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.___32___....................... X
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and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
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Amendment No. __26__............................................. X
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INTERMEDIATE MUNICIPAL TRUST
(Exact Name of Registrant as Specified in Charter)
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7000
(Address of Principal Executive Offices)
(412) 288-1900
(Registrant's Telephone Number)
John W. McGonigle, Esquire
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3779
(Name and Address of Agent for Service)
(Notices should be sent to the Agent for Service)
It is proposed that this filing will become effective:
__ immediately upon filing pursuant to paragraph (b)
X on July 31, 1999 _ 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.
Copies to:
Matthew J. Maloney, Esquire
Dickstein, Shapiro & Morin, L.L.P.
2101 L Street, N.W.
Washington, D.C. 20037
PROSPECTUS
Federated Intermediate Municipal Trust
A Portfolio of Intermediate Municipal Trust
A mutual fund seeking to provide current income exempt from federal regular
income tax by investing in a portfolio of tax-exempt securities with a
dollar-weighted average portfolio maturity of not less than three or more than
ten years.
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus, and any representation to the contrary is a criminal offense.
JULY 31, 1999
CONTENTS
Risk/Return Summary 1
What are the Fund's Fees and Expenses? 3
What are the Fund's Investment Strategies? 4
What are the Principal Securities in Which
the Fund Invests? 5
What are the Specific Risks of Investing in the Fund? 7
What Do Shares Cost? 8
How is the Fund Sold? 8
How to Purchase Shares 9
How to Redeem Shares 10
Account and Share Information 11
Who Manages the Fund? 12
Financial Information 13
Report of Independent Public Accountants 29
Risk/Return Summary
WHAT IS THE FUND'S INVESTMENT OBJECTIVE?
The Fund's investment objective is to provide current income exempt from federal
regular income tax. While there is no assurance that the Fund will achieve its
investment objective, it endeavors to do so by following the strategies and
policies described in this prospectus.
WHAT ARE THE FUND'S MAIN INVESTMENT STRATEGIES?
The Fund pursues its objective by investing at least 80% of its net assets in a
diversified portfolio of tax exempt securities with a dollar-weighted average
portfolio maturity of not less than three or more than ten years. Interest from
the Fund's investments may be subject to the federal alternative minimum tax for
individuals and corporations (AMT). The Fund's portfolio securities will be
investment grade or of comparable quality.
WHAT ARE THE MAIN RISKS OF INVESTING IN THE FUND?
All mutual funds take investment risks. Therefore, it is possible to lose money
by investing in the Fund. The primary factors that may reduce the Fund's returns
include:
* a change in prevailing interest rates;
* defaults or an increase in the risk of defaults on portfolio securities;
* issuer calls of portfolio securities.
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 or
guaranteed by the U.S. government, the Federal Deposit Insurance Corporation,
the Federal Reserve Board, or any other government agency.
RISK/RETURN BAR CHART AND TABLE
[Graphic]
The graphic presentation displayed here consists of a bar chart representing the
annual total returns of the Fund's Shares as of the calendar year-end for each
of 10 years. The `y' axis reflects the "% Total Return" beginning with "-4.00%"
and increasing in increments of 4% up to 12%. The `x' axis represents
calculation periods for the last ten calendar years of the Fund, beginning with
the earliest year. The light gray shaded chart features 10 distinct vertical
bars, each shaded in charcoal, and each visually representing by height the
total return percentages for the calendar year stated directly at its base. The
calculated total return percentage for the Fund's Shares for each calendar year
is stated directly at the top of each respective bar, for the calendar years
1989 through 1998, The percentages noted are: 8.95%, 6.46%, 10.81%, 7.14%,
9.72%, -3.79%, 11.56%, 3.98%, 6.80%, and 5.24%.
The bar chart shows the variability of the Fund's total returns on a calendar
year-end basis.
The Fund's Shares are not sold subject to a sales charge (load). The total
returns displayed above are based upon net asset value.
The Fund's total return from January 1, 1999 to June 30, 1999 was (1.42%).
Within the period shown in the Chart, the Fund's highest quarterly return was
5.06% (quarter ended June 30, 1989). Its lowest quarterly return was (3.85%)
(quarter ended March 31, 1994).
AVERAGE ANNUAL TOTAL RETURN TABLE
The following table represents the Fund's Average Annual Total Returns for the
calendar periods ended December 31, 1998.
The table shows the Fund's total returns averaged over a period of years
relative to the Lehman Brothers 7 Year General Obligation Municipal Bond Index
("LB7YRGOMBI") and the Lipper Intermediate Municipal Debt Funds Average
("LIMDFA"), a broad-based market index. The LB7YRGOMBI is an unmanaged index of
municipal bonds issued after January 1, 1991, with a minimum credit rating of at
least Baa, been issued a part of a deal of at least $50 million, have a maturity
value at least $3 million and a maturity range of four to six years. The LIMDFA
represents the average of the total returns reported by all of the mutual funds
designated by Lipper Analytical Services, Inc. as falling into the respective
category. Total returns for the indexes shown do not reflect sales charges,
expenses, or other fees that the SEC requires to be reflected in the Fund's
performance. Indexes are unmanaged, and it is not possible to invest directly in
an index.
<TABLE>
<CAPTION>
CALENDAR PERIOD FUND LB7YRGOMBI LIMDFA
<S> <C> <C> <C>
1 Year 5.24% 6.36% 5.42%
5 Years 4.65% 5.83% 5.25%
10 Years 6.61% 7.58% 6.95%
</TABLE>
Past performance does not necessarily predict future performance. This
information provides you with historical performance information so that you can
analyze whether the Fund's investment risks are balanced by its potential
rewards.
What are the Fund's Fees and Expenses?
FEDERATED INTERMEDIATE MUNICIPAL TRUST
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
Shares of the Fund.
<TABLE>
<CAPTION>
SHAREHOLDER FEES
<S> <C>
Fees Paid Directly From
Your Investment
Maximum Sales Charge
(Load) Imposed on
Purchases (as a percentage
of offering price) None
Maximum Deferred Sales
Charge (Load) (as a
percentage of original
purchase price or
redemption proceeds, as
applicable) None
Maximum Sales Charge
(Load) Imposed on
Reinvested Dividends (and
other Distributions)
(as a percentage of
offering price) None
Redemption Fee (as a
percentage of amount
redeemed, if applicable) None
Exchange Fee None
ANNUAL FUND OPERATING
EXPENSES (Before Waivers)
1
Expenses That are Deducted
From Fund Assets (as a
percentage of average net
assets)
Management Fee 2 0.40%
Distribution (12b-1) Fee None
Shareholder Services Fee 3 0.25%
Other Expenses 0.17%
Total Annual Fund
Operating Expenses 0.82%
1 Although not contractually obligated to do so, the adviser and the shareholder
services provider waived certain amounts. These are shown below along with the
net expenses the Fund actually paid for the fiscal year ended May 31, 1999.
Total Waivers of Fund
Expense 0.25%
Total Actual Annual Fund
Operating Expenses (after
waivers) 0.57%
2 The management fee for the Fund has been voluntarily waived. This voluntary
waiver can be terminated at any time. The management fee paid by the Fund (after
the voluntary reduction) was 0.34% for the year ended May 31, 1999.
3 The shareholder services fee has been voluntarily waived. This voluntary waiver
can be terminated at any time. The shareholder services fee paid by the Fund
(after the voluntary waiver) was 0.06% for the year ended May 31, 1999.
</TABLE>
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund's
Shares with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund's Shares for the time
periods indicated and then redeem all of your Shares at the end of those
periods. The Example also assumes that your investment has a 5% return each year
and that the Fund's Shares operating expenses are BEFORE WAIVERS as shown in the
table and remain the same. Although your actual costs may be higher or lower,
based on these assumptions your costs would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$84 $262 $455 $1,014
</TABLE>
What are the Fund's Investment Strategies?
The Fund invests at least 80% of its net assets in a portfolio of tax exempt
securities with a dollar-weighted average portfolio maturity of not less than
three or more than ten years. Interest from the Fund's investments may be
subject to AMT. The Fund's portfolio securities will be investment grade or of
comparable quality. The Fund's investment adviser (Adviser) actively manages the
Fund's portfolio, seeking to manage the interest rate risk and credit risk
assumed by the Fund and provide enhanced levels of income.
The Adviser manages interest rate risk by adjusting the duration of its
portfolio. "Duration" measures the sensitivity of a security's price to changes
in interest rates. The greater a portfolio's duration, the greater the change in
the portfolio's value in response to a change in market interest rates. The
Adviser will increase or reduce the Fund's portfolio duration based on its
interest rate outlook. When the Adviser expects interest rates to fall, it will
maintain a longer portfolio duration. When the Adviser expects interest rates to
increase, it will shorten the portfolio duration. The Adviser considers a
variety of factors in formulating its interest rate outlook, including the
following:
* current and expected U.S. economic growth;
* current and expected interest rates and inflation;
* the Federal Reserve's monetary policy; and
* supply and demand factors related to the municipal market and the effect they
may have on the returns offered for various bond maturities.
The Adviser manages credit risk by performing a fundamental credit analysis on
tax exempt securities before the Fund purchases such securities. The Adviser
considers various factors, including the following:
* the economic feasibility of revenue bond financings and general purpose
financings;
* the financial condition of the issuer or guarantor; and
* political developments that may affect credit quality.
The Adviser monitors the credit risks of all securities on an ongoing basis by
reviewing periodic financial data and ratings of nationally recognized ratings
services.
To select securities, the Adviser focuses on several factors. First, it
considers sources available to the issuer for making principal and interest
payments to assess whether the security's risk is commensurate with its
potential return. Second, the Adviser considers the structure of the security;
it seeks securities with favorable structural attributes such as protection
against issuer calls. The Adviser attempts to provide enhanced levels of income,
subject to these considerations and the Fund's maturity, quality and duration
constraints, by purchasing securities offering the highest expected returns. The
Adviser may also allocate investments in sectors of the tax exempt market that
offer the highest return. Finally, the Adviser will invest a portion of the
portfolio in tax exempt securities subject to the alternative minimum tax, which
may offer higher returns.
TEMPORARY DEFENSIVE INVESTMENTS
The Fund may temporarily depart from its principal investment strategies by
investing its assets in securities subject to federal income tax. It may do this
to minimize potential losses and maintain liquidity to meet shareholder
redemptions during adverse market conditions. This may cause the Fund to receive
and distribute taxable income to investors.
What are the Principal Securities in Which the Fund Invests?
