1933 Act File No. 2-75670
1940 Act File No. 811-3375
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. 27 X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 25 X
FEDERATED GNMA TRUST
(Exact Name of Registrant as Specified in Charter)
Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779
(Address of Principal Executive Offices)
(412) 288-1900
(Registrant's Telephone Number)
John W. McGonigle, Esquire,
Federated Investors Tower,
Pittsburgh, Pennsylvania 15222-3779
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b)
X on March 31, 1995 pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a) (i)
on pursuant to paragraph (a) (i).
75 days after filing pursuant to paragraph (a)(ii)
on _________________ pursuant to paragraph (a)(ii) of Rule 485.
If appropriate, check the following box:
This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Registrant has filed with the Securities and Exchange Commission a declaration
pursuant to Rule 24f-2 under the Investment Company Act of 1940, and:
filed the Notice required by that Rule on _________________; or
intends to file the Notice required by that Rule on or about ____________;
or
during the most recent fiscal year did not sell any securities pursuant to
Rule 24f-2 under the Investment Company Act of 1940, and, pursuant to
Rule 24f-2(b)(2), need not file the Notice.
Copies to:
Matthew G. Maloney, Esquire
Dickstein, Shapiro & Morin, L.L.P
2101 L Street, N.W.
Washington, D.C. 20037
CROSS REFERENCE SHEET
This Amendment to the Registration Statement of FEDERATED GNMA TRUST,
which consists of one portfolio: Federated GNMA Trust, which is offered in
two separate classes of shares, (a) Institutional Shares and (b) Institutional
Service Shares, relates to both Institutional Shares and Institutional Service
Shares, and is comprised of the following:
PART A. INFORMATION REQUIRED IN A PROSPECTUS.
Prospectus Heading
(Rule 404(c) Cross Reference)
Item 1. Cover Page Cover Page (a,b).
Item 2. Synopsis Summary of Trust Expenses
(a,b).
Item 3. Condensed Financial
Information. Financial Highlights (a,b);
Performance Information (a,b).
Item 4. General Description of
Registrant General Information (a,b);
Investment Information (a,b);
Investment Objective (a,b);
Investment Policies (a,b);
Investment Limitations (a,b).
Item 5. Management of the Trust Trust Information (a,b);
Management of the Trust (a,b);
Distribution of Institutional
Shares (a); Distribution of
Institutional Service Shares
(b); Distribution and
Shareholder Services Plans
(b); Shareholder Service Plans
(a); Administration of the
Trust (a,b).
Item 6. Capital Stock and Other
Securities Dividends (a,b); Capital Gains
(a,b); Shareholder Information
(a,b); Voting Rights (a,b);
Massachusetts Partnership Law
(a,b); Tax Information (a,b);
Federal Income Tax (a,b);
Pennsylvania Corporate and
Personal Property Taxes (a,b);
Other Classes of Shares (a,b).
Item 7. Purchase of Securities
Being Offered Investing in Institutional
Shares (a); Investing in
Institutional Service Shares
(b); Share Purchases (a,b);
Minimum Investment Required
(a,b); What Shares Cost (a,b);
Exchanging Securities for
Trust Shares (a,b);
Subaccounting Services (a,b);
Certificates and Confirmations
(a,b); Net Asset Value (a,b).
Item 8. Redemption or Repurchase Redeeming Institutional Shares
(a); Redeeming Institutional
Service Shares (b); Telephone
Redemption (a,b); Written
Requests (a,b); Accounts With
Low Balances (a,b).
Item 9. Legal Proceedings None.
PART B. INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION.
Item 10. Cover Page Cover Page (a,b).
Item 11. Table of Contents Table of Contents (a,b).
Item 12. General Information and
History General Information About the
Trust (a,b).
Item 13. Investment Objectives and
Policies Investment Objective and
Policies (a,b).
Item 14. Management of the Registrant Federated GNMA Trust
Management (a,b); Officers and
Trustees (a,b); Trustees'
Compensation (a,b).
Item 15. Control Persons and Principal
Holders of Securities Trust Ownership (a,b).
Item 16. Investment Advisory and Other
Services Investment Advisory Services
(a,b); Administrative Services
(a,b).
Item 17. Brokerage Allocation Brokerage Transactions (a,b).
Item 18. Capital Stock and Other
Securities Not Applicable.
Item 19. Purchase, Redemption and
Pricing of Securities
Being Offered Purchasing Shares (a,b);
Distribution and Shareholder
Services Plans (a,b);
Exchanging Securities for
Shares (a,b); Determining Net
Asset Value (a,b); Redeeming
Shares (a,b).
Item 20. Tax Status Tax Status (a,b).
Item 21. Underwriters Not applicable.
Item 22. Calculation of Performance
Data Total Return (a,b); Yield
(a,b); Performance Comparisons
(a,b).
Item 23. Financial Statements Filed in Part A.
FEDERATED GNMA TRUST
INSTITUTIONAL SHARES
PROSPECTUS
The Institutional Shares of Federated GNMA Trust (the "Trust") offered by this
prospectus represent interests in a diversified portfolio of securities
investing primarily in instruments issued or guaranteed by the Government
National Mortgage Association, to achieve current income. The Trust is an open-
end, diversified management investment company (a mutual fund). Institutional
Shares are sold at net asset value.
THE INSTITUTIONAL SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR
OBLIGATIONS OF ANY BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK, AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD,
OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THESE INSTITUTIONAL SHARES
INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
This prospectus contains the information you should read and know before you
invest in Institutional Shares of the Trust. Keep this prospectus for future
reference.
The Trust has also filed a Combined Statement of Additional Information for
Institutional Shares and Institutional Service Shares dated March 31, 1995 with
the Securities and Exchange Commission. The information contained in the
Combined Statement of Additional Information is incorporated by reference into
this prospectus. You may request a copy of the Combined Statement of Additional
Information free of charge by calling 1-800-235-4669. To obtain other
information or to make inquiries about the Trust, contact the Trust at the
address listed in the back of this prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Prospectus dated March 31, 1995
TABLE OF CONTENTS
--------------------------------------------------------------------------------
SUMMARY OF TRUST EXPENSES 1
------------------------------------------------------
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES 2
------------------------------------------------------
GENERAL INFORMATION 3
------------------------------------------------------
INVESTMENT INFORMATION 3
------------------------------------------------------
Investment Objective 3
Investment Policies 3
Investment Limitations 6
TRUST INFORMATION 6
------------------------------------------------------
Management of the Trust 6
DISTRIBUTION OF INSTITUTIONAL SHARES 8
------------------------------------------------------
ADMINISTRATION OF THE TRUST 8
------------------------------------------------------
NET ASSET VALUE 9
------------------------------------------------------
INVESTING IN INSTITUTIONAL SHARES 9
------------------------------------------------------
Share Purchases 9
Minimum Investment Required 9
What Shares Cost 10
Exchanging Securities for Trust Shares 10
Subaccounting Services 10
Certificates and Confirmations 10
Dividends 11
Capital Gains 11
REDEEMING INSTITUTIONAL SHARES 11
------------------------------------------------------
Telephone Redemption 11
Written Requests 11
Accounts with Low Balances 12
SHAREHOLDER INFORMATION 12
------------------------------------------------------
Voting Rights 12
Massachusetts Partnership Law 13
TAX INFORMATION 13
------------------------------------------------------
Federal Income Tax 13
Pennsylvania Corporate and Personal
Property Taxes 13
PERFORMANCE INFORMATION 13
------------------------------------------------------
OTHER CLASSES OF SHARES 14
------------------------------------------------------
Financial Highlights--Institutional
Service Shares 15
FINANCIAL STATEMENTS 16
------------------------------------------------------
INDEPENDENT AUDITORS' REPORT 25
------------------------------------------------------
ADDRESSES 26
------------------------------------------------------
SUMMARY OF TRUST EXPENSES
--------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INSTITUTIONAL SHARES
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)................................................. None
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price)................................................. None
Contingent Deferred Sales Charge (as a percentage of original
purchase price or redemption proceeds, as applicable)............................... None
Redemption Fee (as a percentage of amount redeemed, if applicable).................... None
Exchange Fee.......................................................................... None
ANNUAL INSTITUTIONAL SHARES OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee........................................................................ 0.40%
12b-1 Fee............................................................................. None
Total Other Expenses.................................................................. 0.22%
Shareholder Services Fee (after waiver)(1).............................. 0.05%
Total Institutional Shares Operating Expenses(2)............................ 0.62%
</TABLE>
(1) The maximum shareholder services fee is 0.25%.
(2) The total Institutional Shares operating expenses in the table above are
based on expenses expected during the fiscal year ending January 31, 1996. The
total Institutional Shares operating expenses were 0.56% for the fiscal year
ended January 31, 1995.
The purpose of this table is to assist an investor in understanding the
various costs and expenses that a shareholder of Institutional Shares of the
Trust will bear, either directly or indirectly. For more complete descriptions
of the various costs and expenses, see "Trust Information" and "Investing in
Institutional Shares." Wire-transferred redemptions of less than $5,000 may be
subject to additional fees.
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years 5 years 10 years
------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 invest-
ment, assuming (1) 5% annual return and (2) redemption
at the end of each time period........................ $6 $20 $35 $ 77
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
The information set forth in the foregoing table and examples relates only
to the Institutional Shares of the Trust. The Trust offers another class of
shares called Institutional Service Shares. Institutional Shares and
Institutional Service Shares are subject to certain of the same expenses;
however, Institutional Service Shares are subject to a 12b-1 fee of up to 0.25%.
See "Other Classes of Shares."
FEDERATED GNMA TRUST
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES
--------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Independent Auditors' Report on page 25.
<TABLE>
<CAPTION>
YEAR ENDED JANUARY 31,
--------------------------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
------ ------ ------ ------ ------ ------ ------ ------ ------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
--------
NET
ASSET
VALUE,
BEGINNING
OF PERIOD $11.64 $11.80 $11.64 $11.29 $10.97 $10.70 $11.08 $11.46 $11.35 $10.77
--------
INCOME
FROM
INVESTMENT
OPERATIONS
--------
Net
investment
income 0.82 0.85 0.93 0.98 1.00 1.00 1.01 1.04 1.11 1.22
--------
Net
realized
and
unrealized
gain
(loss)
on
investments (1.03) (0.16) 0.16 0.35 0.32 0.27 (0.38) (0.38) 0.14 0.58
-------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Total
from
investment
operations (0.21) 0.69 1.09 1.33 1.32 1.27 0.63 0.66 1.25 1.80
-------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
LESS
DISTRIBUTIONS
--------
Distributions
from net
investment
income (0.82) (0.85) (0.93) (0.98) (1.00) (1.00) (1.01) (1.04) (1.11) (1.22)
--------
Distributions
from net
realized
gain on
investment
transactions -- -- -- -- -- -- -- -- (0.03) --
-------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Total
distributions (0.82) (0.85) (0.93) (0.98) (1.00) (1.00) (1.01) (1.04) (1.14) (1.22)
-------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
NET
ASSET
VALUE,
END OF
PERIOD $10.61 $11.64 $11.80 $11.64 $11.29 $10.97 $10.70 $11.08 $11.46 $11.35
-------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
TOTAL
RETURN(A) (1.71%) 6.02% 9.78% 12.25% 12.65% 12.33% 5.99% 6.29% 11.53% 17.75%
--------
RATIOS
TO
AVERAGE
NET
ASSETS
--------
Expenses 0.56% 0.51% 0.51% 0.51% 0.52% 0.52% 0.53% 0.52% 0.51% 0.61%
--------
Net
investment
income 7.51% 7.22% 7.98% 8.54% 9.08% 9.19% 9.33% 9.51% 9.66% 11.01%
--------
SUPPLEMENTAL
DATA
--------
Net
assets,
end of
period
(000
omitted) $1,442,074 $1,910,500 $1,770,169 $1,333,930 $1,268,706 $1,312,780 $1,710,890 $2,111,559 $2,515,127 $569,404
--------
Portfolio
turnover
rate 136% 117% 33% 57% 48% 27% 40% 45% 100% 141%
--------
</TABLE>
(a) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(See Notes which are an integral part of the Financial Statements)
Further information about the Trust's performance is contained in the Trust's
annual report for the fiscal year ended January 31, 1995, which can be obtained
free of charge.
GENERAL INFORMATION
--------------------------------------------------------------------------------
The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated December 10, 1981. The Declaration of Trust permits the Trust to
offer separate series of shares of beneficial interest representing interests in
separate portfolios of securities. The shares in any one portfolio may be
offered in separate classes. As of the date of this prospectus, the Board of
Trustees ("Trustees") has established two classes of shares of the Trust, known
as Institutional Shares and Institutional Service Shares. This prospectus
relates only to Institutional Shares of the Trust.
Institutional Shares ("Shares") are sold primarily to accounts for which
financial institutions act in a fiduciary or agency capacity, and other accounts
where a financial institution maintains master accounts with an aggregate
investment of at least $400 million in certain mutual funds which are advised or
distributed by affiliates of Federated Investors. Shares are also made available
to financial intermediaries, public, and private organizations. An investment in
the Trust serves as a convenient means of accumulating an interest in a
professionally managed, diversified portfolio of primarily mortgage-backed
securities. A minimum initial investment of $25,000 over a 90-day period is
required.
Shares are currently sold and redeemed at net asset value without a sales load
imposed by the Trust.
INVESTMENT INFORMATION
--------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The investment objective of the Trust is current income. The investment
objective may not be changed without the approval of shareholders. The Trust
pursues this investment objective by investing primarily in instruments issued
or guaranteed by the Government National Mortgage Association ("GNMA"). While
there is no assurance that the Trust will achieve its investment objective, it
endeavors to do so by following the investment policies described in this
prospectus.
INVESTMENT POLICIES
As a matter of investment policy which may be changed without shareholder
approval, the Trust will limit its investments to those that are permitted for
purchase by federal savings associations pursuant to applicable rules,
regulations, or interpretations of the Office of Thrift Supervision. Should
additional permitted investments be allowed as a result of future changes in
applicable regulations or federal laws, the Trust reserves the right, without
shareholder approval, to make such investments consistent with the Trust's
investment objective, policies, and limitations. Further, should existing
statutes or regulations change so as to cause any securities held by the Trust
to become ineligible for purchase by federal savings associations, the Trust
will dispose of those securities at times advantageous to the Trust.
As operated within the above limitation, the Trust may also serve as an
appropriate vehicle for a national bank as an investment for its own account.
Unless otherwise designated, the investment policies described below may not be
changed without shareholder approval.
ACCEPTABLE INVESTMENTS. The Trust will invest primarily in mortgage-backed
securities. Under normal circumstances, at least 65% of the Trust's portfolio
will be invested in instruments issued or fully guaranteed as to principal and
interest by GNMA. In addition, to the extent that the Trust will invest in other
mortgage-backed securities, as described below, these will be collateralized by
GNMA obligations.
The Trust's permissible investments are as follows:
- U.S. Treasury bills, notes, and bonds;
- collateralized mortgage obligations;
- real estate mortgage investment conduits; and
- notes, bonds, and discount notes of U.S. government agencies or
instrumentalities, such as the: Farm Credit System, including the
National Bank for Cooperatives, Farm Credit Banks, and Banks for
Cooperatives; Farmers Home Administration; Federal Home Loan Banks;
Federal Home Loan Mortgage Corporation; Federal National Mortgage
Association; Government National Mortgage Association; and Student Loan
Marketing Association.
COLLATERALIZED MORTGAGE OBLIGATIONS ("CMOS"). CMOs are bonds issued by
single-purpose, stand-alone finance subsidiaries or trusts of financial
institutions, government agencies, investment bankers, or companies related to
the construction industry. CMOs purchased by the Trust will be collateralized by
pools of mortgages in which each mortgage is guaranteed as to payment of
principal and interest by GNMA.
All CMOs purchased by the Trust are issued by an agency of the United States and
are rated in the highest rating category by a nationally recognized statistical
rating organization.
The following example illustrates how mortgage cash flows are prioritized in the
case of CMOs--most of the CMOs in which the Trust invests use the same basic
structure:
(1) Several classes of securities are issued against a pool of mortgage
collateral. The most common structure contains four classes of securities:
The first three (A, B, and C bonds) pay interest at their stated rates
beginning with the issue date; the final class (Z bond) typically receives
any excess income from the underlying investments after payments are made
to the other classes and receives no principal or interest payments until
the shorter maturity classes have been retired, but then receives all
remaining principal and interest payments.
(2) The cash flows from the underlying mortgages are applied first to pay
interest and then to retire securities.
(3) The classes of securities are retired sequentially. All principal payments
are directed first to the shortest-maturity class (or A bond). When those
securities are completely retired, all principal payments are then directed
to the next-shortest-maturity security (or B bond). This process continues
until all of the classes have been paid off.
Because the cash flow is distributed sequentially instead of pro-rata, as with
pass-through securities, the cash flows and average lives of CMOs are more
predictable, and there is a period of time during which the investors in the
longer-maturity classes receive no principal paydowns. One or more of the
classes
may be adjustable rate. The interest portion of these payments is distributed by
the Trust as income, and the capital portion is reinvested.
REAL ESTATE MORTGAGE INVESTMENT CONDUITS ("REMICS"). REMICs are offerings of
multiple class real estate mortgage-backed securities which qualify and elect
treatment as such under provisions of the Internal Revenue Code, as amended.
Issuers of REMICs may take several forms, such as trusts, partnerships,
corporations, associations or a segregated pool of mortgages. Once REMIC status
is elected and obtained, the entity is not subject to federal income taxation.
Instead, income is passed through the entity and is taxed to the person or
persons who hold interests in the REMIC. A REMIC interest must consist of one or
more classes of "regular interests," some of which may offer adjustable rates,
and a single class of "residual interests." To qualify as a REMIC, substantially
all of the assets of the entity must be in assets directly or indirectly secured
principally by real property.
Because the mortgages underlying mortgage-backed securities often may be prepaid
without penalty or premium, mortgage-backed securities are generally subject to
higher prepayment risks than most other types of debt instruments. Prepayment
risks on mortgage securities tend to increase during periods of declining
mortgage interest rates, because many borrowers refinance their mortgages to
take advantage of the more favorable rates. Depending upon market conditions,
the yield that the Trust receives from the reinvestment of such prepayments, or
any scheduled principal payments, may be lower than the yield on the original
mortgage security. As a consequence, mortgage securities may be a less effective
means of "locking in" interest rates than other types of debt securities having
the same stated maturity and may also have less potential for capital
appreciation. For certain types of asset pools, such as collateralized mortgage
obligations, prepayments may be allocated to one tranche of securities ahead of
other tranches, in order to reduce the risk of prepayment for the other
tranches.
Prepayments may result in a capital loss to the Trust to the extent that the
prepaid mortgage securities were purchased at a market premium over their stated
principal amount. Conversely, the prepayment of mortgage securities purchased at
a market discount from their stated principal amount will accelerate the
recognition of interest income by the Trust, which would be taxed as ordinary
income when distributed to the shareholders.
The prices of fixed income securities fluctuate inversely to the direction of
interest rates.
TEMPORARY INVESTMENTS. For defensive purposes only, the Trust may invest
temporarily in cash and money market instruments during times of unusual market
conditions and to maintain liquidity. Money market instruments items may
include:
- obligations of the U.S. government or its agencies or instrumentalities;
and
- repurchase agreements.
REPURCHASE AGREEMENTS. Repurchase agreements are arrangements in which
banks, broker/ dealers, and other recognized financial institutions sell
U.S. government securities or other securities to the Trust and agree at
the time of sale to repurchase them at a mutually agreed upon time and
price. To the extent that the original seller does not repurchase the
securities from the Trust, the Trust could receive less than the repurchase
price on any sale of such securities.
LENDING OF PORTFOLIO SECURITIES. In order to generate additional income, the
Trust may lend portfolio securities on a short-term or long-term basis, or both
up to one-third of the value of its total assets to broker/dealers, banks, or
other institutional borrowers of securities. The Trust will only enter into loan
arrangements with broker/dealers, banks, or other institutions which the
investment adviser has determined are creditworthy under guidelines established
by the Trustees. The Trust will receive collateral in the form of cash or U.S.
government securities equal to at least 100% of the value of the securities
loaned.
There is the risk that when lending portfolio securities, the securities may not
be available to the Trust on a timely basis and the Trust may, therefore, lose
the opportunity to sell the securities at a desirable price. In addition, in the
event that a borrower of securities would file for bankruptcy or become
insolvent, disposition of the securities may be delayed pending court action.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Trust may purchase
securities on a when-issued or delayed delivery basis. These transactions are
arrangements in which the Trust purchases securities with payment and delivery
scheduled for a future time. The seller's failure to complete these transactions
may cause the Trust to miss a price or yield considered to be advantageous.
Settlement dates may be a month or more after entering into these transactions,
and the market values of the securities purchased may vary from the purchase
prices. Accordingly, the Trust may pay more or less than the market value of the
securities on the settlement date.
The Trust may dispose of a commitment prior to settlement if the adviser deems
it appropriate to do so. In addition, the Trust may enter into transactions to
sell its purchase commitments to third parties at current market values and
simultaneously acquire other commitments to purchase similar securities at later
dates. The Trust may realize short-term profits or losses upon the sale of such
commitments.
INVESTMENT LIMITATIONS
The Trust will not borrow money directly or through reverse repurchase
agreements (arrangements in which the Trust sells a portfolio instrument for a
percentage of its cash value with an agreement to buy it back on a set date) or
pledge securities except, under certain circumstances, the Trust may borrow
money and engage in reverse repurchase agreements up to one-third of the value
of its total assets and pledge up to 10% of the value of those assets to secure
such borrowings.
As a matter of investment practice, which can be changed without shareholder
approval, the Trust will not invest more than 15% of its net assets in
securities which are illiquid, including repurchase agreements providing for
settlement in more than seven days after notice, and certain restricted
securities not determined by the Trustees to be liquid.
TRUST INFORMATION
--------------------------------------------------------------------------------
MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES. The Trust is managed by a Board of Trustees. The Trustees
are responsible for managing the Trust's business affairs and for exercising all
the Trust's powers except those reserved for the shareholders. The Executive
Committee of the Board of Trustees handles the Board's responsibilities between
meetings of the Board.
INVESTMENT ADVISER. Investment decisions for the Trust are made by Federated
Management, the Trust's investment adviser, subject to direction by the
Trustees. The adviser continually conducts investment research and supervision
for the Trust and is responsible for the purchase or sale of portfolio
instruments, for which it receives an annual fee from the Trust.
ADVISORY FEES. The Trust's adviser receives an annual investment advisory
fee equal to .40 of 1% of the Trust's average daily net assets. The adviser
has also undertaken to reimburse the Trust for operating expenses in excess
of limitations established by certain states. This does not include
reimbursement to the Trust of any expenses incurred by shareholders who use
the transfer agent's subaccounting facilities.
ADVISER'S BACKGROUND. Federated Management, a Delaware business trust
organized on April 11, 1989, is a registered investment adviser under the
Investment Advisers Act of 1940. It is a subsidiary of Federated Investors.
All of the Class A (voting) shares of Federated Investors are owned by a
trust, the trustees of which are John F. Donahue, Chairman and Trustee of
Federated Investors, Mr. Donahue's wife, and Mr. Donahue's son, J.
Christopher Donahue, who is President and Trustee of Federated Investors.
Federated Management and other subsidiaries of Federated Investors serve as
investment advisers to a number of investment companies and private
accounts. Certain other subsidiaries also provide administrative services
to a number of investment companies. Total assets under management or
administration by these and other subsidiaries of Federated Investors are
approximately $70 billion. Federated Investors, which was founded in 1956
as Federated Investors, Inc., develops and manages mutual funds primarily
for the financial industry. Federated Investors' track record of
competitive performance and its disciplined, risk-averse investment
philosophy serve approximately 3,500 client institutions nationwide.
Through these same client institutions, individual shareholders also have
access to this same level of investment expertise.
James D. Roberge has been the Trust's portfolio manager since February,
1995. Mr. Roberge joined Federated Investors in 1990 and has been a Vice
President of the Trust's investment adviser since October, 1994. Prior to
this, Mr. Roberge served as an Assistant Vice President of the Trust's
investment adviser. From 1990 until 1992, Mr. Roberge acted as an
investment analyst. Mr. Roberge is a Chartered Financial Analyst and
received his M.B.A. in Finance from Wharton Business School in 1990.
Kathleen M. Foody-Malus has been the Trust's portfolio manager since July,
1993. Ms. Foody-Malus joined Federated Investors in 1983 and has been a
Vice President of the Trust's investment adviser since 1993. Ms.
Foody-Malus served as an Assistant Vice President of the investment adviser
from 1990 until 1992, and from 1986 until 1989 she acted as an investment
analyst. Ms. Foody-Malus received her M.B.A. in Accounting/Finance from the
University of Pittsburgh.
DISTRIBUTION OF INSTITUTIONAL SHARES
--------------------------------------------------------------------------------
Federated Securities Corp. is the principal distributor for Institutional
Shares. It is a Pennsylvania corporation organized on November 14, 1969, and is
the principal distributor for a number of investment companies. Federated
Securities Corp. is a subsidiary of Federated Investors.
ADMINISTRATION OF THE TRUST
--------------------------------------------------------------------------------
ADMINISTRATIVE SERVICES. Federated Administrative Services, a subsidiary of
Federated Investors, provides administrative personnel and services (including
certain legal and financial reporting services) necessary to operate the Trust.
Federated Administrative Services provides these at an annual rate, which
relates to the average aggregate daily net assets of all funds advised by
subsidiaries of Federated Investors ("Federated Funds"), as specified below:
<TABLE>
<CAPTION>
MAXIMUM AVERAGE AGGREGATE DAILY NET
ADMINISTRATIVE FEE ASSETS OF THE FEDERATED FUNDS
-------------------- ------------------------------------
<S> <C>
0.15 of 1% on the first $250 million
0.125 of 1% on the next $250 million
0.10 of 1% on the next $250 million
0.075 of 1% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
Federated Administrative Services may choose voluntarily to waive a portion of
its fee.
SHAREHOLDER SERVICES PLAN. The Trust has adopted a Shareholder Services Plan
(the "Services Plan") under which it may make payments up to 0.25 of 1% of the
average daily net asset value of the Institutional Shares to obtain certain
personal services for shareholders and the maintenance of shareholder accounts
("shareholder services"). The Trust has entered into a Shareholder Services
Agreement with Federated Shareholder Services, a subsidiary of Federated
Investors, under which Federated Shareholder Services will either perform
shareholder services directly or will select financial institutions to perform
shareholder services. Financial institutions will receive fees based upon shares
owned by their clients or customers. The schedules of such fees and the basis
upon which such fees will be paid will be determined from time to time by the
Trust and Federated Shareholder Services.
OTHER PAYMENTS TO FINANCIAL INSTITUTIONS. In addition to periodic payments to
financial institutions under the Shareholder Services Plan, certain financial
institutions may be compensated by the adviser or its affiliates for the
continuing investment of customers' assets in certain funds, including the
Trust, advised by those entities. These payments will be made directly by the
distributor or adviser from their assets, and will not be made from the assets
of the Trust or by the assessment of a sales load on Shares.
CUSTODIAN. State Street Bank and Trust Company ("State Street Bank"), Boston,
Massachusetts, is custodian for the securities and cash of the Trust.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT. Federated Services Company,
Pittsburgh, Pennsylvania, is transfer agent for the Shares of the Trust, and
dividend disbursing agent for the Trust.
INDEPENDENT AUDITORS. The independent auditors for the Trust are Deloitte &
Touche LLP, Pittsburgh, Pennsylvania.
NET ASSET VALUE
--------------------------------------------------------------------------------
The Trust's net asset value per Share fluctuates. The net asset value for Shares
is determined by adding the interest of the Shares in the market value of all
securities and other assets of the Trust, subtracting the interest of the Shares
in the liabilities of the Trust and those attributable to Shares, and dividing
the remainder by the total number of Shares outstanding. The net asset value for
Shares may exceed that of Institutional Service Shares due to the variance in
daily net income realized by each class. Such variance will reflect only accrued
net income to which the shareholders of a particular class are entitled.
INVESTING IN INSTITUTIONAL SHARES
--------------------------------------------------------------------------------
SHARE PURCHASES
Shares are sold on days on which the New York Stock Exchange and the Federal
Reserve wire system are open. Shares may be purchased either by wire or mail.
To purchase Shares, open an account by calling Federated Securities Corp.
Information needed to establish the account will be taken over the telephone.
The Trust reserves the right to reject any purchase request.
BY WIRE. To purchase Shares by Federal Reserve wire, call the Trust before 4:00
p.m. (Eastern time) to place an order. The order is considered received
immediately. Payment by federal funds must be received before 3:00 p.m. (Eastern
time) on the next business day following the order. Federal funds should be
wired as follows: Federated Services Company, c/o State Street Bank and Trust
Company, Boston, Massachusetts; Attention: EDGEWIRE; For Credit to: Federated
GNMA Trust--Institutional Shares; Trust Number (this number can be found on the
account statement or by contacting the Trust); Group Number or Order Number;
Nominee or Institution Name; and ABA Number 011000028. Shares cannot be
purchased by wire on days on which the New York Stock Exchange is closed and on
federal holidays restricting wire transfers.
BY MAIL. To purchase Shares by mail, send a check made payable to Federated
GNMA Trust-- Institutional Shares to Federated Services Company, c/o State
Street Bank and Trust Company, P.O. Box 8602, Boston, Massachusetts 02266-8602.
Orders by mail are considered received after payment by check is converted by
State Street Bank into federal funds. This is normally the next business day
after State Street Bank receives the check.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment in Shares is $25,000 plus any non-affiliated bank
or broker's fee, if applicable. However, an account may be opened with a smaller
amount as long as the $25,000
minimum is reached within 90 days. An institutional investor's minimum
investment will be calculated by combining all accounts it maintains with the
Trust.
Individual accounts established through a non-affiliated bank or broker may be
subject to a smaller minimum investment.
WHAT SHARES COST
Shares are sold at their net asset value next determined after an order is
received. There is no sales load imposed by the Trust. Investors who purchase
Shares through a non-affiliated bank or broker may be charged an additional
service fee by that bank or broker.
The net asset value is determined at 4:00 p.m. (Eastern time), Monday through
Friday, except on: (i) days on which there are not sufficient changes in the
value of the Trust's portfolio securities that its net asset value might be
materially affected; (ii) days during which no Shares are tendered for
redemption and no orders to purchase Shares are received; and (iii) the
following holidays: New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.
EXCHANGING SECURITIES FOR TRUST SHARES
Investors may exchange certain U.S. government securities or a combination of
securities and cash for Shares. The securities and any cash must have a market
value of at least $25,000. The Trust reserves the right to determine the
acceptability of securities to be exchanged. Securities accepted by the Trust
are valued in the same manner as the Trust values its assets. Investors wishing
to exchange securities should first contact Federated Securities Corp.
SUBACCOUNTING SERVICES
Institutions are encouraged to open single master accounts. However, certain
institutions may wish to use the transfer agent's subaccounting system to
minimize their internal recordkeeping requirements. The transfer agent charges a
fee based on the level of subaccounting services rendered. Institutions holding
Shares in a fiduciary, agency, custodial, or similar capacity may charge or pass
through subaccounting fees as part of or in addition to normal trust or agency
account fees. They may also charge fees for other services provided which may be
related to the ownership of Shares. This prospectus should, therefore, be read
together with any agreement between the customer and the institution with regard
to the services provided, the fees charged for those services, and any
restrictions and limitations imposed.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Trust, Federated Services Company maintains a share
account for each shareholder. Share certificates are not issued unless requested
by contacting the Trust.
Detailed confirmations of each purchase or redemption are sent to each
shareholder. Monthly confirmations are sent to report dividends paid during the
month.
DIVIDENDS
Dividends are declared daily and paid monthly. Dividends are declared just prior
to determining net asset value. If an order for Shares is placed on the
preceding business day, Shares purchased by wire begin earning dividends on the
business day wire payment is received by the transfer agent. If the order for
Shares and payment by wire are received on the same day, Shares begin earning
dividends on the next business day. Shares purchased by check begin earning
dividends on the business day after the check is converted, upon instruction of
the transfer agent, into federal funds. Dividends are automatically reinvested
on payment dates in additional Shares unless cash payments are requested by
contacting the Trust.
CAPITAL GAINS
Capital gains realized by the Trust, if any, are distributed at least once every
12 months.
REDEEMING INSTITUTIONAL SHARES
--------------------------------------------------------------------------------
The Trust redeems Shares at their net asset value next determined after the
Trust receives the redemption request. Redemptions will be made on days on which
the Trust computes its net asset value. Redemption requests must be received in
proper form and can be made by telephone request or by written request.
TELEPHONE REDEMPTION
Shareholders may redeem their Shares by telephoning the Trust before 4:00 p.m.
(Eastern time). The proceeds will normally be wire transferred the following
business day, but in no event more than seven days, to the shareholder's account
at a domestic commercial bank that is a member of the Federal Reserve System. If
at any time, the Trust shall determine it necessary to terminate or modify this
method of redemption, shareholders would be promptly notified.
An authorization form permitting the Trust to accept telephone requests must
first be completed. Authorization forms and information on this service are
available from Federated Securities Corp.
Telephone redemption instructions may be recorded. If reasonable procedures are
not followed by the Trust, it may be liable for losses due to unauthorized or
fraudulent telephone instructions.
In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If such a case should occur, another
method of redemption, such as "Written Requests," should be considered.
WRITTEN REQUESTS
Shares may also be redeemed by sending a written request to the Trust. Call the
Trust for specific instructions before redeeming by letter. The shareholder will
be asked to provide in the request his name, the Trust name, his account number,
and the share or dollar amount requested. If share certificates have been
issued, they must be properly endorsed and should be sent by registered or
certified mail to Federated Services Company, 500 Victory Road - 2nd Floor,
Quincy, Massachusetts 02171 with the written request.
SIGNATURES. Shareholders requesting a redemption of $50,000 or more, a
redemption of any amount to be sent to an address other than that on record with
the Trust, or a redemption payable other than to the shareholder of record must
have signatures on written redemption requests guaranteed by:
- a trust company or commercial bank whose deposits are insured by the Bank
Insurance Fund ("BIF"), which is administered by the Federal Deposit
Insurance Corporation ("FDIC");
- a member of the New York, American, Boston, Midwest, or Pacific Stock
Exchange;
- a savings bank or savings and loan association whose deposits are insured
by the Savings Association Insurance Fund ("SAIF"), which is administered
by the FDIC; or
- any other "eligible guarantor institution," as defined in the Securities
and Exchange Act of 1934.
The Trust does not accept signatures guaranteed by a notary public.
The Trust and its transfer agent have adopted standards for accepting signature
guarantees from the above institutions. The Trust may elect in the future to
limit eligible signature guarantors to institutions that are members of a
signature guarantee program. The Trust and its transfer agent reserve the right
to amend these standards at any time without notice.
RECEIVING PAYMENT. Normally, a check for the proceeds is mailed within one
business day, but in no event more than seven days, after receipt of a proper
written redemption request.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Trust may
redeem shares in any account and pay the proceeds to the shareholder if the
account balance falls below a required minimum value of $25,000. This
requirement does not apply, however, if the balance falls below $25,000 because
of changes in the Trust's net asset value.
Before Shares are redeemed to close an account, the shareholder is notified in
writing and allowed 30 days to purchase additional Shares to meet the minimum
requirement.
SHAREHOLDER INFORMATION
--------------------------------------------------------------------------------
VOTING RIGHTS
Each Share of the Trust gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All shares of all classes of
each portfolio in the Trust have equal voting rights except that, in matters
affecting only a particular fund or class, only shares of that fund or class are
entitled to vote.
As a Massachusetts business trust, the Trust is not required to hold annual
shareholder meetings. Shareholder approval will be sought only for certain
changes in the Trust's operation and for the election of Trustees under certain
circumstances.
Trustees may be removed by the Trustees or by shareholders at a special meeting.
A special meeting of the shareholders for this purpose shall be called by the
Trustees upon the written request of shareholders owning at least 10% of the
Trust's outstanding shares entitled to vote.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for obligations of the Trust. To protect its
shareholders, the Trust has filed legal documents with Massachusetts that
expressly disclaim the liability of its shareholders for such acts or
obligations of the Trust. These documents require notice of this disclaimer to
be given in each agreement, obligation, or instrument that the Trust or its
Trustees enter into or sign on behalf of the Trust.
In the unlikely event a shareholder is held personally liable for the Trust's
obligations, the Trust is required to use its property to protect or compensate
the shareholder. On request, the Trust will defend any claim made and pay any
judgment against a shareholder for any act or obligation of the Trust.
Therefore, financial loss resulting from liability as a shareholder will occur
only if the Trust itself cannot meet its obligations to indemnify shareholders
and pay judgments against them from its assets.
