- -------------------------------------------------------------------------------
FEDERATED INTERMEDIATE MUNICIPAL TRUST
(FORMERLY, INTERMEDIATE MUNICIPAL TRUST)
(A PORTFOLIO OF INTERMEDIATE MUNICIPAL TRUST)
PROSPECTUS
The shares of Federated Intermediate Municipal Trust (formerly,
"Intermediate Municipal Trust") (the "Fund") offered by this
prospectus represent interests in a diversified portfolio of
securities of Intermediate Municipal Trust (the "Trust"), an open-end
management investment company (a mutual fund).
The objective of the Fund is to provide current income exempt from
federal regular income tax. The Fund pursues this investment objective
by investing in a portfolio of municipal securities with a
dollar-weighted average portfolio maturity of not less than three or
more than ten years.
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS
OF ANY BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK, AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THESE
SHARES INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
This prospectus contains the information you should read and know
before you invest in the Fund. Keep this prospectus for future
reference.
The Fund has also filed a Statement of Additional Information dated
July 31, 1995 with the Securities and Exchange Commission. The
information contained in the Statement of Additional Information is
incorporated by reference into this prospectus. You may request a copy
of the Statement of Additional Information, which is in paper form
only, or a paper copy of this prospectus, if you have received your
prospectus electronically, free of charge by calling 1-800-235-4669.
To obtain other information or to 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 July 31, 1995
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
SUMMARY OF FUND EXPENSES 1
- --------------------------------------------------
FINANCIAL HIGHLIGHTS 2
- --------------------------------------------------
GENERAL INFORMATION 3
- --------------------------------------------------
INVESTMENT INFORMATION 3
- --------------------------------------------------
Investment Objective 3
Investment Policies 3
Municipal Securities 5
Investment Risks 6
Investment Limitations 6
INTERMEDIATE MUNICIPAL TRUST
INFORMATION 7
- --------------------------------------------------
Management of the Trust 7
Distribution of Fund Shares 8
Administration of the Fund 8
NET ASSET VALUE 9
- --------------------------------------------------
INVESTING IN THE FUND 9
- --------------------------------------------------
Share Purchases 9
Minimum Investment Required 10
What Shares Cost 10
Exchanging Securities for Fund Shares 10
Subaccounting Services 10
Certificates and Confirmations 11
Dividends 11
Capital Gains 11
REDEEMING SHARES 11
- --------------------------------------------------
Telephone Redemption 11
Written Requests 12
Accounts with Low Balances 12
SHAREHOLDER INFORMATION 13
- --------------------------------------------------
Voting Rights 13
Massachusetts Partnership Law 13
TAX INFORMATION 13
- --------------------------------------------------
Federal Income Tax 13
Pennsylvania Corporate and Personal
Property Taxes 14
Other State and Local Taxes 14
PERFORMANCE INFORMATION 15
- --------------------------------------------------
FINANCIAL HIGHLIGHTS--INSTITUTIONAL
SERVICE SHARES 16
- --------------------------------------------------
FINANCIAL STATEMENTS 17
- --------------------------------------------------
REPORT OF INDEPENDENT PUBLIC
ACCOUNTANTS 34
- --------------------------------------------------
ADDRESSES 35
- --------------------------------------------------
</TABLE>
I
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES
<S> <C> <C>
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
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(As a percentage of average net assets)
<S> <C> <C>
Management Fee (after waiver) (1)................................................................ 0.38%
12b-1 Fee (2).................................................................................... None
Total Other Expenses............................................................................. 0.19%
Shareholder Services Fee (after waiver) (3)......................................... 0.05%
Total Fund Operating Expenses (4)........................................................ 0.57%
<FN>
(1) The management fee has been reduced to reflect the voluntary waiver of a
portion of the management fee. The adviser can terminate this voluntary
waiver at any time at its sole discretion. The maximum management fee is
0.40%.
(2) As of December 21, 1994, Institutional Service Shares were no longer
offered and ceased to exist. Previously, the Fund had adopted a Plan
pursuant to Rule 12b-1 under the Investment Company Act of 1940, which
provided that the Fund could incur distribution expenses up to .25% of 1%
of the average daily net assets of the Institutional Service Shares,
annually to compensate Federated Securities Corp. ("FSC"), the Trust's
distributor. In addition, the Distribution Plan (the "Plan") was
discontinued, as of December 21, 1994, contemporaneous with the termination
of the Institutional Service Shares class. When the Plan was in effect, FSC
chose to voluntarily waive a portion of its fees. As a result, the Fund
paid $520 under the Plan.
(3) The maximum shareholder services fee is 0.25%.
(4) The total Fund operating expenses in the table above are based on expenses
expected during the fiscal year ending May 31, 1996. The total Fund
operating expenses were 0.59% for the fiscal year ended May 31, 1995.
</TABLE>
The purpose of this table is to assist an investor in understanding the various
costs and expenses that a shareholder of the Fund will bear, either directly or
indirectly. For more complete descriptions of the various costs and expenses,
see "Investing in the Fund" and "Intermediate Municipal Trust Information."
Wire-transferred redemptions of less than $5,000 may be subject to additional
fees.
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------------------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return and (2) redemption at the end of
each time period................................................. $6 $18 $32 $71
</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.
1
FEDERATED INTERMEDIATE MUNICIPAL TRUST
(FORMERLY, INTERMEDIATE MUNICIPAL TRUST)
FINANCIAL HIGHLIGHTS*
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 34.
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
----------------------------------------------------------------
1995 1994 1993 1992 1991 1990
- ------------------------------------------------------------ --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.52 $ 10.74 $ 10.31 $ 10.09 $9.84 $9.81
- ------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------
Net investment income 0.54 0.52 0.56 0.59 0.63 0.64
- ------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 0.03 (0.22) 0.43 0.22 0.25 0.03
- ------------------------------------------------------------ --------- --------- --------- --------- --------- ---------
Total from investment operations 0.57 0.30 0.99 0.81 0.88 0.67
- ------------------------------------------------------------
LESS DISTRIBUTIONS
- ------------------------------------------------------------
Distributions from net investment income (0.54) (0.52) (0.56) (0.59) (0.63) (0.64)
- ------------------------------------------------------------ --------- --------- --------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 10.55 $ 10.52 $ 10.74 $ 10.31 $ 10.09 $9.84
- ------------------------------------------------------------ --------- --------- --------- --------- --------- ---------
TOTAL RETURN (B) 5.67% 2.79% 9.80% 8.19% 9.22% 7.02%
- ------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------------------------------
Expenses 0.59% 0.61% 0.48% 0.47% 0.49% 0.50%
- ------------------------------------------------------------
Net investment income 5.23% 4.82% 5.27% 5.73% 6.32% 6.49%
- ------------------------------------------------------------
Expense waiver/reimbursement (d) 0.00% 0.01% 0.14% 0.22% 0.30% 0.38%
- ------------------------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------------------------
Net assets, end of period (000 omitted) $229,285 $302,663 $263,283 $173,702 $116,577 $95,738
- ------------------------------------------------------------
Portfolio turnover 11% 7% 3% 9% 43% 14%
- ------------------------------------------------------------
<CAPTION>
1989 1988 1987 1986(A)
- ------------------------------------------------------------ --------- --------- --------- ------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $9.81 $9.83 $9.97 $ 10.00
- ------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------
Net investment income 0.64 0.62 0.58 0.29
- ------------------------------------------------------------
Net realized and unrealized gain (loss) on investments -- (0.02) (0.14) (0.03)
- ------------------------------------------------------------ --------- --------- --------- ------------
Total from investment operations 0.64 0.60 0.44 0.26
- ------------------------------------------------------------
LESS DISTRIBUTIONS
- ------------------------------------------------------------
Distributions from net investment income (0.64) (0.62) (0.58) (0.29)
- ------------------------------------------------------------ --------- --------- --------- ------------
NET ASSET VALUE, END OF PERIOD $9.81 $9.81 $9.83 $9.97
- ------------------------------------------------------------ --------- --------- --------- ------------
TOTAL RETURN (B) 6.77% 6.34% 4.25% 2.60%
- ------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------------------------------
Expenses 0.48% 0.49% 0.47% 0.003% (c)
- ------------------------------------------------------------
Net investment income 6.56% 6.25% 5.63% 6.46% (c)
- ------------------------------------------------------------
Expense waiver/reimbursement (d) 0.39% 0.31% 0.27% 0.57% (c)
- ------------------------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------------------------
Net assets, end of period (000 omitted) $82,211 $91,195 $120,162 $3,450
- ------------------------------------------------------------
Portfolio turnover 25% 119% 81% 23%
- ------------------------------------------------------------
<FN>
* During the period from September 6, 1993, to December 21, 1994, the Fund
offered two classes of shares, Institutional Shares and Institutional
Service Shares. As of December 21, 1994, Institutional Service Shares
ceased operations and the class designation for Institutional Shares was
eliminated. The table above does not reflect Institutional Service Shares.
See page 16 for Institutional Service Shares Financial Highlights.
(a) Reflects operations for the period from December 26, 1985 (date of initial
public investment) to May 31, 1986. For the period from the start of
business, October 15, 1985, to December 25, 1985, net investment income per
share aggregating $0.108424 ($1,084) was distributed to an affiliate of the
Trust's adviser. Such distribution represented the net income of the Trust
prior to the intitial public offering of the Trust shares which commenced
December 26, 1985.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) Computed on an annualized basis.
(d) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
</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 for the fiscal year ended May 31, 1995, which can be obtained free
of charge.
2
GENERAL INFORMATION
- --------------------------------------------------------------------------------
The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated May 31, 1985. The Declaration of Trust permits the Trust to offer
separate series of shares of beneficial interest representing interests in
separate portfolios of securities. The shares in any one portfolio may be
offered in separate classes.
Shares of the Fund are sold primarily to retail and private banking customers of
financial institutions and to accounts for which financial institutions act in a
fiduciary, advisory, agency, custodial, or similar capacity as a convenient
means of accumulating an interest in a professionally managed, diversified
portfolio of municipal securities. Shares are also designed for funds held by
savings and other institutions, corporations, trusts, brokers, investment
counselors and insurance companies. A minimum initial investment of $25,000 over
a 90-day period is required. The Fund may not be a suitable investment for
retirement plans since it invests in municipal securities.
Shares are currently sold and redeemed at net asset value without a sales load
imposed by the Fund.
INVESTMENT INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The investment objective of the Fund is to provide current income exempt from
federal regular income tax. Interest income of the Fund that is exempt from
federal income tax retains its tax-free status when distributed to the Fund's
shareholders. The Fund pursues this investment objective by investing at least
80% of its net assets in a diversified portfolio of municipal securities with a
dollar-weighted average portfolio maturity of not less than three or more than
ten years. 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 policy stated above cannot
be changed without approval of shareholders.
INVESTMENT POLICIES
The investment policies described below may be changed by the Board of Trustees
(the "Trustees") without shareholder approval. Shareholders will be notified
before any material change in these policies becomes effective.
ACCEPTABLE INVESTMENTS. The municipal securities in which the Fund invests are:
- debt obligations, including industrial development bonds, issued by or on
behalf of any state, territory, or possession of the United States,
including the District of Columbia, or any political subdivision of any of
these; and
- participation interests, as described below, in any of the above
obligations,
the interest from which is, in the opinion of bond counsel for the issuers or in
the opinion of officers of the Fund and/or the investment adviser to the Fund,
exempt from federal regular income tax.
3
The prices of fixed income securities fluctuate inversely to the direction of
interest rates.
AVERAGE MATURITY. The dollar-weighted average portfolio maturity of the Fund's
portfolio of municipal securities will not be less than three years or more than
ten years. For purposes of determining the dollar-weighted average portfolio
maturity of the Fund's portfolio, the maturity of a municipal security will be
its ultimate maturity, unless it is probable that the issuer of the security
will take advantage of maturity-shortening devices such as a call, refunding, or
redemption provision, in which case the maturity date will be the date on which
it is probable that the security will be called, refunded, or redeemed. If the
municipal security includes the right to demand payment, the maturity of the
security for purposes of determining the Fund's dollar-weighted average
portfolio maturity will be the period remaining until the principal amount of
the security can be recovered by exercising the right to demand payment.
CHARACTERISTICS. The municipal securities in which the Fund invests are:
- rated within the three highest ratings for municipal securities by Moody's
Investors Service, Inc. ("Moody's") (Aaa, Aa, or A) or by Standard &
Poor's Ratings Group ("S&P") (AAA, AA, or A);
- guaranteed at the time of purchase by the U.S. government as to the
payment of principal and interest;
- fully collateralized by an escrow of U.S. government securities or other
securities acceptable to the Fund's adviser;
- rated at the time of purchase within Moody's highest short-term municipal
obligation rating (MIG1/VMIG1) or Moody's highest municipal commercial
paper rating (PRIME-1) or S&P's highest municipal commercial paper rating
(SP-1);
- unrated if, at the time of purchase, other municipal securities of that
issuer are rated A or better by Moody's or S&P; or
- unrated if determined to be of equivalent quality to one of the foregoing
rating categories by the Fund's investment adviser.
A description of the rating categories is contained in the Appendix to the
Statement of Additional Information.
PARTICIPATION INTERESTS. The Fund may purchase participation interests from
financial institutions such as commercial banks, savings associations, and
insurance companies. These participation interests give the Fund an undivided
interest in one or more underlying municipal securities. The financial
institutions from which the Fund purchases participation interests frequently
provide or obtain irrevocable letters of credit or guarantees to attempt to
assure that the participation interests are of high quality. The Trustees of the
Fund will determine whether participation interests meet the prescribed quality
standards for the Fund.
VARIABLE RATE MUNICIPAL SECURITIES. Some of the municipal securities which the
Fund purchases may have variable interest rates. Variable interest rates are
ordinarily stated as a percentage of a published interest rate, interest rate
index, or some similar standard, such as the 91-day U.S. Treasury
4
bill rate. Variable interest rates are adjusted on a periodic basis, e.g., every
30 days. The Fund will consider this adjustment period to be the maturity of the
security for purposes of determining the weighted average maturity of the
portfolio.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase and sell
municipal securities on a when-issued or delayed delivery basis. These
transactions are arrangements in which the Fund purchases securities with
payment and delivery scheduled for a future time. The seller's failure to
complete these transactions may cause the Fund to miss a price or yield
considered to be advantageous. Settlement dates may be a month or more after
entering into these transactions, and the market values of the securities
purchased may vary from the purchase prices. Accordingly, the Fund may pay more
or less than the market value of the securities on the settlement date.
The Fund may dispose of a commitment prior to settlement if the adviser deems it
appropriate to do so. In addition, the Fund may enter into transactions to sell
its purchase commitments to third parties at current market values and
simultaneously acquire other commitments to purchase similar securities at later
dates. The Fund may realize short-term profits or losses upon the sale of such
commitments.
TEMPORARY INVESTMENTS. From time to time on a temporary basis, or when the
investment adviser determines that market conditions call for a temporary
defensive posture, the Fund may invest in short-term temporary investments which
may or may not be exempt from federal income tax. Temporary investments include:
tax-exempt variable and floating rate demand notes; tax-free commercial paper;
other temporary municipal securities; obligations issued or guaranteed by the
U.S. government, its agencies or instrumentalities; other debt securities;
commercial paper; certificates of deposit of domestic branches of U.S. banks;
and repurchase agreements (arrangements in which the organization selling the
Fund a security agrees at the time of sale to repurchase it at a mutually agreed
upon time and price).
There are no rating requirements applicable to temporary investments with the
exception of temporary municipal securities which are subject to the same rating
requirements as all other municipal securities in which the Fund invests.
However, the investment adviser will limit temporary investments to those it
considers to be of comparable quality to the acceptable investments of the Fund.
Although the Fund is permitted to make taxable, temporary investments, there is
no current intention of generating income subject to federal regular income tax.
MUNICIPAL SECURITIES
Municipal securities are generally issued to finance public works, such as
airports, bridges, highways, housing, hospitals, mass transportation projects,
schools, streets, and water and sewer works. They are also issued to repay
outstanding obligations, to raise funds for general operating expenses, and to
make loans to other public institutions and facilities.
Municipal securities include industrial development bonds issued by or on behalf
of public authorities to provide financing aid to acquire sites or construct and
equip facilities for privately or
5
publicly owned corporations. The availability of this financing encourages these
corporations to locate within the sponsoring communities and thereby increases
local employment.
The two principal classifications of municipal securities are "general
obligation" and "revenue" bonds. General obligation bonds are secured by the
issuer's pledge of its full faith and credit and taxing power for the payment of
principal and interest. Interest on and principal of revenue bonds, however, are
payable only from the revenue generated by the facility financed by the bond or
other specified sources of revenue. Revenue bonds do not represent a pledge of
credit or create any debt of or charge against the general revenues of a
municipality or public authority. Industrial development bonds are typically
classified as revenue bonds.
INVESTMENT RISKS
Yields on municipal securities depend on a variety of factors, including: the
general conditions of the municipal note market and of the municipal bond
market; the size of the particular offering; the maturity of the obligations;
and the rating of the issue. The ability of the Fund to achieve its investment
objective also depends on the continuing ability of the issuers of municipal
securities and participation interests, or the guarantors of either, to meet
their obligations for the payment of interest and principal when due.
INVESTMENT LIMITATIONS
The Fund will not:
- borrow money or pledge securities 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;
- invest more than 5% of its total assets in purchases of industrial
development bonds, the principal and interest of which are paid by a
company which has an operating history of less than three years; or
- with respect to securities comprising 75% of its assets, invest more than
5% of its total assets in securities of one issuer (except cash and cash
items, and U.S. government obligations).
The above investment limitations cannot be changed without shareholder approval.
The following limitation, however, may be changed by the Trustees without
shareholder approval. Shareholders will be notified before any material change
in this limitation becomes effective.
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, and restricted securities determined by the
Trustees to be illiquid.
6
INTERMEDIATE MUNICIPAL 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 (the "Adviser"), subject to direction
by the Trustees. The Adviser continually conducts investment research and
supervision for the Fund and is responsible for the purchase and sale of
portfolio instruments, for which it receives an annual fee from the Fund.
ADVISORY FEES. The Adviser receives an annual investment advisory fee equal
to .40 of 1% of the Fund's average daily net assets. Under the investment
advisory contract, the Adviser will reimburse the Fund the amount, limited
to the amount of the advisory fee, by which the Fund's aggregate annual
operating expenses, including its investment advisory fee, but excluding
interest, taxes, brokerage commissions, insurance premiums, expenses of
registering and qualifying the Fund and its shares under federal and state
laws and regulations, expenses of withholding taxes, and extraordinary
expenses, exceed .45 of 1% of its average daily net assets. This does not
include reimbursement to the Fund of any expenses incurred by shareholders
who use the transfer agent's subaccounting facilities. Because of this
undertaking, the Adviser receives less than its calculated gross investment
advisory fee. The Adviser has also undertaken to reimburse the Fund for
operating expenses in excess of limitations established by certain states.
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, as amended. 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.
Jonathan C. Conley has been the Fund's portfolio manager since the Fund's
inception. Mr. Conley joined Federated Investors in 1979 and has been a Vice
President of the Fund's Adviser since 1982. Mr. Conley is a Chartered
Financial Analyst and received his M.B.A. in Finance from the University of
Virginia.
J. Scott Albrecht has been the Fund's co-portfolio manager since July 1995.
Mr. Albrecht joined Federated Investors in 1989 and has been an Assistant
Vice President of the Adviser since 1992. From 1989 until 1991, Mr. Albrecht
acted as an investment analyst. Mr. Albrecht was a municipal credit analyst
at Mellon Bank, N.A. from 1985 until 1989. Mr. Albrecht is a Chartered
Financial Analyst and received his M.S. in Management from Carnegie Mellon
University.
7
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. With over $72 billion invested across more
than 260 funds under management and/or administration by its subsidiaries,
as of December 31, 1994, Federated Investors is one of the largest mutual
fund investment managers in the United States. With more than 1,750
employees, Federated continues to be led by the management who founded the
company in 1955. Federated funds are presently at work in and through 4,000
financial institutions nationwide. More than 100,000 investment
professionals have selected Federated funds for their clients.
Both the Trust and the Adviser have adopted strict codes of ethics governing the
conduct of all employees who manage the Fund and its portfolio securities. These
codes recognize that such persons owe a fiduciary duty to the Fund's
shareholders and must place the interests of shareholders ahead of the
employees' own interest. Among other things, the codes: require preclearance and
periodic reporting of personal securities transactions; prohibit personal
transactions in securities being purchased or sold, or being considered for
purchase or sale, by the Fund; prohibit purchasing securities in initial public
offerings; and prohibit taking profits on securities held for less than sixty
days. Violations of the codes are subject to review by the Trustees, and could
result in severe penalties.
DISTRIBUTION OF FUND SHARES
Federated Securities Corp. is the principal distributor for shares of the Fund.
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 (the "Federated Funds") as specified below:
<TABLE>
<CAPTION>
MAXIMUM
FEE AVERAGE AGGREGATE DAILY NET ASSETS
-------------------- ------------------------------------
<C> <S>
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. The Fund has entered into a Shareholder Services
Agreement with Federated Shareholder Services, a subsidiary of Federated
Investors, under which the Fund may
8
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 for the maintenance of
shareholder accounts ("shareholder services"). Under the Shareholder Services
Agreement, 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 Fund and
Federated Shareholder Services.
OTHER PAYMENTS TO FINANCIAL INSTITUTIONS. In addition to periodic payments to
financial institutions for shareholder services, certain financial institutions
may be compensated by the Adviser or its affiliates for the continuing
investment of customers' assets in certain funds, including the Fund, advised by
those entities. These payments will be made directly by the distributor or
Adviser from their assets, and will not be made from the assets of the Fund or
by the assessment of a sales load on shares.
CUSTODIAN. State Street Bank and Trust Company ("State Street Bank"), Boston,
Massachusetts, is custodian for the securities and cash of the Fund.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT. Federated Services Company,
Boston, Massachusetts, is transfer agent for the shares of the Fund and dividend
disbursing agent for the Fund.
INDEPENDENT PUBLIC ACCOUNTANTS. The independent public accountants for the Fund
are Arthur Andersen LLP, Pittsburgh, Pennsylvania.
NET ASSET VALUE
- --------------------------------------------------------------------------------
The Fund's net asset value per share fluctuates. It is determined by dividing
the sum of all securities and other assets, less liabilities, by the number of
shares outstanding.
INVESTING IN THE FUND
- --------------------------------------------------------------------------------
SHARE PURCHASES
Shares are sold on days on which the New York Stock Exchange and the Federal
Reserve Wire System are open for business. Shares may be purchased either by
wire or mail.
To purchase shares, open an account by calling Federated Securities Corp. and
obtain a master account number. Information needed to establish the 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 1:00
p.m. (Eastern time) to place an order. The order is considered received
immediately. Payment by federal funds must be received before 3:00 p.m. (Eastern
time) that day. Federal funds should be wired as follows: Federated Services
Company, c/o State Street Bank and Trust Company, Boston, Massachusetts;
Attention: EDGEWIRE; For Credit to: Federated Intermediate Municipal Trust; Fund
Number (this number can
9
be found on the account statement or by contacting the Fund); Group Number or
Wire Order Number; Nominee or Institution Name; and ABA 011000028.
BY MAIL. To purchase shares by mail, send a check made payable to Federated
Intermediate Municipal Trust to: Federated Services Company, P.O. Box 8600,
Boston, Massachusetts 02266-8600. Orders by mail are considered received after
payment by check is converted into federal funds. This is normally the next
business day after the check is received.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment in the Fund is $25,000, plus any non-affiliated
bank or broker's fee, if applicable. However, an account may be opened with a
smaller amount as long as the $25,000 minimum is reached within 90 days. The
minimum investment for an institutional investor 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 load 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 as of the close of trading (normally 4:00
p.m., Eastern time) on the New York Stock Exchange, Monday through Friday,
except on: (i) days on which there are not sufficient changes in the value of
the Fund's portfolio securities that its net asset value might be materially
affected; (ii) days during which no shares are tendered for redemption and no
orders to purchase shares are received; or (iii) the following holidays: New
Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day, and Christmas Day.
EXCHANGING SECURITIES FOR FUND SHARES
Investors may exchange certain municipal securities or a combination of
securities and cash for Fund shares. The securities and any cash must have a
market value of at least $25,000. The Fund reserves the right to determine the
acceptability of securities to be exchanged. Securities accepted by the Fund are
valued in the same manner as the Fund values its assets. Shareholders wishing to
exchange securities should first contact Federated Securities Corp.
SUBACCOUNTING SERVICES
Institutions are encouraged to open single master accounts. However, certain
institutions may wish to use the transfer agent's subaccounting system to
minimize their internal recordkeeping requirements. The transfer agent charges a
fee based on the level of subaccounting services rendered. Institutions holding
Shares in a fiduciary, agency, custodial, or similar capacity may charge or pass
through subaccounting fees to beneficial owners 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.
10
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Fund, Federated Services Company maintains a share
account for each shareholder of record. 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, upon instruction of
the transfer agent, into federal funds. Dividends are automatically reinvested
on payment dates in additional shares of the Fund unless cash payments are
requested by contacting the Fund.
CAPITAL GAINS
Distributions of net realized long-term capital gains realized by the Fund, if
any, will be made at least once every twelve months.
REDEEMING 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.
(Eastern time). The proceeds will normally be wired 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. It is recommended that investors request this privilege at
the time of their initial application. If not completed at the time of initial
application, authorization forms and information on this service can be obtained
through Federated Securities Corp. Telephone redemption instructions may be
recorded. If reasonable procedures are not followed by the Fund, it may be
liable for losses due to unauthorized or fraudulent telephone instructions.
11
In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If such a case should occur, another
method of redemption, such as "Written Requests," should be considered.
WRITTEN REQUESTS
Shares may also be redeemed by sending a written request to Federated Services
Company, P.O. Box 8600, Boston, Massachusetts 02266-8600. 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, his account number, and the
share or dollar amount requested. If share certificates have been issued, they
must be properly endorsed and should be sent by registered or certified mail to
Federated Services Company, 500 Victory Road - 2nd Floor, Quincy, Massachusetts
02171 with the written request.
SIGNATURES. Shareholders requesting a redemption of $50,000 or more, a
redemption of any amount to be sent to an address other than that on record with
the 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, 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 Savings Association Insurance Fund, 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 of record
if the account balance falls below a required minimum value of $25,000 due to
shareholder redemptions. 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.
12
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 each portfolio
in the Trust have equal voting rights except that, in matters affecting only a
particular Fund, only shares of that Fund 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 Trust 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 acts or obligations of the Trust. To
protect shareholders of the Fund, the Trust has filed legal documents with
Massachusetts that expressly disclaim the liability of its shareholders for 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 on behalf
of the Fund. Therefore, financial loss resulting from liability as a shareholder
of the Fund will occur only if the Trust itself cannot meet its obligations to
indemnify shareholders and pay judgments against them from the assets of the
Fund.
TAX INFORMATION
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet requirements
of the Internal Revenue Code of 1986, as amended (the "Code"), applicable to
regulated investment companies and to receive the special tax treatment afforded
to such companies. The Fund will be treated as a single, separate entity for
federal income tax purposes so that income (including capital gains) and losses
realized by the Trust's other portfolios will not be combined for tax purposes
with those realized by the Fund.
Shareholders are not required to pay the federal regular income tax on any
dividends received from the Fund that represent net interest on tax-exempt
municipal bonds. However, dividends representing net interest earned on some
municipal bonds are included in calculating the federal individual alternative
minimum tax or the federal alternative minimum tax for corporations.
13
The alternative minimum tax, up to 28% of alternative minimum taxable income for
individuals and 20% for corporations, applies when it exceeds the regular tax
for the taxable year. Alternative minimum taxable income is equal to the regular
taxable income of the taxpayer increased by certain "tax preference" items not
included in regular taxable income and reduced by only a portion of the
deductions allowed in the calculation of the regular tax.
Interest on certain "private activity" bonds issued after August 7, 1986, is
treated as a tax preference item for both individuals and corporations. Unlike
traditional governmental purpose municipal bonds, which finance roads, schools,
libraries, prisons and other public facilities, private activity bonds provide
benefits to private parties. The Fund may purchase all types of municipal bonds,
including private activity bonds. Thus, while the Fund has no present intention
of purchasing any private activity bonds, should it purchase any such bonds, a
portion of the Fund's dividends may be treated as a tax preference item.
In addition, in the case of a corporate shareholder, dividends of the Fund which
represent interest on municipal bonds may be subject to the 20% corporate
alternative minimum tax because the dividends are included in a corporation's
"adjusted current earnings." The corporate alternative minimum tax treats 75% of
the excess of a taxpayer's pre-tax "adjusted current earnings" over the
taxpayer's alternative minimum taxable income as a tax preference item.
"Adjusted current earnings" is based upon the concept of a corporation's
"earnings and profits." Since "earnings and profits" generally includes the full
amount of any Fund dividend, and alternative minimum taxable income does not
include the portion of the Fund's dividend attributable to municipal bonds which
are not private activity bonds, the difference will be included in the
calculation of the corporation's alternative minimum tax.
Dividends of the Fund representing net interest income earned on some temporary
investments and any realized net short-term gains are taxed as ordinary income.
These tax consequences apply whether dividends are received in cash or as
additional shares. Information on the tax status of dividends and distributions
is provided annually.
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.
OTHER STATE AND LOCAL TAXES
Distributions representing net interest received on tax-exempt municipal
securities are not necessarily free from income taxes of any state or local
taxing authority. State laws differ on this issue and shareholders are urged to
consult their own tax advisers.
14
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time, the Fund advertises its total return, yield, and
tax-equivalent yield.
Total return represents the change, over a specific period of time, in the value
of an investment in the Fund after reinvesting all income and capital gains
distributions. It is calculated by dividing that change by the initial
investment and is expressed as a percentage.
The yield of the Fund is calculated by dividing the net investment income per
share (as defined by the Securities and Exchange Commission) earned by the Fund
over a thirty-day period by the maximum offering price per share of the Fund on
the last day of the period. This number is then annualized using semi-annual
compounding. The tax-equivalent yield of the Fund is calculated similarly to the
yield, but is adjusted to reflect the taxable yield that the Fund would have had
to earn to equal its actual yield, assuming a specific tax rate. The yield and
the tax-equivalent yield do not necessarily reflect income actually earned by
the Fund and, therefore, may not correlate to the dividends or other
distributions paid to shareholders.
From time to time, advertisements for the Fund may refer to ratings, rankings
and other information in certain financial publications and/or compare the
Fund's performance to certain indices.
15
FEDERATED INTERMEDIATE MUNICIPAL TRUST
(FORMERLY, INTERMEDIATE MUNICIPAL TRUST)
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SERVICE SHARES*
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 34.
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
---------------------
1995(a) 1994(b)
- ---------------------------------------------------------- --------- ---------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.52 $11.00
- ----------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------
Net investment income 0.28 0.36
- ----------------------------------------------------------
Net realized and unrealized gain (loss) on investments (0.44) (0.48)
- ---------------------------------------------------------- --------- ---------
Total from investment operations (0.16) (0.12)
- ----------------------------------------------------------
LESS DISTRIBUTIONS
- ----------------------------------------------------------
Distributions from net investment income (0.28) (0.36)
- ---------------------------------------------------------- --------- ---------
NET ASSET VALUE, END OF PERIOD $10.08 $10.52
- ---------------------------------------------------------- --------- ---------
--------- ---------
TOTAL RETURN (c) -1.53% -1.10%
- ----------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------
Expenses 0.84%(d) 0.89%(d)
- ----------------------------------------------------------
Net investment income 4.88%(d) 4.66%(d)
- ----------------------------------------------------------
Expense waiver/reimbursement (e) 0.14%(d) 0.14%(d)
- ----------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------
Net assets, end of period (000 omitted) $0 $1,715
- ----------------------------------------------------------
Portfolio turnover 11% 7%
- ----------------------------------------------------------
<FN>
* As of December 21, 1994, Institutional Service Shares were no longer
offered and ceased to exist. Prior to that date, the Fund had offered two
classes of shares, known as Institutional Shares and Institutional Service
Shares.
(a) Reflects operations for the period from June 1, 1994 to December 21, 1994
(date Institutional Service Shares ceased operations.)
(b) Reflects operations for the period from September 6, 1993 (date of initial
public offering) to May 31, 1994.
(c) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(d) Computed on an annualized basis.
