FEDERATED SHORT TERM MUNICIPAL TRUST, 485APOS, 1999-07-01

FEDERATED SHORT TERM MUNICIPAL TRUST
485APOS, 1999-07-01

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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. __36_____...............___X___

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 ___X___

Amendment No. __27_____..............................___X___

FEDERATED SHORT-TERM MUNICIPAL TRUST

Federated Investors Funds
5800 Corporate Drive

Pittsburgh, Pennsylvania 15237-7000
(Address of Principal Executive Offices)

(412) 288-1900

(Registrant's Telephone Number)

John W. McGonigle, Esquire
Federated Investors Tower

1001 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3779

(Name and Address of Agent for Service)

It is proposed that this filing will become effective:

immediately upon filing pursuant to paragraph (b) on _____ pursuant to
paragraph (b) 60 days after filing pursuant to paragraph (a) (i)

X on AUGUST 31, 1999 pursuant to paragraph (a) (i). 75 days after filing
pursuant to paragraph (a)(ii) on _________________ pursuant to paragraph
(a)(ii) of Rule 485.

If appropriate, check the following box:

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

Copies to:

Matthew J. Maloney, Esquire
Dickstein Shapiro Morin & Oshinsky, LLP

2101 L Street, N.W.
Washington, D.C. 20037

PROSPECTUS

FEDERATED SHORT-TERM MUNICIPAL TRUST

INSTITUTIONAL SHARES

A mutual fund seeking dividend income which is exempt from federal regular
income tax 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.

As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus, and any representation to the contrary is a criminal offense.

CONTENTS

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

August 31, 1999

<PAGE>

RISK/RETURN SUMMARY

WHAT IS THE FUND'S INVESTMENT OBJECTIVE?

The Fund's investment objective is to provide dividend income which is exempt
from federal regular income tax. While there is no assurance that the Fund will
achieve its investment objective, it endeavors to do so by following the
strategies and policies described in this prospectus.

WHAT ARE THE FUND'S MAIN INVESTMENT STRATEGIES?

The Fund pursues its 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. The Fund's dollar-weighted
average portfolio maturity will be less than three years. Interest from the
Fund's investments may be subject to the federal alternative minimum tax for
individuals and corporations (AMT).

WHAT ARE THE MAIN RISKS OF INVESTING IN THE FUND?

All mutual funds take investment risks. Therefore, it is possible to lose
money by investing in the Fund. The primary factors that may reduce the
Fund's returns include: o a change in prevailing interest rates, o
defaults or an increase in the risk of defaults on portfolio securities.

Other risk factors associated with an investment in the Fund include sector
risk, liquidity risk and call risk.

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

<PAGE>

RISK/RETURN BAR CHART AND TABLE

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

The `y' axis reflects the "% Total Return" beginning with "-0.10" and increasing
in increments of 1% up to 14.90%.

The `x' axis represents calculation periods for the last ten calendar years of
the Fund, beginning with 1989. The light gray shaded chart features ten distinct
vertical bars, each shaded in charcoal, and each visually representing by height
the total return percentages for the calendar year stated directly at its base.
The calculated total return percentage for the Class for each calendar year is
stated directly at the top of each respective bar, for the calendar years 1989
through 1998. The percentages noted are: 6.51%; 6.27%; 7.32%; 5.12%; 4.05%;
0.12%; 8.09%; 4.01%; 4.49%; and 4.84%.

The bar chart shows the variability of the Fund's Institutional Shares total
returns on a calendar year-end basis.

The Fund's shares are not sold subject to a sales charge (load). The total
returns displayed above are based upon net asset value.

The Fund's total return from January 1, 1999 to March 31, 1999 was 0.67%.

Within the period shown in the Chart, the Fund's highest quarterly return was
3.08% (quarter ended March 31, 1995). Its lowest quarterly return was -0.59%
(quarter ended March 31, 1994).

AVERAGE ANNUAL TOTAL RETURN TABLE

The following table represents the Fund's Institutional Shares Average Annual
Total Returns for the calendar periods ending December 31, 1998. The table shows
the Fund's total returns averaged over a period of years relative to the Lehman
Brothers 1 Year General Obligation Index ("LB1YRGOI") and Lehman Brothers 3-Year
Government Obligation Index ("LB3YRSGOI") broad-based market indexes. Total
returns for the indexes shown do not reflect sales charges, expenses or other
fees that the SEC requires to be reflected in the Fund's performance. Indexes
are unmanaged, and it is not possible to invest directly in an index.

CALENDAR PERIOD FUND LB1YRGOI LB3YRSGOI
1 Year % % %
5 Years % % %
10 Years % % %

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

<PAGE>

WHAT ARE THE FUND'S FEES AND EXPENSES?

FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy and hold
Institutional Shares of the Fund.

SHAREHOLDER FEES

<S> <C>

FEES PAID DIRECTLY FROM YOUR INVESTMENT

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

ANNUAL FUND OPERATING EXPENSES (Before Waivers)

EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS (AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fee (1) 0.40%
Distribution (12b-1) Fee None
Shareholder Services Fee (2) 0.25%
Other Expenses 0.18%
Total Annual Fund Operating Expenses 0.83%
Total Waiver of Fund Expenses 0.37%
Total Actual Annual Fund Operating Expenses (after waivers) 0.46%
</TABLE>

1 Pursuant to the investment advisory contract, the Adviser waived a
portion of the Management Fee. The Management Fee paid by the Fund
(after the contractual waiver) was 0.28% for the fiscal year ended
June 30, 1999.

2 The Shareholder Services Provider did not accrue or charge its
Shareholder Services Fee which (after the waiver) was 0.00% for the
fiscal year ended June 30, 1999.

EXAMPLE

The following Example is intended to help you compare the cost of investing in
the Fund's Institutional Shares with the cost of investing in other mutual
funds.

The Example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
Example also assumes that your investment has a 5% return each year and that the
Fund's maximum allowable operating expenses as shown in the table remain the
same. Although your actual costs may be higher or lower, based on these
assumptions your costs would be:

1 Year $ 47
3 Years $ 148
5 Years $ 258
10 Years $ 579

<PAGE>

WHAT ARE THE FUND'S INVESTMENT STRATEGIES?

The Fund invests at least 80% of its net assets in a diversified portfolio of
municipal securities or invests so that at least 80% of its income will be tax
exempt. The Fund's dollar-weighted average portfolio maturity is less than three
years. Interest from the Fund's investments may be subject to the AMT. The
Fund's investment adviser (Adviser) actively manages the Fund's portfolio,
emphasizing credit quality while seeking to manage the Fund's interest rate risk
and provide enhanced levels of income. The Adviser emphasizes the credit quality
of the Fund's portfolio. The Adviser performs a fundamental credit analysis on
tax exempt securities before the Fund purchases such securities. The Adviser
considers various factors, including the following: o the economic feasibility
of revenue bond financings and general purpose financings; o the financial
condition of the issuer or guarantor; o political developments that may affect
credit quality. The Adviser monitors the credit risks of all securities on an
ongoing basis by reviewing periodic financial data and ratings of nationally
recognized ratings services. The Adviser manages the Fund's interest rate risk
by adjusting the duration of its portfolio. "Duration" measures the sensitivity
of a security's price to changes in interest rates. The greater a portfolio's
duration, the greater the change in the portfolio's value in response to a
change in market interest rates. The Adviser will increase or reduce the Fund's
portfolio duration based on its interest rate outlook. When the Adviser expects
interest rates to fall, it will maintain a longer portfolio duration. When the
Adviser expects interest rates to increase, it will shorten the portfolio
duration. The Adviser considers a variety of factors in formulating its interest
rate outlook, including the following: o current and expected U.S. economic
growth; o current and expected interest rates and inflation; o the Federal
Reserve's monetary policy; and o supply and demand factors related to the
municipal market and the effect they may have on the returns offered for various
bond maturities.

The Adviser attempts to provide enhanced levels of income, subject to
the Fund's maturity, quality and duration constraints, through the following
management techniques. The Adviser will engage in a relative value analysis;
that is, the Adviser will assess the cost of a tax exempt security compared with
other tax exempt securities and taxable securities such as U.S. Treasury
obligations. The Adviser may also allocate investments in sectors of the tax
exempt market that offer the highest return. Finally, the Adviser will invest a
portion of the portfolio in tax exempt securities subject to the alternative
minimum tax, which may offer higher returns.

<PAGE>

TEMPORARY DEFENSIVE INVESTMENTS

The Fund may temporarily depart from its principal investment strategies by
investing its assets in securities subject to federal income tax. It may do this
to minimize potential losses and maintain liquidity to meet shareholder
redemptions during adverse market conditions. This may cause the Fund to receive
and distribute taxable income to investors.

WHAT ARE THE PRINCIPAL SECURITIES IN WHICH THE FUND INVESTS?

TAX EXEMPT SECURITIES

Tax exempt securities are fixed income securities that pay interest that is not
subject to federal income taxes. Fixed income securities pay interest, dividends
or distributions at a specified rate. The rate may be fixed or adjusted
periodically. The issuer must also repay the principal amount of the security,
normally within a specified time. Typically, states, counties, cities and other
political subdivisions and authorities issue tax exempt securities. The market
categorizes tax exempt securities by their source of repayment.

GENERAL OBLIGATION BONDS

General obligation bonds are supported by the issuer's power to exact
property or other taxes. The issuer must impose and collect taxes sufficient
to pay principal and interest on the bonds. However, the issuer's authority
to impose additional taxes may be limited by its charter or state law.
SPECIAL REVENUE BONDS Special revenue bonds are payable solely from specific
revenues received by the issuer such as specific taxes, assessments, tolls,
or fees. Bondholders may not collect from the municipality's general taxes
or revenues. For example, a municipality may issue bonds to build a toll
road, and pledge the tolls to repay the bonds.

Therefore, a shortfall in the tolls could result in a default on the bonds.

PRIVATE ACTIVITY BONDS

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

<PAGE>

CREDIT ENHANCEMENT

Credit enhancement consists of an arrangement in which a company agrees to
pay amounts due on a fixed income security if the issuer defaults. In some
cases the company providing credit enhancement makes all payments directly
to the security holders and receives reimbursement from the issuer.
Normally, the credit enhancer has greater financial resources and liquidity
than the issuer. For this reason, the Adviser usually evaluates the credit
risk of a fixed income security based solely upon its credit enhancement.

INVESTMENT RATINGS FOR INVESTMENT GRADE SECURITIES

The Adviser will determine whether a security is investment grade based upon the
credit ratings given by one or more nationally recognized rating services. For
example, Standard and Poor's, a rating service, assigns ratings to investment
grade securities (AAA, AA, A, and BBB) based on their assessment of the
likelihood of the issuer's inability to pay interest or principal (default) when
due on each security. Lower credit ratings correspond to higher credit risk. If
a security has not received a rating, the Fund must rely entirely upon the
Adviser's credit assessment that the security is comparable to investment grade.

WHAT ARE THE SPECIFIC RISKS OF INVESTING IN THE FUND?

INTEREST RATE RISKS

Prices of fixed income securities rise and fall in response to changes in the
interest rate paid by similar securities. Generally, when interest rates rise,
prices of fixed income securities fall. However, market factors, such as the
demand for particular fixed income securities, may cause the price of certain
fixed income securities to fall while the prices of other securities rise or
remain unchanged. Interest rate changes have a greater effect on the price of
fixed income securities with longer durations. Duration measures the price
sensitivity of a fixed income security to changes in interest rates. The Fund
attempts to manage interest rate risk by limiting its duration. CREDIT RISKS
Credit risk is the possibility that an issuer will default on a security by
failing to pay interest or principal when due. If an issuer defaults, the Fund
will lose money. Many fixed income securities receive credit ratings from
services such as Standard & Poor's and Moody's Investor Services, Inc. These
services assign ratings to securities by assessing the likelihood of issuer
default. Lower credit ratings correspond to higher credit risk. If a security
has not received a rating, the Fund must rely entirely on the Adviser's credit
assessment. The Fund attempts to manage credit risk by purchasing higher quality
securities. SECTOR RISKS A substantial part of the Fund's portfolio may be
comprised of securities credit enhanced by insurance companies, banks or
companies with similar characteristics. As a result, the Fund will be more
susceptible to any economic, business, political or other developments which
generally affect these entities.

<PAGE>

LIQUIDITY RISKS

Trading opportunities are more limited for fixed income securities that have not
received any credit ratings or are not widely held.

These features may make it more difficult to sell or buy a security at a
favorable price or time. Consequently, the Fund may have to accept a lower price
to sell a security, sell other securities to raise cash or give up an investment
opportunity, any of which could have a negative effect on the Fund's
performance. Infrequent trading of securities may also lead to an increase in
their price volatility. CALL RISKS Call risk is the possibility that an issuer
may redeem a fixed income security before maturity (a call) at a price below its
current market price. An increase in the likelihood of a call may reduce the
security's price. If a fixed income security is called, the Fund may have to
reinvest the proceeds in other fixed income securities with lower interest
rates, higher credit risks, or other less favorable characteristics.

WHAT DO SHARES COST?

You can purchase or redeem Shares any day the New York Stock Exchange (NYSE) is
open. When the Fund receives your transaction request in proper form, it is
processed at the next calculated net asset value (NAV). The Fund does not charge
a front-end sales charge. NAV is determined at the end of regular trading
(normally 4:00 p.m. Eastern time) each day the NYSE is open.

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

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

HOW IS THE FUND SOLD?

The Fund offers two share classes: Institutional Shares and Institutional
Service Shares, each representing interests in a single portfolio of securities.
This prospectus relates only to Institutional Shares. Each share class has
different expenses, which affect their performance. Contact your investment
professional or call 1-800-341-7400 for more information concerning the other
class.

The Fund's Distributor markets the Shares described in this prospectus to
accounts for which financial institutions act in a fiduciary or agency capacity
or to individuals, directly or through investment professionals. The Fund may
not be a suitable investment for retirement plans.

The Distributor and its affiliates may pay out of their assets other amounts
(including items of material value) to investment professionals for marketing
and servicing Shares. The Distributor is a subsidiary of Federated Investors,
Inc. (Federated).

HOW TO PURCHASE SHARES

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

THROUGH AN INVESTMENT PROFESSIONAL

o Establish an account with the investment professional; and

o Submit your purchase order to the investment professional before the end of
regular trading on the NYSE (normally 4:00 p.m. Eastern time). You will
receive the next calculated NAV if the investment professional forwards the
order to the Fund on the same day and the Fund receives payment within one
business day. You will become the owner of Shares and receive dividends when
the Fund receives your payment.

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

DIRECTLY FROM THE FUND

o Establish your account with the Fund by submitting a completed New Account
Form; and

o Send your payment to the Fund by Federal Reserve wire or check.

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

An institution may establish an account and place an order by calling the Fund
and the Shares will be priced at the next calculated NAV after the Fund receives
the order.

BY WIRE Send your wire to:

State Street Bank and Trust Company
Boston, MA
Dollar Amount of Wire

ABA Number 011000028
Attention: EDGEWIRE

Wire Order Number, Dealer Number, or Group Number
Nominee/Institution Name
Fund Name and Number and Account Number

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

BY CHECK

Make your check payable to THE FEDERATED FUNDS, note your account number on the
check, and mail it to:

Federated Shareholder Services Company
P.O. Box 8600

Boston, MA 02266-8600

If you send your check by a PRIVATE COURIER OR OVERNIGHT DELIVERY SERVICE that
requires a street address, mail it to:

Federated Shareholder Services Company
1099 Hingham Street

Rockland, MA 02370-3317

Payment should be made in U.S. dollars and drawn on a U.S. bank. The Fund will
not accept third-party checks (checks originally payable to someone other than
you or The Federated Funds).

BY AUTOMATED CLEARING HOUSE (ACH)

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

HOW TO REDEEM SHARES

You should redeem Shares:

o through an investment professional if you purchased Shares through an
investment professional; or

o directly from the Fund if you purchased Shares directly from the Fund.

THROUGH AN INVESTMENT PROFESSIONAL

Submit your redemption request to your investment professional by the end of
regular trading on the NYSE (normally 4:00 p.m. Eastern time). The redemption
amount you will receive is based upon the next calculated NAV after the Fund
receives the order from your investment professional.

DIRECTLY FROM THE FUND

BY TELEPHONE

You may redeem Shares by calling the Fund once you have completed the
appropriate authorization form for telephone transactions. If you call before
the end of regular trading on the NYSE (normally 4:00 p.m. Eastern time) you
will receive a redemption amount based on that day's NAV.

BY MAIL

You may redeem Shares by mailing a written request to the Fund.

You will receive a redemption amount based on the next calculated NAV after the
Fund receives your written request in proper form.

Send requests by mail to:

Federated Shareholder Services Company
P.O. Box 8600

Boston, MA 02266-8600

Send requests by PRIVATE COURIER OR OVERNIGHT DELIVERY SERVICE to:

Federated Shareholder Services Company
1099 Hingham Street

Rockland, MA 02370-3317 All requests must include:

o Fund Name and Share Class, account number and account registration;

o amount to be redeemed; and

o signatures of all shareholders exactly as registered.

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

<PAGE>

SIGNATURE GUARANTEES Signatures must be guaranteed if:

o your redemption will be sent to an address other than the address of
record;

o your redemption will be sent to an address of record that was changed
within the last 30 days; or

o a redemption is payable to someone other than the shareholder(s) of record.

A signature guarantee is designed to protect your account from fraud. Obtain a
signature guarantee from a bank or trust company, savings association, credit
union or broker, dealer, or securities exchange member. A NOTARY PUBLIC CANNOT
PROVIDE A SIGNATURE GUARANTEE.

PAYMENT METHODS FOR REDEMPTIONS

Your redemption proceeds will be mailed by check to your address of record. The
following payment options are available if you complete the appropriate section
of the New Account Form or an Account Service Options Form. These payment
options require a signature guarantee if they were not established when the
account was opened:

o an electronic transfer to your account at a financial institution that is
an ACH member; or

o wire payment to your account at a domestic commercial bank that is a Federal
Reserve System member.

REDEMPTION IN KIND

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

LIMITATIONS ON REDEMPTION PROCEEDS

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

o to allow your purchase to clear;

o during periods of market volatility; or

o when a shareholder's trade activity or amount adversely impacts the Fund's
ability to manage its assets.

You will not accrue interest or dividends on uncashed checks from the Fund if
those checks are undeliverable and returned to the Fund.

ADDITIONAL CONDITIONS

TELEPHONE TRANSACTIONS

The Fund will record your telephone instructions. If the Fund does not follow
reasonable procedures, it may be liable for losses due to unauthorized or
fraudulent telephone instructions.

SHARE CERTIFICATES

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

<PAGE>

ACCOUNT AND SHARE INFORMATION

CONFIRMATIONS AND ACCOUNT STATEMENTS

You will receive confirmation of purchases and redemptions. In addition, you
will receive periodic statements reporting all account activity, including
dividends and capital gains paid.

DIVIDENDS AND CAPITAL GAINS

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

In addition, the Fund pays any capital gains at least annually. Your dividends
and capital gains distributions will be automatically reinvested in additional
Shares without a sales charge, unless you elect cash payments.

If you purchase Shares just before a Fund declares a capital gain distribution,
you will pay the full price for the Shares and then receive a portion of the
price back in the form of a taxable distribution, whether or not you reinvest
the distribution in Shares. Therefore, you should consider the tax implications
of purchasing Shares shortly before the Fund declares a capital gain. Contact
your investment professional or the Fund for information concerning when
dividends and capital gains will be paid.

ACCOUNTS WITH LOW BALANCES

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

TAX INFORMATION

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

WHO MANAGES THE FUND?

