1933 Act File No. 2-72277
1940 Act File No. 811-3181
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
x_____
Pre-Effective Amendment No. ______
Post-Effective Amendment No. 28 x_____
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
x_____
Amendment No. 21 x_____
FEDERATED SHORT-TERM MUNICIPAL TRUST
(Exact Name of Registrant as Specified in Charter)
Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779
(Address of Principal Executive Offices)
(412) 288-1900
(Registrant's Telephone Number)
John W. McGonigle, Esquire,
Federated Investors Tower,
Pittsburgh, Pennsylvania 15222-3779
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b)
x on August 31, 1995 pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a) (i)
on pursuant to paragraph (a) (i).
75 days after filing pursuant to paragraph (a)(ii)
on _________________ pursuant to paragraph (a)(ii) of Rule
485.
If appropriate, check the following box:
This post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
Registrant has filed with the Securities and Exchange Commission
a declaration pursuant to Rule 24f-2 under the Investment Company
Act of 1940, and:
x filed the Notice required by that Rule on August 15, 1995; or
intends to file the Notice required by that Rule on or about
____________; or
during the most recent fiscal year did not sell any
securities pursuant to Rule 24f-2 under the Investment Company
Act of 1940, and, pursuant to Rule 24f-2(b)(2), need not file
the Notice.
Copies to:
Matthew J. Maloney, Esquire
Dickstein, Shapiro & Morin, L.L.P.
2101 L Street, N.W.
Washington, D.C. 20037
CROSS REFERENCE SHEET
This Amendment to the Registration Statement of FEDERATED
SHORT-TERM MUNICIPAL TRUST (formerly, Short-Term Municipal
Trust), which consists of one portfolio: Federated Short-Term
Municipal Trust, which is offered in two separate classes of
shares, Institutional Shares and Institutional Service Shares,
is comprised of the following:
PART A. INFORMATION REQUIRED IN A
PROSPECTUS.
Prospectus Heading
(Rule 404(c) Cross Reference)
Item 1. Cover Page Cover Page.
Item 2. Synopsis Summary of Trust
Expenses.
Item 3. Condensed Financial
Information Financial
Highlights; Performance
Information.
Item 4. General Description of
Registrant General
Information; Investment
Information; Investment
Objective; Investment
Policies; Municipal
Securities; Investment Risks;
Investment Limitations.
Item 5. Management of the Trust
Trust Information; Management
of the Trust; Distribution of
(Institutional or
Institutional Service)
Shares; Distribution
(Institutional Service Shares
only) and Shareholder
Services Plans;
Administration of the Trust;
Item 6. Capital Stock and Other
Securities Dividends;
Capital Gains; Shareholder
Information; Voting Rights;
Massachusetts Partnership
Law; Tax Information; Federal
Income Tax; Pennsylvania
Corporate and Personal
Property Taxes; Other State
and Local Taxes; Other
Classes of Shares.
Item 7. Purchase of Securities Being
Offered Net Asset Value;
Investing in (Institutional
or Institutional Service)
Shares; Share Purchases;
Minimum Investment Required;
What Shares Cost;
Subaccounting Services;
Certificates and
Confirmations.
Item 8. Redemption or Repurchase
Redeeming (Institutional or
Institutional Service)
Shares; Telephone Redemption;
Written Requests; Accounts
With Low Balances.
Item 9. Pending Legal Proceedings
None.
PART B. INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL
INFORMATION.
Item 10. Cover Page Cover Page.
Item 11. Table of Contents Table of
Contents.
Item 12. General Information and
History General
Information; About Federated
Investors
Item 13. Investment Objectives and
Policies Investment
Objective and Policies.
Item 14. Management of the Fund
Trust Management.
Item 15. Control Persons and Principal
Holders of Securities Not
Applicable.
Item 16. Investment Advisory and Other
Services Investment Advisory
Services; Administrative
Services;Shareholder Services
Agreement; Transfer Agent and
Dividend Disbursing Agent
Item 17. Brokerage Allocation
Brokerage Transactions.
Item 18. Capital Stock and Other
Securities Not
Applicable.
Item 19. Purchase, Redemption and
Pricing of Securities Being
Offered Purchasing Shares;
Distribution Plan
(Institutional Service Shares
only) and Shareholder
Services Plan; Determining
Net Asset Value; Redeeming
Shares.
Item 20. Tax Status Tax Status.
Item 21. Underwriters Not
applicable.
Item 22. Calculation of Performance
Data Total Return; Yield; Tax-
Equivalent Yield; Performance
Comparisons.
Item 23. Financial Statements
Filed in Part A.
FEDERATED SHORT-TERM MUNICIPAL TRUST
(FORMERLY, SHORT-TERM MUNICIPAL TRUST)
INSTITUTIONAL SHARES
PROSPECTUS
The Institutional Shares offered by this prospectus represent interests
in a
diversified portfolio of securities of Federated 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,
1995,
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 which is in paper form only, or a paper copy of this
prospectus, if
you have received your prospectus electronically, 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, 1995
TABLE OF CONTENTS
-------------------------------------------------------------------------
-------
SUMMARY OF TRUST EXPENSES
1
------------------------------------------------------
FINANCIAL HIGHLIGHTS--
INSTITUTIONAL SHARES
2
------------------------------------------------------
GENERAL INFORMATION
3
------------------------------------------------------
INVESTMENT INFORMATION
3
------------------------------------------------------
Investment Objective
3
Investment Policies
3
Municipal Securities
5
Investment Risks
6
Investment Limitations
6
TRUST INFORMATION
6
------------------------------------------------------
Management of the Trust
6
Distribution of Institutional Shares
8
Administration of the Trust
8
NET ASSET VALUE
9
------------------------------------------------------
INVESTING IN INSTITUTIONAL SHARES
9
------------------------------------------------------
Share Purchases
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
Accounts with Low Balances
12
SHAREHOLDER INFORMATION
12
------------------------------------------------------
Voting Rights
12
Massachusetts Partnership Law
12
TAX INFORMATION
13
------------------------------------------------------
Federal Income Tax
13
Pennsylvania Corporate and
Personal Property Taxes
14
Other State and Local Taxes
14
PERFORMANCE INFORMATION
14
------------------------------------------------------
OTHER CLASSES OF SHARES
14
------------------------------------------------------
FINANCIAL HIGHLIGHTS--
INSTITUTIONAL SERVICE SHARES
16
------------------------------------------------------
FINANCIAL STATEMENTS
17
------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC
ACCOUNTANTS
32
------------------------------------------------------
ADDRESSES
33
------------------------------------------------------
SUMMARY OF TRUST EXPENSES
-------------------------------------------------------------------------
-------
<TABLE>
<S>
<C> <C>
INSTITUTIONAL SHARES
SHAREHOLDER TRANSACTION EXPENSES
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
ANNUAL INSTITUTIONAL SHARES OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after
waiver)(1)............................................. 0.27%
12b-1
Fee....................................................................
None
Total Other
Expenses.........................................................
0.19%
Shareholder Services Fee (after
waiver)(2)................................. 0.00%
Total Institutional Shares Operating
Expenses(3)........................ 0.46%
</TABLE>
(1) The management fee has been reduced to reflect the waiver of a
portion of
the management fee. The maximum management fee is 0.40%.
(2) The maximum shareholder services fee is 0.25%.
(3) The total Institutional Shares operating expenses in the table above
are
based on expenses expected during the fiscal year ending June 30, 1996.
The
total Institutional Shares operating expenses were 0.46% for the fiscal
year
ended June 30, 1995 and would have been 0.59% absent the waiver of a
portion of
the management fee.
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 $ 58
</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.
FEDERATED SHORT-TERM MUNICIPAL TRUST
(FORMERLY, SHORT-TERM 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 32.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
----------------------------------------
--------------------------------------------------------
1995 1994 1993 1992
1991 1990 1989 1988 1987 1986
------ ------ ------ ------
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C>
<C> <C> <C> <C> <C> <C>
-------------------------------
NET ASSET VALUE, BEGINNING OF
PERIOD $10.15 $10.37 $10.29 $10.18
$10.14 $10.10 $10.19 $10.24 $10.31 $10.22
-------------------------------
INCOME FROM INVESTMENT
OPERATIONS
-------------------------------
Net investment income 0.42 0.40 0.44 0.53
0.60 0.60 0.57 0.54 0.51 0.60
-------------------------------
Net realized and unrealized
gain (loss) on investments 0.13 (0.22) 0.08 0.11
0.04 0.04 (0.09) (0.05) (0.07) 0.09
------------------------------- ---- ---- ---- ----
---- ---- ---- ---- ---- ----
Total from investment
operations 0.55 0.18 0.52 0.64
0.64 0.64 0.48 0.49 0.44 0.69
-------------------------------
LESS DISTRIBUTIONS
-------------------------------
Distributions from net
investment income (0.42) (0.40) (0.44) (0.53)
(0.60) (0.60) (0.57) (0.54) (0.51) (0.60)
------------------------------- ---- ---- ---- ----
---- ---- ---- ---- ---- ----
NET ASSET VALUE, END OF PERIOD $10.28 $10.15 $10.37 $10.29
$10.18 $10.14 $10.10 $10.19 $10.24 $10.31
------------------------------- ---- ---- ---- ----
---- ---- ---- ---- ---- ----
TOTAL RETURN (A) 5.52% 1.76% 5.11% 6.40%
6.47% 6.54% 4.84% 4.89% 4.37% 7.55%
-------------------------------
RATIOS TO AVERAGE NET ASSETS
-------------------------------
Expenses 0.46% 0.47% 0.46% 0.46%
0.46% 0.47% 0.46% 0.47% 0.47% 0.48%
-------------------------------
Net investment income 4.09% 3.89% 4.21% 5.12%
5.89% 5.94% 5.59% 5.25% 4.95% 5.80%
-------------------------------
SUPPLEMENTAL DATA
-------------------------------
Net assets, end of period (000
omitted) $217,713 $316,810 $318,932 $205,101
$142,493 $139,113 $178,978 $315,154 $483,279 $341,294
-------------------------------
Portfolio turnover 33% 36% 15% 42%
40% 69% 55% 63% 57% 16%
-------------------------------
</TABLE>
(a) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(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, 1995, which can be
obtained
free of charge.
GENERAL INFORMATION
-------------------------------------------------------------------------
-------
The Trust was established as a Massachusetts business trust under a
Declaration
of Trust dated May 8, 1981. On December 15, 1994, the name of the Trust
was
changed from Short-Term Municipal Trust to Federated Short-Term Municipal
Trust.
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") has
established
two classes of shares of the Trust, known as Institutional Shares and
Institutional Service Shares. This prospectus relates only to
Institutional
Shares (the "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
load
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, 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 Ratings Group ("S&P") (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 (PRIME-1) or S&P's highest municipal commercial paper
rating
(A-1);
- unrated if, at the time of purchase, longer term municipal
securities of
the issuer are rated A or better by Moody's or S&P 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
S&P.
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 rating 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.
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 seller's failure to complete these
transactions
may cause the Trust to miss a price or yield considered to be
advantageous.
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. Accordingly, the Trust may pay more/less than the market value of
the
securities on the settlement date. The Trust may dispose of a commitment
prior
to settlement if the adviser deems it appropriate to do so. In addition,
the
Trust may enter into transactions to sell its purchase commitments to
third
parties at current market values and simultaneously acquire other
commitments to
purchase similar securities at later dates. The Trust may realize short-
term
profits or losses upon the sale of such commitments.
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.
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.
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, as amended. 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.
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.
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. With over $72 billion invested across more than 260
funds
under management and/or administration by its subsidiaries, as of
December 31,
1994, Federated Investors is one of the largest mutual fund investment
managers
in the United States. With more than 1,750 employees, Federated continues
to be
led by the management who founded the company in 1955. Federated funds
are
presently at work in and through 4,000 financial institutions nationwide.
More
than 100,000 investment professionals have selected Federated funds for
their
clients.
Both the Trust and the Adviser have adopted strict codes of ethics
governing the
conduct of all employees who manage the Trust and its portfolio
securities.
These codes recognize that such persons owe a fiduciary duty to the
Trust's
shareholders and must place the interests of shareholders ahead of the
employees' own interest. Among other things, the codes: require
preclearance and
periodic reporting of personal securities transactions; prohibit personal
transactions in securities being purchased or sold, or being considered
for
purchase or sale, by the Trust; prohibit purchasing securities in initial
public
offerings; and prohibit taking profits on securities held for less than
sixty
days. Violations of the codes are subject to review by the Board of
Trustees and
could result in severe penalties.
OTHER PAYMENTS TO FINANCIAL INSTITUTIONS. In addition to periodic
payments to
financial institutions for shareholder services, 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 load on Shares.
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
ADMINISTRATIVE FEE NET ASSETS OF THE FEDERATED FUNDS
--------------------- ----------------------------------
<S> <C>
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
on assets in excess of $750
0.075 of 1% 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. The Trust has entered into a Shareholder Services
Agreement with Federated Shareholder Services, a subsidiary of Federated
Investors, under which the Trust may make payments up to 0.25 of 1.00% of
the
average daily net asset value of the Trust to obtain certain personal
services
for shareholders and to maintain shareholder accounts ("Shareholder
Services").
Under the Shareholder Services Agreement, 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.
In addition to payments made pursuant to the Shareholder Services
Agreement,
Federated Securities Corp. and Federated Shareholder Services, from their
own
assets, may pay financial institutions supplemental fees for their
performance
of sales services, distribution-related support services, or 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,
Boston, Massachusetts, is transfer agent for the Shares of the Trust and
dividend disbursing agent for the Trust.
INDEPENDENT PUBLIC ACCOUNTANTS. The independent public accountants for
the Trust
are Arthur Andersen LLP, Pittsburgh, Pennsylvania.
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: Federated Services Company, c/o State Street Bank and
Trust
Company, Boston, Massachusetts; Attention: EDGEWIRE; For Credit to:
Federated
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
Federated
Short-Term Municipal Trust Institutional Shares to: Federated Services
Company,
P.O. Box 8600, Boston, Massachusetts 02266-8600. Orders by mail are
considered
received after payment by check is converted into federal funds. This is
normally the next business day after the check is received.
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.
WHAT SHARES COST
Shares are sold at their net asset value next determined after an order
is
received. There is no sales load 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 as of the close of trading (normally
4:00
p.m., Eastern time) on the New York Stock Exchange, 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.
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. It is recommended that investors request this
privilege at
the time of their initial application. If not completed at the time of
initial
application, authorization forms and information on this service can be
obtained
through 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 Federated
Services
Company, P.O. Box 8600, Boston, Massachusetts 02266-8600. 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 to Federated Services Company, 500 Victory
Road -- 2nd Floor, Quincy, Massachusetts 02171, 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, as amended.
The Trust does not accept signatures guaranteed by a notary public.
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.
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 acts or 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 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.
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 maximum offering price 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.
From time to time, advertisements for the Trust may refer to ratings,
rankings
and other information in certain financial publications and/or compare
the
Trust's performance to certain indices.
OTHER CLASSES OF SHARES
-------------------------------------------------------------------------
-------
The Trust also offers another class of shares called Institutional
Service
Shares.
Institutional Service Shares are sold primarily to retail and private
banking
customers of financial institutions at net asset value and are subject to
a
minimum initial investment of $25,000.
Institutional Shares and Institutional Service Shares are subject to
certain of
the same expenses; however, 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. Expense differences between Institutional Shares and
Institutional
Service Shares may affect the performance of each class.
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 stated advisory fee is the same for both classes of shares.
To obtain more information and a prospectus for Institutional Service
Shares,
investors may call 1-800-235-4669.
FEDERATED SHORT-TERM MUNICIPAL TRUST
(FORMERLY, SHORT-TERM MUNICIPAL TRUST)
FINANCIAL HIGHLIGHTS-INSTITUTIONAL SERVICE SHARES
-------------------------------------------------------------------------
-------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants, on
page 32.
<TABLE>
<CAPTION>
YEAR ENDED JUNE
30,
----------------
1995 1994(A)
------ ------
<S>
<C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD
$10.15 $10.35
-------------------------------------------------------------------------
--
INCOME FROM INVESTMENT OPERATIONS
-------------------------------------------------------------------------
--
Net investment income
0.39 0.31
-------------------------------------------------------------------------
--
Net realized and unrealized gain (loss) on investments
0.13 (0.20)
-------------------------------------------------------------------------
-- ------ ------
Total from investment operations
0.52 0.11
-------------------------------------------------------------------------
--
LESS DISTRIBUTIONS
-------------------------------------------------------------------------
--
Distributions from net investment income
(0.39) (0.31)
-------------------------------------------------------------------------
-- ------ ------
NET ASSET VALUE, END OF PERIOD
$10.28 $10.15
-------------------------------------------------------------------------
-- ------ ------
TOTAL RETURN (B)
5.26% 1.08%
-------------------------------------------------------------------------
--
RATIOS TO AVERAGE NET ASSETS
-------------------------------------------------------------------------
--
Expenses
0.71% 0.72%(c)
-------------------------------------------------------------------------
--
Net investment income
3.69% 3.65%(c)
-------------------------------------------------------------------------
--
Expense waiver/reimbursement (d)
0.25% 0.18%(c)
-------------------------------------------------------------------------
--
SUPPLEMENTAL DATA
-------------------------------------------------------------------------
--
Net assets, end of period (000 omitted)
$5,223 $31,459
-------------------------------------------------------------------------
--
Portfolio Turnover
33% 36%
-------------------------------------------------------------------------
--
</TABLE>
(a) Reflects operations for the period from August 31, 1993 (date of
initial
public offering) to June 30, 1994.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) Computed on an annualized basis.
(d) This voluntary expense decrease for the distribution services fee is
reflected in both the expense and net investment income ratios shown
above
(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, 1995, which can be
obtained
free of charge.