TAX EXEMPT SECURITIES
Tax exempt securities are fixed income securities that pay interest that is not
subject to regular federal income taxes. Fixed income securities pay interest
dividends or distributions at a specific rate. The rate may be a fixed
percentage of the principal or adjusted periodically.
Typically, states, counties, cities and other political subdivisions and
authorities issue tax exempt securities. The market categorizes tax exempt
securities by their source of repayment.
GENERAL OBLIGATION BONDS
General obligation bonds are supported by the issuer's power to exact property
or other taxes. The issuer must impose and collect taxes sufficient to pay
principal and interest on the bonds. However, the issuer's authority to impose
additional taxes may be limited by its charter or state law.
SPECIAL REVENUE BONDS
Special revenue bonds are payable solely from specific revenues received by the
issuer such as specific taxes, assessments, tolls or fees. Bondholders may not
collect from the municipality's general taxes or revenues. For example, a
municipality may issue bonds to build a toll road, and pledge the tolls to repay
the bonds. Therefore, a shortfall in the tolls normally would result in a
default on the bonds.
PRIVATE ACTIVITY BONDS
Private activity bonds are special revenue bonds used to finance private
entities. For example, a municipality may issue bonds to finance a new factory
to improve its local economy. The municipality would lend the proceeds from its
bonds to the company using the factory, and the company would agree to make loan
payments sufficient to repay the bonds. The bonds would be payable solely from
the company's loan payments, not from any other revenues of the municipality.
Therefore, any default on the loan normally would result in a default on the
bonds.
The interest on many types of private activity bonds is subject to AMT.
MUNICIPAL LEASES
Municipalities may enter into leases for equipment or facilities. In order to
comply with state public financing laws, these leases are typically subject to
annual appropriation. In other words, a municipality may end a lease, without
penalty, by not providing for the lease payments in its annual budget. After the
lease ends, the lessor can resell the equipment or facility but may lose money
on the sale.
The Fund may invest in securities supported by pools of municipal leases. The
most common type of lease backed securities are certificates of participation
(COPs). However, the Fund may also invest directly in individual leases.
INVERSE FLOATERS
An inverse floater has a floating or variable interest rate that moves in the
opposite direction of market interest rates. When market interest rates go up,
the interest rate paid on the inverse floater goes down; when market rates go
down, the interest rate paid on the inverse floater goes up. Inverse floaters
generally respond more rapidly to market interest rate changes than fixed rate
tax exempt securities. Inverse floaters are subject to interest rate risks and
leverage risks.
ZERO COUPON SECURITIES
Zero coupon securities do not pay interest or principal until final maturity
unlike debt securities that provide periodic payments of interest (referred to
as a coupon payment). Investors buy zero coupon securities at a price below the
amount payable at maturity. The difference between the purchase price and the
amount paid at maturity represents interest on the zero coupon security.
Investors must wait until maturity to receive interest and principal, which
increases the interest rate and credit risks of a zero coupon security.
TAX INCREMENT FINANCING BONDS
Tax increment financing (TIF) bonds are payable from increases in taxes or other
revenues attributable to projects financed by the bonds. For example, a
municipality may issue TIF bonds to redevelop a commercial area. The TIF bonds
would be payable solely from any increase in sales taxes collected from
merchants in the area. The bonds could default if merchants' sales, and related
tax collections, failed to increase as anticipated.
MUNICIPAL NOTES
Municipal notes are short-term tax exempt securities. Many municipalities issue
such notes to fund their current operations before collecting taxes or other
municipal revenues. Municipalities may also issue notes to fund capital projects
prior to issuing long-term bonds. The issuers typically repay the notes at the
end of their fiscal year, either with taxes, other revenues or proceeds from
newly issued notes or bonds.
VARIABLE RATE DEMAND INSTRUMENTS
Variable rate demand instruments are tax exempt securities that require the
issuer or a third party, such as a dealer or bank, to repurchase the security
for its face value upon demand. The securities also pay interest at a variable
rate intended to cause the securities to trade at their face value. The Fund
treats demand instruments as short-term securities, because their variable
interest rate adjusts in response to changes in market rates, even though their
stated maturity may extend beyond 13 months.
CREDIT ENHANCEMENT
Credit enhancement consists of an arrangement in which a company agrees to pay
amounts due on a fixed income security if the issuer defaults. In some cases the
company providing credit enhancement makes all payments directly to the security
holders and receives reimbursement from the issuer. Normally, the credit
enhancer has greater financial resources and liquidity than the issuer. For this
reason, the Adviser usually evaluates the credit risk of a fixed income security
based solely upon its credit enhancement.
SPECIAL TRANSACTIONS
DELAYED DELIVERY TRANSACTIONS
Delayed delivery transactions, including when-issued transactions, are
arrangements in which the Fund buys securities for a set price, with payment and
delivery of the securities scheduled for a future time. During the period
between purchase and settlement, no payment is made by the Fund to the issuer
and no interest accrues to the Fund. The Fund records the transaction when it
agrees to buy the securities and reflects their value in determining the price
of its shares. Settlement dates may be a month or more after entering into these
transactions so that the market values of the securities brought may vary from
the purchase prices. Therefore, delayed delivery transactions create interest
rate risks for the Fund. Delayed delivery transactions also involve credit risks
in the event of a counterparty default.
INVESTMENT RATINGS FOR INVESTMENT GRADE SECURITIES
The Adviser will determine whether a security is investment grade based upon the
credit ratings given by one or more nationally recognized rating services. For
example, Standard and Poor's, a rating service, assigns ratings to investment
grade securities (AAA, AA, A, and BBB) based on their assessment of the
likelihood of the issuer's inability to pay interest or principal (default) when
due on each security. The Fund may invest up to 100% of its assets in securities
rated BBB or unrated, comparable securities. Lower credit ratings correspond to
higher credit risk. If a security has not received a rating, the Fund must rely
entirely upon the Adviser's credit assessment that the security is comparable to
investment grade.
What are the Specific Risks of Investing in the Fund?
INTEREST RATE RISKS
Prices of fixed income securities rise and fall in response to changes in the
interest rate paid by similar securities. Generally, when interest rates rise,
prices of fixed income securities fall. However, market factors, such as the
demand for particular fixed income securities, may cause the price of certain
fixed income securities to fall while the prices of other securities rise or
remain unchanged.
Interest rate changes have a greater effect on the price of fixed income
securities with longer durations. Duration measures the price sensitivity of a
fixed income security to changes in interest rates.
CREDIT RISKS
Credit risk is the possibility that an issuer will default on a security by
failing to pay interest or principal when due. If an issuer defaults, the Fund
will lose money.
Many fixed income securities receive credit ratings from services such as
Standard & Poor's and Moody's Investor Services, Inc. These services assign
ratings to securities by assessing the likelihood of issuer default. Lower
credit ratings correspond to higher credit risk. If a security has not received
a rating, the Fund must rely entirely upon the Adviser's credit assessment.
Credit risk includes the possibility that a party to a transaction involving the
Fund will fail to meet its obligations. This could cause the Fund to lose the
benefit of the transaction or prevent the Fund from selling or buying other
securities to implement its investment strategy.
CALL RISKS
Call risk is the possibility that an issuer may redeem a fixed income security
before maturity (a call) at a price below its current market price. An increase
in the likelihood of a call may reduce the security's price.
If a fixed income security is called, the Fund may have to reinvest the proceeds
in other fixed income securities with lower interest rates, higher credit risks,
or other less favorable characteristics.
SECTOR RISKS
A substantial part of the Fund's portfolio may be comprised of securities credit
enhanced by banks or companies with similar characteristics. As a result, the
Fund will be more susceptible to any economic, business, political, or other
developments which generally affect these issuers.
LEVERAGE RISKS
Leverage risk is created when an investment exposes the Fund to a level of risk
that exceeds the amount invested. Changes in the value of such an investment
magnify the Fund's risk of loss and potential for gain.
Investments can have these same results if their returns are based on a multiple
of a specified index, security, or other benchmark.
What Do Shares Cost?
You can purchase or redeem Shares any day the New York Stock Exchange (NYSE) is
open. When the Fund receives your transaction request in proper form, it is
processed at the next calculated net asset value (NAV). The Fund does not charge
a front-end sales charge. NAV is determined at the end of regular trading
(normally 4:00 p.m. Eastern time) each day the NYSE is open.
The required minimum initial investment for Fund Shares is $25,000. There is no
required minimum subsequent investment amount.
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 is
calculated by combining all accounts it maintains with the Fund. Accounts
established through investment professionals may be subject to a smaller minimum
investment amount. Keep in mind that investment professionals may charge you
fees for their services in connection with your Share transactions.
How is the Fund Sold?
The Fund's Distributor, Federated Securities Corp., markets the Shares described
in this prospectus 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 or to individuals,
directly or through investment professionals. The Fund may not be a suitable
investment for retirement plans.
The Distributor and its affiliates may pay out of their assets other
amounts (including items of material value) to investment professionals
for marketing and servicing Shares. The Distributor is a subsidiary of
Federated Investors, Inc. (Federated).
How to Purchase Shares
You may purchase Shares through an investment professional or directly from the
Fund. The Fund reserves the right to reject any request to purchase Shares.
THROUGH AN INVESTMENT PROFESSIONAL
* Establish an account with the investment professional; and
* Submit your purchase order to the investment professional before the end of
regular trading on the NYSE (normally 4:00 p.m. Eastern time). You will receive
the next calculated NAV if the investment professional forwards the order to the
Fund on the same day and the Fund receives payment within one business day. You
will become the owner of Shares and receive dividends when the Fund receives
your payment.
Investment professionals should send payments according to the instructions in
the sections "By Wire" or "By Check."
DIRECTLY FROM THE FUND
* Establish your account with the Fund by submitting a completed New
Account Form; and
* Send your payment to the Fund by Federal Reserve wire or check.
You will become the owner of Shares and your Shares will be priced at the next
calculated NAV after the Fund receives your wire or your check. If your check
does not clear, your purchase will be canceled and you could be liable for any
losses or fees the Fund or its transfer agent incurs.
An institution may establish an account and place an order by calling the Fund
and the Shares will be priced at the next calculated NAV after the Fund receives
the order.
BY WIRE
Send your wire to:
State Street Bank and Trust Company
Boston, MA
Dollar Amount of Wire
ABA Number 011000028
Attention: EDGEWIRE
Wire Order Number, Dealer Number or Group Number
Nominee/Institution Name
Fund Name and Number and Account Number
You cannot purchase Shares by wire on holidays when wire transfers are
restricted.