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

The Adviser and other subsidiaries of Federated advise approximately 175 mutual
funds and separate accounts, which total approximately $111 billion in assets as
of December 31, 1998. Federated was established in 1955 and is one of the
largest mutual fund investment managers in the United States with approximately
1,900 employees.

More than 4,000 investment professionals make Federated Funds available to their
customers.

<PAGE>

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The Fund's portfolio managers are:

JEFF A. KOZEMCHAK Jeff A. Kozemchak has been the Fund's portfolio manager
since June 1996. He is Vice President of the Fund. Mr.
Kozemchak joined Federated in 1987 and has been a Senior
Portfolio Manager since 1996 and a Senior Vice President of
the Fund's Adviser since 1999. He was a Portfolio Manager
and a Vice President of the Fund's Adviser from 1993 to
1998. Mr. Kozemchak is a Chartered Financial Analyst and
received his M.S. in Industrial Administration from Carnegie
Mellon University in 1987.

MARY JO OCHSON Mary Jo Ochson has been the Fund's portfolio manager since
January 1997. Ms. Ochson joined Federated in 1982 and has
been a Senior Portfolio Manager and a Senior Vice President
of the Fund's Adviser since 1996. From 1988 through 1995,
Ms. Ochson served as a Portfolio Manager and a Vice
President of the Fund's Adviser. Ms. Ochson is a Chartered
Financial Analyst and received her M.B.A. in Finance from
the University of Pittsburgh.

</TABLE>

ADVISORY FEES

The Adviser receives an annual investment advisory fee of 0.40% of the Fund's
average daily net assets. Under the investment advisory contract, which is
subject to annual renewal by the Fund's Board of Trustees, the Adviser will
waive the amount, limited to the amount of the advisory fee, by which the Fund's
aggregate annual operating expenses, including the investment advisory fee but
excluding interest, taxes, brokerage commissions, expenses of registering or
qualifying the Fund and its shares under federal and state laws and regulations,
expenses of withholding taxes, and extraordinary expenses exceed 0.45% of its
average daily net assets.

YEAR 2000 READINESS

The "Year 2000" problem is the potential for computer errors or failures because
certain computer systems may be unable to interpret dates after December 31,
1999 or experience other date-related problems. The Year 2000 problem may cause
systems to process information incorrectly and could disrupt businesses, such as
the Fund, that rely on computers.

While it is impossible to determine in advance all of the risks to the Fund, the
Fund could experience interruptions in basic financial and operational
functions. Fund shareholders could experience errors or disruptions in Fund
share transactions or Fund communications.

The Fund's service providers are making changes to their computer systems to fix
any Year 2000 problems. In addition, they are working to gather information from
third-party providers to determine their Year 2000 readiness.

Year 2000 problems would also increase the risks of the Fund's investments. To
assess the potential effect of the Year 2000 problem, the Adviser is reviewing
information regarding the Year 2000 readiness of issuers of securities the Fund
may purchase. The financial impact of these issues for the Fund is still being
determined. There can be no assurance that potential Year 2000 problems would
not have a material adverse effect on the Fund.

<PAGE>

FINANCIAL INFORMATION

FINANCIAL HIGHLIGHTS

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

This information has been audited by Arthur Anderson LLP whose report, along
with the Fund's audited financial statements, is included in this prospectus.

(To be filed by amendment.)

<PAGE>

FEDERATED SHORT-TERM MUNICIPAL TRUST

INSTITUTIONAL SHARES

A Statement of Additional Information (SAI) dated August 31, 1999, is
incorporated by reference into this prospectus. Additional information about the
Fund's investments is contained in the Fund's Annual and Semi-Annual reports to
shareholders as they become available. The Annual Report discusses market
conditions and investment strategies that significantly affected the Fund's
performance during its last fiscal year. To obtain the SAI, the Annual Report,
Semi-Annual Report and other information without charge, and make inquiries,
call your investment professional or the Fund at 1-800-341-7400.

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

INVESTMENT COMPANY ACT FILE NO. 811-3181
CUSIP 313907107

000000-00 (0/00)

PROSPECTUS

FEDERATED SHORT-TERM MUNICIPAL TRUST

INSTITUTIONAL SERVICE SHARES

CONTENTS

August 31, 1999

<PAGE>

RISK/RETURN SUMMARY

WHAT IS THE FUND'S INVESTMENT OBJECTIVE?

WHAT ARE THE FUND'S MAIN INVESTMENT STRATEGIES?

WHAT ARE THE MAIN RISKS OF INVESTING IN THE FUND?

Other risk factors associated with an investment in the Fund include sector
risk, liquidity risk and call risk.

<PAGE>

RISK/RETURN BAR CHART AND TABLE

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

The `y' axis reflects the "% Total Return" beginning with "-5.00" and increasing
in increments of 5% up to 15.00%.

The `x' axis represents calculation periods from the earliest first full
calendar year end of the Fund's start of business through the calendar year
ended December 31, 1998. The light gray shaded chart features five distinct
vertical bars, each shaded in charcoal, and each visually representing by height
the total return percentages for the calendar year stated directly at its base.
The calculated total return percentage for the Class for each calendar year is
stated directly at the top of each respective bar, for the calendar years 1994
through 1998. The percentages noted are: -0.13%; 7.82%; 3.75%; 4.23%; and 4.58%.

The bar chart shows the variability of the Fund's Institutional Service Shares
total returns on a calendar year-end basis.

The Fund's shares are not sold subject to a sales charge (load). The total
returns displayed above are based upon net asset value.

The Fund's total return from January 1, 1999 to March 31, 1999 was 0.61%.

Within the period shown in the Chart, the Fund's highest quarterly return was
3.02% (quarter ended March 31, 1995). Its lowest quarterly return was -0.65%
(quarter ended March 31, 1994).

AVERAGE ANNUAL TOTAL RETURN TABLE

The following table represents the Fund's Institutional Service Shares Average
Annual Total Returns for the calendar periods ending December 31, 1998. The
table shows the Fund's total returns averaged over a period of years relative to
the Lehman Brothers 1 Year General Obligation Index ("LB1YRGOI") and Lehman
Brothers 3-Year Government Obligation Index ("LB3YRSGOI") broad-based market
indexes. Total returns for the indexes shown do not reflect sales charges,
expenses or other fees that the SEC requires to be reflected in the Fund's
performance. Indexes are unmanaged, and it is not possible to invest directly in
an index.

CALENDAR PERIOD FUND LB1YRGOI LB3YRSGOI
1 Year % % %
5 Years % % %
Start of % % %
Performance1

1 THE FUND'S INSTITUTIONAL SERVICE SHARES START OF PERFORMANCE DATE WAS
SEPTEMBER 1, 1993.

<PAGE>

WHAT ARE THE FUND'S FEES AND EXPENSES?

FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy and hold
Institutional Service Shares of the Fund.

SHAREHOLDER FEES

<S> <C>

FEES PAID DIRECTLY FROM YOUR INVESTMENT

ANNUAL FUND OPERATING EXPENSES (Before Waivers)(1)

EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS (AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fee (2) 0.40%
Distribution (12b-1) Fee (3) 0.25%
Shareholder Services Fee (4) 0.25%
Other Expenses 0.18%
Total Annual Fund Operating Expenses 1.08%

1 As a result of contractual obligations and voluntary waivers, the Adviser,
Distributor and Shareholder Services Provider waived certain amounts. These
are shown below along with the net expenses the Fund actually paid for the
fiscal year ended June 30, 1999.

Total Waiver of Fund Expenses (contractual and voluntary) 0.37%

Total Actual Annual Fund Operating Expenses (after waivers) 0.71%

</TABLE>

2 Pursuant to the investment advisory contract, the Adviser waived a portion of
the Management Fee. The Management Fee paid by the Fund (after the contractual
waiver) was 0.28% for the fiscal year ended June 30, 1999.

3 The Distributor voluntarily waived a portion of the Distribution (12b-1) fee.
The Distributor can terminate this waiver at any time. The Distribution
(12b-1) fee paid by the Fund (after the voluntary waiver) was 0.01% for the
fiscal year ended June 30, 1999.

4 The Shareholder Services Provider voluntarily waived a portion of the
Shareholder Services Fee. The Shareholder Services Provider can terminate this
waiver at any time. The Shareholder Services Fee paid by the Fund (after the
voluntary waiver) was 0.24% for the fiscal year ended June 30, 1999.

EXAMPLE

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

1 Year $ 97
3 Years $ 303
5 Years $ 525
10 Years $ 1,166

<PAGE>

WHAT ARE THE FUND'S INVESTMENT STRATEGIES?

The Fund invests at least 80% of its net assets in a diversified portfolio of
municipal securities or invests so that at least 80% of its income will be tax
exempt. The Fund's dollar-weighted average portfolio maturity is less than three
years. Interest from the Fund's investments may be subject to the AMT for
individuals and corporations. The Fund's investment adviser (Adviser) actively
manages the Fund's portfolio, emphasizing credit quality while seeking to manage
the Fund's interest rate risk and provide enhanced levels of income. The Adviser
emphasizes the credit quality of the Fund's portfolio. The Adviser performs a
fundamental credit analysis on tax exempt securities before the Fund purchases
such securities. The Adviser considers various factors, including the following:
o the economic feasibility of revenue bond financings and general purpose
financings; o the financial condition of the issuer or guarantor; o political
developments that may affect credit quality. The Adviser monitors the credit
risks of all securities on an ongoing basis by reviewing periodic financial data
and ratings of nationally recognized ratings services. The Adviser manages the
Fund's interest rate risk by adjusting the duration of its portfolio. "Duration"
measures the sensitivity of a security's price to changes in interest rates. The
greater a portfolio's duration, the greater the change in the portfolio's value
in response to a change in market interest rates. The Adviser will increase or
reduce the Fund's portfolio duration based on its interest rate outlook. When
the Adviser expects interest rates to fall, it will maintain a longer portfolio
duration. When the Adviser expects interest rates to increase, it will shorten
the portfolio duration. The Adviser considers a variety of factors in
formulating its interest rate outlook, including the following: o current and
expected U.S. economic growth; o current and expected interest rates and
inflation; o the Federal Reserve's monetary policy; and o supply and demand
factors related to the municipal market and the effect they may have on the
returns offered for various bond maturities.

<PAGE>

TEMPORARY DEFENSIVE INVESTMENTS

WHAT ARE THE PRINCIPAL SECURITIES IN WHICH THE FUND INVESTS?

TAX EXEMPT SECURITIES

GENERAL OBLIGATION BONDS

Therefore, a shortfall in the tolls could result in a default on the bonds.

PRIVATE ACTIVITY BONDS

<PAGE>

CREDIT ENHANCEMENT

INVESTMENT RATINGS FOR INVESTMENT GRADE SECURITIES

WHAT ARE THE SPECIFIC RISKS OF INVESTING IN THE FUND?

INTEREST RATE RISKS

<PAGE>

LIQUIDITY RISKS

Trading opportunities are more limited for fixed income securities that have not
received any credit ratings or are not widely held.

WHAT DO SHARES COST?

Eastern time) each day the NYSE is open.

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

HOW IS THE FUND SOLD?

The Fund offers two share classes: Institutional Shares and Institutional
Service Shares, each representing interests in a single portfolio of securities.
This prospectus relates only to Institutional Service Shares. Each share class
has different expenses, which affect their performance. Contact your investment
professional or call 1-800-341-7400 for more information concerning the other
class.

The Fund's Distributor markets the Shares described in this prospectus to retail
and private banking customers of financial institutions or to individuals,
directly or through investment professionals. The Fund may not be a suitable
investment for retirement plans.

When the Distributor receives marketing fees, it may pay some or all of them to
investment professionals. The Distributor and its affiliates may pay out of
their assets other amounts (including items of material value) to investment
professionals for marketing and servicing Shares. The Distributor is a
subsidiary of Federated Investors, Inc. (Federated).

RULE 12B-1 PLAN

The Fund has adopted a Rule 12b-1 Plan, which allows it to pay marketing fees to
the Distributor and investment professionals for the sale, distribution and
customer servicing of the Fund's Institutional Service Shares. Because these
Shares pay marketing fees on an ongoing basis, your investment cost may be
higher over time than other shares with different sales charges and marketing
fees.

HOW TO PURCHASE SHARES

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

THROUGH AN INVESTMENT PROFESSIONAL

o Establish an account with the investment professional; and

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

DIRECTLY FROM THE FUND

o Establish your account with the Fund by submitting a completed New Account
Form; and

o Send your payment to the Fund by Federal Reserve wire or check.

An institution may establish an account and place an order by calling the Fund
and the Shares will be priced at the next calculated NAV after the Fund receives
the order.

BY WIRE Send your wire to:

State Street Bank and Trust Company
Boston, MA
Dollar Amount of Wire

ABA Number 011000028
Attention: EDGEWIRE

Wire Order Number, Dealer Number, or Group Number
Nominee/Institution Name
Fund Name and Number and Account Number

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

<PAGE>

BY CHECK

Make your check payable to THE FEDERATED FUNDS, note your account number on the
check, and mail it to:

Federated Shareholder Services Company
P.O. Box 8600

Boston, MA 02266-8600

If you send your check by a PRIVATE COURIER OR OVERNIGHT DELIVERY SERVICE that
requires a street address, mail it to:

Federated Shareholder Services Company
1099 Hingham Street

Rockland, MA 02370-3317

Payment should be made in U.S. dollars and drawn on a U.S. bank. The Fund will
not accept third-party checks (checks originally payable to someone other than
you or The Federated Funds).

BY AUTOMATED CLEARING HOUSE (ACH)

HOW TO REDEEM SHARES

You should redeem Shares:

o through an investment professional if you purchased Shares through an
investment professional; or

o directly from the Fund if you purchased Shares directly from the Fund.

THROUGH AN INVESTMENT PROFESSIONAL

DIRECTLY FROM THE FUND

BY TELEPHONE

BY MAIL

You may redeem Shares by mailing a written request to the Fund.

You will receive a redemption amount based on the next calculated NAV after the
Fund receives your written request in proper form.

Send requests by mail to:

Federated Shareholder Services Company
P.O. Box 8600

Boston, MA 02266-8600

<PAGE>

Send requests by PRIVATE COURIER OR OVERNIGHT DELIVERY SERVICE to:

Federated Shareholder Services Company
1099 Hingham Street

Rockland, MA 02370-3317 All requests must include:

o Fund Name and Share Class, account number and account registration;

o amount to be redeemed; and

o signatures of all shareholders exactly as registered.

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

SIGNATURE GUARANTEES Signatures must be guaranteed if:

o your redemption will be sent to an address other than the address of
record;

o your redemption will be sent to an address of record that was changed
within the last 30 days; or

o a redemption is payable to someone other than the shareholder(s) of record.

PAYMENT METHODS FOR REDEMPTIONS

o an electronic transfer to your account at a financial institution that is
an ACH member; or

o wire payment to your account at a domestic commercial bank that is a Federal
Reserve System member.

REDEMPTION IN KIND

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

LIMITATIONS ON REDEMPTION PROCEEDS

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

o to allow your purchase to clear;

o during periods of market volatility; or

o when a shareholder's trade activity or amount adversely impacts the Fund's
ability to manage its assets.

You will not accrue interest or dividends on uncashed checks from the Fund if
those checks are undeliverable and returned to the Fund.

<PAGE>

ADDITIONAL CONDITIONS

TELEPHONE TRANSACTIONS

The Fund will record your telephone instructions. If the Fund does not follow
reasonable procedures, it may be liable for losses due to unauthorized or
fraudulent telephone instructions.

SHARE CERTIFICATES

ACCOUNT AND SHARE INFORMATION

CONFIRMATIONS AND ACCOUNT STATEMENTS

You will receive confirmation of purchases and redemptions. In addition, you
will receive periodic statements reporting all account activity, including
dividends and capital gains paid.

DIVIDENDS AND CAPITAL GAINS

ACCOUNTS WITH LOW BALANCES

TAX INFORMATION

<PAGE>

WHO MANAGES THE FUND?

More than 4,000 investment professionals make Federated Funds available to their
customers.

The Fund's portfolio managers are:

<S> <C>

</TABLE>

ADVISORY FEES

YEAR 2000 READINESS

<PAGE>

FINANCIAL INFORMATION

FINANCIAL HIGHLIGHTS

This information has been audited by Arthur Anderson LLP, whose report, along
with the Fund's audited financial statements, is included in this prospectus.

(To be filed by amendment.)

<PAGE>

FEDERATED SHORT TERM MUNICIPAL TRUST

INSTITUTIONAL SERVICE SHARES

A Statement of Additional Information (SAI) dated August 31, 1999, is
incorporated by reference into this prospectus. Additional information about the
Fund's investments is contained in the Fund's Annual and Semi-Annual Reports to
shareholders as they become available. The Annual Report discusses market
conditions and investment strategies that significantly affected the Fund's
performance during its last fiscal year. To obtain the SAI, the Annual Report,
Semi-Annual Report and other information without charge, and make inquiries,
call your investment professional or the Fund at 1-800-341-7400.

INVESTMENT COMPANY ACT FILE NO. 811-3181
CUSIP 313907206

000000-00 (0/00)

STATEMENT OF ADDITIONAL INFORMATION

FEDERATED SHORT-TERM MUNICIPAL TRUST

INSTITUTIONAL SHARES

INSTITUTIONAL SERVICE SHARES

This Statement of Additional Information (SAI) is not a prospectus. Read this
SAI in conjunction with the prospectuses for Institutional Shares and
Institutional Service Shares of Federated Short-Term Municipal Trust (Fund),
dated August 31, 1999.

Obtain the prospectuses without charge by calling 1-800-341-7400.

August 31, 1999

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

CUSIP 313907107

CUSIP 313907206

00000000 (0/00)

<PAGE>

HOW IS THE FUND ORGANIZED?

The Fund is a diversified open-end, management investment company that was
established under the laws of the Commonwealth of Massachusetts on May 8, 1981.
On December 15, 1994, the Fund changed its name from Short-Term Municipal Trust
to Federated Short-Term Municipal Trust. Effective March 31, 1999, the Fund's
investment adviser Federated Management merged into Federated Advisers. On March
31, 1999, the name of Federated Advisers was changed to Federated Investment
Management Company (Adviser).

The Board of Trustees (Board) has established two classes of Shares of the Fund,
known as Institutional Shares and Institutional Service Shares. This SAI relates
to both classes of the above-mentioned Shares.

SECURITIES IN WHICH THE FUND INVESTS

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

SECURITIES DESCRIPTIONS AND TECHNIQUES

FIXED INCOME SECURITIES

Fixed income securities pay interest, dividends or distributions at a specified
rate. The rate may be a fixed percentage of the principal or adjusted
periodically. In addition, the issuer of a fixed income security must repay the
principal amount of the security, normally within a specified time. Fixed income
securities provide more regular income than equity securities. However, the
returns on fixed income securities are limited and normally do not increase with
the issuer's earnings. This limits the potential appreciation of fixed income
securities as compared to equity securities. A security's yield measures the
annual income earned on a security as a percentage of its price. A security's
yield will increase or decrease depending upon whether it costs less (a
discount) or more (a premium) than the principal amount. If the issuer may
redeem the security before its scheduled maturity, the price and yield on a
discount or premium security may change based upon the probability of an early
redemption. Securities with higher risks generally have higher yields. The
following describes the types of fixed income securities in which the Fund
invests.

TAX EXEMPT SECURITIES

Tax exempt securities are fixed income securities that pay interest that is
not subject to regular federal income taxes. Typically, states, counties,
cities and other political subdivisions and authorities issue tax exempt
securities. The market categorizes tax exempt securities by their source of
repayment.

INVERSE FLOATERS

An inverse floater has a floating or variable interest rate that moves
in the opposite direction of market interest rates. When market interest
rates go up, the interest rate paid on the inverse floater goes down;
when market interest rates go down, the interest rate paid on the
inverse floater goes up. Inverse floaters generally respond more rapidly
to market interest rate changes than fixed rate tax exempt securities.
Inverse floaters are subject to interest rate risks and leverage risks.