FEDERATED SHORT-TERM MUNICIPAL TRUST
(FORMERLY, SHORT-TERM MUNICIPAL TRUST)
PORTFOLIO OF INVESTMENTS
JUNE 30, 1995
-------------------------------------------------------------------------
-------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL
MOODY'S
AMOUNT
OR S&P* VALUE
----------- ------------------------------------------------------
------- ------------
<C> <S>
<C> <C>
SHORT-INTERMEDIATE MUNICIPAL SECURITIES--98.2%
----------------------------------------------------------------------
ALABAMA--2.7%
------------------------------------------------------
$ 4,000,000 Alabama, 5.55% UT GO Refunding Bonds, 9/1/1997
AA $ 4,129,880
------------------------------------------------------
1,850,000 Alabama, 5.70% UT GO Refunding Bonds, 9/1/1998
AA 1,932,528
------------------------------------------------------
------------
Total
6,062,408
------------------------------------------------------
------------
</TABLE>
<TABLE>
<C> <S>
<C> <C>
ARIZONA--1.1%
------------------------------------------------------
2,500,000 Salt River Project, AZ Agricultural Improvement &
Power District, 4.00% Electric System Revenue
Refunding Bonds (Series A)/(Original Issue Yield:
4.05%), 1/1/1996
AA 2,505,550
------------------------------------------------------
------------
CALIFORNIA--14.3%
------------------------------------------------------
4,000,000 California State, 10.00% UT GO Bonds, 4/1/1998
Aa 4,567,560
------------------------------------------------------
7,500,000 California State, 6.50% UT GO Bonds, 11/1/1997
A1 7,882,875
------------------------------------------------------
1,250,000 Los Angeles County Transportation Commission, CA,
Proposition C, 4.30% Revenue Bonds (Series A)/(MBIA
Insured), 7/1/1995
Aaa 1,250,000
------------------------------------------------------
13,000,000 Los Angeles, CA Wastewater System, 6.70% Revenue Bonds
(Series D)/(MBIA Insured)/(United States Treasury
PRF)/(Original Issue Yield: 6.769%), 12/1/2000 (@102)
Aaa 14,538,810
------------------------------------------------------
3,310,000 University of California, 8.00% Hospital Revenue
Refunding Bonds (UCLA Medical Center)/(MBIA Insured),
12/1/1998
Aaa 3,700,977
------------------------------------------------------
------------
Total
31,940,222
------------------------------------------------------
------------
COLORADO--1.4%
------------------------------------------------------
2,995,000 Denver, City & County, CO, 7.625% UT GO Bonds
(Series C), 8/1/1995
AA 3,005,123
------------------------------------------------------
------------
</TABLE>
FEDERATED SHORT-TERM MUNICIPAL TRUST
-------------------------------------------------------------------------
-------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL
MOODY'S
AMOUNT
OR S&P* VALUE
----------- ------------------------------------------------------
------- ------------
<C> <S>
<C> <C>
SHORT-INTERMEDIATE MUNICIPAL SECURITIES--CONTINUED
----------------------------------------------------------------------
DISTRICT OF COLUMBIA--0.5%
------------------------------------------------------
$ 1,000,000 District of Columbia, 8.00% UT GO Bonds (Series
C)/(United States Treasury PRF)/(Original Issue Yield:
8.057%), 6/1/1996 (@102)
Aaa $ 1,057,800
------------------------------------------------------
------------
FLORIDA--0.6%
------------------------------------------------------
1,390,000 Miami Beach, FL Health Facilities Authority, 4.45%
Hospital Revenue Refunding Bonds (Mt. Sinai Medical
Center, FL)/(CGIC Insured), 11/15/1995
AAA 1,394,935
------------------------------------------------------
------------
GEORGIA--2.0%
------------------------------------------------------
4,060,000 Georgia State, 8.40% UT GO Bonds (Series D), 6/1/1997
Aaa 4,396,452
------------------------------------------------------
------------
HAWAII--9.7%
------------------------------------------------------
5,500,000 Hawaii State, 5.40% UT GO Refunding Bonds, (Series
BV)/(Original Issue Yield: 5.45%), 11/1/1997
AA 5,664,835
------------------------------------------------------
5,000,000 Hawaii State, 7.10% UT GO Bonds (Series BN)/(United
States Treasury PRF), 6/1/1998 (@101.5)
Aaa 5,462,100
------------------------------------------------------
6,000,000 Honolulu, City & County, HI, 4.20% UT GO Refunding &
Improvement Bonds (Series B)/(Original Issue Yield:
4.30%), 10/1/1997
AA 6,031,680
------------------------------------------------------
4,500,000 Honolulu, City & County, HI, 4.80% UT GO Bonds (Series
B)/(Original Issue Yield: 4.90%), 6/1/1998
AA 4,569,570
------------------------------------------------------
------------
Total
21,728,185
------------------------------------------------------
------------
ILLINOIS--2.8%
------------------------------------------------------
3,000,000 Illinois, 5.50% UT GO Bonds, 8/1/1999
AA- 3,100,530
------------------------------------------------------
2,900,000 Illinois State Sales Tax, 5.625% Revenue Bonds (Series
V), 6/15/1998
AAA 2,999,093
------------------------------------------------------
------------
Total
6,099,623
------------------------------------------------------
------------
</TABLE>
FEDERATED SHORT-TERM MUNICIPAL TRUST
-------------------------------------------------------------------------
-------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL
MOODY'S
AMOUNT
OR S&P* VALUE
----------- ------------------------------------------------------
------- ------------
<C> <S>
<C> <C>
SHORT-INTERMEDIATE MUNICIPAL SECURITIES--CONTINUED
----------------------------------------------------------------------
IOWA--1.0%
------------------------------------------------------
$ 1,095,000 Sioux City, IA, Hospital Authority, 4.15% Hospital
Revenue Refunding Bonds (Series O)/(Sisters of Mercy
Health System), 8/15/1996
A $ 1,092,569
------------------------------------------------------
1,140,000 Sioux City, IA, Hospital Authority, 4.15% Hospital
Revenue Refunding Bonds (Sisters of Mercy Health
System)/(MBIA Insured), 8/15/1997
Aaa 1,141,322
------------------------------------------------------
------------
Total
2,233,891
------------------------------------------------------
------------
MICHIGAN--3.2%
------------------------------------------------------
5,000,000 Detroit, MI City School District, 5.30% UT GO
Refunding Bonds (Michigan State Guaranteed), 5/1/1999
AA 5,107,350
------------------------------------------------------
2,120,000 Michigan State Hospital Finance Authority, 4.00%
Revenue Refunding Bonds (Series P)/(Sisters of Mercy
Health System), 8/15/1996
A 2,111,266
------------------------------------------------------
------------
Total
7,218,616
------------------------------------------------------
------------
MINNESOTA--3.2%
------------------------------------------------------
5,000,000 Minnesota State, 4.70% UT GO Refunding Bonds, 8/1/1997
AA+ 5,079,200
------------------------------------------------------
2,000,000 Southern Minnesota Municipal Power Agency, 9.125%
Power Supply Revenue Bonds (Series C)/ (United States
Treasury PRF)/(Original Issue Yield: 9.224%), 1/1/1996
(@102)
Aaa 2,093,320
------------------------------------------------------
------------
Total
7,172,520
------------------------------------------------------
------------
NEVADA--7.2%
------------------------------------------------------
2,000,000 Clark County, NV School District, 7.10% LT GO Bonds
(Series A), 3/1/1997
A+ 2,094,380
------------------------------------------------------
8,500,000 Nevada State Highway Improvement Authority, 4.75%
Motor Vehicle Fuel Tax Revenue Bonds (Original Issue
Yield: 4.90%), 4/1/1998
AA 8,606,505
------------------------------------------------------
</TABLE>
FEDERATED SHORT-TERM MUNICIPAL TRUST
-------------------------------------------------------------------------
-------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL
MOODY'S
AMOUNT
OR S&P* VALUE
----------- ------------------------------------------------------
------- ------------
<C> <S>
<C> <C>
SHORT-INTERMEDIATE MUNICIPAL SECURITIES--CONTINUED
----------------------------------------------------------------------
NEVADA--CONTINUED
------------------------------------------------------
$ 5,000,000 Nevada State Highway Improvement Authority, 7.00%
Motor Vehicle Fuel Tax Revenue Bonds, 4/1/1999
AA $ 5,415,950
------------------------------------------------------
------------
Total
16,116,835
------------------------------------------------------
------------
NEW HAMPSHIRE--5.4%
------------------------------------------------------
7,900,000 New Hampshire State Turnpike System, 8.25% Revenue
Bonds (United States Treasury PRF)/(Original Issue
Yield: 8.30%), 11/1/1997 (@102)
Aaa 8,770,027
------------------------------------------------------
3,310,000 New Hampshire State, 4.20% UT GO Capital Improvement
Refunding Bonds, 9/1/1995
AA 3,313,840
------------------------------------------------------
------------
Total
12,083,867
------------------------------------------------------
------------
NEW JERSEY--6.8%
------------------------------------------------------
7,000,000 New Jersey State, 6.50% UT GO Refunding Bonds
(Series C), 1/15/2002
AA+ 7,491,120
------------------------------------------------------
7,000,000 New Jersey State, 7.20% UT GO Bonds, 4/15/1999
AA+ 7,682,080
------------------------------------------------------
------------
Total
15,173,200
------------------------------------------------------
------------
NEW MEXICO--4.9%
------------------------------------------------------
2,250,000 Albuquerque, NM 4.00% Joint Water & Sewer System
Revenue Refunding Bonds (Series A)/(Original Issue
Yield: 4.099%), 7/1/1999
AA 2,210,805
------------------------------------------------------
8,650,000 Albuquerque, NM, 4.60% UT GO Bonds (Series A & B),
7/1/1998
AA 8,753,886
------------------------------------------------------
------------
Total
10,964,691
------------------------------------------------------
------------
NEW YORK--7.3%
------------------------------------------------------
680,000 New York City, Municipal Water Finance Authority,
6.50% Water & Sewer System Revenue Bonds (Series C)/
(AMBAC Insured)/(United States Treasury PRF)/
(Original Issue Yield: 6.519%), 6/15/1997 (@101.5)
Aaa 721,800
------------------------------------------------------
</TABLE>
FEDERATED SHORT-TERM MUNICIPAL TRUST
-------------------------------------------------------------------------
-------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL
MOODY'S
AMOUNT
OR S&P* VALUE
----------- ------------------------------------------------------
------- ------------
<C> <S>
<C> <C>
SHORT-INTERMEDIATE MUNICIPAL SECURITIES--CONTINUED
----------------------------------------------------------------------
NEW YORK--CONTINUED
------------------------------------------------------
$ 5,000,000 New York City Municipal Water Finance Authority 7.20%
Water & Sewer System Revenue Bonds (Series A),
6/15/1999
A $ 5,460,700
------------------------------------------------------
9,540,000 New York State, 5.75% UT GO Bonds, 9/15/1999
A 9,984,373
------------------------------------------------------
------------
Total
16,166,873
------------------------------------------------------
------------
OHIO--3.4%
------------------------------------------------------
3,600,000 Miami Valley Regional Transit Authority, OH, 4.75% LT
GO Bonds, 4/15/1997
MIG1 3,639,816
------------------------------------------------------
4,000,000 Ohio State Public Facilities Commission 4.25% Higher
Education Capital Facilities Revenue Bonds (Series
II-A)/ (AMBAC Insured), 12/1/1997
Aaa 4,023,640
------------------------------------------------------
------------
Total
7,663,456
------------------------------------------------------
------------
OREGON--1.9%
------------------------------------------------------
2,000,000 Oregon State Department of Transportation, 5.375%,
Regional Light Rail Revenue Bonds, Westside Project,
(MBIA Insured), 6/1/1999
Aaa 2,073,780
------------------------------------------------------
2,000,000 Oregon State Department of Transportation, 5.50%,
Regional Light Rail Revenue Bonds, Westside Project,
(MBIA Insured), 6/1/2000
Aaa 2,082,820
------------------------------------------------------
------------
Total
4,156,600
------------------------------------------------------
------------
PENNSYLVANIA--5.3%
------------------------------------------------------
1,155,000 Dauphin County, PA, General Authority, 4.35% Hospital
Revenue Refunding Bonds (Series A)/(Hapsco-Western PA
Hospital)/(MBIA Insured), 7/1/1995
Aaa 1,155,000
------------------------------------------------------
1,175,000 Dauphin County, PA, General Authority, 4.35% Hospital
Revenue Refunding Bonds (Hapsco-Western PA
Hospital)/(MBIA Insured), 7/1/1995
Aaa 1,175,000
------------------------------------------------------
</TABLE>
FEDERATED SHORT-TERM MUNICIPAL TRUST
-------------------------------------------------------------------------
-------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL
MOODY'S
AMOUNT
OR S&P* VALUE
----------- ------------------------------------------------------
------- ------------
<C> <S>
<C> <C>
SHORT-INTERMEDIATE MUNICIPAL SECURITIES--CONTINUED
----------------------------------------------------------------------
PENNSYLVANIA--CONTINUED
------------------------------------------------------
$ 5,000,000 Commonwealth of Pennsylvania, 4.75% UT GO Second
Series Refunding Bonds, 6/15/1998
AA- $ 5,067,300
------------------------------------------------------
4,375,000 Pennsylvania Intergovernmental Cooperation Authority,
5.40% Special Tax Revenue Bonds (City of Philadelphia
Funding Program)/(FGIC Insured)/(Original Issue Yield:
5.50%), 6/15/1997
Aaa 4,476,719
------------------------------------------------------
------------
Total
11,874,019
------------------------------------------------------
------------
TENNESSEE--1.4%
------------------------------------------------------
3,000,000 Tennessee State, 6.75% UT GO Bonds (Series A) 7/1/1995
Aaa 3,000,000
------------------------------------------------------
------------
TEXAS--7.3%
------------------------------------------------------
3,000,000 Mesquite, TX Independent School District No 1, 7.00%
UT GO Refunding Bonds, 2/15/1997
A+ 3,133,290
------------------------------------------------------
2,425,000 Texas State Public Property Finance Corp., 4.30%
Revenue Refunding Bonds (Mental Health &
Retardation)/(CGIC Insured), 9/1/1997
Aaa 2,429,850
------------------------------------------------------
4,440,000 Texas State, 8.00% UT GO Bonds, Public Finance
Authority (Series B), 10/1/1999
AA 5,060,712
------------------------------------------------------
3,000,000 Texas State, 6.50% UT GO Bonds, Public Finance
Authority (Series C), 10/1/1997
AA 3,159,120
------------------------------------------------------
2,500,000 Texas Water Development Board, 4.35% State Revolving
Senior Lien Revenue Bonds, 7/15/1995
AA 2,500,000
------------------------------------------------------
------------
Total
16,282,972
------------------------------------------------------
------------
</TABLE>
FEDERATED SHORT-TERM MUNICIPAL TRUST
-------------------------------------------------------------------------
-------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL
MOODY'S
AMOUNT
OR S&P* VALUE
----------- ------------------------------------------------------
------- ------------
<C> <S>
<C> <C>
SHORT-INTERMEDIATE MUNICIPAL SECURITIES--CONTINUED
----------------------------------------------------------------------
WASHINGTON--4.8%
------------------------------------------------------
$ 3,000,000 Washington State, 5.00% UT GO Bonds (Series B)
5/1/1998
AA $ 3,059,340
------------------------------------------------------
7,425,000 Washington State, 5.00% UT GO Bonds (Series B)
5/1/1999
AA 7,567,115
------------------------------------------------------
------------
Total
10,626,455
------------------------------------------------------
------------
TOTAL SHORT-INTERMEDIATE MUNICIPAL SECURITIES
(IDENTIFIED COST $216,467,714)
218,924,293
------------------------------------------------------
------------
SHORT-TERM MUNICIPAL SECURITIES--0.4%
----------------------------------------------------------------------
PUERTO RICO--0.1%
------------------------------------------------------
200,000 Puerto Rico Government Development Bank Weekly VRDNs
(Credit Suisse, Zurich and Sumitomo Bank Ltd., Osaka
LOCs)
A-1+ 200,000
------------------------------------------------------
------------
TENNESSEE--0.3%
------------------------------------------------------
600,000 Chattanooga-Hamilton County, TN Hospital Authority
Daily VRDNs (Erlanger Medical Center)/(Morgan Guaranty
Trust Co., New York LOC)
A+ 600,000
------------------------------------------------------
------------
TOTAL SHORT-TERM MUNICIPAL SECURITIES
(AT AMORTIZED COST)
800,000
------------------------------------------------------
------------
TOTAL INVESTMENTS (IDENTIFIED COST $217,267,714 )(A)
$219,724,293
------------------------------------------------------
------------
</TABLE>
(a) The cost of investments for federal tax purposes amounts to
$217,267,714.
The net unrealized appreciation of investments on a federal tax cost
basis
amounts to $2,456,579 , which is comprised of $2,691,375 appreciation
and
$234,796 depreciation at June 30, 1995.
* Please refer to the Appendix of the Statement of Additional Information
for an
explanation of the credit ratings. Current credit ratings are
unaudited.
Note: The catagories of investments are shown as a percentage of net
assets
($222,935,732) at June 30, 1995.