TAX INFORMATION
--------------------------------------------------------------------------------
FEDERAL INCOME TAX
The Trust will pay no federal income tax because it expects to meet requirements
of the Internal Revenue Code, as amended applicable to regulated investment
companies and to receive the special tax treatment afforded to such companies.
Unless otherwise exempt, shareholders are required to pay federal income tax on
any dividends and other distributions received. This applies whether dividends
and distributions are received in cash or as additional shares.
PENNSYLVANIA CORPORATE AND PERSONAL PROPERTY TAXES
In the opinion of Houston, Houston & Donnelly, counsel to the Trust:
- the Trust is not subject to Pennsylvania corporate or personal property
taxes; and
- Trust shares may be subject to personal property taxes imposed by
counties, municipalities, and school districts in Pennsylvania to the
extent that the portfolio securities in the Trust would be subject to such
taxes if owned directly by residents of those jurisdictions.
Shareholders are urged to consult their own tax advisers regarding the status of
their accounts under state and local tax laws.
PERFORMANCE INFORMATION
--------------------------------------------------------------------------------
From time to time, the Trust advertises its total return and yield for Shares.
Total return represents the change, over a specified period of time, in the
value of an investment in Shares of the Trust after reinvesting all income and
capital gains distributions. It is calculated by dividing that change by the
initial investment and is expressed as a percentage.
The yield of Shares of the Trust is calculated by dividing the net investment
income per share (as defined by the Securities and Exchange Commission) earned
by Shares over a thirty-day period by the
offering price per share of Shares on the last day of the period. This number is
then annualized using semi-annual compounding. The yield does not necessarily
reflect income actually earned by Shares and, therefore, may not correlate to
the dividends or other distributions paid to shareholders.
Shares are sold without any sales load or other similar non-recurring charges.
Total return and yield will be calculated separately for Institutional Shares
and Institutional Service Shares. Because Institutional Service Shares are
subject to a 12b-1 fee, the total return and yield for Institutional Shares, for
the same period, will exceed that of Institutional Service Shares.
From time to time, the Trust may advertise the performance of Institutional
Shares using certain financial publications and/or compare the performance of
Institutional Shares to certain indices.
OTHER CLASSES OF SHARES
--------------------------------------------------------------------------------
Institutional Service Shares are sold primarily to retail and private banking
customers of financial institutions. Institutional Service Shares are sold at
net asset value. Investments in Institutional Service Shares are subject to a
minimum initial investment of $25,000.
Institutional Service Shares are distributed pursuant to a 12b-1 Plan adopted by
the Trust whereby the distributor is paid a fee of 0.25 of 1% of the
Institutional Service Shares' average daily net assets.
Financial institutions and brokers providing sales and/or administrative
services may receive different compensation depending upon which class of shares
of the Trust is sold.
The amount of dividends payable to Institutional Shares will exceed that of
Institutional Service Shares by the difference between class expenses and
distribution and shareholder service expenses borne by shares of each respective
class.
The stated advisory fee is the same for both classes of shares.
FEDERATED GNMA TRUST
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SERVICE SHARES
--------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Independent Auditors' Report on page 25.
<TABLE>
<CAPTION>
YEAR ENDED JANUARY 31,
-----------------------------
1995 1994 1993(A)
------ ------ -------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $11.64 $11.80 $11.71
---------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
---------------------------------------------------------------
Net investment income 0.79 0.82 0.61
---------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (1.03) (0.16) 0.09
-----
--------------------------------------------------------------- ------ ------
Total from investment operations (0.24) 0.66 0.70
-----
--------------------------------------------------------------- ------ ------
LESS DISTRIBUTIONS
---------------------------------------------------------------
Distributions from net investment income (0.79) (0.82) (0.61 )
-----
--------------------------------------------------------------- ------ ------
NET ASSET VALUE, END OF PERIOD $10.61 $11.64 $11.80
-----
--------------------------------------------------------------- ------ ------
TOTAL RETURN(B) (1.92%) 5.76% 5.62 %
---------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
---------------------------------------------------------------
Expenses 0.77% 0.76% 0.76 %(c)
---------------------------------------------------------------
Net investment income 7.32% 6.97% 7.57 %(c)
---------------------------------------------------------------
Expense waiver/reimbursement(d) 0.14% -- --
---------------------------------------------------------------
SUPPLEMENTAL DATA
---------------------------------------------------------------
Net assets, end of period (000 omitted) $120,427 $137,235 $50,166
---------------------------------------------------------------
Portfolio turnover rate 136% 117% 33 %
---------------------------------------------------------------
</TABLE>
(a) Reflects operations for the period from June 18, 1992 (date of initial
public investment) to January 31, 1993.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) Computed on an annualized basis.
(d) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
Further information about the Trust's performance is contained in the Trust's
annual report for the fiscal year ended January 31, 1995, which can be obtained
free of charge.
FEDERATED GNMA TRUST
PORTFOLIO OF INVESTMENTS
JANUARY 31, 1995
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------ -------------------------------------------------------------- --------------
<C> <C> <S> <C>
LONG-TERM GOVERNMENT OBLIGATIONS--98.3%
---------------------------------------------------------------------------------
* GOVERNMENT NATIONAL MORTGAGE ASSOCIATION--98.3%
--------------------------------------------------------------
$256,254,850 7.00%, 11/15/2023 $ 234,229,746
--------------------------------------------------------------
216,653,976 7.50%, 2/15/2023 204,532,186
--------------------------------------------------------------
285,045,143 8.00%, 3/15/2017-8/15/2024 277,075,873+
--------------------------------------------------------------
150,688,678 8.50%, 1/15/2022 150,780,598
--------------------------------------------------------------
238,645,839 9.00%, 8/15/2016-12/15/2022 243,765,236+
--------------------------------------------------------------
198,158,531 9.50%, 7/15/2009-8/15/2019 206,800,472+
--------------------------------------------------------------
104,802,840 10.00%, 3/15/2016-12/20/2020 111,376,044+
--------------------------------------------------------------
12,309,500 10.50%, 6/15/2018-7/15/2019 13,247,978
--------------------------------------------------------------
22,465,853 11.00%, 9/15/2010 24,529,566
--------------------------------------------------------------
17,403,249 11.50%, 8/15/2015 19,154,189
--------------------------------------------------------------
28,655,850 12.00%, 7/15/2015 31,924,049
--------------------------------------------------------------
13,034,483 12.50%, 11/15/2010 14,655,452
--------------------------------------------------------------
1,813,191 13.00%, 2/15/2011 2,056,249
--------------------------------------------------------------
2,155,222 13.50%, 8/15/2014 2,456,931
-------------------------------------------------------------- --------------
TOTAL GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
(IDENTIFIED COST $1,576,266,549) 1,536,584,569
-------------------------------------------------------------- --------------
</TABLE>
FEDERATED GNMA TRUST
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------ -------------------------------------------------------------- --------------
<C> <C> <S> <C>
(A) REPURCHASE AGREEMENTS--12.6%
---------------------------------------------------------------------------------
$ 25,000,000 Chase Manhattan Bank, N. A., 5.80%, dated 1/31/1995,
due 2/1/1995 $ 25,000,000
--------------------------------------------------------------
100,300,000 ** First Boston Corp., 5.78%, dated 1/19/1995, due 2/16/1995 100,300,000
--------------------------------------------------------------
50,000,000 ** First Boston Corp., 5.78%, dated 1/24/1995, due 2/24/1995 50,000,000
--------------------------------------------------------------
20,000,000 ** First Boston Corp., 5.875%, dated 1/24/1995, due 2/22/1995 20,000,000
--------------------------------------------------------------
1,390,000 J.P. Morgan Securities, Inc., 5.87%, dated 1/31/1995, due
2/1/1995 1,390,000
-------------------------------------------------------------- --------------
TOTAL REPURCHASE AGREEMENTS (AT AMORTIZED COST) 196,690,000
-------------------------------------------------------------- --------------
TOTAL INVESTMENTS (IDENTIFIED COST $1,772,956,549) $1,733,274,569++
-------------------------------------------------------------- --------------
</TABLE>
* Because of monthly principal payments, the average lives of the Government
National Mortgage Association Modified Pass-Through securities (based upon
FHA/VA historical experience) are less than the indicated periods.
** Although final maturity falls beyond seven days, a liquidity feature is
included in each transaction to permit termination of the repurchase
agreement within seven days.
(a) Repurchase agreements are fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio. The
investments in the repurchase agreements are through participation in a
joint account with other Federated Funds.
+ Includes securities with a market value of $175,597,383 subject to Dollar
Roll transactions.
++ The cost of investments for federal tax purposes amounts to $1,772,956,549.
The net unrealized depreciation on a federal tax cost basis amounts to
$39,681,980, which is comprised of $13,149,611 appreciation and $52,831,591
depreciation at January 31, 1995.
Note: The categories of investments are shown as a percentage of net assets
($1,562,500,571) at January 31, 1995.
(See Notes which are an integral part of the Financial Statements)
FEDERATED GNMA TRUST
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1995
--------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
-------------------------------------------------------------------------------
Investments in repurchase agreements $ 196,690,000
--------------------------------------------------------------
Investments in securities 1,536,584,569
-------------------------------------------------------------- --------------
Total investments in securities, at value (identified and
tax cost $1,772,956,549) $1,733,274,569
-------------------------------------------------------------------------------
Cash 3,098
-------------------------------------------------------------------------------
Receivable for investments sold 49,380,208
-------------------------------------------------------------------------------
Income receivable 10,140,192
-------------------------------------------------------------------------------
Receivable for shares sold 452,555
------------------------------------------------------------------------------- --------------
Total assets 1,793,250,622
-------------------------------------------------------------------------------
LIABILITIES:
-------------------------------------------------------------------------------
Payable for dollar roll transactions 174,189,487
--------------------------------------------------------------
Payable for investments purchased 46,961,589
--------------------------------------------------------------
Payable for shares redeemed 1,977,713
--------------------------------------------------------------
Income distribution payable 7,613,185
--------------------------------------------------------------
Accrued expenses 8,077
-------------------------------------------------------------- --------------
Total liabilities 230,750,051
------------------------------------------------------------------------------- --------------
NET ASSETS for 147,203,309 shares outstanding $1,562,500,571
------------------------------------------------------------------------------- --------------
NET ASSETS CONSISTS OF:
-------------------------------------------------------------------------------
Paid in capital $1,794,207,072
-------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments (39,681,980)
-------------------------------------------------------------------------------
Accumulated net realized gain (loss) on investments (192,024,521)
------------------------------------------------------------------------------- --------------
Total Net Assets $1,562,500,571
------------------------------------------------------------------------------- --------------
NET ASSET VALUE, Offering Price and Redemption Proceeds Per Share:
Institutional Shares:
($1,442,073,954 / 135,857,801 shares outstanding) $10.61
------------------------------------------------------------------------------- --------------
Institutional Service Shares:
($120,426,617 / 11,345,508 shares outstanding) $10.61
------------------------------------------------------------------------------- --------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED GNMA TRUST
STATEMENT OF OPERATIONS
YEAR ENDED JANUARY 31, 1995
--------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
-------------------------------------------------------------------------------
Interest (net of dollar roll expense of $4,216,711) $ 141,079,522
-------------------------------------------------------------------------------
EXPENSES:
-------------------------------------------------------------------------------
Investment advisory fee $ 6,989,013
-----------------------------------------------------------------
Administrative personnel and services fee 1,317,794
-----------------------------------------------------------------
Custodian fees 381,143
-----------------------------------------------------------------
Transfer agent and dividend disbursing agent fees and expenses 65,214
-----------------------------------------------------------------
Trustees' fees 20,567
-----------------------------------------------------------------
Auditing fees 22,124
-----------------------------------------------------------------
Legal fees 24,238
-----------------------------------------------------------------
Portfolio accounting fees 66,542
-----------------------------------------------------------------
Distribution services fee--Institutional Service Shares 317,246
-----------------------------------------------------------------
Shareholder services fee--Institutional Shares 683,138
-----------------------------------------------------------------
Shareholder services fee--Institutional Service Shares 172,503
-----------------------------------------------------------------
Share registration costs 44,086
-----------------------------------------------------------------
Printing and postage 22,064
-----------------------------------------------------------------
Insurance premiums 29,889
-----------------------------------------------------------------
Taxes 108,159
-----------------------------------------------------------------
Miscellaneous 25,640
----------------------------------------------------------------- -----------
Total expenses 10,289,360
-----------------------------------------------------------------
Deduct-waiver of distribution services fee 172,503
----------------------------------------------------------------- -----------
Net expenses 10,116,857
------------------------------------------------------------------------------- -------------
Net investment income 130,962,665
------------------------------------------------------------------------------- -------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
-------------------------------------------------------------------------------
Net realized gain (loss) on investments (97,737,729)
-------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on investments (77,177,049)
------------------------------------------------------------------------------- -------------
Net realized and unrealized gain (loss) on investments (174,914,778)
------------------------------------------------------------------------------- -------------
Change in net assets resulting from operations ($ 43,952,113)
------------------------------------------------------------------------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED GNMA TRUST
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED JANUARY 31,
---------------------------------
1995 1994
-------------- --------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
------------------------------------------------------------
OPERATIONS--
------------------------------------------------------------
Net investment income $ 130,962,665 $ 147,205,704
------------------------------------------------------------
Net realized gain (loss) on investments ($71,738,355 net
loss and $18,860,608 net gain, respectively, as computed
for federal income tax purposes) (97,737,729) 12,114,105
------------------------------------------------------------
Net change in unrealized appreciation (depreciation) of
investments (77,177,049) (41,032,970)
------------------------------------------------------------ -------------- --------------
Change in assets resulting from operations (43,952,113) 118,286,839
------------------------------------------------------------ -------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS--
------------------------------------------------------------
Dividends to shareholders from net investment income:
------------------------------------------------------------
Institutional Shares (121,679,720) (139,286,614)
------------------------------------------------------------
Institutional Service Shares (9,282,945) (7,919,090)
------------------------------------------------------------ -------------- --------------
Change in net assets resulting from distributions
to shareholders (130,962,665) (147,205,704)
------------------------------------------------------------ -------------- --------------
SHARE TRANSACTIONS
------------------------------------------------------------
Proceeds from sale of Shares 398,304,925 1,020,100,336
------------------------------------------------------------
Net asset value of Shares issued to shareholders in payment
of dividends declared 33,750,837 34,919,870
------------------------------------------------------------
Cost of Shares redeemed (742,374,713) (798,702,252)
------------------------------------------------------------ -------------- --------------
Change in net assets resulting from share transactions (310,318,951) 256,317,954
------------------------------------------------------------ -------------- --------------
Change in net assets (485,233,729) 227,399,089
------------------------------------------------------------
NET ASSETS:
------------------------------------------------------------
Beginning of period 2,047,734,300 1,820,335,211
------------------------------------------------------------ -------------- --------------
End of period $1,562,500,571 $2,047,734,300
------------------------------------------------------------ -------------- --------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED GNMA TRUST
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1995
--------------------------------------------------------------------------------
(1) ORGANIZATION
Federated GNMA Trust ("the Trust") is registered under the Investment Company
Act of 1940, as amended (the "Act"), as a diversified, open-end management
investment company. The Trust provides two classes of shares; Institutional
Shares and Institutional Service Shares.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--Short-term securities with remaining maturities of sixty
days or less at the time of purchase may be valued at amortized cost, which
approximates fair market value. U.S. government securities are generally valued
at the mean between the over-the-counter bid and asked prices as furnished by an
independent pricing service.
REPURCHASE AGREEMENTS--It is the policy of the Trust to require the custodian
bank to take possession, to have legally segregated in the Federal Reserve Book
Entry System, or to have segregated within the custodian bank's vault, all
securities held as collateral under repurchase agreement investments.
Additionally, procedures have been established by the Trust to monitor, on a
daily basis, the market value of each repurchase agreement's underlying
collateral to ensure that the value of collateral at least equals the principal
amount of the repurchase transaction, including accrued interest.
The Trust will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed by
the Trust's adviser to be creditworthy pursuant to guidelines and/or standards
reviewed or established by the Board of Trustees (the "Trustees"). Risks may
arise from the potential inability of counterparties to honor the terms of the
repurchase agreements. Accordingly, the Trust could receive less than the
repurchase price on the sale of collateral securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses are
accrued daily. Bond premium and discount, if applicable, are amortized as
required by the Internal Revenue Code, as amended (the "Code"). Distributions to
shareholders are recorded on the ex-dividend date.
FEDERAL TAXES--It is the Trust's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary. At January 31, 1995, the Trust, for
federal tax purposes, had a capital loss carryforward of $155,539,638, which
will reduce the Trust's taxable income arising from future net realized gain on
investments, if any, to the extent permitted by the Code, and will thus reduce
the amount of the distributions to shareholders which would otherwise
FEDERATED GNMA TRUST
--------------------------------------------------------------------------------
be necessary to relieve the Trust of any liability for federal tax. Pursuant to
the Code, such capital loss carryforward will expire in, 1996 ($31,912,913),
1997 ($18,028,171), 1998 ($14,893,518), 1999 ($13,784,245), 2001 ($5,182,436),
and 2003 ($71,738,355). Additionally, net capital losses of $36,484,883
attributable to security transactions incurred after October 31, 1994, are
treated as arising on February 1, 1995, the first day of the Trust's next
taxable year.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Trust may engage in
when-issued or delayed delivery transactions. The Trust records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the securities
purchased. Securities purchased on a when-issued or delayed delivery basis are
marked to market daily and begin earning interest on the settlement date.
DOLLAR ROLL TRANSACTIONS--The Trust enters into dollar roll transactions with
respect to mortgage securities, issued by GNMA in which the Trust loans mortgage
securities to financial institutions and simultaneously agrees to repurchase
substantially similar (same type, coupon and maturity) securities at a later
date at an agreed upon price. Dollar roll transactions are short-term financing
arrangements which will not exceed twelve months. The Trust will use the
proceeds generated from the transactions to invest in short-term investments,
which may enhance the Trust's current yield and total return.
OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares. Transactions in Trust shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JANUARY 31,
--------------------------------------------------------------
1995 1994
----------------------------- -----------------------------
SHARES DOLLARS SHARES DOLLARS
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
INSTITUTIONAL SHARES
-----------------------------------
Shares sold 33,458,790 $ 365,277,979 75,001,659 $ 882,750,706
-----------------------------------
Shares issued to shareholders in
payment of dividends declared 2,556,101 27,566,855 2,539,103 29,822,854
-----------------------------------
Shares redeemed (64,291,288) (698,723,436) (63,483,695) (745,434,319)
----------------------------------- ----------- ------------- ----------- -------------
Net change resulting from
Institutional share transactions (28,276,397) ($305,878,602) 14,057,067 $ 167,139,241
----------------------------------- ----------- ------------- ----------- -------------
</TABLE>
FEDERATED GNMA TRUST
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED JANUARY 31,
------------------------------------------------------------
1995 1994
---------------------------- ---------------------------
SHARES DOLLARS SHARES DOLLARS
----------- ------------- ----------- ------------
<S> <C> <C> <C> <C>
INSTITUTIONAL SERVICE SHARES
-------------------------------------
Shares sold 3,007,210 $ 33,026,946 11,649,200 $137,349,630
-------------------------------------
Shares issued to shareholders in
payment of dividends declared 573,520 6,183,982 434,613 5,097,016
-------------------------------------
Shares redeemed (4,025,344) (43,651,277) (4,546,844) (53,267,933)
------------------------------------- ----------- ------------- ----------- ------------
Net change resulting from Institu-
tional Service share transactions (444,614) ($ 4,440,349) 7,536,969 $ 89,178,713
------------------------------------- ----------- ------------- ----------- ------------
Net change resulting from Trust
share transactions (28,721,011) ($310,318,951) 21,594,036 $256,317,954
------------------------------------- ----------- ------------- ----------- ------------
</TABLE>
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Management, the Trust's investment adviser,
(the "Adviser"), receives for its services an annual investment advisory fee
equal to .40 of 1% of the Trust's average daily net assets.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS"), under the
Administrative Services Agreement, provides the Trust with administrative
personnel and services. Prior to March 1, 1994, these services were provided at
approximate cost. Effective March 1, 1994, the FAS fee is based on the level of
average aggregate daily net assets of all funds advised by subsidiaries of
Federated Investors for the period. The administrative fee received during the
period of the Administrative Services Agreement shall be at least $125,000 per
portfolio and $30,000 per each additional class of shares.
DISTRIBUTION SERVICES FEE--The Trust has adopted a Distribution Plan (the
"Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the
Trust will compensate Federated Securities Corp. ("FSC"), the principal
distributor, from the net assets of the Trust to finance activities intended to
result in the sale of the Trust's Institutional Service Shares. The Plan
provides that the Trust may incur distribution expenses up to .25 of 1% of the
average daily net assets of the Institutional Service Shares, annually, to
compensate FSC. The distributor may voluntarily choose to waive any portion of
its fee. The distributor can modify or terminate this voluntary waiver at any
time at its sole discretion.
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement
with Federated Shareholder Services ("FSS"), the Trust will pay FSS up to .25 of
1% of average net assets of the Trust for the period. This fee is to obtain
certain personal services for shareholders and to maintain the shareholder
accounts.
FEDERATED GNMA TRUST
--------------------------------------------------------------------------------
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated
Services Company ("FServ") serves as transfer and dividend disbursing agent for
the Trust. The fee is based on the size, type, and number of accounts and
transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ also maintains the Trust's accounting records
for which it receives a fee. The fee is based on the level of the Trust's
average net assets for the period plus, out-of-pocket expenses.
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Trustees or Directors of the above companies.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities and in kind
contributions, for the fiscal year ended January 31, 1995, were as follows:
<TABLE>
<S> <C>
-----------------------------------------------------------------------------
PURCHASES-- $2,351,740,117
----------------------------------------------------------------------------- --------------
SALES-- $2,448,916,033
----------------------------------------------------------------------------- --------------
</TABLE>
INDEPENDENT AUDITORS' REPORT
--------------------------------------------------------------------------------
To the Trustees and Shareholders of
FEDERATED GNMA TRUST:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Federated GNMA Trust as of January 31, 1995,
the related statement of operations for the year then ended, the statement of
changes in net assets for the years ended January 31, 1995 and 1994, and the
financial highlights (see pages 2 and 15 of the prospectus) for each of the ten
years in the period ended January 31, 1995. These financial statements and
financial highlights are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of the securities owned at
January 31, 1995 by correspondence with the custodian and brokers; where replies
were not received from brokers, we performed other auditing procedures. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Federated GNMA Trust
as of January 31, 1995, the results of its operations, the changes in its net
assets and its financial highlights for the respective stated periods in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Pittsburgh, Pennsylvania
March 16, 1995
ADDRESSES
--------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Federated GNMA Trust
Institutional Shares Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
------------------------------------------------------------------------------------------------
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
------------------------------------------------------------------------------------------------
Investment Adviser
Federated Management Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
------------------------------------------------------------------------------------------------
Custodian
State Street Bank and P.O. Box 8602
Trust Company Boston, Massachusetts 02266-8602
------------------------------------------------------------------------------------------------
Transfer Agent and Dividend Disbursing Agent
Federated Services Company Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
------------------------------------------------------------------------------------------------
Independent Auditors
Deloitte & Touche LLP 2500 One PPG Place
Pittsburgh, Pennsylvania 15222
------------------------------------------------------------------------------------------------
</TABLE>
FEDERATED GNMA TRUST
INSTITUTIONAL SHARES
PROSPECTUS
An Open-End, Diversified
Management Investment Company
March 31, 1995
FEDERATED SECURITIES CORP.
(LOGO)
---------------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
314184102
8022901 A-IS (3/95)
FEDERATED GNMA TRUST
INSTITUTIONAL SERVICE SHARES
PROSPECTUS
The Institutional Service Shares of Federated GNMA Trust (the "Trust") offered
by this prospectus represent interests in a diversified portfolio of securities
investing primarily in instruments issued or guaranteed by the Government
National Mortgage Association, to achieve current income. The Trust is an
open-end, diversified management investment company (a mutual fund).
Institutional Service Shares are sold at net asset value.
THE INSTITUTIONAL SERVICE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR
OBLIGATIONS OF ANY BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK, AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD,
OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THESE INSTITUTIONAL SERVICE SHARES
INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
This prospectus contains the information you should read and know before you
invest in Institutional Service Shares of the Trust. Keep this prospectus for
future reference.
The Trust has also filed a Combined Statement of Additional Information for
Institutional Service Shares and Institutional Shares dated March 31, 1995 with
the Securities and Exchange Commission. The information contained in the
Combined Statement of Additional Information is incorporated by reference into
this prospectus. You may request a copy of the Combined Statement of Additional
Information free of charge by calling 1-800-235-4669. To obtain other
information or to make inquiries about the Trust, contact the Trust at the
address listed in the back of this prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Prospectus dated March 31, 1995
TABLE OF CONTENTS
--------------------------------------------------------------------------------
SUMMARY OF TRUST EXPENSES 1
------------------------------------------------------
FINANCIAL HIGHLIGHTS--INSTITUTIONAL
SERVICE SHARES 2
------------------------------------------------------
GENERAL INFORMATION 3
------------------------------------------------------
INVESTMENT INFORMATION 3
------------------------------------------------------
Investment Objective 3
Investment Policies 3
Investment Limitations 6
TRUST INFORMATION 6
------------------------------------------------------
Management of the Trust 6
DISTRIBUTION OF INSTITUTIONAL SERVICE SHARES 8
------------------------------------------------------
ADMINISTRATION OF THE TRUST 9
------------------------------------------------------
NET ASSET VALUE 9
------------------------------------------------------
INVESTING IN INSTITUTIONAL SERVICE SHARES 10
------------------------------------------------------
Share Purchases 10
Minimum Investment Required 10
What Shares Cost 10
Exchanging Securities for Trust Shares 11
Subaccounting Services 11
Certificates and Confirmations 11
Dividends 11
Capital Gains 11
REDEEMING INSTITUTIONAL SERVICE SHARES 12
------------------------------------------------------
Telephone Redemption 12
Written Requests 12
Accounts with Low Balances 13
SHAREHOLDER INFORMATION 13
------------------------------------------------------
Voting Rights 13
Massachusetts Partnership Law 13
TAX INFORMATION 14
------------------------------------------------------
Federal Income Tax 14
Pennsylvania Corporate and Personal
Property Taxes 14
PERFORMANCE INFORMATION 14
------------------------------------------------------
OTHER CLASSES OF SHARES 15
------------------------------------------------------
Financial Highlights--
Institutional Shares 16
FINANCIAL STATEMENTS 17
------------------------------------------------------
INDEPENDENT AUDITORS' REPORT 26
------------------------------------------------------
ADDRESSES 27
------------------------------------------------------
SUMMARY OF TRUST EXPENSES
--------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INSTITUTIONAL SERVICE SHARES
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)...................................................... None
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price)...................................................... None
Contingent Deferred Sales Charge (as a percentage of original
purchase price or redemption proceeds, as applicable).................................... None
Redemption Fee (as a percentage of amount redeemed, if applicable)......................... None
Exchange Fee............................................................................... None
ANNUAL INSTITUTIONAL SERVICE SHARES OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee............................................................................. 0.40%
12b-1 Fee (after waiver)(1)................................................................ 0.03%
Total Other Expenses....................................................................... 0.39%
Shareholder Services Fee (after waiver)(2).................................... 0.23%
Total Institutional Service Shares Operating Expenses(3)............................ 0.82%
</TABLE>
(1) The maximum 12b-1 fee is 0.25%.
(2) The maximum shareholder service fee is 0.25%.
(3) The total Institutional Service Shares operating expenses in the table above
are based on expenses expected during the fiscal year ending January 31, 1996.
The total Institutional Service Shares operating expenses were 0.77% for the
fiscal year ended January 31, 1995 and would have been 0.91% absent the
voluntary waiver of a portion of the 12b-1 fee.
The purpose of this table is to assist an investor in understanding the
various costs and expenses that a shareholder of Institutional Service Shares of
the Trust will bear, either directly or indirectly. For more complete
descriptions of the various costs and expenses, see "Trust Information" and
"Investing in Institutional Service Shares." Wire-transferred redemptions of
less than $5,000 may be subject to additional fees.
Long-term shareholders may pay more than the economic equivalent of the
maximum front-end sales charges permitted under the rules of the National
Association of Securities Dealers, Inc.
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years 5 years 10 years
------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment
assuming (1) 5% annual return and (2) redemption at the end
of each time period........................................ $8 $26 $46 $101
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
The information set forth in the foregoing table relates only to
Institutional Service Shares of the Trust. The Trust offers another class of
shares called Institutional Shares. Institutional Service Shares and
Institutional Shares are subject to certain of the same expenses; however,
Institutional Shares are not subject to a 12b-1 fee. See "Other Classes of
Shares."
FEDERATED GNMA TRUST
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SERVICE SHARES
--------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Independent Auditors' Report on page 26.
<TABLE>
<CAPTION>
YEAR ENDED JANUARY 31,
-----------------------------
1995 1994 1993(A)
------ ------ -------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $11.64 $11.80 $11.71
---------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
---------------------------------------------------------------
Net investment income 0.79 0.82 0.61
---------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (1.03) (0.16) 0.09
-----
--------------------------------------------------------------- ------ ------
Total from investment operations (0.24) 0.66 0.70
-----
--------------------------------------------------------------- ------ ------
LESS DISTRIBUTIONS
---------------------------------------------------------------
Distributions from net investment income (0.79) (0.82) (0.61 )
-----
--------------------------------------------------------------- ------ ------
NET ASSET VALUE, END OF PERIOD $10.61 $11.64 $11.80
-----
--------------------------------------------------------------- ------ ------
TOTAL RETURN(B) (1.92%) 5.76% 5.62 %
---------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
---------------------------------------------------------------
Expenses 0.77% 0.76% 0.76 %(c)
---------------------------------------------------------------
Net investment income 7.32% 6.97% 7.57 %(c)
---------------------------------------------------------------
Expense waiver/reimbursement(d) 0.14% -- --
---------------------------------------------------------------
SUPPLEMENTAL DATA
---------------------------------------------------------------
Net assets, end of period (000 omitted) $120,427 $137,235 $50,166
---------------------------------------------------------------
Portfolio turnover rate 136% 117% 33 %
---------------------------------------------------------------
</TABLE>
(a) Reflects operations for the period from June 18, 1992 (date of initial
public investment) to January 31, 1993.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) Computed on an annualized basis.
(d) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
Further information about the Trust's performance is contained in the Trust's
annual report for the fiscal year ended January 31, 1995, which can be obtained
free of charge.
GENERAL INFORMATION
--------------------------------------------------------------------------------
The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated December 10, 1981. The Declaration of Trust permits the Trust to
offer separate series of shares of beneficial interest representing interests in
separate portfolios of securities. The shares in any one portfolio may be
offered in separate classes. As of the date of this prospectus, the Board of
Trustees ("Trustees") has established two classes of shares of the Trust, known
as Institutional Service Shares and Institutional Shares. This prospectus
relates to Institutional Service Shares of the Trust.
Institutional Service Shares ("Shares") are designed primarily for retail and
private banking customers of financial institutions as a convenient means of
accumulating an interest in a professionally managed, diversified portfolio of
mortgage-backed securities. A minimum initial investment of $25,000 over a
90-day period is required.
Shares are currently sold and redeemed at net asset value without a sales load
imposed by the Trust.
INVESTMENT INFORMATION
--------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The investment objective of the Trust is current income. The investment
objective may not be changed without the approval of shareholders. The Trust
pursues this investment objective by investing primarily in instruments issued
or guaranteed by the Government National Mortgage Association ("GNMA"). While
there is no assurance that the Trust will achieve its investment objective, it
endeavors to do so by following the investment policies described in this
prospectus.
INVESTMENT POLICIES
As a matter of investment policy which may be changed without shareholder
approval, the Trust will limit its investments to those that are permitted for
purchase by federal savings associations pursuant to applicable rules,
regulations, or interpretations of the Office of Thrift Supervision. Should
additional permitted investments be allowed as a result of future changes in
applicable regulations or federal laws, the Trust reserves the right, without
shareholder approval, to make such investments consistent with the Trust's
investment objective, policies, and limitations. Further, should existing
statutes or regulations change so as to cause any securities held by the Trust
to become ineligible for purchase by federal savings associations, the Trust
will dispose of those securities at times advantageous to the Trust.
As operated within the above limitation, the Trust may also serve as an
appropriate vehicle for a national bank as an investment for its own account.
Unless otherwise designated, the investment policies described below may not be
changed without shareholder approval.
ACCEPTABLE INVESTMENTS. The Trust will invest primarily in mortgage-backed
securities. Under normal circumstances, at least 65% of the Trust's portfolio
will be invested in instruments issued or fully guaranteed as to principal and
interest by GNMA. In addition, to the extent that the Trust will invest in
other mortgage-backed securities, as described below, these will be
collateralized by GNMA obligations.
The Trust's permissible investments are as follows:
- U.S. Treasury bills, notes, and bonds;
- collateralized mortgage obligations;
- real estate mortgage investment conduits; and
- notes, bonds and discount notes of U.S. government agencies or
instrumentalities, such as the: Farm Credit System, including the
National Bank for Cooperatives, Farm Credit Banks, and Banks for
Cooperatives; Farmers Home Administration; Federal Home Loan Banks;
Federal Home Loan Mortgage Corporation; Federal National Mortgage
Association; Government National Mortgage Association; and Student Loan
Marketing Association.
COLLATERALIZED MORTGAGE OBLIGATIONS ("CMOS"). CMOs are bonds issued by
single-purpose, stand-alone finance subsidiaries or trusts of financial
institutions, government agencies, investment bankers, or companies related to
the construction industry. CMOs purchased by the Trust will be collateralized by
pools of mortgages in which each mortgage is guaranteed as to payment of
principal and interest by GNMA.
All CMOs purchased by the Trust are issued by an agency of the United States and
are rated in the highest rating category by a nationally recognized statistical
rating organization.
The following example illustrates how mortgage cash flows are prioritized in the
case of CMOs--most of the CMOs in which the Trust invests use the same basic
structure:
(1) Several classes of securities are issued against a pool of mortgage
collateral. The most common structure contains four classes of securities:
The first three (A, B, and C bonds) pay interest at their stated rates
beginning with the issue date; the final class (Z bond) typically receives
any excess income from the underlying investments after payments are made
to the other classes and receives no principal or interest payments until
the shorter maturity classes have been retired, but then receives all
remaining principal and interest payments.
(2) The cash flows from the underlying mortgages are applied first to pay
interest and then to retire securities.
(3) The classes of securities are retired sequentially. All principal payments
are directed first to the shortest-maturity class (or A bond). When those
securities are completely retired, all principal payments are then directed
to the next-shortest-maturity security (or B bond). This process continues
until all of the classes have been paid off.
Because the cash flow is distributed sequentially instead of pro-rata, as with
pass-through securities, the cash flows and average lives of CMOs are more
predictable, and there is a period of time during which the investors in the
longer-maturity classes receive no principal paydowns. One or more of the
classes may be adjustable rate. The interest portion of these payments is
distributed by the Trust as income, and the capital portion is reinvested.
REAL ESTATE MORTGAGE INVESTMENT CONDUITS ("REMICS"). REMICs are offerings of
multiple class real estate mortgage-backed securities which qualify and elect
treatment as such under provisions of the Internal Revenue Code, as amended.
Issuers of REMICs may take several forms, such as trusts, partnerships,
corporations, associations or a segregated pool of mortgages. Once REMIC status
is elected and obtained, the entity is not subject to federal income taxation.
Instead, income is passed through the entity and is taxed to the person or
persons who hold interests in the REMIC. A REMIC interest must consist of one or
more classes of "regular interests," some of which may offer adjustable rates,
and a single class of "residual interests." To qualify as a REMIC, substantially
all of the assets of the entity must be in assets directly or indirectly secured
principally by real property.
Because the mortgages underlying mortgage-backed securities often may be prepaid
without penalty or premium, mortgage-backed securities are generally subject to
higher prepayment risks than most other types of debt instruments. Prepayment
risks on mortgage securities tend to increase during periods of declining
mortgage interest rates, because many borrowers refinance their mortgages to
take advantage of the more favorable rates. Depending upon market conditions,
the yield that the Trust receives from the reinvestment of such prepayments, or
any scheduled principal payments, may be lower than the yield on the original
mortgage security. As a consequence, mortgage securities may be a less effective
means of "locking in" interest rates than other types of debt securities having
the same stated maturity and may also have less potential for capital
appreciation. For certain types of asset pools, such as collateralized mortgage
obligations, prepayments may be allocated to one tranche of securities ahead of
other tranches, in order to reduce the risk of prepayment for the other
tranches.
Prepayments may result in a capital loss to the Trust to the extent that the
prepaid mortgage securities were purchased at a market premium over their stated
principal amount. Conversely, the prepayment of mortgage securities purchased at
a market discount from their stated principal amount will accelerate the
recognition of interest income by the Trust, which would be taxed as ordinary
income when distributed to the shareholders.