<PAGE>

VARIABLE RATE DEMAND INSTRUMENTS

Variable rate demand instruments are tax exempt securities that require
the issuer or a third party, such as a dealer or bank, to repurchase the
security for its face value upon demand. The securities also pay
interest at a variable rate intended to cause the securities to trade at
their face value. The Fund treats demand instruments as short-term
securities, because their variable interest rate adjusts in response to
changes in market rates, even though their stated maturity may extend
beyond thirteen months. MUNICIPAL NOTES Municipal notes are short-term
tax exempt securities. Many municipalities issue such notes to fund
their current operations before collecting taxes or other municipal
revenues. Municipalities may also issue notes to fund capital projects
prior to issuing long-term bonds. The issuers typically repay the notes
at the end of their fiscal year, either with taxes, other revenues or
proceeds from newly issued notes or bonds. TAX INCREMENT FINANCING BONDS
Tax increment financing (TIF) bonds are payable from increases in taxes
or other revenues attributable to projects financed by the bonds. For
example, a municipality may issue TIF bonds to redevelop a commercial
area. The TIF bonds would be payable solely from any increase in sales
taxes collected from merchants in the area. The bonds could default if
merchants' sales, and related tax collections, failed to increase as
anticipated. MUNICIPAL LEASES Municipalities may enter into leases for
equipment or facilities. In order to comply with state public financing
laws, these leases are typically subject to annual appropriation. In
other words, a municipality may end a lease, without penalty, by not
providing for the lease payments in its annual budget. After the lease
ends, the lessor can resell the equipment or facility but may lose money
on the sale. The Fund may invest in securities supported by pools of
municipal leases. The most common type of lease backed securities are
certificates of participation (COPs). However, the Fund may also invest
directly in individual leases. ZERO COUPON SECURITIES Zero coupon
securities do not pay interest or principal until final maturity unlike
debt securities that provide periodic payments of interest (referred to
as a coupon payment). Investors buy zero coupon securities at a price
below the amount payable at maturity. The difference between the
purchase price and the amount paid at maturity represents interest on
the zero coupon security. Investors must wait until maturity to receive
interest and principal, which increases the market and credit risks of a
zero coupon security. CREDIT ENHANCEMENT Common types of credit
enhancement include guarantees, letters of credit, bond insurance and
surety bonds. Credit enhancement also includes arrangements where
securities or other liquid assets secure payment of a fixed income
security. If a default occurs, these assets may be sold and the proceeds
paid to security's holders. Either form of credit enhancement reduces
credit risks by providing another source of payment for a fixed income
security.

<PAGE>

TREASURY SECURITIES

Treasury securities are direct obligations of the federal government of the
United States. Treasury securities are generally regarded as having the
lowest credit risks. AGENCY SECURITIES Agency securities are issued or
guaranteed by a federal agency or other government sponsored entity acting
under federal authority (a GSE). The United States supports some GSEs with
its full faith and credit. Other GSEs receive support through federal
subsidies, loans or other benefits. A few GSEs have no explicit financial
support, but are regarded as having implied support because the federal
government sponsors their activities. Agency securities are generally
regarded as having low

credit risks, but not as low as treasury securities.

The Fund treats mortgage backed securities guaranteed by GSEs as agency
securities. Although a GSE guarantee protects against credit risks, it does
not reduce the market and prepayment risks of these mortgage backed
securities. BANK INSTRUMENTS Bank instruments are unsecured interest bearing
deposits with banks. Bank instruments include bank accounts, time deposits,
certificates of deposit and banker's acceptances. Yankee instruments are
denominated in U.S. dollars and issued by U.S. branches of foreign banks.
Eurodollar instruments are denominated in U.S. dollars

and issued by non-U.S. branches of U.S. or foreign banks.

CORPORATE DEBT SECURITIES

Corporate debt securities are fixed income securities issued by businesses.
Notes, bonds, debentures and commercial paper are the most prevalent types
of corporate debt securities. The Fund may also purchase interests in bank
loans to companies. The credit risks of corporate debt securities vary
widely among issuers.

COMMERCIAL PAPER

Commercial paper is an issuer's obligation with a maturity of less than
nine months. Companies typically issue commercial paper to pay for
current expenditures. Most issuers constantly reissue their commercial
paper and use the proceeds (or bank loans) to repay maturing paper. If
the issuer cannot continue to obtain liquidity in this fashion, its
commercial paper may default. The short maturity of commercial paper
reduces both the market and credit risks as compared to other debt
securities of the same issuer.

FUTURES CONTRACTS

Futures contracts provide for the future sale by one party and purchase by
another party of a specified amount of an underlying asset at a specified price,
date, and time. Entering into a contract to buy an underlying asset is commonly
referred to as buying a contract or holding a long position in the asset.
Entering into a contract to sell an underlying asset is commonly referred to as
selling a contract or holding a short position in the asset. Futures contracts
are considered to be commodity contracts. Futures contracts traded OTC are
frequently referred to as forward contracts. The Fund may buy and sell interest
rate and index financial futures contracts. Depending upon how the Fund uses
futures contracts and the relationships between the market value of a futures
contract and the underlying asset, futures contracts may increase or decrease
the Fund's exposure to interest rate risks, and may also expose the Fund to
liquidity and leverage risks. SPECIAL TRANSACTIONS

REPURCHASE AGREEMENTS

Repurchase agreements are transactions in which the Fund buys a security
from a dealer or bank and agrees to sell the security back at a mutually
agreed upon time and price. The repurchase price exceeds the sale price,
reflecting the Fund's return on the transaction. This return is unrelated to
the interest rate on the underlying security. The Fund will enter into
repurchase agreements only with banks and other recognized financial
institutions, such as securities dealers, deemed creditworthy by the
Adviser. The Fund's custodian or subcustodian will take possession of the
securities subject to repurchase agreements. The Adviser or subcustodian
will monitor the value of the underlying security each day to ensure that
the value of the security always equals or exceeds the repurchase price.
Repurchase agreements are subject to credit risks. DELAYED DELIVERY
TRANSACTIONS Delayed delivery transactions, including when issued
transactions, are arrangements in which the Fund buys securities for a set
price, with payment and delivery of the securities scheduled for a future
time. During the period between purchase and settlement, no payment is made
by the Fund to the issuer and no interest accrues to the Fund. The Fund
records the transaction when it agrees to buy the securities and reflects
their value in determining the price of its shares. Settlement dates may be
a month or more after entering into these transactions so that the market
values of the securities bought may vary from the purchase prices.
Therefore, delayed delivery transactions create interest rate risks for the
Fund. Delayed delivery transactions also involve credit risks in the event
of a counterparty default. ASSET COVERAGE In order to secure its obligations
in connection with futures contracts or special transactions, the Fund will
either own the underlying assets, enter into an offsetting transaction or
set aside readily marketable securities with a value that equals or exceeds
the Fund's obligations. Unless the Fund has other readily marketable assets
to set aside, it cannot trade assets used to secure such obligations without
entering into an offsetting futures contract or terminating a special
transaction. This may cause the Fund to miss favorable trading opportunities
or to realize losses on futures contracts or special transactions.

INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES

The Fund may invest its assets in securities of other investment companies,
including the securities of affiliated investment companies, as an efficient
means of carrying out its investment policies and managing its uninvested cash.

<PAGE>

INVESTMENT RISKS

There are many factors which may affect an investment in the Fund. The Fund's
principal risks are described in its prospectus. Additional risk factors are
outlined below.

CREDIT RISKS

The Fund may invest up to 100% of its assets in fixed income securities rated
AAA, AA, A, or BBB or in unrated but comparable securities. Fixed income
securities generally compensate for greater credit risk by paying interest at a
higher rate. The difference between the yield of a security and the yield of a
"AAA"-rated general obligation security or index with a comparable maturity (the
spread) measures the additional interest paid for risk. Spreads may increase
generally in response to adverse economic or market conditions. A security's
spread may also increase if the security's rating is lowered, or the security is
perceived to have an increased credit risk. An increase in the spread will cause
the price of the security to decline. Credit risk includes the possibility that
a party to a transaction involving the Fund will fail to meet its obligations.
This could cause the Fund to lose the benefit of the transaction or prevent the
Fund from selling or buying other securities to implement its investment
strategy. TAX RISKS In order to be tax-exempt, municipal securities must meet
certain legal requirements. Failure to meet such requirements may cause the
interest received and distributed by the Fund to shareholders to be taxable.
Changes or proposed changes in federal tax laws may cause the prices of
municipal securities to fall. LIQUIDITY RISKS Liquidity risk also refers to the
possibility that the Fund may not be able to sell a security or close out a
futures contract when it wants to. If this happens, the Fund will be required to
continue to hold the security or keep the position open, and the Fund could
incur losses. LEVERAGE RISKS Leverage risk is created when an investment exposes
the Fund to a level of risk that exceeds the amount invested. Changes in the
value of such an investment magnify the Fund's risk of loss and potential for
gain.

Investments can have these same results if their returns are based on a multiple
of a specified index, security, or other benchmark.

<PAGE>

FUNDAMENTAL INVESTMENT POLICIES

The Fund 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.

INVESTMENT LIMITATIONS

DIVERSIFICATION OF INVESTMENTS

With respect to securities comprising 75% of the value of its total
assets, the Fund will not purchase the securities of any one issuer
(other than cash, cash items, securities issued or guaranteed by the
government of the United States or its agencies or instrumentalities and
repurchase agreements collateralized by such U.S. government securities,
and securities of other investment companies) if as a result more than
5% of the value of its total assets would be invested in the securities
of that issuer, or it would own more than 10% of the outstanding voting
securities of that issuer.

BORROWING MONEY

The Fund 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 Fund to
meet redemption requests where the liquidation of portfolio securities
is deemed to be inconvenient or disadvantageous.) While any such
borrowings are outstanding, no net purchases of investment securities
will be made by the Fund. If, due to market fluctuations or other
reasons, the value of the Fund's assets falls below 300% of its
borrowings, the Fund will reduce its borrowings within three business
days. To do this, the Fund may have to sell a portion of its investments
at a time when it may be disadvantageous to do so.

PLEDGING ASSETS

The Fund 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 the total assets at the time of the borrowing.

UNDERWRITING

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

INVESTING IN REAL ESTATE

The Fund 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

The Fund will not buy or sell commodities or commodity contracts.

MAKING LOANS

The Fund 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 Fund 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 Fund will not issue senior securities, except as permitted by its
investment objective and policies.

THE ABOVE LIMITATIONS CANNOT BE CHANGED UNLESS AUTHORIZED BY THE BOARD AND BY
THE "VOTE OF A MAJORITY OF ITS OUTSTANDING VOTING SECURITIES" AS DEFINED BY THE
INVESTMENT COMPANY ACT. THE FOLLOWING LIMITATIONS, HOWEVER, MAY BE CHANGED BY
THE BOARD WITHOUT SHAREHOLDER APPROVAL. SHAREHOLDERS WILL BE NOTIFIED BEFORE ANY
MATERIAL CHANGE IN THESE LIMITATIONS BECOMES EFFECTIVE.

INVESTING IN ILLIQUID SECURITIES

The Fund 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.

For purposes of the diversification 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 some 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.

For purposes of the diversification limitation, the Fund considers cash and cash
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.

The Fund 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 Fund 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.

DETERMINING MARKET VALUE OF SECURITIES

Market values of the Fund's portfolio securities are determined as follows:

for bonds and other fixed income securities, at the last sale price on a
national securities exchange, if available, otherwise, as determined by an
independent pricing service;

o futures contracts and options are valued at market values established by the
exchanges on which they are traded at the close of trading on such exchanges.
Options traded in the over-the-counter market are valued according to the
mean between the last bid and the last asked price for the option as provided
by an investment dealer or other financial institution that deals in the
option. The Board may determine in good faith that another method of valuing
such investments is necessary to appraise their fair market value;

for short-term obligations, according to the mean between bid and asked
prices as furnished by an independent pricing service, except that short-term
obligations with remaining maturities of less than 60 days at the time of
purchase may be valued at amortized cost or at fair market value as
determined in good faith by the Board; and

for all other securities at fair value as determined in good faith by the Board.

<PAGE>

Prices provided by independent pricing services may be determined without
relying exclusively on quoted prices and may consider institutional trading in
similar groups of securities, yield, quality, stability, risk, coupon rate,
maturity, type of issue, trading characteristics, and other market data or
factors. From time to time, when prices cannot be obtained from an independent
pricing service, securities may be valued based on quotes from broker-dealers or
other financial institutions that trade the securities.

WHAT DO SHARES COST?

The Fund's net asset value (NAV) per Share fluctuates and is based on the market
value of all securities and other assets of the Fund.

The NAV for each class of Shares may differ 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.

HOW IS THE FUND SOLD?

Under the Distributor's Contract with the Fund, the Distributor (Federated
Securities Corp.) offers Shares on a continuous, best-efforts basis.

RULE 12B-1 PLAN (INSTITUTIONAL SERVICE SHARES ONLY)

As a compensation-type plan, the Rule 12b-1 Plan is designed to pay the
Distributor (who may then pay investment professionals such as banks,
broker/dealers, trust departments of banks, and registered investment advisers)
for marketing activities (such as advertising, printing and distributing
prospectuses, and providing incentives to investment professionals) to promote
sales of Shares so that overall Fund assets are maintained or increased. This
helps the Fund achieve economies of scale, reduce per share expenses, and
provide cash for orderly portfolio management and Share redemptions. In
addition, the Fund's service providers that receive asset-based fees also
benefit from stable or increasing Fund assets.

The Fund may compensate the Distributor more or less than its actual marketing
expenses. In no event will the Fund pay for any expenses of the Distributor that
exceed the maximum Rule 12b-1 Plan fee.

The maximum Rule 12b-1 Plan fee that can be paid in any one year may not be
sufficient to cover the marketing-related expenses the Distributor has incurred.
Therefore, it may take the Distributor a number of years to recoup these
expenses.

SHAREHOLDER SERVICES

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

SUPPLEMENTAL PAYMENTS

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

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

SUBACCOUNTING SERVICES

Certain investment professionals may wish to use the transfer agent's
subaccounting system to minimize their internal recordkeeping requirements. The
transfer agent may charge a fee based on the level of subaccounting services
rendered. Investment professionals 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 that may be related to the ownership of Shares.
This information should, therefore, be read together with any agreement between
the customer and the investment professional about the services provided, the
fees charged for those services, and any restrictions and limitations imposed.

REDEMPTION IN KIND

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

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

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

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

MASSACHUSETTS PARTNERSHIP LAW

Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for obligations of the Fund. To protect its
shareholders, the Fund has filed legal documents with Massachusetts that
expressly disclaim the liability of its shareholders for acts or obligations of
the Fund.

In the unlikely event a shareholder is held personally liable for the Fund's
obligations, the Fund is required by the Declaration of Trust to use its
property to protect or compensate the shareholder. On request, the Fund will
defend any claim made and pay any judgment against a shareholder for any act or
obligation of the Fund. Therefore, financial loss resulting from liability as a
shareholder will occur only if the Fund itself cannot meet its obligations to
indemnify shareholders and pay judgments against them.

ACCOUNT AND SHARE INFORMATION

VOTING RIGHTS

Each share of the Fund gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote.

All Shares of the Fund have equal voting rights, except that in matters
affecting only a particular class, only Shares of that class are entitled to
vote.

Trustees may be removed by the Board or by shareholders at a special meeting. A
special meeting of shareholders will be called by the Board upon the written
request of shareholders who own at least 10% of the Fund's outstanding shares.

As of June 21, 1999, the following shareholders owned of record, beneficially,
or both, 5% or more of outstanding Institutional Shares: Charles Schwab & Co.
Inc., San Francisco, California owned approximately 3,856,364 shares (19.46%).

As of June 21, 1999, the following shareholders owned of record, beneficially,
or both, 5% or more of outstanding Institutional Service Shares: SEI Trust
Company, Oaks, Pennsylvania owned approximately 146, 756 shares (7.22%); First
American Bank Kane City, Dundee Illinois owned approximately 294,466 shares
(14.49%); and CPB Trust Division, Honolulu, Hawaii owned approximately 125,310
shares (6.17%).

TAX INFORMATION

FEDERAL INCOME TAX

The Fund intends to meet requirements of Subchapter M of the Internal Revenue
Code applicable to regulated investment companies. If these requirements are not
met, it will not receive special tax treatment and will pay federal income tax.

The Fund is entitled to a loss carry-forward, which may reduce the taxable
income or gain that the Fund would realize, and to which the shareholder would
be subject, in the future.

WHO MANAGES AND PROVIDES SERVICES TO THE FUND?

BOARD OF TRUSTEES

The Board is responsible for managing the Fund's business affairs and for
exercising all the Fund's powers except those reserved for the shareholders.
Information about each Board member is provided below and includes each
person's: name, address, birth date, present position(s) held with the Fund,
principal occupations for the past five years and positions held prior to the
past five years, total compensation received as a Trustee from the Fund for its
most recent fiscal year, and the total compensation received from the Federated
Fund Complex for the most recent calendar year. The Federated Fund Complex is
comprised of 54 investment companies, whose investment advisers are affiliated
with the Fund's Adviser.

As of June 21, 1999, the Fund's Board and Officers as a group owned
approximately 390,035 (1.97%) of the Fund's outstanding Shares.

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

<PAGE>

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

NAME TOTAL
BIRTH DATE AGGREGATE COMPENSATION
ADDRESS PRINCIPAL OCCUPATIONS COMPENSATION FROM FUND
POSITION WITH FUND FOR PAST FIVE YEARS FROM FUND AND FUND COMPLEX

JOHN F. DONAHUE*+# Chief Executive Officer and Director or $0 $0 for the
Birth Date: July 28, Trustee of the Federated Fund Complex; Fund and
1924 Chairman and Director, Federated Investors, 54 other investment
Federated Investors Inc.; Chairman and Trustee, Federated companies
Tower Investment Management Company; Chairman and in the Fund Complex
1001 Liberty Avenue Director, Federated Investment Counseling and
Pittsburgh, PA Federated Global Investment Management Corp.;
CHAIRMAN and TRUSTEE Chairman, Passport Research, Ltd.

THOMAS G. BIGLEY Director or Trustee of the Federated Fund $ $113,860.22 for the
Birth Date: February 3, Complex; Director, Member of Executive Fund and
1934 Committee, Children's Hospital of Pittsburgh; 54 other investment
15 Old Timber Trail formerly: Senior Partner, Ernst & Young LLP; companies
Pittsburgh, PA Director, MED 3000 Group, Inc.; Director, in the Fund Complex
TRUSTEE Member of Executive Committee, University of
Pittsburgh.

JOHN T. CONROY, JR. Director or Trustee of the Federated Fund $ $125,264.48 for the
Birth Date: June 23, Complex; President, Investment Properties Fund and
1937 Corporation; Senior Vice President, 54 other investment
Wood/IPC Commercial John R. Wood and Associates, Inc., Realtors; companies
Dept. Partner or Trustee in private real estate in the Fund Complex

John R. Wood ventures in Southwest Florida; formerly:
Associates, Inc. President, Naples Property Management, Inc.
Realtors and Northgate Village Development Corporation.
3255 Tamiami Trail
North

Naples, FL

TRUSTEE

JOHN F. CUNNINGHAM Director or Trustee of some of the Federated $ $0 for the
Birth Date: March 5, Fund Complex; Chairman, President and Chief Fund and
1943 Executive Officer, Cunningham & Co., Inc. ; [ ] other
353 El Brillo Way Trustee Associate, Boston College; Director, investment
Palm Beach, FL EMC Corporation; formerly: Director, Redgate companies
TRUSTEE Communications. in the Fund Complex

Previous Positions: Chairman of the Board and
Chief Executive Officer, Computer Consoles,
Inc.; President and Chief Operating Officer,
Wang Laboratories; Director, First National
Bank of Boston; Director, Apollo Computer,

Inc.