(e) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
</TABLE>
(See Notes which are an integral part of the Financial Statements)
16
FEDERATED INTERMEDIATE MUNICIPAL TRUST
(FORMERLY, INTERMEDIATE MUNICIPAL TRUST)
PORTFOLIO OF INVESTMENTS
MAY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ---------- ------------------------------------------ ---------- ------------
<C> <S> <C> <C>
INTERMEDIATE-TERM MUNICIPAL SECURITIES--98.1%
- ------------------------------------------------------
ALABAMA--0.7%
------------------------------------------
$1,500,000 Alabama Water Pollution Control Authority,
6.35% State Revolving Fund Loan Bonds,
(Series 1991)/(AMBAC Insured), 8/15/2001 AAA $ 1,625,040
------------------------------------------ ------------
ARIZONA--5.9%
------------------------------------------
1,000,000 Arizona State Department of
Transportation, 5.50% Revenue Bonds
(Series 1992B)/(Original Issue Yield:
5.60%)/ (AMBAC Insured), 7/1/2002 Aaa 1,042,170
------------------------------------------
1,500,000 Maricopa County, AZ, 8.20% Revenue Bonds
(MBIA Insured), 12/1/1996 Aaa 1,557,075
------------------------------------------
1,000,000 Mesa, AZ, 7.125% GO Bonds, 7/1/1999 A1 1,051,480
------------------------------------------
1,500,000 Phoenix, AZ, 7.40% GO Bonds (Series A),
7/1/2000 AA+ 1,693,440
------------------------------------------
2,900,000 Pima County, AZ, Tucson Unified School
District #1, 4.80% School Improvement
Bonds (Series 1993E)/(Original Issue
Yield: 4.90%)/(FGIC Insured), 7/1/2003 AAA 2,871,174
------------------------------------------
5,000,000 Salt River Project, AZ, Agicultural
Improvement & Power District, 7.10%
Electric System Revenue Bonds, 1/1/2000 AA 5,386,650
------------------------------------------ ------------
Total 13,601,989
------------------------------------------ ------------
ARKANSAS--1.8%
------------------------------------------
4,000,000 North Little Rock, AR, 9.50%
Hydro-Electric Revenue Bonds
(Prerefunded), 7/1/1995 (@103) Aaa 4,138,000
------------------------------------------ ------------
CALIFORNIA--4.1%
------------------------------------------
2,250,000 California State Veterans Affairs, 7.80%
GO Bonds (Series AV), 10/1/2000 AAA 2,567,475
------------------------------------------
2,000,000 Los Angeles, CA, Department of Water &
Power, 9.00% Electric Plant Revenue Bonds,
2/1/2001 AA 2,415,520
------------------------------------------
</TABLE>
17
FEDERATED INTERMEDIATE MUNICIPAL TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ---------- ------------------------------------------ ---------- ------------
<C> <S> <C> <C>
INTERMEDIATE-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------
CALIFORNIA--CONTINUED
------------------------------------------
$1,875,000 Los Angeles, CA, Department of Water &
Power, 9.00% Electric Plant Revenue Bonds,
6/1/2000 AA $ 2,284,631
------------------------------------------
1,800,000 Los Angeles, CA, Department of Water &
Power, 9.00% Electric Plant Revenue Bonds,
6/1/2001 AA 2,142,216
------------------------------------------ ------------
Total 9,409,842
------------------------------------------ ------------
FLORIDA--7.1%
------------------------------------------
3,000,000 Dade County, FL, 10.00% Solid Waste
Revenue Bonds (Prerefunded), 10/1/1995
(@102) Aaa 3,120,780
------------------------------------------
3,000,000 Florida State Board of Education, 6.00% UT
GO Capital Outlay Bonds, (Series 1991B),
6/1/2001 AA 3,219,660
------------------------------------------
2,000,000 Florida State Board of Education, 6.25%
Public Education Capital Outlay Bonds,
(Series 1991C), 6/1/2001 Aa 2,172,400
------------------------------------------
5,500,000 Jacksonville, FL, Electric Authority,
6.70% Electric Revenue Bonds (St. John's
River Park Power Project), 10/1/1999 AA 5,635,025
------------------------------------------
1,000,000 Miami Beach, FL, HFDA, 5.60% Revenue Bonds
(Mount Sinai Medical Center)/(Original
Issue Yield: 5.65%)/(Capital Guaranty),
11/15/2002 Aaa 1,059,250
------------------------------------------
1,050,000 Plantation, FL, Water & Sewer Authority,
8.70% Revenue Bonds (MBIA Insured)/(ETM),
3/1/1996 Aaa 1,087,737
------------------------------------------ ------------
Total 16,294,852
------------------------------------------ ------------
GEORGIA--3.9%
------------------------------------------
2,000,000 Georgia Municipal Electric Authority,
6.50% Power Supply Revenue Bonds (Series
U), 1/1/2000 A 2,144,220
------------------------------------------
1,000,000 Georgia Municipal Electric Authority,
6.60% Power Supply Revenue Bonds (Series
U), 1/1/2001 A 1,085,660
------------------------------------------
5,000,000 Georgia State, 7.70% GO Bonds, 2/1/2001 AA+ 5,781,200
------------------------------------------ ------------
Total 9,011,080
------------------------------------------ ------------
</TABLE>
18
FEDERATED INTERMEDIATE MUNICIPAL TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ---------- ------------------------------------------ ---------- ------------
<C> <S> <C> <C>
INTERMEDIATE-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------
HAWAII--5.4%
------------------------------------------
$3,000,000 City & County of Honolulu, HI, 6.30% GO
Bonds, (Series 1991A), 8/1/2001 AA $ 3,266,700
------------------------------------------
1,000,000 Hawaii State, 5.85% GO Bonds (Series
1991BU)/(Original Issue Yield: 5.95%),
11/1/2001 AA 1,064,160
------------------------------------------
2,000,000 Hawaii State, 6.25% GO Bonds (Series
1992BZ), 10/1/2002 Aa 2,183,780
------------------------------------------
5,000,000 Hawaii State, 8.00% GO Bonds (Series
1991BT), 2/1/2001 AA 5,795,850
------------------------------------------ ------------
Total 12,310,490
------------------------------------------ ------------
ILLINOIS--5.5%
------------------------------------------
2,000,000 Chicago, IL, School Finance Authority,
8.00% Revenue Bonds, (FGIC Insured),
6/1/1997 Aaa 2,040,000
------------------------------------------
3,000,000 Du Page, IL, Water Commission, 6.05% GO
Water Refunding Bonds (Du Page, Cook &
Will Counties)/ (Series 1992), 3/1/2002 Aaa 3,206,640
------------------------------------------
3,000,000 Illinois Municipal Electric Agency, Power
Supply System, 6.20%, Revenue Bonds
(Series 1991A)/(AMBAC Insured), 2/1/2001 AAA 3,196,800
------------------------------------------
1,840,000 Illinois State Highway Authority, 9.125%
Revenue Bonds, (Northern Illinois Toll
Highway)/(Prerefunded 1/1/1996 @102) AAA 1,931,062
------------------------------------------
2,000,000 University of Illinois Board of Trustees,
6.40% Auxiliary Facilities System, Revenue
Bonds, (Series 1991), 4/1/2001 AA 2,168,360
------------------------------------------ ------------
Total 12,542,862
------------------------------------------ ------------
MARYLAND--0.5%
------------------------------------------
1,000,000 University of Maryland, 5.80% Tuition
Revenue Bonds (Series A)/(System Auxiliary
Facility), 2/1/2002 Aa 1,058,740
------------------------------------------ ------------
MICHIGAN--3.9%
------------------------------------------
4,500,000 Detroit, MI, School District, 4.85% UT GO
Bonds (Q-SBLF Program)/(Original Issue
Yield: 4.95%), 5/1/2004 AA 4,394,790
------------------------------------------
</TABLE>
19
FEDERATED INTERMEDIATE MUNICIPAL TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ---------- ------------------------------------------ ---------- ------------
<C> <S> <C> <C>
INTERMEDIATE-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------
MICHIGAN--CONTINUED
------------------------------------------
$1,250,000 Jackson County, MI, Hospital Finance
Authority, 4.80% Revenue Bonds (Series
A)/(Original Issue Yield: 4.90%)/ (FGIC
Insured), 6/1/2005 AAA $ 1,207,600
------------------------------------------
2,000,000 Michigan State Building Authority, 6.25%
Revenue Bonds (Series II)/(AMBAC Insured),
10/1/2000 AAA 2,155,320
------------------------------------------
1,000,000 Royal Oak, MI, Hospital Finance Authority,
7.40% Hospital Revenue Bonds (William
Beaumont Hospital), 1/1/2000 Aa 1,068,490
------------------------------------------ ------------
Total 8,826,200
------------------------------------------ ------------
MISSOURI--4.6%
------------------------------------------
5,000,000 Missouri State HEFA, 6.00% Health
Facilities Revenue Bonds (Series A)/(BJC
Health System)/(Original Issue Yield:
6.05%), 5/15/2005 AA 5,287,700
------------------------------------------
5,000,000 Missouri State HEFA, 6.10% Health
Facilities Revenue Bonds (Series A)/(BJC
Health System)/(Original Issue Yield:
6.15%), 5/15/2006 AA 5,307,650
------------------------------------------ ------------
Total 10,595,350
------------------------------------------ ------------
NEVADA--0.5%
------------------------------------------
1,000,000 Clark County, NV, 9.75% LT GO School
Improvement Bonds (MBIA Insured), 6/1/2000 AAA 1,223,710
------------------------------------------ ------------
NEW HAMPSHIRE--1.2%
------------------------------------------
2,555,000 New Hampshire State, 6.40% GO Bonds,
(Series 1991A), 6/15/2001 AA 2,793,611
------------------------------------------ ------------
NEW YORK--6.7%
------------------------------------------
1,500,000 Municipal Assistance Corp. of New York,
6.60% Revenue Bonds (Series 62), 7/1/2000 AA- 1,595,115
------------------------------------------
2,000,000 Municipal Assistance Corp. of New York,
7.00% Resolution Revenue Bonds, 7/1/1997 AA 2,108,040
------------------------------------------
</TABLE>
20
FEDERATED INTERMEDIATE MUNICIPAL TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ---------- ------------------------------------------ ---------- ------------
<C> <S> <C> <C>
INTERMEDIATE-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------
NEW YORK--CONTINUED
------------------------------------------
$2,500,000 New York State Environmental Facilities
Corp., 6.15% State Water Pollution Control
Service Revenue Bonds (New York City
Municipal Water Finance
Authority)/(Original Issue Yield: 6.25%),
6/15/2004 A- $ 2,693,775
------------------------------------------
2,550,000 New York State Power Authority, 5.90%
Revenue and General Purpose Bonds,
1/1/2002 Aa 2,706,595
------------------------------------------
4,000,000 New York State Thruway Authority Highway &
Bridge, 5.625% Revenue Bonds (Series
B)/(Original Issue Yield: 5.75%)/(FGIC
Insured), 4/1/2005 AAA 4,163,640
------------------------------------------
1,000,000 New York State Urban Development Corp.,
9.20% Revenue Bonds (Prerefunded),
1/1/1996 (@102) Aaa 1,050,240
------------------------------------------
1,000,000 Triborough Bridge & Tunnel Authority, NY,
6.625% General Purpose Revenue Bonds
(Series S), 1/1/2001 A+ 1,098,150
------------------------------------------ ------------
Total 15,415,555
------------------------------------------ ------------
NORTH CAROLINA--5.8%
------------------------------------------
3,355,000 Charlotte-Mecklenburg Hospital Authority,
NC, 5.90% Health Care System Revenue Bonds
(Original Issue Yield: 5.95%), 1/1/2002 Aa 3,493,796
------------------------------------------
2,000,000 North Carolina Municipal Power Agency,
5.90% Revenue Bonds (Catawba
Electric)/(Original Issue Yield: 5.95%),
1/1/2003 A 2,080,360
------------------------------------------
5,350,000 North Carolina Municipal Power Agency,
6.00% Revenue Bonds (Catawba
Electric)/(Original Issue Yield: 6.05%),
1/1/2004 A 5,575,342
------------------------------------------
2,000,000 North Carolina Municipal Power Agency,
7.25% Revenue Bonds (Catawba Electric),
1/1/2007 A 2,245,600
------------------------------------------ ------------
Total 13,395,098
------------------------------------------ ------------
OHIO--3.8%
------------------------------------------
1,330,000 Franklin County, OH, 5.30% Hospital
Facility Revenue Bonds (Series 1993A)/
(Riverside United Methodist
Hospital)/(Original Issue Yield: 5.40%),
5/15/2002 AA 1,352,371
------------------------------------------
</TABLE>
21
FEDERATED INTERMEDIATE MUNICIPAL TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ---------- ------------------------------------------ ---------- ------------
<C> <S> <C> <C>
INTERMEDIATE-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------
OHIO--CONTINUED
------------------------------------------
$2,500,000 Hamilton County, OH, Sewer System, 6.20%
Improvement & Refunding Revenue Bonds
(Series 1991A)/ (Metropolitan Sewer
District of Greater Cincinnati), 12/1/2000 AA- $ 2,688,650
------------------------------------------
1,400,000 Montgomery County, OH, 6.20% Revenue Bonds
(Series 1991A)/(Sisters of Charity
Healthcare Systems, Inc.)/ (MBIA Insured),
5/15/2001 AAA 1,507,198
------------------------------------------
3,000,000 Ohio State Building Authority, 9.625%
Revenue Bonds (Prerefunded), 10/1/1995
(@103) Aaa 3,145,680
------------------------------------------ ------------
Total 8,693,899
------------------------------------------ ------------
OKLAHOMA--1.8%
------------------------------------------
2,000,000 Oklahoma State Industries Authority, 5.70%
Revenue Bonds (Series C)/(Baptist Center
Health System)/(AMBAC Insured)/ (Original
Issue Yield: 5.80%), 8/15/2002 AAA 2,078,760
------------------------------------------
2,000,000 Tulsa, OK, 5.15% GO Refunding Bonds,
6/1/2003 AA 2,040,720
------------------------------------------ ------------
Total 4,119,480
------------------------------------------ ------------
PENNSYLVANIA--2.5%
------------------------------------------
1,000,000 Allegheny County, PA, HDA, 5.50% Revenue
Bonds (Presbyterian University Health
System)/(Original Issue Yield:
5.60%)/(MBIA Insured), 11/1/2002 Aaa 1,034,370
------------------------------------------
1,500,000 Allegheny County, PA, HDA, 6.875% Revenue
Bonds (Mercy Hospital of Pittsburgh)/(BIGI
Insured), 10/1/1999 Aaa 1,576,545
------------------------------------------
1,500,000 Pennsylvania Infrastructure Investment
Authority, 6.15% Revenue Bonds (Series
1990B)/(Pennvest Loan Pool Program),
9/1/2001 AA 1,603,080
------------------------------------------
1,475,000 Washington County, PA, Hospital Authority,
5.50% Revenue Bonds (Shadyside
Hospital)/(Original Issue Yield: 5.60%)/
(AMBAC Insured), 12/15/2001 Aaa 1,541,581
------------------------------------------ ------------
Total 5,755,576
------------------------------------------ ------------
</TABLE>
22
FEDERATED INTERMEDIATE MUNICIPAL TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ---------- ------------------------------------------ ---------- ------------
<C> <S> <C> <C>
INTERMEDIATE-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------
SOUTH CAROLINA--3.7%
------------------------------------------
$ 730,000 Columbia, SC, Waterworks & Sewer System,
6.40% Revenue Bonds, (Prerefunded),
2/1/2001 AAA $ 793,882
------------------------------------------
4,270,000 Columbia, SC, Waterworks & Sewer System,
6.40% Revenue Bonds, 2/1/2001 AA 4,624,880
------------------------------------------
3,000,000 South Carolina Public Service Authority,
9.50% Electric Revenue Bonds
(Prerefunded), 7/1/1995 (@103) Aaa 3,103,500
------------------------------------------ ------------
Total 8,522,262
------------------------------------------ ------------
TENNESSEE--1.9%
------------------------------------------
3,000,000 Memphis, TN, 5.625% Electric System
Revenue Bonds, 1/1/2002 Aa 3,157,170
------------------------------------------
1,065,000 Metropolitan Government of Nashville &
Davidson County, TN, 5.85% Health &
Educational Facilities Board Revenue
Bonds, (Series 1991B)/(The Vanderbilt
University)/(Original Issue Yield: 5.95%),
10/1/2001 AA 1,130,732
------------------------------------------ ------------
Total 4,287,902
------------------------------------------ ------------
TEXAS--19.7%
------------------------------------------
1,000,000 Canyon, TX, ISD, 8.20% GO Bonds (MBIA
Insured), 2/15/1996 Aaa 1,028,550
------------------------------------------
5,000,000 Central Texas Higher Education Authority,
4.85% (Series C), 12/1/2002 Aa 4,901,550
------------------------------------------
2,000,000 Dallas County, TX, 8.75% UT GO Bonds,
1/10/1996 Aaa 2,057,000
------------------------------------------
1,755,000 Dallas, Denton & Collins Townships, TX,
Waterworks & Sewer System, 6.60% Revenue
Bonds, 4/1/2000 Aa 1,852,824
------------------------------------------
1,000,000 Dallas, Denton & Collins Townships, TX,
Waterworks & Sewer System, 9.50% Revenue
Bonds, 10/1/1998 Aa 1,082,380
------------------------------------------
4,000,000 Garland, TX, 5.80% UT GO Bonds, (Dallas
County)/ (Original Issue Yield: 5.90%),
8/15/2001 Aa 4,231,920
------------------------------------------
4,500,000 Houston, TX, ISD, 8.375% LT Schoolhouse
Bonds (Series 1991), 8/15/2000 AAA 5,266,620
------------------------------------------
</TABLE>
23
FEDERATED INTERMEDIATE MUNICIPAL TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ---------- ------------------------------------------ ---------- ------------
<C> <S> <C> <C>
INTERMEDIATE-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------
TEXAS--CONTINUED
------------------------------------------
$2,500,000 San Antonio, TX, 6.00% Water System
Revenue Refunding Bonds (Series
1992)/(Original Issue Yield: 6.15%)/(FGIC
Insured), 5/15/2001 Aaa $ 2,665,725
------------------------------------------
1,475,000 San Antonio, TX, 8.625% GO Bonds, 8/1/2000 AA 1,742,875
------------------------------------------
2,000,000 San Antonio, TX, Electric & Gas System,
7.00% Revenue Bonds, 2/1/1999 Aa 2,166,400
------------------------------------------
1,650,000 San Antonio, TX, Electric & Gas System,
9.90% Revenue Bonds, 2/1/1998 Aa 1,873,575
------------------------------------------
6,370,000 Socorro, TX, ISD, 6.25% UT GO Refunding
Bonds, (Series 1991A)/ (Permanent School
Fund Guaranty)/(Original Issue Yield:
6.30%), 8/15/2001 AAA 6,852,973
------------------------------------------
3,000,000 Texas State Public Property Finance Corp.,
5.10% Acquisition and Refunding Revenue
Bonds (Series 1993)/ (Mental Health and
Mental Retardation Center)/(CGIC Insured),
9/1/2003 AAA 2,997,750
------------------------------------------
6,000,000 Texas Water Development Board, 5.80%
Revenue Bonds (Series 1992)/(Original
Issue Yield: 5.90%), 7/15/2002 Aa 6,357,960
------------------------------------------ ------------
Total 45,078,102
------------------------------------------ ------------
UTAH--1.0%
------------------------------------------
2,000,000 Intermountain Power Agency, UT, 7.20%
Power Supply Revenue Bonds, 7/1/1999 AA 2,178,920
------------------------------------------ ------------
VIRGINIA--2.8%
------------------------------------------
2,025,000 Newport News, VA, 5.40% General
Improvement GO Refunding Bonds (Series
1992B), 7/1/2002 Aa 2,088,808
------------------------------------------
1,995,000 Virginia Beach, VA, 6.30% GO Bonds,
3/1/2000 AA 2,145,105
------------------------------------------
1,995,000 Virginia Beach, VA, 6.30% GO Bonds,
3/1/2001 AA 2,163,418
------------------------------------------ ------------
Total 6,397,331
------------------------------------------ ------------
</TABLE>
24
FEDERATED INTERMEDIATE MUNICIPAL TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ---------- ------------------------------------------ ---------- ------------
<C> <S> <C> <C>
INTERMEDIATE-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------
WASHINGTON--3.3%
------------------------------------------
$1,020,000 Seattle, WA, 6.00% LT GO Refunding Bonds
(Series B), 3/1/2002 AA+ $ 1,088,554
------------------------------------------
1,500,000 Tacoma, WA, 5.70% Sewer Revenue Bonds
(Series B)/ (Original Issue Yield: 5.85%),
12/1/2005 AAA 1,572,465
------------------------------------------
2,000,000 Washington State, 5.60% GO Motor Vehicle
Fuel Tax Refunding Bonds (Series D),
9/1/2001 Aa 2,097,440
------------------------------------------
2,570,000 Washington State, 6.60% UT GO Bonds
(Series A), 2/1/2002 Aa 2,829,493
------------------------------------------ ------------
Total 7,587,952
------------------------------------------ ------------
TOTAL INTERMEDIATE-TERM MUNICIPAL
SECURITIES
(IDENTIFIED COST $214,382,996) 224,863,843
------------------------------------------ ------------
SHORT-TERM MUNICIPAL SECURITIES--0.3%
- ------------------------------------------------------
TENNESSEE--0.3%
------------------------------------------
800,000 Chattanooga-Hamilton County, TN, Hospital
Authority Daily VRDNs (Erlanger Medical
Center Guaranty)/(Morgan Guaranty Trust
Co. LOC) A-1 800,000
------------------------------------------ ------------
TOTAL SHORT-TERM MUNICIPAL SECURITIES
(AT AMORTIZED COST) 800,000
------------------------------------------ ------------
------------
TOTAL MUNICIPAL SECURITIES (IDENTIFIED
COST, $215,182,996)(a) $225,663,843
------------------------------------------ ------------
------------
<FN>
* Please refer to the Appendix of the Statement of Additional Information for
an explanation of the credit ratings. Current credit ratings are unaudited.
(a) The cost of investments for federal tax purposes amounts to $215,182,996.
The net unrealized appreciation of investments on a federal tax cost basis
amounts to $10,480,847, which is comprised of $10,715,653 appreciation and
$234,806 depreciation at May 31, 1995.
Note: The categories of investments are shown as a percentage of net assets
($229,284,686) at May 31, 1995.
</TABLE>
25
FEDERATED INTERMEDIATE MUNICIPAL TRUST
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
The following abbreviations are used in this portfolio:
AMBAC --American Municipal Bond Assurance Corp.
BIGI --Bond Investors Guaranty Inc.
CGIC --Capital Guaranty Insurance Corporation
ETM --Escrowed to Maturity
FGIC --Financial Guaranty Insurance Company
GO --General Obligations
HDA --Housing Development Authority
HEFA --Health and Education Facilities Authority
HFDA --Health Facility Development Authority
ISD --Independent School District
LOC --Letter of Credit
LT --Limited Tax
MBIA --Municipal Bonds Investors Assurance
Q-SBLF --Qualified State Bond Loan Fund
UT --Unlimited Tax
VRDNs --Variable Rate Demand Notes
</TABLE>
(See Notes which are an integral part of the Financial Statements)
26
FEDERATED INTERMEDIATE MUNICIPAL TRUST
(FORMERLY, INTERMEDIATE MUNICIPAL TRUST)
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
- --------------------------------------------------------------------------------
Investments in securities, at value (identified and tax cost $215,182,996) $225,663,843
- --------------------------------------------------------------------------------
Cash 93,009
- --------------------------------------------------------------------------------
Income Receivable 4,555,135
- --------------------------------------------------------------------------------
Receivable for shares Sold 38,919
- -------------------------------------------------------------------------------- ------------
Total assets 230,350,906
- --------------------------------------------------------------------------------
LIABILITIES:
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C>
Dividends payable $ 814,390
- ----------------------------------------------------------------------
Payable for shares redeemed 192,670
- ----------------------------------------------------------------------
Accrued expenses 59,160
- ---------------------------------------------------------------------- ----------
</TABLE>
<TABLE>
<S> <C>
Total liabilities 1,066,220
- -------------------------------------------------------------------------------- ------------
NET ASSETS for 21,742,785 shares outstanding $229,284,686
- -------------------------------------------------------------------------------- ------------
------------
NET ASSETS CONSIST OF:
- --------------------------------------------------------------------------------
Paid-in capital $232,246,166
- --------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments 10,480,847
- --------------------------------------------------------------------------------
Accumulated net realized gain (loss) on investments (13,442,327)
- -------------------------------------------------------------------------------- ------------
Total Net Assets $229,284,686
- -------------------------------------------------------------------------------- ------------
------------
NET ASSET VALUE, Offering Price, and Redemption Proceeds Per Share:
($229,284,686 DIVIDED BY 21,742,785 shares outstanding) $ 10.55
- -------------------------------------------------------------------------------- ------------
------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
27
FEDERATED INTERMEDIATE MUNICIPAL TRUST
(FORMERLY, INTERMEDIATE MUNICIPAL TRUST)
STATEMENT OF OPERATIONS
YEAR ENDED MAY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- -------------------------------------------------------------------
Interest $15,101,083
- -------------------------------------------------------------------
EXPENSES:
- -------------------------------------------------------------------
Investment advisory fee $1,038,460
- -------------------------------------------------------
Administrative personnel and services fees 196,539
- -------------------------------------------------------
Custodian and portfolio accounting fees 146,451
- -------------------------------------------------------
Shareholder services fee--Institutional Service Shares
(note 4) 1,881
- -------------------------------------------------------
Transfer agent and dividend disbursing agent fees and
expenses 40,276
- -------------------------------------------------------
Share registration costs 27,597
- -------------------------------------------------------
Directors'/Trustees' fees 8,696
- -------------------------------------------------------
Auditing fees 18,613
- -------------------------------------------------------
Legal fees 11,392
- -------------------------------------------------------
Printing and postage 22,784
- -------------------------------------------------------
Insurance premiums 9,300
- -------------------------------------------------------
Distribution services fees--Institutional Service
Shares (note 4) 1,819
- -------------------------------------------------------
Taxes 9,714
- -------------------------------------------------------
Miscellaneous 5,470
- ------------------------------------------------------- ----------
Total expenses 1,538,992
- -------------------------------------------------------
Deduct--
- -------------------------------------------------------
Waiver of distribution services fees 1,299
- ------------------------------------------------------- ----------
Net expenses 1,537,693
- ------------------------------------------------------------------- -----------
Net investment income 13,563,390
- ------------------------------------------------------------------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- -------------------------------------------------------------------
Net realized gain (loss) on investments (5,402,939)
- -------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on investments 4,350,977
- ------------------------------------------------------------------- -----------
Net realized and unrealized gain (loss) on
investments (1,051,962)
- ------------------------------------------------------------------- -----------
Change in net assets resulting from operations $12,511,428
- ------------------------------------------------------------------- -----------
-----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
28
FEDERATED INTERMEDIATE MUNICIPAL TRUST
(FORMERLY, INTERMEDIATE MUNICIPAL TRUST)
STATEMENT OF CHANGES IN NET ASSETS
- ---------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
------------------------------
1995 1994
------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ---------------------------------------------------------------------------
OPERATIONS--
- ---------------------------------------------------------------------------
Net investment income $ 13,563,390 $ 14,990,620
- ---------------------------------------------------------------------------
Net realized gain (loss) on investment ($2,484,394 net loss and $0,
respectively, as computed for federal tax purposes) (5,402,939) (760,854)
- ---------------------------------------------------------------------------
Net change in unrealized appreciation/ (depreciation) of investments 4,350,977 (7,198,457)
- --------------------------------------------------------------------------- ------------- -------------
Change in net assets resulting from operations 12,511,428 7,031,309
- --------------------------------------------------------------------------- ------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ---------------------------------------------------------------------------
Distributions from net investment income:
- ---------------------------------------------------------------------------
Institutional Shares (13,516,478) (14,961,284)
- ---------------------------------------------------------------------------
Institutional Services Shares (46,912) (29,336)
- --------------------------------------------------------------------------- ------------- -------------
Change in net assets from distributions to shareholders (13,563,390) (14,990,620)
- --------------------------------------------------------------------------- ------------- -------------
SHARE TRANSACTIONS--
- ---------------------------------------------------------------------------
Proceeds from sale of Shares 67,745,760 204,983,560
- ---------------------------------------------------------------------------
Net asset value of Shares issued to shareholders in payment of
distributions declared 2,440,705 2,548,104
- ---------------------------------------------------------------------------
Cost of Shares redeemed (144,228,224) (158,476,788)
- --------------------------------------------------------------------------- ------------- -------------
Change in net assets from Share transactions (74,041,759) 49,054,876
- --------------------------------------------------------------------------- ------------- -------------
Change in net assets (75,093,721) 41,095,565
- ---------------------------------------------------------------------------
NET ASSETS:
- ---------------------------------------------------------------------------
Beginning of period 304,378,407 263,282,842
- --------------------------------------------------------------------------- ------------- -------------
End of period $ 229,284,686 $ 304,378,407
- --------------------------------------------------------------------------- ------------- -------------
------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
29
FEDERATED INTERMEDIATE MUNICIPAL TRUST
(FORMERLY, INTERMEDIATE MUNICIPAL TRUST)
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1995
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Intermediate Municipal Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "Act"), as an open-end, management
investment company. The Trust consists of two non-diversified portfolios and one
diversified portfolio. The financial statements included herein are only those
of Federated Intermediate Municipal Trust (the "Fund"), a diversified portfolio.
The financial statements of the other portfolios are presented separately. The
assets of each portfolio are segregated and a shareholder's interest is limited
to the portfolio in which shares are held.
Until December 21, 1994, the Fund offered two classes of shares, Institutional
Shares and Institutional Service Shares. Effective December 21, 1994,
Institutional Service Shares ceased operations and all contracts entered into by
the Fund on behalf of Institutional Service Shares were terminated.
Institutional Service Shares were identical in all respects to Institutional
Shares except that Institutional Service Shares were sold pursuant to a
Distribution Plan adopted in accordance with the Act's Rule 12b-1. Also
effective December 21, 1994, the class designation for Institutional Shares was
eliminated.
Effective December 19, 1994, the Board of Trustees (the "Trustees") changed the
name of the Fund from Intermediate Municipal Trust to Federated Intermediate
Municipal Trust.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--Municipal bonds are valued by an independent pricing
service taking into consideration yield, liquidity, risk, credit quality,
coupon, maturity, type of issue, and any other factors or market data the
pricing service deems relevant in determining valuations for normal
institutional size trading units of debt securities. The independent pricing
service does not rely exclusively on quoted prices. Short-term securities
with remaining maturities of sixty days or less at the time of purchase may
be valued at amortized cost, which approximates fair market value.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized
as required by the Internal Revenue Code, as amended (the "Code").
Distributions to shareholders are recorded on the ex-dividend date.
30
FEDERATED INTERMEDIATE MUNICIPAL TRUST
(FORMERLY, INTERMEDIATE MUNICIPAL TRUST)
- --------------------------------------------------------------------------------
FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its tax-exempt income.
Accordingly, no provisions for federal tax are necessary. At May 31, 1995,
the Fund, for federal tax purposes, had a capital loss carryforward of
$7,088,018, which will reduce the Fund's taxable income arising from future
net realized gain on investments, if any, to the extent permitted by the
Code, and thus will reduce the amount of the distributions to shareholders
which would otherwise be necessary to relieve the Fund of any liability for
federal tax. Pursuant to the Code, such capital loss carryforward will
expire in 1996 ($3,974,606), 1997 ($215,810), 1998 (170,468), 2001
($242,740) and 2003 ($2,484,394). Additionally, net capital losses of
$3,679,399 attributable to security transactions incurred after October 31,
1994 are treated as arising on June 1, 1995, the first day of the Fund's
next taxable year.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares. Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
------------------------------------------------------
1995* 1994
-------------------------- --------------------------
SHARES DOLLARS SHARES DOLLARS
- -------------------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold 6,524,563 $ 67,387,240 18,798,999 $ 203,167,923
- --------------------------------------------------
Shares issued to shareholders in payment of
distributions declared 233,106 2,407,168 233,762 2,527,875
- --------------------------------------------------
Shares redeemed (13,796,581) (142,201,578) (14,769,157) (158,406,508)
- -------------------------------------------------- ----------- ------------- ----------- -------------
Net change resulting from Institutional Shares
transactions (7,038,912) ($ 72,407,170) 4,263,604 $ 47,289,290
- -------------------------------------------------- ----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
</TABLE>
31
FEDERATED INTERMEDIATE MUNICIPAL TRUST
(FORMERLY, INTERMEDIATE MUNICIPAL TRUST)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
--------------------------------------------------------
1995** 1994***
--------------------------- --------------------------
INSTITUTIONAL SERVICE SHARES SHARES DOLLARS SHARES DOLLARS
- -------------------------------------------------- ----------- -------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold 34,479 $ 358,520 167,890 $ 1,815,637
- --------------------------------------------------
Shares issued to shareholders in payment of
distributions declared 3,242 33,537 1,896 20,229
- --------------------------------------------------
Shares redeemed (200,816) (2,026,646) (6,691) (70,280)
- -------------------------------------------------- ----------- -------------- ----------- -------------
Net change resulting from Institutional Service
Shares transactions (163,095) (1,634,589) 163,095 $ 1,765,586
- -------------------------------------------------- ----------- -------------- ----------- -------------
Net change resulting from Fund Share
transactions (7,202,007) ($ 74,041,759) 4,426,699 $ 49,054,876
- -------------------------------------------------- ----------- -------------- ----------- -------------
----------- -------------- ----------- -------------
<FN>
* Until December 21, 1994, the Fund offered two classes of shares,
Institutional Shares and Institutional Service Shares. As of December 21,
1994, Institutional Service Shares ceased operations and the class
designation for Institutional Shares was eliminated.
** For the period from June 1, 1994 to December 21, 1994 (date Institutional
Service Shares ceased operations).
*** For the period from September 6, 1993 (date of initial public offering) to
May 31, 1994.
</TABLE>
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Management, the Fund's investment adviser
(the "Adviser"), receives for its services an annual investment advisory fee
equal to .40% of the Fund's average daily net assets. The Adviser may
voluntarily choose to waive its fee. The Adviser can modify or terminate this
voluntary waiver at any time at its sole discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS"), under the
Administrative Services Agreement, provides the Fund with administrative
personnel and services. The FAS fee is based on the level of average aggregate
daily net assets of all funds advised by subsidiaries of Federated Investors for
the period. The administrative fee received during the period of the
Administrative Agreement shall be at least $125,000 per portfolio and $30,000
per each additional class of shares.
DISTRIBUTION AND SHAREHOLDER SERVICES FEE--As of December 21, 1994,
Institutional Service Shares were no longer offered and ceased to exist. In
addition, the Distribution Plan (the "Plan") was discontinued. Under the terms
of the Plan, the Fund compensated Federated Securities Corp. ("FSC"), the
principal distributor, from the net assets of the Institutional Service Shares
to finance activities intended to result in the sale of the Fund's Institutional
Service Shares subject to the Plan. The Plan provided that the Fund may incur
distribution expenses up to .25 of 1% of the average daily net assets of the
Institutional Service Shares, annually, to compensate FSC. When the Plan was in
32
FEDERATED INTERMEDIATE MUNICIPAL TRUST
(FORMERLY, INTERMEDIATE MUNICIPAL TRUST)
- --------------------------------------------------------------------------------
effect, FSC chose to voluntarily waive a portion of its fees. As a result, the
Fund paid $520 under the Plan.
Under the terms of a Shareholder Services Agreement with Federated Shareholder
Services ("FSS"), the Fund will pay FSS up to .25 of 1% of average daily net
assets of each class of shares for the period. The fee is to obtain certain
services for shareholders and to maintain shareholder accounts. For the year
ended May 31, 1995, Institutional Shares did not incur a shareholder services
fee.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated Services
Company ("FServ") serves as transfer agent and dividend disbursing agent for the
Fund. The fee is based on the size, type, and number of accounts and
transactions made by shareholders.
INTERFUND TRANSACTIONS--During the year ended May 31, 1995, the Fund engaged in
purchase and sale transactions with funds that have a common investment adviser
(or affiliated investment advisers), common Directors/Trustees, and/or common
Officers. These transactions were made at current market value pursuant to Rule
17a-7 under the Act amounting to $59,600,000 and $66,888,860, respectively.
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
year ended May 31, 1995, were as follows:
<TABLE>
<S> <C>
- --------------------------------------------------
PURCHASES $ 27,509,077
- -------------------------------------------------- ------------
SALES $ 99,529,561
- -------------------------------------------------- ------------
</TABLE>
33
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- ---------------------------------------------------------
To the Shareholders and Board of Trustees of
INTERMEDIATE MUNICIPAL TRUST
(Federated Intermediate Municipal Trust)
(formerly, Intermediate Municipal Trust):
We have audited the accompanying statement of assets and liabilities of
Federated Intermediate Municipal Trust (an investment portfolio of Intermediate
Municipal Trust, a Massachusetts business trust), including the schedule of
portfolio of investments, as of May 31, 1995, and the related statement of
operations for the year then ended, the statement of changes in net assets, and
financial highlights (see page 2 and 16 of the prospectus) for the periods
presented. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of the securities owned as of
May 31, 1995, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to
above present fairly, in all material respects, the financial position of
Federated Intermediate Municipal Trust, an investment portfolio of Intermediate
Municipal Trust as of May 31, 1995, the results of its operations for the year
then ended, the changes in its net assets and the financial highlights for the
periods presented, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
June 30, 1995
34
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Fund
Federated Intermediate Municipal Trust 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 Trust Company P.O. Box 8600
Boston, Massachusetts 02266-8600
- -------------------------------------------------------------------------------------------
Transfer Agent and Dividend Disbursing Agent
Federated Services Company P.O. Box 8600
Boston, Massachusetts 02266-8600
- -------------------------------------------------------------------------------------------
Independent Public Accountants
Arthur Andersen LLP 2100 One PPG Place
Pittsburgh, Pennsylvania 15222
- -------------------------------------------------------------------------------------------
</TABLE>
35
- --------------------------------------------------------------------------------
FEDERATED INTERMEDIATE
MUNICIPAL TRUST
PROSPECTUS
A Diversified Portfolio of Intermediate
Municipal Trust, An Open-End Management
Investment Company
July 31, 1995
[LOGO] FEDERATED SECURITIES CORP.
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
CUSIP 458810108
8061702A-IS (7/95) [RECYCLED PAPER LOGO]
Federated Intermediate Municipal Trust
(A Portfolio of Intermediate Municipal Trust)
Statement of Additional Information
This Statement of Additional Information should be read with the
prospectus of Federated Intermediate Municipal Trust (formerly
"Intermediate Municipal Trust") (the "Fund") dated July 31, 1995.
This Statement is not a prospectus itself. To receive a copy of
the prospectus, write or call the Fund.
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
Statement dated July 31, 1995
FEDERATED SECURITIES CORP.
Distributor
A subsidiary of
Federated Investors
General Information About the
Trust 1
Investment Objective and Policies 1
Acceptable Investments 1
When-Issued and Delayed
Delivery Transactions 2
Temporary Investments 2
Portfolio Turnover 3
Investment Limitations 3
Management of Intermediate
Municipal Trust 5
Officers and Trustees 5
Fund Ownership 9
Trustees' Compensation 10
Trustee Liability 10
Investment Advisory Services 11
Adviser to the Fund 11
Advisory Fees 11
Other Related Services 11
Administrative Services 11
Shareholder Services Agreement 11
Transfer Agent and Dividend
Disbursing Agent 12
Brokerage Transactions 12
Conversion to Federal Funds 12
Determining Net Asset Value 12
Determining Value of Securities 12
Redeeming Shares 13
Redemption in Kind 13
Exchanging Securities for Fund
Shares 13
Tax Consequences 13
Tax Status 13
The Fund's Tax Status 13
Shareholders' Tax Status 14
Total Return 14
Yield 14
Tax-Equivalent Yield 14
Performance Comparisons 15
About Federated Investors 16
Mutual Fund Market 16
Appendix 18
General Information About the Trust
Intermediate Municipal Trust (the "Trust") was established as a
Massachusetts business trust under a Declaration of Trust dated May 31,
1985. On September 1, 1993, the name of the Trust was changed from
Federated Intermediate Municipal Trust to Intermediate Municipal Trust.
Investment Objective and Policies
The Fund's investment objective is to provide current income exempt from
federal regular income tax. The investment objective cannot be changed
without approval of shareholders.
Acceptable Investments
The Fund invests at least 80% of its net assets in a diversified
portfolio of municipal securities with an average weighted maturity of
not less than three or more than ten years. The investment policy
objective stated above cannot be changed without the approval of
shareholders. The following investment policies may be changed without
shareholder approval.
Characteristics
The municipal securities in which the Fund invests have the
characteristics set forth in the prospectus.
A municipal security will be determined by the Fund's adviser to
meet the quality standards established by the Trust's Board of
Trustees (the "Trustees") if it is of comparable quality to
municipal securities within the Fund's rating requirements. The
Trustees consider the creditworthiness of the issuer of a
municipal security, the issuer of a participation interest if
the Fund has the right to demand payment from the issuer of the
interest, or the guarantor of payment by either of those
issuers. The Fund is not required to sell a municipal security
if the security's rating is reduced below the required minimum
subsequent to its purchase by the Fund. The investment adviser
considers this event, however, in its determination of whether
the Fund should continue to hold the security in its portfolio.
If Moody's Investors Service, Inc. or Standard & Poor's Ratings
Group ratings change because of changes in those organizations
or in their rating systems, the Fund will try to use comparable
ratings as standards in accordance with the investment policies
described in the Fund's prospectus.
Types of Acceptable Investments
Examples of municipal securities are:
- municipal notes and tax-exempt commercial paper;
- serial bonds sold with a series of maturity dates;
- tax anticipation notes sold to finance working capital needs of
municipalities in anticipation of receiving taxes;
- bond anticipation notes sold in anticipation of the issuance of
longer-term bonds;
- pre-refunded municipal bonds refundable at a later date
(payment of principal and interest on prerefunded bonds are
assured through the first call date by the deposit in escrow of
U.S. government securities); or
- general obligation bonds secured by a municipality's pledge of
taxation.
Participation Interests
The financial institutions from which the Fund purchases
participation interests frequently provide or secure from other
financial institutions irrevocable letters of credit or guarantees
and give the Fund the right to demand payment on specified notice
(normally within thirty days) from the issuer of the letter of
credit or guarantee. These financial institutions may charge
certain fees in connection with their repurchase commitments,
including a fee equal to the excess of the interest paid on the
municipal securities over the negotiated yield at which the
participation interests were purchased by the Fund. By purchasing
participation interests, the Fund is buying a security meeting the
maturity and quality requirements of the Fund and is also
receiving the tax-free benefits of the underlying securities.
In the acquisition of participation interests, the Fund's
investment adviser will consider the following quality factors:
- a high-quality underlying municipal security (of which the
Trust takes possession);
- a high-quality issuer of the participation interest; or
- a guarantee or letter of credit from a high-quality financial
institution supporting the participation interest.
Variable Rate Municipal Securities
Variable interest rates generally reduce changes in the market
value of municipal securities from their original purchase prices.
Accordingly, as interest rates decrease or increase, the potential
for capital appreciation or depreciation is less for variable rate
municipal securities than for fixed income obligations.
Many municipal securities with variable interest rates purchased
by the Fund are subject to repayment of principal (usually within
seven days) on the Fund's demand. The terms of these variable rate
demand instruments require payment of principal and accrued
interest from the issuer of the municipal obligations, the issuer
of the participation interests, or a guarantor of either issuer.
When-Issued and Delayed Delivery Transactions
These transactions are made to secure what is considered to be an
advantageous price or yield for the Fund. Settlement dates may be a
month or more after entering into these transactions, and the market
values of the securities purchased may vary from the purchase prices. No
fees or other expenses, other than normal transaction costs, are
incurred. However, liquid assets of the Fund sufficient to make payment
for the securities to be purchased are segregated on the Fund's records
at the trade date. These assets are marked to market daily and are
maintained until the transaction has been settled. The Fund may engage
in when-issued and delayed delivery transactions to an extent that would
cause the segregation of an amount up to 20% of the total value of its
assets.
Temporary Investments
The Fund may also invest in temporary investments, from time to time,
for temporary, defensive purposes. The Fund does not presently intend to
invest in taxable temporary investments in the coming year. The Fund
might invest in temporary investments:
- while waiting to invest proceeds of sales of portfolio securities,
although generally such proceeds will be invested in municipal
securities as quickly as possible;
- in anticipation of redemption requests; or
- for temporary defensive purposes, in which case the Fund may
invest more than 20% of the value of its net assets in cash or
cash items, U.S. Treasury bills or securities issued or guaranteed
by the U.S. government, its agencies or instrumentalities, or
repurchase agreements.
The Fund will not purchase temporary investments (other than securities
of the U.S. government, its agencies or instrumentalities) if, as a
result of the purchase, 25% or more of the value of its total assets
would be invested in any one industry.
Repurchase Agreements
Repurchase agreements are arrangements in which banks,
broker/dealers, and other recognized financial institutions sell
U.S. government or agency 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 within one year from the date
of acquisition. The Fund or its custodian will take possession of
the securities subject to repurchase agreements. 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 may only enter into repurchase
agreements with banks and other recognized financial institutions
such as broker/dealers which are found by the Fund's adviser to be
creditworthy pursuant to guidelines established by the Trustees.
The Fund's adviser will also monitor the creditworthiness of the
seller.
From time to time, such as when suitable municipal securities are not
available, the Fund may invest a portion of its assets in cash. Any
portion of the Fund's assets maintained in cash will reduce the amount
of assets in municipal securities and thereby reduce the Fund's yield.
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 May 31, 1995 and 1994, the portfolio turnover rates were 11%
and 7%, respectively.
Investment Limitations
Diversification of Investments
With respect to 75% of the value of the Fund's total assets, the
Fund will not purchase securities of any one issuer (other than
securities issued or guaranteed by the government of the United
States or its agencies or instrumentalities) if as a result more
than 5% of the value of its total assets would be invested in the
securities of that issuer.
Under this limitation, each governmental subdivision, including
states and the District of Columbia, territories, possessions of
the United States, or their political subdivisions, agencies,
authorities, instrumentalities, or similar entities, will be
considered a separate issuer if its assets and revenues are
separate from those of the governmental body creating it and the
security is backed only by its own assets and revenues.
Industrial development bonds backed only by the assets and
revenues of a nongovernmental user are considered to be issued
solely by that user. If in the case of an industrial development
bond or government-issued security, a governmental or some other
entity guarantees the security, such guarantee would be considered
a separate security issued by the guarantor, subject to a limit on
investments in the guarantor of 10% of total assets.
Acquiring Securities
The Fund will not acquire the voting securities of any issuer,
except as part of a merger, consolidation, reorganization, or
acquisition of assets. It will not invest in securities issued by
any other investment company or investment trust.
