FEDERATED SHORT-INTERMEDIATE GOVERNMENT TRUST
INSTITUTIONAL SHARES
PROSPECTUS
The Institutional Shares offered by this prospectus represent interests in a
diversified portfolio of securities (the "Fund") of Federated Short-Intermediate
Government Trust (the "Trust"). The Trust is an open-end management investment
company (a mutual fund).
The investment objective of the Fund is current income. The Fund invests
primarily in U.S. government securities. Institutional Shares are sold at net
asset value.
THE INSTITUTIONAL SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR
OBLIGATIONS OF ANY BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK, AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD,
OR ANY OTHER GOVERNMENTAL AGENCY. INVESTMENT IN THESE SHARES INVOLVES INVESTMENT
RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
This prospectus contains the information you should read and know before you
invest in Institutional Shares of the Fund. Keep this prospectus for future
reference.
The Fund has also filed a Combined Statement of Additional Information for
Institutional Shares and Institutional Service Shares dated April 30, 1994, 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 make inquiries about the Fund, contact the Fund 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 April 30, 1994
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
SUMMARY OF FUND EXPENSES 1
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS--
INSTITUTIONAL SHARES 2
- ------------------------------------------------------
GENERAL INFORMATION 3
- ------------------------------------------------------
INVESTMENT INFORMATION 3
- ------------------------------------------------------
Investment Objective 3
Investment Policies 3
Acceptable Investments 3
Repurchase Agreements 4
When-Issued and Delayed
Delivery Transactions 4
Portfolio Transactions 4
Investment Limitations 4
TRUST INFORMATION 4
- ------------------------------------------------------
Management of the Trust 4
Board of Trustees 4
Investment Adviser 4
Advisory Fees 5
Adviser's Background 5
Distribution of Institutional Shares 5
Administration of the Fund 5
Administrative Services 5
Shareholder Services Plan 6
Custodian 6
Transfer Agent and
Dividend Disbursing Agent 6
Legal Counsel 6
Independent Auditors 6
NET ASSET VALUE 6
- ------------------------------------------------------
INVESTING IN INSTITUTIONAL SHARES 7
- ------------------------------------------------------
Share Purchases 7
By Wire 7
By Mail 7
Minimum Investment Required 7
What Shares Cost 7
Subaccounting Services 8
Certificates and Confirmations 8
Dividends 8
Capital Gains 8
REDEEMING INSTITUTIONAL SHARES 8
- ------------------------------------------------------
Telephone Redemption 8
Written Requests 9
Signatures 9
Receiving Payment 9
Accounts With Low Balances 9
SHAREHOLDER INFORMATION 10
- ------------------------------------------------------
Voting Rights 10
Massachusetts Partnership Law 10
TAX INFORMATION 10
- ------------------------------------------------------
Federal Income Tax 10
Pennsylvania Corporate and Personal
Property Taxes 11
PERFORMANCE INFORMATION 11
- ------------------------------------------------------
OTHER CLASSES OF SHARES 12
- ------------------------------------------------------
Financial Highlights
Institutional Service Shares 13
FINANCIAL STATEMENTS 14
- ------------------------------------------------------
REPORT OF ERNST & YOUNG,
INDEPENDENT AUDITORS 23
- ------------------------------------------------------
ADDRESSES Inside Back Cover
- ------------------------------------------------------
SUMMARY OF FUND EXPENSES
INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
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 Fees (as a percentage of amount redeemed, if applicable)................... None
Exchange Fee.......................................................................... None
ANNUAL INSTITUTIONAL SHARES OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee........................................................................ 0.40%
12b-1 Fee............................................................................. None
Total Other Expenses.................................................................. 0.14%
Shareholder Services Fee(1)................................................ 0.00%
Total Institutional Shares Operating Expenses(2)................................. 0.54%
</TABLE>
(1) The maximum Shareholder Servicing Fee is 0.25%.
(2) The Total Institutional Shares Operating Expenses in the table above are
based on expenses expected during the fiscal year ending February 28, 1995. The
Total Institutional Shares Operating Expenses were 0.51% for the fiscal year
ended February 28, 1994.
THE PURPOSE OF THIS TABLE IS TO ASSIST AN INVESTOR IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT A SHAREHOLDER OF THE INSTITUTIONAL SHARES OF THE
FUND WILL BEAR, EITHER DIRECTLY OR INDIRECTLY. FOR MORE COMPLETE DESCRIPTIONS OF
THE VARIOUS COSTS AND EXPENSES, SEE " TRUST INFORMATION" AND "INVESTING IN
INSTITUTIONAL SHARES." Wire-transferred redemptions of less than $5,000 may be
subject to additional fees.
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years 5 years 10 years
------ ------- -------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 invest-
ment assuming (1) 5% annual return and (2) redemption
at the end of each time period.......................... $6 $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 Fund. The Fund 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 up to 0.25%. See
"Other Classes of Shares."
FEDERATED SHORT-INTERMEDIATE GOVERNMENT TRUST
INSTITUTIONAL SHARES
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Ernst & Young, Independent Auditors on page
23.
<TABLE>
<CAPTION>
YEAR ENDED FEBRUARY 28,
-----------------------------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988 1987 1986 1985*
- ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET
ASSET
VALUE,
BEGINNING
OF
PERIOD $10.53 $10.34 $10.12 $9.93 $9.81 $10.21 $10.42 $10.39 $10.18 $10.00
- ------
INCOME
FROM
INVESTMENT
OPERATIONS
- ------
Net
investment
income 0.37 0.48 0.67 0.72 0.84 0.82 0.81 0.84 1.06 1.06
- ------
Net
realized
and
unrealized
gain
(loss) on
investments (0.07) 0.19 0.22 0.19 0.12 (0.40) (0.16) 0.03 0.21 0.18
- ------ ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Total
from
investment
operations 0.30 0.67 0.89 0.91 0.96 0.42 0.65 0.87 1.27 1.24
- ------
LESS
DISTRIBUTIONS
- ------
Dividends
to
shareholders
from
net
investment
income (0.37) (0.48) (0.67) (0.72) (0.84) (0.82) (0.81) (0.84) (1.06) (1.06)
- ------
Distributions
to
shareholders
from net
realized
gain on
investment
transactions -- -- -- -- -- -- (0.05) -- -- --
- ------ ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Total
distributions (0.37) (0.48) (0.67) (0.72) (0.84) (0.82) (0.86) (0.84) (1.06) (1.06)
- ------ ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
NET
ASSET
VALUE,
END OF
PERIOD $10.46 $10.53 $10.34 $10.12 $9.93 $9.81 $10.21 $10.42 $10.39 $10.18
- ------ ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
TOTAL
RETURN** 2.93% 6.64% 9.07% 10.11% 10.08% 4.23% 6.58% 8.73% 12.99% 13.71%
- ------
RATIOS
TO
AVERAGE
NET
ASSETS
- ------
Expenses 0.51% 0.49% 0.48% 0.48% 0.48% 0.47% 0.46% 0.45% 0.43% 0.27%(a)
- ------
Net
investment
income 3.56% 4.63% 6.57% 7.79% 8.42% 8.14% 7.89% 7.97% 10.09% 11.28%(a)
- ------
Expense
waiver/reimbursement(b) 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.01% 0.02% 0.02% 0.18%(a)
- ------
SUPPLEMENTAL
DATA
- ------
Net
assets,
end of
period (000 omitted) $858,556 $1,034,374 $1,171,633 $1,296,579 $1,725,112 $2,236,208 $3,016,355 $4,348,532 $2,005,689 $386,489
- ------
Portfolio
turnover
rate 150% 132% 114% 96% 172% 112% 85% 99% 138% 224%
- ------
</TABLE>
* For the period from March 15, 1984 (date of initial public investment) to
February 28, 1985.
** Based on net asset value which does not reflect the sales load or contingent
deferred sales charge, if applicable.
(a) Computed on an annualized basis.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above (Note 4)
(See Notes which are an integral part of the Financial Statements)
Further information about the Fund's performance is contained in the Fund's
annual report dated February 28, 1994, which can be obtained free of charge.
GENERAL INFORMATION
- --------------------------------------------------------------------------------
The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated January 3, 1984. The Declaration of Trust permits the Trust to
offer separate series of shares of beneficial interest representing interest 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 Trustees
have established two classes of shares of the Fund, known as Institutional
Shares and Institutional Service Shares. This prospectus relates only to
Institutional Shares.
Institutional Shares ("Shares") of the Fund are designed to give institutions
and individuals 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 charge
imposed by the Fund.
INVESTMENT INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The investment objective of the Fund is current income. While there is no
assurance that the Fund 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
The Fund pursues its investment objective by investing in U.S. government
securities with remaining maturities of 3 1/2 years or less.
ACCEPTABLE INVESTMENTS. The U.S. government securities in which the Fund invests
are either issued or guaranteed by the U.S. government, its agencies, or
instrumentalities. These securities are limited to:
- direct obligations of the U.S. Treasury such as U.S. Treasury bills,
notes, and bonds; and
- obligations of U.S. government agencies or instrumentalities such as
Federal Home Loan Banks, Federal National Mortgage Association,
Government National Mortgage Association, Banks for Cooperatives
(including Central Bank for Cooperatives), Federal Land Banks, Federal
Intermediate Credit Banks, Tennessee Valley Authority, Export-Import Bank
of the United States, Commodity Credit Corporation, Federal Financing
Bank, Student Loan Marketing Association, Federal Home Loan Mortgage
Corporation, or National Credit Union Administration.
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. The 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 Fund 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 Fund, the Fund 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 Fund will not invest more than 15% of its net assets in securities
which are illiquid, including repurchase agreements providing for settlement in
more than seven days after notice.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. As a matter of investment policy
which can be changed without shareholder approval, the Fund may purchase U.S.
government securities on a when-issued or delayed delivery basis. In when-issued
and delayed delivery transactions, the Fund relies on the seller to complete the
transaction. The seller's failure to complete the transaction may cause the Fund
to miss a price or yield considered to be advantageous.
PORTFOLIO TRANSACTIONS. The Fund 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 Fund may dispose
of portfolio securities at any time if it appears that selling the securities
will help the Fund achieve its investment objective.
INVESTMENT LIMITATIONS
The Fund will not borrow money or pledge assets except, under certain
circumstances, the Fund 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 Fund are made by Federated
Management, the Fund's investment adviser, subject to direction by the Trustees.
The adviser continually conducts
investment research and supervision for the Fund and is responsible for the
purchase or sale of portfolio instruments, for which it receives an annual fee
from the Fund.
ADVISORY FEES. The Fund's adviser receives an annual investment advisory
fee equal to .40 of 1% of the Fund's average daily net assets. The adviser
has also undertaken to reimburse the Fund for operating expenses in excess
of limitations established by certain states. This does not include
reimbursement to the Fund 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 Fund's co-portfolio manager since September,
1991. Ms. Nason joined Federated Investors in 1987 and has been a Vice
President of the Fund'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.
Roger A. Early has been the Fund's co-portfolio manager since January,
1987. Mr. Early joined Federated Investors in 1984 and has been a Vice
President of the Fund's investment adviser since 1988. Mr. Early is a
Chartered Financial Analyst and received his M.B.A. in Finance from the
University of Pittsburgh.
DISTRIBUTION OF INSTITUTIONAL SHARES
Federated Securities Corp. is the principal distributor for Institutional
Shares. It is a Pennsylvania corporation organized on November 14, 1969, and is
the principal distributor for a number of investment companies. Federated
Securities Corp. is a subsidiary of Federated Investors.
ADMINISTRATION OF THE FUND
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 Fund.
Federated Administrative Services provides these at an annual
rate which relates to the average aggregate daily net assets of all funds
advised by subsidiaries of Federated Investors ("Federated Funds") as specified
below:
<TABLE>
<CAPTION>
MAXIMUM AVERAGE AGGREGATE DAILY NET
ADMINISTRATIVE FEE ASSETS OF THE FEDERATED FUNDS
- ----------------------------- -------------------------------------
<S> <C>
0.15 of 1% on the first $250 million
0.125 of 1% on the next $250 million
0.10 of 1% on the next $250 million
0.075 of 1% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
Federated Administrative Services may choose voluntarily to waive a portion of
its fee.
SHAREHOLDER SERVICES PLAN. The Trust has adopted a Shareholder Services Plan
(the "Services Plan") under which it may make payments up to 0.25 of 1% of the
average daily net asset value of the Fund 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.
CUSTODIAN. State Street Bank and Trust Company, Boston, Massachusetts, is
custodian for the securities and cash of the Fund.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT. Federated Services Company,
Pittsburgh, Pennsylvania is transfer agent for the shares of the Fund and
dividend disbursing agent for the Fund.
LEGAL COUNSEL. Legal counsel is provided by Houston, Houston & Donnelly,
Pittsburgh, Pennsylvania, and Dickstein, Shapiro and Morin, Washington, D.C.
INDEPENDENT AUDITORS. The independent auditors for the Fund are Ernst & Young,
Pittsburgh, Pennsylvania 15219.
NET ASSET VALUE
- --------------------------------------------------------------------------------
The Fund's net asset value per Share fluctuates. The net asset value for Shares
is determined by adding the interest of the Shares in the market value of all
securities and other assets of the Fund, subtracting the interest of the Shares
in the liabilities of the Fund 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 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 an account will be taken over the telephone. The
Fund reserves the right to reject any purchase request.
BY WIRE. To purchase Shares by Federal Reserve wire, call the Fund before 4:00
p.m. (Boston time) to place an order. The order is considered received
immediately. Payment by federal funds must be received before 3:00 p.m. (Boston
time) on the next business day following the order. Federal funds should be
wired as follows: State Street Bank and Trust Company, Boston, Massachusetts;
Attention: EDGEWIRE; For Credit to: Federated Short-Intermediate Government
Trust--Institutional Shares; Fund Number (this number can be found on the
account statement or by contacting the Fund); Group Number or Wire Order Number;
Nominee or Institution Name; and ABA Number 011000028.
BY MAIL. To purchase Shares by mail, send a check made payable to Federated
Short-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. 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 Fund. Accounts established through
a non-affiliated bank or broker may be subject to a smaller minimum investment.