LAWRENCE D. ELLIS, M.D.* Director or Trustee of the Federated Fund $ $113,860.22 for the
Birth Date: October 11, Complex; Professor of Medicine, University of Fund and
1932 Pittsburgh; Medical Director, University of 54 other investment
3471 Fifth Avenue Pittsburgh Medical Center - Downtown; companies
Suite 1111 Hematologist, Oncologist, and Internist, in the Fund Complex
Pittsburgh, PA University of Pittsburgh Medical Center;
TRUSTEE Member, National Board of Trustees, Leukemia
Society of America.

PETER E. MADDEN Director or Trustee of the Federated Fund $ $113,860.22 for the
Birth Date: March 16, Complex; formerly: Representative, Fund and
1942 Commonwealth of Massachusetts General Court; 54 other investment
One Royal Palm Way President, State Street Bank and Trust companies
100 Royal Palm Way Company and State Street Corporation. in the Fund Complex
Palm Beach, FL
TRUSTEE Previous Positions: Director, VISA USA and
VISA International; Chairman and Director,
Massachusetts Bankers Association; Director,
Depository Trust Corporation.

CHARLES F. MANSFIELD, Director or Trustee of some of the Federated $ $0 for the
JR. Fund Complex; Management Consultant. Fund and
Birth Date: April 10, [ ] other
1945 Previous Positions: Chief Executive Officer, investment
80 South Road PBTC International Bank; Chief Financial companies
Westhampton Beach, NY Officer of Retail Banking Sector, Chase in the Fund Complex
TRUSTEE Manhattan Bank; Senior Vice President, Marine
Midland Bank; Vice President, Citibank;
Assistant Professor of Banking and Finance,
Frank G. Zarb School of Business, Hofstra

University.

JOHN E. MURRAY, JR., Director or Trustee of the Federated Fund $ $113,860.22 for the
J.D., S.J.D.# Complex; President, Law Professor, Duquesne Fund and
Birth Date: December University; Consulting Partner, Mollica & 54 other investment
20, 1932 Murray. companies
President, Duquesne in the Fund Complex
University Previous Positions: Dean and Professor of
Pittsburgh, PA Law, University of Pittsburgh School of Law;
[TRUSTEE Dean and Professor of Law, Villanova

University School of Law.

MARJORIE P. SMUTS Director or Trustee of the Federated Fund $ $113,860.22 for the
Birth Date: June 21, Complex; Public Fund and
1935 Relations/Marketing/Conference Planning. 54 other investment
4905 Bayard Street companies
Pittsburgh, PA Previous Positions: National Spokesperson, in the Fund Complex

TRUSTEE Aluminum Company of America; business owner.

JOHN S. WALSH Director or Trustee of some of the Federated $ $0 for the
Birth Date: November Fund Complex; President and Director, Heat Fund and
28, 1957 Wagon, Inc.; President and Director, [ ] other
2007 Sherwood Drive Manufacturers Products, Inc.; President, investment
Valparaiso, IN Portable Heater Parts, a division of companies
TRUSTEE Manufacturers Products, Inc.; Director, Walsh in the Fund Complex
& Kelly, Inc.; formerly: Vice President,
Walsh & Kelly, Inc.

GLEN R. JOHNSON Trustee, Federated Investors, Inc.; staff $ $0 for the
Birth Date: May 2, 1929 member, Federated Securities Corp. Fund and
Federated Investors 8 other investment
Tower companies
1001 Liberty Avenue in the Fund Complex

Pittsburgh, PA

PRESIDENT

J. CHRISTOPHER DONAHUE+ President or Executive Vice President of the $0 $0 for the
Birth Date: April 11, Federated Fund Complex; Director or Trustee Fund and

1949 of some of the Funds in the Federated Fund 16 other investment
Federated Investors Complex; President and Director, Federated companies
Tower Investors, Inc.; President and Trustee, in the Fund Complex

1001 Liberty Avenue Federated Investment Management Company;
Pittsburgh, PA President and Director, Federated Investment
EXECUTIVE VICE PRESIDENT Counseling and Federated Global Investment

Management Corp.; President, Passport Research, Ltd.;
Trustee, Federated Shareholder Services Company;
Director, Federated Services Company.

EDWARD C. GONZALES Trustee or Director of some of the Funds in $0 $0 for the
Birth Date: October 22, the Federated Fund Complex; President, Fund and
1930 Executive Vice President and Treasurer of 1 other investment
Federated Investors some of the Funds in the Federated Fund company
Tower Complex; Vice Chairman, Federated Investors, in the Fund Complex
1001 Liberty Avenue Inc.; Vice President, Federated Investment
Pittsburgh, PA Management Company and Federated Investment
EXECUTIVE VICE PRESIDENT Counseling, Federated Global Investment
Management Corp. and Passport Research, Ltd.;
Executive Vice President and Director,
Federated Securities Corp.; Trustee,
Federated Shareholder Services Company.

JOHN W. MCGONIGLE Executive Vice President and Secretary of the $0 $0 for the
Birth Date: October 26, Federated Fund Complex; Executive Vice Fund and
1938 President, Secretary, and Director, Federated 54 other investment
Federated Investors Investors, Inc.; Trustee, Federated companies
Tower Investment Management Company; Director, in the Fund Complex
1001 Liberty Avenue Federated Investment Counseling and Federated
Pittsburgh, PA Global Investment Management Corp.; Director,
EXECUTIVE VICE Federated Services Company; Director,
PRESIDENT AND SECRETARY Federated Securities Corp.

RICHARD J. THOMAS Treasurer of the Federated Fund Complex; Vice $0 $0 for the
Birth Date: June 17, President - Funds Financial Services Fund and
1954 Division, Federated Investors, Inc.; 54 other investment
Federated Investors formerly: various management positions within companies
Tower Funds Financial Services Division of in the Fund Complex

1001 Liberty Avenue Federated Investors, Inc.
Pittsburgh, PA

TREASURER

RICHARD B. FISHER President or Vice President of some of the $0 $0 for the
Birth Date: May 17, 1923 Funds in the Federated Fund Complex; Director Fund and
Federated Investors or Trustee of some of the Funds in the 6 other investment
Tower Federated Fund Complex; Executive Vice companies
1001 Liberty Avenue President, Federated Investors, Inc.; in the Fund Complex
Pittsburgh, PA Chairman and Director, Federated Securities
VICE PRESIDENT Corp.

<PAGE>

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

NAME TOTAL
BIRTH DATE AGGREGATE COMPENSATION
ADDRESS PRINCIPAL OCCUPATIONS COMPENSATION FROM FUND
POSITION WITH FUND FOR PAST FIVE YEARS FROM FUND AND FUND COMPLEX

WILLIAM D. DAWSON, III Chief Investment Officer of this Fund and $0 $0 for the
Birth Date: March 3, various other Funds in the Federated Fund Fund and
1949 Complex; Executive Vice President, Federated 41 other investment
Federated Investors Investment Counseling, Federated Global companies
Tower Investment Management Corp., Federated in the Fund Complex
1001 Liberty Avenue Investment Management Company and Passport
Pittsburgh, PA Research, Ltd.; Registered Representative,
CHIEF INVESTMENT OFFICER Federated Securities Corp.; Portfolio

Manager, Federated Administrative Services; Vice
President, Federated Investors, Inc.; formerly:
Executive Vice President and Senior Vice President,
Federated Investment Counseling Institutional
Portfolio Management Services Division; Senior Vice
President, Federated Investment Management Company
and Passport Research, Ltd.

JEFF A. KOZEMCHAK Jeff A. Kozemchak has been the Fund's $0 $0 for the
Birth Date: January 15, portfolio manager since June 1996. He is Vice Fund and
1960 President of the Fund. Mr. Kozemchak joined 3 other
Federated Investors Federated in 1987 and has been a Senior investment
Tower Portfolio Manager since 1996 and a Senior companies
1001 Liberty Avenue Vice President of the Fund's Adviser since in the Fund Complex
Pittsburgh, PA 1999. He was a Portfolio Manager and a Vice
VICE PRESIDENT President of the Fund's Adviser from 1993 to
1998. Mr. Kozemchak is a Chartered Financial

Analyst and received his M.S. in Industrial

Administration from Carnegie Mellon
University in 1987.
</TABLE>

+ MR. DONAHUE IS THE FATHER OF J. CHRISTOPHER DONAHUE, EXECUTIVE VICE PRESIDENT
OF THE FUND..

++MESSRS. CUNNINGHAM, MANSFIELD AND WALSH BECAME MEMBERS OF THE BOARD OF
TRUSTEES ON MARCH 23, 1999. THEY DID NOT EARN ANY FEES FOR SERVING THE FUND
COMPLEX SINCE THESE FEES ARE REPORTED AS OF THE END OF THE LAST CALENDAR YEAR.

INVESTMENT ADVISER

The Adviser conducts investment research and makes investment decisions for the
Fund.

The Adviser is a wholly owned subsidiary of Federated.

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

The Adviser must waive the portion of its advisory fee that increases the Fund's
aggregate annual operating expenses above .45% of its average daily net assets.
The Fund's operating expenses include the advisory fee but exclude interest,
taxes, brokerage commissions, expenses of registering the Fund and its shares
under federal and state laws, expenses of withholding taxes, and extraordinary
expenses.

OTHER RELATED SERVICES

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

BROKERAGE TRANSACTIONS

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

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

ADMINISTRATOR

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

MAXIMUM ADMINISTRATIVE AVERAGE AGGREGATE DAILY NET ASSETS OF THE FEDERATED
FEE FUNDS
0.150 of 1% on the first $250 million
0.125 of 1% on the next $250 million
0.100 of 1% on the next $250 million
0.075 of 1% on assets in excess of $750 million
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of Shares.
Federated Services Company may voluntarily waive a portion of its fee and may
reimburse the Fund for expenses.

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

CUSTODIAN

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

TRANSFER AGENT AND DIVIDEND DISBURSING AGENT

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

INDEPENDENT PUBLIC ACCOUNTANTS

Arthur Anderson LLP is the independent public accountant for the Fund.

FEES PAID BY THE FUND FOR SERVICES

FOR THE YEAR ENDED JUNE 30, 1999 1998 1997
Advisory Fee Earned $ $ $
Advisory Fee Reduction $ $ $
Brokerage Commissions $ $ $
Administrative Fee $ $ $
12b-1 Fee
Institutional Service Shares $ -- --
Shareholder Services Fee
Institutional Shares $ -- --
Institutional Service Shares $ -- --

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

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

<PAGE>

HOW DOES THE FUND MEASURE PERFORMANCE?

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

The performance of Shares depends upon such variables as: portfolio quality;
average portfolio maturity; type and value of portfolio securities; changes in
interest rates; changes or differences in the Fund's or any class of Shares'
expenses; and various other factors.

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

AVERAGE ANNUAL TOTAL RETURNS AND YIELD

Total returns given for the one-year, five-year and ten-year or Start of
Performance periods ended .

Yield and Tax-Equivalent Yield given for the 30-day period ended June 30, 1999.

Start of Performance

30-DAY PERIOD 1 Year 5 Years 10 Years on
August 31, 1993

INSTITUTIONAL
SERVICE SHARES

Total Return 4.58% 4.02% NA 4.00%
Yield
Tax-Equivalent Yield
- --------------------------------------------------------------------------------

30-DAY PERIOD 1 Year 5 Years 10 Years
INSTITUTIONAL SHARES

Total Return 4.84% 4.28% 5.06%
Yield
Tax-Equivalent Yield
- --------------------------------------------------------------------------------

TOTAL RETURN

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

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

YIELD

The yield of Shares is calculated by dividing: (i) the net investment income per
Share earned by the Shares over a 30-day period; by (ii) the maximum offering
price per Share on the last day of the period. This number is then annualized
using semi-annual compounding. This means that the amount of income generated
during the 30-day period is assumed to be generated each month over a 12-month
period and is reinvested every six months. The yield and tax-equivalent yield do
not necessarily reflect income actually earned by Shares because of certain
adjustments required by the SEC and, therefore, may not correlate to the
dividends or other distributions paid to shareholders.

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

TAX EQUIVALENCY TABLE

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

TAX EQUIVALENCY TABLE

TAXABLE YIELD EQUIVALENT FOR 1999 MULTISTATE MUNICIPAL FUND

FEDERAL INCOME TAX BRACKET: 15.00% 28.00% 31.00% 36.00% 39.60%
$158,551-283,150
Joint Return $1-43,050 $43,051-104,05$104,051-158,550 Over
283,150
$130,251-283,150

Single Return $1-25,750 $25,751-62,450$62,451-130,250 Over
283,150
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%
</TABLE>

NOTE: THE MAXIMUM MARGINAL TAX RATE FOR EACH BRACKET WAS USED IN CALCULATING THE
TAXABLE YIELD EQUIVALENT.

PERFORMANCE COMPARISONS

Advertising and sales literature may include:

o references to ratings, rankings, and financial publications and/or
performance comparisons of Shares to certain indices;

o charts, graphs and illustrations using the Fund's returns, or returns in
general, that demonstrate investment concepts such as tax-deferred
compounding, dollar-cost averaging and systematic investment;

o discussions of economic, financial and political developments and their
impact on the securities market, including the portfolio manager's views on
how such developments could impact the Funds; and

o information about the mutual fund industry from sources such as the Investment
Company Institute.

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

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

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

LIPPER ANALYTICAL SERVICES, INC. assumes the reinvestment of all capital
gains distributions and income dividends and takes ranks funds in various
fund categories by making comparative calculations using total return.
Total return into account any change in offering price over a specific
period of time. From time to time, the Fund will quote its Lipper ranking
in the "intermediate municipal bond funds" category in advertising and
sales literature.

THE LEHMAN BROTHERS MUNICIPAL INDEX/1-YEAR is an unmanaged index of
municipal bonds issued after January 1, 1991 with a minimum credit rating
of at least Baa, which have been issued as part of a deal of at least $50
million, have a maturity value of at least $3 million and mature in at
least 1, but not more than 2 years. As of January 1996, the index also
includes zero coupon bonds and bonds subject to the Alternative Minimum
Tax.

THE LEHMAN BROTHERS MUNICIPAL INDEX/3 YEAR is an unmanaged index of
municipal bonds issued after January 1, 1991 with a minimum credit rating
of at least Baa, which have been issued as part of a deal of at least $50
million, have a maturity value of at least $3 million, and a maturity range
of 1-5 years. As of January 1996, the index also includes zero coupon bonds
and bonds subject to the Alternative Minimum Tax.

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.

WHO IS FEDERATED INVESTORS, INC.?

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

Federated's disciplined investment selection process is rooted in sound
methodologies backed by fundamental and technical research. At Federated,
success in investment management does not depend solely on the skill of a single
portfolio manager. It is a fusion of individual talents and state-of-the-art
industry tools and resources. Federated's investment process involves teams of
portfolio managers and analysts, and investment decisions are executed by
traders who are dedicated to specific market sectors and who handle trillions of
dollars in annual trading volume.

FEDERATED FUNDS OVERVIEW

MUNICIPAL FUNDS

In the municipal sector, as of December 31, 1998, Federated managed 10 bond
funds with approximately $2.2 billion in assets and 23 money market funds with
approximately $12.5 billion in total assets. In 1976, Federated introduced one
of the first municipal bond mutual funds in the industry and is now one of the
largest institutional buyers of municipal securities. The Funds may quote
statistics from organizations including The Tax Foundation and the National
Taxpayers Union regarding the tax obligations of Americans.

EQUITY FUNDS

In the equity sector, Federated has more than 28 years' experience. As of
December 31, 1998, Federated managed 27 equity funds totaling approximately
$14.9 billion in assets across growth, value, equity income, international,
index and sector (i.e. utility) styles. Federated's value-oriented management
style combines quantitative and qualitative analysis and features a structured,
computer-assisted composite modeling system that was developed in the 1970s.

CORPORATE BOND FUNDS

In the corporate bond sector, as of December 31, 1998, Federated managed 9 money
market funds and 15 bond funds with assets approximating $22.8 billion and $7.1
billion, respectively. Federated's corporate bond decision making--based on
intensive, diligent credit analysis--is backed by over 26 years of experience in
the corporate bond sector. In 1972, Federated introduced one of the first
high-yield bond funds in the industry. In 1983, Federated was one of the first
fund managers to participate in the asset backed securities market, a market
totaling more than $209 billion.

GOVERNMENT FUNDS

In the government sector, as of December 31, 1998, Federated manages 9 mortgage
backed, 5 government/agency and 19 government money market mutual funds, with
assets approximating $5.3 billion, $1.8 billion and $41.6 billion, respectively.
Federated trades approximately $425 million in U.S. government and mortgage
backed securities daily and places approximately $25 billion in repurchase
agreements each day. Federated introduced the first U.S. government fund to
invest in U.S. government bond securities in 1969. Federated has been a major
force in the short- and intermediate-term government markets since 1982 and
currently manages approximately $43.2 billion in government funds within these
maturity ranges.

MONEY MARKET FUNDS

In the money market sector, Federated gained prominence in the mutual fund
industry in 1974 with the creation of the first institutional money market fund.
Simultaneously, the company pioneered the use of the amortized cost method of
accounting for valuing shares of money market funds, a principal means used by
money managers today to value money market fund shares. Other innovations
include the first institutional tax-free money market fund. As of December 31,
1998, Federated managed more than $76.7 billion in assets across 52 money market
funds, including 19 government, 9 prime and 23 municipal with assets
approximating $41.6 billion, $22.8 billion and $12.5 billion, respectively.

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

advisory companies.

MUTUAL FUND MARKET

Thirty-seven percent of American households are pursuing their financial goals
through mutual funds. These investors, as well as businesses and institutions,
have entrusted over $5 trillion to the more than 7,300 funds available,
according to the Investment Company Institute.

FEDERATED CLIENTS OVERVIEW

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

INSTITUTIONAL CLIENTS

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

BANK MARKETING

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

BROKER/DEALERS AND BANK BROKER/DEALER SUBSIDIARIES

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

<PAGE>

INVESTMENT RATINGS

STANDARD AND POOR'S LONG-TERM DEBT RATING DEFINITIONS

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

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

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

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

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

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

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

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

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

MOODY'S INVESTORS SERVICE, INC. LONG-TERM BOND RATING DEFINITIONS

AAA--Bonds which are rated AAA are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as gilt
edged. Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.

AA--Bonds which are rated AA are judged to be of high quality by all standards.
Together with the AAA group, they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in AAA securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in AAA securities.

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

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

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

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

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

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

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

FITCH IBCA, INC. LONG-TERM DEBT RATING DEFINITIONS

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

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

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

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

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

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

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

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

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

<PAGE>

MOODY'S INVESTORS SERVICE, INC. COMMERCIAL PAPER RATINGS

PRIME-1--Issuers rated Prime-1 (or related supporting institutions) have a
superior capacity for repayment of short-term promissory obligations. Prime-1
repayment capacity will normally be evidenced by the following characteristics:

o Leading market positions in well-established industries;

o High rates of return on funds employed;

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

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

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

PRIME-2--Issuers rated Prime-1 (or related supporting institutions) have a
strong capacity for repayment of short-term promissory obligations. This will
normally be evidenced by many of the characteristics cited above but to a lesser
degree. Earnings trends and coverage ratios, while sound, will be more subject
to variation. Capitalization characteristics, while still appropriate, may be
more affected by external conditions. Ample alternate liquidity is maintained.

