1933 Act File No. 2-98237
1940 Act File No. 811-4314
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
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Pre-Effective Amendment No. ..........................
Post-Effective Amendment No.___28___.......................... X
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and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
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Amendment No. __22__............................................... X
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INTERMEDIATE MUNICIPAL TRUST
(Exact Name of Registrant as Specified in Charter)
Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779
(Address of Principal Executive Offices)
(412) 288-1900
(Registrant's Telephone Number)
John W. McGonigle, Esquire,
Federated Investors Tower,
Pittsburgh, Pennsylvania 15222-3779
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b)
x on _July 31, 1997_ pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a) (i) on pursuant to paragraph
(a) (i) 75 days after filing pursuant to paragraph (a)(ii) on
_________________ pursuant to paragraph (a)(ii) of Rule 485.
If appropriate, check the following box:
This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE>
Registrant has filed with the Securities and Exchange Commission a declaration
pursuant to Rule 24f-2 under the Investment Company Act of 1940, and:
x filed the Notice required by that Rule on _ July 15, 1997___; or intends to
file the Notice required by that Rule on or about ____________; or
during the most recent fiscal year did not sell any securities pursuant to
Rule 24f-2 under the Investment Company Act of 1940, and, pursuant to Rule
24f-2(b)(2), need not file the Notice.
Copies to:
Matthew J. Maloney, Esquire
Dickstein, Shapiro & Morin, L.L.P.
2101 L Street, N.W.
Washington, D.C. 20037
<PAGE>
CROSS REFERENCE SHEET
This Amendment to the Registration Statement of INTERMEDIATE MUNICIPAL
TRUST which consists of two portfolios: (1) Federated Pennsylvania Intermediate
Municipal Trust; and (2) Federated Intermediate Municipal Trust is comprised of
the following:
PART A. INFORMATION REQUIRED IN A PROSPECTUS.
Prospectus Heading
(Rule 404(c) Cross Reference)
Item 1. Cover Page................(1,2)Cover Page.
Item 2. Synopsis..................(1,2)Summary of Fund Expenses.
Item 3. Condensed Financial
Information...............(1,2)Financial Highlights; (1,2)
Performance Information;
Item 4. General Description of
Registrant (1,2) General
Information; (1,2)
Investment
Information; (1,2)
Investment
Objective; (1,2)
Investment
Policies; (2)
Municipal
Securities;(1)
Pennsylvania
Municipal
Securities; (1,2)
Investment Risks;
(1)
Non-Diversification;
(1,2) Investment
Limitations.
Item 5. Management of the Fund..........(1,2) Intermediate Municipal Trust
Information; (1,2) Management of the
Trust; (1,2) Distribution of Fund
Shares; (1,2) Administration of the
Fund.
Item 6. Capital Stock and Other
Securities......................(1,2) Dividends; (1,2) Tax
Information; (1,2) Federal Income
Tax; (1) Pennsylvania Taxes; (1,2)
State and Local Taxes; (1,2) Capital
Gains; (1,2) Shareholder Information;
(1,2) Voting Rights.
Item 7. Purchase of Securities Being
Offered.........................(1,2) Investing in the Fund; (1,2)
Share Purchases; (1,2) Minimum
Investment Required; (1,2) What
Shares Cost; (1,2) Exchanging
Securities for
Fund Shares;(1,2) Certificates and
Confirmations; (1,2) Net Asset Value.
Item 8. Redemption or Repurchase........(1,2) Redeeming Shares; (1,2) By
Telephone; (1,2) By Mail; (1,2)
Accounts With Low Balances.
Item 9. Pending Legal Proceedings None.
<PAGE>
PART B. INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
Item 10. Cover Page.......................(1,2) Cover Page.
Item 11. Table of Contents................(1,2) Table of Contents.
Item 12. General Information and
History.........................(1,2) General Information About
the Fund; (1,2) About Federated
Investors.
Item 13. Investment Objectives and
Policies........................(1,2) Investment Objective and
Policies.
Item 14. Management of the Fund (1,2) Intermediate Municipal Trust
Management
Item 15. Control Persons and Principal
Holders of Securities (1,2) Fund Ownership.
Item 16. Investment Advisory and Other
Services........................(1,2) Investment Advisory
Services; (1,2) Other Services;
(1,2) Shareholders Services.
Item 17. Brokerage Allocation.............(1,2) Brokerage Transactions.
Item 18. Capital Stock and Other
Securities (1,2) Massachusetts Partnership law.
Item 19. Purchase, Redemption and
Pricing of Securities Being
Offered.........................(1,2) Purchasing Shares; (1,2)
Determining Net Asset Value; (1,2)
Redeeming Shares; (1,2) Exchanging
Securities For Fund Shares.
Item 20. Tax Status.......................(1,2) Tax Status.
Item 21. Underwriters Not applicable.
Item 22. Calculation of Yield
................................(1,2) Total Return; (1,2) Yield;
(1,2) Tax Equivalent Yield; (1,2)
Performance Comparisons.
Item 23. Financial Statements.............Filed in Part A.
Federated Pennsylvania Intermediate Municipal Trust
(A Portfolio of Intermediate Municipal Trust)
PROSPECTUS
The shares of Federated 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
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,
1997, with the Securities and Exchange Commission (the "SEC"). 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 or a paper copy of this prospectus, if you have received
your prospectus electronically, free of charge by calling 1-800-341-7400. To
obtain other information or to make inquiries about the Fund, contact the Fund
at the address listed in the back of this prospectus. The Statement of
Additional Information, material incorporated by reference into this document,
and other information regarding the Fund is maintained electronically with the
SEC at Internet Web site (http://www.sec.gov).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
Prospectus dated July 31, 1997
TABLE OF CONTENTS
Summary of Fund Expenses 1
Financial Highlights 2
General Information 3
Investment Information 3
Investment Objective 3
Investment Policies 3
Pennsylvania Municipal Securities 5
Investment Risks 5
Non-Diversification 5
Investment Limitations 6
Intermediate Municipal Trust Information 6
Management of the Trust 6
Distribution of Fund Shares 7
Administration of the Fund 7
Net Asset Value 8
Investing in the Fund 8
Share Purchases 8
Minimum Investment Required 8
What Shares Cost 8
Exchanging Securities for Fund Shares 8
Certificates and Confirmations 9
Dividends 9
Capital Gains 9
Redeeming Shares 9
By Telephone 9
By Mail 9
Accounts with Low Balances 10
Shareholder Information 10
Voting Rights 10
Tax Information 10
Federal Income Tax 10
State and Local Taxes 11
Performance Information 11
Financial Statements 12
Report of Independent Public Accountants 22
SUMMARY OF FUND EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES
<S> <C>
Maximum Sales Charge Imposed on Purchases (as a percentage of offering price) None
Maximum Sales Charge Imposed on Reinvested Dividends
(as a percentage of offering price) None
Contingent Deferred Sales Charge (as a percentage of original purchase
price or redemption proceeds, as applicable) None
Redemption Fee (as a percentage of amount redeemed, if applicable) None
Exchange Fee None
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waiver)(1) 0.00%
12b-1 Fee None
Shareholder Services Fee (after waiver)(2) 0.11%
Total Other Expenses (after expense reimbursement) 0.45%
Total Operating Expenses(3) 0.45%
</TABLE>
(1) The management fee has been reduced to reflect the voluntary waiver of the
management fee. The adviser can terminate this voluntary waiver at any time
at its sole discretion. The maximum management fee is 0.50%.
(2) The shareholder services fee has been reduced to reflect the voluntary
waiver of a portion of the shareholder services fee. The shareholder service
provider can terminate this voluntary waiver at any time at its sole
discretion. The maximum management fee is 0.25%.
(3) The total operation expenses would have been 2.54% absent the voluntary
waivers of the management fee and a portion of the shareholder services fee
and the voluntary reimbursement of certain other operating expenses.
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. EXAMPLE
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.
1 Year $ 5
3 Years $ 14
5 Years $ 25
10 Years $ 57
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 22.
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
1997 1996 1995 1994(A)
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.00 $10.06 $ 9.85 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.49 0.49 0.48 0.23
Net realized and unrealized gain (loss) on 0.16 (0.06) 0.21 (0.15)
investments
Total from investment operations 0.65 0.43 0.69 0.08
LESS DISTRIBUTIONS
Distributions from net investment income (0.49) (0.49) (0.48) (0.23)
NET ASSET VALUE, END OF PERIOD $10.16 $10.00 $10.06 $ 9.85
TOTAL RETURN(B) 6.63% 4.27% 7.35% 0.76%
RATIOS TO AVERAGE NET ASSETS
Expenses 0.45% 0.45% 0.45% 0.25%*
Net investment income 4.85% 4.81% 5.11% 4.76%*
Expense waiver/reimbursement(c) 2.09% 2.69%(d) 3.95%(d) 5.06%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $14,417 $15,054 $8,344 $2,881
Portfolio turnover 45% 11% 41% 39%
</TABLE>
* Computed on an annualized basis.
(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 charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(d) For the years ended May 31, 1996, and May 31, 1995, the Adviser waived
$45,372 and $32,714, respectively, of the investment advisory fee, which
represents 0.40% and 0.50% of average net assets, and for the year ended May
31, 1995, the Adviser reimbursed other operating expenses of $86,896, which
represents 1.33% of average net assets, to comply with certain state expense
limitations. The remainder of the waiver/reimbursement is voluntary. The
expense decrease is reflected in both the expense and net investment income
ratios shown above.
(See Notes which are an integral part of the Financial Statements) FURTHER
INFORMATION ABOUT THE FUND'S PERFORMANCE IS CONTAINED IN THE FUND'S ANNUAL
REPORT FOR THE FISCAL YEAR ENDED MAY 31, 1997, WHICH CAN BE OBTAINED
FREE OF CHARGE.
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 monies 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 charge 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,
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 investment 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 investment 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.
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 canceled.
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.
The Fund may dispose of a commitment prior to settlement if the investment
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 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 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.
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,
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 0.50%
of the Fund's average daily net assets. Also, the adviser may voluntarily
choose to waive a portion of its fee or reimburse other expenses of the
Fund, but reserves the right to terminate such waiver or reimbursement at
any time at its sole discretion.
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.
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 $110 billion invested across more than 300
funds under management and/or administration by its subsidiaries, as of
December 31, 1996, Federated Investors is one of the largest mutual fund
investment managers in the United States. With more than 2,000 employees,
Federated continues to be led by the management who founded the company in
1955. Federated funds are presently at work in and through 4,500 financial
institutions nationwide.
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 interests. 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.
PORTFOLIO MANAGER'S BACKGROUND
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 a
Vice President of the Fund's investment adviser since 1994. From 1992 to
1994, Mr. Albrecht served as an Assistant Vice President of the Fund's
investment adviser. In 1991, Mr. Albrecht acted as an investment analyst.
Mr. Albrecht is a Chartered Financial Analyst and received his M.S. in
Public Management from Carnegie Mellon University.
Mary Jo Ochson has been the Fund's portfolio manager since July 1997. Ms.
Ochson joined Federated Investors in 1982 and has been a Senior Vice
President of the Fund's investment adviser since January 1996. From 1988
through 1995, Ms. Ochson served as a Vice President of the Fund's investment
adviser. Ms. Ochson is a Chartered Financial Analyst and received her M.B.A.
in Finance from the University of Pittsburgh.
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 Services Company, a subsidiary of Federated Investors, provides
administrative personnel and services (including certain legal and financial
reporting services) necessary to operate the Fund. Federated Services Company
provides these at an annual rate which relates to the average aggregate daily
net assets of all funds advised by subsidiaries of Federated Investors as
specified below:
MAXIMUM AVERAGE AGGREGATE
ADMINISTRATIVE FEE DAILY NET ASSETS
0.15% on the first $250 million
0.125% on the next $250 million
0.10% on the next $250 million
0.075% on assets in excess of $750 million
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 Services Company 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 the average daily net asset value of the Fund
shares, computed at an annual rate, to obtain certain personal services for
shareholders and to maintain shareholder accounts. From time to time and for
such periods as deemed appropriate, the amount stated above may be reduced
voluntarily. 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.
SUPPLEMENTAL PAYMENTS TO FINANCIAL INSTITUTIONS
In addition to payments made pursuant to the Shareholder Services Agreement,
Federated Securities Corp. and Federated Shareholder Services, from their own
assets, may pay financial institutions supplemental fees for the performance of
substantial sales services, distribution-related support services, or
shareholder services. The support may include sponsoring sales, educational and
training seminars for their employees, providing sales literature, and
engineering computer software programs that emphasize the attributes of the
Fund. Such assistance will be predicated upon the amount of shares the financial
institution sells or may sell, and/or upon the type and nature of sales or
marketing support furnished by the financial institution. Any payments made by
the distributor may be reimbursed by the Fund's investment adviser or its
affiliates.
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 Shareholder
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. Shares cannot be
purchased by wire on holidays when wire transfers are restricted. Questions on
wire purchases should be directed to your shareholder services representative at
the telephone number listed on your account statement.
BY MAIL
To purchase shares of the Fund by mail, send a check made payable to Federated
Pennsylvania Intermediate Municipal Trust to: Federated Shareholder Services
Company, P.O. Box 8600, Boston, Massachusetts 02266-8600. Orders by mail are
considered received when payment by check is converted by State Street Bank and
Trust Company ("State Street Bank") into federal funds. This is normally the
next business day after State Street Bank receives the check.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment in the Fund is $25,000, plus any financial
intermediary 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 financial intermediary 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 charge imposed by the Fund. Investors who purchase
shares through a financial intermediary may be charged a service fee by that
financial intermediary. 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, Martin Luther King 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 Shareholder 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
Dividends are declared daily and paid monthly to all shareholders invested in
the Fund on the record date. Dividends are declared just prior to determining
net asset value. Shares purchased by wire begin earning dividends on the
business day after the order is received. 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 at the ex-dividend date net asset
value 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. Investors who redeem shares through a
financial intermediary may be charged a service fee by that financial
intermediary. 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.
Proceeds from redemption requests received on holidays when wire transfers are
restricted will be wired the following business day. Questions about telephone
redemptions on days when wire transfers are restricted should be directed to
your shareholder services representative at the telephone number listed on your
account statement. 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
Shares may be redeemed in any amount by mailing a written request to:
Federated Shareholder Services Company, P.O. Box 8600, Boston, Massachusetts
02266-8600. If share certificates have been issued, they should be sent
unendorsed with the written request by registered or certified mail to the
address noted above.
The written request should state: Federated Pennsylvania Intermediate Municipal
Trust; the account name as registered with the Fund; the account number; and the
number of shares to be redeemed or the dollar amount requested. All owners of
the account must sign the request exactly as the shares are registered.
Normally, a check for the proceeds is mailed within one business day, but in no
event more than seven days, after the receipt of a proper written redemption
request. Dividends are paid up to and including the day that a redemption
request is processed.
Shareholders requesting 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 their signatures guaranteed by a commercial
or savings bank, trust company or savings association whose deposits are insured
by an organization which is administered by the Federal Deposit Insurance
Corporation; a member firm of a domestic stock exchange; 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.
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 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.
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.
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.
STATE AND LOCAL TAXES
Income from the Fund is not necessarily free from taxes in states other than
Pennsylvania. Shareholders are urged to consult their own tax advisers regarding
the status of their accounts under state and local tax laws.
PENNSYLVANIA TAXES
Under existing Pennsylvania laws, distributions made by the Fund derived from
interest on obligations free from state taxation in Pennsylvania are not subject
to Pennsylvania personal income taxes. Distributions made by the Fund will be
subject to Pennsylvania personal income taxes to the extent that they are
derived from gain realized by the Fund from the sale or exchange of otherwise
tax-exempt obligations.
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
SEC) 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.
PORTFOLIO OF INVESTMENTS
FEDERATED PENNSYLVANIA INTERMEDIATE MUNICIPAL TRUST
MAY 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <S> <C>
INTERMEDIATE-TERM MUNICIPAL SECURITIES -- 98.0%
PENNSYLVANIA -- 96.8%
$ 350,000 Allegheny County, PA HDA, Hospital Revenue Bonds (Series A), 5.45% (Allegheny
General Hospital)/(MBIA INS)/(Original Issue Yield: 5.55%), 9/1/2004 AAA $ 361,602
300,000 Allegheny County, PA HDA, Revenue Bonds (Series A), 5.90% (South Hills Health
System)/(Original Issue Yield: 6.00%), 5/1/2003 A 312,381
300,000 Allegheny County, PA HDA, Revenue Bonds (Series A), 6.00% (South Hills Health
System)/(Original Issue Yield: 6.10%), 5/1/2004 A 313,605
500,000 Allegheny County, PA, Airport Revenue Bonds (Series A), 5.30% (Pittsburgh
International Airport)/(MBIA INS)/(Original Issue Yield: 5.35%), 1/1/2003 AAA 507,940
100,000 Allegheny County, PA, UT GO Bonds (Series C-39), 6.00% (AMBAC INS)/(Original
Issue Yield: 6.098%), 5/1/2012 AAA 103,508
100,000 Allegheny County, PA, UT GO Bonds, 5.40% (MBIA INS)/(Original Issue Yield:
5.50%),
9/15/2005 AAA 103,305
100,000 Altoona, PA Area School District, UT GO Bonds, 5.35% (FGIC INS)/(Original Issue
Yield: 5.40%), 1/15/2004 AAA 102,941
100,000 Altoona, PA City Authority, Water Revenue Bonds, 5.60% (FGIC INS)/(Original Issue
Yield: 5.699%), 11/1/2004 AAA 105,035
150,000 Berks County, PA Municipal Authority, Hospital Revenue Bonds, 5.40% (Reading
Hospital & Medical Center)/(MBIA INS)/(Original Issue Yield: 5.45%), 10/1/2004 AAA 154,565
100,000 Berks County, PA Municipal Authority, Hospital Revenue Bonds, 5.60% (Reading
Hospital & Medical Center)/(MBIA INS)/(Original Issue Yield: 5.65%), 10/1/2006 AAA 104,615
150,000 Cambria County, PA, UT GO (Series A), 5.40% (FGIC INS)/(Original Issue Yield:
5.50%),
8/15/2004 AAA 155,187
100,000 Central Bucks, PA School District, UT GO Bonds, 5.40% (FGIC INS), 5/15/2003 AAA 102,207
100,000 Central Bucks, PA School District, UT GO Bonds, 6.00%, 11/15/2003 Aa 106,966
300,000 Chester County, PA HEFA, Hospital Revenue Bonds (Series 1996A), 5.20% (Chester
County Hospital, PA)/(MBIA INS)/(Original Issue Yield: 5.35%), 7/1/2004 AAA 305,769
100,000 Commonwealth of Pennsylvania, UT GO Bonds (Second Series A), 6.30% (MBIA INS)/
(Original Issue Yield: 6.35%), 11/1/2002 AAA 107,764
150,000 Dauphin County, PA, Revenue Bonds, 6.00% (MBIA INS), 6/1/2002 AAA 156,043
150,000 Dauphin County, PA, Revenue Bonds, 6.10% (MBIA INS), 6/1/2003 AAA 156,396
345,000 Delaware County Authority, PA, (Series 1995) College Revenue Bonds, 5.30%
(Neumann College)/(Connie Lee INS)/(Original Issue Yield: 5.40%), 10/1/2007 AAA 347,750
300,000 Delaware County Authority, PA, Hospital Revenue Bonds, 5.90% (Riddle Memorial
Hospital)/(Original Issue Yield: 6.10%), 1/1/2002 A- 309,195
125,000 Eastern York, PA School District, UT GO Bonds, 5.55% (MBIA INS), 6/1/2003 AAA 129,740
100,000 Elizabethtown, PA Area School District, UT GO Bonds, 5.45%, 2/15/2004 A 101,103
</TABLE>
FEDERATED PENNSYLVANIA INTERMEDIATE MUNICIPAL TRUST
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <S> <C>
INTERMEDIATE-TERM MUNICIPAL SECURITIES -- CONTINUED
PENNSYLVANIA -- CONTINUED
$ 205,000 Fayette County, PA Hospital Authority, Healthcare Facility Revenue Bonds (Series
1996A), 5.35% (Mount Macrina Manor)/(National City, Pennsylvania LOC), 9/1/2006 A- $ 206,142
220,000 Fayette County, PA Hospital Authority, Healthcare Facility Revenue Bonds (Series
1996A), 5.45% (Mount Macrina Manor)/(National City, Pennsylvania LOC), 9/1/2007 A- 221,555
230,000 Fayette County, PA Hospital Authority, Healthcare Facility Revenue Bonds (Series
1996A), 5.55% (Mount Macrina Manor)/(National City, Pennsylvania LOC), 9/1/2008 A- 231,709
500,000 Fayette County, PA Hospital Authority, Hospital Revenue Bonds (Series 1996A),
5.20%
(Uniontown Hospital)/(Connie Lee INS)/(Original Issue Yield: 5.30%), 6/15/2004 AAA 500,570
125,000 Franklin Park Boro, PA, GO Bonds, 5.50% (AMBAC INS), 11/1/2004 AAA 130,760
500,000 Indiana County, PA Hospital Authority, Revenue Refunding Bonds (Series B), 6.20%
(Indiana Hospital, PA)/(Connie Lee INS)/(Original Issue Yield: 6.30%), 7/1/2006 AAA 534,175
350,000 Lehigh County, PA General Purpose Authority, General Purpose Authority Hospital
Revenue Bonds, 5.30% (Lehigh Valley Hospital Inc.)/(MBIA INS)/(Original Issue
Yield: 5.40%), 7/1/2005 AAA 357,833
575,000 Lehigh County, PA General Purpose Authority, Hospital Refunding Revenue Bonds
(Series 1996A), 5.25% (Muhlenberg Hospital Center)/(Original Issue Yield: 5.30%),
7/15/2004 A 578,697
325,000 Lower Dauphin, PA School District, UT GO Bonds, 5.75% (AMBAC INS)/(United States
Treasury PRF), 9/15/2002 (@100) AAA 337,292
330,000 McKeesport, PA Area School District, UT GO Bonds (Series A), 5.40% (FSA INS)/
(Original Issue Yield: 5.50%), 10/1/2006 AAA 341,596
675,000 New Castle, PA Area Hospital Authority, Hospital Revenue Bonds (Series 1997),
6.00% (Jameson Memorial Hospital)/(MBIA INS), 7/1/2010 AAA 717,512
180,000 North Penn, PA Water Authority, Revenue Bonds, 5.80% (FGIC INS)/(Original Issue
Yield: 5.85%), 11/1/2005 AAA 189,076
110,000 North Penn, PA Water Authority, Revenue Bonds, 6.10% (FGIC INS), 11/1/2003 AAA 118,349
500,000 Northeastern, PA Hospital & Education Authority, Health Care Revenue Bonds
(Series 1994 A), 6.10% (Wyoming Valley Health Care, PA)/(AMBAC INS)/(Original
Issue Yield: 6.25%), 1/1/2003 AAA 530,240
150,000 Penn Trafford, PA School District, UT GO Bonds, 5.55% (MBIA INS), 5/1/2006 AAA 155,968
100,000 Pennsylvania Housing Finance Authority, SFM Revenue Bonds (Series 38), 5.30%,
4/1/2003 AA 101,162
100,000 Pennsylvania Housing Finance Authority, SFM Revenue Bonds (Series 41-B), 5.90%,
10/1/2005 AA 101,928
100,000 Pennsylvania Housing Finance Authority, SFM Revenue Bonds (Series 42), 5.90%,
10/1/2004 AA 102,174
345,000 Pennsylvania Housing Finance Authority, SFM Revenue Bonds (Series 43), 6.35%,
4/1/2001 AA 356,043
</TABLE>
FEDERATED PENNSYLVANIA INTERMEDIATE MUNICIPAL TRUST
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <S> <C>
INTERMEDIATE-TERM MUNICIPAL SECURITIES -- CONTINUED
PENNSYLVANIA -- CONTINUED
$ 500,000 Pennsylvania Intergovernmental Coop Authority, Special Tax Revenue Refunding
Bonds, Philadelphia Funding Program, 5.20% (FGIC INS)/(Original Issue Yield:
5.32%),
6/15/2007 AAA $ 507,370
125,000 Pennsylvania State Higher Education Facilities Authority, Health Services Revenue
Bonds (Series A), 6.00% (University of Pennsylvania), 1/1/2003 AA- 132,018
200,000 Pennsylvania State Higher Education Facilities Authority, Revenue Bonds (Series
L),
5.50% (State System of Higher Education, Commonwealth of PA)/(AMBAC INS)/
(Original Issue Yield: 5.55%), 6/15/2005 AAA 207,370
110,000 Pennsylvania State Higher Education Facilities Authority, University Revenue
Bonds
(Series 1996), 5.25% (Drexel University)/(PNC Bank, N.A. LOC)/(Original Issue
Yield: 5.35%), 8/1/2005 A1 110,236
150,000 Pennsylvania State Higher Education Facilities Authority, University Revenue
Bonds
(Series 1996), 5.35% (Drexel University)/(PNC Bank, N.A. LOC)/(Original Issue
Yield: 5.45%), 8/1/2006 A1 150,432
475,000 Pennsylvania State Higher Education Facilities Authority, University Revenue
Bonds
(Series 1996), 5.45% (Drexel University)/(PNC Bank, N.A. LOC)/(Original Issue
Yield: 5.55%), 8/1/2007 A1 477,242
125,000 Pennsylvania State Turnpike Commission, Turnpike Revenue Bonds (Series P), 5.45%,
12/1/2002 A 129,255
100,000 Pennsylvania State University, Second Revenue Refunding Bonds, 5.55%
(AMBAC INS)/(Original Issue Yield: 5.70%), 8/15/2006 AAA 103,746
125,000 Perkiomen Valley School District, PA, UT GO Bonds, 5.50%, 2/1/2004 A1 128,523
300,000 Philadelphia, PA Gas Works, Revenue Bonds (14th Series), 5.50% (FSA
INS)/(Original
Issue Yield: 6.10%), 7/1/2004 AAA 311,106
100,000 Philadelphia, PA Hospitals & Higher Education Facilities Authority, Hospital
Revenue
Bonds (Series 1994), 5.25% (Wills Eye Hospital, PA)/(Original Issue Yield:
5.40%),
7/1/2003 A 100,486
150,000 Philadelphia, PA Water & Wastewater System, Revenue Bonds, 5.50% (FGIC INS),
6/15/2003 AAA 155,328
100,000 Richland School District, PA, UT GO Bonds, 5.30% (MBIA INS)/(Original Issue
Yield: 5.45%), 11/1/2003 AAA 102,981
125,000 Solanco, PA School District, UT GO Bonds, 5.60% (FGIC INS), 2/15/2004 AAA 130,123
600,000 Southeastern, PA Transportation Authority, Special Revenue Bonds, 5.75%
(FGIC INS), 3/1/2008 AAA 632,172
100,000 Spring Ford, PA School District, UT GO Refunding Bonds (Series AA), 5.80%
(FGIC INS), 8/1/2005 AAA 102,678
200,000 Swarthmore Boro Authority PA, College Revenue Bonds, 6.00% (Swarthmore
College)/(Original Issue Yield: 6.10%), 9/15/2006 AA 212,642
</TABLE>
FEDERATED PENNSYLVANIA INTERMEDIATE MUNICIPAL TRUST
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <S> <C>
INTERMEDIATE-TERM MUNICIPAL SECURITIES -- CONTINUED
PENNSYLVANIA -- CONTINUED
$ 185,000 Warren County, PA School District, UT GO Bonds, 5.85% (FGIC INS), 9/1/2001 AAA $ 191,664
110,000 Warren County, PA School District, UT GO Bonds, 6.10% (FGIC INS), 9/1/2003 AAA 114,547
Total 13,960,317
VIRGIN ISLANDS -- 1.2%
170,000 Virgin Islands HFA, SFM Revenue Refunding Bonds (Series A), 5.80% (GNMA COL),
3/1/2005 AAA 172,397
TOTAL INVESTMENTS (IDENTIFIED COST $13,723,427)(A) $14,132,714
</TABLE>
At May 31, 1997, 8.8% of the total investments at market value were subject to
alternative minimum tax.