The prices of fixed income securities fluctuate inversely to the direction of
interest rates.
TEMPORARY INVESTMENTS. For defensive purposes only, the Trust may invest
temporarily in cash and money market instruments during times of unusual market
conditions and to maintain liquidity. Money market instruments may include:
- obligations of the U.S. government or its agencies or instrumentalities;
and
- repurchase agreements.
REPURCHASE AGREEMENTS. Repurchase agreements are arrangements in which
banks, broker/ dealers, and other recognized financial institutions sell
U.S. government securities or other securities to the Trust and agree at
the time of sale to repurchase them at a mutually agreed upon time and
price. To the extent that the original seller does not repurchase the
securities from the Trust, the Trust could receive less than the repurchase
price on any sale of such securities.
LENDING OF PORTFOLIO SECURITIES. In order to generate additional income, the
Trust may lend portfolio securities on a short-term or long-term basis, or both
up to one-third of the value of its total assets to broker/dealers, banks, or
other institutional borrowers of securities. The Trust will only enter into loan
arrangements with broker/dealers, banks, or other institutions which the
investment adviser
has determined are creditworthy under guidelines established by the Trustees.
The Trust will receive collateral in the form of cash or U.S. government
securities equal to at least 100% of the value of the securities loaned.
There is the risk that when lending portfolio securities, the securities may not
be available to the Trust on a timely basis and the Trust may, therefore, lose
the opportunity to sell the securities at a desirable price. In addition, in the
event that a borrower of securities would file for bankruptcy or become
insolvent, disposition of the securities may be delayed pending court action.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Trust may purchase
securities on a when-issued or delayed delivery basis. These transactions are
arrangements in which the Trust purchases securities with payment and delivery
scheduled for a future time. The seller's failure to complete these transactions
may cause the Trust to miss a price or yield considered to be advantageous.
Settlement dates may be a month or more after entering into these transactions,
and the market values of the securities purchased may vary from the purchase
prices. Accordingly, the Trust may pay more or less than the market value of the
securities on the settlement date.
The Trust may dispose of a commitment prior to settlement if the adviser deems
it appropriate to do so. In addition, the Trust may enter into transactions to
sell its purchase commitments to third parties at current market values and
simultaneously acquire other commitments to purchase similar securities at later
dates. The Trust may realize short-term profits or losses upon the sale of such
commitments.
INVESTMENT LIMITATIONS
The Trust will not borrow money directly or through reverse repurchase
agreements (arrangements in which the Trust sells a portfolio instrument for a
percentage of its cash value with an agreement to buy it back on a set date) or
pledge securities except, under certain circumstances, the Trust may borrow
money and engage in reverse repurchase agreements up to one-third of the value
of its total assets and pledge up to 10% of the value of those assets to secure
such borrowings.
As a matter of investment practice, which can be changed without shareholder
approval, the Trust will not invest more than 15% of its net assets in
securities which are illiquid, including repurchase agreements providing for
settlement in more than seven days after notice, and certain restricted
securities not determined by the Trustees to be liquid.
TRUST INFORMATION
--------------------------------------------------------------------------------
MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES. The Trust is managed by a Board of Trustees. The Trustees
are responsible for managing the Trust's business affairs and for exercising all
the Trust's powers except those reserved for the shareholders. The Executive
Committee of the Board of Trustees handles the Board's responsibilities between
meetings of the Board.
INVESTMENT ADVISER. Investment decisions for the Trust are made by Federated
Management, the Trust's investment adviser, subject to direction by the
Trustees. The adviser continually conducts
investment research and supervision for the Trust and is responsible for the
purchase or sale of portfolio instruments, for which it receives an annual fee
from the Trust.
ADVISORY FEES. The Trust's adviser receives an annual investment advisory
fee equal to .40 of 1% of the Trust's average daily net assets. The adviser
has also undertaken to reimburse the Trust for operating expenses in excess
of limitations established by certain states. This does not include
reimbursement to the Trust of any expenses incurred by shareholders who use
the transfer agent's subaccounting facilities.
ADVISER'S BACKGROUND. Federated Management, a Delaware business trust
organized on April 11, 1989, is a registered investment adviser under the
Investment Advisers Act of 1940. It is a subsidiary of Federated Investors.
All of the Class A (voting) shares of Federated Investors are owned by a
trust, the trustees of which are John F. Donahue, Chairman and Trustee of
Federated Investors, Mr. Donahue's wife, and Mr. Donahue's son, J.
Christopher Donahue, who is President and Trustee of Federated Investors.
Federated Management and other subsidiaries of Federated Investors serve as
investment advisers to a number of investment companies and private
accounts. Certain other subsidiaries also provide administrative services
to a number of investment companies. Total assets under management or
administration by these and other subsidiaries of Federated Investors are
approximately $70 billion. Federated Investors, which was founded in 1956
as Federated Investors, Inc., develops and manages mutual funds primarily
for the financial industry. Federated Investors' track record of
competitive performance and its disciplined risk-averse investment
philosophy serve approximately 3,500 client institutions nationwide.
Through these same client institutions, individual shareholders also have
access to this same level of investment expertise.
James D. Roberge has been the Trust's portfolio manager since February,
1995. Mr. Roberge joined Federated Investors in 1990 and has been a Vice
President of the Trust's investment adviser since October, 1994. Prior to
this, Mr. Roberge served as an Assistant Vice President of the Trust's
investment adviser. From 1990 until 1992, Mr. Roberge acted as an
investment analyst. Mr. Roberge is a Chartered Financial Analyst and
received his M.B.A. in Finance from Wharton Business School in 1990.
Kathleen M. Foody-Malus has been the Trust's portfolio manager since July,
1993. Ms. Foody-Malus joined Federated Investors in 1983 and has been a
Vice President of the Trust's investment adviser since 1993. Ms.
Foody-Malus served as an Assistant Vice President of the investment adviser
from 1990 until 1992, and from 1986 until 1989 she acted as an investment
analyst. Ms. Foody-Malus received her M.B.A. in Accounting/Finance from the
University of Pittsburgh.
DISTRIBUTION OF INSTITUTIONAL SERVICE SHARES
--------------------------------------------------------------------------------
Federated Securities Corp. is the principal distributor for Institutional
Service Shares. It is a Pennsylvania corporation organized on November 14, 1969,
and is the principal distributor for a number of investment companies. Federated
Securities Corp. is a subsidiary of Federated Investors.
DISTRIBUTION AND SHAREHOLDER SERVICES PLANS. Under a distribution plan adopted
in accordance with Investment Company Act Rule 12b-1 (the "Distribution Plan"),
the Trust will pay to the distributor an amount, computed at an annual rate of
0.25 of 1% of the average daily net asset value of the Institutional Service
Shares to finance any activity which is principally intended to result in the
sale of shares subject to the Distribution Plan. The distributor may select
financial institutions such as banks, fiduciaries, custodians for public funds,
investment advisers, and broker/dealers to provide sales support services as
agents for their clients or customers.
The Distribution Plan is a compensation-type plan. As such, the Trust makes no
payments to the distributor except as described above. Therefore, the Trust does
not pay for unreimbursed expenses of the distributor, including amounts expended
by the distributor in excess of amounts received by it from the Trust, interest,
carrying or other financing charges in connection with excess amounts expended,
or the distributor's overhead expenses. However, the distributor may be able to
recover such amount or may earn a profit from future payments made by the Trust
under the Distribution Plan.
In addition, the Trust has adopted a Shareholder Services Plan (the "Services
Plan") under which it may make payments up to 0.25 of 1% of the average daily
net asset value of the Institutional Service Shares to obtain certain personal
services for shareholders and the maintenance of shareholder accounts
("shareholder services"). The Trust has entered into a Shareholder Services
Agreement with Federated Shareholder Services, a subsidiary of Federated
Investors, under which Federated Shareholder Services will either perform
shareholder services directly or will select financial institutions to perform
shareholder services. Financial institutions will receive fees based upon shares
owned by their clients or customers. The schedules of such fees and the basis
upon which such fees will be paid will be determined from time to time by the
Trust and Federated Shareholder Services.
The Glass-Steagall Act prohibits a depository institution (such as a commercial
bank or a savings and loan association) from being an underwriter or distributor
of most securities. In the event the Glass-Steagall Act is deemed to prohibit
depository institutions from acting in the administrative capacities described
above or should Congress relax current restrictions on depository institutions,
the Trustees will consider appropriate changes in the services.
State securities laws governing the ability of depository institutions to act as
underwriters or distributors of securities may differ from interpretations given
to the Glass-Steagall Act and, therefore, banks and financial institutions may
be required to register as dealers pursuant to state law.
ADMINISTRATION OF THE TRUST
--------------------------------------------------------------------------------
ADMINISTRATIVE SERVICES. Federated Administrative Services, a subsidiary of
Federated Investors, provides administrative personnel and services (including
certain legal and financial reporting services) necessary to operate the Trust.
Federated Administrative Services provides these at an annual rate, which
relates to the average aggregate daily net assets of all funds advised by
subsidiaries of Federated Investors ("Federated Funds"), as specified below:
<TABLE>
<CAPTION>
MAXIMUM AVERAGE AGGREGATE DAILY NET
ADMINISTRATIVE FEE ASSETS OF THE FEDERATED FUNDS
-------------------------------- --------------------------------
<S> <C>
0.15 of 1% on the first $250 million
0.125 of 1% on the next $250 million
0.10 of 1% on the next $250 million
on assets in excess of $750
0.075 of 1% million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
Federated Administrative Services may choose voluntarily to waive a portion of
its fee.
OTHER PAYMENTS TO FINANCIAL INSTITUTIONS. In addition to periodic payments to
financial institutions under the Distribution and Shareholder Services Plans,
certain financial institutions may be compensated by the adviser or its
affiliates for the continuing investment of customers' assets in certain funds,
including the Trust, advised by those entities. These payments will be made
directly by the distributor or adviser from their assets, and will not be made
from the assets of the Trust or by the assessment of a sales load on Shares.
CUSTODIAN. State Street Bank and Trust Company ("State Street Bank"), Boston,
Massachusetts, is custodian for the securities and cash of the Trust.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT. Federated Services Company,
Pittsburgh, Pennsylvania, is transfer agent for the Shares of the Trust and
dividend disbursing agent for the Trust.
INDEPENDENT AUDITORS. The independent auditors for the Trust are Deloitte &
Touche LLP, Pittsburgh, Pennsylvania.
NET ASSET VALUE
--------------------------------------------------------------------------------
The Trust's net asset value per Share fluctuates. The net asset value for Shares
is determined by adding the interest of the Shares in the market value of all
securities and other assets of the Trust, subtracting the interest of the Shares
in the liabilities of the Trust and those attributable to Shares, and dividing
the remainder by the total number of Shares outstanding. The net asset value for
Institutional Shares may exceed that of Shares due to the variance in daily net
income realized by each class. Such variance will reflect only accrued net
income to which the shareholders of a particular class are entitled.
INVESTING IN INSTITUTIONAL SERVICE SHARES
--------------------------------------------------------------------------------
SHARE PURCHASES
Shares are sold on days on which the New York Stock Exchange and the Federal
Reserve wire system are open. Shares may be purchased either by wire or mail.
To purchase Shares, open an account by calling Federated Securities Corp.
Information needed to establish the account will be taken over the telephone.
The Trust reserves the right to reject any purchase request.
BY WIRE. To purchase Shares by Federal Reserve wire, call the Trust before 4:00
p.m. (Eastern time) to place an order. The order is considered received
immediately. Payment by federal funds must be received before 3:00 p.m. (Eastern
time) on the next business day following the order. Federal funds should be
wired as follows: Federated Services Company, c/o State Street Bank and Trust
Company, Boston, Massachusetts; Attention: EDGEWIRE; For Credit to: Federated
GNMA Trust--Institutional Service Shares; Trust Number (this number can be found
on the account statement or by contacting the Trust); Group Number or Order
Number; Nominee or Institution Name; and ABA Number 011000028. Shares cannot be
purchased by wire on days on which the New York Stock Exchange is closed and on
federal holidays restricting wire transfers.
BY MAIL. To purchase Shares by mail, send a check made payable to Federated
GNMA Trust-- Institutional Service Shares to Federated Services Company, c/o
State Street Bank and Trust Company, P.O. Box 8602, Boston, Massachusetts
02266-8602. Orders by mail are considered received after payment by check is
converted by State Street Bank into federal funds. This is normally the next
business day after State Street Bank receives the check.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment in Shares is $25,000 plus any non-affiliated bank
or broker's fee, if applicable. However, an account may be opened with a smaller
amount as long as the $25,000 minimum is reached within 90 days. An
institutional investor's minimum investment will be calculated by combining all
accounts it maintains with the Trust.
Individual accounts established through a non-affiliated bank or broker may be
subject to a smaller minimum investment.
WHAT SHARES COST
Shares are sold at their net asset value next determined after an order is
received. There is no sales load imposed by the Trust. Investors who purchase
Shares through a non-affiliated bank or broker may be charged an additional
service fee by that bank or broker.
The net asset value is determined at 4:00 p.m. (Eastern time), Monday through
Friday, except on: (i) days on which there are not sufficient changes in the
value of the Trust's portfolio securities that its net asset value might be
materially affected; (ii) days during which no Shares are tendered for
redemption and no orders to purchase Shares are received; and (iii) the
following holidays: New Year's
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, and Christmas Day.
EXCHANGING SECURITIES FOR TRUST SHARES
Investors may exchange certain U.S. government securities or a combination of
securities and cash for Shares. The securities and any cash must have a market
value of at least $25,000. The Trust reserves the right to determine the
acceptability of securities to be exchanged. Securities accepted by the Trust
are valued in the same manner as the Trust values its assets. Investors wishing
to exchange securities should first contact Federated Securities Corp.
SUBACCOUNTING SERVICES
Institutions are encouraged to open single master accounts. However, certain
institutions may wish to use the transfer agent's subaccounting system to
minimize their internal recordkeeping requirements. The transfer agent charges a
fee based on the level of subaccounting services rendered. Institutions holding
Shares in a fiduciary, agency, custodial, or similar capacity may charge or pass
through subaccounting fees as part of or in addition to normal trust or agency
account fees. They may also charge fees for other services provided which may be
related to the ownership of Shares. This prospectus should, therefore, be read
together with any agreement between the customer and the institution with regard
to the services provided, the fees charged for those services, and any
restrictions and limitations imposed.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Trust, Federated Services Company maintains a share
account for each shareholder. Share certificates are not issued unless requested
by contacting the Trust.
Detailed confirmations of each purchase or redemption are sent to each
shareholder. Monthly confirmations are sent to report dividends paid during the
month.
DIVIDENDS
Dividends are declared daily and paid monthly. Dividends are declared just prior
to determining net asset value. If an order for Shares is placed on the
preceding business day, Shares purchased by wire begin earning dividends on the
business day wire payment is received by the transfer agent. If the order for
Shares and payment by wire are received on the same day, Shares begin earning
dividends on the next business day. Shares purchased by check begin earning
dividends on the business day after the check is converted, upon instruction of
the transfer agent, into federal funds. Dividends are automatically reinvested
on payment dates in additional Shares unless cash payments are requested by
contacting the Trust.
CAPITAL GAINS
Capital gains realized by the Trust, if any, are distributed at least once every
12 months.
REDEEMING INSTITUTIONAL SERVICE SHARES
--------------------------------------------------------------------------------
The Trust redeems Shares at their net asset value next determined after the
Trust receives the redemption request. Redemptions will be made on days on which
the Trust computes its net asset value. Redemption requests must be received in
proper form and can be made by telephone request or by written request.
TELEPHONE REDEMPTION
Shareholders may redeem their Shares by telephoning the Trust before 4:00 p.m.
(Eastern time). The proceeds will normally be wire transferred the following
business day, but in no event more than seven days, to the shareholder's account
at a domestic commercial bank that is a member of the Federal Reserve System. If
at any time, the Trust shall determine it necessary to terminate or modify this
method of redemption, shareholders would be promptly notified.
An authorization form permitting the Trust to accept telephone requests must
first be completed. Authorization forms and information on this service are
available from Federated Securities Corp.
Telephone redemption instructions may be recorded. If reasonable procedures are
not followed by the Trust, it may be liable for losses due to unauthorized or
fraudulent telephone instructions.
In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If such a case should occur, another
method of redemption, such as "Written Requests," should be considered.
WRITTEN REQUESTS
Shares may also be redeemed by sending a written request to the Trust. Call the
Trust for specific instructions before redeeming by letter. The shareholder will
be asked to provide in the request his name, the Trust name, his account number,
and the Share or dollar amount requested. If Share certificates have been
issued, they must be properly endorsed and should be sent by registered or
certified mail to Federated Services Company, 500 Victory Road-2nd Floor,
Quincy, Massachusetts 02171 with the written request.
SIGNATURES. Shareholders requesting a redemption of $50,000 or more, a
redemption of any amount to be sent to an address other than that on record with
the Trust, or a redemption payable other than to the shareholder of record must
have signatures on written redemption requests guaranteed by:
- a trust company or commercial bank whose deposits are insured by the Bank
Insurance Fund ("BIF"), which is administered by the Federal Deposit
Insurance Corporation ("FDIC");
- a member of the New York, American, Boston, Midwest, or Pacific Stock
Exchange;
- a savings bank or savings and loan association whose deposits are insured
by the Savings Association Insurance Fund ("SAIF"), which is administered
by the FDIC; or
- any other "eligible guarantor institution," as defined in the Securities
and Exchange Act of 1934.
The Trust does not accept signatures guaranteed by a notary public.
The Trust and its transfer agent have adopted standards for accepting signature
guarantees from the above institutions. The Trust may elect in the future to
limit eligible signature guarantors to institutions that are members of a
signature guarantee program. The Trust and its transfer agent reserve the right
to amend these standards at any time without notice.
RECEIVING PAYMENT. Normally, a check for the proceeds is mailed within one
business day, but in no event more than seven days, after receipt of a proper
written redemption request.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Trust may
redeem shares in any account and pay the proceeds to the shareholder if the
account balance falls below a required minimum value of $25,000. This
requirement does not apply, however, if the balance falls below $25,000 because
of changes in the Trust's net asset value.
Before Shares are redeemed to close an account, the shareholder is notified in
writing and allowed 30 days to purchase additional Shares to meet the minimum
requirement.
SHAREHOLDER INFORMATION
--------------------------------------------------------------------------------
VOTING RIGHTS
Each Share of the Trust gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All shares of all classes of
each portfolio in the Trust have equal voting rights except that, in matters
affecting only a particular fund or class, only shares of that fund or class are
entitled to vote. As of March 6, 1995, Ambank & Co., Baton Rouge, Louisiana,
owned 3,064,163.0800 shares (26.97%) of the voting securities of the Trust, and,
therefore, may, for certain purposes, be deemed to control the Trust and be able
to affect the outcome of certain matters presented for a vote of shareholders.
As a Massachusetts business trust, the Trust is not required to hold annual
shareholder meetings. Shareholder approval will be sought only for certain
changes in the Trust's operation and for the election of Trustees under certain
circumstances.
Trustees may be removed by the Trustees or by shareholders at a special meeting.
A special meeting of the shareholders for this purpose shall be called by the
Trustees upon the written request of shareholders owning at least 10% of the
Trust's outstanding shares entitled to vote.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for obligations of the Trust. To protect its
shareholders, the Trust has filed legal documents with Massachusetts that
expressly disclaim the liability of its shareholders for such acts or
obligations of the Trust. These documents require notice of this disclaimer to
be given in each agreement, obligation, or instrument that the Trust or its
Trustees enter into or sign on behalf of the Trust.
In the unlikely event a shareholder is held personally liable for the Trust's
obligations, the Trust is required to use its property to protect or compensate
the shareholder. On request, the Trust will defend
any claim made and pay any judgment against a shareholder for any act or
obligation of the Trust. Therefore, financial loss resulting from liability as a
shareholder will occur only if the Trust itself cannot meet its obligations to
indemnify shareholders and pay judgments against them from its assets.
TAX INFORMATION
--------------------------------------------------------------------------------
FEDERAL INCOME TAX
The Trust will pay no federal income tax because it expects to meet requirements
of the Internal Revenue Code, as amended applicable to regulated investment
companies and to receive the special tax treatment afforded to such companies.
Unless otherwise exempt, shareholders are required to pay federal income tax on
any dividends and other distributions received. This applies whether dividends
and distributions are received in cash or as additional shares.
PENNSYLVANIA CORPORATE AND PERSONAL PROPERTY TAXES
In the opinion of Houston, Houston & Donnelly, counsel to the Trust:
- the Trust is not subject to Pennsylvania corporate or personal property
taxes; and
- Trust shares may be subject to personal property taxes imposed by
counties, municipalities, and school districts in Pennsylvania to the
extent that the portfolio securities in the Trust would be subject to
such taxes if owned directly by residents of those jurisdictions.
Shareholders are urged to consult their own tax advisers regarding the status of
their accounts under state and local tax laws.
PERFORMANCE INFORMATION
--------------------------------------------------------------------------------
From time to time, the Trust advertises its total return and yield for Shares.
Total return represents the change, over a specified period of time, in the
value of an investment in the Shares of the Trust after reinvesting all income
and capital gains distributions. It is calculated by dividing that change by the
initial investment and is expressed as a percentage.
The yield of Shares of the Trust is calculated by dividing the net investment
income per share (as defined by the Securities and Exchange Commission) earned
by Shares over a thirty-day period by the offering price per share of Shares on
the last day of the period. This number is then annualized using semi-annual
compounding. The yield does not necessarily reflect income actually earned by
Shares and, therefore, may not correlate to the dividends or other distributions
paid to shareholders.
Shares are sold without any sales load or other similar non-recurring charges.
Total return and yield will be calculated separately for Institutional Service
Shares and Institutional Shares. Because Institutional Service Shares are
subject to a 12b-1 fee, the total return and yield for Institutional Shares for
the same period, will exceed that of Institutional Service Shares.
From time to time, the Trust may advertise the performance of Institutional
Service Shares using certain financial publications and/or compare the
performance of Institutional Service Shares to certain indices.
OTHER CLASSES OF SHARES
--------------------------------------------------------------------------------
Institutional Shares are sold to accounts for which financial institutions act
in a fiduciary or agency capacity, and other accounts where a financial
institution maintains master accounts with an aggregate investment of at least
$400 million in certain mutual funds which are advised or distributed by
affiliates of Federated Investors. Shares are also made available to financial
intermediaries, public, and private organizations. Institutional Shares are sold
at net asset value. Investments in Institutional Shares are subject to a minimum
initial investment of $25,000 over a 90-day period.
Institutional Shares are distributed without a 12b-1 Plan.
Financial institutions and brokers providing sales and administrative services
may receive different compensation depending upon which class of shares of the
Trust is sold.
The amount of dividends payable to Institutional Shares will exceed that of
Institutional Service Shares by the difference between class expenses and
distribution and shareholder service expenses borne by shares of each respective
class.
The stated advisory fee is the same for both classes of shares.
FEDERATED GNMA TRUST
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES
--------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Independent Auditors' Report on page 26.
<TABLE>
<CAPTION>
YEAR ENDED JANUARY 31,
--------------------------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
------ ------ ------ ------ ------ ------ ------ ------ ------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
--------
NET
ASSET
VALUE,
BEGINNING
OF PERIOD $11.64 $11.80 $11.64 $11.29 $10.97 $10.70 $11.08 $11.46 $11.35 $10.77
--------
INCOME
FROM
INVESTMENT
OPERATIONS
--------
Net
investment
income 0.82 0.85 0.93 0.98 1.00 1.00 1.01 1.04 1.11 1.22
--------
Net
realized
and
unrealized
gain
(loss)
on
investments (1.03) (0.16) 0.16 0.35 0.32 0.27 (0.38) (0.38) 0.14 0.58
-------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Total
from
investment
operations (0.21) 0.69 1.09 1.33 1.32 1.27 0.63 0.66 1.25 1.80
-------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
LESS
DISTRIBUTIONS
--------
Distributions
from net
investment
income (0.82) (0.85) (0.93) (0.98) (1.00) (1.00) (1.01) (1.04) (1.11) (1.22)
--------
Distributions
from net
realized
gain on
investment
transactions -- -- -- -- -- -- -- -- (0.03) --
-------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Total
distributions (0.82) (0.85) (0.93) (0.98) (1.00) (1.00) (1.01) (1.04) (1.14) (1.22)
-------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
NET
ASSET
VALUE,
END OF
PERIOD $10.61 $11.64 $11.80 $11.64 $11.29 $10.97 $10.70 $11.08 $11.46 $11.35
-------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
TOTAL
RETURN(A) (1.71%) 6.02% 9.78% 12.25% 12.65% 12.33% 5.99% 6.29% 11.53% 17.75%
--------
RATIOS
TO
AVERAGE
NET
ASSETS
--------
Expenses 0.56% 0.51% 0.51% 0.51% 0.52% 0.52% 0.53% 0.52% 0.51% 0.61%
--------
Net
investment
income 7.51% 7.22% 7.98% 8.54% 9.08% 9.19% 9.33% 9.51% 9.66% 11.01%
--------
SUPPLEMENTAL
DATA
--------
Net
assets,
end of
period
(000
omitted) $1,442,074 $1,910,500 $1,770,169 $1,333,930 $1,268,706 $1,312,780 $1,710,890 $2,111,559 $2,515,127 $569,404
--------
Portfolio
turnover
rate 136% 117% 33% 57% 48% 27% 40% 45% 100% 141%
--------
</TABLE>
(a) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(See Notes which are an integral part of the Financial Statements)
Further information about the Trust's performance is contained in the Trust's
annual report for the fiscal year ended January 31, 1995, which can be obtained
free of charge.
FEDERATED GNMA TRUST
PORTFOLIO OF INVESTMENTS
JANUARY 31, 1995
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------ -------------------------------------------------------------- --------------
<C> <C> <S> <C>
LONG-TERM GOVERNMENT OBLIGATIONS--98.3%
---------------------------------------------------------------------------------
* GOVERNMENT NATIONAL MORTGAGE ASSOCIATION--98.3%
--------------------------------------------------------------
$256,254,850 7.00%, 11/15/2023 $ 234,229,746
--------------------------------------------------------------
216,653,976 7.50%, 2/15/2023 204,532,186
--------------------------------------------------------------
285,045,143 8.00%, 3/15/2017-8/15/2024 277,075,873+
--------------------------------------------------------------
150,688,678 8.50%, 1/15/2022 150,780,598
--------------------------------------------------------------
238,645,839 9.00%, 8/15/2016-12/15/2022 243,765,236+
--------------------------------------------------------------
198,158,531 9.50%, 7/15/2009-8/15/2019 206,800,472+
--------------------------------------------------------------
104,802,840 10.00%, 3/15/2016-12/20/2020 111,376,044+
--------------------------------------------------------------
12,309,500 10.50%, 6/15/2018-7/15/2019 13,247,978
--------------------------------------------------------------
22,465,853 11.00%, 9/15/2010 24,529,566
--------------------------------------------------------------
17,403,249 11.50%, 8/15/2015 19,154,189
--------------------------------------------------------------
28,655,850 12.00%, 7/15/2015 31,924,049
--------------------------------------------------------------
13,034,483 12.50%, 11/15/2010 14,655,452
--------------------------------------------------------------
1,813,191 13.00%, 2/15/2011 2,056,249
--------------------------------------------------------------
2,155,222 13.50%, 8/15/2014 2,456,931
-------------------------------------------------------------- --------------
TOTAL GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
(IDENTIFIED COST $1,576,266,549) 1,536,584,569
-------------------------------------------------------------- --------------
</TABLE>
FEDERATED GNMA TRUST
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------ -------------------------------------------------------------- --------------
<C> <C> <S> <C>
(A) REPURCHASE AGREEMENTS--12.6%
---------------------------------------------------------------------------------
$ 25,000,000 Chase Manhattan Bank, N. A., 5.80%, dated 1/31/1995, due
2/1/1995 $ 25,000,000
--------------------------------------------------------------
100,300,000 ** First Boston Corp., 5.78%, dated 1/19/1995, due 2/16/1995 100,300,000
--------------------------------------------------------------
50,000,000 ** First Boston Corp., 5.78%, dated 1/24/1995, due 2/24/1995 50,000,000
--------------------------------------------------------------
20,000,000 ** First Boston Corp., 5.875%, dated 1/24/1995, due 2/22/1995 20,000,000
--------------------------------------------------------------
1,390,000 J.P. Morgan Securities, Inc., 5.87%, dated 1/31/1995, due
2/1/1995 1,390,000
-------------------------------------------------------------- --------------
TOTAL REPURCHASE AGREEMENTS (AT AMORTIZED COST) 196,690,000
-------------------------------------------------------------- --------------
TOTAL INVESTMENTS (IDENTIFIED COST $1,772,956,549) $1,733,274,569++
-------------------------------------------------------------- --------------
</TABLE>
* Because of monthly principal payments, the average lives of the Government
National Mortgage Association Modified Pass-Through securities (based upon
FHA/VA historical experience) are less than the indicated periods.
** Although final maturity falls beyond seven days, a liquidity feature is
included in each transaction to permit termination of the repurchase
agreement within seven days.
(a) Repurchase agreements are fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio. The
investments in the repurchase agreements are through participation in a
joint account with other Federated Funds.
+ Includes securities with a market value of $175,597,383 subject to Dollar
Roll transactions.
++ The cost of investments for federal tax purposes amounts to $1,772,956,549.
The net unrealized depreciation on a federal tax cost basis amounts to
$39,681,980, which is comprised of $13,149,611 appreciation and $52,831,591
depreciation at January 31, 1995.
Note: The categories of investments are shown as a percentage of net assets
($1,562,500,571) at January 31, 1995.
(See Notes which are an integral part of the Financial Statements)
FEDERATED GNMA TRUST
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1995
--------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
-------------------------------------------------------------------------------
Investments in repurchase agreements $ 196,690,000
--------------------------------------------------------------
Investments in securities 1,536,584,569
-------------------------------------------------------------- --------------
Total investments in securities, at value
(identified and tax cost $1,772,956,549) $1,733,274,569
-------------------------------------------------------------------------------
Cash 3,098
-------------------------------------------------------------------------------
Receivable for investments sold 49,380,208
-------------------------------------------------------------------------------
Income receivable 10,140,192
-------------------------------------------------------------------------------
Receivable for shares sold 452,555
------------------------------------------------------------------------------- --------------
Total assets 1,793,250,622
-------------------------------------------------------------------------------
LIABILITIES:
-------------------------------------------------------------------------------
Payable for dollar roll transactions 174,189,487
--------------------------------------------------------------
Payable for investments purchased 46,961,589
--------------------------------------------------------------
Payable for shares redeemed 1,977,713
--------------------------------------------------------------
Income distribution payable 7,613,185
--------------------------------------------------------------
Accrued expenses 8,077
-------------------------------------------------------------- --------------
Total liabilities 230,750,051
------------------------------------------------------------------------------- --------------
NET ASSETS for 147,203,309 shares outstanding $1,562,500,571
------------------------------------------------------------------------------- --------------
NET ASSETS CONSISTS OF:
-------------------------------------------------------------------------------
Paid in capital $1,794,207,072
-------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments (39,681,980)
-------------------------------------------------------------------------------
Accumulated net realized gain (loss) on investments (192,024,521)
------------------------------------------------------------------------------- --------------
Total Net Assets $1,562,500,571
------------------------------------------------------------------------------- --------------
NET ASSET VALUE, Offering Price and Redemption Proceeds Per Share:
Institutional Shares:
($1,442,073,954 / 135,857,801 shares outstanding) $10.61
------------------------------------------------------------------------------- --------------
Institutional Service Shares:
($120,426,617 / 11,345,508 shares outstanding) $10.61
------------------------------------------------------------------------------- --------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED GNMA TRUST
STATEMENT OF OPERATIONS
YEAR ENDED JANUARY 31, 1995
--------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
-------------------------------------------------------------------------------
Interest (net of dollar roll expense of $4,216,711) $ 141,079,522
-------------------------------------------------------------------------------
EXPENSES:
-------------------------------------------------------------------------------
Investment advisory fee $ 6,989,013
-----------------------------------------------------------------
Administrative personnel and services fee 1,317,794
-----------------------------------------------------------------
Custodian fees 381,143
-----------------------------------------------------------------
Transfer agent and dividend disbursing agent fees and expenses 65,214
-----------------------------------------------------------------
Trustees' fees 20,567
-----------------------------------------------------------------
Auditing fees 22,124
-----------------------------------------------------------------
Legal fees 24,238
-----------------------------------------------------------------
Portfolio accounting fees 66,542
-----------------------------------------------------------------
Distribution services fee--Institutional Service Shares 317,246
-----------------------------------------------------------------
Shareholder services fee--Institutional Shares 683,138
-----------------------------------------------------------------
Shareholder services fee--Institutional Service Shares 172,503
-----------------------------------------------------------------
Share registration costs 44,086
-----------------------------------------------------------------
Printing and postage 22,064
-----------------------------------------------------------------
Insurance premiums 29,889
-----------------------------------------------------------------
Taxes 108,159
-----------------------------------------------------------------
Miscellaneous 25,640
----------------------------------------------------------------- -----------
Total expenses 10,289,360
-----------------------------------------------------------------
Deduct-waiver of distribution services fee 172,503
----------------------------------------------------------------- -----------
Net expenses 10,116,857
------------------------------------------------------------------------------- -------------
Net investment income 130,962,665
------------------------------------------------------------------------------- -------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
-------------------------------------------------------------------------------
Net realized gain (loss) on investments (97,737,729)
-------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on investments (77,177,049)
------------------------------------------------------------------------------- -------------
Net realized and unrealized gain (loss) on investments (174,914,778)
------------------------------------------------------------------------------- -------------
Change in net assets resulting from operations ($ 43,952,113)
------------------------------------------------------------------------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED GNMA TRUST
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED JANUARY 31,
---------------------------------
1995 1994
-------------- --------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
------------------------------------------------------------
OPERATIONS--
------------------------------------------------------------
Net investment income $ 130,962,665 $ 147,205,704
------------------------------------------------------------
Net realized gain (loss) on investments ($71,738,355 net
loss and $18,860,608 net gain, respectively, as computed
for federal income tax purposes) (97,737,729) 12,114,105
------------------------------------------------------------
Net change in unrealized appreciation (depreciation) of
investments (77,177,049) (41,032,970)
------------------------------------------------------------ -------------- --------------
Change in assets resulting from operations (43,952,113) 118,286,839
------------------------------------------------------------ -------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS--
------------------------------------------------------------
Dividends to shareholders from net investment income:
------------------------------------------------------------
Institutional Shares (121,679,720) (139,286,614)
------------------------------------------------------------
Institutional Service Shares (9,282,945) (7,919,090)
------------------------------------------------------------ -------------- --------------
Change in net assets resulting from distributions
to shareholders (130,962,665) (147,205,704)
------------------------------------------------------------ -------------- --------------
SHARE TRANSACTIONS
------------------------------------------------------------
Proceeds from sale of Shares 398,304,925 1,020,100,336
------------------------------------------------------------
Net asset value of Shares issued to shareholders in payment
of dividends declared 33,750,837 34,919,870
------------------------------------------------------------
Cost of Shares redeemed (742,374,713) (798,702,252)
------------------------------------------------------------ -------------- --------------
Change in net assets resulting from share transactions (310,318,951) 256,317,954
------------------------------------------------------------ -------------- --------------
Change in net assets (485,233,729) 227,399,089
------------------------------------------------------------
NET ASSETS:
------------------------------------------------------------
Beginning of period 2,047,734,300 1,820,335,211
------------------------------------------------------------ -------------- --------------
End of period $1,562,500,571 $2,047,734,300
------------------------------------------------------------ -------------- --------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED GNMA TRUST
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1995
--------------------------------------------------------------------------------
(1) ORGANIZATION
Federated GNMA Trust ("the Trust") is registered under the Investment Company
Act of 1940, as amended (the "Act"), as a diversified, open-end management
investment company. The Trust provides two classes of shares; Institutional
Shares and Institutional Service Shares.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--Short-term securities with remaining maturities of sixty
days or less at the time of purchase may be valued at amortized cost, which
approximates fair market value. U.S. government securities are generally valued
at the mean between the over-the-counter bid and asked prices as furnished by an
independent pricing service.
REPURCHASE AGREEMENTS--It is the policy of the Trust to require the custodian
bank to take possession, to have legally segregated in the Federal Reserve Book
Entry System, or to have segregated within the custodian bank's vault, all
securities held as collateral under repurchase agreement investments.
Additionally, procedures have been established by the Trust to monitor, on a
daily basis, the market value of each repurchase agreement's underlying
collateral to ensure that the value of collateral at least equals the principal
amount of the repurchase transaction, including accrued interest.