WHAT SHARES COST
Shares are sold at their net asset value next determined after an order is
received. There is no sales charge imposed by the Fund. Investors who purchase
Shares through a non-affiliated bank or broker may be charged an additional
service fee by that bank or broker.
The net asset value is determined at 4:00 p.m. (Boston time), Monday through
Friday, except on (i) days on which there are not sufficient changes in the
value of the Fund's portfolio securities such 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.
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 Fund, Federated Services Company maintains a share
account for each shareholder. Share certificates are not issued unless requested
by contacting the Fund.
Detailed confirmations of each purchase or redemption are sent to each
shareholder. Monthly confirmations are sent to report dividends paid during the
month.
DIVIDENDS
Dividends are declared daily and paid monthly. Dividends are declared just prior
to determining net asset value. If an order for Shares is placed on the
preceding business day, Shares purchased by wire begin earning dividends on the
business day wire payment is received by the Fund. 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 by the transfer agent into federal
funds. Dividends are automatically reinvested on payment dates in additional
Shares unless cash payments are requested by contacting the Fund.
CAPITAL GAINS
Capital gains realized by the Fund, if any, will be distributed at least once
every 12 months.
REDEEMING INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
The Fund redeems Shares at their net asset value next determined after the Fund
receives the redemption request. Redemptions will be made on days on which the
Fund 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 Fund before 4:00 p.m.
(Boston time). Telephone redemption instructions may be recorded. 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 Fund
shall determine it necessary to terminate or modify this method of redemption,
shareholders would be promptly notified.
An authorization form permitting the Fund to accept telephone requests must
first be completed. Authorization forms and information on this service are
available from Federated Securities Corp.
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. If
reasonable procedures are not followed by the Fund, it may be liable for losses
due to unauthorized or fraudulent telephone instructions.
WRITTEN REQUESTS
Shares may also be redeemed by sending a written request to the Fund. Call the
Fund for specific instructions before redeeming by letter. The shareholder will
be asked to provide in the request his name, the Fund name and class of shares
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 Fund, 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 Fund does not accept signatures guaranteed by a notary public.
The Fund and its transfer agent have adopted standards for accepting signature
guarantees from the above institutions. The Fund may elect in the future to
limit eligible signature guarantors to institutions that are members of a
signature guarantee program. The Fund 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 Fund 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 Fund'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 Fund gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All shares of all classes of
each portfolio in the Trust have equal voting rights except that in matters
affecting only a particular Fund or class only shares of that Fund or class are
entitled to vote. As a Massachusetts business trust, the Trust is not required
to hold annual shareholder meetings. Shareholder approval will be sought only
for certain changes in the Trust's or the Fund'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 the
shareholders of the Fund, 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 Fund.
In the unlikely event a shareholder is held personally liable for the Trust's
obligations, the Trust is required to use its property to protect or compensate
the shareholder. On request, the Trust will defend any claim made and pay any
judgment against a shareholder for any act or obligation of the Trust.
Therefore, financial loss resulting from liability as a shareholder will occur
only if the Trust itself cannot meet its obligations to indemnify shareholders
and pay judgments against them from its assets.
TAX INFORMATION
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX
The Fund 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 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 Fund is not subject to Pennsylvania corporate or personal property
taxes; and
- Fund 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 Fund 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 Fund 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 Fund after reinvesting all income and
capital gain distributions. It is calculated by dividing that change by the
initial investment and is expressed as a percentage.
The yield of Shares of the Fund is calculated by dividing the net investment
income per share (as defined by the Securities and Exchange Commission) earned
by Shares over a thirty-day period by the maximum offering price per share of
Shares on the last day of the period. This number is then annualized using
semi-annual compounding. The 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 Fund is sold without any sales load or other similar non-recurring charges.
Total return and yield will be calculated separately for Institutional Shares
and Institutional Service Shares. Because Institutional Service Shares are
subject to 12b-1 fees, the total return and yield for Institutional Shares, for
the same period, will exceed that of Institutional Service Shares.
From time to time the Fund may advertise its performance using certain financial
publications and/or compare its performance to certain indices.
OTHER CLASSES OF SHARES
- --------------------------------------------------------------------------------
Institutional Service Shares are sold primarily to retail and private banking
customers of financial institutions. Institutional Service Shares are sold at
net asset value. Investments in Institutional Service Shares are subject to a
minimum initial investment of $25,000.
Institutional Service Shares are distributed pursuant to a 12b-1 Plan adopted by
the Trust whereby the distributor is paid a fee of .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 Fund is sold.
The amount of dividends payable to Institutional Shares will exceed that of
Institutional Service Shares by the difference between class expenses and
distribution and shareholder service expenses borne by shares of each respective
class.
The stated advisory fee is the same for both classes of shares.
FEDERATED SHORT-INTERMEDIATE GOVERNMENT TRUST
INSTITUTIONAL SERVICE SHARES
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Ernst & Young, Independent Auditors on page
23.
<TABLE>
<CAPTION>
YEAR ENDED FEBRUARY
28,
--------------------
1994 1993*
------- -------
<S> <C> <C>
- --------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.53 $ 10.37
- --------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- --------------------------------------------------------------------
Net investment income 0.35 0.34
- --------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (0.07) 0.16
- -------------------------------------------------------------------- ------- -------
Total from investment operations 0.28 0.50
- --------------------------------------------------------------------
LESS DISTRIBUTIONS
- --------------------------------------------------------------------
Dividends to shareholders from net investment income (0.35) (0.34)
- -------------------------------------------------------------------- ------- -------
NET ASSET VALUE, END OF PERIOD $ 10.46 $ 10.53
- -------------------------------------------------------------------- ------- -------
------- -------
TOTAL RETURN** 2.68% 4.28%
- --------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- --------------------------------------------------------------------
Expenses 0.76% 0.74%(a)
- --------------------------------------------------------------------
Net investment income 3.33% 4.14%(a)
- --------------------------------------------------------------------
Expense waiver/reimbursement 0.00% 0.00%
- --------------------------------------------------------------------
SUPPLEMENTAL DATA
- --------------------------------------------------------------------
Net assets, end of period(000 omitted) $39,905 $72,722
- --------------------------------------------------------------------
Portfolio turnover rate 150% 132%
- --------------------------------------------------------------------
</TABLE>
<TABLE>
<C> <S>
* For the period from May 29, 1992 (effective date of Institutional Service Shares) to February 28,
1993.
** Based on net asset value which does not reflect the sales load or contingent deferred sales
charge, if applicable.
(a) Computed on an annualized basis.
</TABLE>
(See Notes which are an integral part of the Financial Statements)
Further information about the Fund's performance is contained in the Fund's
annual report dated February 28, 1994, which can be obtained free of charge.
FEDERATED SHORT-INTERMEDIATE GOVERNMENT TRUST
PORTFOLIO OF INVESTMENTS
FEBRUARY 28, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------ ---------------------------------------------------------------- ------------
<C> <C> <S> <C>
SHORT-INTERMEDIATE TERM OBLIGATIONS--98.3%
- ----------------------------------------------------------------------------------
U.S. TREASURY NOTES
----------------------------------------------------------------
$ 10,000,000 6.00%, 11/15/94 $ 10,137,400
----------------------------------------------------------------
</TABLE>
<TABLE>
<C> <C> <S> <C>
25,000,000 4.25%, 1/31/95 25,039,000
----------------------------------------------------------------
35,000,000 5.50%, 2/15/95 35,448,350
----------------------------------------------------------------
25,000,000 3.875%, 2/28/95 24,929,500
----------------------------------------------------------------
175,000,000 3.875%, 3/31/95 174,398,000
----------------------------------------------------------------
100,000,000 3.875%, 4/30/95 99,531,000
----------------------------------------------------------------
120,000,000 5.875%, 5/15/95 122,211,600
----------------------------------------------------------------
35,000,000 4.125%, 5/31/95 34,912,150
----------------------------------------------------------------
50,000,000 4.125%, 6/30/95 49,859,000
----------------------------------------------------------------
90,000,000 7.75%, 3/31/96 95,315,400
----------------------------------------------------------------
25,000,000 7.625%, 4/30/96 26,445,250
----------------------------------------------------------------
20,000,000 7.375%, 5/15/96 21,062,400
----------------------------------------------------------------
25,000,000 7.875%, 7/15/96 26,679,500
----------------------------------------------------------------
25,000,000 7.875%, 7/31/96 26,710,750
----------------------------------------------------------------
55,000,000 7.25%, 11/15/96 58,127,850
----------------------------------------------------------------
25,000,000 4.75%, 2/15/97 24,804,500
----------------------------------------------------------------
25,000,000 8.50%, 4/15/97 27,406,000
---------------------------------------------------------------- ------------
TOTAL SHORT-INTERMEDIATE TERM OBLIGATIONS
(IDENTIFIED COST, $886,385,269) 883,017,650
---------------------------------------------------------------- ------------
</TABLE>
FEDERATED SHORT-INTERMEDIATE GOVERNMENT TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------ ---------------------------------------------------------------- ------------
<C> <C> <S> <C>
*REPURCHASE AGREEMENT-0.7%
- ----------------------------------------------------------------------------------
$ 6,035,000 J.P. Morgan Securities, Inc., 3.49%, dated 2/28/94, due 3/1/94
(at amortized cost) (Note 1B) $ 6,035,000
---------------------------------------------------------------- ------------
TOTAL INVESTMENTS (IDENTIFIED COST, $892,420,269) $889,052,650+
---------------------------------------------------------------- ------------
</TABLE>
<TABLE>
<C> <S>
* 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
was through participation in a joint account with other Federated Funds.
+ The cost of investments for federal tax purposes amounts to $892,420,269 at February 28,
1994. The net realized depreciation of investments on a federal tax basis amounts to
$3,367,619, which is comprised of $549,621 appreciation and $3,917,240 depreciation at
February 28, 1994.
</TABLE>
Note: The categories of investments are shown as a percentage of net assets
($898,461,384) at February 28, 1994.
(See Notes which are an integral part of the Financial Statements)
FEDERATED SHORT-INTERMEDIATE GOVERNMENT TRUST
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ------------------------------------------------------------------------------
Investments, at value (Notes 1A and 1B) (identified and tax cost $892,420,269) $ 889,052,650
- ------------------------------------------------------------------------------
Cash 3,132
- ------------------------------------------------------------------------------
Interest receivable 13,630,088
- ------------------------------------------------------------------------------
Receivable for Fund shares sold 67,162
- ------------------------------------------------------------------------------
Prepaid expenses 62,709
- ------------------------------------------------------------------------------ --------------
Total assets 902,815,741
- ------------------------------------------------------------------------------
LIABILITIES:
- -----------------------------------------------------------------
Payable for Fund shares redeemed $2,962,528
- -----------------------------------------------------------------
Dividends payable 1,384,055
- -----------------------------------------------------------------
Payable to Distributor (Note 4) 7,774
- ----------------------------------------------------------------- ----------
Total liabilities 4,354,357
- ------------------------------------------------------------------------------ --------------
NET ASSETS for 85,894,986 shares of beneficial interest outstanding $ 898,461,384
- ------------------------------------------------------------------------------ --------------
NET ASSETS CONSIST OF:
- ------------------------------------------------------------------------------
Paid in capital $1,006,817,282
- ------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments (3,367,619)
- ------------------------------------------------------------------------------
Accumulated net realized gain (loss) on investments (104,988,279)
- ------------------------------------------------------------------------------ --------------
Total $ 898,461,384
- ------------------------------------------------------------------------------ --------------
NET ASSET VALUE, Offering Price, and Redemption Price Per Share:
Institutional Shares ($858,556,098 / 82,079,862 shares of beneficial interest
outstanding) $10.46
- ------------------------------------------------------------------------------ --------------
Institutional Service Shares ($39,905,286 / 3,815,124 shares of beneficial
interest outstanding) $10.46
- ------------------------------------------------------------------------------ --------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED SHORT-INTERMEDIATE GOVERNMENT TRUST
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------
Interest income (Note 1C) $39,951,120
- ---------------------------------------------------------------------------------
EXPENSES--
- ---------------------------------------------------------------------------------
Investment advisory fee (Note 4) $3,924,302
- --------------------------------------------------------------------
Trustees' fees 24,102
- --------------------------------------------------------------------
Administrative personnel and services (Note 4) 629,337
- --------------------------------------------------------------------
Custodian, transfer and dividend disbursing agent fees and expenses 294,670
- --------------------------------------------------------------------
Trust share registration costs 40,683
- --------------------------------------------------------------------
Auditing fees 29,069
- --------------------------------------------------------------------
Legal fees 15,814
- --------------------------------------------------------------------
Printing and postage 15,093
- --------------------------------------------------------------------
Insurance premiums 22,768
- --------------------------------------------------------------------
Distribution services fees (Note 4) 96,057
- --------------------------------------------------------------------
Miscellaneous 19,169
- -------------------------------------------------------------------- ----------
Total expenses 5,111,064
- --------------------------------------------------------------------------------- -----------
Net investment income 34,840,056
- --------------------------------------------------------------------------------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- ---------------------------------------------------------------------------------
Net realized gain (loss) on investments (identified cost basis) 6,224,057
- ---------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on investments (11,798,662)
- --------------------------------------------------------------------------------- -----------
Net realized and unrealized loss on investments (5,574,605)
- --------------------------------------------------------------------------------- -----------
Change in net assets resulting from operations $29,265,451
- --------------------------------------------------------------------------------- -----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED SHORT-INTERMEDIATE GOVERNMENT TRUST
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED FEBRUARY 28,
--------------------------------
1994 1993
-------------- --------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -------------------------------------------------------------
OPERATIONS--
- -------------------------------------------------------------
Net investment income $ 34,840,056 $ 50,880,057
- -------------------------------------------------------------
Net realized gain on investment transactions ($6,224,057 net
gain and $19,386,642 net gain, respectively, as computed
for federal tax purposes) 6,224,057 19,386,642
- -------------------------------------------------------------
Change in unrealized appreciation (depreciation) of
investments (11,798,662) (565,757)
- ------------------------------------------------------------- -------------- --------------
Change in net assets resulting from operations 29,265,451 69,700,942
- ------------------------------------------------------------- -------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2)--
- -------------------------------------------------------------
Dividends to shareholders from net investment income:
- -------------------------------------------------------------
Institutional Shares (33,561,842) (49,534,027)
- -------------------------------------------------------------
Institutional Service Shares (1,278,214) (1,346,030)*
- ------------------------------------------------------------- -------------- --------------
Change in net assets from distributions to shareholders (34,840,056) (50,880,057)
- ------------------------------------------------------------- -------------- --------------
TRUST SHARE (PRINCIPAL) TRANSACTIONS (NOTE 3)--
- -------------------------------------------------------------
Proceeds from sale of shares 532,829,701 700,099,324
- -------------------------------------------------------------
Net asset value of shares issued to shareholders electing to
receive payment of dividends in Fund shares 14,063,973 16,796,279
- -------------------------------------------------------------
Cost of shares redeemed (749,953,492) (800,284,049)
- ------------------------------------------------------------- -------------- --------------
Change in net assets from Fund share transactions (203,059,818) (83,388,446)
- ------------------------------------------------------------- -------------- --------------
Change in net assets (208,634,423) (64,567,561)
- -------------------------------------------------------------
NET ASSETS:
- -------------------------------------------------------------
Beginning of period 1,107,095,807 1,171,663,368
- ------------------------------------------------------------- -------------- --------------
End of period $ 898,461,384 $1,107,095,807
- ------------------------------------------------------------- -------------- --------------
</TABLE>
* For the period from May 29, 1992 (effective date of Institutional Service
Shares to February 28, 1993.)
