FEDERATED INTERMEDIATE GOVERNMENT TRUST
INSTITUTIONAL SERVICE SHARES
PROSPECTUS
The Institutional Service Shares offered by this prospectus represent interests
in a diversified portfolio of securities of Federated Intermediate Government
Trust (the "Trust"). The Trust is an open-end management investment company (a
mutual fund).
The investment objective of the Trust is to provide current income. The Trust
pursues this investment objective by investing in U.S. government securities
with remaining maturities of five years or less. Institutional Service Shares
are sold at net asset value.
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF ANY
BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK, AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
GOVERNMENT AGENCY. INVESTMENT IN THESE SHARES INVOLVES INVESTMENT RISKS
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
This prospectus contains the information you should read and know before you
invest in 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
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SUMMARY OF TRUST EXPENSES 1
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FINANCIAL HIGHLIGHTS--INSTITUTIONAL
SERVICE SHARES 2
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GENERAL INFORMATION 3
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INVESTMENT INFORMATION 3
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Investment Objective 3
Investment Policies 3
Acceptable Investments 3
Repurchase Agreements 4
When-Issued and Delayed Delivery
Transactions 4
Portfolio Turnover 4
Investment Limitations 4
TRUST INFORMATION 5
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Management of the Trust 5
Board of Trustees 5
Investment Adviser 5
Advisory Fees 5
Adviser's Background 5
Distribution of Institutional Service Shares 6
Distribution and Shareholder
Services Plans 6
Other Payments to Financial Institutions 6
Administration of the Trust 7
Administrative Services 7
Custodian 7
Transfer Agent and Dividend
Disbursing Agent 7
Independent Public Accountants 7
NET ASSET VALUE 7
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INVESTING IN INSTITUTIONAL SERVICE SHARES 8
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Share Purchases 8
By Wire 8
By Mail 8
Minimum Investment Required 8
What Shares Cost 8
Exchanging Securities for Trust Shares 9
Subaccounting Services 9
Certificates and Confirmations 9
Dividends 9
Capital Gains 9
REDEEMING INSTITUTIONAL SERVICE SHARES 10
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Telephone Redemption 10
Written Requests 10
Signatures 10
Receiving Payment 11
Accounts with Low Balances 11
SHAREHOLDER INFORMATION 11
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Voting Rights 11
Massachusetts Partnership Law 11
TAX INFORMATION 12
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Federal Income Tax 12
Pennsylvania Corporate and Personal
Property Taxes 12
PERFORMANCE INFORMATION 12
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OTHER CLASSES OF SHARES 13
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FINANCIAL HIGHLIGHTS--INSTITUTIONAL
SHARES 14
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FINANCIAL STATEMENTS 15
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 23
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ADDRESSES 24
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SUMMARY OF TRUST EXPENSES
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<TABLE>
<S> <C>
INSTITUTIONAL SERVICE SHARES
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases (as a percentage of offering price).......... None
Maximum Sales Load Imposed on Reinvested Dividends (as a percentage of offering
price)............................................................................. None
Contingent Deferred Sales Charge (as a percentage of original purchase price
or redemption proceeds, as applicable)............................................. None
Redemption Fee (as a percentage of amount redeemed, if applicable)................... None
Exchange Fee......................................................................... None
ANNUAL INSTITUTIONAL SERVICE SHARES OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waiver)(1)..................................................... 0.38%
12b-1 Fee (after waiver)(2).......................................................... 0.03%
Total Other Expenses................................................................. 0.38%
Shareholder Services Fee (after waiver)(3).............................. 0.22%
Total Institutional Service Shares Operating Expenses(4)................... 0.79%
</TABLE>
(1) The management fee has been reduced to reflect the voluntary waiver of a
portion of the management fee. The adviser can terminate this voluntary
waiver at any time at its sole discretion. The maximum management fee is
0.40%.
(2) The maximum 12b-1 fee is 0.25%.
(3) The maximum shareholder services fee is 0.25%.
(4) The Total Institutional Service Shares Operating Expenses in the table above
are based on expenses expected during the fiscal year ending January 31,
1996. The Total Institutional Service Shares Operating Expenses were 0.79%
for the fiscal year ended January 31, 1995 and would have been 1.00% absent
the voluntary waivers of a portion of the management fee and a portion of
the 12b-1 fee.
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.
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.
<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 $ 25 $ 44 $98
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
The information set forth in the foregoing table and example relates only
to Institutional Service Shares of the Trust. The Trust also offers another
class of shares called Institutional Shares. Institutional Service Shares and
Institutional Shares are subject to certain of the same expenses; however,
Institutional Shares are not subject to a 12b-1 fee. See "Other Classes of
Shares."
FEDERATED INTERMEDIATE GOVERNMENT TRUST
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SERVICE SHARES
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(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 23.
<TABLE>
<CAPTION>
YEAR ENDED JANUARY 31,
-------------------------------
1995 1994 1993*
------- ------- -------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.78 $10.61 $10.35
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INCOME FROM INVESTMENT OPERATIONS
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Net investment income 0.51 0.44 0.34
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Net realized and unrealized gain (loss) on investments (0.67) 0.17 0.26
---------------------------------------------------------- ------ ------ ------
Total from investment operations (0.16) 0.61 0.60
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LESS DISTRIBUTIONS
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Dividends to shareholders from net investment income (0.51) (0.44) (0.34)
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NET ASSET VALUE, END OF PERIOD $10.11 $10.78 $10.61
---------------------------------------------------------- ------ ------ ------
TOTAL RETURN (a) (1.42)% 5.81% 5.84%
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RATIOS TO AVERAGE NET ASSETS
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Expenses 0.79% 0.77% 0.75%(b)
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Net investment income 5.00% 4.01% 5.13%(b)
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Expense waiver/reimbursement (c) 0.21% 0 0
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SUPPLEMENTAL DATA
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Net assets, end of period (000 omitted) $33,117 $30,763 $12,987
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Portfolio turnover rate 163% 131% 85%
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</TABLE>
* Reflects operations for the period from June 18, 1992 (date of initial
public investment) to January 31, 1993.
(a) Based on net asset value which does not reflect the sales load or contingent
deferred sales charge, if applicable.
(b) Computed on an annualized basis.
(c) 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
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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 (the "Trustees") has established two classes of shares of the Trust,
known as Institutional Service Shares and Institutional Shares. This prospectus
relates only to Institutional Service Shares of the Trust.
Institutional Service Shares ("Shares") of the Trust 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 U.S. government 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
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INVESTMENT OBJECTIVE
The investment objective of the Trust is current income. The Trust pursues this
investment objective by investing in U.S. government securities with remaining
maturities of five years or less. As a matter of operating policy, which may be
changed without shareholder approval, the dollar-weighted average maturity of
the portfolio will not be less than two years nor more than five years. While
there is no assurance that the Trust will achieve its investment objective, it
endeavors to do so by following the investment policies described in this
prospectus. The investment objective and the policies and limitations described
below cannot be changed without approval of shareholders.
INVESTMENT POLICIES
ACCEPTABLE INVESTMENTS. The U.S. government securities in which the Trust
invests are either issued or guaranteed by the U.S. government, its agencies, or
instrumentalities. The prices of fixed income securities fluctuate inversely to
the direction of interest rates. The securities in which the Trust may invest
are limited to:
- direct obligations of the U.S. Treasury, such as U.S. Treasury bills,
notes, and bonds; 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.
Some obligations issued or guaranteed by agencies or instrumentalities of the
U.S. government, such as Government National Mortgage Association participation
certificates, are backed by the full faith and credit of the U.S. Treasury. No
assurances can be given that the U.S. government will provide financial
support to other agencies or instrumentalities, since it is not obligated to do
so. These instrumentalities are supported by:
- the issuer's right to borrow an amount limited to a specific line of
credit from the U.S. Treasury;
- discretionary authority of the U.S. government to purchase certain
obligations of an agency or instrumentality; or
- the credit of the agency or instrumentality.
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.
As a matter of investment practice, which can be changed without shareholder
approval, the Trust will not invest more than 10% of its total assets in
securities which are illiquid, including repurchase agreements providing for
settlement in more than seven days after notice.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Trust may purchase U.S.
government 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 Trust's 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.
PORTFOLIO TURNOVER. The Trust conducts portfolio transactions to accomplish its
investment objective as interest rates change, to invest new money obtained from
selling its shares, and to meet redemption requests. The Trust may dispose of
portfolio securities at any time if it appears that selling the securities will
help the Trust achieve its investment objective.
INVESTMENT LIMITATIONS
The Trust will not borrow money or pledge securities except, under certain
circumstances, the Trust may borrow up to one-third of the value of its total
assets and pledge up to 10% of the value of those assets to secure such
borrowings.
TRUST INFORMATION
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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 and 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.
Susan M. Nason has been the Trust's portfolio manager since 1991. Ms. Nason
joined Federated Investors in 1987 and has been a Vice President of the
Trust's investment adviser since 1993. Ms. Nason served as an Assistant
Vice President of the investment adviser from 1990 until 1992, and from
1987 until 1990 she acted as an investment analyst. Ms. Nason is a
Chartered Financial Analyst and received her M.B.A. in Finance from
Carnegie Mellon University.
Joseph M. Balestrino has been the Trust's co-portfolio manager since March
1995. Mr. Balestrino joined Federated Investors in 1986 and has been an
Assistant Vice President of the Trust's investment adviser since 1991. Mr.
Balestrino served as an investment analyst of the investment adviser from
1989 until 1991, and from 1986 until 1989 he acted as project manager in
the Product Development Department. Mr. Balestrino is a Chartered
Financial Analyst and
received his M.A. in Urban and Regional Planning 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 may pay to the distributor an amount, computed at an annual rate of
.25 of 1% of the average daily net asset value of Shares, to finance any
activity which is principally intended to result in the sale of Shares. The
distributor may select financial institutions such as banks, fiduciaries,
custodians for public funds, investment advisers, and broker/dealers to provide
sales support services as agents for their clients or customers.
The Distribution Plan is a compensation-type plan. As such, the Trust makes no
payments to the distributor except as described above. Therefore, the Trust does
not pay for unreimbursed expenses of the distributor, including amounts expended
by the distributor in excess of amounts received by it from the Trust, interest,
carrying or other financing charges in connection with excess amounts expended,
or the distributor's overhead expenses. However, the distributor may be able to
recover such amounts or may earn a profit from future payments made by the Trust
under the Distribution Plan.
