SEMI-ANNUAL REPORT
President's Message
Dear Shareholder:
I am pleased to present the Semi-Annual Report to Shareholders for Federated
Short-Term Municipal Trust for the six-month period ended December 31, 1999. The
report begins with an investment review by the fund's portfolio manager, Jeffrey
A. Kozemchak, Senior Vice President, Federated Investment Management Company,
followed by a complete listing of portfolio holdings and the financial
statements for the fund's Institutional Shares and Institutional Service Shares.
On behalf of its shareholders, the fund pursues monthly income free from federal
regular income tax through a portfolio of high-quality, short-term municipal
securities. 1
During the six-month reporting period, tax-free dividends paid to shareholders
totaled $0.21 per share for Institutional Shares and $0.20 per share for
Institutional Service Shares. Total return was 0.93% for Institutional Shares
and 0.80% for Institutional Service Shares in a rising rate environment that saw
the net asset value of both share classes decline from $10.20 on the first day
of the period to $10.08 on the last day of the period. 2 Fund net assets totaled
$213.4 million on December 31, 1999.
Thank you for participating in tax-free income opportunities through Federated
Short-Term Municipal Trust. As always, we welcome your questions, comments or
suggestions.
Sincerely,
[Graphic]
Glen R. Johnson
President
February 15, 2000
1 Income may be subject to the federal alternative minimum tax and state
and local taxes.
2 Past performance is no guarantee of future results. Investment return and
principal value will fluctuate, so that an investor's shares, when redeemed, may
be worth more or less than their original cost.
Investment Review
Commentary from the fund's portfolio manager, Jeffrey A. Kozemchak, CFA,
Senior Vice President, Federated Investment Management Company.
PERFORMANCE
For the six-month reporting period ended December 31, 1999, Federated Short-Term
Municipal Trust produced a total return of 0.93% 1 for Institutional Shares (IS)
and 0.80%1 for Institutional Service Shares (SS). For the 12-month period ended
December 31, 1999, the fund produced total returns of 1.48% (IS) and 1.23%
(SS).2 These one-year total returns are equivalent to pre-tax equivalent returns
of 4.22% (IS) and 3.80% (SS) for investors in the highest federal tax bracket.
Nonetheless, the fund is managed predominately for tax-exempt income, with the
goal of minimal fluctuation of principal value. Accordingly, the largest
contribution to total return will consist of tax-exempt income to the
shareholder. At the end of the reporting period, the fund produced 30- day SEC
yields 3 of 4.25% (IS) and 4.00% (SS) and 30-day distribution rates4 of 4.26%
(IS) and 4.01% (SS). These rates are equivalent to taxable equivalent
distribution rates of 7.05% (IS) and 6.64% (SS) for investors in the highest
federal tax bracket.
MARKET
The short-term municipal bond market in 1999 had what can only be characterized
as a very difficult year, the worst since 1994, as interest rates rose over 100
basis points on the short-term part of the yield curve (2-3 years). However,
despite the rise in interest rates and the small decline in the fund's net asset
value, the fund's incremental income advantage over money market funds partially
offset the price decline, and the fund only marginally under-performed tax-free
and taxable money funds (pre-tax comparison) over the calendar year 1999.
Perhaps the biggest issues threatening the U.S. economy in the latter half of
1998 were alleviated by the second quarter of 1999. The improvements in
international economies, particularly in Asia, and calmer foreign markets laid
the foundation for the Federal Reserve Board (the "Fed") to focus on U.S.
economic releases and the rapid pace of growth. As the year progressed, the Fed
became increasingly concerned with potential inflationary pressures from tighter
labor markets and rising equity wealth. For the most part, inflationary forces
remained tame in 1999 with increases in some commodity prices, such as oil.
Nevertheless, the Fed began a series of three interest rate increases, in part
to reverse the effects of the three rate cuts in the fall of 1998. The Fed cited
constrained labor markets, strong domestic growth, and the need to be pre-
emptive against rising wage demands that were likely to materialize. The moves
came in June, August and November of 1999; each time, the Fed voted to raise the
federal funds target rate by a quarter point, bringing the rate to 5.50% at the
end of the reporting period.
1 Past performance is no guarantee of future results. Investment return and
principal value will fluctuate, so that an investor's shares, when redeemed, may
be worth more or less than their original cost.
2 For the five-year and ten-year periods ended December 31, 1999, IS produced
average annual total returns of 4.56% and 4.56%, respectively. For the five-year
and since-inception (9-1-93) periods, SS produced average annual total returns
of 4.30% and 3.56%, respectively.
3 The 30-day SEC Yield is calculated by dividing the net investment income per
share for the 30 days ended on the date of calculation by the maximum offering
price per share on that date. The figure is then compounded and annualized.
4 The 30-day distribution rate reflects actual distributions made to
shareholders. It is calculated by dividing the monthly annualized dividend plus
short-term capital gains, if any, by the average 30-day offering price.
Interest rates in the short-term municipal market reflected the Fed's interest
rate moves to slow the economy. The yield on 3-year "AA" municipal bonds (a
proxy for the fund) rose about 40 basis points over the six-month reporting
period and bond prices declined in value. Yields began the reporting period at
4.25%, but fell to a period low of 4.10% in late July. In August, yields began a
slow but steady ascent and then moved sharply higher in December to reach 4.60%.
Because yields rose over the reporting period, the fund's net asset value per
share (NAV) declined, although not as much as intermediate-to-longer maturity
bond funds. The NAV decreased from $10.20 per share to $10.08 per share, a
decline of less than 1.20%.
STRATEGY
Over the six-month reporting period, two-year municipal bonds exhibited less
price and yield volatility than comparable U.S. Treasury notes while providing
an attractive after-tax income advantage for those investors at marginal federal
tax rates of 31% or higher. During the reporting period, yields on two-year "AA"
municipal bonds as a percentage of Treasuries averaged close to 72%, but ranged
from 70% to 74%. A higher ratio means that municipal bonds are more attractive
from an after-tax income viewpoint. Yield ratios of 69% or higher show the
attractiveness of municipal bonds for income-oriented investors at federal tax
rates of 31% or above.