STANDARD AND POOR'S COMMERCIAL PAPER RATINGS

A-1--This designation indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong safety
characteristics are denoted with a plus sign (+) designation.

A-2--Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated A-1.

FITCH IBCA, INC. COMMERCIAL PAPER RATING DEFINITIONS

FITCH-1--(Highest Grade) Commercial paper assigned this rating is regarded as
having the strongest degree of assurance for timely payment.

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

<PAGE>

ADDRESSES

FEDERATED SHORT-TERM MUNICIPAL TRUST

Institutional Shares

Institutional Service Shares

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

DISTRIBUTOR
Federated Securities Corp.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

INVESTMENT ADVISER

Federated Investment Management Company
Federated Investors Tower
1001 Liberty Avenue

Pittsburgh, PA 15222-3779

CUSTODIAN

State Street Bank and Trust Company
P.O. Box 8600

Boston, MA 02266-8600

TRANSFER AGENT AND DIVIDEND DISBURSING AGENT

Federated Shareholder Services Company
P.O. Box 8600

Boston, MA 02266-8600

INDEPENDENT PUBLIC ACCOUNTANTS

Arthur Andersen LLP
225 Franklin Street
Boston, MA 02110-2812

PART C. OTHER INFORMATION

Item 23. Exhibits:

(a) (i) Conformed Copy of Declaration of Trust of the
Registrant; (13) (ii) Conformed Copy of Amendment
No. 1 to the Declaration of Trust; (13) (iii)
Conformed Copy of Amendment No. 2 to the Declaration
of Trust; (13) (iv) Conformed Copy of Amendment No.
3 to the Declaration of Trust; (13) (v) Conformed
Copy of Amendment No. 4 to the Declaration of Trust
of Registrant; (12) (vi) Conformed Copy of
Restatement and Amendment No. 5 of the Declaration
of Trust; +

(b) (i) Copy of the By-Laws of the Registrant; (13)
(ii) Copy of Amendment to the By-Laws; (7)
(iii) Copy of Amendment No. 5 to the By-Laws; (16)
(iv) Copy of Amendment No. 6 to the By-Laws; (16)
(v) Copy of Amendment No. 7 to the By-Laws; (16)
(vi) Copy of Amendment No. 8 to the By-Laws; (16)

(e) (i) Conformed Copy of the Distributor's Contract of the Registrant;
(11)

(ii) The Registrant hereby incorporates the
conformed copy of the specimen Mutual Funds Sales
and Service Agreement; Mutual Funds Service
Agreement; and Plan 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).

(f) Not applicable;

__________________________

+ All exhibits have been filed electronically.

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)

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)

12. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 28 on Form N-1A filed August 25, 1995. (File Nos.
2-72277 and 811-3181)

13. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 29 on Form N-1A filed April 25, 1996. (File Nos. 2-72277
and 811-3181)

16. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 34 on Form N-1A filed June 30, 1998. (File Nos. 2-72277
and 811-3181)

<PAGE>

(g) Conformed Copy of the Custodian Agreement of the Registrant; (11)

(i) Conformed Copy of Domestic Custody Fee Schedule; (16)
(h) (i) Conformed Copy of Amended and Restated Agreement for Fund
Accounting Services, Administrative Services, Transfer Agency
Services, and Custody Services Procurement; (17)

(ii) The responses described in Item 24 (b)(6)(ii)
are hereby incorporated by reference.

(iii) The registrant hereby incorporates the
conformed copy of the Shareholder Services Sub-
Contract between Fidelity and Federated Shareholder
Services from Item 24(b)(9)(iii) of the Federated
GNMA Trust Registration Statement on Form N-1A,
filed with the Commission on March 25, 1996. (File
Nos. 2-75670 and 811- 3375) (iv) Conformed Copy of
Amended and Restated Shareholder Services
Agreement; (16)

(i) Copy of Opinion and Consent of Counsel as to the
legality of shares being registered; (2) (j) Conformed Copy
of the Consent of Independent Public Accountants; (to be
filed by amendment) (k) Not applicable; (l) Copy of Initial
Capital Understanding; (13) (m) Conformed Copy of Rule
12b-1 Plan; (11)

(n) The Registrant hereby incorporates the Conformed Copy
of the specimen Multiple Class Plan from Item 24(b)(18)
of the World Investment Series, Inc. Registration
Statement on Form N-1A, filed with the Commission on
January 26, 1996. (File Nos. 33-52149 and 811-07141)

(o) (i) Power of Attorney of Registrant; + (ii) Power
of Attorney of Chief Investment Officer;+ (iii)
Power of Attorney of New Trustee;+ (iv) Power of
Attorney of New Trustee;+ (v) Power of Attorney of
New Trustee;+

Item 24. Persons Controlled by or Under Common Control with
Registrant:
None

___________________________

+ All exhibits have been filed electronically.

2. Response is incorporated by reference to Registrant's Pre-Effective
Amendment No. 1 on Form N-1A filed August 4, 1981. (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)

13. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 29 on Form N-1A filed April 25, 1996. (File Nos. 2-72277 and
811-3181)

16. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 34 on Form N-1A filed June 30, 1998. (File Nos. 2-72277 and
811-3181)

17. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 35 on Form N-1A filed August 26, 1998.

(File Nos. 2-72277 and 811-3181)

<PAGE>

Item 25. Indemnification: (10)

Item 26. Business and Other Connections of Investment Adviser:

(a) For a description of the other business of the investment adviser,
see the section entitled "Who Manages the Fund?" in Part A. The
affiliations with the Registrant of four of the Trustees and one of
the Officers of the investment adviser are included in Part B of this
Registration Statement under "Who Manages and Provides Services to
the Fund?" 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.

The remaining Officers of the investment adviser are:

Executive Vice Presidents: William D. Dawson, III
Henry A. Frantzen
J. Thomas Madden

Senior Vice Presidents: Joseph M. Balestrino
David A. Briggs
Drew J. Collins
Jonathan C. Conley
Deborah A. Cunningham
Mark E. Durbiano
Jeffrey A. Kozemchak
Sandra L. McInerney
Susan M. Nason
Mary Jo Ochson
Robert J. Ostrowski

Vice Presidents: Todd A. Abraham
J. Scott Albrecht
Arthur J. Barry
Randall S. Bauer
David A. Briggs
Micheal W. Casey
Robert E. Cauley
Kenneth J. Cody
Alexandre de Bethmann
B. Anthony Delserone, Jr.
Michael P. Donnelly
Linda A. Duessel
Donald T. Ellenberger
Kathleen M. Foody-Malus
Thomas M. Franks
Edward C. Gonzales
James E. Grefenstette
Marc Halperin
Patricia L. Heagy
Susan R. Hill
William R. Jamison
Constantine J. Kartsonas
Stephen A. Keen
Robert M. Kowit
Richard J. Lazarchic
Steven Lehman
___________________________

10. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 17 on Form N-1A filed August 22, 1990. (File Nos. 2-72277 and
811-3181)

Marian R. Marinack
William M. Painter
Jeffrey A. Petro
Keith J. Sabol
Frank Semack
Aash M. Shah
Michael W. Sirianni, Jr.
Christopher Smith
Tracy P. Stouffer
Edward J. Tiedge
Paige M. Wilhelm
George B. Wright
Jolanta M. Wysocka

Assistant Vice Presidents: Nancy J. Belz
Lee R. Cunningham, II
James H. Davis, II
Jacqueline A. Drastal
Paul S. Drotch
Salvatore A. Esposito
Donna M. Fabiano
Gary E. Farwell
Eamonn G. Folan
John T. Gentry
John W. Harris
Nathan H. Kehm
John C. Kerber
Grant K. McKay
Natalie F. Metz
Joseph M. Natoli
Ihab Salib
James W. Schaub
John Sheehy
Matthew K. Stapen
Diane Tolby
Timothy G. Trebilcock
Leonardo A. Vila
Steven J. Wagner
Lori A. Wolff

Secretary: G. Andrew Bonnewell

Treasurer: Thomas R. Donahue

Assistant Secretaries: Thomas R. Donahue
Richard B. Fisher
Christine M. Newcamp

Assistant Treasurer: Richard B. Fisher

The business address of each of the Officers of the investment adviser is
Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, Pennsylvania
15222-3779. These individuals are also officers of a majority of the investment
advisers to the investment companies in the Federated Fund Complex described in
Part B of this Registration Statement.

<PAGE>

ITEM 27. PRINCIPAL UNDERWRITERS:

(a)....Federated Securities Corp. the Distributor for shares of the
Registrant, acts as principal underwriter for the following open-end investment
companies, including the Registrant:

Automated Government Money Trust; Cash Trust Series II; Cash Trust Series, Inc.;
CCB Funds; Edward D. Jones & Co. Daily Passport Cash Trust; Federated Adjustable
Rate U.S. Government Fund, Inc.; Federated American Leaders Fund, Inc.;
Federated ARMs Fund; Federated Core Trust; Federated Equity Funds; Federated
Equity Income Fund, Inc.; Federated Fund for U.S. Government Securities, Inc.;
Federated GNMA Trust; Federated Government Income Securities, Inc.; Federated
Government Trust; Federated High Income Bond Fund, Inc.; Federated High Yield
Trust; Federated Income Securities Trust; Federated Income Trust; Federated
Index Trust; Federated Institutional Trust; Federated Insurance Series;
Federated Master Trust; Federated Municipal Opportunities Fund, Inc.; Federated
Municipal Securities Fund, Inc.; Federated Municipal Trust; Federated Short-Term
Municipal Trust; Federated Short-Term U.S. Government Trust; Federated Stock and
Bond Fund, Inc.; 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: 2-5 Years; Federated U.S. Government Securities Fund: 5-10 Years;
Federated Utility Fund, Inc.; Fixed Income Securities, Inc.; ; Hibernia Funds;
Independence One Mutual Funds; Intermediate Municipal Trust; International
Series, Inc.; Investment Series Funds, Inc.; Liberty U.S. Government Money
Market Trust; Liquid Cash Trust; Managed Series Trust; Marshall Funds, Inc.;
Money Market Management, Inc.; Money Market Obligations Trust; Money Market
Obligations Trust II; Money Market Trust; Municipal Securities Income Trust;
Newpoint Funds; Regions Funds; RIGGS Funds; SouthTrust Funds; Tax-Free
Instruments Trust; The Planters Funds; The Wachovia Funds; The Wachovia
Municipal Funds; Trust for Government Cash Reserves; Trust for Short-Term U.S.
Government Securities; Trust for U.S. Treasury Obligations; Vision Group of
Funds, Inc.; World Investment Series, Inc.; Blanchard Funds; Blanchard Precious
Metals Fund, Inc.; DG Investor Series; High Yield Cash Trust; Investment Series
Trust; Star Funds; Targeted Duration Trust; The Virtus Funds; Trust for
Financial Institutions;

Federated Securities Corp. also acts as principal underwriter for the
following closed-end investment company: Liberty Term Trust, Inc.- 1999.

<PAGE>

(b)

(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices

BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT

Richard B. Fisher Director, Chairman, Chief Vice
Federated Investors Tower Executive Officer, Chief President
1001 Liberty Avenue Operating Officer, Asst.

Pittsburgh, PA 15222-3779 Secretary and Asst.
Treasurer, Federated
Securities Corp.

Arthur L. Cherry Director --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

John B. Fisher Director --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Thomas R. Donahue Director, Assistant Secretary --
Federated Investors Tower and Assistant Treasurer
1001 Liberty Avenue Federated Securities Corp.
Pittsburgh, PA 15222-3779

James F. Getz President-Broker/Dealer and --
Federated Investors Tower Director
1001 Liberty Avenue Federated Securities Corp.
Pittsburgh, PA 15222-3779

John B. Fisher President-Institutional Sales, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Edward C. Gonzales Executive Vice President Executive Vice
Federated Investors Tower Federated Securities Corp. President
1001 Liberty Avenue

Pittsburgh, PA 15222-3779

David M. Taylor Executive Vice President --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Mark W. Bloss Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Richard W. Boyd Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Laura M. Deger Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

<PAGE>

Theodore Fadool, Jr. Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Bryant R. Fisher Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Christopher T. Fives Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

James S. Hamilton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

James M. Heaton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Keith Nixon Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Solon A. Person, IV Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Timothy C. Pillion Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Thomas E. Territ Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Ernest G. Anderson Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Teresa M. Antoszyk Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

John B. Bohnet Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Jane E. Broeren-Lambesis Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Matthew W. Brown Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

David J. Callahan Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Mark Carroll Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Steven R. Cohen Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Mary J. Combs Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

R. Edmond Connell, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

R. Leonard Corton, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Kevin J. Crenny Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Daniel T. Culbertson Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

G. Michael Cullen Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Marc C. Danile Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Robert J. Deuberry Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

William C. Doyle Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

<PAGE>

Jill Ehrenfeld Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Mark D. Fisher Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Mark A. Gessner Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Joseph D. Gibbons Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

John K. Goettlicher Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Craig S. Gonzales Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

G. Tad Gullickson Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Dayna C. Haferkamp Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Raymond Hanley Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Bruce E. Hastings Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Beth A. Hetzel Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

James E. Hickey Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Charlene H. Jennings Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

H. Joseph Kennedy Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Michael W. Koenig Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Christopher A. Layton Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Michael H. Liss Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Michael R. Manning Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Mark J. Miehl Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Richard C. Mihm Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Thomas P. Moretti Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Alec H. Neilly Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Thomas A. Peters III Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Robert F. Phillips Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Richard A. Recker Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Eugene B. Reed Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Paul V. Riordan Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

John Rogers Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Brian S. Ronayne Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Thomas S. Schinabeck Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Edward J. Segura Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Edward L. Smith Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

David W. Spears Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

John A. Staley Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Colin B. Starks Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Jeffrey A. Stewart Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

William C. Tustin Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Paul A. Uhlman Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Miles J. Wallace Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

<PAGE>

John F. Wallin Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Richard B. Watts Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Edward J. Wojnarowski Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Michael P. Wolff Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Robert W. Bauman Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Edward R. Bozek Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Terri E. Bush Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Beth C. Dell Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

David L. Immonen Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

John T. Glickson Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Renee L. Martin Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Robert M. Rossi Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Matthew S. Hardin Secretary, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Denis McAuley Treasurer, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Leslie K. Ross Assistant Secretary, Assistant
Federated Investors Tower Federated Securities Corp. Secretary
1001 Liberty Avenue

Pittsburgh, PA 15222-3779
</TABLE>

<PAGE>

Item 28. Location of Accounts and Records:

REGISTRANT Federated Investors Tower

....... 1001 Liberty Avenue
....... Pittsburgh, PA 15222-3779
.......
(Notices should be sent to the Agent for Service at the above address)

Federated Investors Funds
5800 Corporate Drive

....... Pittsburgh, PA 15237-7000

FEDERATED SHAREHOLDER Federated Investors

SERVICES COMPANY Tower
("Transfer Agent, Dividend 1001 Liberty Avenue
Disbursing Agent and Pittsburgh, PA 15222-3779

Portfolio Recordkeeper")
.......

FEDERATED SERVICES COMPANY Federated Investors Tower
("Administrator") 1001 Liberty Avenue
--------------------------
Pittsburgh, PA 15222-3779
.......

FEDERATED INVESTMENT

MANAGEMENT COMPANY Federated Investors Tower

("Adviser") 1001 Liberty Avenue
Pittsburgh, PA 15222-3779
.......

STATE STREET BANK AND TRUST COMPANY P.O. Box 8600
("Custodian") Boston, MA 02266-8600

Item 29. Management Services: Not applicable.

Item 30. Undertakings:

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.

<PAGE>

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, 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 1st day of July, 1999.

FEDERATED SHORT-TERM MUNICIPAL TRUST

BY: /s/ Leslie K. Ross
Leslie K. Ross, Assistant Secretary
Attorney in Fact for John F. Donahue

July 1, 1999

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/ Leslie K. Ross

Leslie K. Ross Attorney In Fact July 1, 1999
ASSISTANT SECRETARY For the Persons
Listed Below

NAME TITLE

John F. Donahue* Chairman and Trustee
(Chief Executive Officer)

Glen R. Johnson* President

Richard J. Thomas* Treasurer
(Principal Financial and
Accounting Officer)

William D. Dawson, III* Chief Investment Officer

Thomas G. Bigley* Trustee

John T. Conroy, Jr.* Trustee

John F. Cunningham* Trustee

Lawrence D. Ellis, M.D.* Trustee

Peter E. Madden* Trustee

Charles F. Mansfield, Jr.* Trustee

John E. Murray, Jr.* Trustee

Marjorie P. Smuts* Trustee

John S. Walsh* Trustee

* By Power of Attorney
</TABLE>

Exhibit No. 23(a)(vi) under Form N-1A
Exhibit No. 3(i) under Item 601/Reg. S-K

RESTATEMENT AND AMENDMENT #5
DECLARATION OF TRUST

FEDERATED SHORT-TERM MUNICIPAL TRUST

Dated: April 2, 1999

AMENDED AND RESTATED DECLARATION OF TRUST made April 2, 1999, by the
undersigned, and by the holders of shares of beneficial interest to be issued
hereunder as hereinafter provided.

WHEREAS, the Trustees now desire to amend and restate the Declaration of
Trust to permit the Board of Trustees to liquidate assets of the Trust without
seeking shareholder approval.

NOW, THEREFORE, the Trustees declare that all money and property
contributed to the trust fund hereunder shall be held and managed under this
Declaration of Trust IN TRUST as herein set froth below.

ARTICLE I

NAMES AND DEFINITIONS

SECTION 1......NAME.

This Trust shall be known as the Federated Short-Term Municipal Trust.

SECTION 2......DEFINITIONS.

Wherever used herein, unless otherwise required by the context or specifically
provided:

(a) The terms "Affiliated Person," "Assignment," "Commission,"
"Interested Person," "Majority Shareholder Vote" (the 67% or 50%
requirement of Section 2(a) (42) of the 1940 Act, whichever may be
applicable) and "Principal Underwriter" shall have the meanings given
them in the 1940 Act, as amended from time to time;

(b) The "Trust" refers to the Federated Short-Term Municipal
Trust.

(c) "Accumulated Net Income" means the accumulated net income of
the Trust determined in the manner provided or authorized in Article X.

(d) "Class" refers to a class of Shares established and
designated under or in accordance with the provisions of Article II;

(e) "Series" refers to a series of Shares established and
designated under or in accordance with the provisions of Article III;

(f) "Series Company" refers to the form of a registered open-end
investment company described in Section 18(f)(2) of the 1940 Act or in
any successor statutory provisions;

(g) "Shareholder" means a record owner of Shares of any Series or Class;

(h) The "Trustees" refer to the individual Trustees in their
capacity as Trustees hereunder of the Trust and their successor or
successors for the time being in office as such Trustees;

(i) "Shares" means the equal proportionate units of interest into
which the beneficial interest in the Trust shall be dividend form time
to time, or if more than one Series or Class of Shares is authorized by
the Trustees, the equal proportionate units into which each Series or
Class of Shares shall be dividend from time to time and includes
fractions of Shares as well as whole Shares; and

(j) The "1940 Act" refers to the Investment Company Act of 1940,
and the Rules and Regulations thereunder, (including any exemptions
granted thereunder) as amended from time to time.

ARTICLE II
PURPOSE OF TRUST

The purpose of this Trust is to provide investors a continuous source of
managed investments by investing primarily in securities.

ARTICLE III
BENEFICIAL INTEREST

SECTION 1. SHARES OF BENEFICIAL INTEREST.

