit
Committee, requested and subsequently accepted the resignation of Arthur
Andersen LLP ("AA") as the Fund's independent auditors. AA's reports on the
Fund's financial statements for the fiscal years ended October 31, 1997, and
October 31, 1998, contained no adverse opinion or disclaimer of opinion, nor
were they qualified or modified as to uncertainty, audit scope or accounting
principles. During the Fund's fiscal years ended October 31, 1997 and October
31, 1998: (i) there were no disagreements with AA on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure, which disagreements, if not resolved to the satisfaction of AA, would
have caused it to make reference to the subject matter of the disagreements in
connection with its report on the financial statements for such years; and (ii)
there were no reportable events of the kind described in Item 304(a)(1)(v) of
Regulation S-K under the Securities Exchange Act of 1934, as amended.
The Fund, by action of its Trustees, upon the recommendation of the Audit
Committee of the Trustees, has engaged Ernst & Young LLP ("E&Y") as the
independent auditors to audit the Fund's financial statements for the fiscal
year ending October 31, 1999. During the fiscal years ended October 31, 1997 and
October 31, 1998, neither the Fund, nor anyone on its behalf has consulted E&Y
on items which (i) concerned the application of accounting principles to a
specified transaction, either completed or proposed, or the type of audit
opinion that might be rendered on the Fund's financial statements, or (ii)
concerned the subject of a disagreement (as defined in paragraph (a)(1)(iv) of
Item 304 of Regulation S-K) or reportable events (as described in paragraph
(a)(1)(v) of said Item 304).
Report of Ernst & Young LLP, Independent Auditors
TO THE BOARD OF TRUSTEES OF FEDERATED MUNICIPAL TRUST AND SHAREHOLDERS OF NEW
YORK MUNICIPAL CASH TRUST:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of the New York Municipal Cash Trust (one of the
portfolios constituting the Federated Municipal Trust) as of October 31, 1999,
and the related statement of operations, the statement of changes in net assets,
and the financial highlights for the year then ended. These financial statements
and financial highlights are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit. The statement of changes in net assets
for the year ended October 31, 1998 and the financial highlights for each of the
periods indicated therein for the period then ended were audited by other
auditors whose report, dated December 23, 1998, expressed an unqualified opinion
on that statement and those financial highlights.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in financial statements and
financial highlights. Our procedures included confirmation of securities owned
as of October 31, 1999, by correspondence with the custodian. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
New York Municipal Cash Trust of the Federated Municipal Trust at October 31,
1999, and the results of its operations, changes in its net assets and financial
highlights for the year then ended, in conformity with generally accepted
accounting principles.
[Graphic]
Boston, Massachusetts
December 16, 1999
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
JOHN W. MCGONIGLE
Executive Vice President and Secretary
EDWARD C. GONZALES
Executive Vice President
RICHARD B. FISHER
Vice President
RICHARD J. THOMAS
Treasurer
LESLIE K. ROSS
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 trust's prospectus which contains facts
concerning its objective and policies, management fees, expenses, and other
information.
[Graphic]
Federated
World-Class Investment Manager
ANNUAL REPORT
New York Municipal Cash Trust
ANNUAL REPORT TO SHAREHOLDERS
OCTOBER 31, 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 314229741
Cusip 314229733
G00207-01 (12/99)
[Graphic]
ANNUAL REPORT
President's Message
Dear Shareholder:
I am pleased to present the Annual Report to Shareholders of Ohio Municipal Cash
Trust, which covers the 12-month period from November 1, 1998 through October
31, 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- through a
portfolio concentrated in high-quality, short-term Ohio 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 of $0.03
per share for Institutional Shares, $0.03 per share for Institutional Service
Shares and $0.03 per share for Cash II Shares. The fund's net assets totaled
$315.8 million at the end of the reporting period.
You can count on Ohio Municipal Cash Trust to seek the best tax-free income
opportunities for your cash investment needs. 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
December 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 REPORTING PERIOD?
Perhaps the biggest issues threatening the U.S. economy in the latter half of
1998 were alleviated by the second quarter of 1999. The improvements in
international economies, particularly Asia, and calm foreign markets laid the
foundation for the Federal Reserve Board (the "Fed") to focus on U.S. economic
releases as a better indicator of the inflation picture. The Fed became
increasingly concerned with inflationary pressures from tighter labor markets
and rising equity wealth. For the most part inflationary forces remained tame
during 1999 with increases in some commodity prices, such as oil. Nevertheless,
the Fed began a series of three rate increases, citing tighter labor markets,
shrinking productivity gains and growth in demand. The moves came in June,
August and November; each time, the Fed voted to raise the federal funds target
rate by a quarter point.
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"), which comprise more than 50% of the fund's assets, started the period
in the 3.00% range, but moved sharply higher in December to the 4.00% level as
supply and demand imbalances occurred. Yields then declined in January, as
investors looked to reinvest coupon payments and year end selling pressures
eased. Yields averaged slightly over 2.75% during February and March before
rising to the 4.00% range in April due to traditional tax season payment
pressures. Over the summer months, yields remained mostly in a band between
3.00% and 3.50%, but rose sharply in September as cash outflows in the municipal
markets pushed rates as high as 3.85%. VRDN yields ended the reporting period at
3.50%. Over the reporting period, VRDN yields averaged roughly 66% of taxable
rates, making them attractive for investors in the highest two 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, have 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 municipal
securities, relative to their taxable counterparts, relatively expensive.
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 46 days. A large redemption at the beginning of 1999 resulted in a
64 day maturity in early January, which benefited the fund due to higher
fixed-rate note exposure. For the balance of the year, the maturity slowly
declined to 32 days by the end of August as we declined to purchase fixed-rate
notes as the Fed was tightening. In September, the fund was able to take
advantage of attractive fixed-rate note opportunities and the average maturity
ended the period at 49 days. 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. Once an average
maturity range was targeted taking into account Federal Reserve monetary policy,
the portfolio maximized 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 municipals to taxable
instruments, such as treasury securities. This portfolio structure continued to
provide a competitive yield over time.
WHAT IS YOUR OUTLOOK GOING FORWARD?
The Fed, concerned by persistent above-trend growth in an environment where
labor markets are constrained and productivity gains are narrowing, will likely
remain on hold until the first quarter of 2000. It is likely that we will see
one and possibly two interest rate increases in the first half of 2000. 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
OCTOBER 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
99.5% 1
OHIO-99.5%
$ 50,000 Akron, Bath & Copley, OH
Joint Township Weekly
VRDNs (Visiting
Nurses)/(National City
Bank, Ohio LOC) $ 50,000
7,465,000 Ashland County, OH Health
Care Weekly VRDNs
(Brethren Care,
Inc.)/(FirstMerit Bank,
N.A. LOC) 7,465,000
2,000,000 Banc One Capital Higher
Education Tax-Exempt
Income Trust, (Series 2
Certificates of Ownership)
Weekly VRDNs (Bank One,
Kentucky LOC) 2,000,000
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 1,400,221
4,000,000 Brookville, OH, (Series
1988) Weekly VRDNs (Green
Tokai)/(Bank of Tokyo-
Mitsubishi Ltd. LOC) 4,000,000
5,750,000 Clark County, OH,
Multifamily Housing
Revenue Bonds (Series
1997) Weekly VRDNs (Ohio
Masonic Home)/(Huntington
National Bank, Columbus,
OH LOC) 5,750,000
1,920,000 Clermont County, OH,
Variable Rate IDRB's
(Series 1997) Weekly VRDNs
(Buriot International,
Inc.)/(KeyBank, N.A. LOC) 1,920,000
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,
Industrial Development
Revenue Bonds 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
4,000,000 Cuyahoga County, OH IDA
Weekly VRDNs (Cleveland
Gear Co.)/(KeyBank,
N.A. LOC) 4,000,000
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
3,350,000 Cuyahoga County, OH IDA
Weekly VRDNs (Watt
Printers)/(Bank One, Ohio,
N.A. LOC) 3,350,000
2,500,000 Cuyahoga County, OH IDA,
(Series 1988) Weekly VRDNs
(Trebmal
Landerhaven)/(Firstar
Bank, N.A., Cincinnati
LOC) 2,500,000
2,860,000 Cuyahoga County, OH IDA,
(Series 1997) Weekly VRDNs
(Northstar Plastics,
Inc.)/(Bank One, Ohio,
N.A. LOC) 2,860,000
2,500,000 Cuyahoga County, OH IDA,
(Series 1999) Weekly VRDNs
(Kowalski Heat Treating
Co.)/(FirstMerit Bank,
N.A. LOC) 2,500,000
75,000 Cuyahoga County, OH IDA,
IDRB (Series 1995) Weekly
VRDNs (Avalon Precision
Casting Co.
Project)/(KeyBank, N.A.
LOC) 75,000
1,500,000 Dayton, OH, (Series 1999),
3.40% BANs, 3/3/2000 1,500,734
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
OHIO-CONTINUED
$ 1,550,000 Delaware County, OH, IDRB
(Series 1995) Weekly VRDNs
(Air Waves, Inc.
Project)/(KeyBank, N.A.
LOC) $ 1,550,000
2,300,000 Dover, OH, 3.60% BANs,
5/25/2000 2,303,754
4,850,000 Erie County, OH,
Adjustable Rate Demand
Health Care Facilities
Bonds (Series 1996A)
Weekly VRDNs (Providence
Care Center)/(Fifth Third
Bank of Northwestern OH
LOC) 4,850,000
1,000,000 Franklin County, OH
Hospital Facility
Authority, (Series 1992)
Weekly VRDNs (Wesley
Glenn, Inc.)/(Fifth Third
Bank, Cincinnati LOC) 1,000,000
1,000,000 Franklin County, OH
Hospital Facility
Authority, Revenue
Refunding and Improvement
Bonds (Series B), 7.60%
Bonds (Riverside United
Methodist
Hospital)/(United States
Treasury PRF), 5/15/2000
(@102) 1,042,501
4,500,000 Franklin County, OH IDA
Weekly VRDNs (Heekin Can,
Inc.)/(PNC Bank, N.A. LOC) 4,500,000
2,620,000 Franklin County, OH IDA
Weekly VRDNs (Promark
Electronics, Inc.)/(Bank
One, Ohio, N.A. LOC) 2,620,000
2,690,000 Franklin County, OH IDA
Weekly VRDNs (Unicorn
Leasing Corp.)/(Fifth
Third Bank, Cincinnati
LOC) 2,690,000
2,950,000 Franklin County, OH IDA,
(Series 1995) Weekly VRDNs
(Fabcon L.L.C.
Project)/(Norwest Bank
Minnesota, N.A. LOC) 2,950,000
4,900,000 Franklin County, OH IDA,
Adjustable Rate Demand
IDRB's (Series 1996A)
Weekly VRDNs (Carams,
Ltd.)/(Huntington National
Bank, Columbus, OH LOC) 4,900,000
1,505,000 Franklin County, OH IDA,
Adjustable Rate Demand
IDRB's (Series 1996B)
Weekly VRDNs (Carams,
Ltd.)/(Huntington National
Bank, Columbus, OH LOC) 1,505,000
2,500,000 Franklin County, OH, 4.05%
TOBs (Blacklick Station
Apartments)/(Fifth Third
Bank, Cincinnati LOC)
10/1/2000 2,500,000
1,615,000 Franklin County, OH,
Adjustable Rate Demand
Economic Development
Revenue Refunding Bonds
(Series 1996) Weekly VRDNs
(CPM
Investments)/(Huntington
National Bank, Columbus,
OH LOC) 1,615,000
1,650,000 Geauga County, OH Park
District, 3.48% BANs,
12/9/1999 1,650,382
1,605,000 Genoa Village, OH, (Series
1999) Weekly VRDNs (Genoa
Health Care Center)/(Fifth
Third Bank of Northwestern
OH LOC) 1,605,000
1,560,000 Hamilton, OH, Issues I & IV (Series 1999), 3.64% BANs,
6/9/2000 1,562,643
2,730,000 Hamilton, OH, Issues V-VI &
VIII (Series 1999), 3.64%
BANs, 6/9/2000 2,734,624
7,195,000 Henry County, OH, Series
1996 Automatic Feed
Project Weekly VRDNs
(Huntington National Bank,
Columbus, OH LOC) 7,195,000
1,510,000 Hilliard, OH, Adjustable
Rate IDRB's (Series 1996)
Weekly VRDNs (Medex,
Inc.)/(Bank One, Ohio,
N.A. LOC) 1,510,000
1,600,000 Holmes County, OH IDA
Weekly VRDNs (Poultry
Processing)/(Rabobank
Nederland, Utrecht LOC) 1,600,000
8,000,000 Huber Heights, OH, IDR
Series 1999 Weekly VRDNs
(Paxar Corp.)/(SunTrust
Bank, Atlanta LOC) 8,000,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
OHIO-CONTINUED
$ 1,015,000 Huber Heights, OH, IDRB
(Series 1994) Weekly VRDNs
(Lasermike, Inc.
Project)/(KeyBank, N.A.