(See Notes which are an integral part of the Financial Statements)
FEDERATED SHORT-INTERMEDIATE GOVERNMENT TRUST
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 1994
- --------------------------------------------------------------------------------
(1) SIGNIFICANT ACCOUNTING POLICIES
The Trust is registered under the Investment Company Act of 1940, as amended, as
a diversified, open-end, management investment company. The following is a
summary of significant accounting policies consistently followed by the Trust in
the preparation of its financial statements. The policies are in conformity with
generally accepted accounting principles. The Federated Short-Intermediate
Government Trust provides two classes of shares ("Institutional Shares" and
"Institutional Service Shares"). Institutional Service Shares are identical in
all respects to Institutional Shares except that Institutional Service Shares
are sold pursuant to a distribution plan ("Plan") adopted in accordance with
Investment Company Act Rule 12b-1. Under the Plan, the Fund pays Federated
Securities Corp. (the "distributor") a fee at an annual rate up to 0.25 of 1% of
the average net asset value of Institutional Service Shares to finance any
activity which is principally intended to result in the sale of Institutional
Service Shares. The Institutional Service Shares class of the Trust was declared
effective on June 1, 1992.
A. INVESTMENT VALUATIONS--U.S. government obligations are valued at the mean
between the over-the counter bid and asked prices as furnished by an
independent pricing service. U.S. government obligations maturing in sixty
days or less are valued 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 securities to ensure the existence of a proper level of
collateral.
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. 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. INCOME--Interest income is recorded on the accrual basis. Interest income
includes interest and discount earned (net of premium) on short-term
obligations, and interest earned on all other debt securities including
discount (net of premium) and original issue discount as required by the
Internal Revenue Code.
D. FEDERAL TAXES--It is the Trust's policy to comply with the provisions of the
Internal Revenue Code, as amended (the "Code"), applicable to regulated
investment companies and to distribute to shareholders each year all of its
taxable income, including any net realized gain on investments. Accordingly,
no provision for federal tax is necessary. At February 28, 1994, the Trust,
for federal
FEDERATED SHORT-INTERMEDIATE GOVERNMENT TRUST
- --------------------------------------------------------------------------------
income tax purposes, had a capital loss carryforward of $104,988,279 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 income tax.
Pursuant to the Code, such capital loss carryforward will expire in 1997
($39,788,098) and 1998 ($65,200,181).
E. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Trust may engage in
when-issued or delayed delivery transactions. To the extent the Trust engages
in such transactions, it will do so for the purpose of acquiring portfolio
securities consistent with its investment objective and policies and not for
the purpose of investment leverage. The Trust will record a when-issued
security and the related liability on the trade date. Until the securities
are received and paid for, the Trust will maintain 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 date of the
transaction.
(2) DIVIDENDS
The Trust computes its net income daily and, immediately prior to the
calculation of its net asset value at the close of business, declares and
records dividends, excluding capital gains, to shareholders of record with
respect to shares for which payment in federal funds has been received. Payment
of dividends is made monthly in cash, or in additional shares at the net asset
value on the payable date. Capital gains realized by the Trust are distributed
once every twelve months and are recorded on the ex-dividend date.
FEDERATED SHORT-INTERMEDIATE GOVERNMENT TRUST
- --------------------------------------------------------------------------------
(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 of the Fund (without par
value). Transactions in Trust shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED FEBRUARY 28,
----------------------------------------------------------------
1994 1993
----------------------------- -----------------------------
INSTITUTIONAL SHARES SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ----------- -------------- ----------- --------------
<S> <C> <C> <C> <C>
Shares outstanding, beginning of period 98,280,959 $1,136,640,375 113,293,534 $1,292,462,612
- ----------------------------------------
Shares sold 46,140,706 485,245,229 59,458,659 620,253,995
- ----------------------------------------
Shares issued to shareholders in payment
of dividends declared 1,246,292 13,114,141 1,490,126 15,546,271
- ----------------------------------------
Shares redeemed (63,588,095) (668,935,000) (75,961,360) (791,622,503)
- ---------------------------------------- ----------- -------------- ----------- --------------
Shares outstanding, end of period 82,079,862 $ 966,064,745 98,280,959 $1,136,640,375
- ---------------------------------------- ----------- -------------- ----------- --------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED FEBRUARY 28,
---------------------------------------------------------------
1994 1993*
----------------------------- --------------------------
INSTITUTIONAL SERVICE SHARES SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------- ---------- ------------ --------- -----------
<S> <C> <C> <C> <C>
Shares outstanding, beginning of period 6,908,973 $ 72,433,791 -- $ --
- -----------------------------------------
Shares sold 4,528,398 47,584,472 7,616,685 79,845,329
- -----------------------------------------
Shares issued to shareholders in payment
of dividends declared 90,266 949,832 119,310 1,250,008
- -----------------------------------------
Shares redeemed (7,712,513) (81,018,492) (827,022) (8,661,546)
- ----------------------------------------- ---------- ------------ --------- -----------
Shares outstanding, end of period 3,815,124 $ 39,949,603 6,908,973 $72,433,791
- ----------------------------------------- ---------- ------------ --------- -----------
</TABLE>
* For the period from May 29, 1992 (effective date of Institutional Service
Shares) to February 28, 1993.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Federated Management, the Trust's investment adviser ("Adviser") receives for
its services an annual investment advisory fee equal to .40 of 1% of the Trust's
average daily net assets.
Administrative personnel and services were provided at approximate cost by
Federated Administrative Services, Inc. Effective March 1, 1994, Federated
Administrative Services ("FAS") will provide administrative personnel and
services. The fee is based on the level of average aggregate net assets of the
total Federated Funds for the period. 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.
The Fund has adopted a Distribution Plan (the "Plan") for its Institutional
Service Shares, pursuant to Rule 12b-1 under the Investment Company Act of 1940.
The Fund reimburses Federated Securities Corp. ("FSC"), the principal
distributor, from the assets of the Institutional Service Shares of the Fund,
FEDERATED SHORT-INTERMEDIATE GOVERNMENT TRUST
- --------------------------------------------------------------------------------
for fees it paid which relate to the distribution and administration of the
Fund's Institutional Service Shares. The Plan provides that the Fund may incur
distribution expenses up to 0.25% of the average daily net assets of the
Institutional Service Shares, annually, to pay commissions, maintenance fees and
to compensate the distributor. For the year ended February 28, 1994, FSC earned
$96,057 in distribution services fees.
Under the terms of a shareholder service agreement with Federated Shareholder
Services ("FSS") which takes effect March 1, 1994, the Fund will pay FSS a fee
to obtain certain personal services for shareholders and the maintenance of
shareholder accounts. The fee is based on the level of average net assets for
the period.
Certain of the Officers and Trustees of the Trust are Officers and Directors of
the above corporations.
(5) INVESTMENT TRANSACTIONS
Purchases, and sales of investments (excluding short-term investments), for the
year ended February 28, 1994, were as follows:
<TABLE>
<S> <C>
- -----------------------------------------------------------------------------
Purchases $1,442,083,788
- ----------------------------------------------------------------------------- --------------
Sales $1,619,833,008
- ----------------------------------------------------------------------------- --------------
</TABLE>
REPORT OF ERNST & YOUNG, INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
To the Trustees and Shareholders of
FEDERATED SHORT-INTERMEDIATE GOVERNMENT TRUST:
We have audited the accompanying statement of assets and liabilities of
Federated Short-Intermediate Government Trust, including the portfolio of
investments, as of February 28, 1994, and the related statement of operations
for the year then ended, the statement of changes in net assets for each of the
two years in the period then ended, and the financial highlights (see pages 2
and 13 of the prospectus) for each of the periods indicated therein. 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
February 28, 1994, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Federated Short-Intermediate Government Trust at February 28, 1994, the results
of its operations for the year then ended, the changes in its net assets for
each of the two years in the period then ended, and the financial highlights for
each of the periods indicated therein, in conformity with generally accepted
accounting principles.
ERNST & YOUNG
Pittsburgh, Pennsylvania
April 13, 1994
[THIS PAGE INTENTIONALLY LEFT BLANK]
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Federated Short-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
- ------------------------------------------------------------------------------------------------
Legal Counsel
Houston, Houston & Donnelly 2510 Centre City Tower
Pittsburgh, Pennsylvania 15222
- ------------------------------------------------------------------------------------------------
Legal Counsel
Dickstein, Shapiro & Morin 2101 L Street, N.W.
Washington, D.C. 20037
- ------------------------------------------------------------------------------------------------
Independent Auditors
Ernst & Young One Oxford Centre
Pittsburgh, Pennsylvania 15219
- ------------------------------------------------------------------------------------------------
</TABLE>
FEDERATED
SHORT-INTERMEDIATE
GOVERNMENT TRUST
INSTITUTIONAL SHARES
PROSPECTUS
An Open-End, Diversified
Management Investment Company
Prospectus dated April 30, 1994
FEDERATED SECURITIES CORP.
(LOGO)
- ---------------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
8032806A-IS (4/94)
FEDERATED SHORT-INTERMEDIATE GOVERNMENT TRUST
INSTITUTIONAL SERVICE SHARES
PROSPECTUS
The Institutional Service Shares offered by this prospectus represent interests
in a diversified portfolio of securities (the "Fund") of Federated
Short-Intermediate Government Trust (the "Trust"). The Trust is an open-end
management investment company (a mutual fund).
The investment objective of the Fund is current income. The Fund invests
primarily in U.S. government securities. Institutional Service Shares are sold
at net asset value.
THE INSTITUTIONAL SERVICE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR
OBLIGATIONS OF ANY BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK, AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD,
OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THESE 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 Institutional Service Shares Fund. Keep this prospectus for future
reference.
The Fund has also filed a Combined Statement of Additional Information for
Institutional Service Shares and Institutional Shares dated April 30, 1994, 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 make inquiries about the Fund, contact the Fund 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 April 30, 1994
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
SUMMARY OF FUND EXPENSES 1
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS--
INSTITUTIONAL SERVICE SHARES 2
- ------------------------------------------------------
GENERAL INFORMATION 3
- ------------------------------------------------------
INVESTMENT INFORMATION 3
- ------------------------------------------------------
Investment Objective 3
Investment Policies 3
Acceptable Investments 3
Repurchase Agreements 4
When-Issued and Delayed
Delivery Transactions 4
Portfolio Transactions 4
Investment Limitations 4
TRUST INFORMATION 4
- ------------------------------------------------------
Management of the Trust 4
Board of Trustees 4
Investment Adviser 4
Advisory Fees 5
Adviser's Background 5
Distribution of Institutional
Service Shares 5
Distribution and Shareholder Services
Plans 5
Administration of the Fund 6
Administrative Services 6
Custodian 6
Transfer Agent and
Dividend Disbursing Agent 7
Legal Counsel 7
Independent Auditors 7
NET ASSET VALUE 7
- ------------------------------------------------------
INVESTING IN INSTITUTIONAL SERVICE SHARES 7
- ------------------------------------------------------
Share Purchases 7
By Wire 7
By Mail 7
Minimum Investment Required 8
What Shares Cost 8
Subaccounting Services 8
Certificates and Confirmations 8
Dividends 8
Capital Gains 9
REDEEMING INSTITUTIONAL SERVICE SHARES 9
- ------------------------------------------------------
Telephone Redemption 9
Written Requests 9
Signatures 10
Receiving Payment 10
Accounts with Low Balances 10
SHAREHOLDER INFORMATION 10
- ------------------------------------------------------
Voting Rights 10
Massachusetts Partnership Law 11
TAX INFORMATION 11
- ------------------------------------------------------
Federal Income Tax 11
Pennsylvania Corporate and
Personal Property Taxes 11
PERFORMANCE INFORMATION 12
- ------------------------------------------------------
OTHER CLASSES OF SHARES 12
- ------------------------------------------------------
Financial Highlights--
Institutional Shares 13
- ------------------------------------------------------
FINANCIAL STATEMENTS 14
- ------------------------------------------------------
REPORT OF ERNST & YOUNG INDEPENDENT AUDITORS 23
- ------------------------------------------------------
ADDRESSES Inside Back Cover
- ------------------------------------------------------
SUMMARY OF FUND EXPENSES
INSTITUTIONAL SERVICE SHARES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)................................................. None
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price)................................................. None
Contingent Deferred Sales Charge (as a percentage of original
purchase price or redemption proceeds as applicable)................................ None
Redemption Fee (as a percentage of amount redeemed, if applicable).................... None
Exchange Fee.......................................................................... None
ANNUAL INSTITUTIONAL SERVICE SHARES OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee........................................................................ 0.40%
12b-1 Fee(1).......................................................................... 0.07%
Total Other Expenses.................................................................. 0.32%
Shareholder Servicing Fee(2)............................................... 0.18%
Total Institutional Service Shares Operating Expenses(3)......................... 0.79%
</TABLE>
(1) The maximum 12b-1 fee is 0.25%.