The beneficial interest in the Trust shall at all times be dividend into
transferable Shares, without par value. Subject to the provisions of Section 5
of this Article III, each Share shall have voting rights as provided in Article
VIII hereof, and holders of the Shares of any Series shall be entitled to
receive dividends, when and as declared with respect thereto in the manner
provided in Article X, Section 1 hereof. The Shares of any Series may be issued
in two or more Classes, as the Trustees may authorize pursuant to Article XII,
Section 8 hereof. Unless the Trustees have authorized the issuance of Shares of
a Series in two or more Classes, each Share of a Series shall represent an equal
proportionate interest in the assets and liabilities of the Series with each
other Share of the same Series, none having priority or preference over another.
If the Trustees have authorized the issuance of Shares of a Series in two or
more Classes, then the Classes may have such variations as to dividend,
redemption, and voting rights, net asset values, expenses borne by the Classes,
and other matters as the Trustees have authorized provided that each Share of a
Class shall represent an equal proportionate interest in the assets and
liabilities of the Class with

<PAGE>

each other Share of the same Class, none having priority or preference over
another. The number of Shares authorized shall be unlimited. The Trustees may
from time to time divide or combine the unlimited. The Trustees may form time to
time divide or combine the Shares of any Series or Class into a greater or
lesser number without thereby changing the proportionate beneficial interests in
the Series or Class.

SECTION 2. ....OWNERSHIP OR SHARES.

The ownership of Shares shall be recorded in the books of the Trust or a
transfer agent which books shall be maintained separately for the Shares of each
Series or Class. The Trustees may make such rules as they consider appropriate
for the transfer of Shares and similar matters. The record books of the Trust or
any transfer agent, as the case may be, shall be conclusive as to who are the
Shareholders of each Series or Class and as to the number of Shares of each
Series or Class held from time to time by each.

SECTION 3......INVESTMENT IN THE TRUST.

The Trustees shall accept investments in the Trust from such persons and
on such terms as they may from time to time authorize. After the date of the
initial contribution of capital (which shall occur prior to the initial public
offering of Shares), the number of Shares to represent the initial contribution
shall be considered as outstanding and the amount received by the Trustees on
account of the contribution shall be treated as an asset of the Trust to be
allocated among any Series or Classes in the manner described in Section 5(a) of
this Article. Subsequent to such initial contribution of capital, Shares
(including Shares which may have been redeemed or repurchased by the Trust) may
be issued or sold at a price which will net the relevant Series or Class, as the
case may be, before paying any taxes in connection with such issue or sale, not
less than the net asset value (as defined in Article X, Section 4) thereof;
provided, however, that the Trustees may in their discretion impose a sales
charge upon investments in the Trust.

SECTION 4......NO PRE-EMPTIVE RIGHTS.

Shareholders shall have no pre-emptive or other right to subscribe to
any additional Shares or other securities issued by the Trust or the Trustees.

SECTION 5......ESTABLISHMENT AND DESIGNATION OF SERIES OR CLASS.

Without limiting the authority of the Trustees set forth in Article XII,
Section 8, inter alia, to establish and designate any additional series or class
or to modify the rights and preferences of any existing Series or Class, the
initial series shall be, and is established and designated as, Federated
Short-Term Municipal Trust.

Shares of any Series or Class established in this Section 5 shall have
the following relative rights and preferences:

(a) ASSETS BELONGING TO SERIES OR CLASS. All consideration
received by the Trust for the issue or sale of Shares of a particular
Series or Class, together with all assets in which such consideration is
invested or reinvested, all income, earnings, profits, and proceeds
thereof from whatever source derived, including, without limitation, any
proceeds derived form the sale, exchange or liquidation of such proceeds
whatever form the same may be, shall irrevocably belong to that Series
or Class for all purposes subject only to the rights of creditors, and
shall be so recorded upon the books of account of the Trust. Such
consideration, assets, income, earnings, profits and proceeds thereof,
from whatever source derived, including, without limitation, any
proceeds derived from the sale, exchange or liquidation of such assets,
and any funds or payments derived from any reinvestment of such
proceeds, in whatever form the same may be, are herein referred to as
"assets belonging to" that Series or Class. In the event that there are
any assets, income, earnings, profits and proceeds thereof, funds or
payments which are not readily identifiable as belonging to any
particular Series or Class (collectively "General Assets"), the Trustees
shall allocate such General Assets to, between or among any one or more
of the Series or Classes established and designated from time to time in
such manner and on such basis as they, in their sole discretion, deem
fair and equitable, and any General Assets so allocated to a particular
Series or Class shall belong to that Series or Class. Each such
allocation by the Trustees shall be conclusive and binding upon the
Shareholders of all Series or Classes for all purposes.

(b) LIABILITIES BELONGING TO SERIES OR CLASS. The assets
belonging to each particular Series or Class shall be charged with the
liabilities of the Trust in respect to that Series or Class and all
expenses, costs, charges and reserves attributable to that Series or
Class, and any general liabilities of the Trust which are not readily
identifiable as belonging to any particular Series or Class shall be
allocated and charged by the Trustees to and among any one or more of
the Series or Classes established and designated from time to time in
such manner and on such basis as the Trustees in their sole discretion
deem fair and equitable. The liabilities, expenses, costs, charges and
reserves so charged to a Series or Class are herein referred to as
"liabilities belonging to" that Series or Class. Each allocation of
liabilities belonging to a Series or by the Trustees shall be conclusive
and binding upon the Shareholders of all Series or Classes for all
purposes.

(c) DIVIDENDS, DISTRIBUTIONS, REDEMPTIONS, REPURCHASES AND
INDEMNIFICATION. Notwithstanding any other provisions of this
Declaration, including, without limitation, Article X, no dividend or
distribution (including, without limitation, any distribution paid upon
termination of the Trust or of any Series or Class) with respect to, nor
any redemption or repurchase of the Shares of any Series Class shall be
effected by the Trust other than from the assets belonging to such
Series or Class, nor except as specifically provided in Section 1 of
Article XI hereof, shall any Shareholder of any particular Series or
Class otherwise have any right or claim against the assets belonging to
any other Series or Class except to the extent that such Shareholder has
such a right or claim hereunder as a Shareholder of such other Series or
Class.

(d) VOTING.Notwithstanding any of the other provisions of this
Declaration, including, without limitation, Section 1 of Article VIII,
only Shareholders of a particular Series or Class shall be entitled to
vote on any matters affecting such Series or Class. Except with respect
to matters as to which any particular Series or Class is affected, all
of the Shares of each Series or Class shall, on matters as to which such
Series or Class is entitled to vote, vote with other Series or Classes
so entitled as a single class. Notwithstanding the foregoing, with
respect to matters which would otherwise be voted on by two or more
Series or Classes as a single class, the Trustees may, in their sole
discretion, submit such matters to the Shareholders of any or all such
Series or Classes, separately.

(e) FRACTION. Any fractional Share of a Series or Class shall
carry proportionately all the rights and obligations of a whole Share of
that Series or Class, including rights with respect to voting, receipt
of dividends and distributions, redemption of Shares and termination of
the Trust or of any Series or Class.

(f) EXCHANGE PRIVILEGE. The Trustees shall have the authority to
provide that the holders of Shares of any Series or Class shall have the
right to exchange said Shares of one or more other Series or Classes in
accordance with such requirements and procedures as may be established
by the Trustees.

(g) COMBINATION OF SERIES OR CLASSES. The Trustees shall have the
authority, without the approval of the Shareholders of any Series or
Class, unless otherwise required by applicable law, to combine the
assets and liabilities belonging to a single Series or Class with the
assets and liabilities of one or more other Series or Classes.

(h) ELIMINATION OF SERIES OR CLASSES. At any time that there are
no Shares outstanding of any particular Series or Class previously
established and designated, the Trustees may amend this Declaration of
Trust to abolish that Series or Class and to rescind the establishment
and designation thereof.

ARTICLE IV
THE TRUSTEES

SECTION 1. MANAGEMENT OF THE TRUST.

The business and affairs of the Trust shall be managed by the Trustees,
and they shall have all powers necessary and desirable to carry out that
responsibility. The Trustees who shall serve are the undersigned.

SECTION 2......ELECTION OF TRUSTEES AT MEETING OF SHAREHOLDERS.

On a date fixed by the Trustees, which shall be subsequent to the
initial public offering of Shares of the Trust, the Shareholders shall elect
Trustees. The number of Trustees shall be determined by the Trustees pursuant to
Article IV, Section 6.

SECTION 3......TERM OF OFFICE OF TRUSTEES.

The Trustees shall hold office during the lifetime of this Trust, and
until its termination as hereinafter provided; except (a) that any Trustee may
resign his office at any time by written instrument signed by him and delivered
to the other Trustees, which shall take effect upon such delivery or upon such
later date as is specified therein; (b) that any Trustee may be removed at any
time by written instrument signed by at least two-thirds of the number of
Trustees prior to such removal, specifying the date when such removal shall
become effective; (c) that any Trustee who requests in writing to be retired or
who has become mentally or physically incapacitated may be retired by written
instrument signed by a majority of the other Trustees, specifying the date of
his retirement; and (d) a Trustee may be removed at any special meeting of
Shareholders of the Trust by a vote of two-thirds of the outstanding Shares.

SECTION 4......TERMINATION OF SERVICE AND APPOINTMENT OF TRUSTEES.

In case of the death, resignation, retirement, removal or mental or
physical incapacity of any of the Trustees, or in case a vacancy shall, by
reason of an increase in number, or for any other reason, exist, the remaining
Trustees shall fill such vacancy by appointing such other person as they in
their discretion shall see fit. Such appointment shall be effected by the
signing of a written instrument by a majority of the Trustees in office. Within
three months of such appointment, the Trustees shall cause notice of such
appointment to be mailed to each Shareholder at his address as recorded on the
books of the Trust. An appointment of a Trustee may be mailed by the Trustees
then in office and notice thereof mailed to Shareholders as aforesaid in
anticipation of a vacancy to occur by reason of retirement, resignation or
increase in number of Trustees effective at a later date, provided that said
appointment shall become effective only at or after the effective date of said
retirement, resignation or increase in number of Trustees. As soon as any
Trustee so appointed shall have accepted this Trust, the trust estate shall vest
in the new Trustee or Trustees, together with the continuing Trustees, without
any further act or conveyance, and he shall be deemed a Trustee hereunder. Any
appointment authorized by this Section 4 is subject to the provisions of Section
16(a) of the 1940 Act.

SECTION 5......TEMPORARY ABSENCE OF TRUSTEE.

Any Trustee may, by power of attorney, delegate his power for a period
not exceeding six months at any one time to any other Trustee or Trustees,
provided that in no case shall less than two of the Trustees personally exercise
the other power hereunder except as herein otherwise expressly provided.

SECTION 6......NUMBER OF TRUSTEES.

The number of Trustees, not less than three (3) nor more than twenty
(20) serving hereunder at any time, shall be determined by the Trustees
themselves.

Whenever a vacancy in the Board of Trustees shall occur, until such
vacancy is filled or while any Trustee is physically or mentally incapacitated,
the other Trustees shall have all the powers hereunder and the certificate
signed by a majority of the other Trustees of such vacancy, absence or
incapacity, shall be conclusive, provided, however, that no vacancy which
reduces the number of Trustees below three (3) shall remain unfilled for a
period longer than six calendar months.

SECTION 7......EFFECT OF DEATH, RESIGNATION, ETC. OF A TRUSTEE.

The death, resignation, retirement, removal, or mental or physical
incapacity of the Trustees, or any one of them, shall not operate to annul the
Trust or to revoke any existing agency created pursuant to the terms of this
Declaration of Trust.

<PAGE>

SECTION 8......OWNERSHIP OF ASSETS.

The assets belonging to each Series or Class shall be held separate and
apart from any assets now or hereafter held in any capacity other than as
Trustee hereunder by the Trustees or any successor Trustee. All of the assets
belonging to each Series or Class or owned by the Trust shall at all times be
considered as vested in the Trustees. No Shareholder shall be deemed to have a
severable ownership interest in any individual asset belonging to any Series or
Class or owned by the Trust or any right of partition or possession thereof, but
each Shareholder shall have a proportionate undivided beneficial interest in a
Series or Class.

ARTICLE V
POWERS OF THE TRUSTEES

SECTION 1......POWERS.

The Trustees in all instances shall act as principals, and are and shall
be free from the control of the Shareholders. The Trustees shall have full power
and authority to do any and all acts and to make and execute any and all
contracts and instruments that they may consider necessary or appropriate in
connection with the management of the Trust or a Series or Class. The Trustees
shall not be bound or limited by present or future laws or customs in regard to
trust investments, but shall have full authority and power to make any and all
investments which they, in their uncontrolled discretion, shall deem proper to
accomplish the purpose of this Trust. Without limiting the foregoing, the
Trustees shall have the following specific powers and authority, subject to any
applicable limitation in this Declaration of Trust or in the By-Laws of the
Trust:

(a) To buy, and invest funds in their hands in securities
including, but not limited to, common stocks, preferred stocks, bonds,
debentures, warrants and rights to purchase securities, certificates of
beneficial interest, money market instruments, notes or other evidences
of indebtedness issued by any corporation, trust or association,
domestic or foreign, or issued or guaranteed by the United States of
America or any agency or instrumentality thereof, by the government of
any foreign country, by any State of the United States, or by any
political subdivision or agency or instrumentality of any State or
foreign country, or in "when-issued" or "delayed-delivery" contracts for
any such securities, or in any repurchase agreement (agreements under
which the seller agrees at the time of sale to repurchase the security
at an agreed time and price), or to retain assets belonging to each and
every Series or Class in cash, and from time to time to change the
investments of the assets belonging to each Series or Class;

(b) To adopt By-Laws of the Trust not inconsistent with the
Declaration of Trust providing for the conduct of the business of the
Trust and to amend and repeal them to the extent that they do not
reserve that right to the Shareholders;

(c) To elect and remove such officers of the Trust and appoint
and terminate such agents of the Trust as they consider appropriate;

(d) To appoint or otherwise engage a bank or trust company as
custodian of any assets belonging to any Series or Class subject to any
conditions set forth in this Declaration of Trust or in the By-Laws;

(e) To appoint or otherwise engage transfer agents, dividend
disbursing agents, Shareholder servicing agents, investment advisers,
sub-investment advisers, principal underwriters, administrative service
agents, and such other agents as the Trustees may from time to time
appoint or otherwise engage;

(f) To provide for the distribution of any Shares of any Series
or Class either through a principal underwriter in the manner
hereinafter provided for or by the Trust itself, or both;

(g) To set record dates in the manner hereinafter provided for;

(h) To delegate such authority as they consider desirable to a
committee or committees composed of Trustees, including without
limitation, an Executive Committee, or to any officers of the Trust and
to any agent, custodian or underwriter;

(i) To sell or exchange any or all of the assets belonging to one or more
Series or Classes, subject to the provisions of Article XII, Section 4(b)
hereof;

(j) To vote or give assent, or exercise any rights of ownership,
with respect to stock or other securities or property; and to execute
and deliver powers of attorney to such person or persons as the Trustees
shall deem proper, granting to such person or persons such power and
discretion with relation to securities or property as the Trustees shall
deem proper;

(k) To exercise powers and rights of subscription or otherwise
which in any manner arise out of ownership of securities;

(l) To hold any security or property in a form not indicating any
trust, whether in bearer, unregistered or other negotiable form; or
either in its own name or in the name of a custodian or a nominee or
nominees, subject in either case to proper safeguards according to the
usual practice of Massachusetts trust companies or investment companies;

(m) To consent to or participate in any plan for the
reorganization, consolidation or merger of any corporation or concern,
any security of which belongs to any Series or Class; to consent to any
contract, lease, mortgage, purchase, or sale of property by such
corporation or concern, and to pay calls or subscriptions with respect
to any security which belongs to any Series or Class;

(n) To engage in and to prosecute, compound, compromise, abandon,
or adjust, by arbitration, or otherwise, any actions, suits,
proceedings, disputes, claims, demands, and things relating to the
Trust, and out of the assets belonging to any Series or Class to pay, or
to satisfy, any debts, claims or expenses incurred in connection
therewith, including those of litigation, upon any evidence that the
Trustees may deem sufficient (such powers shall include without
limitation any actions, suits, proceedings, disputes, claims, demands
and things relating tot he Trust wherein any of the Trustees may be
named individually and the subject matter of which arises by reason of
business for or on behalf of the Trust);

(o) To make distributions of income and of capital gains to Shareholders;

(p) To borrow money but only 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 any amount up to
one-third of the value of its total assets, including the amount
borrowed, or (c) by entering into reverse repurchase agreements in
amounts not in excess of 20% of its total assets, in order to meet
redemption requests without immediately selling any order to meet
redemption requests without immediately selling any portfolio
securities. The Trustees shall not pledge, mortgage or hypothecate the
assets of the Trust, except in connection with any borrowing described
herein and in amounts not in excess of the lesser of the dollar amounts
borrowed of 10% of the value of the Trust's total assets at the time of
such borrowing;

(q) From time to time to issue and sell the Shares of any Series
or Class either for cash or for property whenever and in such amounts as
the Trustees may deem desirable, but subject to the limitation set forth
in Section 3 of Article III;

(r) To purchase insurance of any kind, including, without
limitation, insurance on behalf of any person who is or was a Trustee,
officer, employee or agent of the Trust, or is or was serving at the
request of the Trust as a Trustee, director, officer, agent or employee
of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him and incurred by
him in any such capacity or arising out of his status as such.

No one dealing with the Trustees shall be under any obligation to make
any inquiry concerning the authority of the Trustees, or to see to the
application of any payments made or property transferred to the Trustees or upon
their order.

The Trustees shall have all of the powers set forth in this Section 1
with respect to all assets and liabilities of each Series and Class.

SECTION 2. PRINCIPAL TRANSACTIONS.

The Trustees shall not cause the Trust on behalf of any Series or Class
to buy any securities (other than Shares) from or sell any securities (other
than Shares) from or sell any securities (other than Shares) to, or lend any
assets belonging to any Series or Class to, any Trustee or officer or employee
of the Trust or any firm of which any such Trustee or officer is a member acting
as principal unless permitted by the 1940 Act, but the Trust may employ any such
other party or any such person or firm or company in which any such person is an
interested person in any capacity not prohibited by the 1940 Act.

SECTION 3. TRUSTEES AND OFFICERS AS SHAREHOLDERS.

Any Trustee, officer or other agent of the Trust or any Series or Class
may acquire, own and dispose of Shares of any Series or Class to the same extent
as if he were not a Trustee, officer or agent; and the Trustees may issue and
sell or cause to be issued or sold Shares of any Series or Class to and buy such
Shares from any such person or any firm or company in which he is an interested
person subject only to the general limitations herein contained as to the sale
and purchase of such Shares; and all subject to any restrictions which may be
contained in the By-Laws.

SECTION 4. PARTIES TO CONTRACT.

The Trustees may enter into any contract of the character described in
Article VII or in Article IX hereof or any other capacity not prohibited by the
1940 Act with any corporation, firm, trust or association, although one or more
of the Shareholders, Trustees, officers, employees or agents of the Trust or any
Series or Class or their affiliates may be an officer, director, Trustee,
shareholder or interested person of such other party to the contract, and no
such contract shall be invalidated or rendered voidable by reason of the
existence of any such relationship, nor shall any person holding such
relationship be liable merely by reason of such relationship for any loss or
expense to the Trust or any Series or Class under or by reason of said contract
or accountable for any profit realized directly or indirectly therefrom, in the
absence of actual fraud. The same person (including a firm, corporation, trust
or association) may be the other party to contracts entered into pursuant to
Article VII or Article IX or any other capacity deemed legal under the 1940 Act,
and any individual may be financially interested or otherwise an interested
person of persons who are parties to any or all of the contracts mentioned in
this Section 4.

ARTICLE VI
TRUSTEES' EXPENSES AND COMPENSATION

SECTION 1. TRUSTEE REIMBURSEMENT.