LOC) $ 1,015,000
1,500,000 Kent, OH, Adjustable Rate
IDRB's (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 IDRB's
(Series 1996) Weekly VRDNs
(Apsco Properties,
LTD.)/(FirstMerit Bank,
N.A. LOC) 2,990,000
2,050,000 Lorain County, OH Weekly
VRDNs (Ohio Metallurgical
Service, Inc.)/(FirstMerit
Bank, N.A. LOC) 2,050,000
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
1,030,000 Lorain Port Authority, OH,
Adjustable Rate Demand
Port Development Refunding
Revenue Bonds (Series
1996) Weekly VRDNs
(Spitzer Project)/(Bank
One, Ohio, N.A. LOC) 1,030,000
8,305,000 Lorain Port Authority, OH,
IDRB (Series 1996) Weekly
VRDNs (Brush Wellman,
Inc.)/(National City Bank,
Ohio LOC) 8,305,000
1,920,000 Lucas County, OH, 4.28%
BANs, 10/19/2000 1,926,759
1,375,000 Lucas County, OH, Hospital
Facility Improvement
Revenue Bonds (Series 93)
Weekly VRDNs (Lott
Industries,
Inc.)/(National City Bank,
Ohio LOC) 1,375,000
190,000 Lucas County, OH, Hospital
Improvement Revenue Weekly
VRDNs (Sunshine Children's
Home)/(National City Bank,
Ohio LOC) 190,000
5,000,000 Mahoning County, OH IDA,
(Series 1999) Weekly VRDNs
(Modern Builders Supply,
Inc.)/(PNC Bank, N.A. LOC) 5,000,000
5,325,000 Mahoning County, OH
Multifamily HFA Weekly
VRDNs (International
Towers, Inc.)/(PNC Bank,
N.A. LOC) 5,325,000
40,000 Mansfield, OH, IDR Weekly
VRDNs (Designed Metal
Products, Inc.)/(Bank One,
Ohio, N.A. LOC) 40,000
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
585,000 Marion County, OH Hospital
Authority, (Series 1991)
Weekly VRDNs (Marion
County, OH Pooled Hospital
Program)/(Bank One, Ohio,
N.A. LOC) 585,000
3,250,000 Mayfield Village, OH IDA
Weekly VRDNs (Beta Campus
Co.)/(KeyBank, N.A. LOC) 3,250,000
5,000,000 Medina County, OH Weekly
VRDNs (Three D Metals,
Inc.)/(Bank One, Ohio,
N.A. LOC) 5,000,000
2,740,000 Medina County, OH, (Series
1998) Weekly VRDNs
(Michael Day
Enterprises)/(KeyBank,
N.A. LOC) 2,740,000
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
5,000,000 Montgomery County, OH
Hospital Authority,
Variable Rate Hospital
Facilities Revenue Bonds
(1985 Series B), 3.55% CP
(Miami (OH) Valley
Hospital)/(Northern Trust
Co., Chicago, IL LOC),
Mandatory Tender 1/21/2000 5,000,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
OHIO-CONTINUED
$ 6,400,000 Montgomery County, OH,
(Series 1998B), 3.70% CP
(Miami (OH) Valley
Hospital), Mandatory
Tender 2/8/2000 $ 6,400,000
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
625,000 North Olmsted, OH IDA,
3.95% TOBs (Therm-
All)/(National City Bank,
Ohio LOC), Optional Tender
2/1/2000 625,000
1,055,000 Ohio HFA Weekly VRDNs (Westchester Village)/(KeyBank, N.A.
LOC) 1,055,000
6,620,000 Ohio HFA, 3.15% TOBs
(Lincoln Park
Associates)/(Bank One,
Ohio, N.A. LOC), Optional
Tender 11/1/1999 6,620,000
2,610,000 Ohio HFA, PT-122 Weekly
VRDNs (GNMA COL)/(Banco
Santander Central Hispano,
S.A. LIQ) 2,610,000
4,105,000 Ohio HFA, Single Family Mortgage (Series PT-71), 3.175% TOBs
(GNMA COL)/(Commerzbank AG, Frankfurt LIQ), Optional
Tender 2/17/2000 4,105,000
20,000,000 2 Ohio HFA, Variable Rate
Certificates (Series
1998Q), 3.68% TOBs (GNMA
COL)/(Bank of America,
N.A. LIQ), Optional Tender
7/20/2000 20,000,000
7,000,000 Ohio HFA, Variable Rate Certificates (Series 1999Q) Weekly
VRDNs (GNMA COL)/(Bank of America,
N.A. LIQ) 7,000,000
6,295,000 Ohio State Air Quality
Development Authority,
4.30% TOBs (Ohio Edison
Co.)/(Deutsche Bank AG
LOC), Optional Tender
9/1/2000 6,315,251
1,000,000 Ohio State Building
Authority, Local Jail
Improvements (Series A),
7.30% Bonds (United States
Treasury PRF), 4/1/2000
(@102) 1,036,318
10,000,000 Ohio State Higher
Education Facility,
(Series 1999) Weekly VRDNs
(Higher Education Pooled
Financing 1999 Program)/
(Fifth Third Bank,
Cincinnati LOC) 10,000,000
3,000,000 Ohio State Water
Development Authority, PCR
Refunding Bonds Weekly
VRDNs (General Motors
Corp.) 3,000,000
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
835,000 Ohio State, IDR (Series
1991) Weekly VRDNs
(Standby Screw,
Inc.)/(National City Bank,
Ohio LOC) 835,000
1,100,000 Ohio State, IDRB (Series
1994) Weekly VRDNs
(Anomatic Corp.)/(National
City Bank, Ohio LOC) 1,100,000
800,000 Orrville, OH IDA Weekly
VRDNs (O.S.
Associates/Contours,
Inc.)/(National City Bank,
Ohio LOC) 800,000
3,870,000 Portage County, OH IDA,
Adjustable Rate IDRB's
(Series 1996) Weekly VRDNs
(Barnette
Project)/(National City
Bank, Ohio LOC) 3,870,000
645,000 Portage County, OH IDA,
Industries Revenue Bonds
Weekly VRDNs (Lovejoy
Industries)/(Firstar Bank,
N.A., Cincinnati LOC) 645,000
1,750,000 Solon, OH, 3.60% BANs,
6/15/2000 1,753,678
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
OHIO-CONTINUED
$ 320,000 Solon, OH, IDR Weekly VRDNs
(Graphic
Laminating)/(KeyBank, N.A.
LOC) $ 320,000
1,055,000 Springfield, OH, 3.70%
BANs, 6/16/2000 1,056,906
600,000 Stark County, OH IDR Weekly
VRDNs (Sancap Abrasives,
Inc.)/(KeyBank, N.A. LOC) 600,000
3,545,000 Stark County, OH IDR Weekly
VRDNs (Shearer's Foods,
Inc.)/(Bank One, Ohio,
N.A. LOC) 3,545,000
1,845,000 Stark County, OH IDR,
(Series 1994) Weekly VRDNs
(Wilkof Morris)/(KeyBank,
N.A. LOC) 1,845,000
1,150,000 Stark County, OH IDR, IDRB
(Series 1996) Weekly VRDNs
(Foundations Systems and
Anchors, Inc.
Project)/(Bank One, Ohio,
N.A. LOC) 1,150,000
1,240,000 Strongsville, OH Weekly
VRDNs (Monarch Engraving,
Inc.)/(FirstMerit Bank,
N.A. LOC) 1,240,000
1,100,000 Strongsville, OH, (Series
1), 3.98% BANs, 10/19/2000 1,101,835
1,065,000 Strongsville, OH, IDRB
(Series 1994) Weekly VRDNs
(Nutro Machinery Corp.,
Project)/(Huntington
National Bank, Columbus,
OH LOC) 1,065,000
2,000,000 Summit County, OH IDR
Weekly VRDNs (Maison Aine
Limited Partnership)/(Bank
of America, N.A. LOC) 2,000,000
4,500,000 Summit County, OH IDR,
(Series 1994) Weekly VRDNs
(Harry London Candies,
Inc.)/(KeyBank, N.A. LOC) 4,500,000
1,100,000 Summit County, OH IDR,
(Series 1997) Weekly VRDNs
(Baker McMillen
Co.)/(National City Bank,
Ohio LOC) 1,100,000
2,880,000 Summit County, OH IDR,
(Series 1997) Weekly VRDNs
(Malco Products,
Inc.)/(Bank One, Ohio,
N.A. LOC) 2,880,000
1,985,000 Summit County, OH IDR,
(Series 1998B) Weekly VRDNs (Waldonia Investment)/(KeyBank,
N.A.
LOC) 1,985,000
915,000 Summit County, OH IDR,
3.45% TOBs (Rogers
Industrial Products,
Inc.)/(Bank One, Ohio,
N.A. LOC), Optional Tender
11/1/1999 915,000
500,000 Summit County, OH IDR,
3.60% TOBs (Bechmer-Boyce
Project)/(KeyBank, N.A.
LOC), Mandatory Tender
1/15/2000 500,000
650,000 Summit County, OH IDR,
3.90% TOBs (Universal
Rack)/(National City Bank,
Ohio LOC), Optional Tender
3/1/2000 650,000
775,000 Summit County, OH IDR,
3.95% TOBs (Matech Machine
Tool Co.)/(Bank One, Ohio,
N.A. LOC), Optional Tender
2/1/2000 775,000
1,275,000 Summit County, OH IDR,
Adjustable Rate IDRB's
(Series 1996) Weekly VRDNs
(Fomo Products,
Inc.)/(FirstMerit Bank,
N.A. LOC) 1,275,000
670,000 Summit County, OH IDR,
Bonds (Series 1994) Weekly
VRDNs (Austin Printing
Co., Inc.)/(Bank One,
Ohio, N.A. LOC) 670,000
2,180,000 Summit County, OH IDR, IDRB
(Series 1994B) Weekly
VRDNs (Harry London
Candies, Inc.)/(KeyBank,
N.A. LOC) 2,180,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
OHIO-CONTINUED
$ 665,000 Summit County, OH IDR, IDRB
(Series 1995) Weekly VRDNs
(Cardtech Project
(OH))/(KeyBank, N.A. LOC) $ 665,000
825,000 Summit County, OH IDR,
Multi-Mode Variable Rate I
Weekly VRDNs
(Mastergraphics, Inc.
Project)/(KeyBank, N.A.
LOC) 825,000
2,130,000 Summit County, OH IDR,
Variable Rate IDRB's
(Series 1998A) Weekly
VRDNs (Wintek
Ltd.)/(FirstMerit Bank,
N.A. LOC) 2,130,000
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
1,900,000 Trumbull County, OH IDA,
(Series 1989) Weekly VRDNs (McDonald Steel Corp.)/(PNC Bank,
N.A.
LOC) 1,900,000
1,235,000 Trumbull County, OH IDA,
IDR Refunding Bonds
(Series 1994) Weekly VRDNs
(Churchill Downs,
Inc.)/(Bank One, Ohio,
N.A. LOC) 1,235,000
1,445,000 Tuscarawas County, OH,
Adjustable Rate IDRB's
(Series 1995) Weekly VRDNs
(Primary Packaging,
Inc.)/(FirstMerit Bank,
N.A. LOC) 1,445,000
1,925,000 Valley View, OH, 3.70%
BANs, 3/16/2000 1,927,244
1,000,000 Walnut Hills, OH High
School Alumni Foundation,
(Series 1998) Weekly VRDNs
(Fifth Third Bank,
Cincinnati LOC) 1,000,000
1,580,000 Wayne County, OH, Health
Care Facility Revenue
Bonds (Series 1995) Weekly
VRDNs (D & M Realty
Project)/(Bank One, Ohio,
N.A. LOC) 1,580,000
2,560,000 Williams County, OH,
Multi-Mode Variable Rate
IDRB's (Series 1996)
Weekly VRDNs (Allied
Moulded Products,
Inc.)/(KeyBank, N.A. LOC) 2,560,000
980,000 Willoughby City, OH, IDR
Refunding Bonds (Series
1995A) Weekly VRDNs (Pine
Ridge Shopping Center
Company Project)/(Firstar
Bank, N.A., Cincinnati
LOC) 980,000
1,035,000 Willoughby City, OH, IDR
Revenue Bonds (Series 1995
B) Weekly VRDNs (Pine Ridge
Shopping Center Company
Project)/(Firstar Bank,
N.A., Cincinnati LOC) 1,035,000
800,000 Wood County, OH Weekly
VRDNs (Principle Business
Enterprises)/(National
City Bank, Ohio LOC) 800,000
3,500,000 Wood County, OH, (Series
1999) Weekly VRDNs (Dowa
THT America,
Inc.)/(Comerica Bank LOC) 3,500,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
OHIO-CONTINUED
$ 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
Industries Service Inc,
Project Weekly VRDNs
(Williams Industrial
Service, Inc.)/(Huntington
National Bank, Columbus,
OH LOC) 980,000
3,720,000 Youngstown, OH, Adjustable
Rate Demand IDRB's (Series
1996A) Weekly VRDNs
(Cantar/Polyair
Corp./Performa
Corp.)/(HSBC Bank USA LOC) 3,720,000
TOTAL INVESTMENTS (AT
AMORTIZED COST) 3 $ 314,137,850
</TABLE>
Securities that are subject to alternative minimum tax represent 67.9% 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 Corporation, MIG-1, or MIG-2 by Moody's Investors Service, 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 October 31, 1999, the portfolio securities were rated as follows:
Tier Rating Based on Total Market Value (Unaudited)
<TABLE>
<CAPTION>
FIRST TIER Second Tier
<S> <C>
100.00% 00.00%
</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 October 31, 1999, these securities
amounted to $20,000,000 which represents 6.3% of net assets.
3 Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($315,765,155) at October 31, 1999.