In addition, the Trust has adopted a Shareholder Services Plan (the "Services
Plan") with respect to Shares under which it may make payments up to 0.25 of 1%
of the average daily net asset value of Shares to obtain certain personal
services for shareholders and the maintenance of shareholder accounts
("shareholder services"). The Trust has entered into a Shareholder Services
Agreement with Federated Shareholder Services, a subsidiary of Federated
Investors, under which Federated Shareholder Services will either perform
shareholder services directly or will select financial institutions to perform
shareholder services. Financial institutions will receive fees based upon Shares
owned by their clients or customers. The schedules of such fees and the basis
upon which such fees will be paid will be determined from time to time by the
Trust and Federated Shareholder Services.
OTHER PAYMENTS TO FINANCIAL INSTITUTIONS. The distributor may also pay
financial institutions a fee based on the average net asset value of shares of
their customers invested in the Trust for providing administrative services.
This fee is in addition to the amounts paid under the distribution plan for
administrative services, and, if paid, will be reimbursed by the Trust's
investment adviser and not the Trust.
The Trust's adviser or its affiliates may also offer to pay a fee from their own
assets to financial institutions as financial assistance for providing
substantial marketing and sales support. The support may include sponsoring
sales, educational and training seminars for their employees, providing sales
literature, and engineering computer software programs that emphasize the
attributes of the Trust. Such assistance will be predicated upon the amount of
Shares the dealer sells or may sell, and/or upon the type and nature of sales or
operational support furnished by the financial institution. These payments will
be made by the Trust's adviser and will not be made from the assets of the
Trust.
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>
AVERAGE AGGREGATE
MAXIMUM DAILY NET ASSETS
ADMINISTRATIVE FEE 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.
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 PUBLIC ACCOUNTANTS. The independent public accountants for the
Trust are Arthur Andersen LLP, Pittsburgh, Pennsylvania.
NET ASSET VALUE
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The Trust's net asset value per Share fluctuates. The net asset value for Shares
is determined by adding the interest of Shares in the market value of all
securities and other assets of the Trust, subtracting the interest of 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
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SHARE PURCHASES
Shares are sold on days on which the New York Stock Exchange is open for
business. 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
Intermediate Government 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 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
Intermediate Government 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 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. Accounts established through a bank or broker may be
subject to a different 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 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 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 State Street Bank. If the order for
Shares and payment by wire are received on the same day, Shares begin earning
dividends on the next business day. Shares purchased by check begin earning
dividends on the business day after the check is converted, upon instruction of
the transfer agent, into federal funds. Dividends are automatically reinvested
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
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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). All 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 with the written request.
SIGNATURES. Shareholders requesting a redemption of $50,000 or more, a
redemption of any amount to be sent to an address other than that on record with
the Trust, or a redemption payable other than to the shareholder of record must
have signatures on written redemption requests guaranteed by:
- a trust company or commercial bank whose deposits are insured by the Bank
Insurance Fund ("BIF"), which is administered by the Federal Deposit
Insurance Corporation ("FDIC");
- a member of the New York, American, Boston, Midwest, or Pacific Stock
Exchange;
- a savings bank or savings and loan association whose deposits are insured
by the Savings Association Insurance Fund ("SAIF"), which is administered
by the FDIC; or
- any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934.
The Trust does not accept signatures guaranteed by a notary public.
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 portfolio or class, only shares of that portfolio or
class are entitled to vote. As a Massachusetts business trust, the Trust is not
required to hold annual shareholder meetings. Shareholder approval will be
sought only for certain changes in the Trust's operation and for the election of
Trustees under certain circumstances.
Trustees may be removed by the Trustees or by shareholders at a special meeting.
A special meeting of the shareholders for this purpose shall be called by the
Trustees upon the written request of shareholders owning at least 10% of the
outstanding shares of the Trust entitled to vote.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for obligations of the Trust. To protect
shareholders, the Trust has filed legal documents with Massachusetts that
expressly disclaim the liability of its shareholders for such acts or
obligations of the Trust. These documents require notice of this disclaimer to
be given in each agreement, obligation, or instrument that the Trust or its
Trustees enter into or sign on behalf of the Trust.
In the unlikely event a shareholder is held personally liable for the Trust's
obligations, the Trust is required to use its property to protect or to
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 to 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 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, including capital gains 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.
The Trust is sold without any sales load or other similar non-recurring charges.
From time to time, the Trust may advertise the performance of Shares using
certain financial publications and/or compare the performance of Shares to
certain indices.
OTHER CLASSES OF SHARES
--------------------------------------------------------------------------------
The Trust also offers a separate class of shares known as Institutional Shares.
Institutional Shares are sold to accounts for which financial institutions act
in a fiduciary or agency capacity. Institutional Shares are sold at net asset
value. Investments in Institutional Shares are subject to a minimum initial
investment of $25,000.
Institutional Shares are distributed without a Rule 12b-1 Distribution Plan.
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 by shares of each respective
class.
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, and due to the differences between class expenses and
shareholder services expenses between classes, the total return and yield for
Institutional Shares, for the same period, will exceed that of Institutional
Service Shares.
The stated advisory fee is the same for both classes of shares.
FEDERATED INTERMEDIATE GOVERNMENT TRUST
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES
--------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 23.
<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 $10.78 $10.61 $10.25 $ 9.87 $ 9.59 $ 9.42 $ 9.88 $10.25 $10.02 $ 9.70
------------
INCOME FROM
INVESTMENT
OPERATIONS
------------
Net
investment
income 0.54 0.46 0.57 0.71 0.75 0.79 0.81 0.80 0.86 1.03
------------
Net
realized
and
unrealized
gain (loss)
on
investments (0.67) 0.17 0.36 0.38 0.28 0.17* (0.46) (0.28) 0.29 0.32
------------ ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Total from
investment
operations (0.13) 0.63 0.93 1.09 1.03 0.96 0.35 0.52 1.15 1.35
------------
LESS
DISTRIBUTIONS
------------
Dividends
to
shareholders
from net
investment
income (0.54) (0.46) (0.57) (0.71) (0.75) (0.79) (0.81) (0.80) (0.86) (1.03)
------------
Distributions
to
shareholders
from net
realized
gain on
investment
transactions -- -- -- -- -- -- -- (0.09) (0.06) --
------------ ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Total
distributions (0.54) (0.46) (0.57) (0.71) (0.75) (0.79) (0.81) (0.89) (0.92) (1.03)
------------ ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
NET ASSET
VALUE, END
OF PERIOD $10.11 $10.78 $10.61 $10.25 $ 9.87 $ 9.59 $ 9.42 $ 9.88 $10.25 $10.02
------------ ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
TOTAL RETURN
(A) (1.18)% 6.07% 9.37% 11.44% 11.18% 10.52% 3.66% 5.53% 11.98% 14.71%
------------
RATIOS TO
AVERAGE
NET ASSETS
------------
Expenses 0.54% 0.52% 0.50% 0.50% 0.51% 0.51% 0.47% 0.45% 0.45% 0.44%
------------
Net
investment
income 5.16% 4.30% 5.52% 7.08% 7.75% 8.26% 8.37% 8.18% 8.37% 10.43%
------------
Expense
waiver/reimbursement
(b) 0.02% -- -- -- -- -- 0.03% 0.03% 0.04% 0.13%
------------
SUPPLEMENTAL
DATA
------------
Net assets,
end of
period (000
omitted) $731,280 $951,528 $845,620 $779,686 $791,131 $959,728 $1,246,393 $1,534,501 $1,859,687 $655,790
------------
Portfolio
turnover
rate 163% 131% 85% 108% 60% 166% 82% 70% 49% 126%
------------
</TABLE>
* The effect on the 1990 per share data as a result of the Trust's change in
recording interest income to include amortization of market discounts and
premiums was to increase investment income by $0.05 per share and decrease
net realized and unrealized gain (loss) on investments by a corresponding
amount.
(a) Based on net asset value which does not reflect the sales load or contingent
deferred sales charge, if applicable.
(b) 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 INTERMEDIATE GOVERNMENT TRUST
PORTFOLIO OF INVESTMENTS
JANUARY 31, 1995
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------ ------------------------------------------------------------------ ------------
<C> <S> <C>
U.S. TREASURY NOTES--98.3%
---------------------------------------------------------------------------------
$ 20,000,000 5.125%, 3/31/1996 $ 19,591,800
------------------------------------------------------------------
50,000,000 4.25%, 5/15/1996 48,308,000
------------------------------------------------------------------
45,000,000 5.875%, 5/31/1996 44,333,100
------------------------------------------------------------------
65,000,000 6.75%, 5/31/1997 64,212,850
------------------------------------------------------------------
15,000,000 5.625%, 8/31/1997 14,402,400
------------------------------------------------------------------
130,000,000 5.125%, 2/28/1998 121,854,200
------------------------------------------------------------------
107,000,000 5.125%, 3/31/1998 100,126,320
------------------------------------------------------------------
20,000,000 5.375%, 5/31/1998 18,787,600
------------------------------------------------------------------
155,000,000 5.125%, 6/30/1998 144,174,800
------------------------------------------------------------------
70,000,000 5.25%, 7/31/1998 65,277,800
------------------------------------------------------------------
120,000,000 5.125%, 12/31/1998 110,436,000
------------------------------------------------------------------ ------------
TOTAL U.S. TREASURY NOTES (IDENTIFIED COST, $756,594,714) 751,504,870
------------------------------------------------------------------ ------------
REPURCHASE AGREEMENTS(a)--0.2%
---------------------------------------------------------------------------------
1,620,000 J.P. Morgan Securities, Inc., 5.87%, dated 1/31/1995, due 2/1/1995
(AMORTIZED COST) 1,620,000
------------------------------------------------------------------ ------------
TOTAL INVESTMENTS(B) (IDENTIFIED COST $758,214,714) $753,124,870
------------------------------------------------------------------ ------------
</TABLE>
(a) The repurchase agreement is fully collateralized by U.S. Treasury
obligations based on market prices at the date of the portfolio. The
investment in the repurchase agreement is through participation in joint
accounts with other Federated funds.
(b) The cost of investments for federal tax purposes amounts to $758,214,714.
The net unrealized depreciation of investments on a federal tax basis
amounts to $5,089,844 which is comprised of $2,852,172 appreciation and
$7,942,016 depreciation at January 31, 1995.
Note: The categories of investments are shown as a percentage of net assets
($764,397,062) at January 31, 1995.