Security selection has concentrated on credit quality. Credit spreads have
widened in specific sectors of the municipal bond market over the last half of
1999. However, credit spreads remain tight by historical standards and lower
quality bonds are still hampered by liquidity issues. The fund continues to
emphasize the highest quality instruments, with over 80% of the assets at the
end of the reporting period invested in issues rated "A" or better. We continue
to look for securities with favorable liquidity characteristics and structural
features. Call protection and coupon selection are important determinants of how
a bond will perform as interest rates vary.
Management continues to add value by purchasing bonds in attractive sectors and
through yield curve management. The municipal short-term yield curve (bonds with
maturities between one and five years) remains much steeper than the comparable
maturity Treasury curve. From a relative value standpoint, bonds with maturities
from two to three years offer both value as well as downside protection in a
rising interest rate environment.
At the end of reporting period, net assets of the fund were over $213 million.
Over the six-month reporting period, the weighted average portfolio duration
declined from 2.31 years to 1.99 years. In this rising interest rate
environment, management emphasized the greater price stability of shorter
maturity (two-three year) bonds as well as liquidity and quality. Despite the
maturities of high coupon bonds in the portfolio, management was able to take
advantage of market opportunities to slightly improve the fund's distribution
yield over the reporting period.
Portfolio of Investments
DECEMBER 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING 1 VALUE
<C> <S> <C> <C>
SHORT INTERMEDIATE
MUNICIPAL SECURITIES--
100.6% 2
ALABAMA--4.4%
$ 1,000,000 Alabama State Docks
Department, Docks
Facilities Refunding
Revenue Bonds, 5.25% (MBIA
INS), 10/1/2000 AAA $ 1,008,930
1,000,000 Alabama State Docks
Department, Docks
Facilities Refunding
Revenue Bonds, 5.25% (MBIA
INS), 10/1/2001 AAA 1,013,000
1,855,083 Birmingham, AL, Fire
Equipment Lease Obligation
No. 2, 5.60%, 11/5/2004 NR 1,841,689
3,500,000 Hoover, AL Board of
Education, Warrant
Anticipation Notes
(Series 1999-B), 4.25%,
2/1/2001 NR 3,494,750
2,000,000 Selma, AL IDB, Annual
Tender PCR Refunding Bonds
(Series 1993B), 3.95% TOBs
(International Paper Co.),
Optional Tender 7/15/2000
(@100) BBB+ 1,997,860
TOTAL 9,356,229
ARKANSAS--0.6%
1,290,000 Arkansas Development
Finance Authority, SFM
Revenue Bonds (Series
1997A-R), 6.50% (MBIA
INS), 2/1/2011 AAA 1,327,591
CALIFORNIA--7.9%
12,500,000 Los Angeles, CA Wastewater
System, Revenue Bonds
(Series D), 6.70% (MBIA
INS)/(United States
Treasury PRF)/(Original
Issue Yield: 6.769%),
12/1/2000 (@102) AAA 13,056,000
3,820,000 San Bernardino County, CA,
SFM Revenue Bonds
Mortgage-Backed Securities
Program, 4.875%, 5/1/2015 AAA 3,786,384
TOTAL 16,842,384
COLORADO--3.6%
4,375,000 Arvada, CO Urban Renewal
Authority, Revenue
Refunding Bonds (Series
1997A), 5.25% (MBIA INS),
9/1/2002 AAA 4,441,150
985,000 Colorado HFA, SFM Revenue
Bond, (Series C-1), 7.65%,
12/1/2025 Aa2 1,059,101
915,000 Colorado HFA, SFM Revenue
Bonds (Series 1997C-3),
4.80%, 11/1/2016 Aa2 914,524
445,000 Colorado HFA, Single
Family Program Senior
Bonds (Series 1998C-2),
4.50%, 11/1/2005 Aa2 435,659
235,000 Colorado HFA, Single
Family Program Subordinate
Bonds (Series 1998B),
4.625%, 11/1/2005 A1 230,387
650,000 Denver (City & County), CO,
Airport Special Facilities
Revenue Bonds (Series
1999A), 5.00% (Rental Car
Projects)/(MBIA INS),
1/1/2001 AAA 654,563
TOTAL 7,735,384
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING 1 VALUE
<C> <S> <C> <C>
SHORT INTERMEDIATE
MUNICIPAL SECURITIES--
continued 2
CONNECTICUT--1.9%
$ 2,000,000 Connecticut State Resource
Recovery Authority,
Resource Recovery
Refunding Revenue Bonds,
5.25% (Bridgeport Resco
Co.), 1/1/2002 A2 $ 2,015,260
2,000,000 Connecticut State Resource
Recovery Authority,
Revenue Bonds (Series A),
5.50% (Mid-Conn
System)/(MBIA INS),
11/15/2003 AAA 2,058,420
TOTAL 4,073,680
DISTRICT OF COLUMBIA--3.1%
2,310,000 District of Columbia HFA,
SFM Revenue Bonds (Series
1998A), 6.25% (GNMA Home
Mortgage Program COL),
12/1/2028 AAA 2,369,944
3,000,000 District of Columbia,
Refunding UT GO Bonds
(Series 1999B), 5.50%,
6/1/2001 BBB 3,026,700
1,200,000 District of Columbia,
Revenue Bonds (Series
1999), 5.30% TOBs (819 7th
Street, LLC Issue)/(BB&T
Corp. LOC), Mandatory
Tender 10/1/2004 A 1,192,452
TOTAL 6,589,096
FLORIDA--1.6%
2,000,000 Dade County, FL, Public
Improvement Refunding UT
GO Bonds, 7.20% (FSA INS),
6/1/2001 AAA 2,075,040
1,310,000 Florida Housing Finance
Corp., Homeowner Mortgage
Revenue Bonds, (Series 2),
4.75% (MBIA INS), 7/1/2019 AAA 1,291,817
TOTAL 3,366,857
HAWAII--4.6%
4,660,000 Hawaii State, Highway
Revenue Bonds, (Series
1998), 5.00% (MBIA INS),
7/1/2003 AAA 4,702,406
5,000,000 Hawaii State, UT GO Bonds,
(Series CN), 6.25% (FGIC
LOC), 3/1/2002 AAA 5,166,350
TOTAL 9,868,756
IDAHO--1.5%
3,100,000 Boise, ID Industrial
Development Corp., Multi-
Mode Variable Rate
Industrial Development
Revenue Bonds (Series
1998) Weekly VRDNs
(Multiquip Inc.