The following acronyms are used throughout this portfolio:
BANs -Bond Anticipation Notes
COL -Collateralized
CP -Commercial Paper
EDRB -Economic Development Revenue Bonds GNMA -Government National Mortgage
Association HFA -Housing Finance Authority IDA -Industrial Development Authority
IDR -Industrial Development Revenue IDRB -Industrial Development Revenue Bond
LIQ -Liquidity Agreement LOC -Letter of Credit PCR -Pollution Control Revenue
PRF -Prerefunded 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
OCTOBER 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Total investments in
securities, at amortized
cost and value $ 314,137,850
Cash 581,548
Income receivable 1,753,519
Receivable for shares sold 20,443
TOTAL ASSETS 316,493,360
LIABILITIES:
Payable for shares
redeemed $ 91,702
Income distribution
payable 491,107
Accrued expenses 145,396
TOTAL LIABILITIES 728,205
Net assets for 315,765,155
shares outstanding $ 315,765,155
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PROCEEDS PER SHARE
INSTITUTIONAL SERVICE
SHARES:
$90,294,574 / 90,294,574
shares outstanding $1.00
CASH II SHARES:
$117,596,224 / 117,596,224
shares outstanding $1.00
INSTITUTIONAL SHARES:
$107,874,357 / 107,874,357
shares outstanding $1.00
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Operations
YEAR ENDED OCTOBER 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 12,446,758
EXPENSES:
Investment advisory fee $ 1,448,289
Administrative personnel
and services fee 273,002
Custodian fees 17,841
Transfer and dividend
disbursing agent fees and
expenses 184,259
Directors'/Trustees' fees 3,700
Auditing fees 13,279
Legal fees 27,108
Portfolio accounting fees 90,439
Distribution services fee-
Cash II Shares 401,851
Shareholder services fee-
Institutional Service
Shares 243,864
Shareholder services fee-
Cash II Shares 334,876
Shareholder services fee-
Institutional Shares 324,999
Share registration costs 54,966
Printing and postage 28,855
Insurance premiums 23,757
Miscellaneous 3,640
TOTAL EXPENSES 3,474,725
WAIVERS:
Waiver of investment
advisory fee $ (813,537)
Waiver of distribution
services fee-Cash II
Shares (66,975)
Waiver of shareholder
services fee-Institutional
Service Shares (48,773)
Waiver of shareholder
services fee-Institutional
Shares (324,999)
TOTAL WAIVERS (1,254,284)
Net expenses 2,220,441
Net investment income 10,226,317
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31 1999 1998
<S> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net investment income $ 10,226,317 $ 13,532,686
DISTRIBUTIONS TO
SHAREHOLDERS:
Distributions from net
investment income
Institutional Service
Shares (2,810,726) (2,641,476)
Cash II Shares (3,395,888) (8,076,502)
Institutional Shares (4,019,703) (2,814,708)
CHANGE IN NET ASSETS
RESULTING FROM
DISTRIBUTIONS
TO SHAREHOLDERS (10,226,317) (13,532,686)
SHARE TRANSACTIONS:
Proceeds from sale of
shares 1,437,132,752 2,158,852,726
Net asset value of shares
issued to shareholders in
payment of
distributions declared 3,824,029 8,564,300
Cost of shares redeemed (1,694,429,001) (1,979,838,390)
CHANGE IN NET ASSETS
RESULTING FROM SHARE
TRANSACTIONS (253,472,220) 187,578,636
Change in net assets (253,472,220) 187,578,636
NET ASSETS:
Beginning of period 569,237,375 381,658,739
End of period $ 315,765,155 $ 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>
YEAR ENDED OCTOBER 31 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.03 0.03 0.03 0.03 0.04
LESS DISTRIBUTIONS:
Distributions from net investment income (0.03) (0.03) (0.03) (0.03) (0.04)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN 1 2.90% 3.22% 3.29% 3.27% 3.61%
RATIOS TO AVERAGE NET ASSETS:
Expenses 2 0.85% 0.85% 0.85% 0.88% 0.86%
Net investment income 2 2.60% 2.89% 2.97% 2.92% 3.27%
Expenses (after waivers) 0.57% 0.57% 0.57% 0.57% 0.57%
Net investment income (after waivers) 2.88% 3.17% 3.25% 3.23% 3.56%
SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $90,294 $94,896 $80,619 $59,721 $72,931
</TABLE>
1 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
2 During the period, certain fees were voluntarily waived. If such 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>
YEAR ENDED OCTOBER 31 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.03 0.03 0.03 0.03 0.03
LESS DISTRIBUTIONS:
Distributions from net investment income (0.03) (0.03) (0.03) (0.03) (0.03)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN 1 2.59% 2.91% 2.98% 2.96% 3.30%
RATIOS TO AVERAGE NET ASSETS:
Expenses 2 1.15% 1.15% 1.15% 1.18% 1.16%
Net investment income 2 2.26% 2.58% 2.66% 2.61% 2.96%
Expenses (after waivers) 0.87% 0.87% 0.87% 0.87% 0.87%
Net investment income (after waivers) 2.54% 2.86% 2.94% 2.92% 3.25%
SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $117,596 $342,946 $245,329 $206,149 $188,234
</TABLE>
1 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
2 During the period, certain fees were voluntarily waived. If such 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>
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 0.03 0.03 0.03 0.02
LESS DISTRIBUTIONS:
Distributions from net investment income (0.03) (0.03) (0.03) (0.02)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN 2 3.10% 3.43% 3.49% 2.22%
RATIOS TO AVERAGE NET ASSETS:
Expenses 3 0.86% 0.86% 0.85% 0.88% 4
Net investment income 3 2.60% 2.91% 2.92% 2.87% 4
Expenses (after waivers) 0.38% 0.38% 0.37% 0.37% 4
Net investment income (after waivers) 3.08% 3.39% 3.40% 3.38% 4
SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $107,874 $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 During the period, certain fees were voluntarily waived. If such waivers had
not occurred, the ratios would have been as indicated.
4 Computed on an annualized basis.
See Notes which are an integral part of the Financial Statements
Notes to Financial Statements
OCTOBER 31, 1999
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 exempt from federal regular income tax and the personal income taxes
imposed by the State of Ohio and Ohio 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 October 31, 1999, capital paid-in aggregated $315,765,155.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31 1999 1998
<S> <C> <C>
INSTITUTIONAL SERVICE
SHARES:
Shares sold 253,460,934 311,583,533
Shares issued to
shareholders in payment of
distributions declared 667,036 576,992
Shares redeemed (258,729,340) (297,884,069)
NET CHANGE RESULTING FROM
INSTITUTIONAL SERVICE
SHARE TRANSACTIONS (4,601,370) 14,276,456
<CAPTION>
YEAR ENDED OCTOBER 31 1999 1998
<S> <C> <C>
CASH II SHARES:
Shares sold 450,064,259 1,005,297,220
Shares issued to
shareholders in payment of
distributions declared 2,990,343 7,890,344
Shares redeemed (678,404,876) (915,569,899)
NET CHANGE RESULTING FROM
CASH II SHARE TRANSACTIONS (225,350,274) 97,617,665
<CAPTION>
YEAR ENDED OCTOBER 31 1999 1998
<S> <C> <C>
INSTITUTIONAL SHARES:
Shares sold 733,607,559 841,971,973
Shares issued to
shareholders in payment of
distributions declared 166,650 96,964
Shares redeemed (757,294,785) (766,384,422)
NET CHANGE RESULTING FROM
INSTITUTIONAL SHARE
TRANSACTIONS (23,520,576) 75,684,515
NET CHARGE RESULTING FROM
SHARE TRANSACTIONS (253,472,220) 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 Trust'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 FSS 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 October 31, 1999, the Trust 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 and amounted to $662,545,000 and $840,943,000,
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
October 31, 1999, 86.0% 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 (UNAUDITED)
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.
CHANGE OF INDEPENDENT AUDITOR (UNAUDITED)
On May 19, 1999, the Fund's Trustees, upon the recommendation of its Audit
Committee, requested and subsequently accepted the resignation of Arthur
Andersen LLP ("AA") as the Fund's independent auditors. AA's reports on the
Fund's financial statements for the fiscal years ended October 31, 1997 and
October 31, 1998 contained no adverse opinion or disclaimer of opinion nor were
they qualified or modified as to uncertainty, audit scope or accounting
principles. During the Fund's fiscal years ended October 31, 1997 and October
31, 1998: (i) there were no disagreements with AA on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure, which disagreements, if not resolved to the satisfaction of AA, would
have caused it to make reference to the subject matter of the disagreements in
connection with its reports on the financial statements for such years; and (ii)
there were no reportable events of the kind described in Item 304 (a)(1)(v) of
Regulation S-K under the Securities Exchange Act of 1934, as amended.
The Fund, by action of its Trustees, upon the recommendation of the Audit
Committee, has engaged Ernst & Young LLP ("E&Y") as the independent auditors to
audit the Fund's financial statements for the fiscal year ended October 31,
1999. During the Fund's fiscal years ended October 31, 1997 and October 31,
1998, neither the Fund nor anyone on its behalf has consulted E&Y on items which
(i) concerned the application of accounting principles to a specified
transaction, either completed or proposed, or the type of audit opinion that
might be rendered on the Fund's financial statements; or (ii) concerned the
subject of a disagreement (as defined in paragraph (a)(1)(iv) of Item 304 of
Regulation S-K) of reportable events (as described in the paragraph (a)(1)(v) of
said Item 304).
Report of Ernst & Young LLP, Independent Auditors
TO THE BOARD OF TRUSTEES OF FEDERATED MUNICIPAL TRUST AND
SHAREHOLDERS OF OHIO MUNICIPAL CASH TRUST:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of the Ohio Municipal Cash Trust (one of the
portfolios constituting the Federated Municipal Trust) as of October 31, 1999,
and the related statement of operations, the statement of changes in net assets,
and the financial highlights for the year then ended. These financial statements
and financial highlights are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit. The statement of changes in net assets
for the year ended October 31, 1998 and the financial highlights for each of the
periods indicated therein for the period then ended were audited by other
auditors whose report, dated December 23, 1998, expressed an unqualified opinion
on that statement and those financial highlights.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in financial statements and
financial highlights. Our procedures included confirmation of securities owned
as of October 31, 1999 by correspondence with the custodian. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Ohio Municipal Cash Trust of the Federated Municipal Trust at October 31, 1999,
and the results of its operations, changes in its net assets and financial
highlights for the year then ended, in conformity with generally accepted
accounting principles.
[Graphic]
Boston, Massachusetts
December 16, 1999
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
JOHN W. MCGONIGLE
Executive Vice President and Secretary
EDWARD C. GONZALES
Executive Vice President
RICHARD B. FISHER
Vice President
RICHARD J. THOMAS
Treasurer
LESLIE K. ROSS
Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by any bank, and are not insured or
guaranteed by the U.S. government, the Federal Deposit Insurance Corporation,
the Federal Reserve Board, or any other government agency. Investment in 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
ANNUAL REPORT
Ohio Municipal Cash Trust
ANNUAL REPORT TO SHAREHOLDERS
OCTOBER 31, 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 314229840
Cusip 314229857
G00829-01 ((12/99)
[Graphic]
ANNUAL REPORT
President's Message
Dear Shareholder:
I am pleased to present the Annual Report to Shareholders of Pennsylvania
Municipal Cash Trust, which covers the 12-month period from November 1, 1998
through October 31, 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 of $0.03
per share for Institutional Shares, $0.03 per share for Institutional Service
Shares and $0.02 per share for Cash Series Shares. The fund's net assets totaled
$431.7 million at the end of the reporting period.
You can count on Pennsylvania Municipal Cash Trust to help your ready cash earn
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
December 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 REPORTING PERIOD?
Perhaps the biggest issues threatening the U.S. economy in the latter half of
1998 were alleviated by the second quarter of 1999. The improvements in
international economies, particularly Asia, and calm foreign markets laid the
foundation for the Federal Reserve Board (the "Fed") to focus on U.S. economic
releases as a better indicator of the inflation picture. The Fed became
increasingly concerned with inflationary pressures from tighter labor markets
and rising equity wealth. For the most part inflationary forces remained tame
during 1999 with increases in some commodity prices, such as oil. Nevertheless,
the Fed began a series of three rate increases, citing tighter labor markets,
shrinking productivity gains and growth in demand. The moves came in June,
August and November; each time, the Fed voted to raise the federal funds target
rate by a quarter point.
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"), which comprise more than 50% of the fund's assets, started the period
in the 3.00% range, but moved sharply higher in December to the 4.00% level as
supply and demand imbalances occurred. Yields then declined in January, as
investors looked to reinvest coupon payments and year end selling pressures
eased. Yields averaged slightly over 2.75% during February and March before
rising to the 4.00% range in April due to traditional tax season selling
pressures. Over the summer months, yields remained mostly in a band between
3.00% and 3.50%, but rose sharply in September as cash outflows in the municipal
markets pushed rates as high as 3.85%. VRDN yields ended the reporting period at
3.50%. Over the reporting period, VRDN yields averaged roughly 66% of taxable
rates, making them attractive for investors in the highest two 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, have 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 municipal
securities, relative to their taxable counterparts, relatively expensive.
WHAT WERE YOUR STRATEGIES FOR THE FUND DURING THE REPORTING PERIOD?
The fund's average maturity at the beginning of the period was approximately 41
days. Opportunities in the fixed-rate note market in December pushed the average
maturity to the 60-70 day range in the beginning of 1999. However, for the
balance of the year, the fund was in a 45-60 day range, moving within that band
according to relative value opportunities. At the end of the reporting period,
the average maturity stood at 51 days. 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. Once an average maturity range was targeted, taking into account Fed
monetary policy, the portfolio maximized 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 municipals to
taxable instruments, such as U.S. Treasury securities. This portfolio structure
continued to provide a competitive yield over time.
WHAT IS YOUR OUTLOOK GOING FORWARD?
The Fed, concerned by persistent above-trend growth in an environment where
labor markets are tight and productivity gains are narrowing, will likely remain
on hold until the first quarter of 2000. It is likely that we will see one and
possibly two interest rate increases in the first half of 2000. 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
OCTOBER 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
99.5% 1
PENNSYLVANIA-99.5%
$ 3,500,000 Adams County, PA IDA
(Series 1999C) Weekly
VRDNs (Martin
Limestone, Inc.)/(Allfirst
LOC) $ 3,500,000
7,000,000 Adams County, PA IDA
(Series 1999A) Weekly
VRDNs (Valley Quarries,
Inc.)/(Allfirst LOC) 7,000,000
2,500,000 Adams County, PA IDA
(Series 1999B) Weekly
VRDNs (Valley Quarries,
Inc.)/(Allfirst LOC) 2,500,000
2,605,000 Allegheny County, PA HDA,
Health Center Revenue
Refunding Bonds (Series
1999A) Weekly VRDNs
(Riverside Nursing
Centers, Inc.)/(Bank One,
Ohio, N.A. LOC) 2,605,000
5,000,000 Allegheny County, PA HDA,
Variable Rate Demand
Hospital Revenue Bonds
(Series 1998B) 3.15% TOBs
(South Hills Health
System)/(PNC Bank, N.A.