(See Notes which are an integral part of the Financial Statements)
FEDERATED INTERMEDIATE GOVERNMENT TRUST
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1995
--------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
--------------------------------------------------------------------------------
Investments in securities, at value (identified and tax cost, $758,214,714) $753,124,870
--------------------------------------------------------------------------------
Cash 3,619
--------------------------------------------------------------------------------
Income receivable 8,527,716
--------------------------------------------------------------------------------
Receivable for investments sold 4,915,742
--------------------------------------------------------------------------------
Receivable for shares sold 1,748,838
-------------------------------------------------------------------------------- ------------
Total assets 768,320,785
--------------------------------------------------------------------------------
LIABILITIES:
--------------------------------------------------------------------------------
Payable for shares redeemed $1,106,318
-------------------------------------------------------------------
Income distribution payable 2,746,974
-------------------------------------------------------------------
Accrued expenses 70,431
------------------------------------------------------------------- ----------
Total liabilities 3,923,723
-------------------------------------------------------------------------------- ------------
NET ASSETS for 75,575,367 shares of beneficial interest outstanding $764,397,062
-------------------------------------------------------------------------------- ------------
NET ASSETS CONSISTS OF:
--------------------------------------------------------------------------------
Paid in capital $829,553,866
--------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments (5,089,844)
--------------------------------------------------------------------------------
Accumulated net realized gain (loss) on investments (60,066,960)
-------------------------------------------------------------------------------- ------------
Total Net Assets $764,397,062
-------------------------------------------------------------------------------- ------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
--------------------------------------------------------------------------------
INSTITUTIONAL SHARES:
($731,280,119 / 72,301,159 shares of beneficial interest outstanding) $10.11
-------------------------------------------------------------------------------- ------------
INSTITUTIONAL SERVICE SHARES:
($33,116,943 / 3,274,208 shares of beneficial interest outstanding) $10.11
-------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED INTERMEDIATE GOVERNMENT TRUST
STATEMENT OF OPERATIONS
YEAR ENDED JANUARY 31, 1995
--------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
---------------------------------------------------------------------------------
Interest income $ 48,934,767
---------------------------------------------------------------------------------
EXPENSES:
---------------------------------------------------------------------------------
Investment advisory fee $3,429,592
--------------------------------------------------------------------
Administrative personnel and services fee 710,380
--------------------------------------------------------------------
Custodian fees 296,235
--------------------------------------------------------------------
Transfer agent and dividend disbursing agent fees and expenses 129,746
--------------------------------------------------------------------
Trustees fees 13,544
--------------------------------------------------------------------
Auditing fees 21,236
--------------------------------------------------------------------
Legal fees 15,828
--------------------------------------------------------------------
Portfolio accounting fees 62,135
--------------------------------------------------------------------
Distribution services fee--Institutional Service Shares 71,463
--------------------------------------------------------------------
Shareholder services fee--Institutional Shares 5,353
--------------------------------------------------------------------
Shareholder services fee--Institutional Service Shares 57,785
--------------------------------------------------------------------
Share registration costs 35,000
--------------------------------------------------------------------
Printing and postage 21,387
--------------------------------------------------------------------
Insurance premiums 18,035
--------------------------------------------------------------------
Taxes 336
--------------------------------------------------------------------
Miscellaneous 17,786
-------------------------------------------------------------------- ----------
Total expenses 4,905,841
--------------------------------------------------------------------
Deduct--Waiver of investment advisory fee $141,412
----------------------------------------------------------
Deduct--Waiver of distribution services fee 57,785
---------------------------------------------------------- --------
Total waivers 199,197
-------------------------------------------------------------------- ----------
Net expenses 4,706,644
--------------------------------------------------------------------------------- ------------
Net investment income 44,228,123
--------------------------------------------------------------------------------- ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
---------------------------------------------------------------------------------
Net realized gain (loss) on investments (45,578,263)
---------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on investments (12,312,883)
--------------------------------------------------------------------------------- ------------
Net realized and unrealized gain (loss) on investments (57,891,146)
--------------------------------------------------------------------------------- ------------
Change in net assets resulting from operations $(13,663,023)
--------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED INTERMEDIATE GOVERNMENT 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 $ 44,228,123 $ 40,467,138
------------------------------------------------------------
Net realized gain (loss) on investments ($29,464,881 net
loss and $24,049,193 net gain, respectively, as computed
for federal income tax purposes) (45,578,263) 24,049,193
------------------------------------------------------------
Net change in unrealized appreciation (depreciation)
on investments (12,312,883) (9,851,052)
------------------------------------------------------------ ------------- -------------
Change in net assets resulting from operations (13,663,023) 54,665,279
------------------------------------------------------------ ------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS--
------------------------------------------------------------
Institutional Shares--Distributions from net investment
income (42,798,247) (39,557,765)
------------------------------------------------------------
Institutional Service Shares--Distributions from net
investment income (1,429,876) (909,373)
------------------------------------------------------------ ------------- -------------
Change in net assets resulting from distributions to
shareholders (44,228,123) (40,467,138)
------------------------------------------------------------
SHARE TRANSACTIONS
------------------------------------------------------------
Proceeds from sale of shares 296,717,727 507,015,719
------------------------------------------------------------
Net asset value of shares issued to shareholders in payment
of dividends declared 14,030,578 11,606,567
------------------------------------------------------------
Cost of shares redeemed (470,751,036) (409,136,551)
------------------------------------------------------------ ------------- -------------
Change in net assets resulting from Trust share
transactions (160,002,731) 109,485,735
------------------------------------------------------------ ------------- -------------
Change in net assets (217,893,877) 123,683,876
------------------------------------------------------------
NET ASSETS:
------------------------------------------------------------
Beginning of period 982,290,939 858,607,063
------------------------------------------------------------ ------------- -------------
End of period $ 764,397,062 $ 982,290,939
------------------------------------------------------------ ------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED INTERMEDIATE GOVERNMENT TRUST
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1995
--------------------------------------------------------------------------------
1. ORGANIZATION
Federated Intermediate Government 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.
A. INVESTMENT VALUATIONS--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. Short-term securities with remaining maturities
of sixty days or less may be stated at amortized cost, which approximates
value.
B. 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 in support of 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 repurchase price to be paid under the repurchase agreement transaction.
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 the guidelines
established by the Board of Trustees (the "Trustees"). Risks may arise from
the potential inability of counterparties to honor the terms of the
repurchase agreement. Accordingly, the Trust could receive less than the
repurchase price on the sale of collateral securities.
C. 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.
D. 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 $43,953,577, which
will reduce the Trust's taxable income arising from future net realized gain
on investments, if any, to the extent permitted
by the Code, and thus will reduce the amount of the distributions to
shareholders which would otherwise be necessary to relieve the Trust of any
liability for federal tax. Pursuant to the Code, such capital loss
carryforward will expire in 1998 ($14,488,696) and 2003 ($29,464,881).
Additionally, net capital losses of $16,113,382 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.
E. 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.
F. OTHER--Investment transactions are accounted for on the trade date.
3. SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares.
Transactions in Trust Shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JANUARY 31,
---------------------------------------------------------
1995 1994
--------------------------- ---------------------------
INSTITUTIONAL SHARES SHARES AMOUNT SHARES AMOUNT
---------------------------------------- ----------- ------------- -----------
<S> <C> <C> <C> <C>
Shares sold 26,144,012 $ 270,233,159 44,183,221 $ 474,495,331
----------------------------------------
Shares issued to shareholders in payment
of dividends declared 1,282,081 13,129,629 1,024,213 11,001,988
----------------------------------------
Shares redeemed (43,394,809) (447,488,088) (36,651,122) (393,535,270)
---------------------------------------- ----------- ------------- ----------- -------------
NET CHANGE RESULTING FROM
INSTITUTIONAL SHARE TRANSACTIONS (15,968,716) $(164,125,300) 8,556,312 $ 91,962,049
---------------------------------------- ----------- ------------- ----------- -------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED JANUARY 31,
---------------------------------------------------------
1995 1994
--------------------------- ---------------------------
INSTITUTIONAL SERVICE SHARES SHARES AMOUNT SHARES AMOUNT
---------------------------------------- ----------- ------------- -----------
<S> <C> <C> <C> <C>
Shares sold 2,584,111 $ 26,484,568 3,025,251 32,520,388
----------------------------------------
Shares issued to shareholders in payment
of dividends declared 87,976 900,949 56,258 604,579
----------------------------------------
Shares redeemed (2,251,658) (23,262,948) (1,451,880) (15,601,281)
---------------------------------------- ----------- ------------- ----------- -------------
NET CHANGE RESULTING FROM
INSTITUTIONAL SERVICE SHARE
TRANSACTIONS 420,429 $ 4,122,569 1,629,629 $ 17,523,686
---------------------------------------- ----------- ------------- ----------- -------------
NET CHANGE RESULTING FROM
TRUST SHARE TRANSACTIONS (15,548,287) $(160,002,731) 10,185,941 $ 109,485,735
---------------------------------------- ----------- ------------- ----------- -------------
</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.
The Adviser may voluntarily choose to waive any portion of its fee and/or
reimburse certain operating expenses of the Trust. The Adviser can modify or
terminate this voluntary waiver and/or reimbursement at any time at its sole
discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Trust
administrative personnel and services. The FAS fee is based on the level of
average aggregate daily net assets of all funds advised by subsidiaries of
Federated Investors for the period. The administrative fee received during the
period of the Administrative Services Agreement shall be at least $125,000 per
portfolio and $30,000 per each additional class of shares.
DISTRIBUTION 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 Corporation ("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 services for shareholders and to
maintain shareholder accounts.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES--Federated Services Company
("FServ") serves as transfer agent and dividend disbursing agent for the Trust.
The FServ 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 Officers and Trustees of the Trust are Officers and Directors
or Trustees of the above companies.
5. INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities for the
fiscal year ended January 31, 1995, were as follows:
<TABLE>
<S> <C>
-----------------------------------------------------------------------------
PURCHASES-- $1,370,082,025
----------------------------------------------------------------------------- --------------
SALES-- $1,513,944,141
----------------------------------------------------------------------------- --------------
</TABLE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
--------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
FEDERATED INTERMEDIATE GOVERNMENT TRUST:
We have audited the accompanying statement of assets and liabilities of
Federated Intermediate Government Trust (a Massachusetts business trust),
including the schedule of portfolio investments, as of January 31, 1995, and the
related statement of operations for the year then ended, and the statement of
changes in net assets for each of the two years in the period then ended, and
the financial highlights (see pages 2 and 14 of the prospectus) for the periods
presented. These financial statements and financial highlights are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
January 31, 1995, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Federated Intermediate Government Trust as of January 31, 1995, the results of
its operations for the year then ended, the changes in its net assets for each
of the two years in the period then ended, and the financial highlights for the
periods presented, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
March 10, 1995
ADDRESSES
--------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Federated Intermediate Government 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 Public Accountants
Arthur Andersen LLP 2100 One PPG Place
Pittsburgh, Pennsylvania 15222
------------------------------------------------------------------------------------------------
</TABLE>
FEDERATED INTERMEDIATE
GOVERNMENT 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
314200205
8022502A-SS (3/95)
FEDERATED INTERMEDIATE GOVERNMENT TRUST
INSTITUTIONAL SHARES
PROSPECTUS
The Institutional Shares offered by this prospectus represent interests in a
diversified portfolio of securities of Federated Intermediate Government Trust
(the "Trust"). The Trust is an open-end management investment company (a mutual
fund).