Project)/(Bank of Tokyo-
Mitsubishi Ltd. LOC) A- 3,100,000
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING 1 VALUE
<C> <S> <C> <C>
SHORT INTERMEDIATE
MUNICIPAL SECURITIES--
continued 2
ILLINOIS--4.8%
$ 1,585,000 Broadview, IL, Tax
Increment Financing
Revenue Bonds, 4.40%,
7/1/2002 NR $ 1,554,283
990,000 Chicago, IL SFM Revenue
Bonds, (Series A-1), 4.85%
(GNMA COL), 3/1/2015 Aaa 971,695
770,000 Illinois Health Facilities
Authority, Adjustable Rate
Revenue Bonds, (Series
1991B), 5.00% (Highland
Park Hospital)/(FGIC INS),
10/1/2000 AAA 774,166
1,030,000 Illinois Health Facilities
Authority, Revenue Bonds
(Series 1998), 5.25%
(Centegra Health System),
9/1/2003 A- 1,025,015
1,000,000 Illinois Health Facilities
Authority, Revenue
Refunding Bonds
(Series A), 4.80%
(Advocate Health Care
Network)/(Original Issue
Yield: 4.90%), 8/15/2002 AA 994,870
2,000,000 Illinois Health Facilities
Authority, Revenue
Refunding Bonds
(Series A), 5.00%
(Advocate Health Care
Network), 8/15/2003 AA 1,993,020
3,000,000 Illinois State, UT GO
Bonds, 5.10% (FGIC INS),
9/1/2000 AAA 3,020,190
TOTAL 10,333,239
INDIANA--2.8%
3,900,000 Indiana Health Facility
Financing Authority,
Hospital Revenue Bonds
(Series 1996A), 4.75%
(Clarian Health Partners,
Inc.)/(Original Issue
Yield: 4.85%), 2/15/2002 AA 3,889,704
1,130,000 Indiana State HFA, SFM
Revenue Bonds,(Series C-
3), 4.75%, 1/1/2029 Aaa 1,115,457
200,000 Portage, IN, Revenue Bonds
(Series 1998B) Weekly
VRDNs (American Iron Oxide
Co. Project)/(Bank of
Tokyo-Mitsubishi Ltd. LOC) NR 200,000
800,000 Spencer County, IN, PCR
Bonds Weekly VRDNs
(American Iron Oxide Co.
Project)/(Bank of Tokyo-
Mitsubishi Ltd. LOC) A1 800,000
TOTAL 6,005,161
KANSAS--1.7%
955,000 Sedgwick & Shawnee
Counties, KS, SFM Revenue
Bonds, (Series 1998 A-1),
4.70% (GNMA Home Mortgage
Program COL), 12/1/2008 Aaa 942,996
1,925,000 Sedgwick & Shawnee
Counties, KS, SFM Revenue
Bonds, (Series 1998 A-1),
5.00% (GNMA Home Mortgage
Program COL), 6/1/2013 Aaa 1,875,720
855,000 Sedgwick & Shawnee
Counties, KS, SFM Revenue
Bonds (Series 1997A-2),
4.90% (GNMA Home Mortgage
Program COL), 6/1/2016 Aaa 843,868
TOTAL 3,662,584
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING 1 VALUE
<C> <S> <C> <C>
SHORT INTERMEDIATE
MUNICIPAL SECURITIES--
continued 2
KENTUCKY--0.5%
$ 1,155,000 Jefferson County, KY, UT GO
Trust Certificates, 5.25%,
3/1/2000 A+ $ 1,156,871
LOUISIANA--9.3%
2,200,000 Lake Charles, LA Harbor &
Terminal District, Port
Facilities Revenue
Refunding Bond, Trunkline
Lining Co. Project, 7.75%
(Panhandle Eastern Corp.),
8/15/2022 A3 2,373,580
2,000,000 Louisiana Agricultural
Finance Authority, Revenue
Bonds, 5.20% (Louisiana
Pacific Corporation
Project)/(Hibernia
National Bank LOC),
5/1/2004 A3 1,973,960
4,000,000 Louisiana PFA, Health &
Education Capital
Facilities Revenue Bonds
(Series A), 5.00% TOBs
(AMBAC INS), Mandatory
Tender 6/1/2002 (@100) AAA 4,006,120
7,000,000 Louisiana State, Refunding
GO Bonds (Series 1996A),
6.00% (FGIC INS), 8/1/2000 AAA 7,077,770
2,500,000 St. Charles Parish, LA, PCR
Refunding Bonds (Series
1999-C), 5.35% TOBs
(Entergy Louisiana, Inc.),
Mandatory Tender 10/1/2003
(@100) BBB- 2,491,575
2,000,000 St. Charles Parish, LA, PCR
Refunding Bonds (Series
1999A), 4.85% TOBs
(Entergy Louisiana, Inc.),
Mandatory Tender 6/1/2002
(@100) BBB- 1,977,520
TOTAL 19,900,525
MASSACHUSETTS--1.2%
2,495,000 Massachusetts HEFA,
Revenue Bonds (Series
1999A), 5.25% (Caritas
Christi Obligated Group),
7/1/2004 BBB 2,455,629
MICHIGAN--3.1%
1,000,000 Michigan State Building
Authority, Revenue Bonds
(Series II), 6.25% (AMBAC
INS)/(Original Issue
Yield: 6.35%), 10/1/2000 AAA 1,016,460
925,000 Michigan State Hospital
Finance Authority,
Hospital Revenue &
Refunding Bonds (Series
1998A), 4.60% (Hackley
Hospital Obligated Group),
5/1/2003 A3 900,219
1,005,000 Michigan State Hospital
Finance Authority,
Hospital Revenue &
Refunding Bonds (Series
1998A), 4.70% (Hackley
Hospital Obligated Group),
5/1/2004 A3 970,247
820,000 Michigan State Hospital
Finance Authority, Revenue
& Refunding Bonds (Series