(2) The maximum Shareholder Services Fee is 0.25%.
(3) The Total Institutional Service Shares Operating Expenses in the table above
are based on expenses expected during the fiscal year ending February 28, 1995.
The Total Institutional Service Shares Operating Expenses were 0.76% for the
fiscal year ended February 28, 1994.
THE PURPOSE OF THIS TABLE IS TO ASSIST AN INVESTOR IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT A SHAREHOLDER OF THE INSTITUTIONAL SERVICE
SHARES OF THE FUND 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 invest-
ment 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 Fund. The Fund 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 SHORT-INTERMEDIATE GOVERNMENT TRUST
INSTITUTIONAL SERVICE SHARES
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Ernst & Young, Independent Auditors on page
23.
<TABLE>
<CAPTION>
YEAR ENDED FEBRUARY
28,
-------------------
1994 1993*
------ ------
<S> <C> <C>
- ---------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $10.53 $10.37
- ---------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------------------------------------------
Net investment income 0.35 0.34
- ---------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (0.07) 0.16
- --------------------------------------------------------------------- ------ ------
Total from investment operations 0.28 0.50
- ---------------------------------------------------------------------
LESS DISTRIBUTIONS
- ---------------------------------------------------------------------
Dividends to shareholders from net investment income (0.35) (0.34)
- ---------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $10.46 $10.53
- --------------------------------------------------------------------- ------ ------
------ ------
TOTAL RETURN** 2.68% 4.28%
- ---------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ---------------------------------------------------------------------
Expenses 0.76% 0.74%(a)
- ---------------------------------------------------------------------
Net investment income 3.33% 4.14%(a)
- ---------------------------------------------------------------------
Expense waiver/reimbursement 0.00% 0.00%
- ---------------------------------------------------------------------
SUPPLEMENTAL DATA
- ---------------------------------------------------------------------
Net assets, end of period (000 omitted) $39,905 $72,722
- ---------------------------------------------------------------------
Portfolio turnover rate 150% 132%
- ---------------------------------------------------------------------
</TABLE>
<TABLE>
<C> <S>
* For the period from May 29, 1992 (effective date of Institutional Service Shares) to
February 28, 1993.
** Based on net asset value which does not reflect the sales load or contingent deferred
sales charge, if applicable.
(a) Computed on an annualized basis.
</TABLE>
(See Notes which are an integral part of the Financial Statements)
Further information about the Fund's performance is contained in the Fund's
annual report dated February 28, 1994, which can be obtained free of charge.
GENERAL INFORMATION
- --------------------------------------------------------------------------------
The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated January 3, 1984. The Declaration of Trust permits the Trust to
offer separate series of shares of beneficial interest representing interest 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 Trustees
have established two classes of shares of the Fund, known as Institutional
Service Shares and Institutional Shares. This prospectus relates only to
Institutional Service Shares.
Institutional Service Shares ("Shares") of the Fund 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 charge
imposed by the Fund.
INVESTMENT INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The investment objective of the Fund is current income. While there is no
assurance that the Fund 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
The Fund pursues its investment objective by investing in U.S. government
securities with remaining maturities of 3 1/2 years or less.
ACCEPTABLE INVESTMENTS. The U.S. government securities in which the Fund
invests are either issued or guaranteed by the U.S. government, its agencies, or
instrumentalities. These securities are limited to:
- direct obligations of the U.S. Treasury such as U.S. Treasury bills,
notes, and bonds; and
- obligations of U.S. government agencies or instrumentalities such as
Federal Home Loan Banks, Federal National Mortgage Association,
Government National Mortgage Association, Banks for Cooperatives
(including Central Bank for Cooperatives), Federal Land Banks, Federal
Intermediate Credit Banks, Tennessee Valley Authority, Export-Import Bank
of the United States, Commodity Credit Corporation, Federal Financing
Bank, Student Loan Marketing Association, Federal Home Loan Mortgage
Corporation, or National Credit Union Administration.
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. The
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 Fund 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 Fund, the Fund 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 Fund will not invest more than 15% of its net assets in securities
which are illiquid, including repurchase agreements providing for settlement in
more than seven days after notice.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. As a matter of investment policy
which can be changed without shareholder approval, the Fund may purchase U.S.
government securities on a when-issued or delayed delivery basis. In when-issued
and delayed delivery transactions, the Fund relies on the seller to complete the
transaction. The seller's failure to complete the transaction may cause the Fund
to miss a price or yield considered to be advantageous.
PORTFOLIO TRANSACTIONS. The Fund 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 Fund may dispose
of portfolio securities at any time if it appears that selling the securities
will help the Fund achieve its investment objective.
INVESTMENT LIMITATIONS
The Fund will not borrow money or pledge assets except, under certain
circumstances, the Fund 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 Fund are made by Federated
Management, the Fund's investment adviser, subject to direction by the Trustees.
The adviser continually conducts investment research and supervision for the
Fund and is responsible for the purchase or sale of portfolio instruments, for
which it receives an annual fee from the Fund.
ADVISORY FEES. The Fund's adviser receives an annual investment advisory
fee equal to .40 of 1% of the Fund's average daily net assets. The adviser
has also undertaken to reimburse the Fund for operating expenses in excess
of limitations established by certain states. This does not include
reimbursement to the Fund 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 Fund's co-portfolio manager since September, 1991.
Ms. Nason joined Federated Investors in 1987 and has been a Vice President of
the Fund'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.
Roger A. Early has been the Fund's co-portfolio manager since January, 1987. Mr.
Early joined Federated Investors in 1984 and has been a Vice President of the
Fund's investment adviser since 1988. Mr. Early is a Chartered Financial Analyst
and received his M.B.A. in Finance from the University of Pittsburgh.
DISTRIBUTION OF INSTITUTIONAL SERVICE SHARES
Federated Securities Corp. is the principal distributor for Institutional
Service Shares. It is a Pennsylvania corporation organized on November 14, 1969,
and is the principal distributor for a number of investment companies. Federated
Securities Corp. is a subsidiary of Federated Investors.
DISTRIBUTION AND SHAREHOLDER SERVICES PLANS. Under a distribution plan adopted
in accordance with Investment Company Act Rule 12b-1 (the "Distribution Plan"),
the Fund may pay to the distributor an amount, computed at an annual rate of
0.25 of 1% of the average daily net asset value of the Fund to finance any
activity which is principally intended to result in the sale of shares subject
to the Distribution Plan. The distributor may select Financial Institutions such
as banks, fiduciaries, custodians for public funds, investment advisers, and
broker/dealers to provide sales support services as agents for their clients or
customers.
The Distribution Plan is a compensation-type plan. As such, the Fund makes no
payments to the distributor except as described above. Therefore, the Fund does
not pay for unreimbursed expenses of the distributor, including amounts expended
by the distributor in excess of amounts received by it from the Fund interest,
carrying or other financing charges in connection with excess amounts expended,
or the distributor's overhead expenses. However, the distributor may be able to
recover such amount or may earn a profit from future payments made by the Fund
under the Distribution Plan.
In addition, the Trust has adopted a Shareholder Services Plan (the "Services
Plan") under which it may make payments up to 0.25 of 1% of the average daily
net asset value of the Fund to obtain certain personal services for shareholders
and the maintenance of shareholder accounts ("shareholder services"). The Trust
has entered into a Shareholder Services Agreement with Federated Shareholder
Services, a subsidiary of Federated Investors, under which Federated Shareholder
Services will either perform shareholder services directly or will select
financial institutions to perform shareholder services. Financial institutions
will receive fees based upon shares owned by their clients or customers. The
schedules of such fees and the basis upon which such fees will be paid will be
determined from time to time by the Trust and Federated Shareholder Services.
The Glass-Steagall Act prohibits a depository institution (such as a commercial
bank or a savings and loan association) from being an underwriter or distributor
of most securities. In the event the Glass-Steagall Act is deemed to prohibit
depository institutions from acting in the administrative capacities described
above or should Congress relax current restrictions on depository institutions,
the Board of 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 FUND
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 Fund.
Federated Administrative Services provides these at an annual rate which relates
to the average aggregate daily net assets of all funds advised by subsidiaries
of Federated Investors ("Federated Funds") as specified below.
<TABLE>
<CAPTION>
MAXIMUM AVERAGE AGGREGATE DAILY NET
ADMINISTRATIVE FEE ASSETS OF THE FEDERATED FUNDS
- ------------------- ------------------------------------
<S> <C>
0.15 of 1% on the first $250 million
0.125 of 1% on the next $250 million
0.10 of 1% on the next $250 million
0.075 of 1% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
Federated Administrative Services may choose voluntarily to waive a portion of
its fee.
CUSTODIAN. State Street Bank and Trust Company, Boston, Massachusetts, is
custodian for the securities and cash of the Fund.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT. Federated Services Company,
Pittsburgh, Pennsylvania, is transfer agent for the shares of the Fund and
dividend disbursing agent for the Fund.
LEGAL COUNSEL. Legal counsel is provided by Houston, Houston & Donnelly,
Pittsburgh, Pennsylvania, and Dickstein, Shapiro and Morin, Washington, D.C.
INDEPENDENT AUDITORS. The independent auditors for the Fund are Ernst & Young,
Pittsburgh, Pennsylvania 15219.
NET ASSET VALUE
- --------------------------------------------------------------------------------
The Fund's net asset value per Share fluctuates. The net asset value for Shares
is determined by adding the interest of the Shares in the market value of all
securities and other assets of the Fund, subtracting the interest of the Shares
in the liabilities of the Fund 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 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 SERVICE 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 an account will be taken over the telephone. The
Fund reserves the right to reject any purchase request.
BY WIRE. To purchase Shares by Federal Reserve wire, call the Fund before 4:00
p.m. (Boston time) to place an order. The order is considered received
immediately. Payment by federal funds must be received before 3:00 p.m. (Boston
time) on the next business day following the order. Federal funds should be
wired as follows: State Street Bank and Trust Company, Boston, Massachusetts;
Attention: EDGEWIRE; For Credit to: Federated Short-Intermediate Government
Trust--Institutional Service Shares; Fund Number (this number can be found on
the account statement or by contacting the Fund); Group Number or Wire Order
Number; Nominee or Institution Name; and ABA Number 011000028.
BY MAIL. To purchase Shares by mail, send a check made payable to Federated
Short-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. 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 Fund. Accounts established through
a non-affiliated bank or broker may be subject to a smaller minimum investment.
WHAT SHARES COST
Shares are sold at their net asset value next determined after an order is
received. There is no sales charge imposed by the Fund. Investors who purchase
Shares through a non-affiliated bank or broker may be charged an additional
service fee by that bank or broker.
The net asset value is determined at 4:00 p.m. (Boston time), Monday through
Friday, except on (i) days on which there are not sufficient changes in the
value of the Fund's portfolio securities such 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.
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 Fund, Federated Services Company maintains a share
account for each shareholder. Share certificates are not issued unless requested
by contacting the Fund.
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 by the transfer agent into federal funds. Dividends are
automatically reinvested on payment dates in additional Shares unless cash
payments are requested by contacting the Fund.
CAPITAL GAINS
Capital gains realized by the Fund, if any, will be distributed at least once
every 12 months.
REDEEMING INSTITUTIONAL SERVICE SHARES
- --------------------------------------------------------------------------------
The Fund redeems Shares at their net asset value next determined after the Fund
receives the redemption request. Redemptions will be made on days on which the
Fund 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 Fund before 4:00 p.m.
(Boston time). Telephone redemption instructions may be recorded. 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 Fund shall
determine it necessary to terminate or modify this method of redemption,
shareholders would be promptly notified.
An authorization form permitting the Fund to accept telephone requests must
first be completed. Authorization forms and information on this service are
available from Federated Securities Corp.
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. If
reasonable procedures are not followed by the Fund, it may be liable for losses
due to unauthorized or fraudulent telephone instructions.
WRITTEN REQUESTS
Shares may also be redeemed by sending a written request to the Fund. Call the
Fund for specific instructions before redeeming by letter. The shareholder will
be asked to provide in the request his name, the Fund name and class of shares
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 Fund, 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 Fund does not accept signatures guaranteed by a notary public.
The Fund and its transfer agent have adopted standards for accepting signature
guarantees from the above institutions. The Fund may elect in the future to
limit eligible signature guarantors to institutions that are members of a
signature guarantee program. The Fund 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 Fund 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 Fund'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 Fund gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All shares of all classes of
each portfolio in the Trust have equal voting rights except that in matters
affecting only a particular Fund or class, only shares of that Fund or class are
entitled to vote. As a Massachusetts business trust, the Trust is not required
to hold annual shareholder meetings. Shareholder approval will be sought only
for certain changes in the Trust's or the Fund'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 the
shareholders of the Fund, 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 Fund.
In the unlikely event a shareholder is held personally liable for the Trust's
obligations, the Trust is required to use its property to protect or compensate
the shareholder. On request, the Trust will defend any claim made and pay any
judgment against a shareholder for any act or obligation of the Trust.
Therefore, financial loss resulting from liability as a shareholder will occur
only if the Trust itself cannot meet its obligations to indemnify shareholders
and pay judgments against them from its assets.
TAX INFORMATION
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX
The Fund 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 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 Fund is not subject to Pennsylvania corporate or personal property
taxes; and
- Fund 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 Fund 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 Fund 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 Fund after reinvesting all income and
capital gain distributions. It is calculated by dividing that change by the
initial investment and is expressed as a percentage.
The yield of Shares of the Fund is calculated by dividing the net investment
income per share (as defined by the Securities and Exchange Commission) earned
by Shares over a thirty-day period by the maximum offering price per share of
Shares on the last day of the period. This number is then annualized using
semi-annual compounding. The 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 Fund is sold without any sales load or other similar non-recurring charges.
Total return and yield will be calculated separately for Institutional Service
Shares and Institutional Shares. Because Institutional Service Shares are
subject to 12b-1 fees, the total return and yield for Institutional Shares, for
the same period, will exceed that of Institutional Service Shares.
