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SHORT-TERM MUNICIPAL TRUST
(FORMERLY, FEDERATED SHORT-INTERMEDIATE MUNICIPAL TRUST)
INSTITUTIONAL SHARES
PROSPECTUS
The Institutional Shares offered by this prospectus represent
interests in a diversified portfolio of securities of Short-Term
Municipal Trust (the "Trust"). The Trust is an open-end management
investment company (a mutual fund).
The investment objective of the Trust is to provide dividend income
which is exempt from federal regular income tax. The Trust pursues
this investment objective by investing in a portfolio of municipal
securities with a dollar-weighted average maturity of less than three
years.
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS
OF ANY BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK, AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THESE
SHARES INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
This prospectus contains the information you should read and know
before you invest in Institutional Shares of the Trust. Keep this
prospectus for future reference.
The Trust has also filed a Combined Statement of Additional
Information for Institutional Shares and Institutional Service Shares
dated August 31, 1994, with the Securities and Exchange Commission.
The information contained in the Combined Statement of Additional
Information is incorporated by reference into this prospectus. You
may request a copy of the Combined Statement of Additional
Information free of charge by calling 1-800-235-4669. To obtain other
information or to make inquiries about the Trust, contact the Trust
at the address listed in the back of this prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Prospectus dated August 31, 1994
TABLE OF CONTENTS
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<TABLE>
<S> <C>
SUMMARY OF TRUST EXPENSES 1
- --------------------------------------------------
FINANCIAL HIGHLIGHTS --
INSTITUTIONAL SHARES 2
- --------------------------------------------------
GENERAL INFORMATION 3
- --------------------------------------------------
INVESTMENT INFORMATION 3
- --------------------------------------------------
Investment Objective 3
Investment Policies 3
Acceptable Investments 3
Average Maturity 4
Characteristics 4
Participation Interests 4
Variable Rate Municipal Securities 4
When-Issued and Delayed Delivery
Transactions 5
Temporary Investments 5
Municipal Securities 5
Investment Risks 6
Investment Limitations 6
TRUST INFORMATION 6
- --------------------------------------------------
Management of the Trust 6
Board of Trustees 6
Investment Adviser 6
Advisory Fees 7
Adviser's Background 7
Other Payments to Financial
Institutions 7
Distribution of Institutional Shares 8
Administration of the Trust 8
Administrative Services 8
Shareholder Services Plan 8
Custodian 8
Transfer Agent and Dividend
Disbursing Agent 8
Legal Counsel 8
Independent Public Accountants 8
NET ASSET VALUE 9
- --------------------------------------------------
INVESTING IN INSTITUTIONAL SHARES 9
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Share Purchases 9
By Wire 9
By Mail 9
Minimum Investment Required 9
What Shares Cost 10
Subaccounting Services 10
Certificates and Confirmations 10
Dividends 10
Capital Gains 10
REDEEMING INSTITUTIONAL SHARES 11
- --------------------------------------------------
Telephone Redemption 11
Written Requests 11
Signatures 11
Receiving Payment 12
Accounts with Low Balances 12
SHAREHOLDER INFORMATION 12
- --------------------------------------------------
Voting Rights 12
Massachusetts Partnership Law 12
TAX INFORMATION 13
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Federal Income Tax 13
Pennsylvania Corporate and Personal
Property Taxes 14
OTHER STATE AND LOCAL TAXES 14
- --------------------------------------------------
PERFORMANCE INFORMATION 14
- --------------------------------------------------
OTHER CLASSES OF SHARES 15
- --------------------------------------------------
Financial Highlights --
Institutional Service Shares 16
FINANCIAL STATEMENTS 17
- --------------------------------------------------
REPORT OF INDEPENDENT PUBLIC
ACCOUNTANTS 36
- --------------------------------------------------
ADDRESSES Inside Back Cover
- --------------------------------------------------
</TABLE>
I
SUMMARY OF TRUST EXPENSES
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<TABLE>
<CAPTION>
INSTITUTIONAL SHARES
SHAREHOLDER TRANSACTION EXPENSES
<S> <C> <C>
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)............................................................. None
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price)............................................................. None
Contingent Deferred Sales Charge (as a percentage of original purchase price or redemption
proceeds, as applicable)........................................................................ None
Redemption Fee (as a percentage of amount redeemed, if applicable)................................ None
Exchange Fee...................................................................................... None
<CAPTION>
ANNUAL INSTITUTIONAL SHARES OPERATING EXPENSES
(As a percentage of average net assets)
<S> <C> <C>
Management Fee (after waiver) (1)................................................................. 0.27%
12b-1 Fee......................................................................................... None
Total Other Expenses.............................................................................. 0.20%
Shareholder Services Fee (2)......................................................... 0.00%
Total Institutional Shares Operating Expenses (3)......................................... 0.47%
<FN>
(1) The management fee has been reduced to reflect the waiver of a portion of
the management fee. The adviser can terminate this waiver at any time at
its sole discretion. The maximum management fee is 0.40%.
(2) The maximum Shareholder Services Fee is 0.25%.
(3) The Total Institutional Shares Operating Expenses would have been 0.60%
absent the waiver of a portion of the management fee.
</TABLE>
THE PURPOSE OF THIS TABLE IS TO ASSIST AN INVESTOR IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT A SHAREHOLDER OF INSTITUTIONAL SHARES OF THE
TRUST WILL BEAR, EITHER DIRECTLY OR INDIRECTLY. FOR MORE COMPLETE DESCRIPTIONS
OF THE VARIOUS COSTS AND EXPENSES, SEE "INVESTING IN INSTITUTIONAL SHARES" AND
"TRUST INFORMATION." WIRE-TRANSFERRED REDEMPTIONS OF LESS THAN $5,000 MAY BE
SUBJECT TO ADDITIONAL FEES.
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment
assuming (1) 5% annual return and (2) redemption at the end of
each time period............................................... $5 $15 $26 $59
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
The information set forth in the foregoing table and example relates only to
Institutional Shares of the Trust. The Trust also offers another class of shares
called Institutional Service Shares. Institutional Shares and Institutional
Service Shares are subject to certain of the same expenses; however,
Institutional Service Shares are subject to a 12b-1 fee of up to 0.25%. See
"Other Classes of Shares."
1
SHORT-TERM MUNICIPAL TRUST
(FORMERLY, FEDERATED SHORT-INTERMEDIATE MUNICIPAL TRUST)
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 36.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-----------------------------------------------------
1994 1993 1992 1991 1990
- ------------------------------------------------------------ --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.37 $ 10.29 $ 10.18 $ 10.14 $ 10.10
- ------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------
Net investment income 0.40 0.44 0.53 0.60 0.60
- ------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (0.22) 0.08 0.11 0.04 0.04
- ------------------------------------------------------------ --------- --------- --------- --------- ---------
Total from investment operations 0.18 0.52 0.64 0.64 0.64
- ------------------------------------------------------------
LESS DISTRIBUTIONS
- ------------------------------------------------------------
Dividends to shareholders from net investment income (0.40) (0.44) (0.53) (0.60) (0.60)
- ------------------------------------------------------------ --------- --------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 10.15 $ 10.37 $ 10.29 $ 10.18 $ 10.14
- ------------------------------------------------------------ --------- --------- --------- --------- ---------
TOTAL RETURN* 1.76% 5.11% 6.40% 6.47% 6.54%
- ------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------------------------------
Expenses 0.47% 0.46% 0.46% 0.46% 0.47%
- ------------------------------------------------------------
Net investment income 3.89% 4.21% 5.12% 5.89% 5.94%
- ------------------------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------------------------
Net assets, end of period (000 omitted) $316,810 $318,932 $205,101 $142,493 $139,113
- ------------------------------------------------------------
Portfolio turnover rate 36% 15% 42% 40% 69%
- ------------------------------------------------------------
<CAPTION>
YEAR ENDED JUNE 30,
-----------------------------------------------------
1989 1988 1987 1986 1985
- ------------------------------------------------------------ --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.19 $ 10.24 $ 10.31 $ 10.22 $ 10.05
- ------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------
Net investment income 0.57 0.54 0.51 0.60 0.64
- ------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (0.09) (0.05) (0.07) 0.09 0.17
- ------------------------------------------------------------ --------- --------- --------- --------- ---------
Total from investment operations 0.48 0.49 0.44 0.69 0.81
- ------------------------------------------------------------
LESS DISTRIBUTIONS
- ------------------------------------------------------------
Dividends to shareholders from net investment income (0.57) (0.54) (0.51) (0.60) (0.64)
- ------------------------------------------------------------ --------- --------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 10.10 $ 10.19 $ 10.24 $ 10.31 $ 10.22
- ------------------------------------------------------------ --------- --------- --------- --------- ---------
TOTAL RETURN* 4.84% 4.89% 4.37% 7.55% 7.68%
- ------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------------------------------
Expenses 0.46% 0.47% 0.47% 0.48% 0.47%
- ------------------------------------------------------------
Net investment income 5.59% 5.25% 4.95% 5.80% 6.33%
- ------------------------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------------------------
Net assets, end of period (000 omitted) $178,978 $315,154 $483,279 $341,294 $192,573
- ------------------------------------------------------------
Portfolio turnover rate 55% 63% 57% 16% 32%
- ------------------------------------------------------------
<FN>
* Based on net asset value which does not reflect the sales load or contingent
deferred sales charge, if applicable.
</TABLE>
(See Notes which are an integral part of the Financial Statements)
Further information about the Trust's performance is contained in the Trust's
Annual Report for the fiscal year ended June 30, 1994, which can be obtained
free of charge.
2
GENERAL INFORMATION
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The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated May 8, 1981. The Declaration of Trust permits the Trust to offer
separate series of shares of beneficial interest representing interests in
separate portfolios of securities. The shares in any one portfolio may be
offered in separate classes. As of the date of this prospectus, the Board of
Trustees (the "Trustees") have established two classes of shares of the Trust,
known as Institutional Shares and Institutional Service Shares. This prospectus
relates only to Institutional Shares ("Shares") of the Trust.
Shares of the Trust are sold primarily to accounts for which financial
institutions act in a fiduciary or agency capacity, or other accounts where the
financial institution maintains master accounts with an aggregate investment of
at least $400 million in certain funds which are advised or distributed by
affiliates of Federated Investors. An investment in the Trust serves as a
convenient means of accumulating an interest in a professionally managed,
diversified portfolio of municipal securities. A minimum initial investment of
$25,000 over a 90-day period is required. The Trust may not be a suitable
investment for retirement plans since it invests in municipal securities.
Shares are currently sold and redeemed at net asset value without a sales charge
imposed by the Trust.
INVESTMENT INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The investment objective of the Trust is to provide dividend income which is
exempt from federal regular income tax. Interest income of the Trust that is
exempt from federal regular income tax retains its tax-free status when
distributed to the Trust's shareholders. The Trust attempts to achieve its
investment objective by investing at least 80% of its net assets in a
diversified portfolio of municipal securities or by investing its assets so that
at least 80% of its income will be tax-exempt. While there is no assurance that
the Trust will achieve its investment objective, it endeavors to do so by
following the investment policies described in this prospectus. The investment
objective, and the above investment policy, cannot be changed without approval
of shareholders.
INVESTMENT POLICIES
The investment policies described below may be changed by the Trustees without
shareholder approval. Shareholders will be notified before any material change
in these policies becomes effective.
ACCEPTABLE INVESTMENTS. The municipal securities in which the Trust invests
are:
- debt obligations issued by or on behalf of any state, territory, or
possession of the United States, including the District of Columbia, or
any political subdivision of any of these; and
- participation interests, as described below, in any of the above
obligations,
the interest from which is, in the opinion of bond counsel for the issuers or in
the opinion of officers of the Trust and/or the investment adviser to the Trust,
exempt from federal regular income tax.
3
AVERAGE MATURITY. The dollar-weighted average maturity of the Trust's portfolio
of municipal securities will be less than three years. For purposes of
determining the dollar-weighted average maturity of the Trust's portfolio, the
maturity of a municipal security will be its ultimate maturity, unless it is
probable that the issuer of the security will take advantage of
maturity-shortening devices such as a call, refunding, or redemption provision,
in which case the maturity date will be the date on which it is probable that
the security will be called, refunded, or redeemed. If the municipal security
includes the right to demand payment, the maturity of the security for purposes
of determining the Trust's dollar-weighted average maturity will be the period
remaining until the principal amount of the security can be recovered by
exercising the right to demand payment.
CHARACTERISTICS. The municipal securities in which the Trust invests are:
- rated within the three highest ratings for municipal securities by Moody's
Investors Service, Inc. ("Moody's") (Aaa, Aa or A) or by Standard & Poor's
Corporation ("Standard & Poor's") (AAA, AA, or A);
- guaranteed at the time of purchase by the U.S. government as to the
payment of principal and interest;
- fully collateralized by an escrow of U.S. government or other securities
acceptable to the Trust's adviser;
- rated at the time of purchase within Moody's highest short-term municipal
obligation rating (MIG1/VMIG1) or Moody's highest municipal commercial
paper rating (P-1) or Standard & Poor's highest municipal commercial paper
rating (SP-1);
- unrated if, at the time of purchase, longer term municipal securities of
the issuer are rated A or better by Moody's or Standard & Poor's; or
- determined by the Trust's investment adviser to be equivalent to municipal
securities which are rated A or better by Moody's or by Standard & Poor's.
Downgraded securities will be evaluated on a case by case basis by the adviser.
The adviser will determine whether or not the security continues to be an
acceptable investment. If not, the security will be sold. The prices of fixed
income securities fluctuate inveresely to the direction of interest rates. A
description of the ratings categories is contained in the Appendix to the
Combined Statement of Additional Information.
PARTICIPATION INTERESTS. The Trust may purchase participation interests from
financial institutions such as commercial banks, savings and loan associations,
and insurance companies. These participation interests give the Trust an
undivided interest in municipal securities. The financial institutions from
which the Trust purchases participation interests frequently provide or secure
irrevocable letters of credit or guarantees to assure that the participation
interests are of high quality. The Trustees will determine that participation
interests meet the prescribed quality standards for the Trust.
VARIABLE RATE MUNICIPAL SECURITIES. Some of the municipal securities which the
Trust purchases may have variable interest rates. Variable interest rates are
ordinarily based on a published interest
4
rate or interest rate index or some similar standard, such as the 91-day U.S.
Treasury bill rate. Variable rate municipal securities will be treated as
maturing on the date of the next scheduled adjustment to the interest rate for
purposes of determining the dollar-weighted average maturity of the portfolio.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Trust may purchase municipal
securities on a when-issued or delayed delivery basis. These transactions are
arrangements in which the Trust purchases securities with payment and delivery
scheduled for a future time. The Trust engages in when-issued and delayed
delivery transactions only for the purpose of acquiring portfolio securities
consistent with the Trust's investment objective and policies, not for
investment leverage. In when-issued and delayed delivery transactions, the Trust
relies on the seller to complete the transaction. The seller's failure to
complete the transaction may cause the Trust to miss a price or yield considered
to be advantageous.
TEMPORARY INVESTMENTS. From time to time on a temporary basis, when the
investment adviser determines that market conditions call for a temporary
defensive posture, the Trust may invest in short-term temporary investments
which may or may not be exempt from federal income tax. Temporary investments
include: tax-exempt variable and floating rate demand notes; tax-free commercial
paper; other temporary municipal securities; obligations issued or guaranteed by
the U.S. government, its agencies or instrumentalities; other debt securities;
commercial paper; certificates of deposit of domestic branches of U.S. banks;
and repurchase agreements (arrangements in which the organization selling the
Trust a security agrees at the time of sale to repurchase it at a mutually
agreed upon time and price).
There are no rating requirements applicable to temporary investments with the
exception of temporary municipal securities which are subject to the same rating
requirements as all other municipal securities in which the Trust invests.
However, the investment adviser will limit temporary investments to those it
considers to be of comparable quality to the acceptable investments of the
Trust.
Although the Trust is permitted to make taxable, temporary investments, there is
no current intention of generating income subject to federal regular income tax.
MUNICIPAL SECURITIES
Municipal securities are generally issued to finance public works such as
airports, bridges, highways, housing, hospitals, mass transportation projects,
schools, streets, and water and sewer works. They are also issued to repay
outstanding obligations, to raise funds for general operating expenses, and to
make loans to other public institutions and facilities. Municipal securities
include industrial development bonds issued by or on behalf of public
authorities to provide financing aid to acquire sites or construct and equip
facilities for privately or publicly owned corporations. The availability of
this financing encourages these corporations to locate within the sponsoring
communities and thereby increases local employment. The two principal
classifications of municipal securities are "general obligation" and "revenue"
bonds. General obligation bonds are secured by the issuer's pledge of its full
faith and credit and taxing power for the payment of principal and interest.
Interest on and principal of revenue bonds, however, are payable only from the
revenue generated by the facility financed by the bond or other specified
sources of revenue. Revenue bonds do not represent a pledge
5
of credit or create any debt of or charge against the general revenues of a
municipality or public authority. Industrial development bonds are typically
classified as revenue bonds.
INVESTMENT RISKS
Yields on municipal securities depend on a variety of factors, including: the
general conditions of the money market and the taxable and municipal bond
markets; the size of the particular offering; the maturity of the obligations;
and the rating of the issue. The ability of the Trust to achieve its investment
objective also depends on the continuing ability of the issuers of municipal
securities and participation interests, or the guarantors of either, to meet
their obligations for the payment of interest and principal when due.
INVESTMENT LIMITATIONS
The Trust will not:
- invest more than 5% of its total assets in securities of one issuer
(except cash and cash items and U.S. government obligations); or
- borrow money or pledge securities except, under certain circumstances, the
Trust may borrow up to one-third of the value of its total assets and
pledge up to 10% of the value of those assets to secure such borrowings.
The above investment limitations cannot be changed without shareholder approval.
The following limitations, however, can be changed by the Trustees without
shareholder approval. Shareholders will be notified before any material change
in these limitations becomes effective.
The Trust will not:
- commit more than 15% of its net assets to illiquid obligations;
- invest more than 10% of its total assets in municipal securities subject
to restrictions on resale; or
- invest more than 5% of its total assets in industrial development bonds of
issuers that have a record of less than three years of continuous
operations.
TRUST INFORMATION
- --------------------------------------------------------------------------------
MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES. The Trust is managed by a Board of Trustees. The Trustees
are responsible for managing the Trust's business affairs and for exercising all
the Trust's powers except those reserved for the shareholders. The Executive
Committee of the Board of Trustees handles the Board's responsibilities between
meetings of the Board.
INVESTMENT ADVISER. Investment decisions for the Trust are made by Federated
Management, the Trust's investment adviser (the "Adviser"), subject to direction
by the Trustees. The Adviser
6
continually conducts investment research and supervision for the Trust and is
responsible for the purchase or sale of portfolio instruments, for which it
receives an annual fee from the Trust.
ADVISORY FEES. The Trust's Adviser receives an annual investment advisory
fee equal to .40 of 1% of the Trust's average daily net assets. Under the
investment advisory contract, the Adviser will reimburse the Trust the
amount, limited to the amount of the advisory fee, by which the Trust's
aggregate annual operating expenses, including its investment advisory fee,
but excluding interest, taxes, brokerage commissions, expenses of
registering and qualifying the Trust and its shares under federal and state
laws and regulations, expenses of withholding taxes, and extraordinary
expenses, exceed .45 of 1% of its average daily net assets. This does not
include reimbursement to the Trust of any expenses incurred by shareholders
who use the transfer agent's subaccounting facilities. The Adviser has also
undertaken to reimburse the Trust for operating expenses in excess of
limitations established by certain states.
ADVISER'S BACKGROUND. Federated Management, a Delaware business trust
organized on April 11, 1989, is a registered investment adviser under the
Investment Advisers Act of 1940. It is a subsidiary of Federated Investors.
All of the Class A (voting) shares of Federated Investors are owned by a
trust, the trustees of which are John F. Donahue, Chairman and Trustee of
Federated Investors, Mr. Donahue's wife, and Mr. Donahue's son, J.
Christopher Donahue, who is President and Trustee of Federated Investors.
Federated Management and other subsidiaries of Federated Investors serve as
investment advisers to a number of investment companies and private
accounts. Certain other subsidiaries also provide administrative services to
a number of investment companies. Total assets under management or
administration by these and other subsidiaries of Federated Investors are
approximately $70 billion. Federated Investors, which was founded in 1956 as
Federated Investors, Inc., develops and manages mutual funds primarily for
the financial industry. Federated Investors' track record of competitive
performance and its disciplined, risk-averse investment philosophy serve
approximately 3,500 client institutions nationwide. Through these same
client institutions, individual shareholders also have access to this same
level of investment expertise.
Jonathan C. Conley has been the Trust's portfolio manager since January
1984. Mr. Conley joined Federated Investors in 1979 and has been a Vice
President of the Trust's investment adviser since 1982. Mr. Conley is a
Chartered Financial Analyst and received his M.B.A. in Finance from the
University of Virginia.
OTHER PAYMENTS TO FINANCIAL INSTITUTIONS. In addition to periodic payments to
financial institutions under the Shareholder Services Plan, certain financial
institutions may be compensated by the adviser or its affiliates for the
continuing investment of customers' assets in certain funds, including the
Trust, advised by those entities. These payments will be made directly by the
distributor or adviser from their assets, and will not be made from the assets
of the Trust or by the assessment of a sales charge on Shares.
7
DISTRIBUTION OF INSTITUTIONAL SHARES
Federated Securities Corp. is the principal distributor for Institutional
Shares. It is a Pennsylvania corporation organized on November 14, 1969, and is
the principal distributor for a number of investment companies. Federated
Securities Corp. is a subsidiary of Federated Investors.
ADMINISTRATION OF THE TRUST
ADMINISTRATIVE SERVICES. Federated Administrative Services, a subsidiary of
Federated Investors, provides administrative personnel and services (including
certain legal and financial reporting services) necessary to operate the Trust.
Federated Administrative Services provides these at an annual rate which relates
to the average aggregate daily net assets of all funds advised by subsidiaries
of Federated Investors ("Federated Funds") as specified below:
<TABLE>
<CAPTION>
MAXIMUM AVERAGE AGGREGATE DAILY NET ASSETS
ADMINISTRATIVE FEE OF THE FEDERATED FUNDS
-------------------- ------------------------------------
<C> <S>
0.15 of 1% on the first $250 million
0.125 of 1% on the next $250 million
0.10 of 1% on the next $250 million
0.075 of 1% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
Federated Administrative Services may choose voluntarily to waive a portion of
its fee.
SHAREHOLDER SERVICES PLAN. The Trust has adopted a Shareholder Services Plan
(the "Services Plan") under which it may make payments up to 0.25 of 1% of the
average daily net asset value of Shares to obtain certain personal services for
shareholders and the maintenance of shareholder accounts ("shareholder
services"). The Trust has entered into a Shareholder Services Agreement with
Federated Shareholder Services, a subsidiary of Federated Investors, under which
Federated Shareholder Services will either perform shareholder services directly
or will select financial institutions to perform shareholder services. Financial
institutions will receive fees based upon shares owned by their clients or
customers. The schedules of such fees and the basis upon which such fees will be
paid will be determined from time to time by the Trust and Federated Shareholder
Services.
CUSTODIAN. State Street Bank and Trust Company ("State Street Bank"), Boston,
Massachusetts, is custodian for the securities and cash of the Trust.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT. Federated Services Company, P.O.
Box 8602, Boston, Massachusetts 02266-8602, is transfer agent for the Shares of
the Trust and dividend disbursing agent for the Trust.
LEGAL COUNSEL. Legal counsel is provided by Houston, Houston & Donnelly,
Pittsburgh, Pennsylvania and Dickstein, Shapiro & Morin, L.L.P., Washington,
D.C.
INDEPENDENT PUBLIC ACCOUNTANTS. The independent public accountants for the
Trust are Arthur Andersen & Co., Pittsburgh, Pennsylvania.
8
NET ASSET VALUE
- --------------------------------------------------------------------------------
The Trust's net asset value per Share fluctuates. The net asset value for Shares
is determined by adding the interest of the Shares in the market value of all
securities and other assets of the Trust, subtracting the interest of the Shares
in the liabilities of the Trust and those attributable to Shares, and dividing
the remainder by the total number of Shares outstanding. The net asset value for
Shares may differ from that of Institutional Service Shares due to the variance
in daily net income realized by each class. Such variance will reflect only
accrued net income to which the shareholders of a particular class are entitled.
INVESTING IN INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
SHARE PURCHASES
Shares are sold on days on which the New York Stock Exchange and the Federal
Reserve wire system are open for business. Shares may be purchased either by
wire or by mail.
To purchase Shares, open an account by calling Federated Securities Corp.
Information needed to establish the account will be taken over the telephone.
The Trust reserves the right to reject any purchase request.
BY WIRE. To purchase Shares by Federal Reserve wire, call the Trust before 4:00
p.m. (Eastern time) to place an order. The order is considered received
immediately. Payment by federal funds must be received before 3:00 p.m. (Eastern
time) on the next business day following the order. Federal funds should be
wired as follows: State Street Bank and Trust Company, Boston, Massachusetts;
Attention: EDGEWIRE; For Credit to: Short-Term Municipal Trust--Institutional
Shares; Trust Number (this number can be found on the account statement or by
contacting the Trust); Group Number or Wire Order Number; Nominee or Institution
Name; and ABA Number 011000028. Shares cannot be purchased on days on which the
New York Stock Exchange is closed and on federal holidays restricting wire
transfers.
BY MAIL. To purchase Shares by mail, send a check made payable to Short-Term
Municipal Trust-- Institutional Shares to the Trust's transfer agent, Federated
Services Company, c/o State Street Bank and Trust Company, P.O. Box 8602,
Boston, Massachusetts 02266-8602. Orders by mail are considered received after
payment by check is converted by the transfer agent's bank, State Street Bank,
into federal funds. This is normally the next business day after State Street
Bank receives the check.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment in Shares is $25,000 plus any non-affiliated bank
or broker's fee, if applicable. However, an account may be opened with a smaller
amount as long as the $25,000 minimum is reached within 90 days. The minimum
investment for an institutional investor will be calculated by combining all
accounts it maintains with the Trust. Accounts established through a non-
affiliated bank or broker may be subject to a smaller minimum investment.
9
WHAT SHARES COST
Shares are sold at their net asset value next determined after an order is
received. There is no sales charge imposed by the Trust. Investors who purchase
Shares through a non-affiliated bank or broker may be charged an additional
service fee by that bank or broker.
The net asset value is determined at 4:00 p.m. (Eastern time), Monday through
Friday, except on (i) days on which there are not sufficient changes in the
value of the Trust's portfolio securities that its net asset value might be
materially affected; (ii) days during which no Shares are tendered for
redemption and no orders to purchase Shares are received; or (iii) the following
holidays: New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.
SUBACCOUNTING SERVICES
Institutions are encouraged to open single master accounts. However, certain
institutions may wish to use the transfer agent's subaccounting system to
minimize their internal recordkeeping requirements. The transfer agent may
charge a fee based on the level of subaccounting services rendered. Institutions
holding Shares in a fiduciary, agency, custodial, or similar capacity may charge
or pass through subaccounting fees as part of or in addition to normal trust or
agency account fees. They may also charge fees for other services provided which
may be related to the ownership of Shares. This prospectus should, therefore, be
read together with any agreement between the customer and the institution with
regard to the services provided, the fees charged for those services, and any
restrictions and limitations imposed.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Trust, Federated Services Company maintains a share
account for each shareholder. Share certificates are not issued unless requested
by contacting the Trust.
Detailed confirmations of each purchase or redemption are sent to each
shareholder. Monthly confirmations are sent to report dividends paid during that
month.