Concentration of Investments
The Fund does not intend to purchase securities (other than pre-
refunded municipal bonds prior to the termination of the escrow
arrangement, securities guaranteed by the U.S. government or its
agencies or direct obligations of the U.S. government) if, as a
result of such purchases, 25% or more of the value of its total
assets would be invested in a governmental subdivision in any one
state, territory, or possession of the United States.
This policy applies to securities which are related in such a way
that an economic, business, or political development affecting one
security would also affect the other securities (such as
securities paid from revenues from selected projects in
transportation, public works, education, or housing).
Borrowing
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 serve to
reduce the Fund's income. The Fund will liquidate any such
borrowings as soon as possible and may not purchase any portfolio
securities while any borrowings are outstanding.
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.
Underwriting
The Fund will not underwrite any issue of securities, except as it
may be deemed to be an underwriter under the Securities Act of
1933 in connection with the sale of securities in accordance with
its investment objective, policies, and limitations.
Issuing Senior Securities
The Fund will not issue senior securities except for delayed-
delivery and when-issued transactions and futures contracts, each
of which might be considered senior securities. In addition, the
Fund reserves the right to purchase municipal securities which the
Fund has the right or obligation to sell to a third party
(including the issuer of a participation interest).
Investing in Real Estate
The Fund will not purchase or sell real estate, although it may
invest in municipal securities secured by real estate or interests
in real estate.
Investing in Commodities and Minerals
The Fund will not purchase or sell commodities, commodity
contracts, or oil, gas, or other mineral exploration or
development programs or leases.
Lending Cash or Securities
The Fund will not lend any of its assets, except that it may
acquire publicly or nonpublicly issued municipal securities as
permitted by its investment objective and policies.
Dealing in Puts And Calls
The Fund will not purchase or sell puts, calls, straddles,
spreads, or any combination of them, except that the Fund may
purchase put options on municipal securities in an amount up to
10% of its total assets or may purchase municipal securities
accompanied by agreements of sellers to repurchase them at the
Fund's option.
Investing in New Issuers
The Fund will not invest more than 5% of the value of its total
assets in industrial development bonds where the payment of
principal and interest are the responsibility of a company with a
record of less than three years of continuous operation, including
the operation of any predecessor.
Except as noted, the above investment limitations cannot be changed
without shareholder approval. The following restrictions, however, may
be changed by the Trustees without shareholder approval. Except as
noted, shareholders will be notified before any material change in these
limitations becomes effective.
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.
Investing in Issuers Whose Securities Are Owned by Officers of the
Trust
The Fund will not purchase or retain the securities of any issuer
if the Officers and Trustees of the Trust or its investment
adviser, owning individually more than 1/2 of 1% of the issuer's
securities, together own more than 5% of the issuer's securities.
Investing in Illiquid Securities
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, and
certain restricted securities not determined by the Trustees to be
liquid.
In addition, to comply with investment restrictions of a certain state,
the Fund will not invest in real estate limited partnerships.
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 has no present
intent to borrow money, pledge securities, or purchase put options
during the coming year.
For purposes of its policies and limitations, the Fund considers
certificates of deposit and demand and time deposits issued by a U.S.
branch of a domestic bank or savings and loan having capital, surplus,
and undivided profits in excess of $100,000,000 at the time of
investment to be "cash items."
Management of Intermediate Municipal Trust
Officers and Trustees
Officers and Trustees are listed with their addresses, principal
occupationsduring the past five years, birthdates and present
positions, including any affiliation with Federated Management,
Federated Investors, Federated Securities Corp., Federated Services
Company, Federated Administrative Services, Federated Shareholder
Services, and the Funds (as defined below).
John F. Donahue@*
Federated Investors Tower
Pittsburgh, Pennsylvania
Birthdate: July 28, 1924
Chairman and Trustee
Chairman and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; Chairman and Director, Federated
Research Corp.; Chairman, Passport Research, Ltd.; Chief Executive
Officer and Director, Trustee, or Managing General Partner of the Funds.
Mr. Donahue is the father of J. Christopher Donahue, Executive Vice
President of the Company.
Glen R. Johnson *
Federated Investors Tower
Pittsburgh, Pennsylvania
Birthdate: May 2, 1929
President and Trustee
Trustee, Federated Investors; President and/or Trustee of some of the
Funds; staff member, Federated Securities Corp. and Federated
Administrative Services.
Thomas G. Bigley
28th Floor, One Oxford Centre
Pittsburgh, Pennsylvania
Birthdate: February 3, 1934
Trustee
Director, Oberg Manufacturing Co.; Chairman of the Board, Children's
Hospital of Pittsburgh; Director, Trustee, or Managing General Partner
of the Funds; formerly, Senior Partner, Ernst & Young LLP.
John T. Conroy, Jr.
Wood/IPC Commercial Department
John R. Wood and Associates, Inc., Realtors
3255 Tamiami Trail North
Naples, Florida
Birthdate: June 23, 1937
Trustee
President, Investment Properties Corporation; Senior Vice-President,
John R. Wood and Associates, Inc., Realtors; President, Northgate
Village Development Corporation; Partner or Trustee in private real
estate ventures in Southwest Florida; Director, Trustee, or Managing
General Partner of the Funds; formerly, President, Naples Property
Management, Inc.
William J. Copeland
One PNC Plaza - 23rd Floor
Pittsburgh, Pennsylvania
Birthdate: July 4, 1918
Trustee
Vi
Vice Chairman and Director, PNC Bank, N.A., and PNC Bank Corp. and
Director, Ryan Homes, Inc.
James E. Dowd
571 Hayward Mill Road
Concord, Massachusetts
Birthdate: May 18, 1922
Trustee
Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director,
Trustee, or Managing General Partner of the Funds.
Lawrence D. Ellis, M.D.*
3471 Fifth Avenue, Suite 1111
Pittsburgh, Pennsylvania
Birthdate: October 11, 1932
Trustee
Professor of Medicine and Member, Board of Trustees, University of
Pittsburgh; Medical Director, University of Pittsburgh Medical Center -
Downtown; Member, Board of Directors, University of Pittsburgh Medical
Center; formerly, Hematologist, Oncologist, and Internist, Presbyterian
and Montefiore Hospitals; Director, Trustee, or Managing General Partner
of the Funds.
Edward L. Flaherty, Jr.@
Henny, Kochuba, Meyer and Flaherty
Two Gateway Center - Suite 674
Pittsburgh, Pennsylvania
Birthdate: June 18, 1924
Trustee
Attorney-at-law; Shareholder, Henny, Kochuba, Meyer and Flaherty;
Director, Eat'N Park Restaurants, Inc., and Statewide Settlement Agency,
Inc.; Director, Trustee, or Managing General Partner of the Funds;
formerly, Counsel, Horizon Financial, F.A., Western Region.
Peter E. Madden
70 Westcliff Road
Westin, Massachusetts
Birthdate: March 16, 1942
Trustee
Consultant; State Representative, Commonwealth of Massachusetts;
Director, Trustee, or Managing General Partner of the Funds; formerly,
President, State Street Bank and Trust Company and State Street Boston
Corporation.
Gregor F. Meyer
Henny, Kochuba, Meyer and Flaherty
Two Gateway Center - Suite 674
Pittsburgh, Pennsylvania
Birthdate: October 6, 1926
Trustee
M
Meritcare, Inc.; Director, Eat'N Park Restaurants, Inc.; Director,
Trustee, or Managing General Partner of the Funds.
John E. Murray, Jr., J.D., S.J.D.
President, Duquesne University
Pittsburgh, Pennsylvania
Birthdate: December 20, 1932
Trustee
President, Law Professor, Duquesne University; Consulting Partner,
Mollica, Murray and Hogue; Director, Trustee or Managing General Partner
of the Funds.
Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, Pennsylvania
Birthdate: September 14, 1925
Trustee
Professor, International Politics and Management Consultant; Trustee,
Carnegie Endowment for International Peace, RAND Corporation, Online
Computer Library Center, Inc., and U.S. Space Foundation; Chairman,
Czecho Management Center; Director, Trustee, or Managing General Partner
of the Funds; President Emeritus, University of Pittsburgh; founding
Chairman, National Advisory Council for Environmental Policy and
Technology and Federal Emergency Management Advisory Board.
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, Pennsylvania
Birthdate: June 21, 1935
Trustee
Public relations/marketing consultant; Conference Coordinator, Non-
profit entities; Director, Trustee, or Managing General Partner of the
Funds.
J. Christopher Donahue
Federated Investors Tower
Pittsburgh, Pennsylvania
Birthdate: April 11, 1949
Executive Vice President
President and Trustee, Federated Investors, Federated Advisers,
Federated Management, and Federated Research; President and Director,
Federated Research Corp.; President, Passport Research, Ltd.; Trustee,
Federated Administrative Services, Federated Services Company, and
Federated Shareholder Services; President or Vice President of the
Funds; Director, Trustee, or Managing General Partner of some of the
Funds. Mr. Donahue is the son of John F. Donahue, Chairman and Trustee
of the Company.
Edward C. Gonzales *
Federated Investors Tower
Pittsburgh, Pennsylvania
Birthdate: October 22, 1930
Executive Vice President
Vice President, Treasurer, and Trustee, Federated Investors; Vice
President and Treasurer, Federated Advisers, Federated Management,
Federated Research, Federated Research Corp., and Passport Research,
Ltd.; Executive Vice President, Treasurer, and Director, Federated
Securities Corp.; Trustee, Federated Services Company and Federated
Shareholder Services; Chairman, Treasurer, and Trustee, Federated
Administrative Services; Trustee or Director of some of the Funds;
Executive Vice President or President of the Funds.
John W. McGonigle
Federated Investors Tower
Pittsburgh, Pennsylvania
Birthdate: October 26, 1938
Executive Vice President and Secretary
Vice President, Secretary, General Counsel, and Trustee, Federated
Investors; Vice President, Secretary, and Trustee, Federated Advisers,
Federated Management, and Federated Research; Vice President and
Secretary, Federated Research Corp. and Passport Research, Ltd.;
Trustee, Federated Services Company; Executive Vice President,
Secretary, and Trustee, Federated Administrative Services; Secretary and
Trustee, Federated Shareholder Services; Executive Vice President and
Director, Federated Securities Corp.; Vice President and Secretary of
the Funds.
Richard B. Fisher
Federated Investors Tower
Pittsburgh, Pennsylvania
Birthdate: May 17, 1923
Vice President
Executive Vice President and Trustee, Federated Investors; Director,
Federated Research Corp.; Chairman and Director, Federated Securities
Corp.; President or Vice President of some of the Funds; Director or
Trustee of some of the Funds.
David M. Taylor *
Federated Investors Tower
Pittsburgh, Pennsylvania
Birthdate: January 13, 1947
Treasurer
Senior Vice President, Controller, and Trustee, Federated Investors;
Controller, Federated Advisers, Federated Management, Federated
Research, Federated Research Corp., and Passport Research, Ltd.; Senior
Vice President, Federated Shareholder Services; Senior Vice President,
Federated Administrative Services; Treasurer of the Funds.
* This Trustee is deemed to be an "interested person" as defined
in the Investment Company Act of 1940, as amended.
@ Member of the Executive Committee. The Executive Committee of
the Board of Trustee handles the responsibilities of the Board
of Trustee between meetings of the Board.
As used in the table above, "The Funds" and "Funds" mean the following
investment companies: American Leaders Fund, Inc.; Annuity Management
Series; Arrow Funds; Automated Cash Management Trust; Automated
Government Money Trust; California Municipal Cash Trust; Cash Trust
Series II; Cash Trust Series, Inc.; DG Investor Series; Edward D. Jones
& Co. Daily Passport Cash Trust; Federated ARMs Fund; Federated Exchange
Fund, Ltd.; Federated GNMA Trust; Federated Government Trust; Federated
Growth Trust; Federated High Yield Trust; Federated Income Securities
Trust; Federated Income Trust; Federated Index Trust; Federated
Institutional Trust; Federated Master Trust; Federated Municipal Trust;
Federated Short-Term Municipal Trust; Federated Short-Term U.S.
Government Trust; Federated Stock Trust; Federated Tax-Free Trust;
Federated Total Return Series, Inc.; Federated U.S. Government Bond
Fund; Federated U.S. Government Securities Fund: 1-3 Years; Federated
U.S. Government Securities Fund: 3-5 Years; 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; Insurance Management Series; Intermediate
Municipal Trust; International Series, Inc.; Investment Series Funds,
Inc.; Investment Series Trust; Liberty Equity Income Fund, Inc.; Liberty
High Income Bond Fund, Inc.; Liberty Municipal Securities Fund, Inc.;
Liberty U.S. Government Money Market Trust; Liberty Term Trust, Inc. -
1999; Liberty Utility Fund, Inc.; Liquid Cash Trust; Managed Series
Trust; Money Market Management, Inc.; Money Market Obligations Trust;
Money Market Trust; Municipal Securities Income Trust; Newpoint Funds;
New York Municipal Cash Trust; 111 Corcoran Funds; Peachtree Funds; The
Planters Funds; RIMCO Monument Funds; The Shawmut Funds; Star Funds; The
Starburst Funds; The Starburst Funds II; Stock and Bond Fund, Inc.;
Sunburst Funds; Targeted Duration Trust; Tax-Free Instruments Trust;
Trademark Funds; Trust for Financial Institutions; Trust For Government
Cash Reserves; Trust for Short-Term U.S. Government Securities; Trust
for U.S. Treasury Obligations; The Virtus Funds; and World Investment
Series, Inc.
Fund Ownership
Officers and Trustees own less than 1% of the Fund's outstanding shares.
As of July 6, 1995, the following shareholders of record owned 5% or
more of the outstanding Shares of the Fund: United Jersey Bank,
Hackensack, NJ, owned approximately 1,772,092 Shares 8.21%.
Trustees' Compensation
AGGREGATE
NAME , COMPENSATION
POSITION WITH FROM TOTAL COMPENSATION PAID
TRUST TRUST *# FROM FUND COMPLEX +
John F. Donahue $0 $ 0 for the Trust and
Trustee 68 other investment companies in the Fund
Complex
Thomas G. Bigley $958 $ 20,688 for the Trust and
Trustee 49 other investment companies of the Fund
Complex
John T. Conroy, Jr. $ 2,371 $ 117,202 for the Trust and
Trustee 64 other investment companies in the Fund
Complex
William J. Copeland $ 2,371 $ 117,202 for the Trust and
Trustee 64 other investment companies in the Fund
Complex
James E. Dowd $ 2,371 $ 117,202 for the Trust and
Trustee 64 other investment companies in the Fund
Complex
Lawrence D. Ellis, M.D. $ 1,286 $ 106,460 for the Trust and
Trustee 64 other investment companies in the Fund
Complex
Edward L. Flaherty, Jr. $ 2,371 $ 117,202 for the Trust and
Trustee 64 other investment companies in the Fund
Complex
Glen R. Johnson $ 0 $ 0 for the Trust and
Trustee 8 other investment companies in the Fund
Complex
Peter E. Madden $ 1,091 $ 90,563 for the Trust and
Trustee 64 other investment companies in the Fund
Complex
Gregor F. Meyer $ 1,286 $ 106,460 for the Trust and
Trustee 64 other investment companies in the Fund
Complex
John E. Murray, Jr. $ 632 $ 0 for the Trust and
Trustee 69 other investment companies in the Fund
Complex
Wesley W. Posvar $ 1,286 $ 106,460 for the Trust and
Trustee 64 other investment companies in the Fund
Complex
Marjorie P. Smuts $ 1,286 $ 106,460 for the Trust and
Trustee 64 other investment companies in the Fund
Complex
*Information is furnished for the fiscal year ended May 31, 1995.
#The aggregate compensation is provided for the Trust which is comprised
of three portfolios.
+The information is provided for the last calendar year.
Trustee Liability
The Trust's Declaration of Trust provides that the Trustees will not be
liable for errors of judgment or mistakes of fact or law. However, they
are not protected against any liability to which they would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence,
or reckless disregard of the duties involved in the conduct of their
office.
Investment Advisory Services
Adviser to the Fund
The Fund's investment adviser is Federated Management (the "Adviser").
It is a subsidiary of Federated Investors. All of the voting securities
of Federated Investors are owned by a trust, the Trustees of which are
John F. Donahue, his wife, and his son, J. Christopher Donahue.
The Adviser shall not be liable to the Trust, the Fund, or any
shareholder for any losses that may be sustained in the purchase,
holding, or sale of any security, or for anything done or omitted by it,
except acts or omissions involving willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties imposed upon it by its
contract with the Fund
Advisory Fees
For its advisory services, the Adviser receives an annual investment
advisory fee as described in the prospectus. During the fiscal years
ended May 31, 1995, 1994, and 1993, the Adviser earned $1,038,460,
$1,224,249, and $842,542, respectively, which were reduced by $6,917,
$308,350, and $324,118, respectively, because of undertakings to limit
the Fund's expenses.
State Expense Limitations
The Adviser has undertaken to comply with the expense limitation
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 2.5% per year of the first $30
million of average net assets, 2% per year of the next $70 million
of average net assets, and 1.5% 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
expense 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 Related Services
Affiliates of the Adviser may, from time to time, provide certain
electronic equipment and software to institutional customers in order to
facilitate the purchase of 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 Fund for a fee as
described in the prospectus. Prior to March 1, 1994, Federated
Administrative Services, Inc., also a subsidiary of Federated Investors,
served as the Fund's administrator. (For purposes of this Statement of
Additional Information, Federated Administrative Services and Federated
Administrative Services, Inc. may, hereinafter, collectively be referred
to as the "Administrators.") For the fiscal years ended May 31, 1995,
1994, and 1993, the Administrators earned $196,539, $303,207, and
$271,801, respectively, none of which was waived. Dr. Henry Gailliot, an
officer of Federated Management, the Adviser to the Fund, holds
approximately 20% of the outstanding common stock and serves as a
director of Commercial Data Services, Inc., a company which provides
computer processing services to Federated Administrative Services.
Shareholder Services Agreement
This arrangement permits the payment of fees to Federated Shareholder
Services and, indirectly, to financial institutions, 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: 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.
For the fiscal period ending May 31, 1995 and 1994, the Fund paid
shareholder service fees in the amount of $1,881 and $833, respectively,
all of which was paid to financial institutions.
Transfer Agent and Dividend Disbursing Agent
Federated Services Company serves as transfer agent and dividend
disbursing agent for the Fund. The fee paid to the transfer agent is
based upon the size, type and number of accounts and transactions made
by shareholders.
Federated Services Company also maintains the Trust's accounting
records. The fee paid for this service is based upon the level of the
Fund's average net assets for the period plus out-of-pocket expenses.
Brokerage Transactions
When selecting brokers and dealers to handle the purchase and sale of
portfolio instruments, the Adviser looks for prompt execution of the
order at a favorable price. In working with dealers, the Adviser will
generally use those who are recognized dealers in specific portfolio
instruments, except when a better price and execution of the order can
be obtained elsewhere. In selecting among firms believed to meet these
criteria, the Adviser may give consideration to those firms which have
sold or are selling Shares of the Fund and other Federated Funds. The
Adviser makes decisions on portfolio transactions and selects brokers
and dealers subject to review by the Trustees.
The Adviser may select brokers and dealers who offer brokerage and
research services. These services may be furnished directly to the 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 load on days
the New York Stock Exchange is open for business. The procedure for
purchasing Shares is explained in the prospectus under "Investing in the
Fund."
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. This conversion must be made before shares are purchased. State
Street Bank and Trust Company ("State Street Bank") acts as the
shareholder's agent in depositing checks and converting them to federal
funds.
Determining Net Asset Value
Net asset value generally changes each day. The days on which net asset
value is calculated by the Fund are described in the prospectus.
Determining Value of Securities
The values of the Fund's portfolio securities are determined as follows:
- according to prices provided by independent pricing services,
which do not include market prices for the Fund's specific
portfolio securities and may be determined without exclusive
reliance on quoted prices, and which may take into account
appropriate factors such as yield, quality, coupon rate, maturity,
type of issue, trading characteristics and other market data
employed in determining valuations for such securities; or
- for short-term obligations with remaining maturities of 60 days or
less, at the time of purchase, at amortized cost unless the
Trustees determine that particular circumstances of the security
indicate otherwise.
Redeeming Shares
The Fund redeems shares at the next computed net asset value after the
Fund receives the redemption request. Redemption procedures are
explained in the prospectus under "Redeeming 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
Although the Fund intends to redeem shares in cash, it reserves the
right under certain circumstances to pay the redemption price in whole
or in part by a distribution of securities from the Fund's portfolio.
Redemption in kind will be made in conformity with applicable Securities
and Exchange Commission rules, taking such securities at the same value
employed in determining net asset value and selecting the securities in
a manner the Trustees determine to be fair and equitable.
The Fund has elected to be governed by Rule 18f-1 of the Investment
Company Act of 1940, as amended, under which the Trust is obligated to
redeem shares for any one shareholder in cash only up to the lesser of
$250,000 or 1% of the Fund's net asset value during any 90-day period.
Exchanging Securities for Fund Shares
Investors may exchange municipal securities they already own for shares
or they may exchange a combination of municipal securities and cash for
shares. An investor should forward the securities in negotiable form
with a letter of transmittal and authorization to Federated Securities
Corp. The Fund will notify the investor of its acceptance and valuation
of the securities within five business days of their receipt by State
Street Bank. The Fund values securities in the same manner as the Fund
values its assets. The basis of the exchange will depend upon the net
asset value of Fund shares on the day the securities are valued. One
share of the Fund will be issued for each equivalent amount of
securities accepted.
Any interest earned on the securities prior to the exchange will be
considered in valuing the securities. All interest, dividends,
subscription, or other rights attached to the securities become the
property of the Trust, along with the securities.
Tax Consequences
Exercise of this exchange privilege is treated as a sale for federal
income tax purposes. Depending upon the cost basis of the securities
exchanged for shares, a gain or loss may be realized by the investor.
Tax Status
The 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 of 1986, as
amended, 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
Capital Gains
Capital gains or losses may be realized by the Fund on the sale of
portfolio securities and as a result of discounts from par value
on securities held to maturity. Sales would generally be made
because of:
- the availability of higher relative yields;
- differentials in market values;
- new investment opportunities;
- changes in creditworthiness of an issuer; or
- an attempt to preserve gains or limit losses.
Distributions of long-term capital gains are taxed as such,
whether they are taken in cash or reinvested, and regardless of
the length of time the shareholder has owned the shares. Any loss
by a shareholder on Fund shares held for less than six months and
sold after a capital gains distribution will be treated as a long-
term capital loss to the extent of the capital gains distribution.
Total Return
The Fund's average annual total returns for the Fund, and its
predecessor, Instutional Shares of the Fund (when the Fund was offered
with separate classes of shares) for the one-year and five-year periods
ended May 31, 1995, and for the period from December 26, 1985 (effective
date of the Trust's registration statement) to May 31, 1995, were 5.67%,
7.10% and 6.63%, respectively.
The average annual total return for the Fund is the average compounded
rate of return for a given period that would equate a $1,000 initial
investment to the ending redeemable value of that investment. The ending
redeemable value is computed by multiplying the number of shares owned
at the end of the period by the net asset value per share at the end of
the period. The number of shares owned at the end of the period is based
on the number of shares purchased at the beginning of the period with
$1,000, adjusted over the period by any additional shares, assuming the
monthly reinvestment of all dividends and distributions.
Yield
The Fund's yield for the thirty-day period ended May 31, 1995, was
4.39%.
The yield for shares of the Fund is determined by dividing the net
investment income per share (as defined by the Securities and Exchange
Commission) earned by the Fund over a thirty-day period by the maximum
offering price per share on the last day of the period. This value is
then annualized using semi-annual compounding. This means that the
amount of income generated during the thirty-day period is assumed to be
generated each month over a twelve-month period and is reinvested every
six months. The yield does not necessarily reflect income actually
earned by the 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 brokers/dealers charge
fees in connection with services provided in conjunction with an
investment in the Fund, performance will be reduced for those
shareholders paying those fees.
Tax-Equivalent Yield
The Fund's tax-equivalent yields for the thirty-day period ended May 31,
1995, was 6.10%
The tax-equivalent yield of the Fund is calculated similarly to the
yield, but is adjusted to reflect the taxable yield that the Fund would
have had to earn to equal its actual yield, assuming a 28% tax rate and
assuming that income is 100% tax-exempt.
Tax-Equivalency Table
The Fund may also use a tax-equivalency table in advertising and
sales literature. The interest earned by the municipal bonds in
the Fund's portfolio generally remains free from federal regular
income tax,* and is often free from state and local taxes as well.
As the table below indicates, a "tax-free" investment is an
attractive choice for investors, particularly in times of narrow
spreads between tax-free and taxable yields.
TAXABLE YIELD EQUIVALENT FOR 1995
MULTISTATE MUNICIPAL FUNDS
FEDERAL INCOME TAX BRACKET:
15.00% 28.00% 31.00% 36.00% 39.60%
JOINT $1- $39,001- $94,251- $143,601- OVER
RETURN 39,000 94,250 143,600 256,500 256,500
SINGLE $1- $23,351- $56,551- $117,951- OVER
RETURN 23,350 56,550 117,950 256,500 256,500
Tax-Exempt
Yield Taxable Yield Equivalent
1.00% 1.18% 1.39% 1.45% 1.56%
1.66%
1.50% 1.76% 2.08% 2.17% 2.34%
2.48%
2.00% 2.35% 2.78% 2.90% 3.13%
3.31%
2.50% 2.94% 3.47% 3.62% 3.91%
4.14%
3.00% 3.53% 4.17% 4.35% 4.69%
4.97%
3.50% 4.12% 4.86% 5.07% 5.47%
5.79%
4.00% 4.71% 5.56% 5.80% 6.25%
6.62%
4.50% 5.29% 6.25% 6.52% 7.03%
7.45%
5.00% 5.88% 6.94% 7.25% 7.81%
8.28%
5.50% 6.47% 7.64% 7.97% 8.59%
9.11%
6.00% 7.06% 8.33% 8.70% 9.38%
9.93%
6.50% 7.65% 9.03% 9.42% 10.16%
10.76%
7.00% 8.24% 9.72% 10.14% 10.94%
11.59%
7.50% 8.82% 10.42% 10.87% 11.72%
12.42%
8.00% 9.41% 11.11% 11.59% 12.50%
13.25%
Note: The maximum marginal tax rate for each bracket was used in
calculating the taxable yield equivalent. Furthermore, additional
state and local taxes paid on comparable taxable investments were
not used to increase federal deductions.
The chart above is for illustrative purposes only. It is not an
indicator of past or future performance of Fund shares.
* Some portion of the Fund's income may be subject to the federal
alternative minimum tax and state and local income taxes.
Performance Comparisons
The performance of the Fund depends on 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 ; and
- various other factors.
The Fund's performance fluctuates on a daily basis largely because net
earnings and offering price per share fluctuate daily. Both net earnings
and offering price per share are factors in the computation of yield and
total return.
Investors may use financial publications and/or indices to obtain a more
complete view of the 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 fund
categories by making comparative calculations using total return.
Total return assumes the reinvestment of all capital gains
distributions and income dividends and takes into account any
change in offering price over a specific period of time. From time
to time, the Fund will quote its Lipper ranking in the
intermediate municipal bond funds category in advertising and
sales literature.
- Morningstar Inc., an independent rating service, is the publisher
of the bi-weekly Mutual Fund Values. Mutual Fund Values rates more
than 1,000 NASDAQ - listed mutual funds of all types, according to
their risk-adjusted returns. The maximum rating is five stars, and
ratings are effective for two weeks.
- Lehman Brothers Five-Year State General Obligation Bonds is an
index comprised of all state general obligation debt issues with
maturities between four and six years. These bonds are rated A or
better and represent a variety of coupon ranges. Index figures are
total returns calculated for one, three, and twelve month periods
as well as year-to-date. Total returns are also calculated as of
the index inception, December 31, 1979.
- Lehman Brothers Ten-Year State General Obligation Bonds is an
index comprised of the same issues noted above except that the
maturities range between nine and eleven years. Index figures are
total returns calculated for the same periods as listed above.
Advertisements and other sales literature for the Fund may quote total
returns which are calculated on non-standardized base periods. These
total returns represent the historic change in the value of an
investment in the Fund based on monthly reinvestment of dividends over a
specified period of time.
About Federated Investors
Federated is dedicated to meeting investor needs which is reflected in
its investment decision making structured, straightforward, and
consistent. This has resulted in a history of competitive performance
with a range of competitive investment products that have gained the
confidence of thousands of clients and their customers.
The company's disciplined security selection process is firmly rooted in
sound methodologies backed by fundamental and technical research.
Investment decisions are made and executed by teams of portfolio
managers, analysts, and traders dedicated to specific market sectors.
In the municipal sector, as of December 31, 1994, Federated managed 18
bond funds with approximately $1.9 billion in assets and 18 money market
funds with approximately $6.6 billion in total assets. In 1976,
Federated introduced one of the first municipal bond mutual funds in the
industry and is now one of the largest institutional buyers of municipal
securities.
J. Thomas Madden, Executive Vice President, oversees Federated's equity
and high yield corporate bond management while William D. Dawson,
Executive Vice President, oversees Federated's domestic fixed income
management. Henry A. Frantzen, Executive Vice President, oversees the
management of Federated's international portfolios.
Mutual Fund Market
Twenty-seven percent of American households are pursuing their financial
goals through mutual funds. These investors, as well as businesses and
institutions, have entrusted over $2 trillion to the more than 5,500
funds available.*
Federated Investors, through its subsidiaries, distributes mutual funds
for a variety of investment applications. Specific markets include:
Institutional
Federated meets the needs of more than 4,000 institutional clients
nationwide by managing and servicing separate accounts and mutual
funds for a variety of applications, including defined benefit and
defined contribution programs, cash management, and
asset/liability management. Institutional clients include
corporations, pension funds, tax-exempt entities,
foundations/endowments, insurance companies, and investment and
financial advisors. The marketing effort to these institutional
clients is headed by John B. Fisher, President, Institutional
Sales Division.
Trust Organizations
Other institutional clients include close relationships with more
than 1,500 banks and trust organizations. Virtually all of the
trust divisions of the top 100 bank holding companies use
Federated funds in their clients' portfolios. The marketing effort
to trust clients is headed by Mark R. Gensheimer, Executive Vice
President, Bank Marketing & Sales.
Broker/Dealers and Bank Broker/Dealer Subsidiaries
Federated mutual funds are available to consumers through major
brokerage firms nationwide including 200 New York Stock Exchange
firms supported by more wholesalers than any other mutual fund
distributor. The marketing effort to these firms is headed by
James F. Getz, President, Broker/Dealer Division.
* SOURCE: Investment Company Institute
Appendix
Standard and Poor's Ratings Group ("S&P") Municipal Bond Ratings
AAA--Debt rated "AAA" has the highest rating assigned by S&P. Capacity
to pay interest and repay principal is extremely strong.
AA--Debt rated "AA" has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.
A--Debt rated "A" has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than debt in
higher rated categories.
NR--Indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not
rate a particular type of obligation as a matter of policy.
Plus (+) or minus (-): The ratings from "AA" to "CCC" may be modified by
the addition of a plus or minus sign to show relative standing within
the major rating categories.
Moody's Investors Service, Inc. Municipal Bond Ratings
Aaa--Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally
referred to as "gilt edged." Interest payments are protected by a large
or by an exceptionally stable margin and principal is secure. While the
various protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position
of such issues.
Aa--Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities
or fluctuation of protective elements may be of greater amplitude or
there may be other elements present which make the long-term risks
appear somewhat larger than in Aaa securities.
A--Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate but
elements may be present which suggest a susceptibility to impairment
sometime in the future.
NR--Not rated by Moody's.
Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from Aa through B in its corporate or municipal bond
rating system. The modifier 1 indicates that the security ranks in the
higher end of its generic rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates that the issue ranks in
the lower end of its generic rating category.
Fitch Investors Service, Inc. Investment Grade Bond Ratings
AAA--Bonds considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay interest
and repay principal, which is unlikely to be affected by reasonably
foreseeable events.
AA--Bonds considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal is
very strong, although not quite as strong as bonds rated "AAA." Because
bonds rated in the "AAA" and "AA" categories are not significantly
vulnerable to foreseeable future developments, short-term debt of these
issuers is generally rated "F-1+."
A--Bonds considered to be investment grade and of high credit quality.
The obligor's ability to pay interest and repay principal is considered
strong, but may be more vulnerable to adverse changes in economic
conditions and circumstances than bonds with higher ratings.
NR--NR indicates that Fitch does not rate the specific issue.
Plus (+) or Minus (-): Plus and minus signs are used with a rating
symbol to indicate the relative position of a credit within the rating
category. Plus and minus signs, however, are not used in the "AAA"
category.
Standard and Poor's Ratings Group Municipal Note Ratings
SP-1--Very strong or strong capacity to pay principal and interest.
Those issues determined to possess overwhelming safety characteristics
will be given a plus sign (+) designation.
SP-2--Satisfactory capacity to pay principal and interest.
Moody's Investors Service, Inc. Short-Term Loan Ratings
MIG1/VMIG1--This designation denotes best quality. There is present
strong protection by established cash flows, superior liquidity support
or demonstrated broad based access to the market for refinancing.
MIG2/VMIG2--This designation denotes high quality. Margins of protection
are ample although not so large as in the preceding group.
Standard and Poor's Ratings Group Commercial Paper Ratings
A-1--This highest category indicates that the degree of safety regarding
timely payment is strong. Those issues determined to possess extremely
strong safety characteristics are denoted with a plus sign (+)
designation.
A-2--Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high for
issues designated A-1.
Moody's Investors Service, Inc. Commercial Paper Ratings
PRIME-1--Issuers rated PRIME-1 (or related supporting institutions) have
a superior capacity for repayment of short-term promissory obligations.
PRIME-1 repayment capacity will normally be evidenced by the following
characteristics:
- leading market positions in well-established industries;
- high rates of return on funds employed;
- conservative capitalization structure with moderate reliance on
debt and ample asset protection;
- broad margins in earning coverage of fixed financial charges and
high internal cash generation; and
- well-established access to a range of financial markets and
assured sources of alternative liquidity.
PRIME-2--Issuers rated PRIME-2 (or related supporting institutions) have
a strong capacity for repayment of short-term promissory obligations.
This will normally be evidenced by many of the characteristics cited
above, but to a lesser degree. Earnings trends and coverage ratios,
while sound, will be more subject to variation. Capitalization
characteristics, while still appropriate, may be more affected by
external conditions. Ample alternate liquidity is maintained.
Cusip 458810108
8061702B (7/95)
- --------------------------------------------------------------------------------
FEDERATED PENNSYLVANIA INTERMEDIATE MUNICIPAL TRUST
(FORMERLY, PENNSYLVANIA INTERMEDIATE MUNICIPAL TRUST)
(A PORTFOLIO OF INTERMEDIATE MUNICIPAL TRUST)
PROSPECTUS
The shares of Federated Pennsylvania Intermediate Municipal Trust
(formerly, "Pennsylvania Intermediate Municipal Trust") (the "Fund")
offered by this prospectus represent interests in a non-diversified
portfolio of securities of Intermediate Municipal Trust (the "Trust"),
an open-end management investment company (a mutual fund).
The investment objective of the Fund is to provide current income
which is exempt from federal regular income tax and the personal
income taxes imposed by the Commonwealth of Pennsylvania. The Fund
invests primarily in a portfolio of Pennsylvania municipal securities,
including securities of states, territories, and possessions of the
United States which are not issued by or on behalf of the Commonwealth
of Pennsylvania or its political subdivisions, but which are exempt
from federal regular income tax and Pennsylvania state personal income
taxes.
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS
OF ANY BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK, AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD, OR ANY OTHER GOVERNMENTAL 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 Fund. Keep this prospectus for future
reference.
The Fund has also filed a Statement of Additional Information, dated
July 31, 1995, with the Securities and Exchange Commission. The
information contained in the Statement of Additional Information is
incorporated by reference into this prospectus. You may request a copy
of the Statement of Additional Information which is in paper form
only, or a paper copy of this prospectus, if you have received your
prospectus electronically, free of charge by calling 1-800-235-4669.
To obtain other information or to 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 July 31, 1995
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
SUMMARY OF FUND EXPENSES 1
- ---------------------------------------------------
FINANCIAL HIGHLIGHTS 2
- ---------------------------------------------------
GENERAL INFORMATION 3
- ---------------------------------------------------
INVESTMENT INFORMATION 3
- ---------------------------------------------------
Investment Objective 3
Investment Policies 3
Pennsylvania Municipal Securities 6
Investment Risks 6
Non-Diversification 7
Investment Limitations 7
INTERMEDIATE MUNICIPAL TRUST INFORMATION 8
- ---------------------------------------------------
Management of the Trust 8
Distribution of Fund Shares 9
Administration of the Fund 9
NET ASSET VALUE 10
- ---------------------------------------------------
INVESTING IN THE FUND 10
- ---------------------------------------------------
Share Purchases 10
Subaccounting Services 11
Minimum Investment Required 11
What Shares Cost 11
Exchanging Securities for Fund Shares 11
Certificates and Confirmations 12
Dividends and Distributions 12
Capital Gains 12
REDEEMING SHARES 12
- ---------------------------------------------------
Accounts with Low Balances 13
SHAREHOLDER INFORMATION 13
- ---------------------------------------------------
Voting Rights 13
Massachusetts Partnership Law 14
TAX INFORMATION 14
- ---------------------------------------------------
Federal Income Tax 14
Pennsylvania Taxes 15
Other State and Local Taxes 15
PERFORMANCE INFORMATION 16
- ---------------------------------------------------
FINANCIAL STATEMENTS 17
- ---------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 29
- ---------------------------------------------------
ADDRESSES 30
- ---------------------------------------------------
</TABLE>
I
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES
<S> <C> <C>
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
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(As a percentage of average net assets)
<S> <C> <C>
Management Fee (after waiver) (1)................................................................. 0.00%
12b-1 Fee......................................................................................... None
Total Other Expenses (after expense reimbursement)................................................ 0.45%
Shareholder Services Fee (after waiver) (2).......................................... 0.10%
Total Fund Operating Expenses (3)......................................................... 0.45%
<FN>
(1) The management fee has been reduced to reflect the waiver of the management
fee. The maximum management fee is 0.50%
(2) The maximum shareholder services fee is 0.25%
(3) The total Fund operating expenses in the table above are based on expenses
expected during the fiscal year ending May 31, 1996. The total Fund
operating expenses were 0.45% for the fiscal year ended May 31, 1995 and
would have been 4.40% absent the voluntary reimbursement of certain other
operating expenses and reductions to meet state limitations.
</TABLE>
The purpose of this table is to assist an investor in understanding the
various costs and expenses that a shareholder of the Fund will bear, either
directly or indirectly. For more complete descriptions of the various costs and
expenses, see "Investing in the Fund" and "Intermediate Municipal Trust
Information." Wire-transferred redemptions of less than $5,000 may be subject to
additional fees.
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------------------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return and (2) redemption at the end of
each time period................................................. $5 $14 $25 $57
</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.
1
FEDERATED PENNSYLVANIA INTERMEDIATE MUNICIPAL TRUST
(FORMERLY, PENNSYLVANIA INTERMEDIATE MUNICIPAL TRUST)
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 29.