LOC) Mandatory Tender
3/31/2000 5,000,000
2,000,000 Allegheny County, PA IDA,
Variable Rate Demand
Revenue Bonds (Series
1997B) Weekly VRDNs
(Jewish Community
Center)/(National City,
Pennsylvania LOC) 2,000,000
1,050,000 Berks County, PA IDA Weekly
VRDNs (ADC Quaker Maid
Meats)/(First Union
National Bank, Charlotte,
NC LOC) 1,050,000
240,000 Berks County, PA IDA Weekly
VRDNs (Beacon
Container)/(First Union
National Bank, Charlotte,
NC LOC) 240,000
1,300,000 Berks County, PA IDA
(Series 1988) Weekly VRDNs
(Arrow Electronics,
Inc.)/(First Union
National Bank, Charlotte,
NC LOC) 1,300,000
5,600,000 Berks County, PA IDA
(Series 1998) Weekly VRDNs
(Stabler Co.,
Inc.)/(Dauphin Deposit
Bank and Trust LOC) 5,600,000
3,155,000 Berks County, PA IDA,
Manufacturing Facilities
Revenue Bonds (Series
1996) Weekly VRDNs (Ram
Industries, Inc.)/(First
Union National Bank,
Charlotte, NC LOC) 3,155,000
1,440,000 Berks County, PA IDA,
Manufacturing Facilities
Revenue Bonds (Series
1995) Weekly VRDNs
(Grafika Commercial
Printing, Inc.)/(First
Union National Bank,
Charlotte, NC LOC) 1,440,000
120,000 Berks County, PA IDA,
Revenue Bonds (Series
1995A/Subseries A) Weekly
VRDNs (First Union
National Bank, Charlotte,
NC LOC) 120,000
775,000 Berks County, PA IDA,
Revenue Bonds (Series
1995A/Subseries B) Weekly
VRDNs (First Union
National Bank, Charlotte,
NC LOC) 775,000
1,300,000 Boyertown, PA Area School
District (Series 1999/00)
3.75% TRANs, 6/30/2000 1,301,241
1,665,000 Boyertown, PA Area School
District, 3.30% Bonds (FSA
INS) 2/1/2000 1,665,142
1,300,000 Brandywine Heights, PA
Area School District
(Series 1999/00) 3.75%
TANs, 6/30/2000 1,300,826
1,855,000 Bucks County, PA IDA Weekly
VRDNs (Double H Plastics,
Inc.)/(First Union
National Bank, Charlotte,
NC LOC) 1,855,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
PENNSYLVANIA-CONTINUED
$ 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
2,805,000 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) 2,805,000
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
(Series 1996A) 2.95% TOBs
(Lutheran Welfare)/(PNC
Bank, N.A. LOC) Mandatory
Tender 11/1/1999 6,185,000
1,965,000 Butler County, PA IDA
(Series 1998) Weekly VRDNs
(Allegheny Metalworking
Corp.)/(National City,
Pennsylvania LOC) 1,965,000
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
2,170,000 Butler County, PA IDA,
IDRBs (Series 1997) Weekly
VRDNs (Wise Business
Forms, Inc.)/(SouthTrust
Bank of Alabama,
Birmingham LOC) 2,170,000
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) 3.50% CP
(Panther Creek)/(National
Westminster Bank, PLC,
London LOC) Mandatory
Tender 11/10/1999 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
2,935,000 Chartiers Valley, PA
Industrial & Commercial
Development Authority,
Nursing Home Revenue
Refunding Bonds (Series
1997A) Weekly VRDNs
(Woodhaven Convalescent
Center)/(Bank One, Ohio,
N.A. LOC) 2,935,000
7,300,000 Clearfield County, PA IDA
Weekly VRDNs (Penn Traffic
Co.)/(Fleet Bank N.A. 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
5,000,000 Clinton County, PA, IDA
Weekly VRDNs (Armstrong
World Industries,
Inc.)/(Mellon Bank N.A.,
Pittsburgh LOC) 5,000,000
3,000,000 Coatsville, PA School
District (Series 1999/00)
4.00% TRANs, 6/30/2000 3,007,650
1,770,000 Commonwealth of
Pennsylvania (Series A)
7.00% Bonds (United States
Treasury PRF) 5/1/2000
(@101.5) 1,828,790
1,210,000 Commonwealth of
Pennsylvania (First
Series) 5.00% Bonds (AMBAC
INS) 3/15/2000 1,218,367
3,985,000 Commonwealth of Pennsylvania, Floater Certificate 1998-53
Weekly VRDNs (FGIC INS)/(Morgan Stanley, Dean Witter Municipal
Funding, Inc.
LIQ) 3,985,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
PENNSYLVANIA-CONTINUED
$ 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
6,900,000 Cumberland County, PA
Municipal Authority
(Series 1994) 3.23% TOBs
(United Methodist Homes
for the Aging)/(PNC Bank,
N.A. LOC) Mandatory Tender
6/1/2000 6,900,000
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
5,000,000 Dallastown Area School
District, PA, GO Bonds (Series 1998) Weekly VRDNs (FGIC
INS)/(FGIC Securities Purchase, Inc.
LIQ) 5,000,000
10,500,000 Dauphin County, PA General
Authority, (Education and
Health Loan Program
(Series 1997) Weekly VRDNs
(AMBAC INS) (Chase
Manhattan Bank N.A., New
York LIQ) 10,500,000
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
4,900,000 Delaware County, PA
Authority, Hospital
Revenue Bonds (Series of
1996) Weekly VRDNs
(Crozer-Chester Medical
Center)/(KBC Bancassurance
Holding LOC) 4,900,000
3,000,000 Downington Area School
District, PA, 3.75% TRANs,
6/30/2000 3,004,774
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
1,200,000 East Hempfield Township,
PA IDA (Series 1985) Weekly
VRDNs (Yellow
Freight System)/(Wachovia
Bank of NC, N.A., Winston-
Salem LOC) 1,200,000
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
2,000,000 East Hempfield Township,
PA IDA (Series 1997) Weekly
VRDNs
(Mennonite Home)/(Dauphin
Deposit Bank and Trust LOC) 2,000,000
15,000,000 Easton Area School
District, PA (Series 1997)
Weekly VRDNs (FGIC
INS)/(FGIC Securities
Purchase, Inc. LIQ) 15,000,000
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 4,003,455
2,900,000 Franconia Township, PA IDA, IDRBs (Series 1997A) Weekly VRDNs
(Asher's Chocolates)/(Mell on Bank N.A., Pittsburgh
LOC) 2,900,000
1,305,000 Franklin County, PA IDA
Weekly VRDNs (The
Guarriello Limited
Partnership)/(PNC Bank,
N.A., LOC) 1,305,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
PENNSYLVANIA-CONTINUED
$ 2,400,000 Gettysburg Area IDA
(Series 1998A) Weekly
VRDNs (Hanover Lantern,
Inc.)/(Allfirst LOC) $ 2,400,000
2,000,000 Greene County, PA IDA
(Series 1999) Weekly VRDNs
(CWS Company,
Inc.)/(Huntington National
Bank, Columbus, OH LOC) 2,000,000
2,500,000 Harbor Creek, PA School
District (Series 1999)
3.75% BANs, 6/15/2000 2,505,960
7,500,000 Indiana County, PA IDA, PCR
Bonds (Series 1997A)
Weekly VRDNs
(Peco Energy Co.)/(UBS AG
LOC) 7,500,000
2,255,000 Jackson Township, PA IDA (Series 1999A) Weekly VRDNs (Aerial
Innovations, Inc.)/(Allfir
st LOC) 2,255,000
6,000,000 Lancaster County, PA
Hospital Authority, Health
Center Revenue Bonds
(Series 1996) Weekly VRDNs
(Masonic Homes) 6,000,000
3,385,000 Lancaster, PA IDA (Series
1988C) Weekly VRDNs (Henry
Molded
Products, Inc.)/(Dauphin
Deposit Bank and Trust LOC) 3,385,000
2,195,000 Lancaster, PA IDA (Series
1998A) Weekly VRDNs (Henry
Molded
Products, Inc.)/(Dauphin
Deposit Bank and Trust LOC) 2,195,000
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
4,510,000 Montgomery County, PA
Higher Education and
Health Authority, 7.38%
Bonds (Bryn Mawr
Hospital)/(United States
Treasury PRF) 12/1/1999
(@102) 4,614,854
1,000,000 Montgomery County, PA IDA
(Series 1984) Weekly VRDNs
(Seton Co.)/(First Union
National Bank, Charlotte,
NC LOC) 1,000,000
1,100,000 Montgomery County, PA IDA
(Series 1992) Weekly VRDNs
(RJI Limited
Partnership)/(First Union
National Bank, Charlotte,
NC LOC) 1,100,000
1,000,000 Montgomery County, PA IDA
(Series A) Weekly VRDNs
(Vari Corp.)/(Dauphin Depo
sit Bank and Trust LOC) 1,000,000
4,250,000 Montgomery County, PA IDA
(Series C) Weekly VRDNs
(Vari Corp.)/(Dauphin Depo
sit 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
4,620,000 Moon Township, PA IDA
Weekly VRDNs (Airport
Hotel
Associates)/(National
City, Pennsylvania LOC) 4,620,000
3,500,000 Norristown, PA (Series
1999) 3.35% TRANs,
12/30/1999 3,500,000
9,000,000 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) 9,000,000
12,850,000 Northampton County, PA
IDA, 3.65% CP (Citizens
Utilities Co.) Mandatory
Tender 12/7/1999 12,850,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
PENNSYLVANIA-CONTINUED
$ 2,442,000 Northampton County, PA
IDA, Variable Rate Revenue
Bonds (Series 1997)
Weekly VRDNs (Ultra-Poly
Corp.)/(PNC Bank, N.A.
LOC) $ 2,442,000
1,590,000 Northumberland County PA
IDA, Revenue Bonds (Series
1995A) 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
2,300,000 Pennsylvania EDFA Weekly
VRDNs (Industrial
Scientific Corp.)/(Mellon
Bank N.A., Pittsburgh LOC) 2,300,000
450,000 Pennsylvania EDFA Weekly
VRDNs (ProMinent Fluid)/(PNC Bank, N.A.
LOC) 450,000
375,000 Pennsylvania EDFA Weekly
VRDNs (RMF
Associates)/(PNC Bank,
N.A. LOC) 375,000
1,175,000 Pennsylvania EDFA Weekly
VRDNs (Stone and Lime
Co.)/(PNC Bank, N.A. LOC) 1,175,000
1,400,000 Pennsylvania EDFA (Series
1995-D2) Weekly VRDNs
(ARCO Enterprises,
Inc./Ronald L. Repasky,
Sr. Project)/(PNC Bank,
N.A. LOC) 1,400,000
500,000 Pennsylvania EDFA (Series 1995-D9) Weekly VRDNs (North
American Communications, Inc. Project)/(PNC Bank, N.A.
LOC) 500,000
1,170,200 Pennsylvania EDFA (Series
1992-C) Weekly VRDNs
(Leonard H.
Berenfield/Berenfield
Containers)/(PNC Bank,
N.A. LOC) 1,170,200
2,100,000 Pennsylvania EDFA (Series 1996-E) Weekly VRDNs (Adelphoi,
Inc.)/(PNC
Bank, N.A. LOC) 2,100,000
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
1998-A) 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
(Series 1996-D6) Weekly
VRDNs (Toyo Tanso
Specialty Materials,
Inc.)/(PNC Bank, N.A. LOC) 3,000,000
3,890,000 Pennsylvania EDFA, EDRBs
(Series 1996-C) Weekly
VRDNs (Napco, Inc.
Project)/(Mellon Bank
N.A., Pittsburgh LOC) 3,890,000
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
13,620,000 2 Pennsylvania Housing
Finance Authority (Series
1997-58A) PT-149, 3.85%
TOBs (Commerzbank AG,
Frankfurt LIQ) Optional
Tender 10/5/2000 13,620,000
14,385,000 Pennsylvania Housing
Finance Authority, MERLOTS
(Series K) Weekly VRDNs
(First Union National
Bank, Charlotte, NC LIQ) 14,385,000
1,920,000 Pennsylvania Housing
Finance Authority, PT-119B
(Series 1997-56B) Weekly
VRDNs (Merrill Lynch
Capital Services, Inc.