DIVIDENDS
Dividends are declared daily and paid monthly. Dividends are declared just prior
to determining net asset value. If an order for Shares is placed on the
preceding business day, Shares purchased by wire begin earning dividends on the
business day wire payment is received by State Street Bank. If the order for
Shares and payment by wire are received on the same day, Shares begin earning
dividends on the next business day. Shares purchased by check begin earning
dividends on the business day after the check is converted, upon instruction of
the transfer agent, into federal funds. Dividends are automatically reinvested
in additional Shares unless cash payments are requested by contacting the Trust.
CAPITAL GAINS
Distributions of net realized long-term capital gains realized by the Trust, if
any, will be made at least annually.
10
REDEEMING INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
The Trust redeems Shares at their net asset value next determined after the
Trust receives the redemption request. Redemptions may be made on days on which
the Trust computes its net asset value. Redemption requests must be received in
proper form and can be made by telephone request or by written request.
TELEPHONE REDEMPTION
Shareholders may redeem their Shares by telephoning the Trust before 4:00 p.m.
(Eastern time). The proceeds will normally be wired the following business day,
but in no event more than seven days, to the shareholder's account at a domestic
commercial bank that is a member of the Federal Reserve System. If at any time
the Trust shall determine it necessary to terminate or modify this method of
redemption, shareholders would be promptly notified.
An authorization form permitting the Trust to accept telephone requests must
first be completed. Authorization forms and information on this service are
available from Federated Securities Corp. Telephone redemption instructions may
be recorded. If reasonable procedures are not followed by the Trust, it may be
liable for losses due to unauthorized or fraudulent telephone instructions.
In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If such a case should occur, another
method of redemption, such as "Written Requests," should be considered.
WRITTEN REQUESTS
Shares may also be redeemed by sending a written request to the Trust. Call the
Trust for specific instructions before redeeming by letter. The shareholder will
be asked to provide in the request his name, the Trust name and class of shares,
his account number, and the Share or dollar amount requested. If Share
certificates have been issued, they must be properly endorsed and should be sent
by registered or certified mail with the written request.
SIGNATURES. Shareholders requesting a redemption of $50,000 or more, a
redemption of any amount to be sent to an address other than that on record with
the Trust, or a redemption payable other than to the shareholder of record must
have signatures on written redemption requests guaranteed by:
- a trust company or commercial bank whose deposits are insured by the Bank
Insurance Fund ("BIF"), which is administered by the Federal Deposit
Insurance Corporation ("FDIC");
- a member of the New York, American, Boston, Midwest, or Pacific Stock
Exchange;
- a savings bank or savings and loan association whose deposits are insured
by the Savings Association Insurance Fund ("SAIF"), which is administered
by the FDIC; or
- any other "eligible guarantor institution" as defined in the Securities
Exchange Act of 1934.
The Trust does not accept signatures guaranteed by a notary public.
11
The Trust and its transfer agent have adopted standards for accepting signature
guarantees from the above institutions. The Trust may elect in the future to
limit eligible signature guarantors to institutions that are members of a
signature guarantee program. The Trust and its transfer agent reserve the right
to amend these standards at any time without notice.
RECEIVING PAYMENT. Normally, a check for the proceeds is mailed within one
business day, but in no event more than seven days, after receipt of a proper
written redemption request.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Trust may
redeem Shares in any account and pay the proceeds to the shareholder if the
account balance falls below a required minimum value of $25,000 due to
shareholder redemptions. This requirement does not apply, however, if the
balance falls below $25,000 because of changes in the Trust's net asset value.
Before Shares are redeemed to close an account, the shareholder is notified in
writing and allowed 30 days to purchase additional Shares to meet the minimum
requirement.
Shares are redeemed to close an account, the shareholder is notified in writing
and allowed 30 days to purchase additional Shares to meet the minimum
requirements.
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
VOTING RIGHTS
Each Share of the Trust gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All shares of all classes of
each portfolio in the Trust have equal voting rights except that in matters
affecting only a particular portfolio or class, only shares of that portfolio or
class are entitled to vote. As a Massachusetts business trust, the Trust is not
required to hold annual shareholder meetings. Shareholder approval will be
sought only for certain changes in the Trust's operation and for the election of
Trustees under certain circumstances. As of August 1, 1994, Marion Merrell Dow,
Inc., Kansas City, Missouri, owned 63.64% of the Institutional Service Shares of
the Trust, and therefore, may for certain purposes, be deemed to control the
Class and be able to affect the outcome of certain matters presented for a vote
of shareholders.
Trustees may be removed by the Trustees or by shareholders at a special meeting.
A special meeting of shareholders shall be called for this purpose by the
Trustees upon written request of shareholders owning at least 10% of the
outstanding shares of the Trust entitled to vote.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for obligations of the Trust. To protect
shareholders, the Trust has filed legal documents with Massachusetts that
expressly disclaim the liability of its shareholders for such acts or
obligations of the Trust. These documents require notice of this disclaimer to
be given in each agreement, obligation, or instrument that the Trust or its
Trustees enter into or sign on behalf of the Trust.
12
In the unlikely event a shareholder is held personally liable for the Trust's
obligations, the Trust is required to use its property to protect or compensate
the shareholder. On request, the Trust will defend any claim made and pay any
judgment against a shareholder for any act or obligation of the Trust.
Therefore, financial loss resulting from liability as a shareholder will occur
only if the Trust itself cannot meet its obligations to indemnify shareholders
and pay judgments against them from its assets.
TAX INFORMATION
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX
The Trust will pay no federal income tax because it expects to meet requirements
of the Internal Revenue Code of 1986, as amended, applicable to regulated
investment companies and to receive the special tax treatment afforded to such
companies.
Shareholders are not required to pay the federal regular income tax on any
dividends received from the Trust that represent net interest on tax-exempt
municipal bonds. However, dividends representing net interest earned on some
municipal bonds may be included in calculating the federal individual
alternative minimum tax or the federal alternative minimum tax for corporations.
The alternative minimum tax, equal to up to 28% of alternative minimum taxable
income for individuals and 20% for corporations, applies when it exceeds the
regular tax for the taxable year. Alternative minimum taxable income is equal to
the regular taxable income of the taxpayer increased by certain "tax preference"
items not included in regular taxable income and reduced by only a portion of
the deductions allowed in the calculation of the regular tax.
Interest on certain "private activity" bonds issued after August 7, 1986, is
treated as a tax preference item for both individuals and corporations. Unlike
traditional governmental purpose municipal bonds, which finance roads, schools,
libraries, prisons and other public facilities, private activity bonds provide
benefits to private parties. The Trust may purchase all types of municipal
bonds, including private activity bonds. Thus, while the Trust has no present
intention of purchasing any private activity bonds, should it purchase any such
bonds, a portion of the Trust's dividends may be treated as a tax preference
item.
In addition, in the case of a corporate shareholder, dividends of the Trust
which represent interest on municipal bonds may be subject to the 20% corporate
alternative minimum tax because the dividends are included in a corporation's
"adjusted current earnings." The corporate alternative minimum tax treats 75% of
the excess of a taxpayer's pre-tax "adjusted current earnings" over the
taxpayer's alternative minimum taxable income as a tax preference item.
"Adjusted current earnings" is based upon the concept of a corporation's
"earnings and profits." Since "earnings and profits" generally includes the full
amount of any Trust dividend, and alternative minimum taxable income does not
include the portion of the Trust's dividend attributable to municipal bonds
which are not private activity bonds, the difference will be included in the
calculation of the corporation's alternative minimum tax.
Dividends of the Trust representing net interest income earned on some temporary
investments and any realized net short-term gains are taxed as ordinary income.
13
These tax consequences apply whether dividends are received in cash or as
additional Shares. Information on the tax status of dividends and distributions
is provided annually.
PENNSYLVANIA CORPORATE AND PERSONAL PROPERTY TAXES
In the opinion of Houston, Houston & Donnelly, counsel to the Trust:
- the Trust is not subject to Pennsylvania corporate or personal property
taxes; and
- Trust shares may be subject to personal property taxes imposed by
counties, municipalities and school districts in Pennsylvania to the
extent that the portfolio securities in the Trust would be subject to such
taxes if owned directly by residents of those jurisdictions.
OTHER STATE AND LOCAL TAXES
Distributions representing net interest received on tax-exempt municipal
securities are not necessarily free from income taxes of any state or local
taxing authority. State laws differ on this issue and shareholders are urged to
consult their own tax advisers.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time the Trust advertises its total return, yield, and
tax-equivalent yield for Institutional Shares.
Total return represents the change, over a specified period of time, in the
value of an investment in Shares of the Trust after reinvesting all income and
capital gain distributions. It is calculated by dividing that change by the
initial investment and is expressed as a percentage.
The yield of Shares of the Trust is calculated by dividing the net investment
income per share (as defined by the Securities and Exchange Commission) earned
by Shares over a thirty-day period by the net asset value per share of Shares on
the last day of the period. This number is then annualized using semi-annual
compounding. The tax-equivalent yield of Shares is calculated similarly to the
yield, but is adjusted to reflect the taxable yield that Shares would have had
to earn to equal its actual yield, assuming a specific tax rate. The yield and
the tax-equivalent yield do not necessarily reflect income actually earned by
Shares and, therefore, may not correlate to the dividends or other distributions
paid to shareholders.
The Trust is sold without any sales load or other similar non-recurring charges.
Total return, yield, and tax-equivalent yield will be calculated separately for
Shares and Institutional Service Shares. Because Institutional Service Shares
are subject to a 12b-1 fee, the total return, yield, and tax-equivalent yield
for Shares, for the same period, may exceed that of Institutional Service
Shares.
From time to time, the Trust may advertise the performance of Shares using
certain financial publications and/or compare the performance of Shares to
certain indices.
14
OTHER CLASSES OF SHARES
- --------------------------------------------------------------------------------
Institutional Service Shares are sold primarily to retail and private banking
customers of financial institutions. Institutional Service Shares are sold at
net asset value and are subject to a minimum initial investment of $25,000.
Institutional Service Shares are distributed pursuant to a 12b-1 Plan adopted by
the Trust whereby the distributor is paid a fee of up to 0.25 of 1% of the
Institutional Service Shares' average daily net assets.
Financial institutions and brokers providing sales and/or administrative
services may receive different compensation depending upon which class of shares
of the Trust is sold.
The amount of dividends payable to Shares may exceed that of Institutional
Service Shares by the difference between class expenses and distribution and
shareholder service expenses borne by shares of each respective class.
The stated advisory fee is the same for both classes of shares.
15
SHORT-TERM MUNICIPAL TRUST
(FORMERLY, FEDERATED SHORT-INTERMEDIATE MUNICIPAL TRUST)
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SERVICE SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
Reference is made to the Report of Independent Public Accountants on page 36.
<TABLE>
<CAPTION>
YEAR ENDED
JUNE 30, 1994*
- ---------------------------------------------------------------------- ---------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.35
- ----------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------
Net investment income 0.31
- ----------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (0.20)
- ---------------------------------------------------------------------- ---------------
Total from investment operations 0.11
- ----------------------------------------------------------------------
LESS DISTRIBUTIONS
- ----------------------------------------------------------------------
Dividends to shareholders from net investment income (0.31)
- ---------------------------------------------------------------------- ---------------
NET ASSET VALUE, END OF PERIOD $ 10.15
- ---------------------------------------------------------------------- ---------------
TOTAL RETURN** 1.08%
- ----------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------------
Expenses 0.72%(a)
- ----------------------------------------------------------------------
Net investment income 3.65%(a)
- ----------------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------------
Net assets, end of period (000 omitted) $31,459
- ----------------------------------------------------------------------
Portfolio turnover rate 36%
- ----------------------------------------------------------------------
<FN>
* Reflects operations for the period from August 31, 1993 (date of initial
public offering) to June 30, 1994.
** Based on net asset value which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(a) Computed on an annualized basis.
</TABLE>
(See Notes which are an integral part of the Financial Statements)
Further information about the Trust's performance is contained in the Trust's
Annual Report for the fiscal year ended June 30, 1994, which can be obtained
free of charge.
16
SHORT-TERM MUNICIPAL TRUST
(FORMERLY, FEDERATED SHORT-INTERMEDIATE MUNICIPAL TRUST)
PORTFOLIO OF INVESTMENTS
JUNE 30, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S OR
AMOUNT S&P* VALUE
- ---------- ------------------------------------------------------- ---------- -----------
<C> <S> <C> <C>
SHORT-INTERMEDIATE MUNICIPAL SECURITIES--100.1%
- -------------------------------------------------------------------
ALABAMA--0.3%
-------------------------------------------------------
$1,000,000 Alabama Water Pollution Control Authority, 5.40%
Revenue Bonds (Series 1991)/(Revolving Trust Loan
Program)/ (AMBAC Insured), 8/15/94 AAA $ 1,002,410
------------------------------------------------------- -----------
ARIZONA--1.6%
-------------------------------------------------------
2,000,000 Pima County, AZ, Unified School District #1, 8.00%
School Improvement Bonds (FGIC Insured), 7/1/96 AAA 2,133,020
-------------------------------------------------------
1,000,000 Salt River, AZ, 3.70% Electric System Revenue Bonds
(Agricultural Improvement & Power District), 1/1/96 AA 988,920
-------------------------------------------------------
2,500,000 Salt River, AZ, 4.00% Power Supply Revenue Bonds
(Agricultural Improvement & Power District)/(Original
Issue Yield: 4.05%), 1/1/96 Aa 2,485,950
------------------------------------------------------- -----------
Total 5,607,890
------------------------------------------------------- -----------
CALIFORNIA--11.6%
-------------------------------------------------------
4,000,000 California State, 10.00% UT GO Bonds, 4/1/98 A+ 4,657,440
-------------------------------------------------------
1,250,000 Los Angeles County, CA, Transportation Commission,
4.30% Sales Tax Revenue Bonds (Series 1992A)/(MBIA
Insured), 7/1/95 Aaa 1,256,212
-------------------------------------------------------
16,000,000 Los Angeles, CA, Waste Water System, 6.70% Revenue
Bonds (Series D)/(MBIA Insured)/(Original Issue Yield:
6.769%)/(Prerefunded), 12/1/2000 (@102) AAA 17,682,080
-------------------------------------------------------
1,250,000 Orange County, CA, Local Transportation Authority,
4.15% Sales Tax Revenue Bonds, 2/15/95 Aa 1,255,700
-------------------------------------------------------
8,000,000 Southern California Public Power Authority, 11.25%
Transmission Project Revenue Bonds (Prerefunded),
1/1/95 (@103) Aaa 8,548,080
-------------------------------------------------------
</TABLE>
17
SHORT-TERM MUNICIPAL TRUST
- ---------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S OR
AMOUNT S&P* VALUE
- ---------- ------------------------------------------------------- ---------- -----------
<C> <S> <C> <C>
SHORT-INTERMEDIATE MUNICIPAL SECURITIES--CONTINUED
- -------------------------------------------------------------------
CALIFORNIA--CONTINUED
-------------------------------------------------------
$3,045,000 University of California, 8.00% Refunding Revenue Bonds
(UCLA Medical Center)/(MBIA Insured), 12/1/97 AAA $ 3,343,714
-------------------------------------------------------
3,310,000 University of California, 8.00% Refunding Revenue Bonds
(UCLA Medical Center)/(MBIA Insured), 12/1/98 AAA 3,700,580
------------------------------------------------------- -----------
Total 40,443,806
------------------------------------------------------- -----------
COLORADO--1.9%
-------------------------------------------------------
1,535,000 City & County of Denver Airport, 10.50% Revenue Bonds
(Stapleton International Airport)/(Prerefunded),
12/1/94 (@100) Aaa 1,581,127
-------------------------------------------------------
2,995,000 Denver (City & County), CO, 7.625% GO Bonds (Series
1992C), 8/1/95 Aa 3,112,344
-------------------------------------------------------
1,900,000 Mesa County, CO, School District #51, 4.90% GO
Refunding Bonds (Series 1991B)/(AMBAC Insured), 12/1/94 Aaa 1,914,820
------------------------------------------------------- -----------
Total 6,608,291
------------------------------------------------------- -----------
DELAWARE--0.6%
-------------------------------------------------------
2,000,000 Delaware, 6.80% UT GO Bonds, 5/1/95 Aa 2,053,120
------------------------------------------------------- -----------
DISTRICT OF COLUMBIA--0.6%
-------------------------------------------------------
1,000,000 District Columbia, 8.00% UT GO Bonds (Prerefunded),
6/1/96 (@102) AAA 1,084,680
-------------------------------------------------------
1,000,000 District of Columbia, 5.50% GO Bonds (FGIC Insured),
6/1/95 Aaa 1,011,110
------------------------------------------------------- -----------
Total 2,095,790
------------------------------------------------------- -----------
FLORIDA--1.2%
-------------------------------------------------------
1,500,000 Florida State Board of Education, 7.80% UT GO Capital
Outlay Bonds (Prerefunded), 6/1/96 (@102) AAA 1,621,560
-------------------------------------------------------
1,390,000 Miami Beach, FL, Health Facilities Authority, 4.45%
Hospital Revenue Reference Bonds (Mount Sinai Medical
Center)/(Capital Guaranty Insured), 11/15/95 AAA 1,403,789
-------------------------------------------------------
</TABLE>
18
SHORT-TERM MUNICIPAL TRUST
- ---------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S OR
AMOUNT S&P* VALUE
- ---------- ------------------------------------------------------- ---------- -----------
<C> <S> <C> <C>
SHORT-INTERMEDIATE MUNICIPAL SECURITIES--CONTINUED
- -------------------------------------------------------------------
FLORIDA--CONTINUED
-------------------------------------------------------
$1,000,000 Orlando, FL, Utilities Commission, 7.75% Water &
Electric Revenue Bonds, 10/1/94 Aa $ 1,011,480
------------------------------------------------------- -----------
Total 4,036,829
------------------------------------------------------- -----------
GEORGIA--0.5%
-------------------------------------------------------
1,820,000 Gwinnett County, GA, School District, 4.90% GO School
Bonds (Series A), 2/1/95 Aa 1,834,487
------------------------------------------------------- -----------
HAWAII--3.3%
-------------------------------------------------------
5,000,000 Hawaii State, 7.10% GO Bonds (Prerefunded), 6/1/98
(@101-1/2) Aaa 5,434,750
-------------------------------------------------------
6,000,000 Honolulu, City & County, HI, 4.20% OID UT GO Bonds
(Original Issue Yield: 4.30%), 10/1/97 AA 5,918,940
------------------------------------------------------- -----------
Total 11,353,690
------------------------------------------------------- -----------
ILLINOIS--4.7%
-------------------------------------------------------
1,750,000 Du Page, IL, Water Commission, 5.90% Refunding Revenue
Bonds, 5/1/96 AA- 1,791,965
-------------------------------------------------------
2,000,000 Illinois State Toll Highway Authority, 7.375% Revenue
Bonds (Prerefunded), 1/1/96 (@102) AAA 2,127,900
-------------------------------------------------------
5,500,000 Illinois State Toll Highway Road Authority, 7.10%
Revenue Bonds (Prerefunded), 1/1/96 (@102) A- 5,830,770
-------------------------------------------------------
6,500,000 Illinois State, 4.50% GO Bonds (Series 1993), 8/1/96 AA 6,498,440
------------------------------------------------------- -----------
Total 16,249,075
------------------------------------------------------- -----------
IOWA--0.6%
-------------------------------------------------------
1,095,000 Sioux City, IA, 4.15% Hospital Revenue Refunding Bonds
(Series 1993O)/(Sisters of Mercy Health Corp.), 8/15/96 A- 1,080,294
-------------------------------------------------------
1,140,000 Sioux City, IA, 4.15% Hospital Revenue Refunding Bonds
(Sisters of Mercy Health Corp.), 8/15/97 A 1,119,651
------------------------------------------------------- -----------
Total 2,199,945
------------------------------------------------------- -----------
</TABLE>
19
SHORT-TERM MUNICIPAL TRUST
- ---------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S OR
AMOUNT S&P* VALUE
- ---------- ------------------------------------------------------- ---------- -----------
<C> <S> <C> <C>
SHORT-INTERMEDIATE MUNICIPAL SECURITIES--CONTINUED
- -------------------------------------------------------------------
KENTUCKY--0.3%
-------------------------------------------------------
$1,000,000 Kentucky State Turnpike Authority, 7.875%
(Prerefunded), 7/1/96 (@102) AAA $ 1,084,650
------------------------------------------------------- -----------
MAINE--0.5%
-------------------------------------------------------
1,805,000 Maine, 7.875% Full Faith and Credit Bonds (Highway
Purpose), 7/1/94 Aa1 1,805,000
------------------------------------------------------- -----------
MARYLAND--1.8%
-------------------------------------------------------
1,500,000 Charles County, MD, 7.00% UT GO Refunding and Public
Improvement Bonds (AMBAC Insured), 1/15/95 Aaa 1,528,695
-------------------------------------------------------
2,055,000 University of Maryland System Auxiliary, 4.75% Facility
& Tuition Revenue Bonds (Series A), 2/1/95 Aa 2,069,714
-------------------------------------------------------
2,650,000 Washington, MD, Suburban Sanitary District, 7.20% UT GO
Bonds, 6/1/95 Aa1 2,728,705
------------------------------------------------------- -----------
Total 6,327,114
------------------------------------------------------- -----------
MASSACHUSETTS--1.4%
-------------------------------------------------------
4,500,000 Massachusetts State, 7.25% UT GO Bonds, 6/1/96 A 4,746,060
------------------------------------------------------- -----------
MICHIGAN--3.3%
-------------------------------------------------------
5,000,000 Detroit, MI, City School District, 5.30% Refunding
Bonds (Q-SBLF Guaranty), 5/1/99 AA- 5,025,000
-------------------------------------------------------
2,120,000 Michigan State Hospital Finance Authority, 4.00%
Hospital Revenue Refunding Bonds (Series
1993P)/(Sisters of Mercy Health Corp.), 8/15/96 A- 2,084,342
-------------------------------------------------------
4,345,000 Michigan State Hospital Finance Authority, 4.00%
Revenue Refunding Bonds (Series 1993P)/(Sisters of
Mercy Health Corp.) (MBIA Insured), 8/15/97 Aaa 4,235,810
------------------------------------------------------- -----------
Total 11,345,152
------------------------------------------------------- -----------
MINNESOTA--3.1%
-------------------------------------------------------
2,000,000 Southern Minnesota Municipal Power Agency, 9.125% Power
Supply Revenue Bonds (Prerefunded), 1/1/96 (@102) Aaa 2,178,340
-------------------------------------------------------
</TABLE>
20
SHORT-TERM MUNICIPAL TRUST
- ---------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S OR
AMOUNT S&P* VALUE
- ---------- ------------------------------------------------------- ---------- -----------
<C> <S> <C> <C>
SHORT-INTERMEDIATE MUNICIPAL SECURITIES--CONTINUED
- -------------------------------------------------------------------
MINNESOTA--CONTINUED
-------------------------------------------------------
$1,915,000 Washington County, MN, Housing Redevelopment Authority,
3.85% Refunding Revenue Bonds, 2/1/96 AA- $ 1,892,920
-------------------------------------------------------
3,410,000 Western Minnesota Municipal Power Agency, 7.00% Revenue
Bonds (Series A)/(Original Issue Yield: 7.062%),
1/1/2013, Callable 1/1/97 (@102) A- 3,597,448
-------------------------------------------------------
3,000,000 Western Minnesota Municipal Power Agency, 9.50% Power
Supply Revenue Bonds (Prerefunded), 1/1/96 (@102) Aaa 3,283,740
------------------------------------------------------- -----------
Total 10,952,448
------------------------------------------------------- -----------
MISSOURI--1.7%
-------------------------------------------------------
2,310,000 Kansas City, MO, 5.65% Sewer Revenue Bonds, 3/1/95 Aa 2,341,069
-------------------------------------------------------
1,580,000 Kansas City, MO, School District, 5.70% Missouri
Building Corp. Refunding Leasehold Revenue Bonds
(Series 1991A)/ (FGIC Insured), 2/1/95 Aaa 1,598,454
-------------------------------------------------------
2,000,000 Missouri State HEFA, 4.10% Revenue Bonds (Series
1992B)/ (Health Midwest)/(MBIA Insured), 2/15/95 Aaa 2,002,980
------------------------------------------------------- -----------
Total 5,942,503
------------------------------------------------------- -----------
NEBRASKA--1.0%
-------------------------------------------------------
1,250,000 Omaha, NE, 3.80% Electric System Revenue Bonds (Series
B)/(Public Power District), 2/1/96 Aa 1,238,025
-------------------------------------------------------
1,400,000 Omaha, NE, 3.90% Electric System Revenue Bonds (Series
A)/(Public Power District), 2/1/96 Aa 1,389,332
-------------------------------------------------------
1,000,000 Omaha, NE, 4.70% Electric System Revenue Bonds (Series
A)/(Public Power District), 2/1/95 Aa 1,009,870
------------------------------------------------------- -----------
Total 3,637,227
------------------------------------------------------- -----------
NEVADA--0.6%
-------------------------------------------------------
2,000,000 Clark County, NV, School District, 7.10% LT GO Bonds
(Series A), 3/1/97 A+ 2,111,720
------------------------------------------------------- -----------
</TABLE>
21
SHORT-TERM MUNICIPAL TRUST
- ---------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S OR
AMOUNT S&P* VALUE
- ---------- ------------------------------------------------------- ---------- -----------
<C> <S> <C> <C>
SHORT-INTERMEDIATE MUNICIPAL SECURITIES--CONTINUED
- -------------------------------------------------------------------
NEW HAMPSHIRE--1.0%
-------------------------------------------------------
$3,310,000 New Hampshire, 4.20% Capital Improvement Refunding GO
Bonds (Series 1992), 9/1/95 Aa $ 3,330,886
------------------------------------------------------- -----------
NEW JERSEY--2.4%
-------------------------------------------------------
8,000,000 New Jersey State, 6.50% Refunding GO Bonds (Series C),
1/15/2002 AA+ 8,443,280
------------------------------------------------------- -----------
NEW MEXICO--7.7%
-------------------------------------------------------
2,250,000 Albuquerque, NM, 4.00% Joint Water and Sewer System
Refunding and Improvement Revenue Bonds (Series
1994A)/(Original Issue Yield: 4.10%), 7/1/99 AA 2,121,030
-------------------------------------------------------
5,375,000 Albuquerque, NM, 4.10% Joint Water and Sewer System
Refunding and Improvement Revenue Bonds (Series
1994A)/(Original Issue Yield: 4.25%), 7/1/2000 AA 4,999,879
-------------------------------------------------------
8,650,000 Albuquerque, NM, 4.60% UT GO Bonds (Series A), 7/1/98 AA 8,569,036
-------------------------------------------------------
4,000,000 Albuquerque, NM, 5.20% General Purpose GO Bonds (Series
1992A), 7/1/94 AA 4,000,000
-------------------------------------------------------
2,865,000 Bernalillo County, NM, 6.25% GO Special Tax Bonds,
8/1/95 Aa 2,938,545
-------------------------------------------------------
4,250,000 New Mexico, 5.00% Severance Tax Refunding Bonds (Series
1991A), 7/1/94 AA 4,250,000
------------------------------------------------------- -----------
Total 26,878,490
------------------------------------------------------- -----------
NEW YORK--8.4%
-------------------------------------------------------
4,600,000 New York City, NY, 10.25% GO Bonds (Series C)/
(Prerefunded), 3/15/96 (@103) Aaa 4,954,292
-------------------------------------------------------
4,735,000 New York City, NY, Municipal Water Finance Authority,
6.50% Water & Sewer System Revenue Bonds (Series C),
6/15/97 A- 4,781,261
-------------------------------------------------------