The investment objective of the Trust is to provide current income. The Trust
pursues this investment objective by investing in U.S. government securities
with remaining maturities of five years or less. Institutional Shares are sold
at net asset value.
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF ANY
BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK, AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
GOVERNMENT AGENCY. INVESTMENT IN THESE SHARES INVOLVES INVESTMENT RISKS
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
This prospectus contains the information you should read and know before you
invest in 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
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SUMMARY OF TRUST EXPENSES 1
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FINANCIAL HIGHLIGHTS--
INSTITUTIONAL SHARES 2
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GENERAL INFORMATION 3
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INVESTMENT INFORMATION 3
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Investment Objective 3
Investment Policies 3
Acceptable Investments 3
Repurchase Agreements 4
When-Issued and Delayed Delivery
Transactions 4
Portfolio Turnover 4
Investment Limitations 4
TRUST INFORMATION 5
------------------------------------------------------
Management of the Trust 5
Board of Trustees 5
Investment Adviser 5
Advisory Fees 5
Adviser's Background 5
Distribution of Institutional Shares 6
Administration of the Trust 6
Administrative Services 6
Shareholder Services Plan 6
Other Payments to Financial Institutions 6
Custodian 7
Transfer Agent and Dividend
Disbursing Agent 7
Independent Public Accountants 7
NET ASSET VALUE 7
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INVESTING IN INSTITUTIONAL SHARES 7
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Share Purchases 7
By Wire 7
By Mail 8
Minimum Investment Required 8
What Shares Cost 8
Exchanging Securities for Trust Shares 8
Subaccounting Services 8
Certificates and Confirmations 9
Dividends 9
Capital Gains 9
REDEEMING INSTITUTIONAL SHARES 9
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Telephone Redemption 9
Written Requests 10
Signatures 10
Receiving Payment 10
Accounts with Low Balances 10
SHAREHOLDER INFORMATION 10
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Voting Rights 10
Massachusetts Partnership Law 11
TAX INFORMATION 11
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Federal Income Tax 11
Pennsylvania Corporate and Personal
Property Taxes 11
PERFORMANCE INFORMATION 12
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OTHER CLASSES OF SHARES 12
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FINANCIAL HIGHLIGHTS--
INSTITUTIONAL SERVICE SHARES 13
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FINANCIAL STATEMENTS 14
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 22
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ADDRESSES 23
----------------------------------------------------
SUMMARY OF TRUST EXPENSES
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<TABLE>
<S> <C>
INSTITUTIONAL SHARES
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases (as a percentage of offering price).......... None
Maximum Sales Load Imposed on Reinvested Dividends (as a percentage
of offering price)................................................................. None
Contingent Deferred Sales Charge (as a percentage of original purchase price
or redemption proceeds, as applicable)............................................. None
Redemption Fee (as a percentage of amount redeemed, if applicable)................... None
Exchange Fee......................................................................... None
ANNUAL INSTITUTIONAL SHARES OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waiver)(1)..................................................... 0.38%
12b-1 Fee............................................................................ None
Total Other Expenses................................................................. 0.16%
Shareholder Services Fee (after waiver)(2).............................. 0.00%
Total Institutional Shares Operating Expenses(3)........................... 0.54%
</TABLE>
(1) The management fee has been reduced to reflect the voluntary waiver of a
portion of the management fee. The adviser can terminate this voluntary
waiver at any time at its sole discretion. The maximum management fee is
0.40%.
(2) The maximum shareholder services fee is 0.25%.
(3) The Total Institutional Shares Operating Expenses would have been 0.56%
absent the voluntary waiver of a portion of the management fee.
The purpose of this table is to assist an investor in understanding the
various costs and expenses that a shareholder of Institutional Shares of the
Trust will bear, either directly or indirectly. For more complete descriptions
of the various costs and expenses, see "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
investment, assuming (1) 5% annual return and
(2) redemption at the end of each time
period......................................... $ 6 $ 17 $ 30 $68
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
The information set forth in the foregoing table and example relates only
to Institutional Shares of the Trust. The Trust also offers another class of
shares called Institutional Service Shares. Institutional Shares and
Institutional Service Shares are subject to certain of the same expenses;
however, Institutional Service Shares are subject to a 12b-1 fee of 0.25%. See
"Other Classes of Shares."
FEDERATED INTERMEDIATE GOVERNMENT TRUST
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES
--------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 22.
<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 $10.78 $10.61 $10.25 $ 9.87 $ 9.59 $ 9.42 $ 9.88 $10.25 $10.02 $ 9.70
------------
INCOME FROM
INVESTMENT
OPERATIONS
------------
Net
investment
income 0.54 0.46 0.57 0.71 0.75 0.79 0.81 0.80 0.86 1.03
------------
Net
realized
and
unrealized
gain (loss)
on
investments (0.67) 0.17 0.36 0.38 0.28 0.17* (0.46) (0.28) 0.29 0.32
------------ ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Total from
investment
operations (0.13) 0.63 0.93 1.09 1.03 0.96 0.35 0.52 1.15 1.35
------------
LESS
DISTRIBUTIONS
------------
Dividends
to
shareholders
from net
investment
income (0.54) (0.46) (0.57) (0.71) (0.75) (0.79) (0.81) (0.80) (0.86) (1.03)
------------
Distributions
to
shareholders
from net
realized
gain on
investment
transactions -- -- -- -- -- -- -- (0.09) (0.06) --
------------ ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Total
distributions (0.54) (0.46) (0.57) (0.71) (0.75) (0.79) (0.81) (0.89) (0.92) (1.03)
------------ ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
NET ASSET
VALUE, END
OF PERIOD $10.11 $10.78 $10.61 $10.25 $ 9.87 $ 9.59 $ 9.42 $ 9.88 $10.25 $10.02
------------ ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
TOTAL RETURN
(A) (1.18)% 6.07% 9.37% 11.44% 11.18% 10.52% 3.66% 5.53% 11.98% 14.71%
------------
RATIOS TO
AVERAGE
NET ASSETS
------------
Expenses 0.54% 0.52% 0.50% 0.50% 0.51% 0.51% 0.47% 0.45% 0.45% 0.44%
------------
Net
investment
income 5.16% 4.30% 5.52% 7.08% 7.75% 8.26% 8.37% 8.18% 8.37% 10.43%
------------
Expense
waiver/reimbursement
(b) 0.02% -- -- -- -- -- 0.03% 0.03% 0.04% 0.13%
------------
SUPPLEMENTAL
DATA
------------
Net assets,
end of
period (000
omitted) $731,280 $951,528 $845,620 $779,686 $791,131 $959,728 $1,246,393 $1,534,501 $1,859,687 $655,790
------------
Portfolio
turnover
rate 163% 131% 85% 108% 60% 166% 82% 70% 49% 126%
------------
</TABLE>
* The effect on the 1990 per share data as a result of the Trust's change in
recording interest income to include amortization of market discounts and
premiums was to increase investment income by $0.05 per share and decrease
net realized and unrealized gain (loss) on investments by a corresponding
amount.
(a) Based on net asset value which does not reflect the sales load or contingent
deferred sales charge, if applicable.
(b) 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 (the "Trustees") has established two classes of shares of the Trust,
known as Institutional Shares and Institutional Service Shares. This prospectus
relates only to Institutional Shares of the Trust.
Institutional Shares ("Shares") of the Trust are sold primarily to accounts for
which financial institutions act in a fiduciary or agency capacity as a
convenient means of accumulating an interest in a professionally managed,
diversified portfolio of U.S. government 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 Trust pursues this
investment objective by investing in U.S. government securities with remaining
maturities of five years or less. As a matter of operating policy, which may be
changed without shareholder approval, the dollar-weighted average maturity of
the portfolio will not be less than two years nor more than five years. While
there is no assurance that the Trust will achieve its investment objective, it
endeavors to do so by following the investment policies described in this
prospectus. The investment objective and the policies and limitations described
below cannot be changed without approval of shareholders.
INVESTMENT POLICIES
ACCEPTABLE INVESTMENTS. The U.S. government securities in which the Trust
invests are either issued or guaranteed by the U.S. government, its agencies, or
instrumentalities. The prices of fixed income securities fluctuate inversely to
the direction of interest rates. The securities in which the Trust may invest
are limited to:
- direct obligations of the U.S. Treasury, such as U.S. Treasury bills,
notes, and bonds; 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.
Some obligations issued or guaranteed by agencies or instrumentalities of the
U.S. government, such as Government National Mortgage Association participation
certificates, are backed by the full faith and credit of the U.S. Treasury. No
assurances can be given that the U.S. government will provide financial
support to other agencies or instrumentalities, since it is not obligated to do
so. These instrumentalities are supported by:
- the issuer's right to borrow an amount limited to a specific line of
credit from the U.S. Treasury;
- discretionary authority of the U.S. government to purchase certain
obligations of an agency or instrumentality; or
- the credit of the agency or instrumentality.
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.
As a matter of investment practice, which can be changed without shareholder
approval, the Trust will not invest more than 10% of its total assets in
securities which are illiquid, including repurchase agreements providing for
settlement in more than seven days after notice.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Trust may purchase U.S.
government 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
purchase 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 Trust's 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.
PORTFOLIO TURNOVER. The Trust conducts portfolio transactions to accomplish its
investment objective as interest rates change, to invest new money obtained from
selling its shares, and to meet redemption requests. The Trust may dispose of
portfolio securities at any time if it appears that selling the securities will
help the Trust achieve its investment objective.
INVESTMENT LIMITATIONS
The Trust will not borrow money or pledge securities except, under certain
circumstances, the Trust may borrow up to one-third of the value of its total
assets and pledge up to 10% of the value of those assets to secure such
borrowings.
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 and 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.
Susan M. Nason has been the Trust's portfolio manager since 1991. Ms. Nason
joined Federated Investors in 1987 and has been a Vice President of the
Trust's investment adviser since 1993. Ms. Nason served as an Assistant
Vice President of the investment adviser from 1990 until 1992, and from
1987 until 1990 she acted as an investment analyst. Ms. Nason is a
Chartered Financial Analyst and received her M.B.A. in Finance from
Carnegie Mellon University.