(a) The cost of investments for federal tax purposes amounts to $13,723,427. The
net unrealized appreciation of investments on a federal tax basis amounts to
$409,287 which is comprised of $409,470 appreciation and $183 depreciation
at May 31, 1997.
* Please refer to the Appendix of the Statement of Additional Information for an
explanation of the credit ratings. Current credit ratings are unaudited.
Note: The categories of investments are shown as a percentage of net assets
($14,416,769) at May 31, 1997.
The following acronyms are used throughout this portfolio:
AMBAC -- American Municipal Bond Assurance Corporation COL -- Collateralized
FGIC -- Financial Guaranty Insurance Company FSA -- Financial Security Assurance
GNMA -- Government National Mortgage Association GO -- General Obligation HDA --
Hospital Development Authority HEFA -- Health and Education Facilities Authority
HFA -- Housing Finance Authority INS -- Insured LOC -- Letter of Credit MBIA --
Municipal Bond Investors Assurance PRF -- Prerefunded SFM -- Single Family
Mortgage UT -- Unlimited Tax (See Notes which are an integral part of the
Financial Statements)
STATEMENT OF ASSETS AND LIABILITIES
FEDERATED PENNSYLVANIA INTERMEDIATE MUNICIPAL TRUST
MAY 31, 1997
<TABLE>
<S> <C> <C>
ASSETS:
Total investments in securities, at value (identified and tax cost
$13,723,427) $14,132,714
Income receivable 215,183
Receivable for investments sold 826,470
Receivable for shares sold 8,500
Deferred expenses 7,078
Total assets 15,189,945
LIABILITIES:
Payable for investments purchased $ 716,198
Payable for shares redeemed 5,700
Income distribution payable 44,728
Payable to Bank 2,523
Accrued expenses 4,027
Total liabilities 773,176
NET ASSETS for 1,418,321 shares outstanding $14,416,769
NET ASSETS CONSIST OF:
Paid in capital $14,184,456
Net unrealized appreciation of investments 409,287
Accumulated net realized loss on investments (176,974)
Total Net Assets $14,416,769
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
$14,416,769 / 1,418,321 shares outstanding $10.16
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF OPERATIONS
FEDERATED PENNSYLVANIA INTERMEDIATE MUNICIPAL TRUST
YEAR ENDED MAY 31, 1997
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 824,635
EXPENSES:
Investment advisory fee $ 77,730
Administrative personnel and services fee 125,000
Custodian fees 11,325
Transfer and dividend disbursing agent fees and expenses 20,676
Directors'/Trustees' fees 4,089
Auditing fees 14,438
Legal fees 3,024
Portfolio accounting fees 54,346
Shareholder services fee 38,865
Share registration costs 13,409
Printing and postage 15,023
Insurance premiums 2,669
Taxes 25
Miscellaneous 15,498
Total expenses 396,117
Waivers and reimbursements --
Waiver of investment advisory fee $ (77,730)
Waiver of shareholder services fee (21,764)
Reimbursement of other operating expenses (225,981)
Total waivers and reimbursements (325,475)
Net expenses 70,642
Net investment income 753,993
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments 11,890
Net change in unrealized appreciation of investments 250,674
Net realized and unrealized gain on investments 262,564
Change in net assets resulting from operations $ 1,016,557
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF CHANGES IN NET ASSETS
FEDERATED PENNSYLVANIA INTERMEDIATE MUNICIPAL TRUST
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
1997 1996
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS --
Net investment income $ 753,993 $ 547,070
Net realized gain (loss) on investments ($14,828 and $87,417
net losses, respectively,
as computed for federal tax purposes) 11,890 (26,717)
Net change in unrealized appreciation/depreciation 250,674 (126,841)
Change in net assets resulting from operations 1,016,557 393,512
DISTRIBUTIONS TO SHAREHOLDERS --
Distributions from net investment income (753,993) (547,070)
SHARE TRANSACTIONS --
Proceeds from sale of shares 5,435,406 13,768,008
Net asset value of shares issued to shareholders in payment of 170,651 118,987
distributions declared
Cost of shares redeemed (6,506,058) (7,023,515)
Change in net assets resulting from share transactions (900,001) 6,863,480
Change in net assets (637,437) 6,709,922
NET ASSETS:
Beginning of period 15,054,206 8,344,284
End of period $14,416,769 $15,054,206
</TABLE>
(See Notes which are an integral part of the Financial Statements)
NOTES TO FINANCIAL STATEMENTS
FEDERATED PENNSYLVANIA INTERMEDIATE MUNICIPAL TRUST
MAY 31, 1997
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. As of May 31, 1997, the Trust consists of three portfolios.
The financial statements included herein are 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. 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. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS
Municipal bonds are valued by an independent pricing service, taking into
consideration yield, liquidity, risk, credit quality, coupon, maturity, type of
issue, and any other factors or market data the pricing service deems relevant.
Short-term securities are valued at the prices provided by an independent
pricing service. However, 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 income. Accordingly, no provisions for federal tax are
necessary.
At May 31, 1997, the Fund, for federal tax purposes, had a capital loss
carryforward of $176,976, which will reduce the Fund's taxable income arising
from future net realized gain on investments, if any, to the extent permitted by
the Code, and thus will reduce the amount of the distributions to shareholders
which would otherwise be necessary to relieve the Fund of any liability for
federal tax. Pursuant to the Code, such capital loss carryforward will expire as
follows:
EXPIRATION YEAR EXPIRATION AMOUNT
2003 $74,731
2004 $87,417
2005 $14,828
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 over a period not to exceed five years
from the Fund's commencement date.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts of assets, liabilities, expenses and revenues reported in the
financial statements. Actual results could differ from those estimated.
OTHER
Investment transactions are accounted for on the trade date.
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 shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
1997 1996
<S> <C> <C>
Shares sold 536,995 1,358,404
Shares issued to shareholders in payment of distributions declared 16,821 11,708
Shares redeemed (641,073) (694,299)
Net change resulting from share transactions (87,257) 675,813
</TABLE>
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 0.50% of the Fund's
average daily net assets. The Adviser may voluntarily choose to waive any
portion of its fee and 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 Services Company ("FServ"), under the Administrative Services
Agreement, provides the Fund with administrative personnel and services. The fee
paid to FServ 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 Shareholder
Services ("FSS"), the Fund will pay FSS up to 0.25% of average daily net assets
of the Fund for the period. The fee paid to FSS is used to finance certain
services for shareholders and to maintain shareholder accounts. FSS may
voluntarily choose to waive any portion of its fee. FSS can modify or terminate
this voluntary waiver at any time at its sole discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES
FServ, through its subsidiary, Federated Shareholder Services Company ("FSSC")
serves as transfer and dividend disbursing agent for the Fund. The fee paid to
FSSC is based on the size, type, and number of accounts and transactions made by
shareholders.
PORTFOLIO ACCOUNTING FEES
FServ maintains the Trust's accounting records for which it receives a fee. The
fee is based on the level of the Trust's average daily net assets for the
period, plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES
Organizational and start-up administrative service expenses of $56,196 were
borne initially by the Adviser. The Fund has agreed to reimburse the Adviser for
the organizational and start-up administrative expenses during the five-year
period following effective date. For the period ended May 31, 1997, the Fund
paid $13,425 pursuant to this agreement.
INTERFUND TRANSACTIONS
During the period ended May 31, 1997, the Trust engaged in purchase and sale
transactions with funds that have a common investment adviser (or affiliated
investment advisers), common Directors/Trustees, and/or common Officers. These
purchase and sale transactions were made at current market value pursuant to
Rule 17a-7 under the Act amounting to $8,440,388 and $4,750,000, respectively.
GENERAL
Certain of the Officers and Trustees of the Trust are Officers and Directors or
Trustees of the above companies.
INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended May 31, 1997, were as follows:
PURCHASES $6,879,755
SALES $7,492,487
CONCENTRATION OF CREDIT 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 of
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, 1997, 78.2% 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 percentage of investments insured by
or supported (backed) by a letter of credit from any one institution or agency
did not exceed 24.2% of total investments. SUBSEQUENT EVENT
The Board of Trustees and Management of Intermediate Municipal Trust, on behalf
of its portfolio, Federated Ohio Intermediate Municipal Trust, submitted a
proposal to sell all of Federated Ohio Intermediate Municipal Trust's assets to
Federated Ohio Municipal Income Fund, a portfolio of Municipal Securities Income
Trust, dated May 23, 1997. A special meeting of shareholders of Federated Ohio
Intermediate Trust was held on July 7, 1997 in which shareholders approved the
proposed agreement. The agreement provides that the Federated Ohio Municipal
Income Fund will acquire all of the assets of Federated Ohio Intermediate
Municipal Trust in exchange for Class F Shares of Federated Ohio Municipal
Income Fund to be distributed pro rata to the holders of shares of the Federated
Ohio Intermediate Municipal Trust in complete liquidation of the Federated Ohio
Intermediate Municipal Trust on or about July 11, 1997.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Trustees of INTERMEDIATE MUNICIPAL TRUST
(Federated 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
schedules of portfolio of investments, as of May 31, 1997, the related statement
of operations for the year then ended, the statement of changes in net assets
for each of the two years then ended, and the 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 securities owned as of May
31, 1997, by correspondence with the custodian and brokers. 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, 1997, the results of its operations
for the year then ended, the changes in its net assets for each of the two years
in the period then ended, and financial highlights for the periods presented, in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
July 7, 1997
NOTES
NOTES
[Graphic]
Federated Pennsylvania Intermediate Municipal Trust
(A Portfolio of Intermediate Municipal Trust)
PROSPECTUS
JULY 31, 1997
An Open-End, Management Investment Company
FEDERATED PENNSYLVANIA INTERMEDIATE MUNICIPAL TRUST
Federated Investors Tower
Pittsburgh, PA 15222-3779
DISTRIBUTOR
Federated Securities Corp.
Federated Investors Tower Pittsburgh, PA 15222-3779
INVESTMENT ADVISER
Federated Management
Federated Investors Tower Pittsburgh, PA 15222-3779
CUSTODIAN
State Street Bank and Trust Company
P.O. Box 8600
Boston, MA 02266-8600
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Federated Shareholder Services Company
P.O. Box 8600
Boston, MA 02266-8600
INDEPENDENT PUBLIC ACCOUNTANTS Arthur Andersen LLP 2100 One PPG Place
Pittsburgh, PA 15222
Federated Securities Corp., Distributor
Cusip 458810306
3081603A (7/97)
[Graphic]
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 (the "Fund"), a portfolio of
Intermediate Municipal Trust (the "Trust") dated July 31, 1997. This Statement
is not a prospectus. You may request a copy of a prospectus or a paper copy of
this Statement, if you have received it electronically,
free of charge by calling 1-800-341-7400.
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
Statement dated July 31, 1997
[Graphic]
Federated Investors
Federated Securities Corp., Distributor
Cusip 458810306
3081603B (7/97)
[Graphic]
TABLE OF CONTENTS
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
INTERMEDIATE MUNICIPAL TRUST MANAGEMENT 5
Officers and Trustees 5
Fund Ownership 8
Trustees' Compensation 9
Trustee Liability 9
INVESTMENT ADVISORY SERVICES 9
Adviser to the Fund 9
Advisory Fees 10
OTHER SERVICES 10
Fund Administration 10
Custodian and Portfolio Accountant 10
Transfer Agent 10
Independent Public Accountants 10
SHAREHOLDER SERVICES 10
BROKERAGE TRANSACTIONS 11
PURCHASING SHARES 11
Conversion to Federal Funds 11
DETERMINING NET ASSET VALUE 11
Valuing Municipal Bonds 11
Use of Amortized Cost 11
REDEEMING SHARES 12
Redemption in Kind 12
EXCHANGING SECURITIES FOR FUND SHARES 12
Tax Consequences 12
MASSACHUSETTS PARTNERSHIP LAW 12
TAX STATUS 13
The Fund's Tax Status 13
Shareholders' Tax Status 13
TOTAL RETURN 13
YIELD 13
TAX-EQUIVALENT YIELD 14
Tax-Equivalency Table 14
PERFORMANCE COMPARISONS 14
Economic and Market Information 15
ABOUT FEDERATED INVESTORS 15
Mutual Fund Market 16
APPENDIX 17
Standard and Poor's Ratings Group
("S&P") Municipal Bond Ratings 17
Moody's Investors Service, Inc.
Municipal Bond Ratings 17
Fitch Investors Service, Inc. Investment
Grade Bond Ratings 17
Standard and Poor's Ratings Group
Municipal Note Ratings 17
Moody's Investors Service, Inc.
Short-Term Loan Ratings 18
Standard and Poor's Ratings Group
Commercial Paper Ratings 18
Moody's Investors Service, Inc.
Commercial Paper Ratings 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. On September 1, 1993, the name of the Trust was changed from
"Federated Intermediate Municipal Trust" to "Intermediate Municipal Trust." On
December 19, 1994, the name of the Fund was changed from "Pennsylvania
Intermediate Municipal Trust" to "Federated Pennsylvania Intermediate Municipal
Trust."
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, 1997 and 1996, the
portfolio turnover rates for the Fund were 45% and 11%, 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 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.
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 moderate 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 include rapid growth in Medicaid spending and
social service programs, and expenditures for additional correctional
facilities. Spending was increased by 2.7% for fiscal year 1996 based on
continued modest improvement in the economy, adherence to debt control policies
and spendable reserves from the prior year. The 1997 budget includes an
estimated $118 million surplus from fiscal year 1996, tax credit for job
creation, and continued growth in Medicaid expenditures. The Commonwealth has
restored the Tax Stabilization Reserve Fund to approximately $211 million at the
end of fiscal year 1996. 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.
INTERMEDIATE MUNICIPAL TRUST MANAGEMENT
Officers and Trustees are listed with their addresses, birthdates, present
positions with Intermediate Municipal Trust, and principal occupations.
John F. Donahue@*
Federated Investors Tower
Pittsburgh, PA
Birthdate: July 28, 1924
Chairman and Trustee
Chairman and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; Chairman and Director, Federated
Research Corp. and Federated Global Research Corp.; Chairman, Passport
Research, Ltd.; Chief Executive Officer and Director or Trustee of the
Funds. Mr. Donahue is the father of J. Christopher Donahue, President and
Trustee of the Company.
Thomas G. Bigley
15 Old Timber Trail
Pittsburgh, PA
Birthdate: February 3, 1934
Trustee
Chairman of the Board, Children's Hospital of Pittsburgh; formerly, Senior
Partner, Ernst & Young LLP; Director, MED 3000 Group, Inc.; Director, Member of
Executive Committee, University of Pittsburgh; Director or Trustee of the Funds.
John T. Conroy, Jr.
Wood/IPC Commercial Department
John R. Wood and Associates, Inc., Realtors
3255 Tamiami Trail North
Naples, FL
Birthdate: June 23, 1937
Trustee
President, Investment Properties Corporation; Senior Vice-President, John R.
Wood and Associates, Inc., Realtors; Partner or Trustee in private real
estate ventures in Southwest Florida; formerly, President, Naples Property
Management, Inc. and Northgate Village Development Corporation; Director or
Trustee of the Funds.
William J. Copeland
One PNC Plaza -- 23rd Floor
Pittsburgh, PA
Birthdate: July 4, 1918
Trustee
Director and Member of the Executive Committee, Michael Baker, Inc.; formerly,
Vice Chairman and Director, PNC Bank, N.A., and PNC Bank Corp.; Director, Ryan
Homes, Inc.; Director or Trustee of the Funds.
James E. Dowd
571 Hayward Mill Road
Concord, MA
Birthdate: May 18, 1922
Trustee
Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director or
Trustee of the Funds.
Lawrence D. Ellis, M.D.*
3471 Fifth Avenue, Suite 1111
Pittsburgh, PA
Birthdate: October 11, 1932
Trustee
Professor of Medicine, 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 or Trustee of the Funds.
Edward L. Flaherty, Jr.@
Miller, Ament, Henny & Kochuba
205 Ross Street
Pittsburgh, PA
Birthdate: June 18, 1924
Trustee
Attorney of Counsel, Miller, Ament, Henny & Kochuba; Director, Eat'N Park
Restaurants, Inc.; formerly, Counsel, Horizon Financial, F.A., Western
Region; Director or Trustee of the Funds.
Glen R. Johnson*
Federated Investors Tower
Pittsburgh, PA
Birthdate: May 2, 1929
President and Trustee
Trustee, Federated Investors; President and/or Trustee of some of the Funds;
staff member, Federated Securities Corp.
Peter E. Madden
One Royal Palm Way
100 Royal Palm Way
Palm Beach, FL
Birthdate: March 16, 1942
Trustee
Consultant; Former State Representative, Commonwealth of Massachusetts;
formerly, President, State Street Bank and Trust Company and State Street Boston
Corporation; Director or Trustee of the Funds.
Gregor F. Meyer
203 Kensington Ct.
Pittsburgh, PA
Birthdate: October 6, 1926
Trustee
Attorney, Retired Member of Miller, Ament, Henny & Kochuba; Chairman,
Meritcare, Inc.; Director, Eat'N Park Restaurants, Inc.; Director or Trustee
of the Funds.
John E. Murray, Jr., J.D., S.J.D.
President, Duquesne University
Pittsburgh, PA
Birthdate: December 20, 1932
Trustee
President, Law Professor, Duquesne University; Consulting Partner, Mollica &
Murray; Director or Trustee of the Funds.
Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, PA
Birthdate: September 14, 1925
Trustee
Professor, International Politics; Management Consultant; Trustee, Carnegie
Endowment for International Peace, RAND Corporation, Online Computer Library
Center, Inc., National Defense University and U.S. Space Foundation; President
Emeritus, University of Pittsburgh; Founding Chairman, National Advisory Council
for Environmental Policy and Technology, Federal Emergency Management Advisory
Board and Czech Management Center, Prague; Director or Trustee of the Funds.
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA
Birthdate: June 21, 1935
Trustee
Public Relations/Marketing/Conference Planning; Director or Trustee of the
Funds.
J. Christopher Donahue
Federated Investors Tower
Pittsburgh, PA
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. and Federated Global Research Corp.; President, Passport
Research, Ltd.; Trustee, Federated Shareholder Services Company, and
Federated Shareholder Services; Director, Federated Services Company;
President or Executive Vice President of the Funds; Director or Trustee 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, PA
Birthdate: October 22, 1930
Executive Vice President
Vice Chairman, Treasurer, and Trustee, Federated Investors; Vice President,
Federated Advisers, Federated Management, Federated Research, Federated Research
Corp., Federated Global Research Corp. and Passport Research, Ltd.; Executive
Vice President and Director, Federated Securities Corp.; Trustee, Federated
Shareholder Services Company; Trustee or Director of some of the Funds;
President, Executive Vice President and Treasurer of some of the Funds.