The Trust will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed by
the Trust's adviser to be creditworthy pursuant to guidelines and/or standards
reviewed or established by the Board of Trustees (the "Trustees"). Risks may
arise from the potential inability of counterparties to honor the terms of the
repurchase agreements. Accordingly, the Trust could receive less than the
repurchase price on the sale of collateral securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses are
accrued daily. Bond premium and discount, if applicable, are amortized as
required by the Internal Revenue Code, as amended (the "Code"). Distributions to
shareholders are recorded on the ex-dividend date.
FEDERAL TAXES--It is the Trust's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary. At January 31, 1995, the Trust, for
federal tax purposes, had a capital loss carryforward of $155,539,638, which
will reduce the Trust's taxable income arising from future net realized gain on
investments, if any, to the extent permitted by the Code, and will thus reduce
the amount of the distributions to shareholders which would otherwise
FEDERATED GNMA TRUST
--------------------------------------------------------------------------------
be necessary to relieve the Trust of any liability for federal tax. Pursuant to
the Code, such capital loss carryforward will expire in 1996 ($31,912,913), 1997
($18,028,171), 1998 ($14,893,518), 1999 ($13,784,245), 2001 ($5,182,436), and
2003 ($71,738,355). Additionally, net capital losses of $36,484,883 attributable
to security transactions incurred after October 31, 1994, are treated as arising
on February 1, 1995, the first day of the Trust's next taxable year.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Trust may engage in
when-issued or delayed delivery transactions. The Trust records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the securities
purchased. Securities purchased on a when-issued or delayed delivery basis are
marked to market daily and begin earning interest on the settlement date.
DOLLAR ROLL TRANSACTIONS--The Trust enters into dollar roll transactions with
respect to mortgage securities, issued by GNMA in which the Trust loans mortgage
securities to financial institutions and simultaneously agrees to repurchase
substantially similar (same type, coupon and maturity) securities at a later
date at an agreed upon price. Dollar roll transactions are short-term financing
arrangements which will not exceed twelve months. The Trust will use the
proceeds generated from the transactions to invest in short-term investments,
which may enhance the Trust's current yield and total return.
OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares. Transactions in Trust shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JANUARY 31,
--------------------------------------------------------------
1995 1994
----------------------------- -----------------------------
SHARES DOLLARS SHARES DOLLARS
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
INSTITUTIONAL SHARES
-----------------------------------
Shares sold 33,458,790 $ 365,277,979 75,001,659 $ 882,750,706
-----------------------------------
Shares issued to shareholders in
payment of dividends declared 2,556,101 27,566,855 2,539,103 29,822,854
-----------------------------------
Shares redeemed (64,291,288) (698,723,436) (63,483,695) (745,434,319)
----------------------------------- ----------- ------------- ----------- -------------
Net change resulting from
Institutional share transactions (28,276,397) ($305,878,602) 14,057,067 $ 167,139,241
----------------------------------- ----------- ------------- ----------- -------------
</TABLE>
FEDERATED GNMA TRUST
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED JANUARY 31,
-----------------------------------------------------------
1995 1994
---------------------------- --------------------------
SHARES DOLLARS SHARES DOLLARS
----------- ------------- ---------- ------------
<S> <C> <C> <C> <C>
INSTITUTIONAL SERVICE SHARES
--------------------------------------
Shares sold 3,007,210 $ 33,026,946 11,649,200 $137,349,630
--------------------------------------
Shares issued to shareholders in
payment of dividends declared 573,520 6,183,982 434,613 5,097,016
--------------------------------------
Shares redeemed (4,025,344) (43,651,277) (4,546,844) (53,267,933)
-------------------------------------- ----------- ------------- ---------- ------------
Net change resulting from
Institutional Service share
transactions (444,614) $ (4,440,349) 7,536,969 $ 89,178,713
-------------------------------------- ----------- ------------- ---------- ------------
Net change resulting from Trust
share transactions (28,721,011) $(310,318,951) 21,594,036 $256,317,954
-------------------------------------- ----------- ------------- ---------- ------------
</TABLE>
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Management, the Trust's investment adviser,
(the "Adviser"), receives for its services an annual investment advisory fee
equal to .40 of 1% of the Trust's average daily net assets.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS"), under the
Administrative Services Agreement, provides the Trust with administrative
personnel and services. Prior to March 1, 1994, these services were provided at
approximate cost. Effective March 1, 1994, the FAS fee is based on the level of
average aggregate daily net assets of all funds advised by subsidiaries of
Federated Investors for the period. The administrative fee received during the
period of the Administrative Services Agreement shall be at least $125,000 per
portfolio and $30,000 per each additional class of shares.
DISTRIBUTION SERVICES FEE--The Trust has adopted a Distribution Plan (the
"Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the
Trust will compensate Federated Securities Corp. ("FSC"), the principal
distributor, from the net assets of the Trust to finance activities intended to
result in the sale of the Trust's Institutional Service Shares. The Plan
provides that the Trust may incur distribution expenses up to .25 of 1% of the
average daily net assets of the Institutional Service Shares, annually, to
compensate FSC. The distributor may voluntarily choose to waive any portion of
its fee. The distributor can modify or terminate this voluntary waiver at any
time at its sole discretion.
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement
with Federated Shareholder Services ("FSS"), the Trust will pay FSS up to .25 of
1% of average net assets of the Trust for the period. This fee is to obtain
certain personal services for shareholders and to maintain the shareholder
accounts.
FEDERATED GNMA TRUST
--------------------------------------------------------------------------------
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated
Services Company ("FServ") serves as transfer and dividend disbursing agent for
the Trust. The Fee is based on the size, type, and number of accounts and
transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ also maintains the Trust's accounting records
for which it receives a fee. The fee is based on the level of the Trust's
average net assets for the period plus, out-of-pocket expenses.
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Trustees or Directors of the above companies.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities and in kind
contributions, for the fiscal year ended January 31, 1995, were as follows:
<TABLE>
<S> <C>
-----------------------------------------------------------------------------
PURCHASES-- $2,351,740,117
----------------------------------------------------------------------------- --------------
SALES-- $2,448,916,033
----------------------------------------------------------------------------- --------------
</TABLE>
INDEPENDENT AUDITORS' REPORT
--------------------------------------------------------------------------------
To the Trustees and Shareholders of
FEDERATED GNMA TRUST:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Federated GNMA Trust as of January 31, 1995,
the related statement of operations for the year then ended, the statement of
changes in net assets for the years ended January 31, 1995 and 1994, and the
financial highlights (see pages 2 and 16 of the prospectus) for each of the ten
years in the period ended January 31, 1995. These financial statements and
financial highlights are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of the securities owned at
January 31, 1995 by correspondence with the custodian and brokers; where replies
were not received from brokers, we performed other auditing procedures. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Federated GNMA Trust
as of January 31, 1995, the results of its operations, the changes in its net
assets and its financial highlights for the respective stated periods in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Pittsburgh, Pennsylvania
March 16, 1995
ADDRESSES
--------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Federated GNMA Trust
Institutional Service Shares Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
------------------------------------------------------------------------------------------------
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
------------------------------------------------------------------------------------------------
Investment Adviser
Federated Management Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
------------------------------------------------------------------------------------------------
Custodian
State Street Bank and P.O. Box 8602
Trust Company Boston, Massachusetts 02266-8602
------------------------------------------------------------------------------------------------
Transfer Agent and Dividend Disbursing Agent
Federated Services Company Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
------------------------------------------------------------------------------------------------
Independent Auditors
Deloitte & Touche LLP 2500 One PPG Place
Pittsburgh, Pennsylvania 15222
------------------------------------------------------------------------------------------------
</TABLE>
FEDERATED GNMA TRUST
INSTITUTIONAL SERVICE SHARES
PROSPECTUS
An Open-End, Diversified
Management Investment Company
March 31, 1995
FEDERATED SECURITIES CORP.
(LOGO)
---------------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
314184201
8022901A-SS (3/95)
Federated GNMA Trust
Institutional Shares
Institutional Service Shares
Combined Statement of Additional Information
The Institutional Shares and Institutional Service Shares of Federated
GNMA Trust (the "Trust") represent interests in a diversified portfolio
of securities. This Combined Statement of Additional Information should
be read with the respective prospectus for Institutional Shares and
Institutional Service Shares dated March 31, 1995. This Statement is not
a prospectus itself. To receive a copy of either prospectus, write or
call the Trust.
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
Statement dated March 31, 1995
Federated Securities Corp.
Distributor
A subsidiary of Federated
Investors
GENERAL INFORMATION ABOUT THE TRUST 1
INVESTMENT OBJECTIVE AND POLICIES 1
Types Of Investments 1
When-Issued And Delayed Delivery
Transactions 1
Lending Of Portfolio Securities 2
Repurchase Agreements 2
Reverse Repurchase Agreements 2
Portfolio Turnover 3
Investment Limitations 3
FEDERATED GNMA TRUST MANAGEMENT 6
Officers And Trustees 6
Trust Ownership 11
Trustees Compensation 11
Trustee Liability 12
INVESTMENT ADVISORY SERVICES 12
Adviser To The Trust 12
Advisory Fees 12
State Expense Limitations 13
Other Advisory Services 13
ADMINISTRATIVE SERVICES 13
Transfer Agent And Dividend
Disbursing Agent 13
BROKERAGE TRANSACTIONS 14
Distribution And Shareholder
Services Plans 14
Conversion To Federal Funds 15
DETERMINING NET ASSET VALUE 15
REDEEMING SHARES 16
EXCHANGING SECURITIES FOR SHARES 16
Tax Consequences 16
TAX STATUS 16
The Trust's Tax Status 16
Shareholders' Tax Status 17
TOTAL RETURN 17
YIELD 17
PERFORMANCE COMPARISONS 18
Duration 19
General Information About the Trust
Federated GNMA Trust was established as a Massachusetts business trust under a
Declaration of Trust dated December 10, 1981.
Shares of the Trust are offered in two classes, known as Institutional Shares
and Institutional Service Shares (individually and collectively referred to as
"Shares"). This Combined Statement of Additional Information relates to the
above-mentioned Shares of the Trust.
Investment Objective and Policies
The Trust's investment objective is current income. The investment objective
cannot be changed without approval of shareholders.
Types of Investments
The Trust will invest primarily in mortgage-backed securities. Under normal
circumstances, at least 65% of the Trust's portfolio will be invested in
instruments issued or fully guaranteed as to principal and interest by the
Government National Mortgage Association ("GNMA"). In addition, to the extent
that the Trust will invest in other mortgage-backed securities, these will be
collateralized by GNMA obligations.
Because the mortgages underlying mortgage-backed securities often may be
prepaid without penalty or premium, mortgage-backed securities are generally
subject to higher prepayment risks than most other types of debt instruments.
Prepayment risks on mortgage securities tend to increase during periods of
declining mortgage interest rates, because many borrowers refinance their
mortgages to take advantage of the more favorable rates. Depending upon market
conditions, the yield that the Trust receives from the reinvestment of such
prepayments, or any scheduled principal payments, may be lower than the yield
on the original mortgage security. As a consequence, mortgage securities may
be a less effective means of "locking in" interest rates than other types of
debt securities having the same stated maturity and may also have less
potential for capital appreciation. For certain types of asset pools, such as
collateralized mortgage obligations, prepayments may be allocated to one
tranche of securities ahead of other tranches, in order to reduce the risk of
prepayment for the other tranches.
Prepayments may result in a capital loss to the Trust to the extent that the
prepaid mortgage securities were purchased at a market premium over their
stated principal amount. Conversely, the prepayment of mortgage securities
purchased at a market discount from their stated principal amount will
accelerate the recognition of interest income by the Trust, which would be
taxed as ordinary income when distributed to the shareholders.
When-Issued and Delayed Delivery Transactions
These transactions are made to secure what is considered to be an advantageous
price or yield for the Trust. Settlement dates may be a month or more after
entering into these transactions, and the market values of the securities
purchased may vary from the purchase prices. No fees or other expenses, other
than normal transaction costs, are incurred. However, liquid assets of the
Trust sufficient to make payment for the securities to be purchased are
segregated on the Trust's records at the trade date. These assets are marked
to market daily and are maintained until the transaction has been settled.
The Trust does not intend to engage in when-issued and delayed delivery
transactions to an extent that would cause the segregation of more than 20% of
the total value of its assets.
Lending of Portfolio Securities
The collateral received when the Trust lends portfolio securities must be
valued daily and, should the market value of the loaned securities increase,
the borrower must furnish additional collateral to the Trust. During the time
portfolio securities are on loan, the borrower pays the Trust any dividends or
interest paid on such securities. Loans are subject to termination at the
option of the Trust or the borrower. The Trust may pay reasonable
administrative and custodial fees in connection with a loan and may pay a
negotiated portion of the interest earned on the cash or equivalent collateral
to the borrower or placing broker.
Repurchase Agreements
The Trust requires its custodian to take possession of the securities subject
to repurchase agreements, and these securities are marked to market daily. To
the extent that the original seller does not repurchase the securities from
the Trust, the Trust could receive less than the repurchase price on any sale
of such securities. In the event that such a defaulting seller filed for
bankruptcy or became insolvent, disposition of such securities by the Trust
might be delayed pending court action. The Trust believes that under the
regular procedures normally in effect for custody of the Trust's portfolio
securities subject to repurchase agreements, a court of competent jurisdiction
would rule in favor of the Trust and allow retention or disposition of such
securities. The Trust will only enter into repurchase agreements with banks
and other recognized financial institutions such as broker/dealers which are
deemed by the Trust's adviser to be creditworthy pursuant to guidelines
established by the Board of Trustees ("Trustees").
Reverse Repurchase Agreements
The Trust may also enter into reverse repurchase agreements. These
transactions are similar to borrowing cash. In a reverse repurchase agreement
the Trust transfers possession of a portfolio instrument to another person,
such as a financial institution, broker, or dealer, in return for a percentage
of the instrument's market value in cash, and agrees that on a stipulated date
in the future the Trust will repurchase the portfolio instrument by remitting
the original consideration plus interest at an agreed upon rate.
When effecting reverse repurchase agreements, liquid assets of the Trust, in a
dollar amount sufficient to make payment for the obligations to be purchased,
are segregated at the trade date. These securities are marked to market daily
and maintained until the transaction is settled.
The use of reverse repurchase agreements may enable the Trust to avoid selling
portfolio instruments at a time when a sale may be deemed to be
disadvantageous, but the ability to enter into reverse repurchase agreements
does not ensure that the Trust will be able to avoid selling portfolio
instruments at a disadvantageous time.
Portfolio Turnover
The Trust will not attempt to set or meet a portfolio turnover rate since any
turnover would be incidental to transactions undertaken in an attempt to
achieve the Trust's investment objective. During the fiscal years ended
January 31, 1995 and 1994, the portfolio turnover rates were 136% and 117%,
respectively.
Investment Limitations
Selling Short and Buying on Margin
The Trust will not sell any securities short or purchase any securities
on margin, but may obtain such short-term credits as may be necessary
for clearance of purchases and sales of portfolio securities.
Borrowing Money
The Trust will not borrow money directly or through reverse repurchase
agreements in amounts in excess of one-third of the value of its assets,
including the amounts borrowed.
The Trust will not borrow money or engage in reverse repurchase
agreements for investment leverage, but rather as a temporary,
extraordinary or emergency measure or to facilitate management of the
portfolio by enabling the Trust to meet redemption requests when the
liquidation of portfolio securities is deemed to be inconvenient or
disadvantageous. The Trust will not purchase any securities while
borrowings in excess of 5% of the value of its total assets are
outstanding.
Issuing Senior Securities
The Trust will not issue senior securities except as permitted by its
investment objective and policies.
Pledging Assets
The Trust will not mortgage, pledge, or hypothecate any assets except to
secure permitted borrowings. In those cases, it may mortgage, pledge, or
hypothecate assets having a market value not exceeding the lesser of the
dollar amount borrowed or 10% of the value of total assets at the time
of the borrowing.
Lending Cash or Securities
The Trust will not lend any of its assets, except portfolio securities
up to one-third of the value of its total assets. This shall not prevent
the Trust from purchasing or holding U.S. government obligations, money
market instruments, bonds, debentures, notes, certificates of
indebtedness or other debt securities, entering into repurchase
agreements, or engaging in other transactions where permitted by the
Trust's investment objective, policies and limitations.
Diversification of Investments
With respect to securities comprising 75% of the value of its total
assets, the Trust will not purchase securities of any one issuer (other
than cash, cash items or securities issued or guaranteed by the
government of the United States or its agencies or instrumentalities and
repurchase agreements collateralized by U.S. government securities) if
as a result more than 5% of the value of its total assets would be
invested in the securities of that issuer.
Investing in Real Estate
The Trust will not buy or sell real estate, including limited
partnership interests in real estate, although it may invest in
securities of companies whose business involves the purchase or sale of
real estate or in securities which are secured by real estate or
interests in real estate.
Investing in Commodities
The Trust will not purchase or sell commodities.
Underwriting
The Trust will not underwrite any issue of securities, except as it may
be deemed to be an underwriter under the Securities Act of 1933 in
connection with the sale of restricted securities which the Trust may
purchase pursuant to its investment objective, policies, and
limitations.
The above investment limitations cannot be changed without shareholder
approval. The following limitations, however, may be changed by the Trustees
without shareholder approval. Shareholders will be notified before any
material change in these limitations becomes effective.
Investing in New Issuers
The Trust will not invest more than 5% of the value of its total assets
in securities of issuers which have records of less than three years of
operating history, including the operation of any predecessor. (This
limitation does not apply to issuers of CMOs or REMICs which are
collateralized by securities or mortgages issued or guaranteed as to
prompt payment of principal and interest by an agency of the U.S.
government).
Investing in Minerals
The Trust will not purchase or sell oil, gas, or other mineral
exploration or development programs or leases, although it may purchase
the securities of issuers which invest or sponsor such programs.
Investing in Issuers Whose Securities are Owned by Officers and Trustees of
the Trust
The Trust will not purchase or retain the securities of any issuer if
the officers and Trustees of the Trust's investment adviser owning
individually more than 1/2 of 1% of the issuer's securities together own
more than 5% of the issuer's securities.
Investing in Securities of Other Investment Companies
The Trust may not own securities of open-end investment companies. The
Trust can acquire up to 3% of the total outstanding stock of closed-end
investment companies. The Trust will not be subject to any other
limitations with regard to the acquisition of securities of closed-end
investment companies so long as the public offering price of the Trust's
shares does not include a sales load exceeding 1 1/2%. The Trust will
purchase securities of closed-end investment companies only in open-
market transactions involving only customary broker's commissions.
However, these limitations are not applicable if the securities are
acquired in a merger, consolidation, or acquisition of assets; nor are
they applicable with respect to securities of investment companies that
have been exempted from registration under the Investment Company Act of
1940.
Investing in Illiquid Securities
The Trust will not invest more than 15% of the value of its net assets
in illiquid securities, including repurchase agreements providing for
settlement in more than seven days after notice, and certain restricted
securities not determined by the Trustees to be liquid.
Except with respect to borrowing money, if a percentage limitation is adhered
to at the time of investment, a later increase or decrease in percentage
resulting from any change in value or net assets will not result in a
violation of such restriction.
For the purposes of its policies and limitations, the Trust considers
certificates of deposit and demand and time deposits issued by a U.S. branch
of a domestic bank or savings and loan having capital, surplus and undivided
profits in excess of $100,000,000 at the time of investment to be "cash
items".
Federated GNMA Trust Management
Officers and Trustees
Officers and Trustees are listed with their addresses, birthdates, present
positions with Federated GNMA Trust, and principal occupations.
John F. Donahue@*
Federated Investors Tower
Pittsburgh, PA
Birthdate: July 28, 1924
Chairman and Trustee
Chairman and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; Chairman and Trustee, Federated Research
Corp.; Chairman, Passport Research, Ltd.; Director, AEtna Life and Casualty
Company; Chief Executive Officer and Director, Trustee, or Managing General
Partner of the Funds. Mr. Donahue is the father of J. Christopher Donahue,
Vice President of the Trust.
Thomas G. Bigley
28th Floor, One Oxford Centre
Pittsburgh, PA
Birthdate: February 3, 1934
Trustee
Director, Oberg Manufacturing Co.; Chairman of the Board, Children's Hospital
of Pittsburgh; Director, Trustee, or Managing General Partner of the Funds;
formerly, Senior Partner, Ernst & Young LLP.
John T. Conroy, Jr.
Wood/IPC Commercial Department
John R. Wood and Associates, Inc., Realtors
3255 Tamiami Trail North
Naples, FL
Birthdate: June 23, 1937
Trustee
President, Investment Properties Corporation; Senior Vice-President, John R.
Wood and Associates, Inc., Realtors; President, Northgate Village Development
Corporation; Partner or Trustee in private real estate ventures in Southwest
Florida; Director, Trustee, or Managing General Partner of the Funds;
formerly, President, Naples Property Management, Inc.
William J. Copeland
One PNC Plaza - 23rd Floor
Pittsburgh, PA
Birthdate: July 4, 1918
Trustee
Director and Member of the Executive Committee, Michael Baker, Inc.; Director,
Trustee, or Managing General Partner of the Funds; formerly, Vice Chairman and
Director, PNC Bank, N.A., and PNC Bank Corp. and Director, Ryan Homes, Inc.
James E. Dowd
571 Hayward Mill Road
Concord, MA
Birthdate: May 18, 1922
Trustee
Attorney-at-law; Director, The Emerging Germany Trust, Inc.; Director,
Trustee, or Managing General Partner of the Funds; formerly, Director, Blue
Cross of Massachusetts, Inc.
Lawrence D. Ellis, M.D.
3471 Fifth Avenue, Suite 1111
Pittsburgh, PA
Birthdate: October 11, 1932
Trustee
Professor of Medicine and Member, Board of Trustees, University of Pittsburgh;
Medical Director, University of Pittsburgh Medical Center, Downtown; Member,
Board of Directors, University of Pittsburgh Medical Center; formerly,
Hematologist, Oncologist, and Internist, Presbyterian and Montefiore
Hospitals; Director, Trustee, or Managing General Partner of the Funds.
Edward L. Flaherty, Jr.@
Henny, Koehuba, Meyer and Flaherty
Two Gateway Center, Suite 674
Pittsburgh, PA
Birthdate: June 18, 1924
Trustee
Truste
Trustee, or Managing General Partner of the Funds; formerly, Counsel, Horizon
Financial, F.A., Western Region.
Peter E. Madden
225 Franklin Street
Boston, MA
Birthdate: April 16, 1942
Trustee
Consultant; State Representative, Commonwealth of Massachusetts; Director,
Trustee, or Managing General Partner of the Funds; formerly, President, State
Street Bank and Trust Company and State Street Boston Corporation and Trustee,
Lahey Clinic Foundation, Inc.
Gregor F. Meyer
Henny, Koehuba, Meyer and Flaherty
Two Gateway Center, Suite 674
Pittsburgh, PA
Birthdate: October 6, 1926
Trustee
Attorney-at-law; Partner, Henny, Koehuba, Meyer and Flaherty; Chairman,
Meritcare, Inc.; Director, Eat'N Park Restaurants, Inc.; Director, Trustee, or
Managing General Partner of the Funds; formerly, Vice Chairman, Horizon
Financial, F.A.
John E. Murray, Jr., J.D., S.J.D.
President, Duquesne University
Pittsburgh, PA
Birthdate: December 20, 1932
Trustee
President, Law Professor, Duquesne University; Consulting Partner, Mollica,
Murray and Hogue; Director, Trustee or Managing General Partner of the Funds.
Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, PA
Birthdate: September 14, 1925
Trustee
Professor, Foreign Policy and Management Consultant; Trustee, Carnegie
Endowment for International Peace, RAND Corporation, Online Computer Library
Center, Inc., and U.S. Space Foundation; Chairman, Czecho Slovak Management
Center; Director, Trustee, or Managing General Partner of the Funds; President
Emeritus, University of Pittsburgh; formerly, Chairman, National Advisory
Council for Environmental Policy and Technology.
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA
Birthdate: July 21, 1935
Trustee
Public relations/marketing consultant; Director, Trustee, or Managing General
Partner of the Funds.
Glen R. Johnson
Federated Investors Tower
Pittsburgh, PA
Birthdate: May 2, 1929
President
Trustee, Federated Investors; President and/or Trustee of some of the Funds;
staff member, Federated Securities Corp. and Federated Administrative
Services.
J. Christopher Donahue
Federated Investors Tower
Pittsburgh, PA
Birthdate: April 11, 1949
Vice President
President and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; President and Director, Federated Research
Corp.; President, Passport Research, Ltd.; Trustee, Federated Administrative
Services, Federated Services Company, and Federated Shareholder Services;
President or Vice President of the Funds; Director, Trustee, or Managing
General Partner of some of the Funds. Mr. Donahue is the son of John F.
Donahue, Chairman and Trustee of the Trust.
Richard B. Fisher
Federated Investors Tower
Pittsburgh, PA
Birthdate: May 17, 1923
Vice President
Executive Vice President and Trustee, Federated Investors; Director, Federated
Research Corp.; Chairman and Director, Federated Securities Corp.; President
or Vice President of some of the Funds; Director or Trustee of some of the
Funds.
Edward C. Gonzales
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 22, 1930
Vice President and Treasurer
Vice President, Treasurer, and Trustee, Federated Investors; Vice President
and Treasurer, Federated Advisers, Federated Management, Federated Research,
Federated Research Corp., and Passport Research, Ltd.; Executive Vice
President, Treasurer, and Director, Federated Securities Corp.; Trustee,
Federated Services Company and Federated Shareholder Services; Chairman,
Treasurer, and Trustee, Federated Administrative Services; Trustee or Director
of some of the Funds; Vice President and Treasurer of the Funds.
John W. McGonigle
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 26, 1938
Vice President and Secretary
Vice President, Secretary, General Counsel, and Trustee, Federated Investors;
Vice President, Secretary, and Trustee, Federated Advisers, Federated
Management, and Federated Research; Vice President and Secretary, Federated
Research Corp. and Passport Research, Ltd.; Trustee, Federated Services
Company; Executive Vice President, Secretary, and Trustee, Federated
Administrative Services; Secretary and Trustee, Federated Shareholder
Services; Executive Vice President and Director, Federated Securities Corp.;
Vice President and Secretary of the Funds.
* This Trustee is deemed to be an "interested person" as defined in the
Investment Company Act of 1940, as amended.
@ Member of the Trust's Executive Committee. The Executive Committee of
the Board of Trustees handles the responsibilities of the Board of
Trustees between meetings of the Board.
As used in the table above, "The Funds" and "Funds" mean the following
investment companies: American Leaders Fund, Inc.; Annuity Management Series;
Arrow Funds; Automated Cash Management Trust; Automated Government Money
Trust; California Municipal Cash Trust; Cash Trust Series II; Cash Trust
Series, Inc.; DG Investor Series; Edward D. Jones & Co. Daily Passport Cash
Trust; Federated ARMs Fund; Federated Exchange Fund, Ltd.; Federated GNMA
Trust; Federated Government Trust; Federated Growth Trust; Federated High
Yield Trust; Federated Income Securities Trust; Federated Income Trust;
Federated Index Trust; Federated Institutional Trust; Federated Intermediate
Government Trust; Federated Master Trust; Federated Municipal Trust; Federated
Short-Intermediate Government Trust; Federated Short-Term U.S. Government
Trust; Federated Stock Trust; Federated Tax-Free Trust; Federated U.S.
Government Bond Trust; First Priority Funds; Fixed Income Securities, Inc.;
Fortress Adjustable Rate U.S. Government Fund, Inc.; Fortress Municipal Income
Fund, Inc.; Fortress Utility Fund, Inc.; Fund for U.S. Government Securities,
Inc.; Government Income Securities, Inc.; High Yield Cash Trust; Insight
Institutional Series, Inc.; Insurance Management Series; Intermediate
Municipal Trust; International Series, Inc.; Investment Series Funds, Inc.;
Investment Series Trust; Liberty Equity Income Fund, Inc.; Liberty High Income
Bond Fund, Inc.; Liberty Municipal Securities Fund, Inc.; Liberty U.S.
Government Money Market Trust; Liberty Term Trust, Inc. - 1999; Liberty
Utility Funds, Inc.; Liquid Cash Trust; Managed Series Trust; Money Market
Management, Inc.; Money Market Obligations Trust; Money Market Trust;
Municipal Securities Income Trust; Newpoint Funds; New York Municipal Cash
Trust; 111 Corcoran Funds; Peachtree Funds; The Planters Funds; RIMCO Monument
Funds; The Shawmut Funds; Short-Term Municipal Trust; Star Funds; The
Starburst Funds; The Starburst Funds II; Stock and Bond Fund, Inc.; Sunburst
Funds; Targeted Duration Trust; Tax-Free Instruments Trust; Trademark Funds;
Trust for Financial Institutions; Trust For Government Cash Reserves; Trust
for Short-Term U.S. Government Securities; Trust for U.S. Treasury
Obligations; The Virtus Funds; and World Investment Series, Inc.
Trust Ownership
Officers and Trustees own less than 1% of the Trust's outstanding shares.
As of March 6, 1995, the following shareholders of record owned 5% or more of
the outstanding Institutional Service Shares of the Trust. Charles Schwab &
Co., Inc., San Francisco, California, owned approximately 905,267.6840 Shares
(7.97%); Trucojo Trust Company of St. Joseph, St. Joseph, Missouri, owned
approximately 1,323,499.9570 Shares (11.65%); Ambank & Co., Baton Rouge,
Louisiana, owned approximately 3,064,163.0800 Shares (26.97%); and The Bank of
Guam, Agana, Guam, owned approximately 1,065,876.0210 Shares (9.38%).
As of March 6,1995, there were no shareholders of record who owned 5% or more
of the outstanding Institutional Shares of the Trust.
Trustees Compensation
<TABLE>
<CAPTION>
<S> <C> <C>
NAME,
POSITION AGGREGATE COMPENSATION #TOTAL COMPENSATION PAID
WITH TRUST FROM TRUST* FROM FUND COMPLEX+
Thomas G. Bigley $2,840.00 $20,688 for the Trust and
50 other investment companies
in the Fund Complex
John T. Conroy, Jr. $3,139.00 $117,202 for the Trust and
65 other investment companies
in the Fund Complex
William J. Copeland $3,139.00 $117,202 for the Trust and
65 other investment companies
in the Fund Complex
James E. Dowd $3,139.00 $117,202 for the Trust and
65 other investment companies
in the Fund Complex
Lawrence D. Ellis, M.D. $2,840.00 $106,460 for the Trust and
65 other investment companies
in the Fund Complex
Edward L. Flaherty, Jr. $3,139.00 $117,202 for the Trust and
65 other investment companies
in the Fund Complex
Peter E. Madden $2,382.00 $90,563 for the Trust and
65 other investment companies
in the Fund Complex
Gregor F. Meyer $2,840.00 $106,460 for the Trust and
65 other investment companies
in the Fund Complex
John E. Murray, Jr. $ -0- $0 for the Trust and
69 other investment companies
in the Fund Complex
Wesley W. Posvar $2,840.00 $106,460 for the Trust and
65 other investment companies
in the Fund Complex
Marjorie P. Smuts $2,840.00 $106,460 for the Trust and
65 other investment
companies in the Fund Complex
</TABLE>
*Information is furnished for the fiscal year ended January 31, 1995.
#The aggregate compensation is provided for the Trust which is comprised of
one portfolio.
+The information is provided for the last calendar year.
Trustee Liability
The Trust's Declaration of Trust provides that the Trustees will not be liable
for errors of judgment or mistakes of fact or law. However, they are not
protected against any liability to which they would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of their office.
Investment Advisory Services
Adviser to the Trust
The Trust's investment adviser is Federated Management. It is a subsidiary of
Federated Investors. All of the voting securities of Federated Investors are
owned by a trust, the trustees of which are John F. Donahue, his wife, and his
son, J. Christopher Donahue.
The adviser shall not be liable to the Trust or any shareholder of the Trust
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 Trust.
Advisory Fees
For its advisory services, Federated Management receives an annual investment
advisory fee as described in the prospectuses. During the fiscal years ended
January 31, 1995, 1994, and 1993, the Trust's adviser earned $6,989,013,
$8,180,174, and $6,298,393, respectively.
State Expense Limitations
The adviser has undertaken to comply with the expense limitations
established by certain states for investment companies whose shares are
registered for sale in those states. If the Trust's normal operating
expenses (including the investment advisory fee, but not including
brokerage commissions, interest, taxes, and extraordinary expenses)
exceed 2 1/2% per year of the first $30 million of average net assets,
2% per year of the next $70 million of average net assets, and 1 1/2%
per year of the remaining average net assets, the adviser will reimburse
the Trust for its expenses over the limitation.
If the Trust's monthly projected operating expenses exceed this
limitation, the investment advisory fee paid will be reduced by the
amount of the excess, subject to an annual adjustment. If the expense
limitation is exceeded, the amount to be reimbursed will be limited, in
any single fiscal year, by the amount of the investment advisory fee.
This arrangement is not part of the advisory contract and may be amended
or rescinded in the future.
Other Advisory Services
Federated Research Corp. receives fees from certain depository institutions
for providing consulting and portfolio advisory services relating to each
institution's program of asset management. Federated Research Corp. may advise
such clients to purchase or redeem shares of investment companies, such as the
Trust, which are managed, for a fee, by Federated Research Corp. or other
affiliates of Federated Investors, such as the adviser, and may advise such
clients to purchase and sell securities in the direct markets. Further,
Federated Research Corp., and other affiliates of the adviser may, from time
to time, provide certain consulting services and equipment to depository
institutions in order to facilitate the purchase of shares of funds offered
by Federated Securities Corp.
Administrative Services
Federated Administrative Services, a subsidiary of Federated Investors,
provides administrative personnel and services to the Trust for a fee as
described in the prospectuses. Prior to March 1, 1994, Federated
Administrative Services, Inc., also a subsidiary of Federated Investors,
served as the Trust's administrator. (For purposes of this Statement of
Additional Information, Federated Administrative Services and Federated
Administrative Services, Inc., may hereinafter collectively be referred to as
the "Administrators.") For the fiscal year ended January 31, 1995, the
Administrators earned $1,317,794. For the fiscal years ended January 31, 1994
and 1993, Federated Administrative Services, Inc. earned $1,316,655 and
$1,015,784. Dr. Henry J. Gailliot, an officer of Federated Management, the
adviser to the Trust, holds approximately 20% of the outstanding common stock
and serves as a director of Commercial Data Services, Inc., a company which
provides computer processing services to Federated Administrative Services
Transfer Agent and Dividend Disbursing Agent
Federated Services Company serves as transfer agent and dividend disbursing
agent for the Trust. The fee paid to the transfer agent is based upon the
size, type and number of accounts and transactions made by shareholders.
Federated Services Company also maintains the Trust's accounting records. The
fee paid for this service is based upon the level of the Trust's average net
assets for the period plus out-of-pocket expenses.
Brokerage Transactions
When selecting brokers and dealers to handle the purchase and sale of
portfolio instruments, the adviser looks for prompt execution of the order at
a favorable price. In working with dealers, the adviser will generally use
those who are recognized dealers in specific portfolio instruments, except
when a better price and execution of the order can be obtained elsewhere. The
adviser makes decisions on portfolio transactions and selects brokers and
dealers subject to review by the Trustees.
The adviser may select brokers and dealers who offer brokerage and research
services. These services may be furnished directly to the Trust or to the
adviser and may include:
- advice as to the advisability of investing in securities;
- security analysis and reports;
- economic studies;
- industry studies;
- receipt of quotations for portfolio evaluations; and
- similar services.
The adviser and its affiliates exercise reasonable business judgment in
selecting brokers who offer brokerage and research services to execute
securities transactions. They determine in good faith that commissions charged
by such persons are reasonable in relationship to the value of the brokerage
and research services provided.
Research services provided by brokers may be used by the adviser or by
affiliates of Federated Investors in advising Federated Funds and other
accounts. To the extent that receipt of these services may supplant services
for which the adviser or its affiliates might otherwise have paid, it would
tend to reduce their expenses.
Purchasing Shares
Shares are sold at their net asset value without a sales load on days the New
York Stock Exchange and the Federal Reserve wire system are open for business.
The procedure for purchasing Shares is explained in the respective prospectus
under "Investing in Institutional Shares" or "Investing in Institutional
Service Shares."
Distribution and Shareholder Services Plans
These arrangements permit the payment of fees to financial institutions, the
distributor, and Federated Shareholder Services, to stimulate distribution
activities and to cause services to be provided to shareholders by a
representative who has knowledge of the shareholder's particular circumstances
and goals. These activities and services may include, but are not limited to,
marketing efforts; providing office space, equipment, telephone facilities,
and various clerical, supervisory, computer, and other personnel as necessary
or beneficial to establish and maintain shareholder accounts and records;
processing purchase and redemption transactions and automatic investments of
client account cash balances; answering routine client inquiries; and
assisting clients in changing dividend options, account designations, and
addresses.