Joseph M. Balestrino has been the Trust's co-portfolio manager since March
1995. Mr. Balestrino joined Federated Investors in 1986 and has been an
Assistant Vice President of the Trust's investment adviser since 1991. Mr.
Balestrino served as an investment analyst of the investment adviser from
1989 until 1991, and from 1986 until 1989 he acted as project manager in
the Product
Development Department. Mr. Balestrino is a Chartered Financial Analyst and
received his M.A. in Urban and Regional Planning 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>
AVERAGE AGGREGATE DAILY
MAXIMUM NET ASSETS OF THE FEDERATED
ADMINISTRATIVE FEE 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") with respect to Shares under which it may make payments up
to 0.25 of 1% of the average daily net asset value of Shares to obtain certain
personal services for shareholders and the maintenance of shareholder accounts
("shareholder services"). The Trust has entered into a Shareholder Services
Agreement with Federated Shareholder Services, a subsidiary of Federated
Investors, under which Federated Shareholder Services will either perform
shareholder services directly or will select financial institutions to perform
shareholder services. Financial institutions will receive fees based upon Shares
owned by their clients or customers. The schedules of such fees and the basis
upon which such fees will be paid will be determined from time to time by the
Trust and Federated Shareholder Services.
OTHER PAYMENTS TO FINANCIAL INSTITUTIONS. The distributor may pay financial
institutions a fee based on the average net asset value of shares of their
customers invested in the Trust for providing administrative services. If paid,
this fee will be reimbursed by the Trust's adviser and not the Trust.
The Trust's investment adviser or its affiliates may also offer to pay a fee
from their own assets to financial institutions as financial assistance for
providing substantial marketing and sales support. The support may include
sponsoring sales, educational and training seminars for their employees,
providing sales literature, and engineering computer software programs that
emphasize the attributes of the Trust. Such assistance will be predicated upon
the amount of Shares the dealer sells or may sell, and/or
upon the type and nature of sales or operational support furnished by the
financial institution. These payments will be made by the Trust's adviser and
will not be made from the assets of the Trust.
The Glass-Steagall Act prohibits a depository institution (such as a commercial
bank or savings and loan association) from being an underwriter or distributor
of most securities. In the event the Glass-Steagall Act is deemed to prohibit
depository institutions from acting in the 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.
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 PUBLIC ACCOUNTANTS. The independent public accountants for the
Trust are Arthur Andersen LLP, Pittsburgh, Pennsylvania.
NET ASSET VALUE
--------------------------------------------------------------------------------
The Trust's net asset value per Share fluctuates. The net asset value for Shares
is determined by adding the interest of Shares in the market value of all
securities and other assets of the Trust, subtracting the interest of 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 is open for
business. 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
Intermediate Government
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 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
Intermediate Government 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 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. Accounts established through a bank or broker may be
subject to a different 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 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 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 State Street Bank. If the order for
Shares and payment by wire are received on the same day, Shares begin earning
dividends on the next business day. Shares purchased by check begin earning
dividends on the business day after the check is converted, upon instruction of
the transfer agent, into federal funds. Dividends are automatically reinvested
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). All 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 with the written request.
SIGNATURES. Shareholders requesting a redemption of $50,000 or more, a
redemption of any amount to be sent to an address other than that on record with
the Trust, or a redemption payable other than to the shareholder of record must
have signatures on written redemption requests guaranteed by:
- a trust company or commercial bank whose deposits are insured by the Bank
Insurance Fund ("BIF"), which is administered by the Federal Deposit
Insurance Corporation ("FDIC");
- a member of the New York, American, Boston, Midwest, or Pacific Stock
Exchange;
- a savings bank or savings and loan association whose deposits are insured
by the Savings Association Insurance Fund ("SAIF"), which is administered
by the FDIC; or
- any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934.
The Trust does not accept signatures guaranteed by a notary public.
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 portfolio or class, only shares of that portfolio or
class are entitled to vote. As a Massachusetts business trust, the Trust is not
required to hold annual
shareholder meetings. Shareholder approval will be sought only for certain
changes in the Trust's operation and for the election of Trustees under certain
circumstances.
Trustees may be removed by the Trustees or by shareholders at a special meeting.
A special meeting of the shareholders for this purpose shall be called by the
Trustees upon the written request of shareholders owning at least 10% of the
outstanding shares of the Trust entitled to vote.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for obligations of the Trust. To protect
shareholders, the Trust has filed legal documents with Massachusetts that
expressly disclaim the liability of its shareholders for such acts or
obligations of the Trust. These documents require notice of this disclaimer to
be given in each agreement, obligation, or instrument that the Trust or its
Trustees enter into or sign on behalf of the Trust.
In the unlikely event a shareholder is held personally liable for the Trust's
obligations, the Trust is required to use its property to protect or to
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 to 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 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, including capital gains 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.
The Trust is sold without any sales load or other similar non-recurring charges.
From time to time, the Trust may advertise the performance of Shares using
certain financial publications and/or compare the performance of Shares to
certain indices.
OTHER CLASSES OF SHARES
--------------------------------------------------------------------------------
The Trust also offers a separate class of shares known as Institutional Service
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 Rule 12b-1
Distribution Plan adopted by the Trust whereby the distributor is paid a fee of
.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.
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, and due to the differences between class expenses and
shareholder services expenses between classes, the total return and yield for
Institutional Shares, for the same period, will exceed that of Institutional
Service Shares.
The stated advisory fee is the same for both classes of shares.
FEDERATED INTERMEDIATE GOVERNMENT TRUST
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SERVICE SHARES
--------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 22.
<TABLE>
<CAPTION>
YEAR ENDED JANUARY 31,
-------------------------------
1995 1994 1993*
------- ------- -------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.78 $10.61 $10.35
----------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
----------------------------------------------------------
Net investment income 0.51 0.44 0.34
----------------------------------------------------------
Net realized and unrealized gain (loss) on investments (0.67) 0.17 0.26
---------------------------------------------------------- ------ ------ ------
Total from investment operations (0.16) 0.61 0.60
----------------------------------------------------------
LESS DISTRIBUTIONS
----------------------------------------------------------
Dividends to shareholders from net investment income (0.51) (0.44) (0.34)
----------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $10.11 $10.78 $10.61
---------------------------------------------------------- ------ ------ ------
TOTAL RETURN (a) (1.42)% 5.81% 5.84%
----------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
----------------------------------------------------------
Expenses 0.79% 0.77% 0.75%(b)
----------------------------------------------------------
Net investment income 5.00% 4.01% 5.13%(b)
----------------------------------------------------------
Expense waiver/reimbursement (c) 0.21% 0 0
----------------------------------------------------------
SUPPLEMENTAL DATA
----------------------------------------------------------
Net assets, end of period (000 omitted) $33,117 $30,763 $12,987
----------------------------------------------------------
Portfolio turnover rate 163% 131% 85%
----------------------------------------------------------
</TABLE>
* Reflects operations for the period from June 18, 1992 (date of initial
public investment) to January 31, 1993.
(a) Based on net asset value which does not reflect the sales load or contingent
deferred sales charge, if applicable.
(b) Computed on an annualized basis.
(c) 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 INTERMEDIATE GOVERNMENT TRUST
PORTFOLIO OF INVESTMENTS
JANUARY 31, 1995
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------ ------------------------------------------------------------------ ------------
<C> <S> <C>
U.S. TREASURY NOTES--98.3%
---------------------------------------------------------------------------------
$ 20,000,000 5.125%, 3/31/1996 $ 19,591,800
------------------------------------------------------------------
50,000,000 4.25%, 5/15/1996 48,308,000
------------------------------------------------------------------
45,000,000 5.875%, 5/31/1996 44,333,100
------------------------------------------------------------------
65,000,000 6.75%, 5/31/1997 64,212,850
------------------------------------------------------------------
15,000,000 5.625%, 8/31/1997 14,402,400
------------------------------------------------------------------
130,000,000 5.125%, 2/28/1998 121,854,200
------------------------------------------------------------------
107,000,000 5.125%, 3/31/1998 100,126,320
------------------------------------------------------------------
20,000,000 5.375%, 5/31/1998 18,787,600
------------------------------------------------------------------
155,000,000 5.125%, 6/30/1998 144,174,800
------------------------------------------------------------------
70,000,000 5.25%, 7/31/1998 65,277,800
------------------------------------------------------------------
120,000,000 5.125%, 12/31/1998 110,436,000
------------------------------------------------------------------ ------------
TOTAL U.S. TREASURY NOTES (IDENTIFIED COST, $756,594,714) 751,504,870
------------------------------------------------------------------ ------------
REPURCHASE AGREEMENTS(a)--0.2%
---------------------------------------------------------------------------------
1,620,000 J.P. Morgan Securities, Inc., 5.87%, dated 1/31/1995, due 2/1/1995
(AMORTIZED COST) 1,620,000
------------------------------------------------------------------ ------------
TOTAL INVESTMENTS(B) (IDENTIFIED COST $758,214,714) $753,124,870
------------------------------------------------------------------ ------------
</TABLE>
(a) The repurchase agreement is fully collateralized by U.S. Treasury
obligations based on market prices at the date of the portfolio. The
investment in the repurchase agreement is through participation in joint
accounts with other Federated funds.
(b) The cost of investments for federal tax purposes amounts to $758,214,714.
The net unrealized depreciation of investments on a federal tax basis
amounts to $5,089,844 which is comprised of $2,852,172 appreciation and
$7,942,016 depreciation at January 31, 1995.
Note: The categories of investments are shown as a percentage of net assets
($764,397,062) at January 31, 1995.