LIQ) 1,920,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
PENNSYLVANIA-CONTINUED
$ 890,000 Pennsylvania Housing
Finance Authority, Section
8 Assisted Residential
Development Refunding
Bonds (Series 1992A)
Weekly VRDNs (CGIC
INS)/(Citibank N.A., New
York LIQ) $ 890,000
12,100,000 Pennsylvania Housing
Finance Authority,
Variable Rate Certificates
(Series 1999-65K) Weekly
VRDNs (Bank of America NT
and SA San Francisco) 12,100,000
1,500,000 Pennsylvania
Intergovernmental Coop
Authority, 5.75% Bonds
(FGIC INS) 6/15/2000 1,522,613
1,255,000 Pennsylvania
Intergovernmental Coop
Authority, 6.00% Bonds
(Philadelphia
Funding Program)/(United
States Treasury PRF)
6/15/2000 1,275,489
10,500,000 Pennsylvania State Higher
Education Assistance
Agency, Student Loan
Adjustable Rate Revenue
Bonds (Series 1997A)
Weekly VRDNs (SLMA 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
2,500,000 Pennsylvania State Higher
Education Facilities
Authority (Series 1999-D2)
3.75% TOBs (Holy Family
College)/(Allied Irish
Banks PLC LOC) Optional
Tender 5/1/2000 2,506,035
1,400,000 Pennsylvania State Higher
Education Facilities
Authority (Series 1999-D3)
3.75% TOBs (Lebanon Valley
College)/(Allied Irish
Banks PLC LOC) Mandatory
Tender 5/1/2000 1,403,380
700,000 Pennsylvania State Higher
Education Facilities
Authority, Revenue Bonds
(Series D4) 3.75% TOBs
(Marywood
University)/(Allied Irish
Banks PLC LOC) Mandatory
Tender 5/1/2000 701,010
1,835,000 Pennsylvania State
University, PT-242 Weekly
VRDNs (Bayerische
Hypotheken-und Vereinsbank
AG LIQ) 1,835,000
4,000,000 Perkiomen Valley School
District, PA, 3.75% TRANs,
6/30/2000 4,006,365
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) 3.65%
TOBs (Philadelphia Airport
System)/(FGIC INS)/(Bank
of America, N.A. LIQ),
Optional Tender 7/20/2000 10,000,000
2,000,000 Philadelphia, PA IDA,
Variable Rate Revenue
Bonds (Series 1998) Weekly
VRDNs (Philadelphia
Academy of Music)/(First
Union National Bank,
Charlotte, NC LOC) 2,000,000
2,000,000 Pittsburgh, PA Urban
Redevelopment Authority
(Series 1999E) 3.65%
Bonds, 8/15/2000 2,000,000
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, 3.75% TRANs,
6/30/2000 2,504,790
1,050,000 Sayre, PA, Health Care
Facilities Authority
(Series A) 6.50% Bonds
(Guthrie Healthcare
System, PA)/(AMBAC INS)
3/1/2000 1,061,193
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
PENNSYLVANIA-CONTINUED
$ 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
3,000,000 Venango, PA IDA, Resource
Recovery Bonds (Series
1993) 3.45% CP (Scrubgrass
Power Corp.)/(National
Westminster Bank, PLC,
London LOC) Mandatory
Tender 1/28/2000 3,000,000
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 Brethern
Home Project (PA)/(First
Union National Bank,
Charlotte, NC LOC) 745,000
3,185,000 William Penn School
District, PA, 3.64% TRANs,
6/30/2000 3,185,802
2,500,000 York County, PA IDA,
Limited Obligation Revenue
Bonds (Series 1997) Weekly
VRDNs (Metal Exchange
Corp.)/(Comerica Bank 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 $ 429,569,936
</TABLE>
Securities that are subject to alternative minimum tax represent 54.1% 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, or 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 October 31, 1999, the portfolio securities were rated as follows:
Tier Rating Based on Total Market Value (Unaudited)
FIRST TIER SECOND TIER
98.9% 1.1%
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 October 31, 1999, these
securities amounted to $29,620,000, which represents 6.9% of net assets.
3 Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($431,662,443) at October 31, 1999.
The following acronyms are used throughout this portfolio:
AMBAC -American Municipal Bond Assurance Corporation BANs -Bond Anticipation
Notes CGIC -Capital Guaranty Insurance Corporation CP -Commercial Paper EDFA
- -Economic Development Financing Authority EDRB(s) -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(s) -Industrial Development Revenue
Bond(s) INS -Insured LIQ -Liquidity Agreement LOC -Letter of Credit MERLOTS
- -Municipal Exempt Receipts Liquidity Optional Tender Series PCR -Pollution
Control Revenue PRF -Prerefunded RANs -Revenue Anticipation Notes SLMA -Student
Loan Marketing Association 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
OCTOBER 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Total investments in
securities, at amortized
cost and value $ 429,569,936
Cash 429,014
Income receivable 3,038,891
Prepaid expenses 8,393
TOTAL ASSETS 433,046,234
LIABILITIES:
Payable for shares
redeemed $ 619,902
Income distribution
payable 700,281
Accrued expenses 63,608
TOTAL LIABILITIES 1,383,791
Net assets for 431,662,443
shares outstanding $ 431,662,443
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PROCEEDS PER SHARE
INSTITUTIONAL SHARES:
$135,031,952 / 135,031,952
shares outstanding $1.00
INSTITUTIONAL SERVICE
SHARES:
$253,338,762 / 253,338,762
shares outstanding $1.00
CASH SERIES SHARES:
$43,291,729 / 43,291,729
shares outstanding $1.00
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Operations
YEAR ENDED OCTOBER 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 15,601,182
EXPENSES:
Investment advisory fee $ 2,330,962
Administrative personnel
and services fee 351,545
Custodian fees 32,400
Transfer and dividend
disbursing agent fees and
expenses 102,953
Directors'/Trustees' fees 4,667
Auditing fees 13,156
Legal fees 13,053
Portfolio accounting fees 113,282
Distribution services fee-
Cash Series Shares 195,333
Shareholder services fee-
Institutional Shares 261,097
Shareholder services fee-
Institutional Service
Shares 782,301
Shareholder services fee-
Cash Series Shares 122,083
Share registration costs 27,068
Printing and postage 30,091
Insurance premiums 29,397
Miscellaneous 6,182
TOTAL EXPENSES 4,415,570
WAIVERS:
Waiver of investment
advisory fee $ (936,982)
Waiver of distribution
services fee-Cash Series
Shares (24,417)
Waiver of shareholder
services fee-Institutional
Shares (261,097)
Waiver of shareholder
services fee-Institutional
Service Shares (156,460)
TOTAL WAIVERS (1,378,956)
Net expenses 3,036,614
Net investment income $ 12,564,568
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31 1999 1998
<S> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net investment income $ 12,564,568 $ 12,841,417
DISTRIBUTIONS TO
SHAREHOLDERS:
Distributions from net
investment income
Institutional Shares (3,050,817) (1,812,898)
Institutional Service
Shares (8,398,776) (9,813,298)
Cash Series Shares (1,114,975) (1,215,221)
CHANGE IN NET ASSETS
RESULTING FROM
DISTRIBUTIONS
TO SHAREHOLDERS (12,564,568) (12,841,417)
SHARE TRANSACTIONS:
Proceeds from sale of
shares 1,619,949,097 1,771,726,568
Net asset value of shares
issued to shareholders in
payment of
distributions declared 3,820,422 4,355,879
Cost of shares redeemed (1,696,708,970) (1,623,039,093)
CHANGE IN NET ASSETS
RESULTING FROM SHARE
TRANSACTIONS (72,939,451) 153,043,354
Change in net assets (72,939,451) 153,043,354
NET ASSETS:
Beginning of period 504,601,894 351,558,540
End of period $ 431,662,443 $ 504,601,894
</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>
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 0.03 0.03 0.03 0.03 0.01
LESS DISTRIBUTIONS:
Distributions from net investment income (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
TOTAL RETURN 2 2.94% 3.36% 3.38% 3.37% 1.03%
RATIOS TO AVERAGE NET ASSETS:
Expenses 3 0.90% 0.91% 0.92% 0.92% 0.91% 4
Net investment income 3 2.47% 2.85% 2.88% 2.80% 3.35% 4
Expenses (after waivers) 0.45% 0.45% 0.45% 0.45% 0.45% 4
Net investment income (after waivers) 2.92% 3.31% 3.35% 3.27% 3.81% 4
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $135,032 $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 During the period, certain fees were voluntarily waived. If such voluntary
waivers had not occurred, the ratios would have been as indicated.
4 Computed on an annualized basis.
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>
YEAR ENDED OCTOBER 31 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.03 0.03 0.03 0.03 0.03
LESS DISTRIBUTIONS:
Distributions from net investment income (0.03) (0.03) (0.03) (0.03) (0.03)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $1.00
TOTAL RETURN 1 2.73% 3.15% 3.18% 3.16% 3.44%
RATIOS TO AVERAGE NET ASSETS:
Expenses 2 0.90% 0.91% 0.92% 0.92% 0.92%
Net investment income 2 2.43% 2.83% 2.87% 2.85% 3.11%
Expenses (after waivers) 0.65% 0.65% 0.65% 0.65% 0.65%
Net investment income (after waivers) 2.68% 3.09% 3.14% 3.12% 3.38%
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $253,339 $392,381 $264,634 $221,851 $276,407
</TABLE>
1 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
2 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>
YEAR ENDED OCTOBER 31 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.02 0.03 0.03 0.03 0.03
LESS DISTRIBUTIONS:
Distributions from net investment income (0.02) (0.03) (0.03) (0.03) (0.03)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN 1 2.32% 2.74% 2.77% 2.75% 3.02%
RATIOS TO AVERAGE NET ASSETS:
Expenses 2 1.30% 1.31% 1.32% 1.32% 1.33%
Net investment income 2 2.03% 2.44% 2.45% 2.45% 2.70%
Expenses (after waivers) 1.05% 1.05% 1.05% 1.05% 1.05%
Net investment income (after waivers) 2.28% 2.70% 2.72% 2.72% 2.98%
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $43,292 $47,940 $23,777 $19,825 $28,255
</TABLE>
1 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
2 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
OCTOBER 31, 1999
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 Shares, Institutional Service Shares and
Cash Series Shares. The investment objective of the the Fund is current income
exempt from federal 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 provision for federal tax is
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 October 31, 1999, capital paid-in aggregated $431,662,443.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31 1999 1998
<S> <C> <C>
INSTITUTIONAL SHARES:
Shares sold 590,890,826 403,352,478
Shares issued to
shareholders in payment of
distributions declared 1,069,331 121,832
Shares redeemed (521,209,277) (402,341,293)
NET CHANGE RESULTING FROM
INSTITUTIONAL SHARE
TRANSACTIONS 70,750,880 1,133,017
<CAPTION>
YEAR ENDED OCTOBER 31 1999 1998
<S> <C> <C>
INSTITUTIONAL SERVICE
SHARES:
Shares sold 886,863,203 1,209,407,656
Shares issued to
shareholders in payment of
distributions declared 1,700,459 3,071,889
Shares redeemed (1,027,605,705) (1,084,732,294)
NET CHANGE RESULTING FROM
INSTITUTIONAL SERVICE
SHARE TRANSACTIONS (139,042,043) 127,747,251
<CAPTION>
YEAR ENDED OCTOBER 31 1999 1998
<S> <C> <C>
CASH SERIES SHARES:
Shares sold 142,195,068 158,966,434
Shares issued to
shareholders in payment of
distributions declared 1,050,632 1,162,158
Shares redeemed (147,893,988) (135,965,506)
NET CHANGE RESULTING FROM
CASH SERIES SHARE
TRANSACTIONS (4,648,288) 24,163,086
NET CHANGE RESULTING FROM
SHARE TRANSACTIONS (72,939,451) 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
For the year ended October 31, 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 and amounted to $765,115,114 and $695,595,000,
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
October 31, 1999, 74.8% 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 9.7% of total investments.
YEAR 2000 (UNAUDITED)
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.
CHANGE OF INDEPENDENT AUDITORS (UNAUDITED)
On May 19, 1999, the Fund's Trustees, upon the recommendation of its Audit
Committee, requested and subsequently accepted the resignation of Arthur
Andersen LLP ("AA") as the Fund's independent auditors. AA's reports on the
Fund's financial statements for the fiscal years ended October 31, 1997 and
October 31, 1998 contained no adverse opinion or disclaimer of opinion nor were
they qualified or modified as to uncertainty, audit scope or accounting
principles. During the Fund's fiscal years ended October 31, 1997 and October
31, 1998: (i) there were no disagreements with AA on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure, which disagreements, if not resolved to the satisfaction of AA, would
have caused it to make reference to the subject matter of the disagreements in
connection with its reports on the financial statements for such years; and (ii)
there were no reportable events of the kind described in Item 304(a)(1)(v) of
Regulation S-K under the Securities Exchange Act of 1934, as amended.
The Fund, by action of its Trustees, upon the recommendation of the Audit
Committee, has engaged Ernst & Young LLP ("E&Y") as the independent auditors to
audit the Fund's financial statements for the fiscal year ended October 31,
1999. During the Fund's fiscal years ended October 31, 1997 and October 31,
1998, neither the Fund nor anyone on its behalf has consulted E&Y on items which
(i) concerned the application of accounting principles to a specified
transaction, either completed or proposed, or the type of audit opinion that
might be rendered on the Fund's financial statements, or (ii) concerned the
subject of a disagreement (as defined in paragraph (a)(1)(iv) of Item 304 of
Regulation S-K) of reportable events (as described in paragraph (a)(1)(v) of
said Item 304).
Report of Ernst & Young LLP, Independent Auditors
TO THE BOARD OF TRUSTEES OF FEDERATED MUNICIPAL TRUST AND SHAREHOLDERS OF
PENNSYLVANIA MUNICIPAL CASH TRUST:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of the Pennsylvania Municipal Cash Trust (one of
the portfolios constituting the Federated Municipal Trust) as of October 31,
1999, and the related statement of operations, the statement of changes in net
assets, and the financial highlights for the year then ended. These financial
statements and financial highlights are the responsibility of the Trust's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audit. The statement of changes
in net assets for the year ended October 31, 1998, and the financial highlights
for each of the periods indicated therein for the period then ended were audited
by other auditors whose report, dated December 23, 1998, expressed an
unqualified opinion on that statement and those financial highlights.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in financial statements and
financial highlights. Our procedures included confirmation of securities owned
as of October 31, 1999, by correspondence with the custodian. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Pennsylvania Municipal Cash Trust of the Federated Municipal Trust at October
31, 1999, and the results of its operations, changes in its net assets and
financial highlights for the year then ended, in conformity with generally
accepted accounting principles.
[Graphic]
Boston, Massachusetts
December 16, 1999
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
JOHN W. MCGONIGLE
Executive Vice President and Secretary
EDWARD C. GONZALES
Executive Vice President
RICHARD B. FISHER
Vice President
RICHARD J. THOMAS
Treasurer
LESLIE K. ROSS
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
Pennsylvania Municipal Cash Trust
ANNUAL REPORT
TO SHAREHOLDERS
ANNUAL REPORT
OCTOBER 31, 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 314229881
Cusip 314229204
Cusip 314229717
G00830-01 (12/99)
[Graphic]
ANNUAL REPORT
President's Message
Dear Shareholder:
I am pleased to present the Annual Report to Shareholders of Tennessee Municipal
Cash Trust, which covers the 12-month period from November 1, 1998 through
October 31, 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-through a portfolio concentrated in high-quality, short-term Tennessee
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
$0.03 per share for both Institutional Shares and Institutional Service Shares.