The following abbreviations are used in this portfolio:
<TABLE>
<S> <C>
AMBAC --American Municipal Bond Assurance Corporation
CGIC --Capital Guaranty Insurance Corporation
FGIC --Financial Guaranty Insurance Company
GO --General Obligation
LOC --Letter of Credit
LOC(s) --Letter(s) of Credit
LT --Limited Tax
MBIA --Municipal Bond Investors Assurance
PRF --Prerefunded
UT --Utah/Unlimited Tax
VRDNs --Variable Rate Demand Notes
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED SHORT-TERM MUNICIPAL TRUST
(FORMERLY, SHORT-TERM MUNICIPAL TRUST)
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1995
-------------------------------------------------------------------------
-------
<TABLE>
<S>
<C> <C>
ASSETS:
-------------------------------------------------------------------------
------
Investments in securities, at value (identified and tax cost
$217,267,714) $219,724,293
-------------------------------------------------------------------------
------
Cash
290,711
-------------------------------------------------------------------------
------
Income receivable
2,898,564
-------------------------------------------------------------------------
------
Receivable for shares sold
677,695
-------------------------------------------------------------------------
------ ------------
Total assets
223,591,263
-------------------------------------------------------------------------
------
LIABILITIES:
-------------------------------------------------------------------------
------
Payable for shares redeemed $
68,410
--------------------------------------------------------------------
Income distribution payable
569,213
--------------------------------------------------------------------
Accrued expenses
17,908
-------------------------------------------------------------------- --
------
Total liabilities
655,531
-------------------------------------------------------------------------
------ ------------
NET ASSETS for 21,684,185 shares outstanding
$222,935,732
-------------------------------------------------------------------------
------ ------------
NET ASSETS CONSIST OF:
-------------------------------------------------------------------------
------
Paid in capital
229,422,233
-------------------------------------------------------------------------
------
Net unrealized appreciation (depreciation) of investments
2,456,579
-------------------------------------------------------------------------
------
Accumulated net realized gain (loss) on investments
(8,943,080)
-------------------------------------------------------------------------
------ ------------
Total Net Assets
$222,935,732
-------------------------------------------------------------------------
------ ------------
NET ASSET VALUE, Offering Price and Redemption Proceeds Per Share:
Institutional Shares ($217,712,823 / 21,176,178 shares outstanding)
$10.28
-------------------------------------------------------------------------
------ ------------
Institutional Service Shares ($5,222,909 / 508,007 shares outstanding)
$10.28
-------------------------------------------------------------------------
------ ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED SHORT-TERM MUNICIPAL TRUST
(FORMERLY, SHORT-TERM MUNICIPAL TRUST)
STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1995
-------------------------------------------------------------------------
-------
<TABLE>
<S> <C>
<C> <C>
INVESTMENT INCOME:
-------------------------------------------------------------------------
---------------
Interest
$12,342,393
-------------------------------------------------------------------------
---------------
EXPENSES:
-------------------------------------------------------------------------
---------------
Investment advisory fee
$1,084,312
-------------------------------------------------------------------------
-
Administrative personnel and services fee
205,206
-------------------------------------------------------------------------
-
Custodian fees
127,075
-------------------------------------------------------------------------
-
Transfer agent and dividend disbursing agent fees and expenses
34,101
-------------------------------------------------------------------------
-
Directors'/Trustees' fees
11,976
-------------------------------------------------------------------------
-
Auditing fees
18,564
-------------------------------------------------------------------------
-
Legal fees
8,082
-------------------------------------------------------------------------
-
Portfolio accounting fees
40,300
-------------------------------------------------------------------------
-
Distribution services fee--Institutional Service Shares
25,694
-------------------------------------------------------------------------
-
Shareholder services fee--Institutional Service Shares
25,362
-------------------------------------------------------------------------
-
Share registration costs
35,913
-------------------------------------------------------------------------
-
Printing and postage
22,269
-------------------------------------------------------------------------
-
Insurance premiums
10,153
-------------------------------------------------------------------------
-
Taxes
3,284
-------------------------------------------------------------------------
-
Miscellaneous
4,258
-------------------------------------------------------------------------
- ----------
Total expenses
1,656,549
-------------------------------------------------------------------------
-
Deduct--
---------------------------------------------------------------
Waiver of investment advisory fee
$346,925
---------------------------------------------------------------
Waiver of distribution services fee
25,362
--------------------------------------------------------------- -------
-
Total waivers
372,287
-------------------------------------------------------------------------
- ----------
Net expenses
1,284,262
-------------------------------------------------------------------------
--------------- -----------
Net investment income
11,058,131
-------------------------------------------------------------------------
--------------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
-------------------------------------------------------------------------
---------------
Net realized gain (loss) on investments
(3,533,063)
-------------------------------------------------------------------------
---------------
Net change in unrealized appreciation (depreciation) on investments
5,627,330
-------------------------------------------------------------------------
--------------- -----------
Net realized and unrealized gain (loss) on investments
2,094,267
-------------------------------------------------------------------------
--------------- -----------
Change in net assets resulting from operations
$13,152,398
-------------------------------------------------------------------------
--------------- -----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED SHORT-TERM MUNICIPAL TRUST
(FORMERLY, SHORT-TERM MUNICIPAL TRUST)
STATEMENT OF CHANGES IN NET ASSETS
-------------------------------------------------------------------------
-------
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-------
-----------------------
1995 1994
-------
------ -------------
<S> <C>
<C>
INCREASE (DECREASE) IN NET ASSETS:
---------------------------------------------------------------
OPERATIONS--
---------------------------------------------------------------
Net investment income $
11,058,131 $ 13,727,553
---------------------------------------------------------------
Net realized gain/(loss) on investments ($1,189,491 and $0,
respectively, as computed for federal income tax purposes)
(3,533,063) (253,551)
---------------------------------------------------------------
Net change in unrealized appreciation/(depreciation)
5,627,330 (7,720,690)
--------------------------------------------------------------- -------
------ -------------
Change in assets resulting from operations
13,152,398 5,753,312
--------------------------------------------------------------- -------
------ -------------
DISTRIBUTIONS TO SHAREHOLDERS--
---------------------------------------------------------------
Distributions from net investment income:
---------------------------------------------------------------
Institutional Shares
(10,679,008) (13,167,119)
---------------------------------------------------------------
Institutional Service Shares
(379,123) (560,434)
--------------------------------------------------------------- -------
------ -------------
Change in net assets resulting from distributions to
shareholders
(11,058,131) (13,727,553)
--------------------------------------------------------------- -------
------ -------------
SHARE TRANSACTIONS--
---------------------------------------------------------------
Proceeds from sale of Shares
51,547,320 259,790,293
---------------------------------------------------------------
Net asset value of Shares issued to shareholders in payment of
distributions declared
2,700,836 3,549,886
---------------------------------------------------------------
Cost of Shares redeemed
(181,676,422) (226,027,733)
--------------------------------------------------------------- -------
------ -------------
Change in net assets resulting from Share transactions
(127,428,266) 37,312,446
--------------------------------------------------------------- -------
------ -------------
Change in net assets
(125,333,999) 29,338,205
---------------------------------------------------------------
NET ASSETS:
---------------------------------------------------------------
Beginning of period
348,269,731 318,931,526
--------------------------------------------------------------- -------
------ -------------
End of period $
222,935,732 $ 348,269,731
--------------------------------------------------------------- -------
------ -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED SHORT-TERM MUNICIPAL TRUST
(FORMERLY, SHORT-TERM MUNICIPAL TRUST)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1995
-------------------------------------------------------------------------
-------
(1) ORGANIZATION
Federated Short-Term Municipal Trust (the "Trust") is registered under
the
Investment Company Act of 1940, as amended (the "Act"), as a diversified,
open-end management investment company.
The Trust offers two classes of shares, Institutional Shares and
Institutional
Service Shares.
Effective December 15, 1994, the Trust changed its name from Short-Term
Municipal Trust to Federated Short-Term Municipal Trust.
(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.
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 the
pricing service 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 at the
time of
purchase may be valued at amortized cost, which approximates fair
market
value.
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.
Income distributions and capital gains distributions are determined
in
accordance with income tax regulations which may differ from
generally
accepted accounting principles. These differences are primarily due
to
differing treatments for expiring capital loss carryforwards.
Accordingly,
amounts as of June 30, 1995, have been reclassified to reflect a
decrease
in paid in capital and a decrease in accumulated net realized loss
of
$1,449,467. Net investment income, net realized gains and net assets
were
not affected by this change.
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 income. Accordingly,
no
provisions for federal tax are necessary. At June 30, 1995, the
Trust, for
federal tax purposes, had a capital loss carryforward of $6,345,635,
which
will reduce the Trust's taxable income arising from future net
realized
gain on investments, if any, to the extent permitted
FEDERATED SHORT-TERM MUNICIPAL TRUST
-------------------------------------------------------------------------
-------
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 1996 ($2,255,334), 1997 ($1,097,445),
1998
($1,729,378), 1999 ($11,866), 2001 ($62,121) and 2002 ($1,189,491).
Additionally, net capital losses of $2,597,123 attributable to
security
transactions incurred after October 31, 1994 are treated as arising
on July
1, 1995, the first day of the Trust's next taxable year.
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 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.
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 shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED
JUNE 30,
----------------------------------
---------------------------
1995
1994
---------------------------- --
--------------------------
INSTITUTIONAL SHARES SHARES DOLLARS
SHARES DOLLARS
------------------------------------- ------ -------
------ -------
<S> <C> <C>
<C> <C>
Shares Sold 4,823,992 $ 48,787,554
20,791,128 $ 215,505,746
-------------------------------------
Shares issued to shareholders in
payment of distributions declared 234,548 2,373,194
292,960 3,013,260
-------------------------------------
Shares redeemed (15,099,319) (152,318,952)
(20,620,412) (213,148,873)
------------------------------------- ----------- -------------
----------- -------------
Net change resulting from
Institutional Shares transactions (10,040,779) $(101,158,204)
463,676 $ 5,370,133
------------------------------------- ----------- -------------
----------- -------------
</TABLE>
FEDERATED SHORT-TERM MUNICIPAL TRUST
-------------------------------------------------------------------------
-------
<TABLE>
<CAPTION>
YEAR ENDED
JUNE 30,
---------------------------------
----------------------------
1995
1994*
----------------------------
---------------------------
INSTITUTIONAL SERVICE SHARES SHARES DOLLARS
SHARES DOLLARS
------------------------------------- ------ -------
------ -------
<S> <C> <C>
<C> <C>
Shares Sold 272,110 $ 2,759,766
4,299,696 $ 44,284,547
-------------------------------------
Shares issued to shareholders in
payment of distributions declared 32,358 327,642
52,512 536,626
-------------------------------------
Shares redeemed (2,896,311) (29,357,470)
(1,252,358) (12,878,860)
------------------------------------- ----------- -------------
----------- -------------
Net change resulting from
Institutional Service Shares
transactions (2,591,843) (26,270,062)
3,099,850 31,942,313
------------------------------------- ----------- -------------
----------- -------------
Total net change resulting from
Share transactions (12,632,622) $(127,428,266)
3,563,526 $ 37,312,446
------------------------------------- ----------- -------------
----------- -------------
</TABLE>
*For the period from August 31, 1993 (date of initial public offering) to
June
30, 1994.
(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"), under the
Administrative Services Agreement, provides the Trust with administrative
personnel and services. The FAS fee is based on the level of average
aggregate
daily net assets of all funds advised by subsidiaries of Federated
Investors for
the period. The administrative fee received during the period of the
Administrative Services Agreement shall be at least $125,000 per
portfolio and
$30,000 per each additional class of shares.
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 Service Shares,
annually, to
compensate FSC. The distributor may voluntarily choose to waive a portion
of its
fee. The distributor can modify or terminate this voluntary waiver at any
time
at its sole discretion.
FEDERATED SHORT-TERM MUNICIPAL TRUST
-------------------------------------------------------------------------
-------
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 daily
net
assets of the Trust for the period. This fee is to obtain certain
services for
shareholders and to maintain shareholder accounts.
For the year ended June 30, 1995, the Institutional Shares did not incur
a
Shareholder Services Fee.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated
Services Company ("FServ") serves as transfer and dividend disbursing
agent for
the Trust. This fee is based on the size, type, and number of accounts
and
transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ also maintains the Trust's accounting
records
for which it receives a fee. The fee is based on the level of the Trust's
average daily net assets for the period, plus out-of-pocket expenses.
INTERFUND TRANSACTIONS--During the year ended June 30, 1995, the Trust
engaged
in purchase and sale transactions with funds that have a common
investment
adviser (or affiliated investment advisers), common Directors/Trustees,
and/or
common Officers. These transactions were made at current market value
pursuant
to Rule 17a-7 under the Act amounting to $65,650,000 and $99,158,028,
respectively.
GENERAL--Certain Officers and Trustees of the Trust are Officers and
Directors
or Trustees of the above companies.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for
the
year ended June 30, 1995, were as follows:
<TABLE>
<S>
<C>
-------------------------------------------------------------------------
-----
Purchases
$ 88,595,509
-------------------------------------------------------------------------
----- ------------
Sales
$216,945,935
-------------------------------------------------------------------------
----- ------------
</TABLE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
-------------------------------------------------------------------------
-------
To the Shareholders and Board of Trustees of
FEDERATED SHORT-TERM MUNICIPAL TRUST:
(formerly, Short-Term Municipal Trust)
We have audited the accompanying statement of assets and liabilities of
Federated Short-Term Municipal Trust (a Massachusetts business trust),
including
the schedule of portfolio of investments as of June 30, 1995, 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, 1995, by correspondence with the custodian. An audit also includes
assessing
the accounting principles used and significant estimates made by
management, as
well as evaluating the overall financial statement presentation. We
believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to
above present fairly, in all material respects, the financial position of
Federated Short-Term Municipal Trust as of June 30, 1995, 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 LLP
Pittsburgh, Pennsylvania
August 10, 1995
ADDRESSES
-------------------------------------------------------------------------
-------
<TABLE>
<S> <C> <C>
Federated Short-Term Municipal Trust
Institutional 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 P.O. Box
8600
Trust Company Boston,
Massachusetts 02266-8600
-------------------------------------------------------------------------
-----------------------
Transfer Agent & Dividend Disbursing Agent
Federated Services Company P.O. Box
8600
Boston,
Massachusetts 02266-8600
-------------------------------------------------------------------------
-----------------------
Independent Public Accountants
Arthur Andersen LLP 2100 One PPG
Place
Pittsburgh,
Pennsylvania 15222
-------------------------------------------------------------------------
-----------------------
</TABLE>
FEDERATED SHORT-TERM
MUNICIPAL TRUST
(FORMERLY, SHORT-TERM
MUNICIPAL TRUST)
INSTITUTIONAL SHARES
PROSPECTUS
A No-Load, Open-End,
Diversified
Management Investment Company
Prospectus dated August 31,
1995
FEDERATED SECURITIES CORP.
(LOGO)
---------------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
CUSIP 825253107
8072507A-IS (8/95)
FEDERATED SHORT-TERM MUNICIPAL TRUST
(FORMERLY, SHORT-TERM MUNICIPAL TRUST)
INSTITUTIONAL SERVICE SHARES
PROSPECTUS
The Institutional Service Shares offered by this prospectus represent
interests
in a diversified portfolio of securities of Federated 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,
1995,
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 which is in paper form only, or a paper copy of this
prospectus, if
you have received your prospectus electronically, 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, 1995
TABLE OF CONTENTS
-------------------------------------------------------------------------
-------
SUMMARY OF TRUST EXPENSES
1
------------------------------------------------------
FINANCIAL HIGHLIGHTS--
INSTITUTIONAL SERVICE SHARES
2
------------------------------------------------------
GENERAL INFORMATION
3
------------------------------------------------------
INVESTMENT INFORMATION
3
------------------------------------------------------
Investment Objective
3
Investment Policies
3
Municipal Securities
5
Investment Risks
6
Investment Limitations
6
TRUST INFORMATION
6
------------------------------------------------------
Management of the Trust
6
Distribution of Institutional
Service Shares
7
Administration of the Trust
8
NET ASSET VALUE
9
------------------------------------------------------
INVESTING IN INSTITUTIONAL SERVICE SHARES
9
------------------------------------------------------
Share Purchases
9
Minimum Investment Required
10
What Shares Cost
10
Subaccounting Services
10
Certificates and Confirmations
10
Dividends
11
Capital Gains
11
REDEEMING INSTITUTIONAL SERVICE SHARES
11
------------------------------------------------------
Telephone Redemption
11
Written Requests
11
Accounts with Low Balances
12
SHAREHOLDER INFORMATION
12
------------------------------------------------------
Voting Rights
12
Massachusetts Partnership Law
13
TAX INFORMATION
13
------------------------------------------------------
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 SHARES
16
------------------------------------------------------
FINANCIAL STATEMENTS
17
------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC
ACCOUNTANTS
32
------------------------------------------------------
ADDRESSES
33
------------------------------------------------------
SUMMARY OF TRUST EXPENSES
-------------------------------------------------------------------------
-------
<TABLE>
<S>
<C> <C>
INSTITUTIONAL SERVICE SHARES
SHAREHOLDER TRANSACTION EXPENSES
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
ANNUAL INSTITUTIONAL SERVICE SHARES OPERATING
EXPENSES
(As a percentage of average net assets)
Management Fee (after
waiver)(1)............................................. 0.27%
12b-1 Fee (after
waiver)(2)..................................................
0.01%
Total Other
Expenses.........................................................
0.43%
Shareholder Services Fee (after
waiver)(3)................................. 0.24%
Total Institutional Service Shares Operating
Expenses(4)................ 0.71%
</TABLE>
(1) The management fee has been reduced to reflect the waiver of a
portion of
the management fee. The maximum management fee is 0.40%.
(2) The maximum 12b-1 fee is 0.25%.
(3) The maximum shareholder services fee is 0.25%.
(4) The total Institutional Service Shares operating expenses in the
table above
are based on expenses expected during the fiscal year ending June 30,
1996. The
total Institutional Service Shares operating expenses were 0.71% for the
fiscal
year ended June 30, 1995 and would have been 1.09% absent the waivers of
a
portion of the management fee and a portion of the 12b-1 fee.
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.
Long-term shareholders may pay more than the economic equivalent of
the
maximum front-end sales loads permitted under the rules of the National
Association of Securities Dealers, Inc.
<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 $ 88
</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.
FEDERATED SHORT-TERM MUNICIPAL TRUST
(FORMERLY, SHORT-TERM MUNICIPAL TRUST)
FINANCIAL HIGHLIGHTS-INSTITUTIONAL SERVICE SHARES
-------------------------------------------------------------------------
-------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants, on
page 32.