680,000 New York City, NY, Municipal Water Finance Authority,
6.50% Water & Sewer System Revenue Bonds (Series C)/
(Prerefunded), 6/15/97 A 722,310
-------------------------------------------------------
</TABLE>
22
SHORT-TERM MUNICIPAL TRUST
- ---------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S OR
AMOUNT S&P* VALUE
- ---------- ------------------------------------------------------- ---------- -----------
<C> <S> <C> <C>
SHORT-INTERMEDIATE MUNICIPAL SECURITIES--CONTINUED
- -------------------------------------------------------------------
NEW YORK--CONTINUED
-------------------------------------------------------
$5,000,000 New York City, NY, Municipal Water Finance Authority,
7.20% Water and Sewer System Revenue Bonds (Series A),
6/15/99 A- $ 5,484,500
-------------------------------------------------------
3,500,000 New York State Thruway Authority, 3.80% Emergency
Highway Construction & Reconstruction Bonds (FGIC
Insured), 3/1/96 AAA 3,469,690
-------------------------------------------------------
9,540,000 New York State, 5.75% UT GO Bonds, 9/15/99 A- 9,850,432
------------------------------------------------------- -----------
Total 29,262,485
------------------------------------------------------- -----------
NORTH CAROLINA--3.1%
-------------------------------------------------------
1,500,000 Charlotte-Mecklenberg, NC, Hospital Authority, 4.65%
Health Care System Revenue Bonds, 1/1/95 Aa 1,502,865
-------------------------------------------------------
6,000,000 Mecklenberg County, NC, 5.00% UT GO Refunding Bonds
(Series 1992), 3/1/95 Aaa 6,061,080
-------------------------------------------------------
3,000,000 North Carolina Eastern Municipal Power Authority,
10.00% Revenue Bonds (Prerefunded), 1/1/95 (@103) Aaa 3,186,180
------------------------------------------------------- -----------
Total 10,750,125
------------------------------------------------------- -----------
OHIO--3.0%
-------------------------------------------------------
3,300,000 Columbus, OH, 7.70% UT GO Bonds (Prerefunded), 5/1/96
(@102) AAA 3,556,872
-------------------------------------------------------
4,000,000 Ohio State Public Facilities Authority, 4.25% Higher
Education Capital Facilities Revenue Bonds (Series
11-A)/ (AMBAC Insured), 12/1/97 AAA 3,931,240
-------------------------------------------------------
2,815,000 Ohio State, Water Development Authority, PCA, 7.25%
Revenue Bonds (Phillip Morris), Callable 12/1/97 (@103) A 3,026,181
------------------------------------------------------- -----------
Total 10,514,293
------------------------------------------------------- -----------
OREGON--1.2%
-------------------------------------------------------
2,000,000 Oregon State Department of Transportation, 5.375%
Regional Light Rail Extension Revenue Bonds (Series
1994)/(MBIA Insured), 6/1/99 AAA 2,029,640
-------------------------------------------------------
</TABLE>
23
SHORT-TERM MUNICIPAL TRUST
- ---------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S OR
AMOUNT S&P* VALUE
- ---------- ------------------------------------------------------- ---------- -----------
<C> <S> <C> <C>
SHORT-INTERMEDIATE MUNICIPAL SECURITIES--CONTINUED
- -------------------------------------------------------------------
OREGON--CONTINUED
-------------------------------------------------------
$2,000,000 Oregon State Department of Transportation, 5.50%
Regional Light Rail Extension Revenue Bonds (MBIA
Insured), 6/1/2000 AAA $ 2,037,780
------------------------------------------------------- -----------
Total 4,067,420
------------------------------------------------------- -----------
PENNSYLVANIA--7.8%
-------------------------------------------------------
5,840,000 Commonwealth of Pennsylvania, 3.80% GO Bonds, 4/15/96 AA- 5,776,986
-------------------------------------------------------
8,000,000 Commonwealth of Pennsylvania, 4.75% GO Bonds, 6/15/98 AA- 7,974,160
-------------------------------------------------------
1,155,000 Dauphin County, PA, General Authority, 4.35% Revenue
Bonds (Series A)/(West Penn Hospital)/(MBIA Insured),
7/1/95 Aaa 1,160,059
-------------------------------------------------------
1,175,000 Dauphin County, PA, General Authority, 4.35% Revenue
Bonds (Series B)/(West Penn Hospital)/(MBIA Insured),
7/1/95 Aaa 1,180,146
-------------------------------------------------------
7,000,000 Pennsylvania Intergovernmental Cooperation Authority,
5.75% Special Tax Revenue Bonds (City of Philadelphia)/
(FGIC Insured)/(Original Issue Yield: 5.85%), 6/15/99 AAA 7,224,700
-------------------------------------------------------
3,690,000 Pittsburgh, PA, 4.10% GO Bonds (AMBAC Insured), 9/1/95 Aaa 3,700,258
------------------------------------------------------- -----------
Total 27,016,309
------------------------------------------------------- -----------
SOUTH CAROLINA--3.4%
-------------------------------------------------------
5,500,000 Piedmont Municipal Electric Agency, SC, 10.25% Power
Supply Revenue Bonds (Prerefunded), 1/1/95 (@102) Aaa 5,848,150
-------------------------------------------------------
2,000,000 Piedmont Municipal Power Agency, SC, 7.00% Refunding
Revenue Bonds (Series A)/(AMBAC Insured), 1/1/2019,
Callable 1/1/98 AAA 2,110,000
-------------------------------------------------------
2,300,000 South Carolina, 7.00% UT GO Capital Improvement Bonds,
3/1/95 Aaa 2,353,268
-------------------------------------------------------
</TABLE>
24
SHORT-TERM MUNICIPAL TRUST
- ---------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S OR
AMOUNT S&P* VALUE
- ---------- ------------------------------------------------------- ---------- -----------
<C> <S> <C> <C>
SHORT-INTERMEDIATE MUNICIPAL SECURITIES--CONTINUED
- -------------------------------------------------------------------
SOUTH CAROLINA--CONTINUED
-------------------------------------------------------
$1,500,000 South Carolina, 7.60% GO Bonds (Series U), 2/1/95 Aaa $ 1,535,565
------------------------------------------------------- -----------
Total 11,846,983
------------------------------------------------------- -----------
TENNESSEE--1.2%
-------------------------------------------------------
1,000,000 Nashville & Davidson, TN, Metropolitan Government,
9.375% Revenue Bonds (Prerefunded), 1/1/95 (@102) Aaa 1,049,190
-------------------------------------------------------
3,000,000 Tennessee, 6.75% GO Bonds (Series 1992A), 7/1/95 AA+ 3,087,750
------------------------------------------------------- -----------
Total 4,136,940
------------------------------------------------------- -----------
TEXAS--5.5%
-------------------------------------------------------
1,000,000 Arlington, TX, 6.70% Waterworks & Sewer Refunding
Revenue Bonds (Series A)/(AMBAC Insured), 6/1/96 AAA 1,038,480
-------------------------------------------------------
1,290,000 Houston, TX, ISD, 4.00% LT GO School House Bonds,
8/15/95 Aaa 1,292,477
-------------------------------------------------------
7,000,000 Northside, TX, ISD, 4.10% UT GO Bonds, 2/1/96 Aaa 6,970,530
-------------------------------------------------------
5,000,000 San Antonio, TX, Electric & Gas System, 4.00% Revenue
Bonds, 2/1/95 Aa 5,014,250
-------------------------------------------------------
2,425,000 Texas State Public Property Finance Corp., 4.30%
Refunding Revenue Bonds (Series 1993)/(Mental Health
and Mental Retardation Center), 9/1/97 AAA 2,395,197
-------------------------------------------------------
2,500,000 Texas Water Development Board, 4.35% Senior Lien
Revenue Bonds (Series 1992), 7/15/95 AA 2,508,025
------------------------------------------------------- -----------
Total 19,218,959
------------------------------------------------------- -----------
UTAH--3.4%
-------------------------------------------------------
8,000,000 Granite City School District, UT, Board of Education,
4.00% GO Refunding Bonds (Series 1992), 6/1/95 Aa 8,011,200
-------------------------------------------------------
1,800,000 Intermountain Power Agency, UT, 3.70% Power Supply
Revenue Bonds (Series 1993C), 7/1/96 AA 1,771,686
-------------------------------------------------------
</TABLE>
25
SHORT-TERM MUNICIPAL TRUST
- ---------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S OR
AMOUNT S&P* VALUE
- ---------- ------------------------------------------------------- ---------- -----------
<C> <S> <C> <C>
SHORT-INTERMEDIATE MUNICIPAL SECURITIES--CONTINUED
- -------------------------------------------------------------------
UTAH--CONTINUED
-------------------------------------------------------
$2,000,000 Intermountain Power Agency, UT, 8.75% Power Supply
Revenue Bonds (Prerefunded), 7/1/95 (@102) Aaa $ 2,135,020
------------------------------------------------------- -----------
Total 11,917,906
------------------------------------------------------- -----------
VERMONT--0.7%
-------------------------------------------------------
2,500,000 Vermont, 7.50% GO Bonds (Series A), 2/1/95 Aa 2,557,400
------------------------------------------------------- -----------
VIRGINIA--2.2%
-------------------------------------------------------
7,500,000 Fairfax County, VA, 8.25% Public Improvement Bonds
(Series 1992A), 4/1/95 Aaa 7,764,000
------------------------------------------------------- -----------
WASHINGTON--6.0%
-------------------------------------------------------
1,445,000 Seattle, WA, 4.75% Various Purpose LT GO Bonds, 3/1/95 Aa1 1,456,011
-------------------------------------------------------
4,865,000 Seattle, WA, 9.70% Municipal Light and Power Revenue
Bonds (Prerefunded), 9/1/95 (@102) Aaa 5,268,163
-------------------------------------------------------
3,000,000 Washington State, 5.00% Various Purpose GO Bonds
(Series 1994B), 5/1/98 AA 3,017,460
-------------------------------------------------------
7,425,000 Washington State, 5.00% Various Purpose GO Bonds
(Series 1994B), 5/1/99 AA 7,414,976
-------------------------------------------------------
1,000,000 Washington, 6.90% UT GO Bonds, 6/1/95 Aa 1,027,250
-------------------------------------------------------
1,500,000 Washington, 4.50% Various Purpose GO Refunding Bonds
(Series 1992A), 2/1/95 (@106) Aa 1,508,580
-------------------------------------------------------
1,000,000 Washington, 6.80% Various Purpose GO Bonds, 4/1/95 Aa 1,023,290
------------------------------------------------------- -----------
Total 20,715,730
------------------------------------------------------- -----------
WISCONSIN--2.5%
-------------------------------------------------------
2,535,000 Milwaukee, WI, 8.80% UT GO Metropolitan Sewer District
Bonds, 5/1/95 Aa 2,639,594
-------------------------------------------------------
1,970,000 Milwaukee, WI, 6.00% UT GO Public Improvement Bonds
(Series CA), 6/15/95 Aa 2,007,371
-------------------------------------------------------
3,000,000 Wisconsin State, 6.40% GO Bonds (Series A), 5/1/99 AA 3,170,580
-------------------------------------------------------
</TABLE>
26
SHORT-TERM MUNICIPAL TRUST
- ---------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S OR
AMOUNT S&P* VALUE
- ---------- ------------------------------------------------------- ---------- -----------
<C> <S> <C> <C>
SHORT-INTERMEDIATE MUNICIPAL SECURITIES--CONTINUED
- -------------------------------------------------------------------
WISCONSIN--CONTINUED
-------------------------------------------------------
$1,000,000 Wisconsin, 6.40% UT GO Bonds (Series A), 5/1/95 Aa $ 1,022,790
------------------------------------------------------- -----------
Total 8,840,335
------------------------------------------------------- -----------
TOTAL SHORT-INTERMEDIATE MUNICIPAL SECURITIES
(IDENTIFIED COST $351,869,499) 348,698,748
------------------------------------------------------- -----------
SHORT-TERM MUNICIPAL SECURITIES--0.9%
- -------------------------------------------------------------------
PUERTO RICO--0.3%
-------------------------------------------------------
1,050,000 Government Development Bank of Puerto Rico Weekly VRDNs
(Credit Suisse and Sumitomo Bank Ltd. LOCS) A-1+ 1,050,000
------------------------------------------------------- -----------
TENNESSEE--0.6%
-------------------------------------------------------
2,000,000 Chattanooga-Hamilton County, TN, Hospital Authority
Daily VRDNs (Erlanger Medical Center Guaranty) A-1+ 2,000,000
------------------------------------------------------- -----------
TOTAL SHORT-TERM MUNICIPAL SECURITIES (AT AMORTIZED
COST) 3,050,000
------------------------------------------------------- -----------
TOTAL MUNICIPAL SECURITIES (IDENTIFIED COST
$354,919,499) (NOTE 2A) $351,748,748+
------------------------------------------------------- -----------
<FN>
* Please refer to the Appendix of the Statement of Additional Information
for an explanation of the credit ratings. Current credit ratings are
unaudited.
+ The cost of investments for federal tax purposes amounts to $354,919,499.
The net unrealized depreciation of investments on a federal tax cost basis
amounts to $3,170,751, which is comprised of $841,220 appreciation and
$4,011,971 depreciation at June 30, 1994.
Note: The categories of investments is shown as a percentage of net assets
($348,269,731) at June 30, 1994.
</TABLE>
27
SHORT-TERM MUNICIPAL TRUST
- ---------------------------------------------------------
<TABLE>
<S> <C>
The following abbreviations are used in this portfolio:
AMBAC --American Municipal Bond Assurance Corporation
FGIC --Financial Guaranty Insurance Company
GO --General Obligation
HEFA --Health and Education Facilities Authority
ISD --Independent School District
LOCS --Letters of Credit
LT --Limited Tax
MBIA --Municipal Bond Investors Assurance
OID --Original Issue Discount
PCA --Pollution Control Authority
Q-SBLF --Qualified State Bond Loan Trust
UT --Utah/Unlimited Tax
VA --Virginia/Veterans Administration
VRDNs --Variable Rate Demand Notes
</TABLE>
(See Notes which are an integral part of the Financial Statements)
28
SHORT-TERM MUNICIPAL TRUST
(FORMERLY, FEDERATED SHORT-INTERMEDIATE MUNICIPAL TRUST)
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
- --------------------------------------------------------------------------------
Investments in securities, at value (Note 2A) (identified and tax cost
$354,919,499) $351,748,748
- --------------------------------------------------------------------------------
Cash 254,481
- --------------------------------------------------------------------------------
Interest receivable 6,191,253
- --------------------------------------------------------------------------------
Receivable for Trust shares sold 154,981
- -------------------------------------------------------------------------------- ------------
Total assets 358,349,463
- --------------------------------------------------------------------------------
LIABILITIES:
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C>
Payable for investments purchased $8,025,289
- ----------------------------------------------------------------------
Payable for Trust shares redeemed 1,165,592
- ----------------------------------------------------------------------
Dividends payable (Note 2B) 833,068
- ----------------------------------------------------------------------
Accrued expenses 55,783
- ---------------------------------------------------------------------- ----------
</TABLE>
<TABLE>
<S> <C>
Total liabilities 10,079,732
- -------------------------------------------------------------------------------- ------------
NET ASSETS for 34,316,807 shares of beneficial interest outstanding $348,269,731
- -------------------------------------------------------------------------------- ------------
NET ASSETS CONSIST OF: (NOTE 2E)
- --------------------------------------------------------------------------------
Paid-in-Capital $358,299,966
- --------------------------------------------------------------------------------
Unrealized depreciation of investments (3,170,751)
- --------------------------------------------------------------------------------
Accumulated net realized loss on investments (6,859,484)
- -------------------------------------------------------------------------------- ------------
Total Net Assets $348,269,731
- -------------------------------------------------------------------------------- ------------
NET ASSET VALUE, Offering Price, and Redemption Price Per Share
- --------------------------------------------------------------------------------
Institutional Shares (net assets of $316,810,333 DIVIDED BY 31,216,957 shares of
beneficial interest outstanding) $ 10.15
- -------------------------------------------------------------------------------- ------------
Institutional Service Shares (net assets of $31,459,398 DIVIDED BY 3,099,850
shares of beneficial interest outstanding) $ 10.15
- -------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
29
SHORT-TERM MUNICIPAL TRUST
(FORMERLY, FEDERATED SHORT-INTERMEDIATE MUNICIPAL TRUST)
STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- -------------------------------------------------------------------------------------
Interest income (Note 2B) $15,437,877
- -------------------------------------------------------------------------------------
EXPENSES:
- -------------------------------------------------------------------------------------
Investment advisory fee (Note 4) $1,414,365
- -----------------------------------------------------------------------
Trustees' Fees 12,409
- -----------------------------------------------------------------------
Administrative personnel and services fees (Note 4) 346,714
- -----------------------------------------------------------------------
Custodian and portfolio accounting fees 164,292
- -----------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses (Note 4) 26,023
- -----------------------------------------------------------------------
Shareholder services fee (Note 4) 27,051
- -----------------------------------------------------------------------
Trust share registration fees 78,919
- -----------------------------------------------------------------------
Distribution services fee (Note 4) 38,361
- -----------------------------------------------------------------------
Auditing fees 17,863
- -----------------------------------------------------------------------
Legal fees 15,239
- -----------------------------------------------------------------------
Printing and postage 31,383
- -----------------------------------------------------------------------
Insurance premiums 9,889
- -----------------------------------------------------------------------
Taxes 2,473
- -----------------------------------------------------------------------
Miscellaneous 5,059
- ----------------------------------------------------------------------- ----------
Total expenses 2,190,040
- -----------------------------------------------------------------------
Deduct--
- ------------------------------------------------------------
Waiver of investment advisory fee (Note 4) $452,665
- ------------------------------------------------------------
Waiver of distribution services fee (Note 4) 27,051 479,716
- ------------------------------------------------------------ -------- ----------
Net expenses 1,710,324
- ------------------------------------------------------------------------------------- -----------
Net investment income 13,727,553
- ------------------------------------------------------------------------------------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- -------------------------------------------------------------------------------------
Net realized gain (loss) on investment transactions (identified cost basis) (253,551)
- -------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on investments (7,720,690)
- ------------------------------------------------------------------------------------- -----------
Net realized and unrealized loss on investments (7,974,241)
- ------------------------------------------------------------------------------------- -----------
Change in net assets resulting from operations $ 5,753,312
- ------------------------------------------------------------------------------------- -----------
<FN>
(See Notes which are an integral part of the Financial Statements)
</TABLE>
30
SHORT-TERM MUNICIPAL TRUST
(FORMERLY, FEDERATED SHORT-INTERMEDIATE MUNICIPAL TRUST)
STATEMENT OF CHANGES IN NET ASSETS
- ---------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
------------------------------
1994 1993
- --------------------------------------------------------------------------- ------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ---------------------------------------------------------------------------
<CAPTION>
OPERATIONS--
- ---------------------------------------------------------------------------
<S> <C> <C>
Net investment income $ 13,727,553 $ 10,622,845
- ---------------------------------------------------------------------------
Net realized gain (loss) on investment transactions ($0 and $62,121 net
loss, respectively, as computed for federal income tax purposes) (Note 2C) (253,551) 19,108
- ---------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) on investments (7,720,690) 1,638,701
- --------------------------------------------------------------------------- ------------- -------------
Change in net assets resulting from operations 5,753,312 12,280,654
- ---------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2B)--
- ---------------------------------------------------------------------------
Dividends to shareholders from net investment income
- ---------------------------------------------------------------------------
Institutional Shares (13,167,119) (10,622,845)
- ---------------------------------------------------------------------------
Institutional Service Shares (560,434) --
- --------------------------------------------------------------------------- ------------- -------------
Change in net assets from distributions to shareholders (13,727,553) (10,622,845)
- --------------------------------------------------------------------------- ------------- -------------
TRUST SHARE (PRINCIPAL) TRANSACTION (NOTE 3)--
- ---------------------------------------------------------------------------
Proceeds from sale of shares 259,790,293 238,425,313
- ---------------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of dividends
declared 3,549,886 1,899,201
- ---------------------------------------------------------------------------
Cost of shares redeemed (226,027,733) (128,151,579)
- --------------------------------------------------------------------------- ------------- -------------
Change in net assets resulting from Trust share transactions 37,312,446 112,172,935
- --------------------------------------------------------------------------- ------------- -------------
Change in net assets 29,338,205 113,830,744
- ---------------------------------------------------------------------------
NET ASSETS:
- ---------------------------------------------------------------------------
Beginning of period 318,931,526 205,100,782
- --------------------------------------------------------------------------- ------------- -------------
End of period $ 348,269,731 $ 318,931,526
- --------------------------------------------------------------------------- ------------- -------------
<FN>
(See Notes which are an integral part of the Financial Statements)
</TABLE>
31
SHORT-TERM MUNICIPAL TRUST
(FORMERLY, FEDERATED SHORT-INTERMEDIATE MUNICIPAL TRUST)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1994
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Short-Term Municipal Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "Act"), as a diversified, no load, open-end
management investment company.
The Trust provides two classes of shares, Institutional Shares and Institutional
Service Shares.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
A. INVESTMENT VALUATIONS--Municipal bonds are valued by an independent pricing
service taking into consideration yield, liquidity, risk, credit, quality,
coupon, maturity, type of issue, and any other factors or market data it
deems relevant in determining valuations for normal institutional size
trading units of debt securities. The independent pricing service does not
rely exclusively on quoted prices. Short-term securities with remaining
maturities of sixty days or less may be stated at amortized cost, which
approximates value.
B. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized
as required by the Internal Revenue Code, as amended (the "Code").
Distributions to shareholders are recorded on the ex-dividend date.
C. FEDERAL TAXES--It is the Trust's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its tax-exempt income.
Accordingly, no provisions for federal tax are necessary. At June 30, 1994,
the Trust, for federal tax purposes, had a capital loss carryforward of
$6,605,611, which will reduce the Trust'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 Trust of any liability for
federal tax. Pursuant to the Code, such capital loss carryforward will
expire in 1995 ($1,449,467), 1996 ($2,255,334), 1997 ($1,097,445), 1998
($1,729,378), 1999 ($11,866) and 2001 ($62,121). Additionally, net capital
losses of $253,551 attributable to security transactions incurred after
October 31, 1993 are treated as arising on July 1, 1994, the first day of
the Trust's next taxable year.
D. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Trust may engage in
when-issued or delayed delivery transactions. The Trust records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment
32
SHORT-TERM MUNICIPAL TRUST
(FORMERLY, FEDERATED SHORT-INTERMEDIATE MUNICIPAL TRUST)
- --------------------------------------------------------------------------------
for the securities purchased. Securities purchased on a when-issued or
delayed delivery basis are marked to market daily and begin earning interest
on the settlement date.
E. RECLASSIFICATION--During the year ended June 30, 1994, the Trust adopted
Statement of Position 93-2, DETERMINATION, DISCLOSURE, AND FINANCIAL
STATEMENT PRESENTATION OF INCOME, CAPITAL GAIN, AND RETURN OF CAPITAL
DISTRIBUTIONS BY INVESTMENT COMPANIES. Accordingly, permanent book and tax
differences have been reclassified to paid-in-capital. The Trust
reclassified $417,890 from accumulated net realized loss to paid-in-capital
in accordance with SOP 93-2. Net investment income, net realized gains, and
net assets were not affected by this change.
F. OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares. Transactions in Trust shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-------------------------------------------------------------
1994 1993
----------------------------- -----------------------------
INSTITUTIONAL SHARES SHARES DOLLARS SHARES DOLLARS
- -------------------------------------------------- ------------ -------------- ------------ --------------
<S> <C> <C> <C> <C>
Shares sold 20,791,128 $ 215,505,746 23,007,231 $ 238,425,313
- --------------------------------------------------
Shares issued to shareholders in payment of
dividends declared 292,960 3,013,260 183,329 1,899,201
- --------------------------------------------------
Shares redeemed (20,620,412) (213,148,873) (12,367,267) (128,151,579)
- -------------------------------------------------- ------------ -------------- ------------ --------------
Net change resulting from Institutional Share
transactions 463,676 $ 5,370,133 10,823,293 $ 112,172,935
- -------------------------------------------------- ------------ -------------- ------------ --------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30, 1994*
--------------------------
INSTITUTIONAL SERVICE SHARES SHARES DOLLARS
- -------------------------------------------------- ----------- ------------
<S> <C> <C>
Shares sold 4,299,696 $ 44,284,547
- --------------------------------------------------
Shares issued to shareholders in payment of
dividends declared 52,512 536,626
- --------------------------------------------------
Shares redeemed (1,252,358) (12,878,860)
- -------------------------------------------------- ----------- ------------
Net change resulting from Institutional Service
Share transactions 3,099,850 31,942,313
- -------------------------------------------------- ----------- ------------
Total net change resulting from Trust Share
transactions 3,563,526 $ 37,312,446
- -------------------------------------------------- ----------- ------------
<FN>
* For the period from August 31, 1993 (date of initial public offering) to June
30, 1994.
</TABLE>
33
SHORT-TERM MUNICIPAL TRUST
(FORMERLY, FEDERATED SHORT-INTERMEDIATE MUNICIPAL TRUST)
- --------------------------------------------------------------------------------
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
ADVISORY FEE--Federated Management, the Trust's investment adviser (the
"Adviser"), receives for its services an annual investment advisory fee equal to
.40 of 1% of the Trust's average daily net assets. The Adviser will waive, to
the extent of its advisory fee, the amount, if any, by which the Trust's
aggregate annual operating expenses (excluding interest, taxes, brokerage
commissions, expenses of registering and qualifying the Trust and its shares
under federal and state laws and regulations, expenses of withholding taxes, and
extraordinary expenses) exceeded .45 of 1% of average daily net assets of the
Trust.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Trust
administrative personnel and services. Prior to March 1, 1994, these services
were provided at approximate cost. Effective March 1, 1994, the FAS fee is based
on the level of average aggregate daily net assets of all funds advised by
subsidiaries of Federated Investors for the period. The administrative fee
received during the period of the Administrative Services Agreement shall be at
least $125,000 per portfolio and $30,000 per each additional class of shares.
DISTRIBUTION AND SHAREHOLDER SERVICES FEE--The Trust has adopted a Distribution
Plan (the "Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the
Plan, the Trust will compensate Federated Securities Corp. ("FSC"), the
principal distributor, from the net assets of the Trust to finance activities
intended to result in the sale of the Trust's Institutional Service Shares. The
Plan provides that the Trust may incur distribution expenses up to .25 of 1% of
the average daily net assets of the Institutional Shares, annually, to
compensate FSC.
Under the terms of a Shareholder Services Agreement with Federated Shareholder
Services ("FSS"), the Trust will pay FSS up to .25 of 1% of average net assets
for the Trust for the period. This fee is to obtain certain personal services
for shareholders and the maintenance of shareholder accounts. For the period
ended June 30, 1994, Institutional Service Shares did not incur a shareholder
services fee.
INTERFUND TRANSACTIONS--During the year ended June 30, 1994, the Trust engaged
in purchase and sale transactions with other affiliated funds pursuant to Rule
17a-7 amounting to $119,950,000 and $114,596,919, respectively. These purchases
and sales were conducted on an arms length basis and transacted for cash
consideration only, at independent current market prices and without brokerage
commissions, fees or other remuneration.
Certain Officers and Trustees of the Trust are Officers and Directors or
Trustees of the above companies.