(See Notes which are an integral part of the Financial Statements)
FEDERATED INTERMEDIATE GOVERNMENT TRUST
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1995
--------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
--------------------------------------------------------------------------------
Investments in securities, at value (identified and tax cost, $758,214,714) $753,124,870
--------------------------------------------------------------------------------
Cash 3,619
--------------------------------------------------------------------------------
Income receivable 8,527,716
--------------------------------------------------------------------------------
Receivable for investments sold 4,915,742
--------------------------------------------------------------------------------
Receivable for shares sold 1,748,838
-------------------------------------------------------------------------------- ------------
Total assets 768,320,785
--------------------------------------------------------------------------------
LIABILITIES:
--------------------------------------------------------------------------------
Payable for shares redeemed $1,106,318
-------------------------------------------------------------------
Income distribution payable 2,746,974
-------------------------------------------------------------------
Accrued expenses 70,431
------------------------------------------------------------------- ----------
Total liabilities 3,923,723
-------------------------------------------------------------------------------- ------------
NET ASSETS for 75,575,367 shares of beneficial interest outstanding $764,397,062
-------------------------------------------------------------------------------- ------------
NET ASSETS CONSISTS OF:
--------------------------------------------------------------------------------
Paid in capital $829,553,866
--------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments (5,089,844)
--------------------------------------------------------------------------------
Accumulated net realized gain (loss) on investments (60,066,960)
-------------------------------------------------------------------------------- ------------
Total Net Assets $764,397,062
-------------------------------------------------------------------------------- ------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
--------------------------------------------------------------------------------
INSTITUTIONAL SHARES:
($731,280,119 / 72,301,159 shares of beneficial interest outstanding) $10.11
-------------------------------------------------------------------------------- ------------
INSTITUTIONAL SERVICE SHARES:
($33,116,943 / 3,274,208 shares of beneficial interest outstanding) $10.11
-------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED INTERMEDIATE GOVERNMENT TRUST
STATEMENT OF OPERATIONS
YEAR ENDED JANUARY 31, 1995
--------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
---------------------------------------------------------------------------------
Interest income $ 48,934,767
---------------------------------------------------------------------------------
EXPENSES:
---------------------------------------------------------------------------------
Investment advisory fee $3,429,592
--------------------------------------------------------------------
Administrative personnel and services fee 710,380
--------------------------------------------------------------------
Custodian fees 296,235
--------------------------------------------------------------------
Transfer agent and dividend disbursing agent fees and expenses 129,746
--------------------------------------------------------------------
Trustees fees 13,544
--------------------------------------------------------------------
Auditing fees 21,236
--------------------------------------------------------------------
Legal fees 15,828
--------------------------------------------------------------------
Portfolio accounting fees 62,135
--------------------------------------------------------------------
Distribution services fee--Institutional Service Shares 71,463
--------------------------------------------------------------------
Shareholder services fee--Institutional Shares 5,353
--------------------------------------------------------------------
Shareholder services fee--Institutional Service Shares 57,785
--------------------------------------------------------------------
Share registration costs 35,000
--------------------------------------------------------------------
Printing and postage 21,387
--------------------------------------------------------------------
Insurance premiums 18,035
--------------------------------------------------------------------
Taxes 336
--------------------------------------------------------------------
Miscellaneous 17,786
-------------------------------------------------------------------- ----------
Total expenses 4,905,841
--------------------------------------------------------------------
Deduct--Waiver of investment advisory fee $141,412
----------------------------------------------------------
Deduct--Waiver of distribution services fee 57,785
---------------------------------------------------------- --------
Total waivers 199,197
-------------------------------------------------------------------- ----------
Net expenses 4,706,644
--------------------------------------------------------------------------------- ------------
Net investment income 44,228,123
--------------------------------------------------------------------------------- ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
---------------------------------------------------------------------------------
Net realized gain (loss) on investments (45,578,263)
---------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on investments (12,312,883)
--------------------------------------------------------------------------------- ------------
Net realized and unrealized gain (loss) on investments (57,891,146)
--------------------------------------------------------------------------------- ------------
Change in net assets resulting from operations $(13,663,023)
--------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED INTERMEDIATE GOVERNMENT 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 $ 44,228,123 $ 40,467,138
------------------------------------------------------------
Net realized gain (loss) on investments ($29,464,881 net
loss and $24,049,193 net gain, respectively, as computed
for federal income tax purposes) (45,578,263) 24,049,193
------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on
investments (12,312,883) (9,851,052)
------------------------------------------------------------ ------------- -------------
Change in net assets resulting from operations (13,663,023) 54,665,279
------------------------------------------------------------ ------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS--
------------------------------------------------------------
Institutional Shares--Distributions from net investment
income (42,798,247) (39,557,765)
------------------------------------------------------------
Institutional Service Shares--Distributions from net
investment income (1,429,876) (909,373)
------------------------------------------------------------ ------------- -------------
Change in net assets resulting from distributions to
shareholders (44,228,123) (40,467,138)
------------------------------------------------------------
SHARE TRANSACTIONS
------------------------------------------------------------
Proceeds from sale of shares 296,717,727 507,015,719
------------------------------------------------------------
Net asset value of shares issued to shareholders in payment
of dividends declared 14,030,578 11,606,567
------------------------------------------------------------
Cost of shares redeemed (470,751,036) (409,136,551)
------------------------------------------------------------ ------------- -------------
Change in net assets resulting from Trust share
transactions (160,002,731) 109,485,735
------------------------------------------------------------ ------------- -------------
Change in net assets (217,893,877) 123,683,876
------------------------------------------------------------
NET ASSETS:
------------------------------------------------------------
Beginning of period 982,290,939 858,607,063
------------------------------------------------------------ ------------- -------------
End of period $ 764,397,062 $ 982,290,939
------------------------------------------------------------ ------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED INTERMEDIATE GOVERNMENT TRUST
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1995
--------------------------------------------------------------------------------
1. ORGANIZATION
Federated Intermediate Government 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.
<TABLE>
<C> <S>
A. INVESTMENT VALUATIONS--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. Short- term securities with remaining maturities of sixty days or less may be
stated at amortized cost, which approximates value.
B. 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
in support of 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 repurchase price to be paid under the repurchase agreement transaction.
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 the guidelines established by the Board of Trustees (the
"Trustees"). Risks may arise from the potential inability of counterparties to honor the
terms of the repurchase agreement. Accordingly, the Trust could receive less than the
repurchase price on the sale of collateral securities.
C. 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.
D. 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 $43,953,577, which will reduce the Trust's taxable income arising from
future net realized gain on investments, if any, to the extent permitted by the Code,
and thus will reduce the amount of the distributions to shareholders which would
otherwise be necessary to relieve the Trust of any liability for federal tax. Pursuant
to the Code, such capital loss carryforward will expire in 1998 ($14,488,696) and 2003
($29,464,881). Additionally, net capital losses of $16,113,382 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.
E. 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.
F. OTHER--Investment transactions are accounted for on the trade date.
</TABLE>
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
--------------------------- ---------------------------
INSTITUTIONAL SHARES SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
----------------------------------------
Shares sold 26,144,012 $ 270,233,159 44,183,221 $ 474,495,331
----------------------------------------
Shares issued to shareholders in payment
of dividends declared 1,282,081 13,129,629 1,024,213 11,001,988
----------------------------------------
Shares redeemed (43,394,809) (447,488,088) (36,651,122) (393,535,270)
---------------------------------------- ----------- ------------- ----------- -------------
NET CHANGE RESULTING FROM
INSTITUTIONAL SHARE TRANSACTIONS (15,968,716) $(164,125,300) 8,556,312 $ 91,962,049
---------------------------------------- ----------- ------------- ----------- -------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED JANUARY 31,
---------------------------------------------------------
1995 1994
--------------------------- ---------------------------
INSTITUTIONAL SERVICE SHARES SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
----------------------------------------
Shares sold 2,584,111 $ 26,484,568 3,025,251 32,520,388
----------------------------------------
Shares issued to shareholders in payment
of dividends declared 87,976 900,949 56,258 604,579
----------------------------------------
Shares redeemed (2,251,658) (23,262,948) (1,451,880) (15,601,281)
---------------------------------------- ----------- ------------- ----------- -------------
NET CHANGE RESULTING FROM
INSTITUTIONAL SERVICE SHARE
TRANSACTIONS 420,429 $ 4,122,569 1,629,629 $ 17,523,686
---------------------------------------- ----------- ------------- ----------- -------------
NET CHANGE RESULTING FROM TRUST
SHARE TRANSACTIONS (15,548,287) $(160,002,731) 10,185,941 $ 109,485,735
---------------------------------------- ----------- ------------- ----------- -------------
</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.
The Adviser may voluntarily choose to waive any portion of its fee and/or
reimburse certain operating expenses of the Trust. The Adviser can modify or
terminate this voluntary waiver and/or reimbursement at any time at its sole
discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Trust
administrative personnel and services. The FAS fee is based on the level of
average aggregate daily net assets of all funds advised by subsidiaries of
Federated Investors for the period. The administrative fee received during the
period of the Administrative Services Agreement shall be at least $125,000 per
portfolio and $30,000 per each additional class of shares.
DISTRIBUTION 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 Corporation ("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 services for shareholders and to
maintain shareholder accounts.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES--Federated Services Company
("FServ") serves as transfer agent and dividend disbursing agent for the Trust.
The FServ 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 Officers and Trustees of the Trust are Officers and Directors
or Trustees of the above companies.
5. INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
fiscal year ended January 31, 1995, were as follows:
<TABLE>
<S> <C>
-----------------------------------------------------------------------------
PURCHASES-- $1,370,082,025
----------------------------------------------------------------------------- --------------
SALES-- $1,513,944,141
----------------------------------------------------------------------------- --------------
</TABLE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
--------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
FEDERATED INTERMEDIATE GOVERNMENT TRUST:
We have audited the accompanying statement of assets and liabilities of
Federated Intermediate Government Trust (a Massachusetts business trust),
including the schedule of portfolio investments, as of January 31, 1995, and the
related statement of operations for the year then ended, and the statement of
changes in net assets for each of the two years in the period then ended, and
the financial highlights (see pages 2 and 13 of the prospectus) for the periods
presented. These financial statements and financial highlights are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
January 31, 1995, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Federated Intermediate Government Trust as of January 31, 1995, the results of
its operations for the year then ended, the changes in its net assets for each
of the two years in the period then ended, and the financial highlights for the
periods presented, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania,
March 10, 1995
ADDRESSES
--------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Federated Intermediate Government 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 Public Accountants
Arthur Andersen LLP 2100 One PPG Place
Pittsburgh, Pennsylvania 15222
------------------------------------------------------------------------------------------------
</TABLE>
FEDERATED INTERMEDIATE
GOVERNMENT 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
314200106
8022502A-IS (3/95)
Federated Intermediate Government Trust
Institutional Shares
Institutional Service Shares
Combined Statement of Additional Information
The Institutional Shares and Institutional Service Shares
represent interests in a diversified portfolio of securities of
Federated Intermediate Government Trust (the "Trust"). This
Combined Statement of Additional Information should be read with
the respective prospectuses 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
Repurchase Agreements 1
Portfolio Turnover 1
Investment Limitations 1
Federated Intermediate Government
Trust Management 2
Trust Ownership 6
Trustees Compensation 7
Trustee Liability 7
Investment Advisory Services 7
Adviser to the Trust 7
Advisory Fees 8
Other Advisory Services 8
Administrative Services 8
Brokerage Transactions 9
Distribution Plan
(Institutional Service Shares
only) and Shareholder Services
Plan 9
Conversion to Federal Funds 10
Determining Net Asset Value 10
Determining Market Value of
Securities 10
Redeeming Shares 10
Exchanging Securities for Trust
Shares 10
Tax Consequences 10
Tax Status 10
The Trust's Tax Status 10
Shareholders' Tax Status 11
Total Return 11
Yield 11
Performance Comparisons 11
Duration 13
General Information About the Trust
Federated Intermediate Government 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," as the context may require). This Combined
Statement of Additional Information relates to the above-mentioned
Shares of the Trust.