<TABLE>
<CAPTION>
YEAR ENDED JUNE
30,
----------------
1995 1994(A)
------ ------
<S>
<C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD
$10.15 $10.35
-------------------------------------------------------------------------
--
INCOME FROM INVESTMENT OPERATIONS
-------------------------------------------------------------------------
--
Net investment income
0.39 0.31
-------------------------------------------------------------------------
--
Net realized and unrealized gain (loss) on investments
0.13 (0.20)
-------------------------------------------------------------------------
-- ------ ------
Total from investment operations
0.52 0.11
-------------------------------------------------------------------------
--
LESS DISTRIBUTIONS
-------------------------------------------------------------------------
--
Distributions from net investment income
(0.39) (0.31)
-------------------------------------------------------------------------
-- ------ ------
NET ASSET VALUE, END OF PERIOD
$10.28 $10.15
-------------------------------------------------------------------------
-- ------ ------
TOTAL RETURN (B)
5.26% 1.08%
-------------------------------------------------------------------------
--
RATIOS TO AVERAGE NET ASSETS
-------------------------------------------------------------------------
--
Expenses
0.71% 0.72%(c)
-------------------------------------------------------------------------
--
Net investment income
3.69% 3.65%(c)
-------------------------------------------------------------------------
--
Expense waiver/reimbursement (d)
0.25% 0.18%(c)
-------------------------------------------------------------------------
--
SUPPLEMENTAL DATA
-------------------------------------------------------------------------
--
Net assets, end of period (000 omitted)
$5,223 $31,459
-------------------------------------------------------------------------
--
Portfolio Turnover
33% 36%
-------------------------------------------------------------------------
--
</TABLE>
(a) Reflects operations for the period from August 31, 1993 (date of
initial
public offering) to June 30, 1994.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) Computed on an annualized basis.
(d) This voluntary expense decrease for the distribution services fee is
reflected in both the expense and net investment income ratios shown
above
(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, 1995, which can be
obtained
free of charge.
GENERAL INFORMATION
-------------------------------------------------------------------------
-------
The Trust was established as a Massachusetts business trust under a
Declaration
of Trust dated May 8, 1981. On December 15, 1994, the name of the Trust
was
changed from Short-Term Municipal Trust to Federated Short-Term Municipal
Trust.
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") has
established
two classes of shares of the Trust, known as Institutional Service Shares
and
Institutional Shares. This prospectus relates only to Institutional
Service
Shares (the "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
load
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, 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 Ratings Group ("S&P") (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 (PRIME-1) or S&P's highest municipal commercial paper
rating
(A-1);
- unrated if, at the time of purchase, longer term municipal
securities of
the issuer are rated A or better by Moody's or S&P; 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
S&P.
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 rating 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.
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 seller's failure to
complete these transactions may cause the Trust to miss a price or yield
considered to be advantageous. 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. Accordingly, the Trust may
pay
more/less than the market value of the securities on the settlement date.
The
Trust may dispose of a commitment prior to settlement if the adviser
deems it
appropriate to do so. In addition, the Trust may enter into transactions
to sell
its purchase commitments to third parties at current market values and
simultaneously acquire other commitments to purchase similar securities
at later
dates. The Trust may realize short-term profits or losses upon the sale
of such
commitments.
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.
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.
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, as amended. 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.
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.
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. With over $72 billion invested across more than 260
funds
under management and/or administration by its subsidiaries, as of
December 31,
1994, Federated Investors is one of the largest mutual fund investment
managers
in the United States. With more than 1,750 employees, Federated continues
to be
led by the management who founded the company in 1955. Federated funds
are
presently at work in and through 4,000 financial institutions nationwide.
More
than 100,000 investment professionals have selected Federated funds for
their
clients.
Both the Trust and the Adviser have adopted strict codes of ethics
governing the
conduct of all employees who manage the Trust and its portfolio
securities.
These codes recognize that such persons owe a fiduciary duty to the
Trust's
shareholders and must place the interests of shareholders ahead of the
employees' own interest. Among other things, the codes: require
preclearance and
periodic reporting of personal securities transactions; prohibit personal
transactions in securities being purchased or sold, or being considered
for
purchase or sale, by the Trust; prohibit purchasing securities in initial
public
offerings; and prohibit taking profits on securities held for less than
sixty
days. Violations of the codes are subject to review by the Board of
Trustees and
could result in severe penalties.
OTHER PAYMENTS TO FINANCIAL INSTITUTIONS. In addition to periodic
payments to
financial institutions under the Distribution Plan and Shareholder
Services
Agreement, 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 load 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.
DISTRIBUTION PLAN AND SHAREHOLDER SERVICES. 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 1.00% 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 services or distribution-related 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 entered into a Shareholder Services Agreement
with
Federated Shareholder Services, a subsidiary of Federated Investors,
under which
the Trust may make payments up to 0.25 of 1.00% of the average daily net
asset
value of the Trust to obtain certain personal services for shareholders
and to
maintain shareholder accounts ("Shareholder Services"). Under the
Shareholder
Services Agreement, 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.
In addition to payments made pursuant to the Distribution Plan and
Shareholder
Services Agreement, Federated Securities Corp. and Federated Shareholder
Services, from their own assets, may pay financial institutions for the
performance of sales services, distribution-related support services, or
Shareholder Services.
The Glass-Steagall Act prohibits a depository institution (such as a
commercial
bank or savings 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
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
ADMINISTRATIVE FEE NET ASSETS OF THE FEDERATED FUNDS
--------------------- ----------------------------------
<S> <C>
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
on assets in excess of $750
0.075 of 1% 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,
Boston, Massachusetts, is transfer agent for the Shares of the Trust and
dividend disbursing agent for the Trust.
INDEPENDENT PUBLIC ACCOUNTANTS. The independent public accountants for
the
Trust are Arthur Andersen LLP, Pittsburgh, Pennsylvania.
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 PURCHASE
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: Federated Services Company, c/o State Street
Bank
and Trust Company, Boston, Massachusetts; Attention: EDGEWIRE; For Credit
to:
Federated 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
Federated
Short-Term Municipal Trust Institutional Service Shares to: Federated
Services
Company, P.O. Box 8600, Boston, Massachusetts 02266-8600. Orders by mail
are
considered received when payment by check is converted into federal
funds. This
is normally the next business day after the check is received.
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.
WHAT SHARES COST
Shares are sold at their net asset value next determined after an order
is
received. There is no sales load 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 as of the close of trading (normally
4:00
p.m., Eastern time) on the New York Stock Exchange 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.
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. It is recommended that investors request this
privilege at
the time of their initial application. If not completed at the time of
initial
application, authorization forms and information on this service can be
obtained
through 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 Federated
Services
Company, P.O. Box 8600, Boston, Massachusetts 02266-8600. 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 to Federated
Services Company, 500 Victory Road - 2nd Floor, Quincy, Massachusetts
02171 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, as amended.
The Trust does not accept signatures guaranteed by a notary public.
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.
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 acts or 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 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.
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 specific 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 maximum offering price 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 Shares.
From time to time, advertisements for the Trust may refer to ratings,
rankings
and other information in certain financial publications and/or compare
the
Trust's performance to certain indices.
OTHER CLASSES OF SHARES
-------------------------------------------------------------------------
-------
The Trust also offers another class of shares called Institutional
Shares.
Institutional Shares 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.
Institutional Service Shares and Institutional Shares are subject to
certain of
the same expenses; however, 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. Expense differences between Institutional Service
Shares
and Institutional Shares may affect the performance of each class.
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 stated advisory fee is the same for both classes of shares.
To obtain more information and a prospectus for Institutional Shares,
investors
may call 1-800-235-4669.
FEDERATED SHORT-TERM MUNICIPAL TRUST
(FORMERLY, SHORT-TERM 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 32.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
----------------------------------------
--------------------------------------------------------
1995 1994 1993 1992
1991 1990 1989 1988 1987 1986
------ ------ ------ ------
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C>
<C> <C> <C> <C> <C> <C>
-------------------------------
NET ASSET VALUE, BEGINNING OF
PERIOD $10.15 $10.37 $10.29 $10.18
$10.14 $10.10 $10.19 $10.24 $10.31 $10.22
-------------------------------
INCOME FROM INVESTMENT
OPERATIONS
-------------------------------
Net investment income 0.42 0.40 0.44 0.53
0.60 0.60 0.57 0.54 0.51 0.60
-------------------------------
Net realized and unrealized
gain (loss) on investments 0.13 (0.22) 0.08 0.11
0.04 0.04 (0.09) (0.05) (0.07) 0.09
------------------------------- ---- ---- ---- ----
---- ---- ---- ---- ---- ----
Total from investment
operations 0.55 0.18 0.52 0.64
0.64 0.64 0.48 0.49 0.44 0.69
-------------------------------
LESS DISTRIBUTIONS
-------------------------------
Distributions from net
investment income (0.42) (0.40) (0.44) (0.53)
(0.60) (0.60) (0.57) (0.54) (0.51) (0.60)
------------------------------- ---- ---- ---- ----
---- ---- ---- ---- ---- ----
NET ASSET VALUE, END OF PERIOD $10.28 $10.15 $10.37 $10.29
$10.18 $10.14 $10.10 $10.19 $10.24 $10.31
------------------------------- ---- ---- ---- ----
---- ---- ---- ---- ---- ----
TOTAL RETURN (A) 5.52% 1.76% 5.11% 6.40%
6.47% 6.54% 4.84% 4.89% 4.37% 7.55%
-------------------------------
RATIOS TO AVERAGE NET ASSETS
-------------------------------
Expenses 0.46% 0.47% 0.46% 0.46%
0.46% 0.47% 0.46% 0.47% 0.47% 0.48%
-------------------------------
Net investment income 4.09% 3.89% 4.21% 5.12%
5.89% 5.94% 5.59% 5.25% 4.95% 5.80%
-------------------------------
SUPPLEMENTAL DATA
-------------------------------
Net assets, end of period (000
omitted) $217,713 $316,810 $318,932 $205,101
$142,493 $139,113 $178,978 $315,154 $483,279 $341,294
-------------------------------
Portfolio turnover 33% 36% 15% 42%
40% 69% 55% 63% 57% 16%
-------------------------------
</TABLE>
(a) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(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, 1995, which can be
obtained
free of charge.
FEDERATED SHORT-TERM MUNICIPAL TRUST
(FORMERLY, SHORT-TERM MUNICIPAL TRUST)
PORTFOLIO OF INVESTMENTS
JUNE 30, 1995
-------------------------------------------------------------------------
-------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL
MOODY'S
AMOUNT
OR S&P* VALUE
----------- ------------------------------------------------------
------- ------------
<C> <S>
<C> <C>
SHORT-INTERMEDIATE MUNICIPAL SECURITIES--98.2%
----------------------------------------------------------------------
ALABAMA--2.7%
------------------------------------------------------
$ 4,000,000 Alabama, 5.55% UT GO Refunding Bonds, 9/1/1997
AA $ 4,129,880
------------------------------------------------------
1,850,000 Alabama, 5.70% UT GO Refunding Bonds, 9/1/1998
AA 1,932,528
------------------------------------------------------
------------
Total
6,062,408
------------------------------------------------------
------------
</TABLE>
<TABLE>
<C> <S>
<C> <C>
ARIZONA--1.1%
------------------------------------------------------
2,500,000 Salt River Project, AZ Agricultural Improvement &
Power District, 4.00% Electric System Revenue
Refunding Bonds (Series A)/(Original Issue Yield:
4.05%), 1/1/1996
AA 2,505,550
------------------------------------------------------
------------
CALIFORNIA--14.3%
------------------------------------------------------
4,000,000 California State, 10.00% UT GO Bonds, 4/1/1998
A1 4,567,560
------------------------------------------------------
7,500,000 California State, 6.50% UT GO Bonds, 11/1/1997
A1 7,882,875
------------------------------------------------------
1,250,000 Los Angeles County Transportation Commission, CA,
Proposition C, 4.30% Revenue Bonds (Series A)/(MBIA
Insured), 7/1/1995
Aaa 1,250,000
------------------------------------------------------
13,000,000 Los Angeles, CA Wastewater System, 6.70% Revenue Bonds
(Series D)/(MBIA Insured)/ (United States Treasury
PRF)/ (Original Issue Yield: 6.769%), 12/1/2000 (@102)
Aaa 14,538,810
------------------------------------------------------
3,310,000 University of California, 8.00% Hospital Revenue
Refunding Bonds (UCLA Medical Center)/(MBIA Insured),
12/1/1998
Aaa 3,700,977
------------------------------------------------------
------------
Total
31,940,222
------------------------------------------------------
------------
COLORADO--1.4%
------------------------------------------------------
2,995,000 Denver, City & County, CO, 7.625% UT GO Bonds
(Series C), 8/1/1995
AA 3,005,123
------------------------------------------------------
------------
</TABLE>
FEDERATED SHORT-TERM MUNICIPAL TRUST
-------------------------------------------------------------------------
-------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL
MOODY'S
AMOUNT
OR S&P* VALUE
----------- ------------------------------------------------------
------- ------------
<C> <S>
<C> <C>
SHORT-INTERMEDIATE MUNICIPAL SECURITIES--CONTINUED
----------------------------------------------------------------------
DISTRICT OF COLUMBIA--0.5%
------------------------------------------------------
$ 1,000,000 District of Columbia, 8.00% UT GO Bonds (Series
C)/(United States Treasury PRF)/(Original Issue Yield:
8.057%), 6/1/1996 (@102)
Aaa $ 1,057,800
------------------------------------------------------
------------
FLORIDA--0.6%
------------------------------------------------------
1,390,000 Miami Beach, FL Health Facilities Authority, 4.45%
Hospital Revenue Refunding Bonds (Mt. Sinai Medical
Center, FL)/(CGIC Insured), 11/15/1995
AAA 1,394,935
------------------------------------------------------
------------
GEORGIA--2.0%
------------------------------------------------------
4,060,000 Georgia State, 8.40% UT GO Bonds (Series D), 6/1/1997
Aaa 4,396,452
------------------------------------------------------
------------
HAWAII--9.7%
------------------------------------------------------
5,500,000 Hawaii State, 5.40% UT GO Refunding Bonds, (Series
BV)/(Original Issue Yield: 5.45%), 11/1/1997
AA 5,664,835
------------------------------------------------------
5,000,000 Hawaii State, 7.10% UT GO Bonds (Series BN)/(United
States Treasury PRF), 6/1/1998 (@101.5)
Aaa 5,462,100
------------------------------------------------------
6,000,000 Honolulu, City & County, HI, 4.20% UT GO Refunding &
Improvement Bonds (Series B)/(Original Issue Yield:
4.30%), 10/1/1997
AA 6,031,680
------------------------------------------------------
4,500,000 Honolulu, City & County, HI, 4.80% UT GO Bonds (Series
B)/(Original Issue Yield: 4.90%), 6/1/1998
AA 4,569,570
------------------------------------------------------
------------
Total
21,728,185
------------------------------------------------------
------------
ILLINOIS--2.8%
------------------------------------------------------
3,000,000 Illinois, 5.50% UT GO Bonds, 8/1/1999
AA- 3,100,530
------------------------------------------------------
2,900,000 Illinois State Sales Tax, 5.625% Revenue Bonds (Series
V), 6/15/1998
AAA 2,999,093
------------------------------------------------------
------------
Total
6,099,623
------------------------------------------------------
------------
</TABLE>
FEDERATED SHORT-TERM MUNICIPAL TRUST
-------------------------------------------------------------------------
-------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL
MOODY'S
AMOUNT
OR S&P* VALUE
----------- ------------------------------------------------------
------- ------------
<C> <S>
<C> <C>
SHORT-INTERMEDIATE MUNICIPAL SECURITIES--CONTINUED
----------------------------------------------------------------------
IOWA--1.0%
------------------------------------------------------
$ 1,095,000 Sioux City, IA, Hospital Authority, 4.15% Hospital
Revenue Refunding Bonds (Series O)/ (Sisters of Mercy
Health System), 8/15/1996
A $ 1,092,569
------------------------------------------------------
1,140,000 Sioux City, IA, Hospital Authority, 4.15% Hospital
Revenue Refunding Bonds (Sisters of Mercy Health
System)/(MBIA Insured), 8/15/1997
Aaa 1,141,322
------------------------------------------------------
------------
Total
2,233,891
------------------------------------------------------
------------
MICHIGAN--3.2%
------------------------------------------------------
5,000,000 Detroit, MI City School District, 5.30% UT GO
Refunding Bonds (Michigan State Guaranteed), 5/1/1999
AA 5,107,350
------------------------------------------------------
2,120,000 Michigan State Hospital Finance Authority, 4.00%
Revenue Refunding Bonds (Series P)/(Sisters of Mercy
Health System), 8/15/1996
A 2,111,266
------------------------------------------------------
------------
Total
7,218,616
------------------------------------------------------
------------
MINNESOTA--3.2%
------------------------------------------------------
5,000,000 Minnesota State, 4.70% UT GO Refunding Bonds, 8/1/1997
AA+ 5,079,200
------------------------------------------------------
2,000,000 Southern Minnesota Municipal Power Agency, 9.125%
Power Supply Revenue Bonds (Series C)/ (United States
Treasury PRF)/(Original Issue Yield: 9.224%), 1/1/1996
(@102)
Aaa 2,093,320
------------------------------------------------------
------------
Total
7,172,520
------------------------------------------------------
------------
NEVADA--7.2%
------------------------------------------------------
2,000,000 Clark County, NV School District, 7.10% LT GO Bonds
(Series A), 3/1/1997
A+ 2,094,380
------------------------------------------------------
8,500,000 Nevada State Highway Improvement Authority, 4.75%
Motor Vehicle Fuel Tax Revenue Bonds (Original Issue
Yield: 4.90%), 4/1/1998
AA 8,606,505
------------------------------------------------------
</TABLE>
FEDERATED SHORT-TERM MUNICIPAL TRUST
-------------------------------------------------------------------------