From time to time the Fund may advertise its performance using certain financial
publications and/or compare its performance to certain indices.
OTHER CLASSES OF 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 12b-1 Plan.
Financial institutions and brokers providing sales and/or administrative
services may receive different compensation depending upon which class of shares
of the Fund 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.
The stated advisory fee is the same for both classes of shares.
FEDERATED SHORT-INTERMEDIATE GOVERNMENT TRUST
INSTITUTIONAL SHARES
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Ernst & Young, Independent Auditors on page
23.
<TABLE>
<CAPTION>
YEAR ENDED FEBRUARY 28,
-------------------------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988 1987 1986 1985*
- ------------- ------- --------- ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET
VALUE,
BEGINNING OF
PERIOD $10.53 $10.34 $10.12 $ 9.93 $ 9.81 $10.21 $10.42 $10.39 $10.18 $10.00
- -------------
INCOME FROM
INVESTMENT
OPERATIONS
- -------------
Net
investment
income 0.37 0.48 0.67 0.72 0.84 0.82 0.81 0.84 1.06 1.06
- -------------
Net realized
and
unrealized
gain (loss)
on
investments (0.07) 0.19 0.22 0.19 0.12 (0.40) (0.16) 0.03 0.21 0.18
- ------------- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Total from
investment
operations 0.30 0.67 0.89 0.91 0.96 0.42 0.65 0.87 1.27 1.24
- -------------
LESS
DISTRIBUTIONS
- -------------
Dividends to
shareholders
from net
investment
income (0.37) (0.48) (0.67) (0.72) (0.84) (0.82) (0.81) (0.84) (1.06) (1.06)
- -------------
Distributions
to
shareholders
from net
realized
gain on
investment
transactions -- -- -- -- -- -- (0.05) -- -- --
- ------------- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Total
distributions (0.37) (0.48) (0.67) (0.72) (0.84) (0.82) (0.86) (0.84) (1.06) (1.06)
- ------------- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
NET ASSET
VALUE, END
OF PERIOD $10.46 $10.53 $10.34 $10.12 $ 9.93 $ 9.81 $10.21 $10.42 $10.39 $10.18
- ------------- ----- ----- ---- ---- ---- ---- ---- ---- ---- ----
----- ---- ---- ---- ---- ---- ---- ---- ---- ----
TOTAL
RETURN** 2.93% 6.64% 9.07% 10.11% 10.08% 4.23% 6.58% 8.73% 12.99% 13.71%
- -------------
RATIOS TO
AVERAGE NET
ASSETS
- -------------
Expenses 0.51% 0.49% 0.48% 0.48% 0.48% 0.47% 0.46% 0.45% 0.43% 0.27%(a)
- -------------
Net
investment
income 3.56% 4.63% 6.57% 7.79% 8.42% 8.14% 7.89% 7.97% 10.09% 11.28%(a)
- -------------
Expense
waiver/
reimbursement(b) 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.01% 0.02% 0.02% 0.18%(a)
- -------------
SUPPLEMENTAL
DATA
- -------------
Net assets,
end of
period (000
omitted) $858,556 $1,034,374 $1,171,633 $1,296,579 $1,725,112 $2,236,208 $3,016,355 $4,348,532 $2,005,689 $386,489
- -------------
Portfolio
turnover
rate 150% 132% 114% 96% 172% 112% 85% 99% 138% 224%
- -------------
</TABLE>
* For the period from March 15, 1984 (date of initial public investment) to
February 28, 1985.
** Based on net asset value which does not reflect the sales load or contingent
deferred sales charge, if applicable.
(a) Computed on an annualized basis.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above (Note 4)
(See Notes which are an integral part of the Financial Statements)
Further information about the Fund's performance is contained in the Fund's
annual report dated February 28, 1994,
which can be obtained free of charge.
FEDERATED SHORT-INTERMEDIATE GOVERNMENT TRUST
PORTFOLIO OF INVESTMENTS
FEBRUARY 28, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------ ---------------------------------------------------------------- ------------
<C> <C> <S> <C>
SHORT-INTERMEDIATE TERM OBLIGATIONS--98.3%
- ----------------------------------------------------------------------------------
U.S. TREASURY NOTES
----------------------------------------------------------------
$ 10,000,000 6.00%, 11/15/94 $ 10,137,400
----------------------------------------------------------------
</TABLE>
<TABLE>
<C> <C> <S> <C>
25,000,000 4.25%, 1/31/95 25,039,000
----------------------------------------------------------------
35,000,000 5.50%, 2/15/95 35,448,350
----------------------------------------------------------------
25,000,000 3.875%, 2/28/95 24,929,500
----------------------------------------------------------------
175,000,000 3.875%, 3/31/95 174,398,000
----------------------------------------------------------------
100,000,000 3.875%, 4/30/95 99,531,000
----------------------------------------------------------------
120,000,000 5.875%, 5/15/95 122,211,600
----------------------------------------------------------------
35,000,000 4.125%, 5/31/95 34,912,150
----------------------------------------------------------------
50,000,000 4.125%, 6/30/95 49,859,000
----------------------------------------------------------------
90,000,000 7.75%, 3/31/96 95,315,400
----------------------------------------------------------------
25,000,000 7.625%, 4/30/96 26,445,250
----------------------------------------------------------------
20,000,000 7.375%, 5/15/96 21,062,400
----------------------------------------------------------------
25,000,000 7.875%, 7/15/96 26,679,500
----------------------------------------------------------------
25,000,000 7.875%, 7/31/96 26,710,750
----------------------------------------------------------------
55,000,000 7.25%, 11/15/96 58,127,850
----------------------------------------------------------------
25,000,000 4.75%, 2/15/97 24,804,500
----------------------------------------------------------------
25,000,000 8.50%, 4/15/97 27,406,000
---------------------------------------------------------------- ------------
TOTAL SHORT-INTERMEDIATE TERM OBLIGATIONS
(IDENTIFIED COST, $886,385,269) 883,017,650
---------------------------------------------------------------- ------------
</TABLE>
FEDERATED SHORT-INTERMEDIATE GOVERNMENT TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------ ---------------------------------------------------------------- ------------
<C> <C> <S> <C>
*REPURCHASE AGREEMENT-0.7%
- ----------------------------------------------------------------------------------
$ 6,035,000 J.P. Morgan Securities, Inc., 3.49%, dated 2/28/94, due 3/1/94
(at amortized cost) (Note 1B) $ 6,035,000
---------------------------------------------------------------- ------------
TOTAL INVESTMENTS (IDENTIFIED COST, $892,420,269) $889,052,650+
---------------------------------------------------------------- ------------
</TABLE>
<TABLE>
<C> <S>
* 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 was
through participation in a joint account with other Federated Funds.
+ The cost of investments for federal tax purposes amounts to $892,420,269 at February 28,
1994. The net realized depreciation of investments on a federal tax basis amounts to
$3,367,619, which is comprised of $549,621 appreciation and $3,917,240 depreciation at
February 28, 1994.
</TABLE>
Note: The categories of investments are shown as a percentage of net assets
($898,461,384) at February 28, 1994.
(See Notes which are an integral part of the Financial Statements)
FEDERATED SHORT-INTERMEDIATE GOVERNMENT TRUST
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ------------------------------------------------------------------------------
Investments, at value (Notes 1A and 1B) (identified and tax cost $892,420,269) $ 889,052,650
- ------------------------------------------------------------------------------
Cash 3,132
- ------------------------------------------------------------------------------
Interest receivable 13,630,088
- ------------------------------------------------------------------------------
Receivable for Fund shares sold 67,162
- ------------------------------------------------------------------------------
Prepaid expenses 62,709
- ------------------------------------------------------------------------------ --------------
Total assets 902,815,741
- ------------------------------------------------------------------------------
LIABILITIES:
- -----------------------------------------------------------------
Payable for Fund shares redeemed $2,962,528
- -----------------------------------------------------------------
Dividends payable 1,384,055
- -----------------------------------------------------------------
Payable to Distributor (Note 4) 7,774
- ----------------------------------------------------------------- ----------
Total liabilities 4,354,357
- ------------------------------------------------------------------------------ --------------
NET ASSETS for 85,894,986 shares of beneficial interest outstanding $ 898,461,384
- ------------------------------------------------------------------------------ --------------
NET ASSETS CONSIST OF:
- ------------------------------------------------------------------------------
Paid in capital $1,006,817,282
- ------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments (3,367,619)
- ------------------------------------------------------------------------------
Accumulated net realized gain (loss) on investments (104,988,279)
- ------------------------------------------------------------------------------ --------------
Total $ 898,461,384
- ------------------------------------------------------------------------------ --------------
NET ASSET VALUE, Offering Price, and Redemption Price Per Share:
Institutional Shares ($858,556,098 / 82,079,862 shares of beneficial
interest outstanding) $10.46
- ------------------------------------------------------------------------------ --------------
Institutional Service Shares ($39,905,286 / 3,815,124 shares of beneficial
interest outstanding) $10.46
- ------------------------------------------------------------------------------ --------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED SHORT-INTERMEDIATE GOVERNMENT TRUST
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- --------------------------------------------------------------------------------
Interest income (Note 1C) $ 39,951,120
- --------------------------------------------------------------------------------
EXPENSES--
- --------------------------------------------------------------------------------
Investment advisory fee (Note 4) $3,924,302
- -------------------------------------------------------------------
Trustees' fees 24,102
- -------------------------------------------------------------------
Administrative personnel and services (Note 4) 629,337
- -------------------------------------------------------------------
Custodian, transfer and dividend disbursing agent fees and expenses 294,670
- -------------------------------------------------------------------
Trust share registration costs 40,683
- -------------------------------------------------------------------
Auditing fees 29,069
- -------------------------------------------------------------------
Legal fees 15,814
- -------------------------------------------------------------------
Printing and postage 15,093
- -------------------------------------------------------------------
Insurance premiums 22,768
- -------------------------------------------------------------------
Distribution services fees (Note 4) 96,057
- -------------------------------------------------------------------
Miscellaneous 19,169
- ------------------------------------------------------------------- ----------
Total expenses 5,111,064
- -------------------------------------------------------------------------------- ------------
Net investment income 34,840,056
- -------------------------------------------------------------------------------- ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- --------------------------------------------------------------------------------
Net realized gain (loss) on investments (identified cost basis) 6,224,057
- --------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on investments (11,798,662)
- -------------------------------------------------------------------------------- ------------
Net realized and unrealized loss on investments (5,574,605)
- -------------------------------------------------------------------------------- ------------
Change in net assets resulting from operations $ 29,265,451
- -------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED SHORT-INTERMEDIATE GOVERNMENT TRUST
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED FEBRUARY 28,
--------------------------------
1994 1993
-------------- --------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -------------------------------------------------------------
OPERATIONS--
- -------------------------------------------------------------
Net investment income $ 34,840,056 $ 50,880,057
- -------------------------------------------------------------
Net realized gain on investment transactions ($6,224,057 net
gain and $19,386,642 net gain, respectively, as computed
for federal tax purposes) 6,224,057 19,386,642
- -------------------------------------------------------------
Change in unrealized appreciation (depreciation) of
investments (11,798,662) (565,757)
- ------------------------------------------------------------- -------------- --------------
Change in net assets resulting from operations 29,265,451 69,700,942
- ------------------------------------------------------------- -------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2)--
- -------------------------------------------------------------
Dividends to shareholders from net investment income:
- -------------------------------------------------------------
Institutional Shares (33,561,842) (49,534,027)
- -------------------------------------------------------------
Institutional Service Shares (1,278,214) (1,346,030)*
- ------------------------------------------------------------- -------------- --------------
Change in net assets from distributions to shareholders (34,840,056) (50,880,057)
- ------------------------------------------------------------- -------------- --------------
TRUST SHARE (PRINCIPAL) TRANSACTIONS (NOTE 3)--
- -------------------------------------------------------------
Proceeds from sale of shares 532,829,701 700,099,324
- -------------------------------------------------------------
Net asset value of shares issued to shareholders electing to
receive payment of dividends in Fund shares 14,063,973 16,796,279
- -------------------------------------------------------------
Cost of shares redeemed (749,953,492) (800,284,049)
- ------------------------------------------------------------- -------------- --------------
Change in net assets from Fund share transactions (203,059,818) (83,388,446)
- ------------------------------------------------------------- -------------- --------------
Change in net assets (208,634,423) (64,567,561)
- -------------------------------------------------------------
NET ASSETS:
- -------------------------------------------------------------
Beginning of period 1,107,095,807 1,171,663,368
- ------------------------------------------------------------- -------------- --------------
End of period $ 898,461,384 $1,107,095,807
- ------------------------------------------------------------- -------------- --------------
</TABLE>
* For the period from May 29, 1992 (effective date of Institutional Service
Shares) to February 28, 1993.
(See Notes which are an integral part of the Financial Statements)
FEDERATED SHORT-INTERMEDIATE GOVERNMENT TRUST
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 1994
- --------------------------------------------------------------------------------
(1) SIGNIFICANT ACCOUNTING POLICIES
The Trust is registered under the Investment Company Act of 1940, as amended, as
a diversified, open-end, management investment company. The following is a
summary of significant accounting policies consistently followed by the Trust in
the preparation of its financial statements. The policies are in conformity with
generally accepted accounting principles. The Federated Short-Intermediate
Government Trust provides two classes of shares ("Institutional Shares" and
"Institutional Service Shares"). Institutional Service Shares are identical in
all respects to Institutional Shares except that Institutional Service Shares
are sold pursuant to a distribution plan ("Plan") adopted in accordance with
Investment Company Act Rule 12b-1. Under the Plan, the Fund pays Federated
Securities Corp. (the "distributor") a fee at an annual rate up to 0.25 of 1% of
the average net asset value of Institutional Service Shares to finance any
activity which is principally intended to result in the sale of Institutional
Service Shares. The Institutional Service Shares class of the Trust was declared
effective on June 1, 1992.
A. INVESTMENT VALUATIONS--U.S. government obligations are valued at the mean
between the over-the counter bid and asked prices as furnished by an
independent pricing service. U.S. government obligations maturing in sixty
days or less are valued 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 securities to ensure the existence of a proper level of
collateral.