With respect to the Institutional Service Shares class of the Trust, by
adopting the Distribution Plan, the Board of Trustees expects that the Trust
will be able to achieve a more predictable flow of cash for investment
purposes and to meet redemptions. This will facilitate more efficient
portfolio management and assist the Trust in pursuing its investment
objectives. By identifying potential investors whose needs are served by the
Trust's objectives, and properly servicing these accounts, it may be possible
to curb sharp fluctuations in rates of redemptions and sales.
Other benefits, which may be realized under either arrangement, may include:
(1) providing personal services to shareholders; (2) investing shareholder
assets with a minimum of delay and administrative detail; (3) enhancing
shareholder recordkeeping systems; and (4) responding promptly to
shareholders' requests and inquiries concerning their accounts.
For the fiscal period ending January 31, 1995 and 1994, payments in the amount
of $317,246 and $287,334 were made pursuant to the Distribution Plan
(Institutional Service Shares only) all of which was paid to financial
institutions.
Conversion to Federal Funds
It is the Trust's policy to be as fully invested as possible so that maximum
interest may be earned. To this end, all payments from shareholders must be in
federal funds or be converted into federal funds. State Street Bank acts as
the shareholder's agent in depositing checks and converting them to federal
funds.
Determining Net Asset Value
Net asset value generally changes each day. The days on which the net asset
value for each class of Shares is calculated by the Trust are described in the
respective prospectuses.
Determining Market Value of Securities
Market values of the Trust's portfolio securities are determined as follows:
- according to the mean between the over-the-counter bid and asked prices
provided by an independent pricing service, if available, or at fair
value as determined in good faith by the Trustees; or
- for short-term obligations with remaining maturities of 60 days or less
at the time of purchase, at amortized cost unless the Trustees determine
that particular circumstances of the security indicate otherwise.
Redeeming Shares
The Trust redeems Shares of either class at the next computed net asset value
after the Trust receives the redemption request. Redemption procedures are
explained in the respective prospectus under "Redeeming Institutional Shares"
or "Redeeming Institutional Service Shares." Although the transfer agent does
not charge for telephone redemptions, it reserves the right to charge a fee
for the cost of wire-transferred redemptions of less than $5,000.
Exchanging Securities for Shares
Investors may exchange certain U.S. government securities they already own for
Shares of either class, or they may exchange a combination of U.S. government
securities and cash for Shares of either class. An investor should forward the
securities in negotiable form with an authorized letter of transmittal to
Federated Securities Corp. specifying whether the investor will receive
Institutional Shares or Institutional Service Shares in exchange. The Trust
will notify the investor of its acceptance and valuation of the securities
within five business days of their receipt by State Street Bank.
The Trust values securities in the same manner as the Trust values its assets.
The basis of the exchange will depend upon the net asset value of Shares on
the day the securities are valued. One Share will be issued for each
equivalent amount of securities accepted.
Any interest earned on the securities prior to the exchange will be considered
in valuing the securities. All interest, dividends, subscription, or other
rights attached to the securities become the property of the Trust, along with
the securities.
Tax Consequences
Exercise of this exchange privilege is treated as a sale for federal income
tax purposes. Depending upon the cost basis of the securities exchanged for
Shares, a gain or loss may be realized by the investor.
Tax Status
The Trust's Tax Status
The Trust will pay no federal income tax because it expects to meet the
requirements of Subchapter M of the Internal Revenue Code applicable to
regulated investment companies and to receive the special tax treatment
afforded to such companies. To qualify for this treatment, the Trust must,
among other requirements:
- derive at least 90% of its gross income from dividends, interest, and
gains from the sale of securities;
- derive less than 30% of its gross income from the sale of securities
held less than three months;
- invest in securities within certain statutory limits; and
- distribute to its shareholders at least 90% of its net income earned
during the year.
Shareholders' Tax Status
Shareholders are subject to federal income tax on dividends and capital gains
received as cash or additional Shares. No portion of any income dividend paid
by the Trust is eligible for the dividends received deduction available to
corporations. These dividends, and any short-term capital gains, are taxable
as ordinary income.
Capital Gains
Capital gains distributed to shareholders will be treated as long-term
capital gains regardless of how long shareholders have held Shares.
Total Return
he Trust's average annual total returns for Institutional Shares for the one-
year and five-year periods ended January 31, 1995, and for the period from
March 23, 1982 (effective date of the Trust's registration statement) to
January 31, 1995 were (1.71)%, 7.66%, and 10.58%, respectively. The Trust's
average annual total return for Institutional Service Shares for the one-year
period ended January 31, 1995, and for the period from June 18, 1992 (date of
initial public investment) to January 31, 1995 were (1.92)% and 3.80%,
respectively.
The average annual total return for both classes of shares of the Trust is the
average compounded rate of return for a given period that would equate a
$1,000 initial investment to the ending redeemable value of that investment.
The ending redeemable value is computed by multiplying the number of shares
owned at the end of the period by the offering price per share at the end of
the period. The number of shares owned at the end of the period is based on
the number of shares purchased at the beginning of the period with $1,000,
adjusted over the period by any additional shares, assuming the monthly
reinvestment of all dividends and distributions.
Yield
The Trust's yield for Institutional Shares for the thirty-day period ended
January 31, 1995 was 8.01%. The Trust's yield for Institutional Service Shares
was 7.81% for the same period.
The yield for both classes of shares of the Trust is determined by dividing
the net investment income per share (as defined by the Securities and Exchange
Commission) earned by the respective class of shares over a thirty-day period
by the offering price per share of the respective class on the last day of the
period. This value is then annualized using semi-annual compounding. This
means that the amount of income generated during the thirty-day period is
assumed to be generated each month over a twelve-month period and is
reinvested every six months. The yield does not necessarily reflect income
actually earned by the Trust because of certain adjustments required by the
Securities and Exchange Commission and, therefore, may not correlate to the
dividends or other distributions paid to shareholders.
To the extent that financial institutions and broker/dealers charge fees in
connection with services provided in conjunction with an investment in either
class of shares, the performance will be reduced for those shareholders paying
those fees.
Performance Comparisons
The performance of both classes of Shares depends upon such variables as:
- portfolio quality;
- average portfolio maturity;
- type of instruments in which the portfolio is invested;
- changes in interest rates and market value of portfolio securities;
- changes in the Trust's expenses or either class of Shares' expenses; and
- various other factors.
Both classes of Shares' performance fluctuates on a daily basis largely
because net earnings and offering price per share fluctuate daily. Both net
earnings and offering price per share are factors in the computation of yield
and total return.
Investors may use financial publications and/or indices to obtain a more
complete view of the Trust's performance. When comparing performance,
investors should consider all relevant factors such as the composition of any
index used, prevailing market conditions, portfolio compositions of other
funds, and methods used to value portfolio securities and compute offering
price. The financial publications and/or indices which the Trust uses in
advertising may include:
- Lipper Analytical Services, Inc. ranks funds in various fund categories
by making comparative calculations using total return. Total return
assumes the reinvestment of all capital gains distributions and income
dividends and takes into account any change in net asset value over a
specified period of time. From time to time, the Trust will quote its
Lipper ranking in the "GNMA Funds" category in advertising and sales
literature.
- 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.
- Salomon Brothers GNMA 9-11% Index, a widely recognized index of
Government National Mortgage Association mortgage pass-through
securities in the 9-11% current coupon range. Total return is reported
for periods of 1 month, 3 months, and 12 months. The index is tracked by
Salomon Brothers, Inc.
- Salomon Brothers GNMA 30 Year Index is a total, comprehensive GNMA index
comprised of 30-year GNMA pass-throughs, 15-year GNMA pass-throughs, and
GNMA GPM's.
- Lehman Brothers Government/Corporate (Total) Index is comprised of
approximately 5,000 issues which include non-convertible bonds publicly
issued by the U.S. government or its agencies; corporate bonds
guaranteed by the U.S. government and quasifederal corporations; and
publicly issued, fixed rate, nonconvertible domestic bonds of companies
in industry, public utilities and finance. The average maturity of these
bonds approximates nine years. Tracked by Lehman Brothers Inc., the
index calculates total returns for one month, three month, twelve month
and ten year periods and year-to-date.
- Lehman Brothers Government Index is an unmanaged index comprised of all
publicly issued, non-convertible domestic debt of the U.S. government,
or any agency thereof, or any quasi-federal corporation and of corporate
debt guaranteed by the U.S. government. Only notes and bonds with a
minimum outstanding principal of $1 million and a minimum maturity of
one year are included.
In addition, the Trust will make comparisons to certain direct market
securities in which it is permitted to invest. The type of security that will
be used for such comparisons, and the source of its performance information is
listed below.
- 10-Year Treasury Notes--Source: Salomon Brothers. Total returns are
calculated for periods of one, three, and twelve months.
Advertisements and other sales literature for both classes of Shares may quote
total returns which are calculated on non-standardized base periods. These
total returns also represent the historic change in the value of an investment
in either class of Shares based on monthly reinvestment of dividends over a
specified period of time.
Duration
Duration is a commonly used measure of the potential volatility in the price
of a bond, or other fixed income security, or in a portfolio of fixed income
securities, prior to maturity. Volatility is the magnitude of the change in
the price of a bond relative to a given change in the market rate of interest.
A bond's price volatility depends on three primary variables: the bond's
coupon rate; maturity date; and the level of market yields of similar fixed-
income securities. Generally, bonds with lower coupons or longer maturities
will be more volatile than bonds with higher coupons or shorter maturities.
Duration combines these variables into a single measure.
Duration is calculated by dividing the sum of the time-weighted values of the
cash flows of a bond or bonds, including interest and principal payments, by
the sum of the present values of the cash flows.
When the Trust invests in mortgage pass-through securities, its duration will
be calculated in a manner which requires assumptions to be made regarding
future principal prepayments. A more complete description of this calculation
is available upon request from the Trust.
8022901B (3/95)
314184102
314184201
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits:
(a) Financial Statements (Filed in Part A)
(b) Exhibits:
(1) Conformed copy of the Declaration of Trust of the
Registrant as amended (14.);
(2) Copy of the By-Laws of the Registrant as amended
(1.,2.,4.,7.,8.);
(3) Not applicable;
(4) Copy of revised Specimen Certificate for Shares of
Beneficial Interest of the Registrant (5.);
(5) Conformed copy of the revised Investment Advisory
Contract of the Registrant dated September 11, 1984
(10.);
(6) Conformed copy of the revised Distributor's Contract
(10.);
(7) Not applicable;
(8) (i) Conformed copy of the Custodian Agreement of
the Registrant;+
(9) (i) Conformed copy of Shareholder Services Plan of the
Registrant;+
(ii) Copy of Shareholder Services Sub-Contract of the
Registrant;+
(iii) Conformed copy of Shareholder Services Agreement
of the Registrant;+
(iv) Conformed copy of Administrative Services
Agreement of the Registrant;+
(v) Conformed Copy of Agreement for Fund Accounting,
Shareholder Recordkeeping, and Custody Services
Procurement;+
(10) Conformed copy of the Opinion and Consent of Counsel
as to legality of shares being registered;+
(11) Conformed copy of the Consent of Independent Public
Accountants;+
(12) Not applicable;
(13) Initial Capital Understanding (2.);
(14) Not applicable;
(15) Not applicable.
(16) Schedule of Computation of Fund Performance Data;+
(17) Financial Data Schedules;+
(18) (i) Opinion and Consent of Counsel as to Transfer of
Organization Expenses (6.);
(19) Power of Attorney;+
+ All exhibits have been filed electronically.
1. Response is incorporated by reference to Registrant's Initial
Registration Statement on Form N-1A filed January 12, 1982. (File Nos.
2-75670 and 811-3375)
2. Response is incorporated by reference to Registrant's Pre-Effective
Amendment No. 1 on Form N-1A filed February 11, 1982. (File Nos. 2-
75670 and 811-3375)
4. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 4 on Form N-1A filed January 30, 1984. (File Nos. 2-75670
and 811-3375)
5. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 5 on Form N-1A filed March 27, 1984. (File Nos. 2-75670
and 811-3375)
7. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 10 on Form N-1A filed March 23, 1987. (File Nos. 2-75670
and 811-3375)
8. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 12 on Form N-1A filed March 22, 1988. (File Nos. 2-75670
and 811-3375)
10. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 15 on Form N-1A filed January 22, 1990. (File Nos. 2-
75670 and 811-3375)
14. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 23 on Form N-1A filed March 24, 1993. (File Nos. 2-75670
and 811-3375)
Item 25. Persons Controlled by or Under Common Control with Registrant:
None.
Item 26. Number of Holders of Securities:
Number of Record Holders
Title of Class as of March 6, 1995
Shares of Beneficial Interest
(no par value)
Institutional Shares 16,279
Institutional Service Shares 923
Item 27. Indemnification: (12.)
Item 28. Business and Other Connections of Investment Adviser:
(a) For a description of the other business of the investment
adviser, see the section entitled "Trust Information -
Management of the Trust" in Part A. The affiliations with
the Registrant of four of the Trustees and one of the
Officers of the investment adviser are included in Part B of
this Registration Statement under "Trust Management -
Officers and Trustees." The remaining Trustee of the
investment adviser, his position with the investment adviser,
and, in parentheses, his principal occupation is: Mark D.
Olson (Partner, Wilson, Halbrook & Bayard), 107 W. Market
Street, Georgetown, Delaware 19947.
+ 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 February 11, 1982. (File Nos. 2-
75670 and 811-3375)
6. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 6 on Form N-1A filed January 30, 1985. (File Nos. 2-75670
and 811-3375)
12. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 19 on Form N-1A filed on March 22, 1991. (File Nos. 2-
75670 and 811-3375)
The remaining Officers of the investment adviser are: William
D. Dawson, J. Thomas Madden, and Mark L. Mallon, Executive
Vice Presidents; Henry J. Gailliot, Senior Vice President-
Economist; Peter R. Anderson, and J. Alan Minteer, Senior
Vice Presidents; Randall A. Bauer, David A. Briggs, Jonathan
C. Conley, Deborah A. Cunningham, Michael P. Donnelly, Mark
E. Durbiano, Kathleen M. Foody-Malus, Thomas M. Franks,
Edward C. Gonzales, Jeff A. Kozemchak, Marian R. Marinack,
John W. McGonigle, Gregory M. Melvin, Susan M. Nason, Mary Jo
Ochson, Robert J. Ostrowski, Frederick L. Plautz, Jr.,
Charles A. Ritter, James D. Roberge, Sandra L. Weber, and
Christopher H. Wiles, Vice Presidents, Edward C. Gonzales,
Treasurer, and John W. McGonigle, Secretary. The business
address of each of the Officers of the investment adviser is
Federated Investors Tower, Pittsburgh, PA 15222-3779. These
individuals are also officers of a majority of the investment
advisers to the Funds listed in Part B of this Registration
Statement.
Item 29. Principal Underwriters:
(a) Federated Securities Corp., the Distributor for shares of the
Registrant, also acts as principal underwriter for the
following open-end investment companies: Alexander Hamilton
Funds; American Leaders Fund, Inc.; Annuity Management
Series; Arrow Funds; Automated Cash Management Trust;
Automated Government Money Trust; BayFunds; The Biltmore
Funds; The Biltmore Municipal Funds; California Municipal
Cash Trust; Cash Trust Series, Inc.; Cash Trust Series II; DG
Investor Series; Edward D. Jones & Co. Daily Passport Cash
Trust; Federated ARMs Fund; Federated Exchange Fund, Ltd.;
Federated GNMA Trust; Federated Government Trust; Federated
Growth Trust; Federated High Yield Trust; Federated Income
Securities Trust; Federated Income Trust; Federated Index
Trust; Federated Institutional Trust; Federated Intermediate
Government Trust; Federated Master Trust; Federated Municipal
Trust; Federated Short-Intermediate Government Trust;
Federated Short-Term U.S. Government Trust; Federated Stock
Trust; Federated Tax-Free Trust; Federated U.S. Government
Bond Fund; First Priority Funds; First Union Funds; Fixed
Income Securities, Inc.; Fortress Adjustable Rate U.S.
Government Fund, Inc.; Fortress Municipal Income Fund, Inc.;
Fortress Utility Fund, Inc.; Fountain Square Funds; Fund for
U.S. Government Securities, Inc.; Government Income
Securities, Inc.; High Yield Cash Trust; Independence One
Mutual Funds; Insight Institutional Series, Inc.; Insurance
Management Series; Intermediate Municipal Trust;
International Series Inc.; Investment Series Funds, Inc.;
Investment Series Trust; Liberty Equity Income Fund, Inc.;
Liberty High Income Bond Fund, Inc.; Liberty Municipal
Securities Fund, Inc.; Liberty U.S. Government Money Market
Trust; Liberty Utility Fund, Inc.; Liquid Cash Trust; Managed
Series Trust; Marshall Funds, Inc.; Money Market Management,
Inc.; The Medalist Funds; Money Market Obligations Trust;
Money Market Trust; The Monitor Funds; Municipal Securities
Income Trust; Newpoint Funds; New York Municipal Cash Trust;
111 Corcoran Funds; Peachtree Funds; The Planters Funds;
RIMCO Monument Funds; The Shawmut Funds; Short-Term Municipal
Trust; SouthTrust Vulcan Funds; Star Funds; The Starburst
Funds; The Starburst Funds II; Stock and Bond Fund, Inc.;
Sunburst Funds; Targeted Duration Trust; Tax-Free Instruments
Trust; Tower Mutual Funds; Trademark Funds; Trust for
Financial Institutions; Trust for Government Cash Reserves;
Trust for Short-Term U.S. Government Securities; Trust for
U.S. Treasury Obligations; Vision Fiduciary Funds, Inc.;
Vision Group of Funds, Inc.; and World Investment Series,
Inc.
Federated Securities Corp. also acts as principal underwriter
for the following closed-end investment company: Liberty
Term Trust, Inc.- 1999.
(b)
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Richard B. Fisher Director, Chairman, Chief Vice President
Federated Investors Tower Executive Officer, Chief
Pittsburgh, PA 15222-3779 Operating Officer, and
Asst. Treasurer, Federated
Securities Corp.
Edward C. Gonzales Director, Executive Vice Vice President and
Federated Investors Tower President, and Treasurer, Treasurer
Pittsburgh, PA 15222-3779 Federated Securities
Corp.
John W. McGonigle Director, Executive Vice Vice President and
Federated Investors Tower President, and Assistant Secretary
Pittsburgh, PA 15222-3779 Secretary, Federated
Securities Corp.
John B. Fisher President-Institutional Sales, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James F. Getz President-Broker/Dealer, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark R. Gensheimer Executive Vice President of --
Federated Investors Tower Bank/Trust
Pittsburgh, PA 15222-3779 Federated Securities Corp.
Mark W. Bloss Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Theodore Fadool, Jr. Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Bryant R. Fisher Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Christopher T. Fives Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James S. Hamilton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James M. Heaton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
H. Joseph Kennedy Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Keith Nixon Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Solon A. Person, IV Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Timothy C. Pillion Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Thomas E. Territ Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
John B. Bohnet Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard W. Boyd Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jane E. Broeren-Lambesis Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Mary J. Combs Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
R. Edmond Connell, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Kevin J. Crenny Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Daniel T. Culbertson Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Laura M. Deger Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jill Ehrenfeld Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Joseph L. Epstein Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark D. Fisher Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Michael D. Fitzgerald Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Joseph D. Gibbons Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
David C. Glabicki Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Craig S. Gonzales Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard C. Gonzales Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Scott A. Hutton Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
William J. Kerns Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
William E. Kugler Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Dennis M. Laffey Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Stephen A. LaVersa Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Francis J. Matten, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark J. Miehl Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard C. Mihm Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
J. Michael Miller Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
R. Jeffrey Niss Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Michael P. O'Brien Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Robert D. Oehlschlager Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Robert F. Phillips Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Eugene B. Reed Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Paul V. Riordan Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Charles A. Robison Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
John C. Shelar, Jr. Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
David W. Spears Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jeffrey A. Stewart Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jamie M. Teschner Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
William C. Tustin Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Paul A. Uhlman Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard B. Watts Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Michael P. Wolff Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Philip C. Hetzel Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Charlene H. Jennings Assistant Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Ernest L. Linane Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
S. Elliott Cohan Secretary, Assistant
Federated Investors Tower Federated Securities Corp. Secretary
Pittsburgh, PA 15222-3779
(c) Not applicable.
Item 30. Location of Accounts and Records:
Federated GNMA Trust Federated Investors Tower
Pittsburgh, Pennsylvania
15222-3779
Federated Services Company Federated Investors Tower
("Transfer Agent and Pittsburgh, Pennsylvania
Dividend Disbursing Agent) 15222-3779
Federated Administrative Services Federated Investors Tower
("Administrator") Pittsburgh, Pennsylvania
15222-3779
Federated Management Federated Investors Tower
("Adviser") Pittsburgh, Pennsylvania
15222-3779
State Street Bank and Trust P.O. Box 8602
Company Boston, Massachusetts 02266-
("Custodian") 8602
Item 31. Management Services: Not applicable.
Item 32. 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.
Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest
annual report to shareholders, upon request and without charge.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, FEDERATED GNMA 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 30th day of March, 1995.
FEDERATED GNMA TRUST
BY: /s/ Melissa Moore
Melissa Moore, Assistant Secretary
Attorney in Fact for John F. Donahue
March 30, 1995
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to its Registration Statement has been signed below by the following person in
the capacity and on the date indicated:
NAME TITLE DATE
By: /s/Melissa Moore
Melissa Moore Attorney In Fact March 30, 1995
March 30, 1995 For the Persons
ASSISTANT SECRETARY Listed Below
NAME TITLE
John F. Donahue* Chairman and Trustee
(Chief Executive Officer)
Glen R. Johnson* President
Edward C. Gonzales* Vice President and Treasurer
(Principal Financial and
Accounting Officer)
Thomas G. Bigley* Trustee
John T. Conroy, Jr.* Trustee
William J. Copeland* Trustee
James E. Dowd* Trustee
Lawrence D. Ellis, M.D.* Trustee
Edward L. Flaherty, Jr.* Trustee
Peter E. Madden* Trustee
Gregor F. Meyer* Trustee
John E. Murray, Jr.* Trustee
Wesley W. Posvar* Trustee
Marjorie P. Smuts* Trustee
* By Power of Attorney
Exhibit (11) under N-1A
Exhibit 23 under 601/Reg. SK
INDEPENDENT AUDITORS' CONSENT
To the Trustees of
FEDERATED GNMA TRUST:
We consent to the use in the Post-Effective Amendment No. 27 to Registration
Statement (No 2-75670) of Federated GNMA Trust of our report dated March 16,
1995, appearing in the Prospectus, which is a part of such Registration
Statement, and the reference to us under the heading "Financial Highlights" in
such Prospectus.
DELOITTE & TOUCHE LLP
Pittsburgh, Pennsylvania
March 29, 1995
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and
appoints the Secretary and Assistant Secretary of FEDERATED GNMA TRUST and
the Assistant General Counsel of Federated Investors, and each of them, their
true and lawful attorneys-in-fact and agents, with full power of substitution
and resubstitution for them and in their names, place and stead, in any and
all capacities, to sign any and all documents to be filed with the Securities
and Exchange Commission pursuant to the Securities Act of 1933, the Securities
Exchange Act of 1934 and the Investment Company Act of 1940, by means of the
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 attorney-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 attorney-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 March 8, 1995
John F. Donahue (Chief Executive Officer)
/s/ Glen R. Johnson President March 8, 1995
Glen R. Johnson
/s/ Edward C. Gonzales Vice President and Treasurer March 8, 1995
Edward C. Gonzales (Principal Financial and
Accounting Officer)
/s/ Thomas G. Bigley Trustee March 8, 1995
Thomas G. Bigley
/s/ John T. Conroy, Jr. Trustee March 8, 1995
John T. Conroy, Jr.
/s/ William J. Copeland Trustee March 8, 1995
William J. Copeland
SIGNATURES TITLE DATE
/s/ James E. Dowd Trustee March 8, 1995
James E. Dowd
/s/ Lawrence D. Ellis, M.D. Trustee March 8, 1995
Lawrence D. Ellis, M.D.
/s/ Edward L. Flaherty, Jr. Trustee March 8, 1995
Edward L. Flaherty, Jr.
/s/ Peter E. Madden Trustee March 8, 1995
Peter E. Madden
/s/ Gregor F. Meyer Trustee March 8, 1995
Gregor F. Meyer
/s/ John E. Murray, Jr. Trustee March 8, 1995
John E. Murray, Jr.
/s/ Wesley W. Posvar Trustee March 8, 1995
Wesley W. Posvar
/s/ Marjorie P. Smuts Trustee March 8, 1995
Marjorie P. Smut
Sworn to and subscribed before me this 8th day of March, 1995
/s/ Marie M. Hamm
Exhibit 8 under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
CUSTODIAN CONTRACT
Between
FEDERATED INVESTMENT COMPANIES
and
STATE STREET BANK AND TRUST COMPANY
and
FEDERATED SERVICES COMPANY
TABLE OF CONTENTS
Page
1. Employment of Custodian and Property to be Held by It 1
2. Duties of the Custodian With Respect to Property
of the Funds Held by the Custodian 2
2.1 Holding Securities 2
2.2 Delivery of Securities 2
2.3 Registration of Securities 5
2.4 Bank Accounts 6
2.5 Payments for Shares 7
2.6 Availability of Federal Funds 7
2.7 Collection of Income 7
2.8 Payment of Fund Moneys 8
2.9 Liability for Payment in Advance of
Receipt of Securities Purchased. 9
2.10 Payments for Repurchases or Redemptions
of Shares of a Fund 9
2.11 Appointment of Agents 10
2.12 Deposit of Fund Assets in Securities System 10
2.13 Segregated Account 12
2.14 Joint Repurchase Agreements 13
2.15 Ownership Certificates for Tax Purposes 13
2.16 Proxies 13
2.17 Communications Relating to Fund Portfolio
Securities 13
2.18 Proper Instructions 14
2.19 Actions Permitted Without Express Authority 14
2.20 Evidence of Authority 15
2.21 Notice to Trust by Custodian Regarding Cash
Movement. 15
3. Duties of Custodian With Respect to the Books of Account and
Calculation of Net Asset Value and Net Income 15
4. Records 16
5. Opinion of Funds' Independent Public Accountants/Auditors 16
6. Reports to Trust by Independent Public Accountants/
Auditors 17
7. Compensation of Custodian 17
8. Responsibility of Custodian 17
9. Effective Period, Termination and Amendment 19
10. Successor Custodian 20
11. Interpretive and Additional Provisions 21
12. Massachusetts Law to Apply 22
13. Notices 22
14. Counterparts 22
15. Limitations of Liability 22
CUSTODIAN CONTRACT
This Contract between those INVESTMENT COMPANIES listed on Exhibit 1,
as it may be amended from time to time, (the "Trust"), which may be
Massachusetts business trusts or Maryland corporations or have such other form
of organization as may be indicated, on behalf of the portfolios (hereinafter
collectively called the "Funds" and individually referred to as a "Fund") of
the Trust, having its principal place of business at Federated Investors
Tower, Pittsburgh, Pennsylvania, 15222-3779, and STATE STREET BANK AND TRUST
COMPANY, a Massachusetts trust company, having its principal place of business
at 225 Franklin Street, Boston, Massachusetts, 02110, hereinafter called the
"Custodian", and FEDERATED SERVICES COMPANY, a Delaware Business trust
company, having its principal place of business at Federated Investors Tower,
Pittsburgh, Pennsylvania, 15222-3779, hereinafter called ("Company").
WITNESSETH: That in consideration of the mutual covenants and
agreements hereinafter contained, the parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by It
The Trust hereby employs the Custodian as the custodian of the assets of
each of the Funds of the Trust. Except as otherwise expressly provided
herein, the securities and other assets of each of the Funds shall be
segregated from the assets of each of the other Funds and from all other
persons and entities. The Trust will deliver to the Custodian all securities
and cash owned by the Funds and all payments of income, payments of principal
or capital distributions received by them with respect to all securities owned
by the Funds from time to time, and the cash consideration received by them
for shares ("Shares") of beneficial interest/capital stock of the Funds as may
be issued or sold from time to time. The Custodian shall not be responsible
for any property of the Funds held or received by the Funds and not delivered
to the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Section
2.18), the Custodian shall from time to time employ one or more sub-custodians
upon the terms specified in the Proper Instructions, provided that the
Custodian shall have no more or less responsibility or liability to the Trust
or any of the Funds on account of any actions or omissions of any sub-
custodian so employed than any such sub-custodian has to the Custodian.
2. Duties of the Custodian With Respect to Property of the Funds Held
by the Custodian
2.1 Holding Securities. The Custodian shall hold and physically
segregate for the account of each Fund all non-cash property,
including all securities owned by each Fund, other than securities
which are maintained pursuant to Section 2.12 in a clearing agency
which acts as a securities depository or in a book-entry system
authorized by the U.S. Department of the Treasury, collectively
referred to herein as "Securities System", or securities which are
subject to a joint repurchase agreement with affiliated funds
pursuant to Section 2.14. The Custodian shall maintain records of
all receipts, deliveries and locations of such securities, together
with a current inventory thereof, and shall conduct periodic physical
inspections of certificates representing stocks, bonds and other
securities held by it under this Contract in such manner as the
Custodian shall determine from time to time to be advisable in order
to verify the accuracy of such inventory. With respect to securities
held by any agent appointed pursuant to Section 2.11 hereof, and with
respect to securities held by any sub-custodian appointed pursuant to
Section 1 hereof, the Custodian may rely upon certificates from such
agent as to the holdings of such agent and from such sub-custodian as
to the holdings of such sub-custodian, it being understood that such
reliance in no way relieves the Custodian of its responsibilities
under this Contract. The Custodian will promptly report to the Trust
the results of such inspections, indicating any shortages or
discrepancies uncovered thereby, and take appropriate action to
remedy any such shortages or discrepancies.
2.2 Delivery of Securities. The Custodian shall release and deliver
securities owned by a Fund held by the Custodian or in a Securities
System account of the Custodian only upon receipt of Proper
Instructions, which may be continuing instructions when deemed
appropriate by the parties, and only in the following cases:
(1) Upon sale of such securities for the account of a Fund and
receipt of payment therefor;
(2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the Trust;
(3) In the case of a sale effected through a Securities System, in
accordance with the provisions of Section 2.12 hereof;
(4) To the depository agent in connection with tender or other
similar offers for portfolio securities of a Fund, in accordance
with the provisions of Section 2.17 hereof;
(5) To the issuer thereof or its agent when such securities are
called, redeemed, retired or otherwise become payable; provided
that, in any such case, the cash or other consideration is to be
delivered to the Custodian;
(6) To the issuer thereof, or its agent, for transfer into the name
of a Fund or into the name of any nominee or nominees of the
Custodian or into the name or nominee name of any agent
appointed pursuant to Section 2.11 or into the name or nominee
name of any sub-custodian appointed pursuant to Section 1; or
for exchange for a different number of bonds, certificates or
other evidence representing the same aggregate face amount or
number of units; provided that, in any such case, the new
securities are to be delivered to the Custodian;
(7) Upon the sale of such securities for the account of a Fund, to
the broker or its clearing agent, against a receipt, for
examination in accordance with "street delivery custom";
provided that in any such case, the Custodian shall have no
responsibility or liability for any loss arising from the
delivery of such securities prior to receiving payment for such
securities except as may arise from the Custodian's own failure
to act in accordance with the standard of reasonable care or any
higher standard of care imposed upon the Custodian by any
applicable law or regulation if such above-stated standard of
reasonable care were not part of this Contract;
(8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment
of the securities of the issuer of such securities, or pursuant
to provisions for conversion contained in such securities, or
pursuant to any deposit agreement; provided that, in any such
case, the new securities and cash, if any, are to be delivered
to the Custodian;
(9) In the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights or
similar securities or the surrender of interim receipts or
temporary securities for definitive securities; provided that,
in any such case, the new securities and cash, if any, are to be
delivered to the Custodian;
(10)For delivery in connection with any loans of portfolio
securities of a Fund, but only against receipt of adequate
collateral in the form of (a) cash, in an amount specified by
the Trust, (b) certificated securities of a description
specified by the Trust, registered in the name of the Fund or in
the name of a nominee of the Custodian referred to in Section
2.3 hereof or in proper form for transfer, or (c) securities of
a description specified by the Trust, transferred through a
Securities System in accordance with Section 2.12 hereof;
(11)For delivery as security in connection with any borrowings
requiring a pledge of assets by a Fund, but only against receipt
of amounts borrowed, except that in cases where additional
collateral is required to secure a borrowing already made,
further securities may be released for the purpose;
(12)For delivery in accordance with the provisions of any agreement
among the Trust or a Fund, the Custodian and a broker-dealer
registered under the Securities Exchange Act of 1934, as
amended, (the "Exchange Act") and a member of The National
Association of Securities Dealers, Inc. ("NASD"), relating to
compliance with the rules of The Options Clearing Corporation
and of any registered national securities exchange, or of any
similar organization or organizations, regarding escrow or other
arrangements in connection with transactions for a Fund;
(13)For delivery in accordance with the provisions of any agreement
among the Trust or a Fund, the Custodian, and a Futures
Commission Merchant registered under the Commodity Exchange Act,
relating to compliance with the rules of the Commodity Futures
Trading Commission and/or any Contract Market, or any similar
organization or organizations, regarding account deposits in
connection with transaction for a Fund;
(14)Upon receipt of instructions from the transfer agent ("Transfer
Agent") for a Fund, for delivery to such Transfer Agent or to
the holders of shares in connection with distributions in kind,
in satisfaction of requests by holders of Shares for repurchase
or redemption; and
(15)For any other proper corporate purpose, but only upon receipt
of, in addition to Proper Instructions, a certified copy of a
resolution of the Executive Committee of the Trust on behalf of
a Fund signed by an officer of the Trust and certified by its
Secretary or an Assistant Secretary, specifying the securities
to be delivered, setting forth the purpose for which such
delivery is to be made, declaring such purpose to be a proper
corporate purpose, and naming the person or persons to whom
delivery of such securities shall be made.
2.3 Registration of Securities. Securities held by the Custodian (other
than bearer securities) shall be registered in the name of a
particular Fund or in the name of any nominee of the Fund or of any
nominee of the Custodian which nominee shall be assigned exclusively
to the Fund, unless the Trust has authorized in writing the
appointment of a nominee to be used in common with other registered
investment companies affiliated with the Fund, or in the name or
nominee name of any agent appointed pursuant to Section 2.11 or in
the name or nominee name of any sub-custodian appointed pursuant to
Section 1. All securities accepted by the Custodian on behalf of a
Fund under the terms of this Contract shall be in "street name" or
other good delivery form.
2.4 Bank Accounts. The Custodian shall open and maintain a separate bank
account or accounts in the name of each Fund, subject only to draft
or order by the Custodian acting pursuant to the terms of this
Contract, and shall hold in such account or accounts, subject to the
provisions hereof, all cash received by it from or for the account of
each Fund, other than cash maintained in a joint repurchase account
with other affiliated funds pursuant to Section 2.14 of this Contract
or by a particular Fund in a bank account established and used in
accordance with Rule 17f-3 under the Investment Company Act of 1940,
as amended, (the "1940 Act"). Funds held by the Custodian for a Fund
may be deposited by it to its credit as Custodian in the Banking
Department of the Custodian or in such other banks or trust companies
as it may in its discretion deem necessary or desirable; provided,
however, that every such bank or trust company shall be qualified to
act as a custodian under the 1940 Act and that each such bank or
trust company and the funds to be deposited with each such bank or
trust company shall be approved by vote of a majority of the Board of
Trustees/Directors ("Board") of the Trust. Such funds shall be
deposited by the Custodian in its capacity as Custodian for the Fund
and shall be withdrawable by the Custodian only in that capacity. If
requested by the Trust, the Custodian shall furnish the Trust, not
later than twenty (20) days after the last business day of each
month, an internal reconciliation of the closing balance as of that
day in all accounts described in this section to the balance shown on
the daily cash report for that day rendered to the Trust.
2.5 Payments for Shares. The Custodian shall make such arrangements with
the Transfer Agent of each Fund, as will enable the Custodian to
receive the cash consideration due to each Fund and will deposit into
each Fund's account such payments as are received from the Transfer
Agent. The Custodian will provide timely notification to the Trust
and the Transfer Agent of any receipt by it of payments for Shares of
the respective Fund.
2.6 Availability of Federal Funds. Upon mutual agreement between the
Trust and the Custodian, the Custodian shall make federal funds
available to the Funds as of specified times agreed upon from time to
time by the Trust and the Custodian in the amount of checks, clearing
house funds, and other non-federal funds received in payment for
Shares of the Funds which are deposited into the Funds' accounts.