-------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL
MOODY'S
AMOUNT
OR S&P* VALUE
----------- ------------------------------------------------------
------- ------------
<C> <S>
<C> <C>
SHORT-INTERMEDIATE MUNICIPAL SECURITIES--CONTINUED
----------------------------------------------------------------------
NEVADA--CONTINUED
------------------------------------------------------
$ 5,000,000 Nevada State Highway Improvement Authority, 7.00%
Motor Vehicle Fuel Tax Revenue Bonds, 4/1/1999
AA $ 5,415,950
------------------------------------------------------
------------
Total
16,116,835
------------------------------------------------------
------------
NEW HAMPSHIRE--5.4%
------------------------------------------------------
7,900,000 New Hampshire State Turnpike System, 8.25% Revenue
Bonds (United States Treasury PRF)/(Original Issue
Yield: 8.30%), 11/1/1997 (@102)
Aaa 8,770,027
------------------------------------------------------
3,310,000 New Hampshire State, 4.20% UT GO Capital Improvement
Refunding Bonds, 9/1/1995
AA 3,313,840
------------------------------------------------------
------------
Total
12,083,867
------------------------------------------------------
------------
NEW JERSEY--6.8%
------------------------------------------------------
7,000,000 New Jersey State, 6.50% UT GO Refunding Bonds
(Series C), 1/15/2002
AA+ 7,491,120
------------------------------------------------------
7,000,000 New Jersey State, 7.20% UT GO Bonds, 4/15/1999
AA+ 7,682,080
------------------------------------------------------
------------
Total
15,173,200
------------------------------------------------------
------------
NEW MEXICO--4.9%
------------------------------------------------------
2,250,000 Albuquerque, NM 4.00% Joint Water & Sewer System
Revenue Refunding Bonds (Series A)/(Original Issue
Yield: 4.099%), 7/1/1999
AA 2,210,805
------------------------------------------------------
8,650,000 Albuquerque, NM, 4.60% UT GO Bonds (Series A & B),
7/1/1998
AA 8,753,886
------------------------------------------------------
------------
Total
10,964,691
------------------------------------------------------
------------
NEW YORK--7.3%
------------------------------------------------------
680,000 New York City, Municipal Water Finance Authority,
6.50% Water & Sewer System Revenue Bonds (Series
C)/(AMBAC Insured)/(United States Treasury PRF)/
(Original Issue Yield: 6.519%), 6/15/1997 (@101.5)
Aaa 721,800
------------------------------------------------------
</TABLE>
FEDERATED SHORT-TERM MUNICIPAL TRUST
-------------------------------------------------------------------------
-------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL
MOODY'S
AMOUNT
OR S&P* VALUE
----------- ------------------------------------------------------
------- ------------
<C> <S>
<C> <C>
SHORT-INTERMEDIATE MUNICIPAL SECURITIES--CONTINUED
----------------------------------------------------------------------
NEW YORK--CONTINUED
------------------------------------------------------
$ 5,000,000 New York City Municipal Water Finance Authority 7.20%
Water & Sewer System Revenue Bonds (Series A),
6/15/1999
A $ 5,460,700
------------------------------------------------------
9,540,000 New York State, 5.75% UT GO Bonds, 9/15/1999
A 9,984,373
------------------------------------------------------
------------
Total
16,166,873
------------------------------------------------------
------------
OHIO--3.4%
------------------------------------------------------
3,600,000 Miami Valley Regional Transit Authority, OH, 4.75% LT
GO Bonds, 4/15/1997
MIG1 3,639,816
------------------------------------------------------
4,000,000 Ohio State Public Facilities Commission 4.25% Higher
Education Capital Facilities Revenue Bonds (Series
II-A)/ (AMBAC Insured), 12/1/1997
Aaa 4,023,640
------------------------------------------------------
------------
Total
7,663,456
------------------------------------------------------
------------
OREGON--1.9%
------------------------------------------------------
2,000,000 Oregon State Department of Transportation, 5.375%,
Regional Light Rail Revenue Bonds, Westside Project,
(MBIA Insured), 6/1/1999
Aaa 2,073,780
------------------------------------------------------
2,000,000 Oregon State Department of Transportation, 5.50%,
Regional Light Rail Revenue Bonds, Westside Project,
(MBIA Insured), 6/1/2000
Aaa 2,082,820
------------------------------------------------------
------------
Total
4,156,600
------------------------------------------------------
------------
PENNSYLVANIA--5.3%
------------------------------------------------------
1,155,000 Dauphin County, PA, General Authority, 4.35% Hospital
Revenue Refunding Bonds (Series A)/(Hapsco-Western PA
Hospital)/(MBIA Insured), 7/1/1995
Aaa 1,155,000
------------------------------------------------------
1,175,000 Dauphin County, PA, General Authority, 4.35% Hospital
Revenue Refunding Bonds (Hapsco-Western PA
Hospital)/(MBIA Insured), 7/1/1995
Aaa 1,175,000
------------------------------------------------------
</TABLE>
FEDERATED SHORT-TERM MUNICIPAL TRUST
-------------------------------------------------------------------------
-------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL
MOODY'S
AMOUNT
OR S&P* VALUE
----------- ------------------------------------------------------
------- ------------
<C> <S>
<C> <C>
SHORT-INTERMEDIATE MUNICIPAL SECURITIES--CONTINUED
----------------------------------------------------------------------
PENNSYLVANIA--CONTINUED
------------------------------------------------------
$ 5,000,000 Commonwealth of Pennsylvania, 4.75% UT GO Second
Series Refunding Bonds, 6/15/1998
AA- $ 5,067,300
------------------------------------------------------
4,375,000 Pennsylvania Intergovernmental Cooperation Authority,
5.40% Special Tax Revenue Bonds (City of Philadelphia
Funding Program)/(FGIC Insured)/(Original Issue Yield:
5.50%), 6/15/1997
Aaa 4,476,719
------------------------------------------------------
------------
Total
11,874,019
------------------------------------------------------
------------
TENNESSEE--1.4%
------------------------------------------------------
3,000,000 Tennessee State, 6.75% UT GO Bonds (Series A) 7/1/1995
Aaa 3,000,000
------------------------------------------------------
------------
TEXAS--7.3%
------------------------------------------------------
3,000,000 Mesquite, TX Independent School District No 1, 7.00%
UT GO Refunding Bonds, 2/15/1997
A+ 3,133,290
------------------------------------------------------
2,425,000 Texas State Public Property Finance Corp., 4.30%
Revenue Refunding Bonds (Mental Health &
Retardation)/(CGIC Insured), 9/1/1997
Aaa 2,429,850
------------------------------------------------------
4,440,000 Texas State, 8.00% UT GO Bonds, Public Finance
Authority (Series B), 10/1/1999
AA 5,060,712
------------------------------------------------------
3,000,000 Texas State, 6.50% UT GO Bonds, Public Finance
Authority (Series C), 10/1/1997
AA 3,159,120
------------------------------------------------------
2,500,000 Texas Water Development Board, 4.35% State Revolving
Senior Lien Revenue Bonds, 7/15/1995
AA 2,500,000
------------------------------------------------------
------------
Total
16,282,972
------------------------------------------------------
------------
</TABLE>
FEDERATED SHORT-TERM MUNICIPAL TRUST
-------------------------------------------------------------------------
-------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL
MOODY'S
AMOUNT
OR S&P* VALUE
----------- ------------------------------------------------------
------- ------------
<C> <S>
<C> <C>
SHORT-INTERMEDIATE MUNICIPAL SECURITIES--CONTINUED
----------------------------------------------------------------------
WASHINGTON--4.8%
------------------------------------------------------
$ 3,000,000 Washington State, 5.00% UT GO Bonds (Series B)
5/1/1998
AA $ 3,059,340
------------------------------------------------------
7,425,000 Washington State, 5.00% UT GO Bonds (Series B)
5/1/1999
AA 7,567,115
------------------------------------------------------
------------
Total
10,626,455
------------------------------------------------------
------------
TOTAL SHORT-INTERMEDIATE MUNICIPAL SECURITIES
(IDENTIFIED COST $216,467,714)
218,924,293
------------------------------------------------------
------------
SHORT-TERM MUNICIPAL SECURITIES--0.4%
----------------------------------------------------------------------
PUERTO RICO--0.1%
------------------------------------------------------
200,000 Puerto Rico Government Development Bank Weekly VRDNs
(Credit Suisse, Zurich and Sumitomo Bank Ltd., Osaka
LOCs)
A-1+ 200,000
------------------------------------------------------
------------
TENNESSEE--0.3%
------------------------------------------------------
600,000 Chattanooga-Hamilton County, TN Hospital Authority
Daily VRDNs (Erlanger Medical Center)/(Morgan Guaranty
Trust Co., New York LOC)
A+ 600,000
------------------------------------------------------
------------
TOTAL SHORT-TERM MUNICIPAL SECURITIES
(AT AMORTIZED COST)
800,000
------------------------------------------------------
------------
TOTAL INVESTMENTS (IDENTIFIED COST $217,267,714 )(A)
$219,724,293
------------------------------------------------------
------------
</TABLE>
(a) The cost of investments for federal tax purposes amounts to
$217,267,714.
The net unrealized appreciation of investments on a federal tax cost
basis
amounts to $2,456,579 , which is comprised of $2,691,375 appreciation
and
$234,796 depreciation at June 30, 1995.
* Please refer to the Appendix of the Statement of Additional Information
for an
explanation of the credit ratings. Current credit ratings are
unaudited.
Note: The catagories of investments are shown as a percentage of net
assets
($222,935,732) at June 30, 1995.
The following abbreviations are used in this portfolio:
<TABLE>
<S> <C>
AMBAC --American Municipal Bond Assurance Corporation
CGIC --Capital Guaranty Insurance Corporation
FGIC --Financial Guaranty Insurance Company
GO --General Obligation
LOC --Letter of Credit
LOC(s) --Letter(s) of Credit
LT --Limited Tax
MBIA --Municipal Bond Investors Assurance
PRF --Prerefunded
UT --Utah/Unlimited Tax
VRDNs --Variable Rate Demand Notes
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED SHORT-TERM MUNICIPAL TRUST
(FORMERLY, SHORT-TERM MUNICIPAL TRUST)
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1995
-------------------------------------------------------------------------
-------
<TABLE>
<S>
<C> <C>
ASSETS:
-------------------------------------------------------------------------
------
Investments in securities, at value (identified and tax cost
$217,267,714) $219,724,293
-------------------------------------------------------------------------
------
Cash
290,711
-------------------------------------------------------------------------
------
Income receivable
2,898,564
-------------------------------------------------------------------------
------
Receivable for shares sold
677,695
-------------------------------------------------------------------------
------ ------------
Total assets
223,591,263
-------------------------------------------------------------------------
------
LIABILITIES:
-------------------------------------------------------------------------
------
Payable for shares redeemed $
68,410
--------------------------------------------------------------------
Income distribution payable
569,213
--------------------------------------------------------------------
Accrued expenses
17,908
-------------------------------------------------------------------- --
------
Total liabilities
655,531
-------------------------------------------------------------------------
------ ------------
NET ASSETS for 21,684,185 shares outstanding
$222,935,732
-------------------------------------------------------------------------
------ ------------
NET ASSETS CONSIST OF:
-------------------------------------------------------------------------
------
Paid in capital
229,422,233
-------------------------------------------------------------------------
------
Net unrealized appreciation (depreciation) of investments
2,456,579
-------------------------------------------------------------------------
------
Accumulated net realized gain (loss) on investments
(8,943,080)
-------------------------------------------------------------------------
------ ------------
Total Net Assets
$222,935,732
-------------------------------------------------------------------------
------ ------------
NET ASSET VALUE, Offering Price and Redemption Proceeds Per Share:
Institutional Shares ($217,712,823 / 21,176,178 shares outstanding)
$10.28
-------------------------------------------------------------------------
------ ------------
Institutional Service Shares ($5,222,909 / 508,007 shares outstanding)
$10.28
-------------------------------------------------------------------------
------ ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED SHORT-TERM MUNICIPAL TRUST
(FORMERLY, SHORT-TERM MUNICIPAL TRUST)
STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1995
-------------------------------------------------------------------------
-------
<TABLE>
<S> <C>
<C> <C>
INVESTMENT INCOME:
-------------------------------------------------------------------------
---------------
Interest
$12,342,393
-------------------------------------------------------------------------
---------------
EXPENSES:
-------------------------------------------------------------------------
---------------
Investment advisory fee
$1,084,312
-------------------------------------------------------------------------
-
Administrative personnel and services fee
205,206
-------------------------------------------------------------------------
-
Custodian fees
127,075
-------------------------------------------------------------------------
-
Transfer agent and dividend disbursing agent fees and expenses
34,101
-------------------------------------------------------------------------
-
Directors'/Trustees' fees
11,976
-------------------------------------------------------------------------
-
Auditing fees
18,564
-------------------------------------------------------------------------
-
Legal fees
8,082
-------------------------------------------------------------------------
-
Portfolio accounting fees
40,300
-------------------------------------------------------------------------
-
Distribution services fee--Institutional Service Shares
25,694
-------------------------------------------------------------------------
-
Shareholder services fee--Institutional Service Shares
25,362
-------------------------------------------------------------------------
-
Share registration costs
35,913
-------------------------------------------------------------------------
-
Printing and postage
22,269
-------------------------------------------------------------------------
-
Insurance premiums
10,153
-------------------------------------------------------------------------
-
Taxes
3,284
-------------------------------------------------------------------------
-
Miscellaneous
4,258
-------------------------------------------------------------------------
- ----------
Total expenses
1,656,549
-------------------------------------------------------------------------
-
Deduct--
---------------------------------------------------------------
Waiver of investment advisory fee
$346,925
---------------------------------------------------------------
Waiver of distribution services fee
25,362
--------------------------------------------------------------- -------
-
Total waivers
372,287
-------------------------------------------------------------------------
- ----------
Net expenses
1,284,262
-------------------------------------------------------------------------
--------------- -----------
Net investment income
11,058,131
-------------------------------------------------------------------------
--------------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
-------------------------------------------------------------------------
---------------
Net realized gain (loss) on investments
(3,533,063)
-------------------------------------------------------------------------
---------------
Net change in unrealized appreciation (depreciation) on investments
5,627,330
-------------------------------------------------------------------------
--------------- -----------
Net realized and unrealized gain (loss) on investments
2,094,267
-------------------------------------------------------------------------
--------------- -----------
Change in net assets resulting from operations
$13,152,398
-------------------------------------------------------------------------
--------------- -----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED SHORT-TERM MUNICIPAL TRUST
(FORMERLY, SHORT-TERM MUNICIPAL TRUST)
STATEMENT OF CHANGES IN NET ASSETS
-------------------------------------------------------------------------
-------
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-------
-----------------------
1995 1994
-------
------ -------------
<S> <C>
<C>
INCREASE (DECREASE) IN NET ASSETS:
---------------------------------------------------------------
OPERATIONS--
---------------------------------------------------------------
Net investment income $
11,058,131 $ 13,727,553
---------------------------------------------------------------
Net realized gain/(loss) on investments ($1,189,491 and $0,
respectively, as computed for federal income tax purposes)
(3,533,063) (253,551)
---------------------------------------------------------------
Net change in unrealized appreciation/(depreciation)
5,627,330 (7,720,690)
--------------------------------------------------------------- -------
------ -------------
Change in assets resulting from operations
13,152,398 5,753,312
--------------------------------------------------------------- -------
------ -------------
DISTRIBUTIONS TO SHAREHOLDERS--
---------------------------------------------------------------
Distributions from net investment income:
---------------------------------------------------------------
Institutional Shares
(10,679,008) (13,167,119)
---------------------------------------------------------------
Institutional Service Shares
(379,123) (560,434)
--------------------------------------------------------------- -------
------ -------------
Change in net assets resulting from distributions to
shareholders
(11,058,131) (13,727,553)
--------------------------------------------------------------- -------
------ -------------
SHARE TRANSACTIONS--
---------------------------------------------------------------
Proceeds from sale of Shares
51,547,320 259,790,293
---------------------------------------------------------------
Net asset value of Shares issued to shareholders in payment of
distributions declared
2,700,836 3,549,886
---------------------------------------------------------------
Cost of Shares redeemed
(181,676,422) (226,027,733)
--------------------------------------------------------------- -------
------ -------------
Change in net assets resulting from Share transactions
(127,428,266) 37,312,446
--------------------------------------------------------------- -------
------ -------------
Change in net assets
(125,333,999) 29,338,205
---------------------------------------------------------------
NET ASSETS:
---------------------------------------------------------------
Beginning of period
348,269,731 318,931,526
--------------------------------------------------------------- -------
------ -------------
End of period $
222,935,732 $ 348,269,731
--------------------------------------------------------------- -------
------ -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED SHORT-TERM MUNICIPAL TRUST
(FORMERLY, SHORT-TERM MUNICIPAL TRUST)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1995
-------------------------------------------------------------------------
-------
(1) ORGANIZATION
Federated Short-Term Municipal Trust (the "Trust") is registered under
the
Investment Company Act of 1940, as amended (the "Act"), as a diversified,
open-end management investment company.
The Trust offers two classes of shares, Institutional Shares and
Institutional
Service Shares.
Effective December 15, 1994, the Trust changed its name from Short-Term
Municipal Trust to Federated Short-Term Municipal Trust.
(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.
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 the
pricing service 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 at the
time of
purchase may be valued at amortized cost, which approximates fair
market
value.
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.
Income distributions and capital gains distributions are determined
in
accordance with income tax regulations which may differ from
generally
accepted accounting principles. These differences are primarily due
to
differing treatments for expiring capital loss carryforwards.
Accordingly,
amounts as of June 30, 1995, have been reclassified to reflect a
decrease
in paid in capital and a decrease in accumulated net realized loss
of
$1,449,467. Net investment income, net realized gains, and net
assets were
not affected by this change.