John W. McGonigle
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 26, 1938
Executive Vice President, Secretary, and Treasurer
Executive Vice President, Secretary, and Trustee, Federated Investors; Trustee,
Federated Advisers, Federated Management, and Federated Research; Director,
Federated Research Corp. and Federated Global Research Corp.; Trustee, Federated
Shareholder Services Company; Director, Federated Services Company; President
and Trustee, Federated Shareholder Services; Director, Federated Securities
Corp.; Executive Vice President and Secretary of the Funds; Treasurer of some of
the Funds.
Richard B. Fisher
Federated Investors Tower
Pittsburgh, PA
Birthdate: May 17, 1923
Vice President
Executive Vice President and Trustee, Federated Investors; Chairman and
Director, Federated Securities Corp.; President or Vice President of some of
the Funds; Director or Trustee of some of the Funds.
* This Trustee is deemed to be an "interested person" as defined in the
Investment Company Act of 1940.
@ Member of the Executive Committee. The Executive Committee of the Board of
Trustees handles the responsibilities of the Board between meetings of the
Board.
As used in the table above, "The Funds" and "Funds" mean the following
investment companies: 111 Corcoran Funds; Arrow Funds; Automated Government
Money Trust; Blanchard Funds; Blanchard Precious Metals Fund, Inc.; Cash Trust
Series II; Cash Trust Series, Inc.; DG Investor Series; Edward D. Jones & Co.
Daily Passport Cash Trust; Federated Adjustable Rate U.S. Government Fund, Inc.;
Federated American Leaders Fund, Inc.; Federated ARMs Fund; Federated Equity
Funds; Federated Equity Income Fund, Inc.; Federated Fund for U.S. Government
Securities, Inc.; Federated GNMA Trust; Federated Government Income Securities,
Inc.; Federated Government Trust; Federated High Income Bond Fund, Inc.;
Federated High Yield Trust; Federated Income Securities Trust; Federated Income
Trust; Federated Index Trust; Federated Institutional Trust; Federated Insurance
Series; Federated Investment Portfolios; Federated Investment Trust; Federated
Master Trust; Federated Municipal Opportunities Fund, Inc.; Federated Municipal
Securities Fund, Inc.; Federated Municipal Trust; Federated Short-Term Municipal
Trust; Federated Short-Term U.S. Government Trust; Federated Stock and Bond
Fund, Inc.; 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: 2-5 Years; Federated U.S. Government Securities Fund: 5-10 Years;
Federated Utility Fund, Inc.; First Priority Funds; Fixed Income Securities,
Inc.; High Yield Cash Trust; Intermediate Municipal Trust; International Series,
Inc.; Investment Series Funds, Inc.; Investment Series Trust; Liberty Term
Trust, Inc. -- 1999; Liberty U.S. Government Money Market Trust; Liquid Cash
Trust; Managed Series Trust; Money Market Management, Inc.; Money Market
Obligations Trust; Money Market Obligations Trust II; Money Market Trust;
Municipal Securities Income Trust; Newpoint Funds; Peachtree Funds; RIMCO
Monument Funds; Targeted Duration Trust; Tax-Free Instruments Trust; The
Planters Funds; The Starburst Funds; The Starburst Funds II; The Virtus Funds;
Trust for Financial Institutions; Trust for Government Cash Reserves; Trust for
Short-Term U.S. Government Securities; Trust for U.S. Treasury Obligations;
Wesmark Funds; and World Investment Series, Inc.
FUND OWNERSHIP
Officers and Trustees own less than 1% of the Fund's outstanding shares.
As of July 2, 1997, the following shareholders of record owned 5% or more of the
outstanding shares of the Fund: Univest & Company, Souderton, Pennsylvania,
owned approximately 289,310 Shares (20.04%); Charles Schwab & Co., Inc., San
Francisco, California, owned approximately 247,818 Shares (17.17%); Keystone
Financial Inc., Altoona, Pennsylvania, owned approximately 135,105 Shares
(9.36%); and Harmony Co., Carlisle, Pennsylvania, owned approximately 261,472
Shares (18.12%).
TRUSTEES' COMPENSATION
<TABLE>
<CAPTION>
AGGREGATE
NAME, COMPENSATION
POSITION WITH FROM TOTAL COMPENSATION PAID
TRUST TRUST*# FROM FUND COMPLEX+
<S> <C> <C>
John F. Donahue, $0 $0 for the Trust and
Chairman and Trustee 56 other investment companies in the Complex
Thomas G. Bigley, $346.73 $108,725 for the Trust and
Trustee 56 other investment companies in the Complex
John T. Conroy, Jr., $381.47 $119,615 for the Trust and
Trustee 56 other investment companies in the Complex
William J. Copeland, $381.47 $119,615 for the Trust and
Trustee 56 other investment companies in the Complex
James E. Dowd, $381.47 $119,615 for the Trust and
Trustee 56 other investment companies in the Complex
Lawrence D. Ellis, M.D., $346.73 $108,725 for the Trust and
Trustee 56 other investment companies in the Complex
Edward L. Flaherty, Jr., $381.47 $119,615 for the Trust and
Trustee 56 other investment companies in the Complex
Glen R. Johnson, $ 0 $ 0 for the Trust and
President and Trustee 8 other investment companies in the Complex
Peter E. Madden, $346.73 $108,725 for the Trust and
Trustee 56 other investment companies in the Complex
Gregor F. Meyer, $346.73 $108,725 for the Trust and
Trustee 56 other investment companies in the Complex
John E. Murray, Jr., $346.73 $108,725 for the Trust and
Trustee 56 other investment companies in the Complex
Wesley W. Posvar, $346.73 $108,725 for the Trust and
Trustee 56 other investment companies in the Complex
Marjorie P. Smuts, $346.73 $108,725 for the Trust and
Trustee 56 other investment companies in the Complex
</TABLE>
* Information is furnished for the fiscal year ended May 31, 1997.
# 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. 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, 1997, 1996, and 1995, the adviser earned $77,730,
$56,849, and $32,714, all of which was voluntarily waived. In addition, the
adviser reimbursed other operating expenses of $225,981, $232,945, and $225,621,
respectively.
OTHER SERVICES
FUND ADMINISTRATION
Federated Services Company, a subsidiary of Federated Investors, provides
administrative personnel and services to the Fund for a fee as described in the
prospectus. From March 1, 1994 to March 1, 1996, Federated Administrative
Services, a subsidiary of Federated Investors, served as the Fund's
administrator. For purposes of this Statement of Additional Information,
Federated Services Company, and Federated Administrative Services may
hereinafter collectively be referred to as the "Administrators." For the fiscal
years ended May 31, 1997, 1996, and 1995, the Administrators earned $125,000,
$125,000, and $125,000, respectively, none of which was waived.
CUSTODIAN AND PORTFOLIO ACCOUNTANT
State Street Bank and Trust Company, Boston, Massachusetts, is custodian for the
securities and cash of the Fund. Federated Services Company, Pittsburgh,
Pennsylvania, provides certain accounting and recordkeeping services with
respect to the Fund's portfolio investments. 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.
TRANSFER AGENT
Federated Services Company, through its registered transfer agent, Federated
Shareholder Services Company, maintains all necessary shareholder records. For
its services, the transfer agent receives a fee based upon the size, type and
number of accounts and transactions made by shareholders.
INDEPENDENT PUBLIC ACCOUNTANTS
The independent public accountants for the Fund are Arthur Andersen LLP,
Pittsburgh, Pennsylvania.
SHAREHOLDER SERVICES
This arrangement permits the payment of fees to Federated Shareholder Services
and financial institutions to cause services to be provided which are necessary
for the maintenance of shareholder accounts and to encourage personal services
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 to maintain shareholder accounts and records;
processing purchase and redemption transactions and automatic investments of
client account cash balances; answering routine client inquiries; and assisting
clients in changing dividend options, account designations, and addresses.
By adopting the Shareholder Services Agreement, the Trustees expect that the
Fund will benefit by: (1) providing personal services to shareholders; (2)
investing shareholder assets with a minimum of delay and administrative detail;
(3) enhancing shareholder recordkeeping systems; and (4) responding promptly to
shareholders' requests and inquiries concerning their accounts.
For the fiscal year ended May 31, 1997, the Fund paid $38,865 pursuant to the
Shareholder Services Agreement, of which $21,764 was waived.
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of portfolio
instruments, the adviser looks for prompt execution of the order at a favorable
price. In working with dealers, the adviser will generally use those who are
recognized dealers in specific portfolio instruments, except when a better price
and execution of the order can be obtained elsewhere. The adviser makes
decisions on portfolio transactions and selects brokers and dealers subject to
guidelines established 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. Research services provided by brokers and
dealers may be used by the adviser or its affiliates in advising the Fund 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. 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. During the fiscal
years ended May 31, 1997, 1996, and 1995, the Fund paid no brokerage
commissions.
Although investment decisions for the Fund are made independently from those of
the other accounts managed by the adviser, investments of the type the Fund may
make may also be made by those other accounts. When the Fund and one or more
other accounts managed by the adviser are prepared to invest in, or desire to
dispose of, the same security, available investments or opportunities for sales
will be allocated in a manner believed by the adviser to be equitable to each.
In some cases, this procedure may adversely affect the price paid or received by
the Fund or the size of the position obtained or disposed of by the Fund. In
other cases, however, it is believed that coordination and the ability to
participate in volume transactions will be to the benefit of the Fund.
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
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.
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 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 one-year ended May 31, 1997, and
for the period from December 5, 1993 (date of initial public investment) to May
31, 1997 were 6.63% and 5.44%, 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, 1997, was 4.70%.
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, 1997,
was 8.16%.
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 1997
STATE OF PENNSYLVANIA
COMBINED FEDERAL AND STATE INCOME TAX BRACKET:
17.80% 30.80% 33.80% 38.80% 42.40%
JOINT $1- $41,201- $99,601- $151,751- OVER
RETURN 41,200 99,600 151,750 271,050 $271,050
SINGLE $1- $24,651- $59,751- $124,651- OVER
RETURN 24,650 59,750 124,650 271,050 $271,050
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.
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 nonstandardized 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.
Advertising and other promotional literature may include charts, graphs and
other illustrations using the Fund's returns in general, that demonstrate basic
investment concepts such as tax-deferred compounding, dollar-cost averaging and
systematic investment. In addition, the Fund can compare its performance, or
performance for the types of securities in which it invests, to a variety of
other investments, such as bank savings accounts, certificates of deposit, and
Treasury bills.
ECONOMIC AND MARKET INFORMATION
Advertising and sales literature for the Fund may include discussions of
economic, financial and political developments and their effect on the
securities market. Such discussions may take the form of commentary on these
developments by Fund portfolio managers and their views and analysis on how such
developments could affect the Fund. In addition, advertising and sales
literature may quote statistics and give general information about the mutual
fund industry, including the growth of the industry, from sources such as the
Investment Company Institute.
ABOUT FEDERATED INVESTORS
Federated Investors 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. These traders handle trillions of dollars
in annual trading volume.
In the municipal sector, as of December 31, 1996, Federated Investors managed 12
bond funds with approximately $2.0 billion in assets and 21 money market funds
with approximately $9.5 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. The Fund may quote
statistics from organizations including The Tax Foundation and the National
Taxpayers Union regarding the tax obligations of Americans.
J. Thomas Madden, Executive Vice President, oversees Federated Investors' equity
and high-yield corporate bond management while William D. Dawson, Executive Vice
President, oversees Federated Investors' domestic fixed income management. Henry
A. Frantzen, Executive Vice President, oversees the management of Federated
Investors' international and global portfolios.
MUTUAL FUND MARKET
Thirty-seven percent of American households are pursuing their financial goals
through mutual funds. These investors, as well as businesses and institutions,
have entrusted over $3.5 trillion to the more than 6,000 funds available.*
Federated Investors, through its subsidiaries, distributes mutual funds for a
variety of investment applications. Specific markets include:
INSTITUTIONAL CLIENTS
Federated Investors 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.
BANK MARKETING
Other institutional clients include close relationships with more than 1,600
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 Timothy C. Pillion, Senior Vice
President, Bank Marketing & Sales.
BROKER/DEALERS AND BANK BROKER/DEALER SUBSIDIARIES
Federated funds are available to consumers through major brokerage firms
nationwide -- we have over 2,200 broker/dealer and bank broker/dealer
relationships across the country -- supported by more wholesalers than any other
mutual fund distributor. Federated's service to financial professionals and
institutions has earned it high ratings in several surveys performed by DALBAR,
Inc. DALBAR is recognized as the industry benchmark for service quality
measurement. The marketing effort to these firms is headed by James F. Getz,
President, Federated Securities Corp.
* 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.
Federated Intermediate Municipal Trust
(A Portfolio of Intermediate Municipal Trust)
PROSPECTUS
The shares of Federated 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,
1997, with the Securities and Exchange Commission (the "SEC"). 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 or a paper copy of this prospectus, if you have received
your prospectus electronically, free of charge by calling 1-800-341-7400. To
obtain other information or to make inquiries about the Fund, contact the Fund
at the address listed in the back of this prospectus. The Statement of
Additional Information, material incorporated by reference into this document,
and other information regarding the Fund is maintained electronically with the
SEC at Internet Web site (http://www.sec.gov).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
Prospectus dated July 31,1997
TABLE OF CONTENTS
Summary of Fund Expenses 1
Financial Highlights 2
General Information 3
Investment Information 3
Investment Objective 3
Investment Policies 3
Municipal Securities 4
Investment Risks 5
Investment Limitations 5
Intermediate Municipal Trust Information 5
Management of the Trust 5
Distribution of Fund Shares 6
Administration of the Fund 6
Net Asset Value 7
Investing in the Fund 7
Share Purchases 7
Minimum Investment Required 7
What Shares Cost 7
Exchanging Securities for Fund Shares 7
Certificates and Confirmations 8
Dividends 8
Capital Gains 8
Redeeming Shares 8
By Telephone 8
By Mail 8
Accounts with Low Balances 9
Shareholder Information 9
Voting Rights 9
Tax Information 9
Federal Income Tax 9
State and Local Taxes 10
Performance Information 10
Financial Statements 11
Report of Independent Public Accountants 24
SUMMARY OF FUND EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES
<S> <C> Maximum Sales Charge Imposed on Purchases (as a percentage of offering
price) None Maximum Sales Charge 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 OPERATING EXPENSES
(As a percentage of average net assets)
<S> <C> <C>
Management Fee (after waiver)(1) 0.33%
12b-1 Fee None
Shareholder Services Fee (after waiver)(2) 0.06%
Total Other Expenses 0.24%
Total Operating Expenses(3) 0.57%
</TABLE>
(1) The management fee has been reduced to reflect the voluntary waiver of a
portion of the management fee. The adviser can terminate this voluntary
waiver at any time at its sole discretion. The maximum management fee is
0.40%.
(2) The shareholder services fee has been reduced to reflect the voluntary
waiver of a portion of the shareholder services fee. The shareholder service
provider can terminate this voluntary waiver at any time at its sole
discretion. The maximum shareholder services fee is 0.25%.
(3) The total operating expenses would have been 0.83% absent the voluntary
waivers of portions of the management fee and the shareholder services fee.
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.
EXAMPLE
You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of period.
1 Year $ 6
3 Years $18
5 Years $32
10 Years $71
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
FINANCIAL HIGHLIGHTS*
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 24.
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $10.41 $10.55 $10.52 $10.74 $10.31 $10.09 $ 9.84 $ 9.81 $ 9.81 $ 9.83
INCOME FROM INVESTMENT
OPERATIONS
Net investment income 0.53 0.53 0.54 0.52 0.56 0.59 0.63 0.64 0.64 0.62
Net realized and
unrealized gain
(loss) on investments 0.09 (0.14) 0.03 (0.22) 0.43 0.22 0.25 0.03 -- (0.02)
Total from investment 0.62 0.39 0.57 0.30 0.99 0.81 0.88 0.67 0.64 0.60
operations
LESS DISTRIBUTIONS
Distributions from net
investment income (0.53) (0.53) (0.54) (0.52) (0.56) (0.59) (0.63) (0.64) (0.64) (0.62)
NET ASSET VALUE, END OF $10.50 $10.41 $10.55 $10.52 $10.74 $10.31 $10.09 $ 9.84 $ 9.81 $ 9.81
PERIOD
TOTAL RETURN(A) 6.11% 3.78% 5.67% 2.79% 9.80% 8.19% 9.22% 7.02% 6.77% 6.34%
RATIOS TO AVERAGE
NET ASSETS
Expenses 0.57% 0.57% 0.59% 0.61% 0.48% 0.47% 0.49% 0.50% 0.48% 0.49%
Net investment income 5.09% 5.05% 5.23% 4.82% 5.27% 5.73% 6.32% 6.49% 6.56% 6.25%
Expense 0.26% 0.24% 0.00% 0.01% 0.14% 0.22% 0.30% 0.38% 0.39% 0.31%
waiver/reimbursement(b)
SUPPLEMENTAL DATA
Net assets, end of
period (000 omitted) $232,506 $218,398 $229,285 $302,663 $263,283 $173,702 $116,577 $95,738 $82,211 $91,195
Portfolio turnover 33% 19% 11% 7% 3% 9% 43% 14% 25% 119%
</TABLE>
* 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.
(a) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
FURTHER INFORMATION ABOUT THE FUND'S PERFORMANCE IS CONTAINED IN THE FUND'S
ANNUAL REPORT FOR THE FISCAL YEAR ENDED MAY 31, 1997, WHICH CAN BE OBTAINED FREE
OF CHARGE.
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 charge
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.
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 investment 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 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.
The Fund may dispose of a commitment prior to settlement if the investment
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 INVESTMENT
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 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.
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, 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 0.40% of the
Fund's average daily net assets. Also, the adviser may voluntarily choose to
waive a portion of its fee or reimburse other expenses of the Fund, but
reserves the right to terminate such waiver or reimbursement at any time at
its sole discretion.
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.
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 $110 billion invested across more than 300
funds under management and/or administration by its subsidiaries, as of
December 31, 1996, Federated Investors is one of the largest mutual fund
investment managers in the United States. With more than 2,000 employees,
Federated continues to be led by the management who founded the company in
1955. Federated funds are presently at work in and through 4,500 financial
institutions nationwide.
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 interests. 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.
PORTFOLIO MANAGER'S BACKGROUND
J. Scott Albrecht has been the Fund's portfolio manager since July 1995. Mr.
Albrecht joined Federated Investors in 1989 and has been a Vice President of
the Fund's investment adviser since 1994. From 1992 to 1994, Mr. Albrecht
served as an Assistant Vice President of the Fund's investment adviser. In
1991, Mr. Albrecht acted as an investment analyst. Mr. Albrecht is a
Chartered Financial Analyst and received his M.S. in Public Management from
Carnegie Mellon University.
Mary Jo Ochson has been the Fund's portfolio manager since July 1997. Ms.
Ochson joined Federated Investors in 1982 and has been a Senior Vice
President of the Fund's investment adviser since January 1996. From 1988
through 1995, Ms. Ochson served as a Vice President of the Fund's investment
adviser. Ms. Ochson is a Chartered Financial Analyst and received her M.B.A.
in Finance from the University of Pittsburgh.
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 Services Company, a subsidiary of Federated Investors, provides
administrative personnel and services (including certain legal and financial
reporting services) necessary to operate the Fund. Federated Services Company
provides these at an annual rate which relates to the average aggregate daily
net assets of all funds advised by subsidiaries of Federated Investors as
specified below:
MAXIMUM AVERAGE AGGREGATE
FEE DAILY NET ASSETS
0.15% on the first $250 million
0.125% on the next $250 million
0.10% on the next $250 million
0.075% on assets in excess of $750 million
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 Services Company 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 the average daily net asset value of the Fund
shares, computed at an annual rate, to obtain certain personal services for
shareholders and to maintain shareholder accounts. From time to time and for
such periods as deemed appropriate, the amount stated above may be reduced
voluntarily. 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.
SUPPLEMENTAL PAYMENTS TO FINANCIAL INSTITUTIONS
In addition to payments made pursuant to the Shareholder Services Agreement,
Federated Securities Corp. and Federated Shareholder Services, from their own
assets, may pay financial institutions supplemental fees for the performance of
substantial sales services, distribution-related support services, or
shareholder services. The support may include sponsoring sales, educational and
training seminars for their employees, providing sales literature, and
engineering computer software programs that emphasize the attributes of the
Fund. Such assistance will be predicated upon the amount of shares the financial
institution sells or may sell, and/or upon the type and nature of sales or
marketing support furnished by the financial institution. Any payments made by
the distributor may be reimbursed by the Fund's investment adviser or its
affiliates.
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 is 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 Shareholder 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 be found on the account statement or by contacting the
Fund); Group Number or Wire Order Number; Nominee or Institution Name; and ABA
011000028. Shares cannot be purchased by wire on holidays when wire transfers
are restricted. Questions on wire purchases should be directed to your
shareholder services representative at the telephone number listed on your
account statement.
BY MAIL
To purchase shares by mail, send a check made payable to Federated Intermediate
Municipal Trust to: Federated Shareholder Services Company, P.O. Box 8600,
Boston, Massachusetts 02266-8600. Orders by mail are considered received when
payment by check is converted by State Street Bank and Trust Company ("State
Street Bank") into federal funds. This is normally the next business day after
State Street Bank receives the check.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment in the Fund is $25,000, plus any financial
intermediary 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
financial intermediary may be subject to a smaller minimum investment.
WHAT SHARES COST
Shares are sold at their net asset value next determined after an order is
received. There is no sales charge imposed by the Fund. Investors who purchase
shares through a financial intermediary may be charged a service fee by that
financial intermediary. 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, Martin Luther King 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.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Fund, Federated Shareholder 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 to all shareholders invested in
the Fund on the record date. Dividends are declared just prior to determining
net asset value. Shares purchased by wire begin earning dividends on the
business day after the order is received. 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 at the ex-dividend date net asset
value 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. Investors who redeem shares through a
financial intermediary may be charged a service fee by that financial
intermediary. 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). 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. Proceeds from
redemption requests received on holidays when wire transfers are restricted will
be wired the following business day. Questions about telephone redemptions on
days when wire transfers are restricted should be directed to your shareholder
services representative at the telephone number listed on your account
statement. 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.
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
Shares may be redeemed in any amount by mailing a written request to:
Federated Shareholder Services Company, P.O. Box 8600, Boston, Massachusetts
02266-8600. If share certificates have been issued, they should be sent
unendorsed with the written request by registered or certified mail to the
address noted above.
The written request should state: Federated Intermediate Municipal Trust; the
account name as registered with the Fund; the account number; and the number of
shares to be redeemed or the dollar amount requested. All owners of the account
must sign the request exactly as the shares are registered. Normally, a check
for the proceeds is mailed within one business day, but in no event more than
seven days, after the receipt of a proper written redemption request. Dividends
are paid up to and including the day that a redemption request is processed.
Shareholders requesting 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 their signatures guaranteed by a commercial
or savings bank, trust company or savings association whose deposits are insured
by an organization which is administered by the Federal Deposit Insurance
Corporation; a member firm of a domestic stock exchange; 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.
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.
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.
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.
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.
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. Shareholders are urged to consult their own tax advisers
regarding the status of their accounts under state and local tax laws.
PERFORMANCE INFORMATION
From time to time, the Fund advertises its total return, 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 SEC) 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.