2.7 Collection of Income.
(1) The Custodian shall collect on a timely basis all income and
other payments with respect to registered securities held
hereunder to which each Fund shall be entitled either by law or
pursuant to custom in the securities business, and shall collect
on a timely basis all income and other payments with respect to
bearer securities if, on the date of payment by the issuer, such
securities are held by the Custodian or its agent thereof and
shall credit such income, as collected, to each Fund's custodian
account. Without limiting the generality of the foregoing, the
Custodian shall detach and present for payment all coupons and
other income items requiring presentation as and when they
become due and shall collect interest when due on securities
held hereunder. The collection of income due the Funds on
securities loaned pursuant to the provisions of Section 2.2 (10)
shall be the responsibility of the Trust. The Custodian will
have no duty or responsibility in connection therewith, other
than to provide the Trust with such information or data as may
be necessary to assist the Trust in arranging for the timely
delivery to the Custodian of the income to which each Fund is
properly entitled.
(2) The Custodian shall promptly notify the Trust whenever income
due on securities is not collected in due course and will
provide the Trust with monthly reports of the status of past due
income unless the parties otherwise agree.
2.8 Payment of Fund Moneys. Upon receipt of Proper Instructions,
which may be continuing instructions when deemed appropriate by the
parties, the Custodian shall pay out moneys of each Fund in the
following cases only:
(1) Upon the purchase of securities, futures contracts or options on
futures contracts for the account of a Fund but only (a) against
the delivery of such securities, or evidence of title to futures
contracts, to the Custodian (or any bank, banking firm or trust
company doing business in the United States or abroad which is
qualified under the 1940 Act to act as a custodian and has been
designated by the Custodian as its agent for this purpose)
registered in the name of the Fund or in the name of a nominee
of the Custodian referred to in Section 2.3 hereof or in proper
form for transfer, (b) in the case of a purchase effected
through a Securities System, in accordance with the conditions
set forth in Section 2.12 hereof or (c) in the case of
repurchase agreements entered into between the Trust and any
other party, (i) against delivery of the securities either in
certificate form or through an entry crediting the Custodian's
account at the Federal Reserve Bank with such securities or (ii)
against delivery of the receipt evidencing purchase for the
account of the Fund of securities owned by the Custodian along
with written evidence of the agreement by the Custodian to
repurchase such securities from the Fund;
(2) In connection with conversion, exchange or surrender of
securities owned by a Fund as set forth in Section 2.2 hereof;
(3) For the redemption or repurchase of Shares of a Fund issued by
the Trust as set forth in Section 2.10 hereof;
(4) For the payment of any expense or liability incurred by a Fund,
including but not limited to the following payments for the
account of the Fund: interest; taxes; management, accounting,
transfer agent and legal fees; and operating expenses of the
Fund, whether or not such expenses are to be in whole or part
capitalized or treated as deferred expenses;
(5) For the payment of any dividends on Shares of a Fund declared
pursuant to the governing documents of the Trust;
(6) For payment of the amount of dividends received in respect of
securities sold short;
(7) For any other proper purpose, but only upon receipt of, in
addition to Proper Instructions, a certified copy of a
resolution of the Executive Committee of the Trust on behalf of
a Fund signed by an officer of the Trust and certified by its
Secretary or an Assistant Secretary, specifying the amount of
such payment, setting forth the purpose for which such payment
is to be made, declaring such purpose to be a proper purpose,
and naming the person or persons to whom such payment is to be
made.
2.9 Liability for Payment in Advance of Receipt of Securities Purchased.
In any and every case where payment for purchase of securities for
the account of a Fund is made by the Custodian in advance of receipt
of the securities purchased, in the absence of specific written
instructions from the Trust to so pay in advance, the Custodian shall
be absolutely liable to the Fund for such securities to the same
extent as if the securities had been received by the Custodian.
2.10 Payments for Repurchases or Redemptions of Shares of a Fund. From
such funds as may be available for the purpose of repurchasing or
redeeming Shares of a Fund, but subject to the limitations of the
Declaration of Trust/Articles of Incorporation and any applicable
votes of the Board of the Trust pursuant thereto, the Custodian
shall, upon receipt of instructions from the Transfer Agent, make
funds available for payment to holders of shares of such Fund who
have delivered to the Transfer Agent a request for redemption or
repurchase of their shares including without limitation through bank
drafts, automated clearinghouse facilities, or by other means. In
connection with the redemption or repurchase of Shares of the Funds,
the Custodian is authorized upon receipt of instructions from the
Transfer Agent to wire funds to or through a commercial bank
designated by the redeeming shareholders.
2.11 Appointment of Agents. The Custodian may at any time or times in its
discretion appoint (and may at any time remove) any other bank or
trust company which is itself qualified under the 1940 Act and any
applicable state law or regulation, to act as a custodian, as its
agent to carry out such of the provisions of this Section 2 as the
Custodian may from time to time direct; provided, however, that the
appointment of any agent shall not relieve the Custodian of its
responsibilities or liabilities hereunder.
2.12 Deposit of Fund Assets in Securities System. The Custodian may
deposit and/or maintain securities owned by the Funds in a clearing
agency registered with the Securities and Exchange Commission ("SEC")
under Section 17A of the Exchange Act, which acts as a securities
depository, or in the book-entry system authorized by the U.S.
Department of the Treasury and certain federal agencies, collectively
referred to herein as "Securities System" in accordance with
applicable Federal Reserve Board and SEC rules and regulations, if
any, and subject to the following provisions:
(1)The Custodian may keep securities of each Fund in a Securities
System provided that such securities are represented in an
account ("Account") of the Custodian in the Securities System
which shall not include any assets of the Custodian other than
assets held as a fiduciary, custodian or otherwise for
customers;
(2)The records of the Custodian with respect to securities of the
Funds which are maintained in a Securities System shall identify
by book-entry those securities belonging to each Fund;
(3)The Custodian shall pay for securities purchased for the account
of each Fund upon (i) receipt of advice from the Securities
System that such securities have been transferred to the
Account, and (ii) the making of an entry on the records of the
Custodian to reflect such payment and transfer for the account
of the Fund. The Custodian shall transfer securities sold for
the account of a Fund upon (i) receipt of advice from the
Securities System that payment for such securities has been
transferred to the Account, and (ii) the making of an entry on
the records of the Custodian to reflect such transfer and
payment for the account of the Fund. Copies of all advices from
the Securities System of transfers of securities for the account
of a Fund shall identify the Fund, be maintained for the Fund by
the Custodian and be provided to the Trust at its request. Upon
request, the Custodian shall furnish the Trust confirmation of
each transfer to or from the account of a Fund in the form of a
written advice or notice and shall furnish to the Trust copies
of daily transaction sheets reflecting each day's transactions
in the Securities System for the account of a Fund.
(4)The Custodian shall provide the Trust with any report obtained by
the Custodian on the Securities System's accounting system,
internal accounting control and procedures for safeguarding
securities deposited in the Securities System;
(5)The Custodian shall have received the initial certificate,
required by Section 9 hereof;
(6)Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Trust for any loss or damage to
a Fund resulting from use of the Securities System by reason of
any negligence, misfeasance or misconduct of the Custodian or
any of its agents or of any of its or their employees or from
failure of the Custodian or any such agent to enforce
effectively such rights as it may have against the Securities
System; at the election of the Trust, it shall be entitled to be
subrogated to the rights of the Custodian with respect to any
claim against the Securities System or any other person which
the Custodian may have as a consequence of any such loss or
damage if and to the extent that a Fund has not been made whole
for any such loss or damage.
(7)The authorization contained in this Section 2.12 shall not relieve
the Custodian from using reasonable care and diligence in making
use of any Securities System.
2.13 Segregated Account. The Custodian shall upon receipt of Proper
Instructions establish and maintain a segregated account or accounts
for and on behalf of each Fund, into which account or accounts may be
transferred cash and/or securities, including securities maintained
in an account by the Custodian pursuant to Section 2.12 hereof, (i)
in accordance with the provisions of any agreement among the Trust,
the Custodian and a broker-dealer registered under the Exchange Act
and a member of the NASD (or any futures commission merchant
registered under the Commodity Exchange Act), relating to compliance
with the rules of The Options Clearing Corporation and of any
registered national securities exchange (or the Commodity Futures
Trading Commission or any registered contract market), or of any
similar organization or organizations, regarding escrow or other
arrangements in connection with transactions for a Fund, (ii) for
purpose of segregating cash or government securities in connection
with options purchased, sold or written for a Fund or commodity
futures contracts or options thereon purchased or sold for a Fund,
(iii) for the purpose of compliance by the Trust or a Fund with the
procedures required by any release or releases of the SEC relating to
the maintenance of segregated accounts by registered investment
companies and (iv) for other proper corporate purposes, but only, in
the case of clause (iv), upon receipt of, in addition to Proper
Instructions, a certified copy of a resolution of the Board or of the
Executive Committee signed by an officer of the Trust and certified
by the Secretary or an Assistant Secretary, setting forth the purpose
or purposes of such segregated account and declaring such purposes to
be proper corporate purposes.
2.14 Joint Repurchase Agreements. Upon the receipt of Proper
Instructions, the Custodian shall deposit and/or maintain any assets
of a Fund and any affiliated funds which are subject to joint
repurchase transactions in an account established solely for such
transactions for the Fund and its affiliated funds. For purposes of
this Section 2.14, "affiliated funds" shall include all investment
companies and their portfolios for which subsidiaries or affiliates
of Federated Investors serve as investment advisers, distributors or
administrators in accordance with applicable exemptive orders from
the SEC. The requirements of segregation set forth in Section 2.1
shall be deemed to be waived with respect to such assets.
2.15 Ownership Certificates for Tax Purposes. The Custodian shall execute
ownership and other certificates and affidavits for all federal and
state tax purposes in connection with receipt of income or other
payments with respect to securities of a Fund held by it and in
connection with transfers of securities.
2.16 Proxies. The Custodian shall, with respect to the securities held
hereunder, cause to be promptly executed by the registered holder of
such securities, if the securities are registered otherwise than in
the name of a Fund or a nominee of a Fund, all proxies, without
indication of the manner in which such proxies are to be voted, and
shall promptly deliver to the Trust such proxies, all proxy
soliciting materials and all notices relating to such securities.
2.17 Communications Relating to Fund Portfolio Securities. The Custodian
shall transmit promptly to the Trust all written information
(including, without limitation, pendency of calls and maturities of
securities and expirations of rights in connection therewith and
notices of exercise of call and put options written by the Fund and
the maturity of futures contracts purchased or sold by the Fund)
received by the Custodian from issuers of the securities being held
for the Fund. With respect to tender or exchange offers, the
Custodian shall transmit promptly to the Trust all written
information received by the Custodian from issuers of the securities
whose tender or exchange is sought and from the party (or his agents)
making the tender or exchange offer. If the Trust desires to take
action with respect to any tender offer, exchange offer or any other
similar transaction, the Trust shall notify the Custodian in writing
at least three business days prior to the date on which the Custodian
is to take such action. However, the Custodian shall nevertheless
exercise its best efforts to take such action in the event that
notification is received three business days or less prior to the
date on which action is required.
2.18 Proper Instructions. Proper Instructions as used throughout this
Section 2 means a writing signed or initialed by one or more person
or persons as the Board shall have from time to time authorized.
Each such writing shall set forth the specific transaction or type of
transaction involved. Oral instructions will be deemed to be Proper
Instructions if (a) the Custodian reasonably believes them to have
been given by a person previously authorized in Proper Instructions
to give such instructions with respect to the transaction involved,
and (b) the Trust promptly causes such oral instructions to be
confirmed in writing. Upon receipt of a certificate of the Secretary
or an Assistant Secretary as to the authorization by the Board of the
Trust accompanied by a detailed description of procedures approved by
the Board, Proper Instructions may include communications effected
directly between electro-mechanical or electronic devices provided
that the Board and the Custodian are satisfied that such procedures
afford adequate safeguards for a Fund's assets.
2.19 Actions Permitted Without Express Authority. The Custodian may in
its discretion, without express authority from the Trust:
(1) make payments to itself or others for minor expenses of handling
securities or other similar items relating to its duties under
this Contract, provided that all such payments shall be
accounted for to the Trust in such form that it may be allocated
to the affected Fund;
(2) surrender securities in temporary form for securities in
definitive form;
(3) endorse for collection, in the name of a Fund, checks, drafts
and other negotiable instruments; and
(4) in general, attend to all non-discretionary details in
connection with the sale, exchange, substitution, purchase,
transfer and other dealings with the securities and property of
each Fund except as otherwise directed by the Trust.
2.20 Evidence of Authority. The Custodian shall be protected in acting
upon any instructions, notice, request, consent, certificate or other
instrument or paper reasonably believed by it to be genuine and to
have been properly executed on behalf of a Fund. The Custodian may
receive and accept a certified copy of a vote of the Board of the
Trust as conclusive evidence (a) of the authority of any person to
act in accordance with such vote or (b) of any determination of or
any action by the Board pursuant to the Declaration of Trust/Articles
of Incorporation as described in such vote, and such vote may be
considered as in full force and effect until receipt by the Custodian
of written notice to the contrary.
2.21 Notice to Trust by Custodian Regarding Cash Movement. The Custodian
will provide timely notification to the Trust of any receipt of cash,
income or payments to the Trust and the release of cash or payment by
the Trust.
3. Duties of Custodian With Respect to the Books of Account and Calculation
of Net Asset Value and Net Income.
The Custodian shall cooperate with and supply necessary information to
the entity or entities appointed by the Board of the Trust to keep the books
of account of each Fund and/or compute the net asset value per share of the
outstanding Shares of each Fund or, if directed in writing to do so by the
Trust, shall itself keep such books of account and/or compute such net asset
value per share. If so directed, the Custodian shall also calculate daily the
net income of a Fund as described in the Fund's currently effective prospectus
and Statement of Additional Information ("Prospectus") and shall advise the
Trust and the Transfer Agent daily of the total amounts of such net income
and, if instructed in writing by an officer of the Trust to do so, shall
advise the Transfer Agent periodically of the division of such net income
among its various components. The calculations of the net asset value per
share and the daily income of a Fund shall be made at the time or times
described from time to time in the Fund's currently effective Prospectus.
4. Records.
The Custodian shall create and maintain all records relating to its
activities and obligations under this Contract in such manner as will meet the
obligations of the Trust and the Funds under the 1940 Act, with particular
attention to Section 31 thereof and Rules 31a-1 and 31a-2 thereunder, and
specifically including identified cost records used for tax purposes. All
such records shall be the property of the Trust and shall at all times during
the regular business hours of the Custodian be open for inspection by duly
authorized officers, employees or agents of the Trust and employees and agents
of the SEC. In the event of termination of this Contract, the Custodian will
deliver all such records to the Trust, to a successor Custodian, or to such
other person as the Trust may direct. The Custodian shall supply daily to the
Trust a tabulation of securities owned by a Fund and held by the Custodian and
shall, when requested to do so by the Trust and for such compensation as shall
be agreed upon between the Trust and the Custodian, include certificate
numbers in such tabulations.
5. Opinion of Funds' Independent Public Accountants/Auditors.
The Custodian shall take all reasonable action, as the Trust may from time
to time request, to obtain from year to year favorable opinions from each
Fund's independent public accountants/auditors with respect to its activities
hereunder in connection with the preparation of the Fund's registration
statement, periodic reports, or any other reports to the SEC and with respect
to any other requirements of such Commission.
6. Reports to Trust by Independent Public Accountants/Auditors.
The Custodian shall provide the Trust, at such times as the Trust may
reasonably require, with reports by independent public accountants/auditors
for each Fund on the accounting system, internal accounting control and
procedures for safeguarding securities, futures contracts and options on
futures contracts, including securities deposited and/or maintained in a
Securities System, relating to the services provided by the Custodian for the
Fund under this Contract; such reports shall be of sufficient scope and in
sufficient detail, as may reasonably be required by the Trust, to provide
reasonable assurance that any material inadequacies would be disclosed by such
examination and, if there are no such inadequacies, the reports shall so
state.
7. Compensation of Custodian.
The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, as agreed upon from time to time between
Company and the Custodian.
8. Responsibility of Custodian.
The Custodian shall be held to a standard of reasonable care in carrying
out the provisions of this Contract; provided, however, that the Custodian
shall be held to any higher standard of care which would be imposed upon the
Custodian by any applicable law or regulation if such above stated standard of
reasonable care was not part of this Contract. The Custodian shall be
entitled to rely on and may act upon advice of counsel (who may be counsel for
the Trust) on all matters, and shall be without liability for any action
reasonably taken or omitted pursuant to such advice, provided that such action
is not in violation of applicable federal or state laws or regulations, and is
in good faith and without negligence. Subject to the limitations set forth in
Section 15 hereof, the Custodian shall be kept indemnified by the Trust but
only from the assets of the Fund involved in the issue at hand and be without
liability for any action taken or thing done by it in carrying out the terms
and provisions of this Contract in accordance with the above standards.
In order that the indemnification provisions contained in this Section 8
shall apply, however, it is understood that if in any case the Trust may be
asked to indemnify or save the Custodian harmless, the Trust shall be fully
and promptly advised of all pertinent facts concerning the situation in
question, and it is further understood that the Custodian will use all
reasonable care to identify and notify the Trust promptly concerning any
situation which presents or appears likely to present the probability of such
a claim for indemnification. The Trust shall have the option to defend the
Custodian against any claim which may be the subject of this indemnification,
and in the event that the Trust so elects it will so notify the Custodian and
thereupon the Trust shall take over complete defense of the claim, and the
Custodian shall in such situation initiate no further legal or other expenses
for which it shall seek indemnification under this Section. The Custodian
shall in no case confess any claim or make any compromise in any case in which
the Trust will be asked to indemnify the Custodian except with the Trust's
prior written consent.
Notwithstanding the foregoing, the responsibility of the Custodian with
respect to redemptions effected by check shall be in accordance with a
separate Agreement entered into between the Custodian and the Trust.
If the Trust requires the Custodian to take any action with respect to
securities, which action involves the payment of money or which action may, in
the reasonable opinion of the Custodian, result in the Custodian or its
nominee assigned to a Fund being liable for the payment of money or incurring
liability of some other form, the Custodian may request the Trust, as a
prerequisite to requiring the Custodian to take such action, to provide
indemnity to the Custodian in an amount and form satisfactory to the
Custodian.
Subject to the limitations set forth in Section 15 hereof, the Trust
agrees to indemnify and hold harmless the Custodian and its nominee from and
against all taxes, charges, expenses, assessments, claims and liabilities
(including counsel fees) (referred to herein as authorized charges) incurred
or assessed against it or its nominee in connection with the performance of
this Contract, except such as may arise from it or its nominee's own failure
to act in accordance with the standard of reasonable care or any higher
standard of care which would be imposed upon the Custodian by any applicable
law or regulation if such above-stated standard of reasonable care were not
part of this Contract. To secure any authorized charges and any advances of
cash or securities made by the Custodian to or for the benefit of a Fund for
any purpose which results in the Fund incurring an overdraft at the end of any
business day or for extraordinary or emergency purposes during any business
day, the Trust hereby grants to the Custodian a security interest in and
pledges to the Custodian securities held for the Fund by the Custodian, in an
amount not to exceed 10 percent of the Fund's gross assets, the specific
securities to be designated in writing from time to time by the Trust or the
Fund's investment adviser. Should the Trust fail to make such designation, or
should it instruct the Custodian to make advances exceeding the percentage
amount set forth above and should the Custodian do so, the Trust hereby agrees
that the Custodian shall have a security interest in all securities or other
property purchased for a Fund with the advances by the Custodian, which
securities or property shall be deemed to be pledged to the Custodian, and the
written instructions of the Trust instructing their purchase shall be
considered the requisite description and designation of the property so
pledged for purposes of the requirements of the Uniform Commercial Code.
Should the Trust fail to cause a Fund to repay promptly any authorized charges
or advances of cash or securities, subject to the provision of the second
paragraph of this Section 8 regarding indemnification, the Custodian shall be
entitled to use available cash and to dispose of pledged securities and
property as is necessary to repay any such advances.
9. Effective Period, Termination and Amendment.
This Contract shall become effective as of its execution, shall continue
in full force and effect until terminated as hereinafter provided, may be
amended at any time by mutual agreement of the parties hereto and may be
terminated by either party by an instrument in writing delivered or mailed,
postage prepaid to the other party, such termination to take effect not sooner
than sixty (60) days after the date of such delivery or mailing; provided,
however that the Custodian shall not act under Section 2.12 hereof in the
absence of receipt of an initial certificate of the Secretary or an Assistant
Secretary that the Board of the Trust has approved the initial use of a
particular Securities System as required in each case by Rule 17f-4 under the
1940 Act; provided further, however, that the Trust shall not amend or
terminate this Contract in contravention of any applicable federal or state
regulations, or any provision of the Declaration of Trust/Articles of
Incorporation, and further provided, that the Trust may at any time by action
of its Board (i) substitute another bank or trust company for the Custodian by
giving notice as described above to the Custodian, or (ii) immediately
terminate this Contract in the event of the appointment of a conservator or
receiver for the Custodian by the appropriate banking regulatory agency or
upon the happening of a like event at the direction of an appropriate
regulatory agency or court of competent jurisdiction.
Upon termination of the Contract, the Trust shall pay to the Custodian
such compensation as may be due as of the date of such termination and shall
likewise reimburse the Custodian for its costs, expenses and disbursements.
10. Successor Custodian.
If a successor custodian shall be appointed by the Board of the Trust, the
Custodian shall, upon termination, deliver to such successor custodian at the
office of the Custodian, duly endorsed and in the form for transfer, all
securities then held by it hereunder for each Fund and shall transfer to
separate accounts of the successor custodian all of each Fund's securities
held in a Securities System.
If no such successor custodian shall be appointed, the Custodian shall, in
like manner, upon receipt of a certified copy of a vote of the Board of the
Trust, deliver at the office of the Custodian and transfer such securities,
funds and other properties in accordance with such vote.
In the event that no written order designating a successor custodian or
certified copy of a vote of the Board shall have been delivered to the
Custodian on or before the date when such termination shall become effective,
then the Custodian shall have the right to deliver to a bank or trust company,
which is a "bank" as defined in the 1940 Act, (delete "doing business ...
Massachusetts" unless SSBT is the Custodian) doing business in Boston,
Massachusetts, of its own selection, having an aggregate capital, surplus, and
undivided profits, as shown by its last published report, of not less than
$100,000,000, all securities, funds and other properties held by the Custodian
and all instruments held by the Custodian relative thereto and all other
property held by it under this Contract for each Fund and to transfer to
separate accounts of such successor custodian all of each Fund's securities
held in any Securities System. Thereafter, such bank or trust company shall
be the successor of the Custodian under this Contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Trust to procure the certified copy of the vote referred to or
of the Board to appoint a successor custodian, the Custodian shall be entitled
to fair compensation for its services during such period as the Custodian
retains possession of such securities, funds and other properties and the
provisions of this Contract relating to the duties and obligations of the
Custodian shall remain in full force and effect.
11. Interpretive and Additional Provisions.
In connection with the operation of this Contract, the Custodian and the
Trust may from time to time agree on such provisions interpretive of or in
addition to the provisions of this Contract as may in their joint opinion be
consistent with the general tenor of this Contract. Any such interpretive or
additional provisions shall be in a writing signed by both parties and shall
be annexed hereto, provided that no such interpretive or additional provisions
shall contravene any applicable federal or state regulations or any provision
of the Declaration of Trust/Articles of Incorporation. No interpretive or
additional provisions made as provided in the preceding sentence shall be
deemed to be an amendment of this Contract.
12. Massachusetts Law to Apply.
This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of The Commonwealth of Massachusetts.
13. Notices.
Except as otherwise specifically provided herein, Notices and other
writings delivered or mailed postage prepaid to the Trust at Federated
Investors Tower, Pittsburgh, Pennsylvania, 15222-3779, or to the Custodian at
address for SSBT only: 225 Franklin Street, Boston, Massachusetts, 02110, or
to such other address as the Trust or the Custodian may hereafter specify,
shall be deemed to have been properly delivered or given hereunder to the
respective address.
14. Counterparts.
This Contract may be executed simultaneously in two or more counterparts,
each of which shall be deemed an original.
15. Limitations of Liability.
The Custodian is expressly put on notice of the limitation of liability as
set forth in Article XI of the Declaration of Trust of those Trusts which are
business trusts and agrees that the obligations and liabilities assumed by the
Trust and any Fund pursuant to this Contract, including, without limitation,
any obligation or liability to indemnify the Custodian pursuant to Section 8
hereof, shall be limited in any case to the relevant Fund and its assets and
that the Custodian shall not seek satisfaction of any such obligation from the
shareholders of the relevant Fund, from any other Fund or its shareholders or
from the Trustees, Officers, employees or agents of the Trust, or any of them.
In addition, in connection with the discharge and satisfaction of any claim
made by the Custodian against the Trust, for whatever reasons, involving more
than one Fund, the Trust shall have the exclusive right to determine the
appropriate allocations of liability for any such claim between or among the
Funds.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed effective as of the 1st day of December, 1993.
ATTEST: INVESTMENT COMPANIES (Except those
listed below)
/s/John G. McGonigle_________ By /s/John G. Donahue_____________
John G. McGonigle John F. Donahue
Secretary Chairman
ATTEST: STATE STREET BANK AND TRUST
COMPANY
/s/ Ed McKenzie______________ By /s/ F. J. Sidoti, Jr.___________
(Assistant) Secretary Typed Name: Frank J. Sidoti, Jr.
Typed Name: Ed McKenzie Title: Vice President
ATTEST: FEDERATED SERVICES COMPANIY
/s/ Jeannette Fisher-Garber______ By /s/ James J. Dolan________________
Jeannette Fisher-Garber James J. Dolan
Secretary President
Exhibit 9 (i) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
SHAREHOLDER SERVICES PLAN
This Shareholder Services Plan ("Plan") is adopted as of this 1st day of
March, 1994, by the Boards of Directors or Trustees, as applicable (the
"Boards"), of those investment companies listed on Exhibit 1 hereto as may be
amended from time to time, having their principal office and place of business
at Federated Investors Tower, Pittsburgh, PA 15222-3779 (individually
referred to herein as a "Fund" and collectively as "Funds").
1. This Plan is adopted to allow the Funds to make payments as
contemplated herein to obtain certain personal services for shareholders
and/or the maintenance of shareholder accounts ("Services").
2. This Plan is designed to compensate Federated Shareholder Services
("FSS") for providing personal services and/or the maintenance of shareholder
accounts to the Funds and their shareholders. In compensation for the
services provided pursuant to this Plan, FSS may be paid a monthly fee
computed at the annual rate not to exceed .25 of 1% of the average aggregate
net asset value of the shares of each Fund held during the month.
3. Any payments made by the Funds to FSS pursuant to this Plan will
be made pursuant to a "Shareholder Services Agreement" between FSS and each of
the Funds.
4. Quarterly in each year that this Plan remains in effect, FSS shall
prepare and furnish to the Boards of the Funds, and the Boards shall review, a
written report of the amounts expended under the Plan.
5. This Plan shall become effective with regard to each Fund
(i) after approval by majority votes of: (a) such Fund's Board; and (b) the
members of the Board of such Fund who are not interested persons of such Fund
and have no direct or indirect financial interest in the operation of such
Fund's Plan or in any related documents to the Plan ("Independent Trustees or
Directors"), cast in person at a meeting called for the purpose of voting on
the Plan.
6. This Plan shall remain in effect with respect to each Fund
presently set forth on an exhibit and any subsequent Fund added pursuant to an
exhibit during the initial year of this Plan for the period of one year from
the date set forth above and may be continued thereafter if this Plan is
approved with respect to each Fund at least annually by a majority of the
relevant Fund's Board and a majority of the Independent Trustees or Directors,
of such Fund as applicable, cast in person at a meeting called for the purpose
of voting on the renewal of such Plan. If this Plan is adopted with respect
to a fund after the first annual approval by the Trustees or Directors as
described above, this Plan will be effective as to that Fund at such time as
Exhibit 1 hereto is amended to add such Fund and will continue in effect until
the next annual approval of this Plan by the Funds' Boards and thereafter for
successive periods of one year subject to approval as described above.
7. All material amendments to this Plan must be approved by a vote of
the Board of each Fund and of the Independent Directors or Trustees of such
Fund, cast in person at a meeting called for such purpose.
8. This Plan may be terminated as follows:
(a) at any time, without the payment of any penalty, by the
vote of a majority of the Independent Board Members of any Fund or by
a vote of a majority of the outstanding voting securities of any Fund
as defined in the Investment Company Act of 1940 on sixty (60) days'
written notice to the parties to this Agreement; or
(b) by any party to the Agreement without cause by giving the
other party at least sixty (60) days' written notice of its intention
to terminate.
9. While this Plan shall be in effect, the selection and nomination
of Independent Directors or Trustees of each Fund shall be committed to the
discretion of the Independent Directors or Trustees then in office.
10. All agreements with any person relating to the implementation of
this Plan shall be in writing and any agreement related to this Plan shall be
subject to termination, without penalty, pursuant to the provisions of
Paragraph 8 herein.
11. This Plan shall be construed in accordance with and governed by
the laws of the Commonwealth of Pennsylvania.
Witness the due execution hereof this as of the date set forth above.
Investment Companies (listed
on Exhibit 1)
By: /s/ John F. Donahue
John F. Donahue
Chairman
Attest: /s/ John W. McGonigle
John W. McGonigle
Federated Shareholder Services
By: /s/ James J. Dolan
Title: President
Attest: /s/ John W. McGonigle
John W. McGonigle
Exhibit 9 (ii) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
SHAREHOLDER SERVICES SUB-CONTRACT
This Agreement is made between the Financial Institution executing this
Agreement ("Provider") and Federated Shareholder Services ("FSS") on behalf of
the investment companies listed in Exhibit A hereto (the "Funds"), for whom
FSS administers the Shareholder Services Plan ("Plan") and who have approved
this form of Agreement. In consideration of the mutual covenants hereinafter
contained, it is hereby agreed by and between the parties hereto as follows:
1. FSS hereby appoints Provider to render or cause to be rendered
personal services to shareholders of the Funds and/or the maintenance of
accounts of shareholders of the Funds ("Services"). Provider agrees to
provide Services which, in its best judgment, are necessary or desirable for
its customers who are investors in the Funds. Provider further agrees to
provide FSS, upon request, a written description of the Services which
Provider is providing hereunder.
2. During the term of this Agreement, the Funds will pay the Provider
fees as set forth in a written schedule delivered to the Provider pursuant to
this Agreement. The fee schedule for Provider may be changed by FSS sending a
new fee schedule to Provider pursuant to Paragraph 9 of this Agreement. For
the payment period in which this Agreement becomes effective or terminates,
there shall be an appropriate proration of the fee on the basis of the number
of days that this Agreement is in effect during the quarter. To enable the
Funds to comply with an applicable exemptive order, Provider represents that
the fees received pursuant to this Agreement will be disclosed to its
customers, will be authorized by its customers, and will not result in an
excessive fee to the Provider.
3. The Provider understands that the Department of Labor views ERISA
as prohibiting fiduciaries of discretionary ERISA assets from receiving
shareholder service fees or other compensation from funds in which the
fiduciary's discretionary ERISA assets are invested. To date, the Department
of Labor has not issued any exemptive order or advisory opinion that would
exempt fiduciaries from this interpretation. Without specific authorization
from the Department of Labor, fiduciaries should carefully avoid investing
discretionary assets in any fund pursuant to an arrangement where the
fiduciary is to be compensated by the fund for such investment. Receipt of
such compensation could violate ERISA provisions against fiduciary self-
dealing and conflict of interest and could subject the fiduciary to
substantial penalties.
4. The Provider agrees not to solicit or cause to be solicited
directly, or indirectly at any time in the future, any proxies from the
shareholders of a Fund in opposition to proxies solicited by management of the
Fund, unless a court of competent jurisdiction shall have determined that the
conduct of a majority of the Board of Trustees or Directors of the Fund
constitutes willful misfeasance, bad faith, gross negligence or reckless
disregard of their duties. This paragraph 4 will survive the term of this
Agreement.
5. This Agreement shall continue in effect for one year from the date
of its execution, and thereafter for successive periods of one year if the
form of this Agreement is approved at least annually by the Board of each
Fund, including a majority of the members of the Board of the Fund who are not
interested persons of the Fund and have no direct or indirect financial
interest in the operation of the Fund's Plan or in any related documents to
the Plan ("Disinterested Board Members") cast in person at a meeting called
for that purpose.
6. Notwithstanding paragraph 5, this Agreement may be terminated as
follows:
(a) at any time, without the payment of any penalty, by the
vote of a majority of the Disinterested Board Members of the Fund or
by a vote of a majority of the outstanding voting securities of the
Fund as defined in the Investment Company Act of 1940 on not more than
sixty (60) days' written notice to the parties to this Agreement;
(b) automatically in the event of the Agreement's assignment
as defined in the Investment Company Act of 1940; and
(c) by either party to the Agreement without cause by giving
the other party at least sixty (60) days' written notice of its
intention to terminate.
7. The Provider agrees to obtain any taxpayer identification number
certification from its customers required under Section 3406 of the Internal
Revenue Code, and any applicable Treasury regulations, and to provide the Fund
or its designee with timely written notice of any failure to obtain such
taxpayer identification number certification in order to enable the
implementation of any required backup withholding.
8. The execution and delivery of this Agreement have been authorized
by the Trustees of FSS and signed by an authorized officer of FSS, acting as
such, and neither such authorization by such Trustees nor such execution and
delivery by such officer shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, and the
obligations of this Agreement are not binding upon any of the Trustees or
shareholders of FSS, but bind only the trust property of FSS as provided in
the Declaration of Trust of FSS.
9. Notices of any kind to be given hereunder shall be in writing
(including facsimile communication) and shall be duly given if delivered to
Provider at the address set forth below and if delivered to FSS at Federated
Investors Tower, Pittsburgh, PA 15222-3779, Attention: President.
10. This Agreement constitutes the entire agreement between the
parties hereto and supersedes any prior agreement with respect to the subject
hereof whether oral or written. If any provision of this Agreement shall be
held or made invalid by a court or regulatory agency decision, statute, rule
or otherwise, the remainder of this Agreement shall not be affected thereby.
Subject to the provisions of Sections 5 and 6, hereof, this Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and shall be governed by Pennsylvania law; provided,
however, that nothing herein shall be construed in a manner inconsistent with
the Investment Company Act of 1940 or any rule or regulation promulgated by
the Securities and Exchange Commission thereunder.
11. This Agreement may be executed by different parties on separate
counterparts, each of which, when so executed and delivered, shall be an
original, and all such counterparts shall together constitute one and the same
instrument.
12. This Agreement shall not be assigned by any party without the
prior written consent of FSS in the case of assignment by Provider, or of
Provider in the case of assignment by FSS, except that any party may assign to
a successor all of or a substantial portion of its business to a party
controlling, controlled by, or under common control with such party.
13. This Agreement may be amended by FSS from time to time by the
following procedure. FSS will mail a copy of the amendment to the Provider's
address, as shown below. If the Provider does not object to the amendment
within thirty (30) days after its receipt, the amendment will become part of
the Agreement. The Provider's objection must be in writing and be received by
FSS within such thirty days.
14. This Agreement may be terminated with regard to a particular Fund
or Class at any time, without the payment of any penalty, by FSS or by the
vote of a majority of the Disinterested Trustees or Directors, as applicable,
or by a majority of the outstanding voting securities of the particular Fund
or Class on not more than sixty (60) days' written notice to the Provider.
This Agreement may be terminated by Provider on sixty (60) days' written
notice to FSS.
15. The Provider acknowledges and agrees that FSS has entered into
this Agreement solely in the capacity of agent for the Funds and administrator
of the Plan. The Provider agrees not to claim that FSS is liable for any
responsibilities or amounts due by the Funds hereunder.
[Provider]
Address
City State Zip Code
Dated: By:
Authoried Signature
Title
Print Name of Authorized Signature
FEDERATED SHAREHOLDER SERVICES
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
By:
Vice President
EXHIBIT A to Shareholder Services Sub-Contract with
Funds covered by this Agreement:
Federated GNMA Trust
Shareholder Service Fees
1. During the term of this Agreement, FSS will pay Provider a
quarterly fee. This fee will be computed at the annual rate of ______ of the
average net asset value of shares of the Funds held during the quarter in
accounts for which the Provider provides Services under this Agreement, so
long as the average net asset value of Shares in the Funds during the quarter
equals or exceeds such minimum amount as FSS shall from time to time determine
and communicate in writing to the Provider.
2. For the quarterly period in which the Agreement becomes effective
or terminates, there shall be an appropriate proration of any fee payable on
the basis of the number of days that the Agreement is in effect during the
quarter.
Exhibit 9 (iii) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
SHAREHOLDER SERVICES AGREEMENT
AGREEMENT made as of the first day of March, 1994, by and between those
investment companies listed on Exhibit 1, as may be amended from time to time,
having their principal office and place of business at Federated Investors
Tower, Pittsburgh, PA 15222-3779 and who have approved a Shareholder Services
Plan (the "Plan") and this form of Agreement (individually referred to herein
as a "Fund" and collectively as "Funds") and Federated Shareholder Services, a
Delaware business trust, having its principal office and place of business at
Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779 ("FSS").