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 income. Accordingly,
no
provisions for federal tax are necessary. At June 30, 1995, the
Trust, for
federal tax purposes, had a capital loss carryforward of $6,345,635,
which
will reduce the Trust's taxable income arising from future net
realized
gain on investments, if any, to the extent permitted
FEDERATED SHORT-TERM MUNICIPAL TRUST
-------------------------------------------------------------------------
-------
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 1996 ($2,255,334), 1997 ($1,097,445),
1998
($1,729,378), 1999 ($11,866), 2001 ($62,121) and 2002 ($1,189,491).
Additionally, net capital losses of $2,597,123 attributable to
security
transactions incurred after October 31, 1994 are treated as arising
on July
1, 1995, the first day of the Trust's next taxable year.
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 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.
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 shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED
JUNE 30,
---------------------------------
----------------------------
1995
1994
---------------------------- --
----------------------------
INSTITUTIONAL SHARES SHARES DOLLARS
SHARES DOLLARS
------------------------------------- ------ -------
------ -------
<S> <C> <C>
<C> <C>
Shares Sold 4,823,992 $ 48,787,554
20,791,128 $ 215,505,746
-------------------------------------
Shares issued to shareholders in
payment of distributions declared 234,548 2,373,194
292,960 3,013,260
-------------------------------------
Shares redeemed (15,099,319) (152,318,952)
(20,620,412) (213,148,873)
------------------------------------- ----------- -------------
----------- -------------
Net change resulting from
Institutional Shares transactions (10,040,779) $(101,158,204)
463,676 $ 5,370,133
------------------------------------- ----------- -------------
----------- -------------
</TABLE>
FEDERATED SHORT-TERM MUNICIPAL TRUST
-------------------------------------------------------------------------
-------
<TABLE>
<CAPTION>
YEAR ENDED
JUNE 30,
---------------------------------
----------------------------
1995
1994*
----------------------------
----------------------------
INSTITUTIONAL SERVICE SHARES SHARES DOLLARS
SHARES DOLLARS
------------------------------------- ------ -------
------ -------
<S> <C> <C>
<C> <C>
Shares Sold 272,110 $ 2,759,766
4,299,696 $ 44,284,547
-------------------------------------
Shares issued to shareholders in
payment of distributions declared 32,358 327,642
52,512 536,626
-------------------------------------
Shares redeemed (2,896,311) (29,357,470)
(1,252,358) (12,878,860)
------------------------------------- ----------- -------------
----------- -------------
Net change resulting from
Institutional Service Shares
transactions (2,591,843) (26,270,062)
3,099,850 31,942,313
------------------------------------- ----------- -------------
----------- -------------
Total net change resulting from
Share transactions (12,632,622) $(127,428,266)
3,563,526 $ 37,312,446
------------------------------------- ----------- -------------
----------- -------------
</TABLE>
*For the period from August 31, 1993 (date of initial public offering) to
June
30, 1994.
(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"), under the
Administrative Services Agreement, provides the Trust with administrative
personnel and services. The FAS fee is based on the level of average
aggregate
daily net assets of all funds advised by subsidiaries of Federated
Investors for
the period. The administrative fee received during the period of the
Administrative Services Agreement shall be at least $125,000 per
portfolio and
$30,000 per each additional class of shares.
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 Service Shares,
annually, to
compensate FSC. The distributor may voluntarily choose to waive a portion
of its
fee. The distributor can modify or terminate this voluntary waiver at any
time
at its sole discretion.
FEDERATED SHORT-TERM MUNICIPAL TRUST
-------------------------------------------------------------------------
-------
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 daily
net
assets of the Trust for the period. This fee is to obtain certain
services for
shareholders and to maintain shareholder accounts.
For the year ended June 30, 1995, the Institutional Shares did not incur
a
Shareholder Services Fee.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated
Services Company ("FServ") serves as transfer and dividend disbursing
agent for
the Trust. This fee is based on the size, type, and number of accounts
and
transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ also maintains the Trust's accounting
records
for which it receives a fee. The fee is based on the level of the Trust's
average daily net assets for the period, plus out-of-pocket expenses.
INTERFUND TRANSACTIONS--During the year ended June 30, 1995, the Trust
engaged
in purchase and sale transactions with funds that have a common
investment
adviser (or affiliated investment advisers), common Directors/Trustees,
and/or
common Officers. These transactions were made at current market value
pursuant
to Rule 17a-7 under the Act amounting to $65,650,000 and $99,158,028,
respectively.
GENERAL--Certain Officers and Trustees of the Trust are Officers and
Directors
or Trustees of the above companies.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for
the
year ended June 30, 1995, were as follows:
<TABLE>
<S>
<C>
-------------------------------------------------------------------------
-----
Purchases
$ 88,595,509
-------------------------------------------------------------------------
----- ------------
Sales
$216,945,935
-------------------------------------------------------------------------
----- ------------
</TABLE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
-------------------------------------------------------------------------
-------
To the Shareholders and Board of Trustees of
FEDERATED SHORT-TERM MUNICIPAL TRUST:
(formerly, Short-Term Municipal Trust)
We have audited the accompanying statement of assets and liabilities of
Federated Short-Term Municipal Trust (a Massachusetts business trust),
including
the schedule of portfolio of investments as of June 30, 1995, 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, 1995, by correspondence with the custodian. An audit also includes
assessing
the accounting principles used and significant estimates made by
management, as
well as evaluating the overall financial statement presentation. We
believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to
above present fairly, in all material respects, the financial position of
Federated Short-Term Municipal Trust as of June 30, 1995, 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 LLP
Pittsburgh, Pennsylvania
August 10, 1995
ADDRESSES
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<TABLE>
<S> <C> <C>
Federated Short-Term Municipal Trust
Institutional Service Shares Pittsburgh,
Pennsylvania 15222-3779
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Distributor
Federated Securities Corp. Federated
Investors Tower
Pittsburgh,
Pennsylvania 15222-3779
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Investment Adviser
Federated Management Federated
Investors Tower
Pittsburgh,
Pennsylvania 15222-3779
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Custodian
State Street Bank and P.O. Box
8600
Trust Company Boston,
Massachusetts 02266-8600
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Transfer Agent and Dividend Disbursing Agent
Federated Services Company P.O. Box
8600
Boston,
Massachusetts 02266-8600
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Independent Public Accountants
Arthur Andersen LLP 2100 One PPG
Place
Pittsburgh,
Pennsylvania 15222
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</TABLE>
FEDERATED SHORT-TERM
MUNICIPAL TRUST
(FORMERLY, SHORT-TERM
MUNICIPAL TRUST)
INSTITUTIONAL SERVICE SHARES
PROSPECTUS
A No-Load, Open-End, Diversified,
Management Investment Company
Prospectus dated August 31, 1995
FEDERATED SECURITIES CORP.
(LOGO)
---------------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
CUSIP 825253206
8072507 A-SS (8/95)
FEDERATED SHORT-TERM MUNICIPAL TRUST
(FORMERLY, SHORT-TERM 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 Federated 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, 1995.
This Statement is not a prospectus itself. To receive a copy
of either prospectus, write or call Federated Short-Term
Municipal Trust.
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
Statement dated August 31, 1995
FEDERATED SECURITIES CORP.
Distributor
A subsidiary of
Federated Investors
GENERAL INFORMATION ABOUT THE
TRUST 1
INVESTMENT OBJECTIVE AND POLICIES1
Acceptable Investments 1
When-Issued and Delayed
Delivery Transactions 1
Portfolio Turnover 2
Investment Limitations 2
TRUST MANAGEMENT 4
Officers and Trustees 4
Trust Ownership 8
Trustees Compensation 8
Trustee Liability 9
INVESTMENT ADVISORY SERVICES 9
Adviser to the Trust 9
Advisory Fees 9
State Expense Limitations 9
Other Related Services 9
ADMINISTRATIVE SERVICES 10
SHAREHOLDER SERVICES AGREEMENT 10
TRANSFER AGENT AND DIVIDEND
DISBURSING AGENT 10
BROKERAGE TRANSACTIONS 10
PURCHASING SHARES 11
Distribution Plan
(Institutional Service Shares
only) and Shareholder Services
Agreement 11
DETERMINING NET ASSET VALUE 11
Valuing Municipal Securities 11
Use of Amortized Cost 11
REDEEMING SHARES 12
Redemption in Kind 12
TAX STATUS 12
The Trust's Tax Status 12
TOTAL RETURN 12
YIELD 12
TAX-EQUIVALENT YIELD 13
PERFORMANCE COMPARISONS 14
ABOUT FEDERATED INVESTORS 14
Mutual Fund Market 15
APPENDIX 16
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. On
December 15, 1994, the name of the Trust was changed from Short-
Term Municipal Trust to Federated 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 Ratings Group
("S&P"). 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 S&P 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. 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 on the Trusts records at the trade
date. These securities are marked to market daily and maintained
until the transaction is settled. The Trust does not intend to
engage in when-issued and delayed delivery transactions to the
extent that would cause the segregation of more than 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, 1995 and 1994,
the portfolio turnover rates were 33% and 36%, 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, although it may
invest in municipal securities secured by real estate or
interests in real estate.
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 voting securities, except as part
of a merger, consolidation, reorganization, or acquisition
of assets. The Trust 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.
Investing in Puts, Calls, Straddles, and Spreads
The Trust will not purchase or sell puts, calls, straddles,
spreads, or any combination thereof except that the Trust
may purchase municipal securities from a broker, dealer, or
other person accompanied by the agreement of such seller to
purchase, at the Trusts option, the municipal security
prior to the maturity thereof.
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 association having capital,
surplus, and undivided profits in excess of $100,000,000 at the
time of the investment.
TRUST MANAGEMENT
OFFICERS AND TRUSTEES
Officers and Trustees are listed with their addresses, principal
occupations during the past five years, birthdates and present
positions, including any affiliation with Federated Management,
Federated Investors, Federated Securities Corp., Federated
Services Company, Federated Administrative Services, Federated
Shareholder Services, and the Funds (as defined below).
John F. Donahue@*
Federated Investors Tower
Pittsburgh, Pennsylvania
Birthdate: July 28, 1924
Chairman and Trustee
Chairman and Trustee, Federated Investors, Federated Advisers,
Federated Management, and Federated Research; Chairman and
Director, Federated Research Corp.; Chairman, Passport Research,
Ltd.; Chief Executive Officer and Director, Trustee, or Managing
General Partner of the Funds. Mr. Donahue is the father of J.
Christopher Donahue, Executive Vice President of the Company.
Glen R. Johnson *
Federated Investors Tower
Pittsburgh, Pennsylvania
Birthdate: May 2, 1929
President and Trustee
Trustee, Federated Investors; President and/or Trustee of some of
the Funds; staff member, Federated Securities Corp. and Federated
Administrative Services.
Thomas G. Bigley
28th Floor, One Oxford Centre
Pittsburgh, Pennsylvania
Birthdate: February 3, 1934
Trustee
Director, Oberg Manufacturing Co.; Chairman of the Board,
Children s Hospital of Pittsburgh; Director, Trustee, or Managing
General Partner of the Funds; formerly, Senior Partner, Ernst &
Young LLP.
John T. Conroy, Jr.
Wood/IPC Commercial Department
John R. Wood and Associates, Inc., Realtors
3255 Tamiami Trail North
Naples, Florida
Birthdate: June 23, 1937
Trustee
President, Investment Properties Corporation; Senior Vice-
President, John R. Wood and Associates, Inc., Realtors;
President, Northgate Village Development Corporation; Partner or
Trustee in private real estate ventures in Southwest Florida;
Director, Trustee, or Managing General Partner of the Funds;
formerly, President, Naples Property Management, Inc.
William J. Copeland
One PNC Plaza - 23rd Floor
Pittsburgh, Pennsylvania
Birthdate: July 4, 1918
Trustee
Director and Member of the Executive Committee, Michael Baker,
Inc.; Director, Trustee, or Managing General Partner of the
Funds; formerly, Vice Chairman and Director, PNC Bank, N.A., and
PNC Bank Corp. and Director, Ryan Homes, Inc.
James E. Dowd
571 Hayward Mill Road
Concord, Massachusetts
Birthdate: May 18, 1922
Trustee
Attorney-at-law; Director, The Emerging Germany Fund, Inc.;
Director, Trustee, or Managing General Partner of the Funds.
Lawrence D. Ellis, M.D.*
3471 Fifth Avenue, Suite 1111
Pittsburgh, Pennsylvania
Birthdate: October 11, 1932
Trustee
Professor of Medicine and Member, Board of Trustees, University
of Pittsburgh; Medical Director, University of Pittsburgh Medical
Center Downtown; Member, Board of Directors, University of
Pittsburgh Medical Center; formerly, Hematologist, Oncologist,
and Internist, Presbyterian and Montefiore Hospitals; Director,
Trustee, or Managing General Partner of the Funds.
Edward L. Flaherty, Jr.@
Henny, Kochuba, Meyer and Flaherty
Two Gateway Center Suite 674
Pittsburgh, Pennsylvania
Birthdate: June 18, 1924
Trustee
Attorney-at-law; Shareholder, Henny, Kochuba, Meyer and Flaherty;
Director, Eat'N Park Restaurants, Inc., and Statewide Settlement
Agency, Inc.; Director, Trustee, or Managing General Partner of
the Funds; formerly, Counsel, Horizon Financial, F.A., Western
Region.
Peter E. Madden
70 Westcliff Road
Westin, Massachusetts
Birthdate: March 16, 1942
Trustee
Consultant; State Representative, Commonwealth of Massachusetts;
Director, Trustee, or Managing General Partner of the Funds;
formerly, President, State Street Bank and Trust Company and
State Street Boston Corporation.
Gregor F. Meyer
Henny, Kochuba, Meyer and Flaherty
Two Gateway Center Suite 674
Pittsburgh, Pennsylvania
Birthdate: October 6, 1926
Trustee
Attorney-at-law; Partner, Henny, Kochuba, Meyer and Flaherty;
Chairman, Meritcare, Inc.; Director, Eat'N Park Restaurants,
Inc.; Director, Trustee, or Managing General Partner of the
Funds.
John E. Murray, Jr., J.D., S.J.D.
President, Duquesne University
Pittsburgh, Pennsylvania
Birthdate: December 20, 1932
Trustee
President, Law Professor, Duquesne University; Consulting
Partner, Mollica, Murray and Hogue; Director, Trustee or Managing
General Partner of the Funds.
Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, Pennsylvania
Birthdate: September 14, 1925
Trustee
Professor, International Politics and Management Consultant;
Trustee, Carnegie Endowment for International Peace, RAND
Corporation, Online Computer Library Center, Inc., and U.S. Space
Foundation; Chairman, Czecho Management Center; Director,
Trustee, or Managing General Partner of the Funds; President
Emeritus, University of Pittsburgh; founding Chairman, National
Advisory Council for Environmental Policy and Technology and
Federal Emergency Management Advisory Board.
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, Pennsylvania
Birthdate: June 21, 1935
Trustee
Public relations/marketing consultant; Conference Coordinator,
Non-profit entities; Director, Trustee, or Managing General
Partner of the Funds.
J. Christopher Donahue
Federated Investors Tower
Pittsburgh, Pennsylvania
Birthdate: April 11, 1949
Executive Vice President
President and Trustee, Federated Investors, Federated Advisers,
Federated Management, and Federated Research; President and
Director, Federated Research Corp.; President, 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 Company.
Edward C. Gonzales *
Federated Investors Tower
Pittsburgh, Pennsylvania
Birthdate: October 22, 1930
Executive Vice President
Vice President, Treasurer, and Trustee, Federated Investors; Vice
President and Treasurer, Federated Advisers, Federated
Management, Federated Research, Federated Research Corp., 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; Executive Vice President or
President of the Funds.
John W. McGonigle
Federated Investors Tower
Pittsburgh, Pennsylvania
Birthdate: October 26, 1938
Executive Vice President and Secretary
Vice President, Secretary, General Counsel, and Trustee,
Federated Investors; Vice President, Secretary, and Trustee,
Federated Advisers, Federated Management, and Federated 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.
Richard B. Fisher
Federated Investors Tower
Pittsburgh, Pennsylvania
Birthdate: May 17, 1923
Vice President
Executive Vice President and Trustee, Federated Investors;
Director, Federated Research Corp.; Chairman and Director,
Federated Securities Corp.; President or Vice President of some
of the Funds; Director or Trustee of some of the Funds.
David M. Taylor *
Federated Investors Tower
Pittsburgh, Pennsylvania
Birthdate: January 13, 1947
Treasurer
Senior Vice President, Controller, and Trustee, Federated
Investors; Controller, Federated Advisers, Federated Management,
Federated Research, Federated Research Corp., and Passport
Research, Ltd.; Senior Vice President, Federated Shareholder
Services; Senior Vice President, Federated Administrative
Services; Treasurer of the Funds.
* This Trustee is deemed to be an "interested person" as
defined in the Investment Company Act of 1940, as
amended.
@ Member of the Executive Committee. The Executive
Committee of the Board of Trustee handles the
responsibilities of the Board of Trustee between
meetings of the Board.
As used in the table above, "The Funds" and "Funds" mean the
following investment companies: American Leaders Fund, Inc.;
Annuity Management Series; Arrow Funds; 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 Fund; Federated Exchange Fund, 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
Institutional Trust; Federated Master Trust; Federated Municipal
Trust; Federated Short-Term Municipal Trust; Federated Short-
Term U.S. Government Trust; Federated Stock Trust; Federated Tax-
Free Trust; Federated Total Return Series, Inc.; Federated U.S.
Government Bond Fund; Federated U.S. Government Securities Fund:
1-3 Years; Federated U.S. Government Securities Fund: 3-5 Years;
First Priority Funds; Fixed Income Securities, Inc.; Fortress
Adjustable Rate U.S. Government Fund, Inc.; Fortress Municipal
Income Fund, Inc.; Fortress Utility Fund, Inc.; Fund for U.S.