34
SHORT-TERM MUNICIPAL TRUST
(FORMERLY, FEDERATED SHORT-INTERMEDIATE MUNICIPAL TRUST)
- --------------------------------------------------------------------------------
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
fiscal year ended June 30, 1994, were as follows:
<TABLE>
<S> <C>
PURCHASES $181,622,840
- -------------------------------------------------- ------------
SALES $125,798,481
- -------------------------------------------------- ------------
</TABLE>
35
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- -------------------------------------------------------------
To the Shareholders and Board of Trustees of
SHORT-TERM MUNICIPAL TRUST:
We have audited the accompanying statement of assets and liabilities of
Short-Term Municipal Trust (a Massachusetts business trust), including the
schedule of portfolio of investments as of June 30, 1994 and the related
statement of operations for the year then ended, the statement of changes in net
assets for each of the two years in the period then ended, and the financial
highlights (see pages 2 and 16 of the prospectus) for each of the periods
presented. These financial statements and financial highlights are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of June
30, 1994, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Short-Term Municipal Trust as of June 30, 1994, the results of its operations
for the year then ended, the changes in its net assets for each of the two years
in the period then ended, and the financial highlights for each of the periods
presented in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN & CO.
Pittsburgh, Pennsylvania
August 1, 1994
36
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Short-Term Municipal Trust Federated Investors Tower
Institutional Shares Pittsburgh, Pennsylvania 15222-3779
- -------------------------------------------------------------------------------------------
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- -------------------------------------------------------------------------------------------
Investment Adviser
Federated Management Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- -------------------------------------------------------------------------------------------
Custodian
State Street Bank and P.O. Box 8602
Trust Company Boston, Massachusetts 02266-8602
- -------------------------------------------------------------------------------------------
Transfer Agent and Dividend Disbursing Agent
Federated Services Company Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- -------------------------------------------------------------------------------------------
Legal Counsel
Houston, Houston & Donnelly 2510 Centre City Tower
Pittsburgh, Pennsylvania 15222
- -------------------------------------------------------------------------------------------
Legal Counsel
Dickstein, Shapiro & Morin, L.L.P. 2101 L Street, N.W.
Washington, D.C. 20037
- -------------------------------------------------------------------------------------------
Independent Public Accountants
Arthur Andersen & Co. 2100 One PPG Place
Pittsburgh, Pennsylvania 15222
</TABLE>
- --------------------------------------------------------------------------------
SHORT-TERM
MUNICIPAL TRUST
(FORMERLY, FEDERATED SHORT-
INTERMEDIATE MUNICIPAL TRUST)
INSTITUTIONAL SHARES
PROSPECTUS
A NO-LOAD, OPEN-END, DIVERSIFIED,
MANAGEMENT INVESTMENT COMPANY
AUGUST 31, 1994
[LOGO]
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
[LOGO]
RECYCLED
PAPER
825253107
8072507A-IS (8/94)
- --------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL TRUST
(FORMERLY, FEDERATED SHORT-INTERMEDIATE MUNICIPAL TRUST)
INSTITUTIONAL SERVICE SHARES
PROSPECTUS
The Institutional Service Shares offered by this prospectus represent
interests in a diversified portfolio of securities of Short-Term
Municipal Trust (the "Trust"). The Trust is an open-end management
investment company (a mutual fund).
The investment objective of the Trust is to provide dividend income
which is exempt from federal regular income tax. The Trust pursues
this investment objective by investing in a portfolio of municipal
securities with a dollar-weighted average maturity of less than three
years.
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS
OF ANY BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK, AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THESE
SHARES INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
This prospectus contains the information you should read and know
before you invest in Institutional Service Shares of the Trust. Keep
this prospectus for future reference.
The Trust has also filed a Combined Statement of Additional
Information for Institutional Shares and Institutional Service Shares
dated August 31, 1994, with the Securities and Exchange Commission.
The information contained in the Combined Statement of Additional
Information is incorporated by reference into this prospectus. You
may request a copy of the Combined Statement of Additional
Information free of charge by calling 1-800-235-4669. To obtain other
information or to make inquiries about the Trust, contact the Trust
at the address listed in the back of this prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Prospectus dated August 31, 1994
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
SUMMARY OF TRUST EXPENSES 1
- --------------------------------------------------
FINANCIAL HIGHLIGHTS--INSTITUTIONAL
SERVICE SHARES 2
- --------------------------------------------------
GENERAL INFORMATION 3
- --------------------------------------------------
INVESTMENT INFORMATION 3
- --------------------------------------------------
Investment Objective 3
Investment Policies 3
Acceptable Investments 3
Average Maturity 3
Characteristics 4
Participation Interests 4
Variable Rate Municipal Securities 4
When-Issued and Delayed Delivery
Transactions 5
Temporary Investments 5
Municipal Securities 5
Investment Risks 6
Investment Limitations 6
TRUST INFORMATION 6
- --------------------------------------------------
Management of the Trust 6
Board of Trustees 6
Investment Adviser 6
Advisory Fees 7
Adviser's Background 7
Other Payments to Financial
Institutions 7
Distribution of Institutional Service
Shares 7
Distribution and Shareholder
Services Plans 8
Administration of the Trust 8
Administrative Services 8
Custodian 9
Transfer Agent and Dividend
Disbursing Agent 9
Legal Counsel 9
Independent Public Accountants 9
Expenses of the Trust and
Institutional Service Shares 9
NET ASSET VALUE 10
- --------------------------------------------------
INVESTING IN INSTITUTIONAL SERVICE
SHARES 10
- --------------------------------------------------
Share Purchases 10
By Wire 10
By Mail 10
Minimum Investment Required 10
What Shares Cost 11
Subaccounting Services 11
Certificates and Confirmations 11
Dividends 11
Capital Gains 11
REDEEMING INSTITUTIONAL SERVICE SHARES 12
- --------------------------------------------------
Telephone Redemption 12
Written Requests 12
Signatures 12
Receiving Payment 13
Accounts with Low Balances 13
SHAREHOLDER INFORMATION 13
- --------------------------------------------------
Voting Rights 13
Massachusetts Partnership Law 13
TAX INFORMATION 14
- --------------------------------------------------
Federal Income Tax 14
Pennsylvania Corporate and Personal
Property Taxes 15
Other State and Local Taxes 15
PERFORMANCE INFORMATION 15
- --------------------------------------------------
OTHER CLASSES OF SHARES 16
- --------------------------------------------------
Financial Highlights--Institutional
Shares 17
FINANCIAL STATEMENTS 18
- --------------------------------------------------
REPORT OF INDEPENDENT PUBLIC
ACCOUNTANTS 37
- --------------------------------------------------
ADDRESSES Inside Back Cover
- --------------------------------------------------
</TABLE>
I
SUMMARY OF TRUST EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INSTITUTIONAL SERVICE SHARES
SHAREHOLDER TRANSACTION EXPENSES
<S> <C> <C>
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)............................................................. None
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price)............................................................. None
Contingent Deferred Sales Charge (as a percentage of original purchase price or redemption
proceeds, as applicable)........................................................................ None
Redemption Fee (as a percentage of amount redeemed, if applicable)................................ None
Exchange Fee...................................................................................... None
<CAPTION>
ANNUAL INSTITUTIONAL SERVICE SHARES OPERATING EXPENSES
(As a percentage of average net assets)
<S> <C> <C>
Management Fee (after waiver) (1)................................................................. 0.27%
12b-1 Fee (after waiver)(2)....................................................................... 0.00%
Total Other Expenses.............................................................................. 0.45%
Shareholder Services Fee............................................................. 0.25%
Total Institutional Service Shares Operating Expenses (3)................................. 0.72%
<FN>
(1) The management fee has been reduced to reflect the waiver of a portion of
the management fee. The adviser can terminate this waiver at any time at
its sole discretion. The maximum management fee is 0.40%.
(2) The maximum 12b-1 Fee is 0.25%.
(3) The Total Institutional Service Shares Operating Expenses in the table
above are based on expenses expected during the fiscal year ending June 30,
1995. The Total Institutional Service Shares Operating Expenses were 0.72%
for the fiscal year ended June 30, 1994, and were 1.03% absent the waiver
of a portion of the management fee and a portion of the 12b-1 fee.
</TABLE>
Long-term shareholders may pay more than the economic equivalent of the
maximum front-end sales charge permitted under the rules of the National
Association of Securities Dealers, Inc.
THE PURPOSE OF THIS TABLE IS TO ASSIST AN INVESTOR IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT A SHAREHOLDER OF INSTITUTIONAL SERVICE SHARES OF
THE TRUST WILL BEAR, EITHER DIRECTLY OR INDIRECTLY. FOR MORE COMPLETE
DESCRIPTIONS OF THE VARIOUS COSTS AND EXPENSES, SEE "INVESTING IN INSTITUTIONAL
SERVICE SHARES" AND "TRUST INFORMATION." WIRE-TRANSFERRED REDEMPTIONS OF LESS
THAN $5,000 MAY BE SUBJECT TO ADDITIONAL FEES.
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment
assuming (1) 5% annual return and (2) redemption at the end of
each time period............................................... $7 $23 $40 $89
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
The information set forth in the foregoing table and example relates only to
Institutional Service Shares of the Trust. The Trust also offers another class
of shares called Institutional Shares. Institutional Service Shares and
Institutional Shares are subject to certain of the same expenses; however,
Institutional Shares are not subject to a 12b-1 fee. See "Other Classes of
Shares."
1
SHORT-TERM MUNICIPAL TRUST
(FORMERLY, FEDERATED SHORT-INTERMEDIATE MUNICIPAL TRUST)
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SERVICE SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
Reference is made to the Report of Independent Public Accountants on page 37.
<TABLE>
<CAPTION>
YEAR ENDED
JUNE 30, 1994*
- ---------------------------------------------------------------------- --------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.35
- ----------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------
Net investment income 0.31
- ----------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (0.20)
- ---------------------------------------------------------------------- --------------
Total from investment operations 0.11
- ----------------------------------------------------------------------
LESS DISTRIBUTIONS
- ----------------------------------------------------------------------
Dividends to shareholders from net investment income (0.31)
- ---------------------------------------------------------------------- --------------
NET ASSET VALUE, END OF PERIOD $10.15
- ---------------------------------------------------------------------- --------------
TOTAL RETURN** 1.08%
- ----------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------------
Expenses 0.72%(a)
- ----------------------------------------------------------------------
Net investment income 3.65%(a)
- ----------------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------------
Net assets, end of period (000 omitted) $31,459
- ----------------------------------------------------------------------
Portfolio turnover rate 36%
- ----------------------------------------------------------------------
<FN>
* Reflects operations for the period from August 31, 1993 (date of initial
public offering) to June 30, 1994.
** Based on net asset value which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(a) Computed on an annualized basis.
</TABLE>
(See Notes which are an integral part of the Financial Statements)
Further information about the Trust's performance is contained in the Trust's
Annual Report for the fiscal year ended June 30, 1994, which can be obtained
free of charge.
2
GENERAL INFORMATION
- --------------------------------------------------------------------------------
The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated May 8, 1981. The Declaration of Trust permits the Trust to offer
separate series of shares of beneficial interest representing interests in
separate portfolios of securities. The shares in any one portfolio may be
offered in separate classes. As of the date of this prospectus, the Board of
Trustees (the "Trustees") have established two classes of shares of the Trust,
known as Institutional Service Shares and Institutional Shares. This prospectus
relates only to Institutional Service Shares ("Shares") of the Trust.
Shares of the Trust are sold primarily to retail and private banking customers
of financial institutions as a convenient means of accumulating an interest in a
professionally managed, diversified portfolio of municipal securities. A minimum
initial investment of $25,000 over a 90-day period is required. The Trust may
not be a suitable investment for retirement plans since it invests in municipal
securities.
Shares are currently sold and redeemed at net asset value without a sales charge
imposed by the Trust.
INVESTMENT INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The investment objective of the Trust is to provide dividend income which is
exempt from federal regular income tax. Interest income of the Trust that is
exempt from federal regular income tax retains its tax-free status when
distributed to the Trust's shareholders. The Trust attempts to achieve its
investment objective by investing at least 80% of its net assets in a
diversified portfolio of municipal securities or by investing its assets so that
at least 80% of its income will be tax-exempt. While there is no assurance that
the Trust will achieve its investment objective, it endeavors to do so by
following the investment policies described in this prospectus. The investment
objective, and the above investment policy, cannot be changed without approval
of shareholders.
INVESTMENT POLICIES
The investment policies described below may be changed by the Trustees without
shareholder approval. Shareholders will be notified before any material change
in these policies becomes effective.
ACCEPTABLE INVESTMENTS. The municipal securities in which the Trust invests
are:
- debt obligations issued by or on behalf of any state, territory, or
possession of the United States, including the District of Columbia, or
any political subdivision of any of these; and
- participation interests, as described below, in any of the above
obligations,
the interest from which is, in the opinion of bond counsel for the issuers or in
the opinion of officers of the Trust and/or the investment adviser to the Trust,
exempt from federal regular income tax.
AVERAGE MATURITY. The dollar-weighted average maturity of the Trust's portfolio
of municipal securities will be less than three years. For purposes of
determining the dollar-weighted average maturity of the Trust's portfolio, the
maturity of a municipal security will be its ultimate maturity,
3
unless it is probable that the issuer of the security will take advantage of
maturity-shortening devices such as a call, refunding, or redemption provision,
in which case the maturity date will be the date on which it is probable that
the security will be called, refunded, or redeemed. If the municipal security
includes the right to demand payment, the maturity of the security for purposes
of determining the Trust's dollar-weighted average maturity will be the period
remaining until the principal amount of the security can be recovered by
exercising the right to demand payment.
CHARACTERISTICS. The municipal securities in which the Trust invests are:
- rated within the three highest ratings for municipal securities by Moody's
Investors Service, Inc. ("Moody's") (Aaa, Aa or A) or by Standard & Poor's
Corporation ("Standard & Poor's") (AAA, AA, or A);
- guaranteed at the time of purchase by the U.S. government as to the
payment of principal and interest;
- fully collateralized by an escrow of U.S. government or other securities
acceptable to the Trust's adviser;
- rated at the time of purchase within Moody's highest short-term municipal
obligation rating (MIG1/VMIG1) or Moody's highest municipal commercial
paper rating (P-1) or Standard & Poor's highest municipal commercial paper
rating (SP-1);
- unrated if, at the time of purchase, longer term municipal securities of
the issuer are rated A or better by Moody's or Standard & Poor's; or
- determined by the Trust's investment adviser to be equivalent to municipal
securities which are rated A or better by Moody's or by Standard & Poor's.
Downgraded securities will be evaluated on a case by case basis by the adviser.
The adviser will determine whether or not the security continues to be an
acceptable investment. If not, the security will be sold. The prices of fixed
income securities fluctuate inversely to the direction of interest rates. A
description of the ratings categories is contained in the Appendix to the
Combined Statement of Additional Information.
PARTICIPATION INTERESTS. The Trust may purchase participation interests from
financial institutions such as commercial banks, savings and loan associations,
and insurance companies. These participation interests give the Trust an
undivided interest in municipal securities. The financial institutions from
which the Trust purchases participation interests frequently provide or secure
irrevocable letters of credit or guarantees to assure that the participation
interests are of high quality. The Trustees will determine that participation
interests meet the prescribed quality standards for the Trust.
VARIABLE RATE MUNICIPAL SECURITIES. Some of the municipal securities which the
Trust purchases may have variable interest rates. Variable interest rates are
ordinarily based on a published interest rate or interest rate index or some
similar standard, such as the 91-day U.S. Treasury bill rate. Variable rate
municipal securities will be treated as maturing on the date of the next
scheduled adjustment to the interest rate for purposes of determining the
dollar-weighted average maturity of the portfolio.
4
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Trust may purchase municipal
securities on a when-issued or delayed delivery basis. These transactions are
arrangements in which the Trust purchases securities with payment and delivery
scheduled for a future time. The Trust engages in when-issued and delayed
delivery transactions only for the purpose of acquiring portfolio securities
consistent with the Trust's investment objective and policies, not for
investment leverage. In when-issued and delayed delivery transactions, the Trust
relies on the seller to complete the transaction. The seller's failure to
complete the transaction may cause the Trust to miss a price or yield considered
to be advantageous.
TEMPORARY INVESTMENTS. From time to time on a temporary basis, when the
investment adviser determines that market conditions call for a temporary
defensive posture, the Trust may invest in short-term temporary investments
which may or may not be exempt from federal income tax. Temporary investments
include: tax-exempt variable and floating rate demand notes; tax-free commercial
paper; other temporary municipal securities; obligations issued or guaranteed by
the U.S. government, its agencies or instrumentalities; other debt securities;
commercial paper; certificates of deposit of domestic branches of U.S. banks;
and repurchase agreements (arrangements in which the organization selling the
Trust a security agrees at the time of sale to repurchase it at a mutually
agreed upon time and price).
There are no rating requirements applicable to temporary investments with the
exception of temporary municipal securities which are subject to the same rating
requirements as all other municipal securities in which the Trust invests.
However, the investment adviser will limit temporary investments to those it
considers to be of comparable quality to the acceptable investments of the
Trust.
Although the Trust is permitted to make taxable, temporary investments, there is
no current intention of generating income subject to federal regular income tax.
MUNICIPAL SECURITIES
Municipal securities are generally issued to finance public works such as
airports, bridges, highways, housing, hospitals, mass transportation projects,
schools, streets, and water and sewer works. They are also issued to repay
outstanding obligations, to raise funds for general operating expenses, and to
make loans to other public institutions and facilities. Municipal securities
include industrial development bonds issued by or on behalf of public
authorities to provide financing aid to acquire sites or construct and equip
facilities for privately or publicly owned corporations. The availability of
this financing encourages these corporations to locate within the sponsoring
communities and thereby increases local employment. The two principal
classifications of municipal securities are "general obligation" and "revenue"
bonds. General obligation bonds are secured by the issuer's pledge of its full
faith and credit and taxing power for the payment of principal and interest.
Interest on and principal of revenue bonds, however, are payable only from the
revenue generated by the facility financed by the bond or other specified
sources of revenue. Revenue bonds do not represent a pledge of credit or create
any debt of or charge against the general revenues of a municipality or public
authority. Industrial development bonds are typically classified as revenue
bonds.
5
INVESTMENT RISKS
Yields on municipal securities depend on a variety of factors, including: the
general conditions of the money market and the taxable and municipal bond
markets; the size of the particular offering; the maturity of the obligations;
and the rating of the issue. The ability of the Trust to achieve its investment
objective also depends on the continuing ability of the issuers of municipal
securities and participation interests, or the guarantors of either, to meet
their obligations for the payment of interest and principal when due.
INVESTMENT LIMITATIONS
The Trust will not:
- invest more than 5% of its total assets in securities of one issuer
(except cash and cash items and U.S. government obligations); or
- borrow money or pledge securities except, under certain circumstances, the
Trust may borrow up to one-third of the value of its total assets and
pledge up to 10% of the value of those assets to secure such borrowings.
The above investment limitations cannot be changed without shareholder approval.
The following limitations, however, can be changed by the Trustees without
shareholder approval. Shareholders will be notified before any material change
in these limitations becomes effective.
The Trust will not:
- commit more than 15% of its net assets to illiquid obligations;
- invest more than 10% of its total assets in municipal securities subject
to restrictions on resale; or
- invest more than 5% of its total assets in industrial development bonds of
issuers that have a record of less than three years of continuous
operations.
TRUST INFORMATION
- --------------------------------------------------------------------------------
MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES. The Trust is managed by a Board of Trustees. The Trustees
are responsible for managing the Trust's business affairs and for exercising all
the Trust's powers except those reserved for the shareholders. The Executive
Committee of the Board of Trustees handles the Board's responsibilities between
meetings of the Board.
INVESTMENT ADVISER. Investment decisions for the Trust are made by Federated
Management, the Trust's investment adviser (the "Adviser"), subject to direction
by the Trustees. The Adviser continually conducts investment research and
supervision for the Trust and is responsible for the purchase or sale of
portfolio instruments, for which it receives an annual fee from the Trust.
6
ADVISORY FEES. The Trust's Adviser receives an annual investment advisory fee
equal to .40 of 1% of the Trust's average daily net assets. Under the investment
advisory contract, the Adviser will reimburse the Trust the amount, limited to
the amount of the advisory fee, by which the Trust's aggregate annual operating
expenses, including its investment advisory fee, but excluding interest, taxes,
brokerage commissions, expenses of registering and qualifying the Trust and its
shares under federal and state laws and regulations, expenses of withholding
taxes, and extraordinary expenses, exceed .45 of 1% of its average daily net
assets. This does not include reimbursement to the Trust of any expenses
incurred by shareholders who use the transfer agent's subaccounting facilities.
The Adviser has also undertaken to reimburse the Trust for operating expenses in
excess of limitations established by certain states.
ADVISER'S BACKGROUND. Federated Management, a Delaware business trust organized
on April 11, 1989, is a registered investment adviser under the Investment
Advisers Act of 1940. It is a subsidiary of Federated Investors. All of the
Class A (voting) shares of Federated Investors are owned by a trust, the
trustees of which are John F. Donahue, Chairman and Trustee of Federated
Investors, Mr. Donahue's wife, and Mr. Donahue's son, J. Christopher Donahue,
who is President and Trustee of Federated Investors.
Federated Management and other subsidiaries of Federated Investors serve as
investment advisers to a number of investment companies and private accounts.
Certain other subsidiaries also provide administrative services to a number of
investment companies. Total assets under management or administration by these
and other subsidiaries of Federated Investors are approximately $70 billion.
Federated Investors, which was founded in 1956 as Federated Investors, Inc.,
develops and manages mutual funds primarily for the financial industry.
Federated Investors' track record of competitive performance and its
disciplined, risk-averse investment philosophy serve approximately 3,500 client
institutions nationwide. Through these same client institutions, individual
shareholders also have access to this same level of investment expertise.
Jonathan C. Conley has been the Trust's portfolio manager since January 1984.
Mr. Conley joined Federated Investors in 1979 and has been a Vice President of
the Trust's investment adviser since 1982. Mr. Conley is a Chartered Financial
Analyst and received his M.B.A. in Finance from the University of Virginia.
OTHER PAYMENTS TO FINANCIAL INSTITUTIONS. In addition to periodic payments to
financial institutions under the Distribution and Shareholder Services Plans,
certain financial institutions may be compensated by the adviser or its
affiliates for the continuing investment of customers' assets in certain funds,
including the Trust, advised by those entities. These payments will be made
directly by the distributor or adviser from their assets, and will not be made
from the assets of the Trust or by the assessment of a sales charge on Shares.
DISTRIBUTION OF INSTITUTIONAL SERVICE SHARES
Federated Securities Corp. is the principal distributor for Institutional
Service Shares. It is a Pennsylvania corporation organized on November 14, 1969,
and is the principal distributor for a number of investment companies. Federated
Securities Corp. is a subsidiary of Federated Investors.
7
DISTRIBUTION AND SHAREHOLDER SERVICES PLANS. Under a distribution plan adopted
in accordance with Investment Company Act Rule 12b-1 (the "Distribution Plan"),
the Trust may pay to the distributor an amount, computed at an annual rate of
0.25 of 1% of the average daily net asset value of Shares, to finance any
activity which is principally intended to result in the sale of Shares subject
to the Distribution Plan. The distributor may select financial institutions such
as banks, fiduciaries, custodians for public funds, investment advisers, and
broker/dealers to provide sales support services as agents for their clients or
customers.
The Distribution Plan is a compensation-type plan. As such, the Trust makes no
payments to the distributor except as described above. Therefore, the Trust does
not pay for unreimbursed expenses of the distributor, including amounts expended
by the distributor in excess of amounts received by it from the Trust, interest,
carrying, or other financing charges in connection with excess amounts expended,
or the distributor's overhead expenses. However, the distributor may be able to
recover such amounts or may earn a profit from future payments made by the Trust
under the Distribution Plan.
In addition, the Trust has adopted a Shareholder Services Plan (the "Services
Plan") under which it may make payments up to 0.25 of 1% of the average daily
net asset value of the Shares to obtain certain personal services for
shareholders and the maintenance of shareholder accounts ("shareholder
services"). The Trust has entered into a Shareholder Services Agreement with
Federated Shareholder Services, a subsidiary of Federated Investors, under which
Federated Shareholder Services will either perform shareholder services directly
or will select financial institutions to perform shareholder services. Financial
institutions will receive fees based upon Shares owned by their clients or
customers. The schedules of such fees and the basis upon which fees will be paid
will be determined from time to time by the Trust and Federated Shareholder
Services.
The Glass-Steagall Act prohibits a depository institution (such as a commercial
bank or savings and loan association) from being an underwriter or distributor
of most securities. In the event the Glass-Steagall Act is deemed to prohibit
depository institutions from acting in the capacities described above or should
Congress relax current restrictions on depository institutions, Trustees will
consider appropriate changes in the services.
State securities laws governing the ability of depository institutions to act as
underwriters or distributors of securities may differ from interpretations given
to the Glass-Steagall Act and, therefore, banks and financial institutions may
be required to register as dealers pursuant to state laws.
The distributor may, from time to time and for such periods as it deems
appropriate, voluntarily reduce its compensation under the Plans.
ADMINISTRATION OF THE TRUST
ADMINISTRATIVE SERVICES. Federated Administrative Services, a subsidiary of
Federated Investors, provides administrative personnel and services (including
certain legal and financial reporting services) necessary to operate the Trust.
Federated Administrative Services provides these at an annual
8
rate which relates to the average aggregate daily net assets of all funds
advised by subsidiaries of Federated Investors ("Federated Funds") as specified
below:
<TABLE>
<CAPTION>
MAXIMUM AVERAGE AGGREGATE DAILY NET ASSETS
ADMINISTRATIVE FEE OF THE FEDERATED FUNDS
-------------------- ------------------------------------
<C> <S>
0.15 of 1% on the first $250 million
0.125 of 1% on the next $250 million
0.10 of 1% on the next $250 million
0.075 of 1% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
Federated Administrative Services may choose voluntarily to waive a portion of
its fee.
CUSTODIAN. State Street Bank and Trust Company ("State Street Bank"), Boston,
Massachusetts, is custodian for the securities and cash of the Trust.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT. Federated Services Company, P.O.
Box 8602, Boston, Massachusetts 02266-8602, is transfer agent for the Shares of
the Trust and dividend disbursing agent for the Trust.
LEGAL COUNSEL. Legal counsel is provided by Houston, Houston & Donnelly,
Pittsburgh, Pennsylvania and Dickstein, Shapiro & Morin, L.L.P., Washington,
D.C.
INDEPENDENT PUBLIC ACCOUNTANTS. The independent public accountants for the
Trust are Arthur Andersen & Co., Pittsburgh, Pennsylvania.
EXPENSES OF THE TRUST AND INSTITUTIONAL SERVICE SHARES
Holders of Shares pay their allocable portion of Trust expenses.
The Trust expenses for which holders of Shares pay their allocable portion
include, but are not limited to: the cost of organizing the Trust and continuing
its existence; registering the Trust with federal and state securities
authorities; Trustees' fees; auditors' fees; the cost of meetings of Trustees;
legal fees of the Trust; association membership dues; and such non-recurring and
extraordinary items as may arise.
At present, the only expenses allocated to the Shares as a class are expenses
under the Trust's Distribution Plan. However, the Trustees reserve the right to
allocate certain other expenses to holders of Shares as they deem appropriate
("Class Expenses"). In any case, Class Expenses would be limited to:
distribution fees; transfer agent fees as identified by the transfer agent as
attributable to holders of Shares; printing and postage expenses related to
preparing and distributing materials such as shareholder reports, prospectuses
and proxies to current shareholders; registration fees paid to the Securities
and Exchange Commission and registration fees paid to state securities
commissions; expenses related to administrative personnel and services as
required to support holders of Shares; legal fees relating solely to Shares; and
Trustees' fees incurred as a result of issues relating solely to Shares.
9
NET ASSET VALUE
- --------------------------------------------------------------------------------
The Trust's net asset value per Share fluctuates. The net asset value for Shares
is determined by adding the interest of the Shares in the market value of all
securities and other assets of the Trust, subtracting the interest of the Shares
in the liabilities of the Trust and those attributable to Shares, and dividing
the remainder by the total number of Shares outstanding. The net asset value for
Shares may differ from that of Institutional Shares due to the variance in daily
net income realized by each class. Such variance will reflect only accrued net
income to which the shareholders of a particular class are entitled.