1. The Funds hereby appoint FSS to render or cause to be rendered
personal services to shareholders of the Funds and/or the maintenance of
accounts of shareholders of the Funds ("Services"). In addition to providing
Services directly to shareholders of the Funds, FSS is hereby appointed the
Funds' agent to select, negotiate and subcontract for the performance of
Services. FSS hereby accepts such appointments. FSS agrees to provide or
cause to be provided Services which, in its best judgment (subject to
supervision and control of the Funds' Boards of Trustees or Directors, as
applicable), are necessary or desirable for shareholders of the Funds. FSS
further agrees to provide the Funds, upon request, a written description of
the Services which FSS is providing hereunder.
2. During the term of this Agreement, each Fund will pay FSS and FSS
agrees to accept as full compensation for its services rendered hereunder a
fee at an annual rate, calculated daily and payable monthly, up to 0.25% of 1%
of average net assets of each Fund.
For the payment period in which this Agreement becomes effective or
terminates with respect to any Fund, there shall be an appropriate proration
of the monthly fee on the basis of the number of days that this Agreement is
in effect with respect to such Fund during the month. To enable the Funds to
comply with an applicable exemptive order, FSS represents that the fees
received pursuant to this Agreement will be disclosed to and authorized by any
person or entity receiving Services, and will not result in an excessive fee
to FSS.
3. This Agreement shall continue in effect for one year from the date
of its execution, and thereafter for successive periods of one year only if
the form of this Agreement is approved at least annually by the Board of each
Fund, including a majority of the members of the Board of the Fund who are not
interested persons of the Fund and have no direct or indirect financial
interest in the operation of the Funds' Plan or in any related documents to
the Plan ("Independent Board Members") cast in person at a meeting called for
that purpose.
4. Notwithstanding paragraph 3, this Agreement may be terminated as
follows:
(a) at any time, without the payment of any penalty, by the
vote of a majority of the Independent Board Members of any Fund or by
a vote of a majority of the outstanding voting securities of any Fund
as defined in the Investment Company Act of 1940 on sixty (60) days'
written notice to the parties to this Agreement;
(b) automatically in the event of the Agreement's assignment
as defined in the Investment Company Act of 1940; and
(c) by any party to the Agreement without cause by giving the
other party at least sixty (60) days' written notice of its intention
to terminate.
5. FSS agrees to obtain any taxpayer identification number
certification from each shareholder of the Funds to which it provides Services
that is required under Section 3406 of the Internal Revenue Code, and any
applicable Treasury regulations, and to provide each Fund or its designee with
timely written notice of any failure to obtain such taxpayer identification
number certification in order to enable the implementation of any required
backup withholding.
6. FSS shall not be liable for any error of judgment or mistake of
law or for any loss suffered by any Fund in connection with the matters to
which this Agreement relates, except a loss resulting from willful
misfeasance, bad faith or gross negligence on its part in the performance of
its duties or from reckless disregard by it of its obligations and duties
under this Agreement. FSS shall be entitled to rely on and may act upon
advice of counsel (who may be counsel for such Fund) on all matters, and shall
be without liability for any action reasonably taken or omitted pursuant to
such advice. Any person, even though also an officer, trustee, partner,
employee or agent of FSS, who may be or become a member of such Fund's Board,
officer, employee or agent of any Fund, shall be deemed, when rendering
services to such Fund or acting on any business of such Fund (other than
services or business in connection with the duties of FSS hereunder) to be
rendering such services to or acting solely for such Fund and not as an
officer, trustee, partner, employee or agent or one under the control or
direction of FSS even though paid by FSS.
This Section 6 shall survive termination of this Agreement.
7. No provision of this Agreement may be changed, waived, discharged
or terminated orally, but only by an instrument in writing signed by the party
against which an enforcement of the change, waiver, discharge or termination
is sought.
8. FSS is expressly put on notice of the limitation of liability as
set forth in the Declaration of Trust of each Fund that is a Massachusetts
business trust and agrees that the obligations assumed by each such Fund
pursuant to this Agreement shall be limited in any case to such Fund and its
assets and that FSS shall not seek satisfaction of any such obligations from
the shareholders of such Fund, the Trustees, Officers, Employees or Agents of
such Fund, or any of them.
9. The execution and delivery of this Agreement have been authorized
by the Trustees of FSS and signed by an authorized officer of FSS, acting as
such, and neither such authorization by such Trustees nor such execution and
delivery by such officer shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, and the
obligations of this Agreement are not binding upon any of the Trustees or
shareholders of FSS, but bind only the trust property of FSS as provided in
the Declaration of Trust of FSS.
10. Notices of any kind to be given hereunder shall be in writing
(including facsimile communication) and shall be duly given if delivered to
any Fund and to such Fund at the following address: Federated Investors
Tower, Pittsburgh, PA 15222-3779, Attention: President and if delivered to
FSS at Federated Investors Tower, Pittsburgh, PA 15222-3779, Attention:
President.
11. This Agreement constitutes the entire agreement between the
parties hereto and supersedes any prior agreement with respect to the subject
hereof whether oral or written. If any provision of this Agreement shall be
held or made invalid by a court or regulatory agency decision, statute, rule
or otherwise, the remainder of this Agreement shall not be affected thereby.
Subject to the provisions of Sections 3 and 4, hereof, this Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and shall be governed by Pennsylvania law; provided,
however, that nothing herein shall be construed in a manner inconsistent with
the Investment Company Act of 1940 or any rule or regulation promulgated by
the Securities and Exchange Commission thereunder.
12. This Agreement may be executed by different parties on separate
counterparts, each of which, when so executed and delivered, shall be an
original, and all such counterparts shall together constitute one and the same
instrument.
13. This Agreement shall not be assigned by any party without the
prior written consent of FSS in the case of assignment by any Fund, or of the
Funds in the case of assignment by FSS, except that any party may assign to a
successor all of or a substantial portion of its business to a party
controlling, controlled by, or under common control with such party. Nothing
in this Section 14 shall prevent FSS from delegating its responsibilities to
another entity to the extent provided herein.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
Investment Companies (listed
on Exhibit 1)
By: /s/ John F. Donahue
John F. Donahue
Chairman
Attest: /s/ John W. McGonigle
John W. McGonigle
Federated Shareholder Services
By: /s/ James J. Dolan
Title: President
Attest: /s/ John W. McGonigle
John W. McGonigle
Exhibit 9 (iv) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
ADMINISTRATIVE SERVICES AGREEMENT
This Administrative Services Agreement is made as of this first day of
March, 1994, between those investment companies listed on Exhibit 1, as may
be amended from time to time, having their principal office and place of
business at Federated Investors Tower, Pittsburgh PA 15222-3779
(individually referred to herein as "Fund" and collectively referred to as
"Funds), on behalf of the portfolios of the Funds, and Federated
Administrative Services, a Delaware business trust (herein called "FAS").
WHEREAS, the Funds desire to retain FAS as their Administrator to
provide them with Administrative Services (as herein defined), and FAS is
willing to render such services;
WHEREAS, the Funds are registered as open-end management investment
companies under the Investment Company Act of 1940, as amended (the "1940
Act"), with authorized and issued shares of capital stock or beneficial
interest ("Shares"); and
NOW, THEREFORE, in consideration of the premises and mutual covenants
set forth herein, the parties hereto agree as follows:
1. Appointment of Administrator. The Funds hereby appoint FAS as
Administrator of the Funds on the terms and conditions set forth in this
Agreement; and FAS hereby accepts such appointment and agrees to perform the
services and duties set forth in Section 2 of this Agreement in consideration
of the compensation provided for in Section 4 hereof.
2. Services and Duties. As Administrator, and subject to the
supervision and control of the Funds' Boards of Trustees or Directors, as
applicable (the "Boards"), FAS will provide facilities, equipment, and
personnel to carry out the following administrative services for operation of
the business and affairs of the Funds and each of their portfolios:
(a) prepare, file, and maintain the Funds'
governing documents and any amendments thereto, including the
Declaration of Trust or Articles of Incorporation, as
appropriate,(which has already been prepared and filed), the By-
laws and minutes of meetings of their Boards, Committees, and
shareholders;
(b) prepare and file with the Securities
and Exchange Commission and the appropriate state securities
authorities the registration statements for the Funds and the
Funds' shares and all amendments thereto, reports to regulatory
authorities and shareholders, prospectuses, proxy statements,
and such other documents all as may be necessary to enable the
Funds to make continuous offerings of their shares, as
applicable;
(c) prepare, negotiate, and administer
contracts on behalf of the Funds with, among others, each Fund's
investment adviser, distributor, custodian, and transfer agent,
subject to any applicable restrictions of the Boards or the 1940
Act;
(d) supervise the Funds' custodians in the
maintenance of the Funds' general ledgers and in the preparation
of the Funds' financial statements, including oversight of
expense accruals and payments, the determination of the net
asset value of the Funds and the declaration and payment of
dividends and other distributions to shareholders;
(e) calculate performance data of the
Funds for dissemination to information services covering the
investment company industry;
(f) prepare and file the Funds' tax
returns;
(g) examine and review the operations of
the Funds' custodians and transfer agents;
(h) coordinate the layout and printing of
publicly disseminated prospectuses and reports;
(i) perform internal audit examinations in
accordance with a charter to be adopted by FAS and the Funds;
(j) assist with the design, development,
and operation of the Funds;
(k) provide individuals reasonably
acceptable to the Funds' Boards for nomination, appointment, or
election as officers of the Funds, who will be responsible for
the management of certain of the Funds' affairs as determined by
the Funds' Boards; and
(l) consult with the Funds and their
Boards of Trustees or Directors, as appropriate, on matters
concerning the Funds and their affairs.
The foregoing, along with any additional services that FAS shall agree
in writing to perform for the Funds hereunder, shall hereafter be referred to
as "Administrative Services." Administrative Services shall not include any
duties, functions, or services to be performed for any Fund by such Fund's
investment adviser, distributor, custodian, transfer agent, or shareholder
service agent, pursuant to their respective agreements with such Fund.
3. Expenses. FAS shall be responsible for expenses incurred in
providing office space, equipment, and personnel as may be necessary or
convenient to provide the Administrative Services to the Fund, including the
compensation of FAS employees who serve on the Funds' Boards, or as officers
of the Funds. Each Fund shall be responsible for all other expenses incurred
by FAS on behalf of such Fund, including without limitation postage and
courier expenses, printing expenses, travel expenses, registration fees,
filing fees, fees of outside counsel and independent auditors, insurance
premiums, fees payable to members of such Fund's Board who are not FAS
employees, and trade association dues.
4. Compensation. For the Administrative Services provided, each
Fund hereby agrees to pay and FAS hereby agrees to accept as full
compensation for its services rendered hereunder an administrative fee at an
annual rate, payable daily, as specified below, based upon the total assets
of all of the Funds:
Maximum Administrative Average Daily Net Assets
Fee of the Funds
.150% on the first $250 million
.125% on the next $250 million
.100% on the next $250 million
.075% on assets in excess of
$750 million
However, in no event shall the administrative fee received during any
year of this Agreement be less than, or be paid at a rate less than would
aggregate, $125,000, per individual Fund, with an additional $30,000 for each
class of shares added to any such Fund after the date hereof.
5. Standard of Care.
(a) FAS shall not be liable for any error
of judgment or mistake of law or for any loss suffered by any
Fund in connection with the matters to which this Agreement
relates, except a loss resulting from willful misfeasance, bad
faith or gross negligence on its part in the performance of its
duties or from reckless disregard by it of its obligations and
duties under this Agreement. FAS shall be entitled to rely on
and may act upon advice of counsel (who may be counsel for such
Fund) on all matters, and shall be without liability for any
action reasonably taken or omitted pursuant to such advice. Any
person, even though also an officer, trustee, partner, employee
or agent of FAS, who may be or become a member of such Fund's
Board, officer, employee or agent of any Fund, shall be deemed,
when rendering services to such Fund or acting on any business
of such Fund (other than services or business in connection with
the duties of FAS hereunder) to be rendering such services to or
acting solely for such Fund and not as an officer, trustee,
partner, employee or agent or one under the control or direction
of FAS even though paid by FAS.
(b) This Section 5 shall survive
termination of this Agreement.
6. Duration and Termination. The initial term of this Agreement
with respect to each Fund shall commence on the date hereof, and extend for a
period of one year, renewable annually by the approval of the Board of
Directors/Trustees of each Fund.
7. Amendment. No provision of this Agreement may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party against which an enforcement of the change, waiver,
discharge or termination is sought.
8. Limitations of Liability of Trustees or Officers, Employees,
Agents and Shareholders of the Funds. FAS is expressly put on notice of the
limitation of liability as set forth in the Declaration of Trust of each Fund
that is a Massachusetts business trust and agrees that the obligations
assumed by each such Fund pursuant to this Agreement shall be limited in any
case to such Fund and its assets and that FAS shall not seek satisfaction of
any such obligations from the shareholders of such Fund, the Trustees,
Officers, Employees or Agents of such Fund, or any of them.
9. Limitations of Liability of Trustees and Shareholders of FAS.
The execution and delivery of this Agreement have been authorized by the
Trustees of FAS and signed by an authorized officer of FAS, acting as such,
and neither such authorization by such Trustees nor such execution and
delivery by such officer shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, and the
obligations of this Agreement are not binding upon any of the Trustees or
shareholders of FAS, but bind only the trust property of FAS as provided in
the Declaration of Trust of FAS.
10. Notices. Notices of any kind to be given hereunder shall be
in writing (including facsimile communication) and shall be duly given if
delivered to any Fund at the following address: Federated Investors Tower,
Pittsburgh, PA 15222-3779, Attention: President and if delivered to FAS at
Federated Investors Tower, Pittsburgh, PA 15222-3779, Attention: President.
11. Miscellaneous. This Agreement constitutes the entire agreement
between the parties hereto and supersedes any prior agreement with respect to
the subject hereof whether oral or written. The captions in this Agreement
are included for convenience of reference only and in no way define or
delimit any of the provisions hereof or otherwise affect their construction
or effect. If any provision of this Agreement shall be held or made invalid
by a court or regulatory agency decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby. Subject to the
provisions of Section 5, hereof, this Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors and shall be governed by Pennsylvania law; provided, however, that
nothing herein shall be construed in a manner inconsistent with the
Investment Company Act of 1940 or any rule or regulation promulgated by the
Securities and Exchange Commission thereunder.
12. Counterparts. This Agreement may be executed by different
parties on separate counterparts, each of which, when so executed and
delivered, shall be an original, and all such counterparts shall together
constitute one and the same instrument.
13. Assignment; Successors. This Agreement shall not be assigned by
any party without the prior written consent of FAS, in the case of assignment
by any Fund, or of the Funds, in the case of assignment by FAS, except that
any party may assign to a successor all of or a substantial portion of its
business to a party controlling, controlled by, or under common control with
such party. Nothing in this Section 14 shall prevent FAS from delegating its
responsibilities to another entity to the extent provided herein.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
Investment Companies (listed
on Exhibit 1)
By: /s/ John F. Donahue
John F. Donahue
Chairman
Attest: /s/ John W. McGonigle
John W. McGonigle
Federated Administrative Services
By: /s/ Edward C. Gonzales
Edward C. Gonzales
Chairman
Attest: /s/ John W. McGonigle
John W. McGonigle
Exhibit 9 (v) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
AGREEMENT
for
FUND ACCOUNTING,
SHAREHOLDER RECORDKEEPING,
and
CUSTODY SERVICES PROCUREMENT
AGREEMENT made as of the 1st day of December, 1994, by and between those
investment companies listed on Exhibit 1 as may be amended from time to
time, having their principal office and place of business at Federated
Investors Tower, Pittsburgh, PA 15222-3779 (the "Trust"), on behalf of the
portfolios (individually referred to herein as a "Fund" and collectively as
"Funds") of the Trust, and FEDERATED SERVICES COMPANY, a Delaware business
trust, having its principal office and place of business at Federated
Investors Tower, Pittsburgh, Pennsylvania 15222-3779 (the "Company").
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended
(the "1940 Act"), with authorized and issued shares of capital stock or
beneficial interest ("Shares"); and
WHEREAS, the Trust may desire to retain the Company to provide certain
pricing, accounting and recordkeeping services for each of the Funds,
including any classes of shares issued by any Fund ("Classes") if so
indicated on Exhibit 1, and the Company is willing to furnish such services;
and
WHEREAS, the Trust may desire to appoint the Company as its transfer
agent, dividend disbursing agent if so indicated on Exhibit 1, and agent in
connection with certain other activities, and the Company desires to accept
such appointment; and
WHEREAS, the Trust may desire to appoint the Company as its agent to
select, negotiate and subcontract for custodian services from an approved
list of qualified banks if so indicated on Exhibit 1, and the Company
desires to accept such appointment; and
WHEREAS, from time to time the Trust may desire and may instruct the
Company to subcontract for the performance of certain of its duties and
responsibilities hereunder to State Street Bank and Trust Company or another
agent (the "Agent"); and
WHEREAS, the words Trust and Fund may be used interchangeably for those
investment companies consisting of only one portfolio;
NOW THEREFORE, in consideration of the premises and mutual covenants
herein contained, and intending to be legally bound hereby, the parties
hereto agree as follows:
SECTION ONE: Fund Accounting.
Article 1. Appointment.
The Trust hereby appoints the Company to provide certain pricing and
accounting services to the Funds, and/or the Classes, for the period and on
the terms set forth in this Agreement. The Company accepts such appointment
and agrees to furnish the services herein set forth in return for the
compensation as provided in Article 3 of this Section.
Article 2. The Company's Duties.
Subject to the supervision and control of the Trust's Board of Trustees
or Directors ("Board"), the Company will assist the Trust with regard to
fund accounting for the Trust, and/or the Funds, and/or the Classes, and in
connection therewith undertakes to perform the following specific services;
A. Value the assets of the Funds using: primarily, market quotations,
including the use of matrix pricing, supplied by the independent
pricing services selected by the Company in consultation with the
adviser, or sources selected by the adviser, and reviewed by the
board; secondarily, if a designated pricing service does not provide
a price for a security which the Company believes should be
available by market quotation, the Company may obtain a price by
calling brokers designated by the investment adviser of the fund
holding the security, or if the adviser does not supply the names of
such brokers, the Company will attempt on its own to find brokers to
price those securities; thirdly, for securities for which no market
price is available, the Pricing Committee of the Board will
determine a fair value in good faith. Consistent with Rule 2a-4 of
the 40 Act, estimates may be used where necessary or appropriate.
The Company's obligations with regard to the prices received from
outside pricing services and designated brokers or other outside
sources, is to exercise reasonable care in the supervision of the
pricing agent. The Company is not the guarantor of the securities
prices received from such agents and the Company is not liable to
the Fund for potential errors in valuing a Fund's assets or
calculating the net asset value per share of such Fund or Class when
the calculations are based upon such prices. All of the above
sources of prices used as described are deemed by the Company to be
authorized sources of security prices. The Company provides daily
to the adviser the securities prices used in calculating the net
asset value of the fund, for its use in preparing exception reports
for those prices on which the adviser has comment. Further, upon
receipt of the exception reports generated by the adviser, the
Company diligently pursues communication regarding exception reports
with the designated pricing agents.
B. Determine the net asset value per share of each Fund and/or Class, at
the time and in the manner from time to time determined by the Board
and as set forth in the Prospectus and Statement of Additional
Information ("Prospectus") of each Fund;
C. Calculate the net income of each of the Funds, if any;
D. Calculate capital gains or losses of each of the Funds resulting from
sale or disposition of assets, if any;
E. Maintain the general ledger and other accounts, books and financial
records of the Trust, including for each Fund, and/or Class, as
required under Section 31(a) of the 1940 Act and the Rules
thereunder in connection with the services provided by the Company;
F. Preserve for the periods prescribed by Rule 31a-2 under the 1940 Act
the records to be maintained by Rule 31a-1 under the 1940 Act in
connection with the services provided by the Company. The Company
further agrees that all such records it maintains for the Trust are
the property of the Trust and further agrees to surrender promptly
to the Trust such records upon the Trust's request;
G. At the request of the Trust, prepare various reports or other
financial documents required by federal, state and other applicable
laws and regulations; and
H. Such other similar services as may be reasonably requested by the
Trust.
Article 3. Compensation and Allocation of Expenses.
A. The Funds will compensate the Company for its services rendered
pursuant to Section One of this Agreement in accordance with the
fees agreed upon from time to time between the parties hereto. Such
fees do not include out-of-pocket disbursements of the Company for
which the Funds shall reimburse the Company upon receipt of a
separate invoice. Out-of-pocket disbursements shall include, but
shall not be limited to, the items agreed upon between the parties
from time to time.
B. The Fund and/or the Class, and not the Company, shall bear the cost
of: custodial expenses; membership dues in the Investment Company
Institute or any similar organization; transfer agency expenses;
investment advisory expenses; costs of printing and mailing stock
certificates, Prospectuses, reports and notices; administrative
expenses; interest on borrowed money; brokerage commissions; taxes
and fees payable to federal, state and other governmental agencies;
fees of Trustees or Directors of the Trust; independent auditors
expenses; Federated Administrative Services and/or Federated
Administrative Services, Inc. legal and audit department expenses
billed to Federated Services Company for work performed related to
the Trust, the Funds, or the Classes; law firm expenses; or other
expenses not specified in this Article 3 which may be properly
payable by the Funds and/or classes.
C. The compensation and out-of-pocket expenses shall be accrued by the
Fund and shall be paid to the Company no less frequently than
monthly, and shall be paid daily upon request of the Company. The
Company will maintain detailed information about the compensation
and out-of-pocket expenses by Fund and Class.
D. Any schedule of compensation agreed to hereunder, as may be adjusted
from time to time, shall be dated and signed by a duly authorized
officer of the Trust and/or the Funds and a duly authorized officer
of the Company.
E. The fee for the period from the effective date of this Agreement with
respect to a Fund or a Class to the end of the initial month shall
be prorated according to the proportion that such period bears to
the full month period. Upon any termination of this Agreement
before the end of any month, the fee for such period shall be
prorated according to the proportion which such period bears to the
full month period. For purposes of determining fees payable to the
Company, the value of the Fund's net assets shall be computed at the
time and in the manner specified in the Fund's Prospectus.
F. The Company, in its sole discretion, may from time to time
subcontract to, employ or associate with itself such person or
persons as the Company may believe to be particularly suited to
assist it in performing services under this Section One. Such
person or persons may be third-party service providers, or they may
be officers and employees who are employed by both the Company and
the Funds. The compensation of such person or persons shall be paid
by the Company and no obligation shall be incurred on behalf of the
Trust, the Funds, or the Classes in such respect.
SECTION TWO: Shareholder Recordkeeping.
Article 4. Terms of Appointment.
Subject to the terms and conditions set forth in this Agreement, the
Trust hereby appoints the Company to act as, and the Company agrees to act
as, transfer agent and dividend disbursing agent for each Fund's Shares, and
agent in connection with any accumulation, open-account or similar plans
provided to the shareholders of any Fund ("Shareholder(s)"), including
without limitation any periodic investment plan or periodic withdrawal
program.
As used throughout this Agreement, a "Proper Instruction" means a writing
signed or initialed by one or more person or persons as the Board shall have
from time to time authorized. Each such writing shall set forth the
specific transaction or type of transaction involved. Oral instructions
will be deemed to be Proper Instructions if (a) the Company reasonably
believes them to have been given by a person previously authorized in Proper
Instructions to give such instructions with respect to the transaction
involved, and (b) the Trust, or the Fund, and the Company promptly cause
such oral instructions to be confirmed in writing. Proper Instructions may
include communications effected directly between electro-mechanical or
electronic devices provided that the Trust, or the Fund, and the Company are
satisfied that such procedures afford adequate safeguards for the Fund's
assets. Proper Instructions may only be amended in writing.
Article 5. Duties of the Company.
The Company shall perform the following services in accordance with
Proper Instructions as may be provided from time to time by the Trust as to
any Fund:
A. Purchases
(1) The Company shall receive orders and payment for the purchase
of shares and promptly deliver payment and appropriate
documentation therefore to the custodian of the relevant Fund,
(the "Custodian"). The Company shall notify the Fund and the
Custodian on a daily basis of the total amount of orders and
payments so delivered.
(2) Pursuant to purchase orders and in accordance with the Fund's
current Prospectus, the Company shall compute and issue the
appropriate number of Shares of each Fund and/or Class and
hold such Shares in the appropriate Shareholder accounts.
(3) For certificated Funds and/or Classes, if a Shareholder or its
agent requests a certificate, the Company, as Transfer Agent,
shall countersign and mail by first class mail, a certificate
to the Shareholder at its address as set forth on the transfer
books of the Funds, and/or Classes, subject to any Proper
Instructions regarding the delivery of certificates.
(4) In the event that any check or other order for the purchase of
Shares of the Fund and/or Class is returned unpaid for any
reason, the Company shall debit the Share account of the
Shareholder by the number of Shares that had been credited to
its account upon receipt of the check or other order, promptly
mail a debit advice to the Shareholder, and notify the Fund
and/or Class of its action. In the event that the amount paid
for such Shares exceeds proceeds of the redemption of such
Shares plus the amount of any dividends paid with respect to
such Shares, the Fund and/the Class or its distributor will
reimburse the Company on the amount of such excess.
B. Distribution
(1) Upon notification by the Funds of the declaration of any
distribution to Shareholders, the Company shall act as
Dividend Disbursing Agent for the Funds in accordance with the
provisions of its governing document and the then-current
Prospectus of the Fund. The Company shall prepare and mail or
credit income, capital gain, or any other payments to
Shareholders. As the Dividend Disbursing Agent, the Company
shall, on or before the payment date of any such distribution,
notify the Custodian of the estimated amount required to pay
any portion of said distribution which is payable in cash and
request the Custodian to make available sufficient funds for
the cash amount to be paid out. The Company shall reconcile
the amounts so requested and the amounts actually received
with the Custodian on a daily basis. If a Shareholder is
entitled to receive additional Shares by virtue of any such
distribution or dividend, appropriate credits shall be made to
the Shareholder's account, for certificated Funds and/or
Classes, delivered where requested; and
(2) The Company shall maintain records of account for each Fund and
Class and advise the Trust, each Fund and Class and its
Shareholders as to the foregoing.
C. Redemptions and Transfers
(1) The Company shall receive redemption requests and redemption
directions and, if such redemption requests comply with the
procedures as may be described in the Fund Prospectus or set
forth in Proper Instructions, deliver the appropriate
instructions therefor to the Custodian. The Company shall
notify the Funds on a daily basis of the total amount of
redemption requests processed and monies paid to the Company
by the Custodian for redemptions.
(2) At the appropriate time upon receiving redemption proceeds from
the Custodian with respect to any redemption, the Company
shall pay or cause to be paid the redemption proceeds in the
manner instructed by the redeeming Shareholders, pursuant to
procedures described in the then-current Prospectus of the
Fund.
(3) If any certificate returned for redemption or other request for
redemption does not comply with the procedures for redemption
approved by the Fund, the Company shall promptly notify the
Shareholder of such fact, together with the reason therefor,
and shall effect such redemption at the price applicable to
the date and time of receipt of documents complying with said
procedures.
(4) The Company shall effect transfers of Shares by the registered
owners thereof.
(5) The Company shall identify and process abandoned accounts and
uncashed checks for state escheat requirements on an annual
basis and report such actions to the Fund.
D. Recordkeeping
(1) The Company shall record the issuance of Shares of each Fund,
and/or Class, and maintain pursuant to applicable rules of the
Securities and Exchange Commission ("SEC") a record of the
total number of Shares of the Fund and/or Class which are
authorized, based upon data provided to it by the Fund, and
issued and outstanding. The Company shall also provide the
Fund on a regular basis or upon reasonable request with the
total number of Shares which are authorized and issued and
outstanding, but shall have no obligation when recording the
issuance of Shares, except as otherwise set forth herein, to
monitor the issuance of such Shares or to take cognizance of
any laws relating to the issue or sale of such Shares, which
functions shall be the sole responsibility of the Funds.
(2) The Company shall establish and maintain records pursuant to
applicable rules of the SEC relating to the services to be
performed hereunder in the form and manner as agreed to by the
Trust or the Fund to include a record for each Shareholder's
account of the following:
(a) Name, address and tax identification number (and whether
such number has been certified);
(b) Number of Shares held;
(c) Historical information regarding the account, including
dividends paid and date and price for all transactions;
(d) Any stop or restraining order placed against the account;
(e) Information with respect to withholding in the case of a
foreign account or an account for which withholding is
required by the Internal Revenue Code;
(f) Any dividend reinvestment order, plan application,
dividend address and correspondence relating to the
current maintenance of the account;
(g) Certificate numbers and denominations for any Shareholder
holding certificates;
(h) Any information required in order for the Company to
perform the calculations contemplated or required by
this Agreement.
(3) The Company shall preserve any such records required to be
maintained pursuant to the rules of the SEC for the periods
prescribed in said rules as specifically noted below. Such
record retention shall be at the expense of the Company, and
such records may be inspected by the Fund at reasonable times.
The Company may, at its option at any time, and shall
forthwith upon the Fund's demand, turn over to the Fund and
cease to retain in the Company's files, records and documents
created and maintained by the Company pursuant to this
Agreement, which are no longer needed by the Company in
performance of its services or for its protection. If not so
turned over to the Fund, such records and documents will be
retained by the Company for six years from the year of
creation, during the first two of which such documents will be
in readily accessible form. At the end of the six year
period, such records and documents will either be turned over
to the Fund or destroyed in accordance with Proper
Instructions.
E. Confirmations/Reports
(1) The Company shall furnish to the Fund periodically the
following information:
(a) A copy of the transaction register;
(b) Dividend and reinvestment blotters;
(c) The total number of Shares issued and outstanding in each
state for "blue sky" purposes as determined according to
Proper Instructions delivered from time to time by the
Fund to the Company;
(d) Shareholder lists and statistical information;
(e) Payments to third parties relating to distribution
agreements, allocations of sales loads, redemption fees,
or other transaction- or sales-related payments;
(f) Such other information as may be agreed upon from time to
time.
(2) The Company shall prepare in the appropriate form, file with
the Internal Revenue Service and appropriate state agencies,
and, if required, mail to Shareholders, such notices for
reporting dividends and distributions paid as are required to
be so filed and mailed and shall withhold such sums as are
required to be withheld under applicable federal and state
income tax laws, rules and regulations.
(3) In addition to and not in lieu of the services set forth above,
the Company shall:
(a) Perform all of the customary services of a transfer
agent, dividend disbursing agent and, as relevant, agent
in connection with accumulation, open-account or similar
plans (including without limitation any periodic
investment plan or periodic withdrawal program),
including but not limited to: maintaining all
Shareholder accounts, mailing Shareholder reports and
Prospectuses to current Shareholders, withholding taxes
on accounts subject to back-up or other withholding
(including non-resident alien accounts), preparing and
filing reports on U.S. Treasury Department Form 1099 and
other appropriate forms required with respect to
dividends and distributions by federal authorities for
all Shareholders, preparing and mailing confirmation
forms and statements of account to Shareholders for all
purchases and redemptions of Shares and other
conformable transactions in Shareholder accounts,
preparing and mailing activity statements for
Shareholders, and providing Shareholder account
information; and
(b) provide a system which will enable the Fund to monitor
the total number of Shares of each Fund and/or Class
sold in each state ("blue sky reporting"). The Fund
shall by Proper Instructions (i) identify to the Company
those transactions and assets to be treated as exempt
from the blue sky reporting for each state and
(ii) verify the classification of transactions for each
state on the system prior to activation and thereafter
monitor the daily activity for each state. The
responsibility of the Company for each Fund's and/or
Class's state blue sky registration status is limited
solely to the recording of the initial classification of
transactions or accounts with regard to blue sky
compliance and the reporting of such transactions and
accounts to the Fund as provided above.
F. Other Duties
(1) The Company shall answer correspondence from Shareholders
relating to their Share accounts and such other correspondence
as may from time to time be addressed to the Company;
(2) The Company shall prepare Shareholder meeting lists, mail proxy
cards and other material supplied to it by the Fund in
connection with Shareholder Meetings of each Fund; receive,
examine and tabulate returned proxies, and certify the vote of
the Shareholders;
(3) The Company shall establish and maintain facilities and
procedures for safekeeping of stock certificates, check forms
and facsimile signature imprinting devices, if any; and for
the preparation or use, and for keeping account of, such
certificates, forms and devices.
Article 6. Duties of the Trust.
A. Compliance
The Trust or Fund assume full responsibility for the preparation,
contents and distribution of their own and/or their classes'
Prospectus and for complying with all applicable requirements of the
Securities Act of 1933, as amended (the "1933 Act"), the 1940 Act
and any laws, rules and regulations of government authorities having
jurisdiction.
B. Share Certificates
The Trust shall supply the Company with a sufficient supply of blank
Share certificates and from time to time shall renew such supply
upon request of the Company. Such blank Share certificates shall be
properly signed, manually or by facsimile, if authorized by the
Trust and shall bear the seal of the Trust or facsimile thereof; and
notwithstanding the death, resignation or removal of any officer of
the Trust authorized to sign certificates, the Company may continue
to countersign certificates which bear the manual or facsimile
signature of such officer until otherwise directed by the Trust.
C. Distributions
The Fund shall promptly inform the Company of the declaration of any
dividend or distribution on account of any Fund's shares.
Article 7. Compensation and Expenses.
A. Annual Fee
For performance by the Company pursuant to Section Two of this
Agreement, the Trust and/or the Fund agree to pay the Company an
annual maintenance fee for each Shareholder account as agreed upon
between the parties and as may be added to or amended from time to
time. Such fees may be changed from time to time subject to written
agreement between the Trust and the Company. Pursuant to
information in the Fund Prospectus or other information or
instructions from the Fund, the Company may sub-divide any Fund into
Classes or other sub-components for recordkeeping purposes. The
Company will charge the Fund the same fees for each such Class or
sub-component the same as if each were a Fund.
B. Reimbursements
In addition to the fee paid under Article 7A above, the Trust and/or
Fund agree to reimburse the Company for out-of-pocket expenses or
advances incurred by the Company for the items agreed upon between
the parties, as may be added to or amended from time to time. In
addition, any other expenses incurred by the Company at the request
or with the consent of the Trust and/or the Fund, will be reimbursed
by the appropriate Fund.
C. Payment
The compensation and out-of-pocket expenses shall be accrued by the
Fund and shall be paid to the Company no less frequently than
monthly, and shall be paid daily upon request of the Company. The
Company will maintain detailed information about the compensation
and out-of-pocket expenses by Fund and Class.
D. Any schedule of compensation agreed to hereunder, as may be adjusted
from time to time, shall be dated and signed by a duly authorized
officer of the Trust and/or the Funds and a duly authorized officer
of the Company.
Article 8. Assignment of Shareholder Recordkeeping.
Except as provided below, no right or obligation under this Section Two
may be assigned by either party without the written consent of the other
party.
A. This Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns.
B. The Company may without further consent on the part of the Trust
subcontract for the performance hereof with (A) State Street Bank
and its subsidiary, Boston Financial Data Services, Inc., a
Massachusetts Trust ("BFDS"), which is duly registered as a transfer
agent pursuant to Section 17A(c)(1) of the Securities Exchange Act
of 1934, as amended, or any succeeding statute ("Section
17A(c)(1)"), or (B) a BFDS subsidiary duly registered as a transfer
agent pursuant to Section 17A(c)(1), or (C) a BFDS affiliate, or (D)
such other provider of services duly registered as a transfer agent
under Section 17A(c)(1) as Company shall select; provided, however,
that the Company shall be as fully responsible to the Trust for the
acts and omissions of any subcontractor as it is for its own acts
and omissions; or
C. The Company shall upon instruction from the Trust subcontract for the
performance hereof with an Agent selected by the Trust, other than
BFDS or a provider of services selected by Company, as described in
(2) above; provided, however, that the Company shall in no way be
responsible to the Trust for the acts and omissions of the Agent.
SECTION THREE: Custody Services Procurement
Article 9. Appointment.
The Trust hereby appoints Company as its agent to evaluate and obtain
custody services from a financial institution that (i) meets the criteria
established in Section 17(f) of the 1940 Act and (ii) has been approved by
the Board as eligible for selection by the Company as a custodian (the
"Eligible Custodian"). The Company accepts such appointment.
Article 10. The Company and Its Duties.
Subject to the review, supervision and control of the Board, the Company
shall:
A. evaluate the nature and the quality of the custodial services
provided by the Eligible Custodian;
B. employ the Eligible Custodian to serve on behalf of the Trust as
Custodian of the Trust's assets substantially on the terms set forth
as the form of agreement in Exhibit 2;
C. negotiate and enter into agreements with the Custodians for the
benefit of the Trust, with the Trust as a party to each such
agreement. The Company shall not be a party to any agreement with
any such Custodian;
D. establish procedures to monitor the nature and the quality of the
services provided by the Custodians;
E. continuously monitor the nature and the quality of services provided
by the Custodians; and
F. periodically provide to the Trust (i) written reports on the
activities and services of the Custodians; (ii) the nature and
amount of disbursement made on account of the Trust with respect to
each custodial agreement; and (iii) such other information as the
Board shall reasonably request to enable it to fulfill its duties
and obligations under Sections 17(f) and 36(b) of the 1940 Act and
other duties and obligations thereof.