1998A), 4.40% (McLaren
Health Care
Corp.)/(Original Issue
Yield: 4.45%), 6/1/2004 A1 788,996
3,000,000 Michigan Underground
Storage Tank Financial
Assurance Authority,
Revenue Refunding Bonds
(Series I), 5.00%,
5/1/2001 AAA 3,022,560
TOTAL 6,698,482
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING 1 VALUE
<C> <S> <C> <C>
SHORT INTERMEDIATE
MUNICIPAL SECURITIES--
continued 2
MISSISSIPPI--0.8%
$ 840,000 Mississippi Home Corp.,
SFM Revenue Bonds (Series
1998A-4), 5.125% (GNMA
Home Mortgage Program
COL), 12/1/2017 Aaa $ 835,582
900,000 Mississippi Home Corp.,
SFM Revenue Bonds (Series
1998A), 5.25% (GNMA Home
Mortgage Program COL),
12/1/2018 Aaa 893,772
TOTAL 1,729,354
MISSOURI--1.0%
2,000,000 Springfield, MO State
Highway Improvement Corp.,
Transportation Revenue
Bonds (Series 1997), 5.25%
(AMBAC INS), 8/1/2001 AAA 2,023,660
NEW HAMPSHIRE--1.4%
3,000,000 New Hampshire Business
Finance Authority, PCR
Refunding Bonds, 4.55%
TOBs (United Illuminating
Co.), Mandatory Tender
2/1/2004 (@100) BBB+ 2,876,280
NEW MEXICO--0.9%
1,820,000 Santa Fe Solid Waste
Management Agency, NM,
Facility Revenue Bonds
(Series 1996), 5.00%,
6/1/2003 NR 1,815,850
NEW YORK--6.1%
2,500,000 Nassau County, NY, General
Improvement UT GO Bonds
(Series 1999D), 5.25% (FSA
INS), 9/1/2003 Aaa 2,542,700
3,200,000 New York City, NY
Transitional Finance
Authority, (Series 1998A-
1) Weekly VRDNs (Morgan
Guaranty Trust Co., New
York LIQ) AA 3,200,000
4,000,000 New York City, NY, UT GO
Bonds (Series 1991B),
7.50% (Original Issue
Yield: 7.70%), 2/1/2003 A- 4,252,520
2,975,000 New York State Mortgage
Agency, Homeowner Mortgage
Revenue Bonds, Series 71,
4.75%, 10/1/2021 Aa2 2,950,486
TOTAL 12,945,706
NORTH CAROLINA--2.4%
2,710,000 North Carolina HFA, SFM
Revenue Bonds (Series
1997TT), 4.90%, 9/1/2024 AA 2,692,927
1,300,000 Person County, NC
Industrial Facilities &
PCFA Daily VRDNs (Carolina
Power & Light
Co.)/(SunTrust Bank,
Atlanta LOC) Aa3 1,300,000
1,100,000 Wake County, NC Industrial
Facilities & PCFA, (Series
1990B) Daily VRDNs
(Carolina Power & Light
Co.)/(Bank of New York, New
York LOC) AA- 1,100,000
TOTAL 5,092,927
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING 1 VALUE
<C> <S> <C> <C>
SHORT INTERMEDIATE
MUNICIPAL SECURITIES--
continued 2
OHIO--6.9%
$ 1,000,000 Cincinnati City School
District, OH, Tax
Anticipation Notes
(Series A), 5.50% (AMBAC
INS), 12/1/2000 AAA $ 1,013,310
1,800,000 Cuyahoga County, OH
Hospital Authority,
(Series 1997 D) Daily VRDNs
(Cleveland Clinic)/(Bank
of America, N.A. LIQ) AA- 1,800,000
3,000,000 Hamilton County, OH, Local
Cooling Facilities Revenue
Bonds (Series 1998), 4.90%
TOBs (Trigen-Cinergy
Solutions of Cincinnati
LLC)/(Cinergy Corp. GTD),
Mandatory Tender 6/1/2004
(@100) BBB+ 2,902,200
1,610,000 Knox County, OH, Hospital
Facilities Revenue
Refunding Bonds (Series
1998), 4.20% (Knox
Community Hospital)/(Asset
Guaranty INS)/(Original
Issue Yield: 4.30%),
6/1/2003 AA 1,559,832
1,750,000 Knox County, OH, Hospital
Facilities Revenue
Refunding Bonds (Series
1998), 4.30% (Knox
Community Hospital)/(Asset
Guaranty INS)/(Original
Issue Yield: 4.40%),
6/1/2004 AA 1,679,685
1,030,000 Ohio HFA, Residential
Mortgage Revenue Bonds
(Series 1997D-1), 4.85%
(GNMA Home Mortgage
Program COL), 3/1/2015 AAA 1,016,765
1,960,000 Ohio HFA, Residential
Mortgage Revenue Bonds
(Series 1998A-1), 4.60%
(GNMA Home Mortgage
Program COL), 9/1/2026 AAA 1,930,561
900,000 Ohio State Air Quality
Development Authority,
(Series B) Daily VRDNs
(Cincinnati Gas and
Electric Co.)/(Canadian
Imperial Bank of Commerce
LOC) AA- 900,000
2,000,000 Ohio State Air Quality
Development Authority,
Revenue Bonds (Series B)
Daily VRDNs (Cincinnati
Gas and Electric
Co.)/(J.P. Morgan
Delaware, Wilmington LOC) AAA 2,000,000
TOTAL 14,802,353
OKLAHOMA--2.5%
3,985,000 Oklahoma HFA, SFM Revenue
Bonds (Series 1998D-2),
6.25% (GNMA Home Mortgage
Program COL), 9/1/2029 Aaa 4,177,436
1,055,000 Washington County, OK
Medical Authority,
Hospital Revenue Bonds
(Series 1996A), 4.75%
(Jane Phillips Medical
Center)/(AMBAC
INS)/(Original Issue