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
--------------------------
1995 1994(a)
- ------------------------------------------------------------------- ------------ ------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.85 $ 10.00
- -------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------
Net investment income 0.48 0.23
- -------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 0.21 (0.15)
- ------------------------------------------------------------------- ------------ ------------
Total from investment operations 0.69 0.08
- ------------------------------------------------------------------- ------------ ------------
LESS DISTRIBUTIONS
- -------------------------------------------------------------------
Distributions from net investment income (0.48) (0.23)
- ------------------------------------------------------------------- ------------ ------------
NET ASSET VALUE, END OF PERIOD $ 10.06 $ 9.85
- ------------------------------------------------------------------- ------------ ------------
------------ ------------
TOTAL RETURN (b) 7.35% 0.76%
- -------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -------------------------------------------------------------------
Expenses 0.45% 0.25%(c)
- -------------------------------------------------------------------
Net investment income 5.11% 4.76%(c)
- -------------------------------------------------------------------
Expense waiver/reimbursement 3.95%(d) 5.06%(c)(e)
- -------------------------------------------------------------------
SUPPLEMENTAL DATA
- -------------------------------------------------------------------
Net assets, end of period (000 omitted) $8,344 $2,881
- -------------------------------------------------------------------
Portfolio turnover 41% 39%
- -------------------------------------------------------------------
<FN>
(a) Reflects operations for the period from December 5, 1993 (date of initial
public investment) to May 31, 1994.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) Computed on an annualized basis.
(d) The Adviser waived $32,714 of the investment advisory fee and reimbursed
$86,896 of other expenses, which represent 0.50% and 1.33% of average net
assets, respectively, to comply with certain state expense limitations. The
remainder of the waiver/reimbursement was voluntary. This expense decrease
is reflected in both the expense and net investment income ratios shown
above.
(e) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
</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 for the fiscal year ended May 31, 1995, which can be obtained free
of charge.
2
GENERAL INFORMATION
- --------------------------------------------------------------------------------
The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated May 31, 1985. The Declaration of Trust permits the Trust to offer
separate series of shares of beneficial interest representing interests in
separate portfolios of securities. The shares in any one portfolio may be
offered in separate classes.
Shares of the Fund are designed for the investment of moneys generally held by
financial institutions in a fiduciary capacity. A minimum initial investment of
$25,000 over a 90-day period is required. The Fund may not be a suitable
investment for non-Pennsylvania taxpayers or retirement plans since Pennsylvania
municipal securities are not likely to produce competitive after-tax yields for
such persons and entities when compared to other investments.
Shares are sold and redeemed at net asset value without a sales load imposed by
the Fund.
INVESTMENT INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The investment objective of the Fund is to provide current income exempt from
federal regular income tax and the personal income taxes imposed by the
Commonwealth of Pennsylvania. Interest income of the Fund that is exempt from
federal regular income tax and Pennsylvania state personal income tax retains
its tax-free status when distributed to the Fund's shareholders. The Fund
pursues its investment objective by investing at least 80% of its net assets in
a non-diversified portfolio of Pennsylvania municipal securities. The portfolio
has a dollar-weighted average maturity of not less than three or more than ten
years. 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 policy stated above cannot
be changed without approval of shareholders.
INVESTMENT POLICIES
The investment policies described below may be changed by the Board of Trustees
(the "Trustees") without shareholder approval. Shareholders will be notified
before any material change in these policies becomes effective.
ACCEPTABLE INVESTMENTS. The Pennsylvania municipal securities in which the Fund
invests are:
- obligations issued by or on behalf of the Commonwealth of Pennsylvania,
its political subdivisions, or agencies;
- debt obligations of any state, territory, or possession of the United
States, or any political subdivision of any of these; and
- participation interests, as described below, in any of the above
obligations,
3
the interest from which is, in the opinion of bond counsel for the issuers or in
the opinion of officers of the Fund and/or the investment adviser to the Fund,
exempt from both federal regular income tax and the personal income taxes
imposed by the Commonwealth of Pennsylvania.
The prices of fixed income securities fluctuate inversely to the direction of
interest rates.
AVERAGE MATURITY. The dollar-weighted average maturity of the Fund's portfolio
of Pennsylvania municipal securities will not be less than three years or more
than ten years. For purposes of determining the dollar-weighted average maturity
of the Fund's portfolio, the maturity of a municipal security will be its
ultimate maturity, unless it is probable that the issuer of the security will
take advantage of maturity-shortening devices such as a call, refunding, or
redemption provision, in which case the maturity date will be the date on which
it is probable that the security will be called, refunded, or redeemed. If the
municipal security includes the right to demand payment, the maturity of the
security for purposes of determining the Fund's dollar-weighted average
portfolio maturity will be the period remaining until the principal amount of
the security can be recovered by exercising the right to demand payment.
CHARACTERISTICS. The municipal securities in which the Fund invests are:
- rated within the three highest ratings for municipal securities by Moody's
Investors Service, Inc. ("Moody's") (Aaa, Aa, or A), Standard & Poor's
Ratings Group ("S&P") (AAA, AA, or A), or Fitch Investors Service, Inc.
("Fitch") (AAA, AA, or A);
- guaranteed at the time of purchase by the U.S. government as to the
payment of principal and interest;
- fully collateralized by an escrow of U.S. government securities or other
securities acceptable to the Fund's adviser;
- rated at the time of purchase within Moody's highest short-term municipal
obligation rating (MIG1/VMIG1) or Moody's highest municipal commercial
paper rating (PRIME-1) or S&P's highest municipal commercial paper rating
(SP-1);
- unrated if, at the time of purchase, other municipal securities of that
issuer are rated A or better by Moody's, S&P, or Fitch; or
- unrated if determined to be of equivalent quality to one of the foregoing
rating categories by the Fund's investment adviser.
If a security is subsequently downgraded, the adviser will determine whether it
continues to be an acceptable investment; if not, the security will be sold. A
description of the rating categories is contained in the Appendix to the
Statement of Additional Information.
PARTICIPATION INTERESTS. The Fund may purchase participation interests from
financial institutions such as commercial banks, savings associations, and
insurance companies. These participation interests give the Fund an undivided
interest in Pennsylvania municipal securities. The financial institutions from
which the Fund purchases participation interests frequently provide or secure
irrevocable letters of credit or guarantees to assure that the participation
interests are of high quality.
4
The Trustees will determine whether participation interests meet the prescribed
quality standards for the Fund.
VARIABLE RATE MUNICIPAL SECURITIES. Some of the Pennsylvania municipal
securities which the Fund purchases may have variable interest rates. Variable
interest rates are ordinarily stated as a percentage of a published interest
rate, interest rate index, or a similar standard, such as the 91-day U.S.
Treasury bill rate. Many variable rate municipal securities are subject to
payment of principal on demand by the Fund in not more than seven days. All
variable rate municipal securities will meet the quality standards for the Fund.
The Fund's investment adviser has been instructed by the Trustees to monitor the
pricing, quality, and liquidity of the variable rate municipal securities,
including participation interests held by the Fund on the basis of published
financial information and reports of the rating agencies and other analytical
services.
MUNICIPAL LEASES. Also included within the general category of municipal
securities are certain lease obligations or installment purchase contract
obligations and participations therein (hereinafter collectively referred to as
"lease obligations") of municipal authorities or entities. Although lease
obligations do not constitute general obligations of the municipality for which
the municipality's taxing power is pledged, a lease obligation is ordinarily
backed by the municipality's covenant to budget for, appropriate, and make the
payments due under the lease obligation. Interest on lease obligations is
tax-exempt to the same extent as if the municipality had issued debt obligations
to finance the underlying project or purchase. However, certain lease
obligations contain "non-appropriation" clauses which provide that the
municipality has no obligation to make lease or installment purchase payments in
future years unless money is appropriated for such purpose on a yearly basis. In
addition to the "non-appropriation" risk, these securities represent a
relatively new type of financing that has not yet developed the depth of
marketability associated with more conventional bonds, and some lease
obligations may be illiquid. Although "non-appropriation" lease obligations are
generally secured by the leased property, disposition of the property in the
event of foreclosure might prove difficult. In addition, the tax treatment of
such obligations in the event of "non-appropriation" is unclear. The Fund does
not intend to invest more than 10% of its total assets in lease obligations that
contain "non-appropriation" clauses.
If the Fund purchases unrated municipal leases, the Trustees will be responsible
for determining, on an ongoing basis, the credit quality of such leases and the
likelihood that such leases will not be cancelled.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase
Pennsylvania municipal securities on a when-issued or delayed delivery basis.
These transactions are arrangements in which the Fund purchases securities with
payment and delivery scheduled for a future time. The seller's failure to
complete these transactions may cause the Fund to miss a price or yield
considered to be advantageous. Settlement dates may be a month or more after
entering into these transactions, and the market values of the securities
purchased may vary from the purchase prices. Accordingly, the Fund may pay more
or less than the market value of the securities on the settlement date.
The Fund may dispose of a commitment prior to settlement if the adviser deems it
appropriate to do so. In addition, the Fund may enter into transactions to sell
its purchase commitments to third parties
5
at current market values and simultaneously acquire other commitments to
purchase similar securities at later dates. The Fund may realize short-term
profits or losses upon the sale of such commitments.
TEMPORARY INVESTMENTS. The Fund normally invests its assets in Pennsylvania
municipal securities, as described above. However, from time to time, when the
investment adviser determines that market conditions call for a temporary
defensive posture, the Fund may invest in short-term non-Pennsylvania municipal
tax-exempt obligations or taxable temporary investments. These temporary
investments include: notes issued by or on behalf of municipal or corporate
issuers; obligations issued or guaranteed by the U.S. government, its agencies,
or instrumentalities; other debt securities; commercial paper; certificates of
deposit of banks; and repurchase agreements (arrangements in which the
organization selling the Fund a bond or temporary investment agrees at the time
of sale to repurchase it at a mutually agreed upon time and price).
There are no rating requirements applicable to temporary investments with the
exception of temporary municipal securities which are subject to the same rating
requirements as all other municipal securities in which the Fund invests.
However, the investment adviser will limit temporary investments to those it
considers to be of comparable quality to the acceptable investments of the Fund.
Although the Fund is permitted to make taxable, temporary investments, there is
no current intention of generating income subject to federal regular income tax
or Pennsylvania state personal income tax.
PENNSYLVANIA MUNICIPAL SECURITIES
Pennsylvania municipal securities are generally issued to finance public works,
such as airports, bridges, highways, housing, hospitals, mass transportation
projects, schools, streets, and water and sewer works. They are also issued to
repay outstanding obligations, to raise funds for general operating expenses,
and to make loans to other public institutions and facilities.
Pennsylvania municipal securities include industrial development bonds issued by
or on behalf of public authorities to provide financing aid to acquire sites or
construct and equip facilities for privately or publicly owned corporations. The
availability of this financing encourages these corporations to locate within
the sponsoring communities and thereby increases local employment.
The two principal classifications of municipal securities are "general
obligation" and "revenue" bonds. General obligation bonds are secured by the
issuer's pledge of its full faith and credit and taxing power for the payment of
principal and interest. However, interest on and principal of revenue bonds are
payable only from the revenue generated by the facility financed by the bond or
other specified sources of revenue. Revenue bonds do not represent a pledge of
credit or create any debt of or charge against the general revenues of a
municipality or public authority. Industrial development bonds are typically
classified as revenue bonds.
INVESTMENT RISKS
Yields on Pennsylvania municipal securities depend on a variety of factors,
including, but not limited to: the general conditions of the municipal bond
market; the size of the particular offering; the maturity of the obligations;
and the rating of the issue. Further, any adverse economic conditions or
developments affecting the Commonwealth of Pennsylvania or its municipalities
could impact the
6
Fund's portfolio. The ability of the Fund to achieve its investment objective
also depends on the continuing ability of the issuers of Pennsylvania municipal
securities and participation interests, or the guarantors of either, to meet
their obligations for the payment of interest and principal when due. Investing
in Pennsylvania municipal securities which meet the Fund's quality standards may
not be possible if the Commonwealth of Pennsylvania or its municipalities do not
maintain their current credit ratings. In addition, any Pennsylvania
constitutional amendments, legislative measures, executive orders,
administrative regulations, or voter initiatives could result in adverse
consequences affecting Pennsylvania municipal securities.
NON-DIVERSIFICATION
The Fund is a non-diversified investment portfolio. As such, there is no limit
on the percentage of assets which can be invested in any single issuer. An
investment in the Fund, therefore, will entail greater risk than would exist in
a diversified portfolio of securities because the higher percentage of
investments among fewer issuers may result in greater fluctuation in the total
market value of the Fund's portfolio. Any economic, political, or regulatory
developments affecting the value of the securities in the Fund's portfolio will
have a greater impact on the total value of the portfolio than would be the case
if the portfolio was diversified among more issuers.
The Fund intends to comply with Subchapter M of the Internal Revenue Code, as
amended. This undertaking requires that at the end of each quarter of the
taxable year, with regard to at least 50% of the Fund's total assets, no more
than 5% of its total assets are invested in the securities of a single issuer;
beyond that, no more than 25% of its total assets are invested in the securities
of a single issuer.
INVESTMENT LIMITATIONS
The Fund will not borrow money directly or through reverse repurchase agreements
(arrangements in which the Fund sells a portfolio instrument for a percentage of
its cash value with an arrangement to buy it back on a set date) or pledge
securities 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
total assets to secure such borrowings. The Fund does not intend to engage in
any borrowing during the coming fiscal year.
The above investment limitations cannot be changed without shareholder approval.
The following limitations, however, can be changed by the Trustees without
shareholder approval. Shareholders will be notified before any material change
in these limitations becomes effective.
In order to pass-through to investors the tax-free income from the Fund for
purposes of Pennsylvania state personal income taxes, the Fund will invest in
securities for income earnings rather than trading for profit. The Fund will not
vary its investments, except to: (i) eliminate unsafe investments and
investments not consistent with the preservation of the capital or the tax
status of the investments of the Fund; (ii) honor redemption orders, meet
anticipated redemption requirements, and negate gains from discount purchases;
(iii) reinvest the earnings from securities in like securities; or (iv) defray
normal administrative expenses (the "Pennsylvania Investment Restrictions").
Legislation enacted in December 1993, eliminates the necessity of the
Pennsylvania Investment Restrictions. Consequently, the Trustees may vote to
eliminate the Pennsylvania Investment Restrictions.
7
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, and restricted securities determined by the Trustees
not to be liquid.
INTERMEDIATE MUNICIPAL 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 business affairs of the Trust and for
exercising all of the powers of the Trust 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. Pursuant to an investment advisory contract with the Trust,
investment decisions for the Fund are made by Federated Management, the Fund's
investment adviser (the "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 .50 of 1% of the Fund's average daily net assets. Under the
investment advisory contract, the Adviser may reimburse the Fund the amount,
limited to the amount of the advisory fee, by which the Fund's aggregate
annual operating expenses, including its investment advisory fee, but
excluding interest, taxes, brokerage commissions, insurance premiums,
expenses of registering and qualifying the Fund and its shares under federal
and state laws, expenses of withholding taxes, and extraordinary expenses,
exceed a certain percentage of its average daily net assets. This does not
include reimbursement to the Fund of any expenses incurred by shareholders
who use the transfer agent's sub-accounting facilities. The Adviser can
terminate this voluntary reimbursement of expenses at any time at its sole
discretion. The Adviser has also undertaken to reimburse the Fund for
operating expenses in excess of limitations established by certain states.
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, as amended. 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.
J. Scott Albrecht has been the Fund's portfolio manager since the Fund's
inception. Mr. Albrecht joined Federated Investors in 1989 and has been an
Assistant Vice President of the Adviser since 1992. From 1989 until 1991,
Mr. Albrecht acted as an investment analyst. Mr. Albrecht was a municipal
credit analyst at Mellon Bank, N.A. from 1985 until 1989. Mr. Albrecht is a
Chartered Financial Analyst and received his M.S. in Management from
Carnegie Mellon University.
Federated Management and other subsidiaries of Federated Investors serve as
investment advisers to a number of investment companies and private
accounts. Certain other subsidiaries
8
also provide administrative services to a number of investment companies.
With over $72 billion invested across more than 260 funds under management
and/or administration by its subsidiaries, as of December 31, 1994,
Federated Investors is one of the largest mutual fund investment managers in
the United States. With more than 1,750 employees, Federated continues to be
led by the management who founded the company in 1955. Federated funds are
presently at work in and through 4,000 financial institutions nationwide.
More than 100,000 investment professionals have selected Federated funds for
their clients.
Both the Trust and the Adviser have adopted strict codes of ethics governing the
conduct of all employees who manage the Fund and its portfolio securities. These
codes recognize that such persons owe a fiduciary duty to the Fund's
shareholders and must place the interests of shareholders ahead of the
employees' own interest. Among other things, the codes: require preclearance and
periodic reporting of personal securities transactions; prohibit personal
transactions in securities being purchased or sold, or being considered for
purchase or sale, by the Fund; prohibit purchasing securities in initial public
offerings; and prohibit taking profits on securities held for less than sixty
days. Violations of the codes are subject to review by the Trustees, and could
result in severe penalties.
DISTRIBUTION OF FUND SHARES
Federated Securities Corp. is the principal distributor for shares of the Fund.
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 (the "Federated Funds") as specified below:
<TABLE>
<CAPTION>
MAXIMUM FEE AVERAGE AGGREGATE DAILY NET ASSETS
--------------- ------------------------------------
<C> <S>
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. The Fund has entered into a Shareholder Services
Agreement with Federated Shareholder Services, a subsidiary of Federated
Investors, under which the Fund 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 for the maintenance of shareholder accounts ("shareholder
services"). Under the Shareholder Services Agreement, Federated Shareholder
Services will either perform shareholder
9
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 Fund and
Federated Shareholder Services.
OTHER PAYMENTS TO FINANCIAL INSTITUTIONS. In addition to periodic payments to
financial institutions for shareholder services, certain financial institutions
may be compensated by the Adviser or its affiliates for the continuing
investment of customers' assets in certain funds, including the Fund, advised by
those entities. These payments will be made directly by the distributor or
Adviser from their assets, and will not be made from the assets of the Fund or
by the assessment of a sales load on shares.
CUSTODIAN. State Street Bank and Trust Company ("State Street Bank"), Boston,
Massachusetts, is custodian for the securities and cash of the Fund.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT. Federated Services Company,
Boston, Massachusetts, is transfer agent for the shares of the Fund, and
dividend disbursing agent for the Fund.
INDEPENDENT PUBLIC ACCOUNTANTS. The independent public accountants for the Fund
are Arthur Andersen LLP, Pittsburgh, Pennsylvania.
NET ASSET VALUE
- --------------------------------------------------------------------------------
The Fund's net asset value per share fluctuates. It is determined by dividing
the sum of all securities and other assets, less liabilities, by the number of
shares outstanding.
INVESTING IN THE FUND
- --------------------------------------------------------------------------------
SHARE PURCHASES
Shares of the Fund are sold on days on which the New York Stock Exchange is open
for business. Shares may be purchased either by wire or mail. The Fund reserves
the right to reject any purchase request.
To purchase shares of the Fund, open an account by calling Federated Securities
Corp. Information needed to establish the account will be taken over the
telephone.
BY WIRE. To purchase shares of the Fund by Federal Reserve wire, call the Fund
before 1:00 p.m. (Eastern time) to place an order. The order is considered
received immediately. Payment by federal funds must be received before 3:00 p.m.
(Eastern time) that day. Federal funds should be wired as follows: Federated
Services Company, c/o State Street Bank and Trust Company, Boston,
Massachusetts; Attention: EDGEWIRE; For Credit to: Federated Pennsylvania
Intermediate Municipal Trust; Fund Number (this number can be found on the
Account Statement or by contacting the Fund); Group Number or Order Number;
Nominee or Institution Name; and ABA Number 011000028.
10
BY MAIL. To purchase shares of the Fund by mail, send a check made payable to
Federated Pennsylvania Intermediate Municipal Trust to: Federated Services
Company, P.O. Box 8600, Boston, Massachusetts 02266-8600. Orders by mail are
considered received when payment by check is converted into federal funds. This
is normally the next business day after the check is received.
SUBACCOUNTING SERVICES
Financial institutions are encouraged to open single master accounts. However,
certain financial institutions may wish to use the transfer agent's
subaccounting system to minimize their internal recordkeeping requirements. The
transfer agent may charge a fee based on the level of subaccounting services
rendered. Financial 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.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment in the Fund is $25,000, plus any non-affiliated
bank or broker's fee, if applicable. However, an account may be opened with a
smaller amount as long as the $25,000 minimum is reached within 90 days. An
institutional investor's minimum investment will be calculated by combining all
accounts it maintains with the Fund.
Individual accounts established through a bank or broker may be subject to a
different minimum investment requirement.
WHAT SHARES COST
Shares of the Fund are sold at their net asset value next determined after an
order is received. There is no sales load 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 as of the close of trading (normally 4:00
p.m., Eastern time) on the New York Stock Exchange, Monday through Friday,
except on: (i) days on which there are not sufficient changes in the value of
the Fund's portfolio securities that its net asset value might be materially
affected; (ii) days during which no shares are tendered for redemption and no
orders to purchase shares are received; or (iii) the following holidays: New
Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day, and Christmas Day.
EXCHANGING SECURITIES FOR FUND SHARES
Investors may exchange certain municipal securities or a combination of
securities and cash for Fund shares. The securities and cash must have a market
value of at least $25,000. The Fund reserves the right to determine the
acceptability of the securities to be exchanged. Securities accepted by the Fund
are valued in the same manner as the Fund values its assets. Shareholders
wishing to exchange securities should first contact Federated Securities Corp.
11
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
in writing.
Detailed confirmations of each purchase and redemption are sent to each
shareholder. Monthly confirmations are sent to report dividends paid during that
month.
DIVIDENDS AND DISTRIBUTIONS
Dividends are declared daily and paid monthly to all shareholders invested in
the Fund on the record date. Dividends and distributions are automatically
reinvested in additional shares of the Fund on payment dates at the ex-dividend
date net asset value, unless shareholders request cash payments on the new
account form or by writing to Federated Services Company. All shareholders on
the record date are entitled to the dividend.
CAPITAL GAINS
Distributions of net realized long term capital gains realized by the Fund, if
any, will be made at least once every twelve months.
REDEEMING 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.
BY TELEPHONE. Shareholders may redeem their shares by telephoning the Fund
before 4:00 p.m. (Eastern time). All proceeds will normally be wire transferred
the following business day, but in no event more than seven days, to the
shareholder's account at a domestic commercial bank that is a member of the
Federal Reserve System. If at any time the 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 redemption
requests must first be completed. It is recommended that investors request this
privilege at the time of their initial application. If not completed at the time
of initial application, authorization forms and information on this service can
be obtained through Federated Securities Corp. Telephone redemption instructions
may be recorded. If reasonable procedures are not followed by the Fund, it may
be liable for losses due to unauthorized or fraudulent telephone instructions.
In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If such a case should occur, another
method of redemption, such as "By Mail," should be considered.
BY MAIL. Shareholders may redeem shares by sending a written request to
Federated Services Company, P.O. Box 8600, Boston, Massachusetts 02266-8600. The
written request should include the shareholder's name, the Fund name the account
number, and the share or dollar amount requested. If
12
share certificates have been issued, they must be properly endorsed and should
be sent by registered or certified mail to Federated Services Company, 500
Victory Road - 2nd Floor, Quincy, Massachusetts 02171 with the written request.
SIGNATURES. Shareholders requesting a redemption of $50,000 or more, a
redemption of any amount to be sent to an address other than that on record with
the 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, 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, 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.
Normally, a check for the proceeds is mailed to the shareholder within one
business day, but in no event more than seven days, after receipt of a proper
written redemption request provided the transfer agent has received payment for
shares from the shareholder.
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 of record
if the account balance falls below the required minimum value of $25,000 due to
shareholder redemptions. 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 each portfolio
in the Trust have equal voting rights except that in matters affecting only a
particular fund, only shareholders of that fund are entitled to vote. As of July
3, 1995, Univest & Company, Souderton, Pennsylvania, owned 31.30% of the voting
securities of the Fund and, therefore, may for certain purposes, be deemed to
control the Fund and be able to affect the outcome of certain matters presented
for a vote of shareholders.
13
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 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 all series in the Trust entitled to vote.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for acts or obligations of the Trust. To
protect shareholders of the Fund, the Trust has filed legal documents with
Massachusetts that expressly disclaim the liability of 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 of the Fund 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 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 of 1986, as amended (the "Code"), applicable to
regulated investment companies and to receive the special tax treatment afforded
to such companies. The Fund will be treated as a single, separate entity for
federal income tax purposes so that income (including capital gains) and losses
realized by the Trust's other portfolios will not be combined for tax purposes
with those realized by the Fund.
Shareholders are not required to pay federal regular income tax on any dividends
received from the Fund that represent net interest on tax-exempt municipal
bonds. However, dividends representing net interest income earned on some
municipal bonds may be included in calculating the federal individual
alternative minimum tax or the federal alternative minimum tax for corporations.
The alternative minimum tax, up to 28% of alternative minimum taxable income for
individuals and 20% for corporations, applies when it exceeds the regular tax
for the taxable year. Alternative minimum taxable income is equal to the regular
taxable income of the taxpayer increased by certain "tax preference" items not
included in regular taxable income and reduced by only a portion of the
deductions allowed in the calculation of the regular tax.
14
Interest on certain "private activity" bonds issued after August 7, 1986, is
treated as a tax preference item for both individuals and corporations. Unlike
traditional governmental purpose municipal bonds, which finance roads, schools,
libraries, prisons, and other public facilities, private activity bonds provide
benefits to private parties. The Fund may purchase all types of municipal bonds,
including private activity bonds. Thus, should it purchase any such bonds, a
portion of the Fund's dividends may be treated as a tax preference item.
In addition, in the case of a corporate shareholder, dividends of the Fund which
represent interest on municipal bonds will become subject to the 20% corporate
alternative minimum tax because the dividends are included in a corporation's
"adjusted current earnings." The corporate alternative minimum tax treats 75% of
the excess of a taxpayer's pre-tax "adjusted current earnings" over the
taxpayer's alternative minimum taxable income as a tax preference item.
"Adjusted current earnings" is based upon the concept of a corporation's
"earnings and profits." Since "earnings and profits" generally includes the full
amount of any Fund dividend, and alternative minimum taxable income does not
include the portion of the Fund's dividend attributable to municipal bonds which
are not private activity bonds, the difference will be included in the
calculation of the corporation's alternative minimum tax.
Dividends of the Fund representing net interest income earned on some temporary
investments and any realized net short-term gains are taxed as ordinary income.
These tax consequences apply whether dividends are received in cash or as
additional shares. Information on the tax status of dividends and distributions
is provided annually.
PENNSYLVANIA TAXES
The Fund has received a ruling from the Commonwealth of Pennsylvania Department
of Revenue that interest or gain derived by the Fund from obligations free from
state taxation in Pennsylvania is not taxable on pass-through to Fund
shareholders for purposes of Pennsylvania personal income taxes. This is based
upon the existence of the Pennsylvania Investment Restrictions (see "Investment
Limitations"). However, legislation enacted in December 1993, eliminates the
necessity of the Pennsylvania Investment Restrictions. That legislation also
generally repeals the Pennsylvania personal income tax exemption for gains from
the sale of tax-exempt obligations, including the exemption for distributions
from the Fund to the extent they are derived from gains from tax-exempt
obligations.
In the opinion of Houston, Houston & Donnelly, counsel to the Trust:
- the Fund would not be liable to pay Pennsylvania corporate or personal
property taxes; and
- Fund shares are exempt from personal property taxes imposed by counties in
Pennsylvania to the extent that the Fund invests in obligations that are
exempt from such taxes.
OTHER STATE AND LOCAL TAXES
Income from the Fund is not necessarily free from state income taxes in states
other than Pennsylvania or from personal property taxes. State laws differ on
this issue, and shareholders are
15
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, yield, and
tax-equivalent yield.
Total return represents the change, over a specific period of time, in the value
of an investment in the Fund after reinvesting all income and capital gains
distributions. It is calculated by dividing that change by the initial
investment and is expressed as a percentage.
The yield of the Fund is calculated by dividing the net investment income per
share (as defined by the Securities and Exchange Commission) earned by the Fund
over a thirty-day period by the maximum offering price per share of the Fund on
the last day of the period. This number is then annualized using semi-annual
compounding. The tax-equivalent yield of the Fund is calculated similarly to the
yield, but is adjusted to reflect the taxable yield that the Fund would have had
to earn to equal its actual yield, assuming a specific tax rate. The yield and
the tax-equivalent yield do not necessarily reflect income actually earned by
the Fund and, therefore, may not correlate to the dividends or other
distributions paid to shareholders.
From time to time, advertisements for the Fund may refer to ratings, rankings,
and other information in certain financial publications and/or compare the
Fund's performance to certain indices.
16
FEDERATED PENNSYLVANIA INTERMEDIATE MUNICIPAL TRUST
(FORMERLY, PENNSYLVANIA INTERMEDIATE MUNICIPAL TRUST)
PORTFOLIO OF INVESTMENTS
MAY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING:* VALUE
- --------- -------------------------------------------------- ---------- ----------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--4.2%
- -------------------------------------------------------------
$300,000 Government Development Bank of Puerto Rico, Weekly
VRDNs, (Credit Suisse and Sumitomo Bank Ltd. LOCs) VMIG1 $ 300,000
--------------------------------------------------
50,000 Government Development Bank of Puerto Rico, Weekly
VRDNs, (Credit Suisse and Sumitomo Bank Ltd. LOCs) VMIG1 50,000
-------------------------------------------------- ----------
TOTAL SHORT-TERM MUNICIPAL SECURITIES AT
AMORTIZED COST 350,000
-------------------------------------------------- ----------
INTERMEDIATE-TERM MUNICIPAL SECURITIES--94.2%
- -------------------------------------------------------------
PENNSYLVANIA--92.1%
--------------------------------------------------
100,000 Allegheny County, PA, 5.40% UT GO Bonds, (Series
C-43)/ (MBIA Insured), 9/15/2005 AAA 102,338
--------------------------------------------------
100,000 Allegheny County, PA, 6.00% UT GO Bonds, (Series
C-39)/ (AMBAC Insured)/(Original Issue Yield:
6.098%), 5/1/2012 Aaa 102,560
--------------------------------------------------
350,000 Allegheny County, PA, Hospital Development
Authority, 5.45% Revenue Bonds, (Allegheny General
Hospital)/(MBIA Insured), 9/1/2004 AAA 358,652
--------------------------------------------------
600,000 Allegheny County, PA, Hospital Development
Authority, (South Hills Health System), 5.90% -
6.00%, 5/1/2003 - 5/1/2004 A 615,456
--------------------------------------------------
100,000 Altoona Area School District, PA, 5.35% GO Bonds
(Series 1994), (FGIC Insured) 1/15/2004 AAA 100,956
--------------------------------------------------
100,000 Altoona City Authority Water, Blair County, PA,
5.60% Revenue Bonds, (Series A)/(FGIC Insured),
11/1/2004 AAA 104,840
--------------------------------------------------
150,000 Berks County Municipal Authority Hospital, PA,
5.40% Revenue Bonds, (Series B-1994)/(Reading
Hospital and Medical Center)/(MBIA Insured),
10/1/2004 AAA 153,185
--------------------------------------------------
100,000 Berks County Municipal Authority Hospital, PA,
5.60% Revenue Bonds, (Reading Hospital and Medical
Center)/(MBIA Insured) , 10/1/2006 AAA 102,609
--------------------------------------------------
150,000 Cambria County, PA, 5.40% GO Bonds, (Series
1994)/(FGIC Insured), 8/15/2004 AAA 154,482
--------------------------------------------------
</TABLE>
17
FEDERATED PENNSYLVANIA INTERMEDIATE MUNICIPAL TRUST
- ---------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING:* VALUE
- --------- -------------------------------------------------- ---------- ----------
<C> <S> <C> <C>
INTERMEDIATE-TERM MUNICIPAL SECURITIES--CONTINUED
- -------------------------------------------------------------
PENNSYLVANIA--CONTINUED
--------------------------------------------------
$100,000 Central Bucks School District, Bucks County, PA,
5.40% GO Bonds, (Series 1994)/(FGIC Insured),
5/15/2003 AAA $ 102,063
--------------------------------------------------
100,000 Central Bucks School District, Bucks County, PA,
6.00% GO Bonds, (Series 1994)/(FGIC Insured),
11/15/2003 AAA 107,968
--------------------------------------------------
150,000 Dauphin County, PA, General Authority, 6.00%
Revenue Bonds, (Harrisburg International
Airport)/(MBIA Insured), 6/1/2002 AAA 156,283
--------------------------------------------------
150,000 Dauphin County, PA, General Authority, 6.10%
Revenue Bonds, (Harrisburg International
Airport)/(MBIA Insured), 6/1/2003 AAA 156,330
--------------------------------------------------
125,000 Eastern York School District, PA, 5.55% GO Bonds,
(MBIA Insured), 6/1/2003 AAA 129,487
--------------------------------------------------
100,000 Elizabethtown Area School District, Lancaster
County, PA, 5.45% GO Bonds, (Series 1994),
2/15/2004 A 101,903
--------------------------------------------------
125,000 Franklin Park Boro, PA, 5.50% GO Bonds, 11/1/2004 AAA 129,738
--------------------------------------------------
500,000 Indiana County Hospital Authority, PA, 6.20%
Revenue Bonds, (Indiana County Hospital)/(Series
B)/(Connie Lee Insured), 7/1/2006 AAA 526,920
--------------------------------------------------
325,000 Lower Dauphin, PA, School District, 5.75%, UT GO
Bonds, (AMBAC Insured), 9/15/2002 AAA 342,014
--------------------------------------------------
180,000 North Penn Water Authority, PA, 5.80% Revenue
Bonds, (FGIC Insured), 11/1/2005 AAA 188,525
--------------------------------------------------
110,000 North Penn Water Authority, PA, 6.10% Revenue
Bonds, (FGIC Insured), 11/1/2003 AAA 118,459
--------------------------------------------------
500,000 Northeastern, PA Hospital & Education Authority,
6.10% Revenue Bonds, (Series 1994A)/(Wyoming
Valley Health Care)/ (AMBAC Insured), 1/1/2003 AAA 533,035
--------------------------------------------------
150,000 Penn-Trafford School District, PA, 5.55% GO Bonds,
(Series 1994)/(MBIA Insured), 5/1/2006 AAA 154,997
--------------------------------------------------
100,000 Pennsylvania HFA, 5.30%, SFM Revenue Bonds,
(Series 38), 4/1/2003 AA 99,297
--------------------------------------------------
</TABLE>
18
FEDERATED PENNSYLVANIA INTERMEDIATE MUNICIPAL TRUST
- ---------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING:* VALUE
- --------- -------------------------------------------------- ---------- ----------
<C> <S> <C> <C>
INTERMEDIATE-TERM MUNICIPAL SECURITIES--CONTINUED
- -------------------------------------------------------------
PENNSYLVANIA--CONTINUED
--------------------------------------------------
$100,000 Pennsylvania HFA, 5.90%, SFM Revenue Bonds,
10/1/2004 AA $ 103,693
--------------------------------------------------
100,000 Pennsylvania HFA, 5.90%, SFM Revenue Bonds,
10/1/2005 AA 103,511
--------------------------------------------------
345,000 Pennsylvania HFA, 6.35%, SFM Revenue Bonds,
(Series 43), 4/1/2001 AA 358,734
--------------------------------------------------
145,000 Pennsylvania State, 5.30% UT GO Bonds, 5/1/2004 AA- 148,302
--------------------------------------------------
100,000 Pennsylvania State, 6.30% UT GO Bonds, 11/1/2002 AA- 109,328
--------------------------------------------------
100,000 Pennsylvania State, 6.50% UT GO Bonds, (Series A),
11/15/2010 AA- 107,555
--------------------------------------------------
200,000 Pennsylvania Higher Education Facilities
Authority, 5.50% (State System of Higher
Education)/(Series L)/(AMBAC Insured),6/15/2005 AAA 205,876
--------------------------------------------------
125,000 Pennsylvania Higher Education Facilities
Authority, 6.00% Health Services Revenue Bonds,
(University of Pennsylvania)/ (Series A- 1994),
1/1/2003 AA- 131,995
--------------------------------------------------
125,000 Pennsylvania State Turnpike Commission, 5.45%
Revenue Bonds, (Series P), 12/1/2002 A1 129,034
--------------------------------------------------
100,000 Pennsylvania State University, 5.55% Revenue
Bonds, (AMBAC Insured), 8/15/2006 AAA 102,599
--------------------------------------------------
125,000 Perkiomen Valley School District, Montgomery
County, PA, 5.50% GO Bonds, (Series 1994),
2/1/2004 A1 128,035
--------------------------------------------------
300,000 Philadelphia, PA, Gas Works, 5.50% Revenue Bonds,
(Series 14)/(FSA Insured), 7/1/2004 AAA 308,073
--------------------------------------------------
150,000 Philadelphia, PA, Water and Wastewater, 5.50%
Revenue Bonds, (FGIC Insured), 6/15/2003 AAA 155,917
--------------------------------------------------
100,000 Philadelphia, PA, Hospital and Higher Education
Facilities Authority, 5.25% Revenue Bonds, (Wills
Eye Hospital)/ (Series 1994)/(Original Issue
Yield: 5.40%), 7/1/2003 A 98,062
--------------------------------------------------
100,000 Richland School District, Cambria County, PA,
5.30% GO Bonds, (Series 1994)/(MBIA Insured),
11/1/2003 AAA 102,866
--------------------------------------------------
125,000 Solanco School District, Lancaster County, PA,
5.60% UT GO Bonds, (Series 1994)/(FGIC Insured),
2/15/2004 AAA 129,427
--------------------------------------------------
</TABLE>
19
FEDERATED PENNSYLVANIA INTERMEDIATE MUNICIPAL TRUST
- ---------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING:* VALUE
- --------- -------------------------------------------------- ---------- ----------
<C> <S> <C> <C>
INTERMEDIATE-TERM MUNICIPAL SECURITIES--CONTINUED
- -------------------------------------------------------------
PENNSYLVANIA--CONTINUED
--------------------------------------------------
$100,000 Spring Ford School District, PA, 5.80% UT GO
Refunding Bonds, (FGIC Insured), 8/1/2005 AAA $ 103,136
--------------------------------------------------
200,000 Swarthmore Borough Authority, PA, 6.00% Revenue
Bonds, 9/15/2006 AA 210,746
--------------------------------------------------
185,000 Warren County School District, PA, 5.85% UT GO
Bonds (FGIC Insured), 9/1/2001 AAA 193,094
--------------------------------------------------
110,000 Warren County School District, PA, 6.10% UT GO
Bonds (FGIC Insured), 9/1/2003 AAA 114,998
-------------------------------------------------- ----------
Total 7,687,078
-------------------------------------------------- ----------
VIRGIN ISLANDS--2.1%
--------------------------------------------------
170,000 Virgin Islands HFA, 5.80%, SFM Revenue Refunding
Bond, (GNMA Collateralized)/(Series A), 3/1/2005 AAA 173,407
-------------------------------------------------- ----------
TOTAL INTERMEDIATE-TERM MUNICIPAL SECURITIES
(IDENTIFIED COST 7,575,031) 7,860,485
-------------------------------------------------- ----------
TOTAL INVESTMENTS (IDENTIFIED COST
$7,925,031)(a) $8,210,485
-------------------------------------------------- ----------
----------
<FN>
* Please refer to the Appendix of the Statement of Additional Information for
an explanation of the credit ratings. Current credit ratings are unaudited.
(a) The cost of investments for federal tax purposes amounts to $7,925,031. The
net unrealized appreciation on a federal tax basis amounts to $285,454, and
is comprised of $289,681 appreciation and $4,227 depreciation at May 31,
1995.
Note: The categories of investments are shown as a percentage of net assets
($8,344,284) at May 31, 1995.