The fund's net assets totaled $57.5 million at the end of the reporting period.
Thank you for relying on Tennessee Municipal Cash Trust to help your ready cash
earn 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
December 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 REPORTING PERIOD?
Perhaps the biggest issues threatening the U.S. economy in the latter half of
1998 were alleviated by the second quarter of 1999. The improvements in
international economies, particularly Asia, and calm foreign markets laid the
foundation for the Federal Reserve Board (the "Fed") to focus on U.S. economic
releases as a better indicator of the inflation picture. The Fed became
increasingly concerned with inflationary pressures from tighter labor markets
and rising equity wealth. For the most part inflationary forces remained tame
during 1999 with increases in some commodity prices, such as oil. Nevertheless,
the Fed began a series of three interest rate increases, citing tighter labor
markets, shrinking productivity gains and growth in demand. The moves came in
June, August and November; each time, the Fed voted to raise the federal funds
target rate by a quarter point, bringing the target rate to 5.50%.
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"), which comprise more than half of the fund's assets, started the
period in the 3.00% range, but moved sharply higher in December to the 4.00%
level as supply and demand imbalances occurred. Yields then declined in January,
as investors looked to reinvest coupon payments and year end selling pressures
eased. Yields averaged slightly over 2.75% during February and March before
rising to the 4.00% range in April due to traditional tax season payment
pressures. Over the summer months, yields remained mostly in a band between
3.00% and 3.50%, but rose sharply in September as cash outflows in the municipal
markets pushed rates as high as 3.85%. VRDN yields ended the reporting period at
3.50%. Over the reporting period, VRDN yields averaged roughly 66% of taxable
rates, making them attractive for investors in the two highest federal tax
brackets.
The overall tone of the short-term municipal market was positive. Municipalities
across the country 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 of the decade. Lack
of supply and heavy demand kept short-term municipal securities, relative to
their taxable counterparts, relatively expensive.
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 29 days. The fund's average maturity moved steadily upward in the
first half of 1999, reaching 54 days in May as attractive fixed-rate notes
opportunities were available. Over the summer months, with the Fed increasing
rates, we allowed the fund's maturity to decline to end the reporting period at
31 days. 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. Once an average maturity
range was targeted, taking into account Federal Reserve monetary policy, the
portfolio maximized 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 municipals to taxable
instruments, such as treasury securities. This portfolio structure continued to
provide a competitive yield over time.
WHAT IS YOUR OUTLOOK GOING FORWARD?
The Fed, concerned by persistent above-trend growth in an environment where
labor markets are constrained and productivity gains are narrowing, will likely
remain on hold until the first quarter of 2000. It is probable that we will see
one and possibly two interest rate increases in the first half of 2000. In the
near future, 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 market developments with great interest in order to best serve our
municipal clients.
Portfolio of Investments
OCTOBER 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
97.5% 1
TENNESSEE-97.5%
$ 2,410,000 Benton County TN IDB
(Series 1996) Weekly VRDNs
(Jones Plastic and
Engineering Corp.)/(Nation
al City Bank, Kentucky LOC) $ 2,410,000
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
2,000,000 Covington, TN IDB (Series
1992) Weekly VRDNs
(Wallace Computer
Services, Inc.)/(Wachovia
Bank of NC, N.A. LOC) 2,000,000
2,660,000 Dickson County, TN IDB
(Series 1996) Weekly VRDNs
(Tennessee Bun Company,
LLC Project)/(PNC Bank,
N.A. LOC) 2,660,000
2,600,000 Franklin County, TN IDB,
IDRB (Series 1997) Weekly
VRDNs (Hi-Tech)/(Regions
Bank, Alabama LOC) 2,600,000
1,750,000 Greenfield, TN IDB (Series
1995) Weekly VRDNs
(Plastic Products Co.
Project)/(Norwest Bank
Minnesota, N.A. LOC) 1,750,000
4,460,000 Hamilton County, TN IDB
Weekly VRDNs (Pavestone
Co.)/(Bank One, Texas N.A.
LOC) 4,460,000
1,500,000 Hamilton County, TN IDB
(Series 1987) Weekly VRDNs
(Seaboard Farms
Project)/(SunTrust Bank,
Atlanta LOC) 1,500,000
3,680,000 Hawkins County, TN IDB
(Series 1995) Weekly VRDNs
(Sekisui Ta
Industries, Inc.)/(Bank of
Tokyo-Mitsubishi Ltd. LOC) 3,680,000
2,070,000 Hendersonville, TN IDB
(Series 1996) Weekly VRDNs
(Betty Machine Co.
Project)/(First Union
National Bank, Charlotte,
NC LOC) 2,070,000
2,000,000 Jackson, TN IDB (Series
1999) Weekly VRDNs
(Bobrick Washroom
Equipment)/(First American
National Bank, Nashville,
TN LOC) 2,000,000
1,500,000 Jackson, TN IDB, Solid
Waste Facility Bonds
(Series 1995) Weekly VRDNs
(Florida Steel
Corp.)/(Bank of America,
N.A. LOC) 1,500,000
1,800,000 Knox County, TN IDB (Series
1996) Weekly VRDNs (Health
Ventures,
Inc.)/(SunTrust Bank,
Nashville LOC) 1,800,000
1,000,000 Maury County, TN HEFA
(Series 1996E) Weekly
VRDNs (Southern Healthcare
Systems, Inc.)/(Bank One,
Texas N.A. LOC) 1,000,000
834,000 McMinn County, TN IDB
(Series 1995) Weekly VRDNs
(Creative Fabrication
Corp.)/(Bank One, Michigan
LOC) 834,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
TENNESSEE-CONTINUED
$ 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
1,860,000 Metropolitan Government
Nashville & Davidson
County, TN, GO UT Refunding
Bonds, 4.63% Bonds,
5/15/2000 1,873,846
6,200,000 Roane, TN IDB (Series 1982)
Monthly VRDNs (Fortafil
Fibers, Inc.
Project)/(ABN AMRO Bank
N.V., Amsterdam LOC) 6,200,000
1,000,000 Sevier County, TN Public
Building Authority, Local
Government Improvement
Bonds (Series II-G-2)
Weekly VRDNs (Knoxville,
TN)/(AMBAC INS)/(KBC Bank
N.V. LIQ) 1,000,000
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. 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
2,000,000 Shelby County, TN (Series
B) 5.10% Bonds, 3/1/2000 2,013,049
1,600,000 Sumner County, TN, Capital
Outlay Note (Series 1999)
4.00% TANs, 6/26/2000 1,602,506
2,350,000 Union City, TN IDB (Series
1995) Weekly VRDNs (Kohler
Co.)/(Wachovia Bank of
NC, N.A. LOC) 2,350,000
2,200,000 Union County, TN IDB
(Series 1995) Weekly VRDNs
(Cooper Container
Corporation Project)/(SunT
rust Bank, Nashville LOC) 2,200,000
TOTAL INVESTMENTS (AT
AMORTIZED COST) 2 $ 56,103,401
</TABLE>
Securities that are subject to alternative minimum tax represent 70.3% 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, or 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 October 31, 1999, the portfolio securities were rated as follows:
Tier Rating Based on Total Market Value (Unaudited)
FIRST TIER SECOND TIER
100.0% 00.0%
2 Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($57,528,852) at October 31, 1999.
The following acronyms are used throughout this portfolio:
AMBAC -American Municipal Bond Assurance Corporation GO -General Obligation 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 UT
- -Unlimited Tax VRDNs -Variable Rate Demand Notes
See Notes which are an integral part of the Financial Statements
Statement of Assets and Liabilities
OCTOBER 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Total investments in
securities, at amortized
cost and value $ 56,103,401
Cash 504,433
Income receivable 297,481
Receivable for shares sold 721,062
Deferred organizational
costs 9,391
TOTAL ASSETS 57,635,768
LIABILITIES:
Payable for shares
redeemed $ 5,001
Payable for transfer and
dividend disbursing agent
fees and expenses 14,952
Payable for shareholder
services fee 4,620
Income distribution
payable 77,178
Accrued expenses 5,165
TOTAL LIABILITIES 106,916
Net assets for 57,528,852
shares outstanding $ 57,528,852
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PROCEEDS PER SHARE
INSTITUTIONAL SHARES:
$34,850,177 / 34,850,177
shares outstanding $1.00
INSTITUTIONAL SERVICE
SHARES:
$22,678,675 / 22,678,675
shares outstanding $1.00
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Operations
YEAR ENDED OCTOBER 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 2,275,420
EXPENSES:
Investment advisory fee $ 338,749
Administrative personnel
and services fee 155,000
Custodian fees 2,902
Transfer and dividend
disbursing agent fees and
expenses 52,612
Directors'/Trustees' fees 1,313
Auditing fees 12,624
Legal fees 8,335
Portfolio accounting fees 52,167
Shareholder services fee-
Institutional Shares 101,263
Shareholder services fee-
Institutional Service
Shares 67,992
Share registration costs 25,927
Printing and postage 16,670
Insurance premiums 4,250
Miscellaneous 7,710
TOTAL EXPENSES 847,514
WAIVERS AND
REIMBURSEMENTS:
Waiver of investment
advisory fee $ (338,749)
Waiver of shareholder
services fee-Institutional
Shares (101,263)
Reimbursement of other
operating expenses (99,404)
TOTAL WAIVERS AND
REIMBURSEMENTS (539,416)
Net expenses 308,098
Net investment income $ 1,967,322
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31 1999 1998
<S> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net investment income $ 1,967,322 $ 1,768,764
DISTRIBUTIONS TO
SHAREHOLDERS:
Distributions from net
investment income
Institutional Shares (1,221,475) (895,346)
Institutional Service
Shares (745,847) (873,418)
CHANGE IN NET ASSETS
RESULTING FROM
DISTRIBUTIONS
TO SHAREHOLDERS (1,967,322) (1,768,764)
SHARE TRANSACTIONS:
Proceeds from sale of
shares 207,309,458 236,176,586
Net asset value of shares
issued to shareholders in
payment of
distributions declared 999,919 704,085
Cost of shares redeemed (222,566,032) (212,767,088)
CHANGE IN NET ASSETS
RESULTING FROM SHARE
TRANSACTIONS (14,256,655) 24,113,583
Change in net assets (14,256,655) 24,113,583
NET ASSETS:
Beginning of period 71,785,507 47,671,924
End of period $ 57,528,852 $ 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>
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 0.03 0.03 0.03 0.01
LESS DISTRIBUTIONS:
Distributions from net
investment income (0.03) (0.03) (0.03) (0.01)
NET ASSET VALUE, END OF
PERIOD $ 1.00 1.00 $ 1.00 $ 1.00
TOTAL RETURN 2 3.07% 3.42% 3.47% 1.59%
RATIOS TO AVERAGE NET
ASSETS:
Expenses 3 1.25% 1.33% 1.46% 1.72% 4
Net investment income 3 2.11% 2.37% 2.29% 1.95% 4
Expenses (after waivers
and reimbursements) 0.35% 0.35% 0.35% 0.10% 4
Net investment income
(after waivers and
reimbursements) 3.01% 3.35% 3.40% 3.57% 4
SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $ 34,850 $ 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 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.
4 Computed on an annualized basis.
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>
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 0.03 0.03 0.03 0.01
LESS DISTRIBUTIONS:
Distributions from net
investment income (0.03) (0.03) (0.03) (0.01)
NET ASSET VALUE, END OF
PERIOD $ 1.00 1.00 $ 1.00 $ 1.00
TOTAL RETURN 2 2.81% 3.17% 3.21% 1.48%
RATIOS TO AVERAGE NET
ASSETS
Expenses 3 1.25% 1.33% 1.46% 1.72% 4
Net investment income 3 2.09% 2.36% 2.27% 1.93% 4
Expenses (after waivers
and reimbursements) 0.60% 0.60% 0.60% 0.39% 4
Net investment income
(after waivers and
reimbursements) 2.74% 3.09% 3.13% 3.26% 4
SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $ 22,679 $ 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 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.
4 Computed on an annualized basis.
See Notes which are an integral part of the Financial Statements
Notes to Financial Statements
OCTOBER 31, 1999
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 taxes 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 provision for federal tax is
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 October 31, 1999, capital
paid-in aggregated $57,528,852.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31 1999 1998
<S> <C> <C>
INSTITUTIONAL SHARES:
Shares sold 120,958,760 141,723,370
Shares issued to
shareholders in payment of
distributions declared 386,774 31,344
Shares redeemed (125,687,909) (125,610,011)
NET CHANGE RESULTING FROM
INSTITUTIONAL SHARE
TRANSACTIONS (4,342,375) 16,144,703
<CAPTION>
YEAR ENDED OCTOBER 31 1999 1998
<S> <C> <C>
INSTITUTIONAL SERVICE
SHARES:
Shares sold 86,350,698 94,453,216
Shares issued to
shareholders in payment of
distributions declared 613,145 672,741
Shares redeemed (96,878,123) (87,157,077)
NET CHANGE RESULTING FROM
INSTITUTIONAL SERVICE
SHARE TRANSACTIONS (9,914,280) 7,968,880
NET CHANGE RESULTING FROM
SHARE TRANSACTIONS (14,256,655) 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 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.
INTERFUND TRANSACTIONS
During the year ended October 31, 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 and amounted to $111,942,500 and $118,075,000,
respectively.
ORGANIZATIONAL EXPENSES
Organizational expenses of $24,645 were borne initially by the Adviser. The Fund
has reimbursed the Adviser for these expenses. These expense 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
October 31,1999, 84.9% 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 11.2% of total investments.