Yield: 4.90%), 11/1/2001 AAA 1,058,017
TOTAL 5,235,453
OREGON--0.9%
2,000,000 Oregon State Department of
Transportation, Regional
Light Rail Revenue Bond,
Westside Project, 5.50%
(MBIA INS), 6/1/2000 AAA 2,012,180
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING 1 VALUE
<C> <S> <C> <C>
SHORT INTERMEDIATE
MUNICIPAL SECURITIES--
continued 2
PENNSYLVANIA--6.9%
$ 4,000,000 Allegheny County, PA, UT GO
Bonds (Series C-49),
5.00%, 4/1/2004 AAA $ 4,033,960
5,000,000 Montgomery County, PA IDA,
PCR Refunding Bonds
(Series 1999A), 5.20% TOBs
(Peco Energy Co.),
Mandatory Tender 10/1/2004
(@100) BBB+ 4,947,850
500,000 Philadelphia, PA IDA,
Airport Revenue Bonds,
(Series 1998A), 4.50%
(Philadelphia Airport
System)/(FGIC INS),
7/1/2003 AAA 492,615
3,773,821 Philadelphia, PA Municipal
Authority, Equipment
Revenue Bonds (Series
1997A), 5.297%
(Philadelphia, PA Gas
Works)/(AMBAC INS),
10/1/2004 AAA 3,808,464
1,500,000 Southeastern, PA
Transportation Authority,
Special Revenue Bonds,
5.25% (FGIC INS), 3/1/2001 AAA 1,515,750
TOTAL 14,798,639
RHODE ISLAND--1.3%
950,000 Central Falls Detention
Facility Corporation, RI,
Detention Facility Revenue
Refunding Bonds (Series
1998A), 4.10% (Donald W.
Wyatt Detention
Facility)/(Asset Guaranty
INS), 1/15/2003 AA 920,645
990,000 Central Falls Detention
Facility Corporation, RI,
Detention Facility Revenue
Refunding Bonds (Series
1998A), 4.20% (Donald W.
Wyatt Detention
Facility)/(Asset Guaranty
INS), 1/15/2004 AA 949,083
1,035,000 Central Falls Detention
Facility Corporation, RI,
Detention Facility Revenue
Refunding Bonds (Series
1998A), 4.30% (Donald W.
Wyatt Detention
Facility)/(Asset Guaranty
INS), 1/15/2005 AA 983,271
TOTAL 2,852,999
TEXAS--6.9%
5,000,000 Alliance Airport Authority
Inc., TX, Special
Facilities Revenue Bonds,
7.50% (American Airlines
Inc.)/(Original Issue
Yield: 8.00%), 12/1/2029 BBB- 5,156,000
1,000,000 Brazos River Authority,
TX, Revenue Refunding
Bonds (Series 1999C),
5.20% TOBs (Reliant
Energy, Inc.), Mandatory
Tender 12/1/2002 (@100) BBB+ 995,950
2,000,000 Fort Worth, TX, Refunding
LT GO Bonds (Series A),
5.10% (Original Issue
Yield: 5.20%), 3/1/2000 AA 2,003,460
2,500,000 Harris County, TX HFDC,
Hospital Revenue Bonds,
(Series 1997A), 5.25%
(Memorial Hospital
System), 6/1/2002 AAA 2,528,000
2,070,000 Lewisville, TX,
Combination Contract
Revenue & Special
Assessment Bonds (Series
1997), 4.95% TOBs (Wells
Fargo Bank, N.A. LOC),
Mandatory Tender 11/1/2003
(@100) AAA 2,111,980
2,000,000 Matagorda County, TX
Navigation District Number
One, PCR Refunding Bonds
(Series 1999A), 4.90% TOBs
(Central Power & Light
Co.), Mandatory Tender
11/1/2001 A- 1,995,020
TOTAL 14,790,410
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING 1 VALUE
<C> <S> <C> <C>
SHORT INTERMEDIATE
MUNICIPAL SECURITIES--
continued 2
WASHINGTON--3.7%
$ 1,680,000 Tacoma, WA, Solid Waste
Utility Revenue Refunding
Bonds (Series 1997B),
5.50% (AMBAC INS),
12/1/2002 AAA $ 1,717,867
3,000,000 Washington State Public
Power Supply System,
Nuclear Project No. 2
Revenue Refunding Bond,
(Series 1997B), 5.50%,
7/1/2003 AA- 3,062,580
3,000,000 Washington State Public
Power Supply System,
Refunding Revenue Bonds
(Nuclear Project No. 2)
(Series 1997A), 5.00%,
7/1/2001 AA- 3,018,270
TOTAL 7,798,717
WEST VIRGINIA--0.7%
1,500,000 Cabell County, WV Board of
Education, Refunding UT GO
Bonds, 6.00%, 5/1/2001 A+ 1,525,950
WISCONSIN--5.6%
6,500,000 Wisconsin HEFA, Revenue
Bonds (Series 1996), 5.50%
(Gundersen Lutheran)/(FSA
INS), 12/1/2000 AAA 6,572,475
3,335,000 Wisconsin HEFA, Revenue
Bonds (Series 1997), 4.70%
(Marshfield Clinic,
WI)/(MBIA INS)/(Original
Issue Yield: 4.85%),
2/15/2002 AAA 3,327,630
2,000,000 Wisconsin Housing &
Economic Development
Authority, Home Ownership
Revenue Bonds (Series I),
4.15%, 4/1/2001 AA- 1,992,480
TOTAL 11,892,585
TOTAL INVESTMENTS
(IDENTIFIED COST
$216,042,502) 3 $ 214,665,531
</TABLE>
1 Please refer to the Appendix of the Statement of Additional Information for an
explanation of the credit ratings. Current credit ratings are unaudited.