</TABLE>
20
FEDERATED PENNSYLVANIA INTERMEDIATE MUNICIPAL TRUST
- ---------------------------------------------------------
<TABLE>
<S> <C>
The following abbreviations are used in this portfolio:
AMBAC --American Municipal Bond Assurance Corporation
FGIC --Financial Guaranty Insurance Company
FSA --Financial Security Assurance
GO --General Obligation
HFA --Housing Finance Authority/Agency
LOC(s) --Letter(s) of Credit
MBIA --Municipal Bond Investors Assurance
SFM --Single Family Mortgage
UT --Unlimited Tax
VRDNs --Variable Rate Demand Notes
</TABLE>
(See Notes which are an integral part of the Financial Statements)
21
FEDERATED PENNSYLVANIA INTERMEDIATE MUNICIPAL TRUST
(FORMERLY, PENNSYLVANIA INTERMEDIATE MUNICIPAL TRUST)
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- --------------------------------------------------------------------
Investments in securities, at value (identified and tax
cost $7,925,031) $8,210,485
- --------------------------------------------------------------------
Cash 47,063
- --------------------------------------------------------------------
Income Receivable 124,945
- --------------------------------------------------------------------
Receivable for shares sold 143
- --------------------------------------------------------------------
Deferred expenses 10,007
- -------------------------------------------------------------------- ----------
Total assets 8,392,643
- --------------------------------------------------------------------
LIABILITIES:
- --------------------------------------------------------------------
Dividends payable $27,429
- -----------------------------------------------------------
Payable for shares redeemed 1,135
- -----------------------------------------------------------
Accrued expenses 19,795
- ----------------------------------------------------------- -------
Total liabilities 48,359
- -------------------------------------------------------------------- ----------
NET ASSETS for 829,764 shares outstanding $8,344,284
- -------------------------------------------------------------------- ----------
----------
NET ASSETS CONSIST OF:
- --------------------------------------------------------------------
Paid-in capital $8,220,977
- --------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments 285,454
- --------------------------------------------------------------------
Accumulated net realized gain (loss) on investments (162,147)
- -------------------------------------------------------------------- ----------
Total Net Assets $8,344,284
- -------------------------------------------------------------------- ----------
----------
NET ASSET VALUE, Offering Price, and Redemption Proceeds
Per Share: ($8,344,284 DIVIDED BY 829,764 shares
outstanding) $ 10.06
- -------------------------------------------------------------------- ----------
----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
22
FEDERATED PENNSYLVANIA INTERMEDIATE MUNICIPAL TRUST
(FORMERLY, PENNSYLVANIA INTERMEDIATE MUNICIPAL TRUST)
STATEMENT OF OPERATIONS
YEAR ENDED MAY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ------------------------------------------------------------------------------------
Interest $ 363,829
- ------------------------------------------------------------------------------------
EXPENSES:
- ------------------------------------------------------------------------------------
Investment advisory fee $ 32,714
- -------------------------------------------------------------------------
Administrative personnel and services fees 125,000
- -------------------------------------------------------------------------
Custodian and portfolio accounting fees 63,301
- -------------------------------------------------------------------------
Shareholder services fee 4,504
- -------------------------------------------------------------------------
Transfer agent and dividend disbursing agent fees and expenses 15,710
- -------------------------------------------------------------------------
Share registration costs 7,614
- -------------------------------------------------------------------------
Directors'/Trustees' fees 3,108
- -------------------------------------------------------------------------
Auditing fees 11,990
- -------------------------------------------------------------------------
Legal fees 602
- -------------------------------------------------------------------------
Printing and postage 12,779
- -------------------------------------------------------------------------
Insurance premiums 4,196
- -------------------------------------------------------------------------
Taxes 68
- -------------------------------------------------------------------------
Miscellaneous 6,164
- ------------------------------------------------------------------------- ---------
Total expenses 287,750
- -------------------------------------------------------------------------
Deduct--
- --------------------------------------------------------------
Waiver of investment advisory fees $ 32,714
- --------------------------------------------------------------
Reimbursement of other operating expenses 225,621 258,335
- -------------------------------------------------------------- --------- ---------
Net expenses 29,415
- ------------------------------------------------------------------------------------ ---------
Net investment income 334,414
- ------------------------------------------------------------------------------------ ---------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- ------------------------------------------------------------------------------------
Net realized gain (loss) on investments (124,072)
- ------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on
investments 334,985
- ------------------------------------------------------------------------------------ ---------
Net realized and unrealized gain (loss) on investments 210,913
- ------------------------------------------------------------------------------------ ---------
Change in net assets resulting from operations $ 545,327
- ------------------------------------------------------------------------------------ ---------
---------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
23
FEDERATED PENNSYLVANIA INTERMEDIATE MUNICIPAL TRUST
(FORMERLY, PENNSYLVANIA INTERMEDIATE MUNICIPAL TRUST)
STATEMENT OF CHANGES IN NET ASSETS
- ---------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
--------------------------
1995 1994*
------------ -----------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ---------------------------------------------------------------------------
OPERATIONS--
- ---------------------------------------------------------------------------
Net investment income $ 334,414 $ 35,828
- ---------------------------------------------------------------------------
Net realized gain (loss) on investments ($74,731 net loss and $0,
respectively, as computed for federal tax purposes) (124,072) (38,075)
- ---------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) of investments 334,985 (49,531)
- --------------------------------------------------------------------------- ------------ -----------
Change in net assets resulting from operations 545,327 (51,778)
- --------------------------------------------------------------------------- ------------ -----------
DISTRIBUTIONS TO SHAREHOLDERS--
- ---------------------------------------------------------------------------
Distributions from net investment income (334,414) (35,828)
- --------------------------------------------------------------------------- ------------ -----------
SHARE TRANSACTIONS--
- ---------------------------------------------------------------------------
Proceeds from sale of Shares 15,556,453 6,080,600
- ---------------------------------------------------------------------------
Net asset value of Shares issued to shareholders in payment of
distributions declared 34,262 1,841
- ---------------------------------------------------------------------------
Cost of Shares redeemed (10,337,938) (3,114,241)
- --------------------------------------------------------------------------- ------------ -----------
Change in net assets from Share transactions 5,252,777 2,968,200
- --------------------------------------------------------------------------- ------------ -----------
Change in net assets 5,463,690 2,880,594
- ---------------------------------------------------------------------------
NET ASSETS:
- ---------------------------------------------------------------------------
Beginning of period 2,880,594 --
- --------------------------------------------------------------------------- ------------ -----------
End of period $ 8,344,284 $ 2,880,594
- --------------------------------------------------------------------------- ------------ -----------
------------ -----------
<FN>
* For the period from December 5, 1993 (date of initial public investment) to
May 31, 1994.
</TABLE>
(See Notes which are an integral part of the Financial Statements)
24
FEDERATED PENNSYLVANIA INTERMEDIATE MUNICIPAL TRUST
(FORMERLY, PENNSYLVANIA INTERMEDIATE MUNICIPAL TRUST)
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1995
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Intermediate Municipal Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "Act"), as a open-end management investment
company. The Trust consists of two non-diversified portfolios and one
diversified portfolio. The financial statements included herein present only
those of Federated Pennsylvania Intermediate Municipal Trust (the "Fund"), a
non-diversified portfolio. The financial statements of the other portfolios are
presented separately. The assets of each portfolio are segregated and a
shareholder's interest is limited to the portfolio in which shares are held.
Effective December 19, 1994, the Board of Trustees (the "Trustees") changed the
name of the Fund from Pennsylvania Intermediate Municipal Trust to Federated
Pennsylvania Intermediate Municipal Trust.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--Municipal bonds are valued by an independent pricing
service, taking into consideration yield, liquidity, risk, credit quality,
coupon, maturity, type of issue, and any other factors or market data it
deems relevant in determining valuations for normal institutional size
trading units of debt securities. The independent pricing service does not
rely exclusively on quoted prices. Short-term securities with remaining
maturities of sixty days or less at the time of purchase may be valued at
amortized cost, which approximates fair market value.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized
as required by the Internal Revenue Code, as amended (the "Code").
Distributions to shareholders are recorded on the ex-dividend date.
FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its tax-exempt income.
Accordingly, no provisions for federal tax are necessary. At May 31, 1995,
the Fund for federal tax purposes, had a capital loss carryforward of
$74,731 which will reduce the Fund's taxable income arising from future net
realized gain on investments, if any, to the extent permitted by the Code,
and thus will reduce the amount of distributions to shareholders which would
otherwise be necessary to relieve the Fund of any liability for federal tax.
Pursuant to the Code, such capital loss carryforward will expire in 2003
($74,731).
25
FEDERATED PENNSYLVANIA INTERMEDIATE MUNICIPAL TRUST
(FORMERLY, PENNSYLVANIA INTERMEDIATE MUNICIPAL TRUST)
- --------------------------------------------------------------------------------
Additionally, net capital losses of $87,417 attributable to security
transactions incurred after October 31, 1994, are treated as arising on June
1, 1995, the first day of the Fund's next taxable year.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering its shares have been deferred and are being amortized
using the straight-line method not to exceed a period of five years from the
Fund's commencement date.
CONCENTRATION OF RISK--Since the Fund invests a substantial portion of its
assets in issuers located in one state, it will be more susceptible to
factors adversely affecting issuers in that state than would be a comparable
tax-exempt mutual fund that invests nationally. In order to reduce the
credit risk associated with such factors, at May 31, 1995, 60.9% of the
securities in the portfolio of investments are backed by letters of credit
or bond insurance of various financial institutions and financial guaranty
assurance agencies. The value of investments insured by or supported
(backed) by a letter of credit for any one institution or agency did not
exceed 15.7% of total investments.
OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value).
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
--------------------
1995 1994*
- ---------------------------------------------------------- ---------- --------
<S> <C> <C>
Shares sold 1,596,301 603,068
- ----------------------------------------------------------
Shares issued to shareholders in payment of distributions
declared 3,517 183
- ----------------------------------------------------------
Shares redeemed (1,062,458) (310,847)
- ---------------------------------------------------------- ---------- --------
Net change resulting from Fund share transactions 537,360 292,404
- ---------------------------------------------------------- ---------- --------
---------- --------
<FN>
* For the period from December 5, 1993 (date of initial public investment) to
May 31, 1994.
</TABLE>
26
FEDERATED PENNSYLVANIA INTERMEDIATE MUNICIPAL TRUST
(FORMERLY, PENNSYLVANIA INTERMEDIATE MUNICIPAL TRUST)
- --------------------------------------------------------------------------------
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Management, the Fund's investment adviser
(the "Adviser"), receives for its services an annual investment advisory fee
equal to .50 of 1% of the Fund's average daily net assets. The Adviser waived a
portion of its fee to comply with certain state expense limitations. The Adviser
may voluntarily choose to waive a portion of its fee and reimburse certain
operating expenses of the Fund. The Adviser can modify or terminate this
voluntary waiver and reimbursement at any time at its sole discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS"), under the
Administrative Services Agreement, provides the Fund with administrative
personnel and services. The FAS fee is based on the level of average aggregate
daily net assets of all funds advised by subsidiaries of Federated Investors for
the period. The administrative fee received during the period of the
Administrative Services Agreement shall be at least $125,000 per portfolio and
$30,000 per each additional class of shares.
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement
with Federated Shareholders Services ("FSS"), the Fund will pay FSS up to .25 of
1% of average daily net assets of the Fund for the period. The fee is to obtain
certain services for shareholders and to maintain shareholder accounts.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated
Services Company ("FServ") serves as transfer and dividend disbursing agent for
the Fund. The fee is based on the size, type, and number of accounts and
transactions made by shareholders.
ORGANIZATIONAL EXPENSES--Organizational expenses ($24,690) and start-up
administrative service expenses ($31,506) were borne initially by the Adviser.
The Fund has agreed to reimburse the Adviser for the organizational expenses and
start-up administrative expenses during the five year period following November
15, 1993 (date the Fund first became effective). For the year ended May 31,
1995, the Fund paid $2,606 and $3,326, respectively, pursuant to this agreement.
INTERFUND TRANSACTIONS--During the year ended May 31, 1995, the Fund engaged in
purchase and sale transactions with funds that have a common investment adviser
(or affiliated investment advisers), common Directors/Trustees, and/or common
Officers. These transactions were made at current market value pursuant to Rule
17a-7 under the Act amounting to $7,682,312 and $7,450,000, respectively.
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
27
FEDERATED PENNSYLVANIA INTERMEDIATE MUNICIPAL TRUST
(FORMERLY, PENNSYLVANIA INTERMEDIATE MUNICIPAL TRUST)
- --------------------------------------------------------------------------------
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
year ended May 31, 1995, were as follows:
<TABLE>
<S> <C>
PURCHASES $ 7,526,341
- -------------------------------------------------- ------------
SALES $ 2,669,038
- -------------------------------------------------- ------------
</TABLE>
28
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- ---------------------------------------------------------
To the Shareholders and Board of Trustees of
INTERMEDIATE MUNICIPAL TRUST
(Federated Pennsylvania Intermediate Municipal Trust)
(formerly, Pennsylvania Intermediate Municipal Trust):
We have audited the accompanying statement of assets and liabilities of
Federated Pennsylvania Intermediate Municipal Trust (an investment portfolio of
Intermediate Municipal Trust, a Massachusetts business trust), including the
schedule of portfolio of investments, as of May 31, 1995, and the related
statement of operations for the year then ended, the statement of changes in net
assets and financial highlights (see page 2 of the prospectus) for the periods
presented. These financial statements and financial highlights are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of the securities owned as of
May 31, 1995, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Federated Pennsylvania Intermediate Municipal Trust, an investment portfolio of
Intermediate Municipal Trust as of May 31, 1995, the results of its operations
for the year then ended, the changes in its net assets and the financial
highlights for the periods presented, in conformity with generally accepted
accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
June 30, 1995
29
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Fund
Federated Pennsylvania Intermediate
Municipal Trust 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 Trust Company P.O. Box 8600
Boston, Massachusetts 02266-8600
- -------------------------------------------------------------------------------------------
Transfer Agent and Dividend Disbursing Agent
Federated Services Company P.O. Box 8600
Boston, Massachusetts 02266-8600
- -------------------------------------------------------------------------------------------
Independent Public Accountants
Arthur Andersen LLP 2100 One PPG Place
Pittsburgh, Pennsylvania 15222
- -------------------------------------------------------------------------------------------
</TABLE>
30
- --------------------------------------------------------------------------------
FEDERATED PENNSYLVANIA
INTERMEDIATE MUNICIPAL
TRUST
PROSPECTUS
A Non-Diversified Portfolio of Federated
Intermediate Municipal Trust,
An Open-End, Management
Investment Company
Prospectus dated July 31, 1995
[LOGO] FEDERATED SECURITIES CORP.
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
CUSIP 458810306
3081603A (7/95) [RECYCLED PAPER LOGO]
Federated Pennsylvania Intermediate Municipal Trust
(A Portfolio of Intermediate Municipal Trust)
Statement of Additional Information
This Statement of Additional Information should be read with the
prospectus of Federated Pennsylvania Intermediate Municipal Trust
(formerly, "Pennsylvania Intermediate Municipal Trust") (the
"Fund") dated July 31, 1995. This Statement is not a prospectus
itself. To receive a copy of the prospectus, write or call the
Fund.
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
Statement dated July 31, 1995
Federated Securities Corp.
Distributor
A subsidiary of
Federated Investors
General Information About the
Fund 1
Investment Objective and Policies 1
Acceptable Investments 1
When-Issued and Delayed
Delivery Transactions 2
Temporary Investments 2
Portfolio Turnover 3
Investment Limitations 3
Investment Risks 4
Management of Intermediate
Municipal Trust 5
Officers and Trustees 5
Fund Ownership 9
Trustees' Compensation 10
Trustee Liability 10
Investment Advisory Services 11
Adviser to the Fund 11
Advisory Fees 11
Administrative Services 11
Shareholder Services Agreement 11
Transfer Agent and Dividend
Disbursing Agent 12
Brokerage Transactions 12
Conversion to Federal Funds 12
Determining Net Asset Value 12
Valuing Municipal Bonds 12
Use of Amortized Cost 13
Redeeming Shares 13
Redemption in Kind 13
Tax Status 13
The Fund's Tax Status 13
Shareholders' Tax Status 13
Total Return 14
Yield 14
Tax-Equivalent Yield 14
Tax-Equivalency Table 14
Performance Comparisons 15
About Federated Investors 16
Mutual Fund Market 16
Appendix 18
General Information About the Fund
The Fund is a portfolio in Intermediate Municipal Trust (the "Trust").
The Trust was established as a Massachusetts business trust under a
Declaration of Trust dated May 31, 1985.
Investment Objective and Policies
The Fund's investment objective is to provide current income which is
exempt from federal regular income tax and the personal income taxes
imposed by the Commonwealth of Pennsylvania. The investment objective
cannot be changed without approval of shareholders.
Acceptable Investments
The Fund invests primarily in a portfolio of municipal securities which
are exempt from federal regular income tax and Pennsylvania state
personal income taxes. These securities include those issued by or on
behalf of the Commonwealth of Pennsylvania and Pennsylvania
municipalities, and those issued by states, territories and possessions
of the United States which are exempt from federal regular income tax
and the Pennsylvania state personal income taxes.
Characteristics
The Pennsylvania municipal securities in which the Fund invests
have the characteristics set forth in the prospectus.
A Pennsylvania municipal security will be determined by the Fund's
adviser to meet the quality standards established by the Trust's
Board of Trustees (the "Trustees") if it is of comparable quality
to municipal securities within the Fund's rating requirements. The
Trustees consider the creditworthiness of the issuer of a
municipal security, the issuer of a participation interest if the
Fund has the right to demand payment from the issuer of the
interest, or the guarantor of payment by either of those issuers.
The Fund is not required to sell a municipal security if the
security's rating is reduced below the required minimum subsequent
to its purchase by the Fund. The investment adviser considers this
event, however, in its determination of whether the Fund should
continue to hold the security in its portfolio. If Moody's
Investors Service, Inc., Standard & Poor's Ratings Group or Fitch
Investors Services, Inc. ratings change because of changes in
those organizations or in their rating systems, the Fund will try
to use comparable ratings as standards in accordance with the
investment policies described in the Fund's prospectus.
Types of Acceptable Investments
Examples of Pennsylvania municipal securities are:
- municipal notes and municipal commercial paper;
- serial bonds sold with differing maturity dates;
- tax anticipation notes sold to finance working capital needs of
municipalities;
- bond anticipation notes sold prior to the issuance of longer-
term bonds;
- pre-refunded municipal bonds; and
- general obligation bonds secured by a municipality pledge of
taxation.
Participation Interests
The financial institutions from which the Fund purchases
participation interests frequently provide or secure from another
financial institution irrevocable letters of credit or guarantees
and give the Fund the right to demand payment of the principal
amounts of the participation interests plus accrued interest on
short notice (usually within seven days).
Variable Rate Municipal Securities
Variable interest rates generally reduce changes in the market
value of municipal securities from their original purchase prices.
Accordingly, as interest rates decrease or increase, the potential
for capital appreciation or depreciation is less for variable rate
municipal securities than for fixed income obligations. Many
municipal securities with variable interest rates purchased by the
Fund are subject to repayment of principal (usually within seven
days) on the Fund's demand. The terms of these variable rate
demand instruments require payment of principal and accrued
interest from the issuer of the municipal obligations, the issuer
of the participation interests, or a guarantor of either issuer.
Municipal Leases
The Fund may purchase municipal securities in the form of
participation interests which represent undivided proportional
interests in lease payments by a governmental or non-profit
entity. The lease payments and other rights under the lease
provide for and secure the payments on the certificates. Lease
obligations may be limited by municipal charter or the nature of
the appropriation for the lease. In particular, lease obligations
may be subject to periodic appropriation. If the entity does not
appropriate funds for future lease payments, the entity cannot be
compelled to make such payments. Furthermore, a lease may provide
that the certificate trustee cannot accelerate lease obligations
upon default. The trustee would only be able to enforce lease
payments as they became due. In the event of default or failure of
appropriation, it is unlikely that the trustee would be able to
obtain an acceptable substitute source of payment.
In determining the liquidity of municipal lease securities, the
Fund's investment adviser, under the authority delegated by the
Trustees, will base its determination on the following factors:
- whether the lease can be terminated by the lessee;
- the potential recovery, if any, from a sale of the leased
property upon termination of the lease;
- the lessee's general credit strength (e.g., its debt,
administrative, economic and financial characteristics and
prospects);
- the likelihood that the lessee will discontinue appropriating
funding for the leased property because the property is no
longer deemed essential to its operations (e.g., the potential
for an "event of non-appropriation"); and
- any credit enhancement or legal recourse provided upon an event
of non-appropriation or other termination of the lease.
When-Issued and Delayed Delivery Transactions
These transactions are made to secure what is considered to be an
advantageous price or yield for the Fund. 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
assets are marked to market daily and are maintained until the
transaction has been settled. The Fund may engage in when-issued and
delayed delivery transactions to an extent that would cause the
segregation of an amount up to 20% of the total value of its assets.
Temporary Investments
The Fund may also invest in temporary investments during times of
unusual market conditions for defensive purposes.
Repurchase Agreements
Repurchase agreements are arrangements in which banks,
broker/dealers, and other recognized financial institutions sell
U.S. government securities or certificates of deposit to the Fund
and agree at the time of sale to repurchase them at a mutually
agreed upon time and price within one year from the date of
acquisition. The Fund or its custodian will take possession of the
securities subject to repurchase agreements. 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.
Reverse Repurchase Agreements
The Fund may also enter into reverse repurchase agreements. These
transactions are similar to borrowing cash. In a reverse
repurchase agreement, the Fund transfers possession of a portfolio
instrument to another person, such as a financial institution,
broker, or dealer in return for a percentage of the instrument's
market value in cash and agrees that on a stipulated date in the
future the Fund will repurchase the portfolio instrument by
remitting the original consideration plus interest at an agreed
upon rate. The use of reverse repurchase agreements may enable the
Fund to avoid selling portfolio instruments at a time when a sale
may be deemed to be disadvantageous, but the ability to enter into
reverse repurchase agreements does not ensure that the Fund will
be able to avoid selling portfolio instruments at a
disadvantageous time.
When effecting reverse repurchase agreements, liquid assets of the
Fund, in a dollar amount sufficient to make payment for the
obligations to be purchased, are segregated at the trade date.
These securities are marked to market daily and maintained until
the transaction is settled.
Portfolio Turnover
The Fund may trade or dispose of portfolio securities as considered
necessary to meet its investment objective. For the year ended May 31,
1995 and for the period from December 5, 1993 (date of initial public
investment) to May 31, 1994, the portfolio turnover rates for the Fund
were 41% and 39%, respectively.
Investment Limitations
Selling Short and Buying on Margin
The Fund will not sell any securities short or purchase any
securities on margin, but may obtain such short-term credits as
may be necessary for clearance of purchases and sales of
securities.
Issuing Senior Securities and Borrowing Money
The Fund will not issue senior securities except that the Fund may
borrow money and engage in reverse repurchase agreements in
amounts up to one-third of the value of its total assets,
including the amounts borrowed.
The Fund will not borrow money or engage in reverse repurchase
agreements for investment leverage, but rather as a temporary,
extraordinary, or emergency measure or to facilitate management of
the portfolio by enabling the Fund to meet redemption requests
when the liquidation of portfolio securities is deemed to be
inconvenient or disadvantageous. The Fund will not purchase any
securities while borrowings in excess of 5% of its total assets
are outstanding.
Pledging Assets
The Fund will not mortgage, pledge, or hypothecate its assets
except to secure permitted borrowings. In those cases, it may
mortgage, pledge, or hypothecate assets having a market value not
exceeding 10% of the value of its total assets at the time of the
pledge.
Underwriting
The Fund will not underwrite any issue of securities except as it
may be deemed to be an underwriter under the Securities Act of
1933 in connection with the sale of securities in accordance with
its investment objective, policies, and limitations.
Investing in Real Estate
The Fund will not purchase or sell real estate or invest in real
estate limited partnerships, although it may invest in municipal
bonds secured by real estate or interests in real estate.
Investing in Commodities
The Fund will not buy or sell commodities, commodity contracts, or
commodities futures contracts.
Lending Cash or Securities
The Fund will not lend any of its assets except that it may
acquire publicly or non-publicly issued municipal bonds or
temporary investments or enter into repurchase agreements in
accordance with its investment objective, policies, and
limitations or its Declaration of Trust.
Concentration of Investments
The Fund will not purchase securities if, as a result of such
purchase, 25% or more of the value of its total assets would be
invested in any one industry or in industrial development bonds or
other securities, the interest upon which is paid from revenues of
similar types of projects. However, the Fund may invest as
temporary investments more than 25% of the value of its assets in
cash or cash items, securities issued or guaranteed by the U.S.
government, its agencies, or instrumentalities, or instruments
secured by these money market instruments, i.e., repurchase
agreements.
The above investment limitations cannot be changed without shareholder
approval. The following limitations, however, may be changed by the
Trustees without shareholder approval. Shareholders will be notified
before any material change in these limitations becomes effective.
Investing in Securities of Other Investment Companies
The Fund will not purchase securities of other investment
companies except as part of a merger, consolidation, or other
acquisition.
Investing in Issuers Whose Securities are Owned by Officers and
Trustees of the Trust
The Fund will not purchase or retain the securities of any issuer
if the Officers and Trustees of the Trust or its investment
adviser, owning individually more than 1/2 of 1% of the issuer's
securities, together own more than 5% of the issuer's securities.
Investing in Illiquid Securities
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, and
certain restricted securities not determined by the Trustees to be
liquid.
Investing in New Issuers
The Fund will not invest more than 5% of the value of its total
assets in industrial development bonds where the principal and
interest are the responsibility of companies (or guarantors, where
applicable) with less than three years of continuous operations,
including the operation of any predecessor.
Investing in Minerals
The Fund will not purchase interests in oil, gas, or other mineral
exploration or development programs or leases, although it may
invest in the securities of issuers which invest in or sponsor
such programs.
In addition, to comply with investment restrictions of a certain state,
the Fund will not invest in real estate limited partnerships.
Except with respect to borrowing money, if a percentage limitation is
adhered to at the time of investment, a later increase or decrease in
percentage resulting from any change in value or net assets will not
result in a violation of such restriction.
For purposes of its policies and limitations, the Fund considers
certificates of deposit and demand and time deposits issued by a U.S.
branch of a domestic bank or savings and loan having capital, surplus,
and undivided profits in excess of $100,000,000 at the time of
investment to be "cash items."
Investment Risks
Yields on Pennsylvania municipal securities depend on a variety of
factors, including: the general conditions of the municipal bond market;
the size of the particular offering; the maturity of the obligations;
and the rating of the issue. Further, any adverse economic conditions or
developments affecting the Commonwealth of Pennsylvania or its county
and local governments could impact the Fund's portfolio. The Fund's
concentration in securities issued by the Commonwealth of Pennsylvania
and its political subdivisions provides a greater level of risk than a
fund which is diversified across numerous states and municipal entities.
The ability of the Commonwealth or its municipalities to meet their
obligations will depend on the availability of tax and other revenues;
economic, political and demographic conditions within Pennsylvania; and
their underlying fiscal condition.
The Commonwealth of Pennsylvania's budget stability depends largely upon
expenditure controls which keep spending in line with what is considered
a relatively limited revenue base. The Commonwealth maintains reasonable
debt levels and has a sound economic position which has shifted over
time from very heavy reliance on manufacturing and mining industries to
a more stable employment base. The Commonwealth restored structural
balance to its budget in fiscal year 1993 through tax increases,
spending controls and conservative debt management. Recurring budgetary
pressures which will exist into fiscal year 1994 and beyond include
rapid growth in Medicaid spending and social service programs, and
expenditures for additional correctional facilities. Spending was
increased by 5.8% for fiscal year 1994 based on continued modest
improvement in the economy, adherence to debt control policies and
spendable reserves from the prior year. The 1995 budget includes an
estimated $267 million surplus from fiscal year 1994, reductions in the
corporate net income tax, and continued growth in Medicaid expenditures
of approximately 13%. The Commonwealth has restored the Tax
Stabilization Reserve Fund to approximately $30 million and general fund
receipts were on target through fiscal year 1994, reflecting an
improving regional economy and reasonable revenue projections.
Reductions in state assistance and increased social service demands have
made it more difficult for local governments (counties, cities, towns)
to operate with balanced budgets. School districts in the Commonwealth
are provided additional credit support through Pennsylvania's Act 150
which provides subsidized debt service for qualified projects and an
intercept mechanism of state aid payments which would be used to pay
bondholders in the case of a missed debt service payment.
Concerning the constitutional provisions pertaining to debt, the
Commonwealth may issue tax anticipation notes for its General Fund
and/or Motor License Fund. However, the aggregate amount of newly issued
and outstanding tax anticipation notes is limited to a maximum of 20% of
the estimated revenues of the appropriate fund for the fiscal year in
which the notes are issued. The notes must mature within the fiscal year
of issuance. The Commonwealth of Pennsylvania may also issue bond
anticipation notes with a term not to exceed three years. The bond
anticipation notes are subject to applicable statutory limitations
pertaining to the issuance of bonds. The ability of the Fund to achieve
its investment objective depends on the continuing ability of the
issuers of Pennsylvania Municipal Securities and participation
interests, or the guarantors of either, to meet their obligations for
the payment of interest and principal when due. Investing in
Pennsylvania Municipal Securities which meet the Fund's quality
standards may not be possible if the Commonwealth of Pennsylvania and
its municipalities do not maintain their current credit rating.
Management of Intermediate Municipal Trust
Officers and Trustees
Officers and Trustees are listed with their addresses, principal
occupations during the past five years, birthdates and present
positions, including any affiliation with Federated Management,
Federated Investors, Federated Securities Corp., Federated Services
Company, Federated Administrative Services, Federated Shareholder
Services, and the Funds (as defined below).
John F. Donahue@*
Federated Investors Tower
Pittsburgh, Pennsylvania
Birthdate: July 28, 1924
Chairman and Trustee
Chairman and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; Chairman and Director, Federated
Research Corp.; Chairman, Passport Research, Ltd.; Chief Executive
Officer and Director, Trustee, or Managing General Partner of the Funds.
Mr. Donahue is the father of J. Christopher Donahue, Executive Vice
President of the Company.
Glen R. Johnson *
Federated Investors Tower
Pittsburgh, Pennsylvania
Birthdate: May 2, 1929
President and Trustee
Administrat
Administrative Services.
Thomas G. Bigley
28th Floor, One Oxford Centre
Pittsburgh, Pennsylvania
Birthdate: February 3, 1934
Trustee
Director, Oberg Manufacturing Co.; Chairman of the Board, Children's
Hospital of Pittsburgh; Director, Trustee, or Managing General Partner
of the Funds; formerly, Senior Partner, Ernst & Young LLP.
John T. Conroy, Jr.
Wood/IPC Commercial Department
John R. Wood and Associates, Inc., Realtors
3255 Tamiami Trail North
Naples, Florida
Birthdate: June 23, 1937
Trustee
President, Investment Properties Corporation; Senior Vice-President,
John R. Wood and Associates, Inc., Realtors; President, Northgate
Village Development Corporation; Partner or Trustee in private real
estate ventures in Southwest Florida; Director, Trustee, or Managing
General Partner of the Funds; formerly, President, Naples Property
Management, Inc.
William J. Copeland
One PNC Plaza - 23rd Floor
Pittsburgh, Pennsylvania
Birthdate: July 4, 1918
Trustee
Director and Member of the Executive Committee, Michael Baker, Inc.;
Director, Trustee, or Managing General Partner of the Funds; formerly,
Vice Chairman and Director, PNC Bank, N.A., and PNC Bank Corp. and
Director, Ryan Homes, Inc.
James E. Dowd
571 Hayward Mill Road
Concord, Massachusetts
Birthdate: May 18, 1922
Trustee
Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director,
Trustee, or Managing General Partner of the Funds.
Lawrence D. Ellis, M.D.*
3471 Fifth Avenue, Suite 1111
Pittsburgh, Pennsylvania
Birthdate: October 11, 1932
Trustee
Ce
Center; formerly, Hematologist, Oncologist, and Internist, Presbyterian
and Montefiore Hospitals; Director, Trustee, or Managing General Partner
of the Funds.
Edward L. Flaherty, Jr.@
Henny, Kochuba, Meyer and Flaherty
Two Gateway Center - Suite 674
Pittsburgh, Pennsylvania
Birthdate: June 18, 1924
Trustee
Attorney-at-law; Shareholder, Henny, Kochuba, Meyer and Flaherty;
Director, Eat'N Park Restaurants, Inc., and Statewide Settlement Agency,
Inc.; Director, Trustee, or Managing General Partner of the Funds;
formerly, Counsel, Horizon Financial, F.A., Western Region.
Peter E. Madden
70 Westcliff Road
Westin, Massachusetts
Birthdate: March 16, 1942
Trustee
Consultant; State Representative, Commonwealth of Massachusetts;
Director, Trustee, or Managing General Partner of the Funds; formerly,
President, State Street Bank and Trust Company and State Street Boston
Corporation.
Gregor F. Meyer
Henny, Kochuba, Meyer and Flaherty
Two Gateway Center - Suite 674
Pittsburgh, Pennsylvania
Birthdate: October 6, 1926
Trustee
Attorney-at-law; Partner, Henny, Kochuba, Meyer and Flaherty; Chairman,
Meritcare, Inc.; Director, Eat'N Park Restaurants, Inc.; Director,
Trustee, or Managing General Partner of the Funds.
John E. Murray, Jr., J.D., S.J.D.
President, Duquesne University
Pittsburgh, Pennsylvania
Birthdate: December 20, 1932
Trustee
President, Law Professor, Duquesne University; Consulting Partner,
Mollica, Murray and Hogue; Director, Trustee or Managing General Partner
of the Funds.
Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, Pennsylvania
Birthdate: September 14, 1925
Trustee
Professor, International Politics and Management Consultant; Trustee,
Carnegie Endowment for International Peace, RAND Corporation, Online
Computer Library Center, Inc., and U.S. Space Foundation; Chairman,
Czecho Management Center; Director, Trustee, or Managing General Partner
of the Funds; President Emeritus, University of Pittsburgh; founding
Chairman, National Advisory Council for Environmental Policy and
Technology and Federal Emergency Management Advisory Board.
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, Pennsylvania
Birthdate: June 21, 1935
Trustee
Public relations/marketing consultant; Conference Coordinator, Non-
profit entities; Director, Trustee, or Managing General Partner of the
Funds.
J. Christopher Donahue
Federated Investors Tower
Pittsburgh, Pennsylvania
Birthdate: April 11, 1949
Executive Vice President
President and Trustee, Federated Investors, Federated Advisers,
Federated Management, and Federated Research; President and Director,
Federated Research Corp.; President, Passport Research, Ltd.; Trustee,
Federated Administrative Services, Federated Services Company, and
Federated Shareholder Services; President or Vice President of the
Funds; Director, Trustee, or Managing General Partner of some of the
Funds. Mr. Donahue is the son of John F. Donahue, Chairman and Trustee
of the Company.
Edward C. Gonzales *
Federated Investors Tower
Pittsburgh, Pennsylvania
Birthdate: October 22, 1930
Executive Vice President
Vice President, Treasurer, and Trustee, Federated Investors; Vice
President and Treasurer, Federated Advisers, Federated Management,
Federated Research, Federated Research Corp., and Passport Research,
Ltd.; Executive Vice President, Treasurer, and Director, Federated
Securities Corp.; Trustee, Federated Services Company and Federated
Shareholder Services; Chairman, Treasurer, and Trustee, Federated
Administrative Services; Trustee or Director of some of the Funds;
Executive Vice President or President of the Funds.
John W. McGonigle
Federated Investors Tower
Pittsburgh, Pennsylvania
Birthdate: October 26, 1938
Executive Vice President and Secretary
Secretar
Secretary, Federated Research Corp. and Passport Research, Ltd.;
Trustee, Federated Services Company; Executive Vice President,
Secretary, and Trustee, Federated Administrative Services; Secretary and
Trustee, Federated Shareholder Services; Executive Vice President and
Director, Federated Securities Corp.; Vice President and Secretary of
the Funds.
Richard B. Fisher
Federated Investors Tower
Pittsburgh, Pennsylvania
Birthdate: May 17, 1923
Vice President
Executive Vice President and Trustee, Federated Investors; Director,
Federated Research Corp.; Chairman and Director, Federated Securities
Corp.; President or Vice President of some of the Funds; Director or
Trustee of some of the Funds.
David M. Taylor *
Federated Investors Tower
Pittsburgh, Pennsylvania
Birthdate: January 13, 1947
Treasurer
Senior Vice President, Controller, and Trustee, Federated Investors;
Controller, Federated Advisers, Federated Management, Federated
Research, Federated Research Corp., and Passport Research, Ltd.; Senior
Vice President, Federated Shareholder Services; Senior Vice President,
Federated Administrative Services; Treasurer of the Funds.
* This Trustee is deemed to be an "interested person" as defined
in the Investment Company Act of 1940, as amended.
@ Member of the Executive Committee. The Executive Committee of
the Board of Trustee handles the responsibilities of the Board
of Trustee between meetings of the Board.
As used in the table above, "The Funds" and "Funds" mean the following
investment companies: American Leaders Fund, Inc.; Annuity Management
Series; Arrow Funds; Automated Cash Management Trust; Automated
Government Money Trust; California Municipal Cash Trust; Cash Trust
Series II; Cash Trust Series, Inc.; DG Investor Series; Edward D. Jones
& Co. Daily Passport Cash Trust; Federated ARMs Fund; Federated Exchange
Fund, Ltd.; Federated GNMA Trust; Federated Government Trust; Federated
Growth Trust; Federated High Yield Trust; Federated Income Securities
Trust; Federated Income Trust; Federated Index Trust; Federated
Institutional Trust; Federated Master Trust; Federated Municipal Trust;
Federated Short-Term Municipal Trust; Federated Short-Term U.S.
Government Trust; Federated Stock Trust; Federated Tax-Free Trust;
Federated Total Return Series, Inc.; Federated U.S. Government Bond
Fund; Federated U.S. Government Securities Fund: 1-3 Years; Federated
U.S. Government Securities Fund: 3-5 Years; 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; Insurance Management Series; Intermediate
Municipal Trust; International Series, Inc.; Investment Series Funds,
Inc.; Investment Series Trust; Liberty Equity Income Fund, Inc.; Liberty
High Income Bond Fund, Inc.; Liberty Municipal Securities Fund, Inc.;
Liberty U.S. Government Money Market Trust; Liberty Term Trust, Inc. -
1999; Liberty Utility Fund, Inc.; Liquid Cash Trust; Managed Series
Trust; Money Market Management, Inc.; Money Market Obligations Trust;
Money Market Trust; Municipal Securities Income Trust; Newpoint Funds;
New York Municipal Cash Trust; 111 Corcoran Funds; Peachtree Funds; The
Planters Funds; RIMCO Monument Funds; The Shawmut Funds; Star Funds; The
Starburst Funds; The Starburst Funds II; Stock and Bond Fund, Inc.;
Sunburst Funds; Targeted Duration Trust; Tax-Free Instruments Trust;
Trademark Funds; Trust for Financial Institutions; Trust For Government
Cash Reserves; Trust for Short-Term U.S. Government Securities; Trust
for U.S. Treasury Obligations; The Virtus Funds; and World Investment
Series, Inc.
Fund Ownership
Officers and Trustees own less than 1% of the outstanding shares of the
Fund.