Investment Objective and Policies
The Trust's investment objective is current income.
Types of Investments
The Trust invests only in U.S. government securities with remaining
maturities of five years or less. This investment policy and the
objective stated above cannot be changed without approval of
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. 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. As a matter of operating policy, 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.
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").
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
163% and 131% , respectively.
Investment Limitations
The Trust will not change any of the investment limitations described
below without approval of shareholders.
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 except as a temporary measure for
extraordinary or emergency purposes and then only in amounts not
in excess of 5% of the value of its total assets or in an amount
up to one-third of the value of its total assets, including the
amount borrowed, in order to meet redemption requests without
immediately selling portfolio securities. This borrowing provision
is not for investment leverage but solely to facilitate management
of the portfolio by enabling the Trust to meet redemption requests
when the liquidation of portfolio securities is deemed to be
inconvenient or disadvantageous. However, such use will not assure
that portfolio securities will not be liquidated at a
disadvantageous time.
Interest paid by the Trust on borrowed funds will not be available
for investment. While borrowings are outstanding, no portfolio
securities may be purchased by the Trust.
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 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 that it may
purchase or hold U.S. government securities, including repurchase
agreements, permitted by its investment objective and policies.
Issuing Senior Securities
The Trust will not issue senior securities, except as permitted by
its investment objective and policies.
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.
The Trust did not borrow money or pledge securities in excess of 5% of
the value of its total assets during the last fiscal year and has no
present intent to do so in the coming fiscal year.
As a matter of operating policy, the Trust will not purchase any
securities while borrowings in excess of 5% of its total assets are
outstanding.
Federated Intermediate Government Trust Management
Officers and Trustees are listed with their addresses, present
positions with Federated Intermediate Government 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 Director, 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 Fund, 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 & Flaherty
Two Gateway Center - Suite 674
Pittsburgh, PA
Birthdate: June 18, 1924
Trustee
Attorney-at-law; Partner, Henny, Koehuba, Meyer & Flaherty; Director,
Eat'N Park Restaurants, Inc., and Statewide Settlement Agency, Inc.;
Director, Trustee, or Managing General Partner of the Funds; formerly,
Counsel, Horizon Financial, F.A., Western Region.
Peter E. Madden
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 & Flaherty
Two Gateway Center - Suite 674
Pittsburgh, PA
Birthdate: October 6, 1926
Trustee
Attorney-at-law; Partner, Henny, Koehuba, Meyer & 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.S., 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: June 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 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
Fund; 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 Fund, Inc.; Liquid Cash Trust;
Managed Series Trust; Money Market Management, Inc.; Money Market
Obligations Trust; Money Market Trust; Municipal Securities Income
Trust; Newpoint Funds; New York Municipal Cash Trust; 111 Corcoran
Funds; Peachtree Funds; The Planters Funds; RIMCO Monument Funds; The
Shawmut Funds; 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, no shareholders of record owned 5% or more of the
outstanding Institutional Shares of the Trust:
As of March 6, 1995, the following shareholders of record owned 5% or
more of the outstanding Institutional Service Shares of the Trust:
Alltel Corp., Thrift Plan, Nationsbank Trustee, c/o Howard Johnson &
Company owned approximately 743,110 shares (22.65%); Rockland Trust
Company owned approximately 211,836 shares (6.46%); Charles Schwab &
Co., Inc. (as record owner holding shares for its clients) owned
approximately 972,284 shares (29.64%); and Rockland Trust Company (in a
separate account from the above-mentioned) owned approximately 240,943
shares (7.35%).
Trustees Compensation
AGGREGATE
NAME , COMPENSATION
POSITION WITH FROM TOTAL COMPENSATION PAID
TRUST TRUST* FROM FUND COMPLEX +
John F. Donahue, $ 0 $0 for the Trust and
Chairman and Trustee 68 other investment companies in the Fund
Complex
Thomas G. Bigley, $ 1,883 $20,688 for the Trust and
Trustee 49 other investment companies in the Fund
Complex
John T. Conroy, Jr., $ 1,802 $117,202 for the Trust and
Trustee 64 other investment companies in the Fund
Complex
William J. Copeland, $ 1,802 $117,202 for the Trust and
Trustee 64 other investment companies in the Fund
Complex
James E. Dowd, $ 1,802 $117,202 for the Trust and
Trustee 64 other investment companies in the Fund
Complex
Lawrence D. Ellis, M.D., $ 1,883 $106,460 for the Trust and
Trustee 64 other investment companies in the Fund
Complex
Edward L. Flaherty, Jr., $ 1,802 $117,202 for the Trust and
Trustee 64 other investment companies in the Fund
Complex
Peter E. Madden, $ 1,575 $90,563 for the Trust and
Trustee 64 other investment companies in the Fund
Complex
Gregor F. Meyer, $ 1,883 $106,460 for the Trust and
Trustee 64 other investment companies in the Fund
Complex
John E. Murray, Jr., $ 0 $0 for the Trust and
Trustee 68 other investment companies in the Fund
Complex
Wesley W. Posvar, $ 1,883 $106,460 for the Trust and
Trustee 64 other investment companies in the Fund
Complex
Marjorie P. Smuts, $ 1,883 $106,460 for the Trust and
Trustee 64 other investment companies in the Fund
Complex
*Information is furnished for the fiscal year ended January 31, 1995.
+The information is provided for the last calendar year.
Trustee Liability
The Trust's Declaration of Trust provides that the Trustees are not
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 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 $3,429,592, $3,760,780, and $3,139,974, respectively, of which
$141,412, $0, and $0 were voluntarily waived.
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 by the
adviser will be limited, in any single fiscal year, by the amount
of the investment advisory fee.
This arrangement is not part of the advisory contract and may be
amended or rescinded in the future.
Other 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 prospectus. 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 collectively earned $710,380, none of which was
voluntarily waived. For the fiscal years ended January 31, 1994 and
1993, Federated Administrative Services, Inc. earned $647,491, and
$467,115, respectively. Dr. Henry J. Gailliot, an officer of
Federated Management, the adviser to the Trust, holds approximately 20%
of the outstanding common stock and serves as 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:
o advice as to the advisability of investing in securities;
o security analysis and reports;
o economic studies;
o industry studies;
o receipt of quotations for portfolio evaluations; and
o 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 charge on days
the New York Stock Exchange is open for business. The procedure for
purchasing shares is explained in the respective prospectuses under
"Investing in Institutional Shares" or "Investing in Institutional
Service Shares."
Distribution Plan (Institutional Service Shares only) and Shareholder
Services Plan
As explained in the respective prospectuses, with respect to Shares of
the Trust, the Trust has adopted a Shareholder Services Plan, and, with
respect to Institutional Service Shares, the Trust has adopted a
Distribution Plan.
These arrangements permit the payment of fees to financial institutions,
the distributor, and Federated Shareholder Services, to stimulate
distribution activities and to cause services to be provided to
shareholders by a representative who has knowledge of the shareholder's
particular circumstances and goals. These activities and services may
include, but are not limited to, marketing efforts; providing office
space, equipment, telephone facilities, and various clerical,
supervisory, computer, and other personnel as necessary or beneficial to
establish and maintain shareholder accounts and records; processing
purchase and redemption transactions and automatic investments of client
account cash balances; answering routine client inquiries; and assisting
clients in changing dividend options, account designations and
addresses.
By adopting the Distribution Plan, the Trustees expect 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 year ended January 31, 1995, payments in the amount of
$71,463 were made by Institutional Service Shares pursuant to the
Distribution Plan, of which $57,785 was voluntarily waived.
For the fiscal year ended January 31, 1995, payments in the amounts of
$5,353 and $57,785 were made by the Trust pursuant to the Shareholder
Services Plan for Institutional Shares and Institutional Service Shares,
respectively.
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 and Trust Company ("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 net asset
value 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:
o 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
o 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 at the next computed net asset value after the
Trust receives the redemption request. Redemption procedures are
explained in the respective prospectuses 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 Trust Shares
Investors may exchange 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. 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:
o derive at least 90% of its gross income from dividends, interest, and
gains from the sale of securities;
o derive less than 30% of its gross income from the sale of securities
held less than three months;
o invest in securities within certain statutory limits; and
o 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
Long-term capital gains distributed to shareholders will be
treated as long-term capital gains regardless of how long
shareholders have held Shares.
Total Return
The Trust's average annual total return for Institutional Shares for the
one-year and five-year periods ended January 31, 1995, and for the
period from February 18, 1983 (effective date of the Trust's
registration statement) to January 31, 1995, were (1.18%), 7.27% and
8.53%, 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 (1.42%) and 4.15%, 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 7.33%.
The Trust's yield for Institutional Service Shares for the thirty-day
period ended January 31, 1995, was 7.08%.
The yield for both classes of Shares of the Trust is determined by
dividing the net investment income per share (as defined by the
Securities and Exchange Commission) earned by either class of Shares
over a thirty-day period by the offering price per share of either class
on the last day of the period. This value is then annualized using semi-
annual compounding. This means that the amount of income generated
during the thirty-day period is assumed to be generated each month over
a 12-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:
o portfolio quality;
o average portfolio maturity;
o type of instruments in which the portfolio is invested;
o changes in interest rates and market value of portfolio securities;
o changes in the Trust's expenses or either class of Share's expenses;
and
o various other factors.