BY CHECK
Make your check payable to THE FEDERATED FUNDS, note your account number on the
check, and mail it to:
Federated Shareholder Services Company
P.O. Box 8600
Boston, MA 02266-8600
If you send your check by a PRIVATE COURIER OR OVERNIGHT DELIVERY SERVICE that
requires a street address, mail it to:
Federated Shareholder Services Company
1099 Hingham Street
Rockland, MA 02370-3317
Payment should be made in U.S. dollars and drawn on a U.S. bank. The Fund
will not accept third-party checks (checks originally payable to someone
other than you or The Federated Funds).
BY AUTOMATED CLEARING HOUSE (ACH)
Once you have opened an account, you may purchase additional Shares through a
depository institution that is an ACH member. This purchase option can be
established by completing the appropriate sections of the New Account Form.
How to Redeem Shares
You should redeem Shares:
* through an investment professional if you purchased Shares through an
investment professional; or
* directly from the Fund if you purchased Shares directly from the Fund.
THROUGH AN INVESTMENT PROFESSIONAL
Submit your redemption request to your investment professional by the end of
regular trading on the NYSE (normally 4:00 p.m. Eastern time). The redemption
amount you will receive is based upon the next calculated NAV after the Fund
receives the order from your investment professional.
DIRECTLY FROM THE FUND
BY TELEPHONE
You may redeem Shares by calling the Fund once you have completed the
appropriate authorization form for telephone transactions.
If you call before the end of regular trading on the NYSE (normally 4:00 p.m.
Eastern time) you will receive a redemption amount based on that day's NAV.
BY MAIL
You may redeem Shares by mailing a written request to the Fund.
You will receive a redemption amount based on the next calculated NAV after the
Fund receives your written request in proper form.
Send requests by mail to:
Federated Shareholder Services Company
P.O. Box 8600
Boston, MA 02266-8600
Send requests by PRIVATE COURIER OR OVERNIGHT DELIVERY SERVICE to:
Federated Shareholder Services Company
1099 Hingham Street
Rockland, MA 02370-3317
All requests must include:
* Fund Name and Share Class, account number and account registration;
* amount to be redeemed; and
* signatures of all shareholders exactly as registered.
Call your investment professional or the Fund if you need special instructions.
SIGNATURE GUARANTEES
Signatures must be guaranteed if:
* your redemption will be sent to an address other than the address of
record;
* your redemption will be sent to an address of record that was changed
within the last 30 days; or
* a redemption is payable to someone other than the shareholder(s) of
record.
A signature guarantee is designed to protect your account from fraud. Obtain a
signature guarantee from a bank or trust company, savings association, credit
union or broker, dealer, or securities exchange member. A NOTARY PUBLIC CANNOT
PROVIDE A SIGNATURE GUARANTEE.
PAYMENT METHODS FOR REDEMPTIONS
Your redemption proceeds will be mailed by check to your address of record. The
following payment options are available if you complete the appropriate section
of the New Account Form or an Account Service Options Form. These payment
options require a signature guarantee if they were not established when the
account was opened:
* an electronic transfer to your account at a financial institution that is
an ACH member; or
* wire payment to your account at a domestic commercial bank that is a Federal
Reserve System member.
REDEMPTION IN KIND
Although the Fund intends to pay Share redemptions in cash, it reserves the
right to pay the redemption price in whole or in part by a distribution of the
Fund's portfolio securities.
LIMITATIONS ON REDEMPTION PROCEEDS
Redemption proceeds normally are wired or mailed within one business day after
receiving a request in proper form. Payment may be delayed up to seven days:
* to allow your purchase to clear;
* during periods of market volatility; or
* when a shareholder's trade activity or amount adversely impacts the Fund's
ability to manage its assets.
You will not accrue interest or dividends on uncashed checks from the Fund if
those checks are undeliverable and returned to the Fund.
ADDITIONAL CONDITIONS
TELEPHONE TRANSACTIONS
The Fund will record your telephone instructions. If the Fund does not follow
reasonable procedures, it may be liable for losses due to unauthorized or
fraudulent telephone instructions.
SHARE CERTIFICATES
The Fund no longer issues share certificates. If you are redeeming Shares
represented by certificates previously issued by the Fund, you must return the
certificates with your written redemption request. For your protection, send
your certificates by registered or certified mail, but do not endorse them.
Account and Share Information
CONFIRMATIONS AND ACCOUNT STATEMENTS
You will receive confirmation of purchases and redemptions. In addition, you
will receive periodic statements reporting all account activity, including
dividends and capital gains paid.
DIVIDENDS AND CAPITAL GAINS
The Fund declares any dividends daily and pays them monthly to shareholders. If
you purchase Shares by wire, you begin earning dividends on the day your wire is
received. If you purchase Shares by check, you begin earning dividends on the
business day after the Fund receives your check. In either case, you earn
dividends through the day your redemption request is received.
In addition, the Fund pays any capital gains at least annually. Your dividends
and capital gains distributions will be automatically reinvested in additional
Shares without a sales charge, unless you elect cash payments.
If you purchase Shares just before a Fund declares a capital gain distribution,
you will pay the full price for the Shares and then receive a portion of the
price back in the form of a taxable distribution, whether or not you reinvest
the distribution in Shares. Therefore, you should consider the tax implications
of purchasing Shares shortly before the Fund declares a capital gain. Contact
your investment professional or the Fund for information concerning when
dividends and capital gains will be paid.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, accounts may be
closed if redemptions cause the account balance to fall below the minimum
initial investment amount. Before an account is closed, you will be notified and
allowed 30 days to purchase additional Shares to meet the minimum.
TAX INFORMATION
The Fund sends an annual statement of your account activity to assist you in
completing your federal, state and local tax returns. It is anticipated that
Fund distributions will be primarily dividends that are exempt from federal
income tax, although a portion of the Fund's dividends may not be exempt.
Dividends may be subject to state and local taxes. Capital gains and non-exempt
dividends are taxable whether paid in cash or reinvested in the Fund.
Redemptions are taxable sales. Please consult your tax adviser regarding your
federal, state and local tax liability.
Who Manages the Fund?
The Board of Trustees governs the Fund. The Board selects and oversees the
Adviser, Federated Investment Management Company. The Adviser manages the Fund's
assets, including buying and selling portfolio securities. The Adviser's address
is Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA 15222-3779.
The Adviser and other subsidiaries of Federated advise approximately 175 mutual
funds and separate accounts, which totaled approximately $111 billion in assets
as of December 31, 1998. Federated was established in 1955 and is one of the
largest mutual fund investment managers in the United States with approximately
1,900 employees. More than 4,000 investment professionals make Federated Funds
available to their customers.
THE FUND'S PORTFOLIO MANAGERS ARE:
J. SCOTT ALBRECHT
J. Scott Albrecht has been the Fund's portfolio manager since July 1995. Mr.
Albrecht joined Federated in 1989. He has been a Senior Portfolio Manager since
1997 and a Vice President of Fund's Adviser since 1994. He was a Portfolio
Manager from 1994 to 1996. Mr. Albrecht is a Chartered Financial Analyst and
received his M.S. in Public Management from Carnegie Mellon University.
MARY JO OCHSON
Mary Jo Ochson has been the Fund's portfolio manager since July 1997.
Ms. Ochson joined Federated in 1982 and has been a Senior Portfolio Manager
and a Senior Vice President of the Fund's Adviser since 1996. From 1988
through 1995, Ms. Ochson served as a Portfolio Manager and a Vice President
of the Fund's Adviser. Ms. Ochson is a Chartered Financial Analyst and
received her M.B.A. in Finance from the University of Pittsburgh.
ADVISORY FEES
The Adviser receives an annual investment advisory fee of 0.40% of the Fund's
average daily net assets. The Adviser may voluntarily waive a portion of its fee
or reimburse the Fund for certain operating expenses.
YEAR 2000 READINESS
The "Year 2000" problem is the potential for computer errors or failures because
certain computer systems may be unable to interpret dates after December 31,
1999 or may experience other date-related problems. The Year 2000 problem may
cause systems to process information incorrectly and could disrupt businesses,
such as the Fund, that rely on computers.
While it is impossible to determine in advance all of the risks to the Fund, the
Fund could experience interruptions in basic financial and operational
functions. Fund shareholders could experience errors or disruptions in Fund
share transactions or Fund communications.
The Fund's service providers are making changes to their computer systems to fix
any Year 2000 problems. In addition, they are working to gather information from
third-party providers to determine their Year 2000 readiness.
Year 2000 problems would also increase the risks of the Fund's investments. To
assess the potential effect of the Year 2000 problem, the Adviser is reviewing
information regarding the Year 2000 readiness of issuers of securities the Fund
may purchase.
The financial impact of these issues for the Fund is still being determined.
There can be no assurance that potential Year 2000 problems would not have a
material adverse effect on the Fund.
Financial Information
FINANCIAL HIGHLIGHTS
(R)
The following Financial Highlights will help you understand the Fund's financial
performance for its past five fiscal years. Some of the information is presented
on a per share basis. Total returns represent the rate an investor would have
earned (or lost) on an investment in the Fund, assuming reinvestment of any
dividends and capital gains.
(/R)
This information has been audited by Arthur Andersen LLP, whose report, along
with the Fund's audited financial statements, is included in this prospectus.
Financial Highlights
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED MAY 31 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.69 $10.50 $10.41 $10.55 $10.52
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.51 0.53 0.53 0.53 0.54
Net realized and unrealized gain (loss)
on investments (0.13) 0.19 0.09 (0.14) 0.03
TOTAL FROM INVESTMENT OPERATIONS 0.38 0.72 0.62 0.39 0.57
LESS DISTRIBUTIONS:
Distributions from net investment income (0.51) (0.53) (0.53) (0.53) (0.54)
NET ASSET VALUE, END OF PERIOD $10.56 $10.69 $10.50 $10.41 $10.55
TOTAL RETURN 1 3.59% 6.98% 6.11% 3.78% 5.67%
RATIOS TO AVERAGE NET ASSETS:
Expenses 2 0.82% 0.82% 0.83% 0.81% 0.59%
Net investment income 2 4.51% 4.72% 4.83% 4.81% 5.23%
Expenses (after waivers) 0.57% 0.57% 0.57% 0.57% 0.59%
Net investment income (after waivers) 4.76% 4.97% 5.09% 5.05% 5.23%
SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $243,368 $224,582 $232,506 $218,398 $229,285
Portfolio turnover 34% 35% 33% 19% 11%
</TABLE>
1 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
2 During the period certain fees were voluntarily waived and reimbursed. If such
waivers and reimbursements had not occurred, the ratios would have been as
indicated.