As of July 6, 1995 the following shareholders of record owned 5% or more
of the outstanding shares of the Fund: Firstnat Co., West Chester, PA,
owned approximately 70,168 shares 8.86%; Univest & Company, Souderton,
PA, owned approximately 247,906 shares 31.30%; Harmony Co., Carlisle,
PA, owned approximately 44,087 shares 5.57%; Charles Schwab & Co.,
Inc,San Francisco, CA owned approximately 90,879 shares 11.47%;
Keystone Financial , Inc. ,Altoona, PA, owned approximately 40,326
shares 5.09%.;
Trustees' Compensation
AGGREGATE
NAME , COMPENSATION
POSITION WITH FROM TOTAL COMPENSATION PAID
TRUST TRUST *# FROM FUND COMPLEX +
John F. Donahue $0 $ 0 for the Trust and
Trustee 68 other investment companies in the Fund
Complex
Thomas G. Bigley $958 $ 20,688 for the Trust and
Trustee 49 other investment companies of the Fund
Complex
John T. Conroy, Jr. $ 2,371 $ 117,202 for the Trust and
Trustee 64 other investment companies in the Fund
Complex
William J. Copeland $ 2,371 $ 117,202 for the Trust and
Trustee 64 other investment companies in the Fund
Complex
James E. Dowd $ 2,371 $ 117,202 for the Trust and
Trustee 64 other investment companies in the Fund
Complex
Lawrence D. Ellis, M.D. $ 1,286 $ 106,460 for the Trust and
Trustee 64 other investment companies in the Fund
Complex
Edward L. Flaherty, Jr. $ 2,371 $ 117,202 for the Trust and
Trustee 64 other investment companies in the Fund
Complex
Glen R. Johnson $ 0 $ 0for the Trust and
Trustee 8 other investment companies in the Fund
Complex
Peter E. Madden $ 1,091 $ 90,563 for the Trust and
Trustee 64 other investment companies in the Fund
Complex
Gregor F. Meyer $ 1,286 $ 106,460 for the Trust and
Trustee 64 other investment companies in the Fund
Complex
John E. Murray, Jr. $ 632 $ 0 for the Trust and
Trustee 69 other investment companies in the Fund
Complex
Wesley W. Posvar $ 1,286 $ 106,460 for the Trust and
Trustee 64 other investment companies in the Fund
Complex
Marjorie P. Smuts $ 1,286 $ 106,460 for the Trust and
Trustee 64 other investment companies in the Fund
Complex
*Information is furnished for the fiscal year ended May 31, 1995.
#The aggregate compensation is provided for the Trust which is comprised
of three portfolios.
+The information is provided for the last calendar year.
Trustee Liability
The Trust's Declaration of Trust provides that the Trustees will not be
liable for errors of judgment or mistakes of fact or law. However, they
are not protected against any liability to which they would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence,
or reckless disregard of the duties involved in the conduct of their
office.
Investment Advisory Services
Adviser to the Fund
The Fund's investment adviser is Federated Management (the "Adviser").
It is a subsidiary of Federated Investors. All the voting securities of
Federated Investors are owned by a trust, the trustees of which are John
F. Donahue, his wife, and his son, J. Christopher Donahue.
The Adviser shall not be liable to the Trust, 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 Fund.
Advisory Fees
For its advisory services, Federated Management receives an annual
investment advisory fee as described in the prospectus.
For the year ended May 31, 1995, and during the period from December 5,
1993 (date of initial public investment) to May 31, 1994the Adviser
earned $32,714 and 3,767, all of which was voluntarily waived. In
addition, the Adviser reimbursed other operating expenses of $225,621
and $34,400, 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 2.5% per year of the first $30
million of average net assets, 2% per year of the next $70 million
of average net assets, and 1.5% 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
expense 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.
Administrative Services
Federated Administrative Services, a subsidiary of Federated Investors,
provides administrative personnel and services to the Fund for a fee as
described in the prospectus. Prior to March 1, 1994, Federated
Administrative Services, Inc., also a subsidiary of Federated Investors,
served as the Fund's administrator. (For purposes of this Statement of
Additional Information, Federated Administrative Services and Federated
Administrative Services, Inc. may, hereinafter, collectively be referred
to as the "Administrators.") For the fiscal year ended May 31, 1995,
Federated Administrative Services earned $125,000, none of which was
waived. For the period from December 5, 1993 (date of initial public
investment) to May 31, 1994, the Administrators earned $1,225, none of
which was waived. Dr. Henry Gailliot, an officer of Federated
Management, the Adviser to the Fund, holds approximately 20% of the
outstanding common stock and serves as a director of Commercial Data
Services, Inc., a company which provides computer processing services to
Federated Administrative Services.
Shareholder Services Agreement
This arrangement permits the payment of fees to Federated Shareholder
Services and, indirectly, to financial institutions, 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: 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.
For the fiscal periods ending May 31, 1995 and 1994, the Fund paid
shareholder service fees in the amounts of $4,504 and $230,
respectively, all of which were paid to financial institutions.
Transfer Agent and Dividend Disbursing Agent
Federated Services Company serves as transfer agent and dividend
disbursing agent for the Fund. The fee paid to the transfer agent is
based upon the size, type and number of accounts and transactions made
by shareholders.
Federated Services Company also maintains the Trust's accounting
records. The fee paid for this service is based upon the level of the
Fund's average net assets for the period plus out-of-pocket expenses.
Brokerage Transactions
When selecting brokers and dealers to handle the purchase and sale of
portfolio instruments, the Adviser looks for prompt execution of the
order at a favorable price. In working with dealers, the Adviser will
generally use those that are recognized dealers in specific portfolio
instruments, except when a better price and execution of the order can
be obtained elsewhere. In selecting among firms believed to meet these
criteria, the Adviser may give consideration to those firms which have
sold or are selling shares of the Fund and other Federated Funds. The
Adviser makes decisions on portfolio transactions and selects brokers
and dealers subject to review by the Trustees. The Adviser may select
brokers and dealers who offer brokerage and research services. These
services may be furnished directly to the 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 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
Except under certain circumstances described in the prospectus, shares
are sold at their net asset value on days the New York Stock Exchange is
open for business. The procedure for purchasing shares is explained in
the prospectus under "Investing in the Fund. "
Conversion to Federal Funds
It is the Fund's policy to be as fully invested as possible so that the
maximum interest may be earned. Federated Services Company acts as the
shareholder's agent in depositing checks and converting them into
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 prospectus.
Valuing Municipal Bonds
The Trustees use an independent pricing service to value municipal
bonds. The independent pricing service takes into consideration yield,
stability, risk, quality, coupon rate, maturity, type of issue, trading
characteristics, special circumstances of a security or trading market,
and any other factors or market data it considers relevant in
determining valuations for normal institutional size trading units of
debt securities, and does not rely exclusively on quoted prices.
Use of Amortized Cost
The Trustees have decided that the fair value of debt securities
authorized to be purchased by the Fund with remaining maturities of 60
days or less at the time of purchase, shall be their amortized cost
value, unless the particular circumstances of the security indicate
otherwise. Under this method, portfolio instruments and assets are
valued at the acquisition cost as adjusted for amortization of premium
or accumulation of discount rather than at current market value. The
Executive Committee continually assesses this method of valuation and
recommends changes where necessary to assure that the Fund's portfolio
instruments are valued at their fair value as determined in good faith
by the Trustees.
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 prospectus under "Redeeming 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 net asset value of the Fund, 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 Fund will
pay all or a portion of the remainder of the redemption in portfolio
instruments, valued in the same way that net asset value is determined.
The portfolio instruments will be selected in a manner that the Trustees
deem fair and equitable. Such securities will be readily marketable, to
the extent available.
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 transactions 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 of 1986, as
amended, 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
Capital Gains
Capital gains or losses may be realized by the Fund on the sale of
portfolio securities and as a result of discounts from par value
on securities held to maturity. Sales would generally be made
because of:
- the availability of higher relative yields;
- differentials in market values;
- new investment opportunities;
- changes in creditworthiness of an issuer; or
- an attempt to preserve gains or limit losses.
Distributions of long-term capital gains are taxed as such,
whether they are taken in cash or reinvested, and regardless of
the length of time the shareholder has owned the shares. Any loss
by a shareholder on Fund shares held for less than six months and
sold after a capital gains distribution will be treated as a long-
term capital loss to the extent of the capital gains distribution.
Total Return
The Fund's average annual total return for the year ended May 31, 1995
and for the period from December 5, 1993 (date of initial public
investment) to May 31, 1995 were 7.35% and 5.42%, respectively.
The Fund's cumulative total return for the period from December 5, 1993
(date of initial public investment) to May 31, 1994 was 5.42%.
Cumulative average annual total return reflects the Fund's total
performance over a specific period of time. The Fund's total return is
representative of only five months of investment activity since the
Fund's effective date.
The average annual total return for the Fund is the average compounded
rate of return for a given period that would equate a $1,000 initial
investment to the ending redeemable value of that investment. The ending
redeemable value is computed by multiplying the number of shares owned
at the end of the period by the net asset value per share at the end of
the period. The number of shares owned at the end of the period is based
on the number of shares purchased at the beginning of the period with
$1,000, adjusted over the period by any additional shares assuming the
monthly reinvestment of all dividends and distributions.
Yield
The Fund's yield for the thirty-day period ended May 31, 1995, was
5.21%.
The yield for shares of the Fund is determined by dividing the net
investment income per share (as defined by the Securities and Exchange
Commission) earned by the Fund over a thirty-day period by the maximum
offering price per share on the last day of the period. This value is
then annualized using semi-annual compounding. This means that the
amount of income generated during the thirty-day period is assumed to be
generated each month over a twelve-month period and is reinvested every
six months. The yield does not necessarily reflect income actually
earned by the 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 the Fund, performance will be reduced for those shareholders paying
those fees.
Tax-Equivalent Yield
The Fund's tax-equivalent yield for the thirty-day period ended May 31,
1995, was 9.05%.
The tax-equivalent yield for the Fund is calculated similarly to the
yield, but is adjusted to reflect the taxable yield that the Fund would
have had to earn to equal its actual yield, assuming a 39.60% federal
tax rate and assuming that income is 100% tax-exempt.
Tax-Equivalency Table
The Fund may also use a tax-equivalency table in advertising and sales
literature. The interest earned by the municipal bonds in the Fund's
portfolio generally remains free from federal regular income tax,*
Pennsylvania personal income tax and certain local taxes. (Some portion
of the Fund's income may be subject to the federal alternative minimum
tax and state and local taxes.) As the table below indicates, a "tax-
free" investment is an attractive choice for investors, particularly in
times of narrow spreads between tax-free and taxable yields.
TAXABLE YIELD EQUIVALENT FOR 1995
State of Pennsylvania
COMBINED FEDERAL AND STATE INCOME TAX BRACKET:
17.80% 30.80% 33.80% 38.80% 42.40%
JOINT $1- $39,001- $94,251- $143,601- OVER
RETURN 39,000 94,250 143,600 256,500 256,500
SINGLE $1- $23,351- $56,551- $117,951- OVER
RETURN 23,350 56,550 117,950 256,500 256,500
Tax-Exempt
Yield Taxable Yield Equivalent
1.50% 1.82% 2.17% 2.27% 2.45%
2.60%
2.00% 2.43% 2.89% 3.02% 3.27%
3.47%
2.50% 3.04% 3.61% 3.78% 4.08%
4.34%
3.00% 3.65% 4.34% 4.53% 4.90%
5.21%
3.50% 4.26% 5.06% 5.29% 5.72%
6.08%
4.00% 4.87% 5.78% 6.04% 6.54%
6.94%
4.50% 5.47% 6.50% 6.80% 7.35%
7.81%
5.00% 6.08% 7.23% 7.55% 8.17%
8.68%
5.50% 6.69% 7.95% 8.31% 8.99%
9.55%
6.00% 7.30% 8.67% 9.06% 9.80%
10.42%
Note: The maximum marginal tax rate for each bracket was used in
calculating the taxable yield equivalent. Furthermore, additional
state and local taxes paid on comparable taxable investments were
not used to increase federal deductions.
The chart above is for illustrative purposes only. It is not an
indicator of past or future performance of Fund shares.
* Some portion of the Fund's income may be subject to the federal
alternative minimum tax and state and local income taxes.
Performance Comparisons
The performance of the Fund 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; and
- various other factors.
The Fund's performance fluctuates on a daily basis largely because net
earnings and offering price per share fluctuate daily. Both net earnings
and offering price per share are factors in the computation of yield and
total return as described above.
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 composition
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 fund
categories by making comparative calculations using total return.
Total return assumes the reinvestment of all capital gains
distributions and income dividends and takes into account any
change in net asset value over a specific period of time. From
time to time, the Fund will quote its Lipper ranking in the "other
states intermediate municipal debt funds" category in advertising
and sales literature.
- Morningstar, Inc., an independent rating service, is the publisher
of the bi-weekly Mutual Fund Values. Mutual Fund Values rates
more than 1,000 NASDAQ-listed mutual funds of all types, according
to their risk-adjusted returns. The maximum rating is five stars,
and ratings are effective for two weeks.
- Lehman Brothers Five-Year State General Obligation Bonds is an
index comprised of all state general obligation debt issues with
maturities between four and six years. These bonds are rated A or
better and represent a variety of coupon ranges. Index figures
are total returns calculated for one, three and twelve month
periods as well as year-to-date. Total returns are also calculated
as of the index inception December 31, 1979.
- Lehman Brothers Ten-Year State General Obligation Bonds is an
index comprised of the same issues noted above except that the
maturities range between nine and eleven years. Index figures are
total returns calculated for the same periods as listed above.
Advertisements and other sales literature for the Fund may quote total
returns which are calculated on non-standardized base periods. The total
returns represent the historic change in the value of an investment in
the Fund based on monthly reinvestment of dividends over a specific
period of time.
About Federated Investors
Federated is dedicated to meeting investor needs which is reflected in
its investment decision making structured, straightforward, and
consistent. This has resulted in a history of competitive performance
with a range of competitive investment products that have gained the
confidence of thousands of clients and their customers.
The company's disciplined security selection process is firmly rooted in
sound methodologies backed by fundamental and technical research.
Investment decisions are made and executed by teams of portfolio
managers, analysts, and traders dedicated to specific market sectors.
In the municipal sector, as of December 31,1994, Federated managed 18
bond funds with approximately $1.9 billion in assets and 18 money market
funds with approximately $6.6 billion in total assets. In 1976,
Federated introduced one of the first municipal bond mutual funds in
the industry and is now one of the largest institutional buyers of
municipal securities.
J. Thomas Madden, Executive Vice President, oversees Federated's equity
and high yield corporate bond management while William D. Dawson,
Executive Vice President, oversees Federated's domestic fixed income
management. Henry A. Frantzen, Executive Vice President, oversees the
management of Federated's international portfolios.
Mutual Fund Market
Twenty-seven percent of American households are pursuing their financial
goals through mutual funds. These investors, as well as businesses and
institutions, have entrusted over $2 trillion to the more than 5,500
funds available.*
Federated Investors, through its subsidiaries, distributes mutual funds
for a variety of investment applications. Specific markets include:
Institutional
Federated meets the needs of more than 4,000 institutional clients
nationwide by managing and servicing separate accounts and mutual
funds for a variety of applications, including defined benefit and
defined contribution programs, cash management, and
asset/liability management. Institutional clients include
corporations, pension funds, tax-exempt entities,
foundations/endowments, insurance companies, and investment and
financial advisors. The marketing effort to these institutional
clients is headed by John B. Fisher, President, Institutional
Sales Division.
Trust Organizations
Other institutional clients include close relationships with more
than 1,500 banks and trust organizations. Virtually all of the
trust divisions of the top 100 bank holding companies use
Federated funds in their clients' portfolios. The marketing effort
to trust clients is headed by Mark R. Gensheimer, Executive Vice
President, Bank Marketing & Sales.
Broker/Dealers and Bank Broker/Dealer Subsidiaries
Federated mutual funds are available to consumers through major
brokerage firms nationwide including 200 New York Stock Exchange
firms supported by more wholesalers than any other mutual fund
distributor. The marketing effort to these firms is headed by
James F. Getz, President, Broker/Dealer Division.
* SOURCE: Investment Company Institute
Appendix
Standard and Poor's Ratings Group ("S&P") Municipal Bond Ratings
AAA--Debt rated "AAA" has the highest rating assigned by S&P. Capacity
to pay interest and repay principal is extremely strong.
AA--Debt rated "AA" has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.
A--Debt rated "A" has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than debt in
higher rated categories.
NR--Indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not
rate a particular type of obligation as a matter of policy.
Plus (+) or minus (-): The ratings from "AA" to "CCC" may be modified by
the addition of a plus or minus sign to show relative standing within
the major rating categories.
Moody's Investors Service, Inc. Municipal Bond Ratings
Aaa--Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally
referred to as "gilt edged." Interest payments are protected by a large
or by an exceptionally stable margin and principal is secure. While the
various protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position
of such issues.
Aa--Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities
or fluctuation of protective elements may be of greater amplitude or
there may be other elements present which make the long-term risks
appear somewhat larger than in Aaa securities.
A--Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate but
elements may be present which suggest a susceptibility to impairment
sometime in the future.
NR--Not rated by Moody's.
Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from Aa through B in its corporate or municipal bond
rating system. The modifier 1 indicates that the security ranks in the
higher end of its generic rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates that the issue ranks in
the lower end of its generic rating category.
Fitch Investors Service, Inc. Investment Grade Bond Ratings
AAA--Bonds considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay interest
and repay principal, which is unlikely to be affected by reasonably
foreseeable events.
AA--Bonds considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal is
very strong, although not quite as strong as bonds rated "AAA." Because
bonds rated in the "AAA" and "AA" categories are not significantly
vulnerable to foreseeable future developments, short-term debt of these
issuers is generally rated "F-1+."
A--Bonds considered to be investment grade and of high credit quality.
The obligor's ability to pay interest and repay principal is considered
strong, but may be more vulnerable to adverse changes in economic
conditions and circumstances than bonds with higher ratings.
NR--NR indicates that Fitch does not rate the specific issue.
Plus (+) or Minus (-): Plus and minus signs are used with a rating
symbol to indicate the relative position of a credit within the rating
category. Plus and minus signs, however, are not used in the "AAA"
category.
Standard and Poor's Ratings Group Municipal Note Ratings
SP-1--Very strong or strong capacity to pay principal and interest.
Those issues determined to possess overwhelming safety characteristics
will be given a plus sign (+) designation.
SP-2--Satisfactory capacity to pay principal and interest.
Moody's Investors Service, Inc. Short-Term Loan Ratings
MIG1/VMIG1--This designation denotes best quality. There is present
strong protection by established cash flows, superior liquidity support
or demonstrated broad based access to the market for refinancing.
MIG2/VMIG2--This designation denotes high quality. Margins of protection
are ample although not so large as in the preceding group.
Standard and Poor's Ratings Group Commercial Paper Ratings
A-1--This highest category indicates that the degree of safety regarding
timely payment is strong. Those issues determined to possess extremely
strong safety characteristics are denoted with a plus sign (+)
designation.
A-2--Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high for
issues designated A-1.
Moody's Investors Service, Inc. Commercial Paper Ratings
PRIME-1--Issuers rated PRIME-1 (or related supporting institutions) have
a superior capacity for repayment of short-term promissory obligations.
PRIME-1 repayment capacity will normally be evidenced by the following
characteristics:
- leading market positions in well-established industries;
- high rates of return on funds employed;
- conservative capitalization structure with moderate reliance on
debt and ample asset protection;
- broad margins in earning coverage of fixed financial charges and
high internal cash generation; and
- well-established access to a range of financial markets and
assured sources of alternative liquidity.
PRIME-2--Issuers rated PRIME-2 (or related supporting institutions) have
a strong capacity for repayment of short-term promissory obligations.
This will normally be evidenced by many of the characteristics cited
above, but to a lesser degree. Earnings trends and coverage ratios,
while sound, will be more subject to variation. Capitalization
characteristics, while still appropriate, may be more affected by
external conditions. Ample alternate liquidity is maintained.
Cusip 458810306
3081603B (7/95)
- --------------------------------------------------------------------------------
FEDERATED OHIO INTERMEDIATE MUNICIPAL TRUST
(FORMERLY, OHIO INTERMEDIATE MUNICIPAL TRUST)
(A PORTFOLIO OF INTERMEDIATE MUNICIPAL TRUST)
PROSPECTUS
The shares of Federated Ohio Intermediate Municipal Trust (formerly,
"Ohio Intermediate Municipal Trust") (the "Fund") offered by this
prospectus represent interests in a non-diversified portfolio of
securities of Intermediate Municipal Trust (the "Trust"), an open-end
management investment company (a mutual fund).
The investment objective of the Fund is to provide current income
which is exempt from federal regular income tax and the personal
income taxes imposed by the State of Ohio. The Fund invests primarily
in a portfolio of Ohio municipal securities, including securities of
states, territories, and possessions of the United States which are
not issued by or on behalf of the State of Ohio or its political
subdivisions, but which are exempt from federal regular income tax and
Ohio state personal income taxes.
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS
OF ANY BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK, AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THESE
SHARES INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL
This prospectus contains the information you should read and know
before you invest in the Fund. Keep this prospectus for future
reference.
The Fund has also filed a Statement of Additional Information, dated
July 31, 1995, with the Securities and Exchange Commission. The
information contained in the Statement of Additional Information is
incorporated by reference into this prospectus. You may request a copy
of the Statement of Additional Information which is in paper form
only, or a paper copy of this prospectus, if you have received your
prospectus electronically, free of charge by calling 1-800-235-4669.
To obtain other information or to 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 July 31, 1995
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
SUMMARY OF FUND EXPENSES 1
- --------------------------------------------------
FINANCIAL HIGHLIGHTS 2
- --------------------------------------------------
GENERAL INFORMATION 3
- --------------------------------------------------
INVESTMENT INFORMATION 3
- --------------------------------------------------
Investment Objective 3
Investment Policies 3
Ohio Municipal Securities 6
Investment Risks 6
Non-Diversification 7
Investment Limitations 7
INTERMEDIATE MUNICIPAL TRUST
INFORMATION 7
- --------------------------------------------------
Management of the Trust 7
Distribution of Fund Shares 9
Administration of the Fund 9
NET ASSET VALUE 10
- --------------------------------------------------
INVESTING IN THE FUND 10
- --------------------------------------------------
Share Purchases 10
Subaccounting Services 10
Minimum Investment Required 11
What Shares Cost 11
Exchanging Securities for Fund Shares 11
Certificates and Confirmations 11
Dividends and Distributions 11
Capital Gains 12
REDEEMING SHARES 12
- --------------------------------------------------
Accounts with Low Balances 13
SHAREHOLDER INFORMATION 13
- --------------------------------------------------
Voting Rights 13
Massachusetts Partnership Law 14
TAX INFORMATION 14
- --------------------------------------------------
Federal Income Tax 14
Ohio Taxes 15
Other State and Local Taxes 15
PERFORMANCE INFORMATION 16
- --------------------------------------------------
FINANCIAL STATEMENTS 17
- --------------------------------------------------
REPORT OF INDEPENDENT PUBLIC
ACCOUNTANTS 28
- --------------------------------------------------
ADDRESSES 29
- --------------------------------------------------
</TABLE>
I
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES
<S> <C> <C>
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
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(As a percentage of average net assets)
<S> <C> <C>
Management Fee (after waiver) (1)................................................................ 0.00%
12b-1 Fee........................................................................................ None
Total Other Expenses (after expense reimbursement)............................................... 0.45%
Shareholder Services Fee (after waiver) (2)......................................... 0.05%
Total Fund Operating Expenses (3)........................................................ 0.45%
<FN>
(1) The management fee has been reduced to reflect the waiver of the management
fee. The maximum management fee is 0.50%
(2) The maximum shareholder services fee is 0.25%
(3) The total Fund operating expenses in the table above are based on expenses
expected during the fiscal year ending May 31, 1996. The total Fund
operating expenses were 0.45% for the fiscal years ended May 31, 1995 and
would have been 5.25% absent the voluntary waiver of the management fee and
the voluntary reimbursement of certain other operating expenses and
reductions to meet state limitations.
</TABLE>
The purpose of this table is to assist an investor in understanding the
various costs and expenses that a shareholder of the Fund will bear, either
directly or indirectly. For more complete descriptions of the various costs and
expenses, see "Investing in the Fund" and "Intermediate Municipal Trust
Information." Wire-transferred redemptions of less than $5,000 may be subject to
additional fees.
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------------------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return and (2) redemption at the end of
each time period................................................. $5 $14 $25 $57
</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.
1
FEDERATED OHIO INTERMEDIATE MUNICIPAL TRUST
(FORMERLY, OHIO INTERMEDIATE MUNICIPAL TRUST)
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 28.
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
---------------------
1995 1994(a)
--------- ---------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $9.53 $10.00
- ----------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------
Net investment income 0.47 0.22
- ----------------------------------------------------------
Net realized and unrealized gain (loss) on investments 0.26 (0.47)
- ---------------------------------------------------------- --------- ---------
Total from investment operations 0.73 (0.25)
- ---------------------------------------------------------- --------- ---------
LESS DISTRIBUTIONS
- ----------------------------------------------------------
Distributions from net investment income (0.47) (0.22)
- ---------------------------------------------------------- --------- ---------
NET ASSET VALUE, END OF PERIOD $9.79 $9.53
- ---------------------------------------------------------- --------- ---------
--------- ---------
TOTAL RETURN (b) 7.98% (2.52%)
- ----------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------
Expenses 0.45% 0.24%(c)
- ----------------------------------------------------------
Net investment income 5.05% 4.69%(c)
- ----------------------------------------------------------
Expense waiver/reimbursement 4.80%(d) 3.07%(c)(e)
- ----------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------
Net assets, end of period (000 omitted) $6,607 $3,379
- ----------------------------------------------------------
Portfolio turnover 56% 48%
- ----------------------------------------------------------
<FN>
(a) Reflects operations for the period from December 2, 1993 (date of initial
public investment) to May 31, 1994.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) Computed on an annualized basis.
(d) The Adviser waived $26,346 of the investment advisory fee and reimbursed
$115,674 of other expenses, which represent 0.50% and 2.20% of average net
assets, respectively, to comply with certain state expense limitations. The
remainder of the waiver/reimbursement was voluntary. This expense decrease
is reflected in both the expense and net investment income ratios shown
above.
(e) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
</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 for the fiscal year ended May 31, 1995, which can be obtained free
of charge.
2
GENERAL INFORMATION
- --------------------------------------------------------------------------------
The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated May 31, 1985. The Declaration of Trust permits the Trust to offer
separate series of shares of beneficial interest representing interests in
separate portfolios of securities. The shares in any one portfolio may be
offered in separate classes.
Shares of the Fund are designed for the investment of moneys generally held by
financial institutions in a fiduciary capacity. A minimum initial investment of
$25,000 over a 90-day period is required. The Fund may not be a suitable
investment for non-Ohio taxpayers or retirement plans since it intends to invest
primarily in Ohio municipal securities which are not likely to produce
competitive after-tax yields for such persons and entities compared to other
investments.
Shares are sold and redeemed at net asset value without a sales load imposed by
the Fund.
INVESTMENT INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The investment objective of the Fund is to provide current income exempt from
federal regular income tax and the personal income taxes imposed by the State of
Ohio. Interest income of the Fund that is exempt from federal regular income tax
and Ohio state personal income tax retains its tax-free status when distributed
to the Fund's shareholders. The Fund pursues its investment objective by
investing at least 80% of its net assets in a non-diversified portfolio of Ohio
municipal securities. The portfolio has a dollar-weighted average maturity of
not less than three or more than ten years. 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 policy stated above cannot be changed without approval of shareholders.
INVESTMENT POLICIES
The investment policies described below may be changed by the Board of Trustees
(the "Trustees") without shareholder approval. Shareholders will be notified
before any material change in these policies becomes effective.
ACCEPTABLE INVESTMENTS. The Ohio municipal securities in which the Fund invests
are:
- obligations issued by or on behalf of the state of Ohio, its political
subdivisions, or agencies;
- debt obligations of any state, territory, or possession of the United
States, including the District of Columbia, or any political subdivision
of any of these; and
- participation interests, as described below, in any of the above
obligations,
the interest from which is, in the opinion of bond counsel for the issuers or in
the opinion of officers of the Fund and/or the investment adviser to the Fund,
exempt from both federal regular income tax and the personal income taxes
imposed by the State of Ohio.
3
The prices of fixed income securities fluctuate inversely to the direction of
interest rates.
AVERAGE MATURITY. The dollar-weighted average maturity of the Fund's portfolio
of Ohio municipal securities will not be less than three years or more than ten
years. For purposes of determining the dollar-weighted average portfolio
maturity of the Fund's portfolio, the maturity of a municipal security will be
its ultimate maturity, unless it is probable that the issuer of the security
will take advantage of maturity-shortening devices such as a call, refunding, or
redemption provision, in which case the maturity date will be the date on which
it is probable that the security will be called, refunded, or redeemed. If the
municipal security includes the right to demand payment, the maturity of the
security for purposes of determining the Fund's dollar-weighted average
portfolio maturity will be the period remaining until the principal amount of
the security can be recovered by exercising the right to demand payment.
CHARACTERISTICS. The municipal securities in which the Fund invests are:
- rated within the three highest ratings for municipal securities by Moody's
Investors Service, Inc. ("Moody's") (Aaa, Aa, or A), Standard & Poor's
Rating Group ("S&P") (AAA, AA, or A), or Fitch Investors Service, Inc.
("Fitch") (AAA, AA, or A);
- guaranteed at the time of purchase by the U.S. government as to the
payment of principal and interest;
- fully collateralized by an escrow of U.S. government securities or other
securities acceptable to the Fund's adviser;
- rated at the time of purchase within Moody's highest short-term municipal
obligation rating (MIG1/VMIG1) or Moody's highest municipal commercial
paper rating (PRIME-1) or S&P's highest municipal commercial paper rating
(SP-1);
- unrated if, at the time of purchase, other municipal securities of that
issuer are rated A or better by Moody's, S&P or Fitch; or
- unrated if determined to be of equivalent quality to one of the foregoing
rating categories by the Fund's investment adviser.
If a security is subsequently downgraded, the adviser will determine whether it
continues to be an acceptable investment; if not, the security will be sold. A
description of the rating categories is contained in the Appendix to the
Statement of Additional Information.
PARTICIPATION INTERESTS. The Fund may purchase participation interests from
financial institutions such as commercial banks, savings associations, and
insurance companies. These participation interests give the Fund an undivided
interest in Ohio municipal securities. The financial institutions from which the
Fund purchases participation interests frequently provide or secure irrevocable
letters of credit or guarantees to assure that the participation interests are
of high quality. The Trustees will determine whether participation interests
meet the prescribed quality standards for the Fund.
VARIABLE RATE MUNICIPAL SECURITIES. Some of the Ohio municipal securities which
the Fund purchases may have variable interest rates. Variable interest rates are
ordinarily stated as a percentage of a published interest rate, interest rate
index, or a similar standard, such as the 91-day U.S. Treasury
4
bill rate. Many variable rate municipal securities are subject to payment of
principal on demand by the Fund in not more than seven days. All variable rate
municipal securities will meet the quality standards for the Fund. The Fund's
investment adviser has been instructed by the Trustees to monitor the pricing,
quality, and liquidity of the variable rate municipal securities, including
participation interests held by the Fund on the basis of published financial
information and reports of the rating agencies and other analytical services.
MUNICIPAL LEASES. Also included within the general category of municipal
securities are certain lease obligations or installment purchase contract
obligations and participations therein (hereinafter collectively referred to as
"lease obligations") of municipal authorities or entities. Although lease
obligations do not constitute general obligations of the municipality for which
the municipality's taxing power is pledged, a lease obligation is ordinarily
backed by the municipality's covenant to budget for, appropriate, and make the
payments due under the lease obligation. Interest on lease obligations is
tax-exempt to the same extent as if the municipality had issued debt obligations
to finance the underlying project or purchase. However, certain lease
obligations contain "non-appropriation" clauses which provide that the
municipality has no obligation to make lease or installment purchase payments in
future years unless money is appropriated for such purpose on a yearly basis. In
addition to the "non-appropriation" risk, these securities represent a
relatively new type of financing that has not yet developed the depth of
marketability associated with more conventional bonds and some lease obligations
may be illiquid. Although "non-appropriation" lease obligations are generally
secured by the leased property, disposition of the property in the event of
foreclosure might prove difficult. In addition, the tax treatment of such
obligations in the event of "non-appropriation" is unclear. The Fund does not
invest more than 10% of its total assets in lease obligations that contain
"non-appropriation" clauses.
If the Fund purchases unrated municipal leases, the Trustees will be responsible
for determining, on an ongoing basis, the credit quality of such leases and the
likelihood that such leases will not be cancelled.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase Ohio
municipal securities on a when-issued or delayed delivery basis. These
transactions are arrangements in which the Fund purchases securities with
payment and delivery scheduled for a future time. The seller's failure to
complete these transactions may cause the Fund to miss a price or yield
considered to be advantageous. Settlement dates may be a month or more after
entering into these transactions, and the market values of the securities
purchased may vary from the purchase prices. Accordingly, the Fund may pay more
or less than the market value of the securities on the settlement date.
The Fund may dispose of a commitment prior to settlement if the adviser deems it
appropriate to do so. In addition, the Fund may enter into transactions to sell
its purchase commitments to third parties at current market values and
simultaneously acquire other commitments to purchase similar securities at later
dates. The Fund may realize short-term profits or losses upon the sale of such
commitments.
TEMPORARY INVESTMENTS. The Fund normally invests in Ohio municipal securities,
as described above. However, from time to time, when the investment adviser
determines that market conditions call for a temporary defensive posture, the
Fund may invest in short-term non-Ohio municipal tax-
5
exempt obligations or taxable temporary investments. These temporary investments
include: notes issued by or on behalf of municipal or corporate issuers;
obligations issued or guaranteed by the U.S. government, its agencies, or
instrumentalities; other debt securities; commercial paper; certificates of
deposit of banks; and repurchase agreements (arrangements in which the
organization selling the Fund a bond or temporary investment agrees at the time
of sale to repurchase it at a mutually agreed upon time and price).
There are no rating requirements applicable to temporary investments with the
exception of temporary municipal securities, which are subject to the same
rating requirements as all other municipal securities in which the Fund invests.
However, the investment adviser will limit temporary investments to those it
considers to be of comparable quality to the acceptable investments of the Fund.
Although the Fund is permitted to make taxable, temporary investments, there is
no current intention of generating income subject to federal regular income tax
or Ohio state personal income tax.
OHIO MUNICIPAL SECURITIES
Ohio municipal securities are generally issued to finance public works, such as
airports, bridges, highways, housing, hospitals, mass transportation projects,
schools, streets, and water and sewer works. They are also issued to repay
outstanding obligations, to raise funds for general operating expenses, and to
make loans to other public institutions and facilities.
Ohio municipal securities include industrial development bonds issued by or on
behalf of public authorities to provide financing aid to acquire sites or
construct and equip facilities for privately or publicly owned corporations. The
availability of this financing encourages these corporations to locate within
the sponsoring communities and thereby increases local employment.
The two principal classifications of municipal securities are "general
obligation" and "revenue" bonds. General obligation bonds are secured by the
issuer's pledge of its full faith and credit and taxing power for the payment of
principal and interest. However, interest on and principal of revenue bonds are
payable only from the revenue generated by the facility financed by the bond or
other specified sources of revenue. Revenue bonds do not represent a pledge of
credit or create any debt of or charge against the general revenues of a
municipality or public authority. Industrial development bonds are typically
classified as revenue bonds.
INVESTMENT RISKS
Yields on Ohio municipal securities depend on a variety of factors, including:
the general conditions of the municipal bond market; the size of the particular
offering; the maturity of the obligations; and the rating of the issue. Further,
any adverse economic conditions or developments affecting the state of Ohio or
its municipalities could impact the Fund's portfolio. The State of Ohio and
certain underlying municipalities face potential economic problems over the
longer term. The state economy has grown more slowly than that of the nation as
a whole, resulting in a gradual erosion of its relative economic affluence. The
causes of this relative decline are varied and complex, involving in many cases
national and international demographic and economic trends beyond the influence
of the state. The ability of the Fund to achieve its investment objective also
depends on the continuing
6
ability of the issuers of Ohio municipal securities and participation interests,
or the guarantors of either, to meet their obligations for the payment of
interest and principal when due. Investing in Ohio municipal securities which
meet the Fund's quality standards may not be possible if the State of Ohio or
its municipalities do not maintain their current credit ratings. In addition,
certain Ohio constitutional amendments, legislative measures, executive orders,
administrative regulations, or voter initiatives could result in adverse
consequences affecting Ohio municipal securities.
NON-DIVERSIFICATION
The Fund is a non-diversified investment portfolio. As such, there is no limit
on the percentage of assets which can be invested in any single issuer. An
investment in the Fund, therefore, will entail greater risk than would exist in
a diversified portfolio of securities because the higher percentage of
investments among fewer issuers may result in greater fluctuation in the total
market value of the Fund's portfolio. Any economic, political, or regulatory
developments affecting the value of the securities in the Fund's portfolio will
have a greater impact on the total value of the portfolio than would be the case
if the portfolio was diversified among more issuers.
The Fund intends to comply with Subchapter M of the Internal Revenue Code, as
amended. This undertaking requires that at the end of each quarter of the
taxable year, with regard to at least 50% of the Fund's total assets, no more
than 5% of its total assets are invested in the securities of a single issuer;
beyond that no more than 25% of its total assets are invested in the securities
of a single issuer.
INVESTMENT LIMITATIONS
The Fund will not borrow money directly or through reverse repurchase agreements
(arrangements in which the Fund sells a portfolio instrument for a percentage of
its cash value with an agreement to buy it back on a set date) or pledge
securities except, under certain circumstances, the 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. The Fund does not intend to engage in
any borrowings during the coming fiscal year.
The above investment limitation cannot be changed without shareholder approval.
The following limitation, however, can be changed by the Trustees without
shareholder approval. Shareholders will be notified before any material change
in this limitation becomes effective.
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, and restricted securities determined by the Trustees
not to be liquid.
INTERMEDIATE MUNICIPAL 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 business affairs of the Trust and for
exercising all of the powers of the Trust, except those reserved for the
shareholders. An Executive Committee of the Board of Trustees handles the
Board's responsibilities between meetings of the Board.
7
INVESTMENT ADVISER. Investment decisions for the Fund are made by Federated
Management, the Fund's investment adviser (the "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 Adviser receives an annual investment advisory fee equal
to .50 of 1% of the Fund's average daily net assets. Under the investment
advisory contract, the Adviser may reimburse the Fund the amount, limited to
the amount of the advisory fee, by which the Fund's aggregate annual
operating expenses, including its investment advisory fee but excluding
interest, taxes, brokerage commissions, insurance premiums, expenses of
registering and qualifying the Fund and its shares under federal and state
laws, expenses of withholding taxes, and extraordinary expenses, exceed a
certain percentage of its average daily net assets. This does not include
reimbursement to the Fund of any expenses incurred by shareholders who use
the transfer agent's subaccounting facilities. The Adviser can terminate
this voluntary reimbursement of expenses at any time at its sole discretion.
The Adviser has also undertaken to reimburse the Fund for operating expenses
in excess of limitations established by certain states.
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, as amended. 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.
J. Scott Albrecht has been the Fund's portfolio manager since the Fund's
inception. Mr. Albrecht joined Federated Investors in 1989 and has been an
Assistant Vice President of the Adviser since 1992. From 1989 until 1991,
Mr. Albrecht acted as an investment analyst. Mr. Albrecht was a municipal
credit analyst at Mellon Bank, N.A. from 1985 until 1989. Mr. Albrecht is a
Chartered Financial Analyst and received his M.S. in Management from
Carnegie Mellon University.
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. With over $72 billion invested across more
than 260 funds under management and/or administration by its subsidiaries,
as of December 31, 1994, Federated Investors is one of the largest mutual
fund investment managers in the United States. With more than 1,750
employees, Federated continues to be led by the management who founded the
company in 1955. Federated funds are presently at work in and through 4,000
financial institutions nationwide. More than 100,000 investment
professionals have selected Federated funds for their clients.