Either class of Shares' performance fluctuates on a daily basis largely
because net earnings and net asset value per share fluctuate daily. Both
net earnings and net asset value 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:
o 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 specific period of time. From time
to time, the Trust will quote its Lipper ranking in the U.S.
government funds category in advertising and sales literature.
o Merrill Lynch Composite 1-5 Year Treasury Index is comprised of
approximately 66 issues of U.S. Treasury securities maturing
between 1 and 4.99 years, with coupon rates of 4.25% or more. These
total return figures are calculated for one, three, six, and twelve
month periods and year-to-date and include the value of the bond
plus income and any price appreciation or depreciation.
o Merrill Lynch 3-5 Year Treasury Index is comprised of approximately
24 issues of intermediate-term U.S. government and U.S. Treasury
securities with maturities between 3 and 4.99 years and coupon
rates above 4.25%. Index returns are calculated as total returns
for periods of one, three, six and twelve months as well as year-to-
date.
o Merrill Lynch 3-Year, 4-Year, and 5-Year Treasury Yield Curve
Indices are unmanaged indices comprised of the most recently issued
3-year, 4-year, and 5-year U.S. Treasury notes. Index returns are
calculated as total returns for periods of one, three, six, and
twelve months as well as year-to-date.
o Salomon Brothers 3-5 Year Government Index quotes total returns for
U.S. Treasury issues (excluding flower bonds) which have maturities
of three to five years. These total returns are year-to-date
figures which are calculated each month following January 1.
o 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.
o Lehman Brothers Intermediate 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 minimum outstanding principal
of $1 million and minimum maturity of one year and maximum maturity
of ten years are included.
o 3-Year Treasury Notes--Source: Wall Street Journal, Bloomberg
Financial Markets, and Telerate.
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.
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--------------------------------------------------------------------------------
ANNUAL REPORT FOR FISCAL YEAR ENDED JANUARY 31, 1995
MANAGEMENT DISCUSSION AND ANALYSIS:
---------------------------------------------------------------------------
Federated Intermediate Government Trust (the "Trust"), which is rated
AAAf by Standard & Poor's Ratings Group,* represents a fully-invested
participation in obligations of the U.S. Treasury and certain government
agencies which have a maximum maturity of five years and an average
maturity of three to four years.
During the report period, interest rates increased steadily all along
the yield curve. Short to intermediate-term rates rose more than long-term
rates in response to continued tightening of monetary policy by the Federal
Reserve (the "Fed"). The Fed tightened six times, increasing the Federal
Funds target rate from 3.00% to 5.50%, in reaction to a strong U.S. economy
and resource utilization pressures. The 3-year Treasury note yield
increased from 4.40% at January 31, 1994 to 7.40% at January 31, 1995.
During the reporting period, the Trust maintained a defensive posture with
an average maturity of 3.0 years and a duration of 2.8 years. The Trust
benefited from a laddered portfolio structure due to the steepness in the
front end of the yield curve. The total returns for Institutional Shares
and Institutional Service Shares of the Trust for the fiscal year ended
January 31, 1995 were (1.18%)** and (1.42%)**, respectively, compared to
(0.55%) for the Merrill Lynch 3-Year Treasury Index, (1.75%) for the
Merrill Lynch 3-5 Year Government Index, and (1.10%) for the Lipper Short
U.S. Government Fund Average***. The total returns of Institutional Shares
and Institutional Service Shares were between that of the Merrill Lynch
indices because the Trust's duration (2.8 years) fell between the duration
of the Merrill Lynch 3-Year Treasury Index (2.4 years) and the Merrill
Lynch 3-5 Year Government Index (3.4 years)***.
Although economic data has been mixed, economic growth appears to be
slowing and the Fed's tightening cycle appears to be nearing an end.
Economic and market developments will continue to be monitored for the best
opportunities to extend the Trust's average maturity target.
*This rating is obtained after Standard & Poor's Ratings Group evaluates
a number of factors, including credit quality, market price exposure,
and management. They monitor the portfolio weekly for developments that
could cause changes in ratings.
**Performance quoted represents past performance. Investment return and
principal value will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost.
***These indices are unmanaged.
FEDERATED INTERMEDIATE GOVERNMENT TRUST
INSTITUTIONAL SERVICE SHARES
--------------------------------------------------------------------------------
GROWTH OF $25,000 INVESTED IN FEDERATED INTERMEDIATE GOVERNMENT TRUST
INSTITUTIONAL SERVICE SHARES
The graph below illustrates the hypothetical investment of $25,000 in the
Institutional Service Shares of Federated Intermediate Government Trust (the
"Trust")* from May 30, 1992 (start of performance) to January 31, 1995 compared
to the Merrill Lynch Three to Five Year Government Securities Index (MLTFYGS)+,
the Lipper Short-Term U.S. Government Funds Average (LSTUSGFA)++ and the Merrill
Lynch Three Year Treasury Index (MLTYT).+
GRAPHIC REPRESENTATION OMITTED. SEE APPENDIX "A"
AVERAGE ANNUAL TOTAL RETURN** FOR THE PERIOD
ENDED JANUARY 31, 1995
1 Year............................................................... (1.42%)
Start of Performance (5/30/92)....................................... 4.15%
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF OR
GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
THIS REPORT MUST BE PRECEDED OR ACCOMPANIED BY THE TRUST'S PROSPECTUS DATED
MARCH 31, 1995, AND, TOGETHER WITH FINANCIAL STATEMENTS CONTAINED THEREIN,
CONSTITUTES THE TRUST'S ANNUAL REPORT.
* The Trust's performance assumes the reinvestment of all dividends and
distributions. The MLTFYGS Index, the LSTUSGFA and the MLTYT Index have been
adjusted to reflect reinvestment of dividends on securities in the indices
and average.
** Total returns quoted reflect all applicable sales charges and contingent
deferred sales charges.
+ The MLTFYGS Index and the MLTYT Index are not adjusted to reflect sales
loads, expenses, or other fees that the Securities and Exchange Commission
requires to be reflected in the Trust's performance. These indices are
unmanaged.
++ The LSTUSGFA represents the average of the total returns reported by all of
the mutual funds designated by Lipper Analytical Services, Inc. as falling
into the category, and is not adjusted to reflect any sales loads. However,
total return is reported net of expenses or other fees that the Securities
and Exchange Commission requires to be reflected in a fund's performance.
FEDERATED INTERMEDIATE GOVERNMENT TRUST
INSTITUTIONAL SHARES
--------------------------------------------------------------------------------
GROWTH OF $25,000 INVESTED IN FEDERATED INTERMEDIATE GOVERNMENT TRUST
INSTITUTIONAL SHARES
The graph below illustrates the hypothetical investment of $25,000 in the
Institutional Shares of Federated Intermediate Government Trust (the "Trust")*
from January 31, 1985 to January 31, 1995 compared to the Merrill Lynch Three to
Five Year Government Securities Index (MLTFYGS)+, the Lipper Short-Term U.S.
Government Funds Average (LSTUSGFA)++ and the Merrill Lynch Three Year Treasury
Index (MLTYT).+
GRAPHIC REPRESENTATION OMITTED. SEE APPENDIX "B"
AVERAGE ANNUAL TOTAL RETURN** FOR THE PERIOD
ENDED JANUARY 31, 1995
1 Year................................................. (1.18%)
5 Year................................................. 7.27%
10 Year................................................ 8.23%
Start of Performance (2/18/83)......................... 8.53%
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF OR
GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
THIS REPORT MUST BE PRECEDED OR ACCOMPANIED BY THE TRUST'S PROSPECTUS DATED
MARCH 31, 1995, AND, TOGETHER WITH FINANCIAL STATEMENTS CONTAINED THEREIN,
CONSTITUTES THE TRUST'S ANNUAL REPORT.
* The Trust's performance assumes the reinvestment of all dividends and
distributions. The MLTFYGS Index, the LSTUSGFA and the MLTYT Index have been
adjusted to reflect reinvestment of dividends on securities in the indices
and average.
** Total returns quoted reflect all applicable sales charges and contingent
deferred sales charges.
*** For this illustration, the MLTYT Index began performance on December 31,
1987. The index was assigned a beginning value of $33,103, the value of the
Trust on December 31, 1987.
+ The MLTFYGS Index and the MLTYT Index are not adjusted to reflect sales
loads, expenses, or other fees that the Securities and Exchange Commission
requires to be reflected in the Trust's performance. These indices are
unmanaged.
++ The LSTUSGFA represents the average of the total returns reported by all of
the mutual funds designated by Lipper Analytical Services, Inc. as falling
into the category, and is not adjusted to reflect any sales loads. However,
total return is reported net of expenses or other fees that the Securities
and Exchange Commission requires to be reflected in a fund's performance.
FEDERATED SECURITIES CORP.
(LOGO)
--------------------------------------------------------------------------------
Distributor
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FEDERATED INTERMEDIATE GOVERNMENT TRUST
APPENDIX
A. The graphic representation here displayed consists of a line
graph. The corresponding components of the line graph are listed
underneath. The Institutional Service Shares of the Trust are
represented by a solid line. Merrill Lynch Three to Five Year
Government Securities Index is represented by a broken line. Lipper
Short-Term U.S. Government Funds Average is represented by a broken
dotted line. Merrill Lynch Three Year Treasury Index is represented by
a dotted line. The line graph is a visual representation of a
comparison of change in value of a hypothetical investment of $25,000 in
Institutional Service Shares of the Trust, Merrill Lynch Three to Five
Year Government Securities Index, Lipper Short-Term U.S. Government
Funds Average and Merrill Lynch Three Year Treasury Index for the period
from May 30, 1992 (start of performance) to January 31, 1995. The "y"
axis reflects the cost of investment. The "x" axis reflects computation
periods in yearly increments from May 30, 1992 (start of performance) to
January 31, 1995. The right margin of the chart reflects the ending
value of the hypothetical investment in the Institutional Service Shares
of the Trust as compared to Merrill Lynch Three to Five Year Government
Securities Index, Lipper Short-Term U.S. Government Funds Average and
Merrill Lynch Three Year Treasury Index. The ending values are
$27,868, $28,632, $28,207 and $228,224, respectively.
B. The graphic representation here displayed consists of a line
graph. The corresponding components of the line graph are listed
underneath. The Institutional Shares of the Trust are represented by a
solid line. Merrill Lynch Three to Five Year Government Securities
Index is represented by a broken line. Lipper Short-Term U.S.
Government Funds Average is represented by a broken dotted line.
Merrill Lynch Three Year Treasury Index is represented by a dotted line.
The line graph is a visual representation of a comparison of change in
value of a hypothetical investment of $25,000 in Institutional Shares of
the Trust, Merrill Lynch Three to Five Year Government Securities Index,
Lipper Short-Term U.S. Government Funds Average and Merrill Lynch Three
Year Treasury Index for the ten-year period from January 31, 1985 to
January 31, 1995. The "y" axis reflects the cost of investment. The
"x" axis reflects computation periods in yearly increments from January
31, 1985 to January 31, 1995. The right margin of the chart reflects
the ending value of the hypothetical investment in the Institutional
Shares of the Trust as compared to Merrill Lynch Three to Five Year
Government Securities Index, Lipper Short-Term U.S. Government Funds
Average and Merrill Lynch Three Year Treasury Index. The ending values
are $55,154, $60,704, $52,376 and $55,367, respectively.