INVESTING IN INSTITUTIONAL SERVICE SHARES
- --------------------------------------------------------------------------------
SHARE PURCHASES
Shares are sold on days on which the New York Stock Exchange and the Federal
Reserve wire system are open for business. Shares may be purchased either by
wire or by mail.
To purchase Shares, open an account by calling Federated Securities Corp.
Information needed to establish the account will be taken over the telephone.
The Trust reserves the right to reject any purchase request.
BY WIRE. To purchase Shares by Federal Reserve wire, call the Trust before 4:00
p.m. (Eastern time) to place an order. The order is considered received
immediately. Payment by federal funds must be received before 3:00 p.m. (Eastern
time) on the next business day following the order. Federal funds should be
wired as follows: State Street Bank and Trust Company, Boston, Massachusetts;
Attention: EDGEWIRE; For Credit to: Short-Term Municipal Trust--Institutional
Service Shares; Trust Number (this number can be found on the account statement
or by contacting the Trust); Group Number or Wire Order Number; Nominee or
Institution Name; and ABA Number 011000028. Shares cannot be purchased on days
on which the New York Stock Exchange is closed and on federal holidays
restricting wire transfers.
BY MAIL. To purchase Shares by mail, send a check made payable to Short-Term
Municipal Trust-- Institutional Service Shares to the Trust's transfer agent,
Federated Services Company, c/o State Street Bank and Trust Company, P.O. Box
8602, Boston, Massachusetts 02266-8602. Orders by mail are considered received
after payment by check is converted by the transfer agent's bank, State Street
Bank, into federal funds. This is normally the next business day after State
Street Bank receives the check.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment in Shares is $25,000 plus any non-affiliated bank
or broker's fee, if applicable. However, an account may be opened with a smaller
amount as long as the $25,000 minimum is reached within 90 days. The minimum
investment for an institutional investor will be calculated by combining all
accounts it maintains with the Trust. Accounts established through a non-
affiliated bank or broker may be subject to a smaller minimum investment.
10
WHAT SHARES COST
Shares are sold at their net asset value next determined after an order is
received. There is no sales charge imposed by the Trust. Investors who purchase
Shares through a non-affiliated bank or broker may be charged an additional
service fee by that bank or broker.
The net asset value is determined at 4:00 p.m. (Eastern time), Monday through
Friday, except on (i) days on which there are not sufficient changes in the
value of the Trust's portfolio securities that its net asset value might be
materially affected; (ii) days during which no Shares are tendered for
redemption and no orders to purchase Shares are received; or (iii) the following
holidays: New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.
SUBACCOUNTING SERVICES
Institutions are encouraged to open single master accounts. However, certain
institutions may wish to use the transfer agent's subaccounting system to
minimize their internal recordkeeping requirements. The transfer agent may
charge a fee based on the level of subaccounting services rendered. Institutions
holding Shares in a fiduciary, agency, custodial, or similar capacity may charge
or pass through subaccounting fees as part of or in addition to normal trust or
agency account fees. They may also charge fees for other services provided which
may be related to the ownership of Shares. This prospectus should, therefore, be
read together with any agreement between the customer and the institution with
regard to the services provided, the fees charged for those services, and any
restrictions and limitations imposed.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Trust, Federated Services Company maintains a share
account for each shareholder. Share certificates are not issued unless requested
by contacting the Trust.
Detailed confirmations of each purchase or redemption are sent to each
shareholder. Monthly confirmations are sent to report dividends paid during that
month.
DIVIDENDS
Dividends are declared daily and paid monthly. Dividends are declared just prior
to determining net asset value. If an order for Shares is placed on the
preceding business day, Shares purchased by wire begin earning dividends on the
business day wire payment is received by State Street Bank. If the order for
Shares and payment by wire are received on the same day, Shares begin earning
dividends on the next business day. Shares purchased by check begin earning
dividends on the business day after the check is converted, upon instruction of
the transfer agent, into federal funds. Dividends are automatically reinvested
in additional Shares unless cash payments are requested by contacting the Trust.
CAPITAL GAINS
Distributions of net realized long-term capital gains realized by the Trust, if
any, will be made at least annually.
11
REDEEMING INSTITUTIONAL SERVICE SHARES
- --------------------------------------------------------------------------------
The Trust redeems Shares at their net asset value next determined after the
Trust receives the redemption request. Redemptions may be made on days on which
the Trust computes its net asset value. Redemption requests must be received in
proper form and can be made by telephone request or by written request.
TELEPHONE REDEMPTION
Shareholders may redeem their Shares by telephoning the Trust before 4:00 p.m.
(Eastern time). The proceeds will normally be wired the following business day,
but in no event more than seven days, to the shareholder's account at a domestic
commercial bank that is a member of the Federal Reserve System. If at any time
the Trust shall determine it necessary to terminate or modify this method of
redemption, shareholders would be promptly notified.
An authorization form permitting the Trust to accept telephone requests must
first be completed. Authorization forms and information on this service are
available from Federated Securities Corp. Telephone redemption instructions may
be recorded. If reasonable procedures are not followed by the Trust, it may be
liable for losses due to unauthorized or fraudulent telephone instructions.
In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If such a case should occur, another
method of redemption, such as "Written Requests," should be considered.
WRITTEN REQUESTS
Shares may also be redeemed by sending a written request to the Trust. Call the
Trust for specific instructions before redeeming by letter. The shareholder will
be asked to provide in the request his name, the Trust name and class of shares,
his account number, and the share or dollar amount requested. If Share
certificates have been issued, they must be properly endorsed and should be sent
by registered or certified mail with the written request.
SIGNATURES. Shareholders requesting a redemption of $50,000 or more, a
redemption of any amount to be sent to an address other than that on record with
the Trust, or a redemption payable other than to the shareholder of record must
have signatures on written redemption requests guaranteed by:
- a trust company or commercial bank whose deposits are insured by the Bank
Insurance Fund ("BIF"), which is administered by the Federal Deposit
Insurance Corporation ("FDIC");
- a member of the New York, American, Boston, Midwest, or Pacific Stock
Exchange;
- a savings bank or savings and loan association whose deposits are insured
by the Savings Association Insurance Fund ("SAIF"), which is administered
by the FDIC; or
- any other "eligible guarantor institution" as defined in the Securities
Exchange Act of 1934.
The Trust does not accept signatures guaranteed by a notary public.
12
The Trust and its transfer agent have adopted standards for accepting signature
guarantees from the above institutions. The Trust may elect in the future to
limit eligible signature guarantors to institutions that are members of a
signature guarantee program. The Trust and its transfer agent reserve the right
to amend these standards at any time without notice.
RECEIVING PAYMENT. Normally, a check for the proceeds is mailed within one
business day, but in no event more than seven days, after receipt of a proper
written redemption request.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Trust may
redeem Shares in any account and pay the proceeds to the shareholder if the
account balance falls below a required minimum value of $25,000 due to
shareholder redemptions. This requirement does not apply, however, if the
balance falls below $25,000 because of changes in the Trust's net asset value.
Before Shares are redeemed to close an account, the shareholder is notified in
writing and allowed 30 days to purchase additional Shares to meet the minimum
requirement.
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
VOTING RIGHTS
Each Share of the Trust gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All shares of all classes of
each portfolio in the Trust have equal voting rights except that in matters
affecting only a particular portfolio or class only shares of that portfolio or
class are entitled to vote. As a Massachusetts business trust, the Trust is not
required to hold annual shareholder meetings. Shareholder approval will be
sought only for certain changes in the Trust's operation and for the election of
Trustees under certain circumstances. As of August 1, 1994, Marion Merrell Dow,
Inc., Kansas City, Missouri, owned 63.64% of the Institutional Service Shares of
the Trust, and therefore, may for certain purposes, be deemed to control the
Class and be able to affect the outcome of certain matters presented for a vote
of shareholders.
Trustees may be removed by the Trustees or by shareholders at a special meeting.
A special meeting of shareholders shall be called for this purpose by the
Trustees upon written request of shareholders owning at least 10% of the
outstanding shares of the Trust entitled to vote.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for obligations of the Trust. To protect
shareholders, the Trust has filed legal documents with Massachusetts that
expressly disclaim the liability of its shareholders for such acts or
obligations of the Trust. These documents require notice of this disclaimer to
be given in each agreement, obligation, or instrument that the Trust or its
Trustees enter into or sign on behalf of the Trust.
In the unlikely event a shareholder is held personally liable for the Trust's
obligations, the Trust is required to use its property to protect or compensate
the shareholder. On request, the Trust will defend any claim made and pay any
judgment against a shareholder for any act or obligation of the
13
Trust. Therefore, financial loss resulting from liability as a shareholder will
occur only if the Trust itself cannot meet its obligations to indemnify
shareholders and pay judgments against them from its assets.
TAX INFORMATION
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX
The Trust will pay no federal income tax because it expects to meet requirements
of the Internal Revenue Code of 1986, as amended, applicable to regulated
investment companies and to receive the special tax treatment afforded to such
companies.
Shareholders are not required to pay the federal regular income tax on any
dividends received from the Trust that represent net interest on tax-exempt
municipal bonds. However, dividends representing net interest earned on some
municipal bonds may be included in calculating the federal individual
alternative minimum tax or the federal alternative minimum tax for corporations.
The alternative minimum tax, equal to up to 28% of alternative minimum taxable
income for individuals and 20% for corporations, applies when it exceeds the
regular tax for the taxable year. Alternative minimum taxable income is equal to
the regular taxable income of the taxpayer increased by certain "tax preference"
items not included in regular taxable income and reduced by only a portion of
the deductions allowed in the calculation of the regular tax.
Interest on certain "private activity" bonds issued after August 7, 1986, is
treated as a tax preference item for both individuals and corporations. Unlike
traditional governmental purpose municipal bonds, which finance roads, schools,
libraries, prisons and other public facilities, private activity bonds provide
benefits to private parties. The Trust may purchase all types of municipal
bonds, including private activity bonds. Thus, while the Trust has no present
intention of purchasing any private activity bonds, should it purchase any such
bonds, a portion of the Trust's dividends may be treated as a tax preference
item.
In addition, in the case of a corporate shareholder, dividends of the Trust
which represent interest on municipal bonds may be subject to the 20% corporate
alternative minimum tax because the dividends are included in a corporation's
"adjusted current earnings." The corporate alternative minimum tax treats 75% of
the excess of a taxpayer's pre-tax "adjusted current earnings" over the
taxpayer's alternative minimum taxable income as a tax preference item.
"Adjusted current earnings" is based upon the concept of a corporation's
"earnings and profits." Since "earnings and profits" generally includes the full
amount of any Trust dividend, and alternative minimum taxable income does not
include the portion of the Trust's dividend attributable to municipal bonds
which are not private activity bonds, the difference will be included in the
calculation of the corporation's alternative minimum tax.
Dividends of the Trust representing net interest income earned on some temporary
investments and any realized net short-term gains are taxed as ordinary income.
14
These tax consequences apply whether dividends are received in cash or as
additional Shares. Information on the tax status of dividends and distributions
is provided annually.
PENNSYLVANIA CORPORATE AND PERSONAL PROPERTY TAXES
In the opinion of Houston, Houston & Donnelly, counsel to the Trust:
- the Trust is not subject to Pennsylvania corporate or personal property
taxes; and
- Trust shares may be subject to personal property taxes imposed by
counties, municipalities and school districts in Pennsylvania to the
extent that the portfolio securities in the Trust would be subject to such
taxes if owned directly by residents of those jurisdictions.
OTHER STATE AND LOCAL TAXES
Distributions representing net interest received on tax-exempt municipal
securities are not necessarily free from income taxes of any state or local
taxing authority. State laws differ on this issue and shareholders are urged to
consult their own tax advisers.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time the Trust advertises its total return, yield, and
tax-equivalent yield for Institutional Service Shares.
Total return represents the change, over a specified period of time, in the
value of an investment in Shares of the Trust after reinvesting all income and
capital gain distributions. It is calculated by dividing that change by the
initial investment and is expressed as a percentage.
The yield of Shares of the Trust is calculated by dividing the net investment
income per share (as defined by the Securities and Exchange Commission) earned
by Shares over a thirty-day period by the net asset value per share of Shares on
the last day of the period. This number is then annualized using semi-annual
compounding. The tax-equivalent yield of Shares is calculated similarly to the
yield, but is adjusted to reflect the taxable yield that Shares would have had
to earn to equal its actual yield, assuming a specific tax rate. The yield and
the tax-equivalent yield do not necessarily reflect income actually earned by
Shares and, therefore, may not correlate to the dividends or other distributions
paid to shareholders.
The Trust is sold without any sales load or other similar non-recurring charges.
Total return, yield, and tax-equivalent yield will be calculated separately for
Institutional Service Shares and Institutional Shares. Because Institutional
Service Shares are subject to a 12b-1 fee, the total return, yield, and
tax-equivalent yield for Institutional Shares, for the same period, may exceed
that of Institutional Service Shares.
From time to time, the Trust may advertise the performance of Shares using
certain financial publications and/or compare the performance of Shares to
certain indices.
15
OTHER CLASSES OF SHARES
- --------------------------------------------------------------------------------
Institutional Shares are sold to accounts for which financial institutions act
in a fiduciary, advisory, agency, custodial or similar capacity. Institutional
Shares are also designed for funds held by savings and other institutions,
corporations, trusts, brokers, investment counselors, and insurance companies.
Institutional Shares are sold at net asset value, distributed without a 12b-1
Plan, and are subject to a minimum initial investment of $25,000.
Financial institutions and brokers providing sales and/or administrative
services may receive different compensation depending upon which class of shares
of the Trust is sold.
The amount of dividends payable to Institutional Shares may exceed that of
Shares by the difference between Class Expenses and distribution and shareholder
service expenses borne by shares of each respective class.
The stated advisory fee is the same for both classes of shares.
16
SHORT-TERM MUNICIPAL TRUST
(FORMERLY, FEDERATED SHORT-INTERMEDIATE MUNICIPAL TRUST)
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 37.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-----------------------------------------------------
1994 1993 1992 1991 1990
- ------------------------------------------------------------ --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.37 $ 10.29 $ 10.18 $ 10.14 $ 10.10
- ------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------
Net investment income 0.40 0.44 0.53 0.60 0.60
- ------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (0.22) 0.08 0.11 0.04 0.04
- ------------------------------------------------------------ --------- --------- --------- --------- ---------
Total from investment operations 0.18 0.52 0.64 0.64 0.64
- ------------------------------------------------------------
LESS DISTRIBUTIONS
- ------------------------------------------------------------
Dividends to shareholders from net investment income (0.40) (0.44) (0.53) (0.60) (0.60)
- ------------------------------------------------------------ --------- --------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 10.15 $ 10.37 $ 10.29 $ 10.18 $ 10.14
- ------------------------------------------------------------ --------- --------- --------- --------- ---------
TOTAL RETURN* 1.76% 5.11% 6.40% 6.47% 6.54%
- ------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------------------------------
Expenses 0.47% 0.46% 0.46% 0.46% 0.47%
- ------------------------------------------------------------
Net investment income 3.89% 4.21% 5.12% 5.89% 5.94%
- ------------------------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------------------------
Net assets, end of period (000 omitted) $316,810 $318,932 $205,101 $142,493 $139,113
- ------------------------------------------------------------
Portfolio turnover rate 36% 15% 42% 40% 69%
- ------------------------------------------------------------
<CAPTION>
YEAR ENDED JUNE 30,
-----------------------------------------------------
1989 1988 1987 1986 1985
- ------------------------------------------------------------ --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.19 $ 10.24 $ 10.31 $ 10.22 $ 10.05
- ------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------
Net investment income 0.57 0.54 0.51 0.60 0.64
- ------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (0.09) (0.05) (0.07) 0.09 0.17
- ------------------------------------------------------------ --------- --------- --------- --------- ---------
Total from investment operations 0.48 0.49 0.44 0.69 0.81
- ------------------------------------------------------------
LESS DISTRIBUTIONS
- ------------------------------------------------------------
Dividends to shareholders from net investment income (0.57) (0.54) (0.51) (0.60) (0.64)
- ------------------------------------------------------------ --------- --------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 10.10 $ 10.19 $ 10.24 $ 10.31 $ 10.22
- ------------------------------------------------------------ --------- --------- --------- --------- ---------
TOTAL RETURN* 4.84% 4.89% 4.37% 7.55% 7.68%
- ------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------------------------------
Expenses 0.46% 0.47% 0.47% 0.48% 0.47%
- ------------------------------------------------------------
Net investment income 5.59% 5.25% 4.95% 5.80% 6.33%
- ------------------------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------------------------
Net assets, end of period (000 omitted) $178,978 $315,154 $483,279 $341,294 $192,573
- ------------------------------------------------------------
Portfolio turnover rate 55% 63% 57% 16% 32%
- ------------------------------------------------------------
<FN>
* Based on net asset value which does not reflect the sales load or contingent
deferred sales charge, if applicable.
</TABLE>
(See Notes which are an integral part of the Financial Statements)
Further information about the Trust's performance is contained in the Trust's
Annual Report for the fiscal year ended June 30, 1994, which can be obtained
free of charge.
17
SHORT-TERM MUNICIPAL TRUST
(FORMERLY, FEDERATED SHORT-INTERMEDIATE MUNICIPAL TRUST)
PORTFOLIO OF INVESTMENTS
JUNE 30, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S OR
AMOUNT S&P* VALUE
- ---------- ------------------------------------------------------- ---------- -----------
<C> <S> <C> <C>
SHORT-INTERMEDIATE MUNICIPAL SECURITIES--100.1%
- -------------------------------------------------------------------
ALABAMA--0.3%
-------------------------------------------------------
$1,000,000 Alabama Water Pollution Control Authority, 5.40%
Revenue Bonds (Series 1991)/(Revolving Trust Loan
Program)/ (AMBAC Insured), 8/15/94 AAA $ 1,002,410
------------------------------------------------------- -----------
ARIZONA--1.6%
-------------------------------------------------------
2,000,000 Pima County, AZ, Unified School District #1, 8.00%
School Improvement Bonds (FGIC Insured), 7/1/96 AAA 2,133,020
-------------------------------------------------------
1,000,000 Salt River, AZ, 3.70% Electric System Revenue Bonds
(Agricultural Improvement & Power District), 1/1/96 AA 988,920
-------------------------------------------------------
2,500,000 Salt River, AZ, 4.00% Power Supply Revenue Bonds
(Agricultural Improvement & Power District)/(Original
Issue Yield: 4.05%), 1/1/96 Aa 2,485,950
------------------------------------------------------- -----------
Total 5,607,890
------------------------------------------------------- -----------
CALIFORNIA--11.6%
-------------------------------------------------------
4,000,000 California State, 10.00% UT GO Bonds, 4/1/98 A+ 4,657,440
-------------------------------------------------------
1,250,000 Los Angeles County, CA, Transportation Commission,
4.30% Sales Tax Revenue Bonds (Series 1992A)/(MBIA
Insured), 7/1/95 Aaa 1,256,212
-------------------------------------------------------
16,000,000 Los Angeles, CA, Waste Water System, 6.70% Revenue
Bonds (Series D)/(MBIA Insured)/(Original Issue Yield:
6.769%)/(Prerefunded), 12/1/2000 (@102) AAA 17,682,080
-------------------------------------------------------
1,250,000 Orange County, CA, Local Transportation Authority,
4.15% Sales Tax Revenue Bonds, 2/15/95 Aa 1,255,700
-------------------------------------------------------
8,000,000 Southern California Public Power Authority, 11.25%
Transmission Project Revenue Bonds (Prerefunded),
1/1/95 (@103) Aaa 8,548,080
-------------------------------------------------------
</TABLE>
18
SHORT-TERM MUNICIPAL TRUST
- ---------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S OR
AMOUNT S&P* VALUE
- ---------- ------------------------------------------------------- ---------- -----------
<C> <S> <C> <C>
SHORT-INTERMEDIATE MUNICIPAL SECURITIES--CONTINUED
- -------------------------------------------------------------------
CALIFORNIA--CONTINUED
-------------------------------------------------------
$3,045,000 University of California, 8.00% Refunding Revenue Bonds
(UCLA Medical Center)/(MBIA Insured), 12/1/97 AAA $ 3,343,714
-------------------------------------------------------
3,310,000 University of California, 8.00% Refunding Revenue Bonds
(UCLA Medical Center)/(MBIA Insured), 12/1/98 AAA 3,700,580
------------------------------------------------------- -----------
Total 40,443,806
------------------------------------------------------- -----------
COLORADO--1.9%
-------------------------------------------------------
1,535,000 City & County of Denver Airport, 10.50% Revenue Bonds
(Stapleton International Airport)/(Prerefunded),
12/1/94 (@100) Aaa 1,581,127
-------------------------------------------------------
2,995,000 Denver (City & County), CO, 7.625% GO Bonds (Series
1992C), 8/1/95 Aa 3,112,344
-------------------------------------------------------
1,900,000 Mesa County, CO, School District #51, 4.90% GO
Refunding Bonds (Series 1991B)/(AMBAC Insured), 12/1/94 Aaa 1,914,820
------------------------------------------------------- -----------
Total 6,608,291
------------------------------------------------------- -----------
DELAWARE--0.6%
-------------------------------------------------------
2,000,000 Delaware, 6.80% UT GO Bonds, 5/1/95 Aa 2,053,120
------------------------------------------------------- -----------
DISTRICT OF COLUMBIA--0.6%
-------------------------------------------------------
1,000,000 District Columbia, 8.00% UT GO Bonds (Prerefunded),
6/1/96 (@102) AAA 1,084,680
-------------------------------------------------------
1,000,000 District of Columbia, 5.50% GO Bonds (FGIC Insured),
6/1/95 Aaa 1,011,110
------------------------------------------------------- -----------
Total 2,095,790
------------------------------------------------------- -----------
FLORIDA--1.2%
-------------------------------------------------------
1,500,000 Florida State Board of Education, 7.80% UT GO Capital
Outlay Bonds (Prerefunded), 6/1/96 (@102) AAA 1,621,560
-------------------------------------------------------
1,390,000 Miami Beach, FL, Health Facilities Authority, 4.45%
Hospital Revenue Reference Bonds (Mount Sinai Medical
Center)/(Capital Guaranty Insured), 11/15/95 AAA 1,403,789
-------------------------------------------------------
</TABLE>
19
SHORT-TERM MUNICIPAL TRUST
- ---------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S OR
AMOUNT S&P* VALUE
- ---------- ------------------------------------------------------- ---------- -----------
<C> <S> <C> <C>
SHORT-INTERMEDIATE MUNICIPAL SECURITIES--CONTINUED
- -------------------------------------------------------------------
FLORIDA--CONTINUED
-------------------------------------------------------
$1,000,000 Orlando, FL, Utilities Commission, 7.75% Water &
Electric Revenue Bonds, 10/1/94 Aa $ 1,011,480
------------------------------------------------------- -----------
Total 4,036,829
------------------------------------------------------- -----------
GEORGIA--0.5%
-------------------------------------------------------
1,820,000 Gwinnett County, GA, School District, 4.90% GO School
Bonds (Series A), 2/1/95 Aa 1,834,487
------------------------------------------------------- -----------
HAWAII--3.3%
-------------------------------------------------------
5,000,000 Hawaii State, 7.10% GO Bonds (Prerefunded), 6/1/98
(@101-1/2) Aaa 5,434,750
-------------------------------------------------------
6,000,000 Honolulu, City & County, HI, 4.20% OID UT GO Bonds
(Original Issue Yield: 4.30%), 10/1/97 AA 5,918,940
------------------------------------------------------- -----------
Total 11,353,690
------------------------------------------------------- -----------
ILLINOIS--4.7%
-------------------------------------------------------
1,750,000 Du Page, IL, Water Commission, 5.90% Refunding Revenue
Bonds, 5/1/96 AA- 1,791,965
-------------------------------------------------------
2,000,000 Illinois State Toll Highway Authority, 7.375% Revenue
Bonds (Prerefunded), 1/1/96 (@102) AAA 2,127,900
-------------------------------------------------------
5,500,000 Illinois State Toll Highway Road Authority, 7.10%
Revenue Bonds (Prerefunded), 1/1/96 (@102) A- 5,830,770
-------------------------------------------------------
6,500,000 Illinois State, 4.50% GO Bonds (Series 1993), 8/1/96 AA 6,498,440
------------------------------------------------------- -----------
Total 16,249,075
------------------------------------------------------- -----------
IOWA--0.6%
-------------------------------------------------------
1,095,000 Sioux City, IA, 4.15% Hospital Revenue Refunding Bonds
(Series 1993O)/(Sisters of Mercy Health Corp.), 8/15/96 A- 1,080,294
-------------------------------------------------------
1,140,000 Sioux City, IA, 4.15% Hospital Revenue Refunding Bonds
(Sisters of Mercy Health Corp.), 8/15/97 A 1,119,651
------------------------------------------------------- -----------
Total 2,199,945
------------------------------------------------------- -----------
</TABLE>
20
SHORT-TERM MUNICIPAL TRUST
- ---------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S OR
AMOUNT S&P* VALUE
- ---------- ------------------------------------------------------- ---------- -----------
<C> <S> <C> <C>
SHORT-INTERMEDIATE MUNICIPAL SECURITIES--CONTINUED
- -------------------------------------------------------------------
KENTUCKY--0.3%
-------------------------------------------------------
$1,000,000 Kentucky State Turnpike Authority, 7.875%
(Prerefunded), 7/1/96 (@102) AAA $ 1,084,650
------------------------------------------------------- -----------
MAINE--0.5%
-------------------------------------------------------
1,805,000 Maine, 7.875% Full Faith and Credit Bonds (Highway
Purpose), 7/1/94 Aa1 1,805,000
------------------------------------------------------- -----------
MARYLAND--1.8%
-------------------------------------------------------
1,500,000 Charles County, MD, 7.00% UT GO Refunding and Public
Improvement Bonds (AMBAC Insured), 1/15/95 Aaa 1,528,695
-------------------------------------------------------
2,055,000 University of Maryland System Auxiliary, 4.75% Facility
& Tuition Revenue Bonds (Series A), 2/1/95 Aa 2,069,714
-------------------------------------------------------
2,650,000 Washington, MD, Suburban Sanitary District, 7.20% UT GO
Bonds, 6/1/95 Aa1 2,728,705
------------------------------------------------------- -----------
Total 6,327,114
------------------------------------------------------- -----------
MASSACHUSETTS--1.4%
-------------------------------------------------------
4,500,000 Massachusetts State, 7.25% UT GO Bonds, 6/1/96 A 4,746,060
------------------------------------------------------- -----------
MICHIGAN--3.3%
-------------------------------------------------------
5,000,000 Detroit, MI, City School District, 5.30% Refunding
Bonds (Q-SBLF Guaranty), 5/1/99 AA- 5,025,000
-------------------------------------------------------
2,120,000 Michigan State Hospital Finance Authority, 4.00%
Hospital Revenue Refunding Bonds (Series