YEAR 2000 (UNAUDITED)
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.
CHANGE OF INDEPENDENT AUDITORS (UNAUDITED)
On May 19, 1999, the Fund's Trustees, upon its recommendation of the Audit
Committee, requested and subsequently accepted the resignation of Arthur
Andersen LLP ("AA") as the Fund's independent auditors. AA's reports on the
Fund's financial statements for the fiscal years ended October 31, 1997 and
October 31, 1998 contained no adverse opinion or disclaimer of opinion nor were
they qualified or modified as to uncertainty, audit scope or accounting
principles. During the Fund's fiscal years ended October 31, 1997 and October
31, 1998: (i) there were no disagreements with AA on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure, which disagreements, if not resolved to the satisfaction of AA, would
have caused it to make reference to the subject matter of the disagreements in
connection with its reports on the financial statements for such years; and (ii)
there were no reportable events of the kind described in Item 304(a)(1)(v) of
Regulation S-K under the Securities Exchange Act of 1934, as amended.
The Fund, by action of its Trustees, upon the recommendation of the Audit
Committee, has engaged Ernst & Young LLP ("E&Y") as the independent auditors to
audit the Fund's financial statements for the fiscal year ended October 31,
1999. During the Fund's fiscal years ended October 31, 1997 and October 31,
1998, neither the Fund nor anyone on its behalf has consulted E&Y on items which
(i) concerned the application of accounting principles to a specified
transaction, either completed or proposed, or the type of audit opinion that
might be rendered on the Fund's financial statements, or (ii) concerned the
subject of a disagreement (as defined in paragraph (a)(1)(iv) of Item 304 of
Regulation S-K) of reportable events (as described in paragraph (a)(1)(v) of
said Item 304).
Report of Ernst & Young LLP, Independent Auditors
TO THE BOARD OF TRUSTEES OF FEDERATED MUNICIPAL TRUST AND SHAREHOLDERS OF
TENNESSEE MUNICIPAL CASH TRUST:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of the Tennessee Municipal Cash Trust (one of the
portfolios constituting the Federated Municipal Trust) as of October 31, 1999,
and the related statement of operations, the statement of changes in net assets,
and the financial highlights for the year then ended. These financial statements
and financial highlights are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit. The statement of changes in net assets
for the year ended October 31, 1998, and the financial highlights for each of
the periods indicated therein for the period then ended were audited by other
auditors whose report, dated December 23, 1998, expressed an unqualified opinion
on that statement and those financial highlights.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in financial statements and
financial highlights. Our procedures included confirmation of securities owned
as of October 31, 1999, by correspondence with the custodian. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Tennessee Municipal Cash Trust of the Federated Municipal Trust at October 31,
1999, and the results of its operations, changes in its net assets and financial
highlights for the year then ended, in conformity with generally accepted
accounting principles.
[Graphic]
Boston, Massachusetts
December 16, 1999
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
JOHN W. MCGONIGLE
Executive Vice President and Secretary
EDWARD C. GONZALES
Executive Vice President
RICHARD B. FISHER
Vice President
RICHARD J. THOMAS
Treasurer
LESLIE K. ROSS
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
Tennessee Municipal Cash Trust
ANNUAL REPORT
TO SHAREHOLDERS
ANNUAL REPORT
OCTOBER 31, 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
G01865-03 (12/99)
[Graphic]
ANNUAL REPORT
President's Message
Dear Shareholder:
I am pleased to present the Annual Report to Shareholders of Virginia Municipal
Cash Trust, which covers the 12-month period from November 1, 1998 through
October 31, 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 Virginia personal
income tax-through a portfolio concentrated in high-quality, short-term Virginia
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
$0.03 per share for both Institutional Shares and Institutional Service Shares.
The fund's net assets totaled $280.3 million at the end of the reporting period.
Thank you for relying on Virginia Municipal Cash Trust to help your ready cash
earn 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
December 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 REPORTING PERIOD?
Perhaps the biggest issues threatening the U.S. economy in the latter half of
1998 were alleviated by the second quarter of 1999. The improvements in
international economies, particularly Asia, and calm foreign markets laid the
foundation for the Federal Reserve Board (the "Fed") to focus on U.S. economic
releases as a better indicator of the inflation picture. The Fed became
increasingly concerned with inflationary pressures from tighter labor markets
and rising equity wealth. For the most part inflationary forces remained tame
during 1999 with increases in some commodity prices, such as oil. Nevertheless,
the Fed began a series of three interest rate increases, citing tighter labor
markets, shrinking productivity gains and growth in demand. The moves came in
June, August and November; each time, the Fed voted to raise the federal funds
target rate by a quarter point, bringing the target rate to 5.50%.
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"), which comprise more than half of the fund's assets, started the
reporting period in the 3.00% range, but moved sharply higher in December to the
4.00% level as supply and demand imbalances occurred. Yields then declined in
January, as investors looked to reinvest coupon payments and year-end selling
pressures eased. Yields averaged slightly over 2.75% during February and March
before rising to the 4.00% in April due to traditional tax season payment
pressures. Over the summer months, yields remained mostly in a band between
3.00% and 3.50%, but rose sharply in September as cash outflows in the municipal
markets pushed rates as high as 3.85%. VRDN yields ended the reporting period at
3.50%. Over the reporting period, VRDN yields averaged roughly 66% of taxable
rates, making them attractive for investors in the two highest federal tax
brackets.
The overall tone of the short-term municipal market was positive. Municipalities
across the country benefited from an expanding 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 of the decade. Lack
of supply and heavy demand kept short-term municipal securities, relative to
their taxable counterparts, relatively expensive.
WHAT WERE YOUR STRATEGIES FOR THE FUND DURING THE REPORTING PERIOD?
The fund's average maturity at the beginning of the period was approximately 36
days. The fund remained in a 35- to 45-day average maturity range over most of
the reporting period, 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. Once an average
maturity range was targeted, taking into account Federal Reserve monetary
policy, the portfolio maximized 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 municipals to
taxable instruments, such as U.S. Treasury securities. This portfolio structure
continued to provide a competitive yield over time.
WHAT IS YOUR OUTLOOK GOING FORWARD?
The Fed, concerned by persistent above-trend growth in an environment where
labor markets are constrained and productivity gains are narrowing, will likely
remain on hold until the first quarter of 2000. It is probable that we will see
one and possibly two interest rate increases in the first half of 2000. In the
near future, 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 market developments, with great interest, in order to best serve our
municipal clients.
Portfolio of Investments
OCTOBER 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
99.5% 1
VIRGINIA-98.8%
$ 5,000,000 Albemarle County, VA IDA,
(Series 1999) Weekly VRDNs
(Region Ten Community
Services Board,
Inc.)/(Wachovia Bank of
NC, N.A. LOC) $ 5,000,000
2,200,000 Amelia County, VA IDA,
(Series 1991) Weekly VRDNs
(Chambers Waste
System)/(Morgan Guaranty
Trust Co., New York LOC) 2,200,000
1,200,000 Arlington County, VA
Weekly VRDNs (Ballston
Public Parking)/(Citibank
N.A., New York LOC) 1,200,000
4,500,000 Bedford County, VA IDA,
(Series 1999) Weekly VRDNs
(David R. Snowman and Carol
J. Snowman)/(Crestar Bank
of Virginia, Richmond LOC) 4,500,000
13,500,000 Campbell County, VA IDA,
Solid Waste Disposal
Facilities Revenue ACES
Weekly VRDNs (Georgia-
Pacific Corp.)/(SunTrust
Bank, Atlanta LOC) 13,500,000
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
5,000,000 Charlottesville, VA IDA,
7.375% Bonds (Martha
Jefferson
Hospital)/(United States
Treasury PRF), 10/1/2000
(@102) 5,259,613
1,415,000 Charlottesville, VA IDA,
IDR Refunding Bonds, 3.35%
TOBs (Safeway,
Inc.)/(Bankers Trust Co.,
New York LOC), Mandatory
Tender 12/1/1999 1,415,000
5,995,000 2 Chesapeake, VA IDA, Trust
Receipts (Series 1998C-10)
Reg D, Weekly VRDNs
(Sumitomo Machinery Corp.
of America Corp.)/(Bank of
America, N.A. SWP) 5,995,000
1,450,000 Chesapeake, VA, 7.25%
Bonds, 8/1/2000 1,489,523
1,900,000 Chesterfield County, VA
IDA, (Series 1998) Weekly
VRDNs (Lumberg,
Inc.)/(Bank of America,
N.A. LOC) 1,900,000
1,200,000 Chesterfield County, VA,
5.65% Bonds, 7/15/2000 1,215,591
2,000,000 Danville, VA IDA, (Series
1997) Weekly VRDNs
(Diebold, Inc.)/(Bank One,
Ohio, N.A. LOC) 2,000,000
5,298,975 2 Equity Trust III, (1996
Series) Weekly VRDNs
(Bayerische Hypotheken-und
Vereinsbank AG LOC) 5,298,975
1,100,000 Fairfax County, VA EDA,
(Series 1995) Weekly VRDNs
(American Society of Civil
Engineers Foundation,
Inc.)/(Mellon Bank N.A.,
Pittsburgh LOC) 1,100,000
5,000,000 2 Fairfax County, VA EDA,
Trust Receipt (SeriesA-15) Reg D, 3.55% TOBs (AMBAC
INS)/(National Westminster Bank, PLC, London LIQ),
Optional Tender 11/1/1999 5,000,000
9,445,000 2 Fairfax County, VA IDA,
(Series 1998A-35) Reg D,
Weekly VRDNs (Fairfax
Hospital
System)/(Bayerische
Hypotheken-und Vereinsbank
AG LIQ)/(United States
Treasury PRF) 9,445,000
5,000,000 Fairfax County, VA Water
Authority, 7.25% Bonds
(United States Treasury
PRF), 1/1/2000 (@102) 5,132,826
10,700,000 Falls Church, VA IDA,
(Series 1985), 3.40% TOBs
(Kaiser Permanente),
Optional Tender 11/1/1999 10,700,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
VIRGINIA-CONTINUED
$ 7,113,000 Fluvanna County, VA IDA,
(Series 1986) Weekly VRDNs
(Thomasville Furniture
Industries)/(UBS AG LOC) $ 7,113,000
5,710,000 Frederick County, VA IDA,
(Series 1997) Weekly VRDNs
(Jouan, Inc.)/(Wachovia
Bank of NC, N.A. LOC) 5,710,000
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
11,500,000 Halifax County, VA IDA,
MMMs, PCR, 3.40% CP
(Virginia Electric Power
Co.), Mandatory Tender
11/10/1999 11,500,000
7,500,000 Halifax County, VA IDA,
MMMs, PCR, 3.45% CP
(Virginia Electric Power
Co.), Mandatory Tender
11/9/1999 7,500,000
3,000,000 Halifax County, VA IDA,
MMMs, PCR, 3.75% CP
(Virginia Electric Power
Co.), Mandatory Tender
2/17/2000 3,000,000
4,000,000 Hampton, VA Redevelopment
& Housing Authority,
(Series 1998) Weekly VRDNs
(Township
Apartments)/(Amsouth Bank
N.A., Birmingham LOC) 4,000,000
1,500,000 Hanover County, VA IDA
Weekly VRDNs (Fiber-Lam,
Inc. Project)/(Bank of
America, N.A. LOC) 1,500,000
1,110,000 Henry County, VA Public
Service Authority, 5.50%
Bonds (FGIC INS),
11/15/1999 1,111,040
5,000,000 James City County, VA IDA,
IDRB (Series 1997) Weekly
VRDNs (Riverside Health
System-Patriots Colony) 5,000,000
6,500,000 Loudoun County, VA IDA,
(Series 1998), 3.35% TOBs
(Signature Flight Support
Corp.)/(Bayerische
Landesbank Girozentrale
LOC), Optional Tender
12/1/1999 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
11,000,000 Metropolitan Washington,
DC Airports Authority,
3.50% CP (Bank of America,
N.A. LOC), Mandatory
Tender 11/19/1999 11,000,000
4,750,000 New Kent County, VA IDA,
(Series 1999) Weekly VRDNs
(Basic Construction
Company, LLC)/(Crestar
Bank of Virginia, Richmond
LOC) 4,750,000
3,995,000 Newport News, VA IDA,
(Series 1997) Weekly VRDNs
(Iceland Seafood
Corp.)/(Crestar Bank of
Virginia, Richmond LOC) 3,995,000
3,825,000 Newport News, VA
Redevelopment & Housing
Authority, (Series 1999)
Weekly VRDNs (River Park
Towers)/(Bank One, Arizona
N.A. LOC) 3,825,000
4,000,000 Norfolk, VA, (Series A),
5.10% Bonds, 2/1/2000 4,018,629
3,000,000 Peninsula Port Authority,
Facility Revenue Refunding
Bonds (Series 1992), CP
(CSX Corp.)/(Bank of Nova
Scotia, Toronto LOC),
Mandatory Tender 11/9/1999 3,000,000
1,005,000 Pulaski County, VA IDA,
(Series 1995) Weekly VRDNs
(Balogh Real Estate Ltd.
Partnership Mar-Bal Inc.