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. 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. INCOME--Interest income is recorded on the accrual basis. Interest income
includes interest and discount earned (net of premium) on short-term
obligations, and interest earned on all other debt securities including
discount (net of premium) and original issue discount as required by the
Internal Revenue Code.
D. FEDERAL TAXES--It is the Trust's policy to comply with the provisions of the
Internal Revenue Code, as amended (the "Code"), applicable to regulated
investment companies and to distribute to shareholders each year all of its
taxable income, including any net realized gain on investments. Accordingly,
no provision for federal tax is necessary. At February 28, 1994, the Trust,
for federal
FEDERATED SHORT-INTERMEDIATE GOVERNMENT TRUST
- --------------------------------------------------------------------------------
income tax purposes, had a capital loss carryforward of $104,988,279 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 income tax.
Pursuant to the Code, such capital loss carryforward will expire in 1997
($39,788,098) and 1998 ($65,200,181).
E. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Trust may engage in
when-issued or delayed delivery transactions. To the extent the Trust engages
in such transactions, it will do so for the purpose of acquiring portfolio
securities consistent with its investment objective and policies and not for
the purpose of investment leverage. The Trust will record a when-issued
security and the related liability on the trade date. Until the securities
are received and paid for, the Trust will maintain 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 date of the
transaction.
(2) DIVIDENDS
The Trust computes its net income daily and, immediately prior to the
calculation of its net asset value at the close of business, declares and
records dividends, excluding capital gains, to shareholders of record with
respect to shares for which payment in federal funds has been received. Payment
of dividends is made monthly in cash, or in additional shares at the net asset
value on the payable date. Capital gains realized by the Trust are distributed
once every twelve months and are recorded on the ex-dividend date.
FEDERATED SHORT-INTERMEDIATE GOVERNMENT TRUST
- --------------------------------------------------------------------------------
(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 of the Fund (without par
value). Transactions in Trust shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED FEBRUARY 28,
----------------------------------------------------------------
1994 1993
----------------------------- -----------------------------
INSTITUTIONAL SHARES SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ----------- -------------- ----------- --------------
<S> <C> <C> <C> <C>
Shares outstanding, beginning of period 98,280,959 $1,136,640,375 113,293,534 $1,292,462,612
- ----------------------------------------
Shares sold 46,140,706 485,245,229 59,458,659 620,253,995
- ----------------------------------------
Shares issued to shareholders in payment
of dividends declared 1,246,292 13,114,141 1,490,126 15,546,271
- ----------------------------------------
Shares redeemed (63,588,095) (668,935,000) (75,961,360) (791,622,503)
- ---------------------------------------- ----------- -------------- ----------- --------------
Shares outstanding, end of period 82,079,862 $ 966,064,745 98,280,959 $1,136,640,375
- ---------------------------------------- ----------- -------------- ----------- --------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED FEBRUARY 28,
-----------------------------------------------------------------
1994 1993*
--------------------------- ----------------------------
INSTITUTIONAL SERVICE SHARES SHARES AMOUNT SHARES AMOUNT
- --------------------------------------- ---------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Shares outstanding, beginning of period 6,908,973 $72,433,791 -- $ --
- ---------------------------------------
Shares sold 4,528,398 47,584,472 7,616,685 79,845,329
- ---------------------------------------
Shares issued to shareholders in
payment of dividends declared 90,266 949,832 119,310 1,250,008
- ---------------------------------------
Shares redeemed (7,712,513) (81,018,492) (827,022) (8,661,546)
- --------------------------------------- ---------- ----------- --------- -----------
Shares outstanding, end of period 3,815,124 $39,949,603 6,908,973 $72,433,791
- --------------------------------------- ---------- ----------- --------- -----------
</TABLE>
* For the period from May 29, 1992 (effective date of Institutional Service
Shares) to February 28, 1993.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Federated Management, the Trust's investment adviser ("Adviser") receives for
its services an annual investment advisory fee equal to .40 of 1% of the Trust's
average daily net assets.
Administrative personnel and services were provided at approximate cost by
Federated Administrative Services, Inc. Effective March 1, 1994, Federated
Administrative Services ("FAS") will provide administrative personnel and
services. The fee is based on the level of average aggregate net assets of the
total Federated Funds for the period. 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.
The Fund has adopted a Distribution Plan (the "Plan") for its Institutional
Service Shares, pursuant to Rule 12b-1 under the Investment Company Act of 1940.
The Fund reimburses Federated Securities
FEDERATED SHORT-INTERMEDIATE GOVERNMENT TRUST
- --------------------------------------------------------------------------------
Corp. ("FSC"), the principal distributor, from the assets of the Institutional
Service Shares of the Fund, for fees it paid which relate to the distribution
and administration of the Fund's Institutional Service Shares. The Plan provides
that the Fund may incur distribution expenses up to 0.25% of the average daily
net assets of the Institutional Service Shares, annually, to pay commissions,
maintenance fees and to compensate the distributor. For the year ended February
28, 1994, FSC earned $96,057 in distribution services fees.
Under the terms of a shareholder service agreement with Federated Shareholder
Services ("FSS") which takes effect March 1, 1994, the Fund will pay FSS a fee
to obtain certain personal services for shareholders and the maintenance of
shareholder accounts. The fee is based on the level of average net assets for
the period.
Certain of the Officers and Trustees of the Trust are Officers and Directors of
the above corporations.
(5) INVESTMENT TRANSACTIONS
Purchases, and sales of investments (excluding short-term investments), for the
year ended
February 28, 1994, were as follows:
<TABLE>
<S> <C>
- -----------------------------------------------------------------------------
Purchases $1,442,083,788
- ----------------------------------------------------------------------------- --------------
Sales $1,619,833,008
- ----------------------------------------------------------------------------- --------------
</TABLE>
REPORT OF ERNST & YOUNG, INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
To the Trustees and Shareholders of
FEDERATED SHORT-INTERMEDIATE GOVERNMENT TRUST:
We have audited the accompanying statement of assets and liabilities of
Federated Short-Intermediate Government Trust, including the portfolio of
investments, as of February 28, 1994, and the related statement of operations
for the year then ended, the statement of changes in net assets for each of the
two years in the period then ended, and the financial highlights (see pages 2
and 13 of the prospectus) for each of the periods indicated therein. 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
February 28, 1994, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Federated Short-Intermediate Government Trust at February 28, 1994, the results
of its operations for the year then ended, the changes in its net assets for
each of the two years in the period then ended, and the financial highlights for
each of the periods indicated therein, in conformity with generally accepted
accounting principles.
ERNST & YOUNG
Pittsburgh, Pennsylvania
April 13, 1994
[THIS PAGE INTENTIONALLY LEFT BLANK]
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Federated Short-Intermediate Federated Investors Tower
Government Trust Pittsburgh, Pennsylvania 15222-3779
Institutional Service Shares
- ------------------------------------------------------------------------------------------------
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
- ------------------------------------------------------------------------------------------------
Legal Counsel
Houston, Houston & Donnelly 2510 Centre City Tower
Pittsburgh, Pennsylvania 15222
- ------------------------------------------------------------------------------------------------
Legal Counsel
Dickstein, Shapiro & Morin 2101 L Street, N.W.
Washington, D.C. 20037
- ------------------------------------------------------------------------------------------------
Independent Auditors
Ernst & Young One Oxford Centre
Pittsburgh, Pennsylvania 15219
- ------------------------------------------------------------------------------------------------
</TABLE>
FEDERATED
SHORT-INTERMEDIATE
GOVERNMENT TRUST
INSTITUTIONAL SERVICE SHARES
PROSPECTUS
An Open-End, Diversified
Management Investment Company
Prospectus dated April 30, 1994
FEDERATED SECURITIES CORP.
(LOGO)
- ---------------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
8032806A-ISS (4/94)
FEDERATED SHORT-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 (the "Fund") of Federated
Short-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 April 30, 1994. 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 April 30, 1994
FEDERATED SECURITIES CORP.
(LOGO)
- ---------------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
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
TRUST MANAGEMENT 2
- ----------------------------------------------------------------
Officers and Trustees 2
The Funds 4
Fund Ownership 4
Trustee Liability 5
INVESTMENT ADVISORY SERVICES 5
- ----------------------------------------------------------------
Adviser to the Fund 5
Advisory Fees 5
Other Advisory Services 5
ADMINISTRATIVE SERVICES 5
- ----------------------------------------------------------------
BROKERAGE TRANSACTIONS 6
- ----------------------------------------------------------------
PURCHASING SHARES 6
- ----------------------------------------------------------------
Distribution and Shareholder Services Plans 6
Conversion to Federal Funds 7
DETERMINING NET ASSET VALUE 7
- ----------------------------------------------------------------
Determining Market Value of Securities 7
REDEEMING SHARES 7
- ----------------------------------------------------------------
Redemption in Kind 7
TAX STATUS 7
- ----------------------------------------------------------------
The Fund's Tax Status 7
Shareholders' Tax Status 8
TOTAL RETURN 8
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YIELD 8
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PERFORMANCE COMPARISONS 8
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Duration 9
GENERAL INFORMATION ABOUT THE TRUST
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Federated Short-Intermediate Government Trust was established as a Massachusetts
business trust under a Declaration of Trust dated January 3, 1984.
Shares of the Fund 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 Fund.
INVESTMENT OBJECTIVE AND POLICIES
- --------------------------------------------------------------------------------
The Fund's investment objective is current income.
TYPES OF INVESTMENTS
The Fund invests only in U.S. government securities with remaining maturities of
three and one-half (3 1/2) 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 arrangements in which the Fund purchases securities with
payment and delivery scheduled for a future time. The Fund engages in
when-issued and delayed delivery transactions only for the purpose of acquiring
portfolio securities consistent with the Fund's investment objective and
policies, and not for investment leverage.
These transactions are made to secure what is considered to be an advantageous
price and yield for the Fund. Settlement dates will occur no more than 120 days
after entering into these transactions, and the market values of the securities
purchased may vary from the purchase prices.
No fees or other expenses, other than normal transaction costs, are incurred.
However, liquid assets of the Fund sufficient to make payment for the securities
to be purchased are segregated on the Fund's records at the trade date. These
securities are marked to market daily and maintained until the transaction is
settled. The Fund may engage in these transactions to an extent that would cause
the segregation of an amount up to 20% of the total value of its assets.
REPURCHASE AGREEMENTS
The Fund 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
Fund, the Fund 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 Fund might be delayed
pending court action. The Fund believes that under the regular procedures
normally in effect for custody of the Fund's portfolio securities subject to
repurchase agreements, a court of competent jurisdiction would rule in favor of
the Fund and allow retention or disposition of such securities. The Fund will
only enter into repurchase agreements with banks and other recognized financial
institutions such as broker/dealers which are deemed by the Fund's adviser to be
creditworthy pursuant to guidelines established by the Trustees.
PORTFOLIO TURNOVER
The Fund 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 Fund's investment objective. During the fiscal years ended February 28,
1994, and February 28, 1993, the portfolio turnover rates were 150%, and 132%,
respectively.
INVESTMENT LIMITATIONS
The Fund will not change any of the investment limitations described below
without approval of shareholders.
SELLING SHORT AND BUYING ON MARGIN
The Fund will not sell any securities short or purchase any securities on
margin but may obtain such short-term credits as may be necessary for
clearance of purchases and sales of securities.
BORROWING MONEY
The Fund 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 Fund to meet redemption requests when the liquidation of
portfolio securities would be inconvenient or disadvantageous.
Interest paid on borrowed funds will not be available for investment. The
Fund will liquidate any such borrowings as soon as possible and may not
purchase any portfolio securities while the borrowings are outstanding.
- --------------------------------------------------------------------------------
Certain of the Officers and Trustees of the Trust are Officers and
Directors of the above corporation.
PLEDGING ASSETS
The Fund 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 Fund 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.
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 Fund did not borrow money or pledge securities in excess of 5% of the value
of its net 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 Fund will not purchase any securities while
borrowings in excess of 5% of its total assets are outstanding.
TRUST MANAGEMENT
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OFFICERS AND TRUSTEES
Officers and Trustees are listed with their addresses, principal occupations,
and present positions, including any affiliation with Federated Management,
Federated Investors, Federated Securities Corp., Federated Services Company,
Federated Administrative Services, and the Funds (as defined below).
<TABLE>
<CAPTION>
POSITIONS WITH PRINCIPAL OCCUPATIONS
NAME AND ADDRESS THE TRUST DURING PAST FIVE YEARS
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
John F. Donahue*+ Chairman and Chairman and Trustee, Federated Investors; Chairman and
Federated Investors Trustee Trustee, Federated Advisers, Federated Management, and
Tower Federated Research; Director, AEtna Life and Casualty
Pittsburgh, PA Company; Chief Executive Officer and Director, Trustee, or
Managing General Partner of the Funds; formerly Director,
The Standard Fire Insurance Company. Mr. Donahue is the
father of J. Christopher Donahue, Vice President of the
Trust.
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C>
John T. Conroy, Jr. Trustee President, Investment Properties Corporation, Senior Vice-
Wood/IPC Commercial President, John R. Wood and Associates, Inc., Realtors;
Department President, Northgate Village Development Corporation;
John R. Wood and General Partner or Trustee in private real estate ventures
Associates, Inc., in Southwest Florida; Director, Trustee, or Managing
Realtors General Partner of the Funds, formerly, President, Naples
3255 Tamiami Trail North Property Management, Inc.
Naples, FL
- -----------------------------------------------------------------------------------------------------------------
William J. Copeland Trustee Director and Member of the Executive Committee, Michael
One PNC Plaza-23rd Baker, Inc.; Director, Trustee, or Managing General Partner
Floor of the Funds; formerly, Vice Chairman and Director, PNC
Pittsburgh, PA Bank, N.A., and PNC Bank Corp. and Director, Ryan Homes,
Inc.
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James E. Dowd Trustee Attorney-at-law; Director, The Emerging Germany Fund, Inc.;
571 Hayward Mill Road Director, Trustee, or Managing General Partner of the
Concord, MA Funds; formerly, Director, Blue Cross of Massachusetts,
Inc.