See Notes which are an integral part of the Financial Statements
Portfolio of Investments
MAY 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING 1 VALUE
<S> <C> <C> <C>
LONG-TERM MUNICIPALS-
100.1% 2
ALABAMA-3.7%
$ 1,500,000 Alabama Water PCA, PCR
Bonds, 6.35% (AMBAC INS),
8/15/2001 AAA $ 1,582,365
3,000,000 Birmingham, AL, Refunding
UT GO Bonds (Series 1999A),
5.00%, 4/1/2019 AA 2,935,170
4,665,000 Hoover, AL IDB, Industrial
Development Revenue
Refunding Bonds (Series
1998), 4.95% (Cricket
Development
Co.)/(Protective Life
Corp. GTD), 12/1/2011 NR 4,510,402
TOTAL 9,027,937
ALASKA-3.4%
1,620,000 Alaska Energy Authority,
Power Revenue Refunding
Bonds (Fifth Series),
5.00% (Bradley Lake
Hydroelectric
Project)/(FSA
INS)/(Original Issue
Yield: 5.22%), 7/1/2021 AAA 1,556,075
4,000,000 Alaska State Housing
Finance Corp., General
Mortgage Revenue Bonds
(Series A), 5.65% (MBIA
INS), 12/1/2012 AAA 4,167,560
2,500,000 Alaska State Housing
Finance Corp., Mortgage
Revenue Bonds
(Series 1997 A-1), 5.50%
(Original Issue Yield:
5.531%), 12/1/2017 AAA 2,576,450
TOTAL 8,300,085
ARIZONA-2.1%
3,720,000 Phoenix, AZ, LT GO
Refunding Bonds (Series
1999B), 4.75% (Original
Issue Yield: 4.82%),
7/1/2017 AA+ 3,569,303
1,730,000 Phoenix, AZ, LT GO
Refunding Bonds (Series
1999B), 4.75% (Original
Issue Yield: 4.87%),
7/1/2018 AA+ 1,649,486
TOTAL 5,218,789
CALIFORNIA-5.0%
1,500,000 California Health
Facilities Financing
Authority, Revenue Bonds
(Series 1999A), 5.00%
(Sutter Health)/(Original
Issue Yield: 5.08%),
8/15/2018 AAA 1,459,260
2,300,000 California PCFA, (Series
1996 E) Daily VRDNs
(Pacific Gas &
Electric Co.)/(Morgan
Guaranty Trust Co., New
York LOC) AA+ 2,300,000
5,000,000 California State,
Refunding GO Bonds, 4.50%
(Original Issue
Yield: 4.64%), 10/1/2018 A+ 4,607,500
1,875,000 Los Angeles, CA Department
of Water & Power, Electric
Plant Revenue Bonds, 2nd
Issue, 9.00%, 6/1/2001 A+ 2,064,037
1,770,000 Sierra View Local Health
Care District, CA,
Refunding Revenue Bonds
(Series 1998), 5.00%
(American Capital Access
INS)/(Original Issue
Yield: 5.10%), 7/1/2011 A 1,737,662
TOTAL 12,168,459
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING 1 VALUE
<S> <C> <C> <C>
LONG-TERM MUNICIPALS-
continued 2
COLORADO-0.9%
$ 1,000,000 Colorado HFA, SFM Revenue
Bonds (Series 1997C-3),
6.75%, 5/1/2017 Aa2 $ 1,110,780
1,000,000 Highlands Ranch
Metropolitan District No.
3, CO, UT GO Refunding
Bonds, Series B, 5.125%
(American Capital Access
INS)/(Original Issue
Yield: 5.235%), 12/1/2012 A 988,480
TOTAL 2,099,260
FLORIDA-2.6%
2,000,000 Florida State Board of
Education Administration,
UT GO Capital Outlay Bonds
(Series C), 6.25% (Florida
State), 6/1/2001 AA+ 2,098,300
3,000,000 Florida State Board of
Education Administration,
UT GO Capital Outlay Bonds,
6.00% (Florida State),
6/1/2001 AA+ 3,133,650
970,000 Lee County, FL HFA, SFM
Revenue Bonds (Series
1998A-2), 6.30% (GNMA
Collateralized Home
Mortgage Program COL),
3/1/2029 Aaa 1,072,122
TOTAL 6,304,072
GEORGIA-1.3%
2,000,000 Georgia Municipal Electric
Authority, Revenue Bonds
(Series U), 6.50%,
1/1/2000 A 2,037,540
1,000,000 Georgia Municipal Electric
Authority, Revenue Bonds
(Series U), 6.60%,
1/1/2001 A 1,043,830
TOTAL 3,081,370
HAWAII-2.5%
5,000,000 Hawaii State Highway
Authority, Revenue Bonds,
5.25% (FGIC INS), 7/1/2014 AAA 5,069,050
1,000,000 Hawaii State, UT GO Bonds
(Series BU), 5.85%
(Original Issue
Yield: 5.95%), 11/1/2001 A+ 1,045,570
TOTAL 6,114,620
IDAHO-0.8%
1,100,000 Idaho Housing Agency, SFM
Revenue Bonds, Series D-2
Mezzanine Bonds, 5.50%,
7/1/2018 Aa2 1,109,603
775,000 Idaho Housing Agency, SFM
Revenue Bonds, Series D-2
Subordinate Bonds, 5.25%,
7/1/2011 A1 785,021
TOTAL 1,894,624
ILLINOIS-4.1%
3,000,000 Cook County, IL, Refunding
UT GO Bonds (Series A),
5.00%
(FGIC INS)/(Original Issue
Yield: 5.16%), 11/15/2022 AAA 2,877,930
1,260,000 Illinois Health Facilities
Authority, Revenue
Refunding Bonds (Series
A), 5.70% (Advocate Health
Care Network)/(Original
Issue Yield: 5.75%),
8/15/2011 AA 1,375,618
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING 1 VALUE
<S> <C> <C> <C>
LONG-TERM MUNICIPALS-
continued 2
ILLINOIS-CONTINUED
$ 2,540,000 Illinois Health Facilities
Authority, Revenue
Refunding Bonds (Series
B), 5.70% (Advocate Health
Care Network)/(Original
Issue Yield: 5.75%),
8/15/2011 AA $ 2,656,865
3,000,000 Illinois Municipal
Electric Agency, Power
Supply System Revenue
Bonds (Series A), 6.20%
(AMBAC INS), 2/1/2001 AAA 3,122,610
TOTAL 10,033,023
INDIANA-2.6%
1,400,000 Indiana Health Facility
Financing Authority,
Hospital Revenue Refunding
Bonds, 5.25% (Floyd
Memorial Hospital,
IN)/(Original
Issue Yield: 5.45%),
2/15/2018 A 1,361,682
4,800,000 Indiana Health Facility
Financing Authority,
Hospital Revenue
Bonds (Series 1996A),
5.50% (Clarian Health
Partners, Inc.)/(Original
Issue Yield: 5.65%),
2/15/2010 AA 5,025,792
TOTAL 6,387,474
IOWA-0.8%
2,000,000 Iowa Finance Authority,
Hospital Facilities
Revenue Bonds
(Series 1998A), 5.125%
(Iowa Health System)/(MBIA
INS)/(Original Issue
Yield: 5.15%), 7/1/2013 AAA 1,997,920
KANSAS-1.2%
1,810,000 Sedgwick & Shawnee
Counties, KS, SFM Revenue
Bonds (Series 1997A-2),
5.50% (GNMA Collateralized
Home Mortgage Program
COL), 6/1/2029 Aaa 2,025,535
915,000 Sedgwick County, KS, SFM
Revenue Bonds (Series
1997A-2), 6.50% (GNMA
Collateralized Home
Mortgage Program COL),
12/1/2016 Aaa 990,414
TOTAL 3,015,949
LOUISIANA-0.9%
2,100,000 Louisiana HFA, SFM Revenue
Bonds (Series 1998A),
5.65% (GNMA Collateralized
Home Mortgage Program
COL), 12/1/2029 Aaa 2,124,885
MAINE-1.3%
3,000,000 Maine Municipal Bond Bank,
Revenue Bonds (Series
1997D), 5.35% (AMBAC INS),
11/1/2017 AAA 3,053,370
MASSACHUSETTS-2.4%
5,000,000 Commonwealth of
Massachusetts, LT GO Bonds
(Series 1998B), 4.75%
(MBIA INS)/(Original Issue
Yield: 5.28%), 4/1/2018 AAA 4,745,850
1,210,000 Massachusetts Development
Finance Agency, Resource
Recovery Revenue Bonds
(Series 1998B), 5.35%
(Ogden Haverhill),
12/1/2015 BBB 1,180,355
TOTAL 5,926,205
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING 1 VALUE
<S> <C> <C> <C>
LONG-TERM MUNICIPALS-
continued 2
MICHIGAN-8.4%
$ 1,785,000 Kent County, MI, Airport
Revenue Bonds (Series
1998), 4.90% (Kent County
International
Airport)/(MBIA
INS)/(Original Issue
Yield: 4.93%), 1/1/2014 AAA $ 1,736,144
2,000,000 Michigan State Building
Authority, Revenue Bonds
(Series II), 6.25% (AMBAC
INS)/(Original Issue
Yield: 6.35%), 10/1/2000 AAA 2,074,840
4,000,000 Michigan State Hospital
Finance Authority, Revenue
& Refunding Bonds (Series
1998A), 5.10% (McLaren
Health Care
Corp.)/(Original Issue
Yield: 5.15%), 6/1/2013 A1 3,928,920
3,705,000 Michigan State Housing
Development Authority,
(Series B) Rental Housing
Revenue Bonds, 5.65%,
10/1/2007 AAA 3,967,610
3,605,000 Michigan State Housing
Development Authority,
(Series B) Rental Housing
Revenue Bonds, 5.65%,
(MBIA INS), 4/1/2007 AAA 3,856,485
2,000,000 Petoskey, MI Hospital
Finance Authority, Limited
Obligation Revenue &
Refunding Bonds, 5.00%
(Northern Michigan
Hospital Obligated
Group)/(MBIA
INS)/(Original Issue
Yield: 5.22%), 11/15/2018 AAA 1,919,440
1,000,000 Royal Oak, MI Hospital
Finance Authority, Revenue
Refunding Bonds, 7.40%
(William Beaumont
Hospital, MI), 1/1/2000 AAA 1,041,020
2,000,000 Wayne County, MI, Airport
Revenue Bonds (Series
1998A), 5.00% (Detroit
Metropolitan Wayne County
Airport)/(MBIA
INS)/(Original Issue
Yield: 5.29%), 12/1/2019 AAA 1,907,480
TOTAL 20,431,939
MISSOURI-5.5%
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 5,458,000
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 5,534,450