The Trustees shall be reimbursed from the assets belonging to each
particular Series or Class for all of their expenses as such expenses are
allocated to and among any one or more of the Series or Classes pursuant to
Article III, Section 5(b), including, without limitation, expenses of organizing
the Trust or any Series or Class and continuing its or their existence; fees and
expenses of Trustees and officers of the Trust; fees for investment advisory
services, administrative services and principal underwriting services provided
for in Article VII, Sections 1, 2, and 3; fees and expenses of preparing and
printing Registration Statements under the Securities Act of 1933 and the 1940
Act and any amendments thereto; expenses of registering and qualifying the Trust
and any Series or Class and the Shares of any Series or Class under federal and
state laws and regulations; expenses of preparing, printing and distributing
prospectuses and any amendments thereof sent to Shareholders, underwriters,
broker-dealers and to investors who may be considering the purchase of Shares;
expenses of registering, licensing or other authorization of the Trust or any
Series or Class as a broker-dealer and of its or their officers as agents and
salesmen under federal and state laws and regulations; interest expenses, taxes,
fees and commissions of every kind; expenses of issue (including cost of share
certificates), purchase, repurchase and redemption of Shares, including expenses
attributable to a program of periodic issue; charges and expenses of custodians,
transfer agents, dividend disbursing agents, Shareholder servicing agents and
registrars; printing and mailing costs; auditing, accounting and legal expenses;
reports to Shareholders and governmental officers and commissions; expenses of
meetings of Shareholders and proxy solicitations therefor; insurance expenses;
association membership dues and nonrecurring items as may arise, including all
losses and liabilities by them incurred in administering the Trust and any
Series or Class, including expenses incurred in connection with litigation,
proceedings and claims and the obligations of the Trust under Article XI hereof
and the By-Laws to indemnify its Trustees, officers, employees, Shareholders and
agents, and any contract obligation to indemnify principal

<PAGE>

underwriters under Section 3 of Article VII; and for the payment of such
expenses, disbursements, losses and liabilities, the Trustees shall have a lien
on the assets belonging to each Series or Class prior to any rights or interests
of the Shareholders of any Series or Class. This section shall not preclude the
Trust from directly paying any of the aforementioned fees and expenses.

SECTION 2. TRUSTEE COMPENSATION.

The Trustees shall be entitled to compensation from the Trust from the
assets belonging to any Series or Class for their respective services as
Trustees, to be determined from time to time by vote of the Trustees, and the
Trustees shall also determine the compensation of all officers, consultants and
agents whom they may elect or appoint. The Trust may pay out of the assets
belonging to any Series or Class any Trustee or any corporation, firm, trust or
other entity of which a Trustee is an interested person for services rendered in
any capacity not prohibited by the 1940 Act, and such payments shall not be
deemed compensation for services as a Trustee under the first sentence of this
Section 2 of Article VI.

ARTICLE VII
INVESTMENT ADVISER, ADMINISTRATIVE SERVICES,

PRINCIPAL UNDERWRITER AND TRANSFER AGENT

SECTION 1. INVESTMENT ADVISER.

Subject to a Majority Shareholder Vote by the relevant Series or Class,
the Trustees may in their discretion from time to time enter into an investment
advisory contract whereby the other party to such contract shall undertake to
furnish the Trustees investment advisory services for such Series or Class upon
such terms and conditions and for such compensation as the Trustees may in their
discretion determine. Subject to a Majority Shareholder Vote by the relevant
Series or Class, the investment adviser may enter into a sub-investment advisory
contract to receive investment advice and/or statistical and factual information
from the sub-investment adviser for such Series or Class upon such terms and
conditions and for such compensation as the Trustees may, in their discretion,
agree to. Notwithstanding any provisions of this Declaration of Trust, the
Trustees may authorize the investment adviser or sub-investment adviser of any
person furnishing administrative personnel and Services as set forth in Article
VII, Section 2 (subject to such general or specific instructions as the Trustees
may from time to time adopt) to effect purchases, sales or exchanges of
portfolio securities belonging to a Series or Class on behalf of the Trustees or
may authorize any officer or Trustee to effect such purchases, sales, or
exchanges pursuant to recommendations of the investment adviser (and all without
further action by the Trustees). Any such purchases, sales and exchanges shall
be deemed to have been authorized by the Trustees. The Trustees may also
authorize the investment adviser to determine what firms shall be employed to
effect transactions in securities for the account of a Series or Class and to
determine what firms shall participate in any such transactions or shall share
in commissions or fees charged in connection with such transactions.

<PAGE>

SECTION 2. ADMINISTRATIVE SERVICES.

The Trustees may in their discretion from time to time contract for
administrative personnel and services whereby the other party shall agree to
provide the Trustees administrative personnel and services to operate the Trust
or a Series or Class on a daily basis, on such terms and conditions as the
Trustees may in their discretion determine. Such services may be provided by one
or more entities.

SECTION 3. PRINCIPAL UNDERWRITER.

The Trustees may in their discretion from time to time enter into an
exclusive or nonexclusive contract or contracts providing for the sale of the
Shares of a Series or Class to net such Series or Class not less than the amount
provided in Article III, Section 3 hereof, whereby a Series or Class may either
agree to sell the Shares to the other party to the contract or appoint such
other party its sales terms and conditions (including indemnification of
principal underwriters allowable under applicable law and regulation) as the
Trustees may in their discretion determine not inconsistent with the provisions
of this Article VII; and such contract may also provide for the repurchase or
sale of Shares of a Series or Class by such other party as principal or as agent
of the Trust and may provide that the other party may maintain a market for
shares of a Series or Class.

SECTION 4. TRANSFER AGENT.

The Trustees may in their discretion from time to time enter into
transfer agency and shareholder services contracts whereby the other party shall
undertake to furnish transfer agency and shareholder services. The contracts
shall be on such terms and conditions as the Trustees may in their discretion
determine not inconsistent with the provisions of this Declaration of Trust or
of the By-Laws. Such services may be provided by one or more entities.

SECTION 5. PROVISIONS AND AMENDMENTS.

Any contract entered into pursuant to Sections 1 or 3 if this Article
VII shall be consistent with the subject to the requirements of Section 15 of
the 1940 Act (including any amendments thereof or other applicable Act of
Congress hereafter enacted) with respect to its continuance in effect, its
termination and the method of authorization and approval of such contract or
renewal thereof.

ARTICLE VIII
SHAREHOLDERS' VOTING POWERS AND MEETINGS

SECTION 1. VOTING POWERS.

Subject to the provisions set forth in Article III, Section 5(d), the
Shareholders shall have power to vote, (i) for the election of Trustees as
provided in Article IV, Section 2; (ii) for the removal of Trustees as provided
in Article IV, Section 3(d); (iii) with respect to any investment adviser or
sub-investment adviser as provided in Article VII, Section 1; (iv) with respect
to the amendment of this Declaration of Trust as provided in Article XII,
Section 7; (v) to the same extent as the shareholders of a Massachusetts
business corporation as to whether or not a court action, proceeding or claim
should be brought or maintained derivatively or as a class action on behalf of
the Trust or the Shareholders; and (vi) with respect to such additional matters
relating to the Trust as may be required by law, by this Declaration of Trust,
or By-Laws of the Trust or any regulation of the Trust or the Commission or any
State, or as the Trustees may consider desirable. Each whole Share shall be
entitled to one vote as to any matter on which it is entitled to vote, and each
fractional Share shall be entitled to a proportionate fractional vote. There
shall be no cumulative voting in the election of Trustees. Shares may be voted
in person or by proxy. Until Shares of a Series or Class are issued, the
Trustees may exercise all rights. Shareholders of such Series or Class with
respect to matters affecting such Series or Class, and may take any action with
respect to the Trust or such Series or Class required or permitted by law, this
Declaration of Trust or any By-Laws of the Trust to be taken by Shareholders.

SECTION 2. MEETINGS.

A Shareholders meeting shall be held as specified in Section 2 of
Article IV at the principal office of the Trust or such other place as the
Trustees may designate. Special meetings of the Shareholders may be called by
the Trustees or the Chief Executive Officer of the Trust and shall be called by
the Trustees upon the written request of Shareholders owning at least one-tenth
of the outstanding Shares of all Series and Classes entitled to vote.
Shareholders shall be entitled to at least fifteen days' notice of any meeting.

SECTION 3. QUORUM AND REQUIRED VOTE.

Except as otherwise provided by law, to constitute a quorum for the
transaction of any business at any meeting of Shareholders there must be
present, in person or by proxy, holders of one-fourth of the total number of
outstanding Shares of all Series and Classes entitled to vote at such meeting.
When any one or more Series or Classes is entitled to vote as a single Series or
Class, one-fourth of the shares of each such Series or Class entitled to vote
shall constitute a quorum at a Shareholder's meeting of that Series or Class. If
a quorum shall not be present for the purpose of any vote that may properly come
before the meeting, the Shares present in person or by proxy and entitled to
vote at such meeting on such matter may, by plurality vote, adjourn the meeting
from time to time to such place and time without further notice than by
announcement to be given at the meeting until a quorum entitled to vote on such
matter shall be present, where upon any such matter may be voted upon at the
meeting as though held when originally convened. Subject to any applicable
requirement of law or of this Declaration of Trust or the By-Laws, a plurality
of the votes cast shall elect a Trustee, and all other matters shall be decided
by a majority of the votes cast and entitled to vote thereon.

SECTION 4. ADDITIONAL PROVISIONS.

The By-Laws may include further provisions for Shareholders' votes and
meetings and related matters.

<PAGE>

ARTICLE IX

CUSTODIAN

SECTION 1. APPOINTMENT AND DUTIES.

The Trustees shall appoint or otherwise engage a bank or trust company
having an aggregate capital, surplus and undivided profits (as shown in its last
published report) of at least two million dollars ($2,000,000) as custodian with
authority as its agent, but subject to such restrictions, limitations and other
requirements, if any, as may be contained in the By-Laws of the Trust:

(1) To receive and hold the securities owned by the Trust or any Series or
Class and deliver the same upon written order;

(2) To receive and receipt for any moneys due to the Trust or any
Series or Class and deposit the same in its own banking department or
elsewhere as the Trustees may direct; and

(3) To disburse such funds upon order or vouchers;

(4) To keep the books and accounts of the Trust or any Series or Class and
furnish clerical and accounting services;

(5) To compute, if authorized to do so by the Trustees, the
Accumulated Net Income of the Trust or any Series or Class and the net
asset value of the Shares in accordance with the provisions hereof;

all upon such basis of compensation as may be agreed upon between the Trustees
and the custodian. If so directed by a Majority Shareholder Vote, the custodian
shall deliver and pay over all property of the Trust or any Series held by it as
specified in such vote.

The Trustees may also authorize the custodian to employ one or more
sub-custodians from time to time to perform such of the acts and services of the
custodian upon such terms and conditions, as may be agreed upon between the
custodian and such sub-custodian and approved by the Trustees, provided that in
every case such sub-custodian shall be a bank or trust company organized under
the laws of the United States or one of the states thereof and having an
aggregate capital, surplus and undivided profits (as shown in its last published
report) of at least two million dollars ($2,000,000).

SECTION 2......CENTRAL CERTIFICATE SYSTEM.

Subject to such rules, regulations and orders as the Commission may
adopt, the Trustees may direct the custodian to deposit all or any part of the
securities owned by the Trust or any Series in a system for the central handling
of securities established by a national securities exchange or a national
securities association registered with the Commission under the Securities
Exchange Act of 1934, or such other person as may be permitted by the Commission
or

<PAGE>

otherwise in accordance with the 1940 Act, pursuant to which system all
securities of any particular class or series of any issuer deposited within the
system are treated as fungible and may be transferred or pledged by bookkeeping
entry without physical delivery of such securities, provided that all such
deposits shall be subject to withdrawal only upon the order of the custodian at
the discretion of the Trustees.

ARTICLE X
DISTRIBUTIONS AND REDEMPTIONS

SECTION 1......DISTRIBUTIONS.

(a) The Trustees may, on each day Accumulated Net Income of any
Series or Class is determined and is positive, declare and pay such
Accumulated Net Income as dividends to the Shareholders of any Series or
Class, and the amount of such dividends and the payment of them shall be
wholly in the discretion of the Trustees. Such dividends may be accrued
and automatically reinvested in additional Shares (or fractions thereof)
of the relevant Series or Class or paid in cash or additional Shares of
such Series or Class, all upon such terms and conditions as the Trustees
may prescribe.

(b) The Trustees may distribute in respect of any fiscal year as
dividends and as capital gains distributions, respectively, amounts
sufficient to enable any Series or Class to qualify as a regulated
investment company to avoid any liability for federal income taxes in
respect of that year.

(c) The decision of the Trustees as to what constitutes income
and what constitutes principal shall be final, and except as
specifically provided herein the decision of the Trustees as to what
expenses and charges of any Series or Class shall be charged against
principal and what against the income shall be final. Any income not
distributed in any year may be permitted to accumulate and as long as
not distributed may be invested from time to time in the same manner as
the principal funds of any Series or Class.

(d) The Trustees shall have power, to the fullest extent
permitted by the laws of Massachusetts, at any time, or from time to
time, to declare and cause to be paid dividends on any Series or Class,
which dividends, at the election of the Trustees, may be accrued,
automatically reinvested in additional Shares (or fractions thereof) of
the relevant Series or Class or paid in cash or additional Shares of the
relevant Series or Class, all upon such terms and conditions as the
Trustees may prescribe.

(e) Anything in this instrument to the contrary notwithstanding,
the Trustees may at any time declare and distribute a dividend
consisting of Shares of any Series or Class of the Trust.

(f) All dividends and distributions on Shares of a particular
Series or Class shall be distributed pro rata to the holders of that
Series or Class in proportion to the number of Shares of that Series or
Class held by such holders and recorded on the books of the Trust or its
transfer agent at the date and time of record established for that
payment.

<PAGE>

SECTION 2......REDEMPTIONS AND REPURCHASES.

(a) In case any Shareholder of record of any Series or Class at
any time desires to dispose of Shares of such Series or Class recorded
in his name, he may deposit a written request (or such other form of
request as the Trustees may from time to time authorize) requesting that
the Trust purchase his Shares, together with such other instruments or
authorizations to effect the transfer as the Trustees may from time to
time require, at the office of the Transfer Agent, and the Trust shall
purchase his Shares out of assets belonging to such Series or Class. The
purchase price shall be the net asset value of his shares reduced by any
redemption charge as the Trustees from time to time may determine.

Payment for such Shares shall be made by the Trust to the Shareholder of
record within that time period required under the 1940 Act after the
request (and, if required, such other instruments or authorizations or
transfer) is deposited, subject to the right of the Trustees to postpone
the date of payment pursuant to Section 5 of this Article X, the right
of redemption pursuant to Section 5 of this Article X. If the redemption
is postponed beyond the date on which it would normally occur by reason
of a declaration by the Trustees suspending the right of redemption
pursuant to Section 5 of this Article X, the right of the Shareholder to
have his Shares purchased by the Trust shall be similarly suspended, and
he may withdraw his request (or such other instruments or authorizations
of transfer) from deposit if he so elects; or, if he does not so elect,
the purchase price shall be the net asset value of his Shares determined
next after termination of such suspension (reduced by any redemption
charge), and payment therefor shall be made within the time period
required under the 1940 Act.

(b) The Trust may purchase Shares of a Series or Class by
agreement with the owner thereof at a purchase price not exceeding the
net asset value per Share (reduced by any redemption charge) determined
(1) next after the purchase or contract of purchase is made or (2) at
some later time.

(c) The Trust may pay the purchase price (reduced by any
redemption charge) in whole or in part by a distribution in kind of
securities from the portfolio of the relevant Series or Class, taking
such securities at the same value employed in determining net asset
value, and selecting the securities in such manner as the Trustees may
deem fair and equitable.

SECTION 3. DETERMINATION OF ACCUMULATED NET INCOME.

The Accumulated Net Income of any Series or Class of the Trust shall be
determined by or on behalf of the Trustees at such time or times as the Trustees
shall in their discretion determine. Such determination shall be made in
accordance with generally accepted accounting principles and practices and may
include realized and/or unrealized gains from the sale or other deposition of
securities or other property of the relevant Series. The power and duty to
determine Accumulated Net Income for any Series or Class may be delegated by the
Trustees from time to time to one or more of the Trustees or officers of the
Trust, to the other party to any contract entered into pursuant to Section 1 or
2 of Article VII, or to the custodian or to a transfer agent.

<PAGE>

SECTION 4......NET ASSET VALUE OF SHARES.

The net asset value of each Share of a Series or Class outstanding shall
be determined at such time or times as may be determined by or on behalf of the
Trustees. The power and duty to determine net asset value may be delegated by
the Trustees from time to time to one or more of the Trustees or officers of the
Trust, to the other party to any contract entered into pursuant to Section 1 or
2 of Article VII or to the custodian or to a transfer agent or other person
designated by the Trustees.

The net asset value of each Share of a Series or Class as of any
particular time shall be the quotient (adjusted to the nearer cent) obtained by
dividing the value, as of such time, of the net assets belonging to such Series
or Class (i.e., the value of the assets belonging to such Series or Class less
the liabilities belonging to such Series or Class exclusive of capital and
surplus) by the total number of Shares outstanding of the Series or Class at
such time in accordance with the requirements of the 1940 Act and applicable
provisions of the By-Laws of the Trust in conformity with generally accepted
accounting practices and principles.

The Trustees may declare a suspension of the determination of net asset
value for the whole or any part of any period in accordance with the 1940 Act.

SECTION 5......SUSPENSION OF THE RIGHT OF REDEMPTION.

The Trustees may declare a suspension of the right or redemption or
postpone the date of payment for the whole or any part of the any period in
accordance with the 1940 Act.

SECTION 6......TRUST'S RIGHT TO REDEEM SHARES.

The Trust shall have the right to cause the redemption of Shares of any
Series or Class in any Shareholder's account for their then current net asset
value and promptly make payment to the shareholder (which payment may be reduced
by any applicable redemption charge), if at any time the total investment in the
account does not have a minimum dollar value determined from time to time by the
Trustees in their sole discretion. Shares of any Series or Class of the Trust
are redeemable at the option of the Trust if, in the opinion of the Trustees,
ownership of such Shares has or may become concentrated to an extent which would
cause the Trust or any Series to be a personal holding company within the
meaning of the Federal Internal Revenue Code (and thereby disqualified under
Sub-chapter M of said Code); in such circumstances the Trust may compel the
redemption of Shares of such Series or Class, reject any order for the purchase
of such Shares or refuse to give effect to the transfer of such Shares.

ARTICLE XI
LIMITATION OF LIABILITY AND INDEMNIFICATION

SECTION 1......LIMITATION OF PERSONAL LIABILITY AND INDEMNIFICATION OF
SHAREHOLDERS.

The Trustees, officers, employees or agents of the Trust shall have no
power to bind any Shareholder of any Series or Class personally or to call upon
such Shareholder for the payment of any sum of money or assessment whatsoever,
other than such as the Shareholder may at any time agree to pay by way of
subscription to any Shares or otherwise.

No Shareholder or former Shareholder of any Series or Class shall be
liable solely by reason of his being or having been a Shareholder for any debt,
claim, action, demand, suit, proceeding, judgment, decree, liability or
obligation of any kind, against, or with respect to the Trust or any Series or
Class arising out of any action taken or omitted for or on behalf of the Trust
or such Series or Class, and the Trust or such Series or Class shall be solely
liable therefor and resort shall be had solely to the property of the relevant
Series or Class of the Trust for the payment or performance thereof.

Each Shareholder or former Shareholder of any Series or Class (or their
heirs, executors, administrators or other legal representatives or, in case of a
corporate entity, its corporate or general successor) shall be entitled to
indemnity and reimbursement out of Trust property to the full extent of such
liability and the costs of any litigation or other proceedings in which such
liability shall have been determined, including, without limitation, the fees
and disbursements of counsel if, contrary to the provisions hereof, such
Shareholder or former Shareholder of such Series or Class shall be held to be
personally liable. Such indemnification and reimbursement shall come exclusively
from the assets of the relevant Series or Class.