Both the Trust and the Adviser have adopted strict codes of ethics governing the
conduct of all employees who manage the Fund and its portfolio securities. These
codes recognize that such persons owe a fiduciary duty to the Fund's
shareholders and must place the interests of shareholders ahead of the
employees' own interest. Among other things, the codes: require preclearance and
periodic reporting of personal securities transactions; prohibit personal
transactions in securities being purchased or sold, or being considered for
purchase or sale, by the Fund; prohibit purchasing
8
securities in initial public offerings; and prohibit taking profits on
securities held for less than sixty days. Violations of the codes are subject to
review by the Trustees, and could result in severe penalties.
DISTRIBUTION OF FUND SHARES
Federated Securities Corp. is the principal distributor for shares of the Fund.
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 (the "Federated Funds") as specified below:
<TABLE>
<CAPTION>
MAXIMUM FEE AVERAGE AGGREGATE DAILY NET ASSETS
-------------------- ------------------------------------
<C> <S>
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. The Fund has entered into a Shareholder Services
Agreement with Federated Shareholder Services, a subsidiary of Federated
Investors, under which the Fund 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 for the maintenance of shareholder accounts ("shareholder
services"). Under the Shareholder Services Agreement, 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 Fund and Federated Shareholder Services.
OTHER PAYMENTS TO FINANCIAL INSTITUTIONS. In addition to periodic payments to
financial institutions for shareholder services, certain financial institutions
may be compensated by the Adviser or its affiliates for the continuing
investment of customers' assets in certain funds, including the Fund, advised by
those entities. These payments will be made directly by the distributor or
Adviser from their assets, and will not be made from the assets of the Fund or
by the assessment of a sales load on shares.
CUSTODIAN. State Street Bank and Trust Company ("State Street Bank"), Boston,
Massachusetts, is custodian for the securities and cash of the Fund.
9
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT. Federated Services Company,
Boston, Massachusetts, is transfer agent for the shares of the Fund, and
dividend disbursing agent for the Fund.
INDEPENDENT PUBLIC ACCOUNTANTS. The independent public accountants for the Fund
are Arthur Andersen LLP, Pittsburgh, Pennsylvania.
NET ASSET VALUE
- --------------------------------------------------------------------------------
The Fund's net asset value per share fluctuates. It is determined by dividing
the sum of all securities and other assets, less liabilities, by the total
number of shares outstanding.
INVESTING IN THE FUND
- --------------------------------------------------------------------------------
SHARE PURCHASES
Shares of the Fund are sold on days on which the New York Stock Exchange is open
for business. Shares may be purchased either by wire or mail. The Fund reserves
the right to reject any purchase request.
To purchase shares of the Fund, open an account by calling Federated Securities
Corp. Information needed to establish the account will be taken over the
telephone.
BY WIRE. To purchase shares of the Fund by Federal Reserve wire, call the Fund
before 1:00 p.m. (Eastern time) to place an order. The order is considered
received immediately. Payment by federal funds must be received before 3:00 p.m.
(Eastern time) that day. Federal funds should be wired as follows: Federated
Services Company, c/o State Street Bank and Trust Company, Boston,
Massachusetts; Attention: EDGEWIRE; For Credit to: Federated Ohio Intermediate
Municipal Trust; Fund Number (this number can be found on the Account Statement
or by contacting the Fund); Group Number or Order Number; Nominee or Institution
Name; and ABA Number 011000028.
BY MAIL. To purchase shares of the Fund by mail, send a check made payable to
Federated Ohio Intermediate Municipal Trust to: Federated Services Company, P.O.
Box 8600, Boston, Massachusetts 02266-8600. Orders by mail are considered
received when payment by check is converted into federal funds. This is normally
the next business day after the check is received.
SUBACCOUNTING SERVICES
Financial institutions are encouraged to open single master accounts. However,
certain financial institutions may wish to use the transfer agent's
subaccounting system to minimize their internal recordkeeping requirements. The
transfer agent may charge a fee based on the level of subaccounting services
rendered. Financial 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 of the Fund. This prospectus should, therefore, be read together with any
10
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.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment in the Fund is $25,000, plus any non-affiliated
bank or broker's fee, if applicable. However, an account may be opened with a
smaller amount as long as the $25,000 minimum is reached within 90 days. An
institutional investor's minimum investment will be calculated by combining all
accounts it maintains with the Fund.
Individual accounts established through a bank or broker may be subject to a
different minimum investment requirement.
WHAT SHARES COST
Shares are sold at their net asset value next determined after an order is
received. There is no sales load imposed by the 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 as of the close of trading (normally 4:00
p.m., Eastern time) on the New York Stock Exchange, Monday through Friday,
except on: (i) days on which there are not sufficient changes in the value of
the Fund's portfolio securities that its net asset value might be materially
affected; (ii) days during which no Shares are tendered for redemption and no
orders to purchase shares are received; or (iii) the following holidays: New
Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day.
EXCHANGING SECURITIES FOR FUND SHARES
Investors may exchange certain municipal securities or a combination of
securities and cash for Fund shares. The securities and cash must have a market
value of at least $25,000. The Fund reserves the right to determine the
acceptability of the securities to be exchanged. Securities accepted by the Fund
are valued in the same manner as the Fund values its assets. Shareholders
wishing to exchange securities should first contact Federated Securities Corp.
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
in writing.
Detailed confirmations of each purchase and redemption are sent to each
shareholder. Monthly confirmations are sent to report dividends paid during that
month.
DIVIDENDS AND DISTRIBUTIONS
Dividends are declared daily and paid monthly to all shareholders invested in
the Fund on the record date. Dividends and distributions are automatically
reinvested in additional shares of the Fund on payment dates at the ex-dividend
date net asset value, unless shareholders request cash payments on the new
account form or by writing to Federated Services Company. All shareholders on
the record date are entitled to the dividend.
11
CAPITAL GAINS
Distributions of net realized long-term capital gains realized by the Fund, if
any, will be made at least once every twelve months.
REDEEMING 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.
BY TELEPHONE. Shareholders may redeem their shares by telephoning the Fund
before 4:00 p.m. (Eastern time). All proceeds will normally be wire transferred
the following business day, but in no event more than seven days, to the
shareholder's account at a domestic commercial bank that is a member of the
Federal Reserve System. If at any time, the Fund shall determine it necessary to
terminate or modify this method of redemption, shareholders would be promptly
notified. Telephone redemption instructions may be recorded.
An authorization form permitting the Fund to accept telephone redemption
requests must first be completed. It is recommended that investors request this
privilege at the time of their initial application. If not completed at the time
of initial application, authorization forms and information on this service can
be obtained through Federated Securities Corp. If reasonable procedures are not
followed by the Fund, it may be liable for losses due to unauthorized or
fraudulent telephone instructions.
In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If such a case should occur, another
method of redemption, such as "By Mail," should be considered.
BY MAIL. Shareholders may redeem shares by sending a written request to
Federated Services Company, P.O. Box 8600, Boston, Massachusetts 02266-8600. The
written request should include the shareholder's name, the Fund name, the
account number, and the share or dollar amount requested. If share certificates
have been issued, they must be properly endorsed and should be sent by
registered or certified mail to Federated Services Company, 500 Victory Road -
2nd Floor, Quincy, Massachusetts 02171 with the written request.
SIGNATURES. Shareholders requesting a redemption of $50,000 or more, a
redemption of any amount to be sent to an address other than that on record with
the 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, which is administered by the Federal Deposit Insurance
Corporation ("FDIC");
- a member of the New York, American, Boston, Midwest, or Pacific Stock
Exchanges;
12
- a savings bank or savings and loan association whose deposits are insured
by the Savings Association Insurance Fund, 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.
Normally, a check for the proceeds is mailed to the shareholder within one
business day, but in no event more than seven days, after receipt of a proper
written redemption request provided the transfer agent has received payment for
shares from the shareholder.
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 of record
if the account balance falls below the required minimum value of $25,000 due to
shareholder redemptions. 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 each portfolio
in the Trust have equal voting rights except that in matters affecting only a
particular fund, only shareholders of that fund are entitled to vote. As of July
3, 1995, Defco Company, Defiance, Ohio, owned 27.28% of the voting securities of
the Fund and, therefore, may for certain purposes be deemed to control the Fund
and be able to affect the outcome of certain matters presented for a vote of
shareholders.
As a Massachusetts business trust, the Trust is not required to hold annual
shareholder meetings. Shareholder approval will be sought only for certain
changes in the Trust's 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 all series in the Trust entitled to vote.
13
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for acts or obligations of the Trust on behalf
of the Fund. To protect shareholders of the Fund, the Trust has filed legal
documents with Massachusetts that expressly disclaim the liability of
shareholders of the Fund 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 of the Fund is held personally liable for
the Trust's obligations on behalf of the Fund, the Trust is required to use the
property of the Fund to protect or compensate the shareholder. On request, the
Trust will defend any claim made and pay any judgment against a shareholder of
the Fund for any act or obligation of the Trust on behalf of the Fund.
Therefore, financial loss resulting from liability as a shareholder of the Fund
will occur only if the Trust cannot meet its obligations to indemnify
shareholders and pay judgments against them from the assets of the Fund.
TAX INFORMATION
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet requirements
of the Internal Revenue Code of 1986, as amended (the "Code"), applicable to
regulated investment companies and to receive the special tax treatment afforded
to such companies. The Fund will be treated as a single, separate entity for
federal income tax purposes so that income (including capital gains) and losses
realized by the Trust's other portfolios will not be combined for tax purposes
with those realized by the Fund.
Shareholders are not required to pay federal regular income tax on any dividends
received from the Fund that represent net interest on tax-exempt municipal
bonds. However, dividends representing net interest income earned on some
municipal bonds may be included in calculating the federal individual
alternative minimum tax or the federal alternative minimum tax for corporations.
The alternative minimum tax, up to 28% of alternative minimum taxable income for
individuals and 20% for corporations, applies when it exceeds the regular tax
for the taxable year. Alternative minimum taxable income is equal to the regular
taxable income of the taxpayer increased by certain "tax preference" items not
included in regular taxable income and reduced by only a portion of the
deductions allowed in the calculation of the regular tax.
Interest on certain "private activity" bonds issued after August 7, 1986, is
treated as a tax preference item for both individuals and corporations. Unlike
traditional governmental purpose municipal bonds, which finance roads, schools,
libraries, prisons, and other public facilities, private activity bonds provide
benefits to private parties. The Fund may purchase all types of municipal bonds,
including private activity bonds. Thus, should it purchase any such bonds, a
portion of the Fund's dividends may be treated as a tax preference item.
14
In addition, in the case of a corporate shareholder, dividends of the Fund which
represent interest on municipal bonds will become subject to the 20% corporate
alternative minimum tax because the dividends are included in a corporation's
"adjusted current earnings." The corporate alternative minimum tax treats 75% of
the excess of a taxpayer's pre-tax "adjusted current earnings" over the
taxpayer's alternative minimum taxable income as a tax preference item.
"Adjusted current earnings" is based upon the concept of a corporation's
"earnings and profits." Since "earnings and profits" generally includes the full
amount of any Fund dividend, and alternative minimum taxable income does not
include the portion of the Fund's dividend attributable to municipal bonds which
are not private activity bonds, the difference will be included in the
calculation of the corporation's alternative minimum tax.
Dividends of the Fund representing net interest income earned on some temporary
investments and any realized net short-term gains are taxed as ordinary income.
These tax consequences apply whether dividends are received in cash or as
additional shares. Information on the tax status of dividends and distributions
is provided annually.
OHIO TAXES
Under existing Ohio laws, distributions made by the Fund will not be subject to
Ohio individual income tax if such distributions qualify as "exempt-interest
dividends" under the Code, and represent (i) interest from obligations of Ohio
or its subdivisions which is exempt from federal income tax; or (ii) interest or
dividends from obligations issued by the United States and its territories or
possessions or by any authority, commission or instrumentality of the United
States which are exempt from state income tax under federal laws. Conversely, to
the extent that distributions made by the Fund are derived from other types of
obligations, such dividends will be subject to Ohio individual income tax.
Distributions made by the Fund will not be subject to Ohio corporation franchise
tax if such distributions qualify as "exempt-interest dividends" under the Code,
and represent (i) interest from obligations of Ohio or its subdivisions which is
exempt from federal income tax; or (ii) net interest income from obligations
issued by the United States and its territories or possessions or by any
authority, commission or instrumentality of the United States, which is included
in federal taxable income and which the exempt from state income tax under
federal laws.
Exempt-interest dividends that represent interest from obligations held by the
Fund which are issued by the State of Ohio or its political subdivisions will be
exempt from any Ohio municipal income tax (even if the municipality is permitted
under Ohio law to levy a tax on intangible income).
OTHER STATE AND LOCAL TAXES
Income from the Fund is not necessarily free from state income taxes in states
other than Ohio or from personal property taxes. State laws differ on this
issue, and shareholders are urged to consult their own tax advisers regarding
the status of their accounts under state and local tax laws.
15
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time, the Fund advertises its total return, yield, and
tax-equivalent yield.
Total return represents the change, over a specific period of time, in the value
of an investment in the Fund after reinvesting all income and capital gains
distributions. It is calculated by dividing that change by the initial
investment and is expressed as a percentage.
The yield of the Fund is calculated by dividing the net investment income per
share (as defined by the Securities and Exchange Commission) earned by the
shares of the Fund over a thirty-day period by the offering price per share of
the shares of the Fund on the last day of the period. This number is then
annualized using semi-annual compounding. The tax-equivalent yield of the Fund
is calculated similarly to the yield, but is adjusted to reflect the taxable
yield that the Fund would have had to earn to equal its actual yield, assuming a
specific tax rate. The yield and the tax-equivalent yield do not necessarily
reflect income actually earned by the Fund and, therefore, may not correlate to
the dividends or other distributions paid to shareholders.
From time to time, advertisements for the Fund may refer to ratings, rankings,
and other information in certain financial publications and/or compare the
Fund's performance to certain indices.
16
FEDERATED OHIO INTERMEDIATE MUNICIPAL TRUST
(FORMERLY, OHIO INTERMEDIATE MUNICIPAL TRUST)
PORTFOLIO OF INVESTMENTS
MAY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
--------- ---------------------------------------------- ------- ----------
<C> <S> <C> <C>
INTERMEDIATE-TERM MUNICIPAL SECURITIES--98.0%
---------------------------------------------------------
OHIO--94.9%
----------------------------------------------
$200,000 Akron, OH, Waterworks System, 5.50% Mortgage
Revenue Bonds (FGIC Insured), 12/1/2005 AAA $ 207,264
----------------------------------------------
100,000 Avon Lake, OH, 5.35% LT GO Bonds (Series
1994), 12/1/2003 A 102,260
----------------------------------------------
200,000 Cleveland, OH, 5.40% Airport System
Improvement Revenue Bonds (Series 1994A)/(FGIC
Insured)/(Original Issue Yield: 5.55%)/
(Subject to AMT), 1/1/2004 AAA 204,258
----------------------------------------------
250,000 Cleveland, OH, 6.00% Various Purpose LT GO
Bonds (Series 1994)/(MBIA Insured)/(Original
Issue Yield: 6.10%), 11/15/2004 AAA 266,513
----------------------------------------------
150,000 Columbus, OH, 5.50% Various Purpose LT GO
Bonds (Series 1994-1)/(Original Issue Yield:
5.583%), 5/15/2004 AA+ 157,455
----------------------------------------------
500,000 Columbus, OH, Municipal Airport Authority,
5.55% Improvement Revenue Bonds (Series
1994A)/(Port Columbus International
Airport)/(MBIA Insured)/(Original Issue Yield:
5.65%)/(Subject to AMT), 1/1/2004 AAA 514,580
----------------------------------------------
100,000 Columbus, OH, Water System, 6.375% Refunding
Revenue Bonds (Series 1991)/(Original Issue
Yield: 6.65%), 11/1/2010 A1 104,933
----------------------------------------------
400,000 Cuyahoga County, OH, 5.00% Hospital Revenue
Bonds (Fairview General Hospital)/(Original
Issue Yield: 5.10%), 8/15/2004 A 382,052
----------------------------------------------
250,000 Franklin County, OH, 5.875% Revenue Bonds
(Seton Square North)/(FHA Insured)/(Original
Issue Yield: 6.00%), 10/1/2004 Aa 258,780
----------------------------------------------
100,000 Kings Local School District, OH, 6.25% UT GO
Bonds, 12/1/2001 NR 107,668
----------------------------------------------
100,000 Kings Local School District, OH, 6.50% UT GO
Bonds, 12/1/2003 NR 109,920
----------------------------------------------
250,000 Lakewood, OH, 5.35% UT GO Bonds (Series A),
12/1/2004 Aa 258,848
----------------------------------------------
250,000 Lorain County, OH, 5.10% Hospital Facilities
Refunding Revenue Bonds (EMH Regional Medical
Center)/(AMBAC Insured)/ (Original Issue
Yield: 5.30%), 11/1/2004 AAA 247,595
----------------------------------------------
</TABLE>
17
FEDERATED OHIO INTERMEDIATE MUNICIPAL TRUST
- ---------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
--------- ---------------------------------------------- ------- ----------
<C> <S> <C> <C>
INTERMEDIATE-TERM MUNICIPAL SECURITIES--CONTINUED
---------------------------------------------------------
OHIO--CONTINUED
----------------------------------------------
$200,000 Mahoning County, OH, 5.70% LT GO Various
Purpose Capital Bonds (Series 1994)/(MBIA
Insured), 12/1/2004 AAA $ 210,638
----------------------------------------------
150,000 Maumee, OH, 5.35% Hospital Facilities Revenue
Bonds (Series 1994)/(St. Luke's
Hospital)/(AMBAC Insured), 12/1/2004 AAA 154,159
----------------------------------------------
150,000 Miami Valley Regional Transit Authority, OH,
5.40% LT GO Bonds (Series 1994), 12/2/2004 A 153,241
----------------------------------------------
150,000 North Canton, OH, City School District, 5.50%
LT GO Bonds, 12/1/2003 A 153,784
----------------------------------------------
100,000 North Royalton City School District, OH, 5.50%
UT GO School Improvement Bonds (Series
1994)/(MBIA Insured), 12/1/2004 AAA 103,821
----------------------------------------------
150,000 Ohio State HFA, 5.40% Revenue Bonds (Series
1994A-1)/(GNMA Collateralized), 3/1/2004 AAA 151,026
----------------------------------------------
610,000 Ohio State HFA, 5.80% Revenue Bonds (Series
1994B-1)/(GNMA Collateralized), 9/1/2005 AAA 630,892
----------------------------------------------
250,000 Ohio State, 5.60% Infrastructure Improvement
GO Bonds (Series 1995)/(Original Issue Yield:
5.65%), 8/1/2002 AA 264,005
----------------------------------------------
250,000 Olentangy Local School District, OH, 5.60% UT
GO Bonds (Series 1995A)/(Original Issue Yield:
5.70%), 12/1/2004 AA- 260,658
----------------------------------------------
200,000 Portage County, OH, 5.40% LT GO Bonds (AMBAC
Insured), 12/1/2003 AAA 207,164
----------------------------------------------
195,000 Stow, OH, 7.75% LT GO Bonds (Safety Center
Construction Bonds), 12/1/2003 A1 230,726
----------------------------------------------
260,000 Summit County, OH, 5.75% LT GO Various Purpose
Bonds (AMBAC Insured), 12/1/2005 AAA 273,824
----------------------------------------------
200,000 Toledo, OH, Sewer System, 5.75% Revenue Bonds
(Original Issue Yield: 5.85%)/(AMBAC Insured),
11/15/2005 AAA 211,258
----------------------------------------------
230,000 Tuscarawas Valley Local School District, OH,
5.45% UT GO Bonds (Series 1995)/(AMBAC
Insured), 12/1/2004 AAA 239,872
----------------------------------------------
</TABLE>
18
FEDERATED OHIO INTERMEDIATE MUNICIPAL TRUST
- ---------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
--------- ---------------------------------------------- ------- ----------
<C> <S> <C> <C>
INTERMEDIATE-TERM MUNICIPAL SECURITIES--CONTINUED
---------------------------------------------------------
OHIO--CONTINUED
----------------------------------------------
$100,000 Warren County, OH, 5.35% Waterworks System
Revenue Bonds (Series 1994)/(Original Issue
Yield: 5.45%)/(MBIA Insured), 12/1/2005 AAA $ 102,176
---------------------------------------------- ----------
Total 6,269,370
---------------------------------------------- ----------
VIRGIN ISLANDS--3.1%
----------------------------------------------
200,000 Virgin Islands, HFA Single Family Mortgage,
5.70% Refunding Revenue Bonds (GNMA
collateralized)/(Subject to AMT), 3/1/2004 AAA 203,144
---------------------------------------------- ----------
TOTAL INTERMEDIATE-TERM MUNICIPAL SECURITIES
(IDENTIFIED COST, $6,263,138) 6,472,514
---------------------------------------------- ----------
SHORT-TERM MUNICIPAL SECURITIES--3.8%
---------------------------------------------------------
PUERTO RICO--3.8%
----------------------------------------------
250,000 Puerto Rico Government Development Bank,
Weekly VRDNs (Credit Suisse and Sumitomo Bank
Ltd. LOCs) A-1 250,000
---------------------------------------------- ----------
TOTAL SHORT-TERM MUNICIPAL SECURITIES, AT
AMORTIZED COST 250,000
---------------------------------------------- ----------
TOTAL INTERMEDIATE-TERM MUNICIPAL SECURITIES
(IDENTIFIED COST, $6,513,138) (a) $6,722,514
---------------------------------------------- ----------
----------
<FN>
* Please refer to the Appendix of the Statement of Additional Information for
an explanation of the credit ratings. Current credit ratings are unaudited.
(a) The cost of investments for federal tax purposes amounts to $6,513,138. The
net appreciation on a federal tax basis amounts to $209,376, which is
comprised of $225,693 appreciation and $16,317 depreciation at May 31, 1995.
Note: The categories of investments are shown as a percentage of net assets
($6,607,090) at May 31, 1995.
</TABLE>
19
FEDERATED OHIO INTERMEDIATE MUNICIPAL TRUST
- ---------------------------------------------------------
<TABLE>
<S> <C>
The following abbreviations are used in this portfolio:
AMBAC --American Municipal Bond Assurance Corporation
AMT --Alternative Minimum Tax
FGIC --Financial Guaranty Insurance Company
FHA --Federal Housing Administration
GNMA --Government National Mortgage Association
GO --General Obligation
HFA --Housing Finance Authority/Agency
LOCs --Letters of Credit
LT --Limited Tax
MBIA --Municipal Bond Investors Assurance
UT --Unlimited Tax
VRDNs --Variable Rate Demand Notes
</TABLE>
(See Notes which are an integral part of the Financial Statements)
20
FEDERATED OHIO INTERMEDIATE MUNICIPAL TRUST
(FORMERLY, OHIO INTERMEDIATE MUNICIPAL TRUST)
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
- -------------------------------------------------------------------
Investments in securities, at value (identified and tax cost
$6,513,138) $6,722,514
- -------------------------------------------------------------------
Cash 41,817
- -------------------------------------------------------------------
Income Receivable 119,971
- -------------------------------------------------------------------
Deferred Expenses 13,001
- ------------------------------------------------------------------- ----------
Total assets 6,897,303
- -------------------------------------------------------------------
LIABILITIES:
- -------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C>
Payable for investments purchased $247,812
- --------------------------------------------------------
Income distributions payable 22,265
- --------------------------------------------------------
Accrued expenses 20,136
- -------------------------------------------------------- --------
</TABLE>
<TABLE>
<S> <C>
Total liabilities 290,213
- ------------------------------------------------------------------- ----------
NET ASSETS for 675,044 shares outstanding $6,607,090
- ------------------------------------------------------------------- ----------
----------
NET ASSETS CONSIST OF:
- -------------------------------------------------------------------
Paid-in capital $6,650,742
- -------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments 209,376
- -------------------------------------------------------------------
Accumulated net realized gain (loss) on investments (253,028)
- ------------------------------------------------------------------- ----------
Total Net Assets $6,607,090
- ------------------------------------------------------------------- ----------
----------
NET ASSET VALUE, Offering Price, and Redemption Proceeds Per Share:
($6,607,090 DIVIDED BY 675,044 shares outstanding) $ 9.79
- ------------------------------------------------------------------- ----------
----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
21
FEDERATED OHIO INTERMEDIATE MUNICIPAL TRUST
(FORMERLY, OHIO INTERMEDIATE MUNICIPAL TRUST)
STATEMENT OF OPERATIONS
YEAR ENDED MAY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- --------------------------------------------------------------------
Interest $ 289,793
- --------------------------------------------------------------------
EXPENSES:
- --------------------------------------------------------------------
Investment advisory fee $ 26,346
- ---------------------------------------------------------
Administrative personnel and services fees 125,000
- ---------------------------------------------------------
Custodian and portfolio accounting fees 59,367
- ---------------------------------------------------------
Shareholder services fee 2,635
- ---------------------------------------------------------
Transfer agent and dividend disbursing agent fees and
expenses 16,293
- ---------------------------------------------------------
Share registration costs 6,713
- ---------------------------------------------------------
Directors'/Trustees' fees 3,560
- ---------------------------------------------------------
Auditing fees 11,990
- ---------------------------------------------------------
Legal fees 840
- ---------------------------------------------------------
Printing and postage 12,239
- ---------------------------------------------------------
Insurance premiums 3,987
- ---------------------------------------------------------
Taxes 200
- ---------------------------------------------------------
Miscellaneous 7,416
- --------------------------------------------------------- --------
Total expenses 276,586
- ---------------------------------------------------------
Deduct--
- ----------------------------------------------
Waiver of investment advisory fees $ 26,346
- ----------------------------------------------
Reimbursement of other operating expenses 226,561 252,907
- ---------------------------------------------- -------- --------
Net expenses 23,679
- -------------------------------------------------------------------- ---------
Net investment income 266,114
- -------------------------------------------------------------------- ---------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
- --------------------------------------------------------------------
Net realized gain (loss) on investments (196,543)
- --------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on
investments 376,266
- -------------------------------------------------------------------- ---------
Net realized and unrealized gain (loss) on investments 179,723
- -------------------------------------------------------------------- ---------
Change in net assets resulting from
operations $ 445,837
- -------------------------------------------------------------------- ---------
---------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
22
FEDERATED OHIO INTERMEDIATE MUNICIPAL TRUST
(FORMERLY, OHIO INTERMEDIATE MUNICIPAL TRUST)
STATEMENT OF CHANGES IN NET ASSETS
- ---------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
-------------------------
1995 1994*
----------- -----------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ----------------------------------------------------
OPERATIONS--
- ----------------------------------------------------
Net investment income $ 266,114 $ 64,956
- ----------------------------------------------------
Net realized gain (loss) on investments, ($179,063
net loss and $0, respectively, as computed for
federal tax purposes) (196,543) (56,485)
- ----------------------------------------------------
Net change in unrealized appreciation/(depreciation)
of investments 376,266 (166,890)
- ---------------------------------------------------- ----------- -----------
Change in net assets resulting from operations 445,837 (158,419)
- ---------------------------------------------------- ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS--
- ----------------------------------------------------
Distributions from net investment income (266,114) (64,956)
- ---------------------------------------------------- ----------- -----------
SHARE TRANSACTIONS--
- ----------------------------------------------------
Proceeds from sale of Shares 8,891,447 6,891,738
- ----------------------------------------------------
Net asset value of Shares issued to shareholders in
payment of distributions declared 39,693 11,620
- ----------------------------------------------------
Cost of Shares redeemed (5,882,314) (3,301,442)
- ---------------------------------------------------- ----------- -----------
Change in net assets from Share transactions 3,048,826 3,601,916
- ---------------------------------------------------- ----------- -----------
Change in net assets 3,228,549 3,378,541
- ----------------------------------------------------
NET ASSETS:
- ----------------------------------------------------
Beginning of period 3,378,541 --
- ---------------------------------------------------- ----------- -----------
End of period $ 6,607,090 $ 3,378,541
- ---------------------------------------------------- ----------- -----------
----------- -----------
<FN>
* For the period from December 2, 1993 (date of initial public investment) to
May 31, 1994.
</TABLE>
(See Notes which are an integral part of the Financial Statements)
23
FEDERATED OHIO INTERMEDIATE MUNICIPAL TRUST
(FORMERLY, OHIO INTERMEDIATE MUNICIPAL TRUST)
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1995
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Intermediate Municipal Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "Act"), as an open-end management
investment company. The Trust consists of two non-diversified portfolios and one
diversified portfolio. The financial statements included herein present only
those of Federated Ohio Intermediate Municipal Trust (the "Fund"), a
non-diversified portfolio. The financial statements of the other portfolios are
presented separately. The assets of each portfolio are segregated and a
shareholder's interest is limited to the portfolio in which shares are held.
Effective December 19, 1994, the Board of Trustees (the "Trustees") changed the
name of the Fund from Ohio Intermediate Municipal Trust to Federated Ohio
Intermediate Municipal Trust.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--Municipal bonds are valued by an independent pricing
service, taking into consideration yield, liquidity, risk, credit quality,
coupon, maturity, type of issue, and any other factors or market data it
deems relevant in determining valuations for normal institutional size
trading units of debt securities. The independent pricing service does not
rely exclusively on quoted prices. Short-term securities with remaining
maturities of sixty days or less at the time of purchase may be valued at
amortized cost, which approximates fair market value.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized
as required by the Internal Revenue Code, as amended (the "Code").
Distributions to shareholders are recorded on the ex-dividend date.
FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its tax-exempt income.
Accordingly, no provisions for federal tax are necessary. At May 31, 1995,
the Fund for federal tax purposes, had a capital loss carryforward of
$179,063 which will reduce the Fund's taxable income arising from future net
realized gain on investments, if any, to the extent permitted by the Code,
and thus will reduce the amount of distributions to shareholders which would
otherwise be necessary to relieve the Fund of any liability for federal tax.
Pursuant to the Code, such capital loss carryforward will expire in 2003
($179,063).
24
FEDERATED OHIO INTERMEDIATE MUNICIPAL TRUST
(FORMERLY, OHIO INTERMEDIATE MUNICIPAL TRUST)
- --------------------------------------------------------------------------------
Additionally, net capital losses of $73,965 attributable to security
transactions incurred after October 31, 1994, are treated as arising on June
1, 1995, the first day of the Fund's next taxable year.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering its shares have been deferred and are being amortized
using the straight-line method not to exceed a period of five years from the
Fund's commencement date.
CONCENTRATION OF RISK--Since the Fund invests a substantial portion of its
assets in issuers located in one state, it will be more susceptible to
factors adversely affecting issuers in that state than would be a comparable
tax-exempt mutual fund that invests nationally. In order to reduce the
credit risk associated with such factors, at May 31, 1995, 51.3% of the
securities in the portfolio of investments are backed by letters of credit
or bond insurance of various financial institutions and financial guaranty
assurance agencies. The value of investments insured by or supported
(backed) by a letter of credit for any one institution or agency did not
exceed 19.8% of total investments.
OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value).
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
--------------------
1995 1994*
- --------------------------------------------------------------------- --------- ---------
<S> <C> <C>
Shares sold 941,647 690,481
- ---------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 4,237 1,203
- ---------------------------------------------------------------------
Shares redeemed (625,521) (337,003)
- --------------------------------------------------------------------- --------- ---------
Net change resulting from Fund share transactions 320,363 354,681
- --------------------------------------------------------------------- --------- ---------
--------- ---------
<FN>
* For the period from December 2, 1993 (date of initial public investment) to
May 31, 1994.
</TABLE>
25
FEDERATED OHIO INTERMEDIATE MUNICIPAL TRUST
(FORMERLY, OHIO INTERMEDIATE MUNICIPAL TRUST)
- --------------------------------------------------------------------------------
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Management, the Fund's investment adviser
(the "Adviser"), receives for its services an annual investment advisory fee
equal to .50 of 1% of the Fund's average daily net assets. The Adviser waived a
portion of its fee to comply with certain state expense limitations. The Adviser
may voluntarily choose to waive a portion of its fee and reimburse certain
operating expenses of the Fund. The Adviser can modify or terminate this
voluntary waiver and reimbursement at any time at its sole discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS"), under the
Administrative Services Agreement, provides the Fund with administrative
personnel and services. The FAS fee is based on the level of average aggregate
daily net assets of all funds advised by subsidiaries of Federated Investors for
the period. The administrative fee received during the period of the
Administrative Services Agreement shall be at least $125,000 per portfolio and
$30,000 per each additional class of shares.
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement
with Federated Shareholders Services ("FSS"), the Fund will pay FSS up to .25 of
1% of average daily net assets of the Fund for the period. The fee is to obtain
certain services for shareholders and to maintain shareholder accounts.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated
Services Company ("FServ") serves as transfer and dividend disbursing agent for
the Fund. The fee is based on the size, type, and number of accounts and
transactions made by shareholders.
ORGANIZATIONAL EXPENSES--Organizational expenses ($23,676) and start-up
administrative service expenses ($31,506) were borne initially by the Adviser.
The Fund has agreed to reimburse the Adviser for the organizational expenses and
start-up administrative expenses during the five year period following November
15, 1993 (date the Fund first became effective). For the year ended May 31,
1995, the Fund paid $2,499 and $3,326, respectively, pursuant to this agreement.
INTERFUND TRANSACTIONS--During the year ended May 31, 1995, the Fund engaged in
purchase and sale transactions with funds that have a common investment adviser
(or affiliated investment advisers), common Directors/Trustees, and/or common
Officers. These transactions were made at current market value pursuant to Rule
17a-7 under the Act amounting to $6,100,000 and $5,850,000, respectively.
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
26
FEDERATED OHIO INTERMEDIATE MUNICIPAL TRUST
(FORMERLY, OHIO INTERMEDIATE MUNICIPAL TRUST)
- --------------------------------------------------------------------------------
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
year ended May 31, 1995, were as follows:
<TABLE>
<S> <C>
- --------------------------------------------------------------------
PURCHASES $5,909,485
- -------------------------------------------------------------------- ----------
SALES $2,960,611
- -------------------------------------------------------------------- ----------
</TABLE>
27
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- ---------------------------------------------------------
To the Shareholders and Board of Trustees of
INTERMEDIATE MUNICIPAL TRUST
(Federated Ohio Intermediate Municipal Trust)
(formerly, Ohio Intermediate Municpal Trust):
We have audited the accompanying statement of assets and liabilities of
Federated Ohio Intermediate Municipal Trust (an investment portfolio of
Intermediate Municipal Trust, a Massachusetts business trust), including the
schedule of portfolio investments, as of May 31, 1995, and the related statement
of operations for the year then ended, the statement of changes in net assets,
and financial highlights (see page 2 of the prospectus) for the periods
presented. These financial statements and financial highlights are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of the securities owned as of
May 31, 1995, by correspondence with the custodian and brokers. As to the
securities purchased but not received, we requested confirmation from brokers
and, when replies were not received, we carried out other alternative auditing
procedures. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Federated Ohio Intermediate Municipal Trust, an investment portfolio of
Intermediate Municipal Trust as of May 31, 1995, the results of its operations
for the year then ended, the changes in its net assets and the financial
highlights for the periods presented, in conformity with generally accepted
accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
June 30, 1995
28
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Fund
Federated Ohio Intermediate
Municipal Trust 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 Trust Company P.O. Box 8600
Boston, Massachusetts 02266-8600
- -------------------------------------------------------------------------------------------
Transfer Agent and Dividend Disbursing Agent
Federated Services Company P.O. Box 8600
Boston, Massachusetts 02266-8600
- -------------------------------------------------------------------------------------------
Independent Public Accountants
Arthur Andersen LLP 2100 One PPG Place
Pittsburgh, Pennsylvania 15222
- -------------------------------------------------------------------------------------------
</TABLE>
29
- --------------------------------------------------------------------------------
FEDERATED OHIO
INTERMEDIATE
MUNICIPAL TRUST
PROSPECTUS
A Non-Diversified Portfolio of
Intermediate Municipal Trust
An Open-End, Management
Investment Company
July 31, 1995
[LOGO] FEDERATED SECURITIES CORP.
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
CUSIP 458810405
3081602A (7/95) [RECYCLED PAPER LOGO]
Federated Ohio Intermediate Municipal Trust
(A Portfolio of Intermediate Municipal Trust)
Statement of Additional Information
This Statement of Additional Information should be read with the
prospectus of Federated Ohio Intermediate Municipal Trust
(formerly, "Ohio Intermediate Municipal Trust") (the "Fund") dated
July 31, 1995. This Statement is not a prospectus itself. To
receive a copy of the prospectus write or call the Fund.
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
Statement dated July 31, 1995
Federated Securities Corp.
Distributor
A subsidiary of
Federated Investors
General Information About the
Fund 1
Investment Objective and Policies 1
Acceptable Investments 1
When-Issued and Delayed
Delivery Transactions 2
Temporary Investments 2
Portfolio Turnover 3
Investment Limitations 3
Investment Risks 4
Management of Intermediate
Municipal Trust 5
Officers and Trustees 5
Fund Ownership 9
Trustees' Compensation 10
Trustee Liability 10
Investment Advisory Services 11
Adviser to the Fund 11
Advisory Fees 11
Administrative Services 11
Shareholder Services Agreement 11
Transfer Agent and Dividend
Disbursing Agent 12
Purchasing Shares 12
Conversion to Federal Funds 12
Determining Net Asset Value 12
Valuing Municipal Bonds 12
Use of Amortized Cost 13
Redeeming Shares 13
Redemption in Kind 13
Tax Status 13
The Fund's Tax Status 13
Shareholders' Tax Status 13
Total Return 14
Yield 14
Tax-Equivalent Yield 14
Tax-Equivalency Table 14
Performance Comparisons 15
About Federated Investors 16
Mutual Fund Market 16
Appendix 18
General Information About the Fund
The Fund is a portfolio of Intermediate Municipal Trust (the "Trust").
The Trust was established as a Massachusetts business trust under a
Declaration of Trust dated May 31, 1985.
Investment Objective and Policies
The Fund's investment objective is to provide current income which is
exempt from federal regular income tax and personal income taxes imposed
by the State of Ohio. The investment objective cannot be changed without
approval of shareholders.
Acceptable Investments
The Fund invests primarily in a portfolio of municipal securities which
are exempt from federal regular income tax and Ohio state personal
income taxes. These securities include those issued by or on behalf of
the State of Ohio and Ohio municipalities, and those issued by states,
territories, and possessions of the United States which are exempt from
both federal regular income tax and Ohio state personal income taxes.
Characteristics
The Ohio municipal securities in which the Fund invests have the
characteristics set forth in the prospectus.
An Ohio municipal security will be determined by the Fund's
adviser to meet the quality standards established by the Trust's
Board of Trustees (the "Trustees") if it is of comparable quality
to municipal securities within the Fund's rating requirements. The
Trustees consider the creditworthiness of the issuer of a
municipal security, the issuer of a participation interest if the
Fund has the right to demand payment from the issuer of the
interest, or the guarantor of payment by either of those issuers.
The Fund is not required to sell a municipal security if the
security's rating is reduced below the required minimum subsequent
to its purchase by the Fund. The investment adviser considers this
event, however, in its determination of whether the Fund should
continue to hold the security in its portfolio. If Moody's
Investors Service, Inc., Standard & Poor's Ratings Group or Fitch
Investor Services, Inc. ratings change because of changes in those
organizations or in their rating systems, the Fund will try to use
comparable ratings as standards in accordance with the investment
policies described in the Fund's prospectus.
Types of Acceptable Investments
Examples of Ohio municipal securities are:
- municipal notes and municipal commercial paper;
- serial bonds sold with differing maturity dates;
- tax anticipation notes sold to finance working capital needs of
municipalities;
- bond anticipation notes sold prior to the issuance of long-term
bonds;
- pre-refunded municipal bonds; and
- general obligation bonds secured by a municipality pledge of
taxation.
Participation Interests
The financial institutions from which the Fund purchases
participation interests frequently provide or secure from another
financial institution irrevocable letters of credit or guarantees
and give the Fund the right to demand payment of the principal
amounts of the participation interests plus accrued interest on
short notice (usually within seven days).