PORTFOLIO OF INVESTMENTS
FEDERATED INTERMEDIATE MUNICIPAL TRUST
MAY 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
INTERMEDIATE-TERM MUNICIPAL SECURITIES -- 96.9%
ALABAMA -- 0.7%
$ 1,500,000 Alabama Water PCA, PCR Bonds, 6.35% (AMBAC INS), AAA $ 1,601,340
8/15/2001
ALASKA -- 3.0%
7,000,000 Alaska State Housing Finance Corp., General Mortgage
Revenue Bonds (Series A),
5.65% (MBIA INS), 12/1/2012 AAA 7,012,110
ARIZONA -- 2.9%
1,500,000 Phoenix, AZ, UT GO Refunding Bonds (Series A), 7.40%, AA 1,627,560
7/1/2000
5,000,000 Salt River Project, AZ Agricultural Improvement &
Power District, Electric System
Revenue Bonds (Series A), 7.10%, 1/1/2000 AA 5,188,150
Total 6,815,710
CALIFORNIA -- 2.9%
2,250,000 California State, UT GO Bonds, (Series AV), 7.80%, AA 2,487,555
10/1/2000
1,800,000 Los Angeles, CA Department of Water & Power, Electric
Plant Revenue Bonds,
2nd Issue, 9.00%, 6/1/2000 AA 2,027,412
1,875,000 Los Angeles, CA Department of Water & Power, Electric
Plant Revenue Bonds,
2nd Issue, 9.00%, 6/1/2001 AA 2,177,944
Total 6,692,911
FLORIDA -- 2.4%
185,000 Dade County, FL, UT GO Public Imps., 6.70% (MBIA INS), AAA 188,965
6/1/2003
2,000,000 Florida State Board of Education Administration, UT GO
Capital Outlay Bonds
(Series C), 6.25% (Florida State), 6/1/2001 AA 2,127,280
3,000,000 Florida State Board of Education Administration, UT GO
Capital Outlay Bonds,
6.00% (Florida State), 6/1/2001 AA 3,163,710
Total 5,479,955
GEORGIA -- 3.7%
2,000,000 Georgia Municipal Electric Authority, Revenue Bonds AA- 2,096,780
(Series U), 6.50%, 1/1/2000
1,000,000 Georgia Municipal Electric Authority, Revenue Bonds AA- 1,065,890
(Series U), 6.60%, 1/1/2001
5,000,000 Georgia State, UT GO Bonds (Series A), 7.70%, 2/1/2001 AA+ 5,534,650
Total 8,697,320
HAWAII -- 4.2%
5,000,000 Hawaii State, UT GO Bonds (Series BT), 8.00%, 2/1/2001 AA 5,566,600
1,000,000 Hawaii State, UT GO Bonds (Series BU), 5.85% (Original AA 1,051,270
Issue Yield: 5.95%), 11/1/2001
3,000,000 Honolulu, HI City & County, UT GO Bonds (Series A), 6.30%
(Original Issue
Yield: 6.40%), 8/1/2001 AA 3,197,700
Total 9,815,570
</TABLE>
FEDERATED INTERMEDIATE MUNICIPAL TRUST
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
INTERMEDIATE-TERM MUNICIPAL SECURITIES -- CONTINUED
ILLINOIS -- 6.8%
$ 3,100,000 Cook County, IL, GO Capital Improvement Bonds (Series
1996), 5.50% (FGIC INS),
11/15/2008 AAA $ 3,210,608
50,000 Du Page, IL Water Commission, UT GO Bonds, 5.95%, AA+ 52,342
3/1/2001
3,000,000 Du Page, IL Water Commission, UT GO Bonds, 6.05%, AA+ 3,173,730
3/1/2002
90,000 Illinois Health Facilities Authority, Revenue Bonds,
6.40% (Northwestern Memorial
Hospital), 8/15/1999 AA 93,722
3,800,000 Illinois Health Facilities Authority, Revenue
Refunding Bonds (Series A), 5.70%
(Advocate Health Care Network)/(Original Issue Yield: AA 3,802,926
5.75%), 8/15/2011
3,000,000 Illinois Municipal Electric Agency, Power Supply
System Revenue Bonds (Series A),
6.20% (AMBAC INS), 2/1/2001 AAA 3,156,000
100,000 Illinois State, UT GO Bonds, 6.75%, 6/1/1997 AA- 100,008
2,000,000 University of Illinois, Auxiliary Facilities Revenue
Bonds, 6.40% (Original Issue Yield:
6.45%), 4/1/2001 AA 2,126,940
Total 15,716,276
INDIANA -- 2.1%
4,800,000 Indiana Health Facility Financing Authority, Hospital
Revenue Bonds (Series 1996A),
5.50% (Clarian Health Partners, Inc.)/(Original Issue AA 4,811,904
Yield: 5.65%), 2/15/2010
MARYLAND -- 0.9%
1,000,000 University of Maryland, Auxiliary Facility & Tuition
Revenue Bonds (Series A), 5.80%
(Original Issue Yield: 5.85%), 2/1/2002 AA+ 1,048,770
1,000,000 Washington Suburban Sanitation District, MD, UT GO
Revenue Bonds (Second
Series), 6.90% (United States Treasury PRF), 6/1/2009 AA 1,102,790
(@102)
Total 2,151,560
MICHIGAN -- 4.6%
2,000,000 Michigan State Building Authority, Revenue Bonds
(Series II), 6.25% (AMBAC INS)/
(Original Issue Yield: 6.35%), 10/1/2000 AAA 2,108,420
3,705,000 Michigan State Housing Development Authority, (Series
B) Rental Housing Revenue
Bonds, 5.65% (MBIA INS), 10/1/2007 AAA 3,751,016
3,605,000 Michigan State Housing Development Authority, (Series
B) Rental Housing Revenue
Bonds, 5.65% (MBIA INS), 4/1/2007 AAA 3,648,909
1,000,000 Royal Oak, MI Hospital Finance Authority, Revenue
Refunding Bonds, 7.40% (William
Beaumont Hospital, MI), 1/1/2000 AA 1,071,390
Total 10,579,735
</TABLE>
FEDERATED INTERMEDIATE MUNICIPAL TRUST
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
INTERMEDIATE-TERM MUNICIPAL SECURITIES -- CONTINUED
MISSOURI -- 4.6%
$ 5,000,000 Missouri State HEFA, Health Facilities Revenue Bonds
(Series A), 6.00% (BJC Health
System, MO)/(Original Issue Yield: 6.05%), 5/15/2005 AA $ 5,372,350
5,000,000 Missouri State HEFA, Health Facilities Revenue Bonds
(Series A), 6.10% (BJC Health
System, MO)/(Original Issue Yield: 6.15%), 5/15/2006 AA 5,359,550
Total 10,731,900
NEVADA -- 0.5%
1,000,000 Clark County, NV School District, LT GO Bonds (Series AAA 1,142,280
A), 9.75% (MBIA INS), 6/1/2000
NEW HAMPSHIRE -- 1.2%
2,555,000 New Hampshire State, UT GO Bonds (Series A), 6.40%, AA 2,731,040
6/15/2001
NEW JERSEY -- 0.0%
100,000 New Jersey State Transportation Trust Fund Agency,
Revenue Bonds, 5.90%,
6/15/1999 A+ 103,202
NEW YORK -- 8.1%
3,500,000 Hempstead, NY IDA, Resource Recovery Revenue Bonds
(Series 1997), 5.00%
(American Ref-Fuel Company)/(MBIA INS)/(Original Issue AAA 3,408,020
Yield: 5.18%), 12/1/2009
1,500,000 Municipal Assistance Corp. of New York, Revenue Bonds
(Series 62), 6.60% (United
States Treasury PRF), 7/1/2000 (@102) AA- 1,533,525
6,000,000 New York City, NY, UT GO Bonds (Series E), 5.30% (FGIC
INS)/(Original Issue Yield:
5.40%), 8/1/2009 AAA 6,012,600
2,500,000 New York State Environmental Facilities Corp., State
Water Pollution Control Bonds
(Series 1994E), 6.15% (Original Issue Yield: 6.25%), A- 2,703,450
6/15/2004
4,000,000 New York State Thruway Authority, Highway & Bridge
Fund Revenue Bonds
(Series B), 5.625% (FGIC INS)/(Original Issue Yield: AAA 4,195,840
5.75%), 4/1/2005
1,000,000 Triborough Bridge & Tunnel Authority, NY, Revenue
Bonds (Series S), 6.625%
(Original Issue Yield: 6.70%), 1/1/2001 A+ 1,069,430
Total 18,922,865
NORTH CAROLINA -- 6.1%
2,720,000 Charlotte-Mecklenburg Hospital Authority, NC, Health
Care Revenue Bonds
(Series 1996A), 5.50% (Charlotte-Mecklenburg Hospital,
NC)/(Original Issue
Yield: 5.60%), 1/15/2008 AA 2,825,182
3,355,000 Charlotte-Mecklenburg Hospital Authority, NC, Health
Care System Revenue Bonds,
5.90% (Original Issue Yield: 5.95%), 1/1/2002 AA 3,519,194
5,350,000 North Carolina Municipal Power Agency No. 1, Catawba
Electric Revenue Refunding
Bonds, 6.00% (Original Issue Yield: 6.05%), 1/1/2004 A 5,588,878
2,000,000 North Carolina Municipal Power Agency No. 1, Catawba
Electric Revenue Refunding
Bonds, 7.25%, 1/1/2007 A 2,280,040
Total 14,213,294
</TABLE>
FEDERATED INTERMEDIATE MUNICIPAL TRUST
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
INTERMEDIATE-TERM MUNICIPAL SECURITIES -- CONTINUED
OHIO -- 4.6%
$ 100,000 Columbus, OH, UT GO Refunding Bonds, 5.80%, 1/1/2000 AAA $ 103,568
2,500,000 Hamilton County, OH Sewer System, Improvement &
Revenue Refunding Bonds
(Series A), 6.20%, 12/1/2000 AA- 2,633,500
3,195,000 Lucas County, OH, Hospital Revenue Refunding Bonds
(Series 1996), 5.50%
(ProMedica Healthcare Obligated Group)/(MBIA
INS)/(Original Issue Yield: 5.75%),
11/15/2008 AAA 3,294,972
2,840,000 Lucas County, OH, Hospital Revenue Refunding Bonds
(Series 1996), 6.00%
(ProMedica Healthcare Obligated Group)/(MBIA INS), AAA 3,065,439
11/15/2007
1,400,000 Montgomery County, OH Health Facilities Authority,
Revenue Bonds (Series A),
6.20% (Sisters of Charity Health Care System)/(MBIA
INS)/(Original Issue Yield:
6.30%), 5/15/2001 AAA 1,482,516
Total 10,579,995
OKLAHOMA -- 0.9%
2,000,000 Oklahoma State Industrial Authority, Health System
Revenue Bonds (Series C),
5.70% (Baptist Medical Center, OK)/(AMBAC
INS)/(Original Issue Yield: 5.80%),
8/15/2002 AAA 2,085,660
PENNSYLVANIA -- 7.3%
4,570,000 Harrisburg, PA Authority, Revenue Bonds (Pooled Bond
Program) (Series I of
1996), 5.35% (MBIA INS)/(Original Issue Yield: 5.50%), AAA 4,658,155
4/1/2008
1,500,000 Pennsylvania Infrastructure Investment Authority,
Revenue Bonds, 6.15%
(Pennvest), 9/1/2001 AA 1,586,385
3,500,000 Pennsylvania Intergovernmental Coop Authority, Special
Tax Revenue Bonds,
5.45% (FGIC INS)/(Original Issue Yield: 5.55%), AAA 3,562,020
6/15/2008
3,000,000 Pennsylvania State Higher Education Facilities
Authority, Health Services Revenue
Bonds (Series A), 5.50% (Allegheny Delaware Valley
Obligated Group)/(MBIA INS)/
(Original Issue Yield: 5.60%), 11/15/2008 AAA 3,074,280
4,000,000 Pennsylvania State Higher Education Facilities
Authority, Refunding Revenue Bonds
(Series A), 5.50% (University of AA 4,078,600
Pennsylvania)/(Original Issue Yield: 5.55%), 1/1/2009
Total 16,959,440
RHODE ISLAND -- 0.8%
1,655,000 Providence, RI, UT GO Bonds (Series 1997A), 6.00% (FSA AAA 1,769,989
INS), 7/15/2008
SOUTH CAROLINA -- 2.3%
730,000 Columbia, SC Waterworks & Sewer System, Refunding
Revenue Bonds, 6.40%
(United States Treasury COL)/(Original Issue Yield: AAA 775,997
6.45%), 2/1/2001
4,270,000 Columbia, SC Waterworks & Sewer System, Revenue Bonds,
6.40% (Original Issue
Yield: 6.45%), 2/1/2001 AA 4,546,483
Total 5,322,480
</TABLE>
FEDERATED INTERMEDIATE MUNICIPAL TRUST
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
INTERMEDIATE-TERM MUNICIPAL SECURITIES -- CONTINUED
TENNESSEE -- 0.5%
$ 1,065,000 Metropolitan Government Nashville & Davidson County,
TN HEFA, Revenue Bonds
(Series B), 5.85% (Vanderbilt University)/(Original AA $ 1,120,348
Issue Yield: 5.90%), 10/1/2001
TEXAS -- 14.5%
200,000 Brownsville, TX Independent School, UT GO Refunding
Bonds, 6.00% (PSFG INS)/
(Original Issue Yield: 6.00%), 8/15/2000 Aaa 209,110
1,000,000 Dallas, TX Waterworks & Sewer System, Revenue
Refunding and Improvement
Bonds (Series A), 9.50%, 10/1/1998 AA 1,028,110
4,000,000 Garland, TX, LT GO Bonds, 5.80% (Original Issue Yield: AA 4,196,240
5.90%), 8/15/2001
100,000 Gulf Coast, TX Waste Disposal Authority, Revenue
Bonds, 6.10% (Monsanto Co.),
1/1/2004 A1 104,281
4,500,000 Houston, TX Independent School District, LT GO Bonds, AAA 5,012,370
8.375% (PSFG GTD), 8/15/2000
1,945,000 Northeast Hospital Authority, TX, Hospital Revenue
Refunding Bonds (Series 1997),
6.00% (Northeast Medical Center Hospital)/(FSA INS), AAA 2,071,503
5/15/2009
1,650,000 San Antonio, TX Electric & Gas, Revenue Bonds, 9.90%, AA 1,715,835
2/1/1998
2,000,000 San Antonio, TX Electric & Gas, Revenue Refunding Bonds AA 2,086,719
(Series A), 7.00%, 2/1/1999
2,395,000 San Antonio, TX Water Authority, Revenue Bonds, 6.00% AA 2,519,899
(FGIC INS), 5/15/2001
105,000 San Antonio, TX Water Authority, Revenue Bonds, 6.00%
(United States Treasury
COL)/(Original Issue Yield: 6.15%), 5/15/2001 AA 110,515
1,475,000 San Antonio, TX, UT GO General Improvement Bonds, AA 1,651,543
8.625%, 8/1/2000
6,370,000 Socorro, TX Independent School District, UT GO
Refunding Bonds (Series A), 6.25%
(PSFG GTD)/(Original Issue Yield: 6.30%), 8/15/2001 AAA 6,768,698
6,000,000 Texas Water Development Board, State Revolving Fund
Sr. Lien Revenue Bonds,
5.80% (Original Issue Yield: 5.90%), 7/15/2002 AA 6,323,640
Total 33,798,463
UTAH -- 0.9%
2,000,000 Intermountain Power Agency, UT, Power Supply Revenue
Refunding Bonds
(Series B), 7.20%, 7/1/1999 A+ 2,103,600
VIRGINIA -- 1.8%
1,995,000 Virginia Beach, VA, UT GO Bonds (Series A), 6.30%, AA 2,091,738
3/1/2000
1,995,000 Virginia Beach, VA, UT GO Bonds (Series A), 6.30%, AA 2,117,214
3/1/2001
Total 4,208,952
WASHINGTON -- 8.6%
1,805,000 San Juan County, WA School District No. 149, UT GO
Bonds, 6.00% (FSA INS),
12/1/2009 AAA 1,946,025
1,020,000 Seattle, WA, LT GO Refunding Bonds, 6.00% (Original AA+ 1,077,802
Issue Yield: 6.10%), 3/1/2002
1,100,000 Snohomish County, WA School District No. 15, UT GO
Bonds (Series 1997), 6.00%
(FGIC INS), 12/1/2008 AAA 1,184,854
</TABLE>
FEDERATED INTERMEDIATE MUNICIPAL TRUST
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
INTERMEDIATE-TERM MUNICIPAL SECURITIES -- CONTINUED
WASHINGTON -- CONTINUED
$ 1,500,000 Tacoma, WA Sewer Authority, Revenue Refunding Bonds
(Series B), 5.70% (FGIC
INS)/(Original Issue Yield: 5.85%), 12/1/2005 AAA $ 1,585,305
2,510,000 Tacoma, WA, Solid Waste Utility Revenue Refunding
Bonds (Series 1997B), 6.00%
(AMBAC INS), 12/1/2010 AAA 2,684,169
2,000,000 Tacoma, WA, Solid Waste Utility Revenue Refunding
Bonds (Series 1997B), 6.00%
(AMBAC INS), 12/1/2009 AAA 2,150,520
4,500,000 Washington Health Care Facilities Authority, Revenue
Bonds (Series 1996), 5.375%
(Kadlec Medical Center, Richland)/(AMBAC
INS)/(Original Issue Yield: 5.63%),
12/1/2010 AAA 4,421,655
5,000,000 Washington State Public Power Supply System, (Nuclear
Project No. 3) Refunding &
Revenue Bonds (Series B), 5.70% (Original Issue Yield: AA- 5,033,150
5.793%), 7/1/2010
Total 20,083,480
WISCONSIN -- 0.0%
100,000 Waukesha, WI School District, UT GO, 5.75% (Original A1 103,083
Issue Yield: 5.80%), 10/1/1999
TOTAL INTERMEDIATE-TERM MUNICIPAL SECURITIES 225,354,462
(IDENTIFIED COST $216,542,363)
SHORT-TERM MUNICIPAL SECURITIES -- 1.6%
TEXAS -- 1.6%
800,000 Harris County, TX HFDC Daily VRDNs (St. Luke's AA 800,000
Episcopal Hospital)
200,000 Harris County, TX HFDC (Series 1994) Daily VRDNs
(Methodist Hospital, Harris
County, TX) AA 200,000
2,800,000 Harris County, TX HFDC, Hospital Revenue Bonds (Series
1997) Daily VRDNs
(Methodist Hospital, Harris County, TX) A-1+ 2,800,000
TOTAL SHORT-TERM MUNICIPAL SECURITIES (AT AMORTIZED 3,800,000
COST)
TOTAL INVESTMENTS (IDENTIFIED COST $220,342,363)(A) $ 229,154,462
</TABLE>
(a) The cost of investments for federal tax purposes amounts to $220,342,363.
The net unrealized appreciation of investments on a federal tax basis
amounts to $8,812,099 which is comprised of $8,848,850 appreciation and
$36,751 depreciation at May 31, 1997.
* Please refer to the Appendix of the Statement of Additional Information for an
explanation of the credit ratings. Current credit ratings are unaudited.
Note: The categories of investments are shown as a percentage of net assets
($232,505,795) at May 31, 1997.
The following acronyms are used throughout this portfolio:
AMBAC -- American Municipal Bond Assurance Corporation COL -- Collateralized
FGIC -- Financial Guaranty Insurance Company FSA -- Financial Security Assurance
GO -- General Obligation GTD -- Guaranty HEFA -- Health and Education Facilities
Authority HFDC -- Health Facility Development Corporation IDA -- Industrial
Development Authority INS -- Insured LT -- Limited Tax MBIA -- Municipal Bond
Investors Assurance PCA -- Pollution Control Authority PCR -- Pollution Control
Revenue PRF -- Prerefunded PSFG -- Permanent School Fund Guarantee UT --
Unlimited Tax VRDNs -- Variable Rate Demand Notes
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF ASSETS AND LIABILITIES
FEDERATED INTERMEDIATE MUNICIPAL TRUST
MAY 31, 1997
<TABLE>
<S> <C> <C>
ASSETS:
Total investments in securities, at value (identified and tax cost $229,154,462
$220,342,363)
Income receivable 4,034,026
Receivable for shares sold 3,104,075
Total assets 236,292,563
LIABILITIES:
Payable for investments purchased $ 2,057,382
Payable for shares redeemed 39,738
Income distribution payable 718,945
Payable to bank 939,285
Accrued expenses 31,418
Total liabilities 3,786,768
NET ASSETS for 22,152,982 shares outstanding $232,505,795
NET ASSETS CONSIST OF:
Paid in capital $229,417,851
Net unrealized appreciation of investments 8,812,099
Accumulated net realized loss on investments (5,724,155)
Total Net Assets $232,505,795
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
$232,505,795 / 22,152,982 shares outstanding $10.50
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF OPERATIONS
FEDERATED INTERMEDIATE MUNICIPAL TRUST
YEAR ENDED MAY 31, 1997
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 12,345,367
EXPENSES:
Investment advisory fee $ 872,976
Administrative personnel and services fee 164,874
Custodian fees 27,225
Transfer and dividend disbursing agent fees and expenses 49,253
Directors'/Trustees' fees 5,560
Auditing fees 14,938
Legal fees 8,444
Portfolio accounting fees 72,417
Shareholder services fee 545,610
Share registration costs 15,452
Printing and postage 18,622
Insurance premiums 4,210
Taxes 6,955
Miscellaneous 8,816
Total expenses 1,815,352
Waivers --
Waiver of investment advisory fee $ (158,880)
Waiver of shareholder services fee (414,663)
Total waivers (573,543)
Net expenses 1,241,809
Net investment income 11,103,558
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments 1,164,828
Net change in unrealized appreciation of investments 866,681
Net realized and unrealized gain on investments 2,031,509
Change in net assets resulting from operations $ 13,135,067
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF CHANGES IN NET ASSETS
FEDERATED INTERMEDIATE MUNICIPAL TRUST
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
1997 1996
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS --
Net investment income $ 11,103,558 $ 11,295,121
Net realized gain (loss) on investments ($1,059,997
net gain and
$3,670,810, net loss respectively, as computed for 1,164,828 (96,242)
federal tax purposes)
Net change in unrealized appreciation/depreciation 866,681 (2,535,429)
Change in net assets resulting from operations 13,135,067 8,663,450
DISTRIBUTIONS TO SHAREHOLDERS --
Distributions from net investment income (11,103,558) (11,295,121)
SHARE TRANSACTIONS --
Proceeds from sale of shares 85,279,237 77,775,142
Net asset value of shares issued in conjunction with
acquisition of
The Starburst Municipal Income Fund 10,040,690 --
Net asset value of shares issued to shareholders in 2,403,307 2,174,227
payment of distributions declared
Cost of shares redeemed (85,642,824) (88,208,508)
Change in net assets resulting from share 12,080,410 (8,259,139)
transactions
Change in net assets 14,111,919 (10,890,810)
NET ASSETS:
Beginning of period 218,393,876 229,284,686
End of period $232,505,795 $ 218,393,876
</TABLE>
(See Notes which are an integral part of the Financial Statements)
NOTES TO FINANCIAL STATEMENTS
FEDERATED INTERMEDIATE MUNICIPAL TRUST
MAY 31, 1997
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. As of May 31, 1997, the Trust consists of three portfolios.