Government Securities, Inc.; Government Income Securities, Inc.;
High Yield Cash Trust; Insurance Management Series; Intermediate
Municipal Trust; International Series, Inc.; Investment Series
Funds, Inc.; Investment Series Trust; Liberty Equity Income Fund,
Inc.; Liberty High Income Bond Fund, Inc.; Liberty Municipal
Securities Fund, Inc.; Liberty U.S. Government Money Market
Trust; Liberty Term Trust, Inc. - 1999; Liberty Utility Fund,
Inc.; Liquid Cash Trust; Managed Series Trust; Money Market
Management, Inc.; Money Market Obligations Trust; Money Market
Trust; Municipal Securities Income Trust; Newpoint Funds; New
York Municipal Cash Trust; 111 Corcoran Funds; Peachtree Funds;
The Planters Funds; RIMCO Monument Funds; The Shawmut Funds; Star
Funds; The Starburst Funds; The Starburst Funds II; Stock and
Bond Fund, Inc.; Sunburst Funds; Targeted Duration Trust; Tax-
Free Instruments Trust; Trademark Funds; Trust for Financial
Institutions; Trust For Government Cash Reserves; Trust for Short-
Term U.S. Government Securities; Trust for U.S. Treasury
Obligations; The Virtus Funds; and World Investment Series, Inc.
TRUST OWNERSHIP
Officers and Trustees own less than 1% of the Trust's outstanding
shares.
As of August 2, 1995 the following shareholders of record owned
5% or more of the outstanding Institutional Service Shares of the
Trust: Jay Matthews, Morrison, Colorado, owned approximately
28,106 Shares (5.36%); Carroll R. Wetzel, Clinton, Missouri,
owned approximately 38,270 Shares (7.30%); John H. Seale, Jaspar,
Texas, owned approximately 61,213 Shares (11.68%);
As of August 2, 1995, the following shareholders of record owned
5% or more of the outstanding Institutional Shares of the Trust:
Charles Schwab & Co., Inc., San Francisco, California owned
approximately 1,243,005 Shares (5.94%);
_______Trusts records he Trust TRUSTEES COMPENSATION
AGGREGATE
NAME , COMPENSATION
POSITION WITH FROM TOTAL COMPENSATION PAID
TRUST TRUST * FROM FUND COMPLEX +
John F. Donahue $0 $ 0 for the Trust and
Trustee 68 other investment companies in the Fund
Complex
Thomas G. Bigley $973 $ 20,688 for the Trust and
Trustee 49 other investment companies of the Fund
Complex
John T. Conroy, Jr. $ 1,447 $ 117,202 for the Trust and
Trustee 64 other investment companies in the Fund
Complex
William J. Copeland $ 1,447 $ 117,202 for the Trust and
Trustee 64 other investment companies in the Fund
Complex
James E. Dowd $ 1,447 $ 117,202 for the Trust and
Trustee 64 other investment companies in the Fund
Complex
Lawrence D. Ellis, M.D. $ 1,319 $ 106,460 for the Trust and
Trustee 64 other investment companies in the Fund
Complex
Edward L. Flaherty, Jr. $ 1,447 $ 117,202 for the Trust and
Trustee 64 other investment companies in the Fund
Complex
Glen R. Johnson $ 0 $ 0 for the Trust and
Trustee 8 other investment companies in the Fund
Complex
Peter E. Madden $1,116 $ 90,563 for the Trust and
Trustee 64 other investment companies in the Fund
Complex
Gregor F. Meyer $ 1,319 $ 106,460 for the Trust and
Trustee 64 other investment companies in the Fund
Complex
John E. Murray, Jr. $ 635 $ 0 for the Trust and
Trustee 69 other investment companies in the Fund
Complex
Wesley W. Posvar $ 1,319 $ 106,460 for the Trust and
Trustee 64 other investment companies in the Fund
Complex
Marjorie P. Smuts $ 1,319 $ 106,460 for the Trust and
Trustee 64 other investment companies in the Fund
Complex
*Information is furnished for the fiscal year ended June 30,
1995.
+The information provided is for the last calendar year.
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 (the
Adviser). It is a subsidiary of Federated Investors. All of the
securities of Federated Investors are owned by a trust, the
trustees of which are John F. Donahue, his wife, and his son, J.
Christopher Donahue.
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 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, 1995, 1994, and 1993, the
Trust's adviser earned $1,084,312, $1,414,365, and $1,009,339,
respectively, which were reduced by $346,925, $452,665 and
$357,415, 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 2.5% per year of the first $30
million of average net assets, 2% per year of the next $70
million of average net assets, and 1.5% 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, 1995, the Administrators collectively earned $205,206.
For the fiscal years ended June 30, 1994, and 1993, Federated
Administrative Services, Inc. earned $346,714 and $300,002,
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.
SHAREHOLDER SERVICES AGREEMENT
This arrangement permits the payment of fees to Federated
Shareholder Services and, indirectly, to financial institutions,
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: 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.
For the fiscal periods ending June 30, 1995, and 1994, the Trust
paid shareholder service fees in the amounts of $25,362 and
$27,051, respectively, all of which were paid to financial
institutions.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Federated Services Company serves as transfer agent and dividend
disbursing agent for the Trust. The fee paid to the transfer
agent is based upon the size, type and number of accounts and
transactions made by shareholders.
Federated Services Company also maintains the Trusts accounting
records. The fee paid for this service is based upon the level of
the Trusts average net assets for the period plus out-of-pocket
expenses.
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.
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 load 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 AGREEMENT
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.
For the fiscal year ended June 30, 1995 payments in the amount of
$25,694 were made pursuant to the Distribution Plan
(Institutional Service Shares only) of which $25,362 was waived.
In addition, for this period, the Trust paid shareholder service
fees in the amount of $25,362 , all of which were paid to
financial institutions.
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 each
respective prospectus.
VALUING MUNICIPAL SECURITIES
The Trustees use 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 Trustees have 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 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 the Trust receives the redemption request. Redemption
procedures are explained in each 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, as amended 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 of 1986, as amended, 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,
1995, were 5.52%, 5.04%, and 5.33%, 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 net asset value 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 average annual total return for Institutional Service
Shares for the fiscal year ended June 30, 1995 and for the
period since inception (August 31, 1993, date of initial public
offering), to June 30, 1995 was 5.26% and 3.44% respectively.
YIELD
The Trust's yields for the thirty-day period ended June 30, 1995,
for Institutional Shares and Institutional Service Shares were
3.89% and 3.64%, respectively.
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 maximum 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, 1995, for Institutional Shares and Institutional Service
Shares were 5.40% and 5.06%, 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 1995
MULTISTATE MUNICIPAL FUNDS
FEDERAL INCOME TAX BRACKET:
15.00% 28.00% 31.00% 36.00% 39.60%
JOINT $1- $39,001- $94,251- $143,601- OVER
RETURN 39,000 94,250 143,600 256,500 256,500
SINGLE $1- $23,351- $56,551- $117,951- OVER
RETURN 23,350 56,550 117,950 256,500 256,500
Tax-Exempt
Yield Taxable Yield Equivalent
1.00% 1.18% 1.39% 1.45% 1.56% 1.66%
1.50% 1.76% 2.08% 2.17% 2.34% 2.48%
2.00% 2.35% 2.78% 2.90% 3.13% 3.31%
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%
6.00% 7.06% 8.33% 8.70% 9.38% 9.93%
6.50% 7.65% 9.03% 9.42% 10.16% 10.76%
7.00% 8.24% 9.72% 10.14% 10.94% 11.59%
7.50% 8.82% 10.42% 10.87% 11.72% 12.42%
8.00% 9.41% 11.11% 11.59% 12.50% 13.25%
Note: The maximum marginal tax rate for each bracket was
used in calculating the taxable yield equivalent.
Furthermore, additional state and local taxes paid on
comparable taxable investments were not used to increase
federal deductions. The chart above is for illustrative
purposes only. It is not an indicator of past or future
performance of Trust shares.
* Some portion of the Trust's income may be subject to the
federal alternative minimum tax and state and local income
taxes.
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.
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 FUND VALUES. MUTUAL FUND
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.
ABOUT FEDERATED INVESTORS
Federated is dedicated to meeting investor needs which is
reflected in its investment decision making structured,
straightforward, and consistent. This has resulted in a history
of competitive performance with a range of competitive investment
products that have gained the confidence of thousands of clients
and their customers.
The company's disciplined security selection process is firmly
rooted in sound methodologies backed by fundamental and technical
research. Investment decisions are made and executed by teams of
portfolio managers, analysts, and traders dedicated to specific
market sectors.
In the municipal sector, as of December 31, 1994, Federated
managed 18 bond funds with approximately $1.9 billion in assets
and 18 money market funds with approximately $6.6 billion in
total assets. In 1976, Federated introduced one of the first
municipal bond mutual funds in the industry and is now one of
the largest institutional buyers of municipal securities.
J. Thomas Madden, Executive Vice President, oversees Federated's
equity and high yield corporate bond management while William D.
Dawson, Executive Vice President, oversees Federated's domestic
fixed income management. Henry A. Frantzen, Executive Vice
President, oversees the management of Federated's international
portfolios.
MUTUAL FUND MARKET
Twenty-seven percent of American households are pursuing their
financial goals through mutual funds. These investors, as well as
businesses and institutions, have entrusted over $2 trillion to
the more than 5,500 funds available.*
Federated Investors, through its subsidiaries, distributes mutual
funds for a variety of investment applications. Specific markets
include:
Institutional
Federated meets the needs of more than 4,000 institutional
clients nationwide by managing and servicing separate
accounts and mutual funds for a variety of applications,
including defined benefit and defined contribution programs,
cash management, and asset/liability management.
Institutional clients include corporations, pension funds,
tax-exempt entities, foundations/endowments, insurance
companies, and investment and financial advisors. The
marketing effort to these institutional clients is headed by
John B. Fisher, President, Institutional Sales Division.
Trust Organizations
Other institutional clients include close relationships with
more than 1,500 banks and trust organizations. Virtually all
of the trust divisions of the top 100 bank holding companies
use Federated funds in their clients portfolios. The
marketing effort to trust clients is headed by Mark R.
Gensheimer, Executive Vice President, Bank Marketing &
Sales.
Broker/Dealers and Bank Broker/Dealer Subsidiaries
Federated mutual funds are available to consumers through
major brokerage firms nationwide including 200 New York
Stock Exchange firms supported by more wholesalers than
any other mutual fund distributor. The marketing effort to
these firms is headed by James F. Getz, President,
Broker/Dealer Division.
* SOURCE: Investment Company Institute
APPENDIX
STANDARD AND POOR'S RATINGS GROUP (S&P) MUNICIPAL BOND RATINGS
AAA--Debt rated "AAA" has the highest rating assigned by S&P.
Capacity to pay interest and repay principal is extremely strong.
AA--Debt rated "AA" has a very strong capacity to pay interest
and repay principal and differs from the higher rated issues only
in small degree.
A--Debt rated "A" has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than
debt in higher rated categories.
NR--Indicates that no public rating has been requested, that
there is insufficient information on which to base a rating, or
that S&P does not rate a particular type of obligation as a
matter of policy.
Plus (+) or minus (-): The ratings from "AA" to "CCC" may be
modified by the addition of a plus or minus sign to show relative
standing within the major rating categories.
MOODY'S INVESTORS SERVICE, INC. MUNICIPAL BOND RATINGS
AAA--Bonds which are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk and
are generally referred to as "gilt edged." Interest payments are
protected by a large or by an exceptionally stable margin and
principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such
issues.
AA--Bonds which are rated Aa are judged to be of high quality by
all standards. Together with the Aaa group they comprise what are
generally known as high grade bonds. They are rated lower than
the best bonds because margins of protection may not be as large
as in Aaa securities or fluctuation of protective elements may be
of greater amplitude or there may be other elements present which
make the long-term risks appear somewhat larger than in Aaa
securities.
A--Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper medium grade
obligations. Factors giving security to principal and interest
are considered adequate but elements may be present which suggest
a susceptibility to impairment sometime in the future.
NR--Not rated by Moody's.
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.
STANDARD AND POOR'S RATINGS GROUP MUNICIPAL NOTE RATINGS
SP-1--Very strong or strong capacity to pay principal and
interest. Those issues determined to possess overwhelming safety
characteristics will be given a plus sign (+) designation.
SP-2--Satisfactory capacity to pay principal and interest.
MOODY'S INVESTORS SERVICE, INC. SHORT-TERM LOAN RATINGS
MIG1/VMIG1--This designation denotes best quality. There is
present strong protection by established cash flows, superior
liquidity support or demonstrated broad based access to the
market for refinancing.
MIG2/VMIG2--This designation denotes high quality. Margins of
protection are ample although not so large as in the preceding
group.
STANDARD AND POOR'S RATINGS GROUP COMMERCIAL PAPER RATINGS
A-1--This highest category indicates that the degree of safety
regarding timely payment is strong. Those issues determined to
possess extremely strong safety characteristics are denoted with
a plus sign (+) designation.
A-2--Capacity for timely payment on issues with this designation
is satisfactory. However, the relative degree of safety is not as
high for issues designated A-1.
MOODY'S INVESTORS SERVICE, INC. COMMERCIAL PAPER RATINGS
PRIME-1--Issuers rated PRIME-1 (or related supporting
institutions) have a superior capacity for repayment of short-
term promissory obligations. PRIME-1 repayment capacity will
normally be evidenced by the following characteristics:
leading market positions in well-established industries;
high rates of return on funds employed;
conservative capitalization structure with moderate reliance
on debt and ample asset protection;
broad margins in earning coverage of fixed financial charges
and high internal cash generation; and
well-established access to a range of financial markets and
assured sources of alternative liquidity.
PRIME-2--Issuers rated PRIME-2 (or related supporting
institutions) have a strong capacity for repayment of short-term
promissory obligations. This will normally be evidenced by many
of the characteristics cited above, but to a lesser degree.
Earnings trends and coverage ratios, while sound, will be more
subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample
alternate liquidity is maintained.
Cusip 825253107
Cusip 825253206
8072507B(8/95)
PART C. OTHER INFORMATION
Item 24. Financial Statements and
Exhibits:
(a) Financial Statements.
(Filed in Part A)
(b) Exhibits:
(1) (i) Conformed Copy of
Declaration of Trust of the Registrant
(1.);
(ii) Conformed Copy of
amendment to the Declaration of Trust
(2.);
(iii) Conformed
Copy of amendment No.4 to the
Declaration of Trust of Registrant;+
(2) (i) Copy of the By-Laws of the
Registrant (1.);
(ii) Copy of amendment
to the By-Laws of the Registrant (3.,
6., 7.);
(3) Not applicable;
(4) Copy of Specimen
Certificate of Shares (2.);
(5) Conformed Copy of the
Investment Advisory Contract (9.);
___________________________
+ All exhibits have been filed electronically.
1. Response is incorporated by reference to Registrant's
Initial Registration Statement on Form N-1 filed May 13,
1981. (File Nos.2-72277 and 811-3181)
2. Response is incorporated by reference to Registrant's Pre-
Effective Amendment No. 1 on Form N-1 filed August 4, 1981.
(File Nos. 2-72277 and 811-3181)
3. Response is incorporated by reference to Registrant's Post-
Effective Amendment No. 1 on Form N-1 filed February 18,
1982. (File Nos. 2-72277 and 811-3181)
6. Response is incorporated by reference to Registrant's Post-
Effective Amendment No. 8 on Form N-1A filed August 29,
1985. (File Nos. 2-72277 and 811-3181)
7. Response is incorporated by reference to Registrant's Post-
Effective Amendment No. 10 on Form N-1A filed August 24,
1987. (File Nos. 2-72277 and 811-3181)
9. Response is incorporated by reference to Registrant's Post-
Effective Amendment No. 15 on Form N-1A filed August 24,
1989. (File Nos. 2-72277 and 811-3181)
(6) (i)Conformed copy of the
Distributor's Contract (11.);
(ii) The Registrant hereby
incorporates the conformed copy of the specimen
Mutual Funds Sales and Service Agreement; Mutual
Funds Service Agreement; and Plan Trustee/Mutual
Funds Service Agreement from Item 24 (b) (6) of
the Cash Trust Series II Registration Statement
on Form N-1A, filed with the Commission on July
24, 1995. (File Numbers 33-38550 and 811-6269).
(7) Not applicable;
(8) Conformed copy of the
Custodian Agreement of the Registrant (11.);
(9) (i) Conformed copy of
Fund Accounting, Shareholder Recordkeeping,
and Custody Services Procurement Agreement
of the Registrant (11.);
(ii) Conformed copy of
Administrative Services Agreement (11.);
(iii) Conformed copy of
Shareholder Services Agreement (11.);
(iv) The responses described in Item 24
(b) (6) are hereby incorporated by reference.
(10) Not Applicable;
(11) Conformed copy of the Consent of
Independent Public Accountants;+
(12) Not applicable;
(13) Copy of Initial Capital Understanding
(2.);
(14) Not applicable;
(15) Conformed copy of Rule 12B-1 Plan
(11.);
(16) Schedule for Computation of Fund
Performance Data (8.);
(17) Copy of Financial Data Schedules;+
(18) Not applicable;
(19) Power of Attorney;+
___________________________
+ All exhibits have been filed electronically.
2. Response is incorporated by reference to Registrant's Pre-
Effective Amendment No. 1 on Form N-1 filed August 4, 1981.
(File Nos. 2-72277 and 811-3181)
8. Response is incorporated by reference to Registrant's Post-
Effective Amendment No. 12 on Form N-1A filed August 22,
1988. (File Nos. 2-72277 and 811-3181)
11. Response is incorporated by reference to Registrant's Post-
Effective Amendment No. 26 on Form N-1A filed August 26,
1994. (File Nos. 2-72277 and 811-3181)
Item 25. Persons Controlled by or
Under Common Control with
Registrant:
None
Item 26. Number of Holders of
Securities:
Number of
Record Holders
Title of Class as of August 2, 1995
Shares of Beneficial Interest
(no par value)
Institutional Shares
1,902
Institutional Service Shares
203
Item 27. Indemnification: (10.)