The Trust shall, upon request by a Shareholder or former Shareholder,
assume the defense of any claim made against any Shareholder for any act or
obligation of the Trust or any Series or Class and satisfy any judgment thereon.

SECTION 2......LIMITATION OF PERSONAL LIABILITY OF TRUSTEES, OFFICERS,
EMPLOYEES OR AGENTS OF THE TRUST.

No Trustee, officer, employee or agent of the Trust shall have the power
to bind any other Trustee, officer, employee or agent of the Trust personally.
The Trustees, officers, employees or agents of the Trust incurring any debts,
liabilities or obligations, or in taking or omitting any other actions for or in
connection with the Trust are, and each shall be deemed to be, acting as
Trustee, officer, employee or agent of the Trust and not in his own individual
capacity.

Provided they have acted under the belief that their actions are in the
best interest of the Trust, the Trustees and officers shall not be responsible
for or liable in any event for neglect or wrongdoing by them or any officer,
agent, employee, investment adviser or principal underwriter of the Trust or of
any entity providing administrative services to the Trust, but nothing herein
contained shall protect any Trustee or officer against any liability to which he
would otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office.

SECTION 3......EXPRESS EXCULPATORY CLAUSES AND INSTRUMENTS.

The Trustees shall use every reasonable means to assure that all persons
having dealings with the Trust or any Series or Class shall be informed that the
property of the Shareholders and the Trustees, officers, employees and agents of
the Trust or any Series or Class shall not be subject to claims against or
obligations of the Trust or any other Series or Class to any extent whatsoever.
The Trustees shall cause to be inserted in any written agreement, undertaking or
obligation made or issued on behalf of the Trust or any Series or Class
(including certificates for Shares of any Series or Class) an appropriate
reference to this Declaration, providing that neither the Shareholder, the
Trustees, the officers, the employees nor any agent of the Trust or any Series
or Class shall be liable thereunder, and that the other parties to such
instrument shall look solely to the assets belonging to the relevant Series or
Class for the payment of any claim thereunder or for the performance thereof;
but the omission of such provisions from any such instrument shall not render
any Shareholder, Trustee, officer, employee or agent liable, nor shall the
Trustee, or any officer, agent or employee of the Trust or any Series or Class
be liable to anyone for such omission. If, notwithstanding this provision, any
Shareholder, Trustee, officer, employee or agent shall be held liable to any
other person by reason of the omission of such provision form any such
agreement, undertaking or obligation, the Shareholder, Trustee, officer,
employee or agent shall be entitled to indemnity and reimbursement out of the
Trust property, as provided in Article XI.

SECTION 4......INDEMNIFICATION OF TRUSTEES, OFFICERS, EMPLOYEES AND AGENTS.

(a)....Every person who is or has been a Trustee, officer, employee or
agent of the Trust or of any Series of the Trust and persons who serve at the
Trust's request as director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise shall be indemnified by
the Trust or the relevant Series to the fullest extent permitted by law against
liability and against all expenses reasonably incurred or paid by him in
connection with any debt, claim, action, demand, suit, proceeding, judgment,
decree, liability or obligation of any kind in which he becomes involved as a
party or otherwise by virtue of his being or having been a Trustee, officer,
employee or agent of the Trust or of such Series or of another corporation,
partnership, joint venture, trust or other enterprise at the request of the
Trust or of such Series and against amounts paid or incurred by him in the
settlement thereof.

(b)....The words "claim," "action," "suit" or "proceeding" shall apply
to all claims, actions, suits or proceedings (civil, criminal, administrative,
legislative, investigative or other, including appeals), actual or threatened,
and the words "liability" and "expenses" shall include, without limitation,
attorneys' fees, costs, judgments, amounts paid in settlement, fines, penalties
and other liabilities.

(c)....No indemnification shall be provided hereunder to a Trustee,
officer, employee or agent against any liability to the Trust or any Series of
the Trust or to its Shareholders by reason of willful misfeasance, bad faith,
gross negligence, or reckless disregard of the duties involved in the conduct of
his office.

(d)....The rights of indemnification herein provided may be insured
against by policies maintained by the Trust or any Series, shall be severable,
shall not affect any other rights to which any Trustee, officer, employee or
agent may now or hereafter be entitled, shall continue as to a person who has
ceased to be such Trustee, officer, employee, or agent and shall inure to the
benefit of the heirs, executors and administrators of such a person.

(e)....Expenses in connection with the preparation and presentation of a
defense to any claim, action, suit or proceeding of the character described in
paragraph (a) of this Section 4 may be paid by the Trust or any Series prior to
final disposition thereof upon receipt of any undertaking by or on behalf of the
Trustee, officer, employee or agent secured by a surety bond or other suitable
insurance that such amount will be paid over by him to the Trust or any Series
if it is ultimately determined that he is not entitled to indemnification under
this Section 4.

<PAGE>

ARTICLE XII

MISCELLANEOUS

SECTION 1......TRUST IS NOT A PARTNERSHIP.

It is hereby expressly declared that a trust and not a partnership is
created hereby.

SECTION 2......TRUSTEE ACTION BINDING, EXPERT ADVICE, NO BOND OR SURETY.

The exercise by the Trustees of their powers and discretions hereunder
in good faith and with reasonable care under the circumstances then prevailing,
shall be binding upon everyone interested. Subject to the provisions of Article
XI, the Trustees shall not be liable for errors of judgment or mistakes of fact
or law. The Trustees may take advice of counsel or other experts with respect to
the meaning and operation of this Declaration of Trust, and subject to the
provisions of Article XI, shall be under no liability for any act or omission in
accordance with such advice or for failing to follow such advice. The Trustees
shall not be required to give any bond as such, nor any surety if a bond is
required.

SECTION 3......ESTABLISHMENT OF RECORD DATES.

The Trustees may close the Share transfer books of the Trust maintained
with respect to any Series or Class for a period not exceeding sixty (60) days
preceding the date of any meeting of Shareholders of the Trust or any Series or
Class, or the date for the payment of any dividend or the making of any
distribution to Shareholders, or the date for the allotment of rights, or the
date when any change or conversion or exchange of Shares of any Series or Class
shall go into effect; or in lieu of closing the Share transfer books as
aforesaid, the Trustees may fix in advance a date, not exceeding sixty (60) days
preceding the date of any meeting of Shareholders of the Trust or any Series or
Class, or the date for the payment of any dividend or the making of any
distribution to Shareholders of any Series or Class, or the date for the
allotment of rights, or the date when any change or conversion or exchange of
Shares of any Series or Class shall go into effect, or the last day on which the
consent or dissent of Shareholders of any Series or Class may be effectively
expressed for any purpose, as a record date for the determination of the
Shareholders entitled to notice of, and, to vote at, any such meeting and any
adjournment thereof, or entitled to receive payment of any such dividend or
distribution, or to any such allotment of rights, or to exercise the rights in
respect of any such change, conversion or exchange of shares, or to exercise the
right to give such consent or dissent, and in such case such Shareholders and
only such Shareholders as shall be Shareholders of record on the date so fixed
shall be entitled to such notice of, and to vote at, such meeting, or to receive
payment of such dividend or distribution, or to receive such allotment or
rights, or to exercise such rights, as the case may be, notwithstanding, after
such date fixed aforesaid, any transfer of any Shares on the books of the Trust
maintained with respect to any Series or Class. Nothing in the foregoing
sentence shall be construed as precluding the Trustees from setting different
record dates for different Series or Classes.

<PAGE>

SECTION 4......TERMINATION OF TRUST.

(a) This Trust shall continue without limitation of time
but subject to the provisions of paragraphs (b), (c) and (d) of this Section 4.

(b) The Trustees may, by majority action, with the
approval of the holders of more than fifty percent of the
outstanding Shares of each Series or Class entitled to vote and
voting separately by Series or Class, sell and convey the assets
of the Trust or any Series or Class to another trust or
corporation. Upon making provision for the payment of all
liabilities, by assumption or otherwise, the Trustees shall
distribute the remaining proceeds belonging to each Series or
Class ratably among the holders of the Shares of that Series or
Class then outstanding.

(c) The Trustees may at any time sell and convert into
money all the assets of the Trust, or a class or Series of the
Trust, without shareholder approval, unless otherwise required by
applicable law. Upon making provision for the payment of all
outstanding obligations, taxes and other liabilities, accrued or
contingent, belonging to the Trust, the Trustees shall distribute
the remaining assets of the Trust ratably among the holders of
the outstanding Shares having an interest in such assets.

(d) Upon completion of the distribution of the remaining
proceeds of the remaining assets as provided in paragraphs (b)
and (c), the Trust or the applicable Series or Class shall
terminate and the Trustees shall be discharged of any and all
further liabilities and duties hereunder or with respect thereto
and the right, title and interest of all parties shall be
canceled and discharged.

SECTION 5. OFFICES OF THE TRUST, FILING OF COPIES, HEADINGS, COUNTERPARTS.

The Trust shall maintain a usual place of business in Massachusetts,
which, initially, shall be One Post Office Square, Boston, Massachusetts, and
shall continue to maintain an office at such address unless changed by the
Trustees to another location in Massachusetts. The Trust may maintain other
offices as the Trustees may from time to time determine. The original or a copy
of this instrument and of each declaration of trust supplemental hereto shall be
kept at the office of the Trust where it may be inspected by any Shareholder. A
copy of this instrument and of each supplemental declaration of trust shall be
filed by the Trustees with the Massachusetts Secretary of State and the Boston
City Clerk, as well as any other governmental office where such filing may from
time to time be required. Anyone dealing with the Trust may relay on a
certificate by an officer of the Trust as to whether or not any such
supplemental declaration of trust has been made and as to any matters in
connection with the Trust hereunder, and with the same effect as if it were the
original, may rely on a copy certified by an officer of the Trust to be a copy
of this instrument or of any such supplemental declaration of trust. In this
instrument or in any such supplemental declaration of trust. In this instrument
or in any such supplemental declaration of trust, references to this instrument,
and all expressions like "herein," "hereof" and "hereunder," shall be deemed to
refer to this instrument as amended or affected by any such supplemental
declaration of trust. Headings are placed herein for convenience of reference
only and in case of any conflict, the text of this instrument, rather than the
headings, shall control. This instrument may be executed in any number of
counterparts each of which shall be deemed an original.

SECTION 6......APPLICABLE LAW.

The Trust set forth in this instrument is created under and is to be
governed by and construed and administered according to the laws of The
Commonwealth of Massachusetts. The Trust shall be of the type commonly called a
Massachusetts business trust, and without limiting the provisions hereof, the
Trust may exercise all powers which are ordinarily exercised by such a trust.

SECTION 7......AMENDMENTS - - GENERAL.

Prior to the initial issuance of Shares pursuant to Section 3 of Article
III, a majority of the Trustees then in office may amend or otherwise supplement
this instrument by making a Declaration of Trust supplemental hereto, which
thereafter shall form a part hereof. Subsequent to such initial issuance of
Shares, amendments or supplements to this instrument may be authorized by a
majority of the Trustees then in office and by a Majority Shareholder Vote of
all Series and Classes then outstanding and entitled to vote thereon (except
that any amendments or supplements changing the name of the Trust or pursuant to
Section 8 hereunder may be made without shareholder approval), or by any larger
vote which may be required by applicable law or this Declaration of Trust in any
particular case, which amendment or supplement thereafter shall form a part
hereof. Any such amendment or supplement (which may be in the form of a complete
restatement) may be evidenced by either (i) a supplemental Declaration of Trust
signed by at least a majority of the Trustees then in office or (ii) by a
certificate of the President and Secretary of the Trust setting forth such
amendment or supplement and certifying that such amendment or supplement has
been duly authorized by the Trustees, and if required, by the shareholders.
Copies of the supplemental Declaration of Trust or the certificate of the
President and Secretary, as the case may be, shall be filed as specified in
Section 5 of this Article XII.

SECTION 8. ....AMENDMENTS - - SERIES AND CLASSES.

The established and designation of any series or class of Shares in
addition to those established and designated in Section 5 of Article III
hereof shall be effective upon the execution by a majority of the then
Trustees of an amendment to this Declaration of Trust, taking the form
of a complete restatement or otherwise, setting forth such establishment
and designation and the relative rights and preferences of any such
Series or Class, or as otherwise provided in such instrument.

Without limiting the generality of the foregoing, the Declaration of the
Trust may be amended to:

(a) create one or more Series or Classes of Shares (in addition
to any Series or Classes already existing or otherwise) with such to
rights and preferences and such eligibility requirements for investment
therein as the Trustees shall determine and reclassify any or all
outstanding Shares as Shares of particular Series or Classes in
accordance with such eligibility requirements;

(b) combine two or more Series or Classes of Shares into a single Series or
Class on such terms and conditions as the Trustees shall determine;

(c) change or eliminate any eligibility requirements for
investment in Shares of any Series or Class, including without
limitation the power to provide for the issue of Shares of any Series or
Class in connection with any merger or consolidation of the Trust with
another trust or company or any acquisition by the Trust of part or all
of the assets of another trust or company;

(d) change the designation of any Series or Class of Shares;

(e) change the method of allocating dividends among the various Series and
Classes of Shares;

(f) allocate any specific assets or liabilities of the Trust or any
specific items of income or expense of the Trust to one or more Series and
Classes of Shares;

(g) specifically allocate assets to any or all Series or Classes
of Shares or create one or more additional Series or Classes of Shares
which are preferred over all other Series or Classes of Shares in
respect of assets specifically allocated thereto or any dividends paid
by the Trust with respect to any net income, however determined, earned
from the investment and reinvestment of any assets so allocated or
otherwise and provide for any special voting or other rights with
respect to such Series or Classes.

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 owe or more Series or Classes any right to use of the name "Federated".

<PAGE>

The undersigned hereby certify that the above stated Amendment and
Restatement is a true and correct Amendment and Restatement to the Declaration
of Trust, as adopted by the Board of Trustees at a meeting held on the 17th day
of November, 1998, and effective as of April 2, 1999.

IN WITNESS WHEREOF, the undersigned have executed this instrument the
day and year first above written.

/S/ JOHN F. DONAHUE /S/ PETER E. MADDEN
John F. Donahue Peter E. Madden

/S/ THOMAS G. BIGLEY /S/ CHARLES F. MANSFIELD, JR.
Thomas G. Bigley Charles F. Mansfield, Jr.

/S/ JOHN T. CONROY, JR. /S/ JOHN E. MURRAY, JR.
John T. Conroy, Jr. John E Murray, Jr.

/S/ JOHN F. CUNNINGHAM /S/ MARJORIE P. SMUTS
John F. Cunningham Marjorie P. Smuts

/S/ LAWRENCE D. ELLIS, M.D. /S/ JOHN S. WALSH
Lawrence D. Ellis, M.D. John S. Walsh

<PAGE>

COMMONWEALTH OF PENNSYLVANIA )
: ss:
COUNTY OF ALLEGHENY )

I hereby certify that on April 2, 1999, before me, the subscriber, a Notary
Public of the Commonwealth of Pennsylvania, in for the County of Allegheny,
personally appeared JOHN F. DONAHUE, THOMAS G. BIGLEY, JOHN T. CONROY, JR., JOHN
F. CUNNINGHAM, LAWRENCE D. ELLIS, M.D., PETER E. MADDEN, CHARLES F. MANSFIELD,
JR., JOHN E. MURRAY, JR., MARJORIE P. SMUTS, AND JOHN S. WALSH who acknowledged
the foregoing Declaration of Trust to be their act.

Witness my hand and notarial seal the day and year above written.

/S/ NANCY H. BEATTY

Notary Public

....... Exhibit 23(o)(i) under Form N-1A
....... Exhibit 24 under Item 601/Reg.S-K

POWER OF ATTORNEY

Each person whose signature appears below hereby constitutes and
appoints the Secretary and Assistant Secretaries of FEDERATED SHORT-TERM
MUNICIPAL TRUST 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 and Trustee June 18, 1999
- ----------------------------------------
John F. Donahue (Chief Executive Officer)

/S/GLEN R. JOHNSON President June 18, 1999

Glen R. Johnson

/S/RICHARD J. THOMAS Treasurer June 18, 1999
- ----------------------------------------
Richard J. Thomas (Principal Financial
and Accounting Officer)

/S/THOMAS G. BIGLEY Trustee June 18, 1999

Thomas G. Bigley

/S/JOHN T. CONROY, JR. Trustee June 18, 1999
- ----------------------------------------
John T. Conroy, Jr.

<PAGE>

SIGNATURES TITLE DATE

/S/LAWRENCE D. ELLIS, M.D. Trustee June 18, 1999
- ----------------------------------------
Lawrence D. Ellis, M.D.

/S/PETER E. MADDEN Trustee June 18, 1999

Peter E. Madden

/S/JOHN E. MURRAY, JR. Trustee June 18, 1999
- ----------------------------------------
John E. Murray, Jr.

/S/MARJORIE P. SMUTS Trustee June 18, 1999

Marjorie P. Smuts

Sworn to and subscribed before me this 18 day of JUNE , 1999.

/S/ CHERI S. GOOD
Notarial Seal
Cheri S. Good, Notary Public
Pittsburgh, Allegheny County
My Commission Expires Nov. 19, 2001
Member, Pennsylvania Association of Notaries

<PAGE>

Exhibit 23(o)(ii) under Form N-1A
Exhibit 24 under Item 601/Reg.S-K

POWER OF ATTORNEY

SIGNATURES TITLE DATE

/S/WILLIAM D. DAWSON, III Chief Investment Officer June 18, 1999
- -----------------------------
William D. Dawson, III

Sworn to and subscribed before me this 18 day of JUNE , 1999.

/S/ CHERI S. GOOD

Notarial Seal
Cheri S. Good, Notary Public
Pittsburgh, Allegheny County
My Commission Expires Nov. 19, 2001

Member, Pennsylvania Association of Notaries

<PAGE>

Exhibit 23(o)(iii) under Form N-1A
Exhibit 24 under Item 601/Reg.S-K

POWER OF ATTORNEY

SIGNATURES TITLE DATE

/S/JOHN F. CUNNINGHAM Trustee June 18, 1999

John F. Cunningham

Sworn to and subscribed before me this 18 day of JUNE , 1999.

/S/ CHERI S. GOOD

Notarial Seal
Cheri S. Good, Notary Public
Pittsburgh, Allegheny County
My Commission Expires Nov. 19, 2001

Member, Pennsylvania Association of Notaries

<PAGE>

Exhibit 23(o)(iv) under Form N-1A
Exhibit 24 under Item 601/Reg.S-K

POWER OF ATTORNEY

SIGNATURES TITLE DATE

/S/CHARLES F. MANSFIELD Trustee June 18, 1999

Charles F. Mansfield

Sworn to and subscribed before me this 18 day of JUNE , 1999.

/S/ CHERI S. GOOD

Notarial Seal
Cheri S. Good, Notary Public
Pittsburgh, Allegheny County
My Commission Expires Nov. 19, 2001

Member, Pennsylvania Association of Notaries

<PAGE>

Exhibit 23(o)(v) under Form N-1A
Exhibit 24 under Item 601/Reg.S-K

POWER OF ATTORNEY

SIGNATURES TITLE DATE

/S/JOHN S. WALSH Trustee June 18, 1999

John S. Walsh

Sworn to and subscribed before me this 18 day of JUNE , 1999.

/S/ CHERI S. GOOD

Notarial Seal
Cheri S. Good, Notary Public
Pittsburgh, Allegheny County
My Commission Expires Nov. 19, 2001

Member, Pennsylvania Association of Notaries