1993P)/(Sisters of Mercy Health Corp.), 8/15/96 A- 2,084,342
-------------------------------------------------------
4,345,000 Michigan State Hospital Finance Authority, 4.00%
Revenue Refunding Bonds (Series 1993P)/(Sisters of
Mercy Health Corp.) (MBIA Insured), 8/15/97 Aaa 4,235,810
------------------------------------------------------- -----------
Total 11,345,152
------------------------------------------------------- -----------
MINNESOTA--3.1%
-------------------------------------------------------
2,000,000 Southern Minnesota Municipal Power Agency, 9.125% Power
Supply Revenue Bonds (Prerefunded), 1/1/96 (@102) Aaa 2,178,340
-------------------------------------------------------
</TABLE>
21
SHORT-TERM MUNICIPAL TRUST
- ---------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S OR
AMOUNT S&P* VALUE
- ---------- ------------------------------------------------------- ---------- -----------
<C> <S> <C> <C>
SHORT-INTERMEDIATE MUNICIPAL SECURITIES--CONTINUED
- -------------------------------------------------------------------
MINNESOTA--CONTINUED
-------------------------------------------------------
$1,915,000 Washington County, MN, Housing Redevelopment Authority,
3.85% Refunding Revenue Bonds, 2/1/96 AA- $ 1,892,920
-------------------------------------------------------
3,410,000 Western Minnesota Municipal Power Agency, 7.00% Revenue
Bonds (Series A)/(Original Issue Yield: 7.062%),
1/1/2013, Callable 1/1/97 (@102) A- 3,597,448
-------------------------------------------------------
3,000,000 Western Minnesota Municipal Power Agency, 9.50% Power
Supply Revenue Bonds (Prerefunded), 1/1/96 (@102) Aaa 3,283,740
------------------------------------------------------- -----------
Total 10,952,448
------------------------------------------------------- -----------
MISSOURI--1.7%
-------------------------------------------------------
2,310,000 Kansas City, MO, 5.65% Sewer Revenue Bonds, 3/1/95 Aa 2,341,069
-------------------------------------------------------
1,580,000 Kansas City, MO, School District, 5.70% Missouri
Building Corp. Refunding Leasehold Revenue Bonds
(Series 1991A)/ (FGIC Insured), 2/1/95 Aaa 1,598,454
-------------------------------------------------------
2,000,000 Missouri State HEFA, 4.10% Revenue Bonds (Series
1992B)/ (Health Midwest)/(MBIA Insured), 2/15/95 Aaa 2,002,980
------------------------------------------------------- -----------
Total 5,942,503
------------------------------------------------------- -----------
NEBRASKA--1.0%
-------------------------------------------------------
1,250,000 Omaha, NE, 3.80% Electric System Revenue Bonds (Series
B)/(Public Power District), 2/1/96 Aa 1,238,025
-------------------------------------------------------
1,400,000 Omaha, NE, 3.90% Electric System Revenue Bonds (Series
A)/(Public Power District), 2/1/96 Aa 1,389,332
-------------------------------------------------------
1,000,000 Omaha, NE, 4.70% Electric System Revenue Bonds (Series
A)/(Public Power District), 2/1/95 Aa 1,009,870
------------------------------------------------------- -----------
Total 3,637,227
------------------------------------------------------- -----------
NEVADA--0.6%
-------------------------------------------------------
2,000,000 Clark County, NV, School District, 7.10% LT GO Bonds
(Series A), 3/1/97 A+ 2,111,720
------------------------------------------------------- -----------
</TABLE>
22
SHORT-TERM MUNICIPAL TRUST
- ---------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S OR
AMOUNT S&P* VALUE
- ---------- ------------------------------------------------------- ---------- -----------
<C> <S> <C> <C>
SHORT-INTERMEDIATE MUNICIPAL SECURITIES--CONTINUED
- -------------------------------------------------------------------
NEW HAMPSHIRE--1.0%
-------------------------------------------------------
$3,310,000 New Hampshire, 4.20% Capital Improvement Refunding GO
Bonds (Series 1992), 9/1/95 Aa $ 3,330,886
------------------------------------------------------- -----------
NEW JERSEY--2.4%
-------------------------------------------------------
8,000,000 New Jersey State, 6.50% Refunding GO Bonds (Series C),
1/15/2002 AA+ 8,443,280
------------------------------------------------------- -----------
NEW MEXICO--7.7%
-------------------------------------------------------
2,250,000 Albuquerque, NM, 4.00% Joint Water and Sewer System
Refunding and Improvement Revenue Bonds (Series
1994A)/(Original Issue Yield: 4.10%), 7/1/99 AA 2,121,030
-------------------------------------------------------
5,375,000 Albuquerque, NM, 4.10% Joint Water and Sewer System
Refunding and Improvement Revenue Bonds (Series
1994A)/(Original Issue Yield: 4.25%), 7/1/2000 AA 4,999,879
-------------------------------------------------------
8,650,000 Albuquerque, NM, 4.60% UT GO Bonds (Series A), 7/1/98 AA 8,569,036
-------------------------------------------------------
4,000,000 Albuquerque, NM, 5.20% General Purpose GO Bonds (Series
1992A), 7/1/94 AA 4,000,000
-------------------------------------------------------
2,865,000 Bernalillo County, NM, 6.25% GO Special Tax Bonds,
8/1/95 Aa 2,938,545
-------------------------------------------------------
4,250,000 New Mexico, 5.00% Severance Tax Refunding Bonds (Series
1991A), 7/1/94 AA 4,250,000
------------------------------------------------------- -----------
Total 26,878,490
------------------------------------------------------- -----------
NEW YORK--8.4%
-------------------------------------------------------
4,600,000 New York City, NY, 10.25% GO Bonds (Series C)/
(Prerefunded), 3/15/96 (@103) Aaa 4,954,292
-------------------------------------------------------
4,735,000 New York City, NY, Municipal Water Finance Authority,
6.50% Water & Sewer System Revenue Bonds (Series C),
6/15/97 A- 4,781,261
-------------------------------------------------------
680,000 New York City, NY, Municipal Water Finance Authority,
6.50% Water & Sewer System Revenue Bonds (Series C)/
(Prerefunded), 6/15/97 A 722,310
-------------------------------------------------------
</TABLE>
23
SHORT-TERM MUNICIPAL TRUST
- ---------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S OR
AMOUNT S&P* VALUE
- ---------- ------------------------------------------------------- ---------- -----------
<C> <S> <C> <C>
SHORT-INTERMEDIATE MUNICIPAL SECURITIES--CONTINUED
- -------------------------------------------------------------------
NEW YORK--CONTINUED
-------------------------------------------------------
$5,000,000 New York City, NY, Municipal Water Finance Authority,
7.20% Water and Sewer System Revenue Bonds (Series A),
6/15/99 A- $ 5,484,500
-------------------------------------------------------
3,500,000 New York State Thruway Authority, 3.80% Emergency
Highway Construction & Reconstruction Bonds (FGIC
Insured), 3/1/96 AAA 3,469,690
-------------------------------------------------------
9,540,000 New York State, 5.75% UT GO Bonds, 9/15/99 A- 9,850,432
------------------------------------------------------- -----------
Total 29,262,485
------------------------------------------------------- -----------
NORTH CAROLINA--3.1%
-------------------------------------------------------
1,500,000 Charlotte-Mecklenberg, NC, Hospital Authority, 4.65%
Health Care System Revenue Bonds, 1/1/95 Aa 1,502,865
-------------------------------------------------------
6,000,000 Mecklenberg County, NC, 5.00% UT GO Refunding Bonds
(Series 1992), 3/1/95 Aaa 6,061,080
-------------------------------------------------------
3,000,000 North Carolina Eastern Municipal Power Authority,
10.00% Revenue Bonds (Prerefunded), 1/1/95 (@103) Aaa 3,186,180
------------------------------------------------------- -----------
Total 10,750,125
------------------------------------------------------- -----------
OHIO--3.0%
-------------------------------------------------------
3,300,000 Columbus, OH, 7.70% UT GO Bonds (Prerefunded), 5/1/96
(@102) AAA 3,556,872
-------------------------------------------------------
4,000,000 Ohio State Public Facilities Authority, 4.25% Higher
Education Capital Facilities Revenue Bonds (Series
11-A)/ (AMBAC Insured), 12/1/97 AAA 3,931,240
-------------------------------------------------------
2,815,000 Ohio State, Water Development Authority, PCA, 7.25%
Revenue Bonds (Phillip Morris), Callable 12/1/97 (@103) A 3,026,181
------------------------------------------------------- -----------
Total 10,514,293
------------------------------------------------------- -----------
OREGON--1.2%
-------------------------------------------------------
2,000,000 Oregon State Department of Transportation, 5.375%
Regional Light Rail Extension Revenue Bonds (Series
1994)/(MBIA Insured), 6/1/99 AAA 2,029,640
-------------------------------------------------------
</TABLE>
24
SHORT-TERM MUNICIPAL TRUST
- ---------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S OR
AMOUNT S&P* VALUE
- ---------- ------------------------------------------------------- ---------- -----------
<C> <S> <C> <C>
SHORT-INTERMEDIATE MUNICIPAL SECURITIES--CONTINUED
- -------------------------------------------------------------------
OREGON--CONTINUED
-------------------------------------------------------
$2,000,000 Oregon State Department of Transportation, 5.50%
Regional Light Rail Extension Revenue Bonds (MBIA
Insured), 6/1/2000 AAA $ 2,037,780
------------------------------------------------------- -----------
Total 4,067,420
------------------------------------------------------- -----------
PENNSYLVANIA--7.8%
-------------------------------------------------------
5,840,000 Commonwealth of Pennsylvania, 3.80% GO Bonds, 4/15/96 AA- 5,776,986
-------------------------------------------------------
8,000,000 Commonwealth of Pennsylvania, 4.75% GO Bonds, 6/15/98 AA- 7,974,160
-------------------------------------------------------
1,155,000 Dauphin County, PA, General Authority, 4.35% Revenue
Bonds (Series A)/(West Penn Hospital)/(MBIA Insured),
7/1/95 Aaa 1,160,059
-------------------------------------------------------
1,175,000 Dauphin County, PA, General Authority, 4.35% Revenue
Bonds (Series B)/(West Penn Hospital)/(MBIA Insured),
7/1/95 Aaa 1,180,146
-------------------------------------------------------
7,000,000 Pennsylvania Intergovernmental Cooperation Authority,
5.75% Special Tax Revenue Bonds (City of Philadelphia)/
(FGIC Insured)/(Original Issue Yield: 5.85%), 6/15/99 AAA 7,224,700
-------------------------------------------------------
3,690,000 Pittsburgh, PA, 4.10% GO Bonds (AMBAC Insured), 9/1/95 Aaa 3,700,258
------------------------------------------------------- -----------
Total 27,016,309
------------------------------------------------------- -----------
SOUTH CAROLINA--3.4%
-------------------------------------------------------
5,500,000 Piedmont Municipal Electric Agency, SC, 10.25% Power
Supply Revenue Bonds (Prerefunded), 1/1/95 (@102) Aaa 5,848,150
-------------------------------------------------------
2,000,000 Piedmont Municipal Power Agency, SC, 7.00% Refunding
Revenue Bonds (Series A)/(AMBAC Insured), 1/1/2019,
Callable 1/1/98 AAA 2,110,000
-------------------------------------------------------
2,300,000 South Carolina, 7.00% UT GO Capital Improvement Bonds,
3/1/95 Aaa 2,353,268
-------------------------------------------------------
</TABLE>
25
SHORT-TERM MUNICIPAL TRUST
- ---------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S OR
AMOUNT S&P* VALUE
- ---------- ------------------------------------------------------- ---------- -----------
<C> <S> <C> <C>
SHORT-INTERMEDIATE MUNICIPAL SECURITIES--CONTINUED
- -------------------------------------------------------------------
SOUTH CAROLINA--CONTINUED
-------------------------------------------------------
$1,500,000 South Carolina, 7.60% GO Bonds (Series U), 2/1/95 Aaa $ 1,535,565
------------------------------------------------------- -----------
Total 11,846,983
------------------------------------------------------- -----------
TENNESSEE--1.2%
-------------------------------------------------------
1,000,000 Nashville & Davidson, TN, Metropolitan Government,
9.375% Revenue Bonds (Prerefunded), 1/1/95 (@102) Aaa 1,049,190
-------------------------------------------------------
3,000,000 Tennessee, 6.75% GO Bonds (Series 1992A), 7/1/95 AA+ 3,087,750
------------------------------------------------------- -----------
Total 4,136,940
------------------------------------------------------- -----------
TEXAS--5.5%
-------------------------------------------------------
1,000,000 Arlington, TX, 6.70% Waterworks & Sewer Refunding
Revenue Bonds (Series A)/(AMBAC Insured), 6/1/96 AAA 1,038,480
-------------------------------------------------------
1,290,000 Houston, TX, ISD, 4.00% LT GO School House Bonds,
8/15/95 Aaa 1,292,477
-------------------------------------------------------
7,000,000 Northside, TX, ISD, 4.10% UT GO Bonds, 2/1/96 Aaa 6,970,530
-------------------------------------------------------
5,000,000 San Antonio, TX, Electric & Gas System, 4.00% Revenue
Bonds, 2/1/95 Aa 5,014,250
-------------------------------------------------------
2,425,000 Texas State Public Property Finance Corp., 4.30%
Refunding Revenue Bonds (Series 1993)/(Mental Health
and Mental Retardation Center), 9/1/97 AAA 2,395,197
-------------------------------------------------------
2,500,000 Texas Water Development Board, 4.35% Senior Lien
Revenue Bonds (Series 1992), 7/15/95 AA 2,508,025
------------------------------------------------------- -----------
Total 19,218,959
------------------------------------------------------- -----------
UTAH--3.4%
-------------------------------------------------------
8,000,000 Granite City School District, UT, Board of Education,
4.00% GO Refunding Bonds (Series 1992), 6/1/95 Aa 8,011,200
-------------------------------------------------------
1,800,000 Intermountain Power Agency, UT, 3.70% Power Supply
Revenue Bonds (Series 1993C), 7/1/96 AA 1,771,686
-------------------------------------------------------
</TABLE>
26
SHORT-TERM MUNICIPAL TRUST
- ---------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S OR
AMOUNT S&P* VALUE
- ---------- ------------------------------------------------------- ---------- -----------
<C> <S> <C> <C>
SHORT-INTERMEDIATE MUNICIPAL SECURITIES--CONTINUED
- -------------------------------------------------------------------
UTAH--CONTINUED
-------------------------------------------------------
$2,000,000 Intermountain Power Agency, UT, 8.75% Power Supply
Revenue Bonds (Prerefunded), 7/1/95 (@102) Aaa $ 2,135,020
------------------------------------------------------- -----------
Total 11,917,906
------------------------------------------------------- -----------
VERMONT--0.7%
-------------------------------------------------------
2,500,000 Vermont, 7.50% GO Bonds (Series A), 2/1/95 Aa 2,557,400
------------------------------------------------------- -----------
VIRGINIA--2.2%
-------------------------------------------------------
7,500,000 Fairfax County, VA, 8.25% Public Improvement Bonds
(Series 1992A), 4/1/95 Aaa 7,764,000
------------------------------------------------------- -----------
WASHINGTON--6.0%
-------------------------------------------------------
1,445,000 Seattle, WA, 4.75% Various Purpose LT GO Bonds, 3/1/95 Aa1 1,456,011
-------------------------------------------------------
4,865,000 Seattle, WA, 9.70% Municipal Light and Power Revenue
Bonds (Prerefunded), 9/1/95 (@102) Aaa 5,268,163
-------------------------------------------------------
3,000,000 Washington State, 5.00% Various Purpose GO Bonds
(Series 1994B), 5/1/98 AA 3,017,460
-------------------------------------------------------
7,425,000 Washington State, 5.00% Various Purpose GO Bonds
(Series 1994B), 5/1/99 AA 7,414,976
-------------------------------------------------------
1,000,000 Washington, 6.90% UT GO Bonds, 6/1/95 Aa 1,027,250
-------------------------------------------------------
1,500,000 Washington, 4.50% Various Purpose GO Refunding Bonds
(Series 1992A), 2/1/95 (@106) Aa 1,508,580
-------------------------------------------------------
1,000,000 Washington, 6.80% Various Purpose GO Bonds, 4/1/95 Aa 1,023,290
------------------------------------------------------- -----------
Total 20,715,730
------------------------------------------------------- -----------
WISCONSIN--2.5%
-------------------------------------------------------
2,535,000 Milwaukee, WI, 8.80% UT GO Metropolitan Sewer District
Bonds, 5/1/95 Aa 2,639,594
-------------------------------------------------------
1,970,000 Milwaukee, WI, 6.00% UT GO Public Improvement Bonds
(Series CA), 6/15/95 Aa 2,007,371
-------------------------------------------------------
3,000,000 Wisconsin State, 6.40% GO Bonds (Series A), 5/1/99 AA 3,170,580
-------------------------------------------------------
</TABLE>
27
SHORT-TERM MUNICIPAL TRUST
- ---------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S OR
AMOUNT S&P* VALUE
- ---------- ------------------------------------------------------- ---------- -----------
<C> <S> <C> <C>
SHORT-INTERMEDIATE MUNICIPAL SECURITIES--CONTINUED
- -------------------------------------------------------------------
WISCONSIN--CONTINUED
-------------------------------------------------------
$1,000,000 Wisconsin, 6.40% UT GO Bonds (Series A), 5/1/95 Aa $ 1,022,790
------------------------------------------------------- -----------
Total 8,840,335
------------------------------------------------------- -----------
TOTAL SHORT-INTERMEDIATE MUNICIPAL SECURITIES
(IDENTIFIED COST $351,869,499) 348,698,748
------------------------------------------------------- -----------
SHORT-TERM MUNICIPAL SECURITIES--0.9%
- -------------------------------------------------------------------
PUERTO RICO--0.3%
-------------------------------------------------------
1,050,000 Government Development Bank of Puerto Rico Weekly VRDNs
(Credit Suisse and Sumitomo Bank Ltd. LOCS) A-1+ 1,050,000
------------------------------------------------------- -----------
TENNESSEE--0.6%
-------------------------------------------------------
2,000,000 Chattanooga-Hamilton County, TN, Hospital Authority
Daily VRDNs (Erlanger Medical Center Guaranty) A-1+ 2,000,000
------------------------------------------------------- -----------
TOTAL SHORT-TERM MUNICIPAL SECURITIES (AT AMORTIZED
COST) 3,050,000
------------------------------------------------------- -----------
TOTAL MUNICIPAL SECURITIES (IDENTIFIED COST
$354,919,499) (NOTE 2A) $351,748,748+
------------------------------------------------------- -----------
<FN>
* Please refer to the Appendix of the Statement of Additional Information
for an explanation of the credit ratings. Current credit ratings are
unaudited.
+ The cost of investments for federal tax purposes amounts to $354,919,499.
The net unrealized depreciation of investments on a federal tax cost
basis amounts to $3,170,751, which is comprised of $841,220 appreciation
and $4,011,971 depreciation at June 30, 1994.
Note: The categories of investments is shown as a percentage of net assets
($348,269,731) at June 30, 1994.
</TABLE>
28
SHORT-TERM MUNICIPAL TRUST
- ---------------------------------------------------------
<TABLE>
<S> <C>
The following abbreviations are used in this portfolio:
AMBAC --American Municipal Bond Assurance Corporation
FGIC --Financial Guaranty Insurance Company
GO --General Obligation
HEFA --Health and Education Facilities Authority
ISD --Independent School District
LOCS --Letters of Credit
LT --Limited Tax
MBIA --Municipal Bond Investors Assurance
OID --Original Issue Discount
PCA --Pollution Control Authority
Q-SBLF --Qualified State Bond Loan Trust
UT --Utah/Unlimited Tax
VA --Virginia/Veterans Administration
VRDNs --Variable Rate Demand Notes
</TABLE>
(See Notes which are an integral part of the Financial Statements)
29
SHORT-TERM MUNICIPAL TRUST
(FORMERLY, FEDERATED SHORT-INTERMEDIATE MUNICIPAL TRUST)
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
- --------------------------------------------------------------------------------
Investments in securities, at value (Note 2A) (identified and tax cost
$354,919,499) $351,748,748
- --------------------------------------------------------------------------------
Cash 254,481
- --------------------------------------------------------------------------------
Interest receivable 6,191,253
- --------------------------------------------------------------------------------
Receivable for Trust shares sold 154,981
- -------------------------------------------------------------------------------- ------------
Total assets 358,349,463
- --------------------------------------------------------------------------------
LIABILITIES:
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C>
Payable for investments purchased $8,025,289
- ----------------------------------------------------------------------
Payable for Trust shares redeemed 1,165,592
- ----------------------------------------------------------------------
Dividends payable (Note 2B) 833,068
- ----------------------------------------------------------------------
Accrued expenses 55,783
- ---------------------------------------------------------------------- ----------
</TABLE>
<TABLE>
<S> <C>
Total liabilities 10,079,732
- -------------------------------------------------------------------------------- ------------
NET ASSETS for 34,316,807 shares of beneficial interest outstanding $348,269,731
- -------------------------------------------------------------------------------- ------------
NET ASSETS CONSIST OF: (NOTE 2E)
- --------------------------------------------------------------------------------
Paid-in-Capital $358,299,966
- --------------------------------------------------------------------------------
Unrealized depreciation of investments (3,170,751)
- --------------------------------------------------------------------------------
Accumulated net realized loss on investments (6,859,484)
- -------------------------------------------------------------------------------- ------------
Total Net Assets $348,269,731
- -------------------------------------------------------------------------------- ------------
NET ASSET VALUE, Offering Price, and Redemption Price Per Share
- --------------------------------------------------------------------------------
Institutional Shares (net assets of $316,810,333 DIVIDED BY 31,216,957 shares of
beneficial interest outstanding) $ 10.15
- -------------------------------------------------------------------------------- ------------
Institutional Service Shares (net assets of $31,459,398 DIVIDED BY 3,099,850
shares of beneficial interest outstanding) $ 10.15
- -------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
30
SHORT-TERM MUNICIPAL TRUST
(FORMERLY, FEDERATED SHORT-INTERMEDIATE MUNICIPAL TRUST)
STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- -------------------------------------------------------------------------------------
Interest income (Note 2B) $15,437,877
- -------------------------------------------------------------------------------------
EXPENSES:
- -------------------------------------------------------------------------------------
Investment advisory fee (Note 4) $1,414,365
- -----------------------------------------------------------------------
Trustees' Fees 12,409
- -----------------------------------------------------------------------
Administrative personnel and services fees (Note 4) 346,714
- -----------------------------------------------------------------------
Custodian and portfolio accounting fees 164,292
- -----------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses (Note 4) 26,023
- -----------------------------------------------------------------------
Shareholder services fee (Note 4) 27,051
- -----------------------------------------------------------------------
Trust share registration fees 78,919
- -----------------------------------------------------------------------
Distribution services fee (Note 4) 38,361
- -----------------------------------------------------------------------
Auditing fees 17,863
- -----------------------------------------------------------------------
Legal fees 15,239
- -----------------------------------------------------------------------
Printing and postage 31,383
- -----------------------------------------------------------------------
Insurance premiums 9,889
- -----------------------------------------------------------------------
Taxes 2,473
- -----------------------------------------------------------------------
Miscellaneous 5,059
- ----------------------------------------------------------------------- ----------
Total expenses 2,190,040
- -----------------------------------------------------------------------
Deduct--
- ------------------------------------------------------------
Waiver of investment advisory fee (Note 4) $452,665
- ------------------------------------------------------------
Waiver of distribution services fee (Note 4) 27,051 479,716
- ------------------------------------------------------------ -------- ----------
Net expenses 1,710,324
- ------------------------------------------------------------------------------------- -----------
Net investment income 13,727,553
- ------------------------------------------------------------------------------------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- -------------------------------------------------------------------------------------
Net realized gain (loss) on investment transactions (identified cost basis) (253,551)
- -------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on investments (7,720,690)
- ------------------------------------------------------------------------------------- -----------
Net realized and unrealized loss on investments (7,974,241)
- ------------------------------------------------------------------------------------- -----------
Change in net assets resulting from operations $ 5,753,312
- ------------------------------------------------------------------------------------- -----------
<FN>
(See Notes which are an integral part of the Financial Statements)
</TABLE>
31
SHORT-TERM MUNICIPAL TRUST
(FORMERLY, FEDERATED SHORT-INTERMEDIATE MUNICIPAL TRUST)
STATEMENT OF CHANGES IN NET ASSETS
- ---------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
------------------------------
1994 1993
- --------------------------------------------------------------------------- ------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ---------------------------------------------------------------------------
OPERATIONS--
- ---------------------------------------------------------------------------
Net investment income $ 13,727,553 $ 10,622,845
- ---------------------------------------------------------------------------
Net realized gain (loss) on investment transactions ($0 and $62,121 net
loss, respectively, as computed for federal income tax purposes) (Note 2C) (253,551) 19,108
- ---------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) on investments (7,720,690) 1,638,701
- --------------------------------------------------------------------------- ------------- -------------
Change in net assets resulting from operations 5,753,312 12,280,654
- ---------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2B)--
- ---------------------------------------------------------------------------
Dividends to shareholders from net investment income
- ---------------------------------------------------------------------------
Institutional Shares (13,167,119) (10,622,845)
- ---------------------------------------------------------------------------
Institutional Service Shares (560,434) --
- --------------------------------------------------------------------------- ------------- -------------
Change in net assets from distributions to shareholders (13,727,553) (10,622,845)
- --------------------------------------------------------------------------- ------------- -------------
TRUST SHARE (PRINCIPAL) TRANSACTION (NOTE 3)--
- ---------------------------------------------------------------------------
Proceeds from sale of shares 259,790,293 238,425,313
- ---------------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of dividends
declared 3,549,886 1,899,201
- ---------------------------------------------------------------------------
Cost of shares redeemed (226,027,733) (128,151,579)
- --------------------------------------------------------------------------- ------------- -------------
Change in net assets resulting from Trust share transactions 37,312,446 112,172,935
- --------------------------------------------------------------------------- ------------- -------------
Change in net assets 29,338,205 113,830,744
- ---------------------------------------------------------------------------
NET ASSETS:
- ---------------------------------------------------------------------------
Beginning of period 318,931,526 205,100,782
- --------------------------------------------------------------------------- ------------- -------------
End of period $ 348,269,731 $ 318,931,526
- --------------------------------------------------------------------------- ------------- -------------
<FN>
(See Notes which are an integral part of the Financial Statements)
</TABLE>
32
SHORT-TERM MUNICIPAL TRUST
(FORMERLY, FEDERATED SHORT-INTERMEDIATE MUNICIPAL TRUST)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1994
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Short-Term Municipal Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "Act"), as a diversified, no load, open-end
management investment company.
The Trust provides two classes of shares, Institutional Shares and Institutional
Service Shares.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
A. INVESTMENT VALUATIONS--Municipal bonds are valued by an independent pricing
service taking into consideration yield, liquidity, risk, credit, quality,
coupon, maturity, type of issue, and any other factors or market data it
deems relevant in determining valuations for normal institutional size
trading units of debt securities. The independent pricing service does not
rely exclusively on quoted prices. Short-term securities with remaining
maturities of sixty days or less may be stated at amortized cost, which
approximates value.
B. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized
as required by the Internal Revenue Code, as amended (the "Code").
Distributions to shareholders are recorded on the ex-dividend date.
C. FEDERAL TAXES--It is the Trust's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its tax-exempt income.
Accordingly, no provisions for federal tax are necessary. At June 30, 1994,
the Trust, for federal tax purposes, had a capital loss carryforward of
$6,605,611, which will reduce the Trust'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 Trust of any liability for
federal tax. Pursuant to the Code, such capital loss carryforward will
expire in 1995 ($1,449,467), 1996 ($2,255,334), 1997 ($1,097,445), 1998
($1,729,378), 1999 ($11,866) and 2001 ($62,121). Additionally, net capital
losses of $253,551 attributable to security transactions incurred after
October 31, 1993 are treated as arising on July 1, 1994, the first day of
the Trust's next taxable year.
D. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Trust may engage in
when-issued or delayed delivery transactions. The Trust records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment
33
SHORT-TERM MUNICIPAL TRUST
(FORMERLY, FEDERATED SHORT-INTERMEDIATE MUNICIPAL TRUST)
- --------------------------------------------------------------------------------
for the securities purchased. Securities purchased on a when-issued or
delayed delivery basis are marked to market daily and begin earning interest
on the settlement date.