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. The investment objective of the Fund
is to provide current income exempt from federal regular income tax.
On October 31, 1996, the Fund acquired all the net assets of The Starburst
Municipal Income Fund pursuant to the plan of reorganization approved by The
Starburst Municipal Income Fund's shareholders. The acquisition was accomplished
by a tax-free exchange of 955,346 shares of the Fund (valued at $10,040,690) for
the 953,506 shares of The Starburst Municipal Income Fund outstanding on October
31, 1996. The Starburst Municipal Income Fund's net assets at that date
($10,072,849), including $218,574 of unrealized appreciation, at that date were
combined with those of the Fund. The aggregate net assets of the Fund and The
Starburst Municipal Income Fund immediately before acquisition were 209,160,976
and 10,072,849, respectively. Immediately after the acquisition, the combined
aggregate net assets of the Fund were $219,201,666. SIGNIFICANT ACCOUNTING
POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS
Municipal bonds are valued by an independent pricing service, taking into
consideration yield, liquidity, risk, credit quality, coupon, maturity, type of
issue, and any other factors or market data the pricing service deems relevant.
Short-term securities are valued at the prices provided by an independent
pricing service. However, 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 income. Accordingly, no provisions for federal tax are
necessary. At May 31, 1997, the Fund, for federal tax purposes, had a
capital loss carryforward of $5,891,449, which will reduce the Fund's taxable
income arising from future net realized gain on investments, if any, to the
extent permitted by the Code, and thus will reduce the amount of the
distributions to shareholders which would otherwise be necessary to relieve the
Fund of any liability for federal tax. Pursuant to the Code, such capital loss
carryforward will expire as follows:
EXPIRATION YEAR EXPIRATION AMOUNT
2003 $2,220,639
2004 3,670,810
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.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts of assets, liabilities, expenses and revenues reported in the
financial statements. Actual results could differ from those estimated.
OTHER
Investment transactions are accounted for on the trade date.
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 shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
1997 1996
<S> <C> <C>
Shares sold 8,181,651 7,363,145
Shares issued in conjunction with acquisition of The Starburst 955,346 --
Municipal Income Fund
Shares issued to shareholders in payment of distributions 228,984 205,536
declared
Shares redeemed (8,183,995) (8,340,470)
Net change resulting from share transactions 1,181,986 (771,789)
</TABLE>
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 0.40% of the Fund's
average daily net assets. The Adviser may voluntarily choose to waive any
portion of its fee. The Adviser can modify or terminate this voluntary waiver at
any time at its sole discretion.
ADMINISTRATIVE FEE
Federated Services Company ("FServ"), under the Administrative Services
Agreement, provides the Fund with administrative personnel and services. The fee
paid to FServ is based on 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 Shareholder
Services ("FSS"), the Fund will pay FSS up to 0.25% of average daily net assets
of the Fund for the period. The fee paid to FSS is used to finance certain
services for shareholders and to maintain shareholder accounts. FSS may
voluntarily choose to waive any portion of its fee. FSS can modify or terminate
this voluntary waiver at any time at its sole discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES
FServ, through its subsidiary, Federated Shareholder Services Company ("FSSC")
serves as transfer and dividend disbursing agent for the Fund. The fee paid to
FSSC is based on the size, type, and number of accounts and transactions made by
shareholders.
PORTFOLIO ACCOUNTING FEES
FServ maintains the Fund's accounting records for which it receives a fee. The
fee is based on the level of the Fund's average daily net assets for the period,
plus out-of-pocket expenses.
INTERFUND TRANSACTIONS
During the year ended May 31, 1997, the Fund engaged in purchase and sale
transactions with funds that have a common investment adviser (or affiliated
investment advisers), common Directors/Trustees, and/or common Officers. These
purchase and sale transactions were made at current market value pursuant to
Rule 17a-7 under the Act amounting to $4,250,000 and $2,350,000 respectively.
GENERAL
Certain of the Officers and Trustees of the Trust are Officers and Directors or
Trustees of the above companies.
INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
year ended May 31, 1997, were as follows:
PURCHASES $89,389,952
SALES $81,046,710
SUBSEQUENT EVENT
The Board of Trustees and Management of Intermediate Municipal Trust, on behalf
of its portfolio, Federated Ohio Intermediate Municipal Trust, submitted a
proposal to sell all of Federated Ohio Intermediate Municipal Trust's assets to
Federated Ohio Municipal Income Fund, a portfolio of Municipal Securities Income
Trust, dated May 23, 1997. A special meeting of shareholders of Federated Ohio
Intermediate Trust was held on July 7, 1997, in which shareholders approved the
proposed agreement. The agreement provides that the Federated Ohio Municipal
Income Fund will acquire all of the assets of Federated Ohio Intermediate
Municipal Trust in exchange for Class F Shares of Federated Ohio Municipal
Income Fund to be distributed pro rata to the holders of shares of the Federated
Ohio Intermediate Municipal Trust in complete liquidation of the Federated Ohio
Intermediate Municipal Trust on or about July 11, 1997.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Trustees of INTERMEDIATE MUNICIPAL TRUST
(Federated 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, 1997, the related statement of
operations for the year then ended, the statement of changes in net assets for
each of the two years then ended, and the 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 securities owned at May 31,
1997, by correspondence with the custodian and brokers. 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, 1997, the results of its operations for the year
then ended, the changes in its net assets for each of the two years in the
period then ended, and financial highlights for the periods presented, in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
July 7, 1997
[Graphic]
Federated Investors
Federated Intermediate Municipal Trust
(A Portfolio of Intermediate Municipal Trust)
PROSPECTUS
JULY 31, 1997
A Diversified Portfolio of Intermediate Municipal Trust, An Open-End
Management Investment Company
FEDERATED INTERMEDIATE MUNICIPAL TRUST
Federated Investors Tower
Pittsburgh, PA 15222-3779
DISTRIBUTOR
Federated Securities Corp.
Federated Investors
Pittsburgh, PA 15222-3779
INVESTMENT ADVISER
Federated Management
Federated Investors Tower
Pittsburgh, PA 15222-3779
CUSTODIAN
State Street Bank and Trust Company
P.O. Box 8600
Boston, MA 02266-8600
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Federated Shareholder Services Company
P.O. Box 8600
Boston, MA 02266-8600
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP
2100 One PPG Place Pittsburgh, PA 15222
Federated Securities Corp., Distributor
Federated Securities Corp., Distributor
Cusip 458810108
8061702A-IS (7/97)
[Graphic]
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 (the "Fund"), a portfolio of Intermediate
Municipal Trust (the "Trust") dated July 31, 1997. This Statement is not a
prospectus. You may request a copy of a prospectus or a paper copy of this
Statement, if you have received it electronically, free of charge by calling
1-800-341-7400. FEDERATED INVESTORS TOWER PITTSBURGH, PENNSYLVANIA
15222-3779
Statement dated July 31, 1997
[Graphic]Federated Investors
Federated Securities Corp., Distributor
Cusip 458810108
8061702B (7/97)
[Graphic]
TABLE OF CONTENTS
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 2
Investment Limitations 3
INTERMEDIATE MUNICIPAL TRUST MANAGEMENT 5
Fund Ownership 8
Trustees' Compensation 9
Trustee Liability 9
INVESTMENT ADVISORY SERVICES 9
Adviser to the Fund 9
Advisory Fees 10
Other Related Services 10
OTHER SERVICES 10
Fund Administration 10
Custodian and Portfolio Accountant 10
Transfer Agent 10
Independent Public Accountants 10
SHAREHOLDER SERVICES 10
BROKERAGE TRANSACTIONS 11
PURCHASING SHARES 11
Conversion to Federal Funds 11
DETERMINING NET ASSET VALUE 11
Determining Value of Securities 11
REDEEMING SHARES 11
Redemption in Kind 12
EXCHANGING SECURITIES FOR FUND SHARES 12
Tax Consequences 12
MASSACHUSETTS PARTNERSHIP LAW 12
TAX STATUS 12
The Fund's Tax Status 12
Shareholders' Tax Status 13
TOTAL RETURN 13
YIELD 13
TAX-EQUIVALENT YIELD 13
PERFORMANCE COMPARISONS 14
Economic and Market Information 15
ABOUT FEDERATED INVESTORS 15
Mutual Fund Market 16
Institutional Clients 16
Bank Marketing 16
Broker/Dealers and Bank
Broker/Dealer Subsidiaries 16
APPENDIX 17
Standard and Poor's Ratings Group ("S&P") Municipal Bond Ratings 17
Moody's Investors Service, Inc. Municipal
Bond Ratings 17
Fitch Investors Service, Inc. Investment
Grade Bond Ratings 17
Standard and Poor's Ratings Group Municipal
Note Ratings 17
Moody's Investors Service, Inc. Short-Term
Loan Ratings 18
Standard and Poor's Ratings Group
Commercial Paper Ratings 18
Moody's Investors Service, Inc. Commercial
Paper Ratings 18
GENERAL INFORMATION ABOUT THE FUND
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 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, 1997 and
1996, the portfolio turnover rates were 33% and 19%, 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.
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.
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 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.
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."
INTERMEDIATE MUNICIPAL TRUST MANAGEMENT
Officers and Trustees are listed with their addresses, birthdates, present
positions with Intermediate Municipal Trust, and principal occupations.
John F. Donahue@*
Federated Investors Tower
Pittsburgh, PA
Birthdate: July 28, 1924
Chairman and Trustee
Chairman and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; Chairman and Director, Federated
Research Corp. and Federated Global Research Corp.; Chairman, Passport
Research, Ltd.; Chief Executive Officer and Director or Trustee of the
Funds. Mr. Donahue is the father of J. Christopher Donahue, President and
Trustee of the Company.
Thomas G. Bigley
15 Old Timber Trail
Pittsburgh, PA
Birthdate: February 3, 1934
Trustee
Chairman of the Board, Children's Hospital of Pittsburgh; formerly, Senior
Partner, Ernst & Young LLP; Director, MED 3000 Group, Inc.; Director, Member
of Executive Committee, University of Pittsburgh; Director or Trustee of the
Funds.
John T. Conroy, Jr.
Wood/IPC Commercial Department
John R. Wood and Associates, Inc., Realtors
3255 Tamiami Trail North
Naples, FL
Birthdate: June 23, 1937
Trustee
President, Investment Properties Corporation; Senior Vice-President, John R.
Wood and Associates, Inc., Realtors; Partner or Trustee in private real
estate ventures in Southwest Florida; formerly, President, Naples Property
Management, Inc. and Northgate Village Development Corporation; Director or
Trustee of the Funds.
William J. Copeland
One PNC Plaza -- 23rd Floor
Pittsburgh, PA
Birthdate: July 4, 1918
Trustee
Director and Member of the Executive Committee, Michael Baker, Inc.; formerly,
Vice Chairman and Director, PNC Bank, N.A., and PNC Bank Corp.; Director, Ryan
Homes, Inc.; Director or Trustee of the Funds.
James E. Dowd
571 Hayward Mill Road
Concord, MA
Birthdate: May 18, 1922
Trustee
Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director or
Trustee of the Funds.
Lawrence D. Ellis, M.D.*
3471 Fifth Avenue, Suite 1111
Pittsburgh, PA
Birthdate: October 11, 1932
Trustee
Professor of Medicine, 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 or Trustee of the Funds.
Edward L. Flaherty, Jr.@
Miller, Ament, Henny & Kochuba
205 Ross Street
Pittsburgh, PA
Birthdate: June 18, 1924
Trustee
Attorney of Counsel, Miller, Ament, Henny & Kochuba; Director, Eat'N Park
Restaurants, Inc.; formerly, Counsel, Horizon Financial, F.A., Western
Region; Director or Trustee of the Funds.
Glen R. Johnson*
Federated Investors Tower
Pittsburgh, PA
Birthdate: May 2, 1929
President and Trustee
Trustee, Federated Investors; President and/or Trustee of some of the Funds;
staff member, Federated Securities Corp.
Peter E. Madden
One Royal Palm Way
100 Royal Palm Way
Palm Beach, FL
Birthdate: March 16, 1942
Trustee
Consultant; Former State Representative, Commonwealth of Massachusetts;
formerly, President, State Street Bank and Trust Company and State Street Boston
Corporation; Director or Trustee of the Funds.
Gregor F. Meyer
203 Kensington Ct.
Pittsburgh, PA
Birthdate: October 6, 1926
Trustee
Attorney, Retired Member of Miller, Ament, Henny & Kochuba; Chairman,
Meritcare, Inc.; Director, Eat'N Park Restaurants, Inc.; Director or Trustee
of the Funds.
John E. Murray, Jr., J.D., S.J.D.
President, Duquesne University
Pittsburgh, PA
Birthdate: December 20, 1932
Trustee
President, Law Professor, Duquesne University; Consulting Partner, Mollica &
Murray; Director or Trustee of the Funds.
Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, PA
Birthdate: September 14, 1925
Trustee
Professor, International Politics; Management Consultant; Trustee, Carnegie
Endowment for International Peace, RAND Corporation, Online Computer Library
Center, Inc., National Defense University and U.S. Space Foundation;
President Emeritus, University of Pittsburgh; Founding Chairman, National
Advisory Council for Environmental Policy and Technology, Federal Emergency
Management Advisory Board and Czech Management Center, Prague; Director or
Trustee of the Funds.
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA
Birthdate: June 21, 1935
Trustee
Public Relations/Marketing/Conference Planning; Director or Trustee of the
Funds.
J. Christopher Donahue
Federated Investors Tower
Pittsburgh, PA
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. and Federated Global Research Corp.; President, Passport
Research, Ltd.; Trustee, Federated Shareholder Services Company, and
Federated Shareholder Services; Director, Federated Services Company;
President or Executive Vice President of the Funds; Director or Trustee 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, PA
Birthdate: October 22, 1930
Executive Vice President
Vice Chairman, Treasurer, and Trustee, Federated Investors; Vice President,
Federated Advisers, Federated Management, Federated Research, Federated Research
Corp., Federated Global Research Corp. and Passport Research, Ltd.; Executive
Vice President and Director, Federated Securities Corp.; Trustee, Federated
Shareholder Services Company; Trustee or Director of some of the Funds;
President, Executive Vice President and Treasurer of some of the Funds.
John W. McGonigle
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 26, 1938
Executive Vice President, Secretary, and Treasurer
Executive Vice President, Secretary, and Trustee, Federated Investors;
Trustee, Federated Advisers, Federated Management, and Federated Research;
Director, Federated Research Corp. and Federated Global Research Corp.;
Trustee, Federated Shareholder Services Company; Director, Federated
Services Company; President and Trustee, Federated Shareholder Services;
Director, Federated Securities Corp.; Executive Vice President and Secretary
of the Funds; Treasurer of some of the Funds.
Richard B. Fisher
Federated Investors Tower
Pittsburgh, PA
Birthdate: May 17, 1923
Vice President
Executive Vice President and Trustee, Federated Investors; Chairman and
Director, Federated Securities Corp.; President or Vice President of some of
the Funds; Director or Trustee of some of the Funds.
* This Trustee is deemed to be an "interested person" as defined in the
Investment Company Act of 1940.
@ Member of the Executive Committee. The Executive Committee of the Board of
Trustees handles the responsibilities of the Board between meetings of the
Board.
As used in the table above, "The Funds" and "Funds" mean the following
investment companies: 111 Corcoran Funds; Arrow Funds; Automated Government
Money Trust; Blanchard Funds; Blanchard Precious Metals Fund, Inc.; Cash Trust
Series II; Cash Trust Series, Inc.; DG Investor Series; Edward D. Jones & Co.
Daily Passport Cash Trust; Federated Adjustable Rate U.S. Government Fund, Inc.;
Federated American Leaders Fund, Inc.; Federated ARMs Fund; Federated Equity
Funds; Federated Equity Income Fund, Inc.; Federated Fund for U.S. Government
Securities, Inc.; Federated GNMA Trust; Federated Government Income Securities,
Inc.; Federated Government Trust; Federated High Income Bond Fund, Inc.;
Federated High Yield Trust; Federated Income Securities Trust; Federated Income
Trust; Federated Index Trust; Federated Institutional Trust; Federated Insurance
Series; Federated Investment Portfolios; Federated Investment Trust; Federated
Master Trust; Federated Municipal Opportunities Fund, Inc.; Federated Municipal
Securities Fund, Inc.; Federated Municipal Trust; Federated Short-Term Municipal
Trust; Federated Short-Term U.S. Government Trust; Federated Stock and Bond
Fund, Inc.; 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: 2-5 Years; Federated U.S. Government Securities Fund: 5-10 Years;
Federated Utility Fund, Inc.; First Priority Funds; Fixed Income Securities,
Inc.; High Yield Cash Trust; Intermediate Municipal Trust; International Series,
Inc.; Investment Series Funds, Inc.; Investment Series Trust; Liberty Term
Trust, Inc. -- 1999; Liberty U.S. Government Money Market Trust; Liquid Cash
Trust; Managed Series Trust; Money Market Management, Inc.; Money Market
Obligations Trust; Money Market Obligations Trust II; Money Market Trust;
Municipal Securities Income Trust; Newpoint Funds; Peachtree Funds; RIMCO
Monument Funds; Targeted Duration Trust; Tax-Free Instruments Trust; The
Planters Funds; The Starburst Funds; The Starburst Funds II; The Virtus Funds;
Trust for Financial Institutions; Trust for Government Cash Reserves; Trust for
Short-Term U.S. Government Securities; Trust for U.S. Treasury Obligations;
Wesmark Funds; and World Investment Series, Inc. FUND OWNERSHIP As of
July 2, 1997, Officers and Trustees of the Fund, as a group, owned 294,548
(1.35%) of the outstanding shares of the Fund.
As of July 2, 1997, the following shareholder of record owned 5% or more of
the outstanding shares of the Fund: Edrayco, Gainesville, Georgia, owned
approximately 1,391,527 Shares (6.35%).
TRUSTEES' COMPENSATION
<TABLE>
<CAPTION>
AGGREGATE
NAME, COMPENSATION
POSITION WITH FROM TOTAL COMPENSATION PAID
TRUST TRUST*# FROM FUND COMPLEX+
<S> <C> <S>
John F. Donahue, $0 $0 for the Trust and
Chairman and Trustee 56 other investment companies in the Complex
Thomas G.Bigley, $524.38 $108,725 for the Trust and
Trustee 56 other investment companies in the Complex
John T. Conroy, Jr., $576.89 $119,615 for the Trust and
Trustee 56 other investment companies in the Complex
William J. Copeland, $576.89 $119,615 for the Trust and
Trustee 56 other investment companies in the Complex
James E. Dowd, $576.89 $119,615 for the Trust and
Trustee 56 other investment companies in the Complex
Lawrence D. Ellis, M.D., $524.38 $108,725 for the Trust and
Trustee 56 other investment companies in the Complex
Edward L. Flaherty, Jr., $576.89 $119,615 for the Trust and
Trustee 56 other investment companies in the Complex
Glen R. Johnson, $0 $0 for the Trust and
President and Trustee 8 other investment companies in the Complex
Peter E. Madden, $524.38 $108,725 for the Trust and
Trustee 56 other investment companies in the Complex
Gregor F. Meyer, $524.38 $108,725 for the Trust and
Trustee 56 other investment companies in the Complex
John E. Murray, Jr., $524.38 $108,725 for the Trust and
Trustee 56 other investment companies in the Complex
Wesley W. Posvar, $524.38 $108,725 for the Trust and
Trustee 56 other investment companies in the Complex
Marjorie P. Smuts, $524.38 $108,725 for the Trust and
Trustee 56 other investment companies in the Complex
</TABLE>
* Information is furnished for the fiscal year ended May 31, 1997.
# 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. 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, 1997,
1996, and 1995, the adviser earned $872,976, $895,416, and $1,038,460,
respectively, which were reduced by $158,880, $86,923, and $6,917, respectively,
because of undertakings to limit the Fund's expenses.
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.
OTHER SERVICES
FUND ADMINISTRATION
Federated Services Company, a subsidiary of Federated Investors, provides
administrative personnel and services to the Fund for a fee as described in the
prospectus. From March 1, 1994 to March 1, 1996, Federated Administrative
Services, a subsidiary of Federated Investors, served as the Fund's
administrator. For purposes of this Statement of Additional Information,
Federated Services Company, and Federated Administrative Services may
hereinafter collectively be referred to as the "Administrators." For the fiscal
years ended May 31, 1997, 1996, and 1995, the Administrators earned $164,874,
$169,350, and $196,539, respectively, none of which was waived. CUSTODIAN
AND PORTFOLIO ACCOUNTANT
State Street Bank and Trust Company, Boston, Massachusetts, is custodian for the
securities and cash of the Fund. Federated Services Company, Pittsburgh,
Pennsylvania, provides certain accounting and recordkeeping services with
respect to the Fund's portfolio investments. 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.
TRANSFER AGENT
Federated Services Company, through its registered transfer agent, Federated
Shareholder Services Company, maintains all necessary shareholder records. For
its services, the transfer agent receives a fee based upon the size, type and
number of accounts and transactions made by shareholders.
INDEPENDENT PUBLIC ACCOUNTANTS
The independent public accountants for the Fund are Arthur Andersen LLP,
Pittsburgh, Pennsylvania.
SHAREHOLDER SERVICES
This arrangement permits the payment of fees to Federated Shareholder Services
and financial institutions to cause services to be provided which are necessary
for the maintenance of shareholder accounts and to encourage personal services
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 to maintain shareholder accounts and records;
processing purchase and redemption transactions and automatic investments of
client account cash balances; answering routine client inquiries; and assisting
clients in changing dividend options, account designations, and addresses.
By adopting the Shareholder Services Agreement, the Trustees expect that the
Fund will benefit by: (1) providing personal services to shareholders; (2)
investing shareholder assets with a minimum of delay and administrative detail;
(3) enhancing shareholder recordkeeping systems; and (4) responding promptly to
shareholders' requests and inquiries concerning their accounts.
For the fiscal year ended May 31, 1997, the Fund paid $545,610 pursuant to the
Shareholder Services Agreement of which $414,663 was waived.
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of portfolio
instruments, the adviser looks for prompt execution of the order at a favorable
price. In working with dealers, the adviser will generally use those who are
recognized dealers in specific portfolio instruments, except when a better price
and execution of the order can be obtained elsewhere. The adviser makes
decisions on portfolio transactions and selects brokers and dealers subject to
guidelines established 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. Research services provided by brokers and
dealers may be used by the adviser or its affiliates in advising the Fund 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. 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. During the fiscal
years ended May 31, 1997, 1996, and 1995, the Fund paid no brokerage
commissions.
Although investment decisions for the Fund are made independently from those of
the other accounts managed by the adviser, investments of the type the Fund may
make may also be made by those other accounts. When the Fund and one or more
other accounts managed by the adviser are prepared to invest in, or desire to
dispose of, the same security, available investments or opportunities for sales
will be allocated in a manner believed by the adviser to be equitable to each.
In some cases, this procedure may adversely affect the price paid or received by
the Fund or the size of the position obtained or disposed of by the Fund. In
other cases, however, it is believed that coordination and the ability to
participate in volume transactions will be to the benefit of the Fund.
PURCHASING SHARES Shares are sold at their net asset value without a sales
charge on days the New York Stock Exchange is open for business. The procedure
for purchasing Shares is explained in the 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.