- -----------------------------------------------------------------------------------------------------------------
Lawrence D. Ellis, M.D. Trustee Hematologist, Oncologist, and Internist, Presbyterian and
3471 Fifth Avenue Montefiore Hospitals; Clinical Professor of Medicine and
Suite 1111 Trustee, University of Pittsburgh; Director, Trustee, or
Pittsburgh, PA Managing General Partner of the Funds.
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
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<TABLE>
<CAPTION>
POSITIONS WITH PRINCIPAL OCCUPATIONS
NAME AND ADDRESS THE TRUST DURING PAST FIVE YEARS
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
Edward L. Flaherty, Jr.+ Trustee Attorney-at-law; Partner, Meyer and Flaherty; Director,
5916 Penn Mall Eat'N Park Restaurants, Inc., and Statewide Settlement
Pittsburgh, PA Agency, Inc.; Director, Trustee, or Managing General
Partner of the Funds; formerly, Counsel, Horizon Financial,
F.A., Western Region.
- -----------------------------------------------------------------------------------------------------------------
Peter E. Madden Trustee Consultant; State Representative, Commonwealth of
225 Franklin Street Massachusetts; Director, Trustee, or Managing General
Boston, MA Partner of the Funds; formerly, President, State Street
Bank and Trust Company and State Street Boston Corporation
and Trustee, Lahey Clinic Foundation, Inc.
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Gregor F. Meyer Trustee Attorney-at-law; Partner, Meyer and Flaherty; Chairman,
5916 Penn Mall Meritcare, Inc.; Director, Eat'N Park Restaurants, Inc.;
Pittsburgh, PA Director, Trustee, or Managing General Partner of the
Funds; formerly, Vice Chairman, Horizon Financial, F.A.
- -----------------------------------------------------------------------------------------------------------------
Wesley W. Posvar Trustee Professor, Foreign Policy and Management Consultant;
1202 Cathedral of Trustee, Carnegie Endowment for International Peace, RAND
Learning Corporation, Online Computer Library Center, Inc., and U.S.
University of Pittsburgh Space Foundation; Chairman, Czecho Slovak Management
Pittsburgh, PA 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 Trustee Public relations/marketing consultant; Director, Trustee,
4905 Bayard Street or Managing General Partner of the Funds.
Pittsburgh, PA
- -----------------------------------------------------------------------------------------------------------------
J. Christopher Donahue Vice President President and Trustee, Federated Investors; Trustee,
Federated Investors Federated Advisers, Federated Management, and Federated
Tower Research; President and Trustee, Federated Administrative
Pittsburgh, PA Services; Trustee Federated Services Company; 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 Vice President Executive Vice President and Trustee, Federated Investors;
Federated Investors Chairman and Director, Federated Securities Corp.;
Tower President or Vice President of the Funds; Director or
Pittsburgh, PA Trustee of some of the Funds.
- -----------------------------------------------------------------------------------------------------------------
Edward C. Gonzales Vice President Vice President, Treasurer and Trustee, Federated Investors;
Federated Investors and Treasurer Vice President and Treasurer, Federated Advisers, Federated
Tower Management, and Federated Research; Executive Vice
Pittsburgh, PA President, Treasurer, and Director, Federated Securities
Corp.; Chairman, Treasurer, and Trustee, Federated
Administrative Services; Trustee Federated Services
Company; Trustee of some of the Funds; Vice President and
Treasurer of the Funds.
- -----------------------------------------------------------------------------------------------------------------
Glen R. Johnson* President Trustee, Federated Investors; President and/or Trustee of
Federated Investors some of the Funds; staff member, Federated Securities
Tower Corp., and Federated Administrative Services.
Pittsburgh, PA
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
POSITIONS WITH PRINCIPAL OCCUPATIONS
NAME AND ADDRESS THE TRUST DURING PAST FIVE YEARS
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
John W. McGonigle Vice President Vice President, Secretary, General Counsel, and Trustee,
Federated Investors and Secretary Federated Investors; Vice President, Secretary, and
Tower Trustee, Federated Advisers, Federated Management, and
Pittsburgh, PA Federated Research; Executive Vice President, Secretary,
and Trustee, Federated Administrative Services; Trustee
Federated Services Company; Executive Vice President and
Director, Federated Securities Corp.; Vice President and
Secretary of the Funds.
- -----------------------------------------------------------------------------------------------------------------
John A. Staley, IV Vice President Vice President and Trustee, Federated Investors; Executive
Federated Investors Vice President, Federated Securities Corp.; President and
Tower Trustee, Federated Advisers, Federated Management, and
Pittsburgh, PA Federated Research; Vice President of the Funds; Director,
Trustee, or Managing General Partner of some of the Funds;
formerly, Vice President, The Standard Fire Insurance
Company and President of its Federated Research Division.
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
*This Trustee is deemed to be an "interested person" of the Trust as defined in
the Investment Company Act of 1940.
+ Members of the Trust's Executive Committee. The Executive Committee of the
Board of Trustees handles the responsibilities of the Board of Trustees
between meetings of the Board.
THE FUNDS
"The Funds," and "Funds" mean the following investment companies: American
Leaders Fund, Inc.; Annuity Management Series; Automated Cash Management Trust;
Automated Government Money Trust; California Municipal Cash Trust; Cash Trust
Series, Inc.; Cash Trust Series II; DG Investor Series; Edward D. Jones & Co.
Daily Passport Cash Trust; Federated ARMs Fund; Federated Exchange Fund, Ltd.;
Federated GNMA Trust; Federated Government Trust; Federated Growth Trust;
Federated High Yield Trust; Federated Income Securities Trust; Federated Income
Trust; Federated Index Trust; Federated 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 Term Trust, Inc.-1999; Liberty U.S. Government Money Market Trust;
Liberty Utility Fund, Inc.; Liquid Cash Trust; Managed Series Trust; Mark Twain
Funds; Money Market Management, Inc.; Money Market Obligations Trust; Money
Market Trust; Municipal Securities Income Trust; New York Municipal Cash Trust;
111 Corcoran Funds; Peachtree Funds; The Planters Funds; Portage Funds; RIMCO
Monument Funds; The Shawmut Funds; Short-Term Municipal Trust; Signet Select
Funds; Star Funds; The Starburst Funds; The Starburst Funds II; Stock and Bond
Fund, Inc.; Starburst 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; and World Investment Series, Inc.
FUND OWNERSHIP
Officers and Trustees own less than 1% of the Fund's outstanding shares.
As of March 30, 1994, the following shareholders of record owned 5% or more of
the outstanding Institutional Service Shares of the Fund: Charles Schwab and
Company, Inc., San Francisco, California acting in various capacities for
numerous accounts, owned approximately 2,073,214 shares (57.43%); Hauser
Chemical Research, Inc., Boulder, Colorado, owned approximately 322,895 shares
(8.94%); and First American, Trustee for Richland Place, Inc., Nashville,
Tennessee, owned approximately 206,755 shares (5.73%).
As of March 30, 1994, the following shareholder of record owned 5% or more of
the outstanding Institutional Shares of the Fund: NBD Bank, NA as Trustee for
K-Mart Corporation Employee Savings Plan, owned approximately 8,391,860 shares
(10.79%).
- --------------------------------------------------------------------------------
TRUSTEE LIABILITY
The Trust's Declaration of Trust provides that the Trustees will not be liable
for errors of judgment or mistakes of fact or law. However, they are not
protected against any liability to which they would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of their office.
INVESTMENT ADVISORY SERVICES
- --------------------------------------------------------------------------------
ADVISER TO THE FUND
The Fund's investment adviser is Federated Management. 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, his wife, and
his son, J. Christopher Donahue. John F. Donahue is Chairman and Trustee,
Federated Management; Chairman and Trustee, Federated Investors and Chairman and
Trustee of the Trust. John A. Staley, IV, is President, Federated Management;
Vice President and Trustee, Federated Investors; Executive Vice President,
Federated Securities Corp. and Vice President of the Trust. J. Christopher
Donahue is Trustee, Federated Management; President and Trustee, Federated
Investors; Trustee, Federated Administrative Services, and Vice President of the
Trust. John W. McGonigle is Vice President, Secretary, and Trustee, Federated
Management; Trustee, Vice President, Secretary and General Counsel, Federated
Investors; Executive Vice President and Trustee, Federated Administrative
Services; Executive Vice President, Secretary, and Director, Federated
Securities Corp., and Vice President and Secretary of the Trust.
The adviser shall not be liable to the Trust, the Fund, or any shareholder of
the Fund 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 prospectus. During the fiscal years ended
February 28, 1994, February 28, 1993, and February 29, 1992, the Fund's adviser
earned $3,924,302, $4,408,159, and $4,826,232, respectively.
STATE EXPENSE LIMITATIONS
The adviser has undertaken to comply with the expense limitations
established by certain states for investment companies whose shares are
registered for sale in those states. If the Fund'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
Fund for its expenses over the limitation.
If the Fund'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
Fund, 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 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. For the fiscal years ended February 28, 1994, 1993, and February 29,
1992, Federated Administrative Services, Inc., the Trust's former administrator,
earned $629,337, $542,061, and $605,105, respectively, none of which were
waived. John A. Staley, IV, an officer of the Trust and Dr. Henry J. Gailliot,
an officer of Federated Management, the adviser to the Trust, each hold
approximately 15% and 20%, respectively, of the
- --------------------------------------------------------------------------------
outstanding common stock and serve as directors of Commercial Data Services,
Inc., a company which provides computer processing services to Federated
Administrative Services, Inc., and Federated Administrative Services. For the
fiscal years ended February 28, 1994, 1993, and February 29, 1992, Federated
Administrative Services, Inc. paid approximately $159,222, $179,920, and
$202,532, respectively, for services provided by Commercial Data Services, Inc.
to the Funds.
BROKERAGE TRANSACTIONS
- --------------------------------------------------------------------------------
When selecting brokers and dealers to handle the purchase and sale of portfolio
instruments, the adviser looks for prompt execution of the order at a favorable
price. In working with dealers, the adviser will generally use those who are
recognized dealers in specific portfolio instruments, except when a better price
and execution of the order can be obtained elsewhere. The adviser makes
decisions on portfolio transactions and selects brokers and dealers subject to
review by the Board of Trustees.
The adviser may select brokers and dealers who offer brokerage and research
services. These services may be furnished directly to the Fund or to the adviser
and may include:
- - advice as to the advisability of investing in securities;
- - security analysis and reports;
- - economic studies;
- - industry studies;
- - receipt of quotations for portfolio evaluations; and
- - similar services.
The adviser and its affiliates exercise reasonable business judgment in
selecting brokers who offer brokerage and research services to execute
securities transactions. They determine in good faith that commissions charged
by such persons are reasonable in relationship to the value of the brokerage and
research services provided.
Research services provided by brokers may be used by the adviser or by
affiliates of Federated Investors in advising Federated Funds and other
accounts. To the extent that receipt of these services may supplant services for
which the adviser or its affiliates might otherwise have paid, it would tend to
reduce their expenses.
PURCHASING SHARES
- --------------------------------------------------------------------------------
Shares are sold at their net asset value without a sales charge on days the New
York Stock Exchange is open for business. The procedure for purchasing Shares is
explained in the respective prospectus under "Investing in Institutional Shares"
or "Investing in Institutional Service Shares."
DISTRIBUTION AND SHAREHOLDER SERVICES PLANS
These arrangements permit the payment of fees to financial institutions, the
distributor, and Federated Shareholder Services to stimulate distribution
activities and to cause services to be provided to shareholders by a
representative who has knowledge of the shareholder's particular circumstances
and goals. These activities and services may include, but are not limited to,
marketing efforts; providing office space, equipment, telephone facilities, and
various clerical, supervisory, computer, and other personnel as necessary or
beneficial to establish and maintain shareholder accounts and records;
processing purchase and redemption transactions and automatic investments of
client account cash balances; answering routine client inquiries; and assisting
clients in changing dividend options, account designations, and addresses.
With respect to the Institutional Service Shares class of the Fund, by adopting
the Distribution Plan, the Board of Trustees expects that the Fund 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 Fund in pursuing its investment objectives. By identifying potential
investors whose needs are served by the Fund's objectives, and properly
servicing these accounts, it may be possible to curb sharp fluctuations in rates
of redemptions and sales.
Other benefits, which may be realized under either arrangement, may include: (1)
providing personal services to shareholders; (2) investing shareholder assets
with a minimum of delay and administrative detail; (3) enhancing shareholder
recordkeeping systems; and (4) responding promptly to shareholders' requests and
inquiries concerning their accounts.
For the fiscal period ending February 28, 1994 and 1993, payments in the amount
of $96,057 and $81,184, respectively, were made pursuant to the Distribution
Plan (Institutional Service Shares only).
- --------------------------------------------------------------------------------
CONVERSION TO FEDERAL FUNDS
It is the Fund's policy to be as fully invested as possible so that maximum
interest may be earned. To this end, all payments from shareholders must be in
federal funds or be converted into federal funds. State Street Bank acts as the
shareholder's agent in depositing checks and converting them to federal funds.
DETERMINING NET ASSET VALUE
- --------------------------------------------------------------------------------
Net asset value generally changes each day. The days on which net asset value is
calculated by the Fund are described in the respective prospectuses. Net asset
value will not be calculated on the following holidays: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, and Christmas Day.
DETERMINING MARKET VALUE OF SECURITIES
Market values of the Fund's portfolio securities are determined as follows:
- - according to the mean between the over-the-counter bid and asked prices
provided by an independent pricing service, if available, or at fair value as
determined in good faith by the Fund's Board of Trustees; or
- - for short-term obligations with remaining maturities of less than 60 days at
the time of purchase, at amortized cost unless the Board of Trustees
determines that particular circumstances of the security indicate otherwise.
Prices provided by independent pricing services may be determined without
relying exclusively on quoted prices. Pricing services may consider:
- - yield;
- - quality;
- - coupon rate;
- - maturity;
- - type of issue;
- - trading characteristics; and
- - other market data.
REDEEMING SHARES
- --------------------------------------------------------------------------------
The Fund redeems Shares at the next computed net asset value after the Fund
receives the redemption request. Redemption procedures are explained in the
respective prospectuses under "Redeeming Institutional Shares" and "Redeeming
Institutional Service Shares." Although State Street Bank does not charge for
telephone redemptions, it reserves the right to charge a fee for the cost of
wire-transferred redemptions of less than $5,000.