E. RECLASSIFICATION--During the year ended June 30, 1994, the Trust adopted
Statement of Position 93-2, DETERMINATION, DISCLOSURE, AND FINANCIAL
STATEMENT PRESENTATION OF INCOME, CAPITAL GAIN, AND RETURN OF CAPITAL
DISTRIBUTIONS BY INVESTMENT COMPANIES. Accordingly, permanent book and tax
differences have been reclassified to paid-in-capital. The Trust
reclassified $417,890 from accumulated net realized loss to paid-in-capital
in accordance with SOP 93-2. Net investment income, net realized gains, and
net assets were not affected by this change.
F. OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares. Transactions in Trust shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-------------------------------------------------------------
1994 1993
----------------------------- -----------------------------
INSTITUTIONAL SHARES SHARES DOLLARS SHARES DOLLARS
- -------------------------------------------------- ------------ -------------- ------------ --------------
<S> <C> <C> <C> <C>
Shares sold 20,791,128 $ 215,505,746 23,007,231 $ 238,425,313
- --------------------------------------------------
Shares issued to shareholders in payment of
dividends declared 292,960 3,013,260 183,329 1,899,201
- --------------------------------------------------
Shares redeemed (20,620,412) (213,148,873) (12,367,267) (128,151,579)
- -------------------------------------------------- ------------ -------------- ------------ --------------
Net change resulting from Institutional Share
transactions 463,676 $ 5,370,133 10,823,293 $ 112,172,935
- -------------------------------------------------- ------------ -------------- ------------ --------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30, 1994*
--------------------------
INSTITUTIONAL SERVICE SHARES SHARES DOLLARS
- -------------------------------------------------- ----------- ------------
<S> <C> <C>
Shares sold 4,299,696 $ 44,284,547
- --------------------------------------------------
Shares issued to shareholders in payment of
dividends declared 52,512 536,626
- --------------------------------------------------
Shares redeemed (1,252,358) (12,878,860)
- -------------------------------------------------- ----------- ------------
Net change resulting from Institutional Service
Share transactions 3,099,850 31,942,313
- -------------------------------------------------- ----------- ------------
Total net change resulting from Trust Share
transactions 3,563,526 $ 37,312,446
- -------------------------------------------------- ----------- ------------
<FN>
* For the period from August 31, 1993 (date of initial public offering) to June
30, 1994.
</TABLE>
34
SHORT-TERM MUNICIPAL TRUST
(FORMERLY, FEDERATED SHORT-INTERMEDIATE MUNICIPAL TRUST)
- --------------------------------------------------------------------------------
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
ADVISORY FEE--Federated Management, the Trust's investment adviser (the
"Adviser"), receives for its services an annual investment advisory fee equal to
.40 of 1% of the Trust's average daily net assets. The Adviser will waive, to
the extent of its advisory fee, the amount, if any, by which the Trust's
aggregate annual operating expenses (excluding interest, taxes, brokerage
commissions, expenses of registering and qualifying the Trust and its shares
under federal and state laws and regulations, expenses of withholding taxes, and
extraordinary expenses) exceeded .45 of 1% of average daily net assets of the
Trust.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Trust
administrative personnel and services. Prior to March 1, 1994, these services
were provided at approximate cost. Effective March 1, 1994, the FAS fee is based
on the level of average aggregate daily net assets of all funds advised by
subsidiaries of Federated Investors for the period. The administrative fee
received during the period of the Administrative Services Agreement shall be at
least $125,000 per portfolio and $30,000 per each additional class of shares.
DISTRIBUTION AND SHAREHOLDER SERVICES FEE--The Trust has adopted a Distribution
Plan (the "Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the
Plan, the Trust will compensate Federated Securities Corp. ("FSC"), the
principal distributor, from the net assets of the Trust to finance activities
intended to result in the sale of the Trust's Institutional Service Shares. The
Plan provides that the Trust may incur distribution expenses up to .25 of 1% of
the average daily net assets of the Institutional Shares, annually, to
compensate FSC.
Under the terms of a Shareholder Services Agreement with Federated Shareholder
Services ("FSS"), the Trust will pay FSS up to .25 of 1% of average net assets
for the Trust for the period. This fee is to obtain certain personal services
for shareholders and the maintenance of shareholder accounts. For the period
ended June 30, 1994, Institutional Service Shares did not incur a shareholder
services fee.
INTERFUND TRANSACTIONS--During the year ended June 30, 1994, the Trust engaged
in purchase and sale transactions with other affiliated funds pursuant to Rule
17a-7 amounting to $119,950,000 and $114,596,919, respectively. These purchases
and sales were conducted on an arms length basis and transacted for cash
consideration only, at independent current market prices and without brokerage
commissions, fees or other remuneration.
Certain Officers and Trustees of the Trust are Officers and Directors or
Trustees of the above companies.
35
SHORT-TERM MUNICIPAL TRUST
(FORMERLY, FEDERATED SHORT-INTERMEDIATE MUNICIPAL TRUST)
- --------------------------------------------------------------------------------
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
fiscal year ended June 30, 1994, were as follows:
<TABLE>
<S> <C>
PURCHASES $181,622,840
- -------------------------------------------------- ------------
SALES $125,798,481
- -------------------------------------------------- ------------
</TABLE>
36
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- -------------------------------------------------------------
To the Shareholders and Board of Trustees of
SHORT-TERM MUNICIPAL TRUST:
We have audited the accompanying statement of assets and liabilities of
Short-Term Municipal Trust (a Massachusetts business trust), including the
schedule of portfolio of investments as of June 30, 1994 and the related
statement of operations for the year then ended, the statement of changes in net
assets for each of the two years in the period then ended, and the financial
highlights (see pages 2 and 17 of the prospectus) for each of the periods
presented. These financial statements and financial highlights are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of June
30, 1994, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Short-Term Municipal Trust as of June 30, 1994, the results of its operations
for the year then ended, the changes in its net assets for each of the two years
in the period then ended, and the financial highlights for each of the periods
presented in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN & CO.
Pittsburgh, Pennsylvania
August 1, 1994
37
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Short-Term Municipal Trust
Institutional Service Shares Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- -------------------------------------------------------------------------------------------
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- -------------------------------------------------------------------------------------------
Investment Adviser
Federated Management Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- -------------------------------------------------------------------------------------------
Custodian
State Street Bank and and Trust Company P.O. Box 8602
Boston, Massachusetts 02266-8604
- -------------------------------------------------------------------------------------------
Transfer Agent and Dividend Disbursing Agent
Federated Services Company Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- -------------------------------------------------------------------------------------------
Legal Counsel
Houston, Houston & Donnelly 2510 Centre City Tower
Pittsburgh, Pennsylvania 15222
- -------------------------------------------------------------------------------------------
Legal Counsel
Dickstein, Shapiro & Morin, L.L.P. 2101 L Street, N.W.
Washington, D.C. 20037
- -------------------------------------------------------------------------------------------
Independent Public Accountants
Arthur Andersen & Co. 2100 One PPG Place
Pittsburgh, Pennsylvania 15222
</TABLE>
- --------------------------------------------------------------------------------
SHORT-TERM
MUNICIPAL TRUST
(FORMERLY, FEDERATED SHORT-
INTERMEDIATE MUNICIPAL TRUST)
INSTITUTIONAL SERVICE SHARES
PROSPECTUS
A NO-LOAD, OPEN-END, DIVERSIFIED,
MANAGEMENT INVESTMENT COMPANY
AUGUST 31, 1994
[LOGO]
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
[LOGO]
RECYCLED
PAPER
825253206
8072507A-SS (8/94)
SHORT-TERM MUNICIPAL TRUST
(FORMERLY, FEDERATED SHORT-INTERMEDIATE MUNICIPAL TRUST)
INSTITUTIONAL SHARES
INSTITUTIONAL SERVICE SHARES
COMBINED STATEMENT OF ADDITIONAL INFORMATION
The Institutional Shares and Institutional Service Shares represent
interests in a diversified portfolio of securities of Short-Term
Municipal Trust (the "Trust"). This Combined Statement of Additional
Information should be read with the respective prospectuses for
Institutional Shares and Institutional Service Shares dated August
31, 1994. This Statement is not a prospectus itself. To receive a
copy of either prospectus, write or call Short-Term Municipal Trust.
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
Statement dated August 31, 1994
[LOGO]
Distributor
A subsidiary of FEDERATED INVESTORS
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
GENERAL INFORMATION ABOUT THE TRUST 1
- ---------------------------------------------------------
INVESTMENT OBJECTIVE AND POLICIES 1
- ---------------------------------------------------------
Acceptable Investments 1
When-Issued and Delayed Delivery
Transactions 1
Portfolio Turnover 2
Investment Limitations 2
TRUST MANAGEMENT 4
- ---------------------------------------------------------
Officers and Trustees 4
The Funds 6
Trust Ownership 6
Trustee Liability 6
INVESTMENT ADVISORY SERVICES 6
- ---------------------------------------------------------
Adviser to the Trust 6
Advisory Fees 7
State Expense Limitations 7
Other Related Services 7
ADMINISTRATIVE SERVICES 7
- ---------------------------------------------------------
BROKERAGE TRANSACTIONS 7
- ---------------------------------------------------------
PURCHASING SHARES 8
- ---------------------------------------------------------
Distribution Plan (Institutional Service
Shares only) and Shareholder Services Plan 8
DETERMINING NET ASSET VALUE 8
- ---------------------------------------------------------
Valuing Municipal Securities 8
Use of Amortized Cost 8
REDEEMING SHARES 9
- ---------------------------------------------------------
Redemption in Kind 9
TAX STATUS 9
- ---------------------------------------------------------
The Trust's Tax Status 9
TOTAL RETURN 9
- ---------------------------------------------------------
YIELD 9
- ---------------------------------------------------------
TAX-EQUIVALENT YIELD 10
- ---------------------------------------------------------
Tax-Equivalency Table 10
PERFORMANCE COMPARISONS 10
- ---------------------------------------------------------
APPENDIX 12
- ---------------------------------------------------------
</TABLE>
I
GENERAL INFORMATION ABOUT THE TRUST
- --------------------------------------------------------------------------------
The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated May 8, 1981. The name of the Trust was Federated
Short-Intermediate Municipal Trust prior to August 23, 1993. On August 23, 1993,
the shareholders of the Trust voted to change the name of the Trust to
Short-Term Municipal Trust.
Shares of the Trust are offered in two classes, known as Institutional Shares
and Institutional Service Shares (individually and collectively referred to as
"Shares," as the context may require). This Combined Statement of Additional
Information relates to the above-mentioned Shares of the Trust.
INVESTMENT OBJECTIVE AND POLICIES
- --------------------------------------------------------------------------------
The investment objective of the Trust is to provide dividend income which is
exempt from federal regular income tax.
ACCEPTABLE INVESTMENTS
The Trust invests in a portfolio of municipal securities with a dollar-weighted
average maturity of less than three years. The investment objective stated above
cannot be changed without the approval of shareholders. The investment policies
described below may be changed without shareholder approval.
CHARACTERISTICS
The municipal securities in which the Trust invests have the
characteristics set forth in the prospectuses. The Trust may use similar
services or ratings other than Moody's Investors Service, Inc. ("Moody's")
or Standard & Poor's Corporation ("Standard & Poor's"). If a security's
rating is reduced below the required minimum after the Trust has purchased
it, the Trust is not required to sell the security, but may consider doing
so. If ratings made by Moody's or Standard & Poor's change because of
changes in those organizations or in their rating systems, the Trust will
try to use comparable ratings as standards in accordance with the
investment policies described in the Shares' prospectuses.
PARTICIPATION INTERESTS
The financial institutions from which the Trust purchases participation
interests frequently provide or secure from another financial institution
irrevocable letters of credit or guarantees and give the Trust the right
to demand payment of the principal amounts of the participation interests
plus accrued interest on short notice (usually within seven days). These
financial institutions may charge certain fees in connection with their
repurchase commitments, including a fee equal to the excess of the
interest paid on the municipal securities over the negotiated yield at
which the participation interests were purchased by the Trust. By
purchasing participation interests having a seven day demand feature, the
Trust is buying a security meeting the quality requirements of the Trust
and also is receiving the tax-free benefits of the underlying securities.
VARIABLE RATE MUNICIPAL SECURITIES
Variable interest rates generally reduce changes in the market value of
municipal securities from their original purchase prices. Accordingly, as
interest rates decrease or increase, the potential for capital
appreciation or depreciation is less for variable rate municipal
securities than for fixed income obligations. Many municipal securities
with variable interest rates purchased by the Trust are subject to
repayment of principal (usually within seven days) on the Trust's demand.
For purposes of determining the Trust's average maturity, the maturities
of these variable rate demand municipal securities (including
participation interests) are the longer of the periods remaining until the
next readjustment of their interest rates or the periods remaining until
their principal amounts can be recovered by exercising the right to demand
payment. The terms of these variable rate demand instruments require
payment of principal and accrued interest from the issuer of the municipal
obligations, the issuer of the participation interests, or a guarantor of
either issuer.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
These transactions are made to secure what is considered to be an advantageous
price and yield for the Trust. Settlement dates may be a month or more after
entering into these transactions, and the market values of the securities
purchased may vary from the purchase prices.
1
- --------------------------------------------------------------------------------
No fees or other expenses, other than normal transaction costs, are incurred.
However, liquid assets of the Trust sufficient to make payment for the
securities to be purchased are segregated at the trade date. These securities
are marked to market daily and maintained until the transaction is settled.
Municipal securities purchased in when-issued or delayed delivery transactions
are treated as issued on the date at which they begin to accrue interest in
determining whether they mature within three years from the date of purchase.
The Trust may engage in these transactions to an extent that would cause the
segregation of an amount up to 20% of the total value of its assets.
PORTFOLIO TURNOVER
The Trust will not attempt to set or meet a portfolio turnover rate since any
turnover would be incidental to transactions undertaken in an attempt to achieve
the Trust's investment objective. During the fiscal years ended June 30, 1994
and 1993, the portfolio turnover rates were 36% and 15%, respectively.
INVESTMENT LIMITATIONS
DIVERSIFICATION OF INVESTMENTS
The Trust will not purchase the securities of any issuer (except cash and
cash instruments and securities issued or guaranteed by the United States
government, its agencies and instrumentalities) if, as a result, more than
5 percent of its total assets would be invested in the securities of such
issuer. For purposes of this limitation, each governmental subdivision,
i.e., state, territory, possession of the United States or any political
subdivision of any of the foregoing, including agencies, authorities,
instrumentalities, or similar entities, or of the District of Columbia,
shall be considered a separate issuer if its assets and revenues are
separate from those of the governmental body creating it and the security
is backed only by its own assets and revenues. In the case of an
industrial development bond, if the security is backed only by the assets
and revenues of a non-governmental user, then such non-governmental user
will be deemed to be the sole issuer. If, however, in the case of an
industrial development bond or governmental issued security, a
governmental or other entity guarantees the security, such guarantee would
be considered a separate security issued by the guarantor as well as the
other issuer (as above defined) subject to limited exclusions allowed by
the Investment Company Act of 1940.
BORROWING MONEY
The Trust will not borrow money except as a temporary measure for
extraordinary or emergency purposes and then (a) only in amounts not in
excess of 5% of the value of its total assets or (b) in an amount up to
one-third of the value of its total assets, including the amount borrowed.
This borrowing provision is not for investment leverage but solely to
facilitate management of the portfolio by enabling the Trust to meet
redemption requests when the liquidation of portfolio securities would be
inconvenient or disadvantageous.
While any such borrowings are outstanding, no net purchases of investment
securities will be made by the Trust. If, due to market fluctuations or
other reasons, the value of the Trust's assets falls below 300% of its
borrowings, the Trust will reduce its borrowings within three business
days. To do this, the Trust may have to sell a portion of its investments
at a time when it may be disadvantageous to do so.
PLEDGING ASSETS
The Trust will not mortgage, pledge, or hypothecate its assets except to
secure permitted borrowings. In those cases, it may mortgage, pledge, or
hypothecate assets having a market value not exceeding 10% of the value of
total assets at the time of the borrowing.
UNDERWRITING
The Trust will not underwrite any issue of securities, except as it may be
deemed to be an underwriter under the Securities Act of 1933 in connection
with the sale of securities in accordance with its investment objective,
policies, and limitations.
INVESTING IN REAL ESTATE
The Trust will not buy or sell real estate, including limited partnership
interests, although it may invest in municipal securities secured by real
estate or interests in real estate.
2
- --------------------------------------------------------------------------------
INVESTING IN COMMODITIES OR MINERALS
The Trust will not buy or sell commodities, commodity contracts, or oil,
gas, or other mineral exploration or development programs.
MAKING LOANS
The Trust will not make loans, but may acquire publicly or nonpublicly
issued municipal securities as permitted by its investment objective,
policies, and limitations.
SELLING SHORT AND BUYING ON MARGIN
The Trust will not sell any securities short or purchase any securities on
margin but may obtain such short-term credits as may be necessary for
clearance of purchases and sales of securities.
ISSUING SENIOR SECURITIES
The Trust will not issue senior securities, except as permitted by its
investment objective and policies.
The above investment limitations cannot be changed without shareholder approval.
The following limitations, however, may be changed by the Trustees without
shareholder approval. Shareholders will be notified before any material change
in these limitations becomes effective.
INVESTING IN ISSUERS WHOSE SECURITIES ARE OWNED BY OFFICERS AND TRUSTEES OF
THE TRUST
The Trust will not purchase or retain the securities of any issuer if the
officers and Trustees of the Trust or its investment adviser owning
individually more than 1/2 of 1% of the issuer's securities together own
more than 5% of the issuer's securities.
INVESTING IN RESTRICTED SECURITIES
The Trust will not invest more than 10% of the value of its total assets
in securities which are subject to restrictions on resale under federal
securities laws, except for securities which meet the criteria for
liquidity, as established by the Trustees.
ACQUIRING SECURITIES
The Trust will not acquire the voting securities of any issuer, except as
part of a merger, consolidation, reorganization, or acquisition of assets.
It will not invest in securities issued by any other investment company or
investment trust.
INVESTING IN NEW ISSUERS
The Trust will not invest more than 5% of its total assets in industrial
development bonds where the payment of principal and interest are the
responsibility of companies with less than three years of operating
history.
INVESTING IN ILLIQUID SECURITIES
The Trust will not invest more than 15% of the value of its net assets in
illiquid securities, including repurchase agreements providing for
settlement in more than seven days after notice and certain restricted
securities.
The Trust does not intend to purchase securities if, as a result of such
purchase, more than 25% of the value of its assets would be invested in the
securities of governmental subdivisions located in any one state, territory, or
possession of the United States.
Except with respect to borrowing money, if a percentage limitation is adhered to
at the time of the investment, a later increase or decrease in percentage
resulting from any change in value or net assets will not result in violation of
such restriction.
The Trust did not borrow money, pledge securities or invest in illiquid
securities or restricted securities in excess of 5% of the value of its total
assets during the last fiscal year and has no present intent to do so in the
coming fiscal year.
For purposes of this limitation, the Trust considers cash instruments and items
to be instruments issued by a U.S. branch of a domestic bank or savings and loan
having capital, surplus, and undivided profits in excess of $100,000,000 at the
time of the investment.
3
- --------------------------------------------------------------------------------
TRUST MANAGEMENT
- --------------------------------------------------------------------------------
OFFICERS AND TRUSTEES
Officers and Trustees are listed with their addresses, principal occupations,
and present positions.
<TABLE>
<CAPTION>
POSITIONS WITH PRINCIPAL OCCUPATIONS
NAME AND ADDRESS THE TRUST DURING PAST FIVE YEARS
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
John F. Donahue*+ Chairman and Chairman and Trustee, Federated Investors, Federated
Federated Investors Trustee of the Advisers, Federated Management, and Federated Research;
Tower Trust Chairman and Director, Federated Research Corp.; Chairman,
Pittsburgh, PA Passport Research, Ltd.; Director, AEtna Life and Casualty
Company; Chief Executive Officer and Director, Trustee, or
Managing General Partner of the Funds. Mr. Donahue is the
father of J. Christopher Donahue, Vice President of the
Trust.
- ----------------------------------------------------------------------------------------------------------------------
John T. Conroy, Jr. Trustee of the President, Investment Properties Corporation; Senior
Wood/IPC Commercial Department Trust Vice-President, John R. Wood and Associates, Inc., Realtors;
John R. Wood and President, Northgate Village Development Corporation;
Associates, Inc., Realtors Partner or Trustee in private real estate ventures in
3255 Tamiami Trail North Southwest Florida; Director, Trustee, or Managing General
Naples, FL Partner of the Funds; formerly, President, Naples Property
Management, Inc.
- ----------------------------------------------------------------------------------------------------------------------
William J. Copeland Trustee of the Director and Member of the Executive Committee, Michael
One PNC Plaza - 23rd Trust Baker, Inc.; Director, Trustee, or Managing General Partner
Floor of the Funds; formerly, Vice Chairman and Director, PNC
Pittsburgh, PA Bank, N.A., and PNC Bank Corp. and Director, Ryan Homes,
Inc.
- ----------------------------------------------------------------------------------------------------------------------
James E. Dowd Trustee of the Attorney-at-law; Director, The Emerging Germany Trust, Inc.;
571 Hayward Mill Road Trust Director, Trustee, or Managing General Partner of the Funds;
Concord, MA formerly, Director, Blue Cross of Massachusetts, Inc.
- ----------------------------------------------------------------------------------------------------------------------
Lawrence D. Ellis, M.D. Trustee of the Hematologist, Oncologist, and Internist, Presbyterian and
3471 Fifth Avenue, Trust Montefiore Hospitals; Professor of Medicine and Trustee,
Suite 1111 University of Pittsburgh; Director of Corporate Health,
Pittsburgh, PA University of Pittsburgh Medical Center; Director, Trustee,
or Managing General Partner of the Funds.
- ----------------------------------------------------------------------------------------------------------------------
Edward L. Flaherty, Jr.+ Trustee of the Attorney-at-law; Partner, Meyer and Flaherty; Director,
5916 Penn Mall Trust Eat'N Park Restaurants, Inc., and Statewide Settlement
Pittsburgh, PA Agency, Inc.; Director, Trustee, or Managing General Partner
of the Funds; formerly, Counsel, Horizon Financial, F.A.,
Western Region.
- ----------------------------------------------------------------------------------------------------------------------
Glen R. Johnson* President and Trustee, Federated Investors; President and/or Trustee of
Federated Investors Trustee of the some of the Funds; staff member, Federated Securities Corp.
Tower Trust and Federated Administrative Services.
Pittsburgh, PA
- ----------------------------------------------------------------------------------------------------------------------
Peter E. Madden Trustee of the Consultant; State Representative, Commonwealth of
225 Franklin Street Trust Massachusetts; Director, Trustee, or Managing General
Boston, MA Partner of the Funds; formerly, President, State Street Bank
and Trust Company and State Street Boston Corporation and
Trustee, Lahey Clinic Foundation, Inc.
- ----------------------------------------------------------------------------------------------------------------------
Gregor F. Meyer Trustee of the Attorney-at-law; Partner, Meyer and Flaherty; Chairman,
5916 Penn Mall Trust Meritcare, Inc.; Director, Eat'N Park Restaurants, Inc.;
Pittsburgh, PA Director, Trustee, or Managing General Partner of the Funds;
formerly, Vice Chairman, Horizon Financial, F.A.
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
4
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
POSITIONS WITH PRINCIPAL OCCUPATIONS
NAME AND ADDRESS THE TRUST DURING PAST FIVE YEARS
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Wesley W. Posvar Trustee of the Professor, Foreign Policy and Management Consultant;
1202 Cathedral of Trust Trustee, Carnegie Endowment for International Peace, RAND
Learning Corporation, Online Computer Library Center, Inc., and U.S.
University of Pittsburgh Space Foundation; Chairman, Czecho Slovak Management Center;
Pittsburgh, PA Director, Trustee, or Managing General Partner of the Funds;
President Emeritus, University of Pittsburgh; formerly,
Chairman, National Advisory Council for Environmental Policy
and Technology.
- ----------------------------------------------------------------------------------------------------------------------
Marjorie P. Smuts Trustee of the Public relations/marketing consultant; Director, Trustee, or
4905 Bayard Street Trust Managing General Partner of the Funds.
Pittsburgh, PA
- ----------------------------------------------------------------------------------------------------------------------
J. Christopher Donahue Vice President President and Trustee, Federated Investors, Federated
Federated Investors of the Trust Advisers, Federated Management, and Federated Research;
Tower President and Director, Federated Research Corp.; President,
Pittsburgh, PA Passport Research, Ltd.; Trustee, Federated Administrative
Services, Federated Services Company, and Federated
Shareholder Services; President or Vice President of the
Funds; Director, Trustee, or Managing General Partner of
some of the Funds. Mr. Donahue is the son of John F.
Donahue, Chairman and Trustee of the Trust.
- ----------------------------------------------------------------------------------------------------------------------
Richard B. Fisher Vice President Executive Vice President and Trustee, Federated Investors;
Federated Investors of the Trust Director, Federated Research Corp.; Chairman and Director,
Tower Federated Securities Corp.; President or Vice President of
Pittsburgh, PA some of the Funds; Director or Trustee of some of the Funds.
- ----------------------------------------------------------------------------------------------------------------------
Edward C. Gonzales Vice President Vice President, Treasurer, and Trustee, Federated Investors;
Federated Investors and Treasurer Vice President and Treasurer, Federated Advisers, Federated
Tower of the Trust Management, Federated Research, Federated Research Corp.,
Pittsburgh, PA and Passport Research, Ltd.; Executive Vice President,
Treasurer, and Director, Federated Securities Corp.;
Trustee, Federated Services Company and Federated
Shareholder Services; Chairman, Treasurer, and Trustee,
Federated Administrative Services; Trustee or Director of
some of the Funds; Vice President and Treasurer of the
Funds.
- ----------------------------------------------------------------------------------------------------------------------
John W. McGonigle Vice President Vice President, Secretary, General Counsel, and Trustee,
Federated Investors and Secretary Federated Investors; Vice President, Secretary, and Trustee,
Tower of the Trust Federated Advisers, Federated Management, and Federated
Pittsburgh, PA Research; Vice President and Secretary, Federated Research
Corp. and Passport Research, Ltd.; Trustee, Federated
Services Company; Executive Vice President, Secretary, and
Trustee, Federated Administrative Services; Secretary and
Trustee, Federated Shareholder Services; Executive Vice
President and Director, Federated Securities Corp.; Vice
President and Secretary of the Funds.
- ----------------------------------------------------------------------------------------------------------------------
<FN>
* This Trustee is deemed to be an "interested person" of the Trust as defined in
the Investment Company Act of 1940, as amended.
+ Member of the Trust's Executive Committee. The Executive Committee of the
Board of Trustees handles the responsibilities of the Board of Trustees
between meetings of the Board.
</TABLE>
5
- --------------------------------------------------------------------------------
THE FUNDS
"The Funds" and "Funds" mean the following investment companies: Alexander
Hamilton Funds; American Leaders Trust, Inc.; Annuity Management Series;
Automated Cash Management Trust; Automated Government Money Trust; California
Municipal Cash Trust; Cash Trust Series, II Cash Trust Series Inc.; DG Investor
Series; Edward D. Jones & Co. Daily Passport Cash Trust; Federated ARMs Trust;
Federated Exchange Trust, Ltd.; Federated GNMA Trust; Federated Government
Trust; Federated Growth Trust; Federated High Yield Trust; Federated Income
Securities Trust; Federated Income Trust; Federated Index Trust; Federated
Intermediate Government Trust; Federated Master Trust; Federated Municipal
Trust; Federated Short-Intermediate Government Trust; Federated Short-Term U.S.