2 Securities that are subject to alternate minimum tax represent 22.7% of the
portfolio as calculated based upon total portfolio market value.
3 The cost of investments for federal tax purposes amounts to $216,042,502. The
net unrealized depreciation of investments on a federal tax basis amounts to
$1,376,971 which is comprised of $429,338 appreciation and $1,806,309
depreciation at December 31, 1999.
Note: The categories of investments are shown as a percentage of net assets
($213,369,271) at December 31, 1999.
The following acronyms are used throughout this portfolio:
AMBAC --American Municipal Bond Assurance Corporation COL --Collateralized FGIC
- --Financial Guaranty Insurance Company FSA --Financial Security Assurance GNMA
- --Government National Mortgage Association GO --General Obligation GTD
- --Guaranteed HEFA --Health and Education Facilities Authority HFA --Housing
Finance Authority HFDC --Health Facility Development Corporation IDA
- --Industrial Development Authority IDB --Industrial Development Bond INS
- --Insured LIQ --Liquidity Agreement LOC --Letter of Credit LT --Limited Tax MBIA
- --Municipal Bond Investors Assurance PCR --Pollution Control Revenue PCFA
- --Pollution Control Finance Authority PFA --Public Facility Authority PRF
- --Prerefunded SFM --Single Family Mortgage TOBs --Tender Option Bonds UT
- --Unlimited Tax VRDNs --Variable Rate Demand Notes
See Notes which are an integral part of the Financial Statements
Statement of Assets and Liabilities
DECEMBER 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Total investments in
securities, at value
(identified and tax cost
$216,042,502) $ 214,665,531
Cash 302,511
Income receivable 2,715,598
Receivable for investments
sold 405,000
Receivable for shares sold 115,851
Prepaid expense 31,953
TOTAL ASSETS 218,236,444
LIABILITIES:
Payable for investments
purchased $ 4,109,236
Payable for shares
redeemed 341
Income distribution
payable 747,387
Accrued expenses 10,209
TOTAL LIABILITIES 4,867,173
Net assets for 21,170,272
shares outstanding $ 213,369,271
NET ASSETS CONSIST OF:
Paid in capital $ 219,304,988
Net unrealized
depreciation of
investments (1,376,971)
Accumulated net realized
loss on investments (4,558,746)
TOTAL NET ASSETS $ 213,369,271
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PROCEEDS PER SHARE
INSTITUTIONAL SHARES:
$194,583,545 / 19,306,327
shares outstanding $10.08
INSTITUTIONAL SERVICE
SHARES:
$18,785,726 / 1,863,945
shares outstanding $10.08
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Operations
SIX MONTHS ENDED DECEMBER 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 5,106,736
EXPENSES:
Investment adviser fee $ 438,510
Administrative personnel
and services fee 82,644
Custodian fees 7,296
Transfer and dividend
disbursing agent fees and
expenses 29,132
Trustees' fees 5,815
Auditing fees 6,577
Legal fees 1,436
Portfolio accounting fees 37,950
Distribution services fee--
Institutional Service
Shares 26,311
Shareholder services fee--
Institutional Shares 247,757
Shareholder services fee--
Institutional Service
Shares 26,311
Share registration costs 22,020
Printing and postage 5,632
Insurance premiums 805
Miscellaneous 4,527
TOTAL EXPENSES 942,723
WAIVERS:
Waiver of investment
adviser fee $ (127,000)
Waiver of distribution
services fee--Institutional
Service Shares (25,259)
Waiver of shareholder
services fee--Institutional
Shares (247,757)
Waiver of shareholder
services fee--Institutional
Service Shares (1,052)
TOTAL WAIVERS (401,068)
Net expenses 541,655
Net investment income 4,565,081
REALIZED AND UNREALIZED
GAIN (LOSS) ON
INVESTMENTS:
Net realized loss on
investments (333,270)
Net change in unrealized
depreciation of
investments (2,163,117)
Net realized and
unrealized loss on
investments (2,496,387)
Change in net assets
resulting from operations $ 2,068,694
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR
(unaudited) ENDED
DECEMBER 31, JUNE 30,
1999 1999
<S> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net investment income $ 4,565,081 $ 8,865,617
Net realized gain (loss) on
investments (($333,270)
and $48,744, respectively,
as computed for federal tax
purposes) (333,270) (200,513)
Net change in unrealized
depreciation of
investments (2,163,117) (2,021,010)
CHANGE IN NET ASSETS
RESULTING FROM OPERATIONS 2,068,694 6,644,094
DISTRIBUTIONS TO
SHAREHOLDERS:
Distributions from net
investment income
Institutional Shares (4,150,646) (8,248,977)
Institutional Service
Shares (414,435) (616,640)
CHANGE IN NET ASSETS
RESULTING FROM
DISTRIBUTIONS
TO SHAREHOLDERS (4,565,081) (8,865,617)
SHARE TRANSACTIONS:
Proceeds from sale of
shares 43,827,216 113,101,471
Net asset value of shares
issued to shareholders in
payment of
distributions declared 1,699,283 3,922,616
Cost of shares redeemed (53,653,863) (87,078,787)
CHANGE IN NET ASSETS
RESULTING FROM SHARE
TRANSACTIONS (8,127,364) 29,945,300
Change in net assets (10,623,751) 27,723,777
NET ASSETS:
Beginning of period 223,993,022 196,269,245
End of period $ 213,369,271 $ 223,993,022
</TABLE>
See Notes which are an integral part of the Financial Statements
Financial Highlights-Institutional Shares
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(unaudited)
DECEMBER 31, YEAR ENDED JUNE 30,
1999 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $10.20 $10.29 $10.26 $10.24 $10.28 $10.15
INCOME FROM
INVESTMENT OPERATIONS:
Net investment income 0.21 0.44 0.44 0.44 0.43 0.42
Net realized and
unrealized gain (loss) on
investments (0.12) (0.09) 0.03 0.02 (0.04) 0.13
TOTAL FROM
INVESTMENT OPERATIONS 0.09 0.35 0.47 0.46 0.39 0.55
LESS DISTRIBUTIONS:
Distributions from net
investment income (0.21) (0.44) (0.44) (0.44) (0.43) (0.42)
NET ASSET VALUE, END
OF PERIOD $10.08 $10.20 $10.29 $10.26 $10.24 $10.28
TOTAL RETURN 1 0.93% 3.39% 4.68% 4.59% 3.82% 5.52%
RATIOS TO AVERAGE
NET ASSETS:
Expenses 0.47% 2 0.47% 0.47% 0.46% 0.47% 0.46%
Net investment income 4.19% 2 4.21% 4.28% 4.30% 4.14% 4.09%
Expense
waiver/reimbursement 3 0.37% 2 0.37% -- -- -- --
SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $194,584 $202,226 $184,903 $210,169 $189,467 $217,713