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 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,
Institutional Shares of the Fund (when the Fund was offered with separate
classes of shares) for the one-year, five-year and ten-year periods ended May
31, 1997, were 6.11%, 5.60%, and 6.55%, 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, 1997, was 4.34%.
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 yield for the thirty-day period ended May 31, 1997,
was 7.18%.
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 39.6% 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.
<TABLE>
<CAPTION>
TAXABLE YIELD EQUIVALENT FOR 1997
MULTISTATE MUNICIPAL FUNDS
FEDERAL INCOME TAX BRACKET:
<S> <C> <C> <C> <C> <C>
15.00% 28.00% 31.00% 36.00% 39.60%
JOINT $1- $41,201- $99,601- $151,751- OVER
RETURN 41,200 99,600 151,750 271,050 $271,050
SINGLE $1- $24,651- $59,751- $124,651- OVER
RETURN 24,650 59,750 124,650 271,050 $271,050
<CAPTION>
TAX-EXEMPT
YIELD TAXABLE YIELD EQUIVALENT
<C> <C> <C> <C> <C> <C>
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%
</TABLE>
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.
Advertising and other promotional literature may include charts, graphs and
other illustrations using the Fund's returns in general, that demonstrate basic
investment concepts such as tax-deferred compounding, dollar-cost averaging and
systematic investment. In addition, the Fund can compare its performance, or
performance for the types of securities in which it invests, to a variety of
other investments, such as bank savings accounts, certificates of deposit, and
Treasury bills.
ECONOMIC AND MARKET INFORMATION
Advertising and sales literature for the Fund may include discussions of
economic, financial and political developments and their effect on the
securities market. Such discussions may take the form of commentary on these
developments by Fund portfolio managers and their views and analysis on how such
developments could affect the Fund. In addition, advertising and sales
literature may quote statistics and give general information about the mutual
fund industry, including the growth of the industry, from sources such as the
Investment Company Institute.
ABOUT FEDERATED INVESTORS
Federated Investors 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. These traders handle trillions of dollars
in annual trading volume. In the municipal sector, as of December 31, 1996,
Federated Investors managed 12 bond funds with approximately $2.0 billion in
assets and 21 money market funds with approximately $9.5 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. The Fund may quote statistics from organizations including
The Tax Foundation and the National Taxpayers Union regarding the tax
obligations of Americans.
J. Thomas Madden, Executive Vice President, oversees Federated Investors' equity
and high-yield corporate bond management while William D. Dawson, Executive Vice
President, oversees Federated Investors' domestic fixed income management. Henry
A. Frantzen, Executive Vice President, oversees the management of Federated
Investor's international and global portfolios.
MUTUAL FUND MARKET
Thirty-seven percent of American households are pursuing their financial goals
through mutual funds. These investors, as well as businesses and institutions,
have entrusted over $3.5 trillion to the more than 6,000 funds available.*
Federated Investors, through its subsidiaries, distributes mutual funds for a
variety of investment applications. Specific markets include:
INSTITUTIONAL CLIENTS
Federated Investors 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.
BANK MARKETING
Other institutional clients include close relationships with more than 1,600
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 Timothy C. Pillion, Senior Vice
President, Bank Marketing & Sales.
BROKER/DEALERS AND BANK BROKER/DEALER SUBSIDIARIES
Federated funds are available to consumers through major brokerage firms
nationwide -- we have over 2,200 broker/dealer and bank broker/dealer
relationships across the country -- supported by more wholesalers than any other
mutual fund distributor. Federated's service to financial professionals and
institutions has earned it high ratings in several surveys performed by DALBAR,
Inc. DALBAR is recognized as the industry benchmark for service quality
measurement. The marketing effort to these firms is headed by James F. Getz,
President, Federated Securities Corp.
* 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.
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits:
inancial Statements: Filed in Part A
xhibits:
(1) Conformed copy of Declaration of Trust of
the Registrant (12.); (i) Conformed Copy of
Amendment No.3 to Declaration of Trust of
Registrant (15.); (ii) Conformed Copy of
Amendment No.5 to Declaration of Trust of
Registrant (15.); (iii) Conformed Copy of
Amendment No.6 to Declaration of Trust of
Registrant (15.);
(2) (i) Copy of By-Laws of the Registrant (1.);
(ii) Copy of Amendment to By-Laws of Registrant (6.);
(3) Not applicable;
(4) Copy of Specimen Certificate for Shares of Beneficial Interest of the
Registrant (2.);
(i) Copy of Specimen Certificates for Shares of Beneficial Interest
of the Registrant for Federated Intermediate Municipal Trust,
Federated Pennsylvania
Intermediate Municipal Trust and Federated Ohio Intermediate
Municipal Trust (15.);
(5) (i) Copy of Investment Advisory Contract of the Registrant (14.);
(a) Conformed copy of Exhibit A to the Investment Advisory Contract
of the Registrant to add Pennsylvania Intermediate Municipal
Trust and Ohio Intermediate Municipal Trust to the present
Investment Advisory Contract (14.);
+ All exhibits have been filed electronically.
1. Response is incorporated by reference to Registrant's Initial
Registration Statement on Form N-1A filed June 4, 1985 (File Nos.
2-98237 and 811-4314).
2. Response is incorporated by reference to Registrant's Pre-Effective
Amendment No. 1 on Form N-1A filed October 22, 1985 (File Nos. 2-98237
and 811-4314).
6. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 4 on Form N-1A filed July 26, 1988 (File Nos. 2-98237
and 811-4314).
12. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 17 on Form N-1A filed February 17, 1994 (File Nos.
2-98237 and 811-4314).
14. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 20 on Form N-1A filed July 27, 1994 (File Nos. 2-98237
and 811-4314).
15. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 23 on Form N-1A filed July 28, 1994 (File Nos. 2-98237
and 811-4314).
<PAGE>
(6) (i) Conformed copy of Distributor's Contract of the Registrant(15.);
(ii) Conformed copy of Exhibit A to Distributor's Contract (15.);
(iii) Conformed copy of Exhibit B to Distributor's Contract (15.);
(iv) Conformed copy of Exhibit C to Distributor's Contract (15.);
(v) Conformed copy of Exhibit D to Distributor's Contract (15.);
(vi) The Registrant hereby incorporates the
conformed copy of the specimen Mutual Funds
Sales and Service Agreement; Mutual Funds
Service Agreement; and Plan Trustee/Mutual
Funds Service Agreement from Item 24 (b) (6)
of the Cash Trust Series II Registration
Statement on Form N-1A, filed with the
Commission on July 24, 1995.
(File Numbers 33-38550 and 811-6269).
(7) Not applicable;
(8) Conformed copy of the Custodian Contract (14.);
(i) Copy of New Exhibit 1 to Custodian Contract (15.);
(9) (i) The Registrant hereby incorporates by
reference the conformed copy of the Shareholder
Services Sub-Contract between Fidelity and
Federated Shareholder Services from Item
24(b)(9)(iii) of the Federated GNMA Trust
Registration Statement on Form N-1A,filed with
the Commission on March 25, 1996 (File Nos.
2-75670 and 811-3375). (ii) Conformed copy of
Agreement for Fund Accounting Services,
Administrative Services, Transfer Agency
Services, and Custody Services Procurement;+
(iii) The responses described in Item 24 (b)
(6) are hereby incorporated by reference.
(10) Opinion and Consent of Counsel as to legality of shares being
registered (2.);
(11) Conformed copy of the Consent of Independent Public Accountants;+
(12) Not applicable;
(13) Copy of Initial Capital Understanding (3.);
(14) Not applicable;
(15) Not applicable;
(16) Copy of Schedule for Computation of Fund Performance Data (13.);
(17) Copy of Financial Data Schedules;+
(18) Not applicable;
(19) Conformed copy of Power of Attorney;+
- ---------------------------
+ All exhibits have been filed electronically.
2. Response is incorporated by reference to Registrant's Pre-Effective
Amendment No.1 on Form N-1A filed October 22, 1985 (File Nos. 98237
and 811-4314).
3. Response is incorporated by reference to Registrant's Pre-Effective
Amendment No. 2 on Form N-1A filed December 19, 1985 (File Nos.
2-98237 and 811-4314).
13. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 19 on Form N-1A filed May 27, 1994 (File Nos. 2-98237
and 811-4314).
14. Response is incorporated by reference to Registrant's Post Effective
Amendment No. 20 on Form N1-A filed July 27, 1994(File Nos. 2-98237
and 811-4314).
15. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 23 on Form N-1A filed July 28, 1994 (File Nos. 2-98237
and 811-4314).
<PAGE>
Item 25. Persons Controlled by or Under Common Control with Registrant:
None
Item 26. Number of Holders of Securities:
Number of Record Holders
Title of Class as of July 7, 1997
-------------- ----------------------
Shares of Beneficial Interest
Federated Pennsylvania Intermediate Municipal Trust 372
Federated Intermediate Municipal Trust 2,158
Federated Ohio Intermediate Municipal Trust 340
Item 27. Indemnification: (1.)
Item 28. Business and Other Connections of Investment Adviser:
(a) For a description of the other business of the investment adviser, see
the section entitled "INTERMEDIATE MUNICIPAL TRUST INFORMATION - MANAGEMENT OF
THE TRUST" in Part A. The affiliations with the Registrant of four of the
Trustees and one of the Officers of the investment adviser are included in Part
B of this Registration Statement under "INTERMEDIATE MUNICIPAL TRUST
INFORMATION." The remaining Trustee of the investment adviser, his position with
the investment adviser, and, in parentheses, his principal occupation is: Mark
D.Olson (Partner, Wilson, Halbrook & Bayard), 107 W. Market Street, Georgetown,
Delaware 19947.
The remaining Officers of the investment adviser are: William D.
Dawson,III, Henry A. Frantzen, J. Thomas Madden, and Mark L. Mallon, Executive
Vice Presidents; Peter R. Anderson, Drew J. Collins, Jonathan C. Conley, Deborah
A. Cunningham, Mark E. Durbiano, J. Alan Minteer, and Mary Jo Ochson, Senior
Vice Presidents; J. Scott Albrecht, Joseph M. Balestrino, Randall S. Bauer,
David F. Belton, Christine A. Bosio, David A. Briggs, Kenneth J. Cody, Alexandre
de Bethmann, Linda A. Duessel, Michael J. Donnelly, Michael P. Donnelly,
Kathleen M. Foody-Malus, Thomas M. Franks; Edward C. Gonzales, James E.
Grefenstette, Susan R. Hill, Stephen A. Keen, Robert M. Kowit, Mark S. Kopinski,
Jeff A. Kozemchak, Marian R. Marinack, Sandra L. McInerney, Susan M. Nason,
Robert J. Ostrowski, Charles A. Ritter, Frank Semack, Aash M. Shah, Scott B.
Schermerhorn, William F. Stotz, Tracy P.Stouffer, Edward J. Tiedge, Paige M.
Wilhelm, Jolanta M. Wysocka, Vice Presidents; Todd A. Abraham, Stafanie L.
Bachhuber, Michael W. Casey, William R. Jamison, Constantine Kartsonsas, Robert
M. March, Joseph M. Natoli, Keith J. Sabol, and Michael W. Sirianni, Assistant
Vice Presidents; Stephen A. Keen, Secretary; Thomas R. Donahue, Treasurer and
Assistant Secretary; Richard B. Fisher, Assistant Secretary and Assistant
Treasurer; Christine I. McGonigle, Assistant Secretary. The business address of
each of the Officers of the investment adviser is Federated Investors Tower,
Pittsburgh, Pennsylvania 15222-3779. These individuals are also officers of a
majority of the investment advisers to the Funds listed in Part B of this
Registration Statement.
<PAGE>
Item 29. Principal Underwriters:
(a) 111 Corcoran Funds; Arrow Funds; Automated Government Money Trust;
BayFunds; Blanchard Funds; Blanchard Precious Metals Fund, Inc.; Cash Trust
Series II; Cash Trust Series, Inc.; DG Investor Series; Edward D. Jones & Co.
Daily Passport Cash Trust; Federated Adjustable Rate U.S. Government Fund, Inc.;
Federated American Leaders Fund, Inc.; Federated ARMs Fund; Federated Equity
Funds; Federated Equity Income Fund, Inc.; Federated Fund for U.S. Government
Securities, Inc.; Federated GNMA Trust; Federated Government Income Securities,
Inc.; Federated Government Trust; Federated High Income Bond Fund, Inc.;
Federated High Yield Trust; Federated Income Securities Trust; Federated Income
Trust; Federated Index Trust; Federated Institutional Trust; Federated Insurance
Series; Federated Investment Portfolios; Federated Investment Trust; Federated
Master Trust; Federated Municipal Opportunities Fund, Inc.; Federated Municipal
Securities Fund, Inc.; Federated Municipal Trust; Federated Short-Term Municipal
Trust; Federated Short-Term U.S. Government Trust; Federated Stock and Bond
Fund, Inc.; 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: 2-5 Years; Federated U.S. Government Securities Fund: 5-10 Years;
Federated Utility Fund, Inc.; First Priority Funds; Fixed Income Securities,
Inc.; High Yield Cash Trust; Independence One Mutual Funds; Intermediate
Municipal Trust; International Series, Inc.; Investment Series Funds, Inc.;
Investment Series Trust; Liberty U.S. Government Money Market Trust; Liquid Cash
Trust; Managed Series Trust; Marshall Funds, Inc.; Money Market Management,
Inc.; Money Market Obligations Trust; Money Market Obligations Trust II; Money
Market Trust; Municipal Securities Income Trust; Newpoint Funds; Peachtree
Funds; RIMCO Monument Funds; SouthTrust Vulcan Funds; Star Funds; Targeted
Duration Trust; Tax-Free Instruments Trust; The Biltmore Funds; The Biltmore
Municipal Funds; The Monitor Funds; The Planters Funds; The Starburst Funds; The
Starburst Funds II; The Virtus Funds; Tower Mutual Funds; Trust for Financial
Institutions; Trust for Government Cash Reserves; Trust for Short-Term U.S.
Government Securities; Trust for U.S. Treasury Obligations; Vision Group of
Funds, Inc.; Wesmark Funds; and World Investment Series, Inc.
Federated Securities Corp. also acts as principal underwriter for the following
closed-end investment company: Liberty Term Trust, Inc.- 1999.
<PAGE>
<TABLE>
<CAPTION>
(b)
<S> <C> <C>
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Richard B. Fisher Director, Chairman, Chief Vice President
Federated Investors Tower Executive Officer, Chief
Pittsburgh, PA 15222-3779 Operating Officer, Asst.
Secretary, and Asst.
Treasurer, Federated
Securities Corp.
Edward C. Gonzales Director, Executive Vice Executive Vice
Federated Investors Tower President, Federated, President
Pittsburgh, PA 15222-3779 Securities Corp.
Thomas R. Donahue Director, Assistant Secretary, --
Federated Investors Tower Assistant Treasurer
Pittsburgh, PA 15222-3779 Federated Securities Corp
John B. Fisher President-Institutional Sales, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James F. Getz President-Broker/Dealer, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark R. Gensheimer Executive Vice President of --
Federated Investors Tower Bank/Trust, Federated
Pittsburgh, PA 15222-3779 Securities Corp.
David M. Taylor Executive Vice President --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark W. Bloss Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard W. Boyd Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Laura M. Deger Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Theodore Fadool, Jr. Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Bryant R. Fisher Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Christopher T. Fives Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James S. Hamilton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James M. Heaton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Keith Nixon Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Solon A. Person, IV Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Timothy C. Pillion Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Thomas E. Territ Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Teresa M. Antoszyk Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
John B. Bohnet Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Byron F. Bowman Vice President, Secretary, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jane E. Broeren-Lambesis Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Dale R. Browne Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mary J. Combs Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
R. Edmond Connell, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
R. Leonard Corton, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Kevin J. Crenny Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Daniel T. Culbertson Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
G. Michael Cullen Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
William C. Doyle Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jill Ehrenfeld Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark D. Fisher Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Joseph D. Gibbons Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
John K. Goettlicher Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Craig S. Gonzales Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard C. Gonzales Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Bruce E. Hastings Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Beth A. Hetzel Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James E. Hickey Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Brian G. Kelly Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
H. Joseph Kennedy Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark J. Miehl Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard C. Mihm Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
J. Michael Miller Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Robert D. Oehlschlager Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Thomas A. Peters III Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Robert F. Phillips Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard A. Recker Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Eugene B. Reed Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
George D. Riedel Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Paul V. Riordan Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
John Rogers Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Brian S. Ronayne Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Thomas S. Schinabeck Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Edward L. Smith Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
David W. Spears Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
John A. Staley Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jeffrey A. Stewart Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard Suder Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
William C. Tustin Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Paul A. Uhlman Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Miles J. Wallace Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
John F. Wallin Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard B. Watts Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Edward J. Wojnarowski Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Michael P. Wolff Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Edward R. Bozek Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Terri E. Bush Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Charlene H. Jennings Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Matthew S. Propelka Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Denis McAuley Treasurer, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Leslie K. Platt Assistant Secretary, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
</TABLE>
<PAGE>
Item 30. Location of Accounts and Records:
All accounts and records required to be maintained by Section
31(a) of the Investment Company Act of 1940 and Rules 31a-1
through 31a-3 promulgated thereunder are maintained at one of
the following locations:
Registrant Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Shareholder
Services Company Federated Investors Tower
Transfer Agent, Dividend Pittsburgh, PA 15222-3779
Disbursing Agent and
Portfolio Recordkeeper
Federated Services Federated Investors Tower
Company Pittsburgh, PA 15222-3779
Federated Management Federated Investors Tower
Investment Adviser Pittsburgh, PA 15222-3779
State Street Bank and P.O. Box 8600
---------------------
Trust Company Boston, Massachusetts 02266
Custodian
Item 31. Management Services: Not applicable.
Item 32. Undertakings:
Registrant hereby undertakes to comply with the provisions of
Section 16(c) of the 1940 Act with respect to the removal of
Trustees and the calling of special shareholder meetings by
shareholders.
Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered a copy of the Registrant's latest annual report to
shareholders, upon request and without charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, INTERMEDIATE MUNICIPAL TRUST,
certifies that it meets all of the requirements for effectiveness of this
Amendment to its Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933 and has duly caused this Amendment to its Registration
Statement to be signed on its behalf by the undersigned, thereto duly
authorized, in the City of Pittsburgh and Commonwealth of Pennsylvania, on the
22nd day of July, 1997.
INTERMEDIATE MUNICIPAL TRUST
BY: /s/Matthew S. Hardin
Matthew S. Hardin, Assistant Secretary
Attorney in Fact for John F. Donahue
July 22, 1997
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to its Registration Statement has been signed below by the following person in
the capacity and on the date indicated:
NAME TITLE DATE
By: /s/Matthew S. Hardin
Matthew S. Hardin Attorney In Fact July 22, 1997
ASSISTANT SECRETARY For the Persons
Listed Below
NAME TITLE
John F. Donahue* Chairman and Trustee July 22, 1997
(Chief Executive Officer)
Glen R. Johnson* President and Trustee July 22, 1997
John W. McGonigle* Treasurer, Executive Vice July 22, 1997
President,and Secretary
(Principal Fnancial and
Accounting Officer)
Thomas G. Bigley* Trustee July 22, 1997
John T. Conroy, Jr.* Trustee July 22, 1997
William J. Copeland* Trustee July 22, 1997
James E. Dowd* Trustee July 22, 1997
Lawrence D. Ellis, M.D.* Trustee July 22, 1997
Edward L. Flaherty, Jr.* Trustee July 22, 1997
Peter E. Madden* Trustee July 22, 1997
Gregor F. Meyer* Trustee July 22, 1997
John E. Murray, Jr.* Trustee July 22, 1997
Wesley W. Posvar* Trustee July 22, 1997
Marjorie P. Smuts* Trustee July 22, 1997
* By Power of Attorney
Page 1
Exhibit 9(ii) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
AGREEMENT
for
FUND ACCOUNTING SERVICES,
ADMINISTRATIVE SERVICES,
TRANSFER AGENCY SERVICES
and
CUSTODY SERVICES PROCUREMENT
AGREEMENT made as of March 1, 1996, by and between those investment
companies listed on Exhibit 1 as may be amended from time to time, having their
principal office and place of business at Federated Investors Tower, Pittsburgh,
PA 15222-3779 (the "Investment Company"), on behalf of the portfolios
(individually referred to herein as a "Fund" and collectively as "Funds") of the
Investment Company, and FEDERATED SERVICES COMPANY, a Pennsylvania corporation,
having its principal office and place of business at Federated Investors Tower,
Pittsburgh, Pennsylvania 15222-3779 on behalf of itself and its subsidiaries
(the "Company").
WHEREAS, the Investment Company is registered as an open-end management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"), with authorized and issued shares of capital stock or beneficial
interest ("Shares");
WHEREAS, the Investment Company may desire to retain the Company as fund
accountant to provide fund accounting services (as herein defined) including
certain pricing, accounting and recordkeeping services for each of the Funds,
including any classes of shares issued by any Fund ("Classes") if so indicated
on Exhibit 1, and the Company desires to accept such appointment;
WHEREAS, the Investment Company may desire to appoint the Company as its
administrator to provide it with administrative services (as herein defined), if
so indicated on Exhibit, and the Company desires to accept such appointment;
WHEREAS, the Investment Company may desire to appoint the Company as its
transfer agent and dividend disbursing agent to provide it with transfer agency
services (as herein defined) if so indicated on Exhibit 1, and agent in
connection with certain other activities, and the Company desires to accept such
appointment; and
WHEREAS, the Investment Company may desire to appoint the Company as its
agent to select, negotiate and subcontract for custodian services from an
approved list of qualified banks if so indicated on Exhibit 1, and the Company
desires to accept such appointment; and
NOW THEREFORE, in consideration of the premises and mutual covenants herein
contained, and intending to be legally bound hereby, the parties hereto agree as
follows:
SECTION ONE: Fund Accounting.
Article 1. Appointment.
The Investment Company hereby appoints the Company to provide certain
pricing and accounting services to the Funds, and/or the Classes, for the period
and on the terms set forth in this Agreement. The Company accepts such
appointment and agrees to furnish the services herein set forth in return for
the compensation as provided in Article 3 of this Section.
Article 2. The Company's Duties.
Subject to the supervision and control of the Investment Company's Board of
Trustees or Directors ("Board"), the Company will assist the Investment Company
with regard to fund accounting for the Investment Company, and/or the Funds,
and/or the Classes, and in connection therewith undertakes to perform the
following specific services;
A. Value the assets of the Funds using: primarily, market quotations,
including the use of matrix pricing, supplied by the independent pricing
services selected by the Company in consultation with the adviser, or sources
selected by the adviser, and reviewed by the board; secondarily, if a designated
pricing service does not provide a price for a security which the Company
believes should be available by market quotation, the Company may obtain a price
by calling brokers designated by the investment adviser of the fund holding the
security, or if the adviser does not supply the names of such brokers, the
Company will attempt on its own to find brokers to price those securities;
thirdly, for securities for which no market price is available, the Pricing
Committee of the Board will determine a fair value in good faith. Consistent
with Rule 2a-4 of the 40 Act, estimates may be used where necessary or
appropriate. The Company's obligations with regard to the prices received from
outside pricing services and designated brokers or other outside sources, is to
exercise reasonable care in the supervision of the pricing agent. The Company is
not the guarantor of the securities prices received from such agents and the
Company is not liable to the Fund for potential errors in valuing a Fund's
assets or calculating the net asset value per share of such Fund or Class when
the calculations are based upon such prices. All of the above sources of prices
used as described are deemed by the Company to be authorized sources of security
prices. The Company provides daily to the adviser the securities prices used in
calculating the net asset value of the fund, for its use in preparing exception
reports for those prices on which the adviser has comment. Further, upon receipt
of the exception reports generated by the adviser, the Company diligently
pursues communication regarding exception reports with the designated pricing
agents;
B. Determine the net asset value per share of each Fund and/or Class, at
the time and in the manner from time to time determined by the Board and as set
forth in the Prospectus and Statement of Additional Information ("Prospectus")
of each Fund;
C. Calculate the net income of each of the Funds, if any;
D. Calculate realized capital gains or losses of each of the Funds
resulting from sale or disposition of assets, if any;
E. Maintain the general ledger and other accounts, books and financial
records of the Investment Company, including for each Fund, and/or Class, as
required under Section 31(a) of the 1940 Act and the Rules thereunder in
connection with the services provided by the Company;
F. Preserve for the periods prescribed by Rule 31a-2 under the 1940 Act the
records to be maintained by Rule 31a-1 under the 1940 Act in connection with the
services provided by the Company. The Company further agrees that all such
records it maintains for the Investment Company are the property of the
Investment Company and further agrees to surrender promptly to the Investment
Company such records upon the Investment Company's request;
G. At the request of the Investment Company, prepare various reports or
other financial documents in accordance with generally accepted accounting
principles as required by federal, state and other applicable laws and
regulations; and
H. Such other similar services as may be reasonably requested by the
Investment Company.