REDEMPTION IN KIND
The Trust is obligated to redeem Shares solely in cash up to $250,000 or 1% of
the respective class net asset value, whichever is less, for any one shareholder
within a 90-day period.
Any redemption beyond this amount will also be in cash unless the Trustees
determine that further cash payments will have a material adverse effect on
remaining shareholders. In such a case, the Trust will pay all or a portion of
the remainder of the redemption in portfolio instruments, valued in the same way
as the Trust determines net asset value. The portfolio instruments will be
selected in a manner that the Trustees deem fair and equitable.
Redemption in kind is not as liquid as a cash redemption. If redemption is made
in kind, shareholders receiving their securities and selling them before their
maturity could receive less than the redemption value of their securities and
could incur certain transaction costs.
TAX STATUS
- --------------------------------------------------------------------------------
THE FUND'S TAX STATUS
The Fund 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 Fund must, among other
requirements:
- - derive at least 90% of its gross income from dividends, interest, and gains
from the sale of securities;
- - derive less than 30% of its gross income from the sale of securities held less
than three months;
- - invest in securities within certain statutory limits; and
- - distribute to its shareholders at least 90% of its net income earned during
the year.
- --------------------------------------------------------------------------------
SHAREHOLDERS' TAX STATUS
Shareholders are subject to federal income tax on dividends and capital gains
received as cash or additional Shares. No portion of any income dividend paid by
the Fund 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 Fund's average annual total return for Institutional Shares for the one-year
and five-year periods ended February 28, 1994, and for the period from March 15,
1984 (effective date of the Trust's registration statement) to February 28, 1994
were 2.93%, 7.73%, and 8.49%, respectively. The Fund's cumulative total return
for Institutional Service Shares for the period from June 18, 1992 (start of
performance of Institutional Service Shares), through February 28, 1994, and for
the year ended February 28, 1994, was 4.10% and 2.68%, respectively.
YIELD
- --------------------------------------------------------------------------------
The Fund's yield for the thirty day period ended February 28, 1994, was 3.41%
and 3.16% for Institutional Shares and Institutional Service Shares,
respectively.
The yield for both classes of shares of the Fund is determined by dividing the
net investment income per share (as defined by the Securities and Exchange
Commission) earned by either class of shares over a thirty-day period by the
maximum offering price per share of either class on the last day of the period.
This value is annualized using semi-annual compounding. This means that the
amount of income generated during the thirty-day period is assumed to be
generated each month over a twelve month period and is reinvested every six
months. The yield does not necessarily reflect income actually earned by the
Fund because of certain adjustments required by the Securities and Exchange
Commission and, therefore, may not correlate to the dividends or other
distributions paid to shareholders.
To the extent that financial institutions and broker/dealers charge fees in
connection with services provided in conjunction with an investment in either
class of shares, performance will be reduced for those shareholders paying those
fees.
PERFORMANCE COMPARISONS
- --------------------------------------------------------------------------------
The performance of both classes of shares depends upon such variables as:
- - portfolio quality;
- - average portfolio maturity;
- - type of instruments in which the portfolio is invested;
- - changes in interest rates and market value of portfolio securities;
- - changes in the Fund's expenses or either class of Share's expenses; and
- - various other factors.
Either class of Shares' performance fluctuates on a daily basis largely because
net earnings and offering price per share fluctuate daily. Both net earnings and
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 Fund'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 Fund uses in advertising may include:
- - LIPPER ANALYTICAL SERVICES, INC. ranks funds in various 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 Fund will quote its Lipper ranking in the "U.S.
government funds" category in advertising and sales literature.
- - MERRILL LYNCH 1-3 YEAR TREASURY INDEX is an unmanaged index tracking short-
term U.S. government securities with maturities between 1 and 2.99 years. The
index is produced by Merrill Lynch, Pierce, Fenner & Smith, Inc.
- --------------------------------------------------------------------------------
- - SHEARSON LEHMAN 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.
- - MERRILL LYNCH 2-YEAR TREASURY CURVE INDEX is comprised of the most recently
issued 2-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.
- - MERRILL LYNCH U.S. TREASURY SHORT TERM INDEX (1-2.99 YEARS) is an unmanaged
index tracking short-term U.S. government securities with maturities between 1
and 2.99 years. The index is produced by Merrill Lynch, Pierce, Fenner &
Smith, Inc.
- - 2-YEAR TREASURY NOTE--Source: Wall Street Journal, Bloomberg Financial
Markets, and Telerate.
- - MORNINGSTAR, INC., an independent rating service, is the publisher of the
bi-weekly Mutual Fund Values. Mutual Fund Values rates more than 1,000
NASDQ-listed mutual funds of all types, according to their risk-adjusted
returns. The maximum rating is five stars, and ratings are effective for two
weeks.
Advertisements and other sales literature for both classes of shares may quote
total returns which are calculated on nonstandardized 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 Fund 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 Fund.
8032806B (4/94)
FEDERATED SHORT-INTERMEDIATE GOVERNMENT TRUST
- --------------------------------------------------------------------------------
ANNUAL REPORT DATED FEBRUARY 28, 1994
INVESTMENT REVIEW
Federated Short-Intermediate Government Trust's portfolio, which is
rated AAAf by Standard & Poor's*, represents a fully-invested participation
in those obligations of the U.S. Treasury and certain government agencies
which have a maximum maturity of 3 1/2 years and an average maturity of
1 1/2 to 2 years. The Trust remained fully invested in U.S. Treasury
securities as agency yield spreads over Treasuries remained narrow. Since
the Trust's February 28, 1993, fiscal year end, assets decreased to
approximately $898 million.
During the annual reporting period, the 2-year Treasury note yield
dropped from 3.9% at the end of February, 1993, to 3.7% in early September,
and then increased to 4.7% at the end of February, 1994. The Trust's net
asset value moved from $10.53 per share at the end of February, 1993, to
$10.46 per share at the end of February, 1994. Following the early
September, 1993, low in the 2-year Treasury note yield, yields in the
intermediate sector of the curve increased the most as the overall Treasury
curve steepened. The fourth quarter of 1993 was similar to the fourth
quarter of 1992 in that interest rates rose all along the yield curve in
reaction to a stronger economy. Given our view that we had already seen the
bottom in shorter term rates, the Trust's average maturity posture remained
conservative. On February 28, 1994, the average maturity of the Trust was
1.6 years and the modified duration was 1.5 years.
Although the Federal Reserve's (the "Fed") monetary policy had been on
hold for well over a year, the next move was expected to be an increase in
the Federal Funds rate. The Fed did increase the Fed Funds target rate by
1/4% to 3 1/4% on February 4, 1994, as a preemptive strike against any
threat of inflation. Since the Fed tightened, interest rates have continued
to rise due to market expectations that this Fed tightening would not be
the only one. Although economic data has been difficult to interpret due to
weather-related distortions, the economic strength displayed in the fourth
quarter of 1993 appears to have continued into 1994, driving market fears
of inflation. However, the 7.5% annual growth rate in GDP (gross domestic
product) for the fourth quarter of 1993 probably will not be repeated in
the first quarter of 1994. The Trust will continue to target a conservative
average maturity while changing economic and market developments are
monitored to best serve those clients attracted to the short to
intermediate U.S. government market.
* Ratings subject to change.
PERFORMANCE COMPARISON
- --------------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A HYPOTHETICAL $10,000 INVESTMENT
IN FEDERATED SHORT-INTERMEDIATE GOVERNMENT TRUST (INSTITUTIONAL
SERVICE SHARES), MERRILL LYNCH U.S. TREASURY SHORT-TERM INDEX
(1-2.99 YEARS)+, AND LIPPER SHORT U.S. GOVERNMENT FUNDS AVERAGE++.
[Graphic representation "A" omitted. See Appendix.]
<TABLE>
<CAPTION>
FEDERATED
SHORT-INTER- MERR ILL
MEDIATE LYNCH U.S.
GOVERNMENT TREASURY LIPPER SHORT
TRUST (INSTI- SHORT-TERM U.S. GOV-
MEASUREMENT PERIOD TUTIONAL SER- INDEX (1-2.99 ERNMENT FUNDS
(FISCAL YEAR COVERED) VICE SHARES) YEARS) AVERAGE
<S> <C> <C> <C>
6/18/92 10000 10000 10000
2/28/93 10428 10550 10517
2/28/94 10707 10913 10876
</TABLE>
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 annual report incorporates by reference and accompanies the prospectus
dated April 30, 1994.
* Reflects performance of Federated Short-Intermediate Government Trust
(Institutional Service Shares) from start of business 6/18/92 through
2/28/94.
** The Fund's performance assumes the reinvestment of all dividends and
distributions. The Merrill Lynch U.S. Treasury Short-Term Index (1-2.99
years) and Lipper Short U.S. Government Funds Average are adjusted to
reflect reinvestment of dividends on securities in the index and category,
respectively.
+ The Merrill Lynch U.S. Treasury Short-Term Index (1-2.99 years) is not
adjusted to reflect sales loads, expenses, or other fees that the SEC
requires to be reflected in the Fund's performance.
++ The Lipper Short U.S. Government Funds Average is a compilation of mutual
fund total returns reported to Lipper Analytical Services, Inc. Each fund is
reported net of sales loads, expenses or other fees that the SEC requires to
be reflected in a fund's performance.
+++ Reflects maximum applicable fees.
PERFORMANCE COMPARISON
- --------------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A HYPOTHETICAL $10,000 INVESTMENT
IN FEDERATED SHORT-INTERMEDIATE GOVERNMENT TRUST (INSTITUTIONAL
SHARES), MERRILL LYNCH U.S. TREASURY SHORT-TERM INDEX (1-2.99 YEARS)+,
AND LIPPER SHORT U.S. GOVERNMENT FUNDS AVERAGE++.
[Graphic representation "B" omitted. See Appendix.]
<TABLE>
<CAPTION>
FEDERATED
SHORT-INTER- MERR ILL
MEDIATE LYNCH U.S.
GOVERNMENT TREASURY LIPPER SHORT
TRUST (INSTI- SHORT-TERM U.S. GOV-
MEASUREMENT PERIOD TUTIONAL SER- INDEX (1-2.99 ERNMENT FUNDS
(FISCAL YEAR COVERED) VICE SHARES) YEARS) AVERAGE
<S> <C> <C> <C>
3/15/84 10000 10000 10000
2/28/85 11371 11290 11286
2/28/86 12849 12988 13128
2/28/87 13970 14253 14497
2/29/88 14890 15242 15315
2/28/89 15520 15929 15927
2/28/90 17085 17620 17472
2/28/91 18812 19519 19268
2/29/92 20518 21515 21164
2/28/93 21882 23261 23018
2/28/94 22523 24100 23803
</TABLE>
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 annual report incorporates by reference and accompanies the prospectus
dated April 30, 1994.
* Reflects performance of Federated Short-Intermediate Government Trust
(Institutional Shares) from start of business 3/15/84 through 2/28/94.
** The Fund's performance assumes the reinvestment of all dividends and
distributions. The Merrill Lynch U.S. Treasury Short-Term Index (1-2.99
years) and Lipper Short U.S. Government Funds Average are adjusted to
reflect reinvestment of dividends on securities in the index and category,
respectively.
+ The Merrill Lynch U.S. Treasury Short-Term Index (1-2.99 years) is not
adjusted to reflect sales loads, expenses, or other fees that the SEC
requires to be reflected in the Fund's performance.
++ The Lipper Short U.S. Government Funds Average is a compilation of mutual
fund total returns reported to Lipper Analytical Services, Inc. Each fund is
reported net of sales loads, expenses or other fees that the SEC requires to
be reflected in a fund's performance.
+++ Reflects maximum applicable fees.
FEDERATED SECURITIES CORP.
(LOGO)
- --------------------------------------------------------------------------------
Distributor
8032806ARS (4/94)
APPENDIX
A. The graphic presentation here displayed consists of a
boxed legend in the bottom center indicating the components
of the corresponding line graph. The line graph is a visual
representation of a comparison of change in value of a
hypothetical $10,000 purchase in Federated
Short-Intermediate Government Trust (Institutional Service)
(the "Fund"); Merrill Lynch U.S. Treasury
Short -Term Index (1-2.99 years) and Lipper Short U.S.
Government Funds Average. The "x" axis reflects the cost of
the investment. The "y" axis reflects computation periods
from the Fund's start of business, 06/18/92, through
02/28/94. The right margin reflects the ending value of the
hypothetical investment in the Fund as compared to Merrill
Lynch U.S. Treasury Short-Term Index (1-2.99 years) and
Lipper Short U.S. Government Funds Average; the ending
values are $10,913, $10,876 and $10,707 respectively. There
is also a legend in the upper left quadrant of the graphic
presentation which indicates the Average Annual Total Return
for the period ended February 28, 1994, beginning with the
inception date of the Fund (06/18/92), and the one-year
period; the Average Annual Total Returns are 2.68% and
4.10%, respectively.
B. The graphic presentation here displayed consists of a
boxed legend in the bottom center indicating the components
of the corresponding line graph. The line graph is a visual
representation of a comparison of change in value of a
hypothetical $10,000 purchase in Federated
Short-Intermediate Government Trust (Institutional Shares)
(the "Fund"); Merrill Lynch U.S. Treasury Short Term Index
(1-2.99 years) and Lipper Short U.S. Government Funds
Average. The "x" axis reflects the cost of the investment.
The "y" axis reflects the computation period since the
Fund's start of business, 03/15/84, through 02/28/94. The
right margin reflects the ending value of the hypothetical
investment in the Fund as compared to Merrill Lynch U.S.
Treasury Short-Term Index (1-2.99 years) and Lipper Short
U.S. Government Funds Average; the ending values are
$24,061, $23,803 and $22,523 respectively. There is also a
legend in the upper left quadrant of the graphic
presentation which indicates the Average Annual Total Return
for the period ended 2/28/94, beginning with the inception
date of the Fund, (03/15/84); and the one-year and five year
periods, the Average Annual Total Returns are 8.49%; 2.93%
and 8.49% respectively.