Portfolio turnover 23% 19% 33% 50% 20% 33%
</TABLE>
1 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
2 Computed on an annualized basis.
3 This voluntary expense decrease is reflected in both the expense and the net
investment income ratios shown above.
See Notes which are an integral part of the Financial Statements
Financial Highlights-Institutional Service Shares
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(unaudited)
DECEMBER 31, YEAR ENDED JUNE 30,
1999 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $10.20 $10.29 $10.26 $10.24 $10.28 $10.15
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income 0.20 0.41 0.42 0.42 0.40 0.39
Net realized and
unrealized gain (loss) on
investments (0.12) (0.09) 0.03 0.02 (0.04) 0.13
TOTAL FROM
INVESTMENT OPERATIONS 0.08 0.32 0.45 0.44 0.36 0.52
LESS DISTRIBUTIONS:
Distributions from net
investment income (0.20) (0.41) (0.42) (0.42) (0.40) (0.39)
NET ASSET VALUE, END
OF PERIOD $10.08 $10.20 $10.29 $10.26 $10.24 $10.28
TOTAL RETURN 1 0.80% 3.13% 4.41% 4.33% 3.56% 5.26%
RATIOS TO AVERAGE NET
ASSETS:
Expenses 0.72% 2 0.72% 0.72% 0.71% 0.72% 0.71%
Net investment income 3.94% 2 3.97% 4.05% 4.05% 3.90% 3.69%
Expense
waiver/reimbursement 3 0.37% 2 0.37% -- -- -- --
SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $18,786 $21,767 $11,367 $6,758 $6,209 $5,223
Portfolio turnover 23% 19% 33% 50% 20% 33%
</TABLE>
1 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
2 Computed on an annualized basis.
3 This voluntary expense decrease is reflected in both the expense and the net
investment income ratios shown above.
See Notes which are an integral part of the Financial Statements
Notes to Financial Statements
DECEMBER 31, 1999 (UNAUDITED)
ORGANIZATION
Federated Short-Term
Municipal Trust (the "Fund")
is registered under the
Investment Company Act of
1940, as amended (the "Act"), as a diversified, open-end management investment
company. The Fund offers two classes of shares: Institutional Shares and
Institutional Service Shares. The investment objective of the Fund is to provide
dividend income which is exempt from federal regular income tax. The Fund
pursues this investment objective by investing in a portfolio of municipal
securities with a dollar-weighted average maturity of less than three years.
SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS
Municipal bonds are valued by an independent pricing service, taking into
consideration yield, liquidity, risk, credit quality, coupon, maturity, type of
issue, and any other factors or market data the pricing service deems relevant.
Short-term securities are valued according to the mean between bid and ask
prices provided by an independent pricing service. However, short-term
securities with remaining maturities of 60 days or less at the time of purchase
may be valued at amortized cost, which approximates fair market value.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS
Interest income and expenses are accrued daily. Bond premium and discount, if
applicable, are amortized as required by the Internal Revenue Code, as amended
(the "Code"). Distributions to shareholders are recorded on the ex- dividend
date. Non-cash dividends included in dividend income, if any, are recorded at
fair value. The Fund offers multiple classes of shares, which differ in their
respective distribution and service fees. All shareholders bear the common
expenses of the Fund based on average daily net assets of each class, without
distinction between share classes. Dividends are declared separately for each
class. No class has preferential dividend rights; differences in per share
dividend rates are generally due to differences in separate class expenses.
FEDERAL TAXES
It is the Fund's policy to comply with the provisions of the Code applicable to
regulated investment companies and to distribute to shareholders each year
substantially all of its income. Accordingly, no provisions for federal tax is
necessary.
At June 30, 1999, the Fund, for federal tax purposes, had a capital loss
carryforward of $3,982,020 which will reduce the Fund's taxable income arising
from future net realized gain on investments, if any, to the extent permitted by
the Code, and thus will reduce the amount of the distributions to shareholders
which would otherwise be necessary to relieve the Fund of any liability for
federal tax. Pursuant to the Code, such capital loss carryforward will expire as
follows:
<TABLE>
<CAPTION>
EXPIRATION EXPIRATION
YEAR AMOUNT
<S> <C>
2001 $ 25,213
2003 1,189,491
2004 2,597,123
2005 170,193
</TABLE>
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Fund may engage in when-issued or delayed delivery transactions. The Fund
records when-issued securities on the trade date and maintains security
positions such that sufficient liquid assets will be available to make payment
for the securities purchased. Securities purchased on a when- issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date. Losses may occur on these transactions due to changes in market
conditions or the failure of counterparties to perform under the contract.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts of assets, liabilities, expenses and revenues reported in the
financial statements. Actual results could differ from those estimated.