The foregoing, along with any additional services that the Company shall
agree in writing to perform for the Investment Company under this Section One,
shall hereafter be referred to as "Fund Accounting Services."
Article 3. Compensation and Allocation of Expenses.
A. The Funds will compensate the Company for Fund Accounting Services in
accordance with the fees agreed upon from time to time between the
parties hereto. Such fees do not include out-of-pocket disbursements
of the Company for which the Funds shall reimburse the Company.
Out-of-pocket disbursements shall include, but shall not be limited
to, the items agreed upon between the parties from time to time.
B. The Fund and/or the Class, and not the Company, shall bear the cost
of: custodial expenses; membership dues in the Investment Company
Institute or any similar organization; transfer agency expenses;
investment advisory expenses; costs of printing and mailing stock
certificates, Prospectuses, reports and notices; administrative
expenses; interest on borrowed money; brokerage commissions; taxes
and fees payable to federal, state and other governmental agencies;
fees of Trustees or Directors of the Investment Company; independent
auditors expenses; legal and audit department expenses billed to the
Company for work performed related to the Investment Company, the
Funds, or the Classes; law firm expenses; organizational expenses; or
other expenses not specified in this Article 3 which may be properly
payable by the Funds and/or Classes.
C. The compensation and out-of-pocket expenses attributable to the Fund
shall be accrued by the Fund and shall be paid to the Company no less
frequently than monthly, and shall be paid daily upon request of the
Company. The Company will maintain detailed information about the
compensation and out-of-pocket expenses by Fund and Class.
D. Any schedule of compensation agreed to hereunder, as may be adjusted
from time to time, shall be dated and signed by a duly authorized officer of the
Investment Company and/or the Funds and a duly authorized officer of the
Company.
E. The fee for the period from the effective date of this Agreement with
respect to a Fund or a Class to the end of the initial month shall be
prorated according to the proportion that such period bears to the
full month period. Upon any termination of this Agreement before the
end of any month, the fee for such period shall be prorated according
to the proportion which such period bears to the full month period.
For purposes of determining fees payable to the Company, the value of
the Fund's net assets shall be computed at the time and in the manner
specified in the Fund's Prospectus.
F. The Company, in its sole discretion, may from time to time
subcontract to, employ or associate with itself such person or
persons as the Company may believe to be particularly suited to
assist it in performing Fund Accounting Services. Such person or
persons may be affiliates of the Company, third-party service
providers, or they may be officers and employees who are employed by
both the Company and the Investment Company; provided, however, that
the Company shall be as fully responsible to each Fund for the acts
and omissions of any such subcontractor as it is for its own acts and
omissions. The compensation of such person or persons shall be paid
by the Company and no obligation shall be incurred on behalf of the
Investment Company, the Funds, or the Classes in such respect.
SECTION TWO: ADMINISTRATIVE SERVICES.
Article 4. Appointment.
The Investment Company hereby appoints the Company as Administrator for the
period on the terms and conditions set forth in this Agreement. The Company
hereby accepts such appointment and agrees to furnish the services set forth in
Article 5 of this Agreement in return for the compensation set forth in Article
9 of this Agreement.
Article 5. The Company's Duties.
As Administrator, and subject to the supervision and control of the Board
and in accordance with Proper Instructions (as defined hereafter) from the
Investment Company, the Company will provide facilities, equipment, and
personnel to carry out the following administrative services for operation of
the business and affairs of the Investment Company and each of its portfolios:
A. prepare, file, and maintain the Investment Company's governing documents
and any amendments thereto, including the Charter (which has already been
prepared and filed), the By-laws and minutes of meetings of the Board and
Shareholders;
B. prepare and file with the Securities and Exchange Commission and the
appropriate state securities authorities the registration statements
for the Investment Company and the Investment Company's shares and
all amendments thereto, reports to regulatory authorities and
shareholders, prospectuses, proxy statements, and such other
documents all as may be necessary to enable the Investment Company to
make a continuous offering of its shares;
C. prepare, negotiate, and administer contracts (if any) on behalf of the
Investment Company with, among others, the Investment Company's investment
advisers and distributors, subject to any applicable restrictions of the Board
or the 1940 Act;
D. calculate performance data of the Investment Company for dissemination
to information services covering the investment company industry;
E. prepare and file the Investment Company's tax returns;
F. coordinate the layout and printing of publicly disseminated prospectuses
and reports;
G. perform internal audit examinations in accordance with a charter to be
adopted by the Company and the Investment Company;
H. assist with the design, development, and operation of the Investment
Company and the Funds;
I. provide individuals reasonably acceptable to the Board for nomination,
appointment, or election as officers of the Investment Company, who will be
responsible for the management of certain of the Investment Company's affairs as
determined by the Investment Company's Board; and
J. consult with the Investment Company and its Board on matters concerning
the Investment Company and its affairs.
The foregoing, along with any additional services that the Company shall
agree in writing to perform for the Investment Company under this Section Two,
shall hereafter be referred to as "Administrative Services."
Article 6. Records.
The Company shall create and maintain all necessary books and records in
accordance with all applicable laws, rules and regulations, including but not
limited to records required by Section 31(a) of the Investment Company act of
1940 and the rules thereunder, as the same may be amended from time to time,
pertaining to the Administrative Services performed by it and not otherwise
created and maintained by another party pursuant to contract with the Investment
Company. Where applicable, such records shall be maintained by the Company for
the periods and in the places required by Rule 31a-2 under the 1940 Act. The
books and records pertaining to the Investment Company which are in the
possession of the Company shall be the property of the Investment Company. The
Investment Company, or the Investment Company's authorized representatives,
shall have access to such books and records at all times during the Company's
normal business hours. Upon the reasonable request of the Investment Company,
copies of any such books and records shall be provided promptly by the Company
to the Investment Company or the Investment Company's authorized
representatives.
Article 7. Duties of the Fund.
The Fund assumes full responsibility for the preparation, contents and
distribution of its own offering document and for complying with all applicable
requirements the 1940 Act, the Internal Revenue Code, and any other laws, rules
and regulations of government authorities having jurisdiction.
Article 8. Expenses.
The Company shall be responsible for expenses incurred in providing office
space, equipment, and personnel as may be necessary or convenient to provide the
Administrative Services to the Investment Company, including the compensation of
the Company employees who serve as trustees or directors or officers of the
Investment Company. The Investment Company shall be responsible for all other
expenses incurred by the Company on behalf of the Investment Company, including
without limitation postage and courier expenses, printing expenses, travel
expenses, registration fees, filing fees, fees of outside counsel and
independent auditors, or other professional services, organizational expenses,
insurance premiums, fees payable to persons who are not the Company's employees,
trade association dues, and other expenses properly payable by the Funds and/or
the Classes.
Article 9. Compensation.
For the Administrative Services provided, the Investment Company hereby
agrees to pay and the Company hereby agrees to accept as full compensation for
its services rendered hereunder an administrative fee at an annual rate per
Fund, as specified below.
The compensation and out of pocket expenses attributable to the Fund shall
be accrued by the Fund and paid to the Company no less frequently than monthly,
and shall be paid daily upon request of the Company. The Company will maintain
detailed information about the compensation and out of pocket expenses by the
Fund.
Max. Admin. Average Daily Net Assets
Fee of the Funds
.150% on the first $250 million
.125% on the next $250 million
.100% on the next $250 million
.075% on assets in excess of $750 million
(Average Daily Net Asset break-points are on a
complex-wide basis)
However, in no event shall the administrative fee received during any year
of the Agreement be less than, or be paid at a rate less than would aggregate
$125,000 per Fund and $30,000 per Class. The minimum fee set forth above in this
Article 9 may increase annually upon each March 1 anniversary of this Agreement
over the minimum fee during the prior 12 months, as calculated under this
agreement, in an amount equal to the increase in Pennsylvania Consumer Price
Index (not to exceed 6% annually) as last reported by the U.S. Bureau of Labor
Statistics for the twelve months immediately preceding such anniversary.
Article 10. Responsibility of Administrator.
A. The Company shall not be liable for any error of judgment or mistake
of law or for any loss suffered by the Investment Company in
connection with the matters to which this Agreement relates, except a
loss resulting from willful misfeasance, bad faith or gross
negligence on its part in the performance of its duties or from
reckless disregard by it of its obligations and duties under this
Agreement. The Company shall be entitled to rely on and may act upon
advice of counsel (who may be counsel for the Investment Company) on
all matters, and shall be without liability for any action reasonably
taken or omitted pursuant to such advice. Any person, even though
also an officer, director, trustee, partner, employee or agent of the
Company, who may be or become an officer, director, trustee, partner,
employee or agent of the Investment Company, shall be deemed, when
rendering services to the Investment Company or acting on any
business of the Investment Company (other than services or business
in connection with the duties of the Company hereunder) to be
rendering such services to or acting solely for the Investment
Company and not as an officer, director, trustee, partner, employee
or agent or one under the control or direction of the Company even
though paid by the Company.
B. The Company shall be kept indemnified by the Investment Company and be
without liability for any action taken or thing done by it in performing the
Administrative Services in accordance with the above standards. In order that
the indemnification provisions contained in this Article 10 shall apply,
however, it is understood that if in any case the Investment Company may be
asked to indemnify or hold the Company harmless, the Investment Company shall be
fully and promptly advised of all pertinent facts concerning the situation in
question, and it is further understood that the Company will use all reasonable
care to identify and notify the Investment Company promptly concerning any
situation which presents or appears likely to present the probability of such a
claim for indemnification against the Investment Company. The Investment Company
shall have the option to defend the Company against any claim which may be the
subject of this indemnification. In the event that the Investment Company so
elects, it will so notify the Company and thereupon the Investment Company shall
take over complete defense of the claim, and the Company shall in such situation
initiate no further legal or other expenses for which it shall seek
indemnification under this Article. The Company shall in no case confess any
claim or make any compromise in any case in which the Investment Company will be
asked to indemnify the Company except with the Investment Company's written
consent.
SECTION THREE: Transfer Agency Services.
Article 11. Terms of Appointment.
Subject to the terms and conditions set forth in this Agreement, the
Investment Company hereby appoints the Company to act as, and the Company agrees
to act as, transfer agent and dividend disbursing agent for each Fund's Shares,
and agent in connection with any accumulation, open-account or similar plans
provided to the shareholders of any Fund ("Shareholder(s)"), including without
limitation any periodic investment plan or periodic withdrawal program.
Article 12. Duties of the Company.
The Company shall perform the following services in accordance with Proper
Instructions as may be provided from time to time by the Investment Company as
to any Fund:
A. Purchases
(1) The Company shall receive orders and payment for the
purchase of shares and promptly deliver payment and
appropriate documentation therefore to the custodian of the
relevant Fund, (the "Custodian"). The Company shall notify
the Fund and the Custodian on a daily basis of the total
amount of orders and payments so delivered.
(2) Pursuant to purchase orders and in accordance with the Fund's current
Prospectus, the Company shall compute and issue the appropriate number of Shares
of each Fund and/or Class and hold such Shares in the appropriate Shareholder
accounts.
(3) For certificated Funds and/or Classes, if a Shareholder or
its agent requests a certificate, the Company, as Transfer
Agent, shall countersign and mail by first class mail, a
certificate to the Shareholder at its address as set forth
on the transfer books of the Funds, and/or Classes, subject
to any Proper Instructions regarding the delivery of
certificates.
(4) In the event that any check or other order for the purchase
of Shares of the Fund and/or Class is returned unpaid for
any reason, the Company shall debit the Share account of the
Shareholder by the number of Shares that had been credited
to its account upon receipt of the check or other order,
promptly mail a debit advice to the Shareholder, and notify
the Fund and/or Class of its action. In the event that the
amount paid for such Shares exceeds proceeds of the
redemption of such Shares plus the amount of any dividends
paid with respect to such Shares, the Fund and/the Class or
its distributor will reimburse the Company on the amount of
such excess.
B. Distribution
(1) Upon notification by the Funds of the declaration of any
distribution to Shareholders, the Company shall act as
Dividend Disbursing Agent for the Funds in accordance with
the provisions of its governing document and the
then-current Prospectus of the Fund. The Company shall
prepare and mail or credit income, capital gain, or any
other payments to Shareholders. As the Dividend Disbursing
Agent, the Company shall, on or before the payment date of
any such distribution, notify the Custodian of the estimated
amount required to pay any portion of said distribution
which is payable in cash and request the Custodian to make
available sufficient funds for the cash amount to be paid
out. The Company shall reconcile the amounts so requested
and the amounts actually received with the Custodian on a
daily basis. If a Shareholder is entitled to receive
additional Shares by virtue of any such distribution or
dividend, appropriate credits shall be made to the
Shareholder's account, for certificated Funds and/or
Classes, delivered where requested; and
(2) The Company shall maintain records of account for each Fund and Class
and advise the Investment Company, each Fund and Class and its Shareholders as
to the foregoing.
C. Redemptions and Transfers
(1) The Company shall receive redemption requests and redemption
directions and, if such redemption requests comply with the
procedures as may be described in the Fund Prospectus or set
forth in Proper Instructions, deliver the appropriate
instructions therefor to the Custodian. The Company shall
notify the Funds on a daily basis of the total amount of
redemption requests processed and monies paid to the Company
by the Custodian for redemptions.
(2) At the appropriate time upon receiving redemption proceeds from the
Custodian with respect to any redemption, the Company shall pay or cause to be
paid the redemption proceeds in the manner instructed by the redeeming
Shareholders, pursuant to procedures described in the then-current Prospectus of
the Fund.
(3) If any certificate returned for redemption or other request
for redemption does not comply with the procedures for
redemption approved by the Fund, the Company shall promptly
notify the Shareholder of such fact, together with the
reason therefor, and shall effect such redemption at the
price applicable to the date and time of receipt of
documents complying with said procedures.
(4) The Company shall effect transfers of Shares by the registered owners
thereof.
(5) The Company shall identify and process abandoned accounts and uncashed
checks for state escheat requirements on an annual basis and report such actions
to the Fund.
D. Recordkeeping
(1) The Company shall record the issuance of Shares of each
Fund, and/or Class, and maintain pursuant to applicable
rules of the Securities and Exchange Commission ("SEC") a
record of the total number of Shares of the Fund and/or
Class which are authorized, based upon data provided to it
by the Fund, and issued and outstanding. The Company shall
also provide the Fund on a regular basis or upon reasonable
request with the total number of Shares which are authorized
and issued and outstanding, but shall have no obligation
when recording the issuance of Shares, except as otherwise
set forth herein, to monitor the issuance of such Shares or
to take cognizance of any laws relating to the issue or sale
of such Shares, which functions shall be the sole
responsibility of the Funds.
(2) The Company shall establish and maintain records pursuant to applicable
rules of the SEC relating to the services to be performed hereunder in the form
and manner as agreed to by the Investment Company or the Fund to include a
record for each Shareholder's account of the following:
(a) Name, address and tax identification number (and whether such number
has been certified);
(b) Number of Shares held;
(c) Historical information regarding the account,
including dividends paid and date and price for all
transactions;
(d) Any stop or restraining order placed against the
account;
(e) Information with respect to withholding in the case
of a foreign account or an account for which
withholding is required by the Internal Revenue
Code;
(f) Any dividend reinvestment order, plan application,
dividend address and correspondence relating to the
current maintenance of the account;
(g) Certificate numbers and denominations for any Shareholder holding
certificates;
(h) Any information required in order for the Company to perform the
calculations contemplated or required by this Agreement.
(3) The Company shall preserve any such records required to be
maintained pursuant to the rules of the SEC for the periods
prescribed in said rules as specifically noted below. Such
record retention shall be at the expense of the Company, and
such records may be inspected by the Fund at reasonable
times. The Company may, at its option at any time, and shall
forthwith upon the Fund's demand, turn over to the Fund and
cease to retain in the Company's files, records and
documents created and maintained by the Company pursuant to
this Agreement, which are no longer needed by the Company in
performance of its services or for its protection. If not so
turned over to the Fund, such records and documents will be
retained by the Company for six years from the year of
creation, during the first two of which such documents will
be in readily accessible form. At the end of the six year
period, such records and documents will either be turned
over to the Fund or destroyed in accordance with Proper
Instructions.
E. Confirmations/Reports
(1) The Company shall furnish to the Fund periodically the following
information:
(a) A copy of the transaction register;
(b) Dividend and reinvestment blotters;
(c) The total number of Shares issued and outstanding in each state for
"blue sky" purposes as determined according to Proper Instructions delivered
from time to time by the Fund to the Company;
(d) Shareholder lists and statistical information;
(e) Payments to third parties relating to distribution agreements,
allocations of sales loads, redemption fees, or other transaction- or
sales-related payments;
(f) Such other information as may be agreed upon from time to time.
(2) The Company shall prepare in the appropriate form, file with
the Internal Revenue Service and appropriate state agencies,
and, if required, mail to Shareholders, such notices for
reporting dividends and distributions paid as are required
to be so filed and mailed and shall withhold such sums as
are required to be withheld under applicable federal and
state income tax laws, rules and regulations.
(3) In addition to and not in lieu of the services set forth above, the
Company shall:
(a) Perform all of the customary services of a transfer
agent, dividend disbursing agent and, as relevant,
agent in connection with accumulation, open-account
or similar plans (including without limitation any
periodic investment plan or periodic withdrawal
program), including but not limited to: maintaining
all Shareholder accounts, mailing Shareholder
reports and Prospectuses to current Shareholders,
withholding taxes on accounts subject to back-up or
other withholding (including non-resident alien
accounts), preparing and filing reports on U.S.
Treasury Department Form 1099 and other appropriate
forms required with respect to dividends and
distributions by federal authorities for all
Shareholders, preparing and mailing confirmation
forms and statements of account to Shareholders for
all purchases and redemptions of Shares and other
conformable transactions in Shareholder accounts,
preparing and mailing activity statements for
Shareholders, and providing Shareholder account
information; and
(b) provide a system which will enable the Fund to
monitor the total number of Shares of each Fund
(and/or Class) sold in each state ("blue sky
reporting"). The Fund shall by Proper Instructions
(i) identify to the Company those transactions and
assets to be treated as exempt from the blue sky
reporting for each state and (ii) verify the
classification of transactions for each state on
the system prior to activation and thereafter
monitor the daily activity for each state. The
responsibility of the Company for each Fund's
(and/or Class's) state blue sky registration status
is limited solely to the recording of the initial
classification of transactions or accounts with
regard to blue sky compliance and the reporting of
such transactions and accounts to the Fund as
provided above.
F. Other Duties
(1) The Company shall answer correspondence from Shareholders relating to
their Share accounts and such other correspondence as may from time to time be
addressed to the Company;
(2) The Company shall prepare Shareholder meeting lists, mail proxy cards
and other material supplied to it by the Fund in connection with Shareholder
meetings of each Fund; receive, examine and tabulate returned proxies, and
certify the vote of the Shareholders;
(3) The Company shall establish and maintain facilities and procedures for
safekeeping of stock certificates, check forms and facsimile signature
imprinting devices, if any; and for the preparation or use, and for keeping
account of, such certificates, forms and devices.
The foregoing, along with any additional services that the Company shall
agree in writing to perform for the Investment Company under this Section Three,
shall hereafter be referred to as "Transfer Agency Services."
Article 13. Duties of the Investment Company.
A. Compliance
The Investment Company or Fund assume full responsibility for the
preparation, contents and distribution of their own and/or their
classes' Prospectus and for complying with all applicable
requirements of the Securities Act of 1933, as amended (the "1933
Act"), the 1940 Act and any laws, rules and regulations of government
authorities having jurisdiction.
B. Share Certificates
The Investment Company shall supply the Company with a sufficient
supply of blank Share certificates and from time to time shall renew
such supply upon request of the Company. Such blank Share
certificates shall be properly signed, manually or by facsimile, if
authorized by the Investment Company and shall bear the seal of the
Investment Company or facsimile thereof; and notwithstanding the
death, resignation or removal of any officer of the Investment
Company authorized to sign certificates, the Company may continue to
countersign certificates which bear the manual or facsimile signature
of such officer until otherwise directed by the Investment Company.
C. Distributions
The Fund shall promptly inform the Company of the declaration of any
dividend or distribution on account of any Fund's shares.
Article 14. Compensation and Expenses.
A. Annual Fee
For performance by the Company pursuant to Section Three of this
Agreement, the Investment Company and/or the Fund agree to pay the
Company an annual maintenance fee for each Shareholder account as
agreed upon between the parties and as may be added to or amended
from time to time. Such fees may be changed from time to time subject
to written agreement between the Investment Company and the Company.
Pursuant to information in the Fund Prospectus or other information
or instructions from the Fund, the Company may sub-divide any Fund
into Classes or other sub-components for recordkeeping purposes. The
Company will charge the Fund the same fees for each such Class or
sub-component the same as if each were a Fund.
B. Reimbursements
In addition to the fee paid under Article 7A above, the Investment
Company and/or Fund agree to reimburse the Company for out-of-pocket
expenses or advances incurred by the Company for the items agreed
upon between the parties, as may be added to or amended from time to
time. In addition, any other expenses incurred by the Company at the
request or with the consent of the Investment Company and/or the
Fund, will be reimbursed by the appropriate Fund.
C. Payment
The compensation and out-of-pocket expenses shall be accrued by the
Fund and shall be paid to the Company no less frequently than
monthly, and shall be paid daily upon request of the Company. The
Company will maintain detailed information about the compensation and
out-of-pocket expenses by Fund and Class.
D. Any schedule of compensation agreed to hereunder, as may be adjusted
from time to time, shall be dated and signed by a duly authorized officer of the
Investment Company and/or the Funds and a duly authorized officer of the
Company.
SECTION FOUR: Custody Services Procurement.
Article 15. Appointment.
The Investment Company hereby appoints Company as its agent to evaluate and
obtain custody services from a financial institution that (i) meets the criteria
established in Section 17(f) of the 1940 Act and (ii) has been approved by the
Board as eligible for selection by the Company as a custodian (the "Eligible
Custodian"). The Company accepts such appointment.
Article 16. The Company and Its Duties.