Government Trust; Federated Stock Trust; Federated Tax-Free Trust; Federated
U.S. Government Bond Trust; First Priority Funds; Fixed Income Securities, Inc.;
Fortress Adjustable Rate U.S. Government Trust, Inc.; Fortress Municipal Income
Trust, Inc.; Fortress Utility Trust, Inc.; Trust for U.S. Government Securities,
Inc.; Government Income Securities, Inc.; High Yield Cash Trust; Insight
Institutional Series, Inc.; Insurance Management Series; Intermediate Municipal
Trust; International Series,Inc.; Investment Series Funds, Inc.; Investment
Series Trust; Liberty Equity Income Trust, Inc.; Liberty High Income Bond Trust,
Inc.; Liberty Municipal Securities Trust, Inc.; Liberty Term Trust, Inc.-1999;
Liberty U.S. Government Money Market Trust; Liberty Utility Trust, Inc.; Liquid
Cash Trust; Managed Series Trust; Mark Twain Funds; The Medalist Funds; Money
Market Management, Inc.; Money Market Obligations Trust; Money Market Trust;
Municipal Securities Income Trust; New York Municipal Cash Trust; 111 Corcoran
Funds; Peachtree Funds; The Planters Funds; Portage Funds; RIMCO Monument Funds;
The Shawmut Funds; Short-Term Municipal Trust; Star Funds; The Starburst Funds;
The Starburst Funds II; Stock and Bond Trust, Inc.; Sunburst Funds; Targeted
Duration Trust; Tax-Free Instruments Trust; Trust for Financial Institutions;
Trust for Government Cash Reserves; Trust for Short-Term U.S. Government
Securities; Trust for U.S. Treasury Obligations; and World Investment Series,
Inc.
TRUST OWNERSHIP
Officers and Trustees own less than 1% of the Trust's outstanding shares.
As of August 1, 1994, the following shareholder of record owned 5% or more of
the outstanding Institutional Service Shares of the Trust: Marion Merrell Dow,
Inc., Kansas City, Missouri, owned approximately 1,977,905 Shares (63.64%).
As of August 1, 1994, no shareholders of record owned 5% or more of the
outstanding Institutional Shares of the Trust.
TRUSTEE LIABILITY
The Trust's Declaration of Trust provides that the Trustees will not be liable
for errors of judgment or mistakes of fact or law. However, they are not
protected against any liability to which they would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of their office.
INVESTMENT ADVISORY SERVICES
- --------------------------------------------------------------------------------
ADVISER TO THE TRUST
The Trust's investment adviser is Federated Management, a subsidiary of
Federated Investors. All the Class A (voting) shares of Federated Investors are
owned by a trust, the trustees of which are John F. Donahue, his wife, and his
son, J. Christopher Donahue. John F. Donahue is Chairman and Trustee of
Federated Management, Chairman and Trustee of Federated Investors and Chairman
and Trustee of the Trust. J. Christopher Donahue is President and Trustee of
Federated Management; President and Trustee, Federated Investors; Federated
Administrative Services; Trustee, Federated Services Company, and Vice President
of the Trust. John W. McGonigle is Vice President, Secretary, and Trustee of
Federated Management; Trustee, Vice President, Secretary and General Counsel,
Federated Investors; Executive Vice President, Secretary and Trustee, Federated
Administrative Services; Executive Vice President and Director, Federated
Securities Corp.; Trustee, Federated Services Company and Vice President and
Secretary of the Trust.
The adviser shall not be liable to the Trust or its shareholders for any losses
that may be sustained in the purchase, holding, or sale of any security, for
anything done or omitted by it, except acts or omissions involving
6
- --------------------------------------------------------------------------------
willful misfeasance, bad faith, gross negligence, or reckless disregard of the
duties imposed upon it by its contract with the Trust.
ADVISORY FEES
For its advisory services, Federated Management receives an annual investment
advisory fee as described in the prospectuses. During the fiscal years ended
June 30, 1994, 1993, and 1992, the Trust's adviser earned $1,414,365,
$1,009,339, and $685,575, respectively, which were reduced by $452,665, $357,415
and $331,339, respectively, because of undertakings to limit the Trust's
expenses.
STATE EXPENSE LIMITATIONS
The adviser has undertaken to comply with the expense limitations established by
certain states for investment companies whose shares are registered for sale in
those states. If the Trust's normal operating expenses (including the investment
advisory fee, but not including brokerage commissions, interest, taxes and
extraordinary expenses) exceed 2 1/2% per year of the first $30 million of
average net assets, 2% per year of the next $70 million of average net assets,
and 1 1/2% per year of the remaining average net assets, the adviser will
reimburse the Trust for its expenses over the limitation.
If the Trust's monthly projected operating expenses exceed this expense
limitation, the investment advisory fee paid will be reduced by the amount of
the excess, subject to an annual adjustment. If the expense limitation is
exceeded, the amount to be reimbursed by the adviser will be limited, in any
single fiscal year, by the amount of the investment advisory fee.
This arrangement is not part of the advisory contract and may be amended or
rescinded in the future.
OTHER RELATED SERVICES
Affiliates of the adviser may, from time to time, provide certain electronic
equipment and software to institutional customers in order to facilitate the
purchase of shares of funds offered by Federated Securities Corp.
ADMINISTRATIVE SERVICES
- --------------------------------------------------------------------------------
Federated Administrative Services, a subsidiary of Federated Investors, provides
administrative personnel and services to the Trust for a fee as described in the
prospectuses. (Prior to March 1, 1994, Federated Administrative Services, Inc.,
also a subsidiary of Federated Investors, served as the Trust's administrator.
For purposes of this Statement of Additonal Information, Federated
Administrative Services and Federated Administrative Services, Inc., may
hereinafter collectively be referred to as the "Administrators"). For the fiscal
year ended June 30, 1994, the Administrators collectively earned $346,714. For
the fiscal years ended 1993 and 1992, Federated Administrative Services, Inc.,
the Trust's former administrator, earned $300,002 and $238,559, respectively.
Dr. Henry J. Gailliot, an officer of Federated Management, the adviser to the
Trust, holds approximately 20% of the outstanding common stock and serves as
director of Commercial Data Services, Inc., a company which provides computer
processing services to Federated Administrative Services Inc. and Federated
Administrative Services.
BROKERAGE TRANSACTIONS
- --------------------------------------------------------------------------------
When selecting brokers and dealers to handle the purchase and sale of portfolio
instruments, the adviser looks for prompt execution of the order at a favorable
price. In working with dealers, the adviser will generally use those who are
recognized dealers in specific portfolio instruments, except when a better price
and execution of the order can be obtained elsewhere. The adviser makes
decisions on portfolio transactions and selects brokers and dealers subject to
review by the Board of Trustees.
The adviser may select brokers and dealers who offer brokerage and research
services. These services may be furnished directly to the Trust or to the
adviser and may include:
- advice as to the advisability of investing in securities;
- security analysis and reports;
- economic studies;
- industry studies;
- receipt of quotations for portfolio evaluations; and
- similar services.
7
- --------------------------------------------------------------------------------
The adviser and its affiliates exercise reasonable business judgment in
selecting brokers who offer brokerage and research services to execute
securities transactions. They determine in good faith that commissions charged
by such persons are reasonable in relationship to the value of the brokerage and
research services provided.
Research services provided by brokers may be used by the adviser or by
affiliates of Federated Investors in advising Federated Funds and other
accounts. To the extent that receipt of these services may supplant services for
which the adviser or its affiliates might otherwise have paid, it would tend to
reduce their expenses.
PURCHASING SHARES
- --------------------------------------------------------------------------------
Shares are sold at their net asset value without a sales charge on days the New
York Stock Exchange is open for business. The procedure for purchasing Shares is
explained in the respective prospectus under "Investing in Institutional Shares"
or "Investing in Institutional Service Shares."
DISTRIBUTION PLAN (INSTITUTIONAL SERVICE SHARES ONLY) AND SHAREHOLDER SERVICES
PLAN
These arrangements permit the payment of fees to financial institutions, the
distributor, and Federated Shareholder Services to stimulate distribution
activities and to cause services to be provided to shareholders by a
representative who has knowledge of the shareholder's particular circumstances
and goals. These activities and services may include, but are not limited to,
marketing efforts; providing office space, equipment, telephone facilities, and
various clerical, supervisory, computer, and other personnel as necessary or
beneficial to establish and maintain shareholder accounts and records;
processing purchase and redemption transactions and automatic investments of
client account cash balances; answering routine client inquiries; and assisting
clients in changing dividend options, account designations, and addresses.
With respect to the Institutional Service Shares, by adopting the Distribution
Plan, the Board of Trustees expects that the Trust will be able to achieve a
more predictable flow of cash for investment purposes and to meet redemptions.
This will facilitate more efficient portfolio management and assist the Trust in
pursuing its investment objectives. By identifying potential investors whose
needs are served by the Trust's objectives, and properly servicing these
accounts, it may be possible to curb sharp fluctuations in rates of redemptions
and sales.
Other benefits, which may be realized under either arrangement, may include: (1)
providing personal services to shareholders; (2) investing shareholder assets
with a minimum of delay and administrative detail; (3) enhancing shareholder
recordkeeping systems; and (4) responding promptly to shareholders' requests and
inquiries concerning their accounts.
For the period from August 31, 1993 (date of initial public offering) to June
30, 1994, payments in the amount of $38,361 were made pursuant to the
Distribution Plan (Institutional Service Shares only), of which $27,051 was
waived. In addition, for this period, the Trust made payments in the amount of
$27,051 pursuant to the Shareholder Services Plan.
DETERMINING NET ASSET VALUE
Net asset value generally changes each day. The days on which the net asset
value is calculated by the Trust are described in the respective prospectus.
VALUING MUNICIPAL SECURITIES
The Board of Trustees uses an independent pricing service to value municipal
securities. The independent pricing service takes into consideration: yield;
stability; risk; quality; coupon rate; maturity; type of issue; trading
characteristics; special circumstances of a security or trading market; and any
other factors or market data it considers relevant in determining valuations for
normal institutional size trading units of debt securities and does not rely
exclusively on quoted prices.
USE OF AMORTIZED COST
The Board of Trustees has decided that the fair value of municipal securities
authorized to be purchased by the Trust with remaining maturities of 60 days or
less at the time of purchase shall be their amortized cost value, unless the
particular circumstances of the security indicate otherwise. Under this method,
portfolio instruments and assets are valued at the acquisition cost as adjusted
for amortization of premium or accumulation of discount rather than at current
market value. The Executive Committee continually assesses this method of
valuation and
8
- --------------------------------------------------------------------------------
recommends changes where necessary to assure that the Trust's portfolio
instruments are valued at their fair value as determined in good faith by the
Trustees.
REDEEMING SHARES
- --------------------------------------------------------------------------------
The Trust redeems Shares at the next computed net asset value after State Street
Bank receives the redemption request. Redemption procedures are explained in the
respective prospectus under "Redeeming Institutional Shares" or "Redeeming
Institutional Service Shares." Although State Street Bank does not charge for
telephone redemptions, it reserves the right to charge a fee for the cost of
wire-transferred redemptions of less than $5,000.
REDEMPTION IN KIND
Although the Trust intends to redeem shares in cash, it reserves the right under
certain circumstances to pay the redemption price in whole or in part by a
distribution of securities from the Trust's portfolio.
Redemption in kind will be made in conformity with applicable Securities and
Exchange Commission rules, taking such securities at the same value employed in
determining net asset value and selecting the securities in a manner the
Trustees determine to be fair and equitable.
The Trust has elected to be governed by Rule 18f-1 of the Investment Company Act
of 1940 under which the Trust is obligated to redeem shares for any one
shareholder in cash only up to a lesser of $250,000 or 1% of a class's net asset
value during any 90-day period.
TAX STATUS
- --------------------------------------------------------------------------------
THE TRUST'S TAX STATUS
The Trust will pay no federal income tax because it expects to meet the
requirements of Subchapter M of the Internal Revenue Code applicable to
regulated investment companies and to receive the special tax treatment afforded
to such companies. To qualify for this treatment, the Trust must, among other
requirements:
- derive at least 90% of its gross income from dividends, interest, and
gains from the sale of securities;
- derive less than 30% of its gross income from the sale of securities held
less than three months;
- invest in securities within certain statutory limits; and
- distribute to its shareholders at least 90% of its net income earned
during the year.
TOTAL RETURN
- --------------------------------------------------------------------------------
The Trust's average annual total returns for Institutional Shares for the
one-year, five-year and ten-year periods ended June 30, 1994, were 1.76%, 5.24%,
and 5.55%, respectively.
The average annual total return for each class of shares of the Trust is the
average compounded rate of return for a given period that would equate a $1,000
initial investment to the ending redeemable value of that investment. The ending
redeemable value is computed by multiplying the number of shares owned at the
end of the period by the offering price per share at the end of the period. The
number of shares owned at the end of the period is based on the number of shares
purchased at the beginning of the period with $1,000, adjusted over the period
by any additional shares, assuming monthly reinvestment of all dividends and
distributions.
The Trust's cumulative total return for Institutional Service Shares for the
period from August 31, 1993 (date of initial public offering) to June 30, 1994,
was 1.08%.
Cumulative total return reflects the Trust's total performance over a specific
period of time. The Trust's cumulative total return for Institutional Service
Shares is representative of only ten months activity.
YIELD
- --------------------------------------------------------------------------------
The Trust's yields for the thirty-day period ended June 30, 1994, for
Institutional Shares and Institutional Service Shares were 3.73% and 3.48%,
respectively.
9
- --------------------------------------------------------------------------------
The yield for both classes of shares of the Trust is determined by dividing the
net investment income per share (as defined by the Securities and Exchange
Commission) earned by either class of shares over a thirty-day period by the
offering price per share of either class on the last day of the period. This
value is then annualized using semi-annual compounding. This means that the
amount of income generated during the thirty-day period is assumed to be
generated each month over a twelve-month period and is reinvested every six
months. The yield does not necessarily reflect income actually earned by the
Trust because of certain adjustments required by the Securities and Exchange
Commission and, therefore, may not correlate to the dividends or other
distributions paid to shareholders.
To the extent that financial institutions and broker/dealers charge fees in
connection with services provided in conjunction with an investment in either
class of shares, performance will be reduced for those shareholders paying those
fees.
TAX-EQUIVALENT YIELD
- --------------------------------------------------------------------------------
The Trust's tax-equivalent yields for the thirty-day period ended June 30, 1994,
for Institutional Shares and Institutional Service Shares were 5.18% and 4.83%,
respectively.
The tax-equivalent yield of the Trust is calculated similarly to the yield, but
is adjusted to reflect the taxable yield that the Trust would have had to earn
to equal its actual yield, assuming the shareholder is in the 28% tax-bracket
and that income is 100% tax-exempt.
TAX-EQUIVALENCY TABLE
The Trust may also use a tax-equivalency table in advertising and sales
literature. The interest earned by the municipal bonds in the Trust's
portfolio generally remains free from federal regular income tax,* and is
often free from state and local taxes as well. As the table below
indicates, a "tax-free" investment is an attractive choice for investors,
particularly in times of narrow spreads between tax-free and taxable
yields.
TAXABLE YIELD EQUIVALENT FOR 1994
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
TAX BRACKET:
FEDERAL: 15.00% 28.00% 31.00% 36.00% 39.60%
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Joint Return $1-38,000 $38,001-91,850 $91,851-140,000 $140,001-250,000 OVER $250,000
Single Return $1-22,101 $22,751-55,100 $53,101-115,000 $115,001-250,000 OVER $250,000
- --------------------------------------------------------------------------------------------
TAX-EXEMPT YIELD TAXABLE YIELD EQUIVALENT
- --------------------------------------------------------------------------------------------
2.50% 2.94% 3.47% 3.62% 3.91% 4.14%
3.00 3.53 4.17 4.35 4.69 4.97
3.50 4.12 4.86 5.07 5.47 5.79
4.00 4.71 5.56 5.80 6.25 6.62
4.50 5.29 6.25 6.52 7.03 7.45
5.00 5.88 6.94 7.25 7.81 8.28
5.50 6.47 7.64 7.97 8.59 9.11
<FN>
Note: The maximum marginal tax rate for each bracket was used in calculating the
taxable yield equivalent.
The chart above is for illustrative purposes only. It is not an indicator of
past or future performance of the Trust.
* Some portion of the Trust's income may be subject to the federal
alternative minimum tax and state and local taxes.
</TABLE>
PERFORMANCE COMPARISONS
- --------------------------------------------------------------------------------
The performance of both classes of Shares depends upon such variables as:
- portfolio quality;
- average portfolio maturity;
- type of instruments in which the portfolio is invested;
- changes in interest rates and market value of portfolio securities;
- changes in the Trust's expenses or either class of Shares' expenses; and
- various other factors.
10
- --------------------------------------------------------------------------------
Either class of Shares' performance fluctuates on a daily basis largely because
net earnings and offering price per share fluctuate daily. Both net earnings and
offering price per share are factors in the computation of yield and total
return.
Investors may use financial publications and/or indices to obtain a more
complete view of the Trust's performance. When comparing performance, investors
should consider all relevant factors, such as the composition of any index used,
prevailing market conditions, portfolio compositions of other funds, and methods
used to value portfolio securities and compute offering price. The financial
publications and/or indices which the Trust uses in advertising may include:
- LIPPER ANALYTICAL SERVICES, INC., ranks funds in various fund categories
by making comparative calculations using total return. Total return
assumes the reinvestment of all capital gains distributions and income
dividends and takes into account any change in offering price over a
specific period of time. From time to time, the Trust will quote its
Lipper ranking in the "intermediate municipal bond funds" category in
advertising and sales literature.
- THE LEHMAN BROTHERS STATE 5-YEAR G.O. BOND INDEX is a composite measure of
total return performance for the municipal bond market on those municipal
bonds with maturities of five years. The securities on this index include
ratings categories of A and Aaa. Total returns are calculated twice
monthly as well as for one month, three month, and twelve month periods.
Total returns are also calculated as of the beginning of the index
inception on December 31, 1979.
- THE LEHMAN BROTHERS STATE 3-YEAR G.O. BOND INDEX is a total return
performance benchmark for the short-term general obligation sector of the
tax-exempt bond market. Returns and attributes for the index are
calculated semi-monthly.
- MORNINGSTAR, INC., an independent rating service, is the publisher of the
bi-weekly MUTUAL TRUST VALUES. MUTUAL TRUST VALUES rates more than 1,000
NASDAQ-listed mutual funds of all types, according to their risk-adjusted
returns. The maximum rating is five stars, and ratings are effective for
two weeks.
Advertisements and other sales literature for both classes of Shares may quote
total returns which are calculated on non-standardized base periods. The total
returns represent the historic change in the value of an investment in either
class of Shares based on monthly reinvestment of dividends over a specified
period of time.
11
APPENDIX
- --------------------------------------------------------------------------------
STANDARD AND POOR'S CORPORATION MUNICIPAL BOND RATING DEFINITIONS
AAA--Debt rated AAA has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.
AA--Debt rated AA has a very strong capacity to pay interest and repay principal
and differs from the higher rated issues only in small degree.
A--Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effect of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB--Debt rated BBB is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB, B, CCC, CC--Debt rated BB, B, CCC or CC is regarded, on balance, as
predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. BB indicates the
lowest degree of speculation and CC the highest degree of speculation. While
such debt will likely have some quality and protective characteristics, these
are outweighed by large uncertainties of major risk exposures to adverse
conditions.
C--The rating C is reserved for income bonds on which no interest is being paid.
D--Debt rated D is in default, and payment of interest and/or repayment of
principal is in arrears.
MOODY'S INVESTORS SERVICE, INC.
Aaa--Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edged." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa--Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long term risks appear somewhat larger than in AAA securities.
A--Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment some time in the future.
Baa--Bonds which are rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba--Bonds which are Ba are judged to have speculative elements; their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded during
both good and bad times over the future. Uncertainty of position characterizes
bonds in this class.
B--Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa--Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca--Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
C--Bonds which are rated C are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
Moody's applies numerical modifiers 1, 2, and 3 in each generic rating
classification from Aa through B in its corporate or municipal bond rating
system. The modifier 1 indicates that the security ranks in the higher end of
its generic rating category; the modifier 2 indicates a mid-range ranking; and
the modifier 3 indicates that the issue ranks in the lower end of its generic
rating category.
12
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MOODY'S INVESTORS SERVICE, INC.
SHORT-TERM MUNICIPAL OBLIGATION RATING DEFINITIONS
MIG1/VMIG1--Notes which are rated MIG1/VMIG1 are of the best quality. There is
present strong protection by established cash flows, superior liquidity support,
or demonstrated broad-based access to the market for refinancing.
MIG2/VMIG2--Notes which are rated MIG2/VMIG2 are of high quality. Margins of
protection are ample although not so large as in MIG1/VMIG1 ratings.
825253107
825253206
8072507B(8/94)
13
SHORT-TERM MUNICIPAL TRUST
(FORMERLY, FEDERATED SHORT-INTERMEDIATE MUNICIPAL TRUST)
- --------------------------------------------------------------------------------
ANNUAL REPORT FOR FISCAL YEAR ENDED JUNE 30, 1994
MANAGEMENT DISCUSSION & ANALYSIS:
- --------------------------------------------------------------------------------
For the twelve months ending June 30, 1994, interest rates in the
short-term, fixed-income markets exhibited considerable volatility--particularly
in the wake of increases by the Federal Reserve Board, beginning in February of
1994, in the Federal funds rate. On June 30, 1993, the yield on the "current"
three-year U.S. Treasury issue stood at 4.39%; by June 30, 1994, that yield had
ascended to 6.52%. For municipal issues of "A" rating with a three-year
maturity, the response to economic developments was muted in comparison. These
municipal yields climbed from 3.73% to 4.68%.
The outperformance of short-term municipal issues over their Treasury
counterparts is more visible when examined on a price basis. For the twelve
months ending June 30, 1994, a "generic", three-year municipal issue fell in
price by 2.33% while a "generic", three-year U.S. Treasury issue fell by 3.35%
in response to the aforesaid yield movements and to "rolling" down the yield
curve. The performance of the short-term municipal bond market was greatly
assisted by the ongoing large number of issuer bond redemptions and by the
sizeable reduction in municipal bond issuance--off 40% for the first six months
of 1994 when compared to the same period in 1993.
Over the past twelve months, Short-Term Municipal Trust (the "Trust")
selectively purchased "essential-purpose" governmental issues with "A" ratings,
so as to increase the income distribution potential to shareholders. Such issues
constituted 9% of the Trust's portfolio as of June 30, 1994. Should continued
economic growth as well as broad-based, gradual improvement in municipal credit
quality (with significant exceptions such as California localities) persist, the
Trust will contemplate further investment in "A"-rated issues. Over the past
twelve months, the Trust purchased individual issues with maturities between
five and seven years, thereby accessing modest yield premiums from a "positive"
yield curve, without significant portfolio extension.
For the period from August 31, 1993 (date of initial public offering) to
June 30, 1994, the net asset value per Share of the Institutional Service Shares
of the Trust declined from $10.35 to $10.15--or 1.93%. From June 30, 1993 to
June 30, 1994, the net asset value per Share of the Institutional Shares of the
Trust declined from $10.37 to $10.15--or 2.12% --as the portfolio duration was
maintained in a narrow band surrounding 2.00 years while market volatility
increased. For the fiscal year ended June 30, 1994, an investor in the Trust
experienced a total return of 1.76% with respect to the Institutional Shares*,
and a cumulative total return of 1.08% with respect to Institutional Service
Shares.**
*PERFORMANCE QUOTED REPRESENTS PAST PERFORMANCE. INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE, SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED,
MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
**FOR THE PERIOD FROM 8/31/93 (DATE OF INITIAL PUBLIC OFFERING).
SHORT-TERM MUNICIPAL TRUST
(FORMERLY, FEDERATED SHORT-INTERMEDIATE MUNICIPAL TRUST)
INSTITUTIONAL SERVICE SHARES
- --------------------------------------------------------------------------------
GROWTH OF $25,000 INVESTED IN SHORT-TERM MUNICIPAL TRUST,
INSTITUTIONAL SERVICE SHARES
The graph below illustrates the hypothetical investment of $25,000 in
Short-Term Municipal Trust (Institutional Service Shares) from 8/31/93 (date of
initial public offering) to 6/30/94 compared to the Lehman Brothers 3 Year State
GO Index (LB3YRSGOI)+ and the Lehman Brothers 5 Year State GO Index
(LB5YRSGOI)+.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
Short-Term Municipal Trust Lehman Brothers Lehman Brothers
(Institutional Service
Shares) 3 yr State GO Index 5 yr State GO Index
<S> <C> <C> <C>
8/31/93 $25,000 $25,000 $25,000
6/30/94 $25,274 $25,582 $25,351
</TABLE>
<TABLE>
<S> <C>
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIOD ENDED 6/30/94
Start of Performance 8/31/93 (cumulative)....................... 1.08%
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF OR
GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
This report must be preceded or accompanied by the Trust's prospectus dated
August 31, 1994, and, together with the financial statements contained therein,
constitutes the Trust's annual report.
*The performance of Short-Term Municipal Trust (Institutional Service Shares)
assumes the reinvestment of all dividends and distributions. The LB3YRSGOI and
the LB5YRSGOI have been adjusted to reflect reinvestment of dividends on
securities in the indices.
+The LB3YRSGOI and the LB5YRSGOI are not adjusted to reflect sales loads,
expenses, or other fees that the SEC requires to be reflected in the
performance of Short-Term Municipal Trust (Institutional Service Shares).
SHORT-TERM MUNICIPAL TRUST
(FORMERLY, FEDERATED SHORT-INTERMEDIATE MUNICIPAL TRUST)
INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
GROWTH OF $25,000 INVESTED IN SHORT-TERM MUNICIPAL TRUST,
INSTITUTIONAL SHARES
The graph below illustrates the hypothetical investment of $25,000 in
Short-Term Municipal Trust (Institutional Shares) from 6/30/84 to 6/30/94
compared to the Lehman Brothers 3 Year State GO Index (LB3YRSGOI)+ and the
Lehman Brothers 5 Year State GO Index (LB5YRSGOI)+.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
Short-Term Municipal Trust Lehman Brothers Lehman Brothers
(Institutional Service
Shares) 3 yr State GO Index 5 yr State GO Index
<S> <C> <C> <C>
6/30/84 $25,000 $25,000 $25,000
6/30/85 $26,919 $26,334 $29,558
6/30/86 $28,951 $28,790 $32,909
6/30/87 $30,215 $30,474 $35,493
6/30/88 $31,694 $31,928 $37,367
6/30/89 $33,229 $33,645 $39,698
6/30/90 $35,403 $35,916 $42,465
6/30/91 $37,694 $38,768 $46,241
6/30/92 $40,105 $42,292 $50,999
6/30/93 $42,156 $45,320 $55,711
6/30/94 $42,898 $45,284 $55,566
</TABLE>
<TABLE>
<S> <C>
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIOD ENDED 6/30/94
1 Year.......................................................... 1.76%
5 Year.......................................................... 5.24%
10 Year......................................................... 5.55%
Start of Performance 8/20/81.................................... 5.99%
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF OR
GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
This report must be preceded or accompanied by the Trust's prospectus dated
August 31, 1994, and, together with the financial statements contained therein,
constitutes the Trust's annual report.
*The performance of Short-Term Municipal Trust (Institutional Shares) assumes
the reinvestment of all dividends and distributions. The LB3YRSGOI and the
LB5YRSGOI have been adjusted to reflect reinvestment of dividends on securities
in the indices.
+The LB3YRSGOI and the LB5YRSGOI are not adjusted to reflect sales loads,
expenses, or other fees that the SEC requires to be reflected in the
performance of Short-Term Municipal Trust (Institutional Shares).
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