Article 11. Fees and Expenses.
A. Annual Fee
For the performance by the Company pursuant to Section Three of this
Agreement, the Trust and/or the Fund agree to pay the Company an
annual fee as agreed upon between the parties.
B. Reimbursements
In addition to the fee paid under Section 11A above, the Trust
and/or Fund agree to reimburse the Company for out-of-pocket
expenses or advances incurred by the Company for the items agreed
upon between the parties, as may be added to or amended from time to
time. In addition, any other expenses incurred by the Company at
the request or with the consent of the Trust and/or the Fund, will
be reimbursed by the appropriate Fund.
C. Payment
The compensation and out-of-pocket expenses shall be accrued by the
Fund and shall be paid to the Company no less frequently than
monthly, and shall be paid daily upon request of the Company. The
Company will maintain detailed information about the compensation
and out-of-pocket expenses by Fund.
D. Any schedule of compensation agreed to hereunder, as may be adjusted
from time to time, shall be dated and signed by a duly authorized
officer of the Trust and/or the Funds and a duly authorized officer
of the Company.
Article 12. Representations.
The Company represents and warrants that it has obtained all required
approvals from all government or regulatory authorities necessary to enter
into this arrangement and to provide the services contemplated in Section
Three of this Agreement.
SECTION FOUR: General Provisions.
Article 13. Documents.
A. In connection with the appointment of the Company under this
Agreement, the Trust shall file with the Company the following
documents:
(1) A copy of the Charter and By-Laws of the Trust and all
amendments thereto;
(2) A copy of the resolution of the Board of the Trust authorizing
this Agreement;
(3) Specimens of all forms of outstanding Share certificates of the
Trust or the Funds in the forms approved by the Board of the
Trust with a certificate of the Secretary of the Trust as to
such approval;
(4) All account application forms and other documents relating to
Shareholders accounts; and
(5) A copy of the current Prospectus for each Fund.
B. The Fund will also furnish from time to time the following documents:
(1) Each resolution of the Board of the Trust authorizing the
original issuance of each Fund's, and/or Class's Shares;
(2) Each Registration Statement filed with the SEC and amendments
thereof and orders relating thereto in effect with respect to
the sale of Shares of any Fund, and/or Class;
(3) A certified copy of each amendment to the governing document
and the By-Laws of the Trust;
(4) Certified copies of each vote of the Board authorizing officers
to give Proper Instructions to the Custodian and agents for
fund accountant, custody services procurement, and shareholder
recordkeeping or transfer agency services;
(5) Specimens of all new Share certificates representing Shares of
any Fund, accompanied by Board resolutions approving such
forms;
(6) Such other certificates, documents or opinions which the
Company may, in its discretion, deem necessary or appropriate
in the proper performance of its duties; and
(7) Revisions to the Prospectus of each Fund.
Article 14. Representations and Warranties.
A. Representations and Warranties of the Company
The Company represents and warrants to the Trust that:
(1) It is a business trust duly organized and existing and in good
standing under the laws of the State of Delaware.
(2) It is duly qualified to carry on its business in the State of
Delaware.
(3) It is empowered under applicable laws and by its charter and by-
laws to enter into and perform this Agreement.
(4) All requisite corporate proceedings have been taken to
authorize it to enter into and perform its obligations under
this Agreement.
(5) It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and
obligations under this Agreement.
(6) It is in compliance with federal securities law requirements
and in good standing as a transfer agent.
B. Representations and Warranties of the Trust
The Trust represents and warrants to the Company that:
(1) It is an investment company duly organized and existing and in
good standing under the laws of its state of organization;
(2) It is empowered under applicable laws and by its Charter and By-
Laws to enter into and perform its obligations under this
Agreement;
(3) All corporate proceedings required by said Charter and By-Laws
have been taken to authorize it to enter into and perform its
obligations under this Agreement;
(4) The Trust is an open-end investment company registered under
the 1940 Act; and
(5) A registration statement under the 1933 Act will be effective,
and appropriate state securities law filings have been made
and will continue to be made, with respect to all Shares of
each Fund being offered for sale.
Article 15. Standard of Care and Indemnification.
A. Standard of Care
The Company shall be held to a standard of reasonable care in carrying
out the provisions of this Contract. The Company shall be entitled to
rely on and may act upon advice of counsel (who may be counsel for the
Trust) on all matters, and shall be without liability for any action
reasonably taken or omitted pursuant to such advice, provided that
such action is not in violation of applicable federal or state laws or
regulations, and is in good faith and without negligence.
B. Indemnification by Trust
The Company shall not be responsible for and the Trust or Fund shall
indemnify and hold the Company, including its officers, directors,
shareholders and their agents employees and affiliates, harmless
against any and all losses, damages, costs, charges, counsel fees,
payments, expenses and liabilities arising out of or attributable
to:
(1) The acts or omissions of any Custodian, Adviser, Sub-adviser or
other party contracted by or approved by the Trust or Fund,
(2) The reliance on or use by the Company or its agents or
subcontractors of information, records and documents in proper
form which
(a) are received by the Company or its agents or
subcontractors and furnished to it by or on behalf of
the Fund, its Shareholders or investors regarding the
purchase, redemption or transfer of Shares and
Shareholder account information;
(b) are received by the Company from independent pricing
services or sources for use in valuing the assets of the
Funds; or
(c) are received by the Company or its agents or
subcontractors from Advisers, Sub-advisers or other
third parties contracted by or approved by the Trust of
Fund for use in the performance of services under this
Agreement;
(d) have been prepared and/or maintained by the Fund or its
affiliates or any other person or firm on behalf of the
Trust.
(3) The reliance on, or the carrying out by the Company or its
agents or subcontractors of Proper Instructions of the Trust
or the Fund.
(4) The offer or sale of Shares in violation of any requirement
under the federal securities laws or regulations or the
securities laws or regulations of any state that such Shares
be registered in such state or in violation of any stop order
or other determination or ruling by any federal agency or any
state with respect to the offer or sale of such Shares in such
state.
Provided, however, that the Company shall not be protected by
this Article 15.A. from liability for any act or omission
resulting from the Company's willful misfeasance, bad faith,
negligence or reckless disregard of its duties of failure to
meet the standard of care set forth in 15.A. above.
C. Reliance
At any time the Company may apply to any officer of the Trust or
Fund for instructions, and may consult with legal counsel with
respect to any matter arising in connection with the services to be
performed by the Company under this Agreement, and the Company and
its agents or subcontractors shall not be liable and shall be
indemnified by the Trust or the appropriate Fund for any action
reasonably taken or omitted by it in reliance upon such instructions
or upon the opinion of such counsel provided such action is not in
violation of applicable federal or state laws or regulations. The
Company, its agents and subcontractors shall be protected and
indemnified in recognizing stock certificates which are reasonably
believed to bear the proper manual or facsimile signatures of the
officers of the Trust or the Fund, and the proper countersignature
of any former transfer agent or registrar, or of a co-transfer agent
or co-registrar.
D. Notification
In order that the indemnification provisions contained in this
Article 15 shall apply, upon the assertion of a claim for which
either party may be required to indemnify the other, the party
seeking indemnification shall promptly notify the other party of
such assertion, and shall keep the other party advised with respect
to all developments concerning such claim. The party who may be
required to indemnify shall have the option to participate with the
party seeking indemnification in the defense of such claim. The
party seeking indemnification shall in no case confess any claim or
make any compromise in any case in which the other party may be
required to indemnify it except with the other party's prior written
consent.
Article 16. Termination of Agreement.
This Agreement may be terminated by either party upon one hundred twenty
(120) days written notice to the other. Should the Trust exercise its
rights to terminate, all out-of-pocket expenses associated with the movement
of records and materials will be borne by the Trust or the appropriate Fund.
Additionally, the Company reserves the right to charge for any other
reasonable expenses associated with such termination. The provisions of
Article 15 shall survive the termination of this Agreement.
Article 17. Amendment.
This Agreement may be amended or modified by a written agreement executed
by both parties.
Article 18. Interpretive and Additional Provisions.
In connection with the operation of this Agreement, the Company and the
Trust may from time to time agree on such provisions interpretive of or in
addition to the provisions of this Agreement as may in their joint opinion
be consistent with the general tenor of this Agreement. Any such
interpretive or additional provisions shall be in a writing signed by both
parties and shall be annexed hereto, provided that no such interpretive or
additional provisions shall contravene any applicable federal or state
regulations or any provision of the Charter. No interpretive or additional
provisions made as provided in the preceding sentence shall be deemed to be
an amendment of this Agreement.
Article 19. Governing Law.
This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of the Commonwealth of Massachusetts
Article 20. Notices.
Except as otherwise specifically provided herein, Notices and other
writings delivered or mailed postage prepaid to the Trust at Federated
Investors Tower, Pittsburgh, Pennsylvania, 15222-3779, or to the Company at
Federated Investors Tower, Pittsburgh, Pennsylvania, 15222-3779, or to such
other address as the Trust or the Company may hereafter specify, shall be
deemed to have been properly delivered or given hereunder to the respective
address.
Article 21. Counterparts.
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original.
Article 22. Limitations of Liability of Trustees and Shareholders of
the Trust.
The execution and delivery of this Agreement have been authorized by the
Trustees of the Trust and signed by an authorized officer of the Trust,
acting as such, and neither such authorization by such Trustees nor such
execution and delivery by such officer shall be deemed to have been made by
any of them individually or to impose any liability on any of them
personally, and the obligations of this Agreement are not binding upon any
of the Trustees or Shareholders of the Trust, but bind only the appropriate
property of the Fund, or Class, as provided in the Declaration of Trust.
Article 23. Limitations of Liability of Trustees and Shareholders of
the Company.
The execution and delivery of this Agreement have been authorized by the
Trustees of the Company and signed by an authorized officer of the Company,
acting as such, and neither such authorization by such Trustees nor such
execution and delivery by such officer shall be deemed to have been made by
any of them individually or to impose any liability on any of them
personally, and the obligations of this Agreement are not binding upon any
of the Trustees or Shareholders of the Company, but bind only the property
of the Company as provided in the Declaration of Trust.
Article 24. Assignment.
This Agreement and the rights and duties hereunder shall not be
assignable with respect to the Trust or the Funds by either of the parties
hereto except by the specific written consent of the other party.
Article 25. Merger of Agreement.
This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject hereof
whether oral or written.
Article 26. Successor Agent.
If a successor agent for the Trust shall be appointed by the Trust, the
Company shall upon termination of this Agreement deliver to such successor
agent at the office of the Company all properties of the Trust held by it
hereunder. If no such successor agent shall be appointed, the Company shall
at its office upon receipt of Proper Instructions deliver such properties in
accordance with such instructions.
In the event that no written order designating a successor agent or
Proper Instructions shall have been delivered to the Company on or before
the date when such termination shall become effective, then the Company
shall have the right to deliver to a bank or trust company, which is a
"bank" as defined in the 1940 Act, of its own selection, having an aggregate
capital, surplus, and undivided profits, as shown by its last published
report, of not less than $2,000,000, all properties held by the Company
under this Agreement. Thereafter, such bank or trust company shall be the
successor of the Company under this Agreement.
Article 27. Force Majeure.
The Company shall have no liability for cessation of services hereunder
or any damages resulting therefrom to the Fund as a result of work stoppage,
power or other mechanical failure, natural disaster, governmental action,
communication disruption or other impossibility of performance.
Article 28. Assignment; Successors.
This Agreement shall not be assigned by either party without the prior
written consent of the other party, except that either party may assign to a
successor all of or a substantial portion of its business, or to a party
controlling, controlled by, or under common control with such party.
Nothing in this Article 28 shall prevent the Company from delegating its
responsibilities to another entity to the extent provided herein.
Article 29. Severability.
In the event any provision of this Agreement is held illegal, void or
unenforceable, the balance shall remain in effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf under their seals by and through
their duly authorized officers, as of the day and year first above written.
ATTEST: INVESTMENT COMPANIES (listed on Exhibit 1)
/s/ John W. McGonigle_______ By:__/s/ John F. Donahue___
John W. McGonigle John F. Donahue
Secretary Chairman
ATTEST: FEDERATED SERVICES COMPANY
/s/ Jeannette Fisher-Garber By:_/s/ James J. Dolan_____
Jeannette Fisher-Garber James J. Dolan
Secretary President
HOUSTON, HOUSTON & DONNELLY
ATTORNEYS AT LAW
UNION TRUST BUILDING
WILLIAM McC. HOUSTON PITTSBURGH, PA. 15219
FRED CHALMERS HOUSTON, JR. __________
THOMAS J. DONNELLY
JOHN F. MECK (412) 471-5828 FRED CHALMERS HOUSTON
(1914 - 1971)
March 16, 1982
The Trustees of
Federated Government Trust
421 Seventh Avenue
Pittsburgh, PA 15219
Gentlemen:
Federated Government Trust ("Trust") proposes to offer and sell Shares
of Beneficial Interest ("Shares") in the manner and on the terms set forth in
its Registration Statement filed with the Securities and Exchange Commission
under the Securities Act of 1933, as amended.
As counsel we have participated in the organization of the Trust, its
registration under the Investment Company Act of 1940 and the preparation and
filing of its Registration Statement under the Securities Act of 1933. We
have examined and are familiar with the provisions of the written Declaration
of Trust dated December 10, 1981, as amended, ("Declaration of Trust"), the
Bylaws of the Trust and such other documents and records deemed relevant. We
have also reviewed questions of law and consulted with counsel thereon as
deemed necessary or appropriate by us for the purposes of this opinion.
Based upon the foregoing, it is our opinion that:
1. The Trust is duly organized and validly existing pursuant to the
Declaration of Trust.
2. The Shares which are currently being registered by the amended
Registration Statement referred to above may be legally and validly issued
from time to time in accordance with the Declaration of Trust upon receipt of
consideration sufficient to comply with the provisions of Article III, Section
3, of the Declaration of Trust and subject to compliance with the Securities
Act of 1933, as amended, the Investment Company Act of 1940, as amended, and
applicable state laws regulating the sale of securities. Such Shares, when so
issued, will be fully paid and non-assessable.
We consent to your filing this opinion as an exhibit to the amended
Registration Statement referred to above and to any application or
registration statement filed under the securities laws of any of the States of
the United States. We further consent to the reference to our firm under the
caption "Legal Counsel and Accountants" in the prospectus filed as a part of
such amended Registration Statement, applications and registration statements.
Very truly yours,
HOUSTON, HOUSTON & DONNELLY
By /s/ Thomas J. Donnelly
TJD/heh
Exhibit 16 under Form N-1A
DECLARED:DAILY Schedule for Computation FUND: FEDERATED GNMA TRUST
PAID: MONTHLY of Fund Performance Data Perfomance ONE YEAR ending 1/31/89
------------------------ FYE: January 31
Average Total Return
---------- ---------
ONE YEAR Ending 1-31-89
Initial Investment of: $1,000.00 on 1-31-88
Offering Price/Share = $0.00
NAV = $11.00
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Begin Capital Reinvest Ending Total
Reinvest Period Dividend Gain Price Period Ending Invest
Dates Shares /Share /Share /Share Shares Price Value
1/31/88 90.253 0.000000000 0.00000 $11.08 90.253 $11.08 $1,000.00
2/28/88 90.253 0.085155083 0.00000 $11.11 90.944 $11.11 $1,010.39
3/31/88 90.944 0.084724842 0.00000 $10.92 91.650 $10.92 $1,000.82
4/30/88 91.650 0.084805355 0.00000 $10.79 92.370 $10.79 $996.68
5/31/88 92.370 0.084869146 0.00000 $10.65 93.197 $10.65 $991.58
6/30/88 93.107 0.084530604 0.00000 $10.85 93.832 $10.85 $1,018.08
7/31/88 93.832 0.083735566 0.00000 $10.72 94.565 $10.72 $1,013.73
8/31/88 94.565 0.083764089 0.00000 $10.65 95.309 $10.65 $1,015.04
9/30/88 95.309 0.083473495 0.00000 $10.82 96.044 $10.82 $1,039.19
10/31/88 96.044 0.083107689 0.00000 $10.98 96.771 $10.98 $1,062.54
11/30/88 96.771 0.083072090 0.00000 $10.73 97.520 $10.73 $1,046.39
12/31/88 97.520 0.083490531 0.00000 $10.61 98.287 $10.61 $1,042.83
1/31/89 98.287 0.083449341 0.00000 $10.70 99.054 $10.70 $1,059.88
</TABLE>
$1,000 (1+T)1 $1,509.88 (Ending Redeemable Value)
T = 5.98%
[(1+T1/12)]12 = Average Annual Total Return (AA)
AA = 5.98%
DECLARED: DAILY Schedule for Computation FUND: FEDERATED GNMA TRUST
PAID: MONTHLY of Fund Performance Data Perfomance FIVE YEARS ending 1-31-89
------------------------ FYE: January 31
Average Total Return
---------- ---------
FIVE YEARS Ending 1-31-89
Initial Investment of: $1,000.00 on 1-31-84
Offering Price/Share = $0.00
NAV = $10.63
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Begin Capital Reinvest Ending Total
Reinvest Period Dividend Gain Price Period Ending Invest
Dates Shares /Share /Share /Share Shares Price Value
1/31/84 94.073 0.000000000 0.00000 $10.63 94.073 $10.63 $1,000.00
2/28/84 94.073 0.103577165 0.00000 $10.48 95.003 $10.48 $995.63
3/31/84 95.003 0.105067663 0.00000 $10.27 95.975 $10.27 $985.66
4/30/84 95.975 0.102080713 0.00000 $10.12 96.943 $10.12 $981.06
5/31/84 96.943 0.103022031 0.00000 $9.55 97.989 $9.55 $935.79
6/30/84 97.989 0.103798043 0.00000 $9.59 99.050 $9.59 $949.89
7/31/84 99.050 0.103624222 0.00000 $9.93 100.083 $9.93 $993.83
8/31/84 100.083 0.103212435 0.00000 $10.01 101.115 $10.01 $1,012.16
9/30/84 101.115 0.116080148 0.00000 $10.22 102.264 $10.22 $1,045.13
10/31/84 102.264 0.104384029 0.00000 $10.49 103.281 $10.49 $1,083.42
11/30/84 103.281 0.104252653 0.00000 $10.65 104.292 $10.65 $1,110.71
12/31/84 104.292 0.104717369 0.00000 $10.66 105.317 $10.66 $1,122.68
1/31/85 105.317 0.104363648 0.00000 $10.77 106.337 $10.77 $1,145.25
2/28/85 106.337 0.104388161 0.00000 $10.48 107.396 $10.48 $1,125.52
3/31/85 107.396 0.104880735 0.00000 $10.52 108.467 $10.52 $1,141.07
4/30/85 108.467 0.105012486 0.00000 $10.66 109.536 $10.66 $1,167.65
5/31/85 109.536 0.103196944 0.00000 $10.95 110.568 $10.95 $1,210.72
6/30/85 110.568 0.101269617 0.00000 $10.97 111.589 $10.97 $1,224.13
7/31/85 111.589 0.102058829 0.00000 $10.91 112.633 $10.91 $1,228.82
8/31/85 112.633 0.101569427 0.00000 $11.01 113.672 $11.01 $1,251.52
9/30/85 113.672 0.101015442 0.00000 $11.01 114.715 $11.01 $1,263.01
10/31/85 114.715 0.100844201 0.00000 $11.13 115.754 $11.13 $1,288.34
11/30/85 115.754 0.100562531 0.00000 $11.34 116.780 $11.34 $1,324.29
12/31/85 116.780 0.099573143 0.00000 $11.39 117.801 $11.39 $1,341.76
1/31/86 117.801 0.097221116 0.00000 $11.35 118.810 $11.35 $1,348.50
2/28/86 118.810 0.096039925 0.00000 $11.42 119.810 $11.42 $1,368.23
3/31/86 119.810 0.02510 $11.36 120.074 $11.36 $1,364.04
3/31/86 120.074 0.096706479 0.00000 $11.46 121.088 $11.46 $1,387.66
4/30/86 121.088 0.095178643 0.00000 $11.46 122.093 $11.46 $1,399.19
5/31/86 122.093 0.094780195 0.00000 $11.21 123.126 $11.21 $1,380.24
6/30/86 123.126 0.094037432 0.00000 $11.23 124.157 $11.23 $1,394.28
7/31/86 124.157 0.092601975 0.00000 $11.34 125.170 $11.34 $1,419.43
8/31/86 125.170 0.091880725 0.00000 $11.41 126.178 $11.41 $1,439.70
9/30/86 126.178 0.090997795 0.00000 $11.40 127.186 $11.40 $1,449.92
10/31/86 127.186 0.090288938 0.00000 $11.43 128.190 $11.43 $1,465.21
11/30/86 128.190 0.089771426 0.00000 $11.47 129.194 $11.47 $1,481.85
12/31/86 129.194 0.090602482 0.00000 $11.43 130.218 $11.43 $1,488.39
1/31/87 130.218 0.090248376 0.00000 $11.46 131.243 $11.46 $1,504.05
2/28/87 131.243 0.087796682 0.00000 $11.48 132.249 $11.48 $1,518.22
3/31/87 132.249 0.087165706 0.00000 $11.42 133.259 $11.42 $1,521.81
4/30/87 133.259 0.087019387 0.00000 $10.98 134.315 $10.98 $1,474.77
5/31/87 134.315 0.087462258 0.00000 $10.88 135.394 $10.88 $1,473.09
6/30/87 135.394 0.086206408 0.00000 $10.98 136.547 $10.98 $1,498.30
7/31/87 136.457 0.086408973 0.00000 $10.93 137.536 $10.93 $1,503.27
8/31/87 137.536 0.086210269 0.00000 $10.81 138.633 $10.81 $1,498.62
9/30/87 138.633 0.086308744 0.00000 $10.42 139.781 $10.42 $1,456.52
10/31/87 139.781 0.086223439 0.00000 $10.67 140.911 $10.67 $1,503.52
11/30/87 140.911 0.085805701 0.00000 $10.73 142.038 $10.73 $1,524.06
12/31/87 142.038 0.086070132 0.00000 $10.76 143.174 $10.76 $1,540.55
1/31/88 143.174 0.085662533 0.00000 $11.08 144.281 $11.08 $1,598.63
2/28/88 144.281 0.085155083 0.00000 $11.11 145.387 $11.11 $1,615.25
3/31/88 145.387 0.084724842 0.00000 $10.92 146.515 $10.92 $1,599.94
4/30/88 146.515 0.084805355 0.00000 $10.79 147.666 $10.79 $1,593.32
5/31/88 147.666 0.084869146 0.00000 $10.65 148.843 $10.65 $1,585.18
6/30/88 148.843 0.084530604 0.00000 $10.85 150.003 $10.85 $1,627.53
7/31/88 150.003 0.083735566 0.00000 $10.72 151.174 $10.72 $1,620.59
8/31/88 151.174 0.083764089 0.00000 $10.65 152.363 $10.65 $1,622.67
9/30/88 152.363 0.083473495 0.00000 $10.82 153.539 $10.82 $1,661.29
10/31/88 153.539 0.083107689 0.00000 $10.98 154.701 $10.98 $1,698.62
11/30/88 154.701 0.083072090 0.00000 $10.73 155.899 $10.73 $1,672.79
12/31/88 155.899 0.083490531 0.00000 $10.61 157.125 $10.61 $1,667.10
1/31/89 157.125 0.083449341 0.00000 $10.70 158.351 $10.70 $1,694.35
</TABLE>
$1,000 (1+T)1 $1,694.35 (Ending RedEemable Value)
T = 69.51%
[(1+T1/60)]12 = Average Annual Total Return (AA)
AA = 11.13%
DECLARED: DAILY Schedule for Computation FUND: FEDERATED GNMA TRUST
PAID: MONTHLY of Fund Performance Data Perfomance SINCE
INCEPTION ending 1/31/89
------------------------ FYE: January 31
Average Total Return
---------- ---------
SINCE INCEPTION Ending 1-31-89
Initial Investment of: $1,000.00 on 3-23-82
Offering Price/Share = $0.00
NAV = $10.00
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Begin Capital Reinvest Ending Total
Reinvest Period Dividend Gain Price Period Ending Invest
Dates Shares /Share /Share /Share Shares Price Value
3/23/82 100.000 0.000000000 0.00000 $10.00 100.000 $10.00 $1,000.00
6/23/82 100.000 0.3500 0.00000 $9.68 103.616 $9.68 $1,003.00
9/23/82 103.616 0.3450 0.00000 $10.74 106.944 $10.74 $1,148.58
12/23/82 106.944 0.2620 0.00000 $10.86 109.524 $10.86 $1,189.43
1/31/83 109.524 0.104307578 0.00000 $10.76 110.586 $10.76 $1,189.90
2/28/83 110.586 0.101115024 0.00000 $11.04 111.599 $11.04 $1,232.05
3/31/83 111.599 0.100872317 0.00000 $10.90 112.632 $10.90 $1,227.68
4/30/83 112.632 0.098441211 0.00000 $11.05 113.635 $11.05 $1,255.67
5/31/83 113.635 0.106798710 0.00000 $10.82 114.757 $10.82 $1,241.67
6/30/83 114.757 0.104951291 0.00000 $10.66 115.886 $10.66 $1,235.35
7/31/83 115.886 0.104844665 0.00000 $10.13 117.086 $10.13 $1,186.08
8/31/83 117.086 0.103520483 0.00000 $10.13 118.282 $10.13 $1,198.20
9/30/83 118.282 0.101149458 0.00000 $10.48 119.424 $10.48 $1,251.56
10/31/83 119.424 0.103698640 0.00000 $10.59 120.593 $10.59 $1,277.08
11/30/83 120.593 0.105134078 0.00000 $10.57 121.793 $10.57 $1,287.35
12/31/83 121.793 0.104862223 0.00000 $10.49 123.010 $10.49 $1,290.38
1/31/84 123.010 0.104333053 0.00000 $10.63 124.218 $10.63 $1,320.43
2/28/84 124.218 0.103577165 0.00000 $10.48 125.445 $10.48 $1,314.67
3/31/84 125.445 0.105067663 0.00000 $10.27 126.729 $10.27 $1,301.50
4/30/84 126.729 0.102080713 0.00000 $10.12 128.007 $10.12 $1,295.43
5/31/84 128.007 0.103022031 0.00000 $9.55 129.388 $9.55 $1,235.65
6/30/84 129.388 0.103798043 0.00000 $9.59 130.788 $9.59 $1,254.26
7/31/84 130.788 0.103624222 0.00000 $9.93 132.153 $9.93 $1,312.28
8/31/84 132.153 0.103212435 0.00000 $10.01 133.516 $10.01 $1,336.49
9/30/84 133.516 0.116080148 0.00000 $10.22 135.032 $10.22 $1,380.03
10/31/84 135.032 0.104384029 0.00000 $10.49 136.376 $10.49 $1,430.58
11/30/84 136.376 0.104252653 0.00000 $10.65 137.711 $10.65 $1,466.62
12/31/84 137.711 0.104717369 0.00000 $10.66 139.064 $10.66 $1,482.42
1/31/85 139.064 0.104363648 0.00000 $10.77 140.411 $10.77 $1,512.23
2/28/85 140.411 0.104388161 0.00000 $10.48 141.810 $10.48 $1,486.17
3/31/85 141.810 0.104880735 0.00000 $10.52 143.224 $10.52 $1,506.71
4/30/85 143.224 0.105012486 0.00000 $10.66 144.635 $10.66 $1,541.81
5/31/85 144.635 0.103196944 0.00000 $10.95 145.998 $10.95 $1,598.68
6/30/85 145.998 0.101269617 0.00000 $10.97 147.346 $10.97 $1,616.38
7/31/85 147.346 0.102058829 0.00000 $10.91 148.724 $10.91 $1,622.58
8/31/85 148.724 0.101569427 0.00000 $11.01 150.096 $11.01 $1,652.56
9/30/85 150.096 0.101015442 0.00000 $11.01 151.473 $11.01 $1,667.72
10/31/85 151.473 0.100844201 0.00000 $11.13 152.845 $11.13 $1,701.17
11/30/85 152.845 0.100562531 0.00000 $11.34 154.201 $11.34 $1,748.64
12/31/85 154.201 0.099573143 0.00000 $11.39 155.549 $11.39 $1,771.70
1/31/86 155.549 0.097221116 0.00000 $11.35 156.881 $11.35 $1,780.60
2/28/86 156.881 0.096039925 0.00000 $11.42 158.201 $11.42 $1,806.65
3/31/86 158.201 0.02510 $11.36 158.550 $11.36 $1,801.13
3/31/86 158.550 0.096706479 0.00000 $11.46 159.888 $11.46 $1,832.32
4/30/86 159.888 0.095178643 0.00000 $11.46 161.216 $11.46 $1,847.54
5/31/86 161.216 0.094780195 0.00000 $11.21 162.579 $11.21 $1,822.51
6/30/86 162.579 0.094037432 0.00000 $11.23 163.941 $11.23 $1,841.05
7/31/86 163.941 0.092601975 0.00000 $11.34 165.279 $11.34 $1,874.27
8/31/86 165.279 0.091880725 0.00000 $11.41 166.610 $11.41 $1,901.02
9/30/86 166.610 0.090997795 0.00000 $11.40 167.940 $11.40 $1,914.52
10/31/86 167.940 0.090288938 0.00000 $11.43 169.267 $11.43 $1,934.72
11/30/86 169.267 0.089771426 0.00000 $11.47 170.592 $11.47 $1,956.68
12/31/86 170.592 0.090602482 0.00000 $11.43 171.944 $11.43 $1,965.32
1/31/87 171.944 0.090248376 0.00000 $11.46 173.298 $11.46 $1,985.99
2/28/87 173.298 0.087996682 0.00000 $11.48 174.626 $11.48 $2,004.71
3/31/87 174.626 0.087165706 0.00000 $11.42 175.959 $11.42 $2,009.45
4/30/87 175.959 0.087019387 0.00000 $10.98 177.354 $10.98 $1,947.34
5/31/87 177.354 0.087462258 0.00000 $10.88 178.779 $10.88 $1,945.12
6/30/87 178.779 0.086206408 0.00000 $10.98 180.183 $10.98 $1,978.41
7/31/87 180.183 0.086408973 0.00000 $10.93 181.607 $10.93 $1,984.97
8/31/87 181.607 0.086210269 0.00000 $10.81 183.056 $10.81 $1,978.83
9/30/87 183.056 0.086308744 0.00000 $10.42 184.572 $10.42 $1,923.24
10/31/87 184.572 0.086223439 0.00000 $10.67 186.063 $10.67 $1,985.30
11/30/87 186.063 0.085805701 0.00000 $10.73 187.551 $10.73 $2,012.43
12/31/87 187.551 0.086070132 0.00000 $10.76 189.052 $10.76 $2,034.20
1/31/88 189.052 0.085662533 0.00000 $11.08 190.513 $11.08 $2,110.89
2/28/88 190.513 0.085155083 0.00000 $11.11 191.973 $11.11 $2,132.83
3/31/88 191.973 0.084724842 0.00000 $10.92 193.463 $10.92 $2,112.62
4/30/88 193.463 0.084805355 0.00000 $10.79 194.983 $10.79 $2,103.87
5/31/88 194.983 0.084869146 0.00000 $10.65 196.537 $10.65 $2,093.12
6/30/88 196.537 0.084530604 0.00000 $10.85 198.068 $10.85 $2,149.04
7/31/88 198.068 0.083735566 0.00000 $10.72 199.616 $10.72 $2,139.88
8/31/88 199.616 0.083764089 0.00000 $10.65 201.186 $10.65 $2,142.63
9/30/88 201.186 0.083473495 0.00000 $10.82 202.738 $10.82 $2,193.62
10/31/88 202.738 0.083107689 0.00000 $10.98 204.272 $10.98 $2,242.91
11/30/88 204.272 0.083072090 0.00000 $10.73 205.854 $10.73 $2,208.81
12/31/88 205.854 0.083490531 0.00000 $10.61 207.474 $10.61 $2,201.29
1/31/89 207.474 0.083449341 0.00000 $10.70 209.598 $10.70 $2,242.70
</TABLE>
$1,000 (1+T)1 = $2,242.70
T = 124.27%
[(1+T1/82.290)]12 = Average Annual Total Return (AA)
AA = 12.50%
FEDERATED GNMA TRUST
Computation of Yield
AS OF 1/31/89
Dividend and/or Interest Income for the 30 Days
Ended 1/31/8 $13,576,948.00
Net Expenses for the PerioD $685,972.00
Avereage Daily Shares Outstanding and Entitled to Receive
Dividends 160,986,031,000.00
Maximum Offering Price Per Share as of 1/31/89 $10.70
Undistributed Net Income 0.0000
YIELD = 2 [($13,576,948.00 - $685,972.00) + 1) 6 - 1] = 9.15%
160,986,031,000 * ($10.7000 - 0)
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> Federated GNMA Trust
Institutional Service Shares
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Jan-31-1995
<PERIOD-END> Jan-31-1995
<INVESTMENTS-AT-COST> 1,772,956,549
<INVESTMENTS-AT-VALUE> 1,733,274,569
<RECEIVABLES> 59,972,955
<ASSETS-OTHER> 3,098
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,793,250,622
<PAYABLE-FOR-SECURITIES> 46,961,589
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 183,788,462
<TOTAL-LIABILITIES> 230,750,051
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,794,205,314
<SHARES-COMMON-STOCK> 11,345,508
<SHARES-COMMON-PRIOR> 11,790,122
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (192,022,763)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (39,681,980)
<NET-ASSETS> 120,426,617
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 141,079,522
<OTHER-INCOME> 0
<EXPENSES-NET> 10,116,857
<NET-INVESTMENT-INCOME> 130,962,665
<REALIZED-GAINS-CURRENT> (97,737,729)
<APPREC-INCREASE-CURRENT> (77,177,049)
<NET-CHANGE-FROM-OPS> (43,952,113)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 9,282,945
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,007,210
<NUMBER-OF-SHARES-REDEEMED> 4,025,344
<SHARES-REINVESTED> 573,520
<NET-CHANGE-IN-ASSETS> (485,233,730)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (94,285,034)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 6,989,013
<INTEREST-EXPENSE> 4,216,711
<GROSS-EXPENSE> 10,289,360
<AVERAGE-NET-ASSETS> 1,752,509,536
<PER-SHARE-NAV-BEGIN> 11.640
<PER-SHARE-NII> 0.790
<PER-SHARE-GAIN-APPREC> (1.030)
<PER-SHARE-DIVIDEND> 0.790
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 10.610
<EXPENSE-RATIO> 77
<AVG-DEBT-OUTSTANDING> 99,903,839
<AVG-DEBT-PER-SHARE> 0.625
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> Federated GNMA Trust
Institutional Shares
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Jan-31-1995
<PERIOD-END> Jan-31-1995
<INVESTMENTS-AT-COST> 1,772,956,549
<INVESTMENTS-AT-VALUE> 1,733,274,569
<RECEIVABLES> 59,972,955
<ASSETS-OTHER> 3,098
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,793,250,622
<PAYABLE-FOR-SECURITIES> 46,961,589
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 183,788,462
<TOTAL-LIABILITIES> 230,750,051
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,794,205,314
<SHARES-COMMON-STOCK> 135,857,801
<SHARES-COMMON-PRIOR> 164,134,198
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (192,022,763)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (39,681,980)
<NET-ASSETS> 1,442,073,954
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 141,079,522
<OTHER-INCOME> 0
<EXPENSES-NET> 10,116,857
<NET-INVESTMENT-INCOME> 130,962,665
<REALIZED-GAINS-CURRENT> (97,737,729)
<APPREC-INCREASE-CURRENT> (77,177,049)
<NET-CHANGE-FROM-OPS> (43,952,113)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 121,679,721
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 33,458,790
<NUMBER-OF-SHARES-REDEEMED> 64,291,288
<SHARES-REINVESTED> 2,556,101
<NET-CHANGE-IN-ASSETS> (485,233,730)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (94,285,034)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 6,989,013
<INTEREST-EXPENSE> 4,216,711
<GROSS-EXPENSE> 10,289,360
<AVERAGE-NET-ASSETS> 1,752,509,536
<PER-SHARE-NAV-BEGIN> 11.640
<PER-SHARE-NII> 0.820
<PER-SHARE-GAIN-APPREC> (1.030)
<PER-SHARE-DIVIDEND> 0.820
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 10.610
<EXPENSE-RATIO> 56
<AVG-DEBT-OUTSTANDING> 99,903,839
<AVG-DEBT-PER-SHARE> 0.625
</TABLE>