Subject to the review, supervision and control of the Board, the Company
shall:
A. evaluate and obtain custody services from a financial institution that
meets the criteria established in Section 17(f) of the 1940 Act and has been
approved by the Board as being eligible for selection by the Company as an
Eligible Custodian;
B. negotiate and enter into agreements with Eligible Custodians for the
benefit of the Investment Company, with the Investment Company as a party to
each such agreement. The Company may, as paying agent, be a party to any
agreement with any such Eligible Custodian;
C. establish procedures to monitor the nature and the quality of the
services provided by Eligible Custodians;
D. monitor and evaluate the nature and the quality of services provided by
Eligible Custodians;
E. periodically provide to the Investment Company (i) written reports on
the activities and services of Eligible Custodians; (ii) the nature
and amount of disbursements made on account of the each Fund with
respect to each custodial agreement; and (iii) such other information
as the Board shall reasonably request to enable it to fulfill its
duties and obligations under Sections 17(f) and 36(b) of the 1940 Act
and other duties and obligations thereof;
F. periodically provide recommendations to the Board to enhance Eligible
Custodian's customer services capabilities and improve upon fees being charged
to the Fund by Eligible Custodian; and
The foregoing, along with any additional services that Company shall agree
in writing to perform for the Fund under this Section Four, shall hereafter be
referred to as "Custody Services Procurement."
Article 17. Fees and Expenses.
A. Annual Fee
For the performance of Custody Services Procurement by the Company
pursuant to Section Four of this Agreement, the Investment Company
and/or the Fund agree to compensate the Company in accordance with
the fees agreed upon from time to time.
B. Reimbursements
In addition to the fee paid under Section 11A above, the Investment
Company and/or Fund agree to reimburse the Company for out-of-pocket
expenses or advances incurred by the Company for the items agreed
upon between the parties, as may be added to or amended from time to
time. In addition, any other expenses incurred by the Company at the
request or with the consent of the Investment Company and/or the
Fund, will be reimbursed by the appropriate Fund.
C. Payment
The compensation and out-of-pocket expenses shall be accrued by the
Fund and shall be paid to the Company no less frequently than
monthly, and shall be paid daily upon request of the Company. The
Company will maintain detailed information about the compensation and
out-of-pocket expenses by Fund.
D. Any schedule of compensation agreed to hereunder, as may be adjusted
from time to time, shall be dated and signed by a duly authorized officer of the
Investment Company and/or the Funds and a duly authorized officer of the
Company.
Article 18. Representations.
The Company represents and warrants that it has obtained all required
approvals from all government or regulatory authorities necessary to enter into
this arrangement and to provide the services contemplated in Section Four of
this Agreement.
SECTION FIVE: General Provisions.
Article 19. Proper Instructions.
As used throughout this Agreement, a "Proper Instruction" means a writing
signed or initialed by one or more person or persons as the Board shall have
from time to time authorized. Each such writing shall set forth the specific
transaction or type of transaction involved. Oral instructions will be deemed to
be Proper Instructions if (a) the Company reasonably believes them to have been
given by a person previously authorized in Proper Instructions to give such
instructions with respect to the transaction involved, and (b) the Investment
Company, or the Fund, and the Company promptly cause such oral instructions to
be confirmed in writing. Proper Instructions may include communications effected
directly between electro-mechanical or electronic devices provided that the
Investment Company, or the Fund, and the Company are satisfied that such
procedures afford adequate safeguards for the Fund's assets. Proper Instructions
may only be amended in writing.
Article 20. Assignment.
Except as provided below, neither this Agreement nor any of the rights or
obligations under this Agreement may be assigned by either party without the
written consent of the other party.
A. This Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns.
B. With regard to Transfer Agency Services, the Company may without further
consent on the part of the Investment Company subcontract for the performance of
Transfer Agency Services with
(1) its subsidiary, Federated Shareholder Service Company, a Delaware
business trust, which is duly registered as a transfer agent pursuant to Section
17A(c)(1) of the Securities Exchange Act of 1934, as amended, or any succeeding
statute ("Section 17A(c)(1)"); or
(2) such other provider of services duly registered as a transfer agent
under Section 17A(c)(1) as Company shall select.
The Company shall be as fully responsible to the Investment Company
for the acts and omissions of any subcontractor as it is for its own acts and
omissions.
C. With regard to Fund Accounting Services, Administrative Services and
Custody Procurement Services, the Company may without further consent
on the part of the Investment Company subcontract for the performance
of such services with Federated Administrative Services, a
wholly-owned subsidiary of the Company.
D. The Company shall upon instruction from the Investment Company
subcontract for the performance of services under this Agreement with an Agent
selected by the Investment Company, other than as described in B. and C. above;
provided, however, that the Company shall in no way be responsible to the
Investment Company for the acts and omissions of the Agent.
Article 21. Documents. A. In connection with the appointment of the Company
under this Agreement, the Investment Company shall file with the Company the
following documents:
(1) A copy of the Charter and By-Laws of the Investment Company and all
amendments thereto;
(2) A copy of the resolution of the Board of the Investment Company
authorizing this Agreement;
(3) Specimens of all forms of outstanding Share certificates of the
Investment Company or the Funds in the forms approved by the Board of the
Investment Company with a certificate of the Secretary of the Investment Company
as to such approval;
(4) All account application forms and other documents relating to
Shareholders accounts; and
(5) A copy of the current Prospectus for each Fund.
B. The Fund will also furnish from time to time the following documents:
(1) Each resolution of the Board of the Investment Company authorizing the
original issuance of each Fund's, and/or Class's Shares;
(2) Each Registration Statement filed with the SEC and amendments thereof
and orders relating thereto in effect with respect to the sale of Shares of any
Fund, and/or Class;
(3) A certified copy of each amendment to the governing document and the
By-Laws of the Investment Company;
(4) Certified copies of each vote of the Board authorizing officers to give
Proper Instructions to the Custodian and agents for fund accountant, custody
services procurement, and shareholder recordkeeping or transfer agency services;
(5) Specimens of all new Share certificates representing Shares of any
Fund, accompanied by Board resolutions approving such forms;
(6) Such other certificates, documents or opinions which the Company may,
in its discretion, deem necessary or appropriate in the proper performance of
its duties; and
(7) Revisions to the Prospectus of each Fund.
Article 22. Representations and Warranties.
A. Representations and Warranties of the Company
The Company represents and warrants to the Fund that:
(1) it is a corporation duly organized and existing and in good standing
under the laws of the Commonwealth of Pennsylvania;
(2) It is duly qualified to carry on its business in each jurisdiction
where the nature of its business requires such qualification, and in the
Commonwealth of Pennsylvania;
(3) it is empowered under applicable laws and by its Articles of
Incorporation and By-Laws to enter into and perform this Agreement;
(4) all requisite corporate proceedings have been taken to authorize it to
enter into and perform its obligations under this Agreement;
(5) it has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under this
Agreement;
(6) it is in compliance with federal securities law requirements and in
good standing as an administrator and fund accountant; and
B. Representations and Warranties of the Investment Company
The Investment Company represents and warrants to the Company that:
(1) It is an investment company duly organized and existing and in good
standing under the laws of its state of organization;
(2) It is empowered under applicable laws and by its Charter and By-Laws to
enter into and perform its obligations under this Agreement;
(3) All corporate proceedings required by said Charter and By-Laws have
been taken to authorize it to enter into and perform its obligations under this
Agreement;
(4) The Investment Company is an open-end investment company registered
under the 1940 Act; and
(5) A registration statement under the 1933 Act will be effective, and
appropriate state securities law filings have been made and will continue to be
made, with respect to all Shares of each Fund being offered for sale.
Article 23. Standard of Care and Indemnification.
A. Standard of Care
With regard to Sections One, Three and Four, the Company shall be
held to a standard of reasonable care in carrying out the provisions
of this Contract. The Company shall be entitled to rely on and may
act upon advice of counsel (who may be counsel for the Investment
Company) on all matters, and shall be without liability for any
action reasonably taken or omitted pursuant to such advice, provided
that such action is not in violation of applicable federal or state
laws or regulations, and is in good faith and without negligence.
B. Indemnification by Investment Company
The Company shall not be responsible for and the Investment Company
or Fund shall indemnify and hold the Company, including its officers,
directors, shareholders and their agents, employees and affiliates,
harmless against any and all losses, damages, costs, charges, counsel
fees, payments, expenses and liabilities arising out of or
attributable to:
(1) The acts or omissions of any Custodian, Adviser, Sub-adviser or other
party contracted by or approved by the Investment Company or Fund,
(2) The reliance on or use by the Company or its agents or subcontractors
of information, records and documents in proper form which
(a) are received by the Company or its agents or
subcontractors and furnished to it by or on behalf
of the Fund, its Shareholders or investors
regarding the purchase, redemption or transfer of
Shares and Shareholder account information;
(b) are received by the Company from independent pricing services or
sources for use in valuing the assets of the Funds; or
(c) are received by the Company or its agents or subcontractors from
Advisers, Sub-advisers or other third parties contracted by or approved by the
Investment Company of Fund for use in the performance of services under this
Agreement;
(d) have been prepared and/or maintained by the Fund or its
affiliates or any other person or firm on behalf of the Investment Company.
(3) The reliance on, or the carrying out by the Company or its agents or
subcontractors of Proper Instructions of the Investment Company or the Fund.
(4) The offer or sale of Shares in violation of any requirement
under the federal securities laws or regulations or the
securities laws or regulations of any state that such Shares
be registered in such state or in violation of any stop
order or other determination or ruling by any federal agency
or any state with respect to the offer or sale of such
Shares in such state.
Provided, however, that the Company shall not be protected
by this Article 23.B. from liability for any act or omission
resulting from the Company's willful misfeasance, bad faith,
negligence or reckless disregard of its duties or failure to
meet the standard of care set forth in 23.A. above.
C. Reliance
At any time the Company may apply to any officer of the Investment
Company or Fund for instructions, and may consult with legal counsel
with respect to any matter arising in connection with the services to
be performed by the Company under this Agreement, and the Company and
its agents or subcontractors shall not be liable and shall be
indemnified by the Investment Company or the appropriate Fund for any
action reasonably taken or omitted by it in reliance upon such
instructions or upon the opinion of such counsel provided such action
is not in violation of applicable federal or state laws or
regulations. The Company, its agents and subcontractors shall be
protected and indemnified in recognizing stock certificates which are
reasonably believed to bear the proper manual or facsimile signatures
of the officers of the Investment Company or the Fund, and the proper
countersignature of any former transfer agent or registrar, or of a
co-transfer agent or co-registrar.
D. Notification
In order that the indemnification provisions contained in this
Article 23 shall apply, upon the assertion of a claim for which
either party may be required to indemnify the other, the party
seeking indemnification shall promptly notify the other party of such
assertion, and shall keep the other party advised with respect to all
developments concerning such claim. The party who may be required to
indemnify shall have the option to participate with the party seeking
indemnification in the defense of such claim. The party seeking
indemnification shall in no case confess any claim or make any
compromise in any case in which the other party may be required to
indemnify it except with the other party's prior written consent.
Article 24. Term and Termination of Agreement.
This Agreement shall be effective from March 1, 1996 and shall continue
until February 28, 2003 (`Term"). Thereafter, the Agreement will continue for 18
month terms. The Agreement can be terminated by either party upon 18 months
notice to be effective as of the end of such 18 month period. In the event,
however, of willful misfeasance, bad faith, negligence or reckless disregard of
its duties by the Company, the Investment Company has the right to terminate the
Agreement upon 60 days written notice, if Company has not cured such willful
misfeasance, bad faith, negligence or reckless disregard of its duties within 60
days. The termination date for all original or after-added Investment companies
which are, or become, a party to this Agreement. shall be coterminous.
Investment Companies that merge or dissolve during the Term, shall cease to be a
party on the effective date of such merger or dissolution.
Should the Investment Company exercise its rights to terminate, all
out-of-pocket expenses associated with the movement of records and materials
will be borne by the Investment Company or the appropriate Fund. Additionally,
the Company reserves the right to charge for any other reasonable expenses
associated with such termination. The provisions of Articles 10 and 23 shall
survive the termination of this Agreement.
Article 25. Amendment.
This Agreement may be amended or modified by a written agreement executed
by both parties.
Article 26. Interpretive and Additional Provisions.
In connection with the operation of this Agreement, the Company and the
Investment Company may from time to time agree on such provisions interpretive
of or in addition to the provisions of this Agreement as may in their joint
opinion be consistent with the general tenor of this Agreement. Any such
interpretive or additional provisions shall be in a writing signed by both
parties and shall be annexed hereto, provided that no such interpretive or
additional provisions shall contravene any applicable federal or state
regulations or any provision of the Charter. No interpretive or additional
provisions made as provided in the preceding sentence shall be deemed to be an
amendment of this Agreement.
Article 27. Governing Law.
This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of the Commonwealth of Massachusetts
Article 28. Notices.
Except as otherwise specifically provided herein, Notices and other
writings delivered or mailed postage prepaid to the Investment Company at
Federated Investors Tower, Pittsburgh, Pennsylvania, 15222-3779, or to the
Company at Federated Investors Tower, Pittsburgh, Pennsylvania, 15222-3779, or
to such other address as the Investment Company or the Company may hereafter
specify, shall be deemed to have been properly delivered or given hereunder to
the respective address.
Article 29. Counterparts.
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original. Article 30.
Limitations of Liability of Trustees and Shareholders of the Company.
The execution and delivery of this Agreement have been authorized by the
Trustees of the Company and signed by an authorized officer of the Company,
acting as such, and neither such authorization by such Trustees nor such
execution and delivery by such officer shall be deemed to have been made by any
of them individually or to impose any liability on any of them personally, and
the obligations of this Agreement are not binding upon any of the Trustees or
Shareholders of the Company, but bind only the appropriate property of the Fund,
or Class, as provided in the Declaration of Trust.
Article 31. Merger of Agreement.
This Agreement constitutes the entire agreement between the parties hereto
and supersedes any prior agreement with respect to the subject hereof whether
oral or written.
Article 32. Successor Agent.
If a successor agent for the Investment Company shall be appointed by the
Investment Company, the Company shall upon termination of this Agreement deliver
to such successor agent at the office of the Company all properties of the
Investment Company held by it hereunder. If no such successor agent shall be
appointed, the Company shall at its office upon receipt of Proper Instructions
deliver such properties in accordance with such instructions.
In the event that no written order designating a successor agent or Proper
Instructions shall have been delivered to the Company on or before the date when
such termination shall become effective, then the Company shall have the right
to deliver to a bank or trust company, which is a "bank" as defined in the 1940
Act, of its own selection, having an aggregate capital, surplus, and undivided
profits, as shown by its last published report, of not less than $2,000,000, all
properties held by the Company under this Agreement. Thereafter, such bank or
trust company shall be the successor of the Company under this Agreement.
Article 33. Force Majeure.
The Company shall have no liability for cessation of services hereunder or
any damages resulting therefrom to the Fund as a result of work stoppage, power
or other mechanical failure, natural disaster, governmental action,
communication disruption or other impossibility of performance.
Article 34. Assignment; Successors.
This Agreement shall not be assigned by either party without the prior
written consent of the other party, except that either party may assign all of
or a substantial portion of its business to a successor, or to a party
controlling, controlled by, or under common control with such party. Nothing in
this Article 34 shall prevent the Company from delegating its responsibilities
to another entity to the extent provided herein.
Article 35. Severability.
In the event any provision of this Agreement is held illegal, void or
unenforceable, the balance shall remain in effect.
Article 36. Limitations of Liability of Trustees and Shareholders of the
Investment Company.
The execution and delivery of this Agreement have been authorized by the
Trustees of the Investment Company and signed by an authorized officer of the
Investment Company, acting as such, and neither such authorization by such
Trustees nor such execution and delivery by such officer shall be deemed to have
been made by any of them individually or to impose any liability on any of them
personally, and the obligations of this Agreement are not binding upon any of
the Trustees or Shareholders of the Investment Company, but bind only the
property of the Fund, or Class, as provided in the Declaration of Trust.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf under their seals by and through
their duly authorized officers, as of the day and year first above written.
INVESTMENT COMPANIES
(listed on Exhibit 1)
By: /s/ S. Elliott Cohan
S. Elliott Cohan
Assistant Secretary
FEDERATED SERVICES COMPANY
By: /s/ Thomas J. Ward
Thomas J. Ward
Secretary
<PAGE>
Created June 25, 1997
Page 1
EXHIBIT 1
CONTRACT
DATE INVESTMENT COMPANY
Portfolios
Classes
March 1, 1996 Intermediate Municipal Trust
Federated Intermediate Municipal Trust
Federated Pennsylvania Intermediate Municipal Trust
Federated Ohio Intermediate Municipal Trust
FEDERATED SERVICES COMPANY provides the following services:
Fund Accounting Services;
Administrative Services;
Transfer Agency Services; and
Custody Services Procurement.
Exhibit (11) under N-1A
Exhibit 23 under Item 601/Reg SK
ARTHUR ANDERSEN & CO.
Pittsburgh, Pennsylvania
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use in
Post-Effective Amendment No. 28 to Form N-1A Registration Statement of
Intermediate Municipal Trust, of our report dated July 7, 1997, on the financial
statements as of May 31, 1997, of Federated Intermediate Municipal Trust and
Federated Pennsylvania Intermediate Municipal Trust (the two portfolios
comprising the Intermediate Municipal Trust), included in or made a part of this
registration statement.
By: /s/ARTHUR ANDERSEN & CO.
ARTHUR ANDERSEN & CO.
Pittsburgh, Pennsylvania,
July 21, 1997
Exhibit 19 under Form N-1A
Exhibit 24 under Item 601/Reg. S-K
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and
appoints the Secretary and Assistant Secretary of INTERMEDIATE MUNICIPAL TRUST
and the Deputy General Counsel of Federated Services Company, and each of them,
their true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution for them and in their names, place and stead, in
any and all capacities, to sign any and all documents to be filed with the
Securities and Exchange Commission pursuant to the Securities Act of 1933, the
Securities Exchange Act of 1934 and the Investment Company Act of 1940, by means
of the Securities and Exchange Commission's electronic disclosure system known
as EDGAR; and to file the same, with all exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
sign and perform each and every act and thing requisite and necessary to be done
in connection therewith, as fully to all intents and purposes as each of them
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue thereof.
SIGNATURES TITLE DATE
/S/John F. Donahue Chairman and Trustee July 1, 1997
- --------------------------------
John F. Donahue (Chief Executive Officer)
/s/Glen R. Johnson President and Trustee July 1, 1997
- --------------------------------
Glen R. Johnson
/s/John W. McGonigle Treasurer, Executive
John W. McGonigle Vice President and Secretary July 1, 1997
(Principal Financial and
Accounting Officer)
/s/Thomas G. Bigley Trustee July 1, 1997
Thomas G. Bigley
/s/John T. Conroy, Jr. Trustee July 1, 1997
- --------------------------------
John T. Conroy, Jr.
<PAGE>
SIGNATURES TITLE DATE
/s/William J. Copeland Trustee July 1, 1997
William J. Copeland
/s/James E. Dowd Trustee July 1, 1997
James E. Dowd
/s/Lawrence D. Ellis, M.D. Trustee July 1, 1997
- --------------------------------
Lawrence D. Ellis, M.D.
/s/Edward L. Flaherty, Jr. Trustee July 1, 1997
- --------------------------------
Edward L. Flaherty, Jr.
/s/Peter E. Madden Trustee July 1, 1997
Peter E. Madden
/s/Gregor F. Meyer Trustee July 1, 1997
Gregor F. Meyer
/s/John E. Murray, Jr. Trustee July 1, 1997
- --------------------------------
John E. Murray, Jr.
/s/Wesley W. Posvar Trustee July 1, 1997
Wesley W. Posvar
/s/Marjorie P. Smuts Trustee July 1, 1997
Marjorie P. Smuts
Sworn to and subscribed before me this 1st day of July, 1997
/s/Marie M. Hamm
Notarial Seal
Marie M. Hamm, Notary Public
Plum Boro, Allegheny County
My Commission Expires Oct. 9, 2000
Member, Pennsylvania Association of Notaries
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 02
<NAME> Intermediate Municipal Trust
Federated Pennsylvania Intermediate Municipal
Trust
<PERIOD-TYPE> 12-Mos
<FISCAL-YEAR-END> May-31-1997
<PERIOD-END> May-31-1997
<INVESTMENTS-AT-COST> 13,723,427
<INVESTMENTS-AT-VALUE> 14,132,714
<RECEIVABLES> 1,050,153
<ASSETS-OTHER> 7,078
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 15,189,945
<PAYABLE-FOR-SECURITIES> 716,198
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 56,978
<TOTAL-LIABILITIES> 773,176
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 14,184,456
<SHARES-COMMON-STOCK> 1,418,321
<SHARES-COMMON-PRIOR> 1,505,578
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (176,974)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 409,287
<NET-ASSETS> 14,416,769
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 824,635
<OTHER-INCOME> 0
<EXPENSES-NET> 70,642
<NET-INVESTMENT-INCOME> 753,993
<REALIZED-GAINS-CURRENT> 11,890
<APPREC-INCREASE-CURRENT> 250,674
<NET-CHANGE-FROM-OPS> 1,016,557
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 753,993
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 536,995
<NUMBER-OF-SHARES-REDEEMED> 641,073
<SHARES-REINVESTED> 16,821
<NET-CHANGE-IN-ASSETS> (637,437)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (188,864)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 77,730
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 396,117
<AVERAGE-NET-ASSETS> 15,471,941
<PER-SHARE-NAV-BEGIN> 10.000
<PER-SHARE-NII> 0.490
<PER-SHARE-GAIN-APPREC> 0.160
<PER-SHARE-DIVIDEND> 0.490
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 10.160
<EXPENSE-RATIO> 0.45
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 01
<NAME> Intermediate Municipal Trust
Federated Intermediate Municipal Trust
<PERIOD-TYPE> 12-mos
<FISCAL-YEAR-END> May-31-1997
<PERIOD-END> May-31-1997
<INVESTMENTS-AT-COST> 220,342,363
<INVESTMENTS-AT-VALUE> 229,154,462
<RECEIVABLES> 7,138,101
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 236,292,563
<PAYABLE-FOR-SECURITIES> 2,057,382
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,729,386
<TOTAL-LIABILITIES> 3,786,768
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 229,417,851
<SHARES-COMMON-STOCK> 22,152,982
<SHARES-COMMON-PRIOR> 20,970,996
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (5,724,155)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 8,812,099
<NET-ASSETS> 232,505,795
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 12,345,367
<OTHER-INCOME> 0
<EXPENSES-NET> 1,241,809
<NET-INVESTMENT-INCOME> 11,103,558
<REALIZED-GAINS-CURRENT> 1,164,828
<APPREC-INCREASE-CURRENT> 866,681
<NET-CHANGE-FROM-OPS> 13,135,067
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 11,103,558
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 7,750,189
<NUMBER-OF-SHARES-REDEEMED> 8,183,995
<SHARES-REINVESTED> 228,984
<NET-CHANGE-IN-ASSETS> 14,111,919
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (13,538,569)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 872,976
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,815,352
<AVERAGE-NET-ASSETS> 219,439,254
<PER-SHARE-NAV-BEGIN> 10.410
<PER-SHARE-NII> 0.530
<PER-SHARE-GAIN-APPREC> 0.090
<PER-SHARE-DIVIDEND> 0.530
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 10.500
<EXPENSE-RATIO> 0.57
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