1,000,000 Missouri State HEFA,
Health Facilities Revenue
Bonds, Series 1998, 5.10%
(Lake of the Ozarks General
Hospital, Inc.)/(Original
Issue Yield: 5.28%),
2/15/2018 AA 967,950
1,465,000 Missouri State Housing
Development Commission,
SFM Loan Revenue Bonds
(Series 1998B), 5.20%,
9/1/2012 AAA 1,476,031
TOTAL 13,436,431
NEVADA-1.2%
1,000,000 Clark County, NV School
District, LT GO Bonds
(Series A), 9.75% (MBIA
INS), 6/1/2000 AAA 1,062,520
2,000,000 Reno, NV, Hospital Revenue
Bonds (Series 1998A),
5.00% (St. Mary's Regional
Medical Center)/(MBIA
INS)/(Original Issue
Yield: 5.24%), 5/15/2018 AAA 1,920,640
TOTAL 2,983,160
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING 1 VALUE
<S> <C> <C> <C>
LONG-TERM MUNICIPALS-
continued 2
NEW HAMPSHIRE-2.6%
$ 2,805,000 New Hampshire Higher
Educational & Health
Facilities Authority,
Revenue Bonds (Series
1998), 5.125% (Franklin
Pierce College)/ (American
Capital Access
INS)/(Original Issue
Yield: 5.25%), 10/1/2013 A $ 2,776,726
1,000,000 New Hampshire Higher
Educational & Health
Facilities Authority,
Revenue Bonds (Series
1998), 5.25% (Franklin
Pierce College)/ (American
Capital Access
INS)/(Original Issue
Yield: 5.42%), 10/1/2018 A 973,280
2,555,000 New Hampshire State, UT GO
Bonds (Series A), 6.40%,
6/15/2001 AA+ 2,686,506
TOTAL 6,436,512
NEW JERSEY-1.3%
3,000,000 Essex County, NJ, General Improvement UT GO Bonds, 5.00%
(AMBAC INS),
8/1/2009 AAA 3,100,140
NEW YORK-10.5%
5,000,000 Municipal Assistance Corp
of New York, Revenue Bonds
(Series 1999O), 5.25%,
7/1/2007 AA 5,274,300
4,000,000 New York City, NY,
Subseries A-10 Daily VRDNs
(Morgan Guaranty Trust
Co., New York LOC) AAA 4,000,000
2,000,000 New York City, NY, UT GO
Bonds (Series 1999H),
5.25%, 3/15/2013 A- 2,027,080
3,000,000 New York City, NY, UT GO
Bonds (Series C), 5.00%
(Original Issue Yield:
5.26%), 8/15/2022 A- 2,874,570
2,500,000 New York State Environmental Facilities Corp., State Water
Pollution Control Bonds (Series 1994E), 6.15% (Original Issue
Yield:
6.25%), 6/15/2004 AA- 2,726,125
4,000,000 New York State Thruway
Authority, Highway &
Bridge Fund Revenue Bonds
(Series B), 5.625% (FGIC
INS)/ (Original Issue
Yield: 5.75%), 4/1/2005 AAA 4,291,240
2,160,000 St. Lawrence County, NY
IDA, Civic Facility
Revenue Bonds
(Series 1990) Weekly VRDNs
(Clarkson
University)/(Sumitomo
Bank Ltd., Osaka LOC) NR 2,160,000
1,250,000 Suffolk County, NY IDA,
IDRB (Series 1998), 5.30%
(Nissequogue Cogen
Partners
Facility)/(Original Issue
Yield: 5.325%), 1/1/2013 NR 1,249,337
1,000,000 Triborough Bridge & Tunnel
Authority, NY, Revenue
Bonds (Series S), 6.625%
(Original Issue Yield:
6.70%), 1/1/2001 A+ 1,044,530
TOTAL 25,647,182
NORTH CAROLINA-5.0%
2,080,000 Charlotte-Mecklenburg
Hospital Authority, NC,
Refunding Revenue Bonds,
5.90% (Original Issue
Yield: 5.95%), 1/1/2002 AA 2,178,322
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING 1 VALUE
<S> <C> <C> <C>
LONG-TERM MUNICIPALS-
continued 2
NORTH CAROLINA-CONTINUED
$ 1,275,000 Charlotte-Mecklenburg
Hospital Authority, NC,
Refunding Revenue Bonds,
5.90% (Original Issue
Yield: 5.95%), 1/1/2002 AA $ 1,338,355
2,000,000 North Carolina Municipal
Power Agency No. 1, Catawba
Electric Revenue Refunding
Bonds, 6.00% (Original
Issue Yield: 6.05%),
1/1/2004 A- 2,129,500
2,000,000 North Carolina Municipal
Power Agency No. 1, Catawba
Electric Revenue Refunding
Bonds, 7.25%, 1/1/2007 A- 2,311,320
4,100,000 Wake County, NC Industrial
Facilities & PCFA, (Series
1990B)
Daily VRDNs (Carolina
Power & Light Co.)/(Bank of
New York,
New York LOC) AA- 4,100,000
TOTAL 12,057,497
NORTH DAKOTA-0.5%
1,100,000 Grand Forks, ND, Health
Care System Revenue Bonds
(Series 1997), 5.40%
(Altru Health System
Obligated Group)/(MBIA
INS)/(Original Issue
Yield: 5.50%), 8/15/2011 AAA 1,134,859
OHIO-2.0%
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 3,412,292
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 1,464,064
TOTAL 4,876,356
PENNSYLVANIA-8.4%
1,860,000 3 Allegheny County, PA, UT GO
Bonds (Series C-49),
5.00%, 4/1/2004 AAA 1,896,865
1,500,000 3 Allegheny County, PA, UT GO
Bonds (Series C-49),
5.00%, 4/1/2009 AAA 1,512,525
1,200,000 1 Erie County, PA Hospital
Authority Weekly VRDNs
(St. Vincent Health
System)/(Mellon Bank N.A.,
Pittsburgh LOC) A 1,200,000
1,000,000 New Wilmington, PA
Municipal Authority,
College Revenue Bonds,
5.30% (Westminister
College)/(Original Issue
Yield: 5.40%), 3/1/2018 Baa1 974,980
4,000,000 Pennsylvania
Intergovernmental Coop
Authority, Special Tax
Revenue Refunding Bonds
(Series 1999), 5.00%,
6/15/2007 AAA 4,140,520
5,000,000 Philadelphia, PA Hospitals
& Higher Education
Facilities Authority,
Health System Revenue
Bonds (Series 1997A),
5.00% (Jefferson Health
System)/(Original Issue
Yield: 5.40%), 5/15/2012 AA- 4,959,900
2,000,000 Philadelphia Authority for
Industrial Development,
Airport Revenue Bonds,
(Series 1998A), 5.00%
(Philadelphia Airport
System)/(FGIC
INS)/(Original Issue
Yield: 5.25%), 7/1/2015 AAA 1,951,340
2,135,000 Pittsburgh, PA Auditorium
Authority, Regional Asset
District Sales Tax Revenue
Bonds (Series 1999), 5.00%
(AMBAC INS), 2/1/2011 AAA 2,155,795
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING 1 VALUE
<S> <C> <C> <C>
LONG-TERM MUNICIPALS-
continued 2
PENNSYLVANIA-CONTINUED
$ 1,500,000 Pittsburgh, PA Auditorium
Authority, Regional Asset
District Sales Tax Revenue
Bonds (Series 1999), 5.25%
(AMBAC INS), 2/1/2012 AAA $ 1,538,805
TOTAL 20,330,730
TEXAS-9.7%
4,000,000 Garland, TX, LT GO Bonds,
5.80% (Original Issue
Yield: 5.90%), 8/15/2001 AA 4,172,840
2,850,000 Harrison County, TX Health
Facilities Development
Corp., Hospital Revenue
Bonds (Series 1998), 5.50%
(Marshall Regional Medical
Center)/(American Capital
Access INS)/(Original
Issue Yield: 5.52%),
1/1/2018 A 2,855,501
4,500,000 Houston, TX Independent
School District, LT GO
Bonds, 8.375%, 8/15/2000 AAA 4,765,815
1,475,000 San Antonio, TX, UT GO
General Improvement Bonds,
8.625%, 8/1/2000 AA+ 1,562,615
3,760,000 Texas State Department of
Housing & Community
Affairs, SFM Revenue Bonds
(Series B), 5.45% (MBIA
INS), 3/1/2019 AAA 3,860,166
6,000,000 Texas Water Development
Board, State Revolving
Fund Sr. Lien Revenue
Bonds, 5.80% (Original
Issue Yield: 5.90%),
7/15/2002 AAA 6,333,480
TOTAL 23,550,417
WASHINGTON-9.4%
1,020,000 Seattle, WA, LT GO
Refunding Bonds, 6.00%
(Original Issue
Yield: 6.10%), 3/1/2002 AA+ 1,075,294
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 1,618,860
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 4,655,700
2,335,000 Washington Health Care
Facilities Authority,
Revenue Bonds, 5.25%
(Highline Community
Hospital)/(Asset Guaranty
INS)/(Original Issue
Yield: 5.30%), 8/15/2017 AA 2,298,504
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING 1 VALUE
<S> <C> <C> <C>
LONG-TERM MUNICIPALS-
continued 2
WASHINGTON-CONTINUED
$ 3,000,000 Washington State Public
Power Supply System,
(Nuclear Project No. 3)
Refunding & Revenue Bonds
(Series B), 5.70%
(Original Issue
Yield: 5.793%), 7/1/2010 AA- $ 3,129,270
5,250,000 Washington State, UT GO
Bonds (Series 1997E),
5.00% (Original Issue
Yield: 5.375%), 7/1/2022 AA+ 5,038,005
5,000,000 Washington State, Various
Purpose UT GO Bonds (Series
1999B), 5.00%, 1/1/2013 AA+ 5,009,200
TOTAL 22,824,833
TOTAL INVESTMENTS
(IDENTIFIED COST
$238,963,985) 4 $ 243,558,098
</TABLE>
1 Please refer to the Appendix of the Statement of Additional Information for an
explanation of the credit ratings. Current credit ratings are unaudited.
2 At May 31, 1999, 7.8% of the total investments at market value were subject to
alternative minimum tax.