Project)/(Bank One, Ohio,
N.A. LOC) 1,005,000
895,000 Richmond, VA IDA, (Series
1997) Weekly VRDNs (PM
Beef)/(U.S. Bank, N.A.,
Minneapolis LOC) 895,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
VIRGINIA-CONTINUED
$ 6,000,000 Richmond, VA Redevelopment
& Housing Authority,
(Series B-1) Weekly VRDNs
(Richmond, VA Red Tobacco
Row)/(Credit Suisse First
Boston LOC) $ 6,000,000
6,000,000 Richmond, VA Redevelopment
& Housing Authority,
(Series B-2) Weekly VRDNs
(Richmond, VA Red Tobacco
Row)/(Bayerische
Landesbank Girozentrale
INV) 6,000,000
1,500,000 Richmond, VA Redevelopment
& Housing Authority,
(Series B-3A) Weekly VRDNs
(Richmond, VA Red Tobacco
Row)/(Bayerische
Landesbank Girozentrale
INV) 1,500,000
3,160,000 Richmond, VA Redevelopment
& Housing Authority,
(Series B-5) Weekly VRDNs
(Richmond, VA Red Tobacco
Row)/(Bayerische
Landesbank Girozentrale
INV) 3,160,000
3,555,000 Richmond, VA Redevelopment
& Housing Authority,
(Series B-6) Weekly VRDNs
(Richmond, VA Red Tobacco
Row)/(Bayerische
Landesbank Girozentrale
INV) 3,555,000
7,000,000 Richmond, VA Redevelopment
& Housing Authority,
(Series B-9) Weekly VRDNs
(Richmond, VA Red Tobacco
Row)/(Bayerische
Landesbank Girozentrale
INV) 7,000,000
7,000,000 Richmond, VA Redevelopment
& Housing Authority,
(Series B-10) Weekly VRDNs
(Richmond, VA Red Tobacco
Row)/(Bayerische
Landesbank Girozentrale
INV) 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
3,500,000 Roanoke, VA IDA, 7.50%
Bonds (Roanoke Memorial
Hospital Project -
Carilion Health
System)/(United States
Treasury PRF), 7/1/2020
(@102) 3,653,064
2,610,000 South Hill, VA IDA, (Series
1997) Weekly VRDNs
(International Veneer Co.,
Inc.)/(Bank One, Indiana,
N.A. LOC) 2,610,000
4,095,000 Spotsylvania County, VA IDA, (Series 1989), 7.60% TOBs
(Walter Grinders, Inc.)/(Deutsche Bank AG LOC), Optional
Tender
8/31/2000 4,095,000
2,500,000 Staunton, VA IDA, (Series
1997) Weekly VRDNs
(Diebold, Inc.)/(Bank One,
Ohio, N.A. LOC) 2,500,000
3,500,000 Staunton, VA IDA, (Series
1999A) Weekly VRDNs
(Specialty Blades,
Inc.)/(Crestar Bank of
Virginia, Richmond LOC) 3,500,000
2,000,000 Tazewell County, VA IDA,
(Series 1993) Weekly VRDNs
(Seville Properties
Bluefield)/(Huntington
National Bank, Columbus,
OH LOC) 2,000,000
9,920,000 2 Virginia Port Authority,
MERLOTS (Series 1997M)
Weekly VRDNs (MBIA
INS)/(First Union National
Bank, Charlotte, N.C. LIQ) 9,920,000
980,000 Virginia Small Business
Financing Authority Weekly
VRDNs (Moses Lake
Industries)/(KeyBank, N.A.
LOC) 980,000
9,000,000 2 Virginia State Housing
Development Authority,
(Series 1999A-2) Reg D,
Weekly VRDNs (MBIA
INS)/(Commerzbank AG,
Frankfurt LIQ) 9,000,000
3,895,000 Virginia State Public
School Authority, (Series
B), 4.75% Bonds, 8/1/2000 3,923,239
2,620,000 Virginia State Public
School Authority, (Series
B), 5.70% Bonds, 1/1/2000 2,631,361
1,000,000 Virginia State Public
School Authority, 5.75%
Bonds, 1/1/2000 1,004,230
1,507,000 Williamsburg, VA IDA,
(Series 1988) Weekly VRDNs
(Colonial Williamsburg
Foundation Museum)/(Bank
of America, N.A. LOC) 1,507,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued 1
VIRGINIA-CONTINUED
$ 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), 3.70% CP
(Virginia Electric Power
Co.), Mandatory Tender
2/17/2000 5,000,000
TOTAL 276,863,091
PUERTO RICO-0.7%
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 $ 278,863,091
</TABLE>
Securities that are subject to alternative minimum tax represent 67.8% 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 Corporation, MIG-1 or MIG-2 by Moody's Investors Service, or 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 October 31, 1999, the portfolio securities were rated as follows:
Tier Rating Based on Total Market Value
<TABLE>
<CAPTION>
FIRST TIER SECOND TIER
<S> <C>
100.00% 00.00%
</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 October 31, 1999, these
securities amounted to $44,658,975 which represents 15.9% of net assets.
3 Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($280,272,039) at October 31, 1999.
The following acronyms are used throughout this portfolio:
ACES -Adjustable Convertible Extendable Securities AMBAC -American Municipal
Bond Assurance Corporation 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 INV -Investment Agreement LIQ -Liquidity Agreement LLC
- -Limited Liability Corporation 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 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
OCTOBER 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Total investments in
securities, at amortized
cost and value $ 278,863,091
Income receivable 2,114,945
TOTAL ASSETS 280,978,036
LIABILITIES:
Payable for shares
redeemed $ 323,137
Income distribution
payable 206,941
Payable to Bank 168,185
Accrued expenses 7,734
TOTAL LIABILITIES 705,997
Net assets for 280,272,039
shares outstanding $ 280,272,039
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PROCEEDS PER SHARE
INSTITUTIONAL SHARES:
$34,562,076 / 34,562,076
shares outstanding $1.00
INSTITUTIONAL SERVICE
SHARES:
$245,709,963 / 245,709,963
shares outstanding $1.00
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Operations
YEAR ENDED OCTOBER 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 9,720,339
EXPENSES:
Investment advisory fee $ 1,157,907
Administrative personnel
and services fee 218,266
Custodian fees 17,774
Transfer and dividend
disbursing agent fees and
expenses 149,297
Directors'/Trustees' fees 2,749
Auditing fees 12,856
Legal fees 7,669
Portfolio accounting fees 79,337
Shareholder services fee-
Institutional Shares 83,622
Shareholder services fee-
Institutional Service
Shares 639,676
Share registration costs 25,194
Printing and postage 16,360
Insurance premiums 19,042
Miscellaneous 2,407
TOTAL EXPENSES 2,432,156
WAIVERS:
Waiver of investment
advisory fee $ (280,826)
Waiver of shareholder
services fee-Institutional
Shares (83,622)
Waiver of shareholder
services fee-Institutional
Service Shares (255,870)
TOTAL WAIVERS (620,318)
Net expenses 1,811,838
Net investment income $ 7,908,501
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31 1999 1998
<S> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net investment income $ 7,908,501 $ 7,956,244
DISTRIBUTIONS TO
SHAREHOLDERS:
Distributions from net
investment income
Institutional Shares (964,191) (1,199,300)
Institutional Service
Shares (6,944,310) (6,756,944)
CHANGE IN NET ASSETS
RESULTING FROM
DISTRIBUTIONS
TO SHAREHOLDERS (7,908,501) (7,956,244)
SHARE TRANSACTIONS:
Proceeds from sale of
shares 1,226,749,956 1,342,458,938
Net asset value of shares
issued to shareholders in
payment of
distributions declared 5,827,519 5,993,310
Cost of shares redeemed (1,224,012,492) (1,299,965,431)
CHANGE IN NET ASSETS
RESULTING FROM SHARE
TRANSACTIONS 8,564,983 48,486,817
Change in net assets 8,564,983 48,486,817
NET ASSETS:
Beginning of period 271,707,056 223,220,239
End of period $ 280,272,039 $ 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>
YEAR ENDED OCTOBER 31 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.03 0.03 0.03 0.03 0.04
LESS DISTRIBUTIONS:
Distributions from net investment income (0.03) (0.03) (0.03) (0.03) (0.04)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN 1 2.90% 3.26% 3.31% 3.24% 3.56%
RATIOS TO AVERAGE NET ASSETS:
Expenses 2 0.84% 0.85% 0.85% 0.89% 0.91%
Net investment income 2 2.52% 2.87% 2.90% 2.79% 3.08%
Expenses (after waivers) 0.49% 0.49% 0.49% 0.49% 0.49%
Net investment income (after waivers) 2.87% 3.23% 3.26% 3.19% 3.50%
SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $34,562 $24,559 $24,382 $26,302 $22,642
</TABLE>
1 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
2 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>
YEAR ENDED OCTOBER 31 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.03 0.03 0.03 0.03 0.03
LESS DISTRIBUTIONS:
Distributions from net investment income (0.03) (0.03) (0.03) (0.03) (0.03)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN 1 2.75% 3.11% 3.17% 3.14% 3.46%
RATIOS TO AVERAGE NET ASSETS:
Expenses 2 0.84% 0.85% 0.86% 0.89% 0.91%
Net investment income 2 2.51% 2.85% 2.89% 2.80% 3.06%
Expenses (after waivers) 0.64% 0.64% 0.63% 0.59% 0.59%
Net investment income (after waivers) 2.71% 3.06% 3.12% 3.10% 3.38%
SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $245,710 $247,149 $198,838 $177,575 $127,083
</TABLE>
1 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
2 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
OCTOBER 31, 1999
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 their income. Accordingly, no provisions for federal tax
are necessary.
At October 31, 1999, the Fund, for federal tax purposes, had a capital loss
carryforward, as noted below, which will reduce the Fund's taxable income
arising from future net realized gain on investments, if any, to the extent
permitted by the Code, and thus will reduce the amount of the distributions to
shareholders which would otherwise be necessary to relieve the Fund of any
liability for federal tax.
Pursuant to the Code, such capital loss carryforward will expire as follows:
<TABLE>
<CAPTION>
EXPIRATION YEAR EXPIRATION AMOUNT
<S> <C>
2002 $1,190
2004 1,158
</TABLE>
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 maintain 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 October 31, 1999, capital paid-in aggregated $280,272,039.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31 1999 1998
<S> <C> <C>
INSTITUTIONAL SHARES:
Shares sold 94,679,273 140,689,593
Shares issued to
shareholders in payment of
distributions declared 76,053 292,839
Shares redeemed (84,751,755) (140,806,137)
NET CHANGE RESULTING FROM
INSTITUTIONAL SHARE
TRANSACTIONS 10,003,571 176,295
<CAPTION>
YEAR ENDED OCTOBER 31 1999 1998
<S> <C> <C>
INSTITUTIONAL SERVICE
SHARES:
Shares sold 1,132,070,683 1,201,769,345
Shares issued to
shareholders in payment of
distributions declared 5,751,466 5,700,471
Shares redeemed (1,139,260,737) (1,159,159,294)
NET CHANGE RESULTING FROM
INSTITUTIONAL SERVICE
SHARE TRANSACTIONS (1,438,588) 48,310,522
NET CHANGE RESULTING FROM
SHARE TRANSACTIONS 8,564,983 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 year ended October 31, 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 and amounted to $571,435,000 and $535,030,000,
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
October 31, 1999, 28.7% 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 6.8% of total investments.
YEAR 2000 (UNAUDITED)
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.
CHANGE OF INDEPENDENT AUDITOR (UNAUDITED)
On May 19, 1999, the Fund's Trustees, upon the recommendation of its Audit
Committee, requested and subsequently accepted the resignation of Arthur
Andersen ("AA") as the Fund's independent auditors. AA's reports on the Fund's
financial statements for the fiscal years ended October 31, 1997 and October 31,
1998 contained no adverse opinion or disclaimer of opinion nor were they
qualified or modified as to uncertainty, audit scope or accounting principles.
During the Fund's fiscal years ended October 31, 1997 and October 31, 1998: (i)
there were no disagreements with AA on any matter of accounting principles or
practices, financial statement disclosure or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of AA, would have caused it
to make reference to the subject matter of the disagreements in connection with
its reports on the financial statements for such years; and (ii) there were no
reportable events of the kind described in Item 304 (a)(1)(v) of Regulation S-K
under the Securities Exchange Act of 1934, as amended.
The Fund, by action of its Trustees, upon the recommendation of the Audit
Committee, has engaged Ernst & Young LLP ("E&Y") as the independent auditors to
audit the Fund's financial statements for the fiscal year ended October 31,
1999. During the Fund's fiscal years ended October 31, 1997 and October 31,
1998, neither the Fund nor anyone on its behalf has consulted E&Y on items which
(i) concerned the application of accounting principles to a specified
transaction, either completed or proposed, or the type of audit opinion that
might be rendered on the Fund's financial statements, or (ii) concerned the
subject of a disagreement (as defined in paragraph (a)(1)(iv) of Item 304 of
Regulation S-K) of reportable events (as described in the paragraph (a)(1)(v) of
said Item 304).
Report of Ernst & Young LLP, Independent Auditors
TO THE BOARD OF TRUSTEES OF FEDERATED MUNICIPAL TRUST AND SHAREHOLDERS OF
VIRGINIA MUNICIPAL CASH TRUST:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of the Virginia Municipal Cash Trust (one of the
portfolios constituting the Federated Municipal Trust) as of October 31, 1999,
and the related statement of operations, the statement of changes in net assets,
and the financial highlights for the year then ended. These financial statements
and financial highlights are the responsibility of the Trusts' management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit. The statement of changes in net assets
for the year ended October 31, 1998 and the financial highlights for each of the
periods indicated therein for the period then ended were audited by other
auditors whose report, dated December 23, 1998, expressed an unqualified opinion
on that statement and those financial highlights.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in financial statements and
financial highlights. Our procedures included confirmation of securities owned
as of October 31, 1999 by correspondence with the custodian. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Virginia Municipal Cash Trust of the Federated Municipal Trust at October 31,
1999, and the results of its operations, changes in its net assets and financial
highlights for the year then ended, in conformity with generally accepted
accounting principles.
[Graphic]
Boston, Massachusetts
December 16, 1999
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
JOHN W. MCGONIGLE
Executive Vice President and Secretary
EDWARD C. GONZALES
Executive Vice President
RICHARD B. FISHER
Vice President
RICHARD J. THOMAS
Treasurer
LESLIE K. ROSS
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
ANNUAL REPORT
Virginia Municipal Cash Trust
ANNUAL REPORT TO SHAREHOLDERS
OCTOBER 31, 1999
[Graphic]
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
G00133-02 (12/99)
[Graphic]