Variable Rate Municipal Securities
Variable interest rates generally reduce changes in the market
value of municipal securities from their original purchase prices.
Accordingly, as interest rates decrease or increase, the potential
for capital appreciation or depreciation is less for variable rate
municipal securities than for fixed income obligations. Many
municipal securities with variable interest rates purchased by the
Fund are subject to repayment of principal (usually within seven
days) on the Fund's demand. The terms of these variable rate
demand instruments require payment of principal and accrued
interest from the issuer of the municipal obligations, the issuer
of the participation interests, or a guarantor of either issuer.
Municipal Leases
The Fund may purchase municipal securities in the form of
participation interests which represent undivided proportional
interests in lease payments by a governmental or non-profit
entity. The lease payments and other rights under the lease
provide for and secure the payments on the certificates. Lease
obligations may be limited by municipal charter or the nature of
the appropriation for the lease. In particular, lease obligations
may be subject to periodic appropriation. If the entity does not
appropriate funds for future lease payments, the entity cannot be
compelled to make such payments. Furthermore, a lease may provide
that the certificate trustee cannot accelerate lease obligations
upon default. The trustee would only be able to enforce lease
payments as they became due. In the event of a default or failure
of appropriation, it is unlikely that the trustee would be able to
obtain an acceptable substitute source of payment.
In determining the liquidity of municipal lease securities, the
Fund's investment adviser, under the authority delegated by the
Trustees, will base its determination on the following factors;
- whether the lease can be terminated by the lessee;
- the potential recovery, if any, from a sale of the leased
property upon termination of the lease;
- the lessee's general credit strength (e.g., its debt,
administrative, economic and financial characteristics and
prospects);
- the likelihood that the lessee will discontinue appropriating
funding for the leased property because the property is no
longer deemed essential to its operations (e.g., the potential
for an "event of non-appropriation"); and
- any credit enhancement or legal recourse provided upon an event
of non-appropriation or other termination of the lease.
When-Issued and Delayed Delivery Transactions
These transactions are made to secure what is considered to be an
advantageous price or yield for the Fund. 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
assets are marked to market daily and are maintained until the
transaction has been settled. The Fund may engage in when-issued and
delayed delivery transactions to an extent that would cause the
segregation of an amount up to 20% of the total value of its assets.
Temporary Investments
The Fund may also invest in temporary investments during times of
unusual market conditions for defensive purposes.
Repurchase Agreements
Repurchase agreements are arrangements in which banks,
broker/dealers, and other recognized financial institutions sell
U.S. government securities or certificates of deposit to the Fund
and agree at the time of sale to repurchase them at a mutually
agreed upon time and price within one year from the date of
acquisition. The Fund or its custodian will take possession of the
securities subject to repurchase agreements. 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 may only enter into repurchase
agreements with banks and other recognized financial institutions
such as broker/dealers which are found by the Fund's adviser to be
creditworthy pursuant to guidelines established by the Trustees.
Reverse Repurchase Agreements
The Fund may also enter into reverse repurchase agreements. These
transactions are similar to borrowing cash. In a reverse
repurchase agreement, the Fund transfers possession of a portfolio
instrument to another person, such as a financial institution,
broker, or dealer, in return for a percentage of the instrument's
market value in cash, and agrees that on a stipulated date in the
future, the Fund will repurchase the portfolio instrument by
remitting the original consideration plus interest at an agreed
upon rate. The use of reverse repurchase agreements may enable the
Fund to avoid selling portfolio instruments at a time when a sale
may be deemed to be disadvantageous, but the ability to enter into
reverse repurchase agreements does not ensure that the Fund will
be able to avoid selling portfolio instruments at a
disadvantageous time.
When effecting reverse repurchase agreements, liquid assets of the
Fund, in a dollar amount sufficient to make payment for the
obligations to be purchased, are segregated on the Fund's records
at the trade date. These assets are marked to market daily and are
maintained until the transaction is settled.
Portfolio Turnover
The Fund may trade or dispose of portfolio securities as considered
necessary to meet its investment objective. For the year ended May 31,
1995 and for the period from December 2, 1993 (date of initial public
investment) to May 31, 1994, the portfolio turnover rates for the Fund
were 56% and 48%, respectively.
Investment Limitations
Selling Short and Buying on Margin
The Fund will not sell any securities short or purchase any
securities on margin, but may obtain such short-term credits as
may be necessary for clearance of purchases and sales of
securities.
Issuing Senior Securities and Borrowing Money
The Fund will not issue senior securities except that the Fund may
borrow money and engage in reverse repurchase agreements in
amounts up to one-third of the value of its total assets,
including the amounts borrowed.
The Fund will not borrow money or engage in reverse repurchase
agreements for investment leverage, but rather as a temporary,
extraordinary, or emergency measure or to facilitate management of
the portfolio by enabling the Fund to meet redemption requests
when the liquidation of portfolio securities is deemed to be
inconvenient or disadvantageous. The Fund will not purchase any
securities while borrowings in excess of 5% of its total assets
are outstanding.
Pledging Assets
The Fund will not mortgage, pledge, or hypothecate its assets
except to secure permitted borrowings. In those cases, it may
mortgage, pledge, or hypothecate assets having a market value not
exceeding 10% of the value of its total assets at the time of the
pledge.
Underwriting
The Fund will not underwrite any issue of securities except as it
may be deemed to be an underwriter under the Securities Act of
1933 in connection with the sale of securities in accordance with
its investment objective, policies, and limitations.
Investing in Real Estate
The Fund will not purchase or sell real estate or invest in real
estate limited partnerships, although it may invest in municipal
bonds secured by real estate or interests in real estate.
Investing in Commodities
The Fund will not buy or sell commodities, commodity contracts, or
commodities futures contracts.
Lending Cash or Securities
The Fund will not lend any of its assets except that it may
acquire publicly or non-publicly issued municipal bonds or
temporary investments or enter into repurchase agreements in
accordance with its investment objective, policies, and
limitations or its Declaration of Trust.
Concentration of Investments
The Fund will not purchase securities if, as a result of such
purchase, 25% or more of the value of its total assets would be
invested in any one industry or in industrial development bonds or
other securities, the interest upon which is paid from revenues of
similar types of projects. However, the Fund may invest as
temporary investments more than 25% of the value of its assets in
cash or cash items, securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities, or instruments
secured by these money market instruments, i.e., repurchase
agreements.
The above investment limitations cannot be changed without shareholder
approval. The following limitations, however, may be changed by the
Trustees without shareholder approval. Shareholders will be notified
before any material change in these limitations becomes effective.
Investing in Securities of Other Investment Companies
The Fund will not purchase securities of other investment
companies except as part of a merger, consolidation, or other
acquisition.
Investing in Issuers Whose Securities Are Owned by Officers and
Trustees of the Trust
The Fund will not purchase or retain the securities of any issuer
if the officers and Trustees of the Trust or its investment
adviser, owning individually more than 1/2 of 1% of the issuer's
securities, together own more than 5% of the issuer's securities.
Investing in Illiquid Securities
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, and
certain restricted securities not determined by the Trustees to be
liquid.
Investing in New Issuers
The Fund will not invest more than 5% of the value of its total
assets in industrial development bonds where the principal and
interest are the responsibility of companies (or guarantors, where
applicable) with less than three years of continuous operations,
including the operation of any predecessor.
Investing in Minerals
The Fund will not purchase interests in oil, gas, or other mineral
exploration or development programs or leases, although it may
invest in securities of issuers which invest in or sponsor such
programs.
In addition, to comply with investment restrictions of a certain state,
the Fund will not invest in real estate limited partnerships.
Except with respect to borrowing money, if a percentage limitation is
adhered to at the time of investment, a later increase or decrease in
percentage resulting from any change in value or net assets will not
result in a violation of such restriction.
For purposes of its policies and limitations, the Fund considers
certificates of deposit and demand and time deposits issued by a U.S.
branch of a domestic bank or savings and loan having capital, surplus,
and undivided profits in excess of $100,000,000 at the time of
investment to be "cash items."
Investment Risks
The economy of the State of Ohio is reliant in part on durable goods
manufacturing, largely concentrated in motor vehicles and equipment,
steel, rubber products and household appliances. During the past decade,
competition in various industries in the State of Ohio has changed from
being domestic to international in nature. In addition, these industries
may be characterized as having excess capacity in particular product
segments. The steel industry, in particular, and the automobile
industry, to a lesser extent, share these characteristics. Because the
State of Ohio and certain underlying municipalities have large exposure
to these industries and their respective aftermarkets, trends in these
industries may, over the long term, impact the demographic and financial
position of the State of Ohio and its municipalities. To the degree that
domestic manufacturers in industries to which Ohio municipalities have
exposure fail to make competitive adjustments, employment statistics and
disposable income of residents in Ohio may deteriorate, possibly leading
to population declines and erosion of municipality tax bases.
Both the economic trends above and the political climate in various
municipalities may have contributed to the decisions of various
businesses and individuals to relocate outside the State. A
municipality's political climate in particular may affect its own credit
standing. For both the State of Ohio and underlying Ohio municipalities,
adjustment of credit ratings by the rating agencies may affect the
ability to issue securities and thereby affect the supply of obligations
meeting the quality standards for investment by the Fund.
The State ended fiscal year 1993 with a positive budgetary fund balance
of over $100 million. The 1994-1995 biennial budget was formulated with
reasonable revenue assumptions. The State implemented a revenue
enhancement package in January of 1993 that increased the cigarette tax
and the income tax bracket for incomes over $200,000, broadened the
sales tax base and capped tax distributions to local governments. These
and other minor revenue enhancements are budgeted to add $912 million of
additional revenue to the 1994-1995 biennial budget. The State's fund
balance reserve levels continue to be minimal but the State has
demonstrated its ability to manage with limited financial flexibility.
The State has established procedures for municipal fiscal emergencies
under which joint state/local commissions are established to monitor the
fiscal affairs of a financially troubled municipality. When these
procedures are invoked, the municipality must develop a financial plan
to eliminate deficits and cure any defaults. Since their adoption in
1979, these procedures have been applied to approximately twenty-one
cities and villages, including the City of Cleveland; in sixteen of
these communities, the fiscal situation has been resolved and the
procedures terminated.
The foregoing discussion only highlights some of the significant
financial trends and problems affecting the State of Ohio and underlying
municipalities.
Management of Intermediate Municipal Trust
Officers and Trustees
Officers and Trustees are listed with their addresses, principal
occupations during the past five years, birthdates and present
positions, including any affiliation with Federated Management,
Federated Investors, Federated Securities Corp., Federated Services
Company, Federated Administrative Services, Federated Shareholder
Services, and the Funds (as defined below).
John F. Donahue@*
Federated Investors Tower
Pittsburgh, Pennsylvania
Birthdate: July 28, 1924
Chairman and Trustee
M
Mr. Donahue is the father of J. Christopher Donahue, Executive Vice
President of the Company.
Glen R. Johnson *
Federated Investors Tower
Pittsburgh, Pennsylvania
Birthdate: May 2, 1929
President and Trustee
Trustee, Federated Investors; President and/or Trustee of some of the
Funds; staff member, Federated Securities Corp. and Federated
Administrative Services.
Thomas G. Bigley
28th Floor, One Oxford Centre
Pittsburgh, Pennsylvania
Birthdate: February 3, 1934
Trustee
Director, Oberg Manufacturing Co.; Chairman of the Board, Children's
Hospital of Pittsburgh; Director, Trustee, or Managing General Partner
of the Funds; formerly, Senior Partner, Ernst & Young LLP.
John T. Conroy, Jr.
Wood/IPC Commercial Department
John R. Wood and Associates, Inc., Realtors
3255 Tamiami Trail North
Naples, Florida
Birthdate: June 23, 1937
Trustee
President, Investment Properties Corporation; Senior Vice-President,
John R. Wood and Associates, Inc., Realtors; President, Northgate
Village Development Corporation; Partner or Trustee in private real
estate ventures in Southwest Florida; Director, Trustee, or Managing
General Partner of the Funds; formerly, President, Naples Property
Management, Inc.
William J. Copeland
One PNC Plaza - 23rd Floor
Pittsburgh, Pennsylvania
Birthdate: July 4, 1918
Trustee
Director and Member of the Executive Committee, Michael Baker, Inc.;
Director, Trustee, or Managing General Partner of the Funds; formerly,
Vice Chairman and Director, PNC Bank, N.A., and PNC Bank Corp. and
Director, Ryan Homes, Inc.
James E. Dowd
571 Hayward Mill Road
Concord, Massachusetts
Birthdate: May 18, 1922
Trustee
Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director,
Trustee, or Managing General Partner of the Funds.
Lawrence D. Ellis, M.D.*
3471 Fifth Avenue, Suite 1111
Pittsburgh, Pennsylvania
Birthdate: October 11, 1932
Trustee
Professor of Medicine and Member, Board of Trustees, University of
Pittsburgh; Medical Director, University of Pittsburgh Medical Center -
Downtown; Member, Board of Directors, University of Pittsburgh Medical
Center; formerly, Hematologist, Oncologist, and Internist, Presbyterian
and Montefiore Hospitals; Director, Trustee, or Managing General Partner
of the Funds.
Edward L. Flaherty, Jr.@
Henny, Kochuba, Meyer and Flaherty
Two Gateway Center - Suite 674
Pittsburgh, Pennsylvania
Birthdate: June 18, 1924
Trustee
Attorney-at-law; Shareholder, Henny, Kochuba, Meyer and Flaherty;
Director, Eat'N Park Restaurants, Inc., and Statewide Settlement Agency,
Inc.; Director, Trustee, or Managing General Partner of the Funds;
formerly, Counsel, Horizon Financial, F.A., Western Region.
Peter E. Madden
70 Westcliff Road
Westin, Massachusetts
Birthdate: March 16, 1942
Trustee
Consultant; State Representative, Commonwealth of Massachusetts;
Director, Trustee, or Managing General Partner of the Funds; formerly,
President, State Street Bank and Trust Company and State Street Boston
Corporation.
Gregor F. Meyer
Henny, Kochuba, Meyer and Flaherty
Two Gateway Center - Suite 674
Pittsburgh, Pennsylvania
Birthdate: October 6, 1926
Trustee
Attorney-at-law; Partner, Henny, Kochuba, Meyer and Flaherty; Chairman,
Meritcare, Inc.; Director, Eat'N Park Restaurants, Inc.; Director,
Trustee, or Managing General Partner of the Funds.
John E. Murray, Jr., J.D., S.J.D.
President, Duquesne University
Pittsburgh, Pennsylvania
Birthdate: December 20, 1932
Trustee
Mollic
Mollica, Murray and Hogue; Director, Trustee or Managing General Partner
of the Funds.
Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, Pennsylvania
Birthdate: September 14, 1925
Trustee
Professor, International Politics and Management Consultant; Trustee,
Carnegie Endowment for International Peace, RAND Corporation, Online
Computer Library Center, Inc., and U.S. Space Foundation; Chairman,
Czecho Management Center; Director, Trustee, or Managing General Partner
of the Funds; President Emeritus, University of Pittsburgh; founding
Chairman, National Advisory Council for Environmental Policy and
Technology and Federal Emergency Management Advisory Board.
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, Pennsylvania
Birthdate: June 21, 1935
Trustee
Public relations/marketing consultant; Conference Coordinator, Non-
profit entities; Director, Trustee, or Managing General Partner of the
Funds.
J. Christopher Donahue
Federated Investors Tower
Pittsburgh, Pennsylvania
Birthdate: April 11, 1949
Executive Vice President
President and Trustee, Federated Investors, Federated Advisers,
Federated Management, and Federated Research; President and Director,
Federated Research Corp.; President, Passport Research, Ltd.; Trustee,
Federated Administrative Services, Federated Services Company, and
Federated Shareholder Services; President or Vice President of the
Funds; Director, Trustee, or Managing General Partner of some of the
Funds. Mr. Donahue is the son of John F. Donahue, Chairman and Trustee
of the Company.
Edward C. Gonzales *
Federated Investors Tower
Pittsburgh, Pennsylvania
Birthdate: October 22, 1930
Executive Vice President
Execut
Executive Vice President or President of the Funds.
John W. McGonigle
Federated Investors Tower
Pittsburgh, Pennsylvania
Birthdate: October 26, 1938
Executive Vice President and Secretary
Vice President, Secretary, General Counsel, and Trustee, Federated
Investors; Vice President, Secretary, and Trustee, Federated Advisers,
Federated Management, and Federated Research; Vice President and
Secretary, Federated Research Corp. and Passport Research, Ltd.;
Trustee, Federated Services Company; Executive Vice President,
Secretary, and Trustee, Federated Administrative Services; Secretary and
Trustee, Federated Shareholder Services; Executive Vice President and
Director, Federated Securities Corp.; Vice President and Secretary of
the Funds.
Richard B. Fisher
Federated Investors Tower
Pittsburgh, Pennsylvania
Birthdate: May 17, 1923
Vice President
Executive Vice President and Trustee, Federated Investors; Director,
Federated Research Corp.; Chairman and Director, Federated Securities
Corp.; President or Vice President of some of the Funds; Director or
Trustee of some of the Funds.
David M. Taylor *
Federated Investors Tower
Pittsburgh, Pennsylvania
Birthdate: January 13, 1947
Treasurer
Senior Vice President, Controller, and Trustee, Federated Investors;
Controller, Federated Advisers, Federated Management, Federated
Research, Federated Research Corp., and Passport Research, Ltd.; Senior
Vice President, Federated Shareholder Services; Senior Vice President,
Federated Administrative Services; Treasurer of the Funds.
* This Trustee is deemed to be an "interested person" as defined
in the Investment Company Act of 1940, as amended.
@ Member of the Executive Committee. The Executive Committee of
the Board of Trustee handles the responsibilities of the Board
of Trustee between meetings of the Board.
As used in the table above, "The Funds" and "Funds" mean the following
investment companies: American Leaders Fund, Inc.; Annuity Management
Series; Arrow Funds; Automated Cash Management Trust; Automated
Government Money Trust; California Municipal Cash Trust; Cash Trust
Series II; Cash Trust Series, Inc.; DG Investor Series; Edward D. Jones
& Co. Daily Passport Cash Trust; Federated ARMs Fund; Federated Exchange
Fund, Ltd.; Federated GNMA Trust; Federated Government Trust; Federated
Growth Trust; Federated High Yield Trust; Federated Income Securities
Trust; Federated Income Trust; Federated Index Trust; Federated
Institutional Trust; Federated Master Trust; Federated Municipal Trust;
Federated Short-Term Municipal Trust; Federated Short-Term U.S.
Government Trust; Federated Stock Trust; Federated Tax-Free Trust;
Federated Total Return Series, Inc.; Federated U.S. Government Bond
Fund; Federated U.S. Government Securities Fund: 1-3 Years; Federated
U.S. Government Securities Fund: 3-5 Years; 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; Insurance Management Series; Intermediate
Municipal Trust; International Series, Inc.; Investment Series Funds,
Inc.; Investment Series Trust; Liberty Equity Income Fund, Inc.; Liberty
High Income Bond Fund, Inc.; Liberty Municipal Securities Fund, Inc.;
Liberty U.S. Government Money Market Trust; Liberty Term Trust, Inc. -
1999; Liberty Utility Fund, Inc.; Liquid Cash Trust; Managed Series
Trust; Money Market Management, Inc.; Money Market Obligations Trust;
Money Market Trust; Municipal Securities Income Trust; Newpoint Funds;
New York Municipal Cash Trust; 111 Corcoran Funds; Peachtree Funds; The
Planters Funds; RIMCO Monument Funds; The Shawmut Funds; Star Funds; The
Starburst Funds; The Starburst Funds II; Stock and Bond Fund, Inc.;
Sunburst Funds; Targeted Duration Trust; Tax-Free Instruments Trust;
Trademark Funds; Trust for Financial Institutions; Trust For Government
Cash Reserves; Trust for Short-Term U.S. Government Securities; Trust
for U.S. Treasury Obligations; The Virtus Funds; and World Investment
Series, Inc.
Fund Ownership
Officers and Trustees own less than 1% of the outstanding shares of the
Fund.
As of July 6, 1995 the following shareholders of record owned 5% or
more of the outstanding shares of the Fund: SNBSO & Co., Springfield,
OH, owned approximately 43,348 shares 6.34%; Parcol & Co., Akron, OH,
owned approximately 60,750 shares 8.88%; Grand Old Company, Zanesville,
OH, owned approximately 41,085 shares 6%; Lorban & Company, Elvira, OH,
owned approximately 35,652 shares 5.21%; MAHCO, Youngstown, OH, owned
approximately 36,645 shares 5.36%; Federated Disbursing Corp.,
Pittsburgh, PA, owned approximately 110,698 shares 16.18%; Holdon,
Findlay, OH, owned approximately 55,484 shares 8.11%; DEFCO, Defiance,
OH, owned approximately 186,611 shares 27.28%
Trustees' Compensation
AGGREGATE
NAME , COMPENSATION
POSITION WITH FROM TOTAL COMPENSATION PAID
TRUST TRUST *# FROM FUND COMPLEX +
John F. Donahue $0 $ 0 for the Trust and
Trustee 68 other investment companies in the Fund
Complex
Thomas G. Bigley $958 $ 20,688 for the Trust and
Trustee 49 other investment companies of the Fund
Complex
John T. Conroy, Jr. $ 2,371 $ 117,202 for the Trust and
Trustee 64 other investment companies in the Fund
Complex
William J. Copeland $ 2,371 $ 117,202 for the Trust and
Trustee 64 other investment companies in the Fund
Complex
James E. Dowd $ 2,371 $ 117,202 for the Trust and
Trustee 64 other investment companies in the Fund
Complex
Lawrence D. Ellis, M.D. $ 1,286 $ 106,460 for the Trust and
Trustee 64 other investment companies in the Fund
Complex
Edward L. Flaherty, Jr. $ 2,371 $ 117,202 for the Trust and
Trustee 64 other investment companies in the Fund
Complex
Glen R. Johnson $ 0 $ 0for the Trust and
Trustee 8 other investment companies in the Fund
Complex
Peter E. Madden $ 1,091 $ 90,563 for the Trust and
Trustee 64 other investment companies in the Fund
Complex
Gregor F. Meyer $ 1,286 $ 106,460 for the Trust and
Trustee 64 other investment companies in the Fund
Complex
John E. Murray, Jr. $ 632 $ 0 for the Trust and
Trustee 69 other investment companies in the Fund
Complex
Wesley W. Posvar $ 1,286 $ 106,460 for the Trust and
Trustee 64 other investment companies in the Fund
Complex
Marjorie P. Smuts $ 1,286 $ 106,460 for the Trust and
Trustee 64 other investment companies in the Fund
Complex
*Information is furnished for the fiscal year ended May 31, 1995.
#The aggregate compensation is provided for the Trust which is comprised
of three portfolios.
+The information is provided for the last calendar year.
Trustee Liability
The Trust's Declaration of Trust provides that the Trustees will not be
liable for errors of judgement 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 (the "Adviser").
It is a subsidiary of Federated Investors. All of the voting securities
of Federated Investors are owned by a trust, the Trustees of which are
John F. Donahue, his wife, and his son, J. Christopher Donahue.
The Adviser shall not be liable to the Trust, 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 Fund.
Advisory Fees
For its advisory services, Federated Management receives an annual
investment advisory fee as described in the prospectus.
For the year ended May 31, 1995, and for the period from December 2,
1993 (date of initial public investment) to May 31, 1994, the Adviser
earned advisory fees of $26,346 and $6,929, respectively, all of which
was voluntarily waived. In addition, the Adviser reimbursed other
operating expenses of $226,561 and $35,630, 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 2.5% per year of the first $30
million of average net assets, 2% per year of the next $70 million
of average net assets, and 1.5% per year of the remaining average
net assets, the Adviser will reimburse the Trust for its expenses
over the limitation.
If the Fund's monthly projected operating expenses exceed this
expense 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.
Administrative Services
Federated Administrative Services, a subsidiary of Federated Investors,
provides administrative personnel and services to the Fund for a fee as
described in the prospectus. Prior to March 1, 1994, Federated
Administrative Services, Inc., also a subsidiary of Federated Investors,
served as the Fund's administrator. (For purposes of this Statement of
Additional Information, Federated Administrative Services and Federated
Administrative Services, Inc. may, hereinafter, collectively be referred
to as the "Administrators.") For the fiscal year ended May 31, 1995,
Federated Administrative Services earned $125,000, none of which was
waived. For the period from December 2, 1993 (date of initial public
investment) to May 31, 1994, the Administrators earned $1,225, none of
which was waived. Dr. Henry Gailliot, an officer of Federated
Management, the Adviser to the Fund, holds approximately 20% of the
outstanding common stock and serves as director of Commercial Data
Services, Inc., a company which provides computer processing services to
Federated Administrative Services.
Shareholder Services Agreement
This arrangement permits the payment of fees to Federated Shareholder
Services and, indirectly, to financial institutions 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: 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
changing dividend options, account designations, and addresses.
For the fiscal period ending May 31, 1995, and 1994, the Fund paid
shareholder service fees in the amounts of $2,635 and $437, all of which
were paid to financial institutions.
Transfer Agent and Dividend Disbursing Agent
Federated Services Company serves as transfer agent and dividend
disbursing agent for the Fund. The fee paid to the transfer agent is
based upon the size, type and number of accounts and transactions made
by shareholders.
Federated Services Company also maintains the Trust's accounting
records. The fee paid for this service is based upon the level of the
Fund's average net assets for the period plus out-of-pocket expenses.
Brokerage Transactions
When selecting brokers and dealers to handle the purchase and sale of
portfolio instruments, the Adviser looks for prompt execution of the
order at a favorable price. In working with dealers, the Adviser will
generally use those who are recognized dealers in specific portfolio
instruments, except when a better price and execution of the order can
be obtained elsewhere. In selecting among firms believed to meet these
criteria, the Adviser may give consideration to those firms which have
sold or are selling shares of the Fund and other Federated Funds. The
Adviser makes decisions on portfolio transactions and selects brokers
and dealers subject to review by the Trustees. The Adviser may select
brokers and dealers who offer brokerage and research services. These
services may be furnished directly to the 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
Except under certain circumstances described in the prospectus, shares
are sold at their net asset value on days the New York Stock Exchange is
open for business. The procedure for purchasing shares is explained in
the prospectus under "Investing in the Fund."
Conversion to Federal Funds
It is the Fund's policy to be as fully invested as possible so that
maximum interest may be earned. Federated Services Company 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 prospectus.
Valuing Municipal Bonds
The Trustees use an independent pricing service to value municipal
bonds. The independent pricing service takes into consideration yield,
stability, risk, quality, coupon rate, maturity, type of issue, trading
characteristics, special circumstances of a security or trading market,
and any other factors or market data it considers relevant in
determining valuations for normal institutional size trading units of
debt securities, and does not rely exclusively on quoted prices.
Use of Amortized Cost
The Trustees have decided that the fair value of debt securities
authorized to be purchased by the Fund with remaining maturities of 60
days or less at the time of purchase, shall be their amortized cost
value, unless the particular circumstances of the security indicate
otherwise. Under this method, portfolio instruments and assets are
valued at the acquisition cost as adjusted for amortization of premium
or accumulation of discount rather than at current market value. The
Executive Committee continually assesses this method of valuation and
recommends changes where necessary to assure that the Fund's portfolio
instruments are valued at their fair value as determined in good faith
by the Trustees.
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 prospectus under "Redeeming 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 net asset value of the Fund, 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 that net asset value is determined.
The portfolio instruments will be selected in a manner that the Trustees
deem fair and equitable. Such securities will be readily marketable, to
the extent available.
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 of 1986, as
amended, 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
Capital Gains
Capital gains or losses may be realized by the Fund on the sale of
portfolio securities and as a result of discounts from par value
on securities held to maturity. Sales would generally be made
because of:
- the availability of higher relative yields;
- differentials in market values;
- new investment opportunities;
- changes in creditworthiness of an issuer; or
- an attempt to preserve gains or limit losses.
Distributions of long-term capital gains are taxed as such,
whether they are taken in cash or reinvested, and regardless of
the length of time the shareholder has owned shares. Any loss by a
shareholder on Fund shares held for less than six months and sold
after a capital gains distribution will be treated as a long-term
capital loss to the extent of the capital gains distribution.
Total Return
The Fund's average annual total returns for the year ended May 31, 1995
and for the period from December 2, 1993 (date of initial public
investment) to May 31, 1995 were 7.98% and 3.48%, respectively.
The average annual total return for the Fund is the average compounded
rate of return for a given period that would equate a $1,000 initial
investment to the ending redeemable value of that investment. The ending
redeemable value is computed by multiplying the number of shares owned
at the end of the period by the net asset value per share at the end of
the period. The number of shares owned at the end of the period is based
on the number of shares purchased at the beginning of the period with
$1,000, adjusted over the period by any additional shares, assuming the
monthly reinvestment of all dividends and distributions.
Yield
The Fund's yield for the thirty-day period ended May 31, 1995 was 4.94%.
The yield of the Fund is determined by dividing the net investment
income per share (as defined by the Securities and Exchange Commission)
earned by the Fund over a thirty-day period by the maximum offering
price per share on the last day of the period. This value is then
annualized using semi-annual compounding. This means that the amount of
income generated during the thirty-day period is assumed to be generated
each month over a twelve-month period and is reinvested every six
months. The yield does not necessarily reflect income actually earned by
the 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 the Fund, performance will be reduced for those shareholders paying
those fees.
Tax-Equivalent Yield
The Fund's tax-equivalent yield for the thirty-day period ended May 31,
1995, was 9.34%.
The tax-equivalent yield for the Fund is calculated similarly to the
yield, but is adjusted to reflect the taxable yield that the Fund would
have had to earn to equal its actual yield, assuming a 39.60% Federal
tax rate and assuming that income is 100% tax-exempt.
Tax-Equivalency Table
The Fund may also use a tax-equivalency table in advertising and sales
literature. The interest earned by the municipal obligations in the
Fund's portfolio generally remains free from federal regular income tax*
and is free from the income taxes imposed by the State of Ohio (some
portion of the Fund's income may be subject to the federal alternative
minimum tax and state and local taxes). As the table below indicates, a
"tax-free" investment is an attractive choice for investors,
particularly in times of narrow spreads between "tax-free" and taxable
yields.
TAXABLE YIELD EQUIVALENT FOR 1995
State of Ohio
FEDERAL TAX BRACKET:
15.00% 28.00% 31.00% 36.00% 39.60%
COMBINED FEDERAL AND STATE TAX BRACKET:
19.457% 33.201% 37.900% 43.500% 47.100%
SINGLE $1- $23,351- $56,551- $117,951- OVER
RETURN 23,350 56,550 117,950 256,500 256,500
Tax-Exempt
Yield Taxable Yield Equivalent
1.50% 1.86% 2.25% 2.42% 2.65%
2.84%
2.00% 2.48% 2.99% 3.22% 3.54%
3.78%
2.50% 3.10% 3.74% 4.03% 4.42%
4.73%
3.00% 3.72% 4.49% 4.83% 5.31%
5.67%
3.50% 4.35% 5.24% 5.64% 6.19%
6.62%
4.00% 4.97% 5.99% 6.44% 7.08%
7.56%
4.50% 5.59% 6.74% 7.25% 7.96%
8.51%
5.00% 6.21% 7.49% 8.05% 8.85%
9.45%
5.50% 6.83% 8.23% 8.86% 9.73%
10.40%
6.00% 7.45% 8.98% 9.66% 10.62%
11.34%
Note: The maximum marginal tax rate for each bracket was used in
calculating the taxable yield equivalent. Furthermore, additional
state and local taxes paid on comparable taxable investments were
not used to increase federal deductions.
The chart above is for illustrative purposes only. It is not an
indicator of past or future performance of Fund shares.
* Some portion of the Fund's income may be subject to the federal
alternative minimum tax and state and local income taxes.
Performance Comparisons
The performance of the Fund 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; and
- various other factors.
The Fund's performance fluctuates on a daily basis largely because net
earnings and offering price per share fluctuate daily. Both net earnings
and offering price per share are factors in the computation of yield and
total return as described above.
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 fund
categories by making comparative calculations using total return.
Total return assumes the reinvestment of all capital gains
distributions and income dividends and takes into account any
change in net asset value over a specific period of time. From
time to time, the Fund will quote its Lipper ranking in the "other
states intermediate municipal debt funds" category in advertising
and sales literature.
- Morningstar, Inc., an independent rating service, is the publisher
of the bi-weekly Mutual Fund Values. Mutual Fund Values rates
more than 1,000 NASDAQ-listed mutual funds of all types, according
to their risk-adjusted returns. The maximum rating is five stars,
and ratings are effective for two weeks.
- Lehman Brothers Five-Year State General Obligation Bonds is an
index comprised of all state general obligation debt issues with
maturities between four and six years. These bonds are rated A or
better and represent a variety of coupon ranges. Index figures are
total returns calculated for one, three and twelve month periods
as well as year-to-date. Total returns are also calculated as of
the index inception December 31, 1979.
- Lehman Brothers Ten-Year State General Obligation Bonds is an
index comprised of the same issues noted above except that the
maturities range between nine and eleven years. Index figures are
total returns calculated for the same periods as listed above.
Advertisements and other sales literature for the Fund may quote total
returns which are calculated on non-standardized base periods. The total
returns represent the historic change in the value of an investment in
the Fund based on monthly reinvestment of dividends over a specified
period of time.
About Federated Investors
Federated is dedicated to meeting investor needs which is reflected in
its investment decision making structured, straightforward, and
consistent. This has resulted in a history of competitive performance
with a range of competitive investment products that have gained the
confidence of thousands of clients and their customers.
The company's disciplined security selection process is firmly rooted in
sound methodologies backed by fundamental and technical research.
Investment decisions are made and executed by teams of portfolio
managers, analysts, and traders dedicated to specific market sectors.
In the municipal sector, as of December 31,1994, Federated managed 18
bond funds with approximately $1.9 billion in assets and 18 money market
funds with approximately $6.6 billion in total assets. In 1976,
Federated introduced one of the first municipal bond mutual funds in
the industry and is now one of the largest institutional buyers of
municipal securities.
J. Thomas Madden, Executive Vice President, oversees Federated's equity
and high yield corporate bond management while William D. Dawson,
Executive Vice President, oversees Federated's domestic fixed income
management. Henry A. Frantzen, Executive Vice President, oversees the
management of Federated's international portfolios.
Mutual Fund Market
Twenty-seven percent of American households are pursuing their financial
goals through mutual funds. These investors, as well as businesses and
institutions, have entrusted over $2 trillion to the more than 5,500
funds available.*
Federated Investors, through its subsidiaries, distributes mutual funds
for a variety of investment applications. Specific markets include:
Institutional
Federated meets the needs of more than 4,000 institutional clients
nationwide by managing and servicing separate accounts and mutual
funds for a variety of applications, including defined benefit and
defined contribution programs, cash management, and
asset/liability management. Institutional clients include
corporations, pension funds, tax-exempt entities,
foundations/endowments, insurance companies, and investment and
financial advisors. The marketing effort to these institutional
clients is headed by John B. Fisher, President, Institutional
Sales Division.
Trust Organizations
Other institutional clients include close relationships with more
than 1,500 banks and trust organizations. Virtually all of the
trust divisions of the top 100 bank holding companies use
Federated funds in their clients' portfolios. The marketing effort
to trust clients is headed by Mark R. Gensheimer, Executive Vice
President, Bank Marketing & Sales.
Broker/Dealers and Bank Broker/Dealer Subsidiaries
Federated mutual funds are available to consumers through major
brokerage firms nationwide including 200 New York Stock Exchange
firms supported by more wholesalers than any other mutual fund
distributor. The marketing effort to these firms is headed by
James F. Getz, President, Broker/Dealer Division.
* SOURCE: Investment Company Institute
Appendix
Standard and Poor's Ratings Group ("S&P") Municipal Bond Ratings
AAA--Debt rated "AAA" has the highest rating assigned by S&P. Capacity
to pay interest and repay principal is extremely strong.
AA--Debt rated "AA" has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.
A--Debt rated "A" has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than debt in
higher rated categories.
NR--Indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not
rate a particular type of obligation as a matter of policy.
Plus (+) or minus (-): The ratings from "AA" to "CCC" may be modified by
the addition of a plus or minus sign to show relative standing within
the major rating categories.
Moody's Investors Service, Inc. Municipal Bond Ratings
Aaa--Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally
referred to as "gilt edged." Interest payments are protected by a large
or by an exceptionally stable margin and principal is secure. While the
various protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position
of such issues.
Aa--Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities
or fluctuation of protective elements may be of greater amplitude or
there may be other elements present which make the long-term risks
appear somewhat larger than in Aaa securities.
A--Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate but
elements may be present which suggest a susceptibility to impairment
sometime in the future.
NR--Not rated by Moody's.
Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from Aa through B in its corporate or municipal bond
rating system. The modifier 1 indicates that the security ranks in the
higher end of its generic rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates that the issue ranks in
the lower end of its generic rating category.
Fitch Investors Service, Inc. Investment Grade Bond Ratings
AAA--Bonds considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay interest
and repay principal, which is unlikely to be affected by reasonably
foreseeable events.
AA--Bonds considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal is
very strong, although not quite as strong as bonds rated "AAA". Because
bonds rated in the "AAA" and "AA" categories are not significantly
vulnerable to foreseeable future developments, short-term debt of these
issuers is generally rated "F-1+".
A--Bonds considered to be investment grade and of high credit quality.
The obligor's ability to pay interest and repay principal is considered
strong, but may be more vulnerable to adverse changes in economic
conditions and circumstances than bonds with higher ratings.
NR--NR indicates that Fitch does not rate the specific issue.
Plus (+) or Minus (-): Plus and minus signs are used with a rating
symbol to indicate the relative position of a credit within the rating
category. Plus and minus signs, however, are not used in the "AAA"
category.
Standard and Poor's Ratings Group Municipal Note Ratings
SP-1--Very strong or strong capacity to pay principal and interest.
Those issues determined to possess overwhelming safety characteristics
will be given a plus sign (+) designation.
SP-2--Satisfactory capacity to pay principal and interest.
Moody's Investors Service, Inc. Short-Term Loan Ratings
MIG1/VMIG1--This designation denotes best quality. There is present
strong protection by established cash flows, superior liquidity support
or demonstrated broad based access to the market for refinancing.
MIG2/VMIG2--This designation denotes high quality. Margins of protection
are ample although not so large as in the preceding group.
Standard and Poor's Ratings Group Commercial Paper Ratings
A-1--This highest category indicates that the degree of safety regarding
timely payment is strong. Those issues determined to possess extremely
strong safety characteristics are denoted with a plus sign (+)
designation.
A-2--Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high for
issues designated A-1.
Moody's Investors Service, Inc. Commercial Paper Ratings
PRIME-1--Issuers rated PRIME-1 (or related supporting institutions) have
a superior capacity for repayment of short-term promissory obligations.
PRIME-1 repayment capacity will normally be evidenced by the following
characteristics:
- leading market positions in well-established industries;
- high rates of return on funds employed;
- conservative capitalization structure with moderate reliance on
debt and ample asset protection;
- broad margins in earning coverage of fixed financial charges and
high internal cash generation; and
- well-established access to a range of financial markets and
assured sources of alternative liquidity.
PRIME-2--Issuers rated PRIME-2 (or related supporting institutions) have
a strong capacity for repayment of short-term promissory obligations.
This will normally be evidenced by many of the characteristics cited
above, but to a lesser degree. Earnings trends and coverage ratios,
while sound, will be more subject to variation. Capitalization
characteristics, while still appropriate, may be more affected by
external conditions. Ample alternate liquidity is maintained.
Cusip 45881040
3081602B (7/95)