3 This security was purchased on a when-issued basis.
4 The cost of investments for federal tax purposes amounts to $238,963,985. The
net unrealized appreciation of investments on a federal tax basis amounts to
$4,594,113 which is comprised of $6,519,817 appreciation and $1,925,704
depreciation at May 31, 1999.
Note: The categories of investments are shown as a percentage of net assets
($243,367,922) at May 31, 1999.
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 GTD -Guaranty
HEFA -Health and Education Facilities Authority HFA -Housing Finance Authority
IDA -Industrial Development Authority IDB -Industrial Development Bond IDRB
- -Industrial Development Revenue Bonds INS -Insured LOC -Letter of Credit LT
- -Limited Tax MBIA -Municipal Bond Investors Assurance PCA -Pollution Control
Authority PCR -Pollution Control Revenue PCFA -Pollution Control Finance
Authority SFM -Single Family Mortgage UT -Unlimited Tax VRDNs -Variable Rate
Demand Notes
See Notes which are an
integral part of the
Financial Statements
Statement of Assets and Liabilities
MAY 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Total investments in
securities, at value
(identified and tax cost
$238,963,985) $ 243,558,098
Cash 76,042
Income receivable 3,820,301
Receivable for shares sold 146,405
TOTAL ASSETS 247,600,846
LIABILITIES:
Payable for investments
purchased $ 3,440,508
Payable for shares
redeemed 110,297
Income distribution
payable 662,209
Accrued expenses 19,910
TOTAL LIABILITIES 4,232,924
Net assets for 23,053,699
shares outstanding $ 243,367,922
NET ASSETS CONSIST OF:
Paid in capital $ 239,340,683
Net unrealized
appreciation of
investments 4,594,113
Accumulated net realized
loss on investments (566,874)
TOTAL NET ASSETS $ 243,367,922
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PROCEEDS PER SHARE:
$243,367,922 / 23,053,699
shares outstanding $10.56
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Operations
YEAR ENDED MAY 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 12,562,174
EXPENSES:
Investment advisory fee $ 943,188
Administrative personnel
and services fee 177,791
Custodian fees 22,230
Transfer and dividend
disbursing agent fees and
expenses 43,940
Directors'/Trustees' fees 13,746
Auditing fees 14,635
Legal fees 3,008
Portfolio accounting fees 62,824
Shareholder services fee 589,492
Share registration costs 20,619
Printing and postage 19,986
Insurance premiums 2,219
Taxes 75
Miscellaneous 5,517
TOTAL EXPENSES 1,919,270
WAIVERS:
Waiver of investment
advisory fee $ (129,436)
Waiver of shareholder
services fee (448,014)
TOTAL WAIVERS (577,450)
Net expenses 1,341,820
Net investment income 11,220,354
REALIZED AND UNREALIZED
GAIN (LOSS) ON
INVESTMENTS:
Net realized gain on
investments 3,035,974
Net change in unrealized
appreciation of
investments (6,084,113)
Net realized and
unrealized loss on
investments (3,048,139)
Change in net assets
resulting from operations $ 8,172,215
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
YEAR ENDED MAY 31 1999 1998
<S> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net investment income $ 11,220,354 $ 10,907,474
Net realized gain on
investments ($3,035,974
and $2,288,603,
respectively, as computed
for federal tax purposes) 3,035,974 2,288,603
Net change in unrealized
appreciation (6,084,113) 1,866,127
CHANGE IN NET ASSETS
RESULTING FROM OPERATIONS 8,172,215 15,062,204
DISTRIBUTIONS TO
SHAREHOLDERS:
Distributions from net
investment income (11,220,354) (10,907,474 )
SHARE TRANSACTIONS:
Proceeds from sale of
shares 140,583,646 142,380,191
Net asset value of shares
issued to shareholders in
payment of
distributions declared 3,325,538 2,674,464
Cost of shares redeemed (122,075,316) (157,132,987 )
CHANGE IN NET ASSETS
RESULTING FROM SHARE
TRANSACTIONS 21,833,868 (12,078,332)
Change in net assets 18,785,729 (7,923,602)
NET ASSETS:
Beginning of period 224,582,193 232,505,795
End of period $ 243,367,922 $ 224,582,193
</TABLE>
See Notes which are an integral part of the Financial Statements
Notes to Financial Statements
MAY 31, 1999
ORGANIZATION
Intermediate Municipal Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "Act"), as an open-end management
investment company. The Trust consists of one portfolio. The financial
statements included herein are only those of Federated Intermediate Municipal
Trust (the "Fund"), a diversified portfolio. The investment objective of the
Fund is to provide current income exempt from federal regular income tax.
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, 1999, the Fund, for federal tax purposes, had a capital loss
carryforward of $566,874, 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:
<TABLE>
<CAPTION>
EXPIRATION YEAR EXPIRATION AMOUNT
<S> <C>
2004 $566,874
</TABLE>
During the year, $167,296 was reclassified from accumulated net realized loss to
paid-in capital to comply with the Code.
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 Board of Trustees (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 1999 1998
<S> <C> <C>
Shares sold 13,101,446 13,361,560
Shares issued to
shareholders in payment of
distributions declared 309,954 250,950
Shares redeemed (11,372,404) (14,750,789)
NET CHANGE RESULTING FROM
SHARE TRANSACTIONS 2,038,996 (1,138,279)
</TABLE>
INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE
Federated Investment Management Company, 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, Inc. 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 Company ("FSSC"), the Fund will pay FSSC up to 0.25% of average daily
net assets of the Fund shares for the period. The fee paid to FSSC is used to
finance certain services for shareholders and to maintain shareholder accounts.
FSSC may voluntarily choose to waive any portion of its fee. FSSC 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 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 period ended May 31, 1999, 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 $167,685,000 and $189,855,000,
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, 1999, were as follows:
<TABLE>
<CAPTION>
<S> <C>
Purchases $ 99,941,705
Sales $ 77,222,297
</TABLE>
YEAR 2000 (UNAUDITED)
Similar to other financial organizations, the Fund could be adversely affected
if the computer systems used by the Fund's service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. The Fund's Adviser and administrator are taking measures that they
believe are reasonably designed to address the Year 2000 issue with respect to
computer systems that they use and to obtain reasonable assurances that
comparable steps are being taken by each of the Fund's other service providers.
At this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact to the Fund.
CHANGE OF INDEPENDENT AUDITORS
On May 19, 1999, the Trust's Board of Trustees, upon the recommendation of the
Audit Committee of the Board of Trustees, requested and subsequently accepted
the resignation of Arthur Andersen LLP ("AA") as the Trust's independent
auditors. AA's reports on the Trust's financial statements for the fiscal years
ended May 31, 1998, and May 31, 1999, contained no adverse opinion or disclaimer
of opinion nor were they qualified or modified as to uncertainty, audit scope or
accounting principles. During the Trust's fiscal years ended May 31, 1998, and
May 31, 1999, (i) there were no disagreements with AA on any matter of
accounting principles or practices, financial statement disclosure or auditing
scope or procedure, which disagreements, if not resolved to the satisfaction of
AA, would have caused it to make reference to the subject matter of the
disagreements in connection with its reports on the financial statements for
such years; and (ii) there were no reportable events of the kind described in
Item 304(a)(1)(v) of Regulation S-K under the Securities Act of 1934, as
amended.
The Trust, by action of its Board of Trustees, upon the recommendation of the
Audit Committee of the Board, has engaged Ernst & Young LLP ("E&Y") as the
independent auditors to audit the Trust's financial statements for the fiscal
year ending May 31, 2000. During the Trust's fiscal years ended May 31, 1998,
and May 31, 1999, neither the Trust nor anyone on its behalf has consulted E&Y
on items which (i) concerned the application of accounting principles to a
specified transaction, either completed or proposed, or the type of audit
opinion that might be rendered on the Trust's financial statements or (ii)
concerned the subject of a disagreement (as defined in paragraph (a)(1)(iv) of
Item 304 of Regulation S-K) of reportable events (as described in paragraph
(a)(1)(v) of said Item 304).
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 investments, as of May 31, 1999, the related statement of operations
for the year then ended, the statement of changes in net assets for each of the
two years in the period then ended, and the financial highlights 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 audit 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, 1999, 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, 1999, 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 its financial highlights for the periods presented, in
conformity with generally accepted accounting principles.
Arthur Andersen LLP
Boston, Massachusetts
July 15, 1999
[Graphic]
Federated
World-Class Investment Manager
PROSPECTUS
Federated Intermediate Municipal Trust
A Portfolio of Intermediate Municipal Trust
JULY 31, 1999
A Statement of Additional Information (SAI) dated July 31, 1999, is incorporated
by reference into this prospectus. Additional information about the Fund's
investments is contained in the Fund's Annual and SemiAnnual reports to
shareholders as they become available. The Annual Report discusses market
conditions and investment strategies that significantly affected the Fund's
performance during its last fiscal year. To obtain the SAI, the Annual Report,
the Semi-Annual Report and other information without charge, and make inquiries,
call your investment professional or the Fund at 1-800-341-7400.
You can obtain information about the Fund (including the SAI) by visiting or
writing the Public Reference Room of the Securities and Exchange Commission in
Washington, DC 20549-6009 or from the Commission's Internet site at
http://www.sec.gov. You can call 1-800-SEC-0330 for information on the Public
Reference Room's operations and copying charges.
[Graphic]
Federated
Federated Intermediate Municipal Trust
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
1-800-341-7400
WWW.FEDERATEDINVESTORS.COM
Federated Securities Corp., Distributor
Investment Company Act File No. 811-4314
Cusip 458810108
8061702A-IS (7/99)
[Graphic]
STATEMENT OF ADDITIONAL INFORMATION
Federated Intermediate Municipal Trust
A Portfolio of Intermediate Municipal Trust
This Statement of Additional Information (SAI) is not a prospectus. Read this
SAI in conjunction with the prospectus for Federated Intermediate Municipal
Trust (Fund), dated July 31, 1999. Obtain the prospectus without charge by
calling 1-800-341-7400.
JULY 31, 1999
[Graphic]
Federated
World-Class Investment Manager
Federated Intermediate Municipal Trust
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
1-800-341-7400
WWW.FEDERATEDINVESTORS.COM
Federated Securities Corp., Distributor
8061702B (7/99)
[Graphic]
CONTENTS
How is the Fund Organized? 1
Securities in Which the Fund Invests 1
What Do Shares Cost? 4
How is the Fund Sold? 4
Subaccounting Services 5
Redemption in Kind 5
Massachusetts Partnership Law 5
Account and Share Information 5
Tax Information 5
Who Manages and Provides Services to the Fund? 6
How Does the Fund Measure Performance? 9
Who is Federated Investors, Inc.? 11
Investment Ratings 13
Addresses 16
How is the Fund Organized?