OTHER
Investment transactions are accounted for on a trade date basis.
SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
DECEMBER 31, 1999 JUNE 30, 1999
INSTITUTIONAL SHARES: SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Shares sold 4,021,959 $ 40,767,407 8,901,686 $ 91,940,247
Shares issued to
shareholders in payment of
distributions declared 146,301 1,485,065 342,196 3,533,322
Shares redeemed (4,696,121) (47,634,073) (7,376,339) (76,161,673)
NET CHANGE RESULTING
FROM INSTITUTIONAL SHARE
TRANSACTIONS (527,861) $ (5,381,601) 1,867,543 $ 19,311,896
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
DECEMBER 31, 1999 JUNE 30, 1999
INSTITUTIONAL SERVICE
SHARES: SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Shares sold 301,453 $ 3,059,809 2,051,296 $ 21,161,224
Shares issued to
shareholders in payment of
distributions declared 21,106 214,218 37,712 389,294
Shares redeemed (593,595) (6,019,790) (1,058,494) (10,917,114)
NET CHANGE RESULTING
FROM INSTITUTIONAL SERVICE
SHARE TRANSACTIONS (271,036) $ (2,745,763) 1,030,514 $ 10,633,404
NET CHANGE RESULTING
FROM SHARE TRANSACTIONS (798,897) $ (8,127,364) 2,898,057 $ 29,945,300
</TABLE>
INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISER FEE
Federated Investment Management Company, the Fund's investment adviser (the
"Adviser"), receives for its services an annual investment Adviser fee equal to
0.40% of the Fund's average daily net assets. The Adviser will waive, to the
extent of its advisory fee, the amount, if any, by which the Fund's aggregate
annual operating expenses (excluding interest, taxes, brokerage commissions,
expenses of registering and qualifying the Fund and its shares under federal and
state laws and regulations, expenses of withholding taxes, distribution and
shareholder services fees, and extraordinary expenses) exceed 0.45% of average
daily net assets of the Fund.
ADMINISTRATIVE FEE
Federated Services Company ("FServ"), under the Administrative Services
Agreement, provides the Fund with administrative personnel and services. The fee
paid to FServ is based on a scale that ranges from 0.15% to 0.075% of the
average aggregate daily net assets of all funds advised by subsidiaries of
Federated Investors, Inc., subject to a $125,000 minimum per portfolio and
$30,000 per each additional class.
DISTRIBUTION SERVICES FEE
The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b- 1
under the Act. Under the terms of the Plan, the Fund will compensate Federated
Securities Corp. ("FSC"), the principal distributor, from the net assets of the
Fund to finance activities intended to result in the sale of the Fund's
Institutional Service Shares. The Plan provides that the Fund may incur
distribution expenses of up to 0.25% of the average daily net assets of the
Institutional Service Shares, annually, to compensate FSC. The distributor may
voluntarily choose to waive any portion of its fee. The distributor can modify
or terminate this voluntarily waiver at any time at its sole discretion.
SHAREHOLDER SERVICES FEE
Under the terms of a Shareholder Services Agreement with Federated Shareholder
Services Company ("FSSC"), the Fund will pay FSSC up to 0.25% of average daily
net assets of the Trust for the period. The fee paid to FSSC is used to finance
certain services for shareholders and to maintain shareholder accounts. FSSC may
voluntarily choose to waive any portion of its fee. FSSC can modify or terminate
this voluntary waiver at any time at its sole discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES
FServ, through its subsidiary FSSC, serves as transfer and dividend disbursing
agent for the Fund. The fee paid to FSSC is based on the size, type and number
of accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES
FServ maintains the Fund's accounting records for which it receives a fee. The
fee is based on the level of the Fund's average daily net assets for the period,
plus out-of-pocket expenses.
INTERFUND TRANSACTIONS
During the year ended December 31, 1999, the Fund engaged in purchase and sale
transactions with funds that have a common investment adviser (or affiliated
investment advisers), common Directors/Trustees, and/or common Officers. These
purchase and sale transactions compiled with Rule 17a-7 under the Act and
amounted to $99,148,500 and $81,830,000, respectively.
GENERAL
Certain of the Officers and Trustees of the Fund are Officers and Directors or
Trustees of the above companies.
INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities (and in-kind
contributions), for the reporting period ended December 31, 1999, were as
follows:
<TABLE>
<CAPTION>
<S> <C>
Purchases $ 47,325,463
Sales $ 52,225,630
</TABLE>
Trustees
JOHN F. DONAHUE
THOMAS G. BIGLEY
JOHN T. CONROY, JR.
NICHOLAS P. CONSTANTAKIS
JOHN F. CUNNINGHAM
J. CHRISTOPHER DONAHUE
LAWRENCE D. ELLIS, M.D.
PETER E. MADDEN
CHARLES F. MANSFIELD, JR.
JOHN E. MURRAY, JR., J.D., S.J.D.
MARJORIE P. SMUTS
JOHN S. WALSH
Officers
JOHN F. DONAHUE
Chairman
GLEN R. JOHNSON
President
J. CHRISTOPHER DONAHUE
Executive Vice President
EDWARD C. GONZALES
Executive Vice President
JOHN W. MCGONIGLE
Executive Vice President and Secretary
RICHARD B. FISHER
Vice President
RICHARD J. THOMAS
Treasurer
LESLIE K. ROSS
Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risk,
including the possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the fund's prospectus which contains facts concerning
its objective and policies, management fees, expenses and other information.
[Graphic]
Federated
World-Class Investment Manager
SEMI-ANNUAL REPORT
Federated Short-Term Municipal Trust
SEMI-ANNUAL REPORT TO SHAREHOLDERS
DECEMBER 31, 1999
[Graphic]
Federated
Federated Short-Term Municipal Trust
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
1-800-341-7400
WWW.FEDERATEDINVESTORS.COM
Federated Securities Corp., Distributor
Cusip 313907107
Cusip 313907206
8020108 (2/00)
[Graphic]