Item 28. Business and Other
Connections of Investment
Adviser:
For a description of the other business of the
investment adviser, see the section entitled "Trust
Information - Management of the Trust" in Part A. The
affiliations with the Registrant of four of the
Trustees and one of the Officers of the investment
adviser and their business addresses are included in
Part B of this Registration Statement under "Trust
Management - Officers and Trustees." The remaining
Trustee of the investment adviser, his position with
the investment adviser, and, in parentheses, his
principal occupation is: Mark D. Olson, Partner,
Wilson, Halbrook & Bayard, 107 W. Market Street,
Georgetown, Delaware 19947.
10. Response is incorporated by reference to Registrant's Post-
Effective Amendment No. 17 on Form N-1A filed August 24,
1990. (File Nos. 2-72277 and 811-3181)
The remaining Officers of the investment adviser are:
William D. Dawson, Henry A. Frantzen, J. Thomas
Madden, and Mark L. Mallon, Executive Vice Presidents;
Henry J. Gailliot, Senior Vice President-Economist;
Peter R. Anderson, and J. Alan Minteer, Senior Vice
Presidents; J. Scott Albrecht, Randall A. Bauer, David
A. Briggs, Jonathan C. Conley, Deborah A. Cunningham,
Micheal P. Donnelly, Mark E. Durbiano, Kathleen M.
Foody-Malus, Thomas M. Franks, Edward C. Gonzales,
Jeff A. Kozemchak, Marian R. Marinack, John W.
McGonigle, Susan M. Nason, Mary Jo Ochson, Robert J.
Ostrowski,Frederick L. Plautz, Jr., Charles A. Ritter,
James D. Roeberge, Sandra L. Weber and Christopher H.
Wiles, Vice Presidents, Edward C. Gonzales, Treasurer,
and John W. McGonigle, Secretary. The business
address of each of the Officers of the investment
adviser is Federated Investors Tower, Pittsburgh, PA
15222-3779. These individuals are also officers of a
majority of the investment advisers to the Funds
listed in Part B of this Registration Statement found
under the main heading entitled "Trust Management."
Item 29. Principal Underwriters:
(a) Federated Securities Corp., the Distributor for shares
of the Registrant, also acts as principal underwriter
for the following open-end investment companies:
Alexander Hamilton Funds; American Leaders Fund, Inc.;
Annuity Management Series; Arrow Funds; Automated Cash
Management Trust; Automated Government Money Trust;
BayFunds; The Biltmore Funds; The Biltmore Municipal
Funds; Blanchard Funds; Blanchard Precious Metals,
Inc.; California Municipal Cash Trust; Cash Trust
Series, Inc.; Cash Trust Series II; DG Investor Series;
Edward D. Jones & Co. Daily Passport Cash Trust;
Federated ARMs Fund; Federated Equity Funds; Federated
Exchange Fund, Ltd.; Federated GNMA Trust; Federated
Government Trust; Federated High Yield Trust; Federated
Income Securities Trust; Federated Income Trust;
Federated Index Trust; Federated Institutional Trust;
Federated Master Trust; Federated Municipal Trust;
Federated Short-Term Municipal Trust; Federated Short-
Term U.S. Government Trust; Federated Stock Trust;
Federated Tax-Free Trust; Federated Total Return
Series, Inc.; Federated U.S. Government Bond Fund;
Federated U.S. Government Securities Fund: 1-3 Years;
Federated U.S. Government Securities Fund: 3-5
Years;First Priority Funds; First Union Funds; Fixed
Income Securities, Inc.; Fortress Adjustable Rate U.S.
Government Fund, Inc.; Fortress Municipal Income Fund,
Inc.; Fortress Utility Fund, Inc.; Fountain Square
Funds; Fund for U.S. Government Securities, Inc.;
Government Income Securities, Inc.; High Yield Cash
Trust; Independence One Mutual Funds; Insurance
Management Series; Intermediate Municipal Trust;
International Series Inc.; Investment Series Funds,
Inc.; Investment Series Trust; Liberty Equity Income
Fund, Inc.; Liberty High Income Bond Fund, Inc.;
Liberty Municipal Securities Fund, Inc.; Liberty U.S.
Government Money Market Trust; Liberty Utility Fund,
Inc.; Liquid Cash Trust; Managed Series Trust; Marshall
Funds, Inc.; Money Market Management, Inc.; Money
Market Obligations Trust; Money Market Trust; The
Monitor Funds; Municipal Securities Income Trust;
Newpoint Funds; New York Municipal Cash Trust; 111
Corcoran Funds; Peachtree Funds; The Planters Funds;
RIMCO Monument Funds; The Shawmut Funds; SouthTrust
Vulcan Funds; Star Funds; The Starburst Funds; The
Starburst Funds II; Stock and Bond Fund, Inc.; Sunburst
Funds; Targeted Duration Trust; Tax-Free Instruments
Trust; Tower Mutual Funds; Trademark Funds; Trust for
Financial Institutions; Trust for Government Cash
Reserves; Trust for Short-Term U.S. Government
Securities; Trust for U.S. Treasury Obligations; The
Virtus Funds; Vision Fiduciary Funds, Inc.; Vision
Group of Funds, Inc.; and World Investment Series, Inc.
Federated Securities Corp. also acts as
principal underwriter for the following closed-end
investment company: Liberty Term Trust, Inc.- 1999.
(b)
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With
Registrant
Richard B. Fisher Director, Chairman, Chief Vice
President
Federated Investors Tower Executive Officer, Chief
Pittsburgh, PA 15222-3779 Operating Officer, and
Asst. Treasurer, Federated
Securities Corp.
Edward C. Gonzales Director, Executive Vice Exec Vice Pres
Federated Investors Tower President, and Treasurer,
Pittsburgh, PA 15222-3779 Federated Securities
Corp.
John W. McGonigle Director, Executive Vice Exec Vice Pres
and
Federated Investors Tower President, and Assistant Secretary
Pittsburgh, PA 15222-3779 Secretary, Federated
Securities Corp.
John B. Fisher President-Institutional Sales, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James F. Getz President-Broker/Dealer, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark R. Gensheimer Executive Vice President of --
Federated Investors Tower Bank/Trust
Pittsburgh, PA 15222-3779 Federated Securities Corp.
Mark W. Bloss Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With
Registrant
Theodore Fadool, Jr. Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Bryant R. Fisher Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Christopher T. Fives Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James S. Hamilton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James M. Heaton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
H. Joseph Kennedy Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Keith Nixon Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Solon A. Person, IV Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Timothy C. Pillion Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Thomas E. Territ Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
John B. Bohnet Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard W. Boyd Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jane E. Broeren-Lambesis Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With
Registrant
Mary J. Combs Vice President, --
Federated Investors Tower Federated Securities
Corp.
Pittsburgh, PA 15222-3779
R. Edmond Connell, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Kevin J. Crenny Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Daniel T. Culbertson Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Laura M. Deger Vice President, --
Federated Investors Tower Federated Securities
Corp.
Pittsburgh, PA 15222-3779
Jill Ehrenfeld Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Joseph L. Epstein Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark D. Fisher Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Michael D. Fitzgerald Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Joseph D. Gibbons Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
David C. Glabicki Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Craig S. Gonzales Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard C. Gonzales Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With
Registrant
Scott A. Hutton Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
William J. Kerns Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
William E. Kugler Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Dennis M. Laffey Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Stephen A. LaVersa Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Francis J. Matten, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark J. Miehl Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard C. Mihm Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
J. Michael Miller Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
R. Jeffrey Niss Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Michael P. O'Brien Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Robert D. Oehlschlager Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Robert F. Phillips Vice President, --
Federated Investors Tower Federated Securities
Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With
Registrant
Eugene B. Reed Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Paul V. Riordan Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Charles A. Robison Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
John C. Shelar, Jr. Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
David W. Spears Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jeffrey A. Stewart Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jamie M. Teschner Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
William C. Tustin Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Paul A. Uhlman Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard B. Watts Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Michael P. Wolff Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Philip C. Hetzel Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Charlene H. Jennings Assistant Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With
Registrant
Ernest L. Linane Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
S. Elliott Cohan Secretary, Assistant
Federated Investors Tower Federated Securities Corp. Secretary
Pittsburgh, PA 15222-3779
Item 30. Location of Accounts and
Records:
Federated Short-Term
Municipal Trust Federated Investors Tower
Pittsburgh, Pennsylvania
15222-3779
Federated Services Company P.O. Box 8600 (Transfer
Agent and Dividend Boston, Massachusetts
Disbursing Agent) 02266-8600
Federated Administrative Services Federated Investors
Tower (Administrator) Pittsburgh, Pennsylvania
15222-3779
Federated Management Federated Investors Tower
(Adviser) Pittsburgh, Pennsylvania
15222-3779
State Street Bank and Trust Company P.O. Box 8600
(Custodian) Boston, Massachusetts
02266-8600
Item 31. Management Services: Not
applicable.
Item 32. Undertakings: (10.)
Registrant hereby undertakes to furnish each person to
whom a prospectus is delivered with a copy of the
Registrant's latest annual report to shareholders,
upon request and without charge.
Registrant hereby undertakes to comply with the
provisions of Section 16(c) of the 1940 Act with
respect to the removal of Trustees and the calling of
special shareholder meetings by shareholders.
____________________________
10. Response is incorporated by reference to Registrant's Post-
Effective Amendment No. 17 filed August 24, 1990. (File
Nos. 2-72277 and 811-3181)
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, the Registrant, FEDERATED
SHORT-TERM MUNICIPAL TRUST certifies that it meets all of the
requirements for effectiveness of this Amendment to its
Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933 and has duly caused this Amendment to its
Registration Statement to be signed on its behalf by the
undersigned, thereto duly authorized, in the City of Pittsburgh
and Commonwealth of Pennsylvania, on the 25th day of August,
1995.
FEDERATED SHORT-TERM MUNICIPAL TRUST
BY: /s/Robert C. Rosselot
Robert C. Rosselot, Assistant Secretary
Attorney in Fact for John F. Donahue
August 25, 1995
Pursuant to the requirements of the Securities Act of 1933,
this Amendment to its Registration Statement has been signed
below by the following person in the capacity and on the date
indicated:
NAME TITLE DATE
By: /s/Robert C. Rosselot
Robert C. Rosselot Attorney In Fact August 25, 1995
ASSISTANT SECRETARY For the Persons
Listed Below
NAME TITLE
John F. Donahue* Chairman and Trustee
(Chief Executive Officer)
Glen R. Johnson* President and Trustee
Edward C. Gonzales* Executive Vice President
David M. Taylor* Treasurer
(Principal Financial and
Accounting Officer)
Thomas G. Bigley* Trustee
John T. Conroy, Jr.* Trustee
William J. Copeland* Trustee
James E. Dowd* Trustee
Lawrence D. Ellis, M.D.* Trustee
Edward L. Flaherty, Jr.* Trustee
Glen R. Johnson* Trustee
Peter E. Madden* Trustee
Gregor F. Meyer* Trustee
John E. Murray, Jr.* Trustee
Wesley W. Posvar* Trustee
Marjorie P. Smuts* Trustee
* By Power of Attorney
Exhibit (11) under N-1A
Exhibit 23 under Item
601/Reg SK
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
use in Post-Effective Amendment No. 28 to Form N-1A
Registration Statement of FEDERATED SHORT-TERM MUNICIPAL
TRUST, of our report dated August 10, 1995 on the financial
statements as of June 30, 1995, included in or made a part of
this registration statement.
By: ARTHUR ANDERSEN LLP.
ARTHUR ANDERSEN LLP.
Pittsburgh, Pennsylvania,
August 21, 1995
SHORT-TERM MUNICIPAL TRUST
Amendment No. 4
to
DECLARATION OF TRUST
Amended and Restated as of September 1, 1993
THIS Declaration of Trust is amended as follows:
A. Delete Section 1 in Article I and substitute in its
place the following:
"Section 1. Name.
This Trust shall be known as Federated Short-Term
Municipal Trust."
B. Delete Section 2(b) in Article I and substitute in its
place the following:
"Section 2. Definitions.
(b) The "Trust" refers to Federated Short-Term
Municipal Trust;"
C. Delete Section 9 in Article XII and substitute in its
place the following:
"Section 9. Use of Name.
The Trust acknowledges that Federated Investors
has reserved the right to grant the non-exclusive
use of the name "Federated" or any derivative
thereof to any other investment company,
investment company portfolio, investment adviser,
distributor, or other business enterprise, and to
withdraw from the Trust or one or more Series or
Classes any right to the use of the name
"Federated".
The undersigned Assistant Secretary of Short-Term
Municipal Trust certifies that the above stated amendment is
a true and correct Amendment to the Declaration of Trust, as
adopted by the Trustees of the Trust as of the 15th day of
December, 1994.
WITNESS the due execution hereof this 15th day of
December, 1994.
/s/ G. Andrew Bonnewell
G. Andrew Bonnewell
Assistant Secretary
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes
and appoints the Secretary and Assistant Secretary of FEDERATED
SHORT-TERM MUNICIPAL TRUST and the Assistant General Counsel of
Federated Investors, and each of them, their true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution for them and in their names, place and stead, in
any and all capacities, to sign any and all documents to be filed
with the Securities and Exchange Commission pursuant to the
Securities Act of 1933, the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, by means of the Securities
and Exchange Commission's electronic disclosure system known as
EDGAR; and to file the same, with all exhibits thereto and other
documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to sign and
perform each and every act and thing requisite and necessary to
be done in connection therewith, as fully to all intents and
purposes as each of them might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue
thereof.
SIGNATURES TITLE DATE
/s/John F. Donahue Chairman August 25, 1995
John F. Donahue (Chief Executive Officer)
/s/Glen R. Johnson President August 25, 1995
Glen R. Johnson
/s/David M. Taylor Treasurer August 25, 1995
David M. Taylor (Principal Financial and
Accounting Officer)
/s/Thomas G. Bigley Trustee August 25, 1995
Thomas G. Bigley
/s/John T. Conroy, Jr. Trustee August 25, 1995
John T. Conroy, Jr.
/s/William J. Copeland Trustee August 25, 1995
William J. Copeland
SIGNATURES TITLE DATE
/s/James E. Dowd Trustee August 25, 1995
James E. Dowd
/s/Lawrence D. Ellis, M.D. Trustee August 25, 1995
Lawrence D. Ellis, M.D.
/s/Edward L. Flaherty, Jr. Trustee August 25, 1995
Edward L. Flaherty, Jr.
/s/Peter E. Madden Trustee August 25, 1995
Peter E. Madden
/s/Gregor F. Meyer Trustee August 25, 1995
Gregor F. Meyer
/s/John E. Murray, Jr. Trustee August 25, 1995
John E. Murray, Jr.
/s/Wesley W. Posvar Trustee August 25, 1995
Wesley W. Posvar
/s/Marjorie P. Smuts Trustee August 25, 1995
Marjorie P. Smuts
Sworn to and subscribed before me this 25th day of August, 1995
/s/Marie M. Hamm
Notarial Seal
Marie M. Hamm, Notary Public
Plum Boro, Allegheny County
My Commission Expires Sept. 16, 1996
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
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<NUMBER> 1
<NAME> Federated Short-Term Municipal Trust
Institutional Shares
<PERIOD-TYPE> 12-mos
<FISCAL-YEAR-END> Jun-30-1995
<PERIOD-END> Jun-30-1995
<INVESTMENTS-AT-COST> 217,267,714
<INVESTMENTS-AT-VALUE> 219,724,293
<RECEIVABLES> 3,576,259
<ASSETS-OTHER> 290,711
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<ACCUMULATED-NET-GAINS> (8,943,080)
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<NET-ASSETS> 217,712,823
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<INTEREST-INCOME> 12,342,393
<OTHER-INCOME> 0
<EXPENSES-NET> 1,284,262
<NET-INVESTMENT-INCOME> 11,058,131
<REALIZED-GAINS-CURRENT> (3,533,063)
<APPREC-INCREASE-CURRENT> 5,627,330
<NET-CHANGE-FROM-OPS> 13,152,398
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<DISTRIBUTIONS-OF-INCOME> 10,679,008
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4,823,992
<NUMBER-OF-SHARES-REDEEMED> 15,099,319
<SHARES-REINVESTED> 234,548
<NET-CHANGE-IN-ASSETS> (125,333,999)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (6,859,484)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,084,312
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,656,549
<AVERAGE-NET-ASSETS> 271,501,550
<PER-SHARE-NAV-BEGIN> 10.150
<PER-SHARE-NII> 0.420
<PER-SHARE-GAIN-APPREC> 0.130
<PER-SHARE-DIVIDEND> 0.420
<PER-SHARE-DISTRIBUTIONS> 0.000
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<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> Federated Short-Term Municipal Trust
Institutional Services Shares
<PERIOD-TYPE> 12-mos
<FISCAL-YEAR-END> Jun-30-1995
<PERIOD-END> Jun-30-1995
<INVESTMENTS-AT-COST> 217,267,714
<INVESTMENTS-AT-VALUE> 219,724,293
<RECEIVABLES> 3,576,259
<ASSETS-OTHER> 290,711
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 223,591,263
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<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 655,531
<TOTAL-LIABILITIES> 655,531
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 229,422,233
<SHARES-COMMON-STOCK> 508,007
<SHARES-COMMON-PRIOR> 3,099,850
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (8,943,080)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,456,579
<NET-ASSETS> 5,222,909
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 12,342,393
<OTHER-INCOME> 0
<EXPENSES-NET> 1,284,262
<NET-INVESTMENT-INCOME> 11,058,131
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<APPREC-INCREASE-CURRENT> 5,627,330
<NET-CHANGE-FROM-OPS> 13,152,398
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 379,123
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 272,110
<NUMBER-OF-SHARES-REDEEMED> 2,896,311
<SHARES-REINVESTED> 32,358
<NET-CHANGE-IN-ASSETS> (125,333,999)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (6,859,484)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,084,312
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,656,549
<AVERAGE-NET-ASSETS> 271,501,550
<PER-SHARE-NAV-BEGIN> 10.150
<PER-SHARE-NII> 0.390
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