The Fund is a diversified portfolio of Intermediate Municipal Trust (Trust). The
Trust is an open-end, management investment company that was established under
the laws of the Commonwealth of Massachusetts on May 31, 1985. The Trust may
offer separate series of shares representing interests in separate portfolios of
securities. The Trust's investment adviser is Federated Investment Management
Company (Adviser). Effective March 31, 1999, Federated Management, former
Adviser to the Fund, became Federated Investment Management Company (formerly,
Federated Advisers).
Securities in Which the Fund Invests
In pursuing its investment strategy, the Fund may invest in the following
securities in addition to those described in the prospectus, for any purpose
that is consistent with its investment objective.
SECURITIES DESCRIPTIONS AND TECHNIQUES
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES
The Fund may invest its assets in securities of other investment companies as an
efficient means of carrying out its investment policies. It should be noted that
investment companies incur certain expenses, such as management fees, and,
therefore, any investment by the Fund in shares of other investment companies
may be subject to such duplicate expenses. At the present time, the Fund expects
that its investments in other investment companies will be limited to shares of
money market funds including funds affiliated with the Fund's Adviser.
DERIVATIVE CONTRACTS
Derivative contracts are financial instruments that require payments based upon
changes in the values of designated (or underlying) securities, currencies,
commodities, financial indices or other assets. Some derivative contracts (such
as futures, forwards and options) require payments relating to a future trade
involving the underlying asset. Other derivative contracts (such as swaps)
require payments relating to the income or returns from the underlying asset.
The other party to a derivative contract is referred to as a counterparty.
Many derivative contracts are traded on securities or commodities exchanges. In
this case, the exchange sets all the terms of the contract except for the price.
Investors make payments due under their contracts through the exchange. Most
exchanges require investors to maintain margin accounts through their brokers to
cover their potential obligations to the exchange. Parties to the contract make
(or collect) daily payments to the margin accounts to reflect losses (or gains)
in the value of their contracts. This protects investors against potential
defaults by the counterparty. Trading contracts on an exchange also allows
investors to close out their contracts by entering into offsetting contracts.
For example, the Fund could close out an open contract to buy an asset at a
future date by entering into an offsetting contract to sell the same asset on
the same date. If the offsetting sale price is more than the original purchase
price, the Fund realizes a gain; if it is less, the Fund realizes a loss.
Exchanges may limit the amount of open contracts permitted at any one time. Such
limits may prevent the Fund from closing out a position. If this happens, the
Fund will be required to keep the contract open (even if it is losing money on
the contract), and to make any payments required under the contract (even if it
has to sell portfolio securities at unfavorable prices to do so). Inability to
close out a contract could also harm the Fund by preventing it from disposing of
or trading any assets it has been using to secure its obligations under the
contract.
Depending upon how the Fund uses derivative contracts and the relationships
between the market value of a derivative contract and the underlying asset,
derivative contracts may increase or decrease the Fund's exposure to interest
rate risks, and may also expose the Fund to liquidity and leverage risks.
The Fund may trade in the following types of derivative contracts.
FUTURES CONTRACTS
Futures contracts provide for the future sale by one party and purchase by
another party of a specified amount of an underlying asset at a specified price,
date, and time. Entering into a contract to buy an underlying asset is commonly
referred to as buying a contract or holding a long position in the asset.
Entering into a contract to sell an underlying asset is commonly referred to as
selling a contract or holding a short position in the asset. Futures contracts
are considered to be commodity contracts.
The Fund may buy and sell interest rate and index financial futures contracts.
SPECIAL TRANSACTIONS
REPURCHASE AGREEMENTS
Repurchase agreements are transactions in which the Fund buys a security from a
dealer or bank and agrees to sell the security back at a mutually agreed upon
time and price. The repurchase price exceeds the sale price, reflecting the
Fund's return on the transaction. This return is unrelated to the interest rate
on the underlying security. The Fund will enter into repurchase agreements only
with banks and other recognized financial institutions, such as securities
dealers, deemed creditworthy by the Adviser.
The Fund's custodian or subcustodian will take possession of the securities
subject to repurchase agreements. The Adviser or subcustodian will monitor the
value of the underlying security each day to ensure that the value of the
security always equals or exceeds the repurchase price.
Repurchase agreements are subject to credit risks.
ASSET COVERAGE
In order to secure its obligations in connection with derivatives contracts or
special transactions, the Fund will either own the underlying assets, enter into
an offsetting transaction or set aside readily marketable securities with a
value that equals or exceeds the Fund's obligations. Unless the Fund has other
readily marketable assets to set aside, it cannot trade assets used to secure
such obligations without entering into an offsetting derivative contract or
terminating a special transaction. This may cause the Fund to miss favorable
trading opportunities or to realize losses on derivative contracts or special
transactions.
TEMPORARY DEFENSIVE INVESTMENTS
The Fund may make temporary defensive investments in the following types of
securities.
BANK INSTRUMENTS
Bank instruments are unsecured interest bearing deposits with banks. Bank
instruments include bank accounts, time deposits, certificates of deposit
and banker's acceptances. Yankee instruments are denominated in
U.S. dollars and issued by U.S. branches of foreign banks. Eurodollar
instruments are denominated in U.S. dollars and issued by non-
U.S. branches of U.S. or foreign banks.
TREASURY SECURITIES
Treasury securities are direct obligations of the federal government of the
United States. Treasury securities are generally regarded as having the lowest
credit risks.
AGENCY SECURITIES
Agency securities are issued or guaranteed by a federal agency or other
government sponsored entity acting under federal authority (a GSE). The United
States supports some GSEs with its full faith and credit. Other GSEs receive
support through federal subsidies, loans or other benefits. A few GSEs have no
explicit financial support, but are regarded as having implied support because
the federal government sponsors their activities. Agency securities are
generally regarded as having low credit risks, but not as low as treasury
securities.
COMMERCIAL PAPER
Commercial paper is an issuer's obligation with a maturity of less than nine
months. Companies typically issue commercial paper to pay for current
expenditures. Most issuers constantly reissue their commercial paper and use the
proceeds (or bank loans) to repay maturing paper. If the issuer cannot continue
to obtain liquidity in this fashion, its commercial paper may default.
INVESTMENT RISKS
There are many factors which may affect an investment in the Fund. The Fund's
principal risks are described in its prospectus. Additional risk factors are
outlined below.
LIQUIDITY RISKS
Trading opportunities are more limited for fixed income securities that have not
received any credit ratings or are not widely held. Liquidity risks also refers
to the possibility that the Fund may not be able to sell a security or close out
a derivative contract when it wants to. If this happens, the Fund will be
required to continue to hold the security or keep the position open, and the
Fund could incur losses.
TAX RISKS
In order to be tax-exempt, municipal securities must meet certain legal
requirements. Failure to meet such requirements may cause the interest received
and distributed by the Fund to shareholders to be taxable.
Changes or proposed changes in federal tax laws may cause the prices of
municipal securities to fall.
FUNDAMENTAL INVESTMENT POLICIES
The Fund pursues its investment objective by investing at least 80% of its net
assets in a diversified portfolio of municipal securities with an average
weighted maturity of not less than three nor more than ten years.
INVESTMENT LIMITATIONS
DIVERSIFICATION OF INVESTMENTS
With respect to securities comprising 75% of the value of its total assets, the
Fund will not purchase securities of any one issuer (other than cash, cash
items, securities issued or guaranteed by the government of the United States or
its agencies or instrumentalities and repurchase agreements collateralized by
such U.S. government securities, and securities of other investment companies)
if as a result more than 5% of the value of its total assets would be invested
in the securities of that issuer, or it would own more than 10% of the
outstanding voting securities of that issuer.
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.
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
The Fund will not purchase or sell commodities or commodity contracts.
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.
The above limitations cannot be changed unless authorized by the Board and by
the "vote of a majority of its outstanding voting securities," as defined by the
Investment Company Act. The following limitations, however, may be changed by
the Board without shareholder approval. Shareholders will be notified before any
material change in these limitations becomes effective.
ACQUIRING SECURITIES
The Fund will not acquire the voting securities of any issuer for the purpose of
exercising control.
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.
CONCENTRATION OF INVESTMENTS
The Fund will not invest 25% or more of its total assets in any one industry.
However, investing in U.S. government securities and domestic bank instruments
shall not be considered investments in any one industry.
Under the diversification 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.
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."
DETERMINING MARKET VALUE OF SECURITIES
Market values of the Fund's portfolio securities are determined as follows:
* for bonds and other fixed income securities, at the last sale price on a
national securities exchange, if available, otherwise, as determined by an
independent pricing service;
* futures contracts and options are valued at market values established by the
exchanges on which they are traded at the close of trading on such exchanges.
Options traded in the over-the-counter market are valued according to the mean
between the last bid and the last asked price for the option as provided by an
investment dealer or other financial institution that deals in the option. The
Board may determine in good faith that another method of valuing such
investments is necessary to appraise their fair market value;
* for short-term obligations, according to the mean between bid and asked prices
as furnished by an independent pricing service, except that short-term
obligations with remaining maturities of less than 60 days at the time of
purchase may be valued at amortized cost or at fair market value as determined
in good faith by the Board; and
* for all other securities at fair value as determined in good faith by the
Board.
* Prices provided by independent pricing services may be determined without
relying exclusively on quoted prices and may consider institutional trading in
similar groups of securities, yield, quality, stability, risk, coupon rate,
maturity, type of issue, trading characteristics, and other market data or
factors. From time to time, when prices cannot be obtained from an independent
pricing service, securities may be valued based on quotes from broker-dealers or
other financial institutions that trade the securities.
What Do Shares Cost?
The Fund's net asset value (NAV) per Share fluctuates and is based on the market
value of all securities and other assets of the Fund.
How is the Fund Sold?
Under the Distributor's Contract with the Fund, the Distributor (Federated
Securities Corp.) offers Shares on a continuous, best-efforts basis.
SHAREHOLDER SERVICES
The Fund may pay Federated Shareholder Services Company, a subsidiary of
Federated Investors, Inc. (Federated), for providing shareholder services and
maintaining shareholder accounts. Federated Shareholder Services Company may
select others to perform these services for their customers and may pay them
fees.
SUPPLEMENTAL PAYMENTS
Investment professionals may be paid fees out of the assets of the Distributor
and/or Federated Shareholder Services Company (but not out of Fund assets). The
Distributor and/or Federated Shareholder Services Company may be reimbursed by
the Adviser or its affiliates.
Investment professionals receive such fees for providing distribution- related
or shareholder services such as sponsoring sales, providing sales literature,
conducting training seminars for employees, and engineering sales-related
computer software programs and systems. Also, investment professionals may be
paid cash or promotional incentives, such as reimbursement of certain expenses
relating to attendance at informational meetings about the Fund or other special
events at recreational-type facilities, or items of material value. These
payments will be based upon the amount of Shares the investment professional
sells or may sell and/or upon the type and nature of sales or marketing support
furnished by the investment professional.
Subaccounting Services
Certain investment professionals may wish to use the transfer agent's
subaccounting system to minimize their internal recordkeeping requirements. The
transfer agent may charge a fee based on the level of subaccounting services
rendered. Investment professionals holding Shares in a fiduciary, agency,
custodial, or similar capacity may charge or pass through subaccounting fees as
part of or in addition to normal trust or agency account fees. They may also
charge fees for other services that may be related to the ownership of Shares.
This information should, therefore, be read together with any agreement between
the customer and the investment professional about the services provided, the
fees charged for those services, and any restrictions and limitations imposed.
Redemption in Kind
Although the Fund intends to pay Share redemptions in cash, it reserves the
right, as described below, to pay the redemption price in whole or in part by a
distribution of the Fund's portfolio securities.
Because the Fund has elected to be governed by Rule 18f-1 under the Investment
Company Act of 1940, the Fund is obligated to pay Share redemptions to any one
shareholder in cash only up to the lesser of $250,000 or 1% of the net assets
represented by such Share class during any 90-day period.
Any Share redemption payment greater than this amount will also be in cash
unless the Fund's Board determines that payment should be in kind. In such a
case, the Fund will pay all or a portion of the remainder of the redemption in
portfolio securities, valued in the same way as the Fund determines its NAV. The
portfolio securities will be selected in a manner that the Fund's Board deems
fair and equitable and, to the extent available, such securities will be readily
marketable.
Redemption in kind is not as liquid as a cash redemption. If redemption is made
in kind, shareholders receiving the portfolio securities and selling them before
their maturity could receive less than the redemption value of the securities
and could incur certain transaction costs.
Massachusetts Partnership Law
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for obligations of the Trust. To protect its
shareholders, the Trust has filed legal documents with Massachusetts that
expressly disclaim the liability of its shareholders for acts or obligations of
the Trust.
In the unlikely event a shareholder is held personally liable for the Trust's
obligations, the Trust is required by the Declaration of Trust to use its
property to protect or compensate the shareholder. On request, the Trust will
defend any claim made and pay any judgment against a shareholder for any act or
obligation of the Trust. Therefore, financial loss resulting from liability as a
shareholder will occur only if the Trust itself cannot meet its obligations to
indemnify shareholders and pay judgments against them.
Account and Share 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 the Fund have
equal voting rights.
Trustees may be removed by the Board or by shareholders at a special meeting. A
special meeting of shareholders will be called by the Board upon the written
request of shareholders who own at least 10% of the Fund's outstanding Shares.
As of July 1, 1999, the following shareholder owned of record,
beneficially, or both, 5% or more of outstanding Shares: Hubco, Birmingham,
AL owned approximately 2,451,221 Shares (10.98%).
Tax Information
FEDERAL INCOME TAX
The Fund intends to meet requirements of Subchapter M of the Internal Revenue
Code applicable to regulated investment companies. If these requirements are not
met, it will not receive special tax treatment and will pay federal income tax.
Who Manages and Provides Services to the Fund?
BOARD OF TRUSTEES
The Board is responsible for managing the Trust's business affairs and for
exercising all the Trust's powers except those reserved for the shareholders.
Information about each Board member is provided below and includes each
person's: name, address, birth date, present position(s) held with the Trust,
principal occupations for the past five years and positions held prior to the
past five years, total compensation received as a Trustee from the Trust for its
most recent fiscal year, and the total compensation received from the Federated
Fund Complex for the most recent calendar year. The Trust is comprised of one
fund and the Federated Fund Complex is comprised of 54 investment companies,
whose investment advisers are affiliated with the Fund's Adviser.
As of July 1, 1999 the Fund's Board and Officers as a group approximately
888,734 (3.98%) of the Fund's outstanding Shares.
An asterisk (*) denotes a Trustee who is deemed to be an interested person as
defined in the Investment Company Act of 1940. A pound sign (#) denotes a Member
of the Board's Executive Committee, which handles the Board's responsibilities
between its meetings.
<TABLE>
<CAPTION>
NAME TOTAL
BIRTH DATE AGGREGATE COMPENSATION
ADDRESS PRINCIPAL OCCUPATIONS COMPENSATION FROM TRUST AND
POSITION WITH TRUST FOR PAST FIVE YEARS FROM TRUST FUND COMPLEX
<S> <C> <C> <C>
JOHN F. DONAHUE*#+ Chief Executive Officer $0 $0 for the Trust and
Birth Date: July 28, 1924 and Director or Trustee of 54 other investment
Federated Investors Tower the Federated Fund companies in the
1001 Liberty Avenue Complex; Chairman and Fund Complex
Pittsburgh, PA Director, Federated
CHAIRMAN and TRUSTEE Investors, Inc.; Chairman
and Trustee, Federated Investment
Management Company; Chairman and
Director, Federated Investment Counseling
and Federated Global Investment
Management Corp.; Chairman, Passport
Research, Ltd.
THOMAS G. BIGLEY Director or Trustee of the Federated Fund $1,139.77 $113,860.22 for the Trust
Birth Date: February 3, 1934 Complex; Director, Member of Executive and 54 other investment
15 Old Timber Trail Committee, Children's Hospital of Pittsburgh; companies in the
Pittsburgh, PA Director, Robroy Industries, Inc. (coated steel Fund Complex
TRUSTEE conduits/computer storage equipment);
formerly: Senior Partner, Ernst & Young
LLP; Director, MED 3000 Group, Inc.;
(physician practice management);
Director, Member of Executive Committee,
University of Pittsburgh.
JOHN T. CONROY, JR. Director or Trustee of the Federated Fund $1,253.94 $125,264.48 for the Trust
Birth Date: June 23, 1937 Complex; President, Investment Properties and 54 other investment
Wood/Commercial Dept. Corporation; Senior Vice President, companies in the
John R. Wood Associates, Inc. Realtors John R. Wood and Associates, Inc., Realtors; Fund Complex
3255 Tamiami Trial North Partner or Trustee in private real estate ventures
Naples, FL in Southwest Florida; formerly: President,
TRUSTEE Naples Property Management, Inc. and
Northgate Village Development Corporation.
JOHN F. CUNNINGHAM++ Director or Trustee of some of the Federated $284.20 $0 for the Trust and
Birth Date: March 5, 1943 Fund Complex; Chairman, President and Chief 40 other investment
353 El Brillo Way Executive Officer, Cunningham & Co., Inc. ; companies in the
Palm Beach, FL (strategic business consulting); Trustee Fund Complex
TRUSTEE Associate, Boston College; Director, EMC
Corporation (computer storage systems);
formerly: Director, Redgate Communications.
Previous Positions: Chairman of the Board and
Chief Executive Officer, Computer Consoles,
Inc.; President and Chief Operating Officer,
Wang Laboratories; Director, First National
Bank of Boston; Director, Apollo Computer, Inc.
LAWRENCE D. ELLIS, M.D.* Director or Trustee of the Federated Fund $1,139.77 $113,860.22 for the Trust
Birth Date: October 11, 1932 Complex; Professor of Medicine, University of and 54 other investment
3471 Fifth Avenue Pittsburgh; Medical Director, University of companies in the
Suite 1111 Pittsburgh Medical Center - Downtown; Fund Complex
Pittsburgh, PA Hematologist, Oncologist, and Internist,
TRUSTEE University of Pittsburgh Medical Center;
Member, National Board of Trustees, Leukemia
Society of America.
PETER E. MADDEN Director or Trustee of the Federated Fund $1,009.31 $113,860.22 for the Trust
Birth Date: March 16, 1942 Complex; formerly: Representative, and 54 other investment
One Royal Palm Way Commonwealth of Massachusetts General companies in the
100 Royal Palm Way Court; President, State Street Bank and Trust Fund Complex
Palm Beach, FL Company and State Street Corporation.
TRUSTEE Previous Positions: Director, VISA USA and
VISA International; Chairman and
Director, Massachusetts Bankers
Association; Director, Depository Trust
Corporation.; Director, The Boston Stock
Exchange.
<CAPTION>
NAME TOTAL
BIRTH DATE AGGREGATE COMPENSATION
ADDRESS PRINCIPAL OCCUPATIONS COMPENSATION FROM TRUST AND
POSITION WITH TRUST FOR PAST FIVE YEARS FROM TRUST FUND COMPLEX
<S> <C> <C> <C>
CHARLES F. MANSFIELD, JR.++ Director or Trustee of some $284.20 $0 for the Trust and
Birth Date: April 10, 1945 of the Federated Fund 43 other investment
80 South Road Complex; Management companies in the
Westhampton Beach, NY Consultant. Fund Complex
TRUSTEE Previous Positions: Chief
Executive Officer, PBTC International
Bank; Partner, Arthur Young & Company
(now Ernst & Young LLP); Chief Financial
Officer of Retail Banking Sector, Chase
Manhattan Bank; Senior Vice President,
Marine Midland Bank; Vice President,
Citibank; Assistant Professor of Banking
and Finance, Frank G. Zarb School of
Business, Hofstra University.
JOHN E. MURRAY, JR., J.D., S.J.D.# Director or Trustee of the Federated Fund $1,196.91 $113,860.22 for the Trust
Birth Date: December 20, 1932 Complex; President, Law Professor, Duquesne and 54 other investment
President, Duquesne University University; Consulting Partner, Mollica & companies in the
Pittsburgh, PA Murray.; Director, Michael Baker Corp. Fund Complex
TRUSTEE (engineering, construction, operations, and
technical services).
Previous Positions: Dean and Professor of Law,
University of Pittsburgh School of Law; Dean
and Professor of Law, Villanova University
School of Law.
MARJORIE P. SMUTS Director or Trustee of the Federated Fund $1,139.77 $113,860.22 for the Trust
Birth Date: June 21, 1935 Complex; Public Relations/Marketing/ and 54 other investment
4905 Bayard Street Conference Planning. companies in the
Pittsburgh, PA Previous Positions: National Spokesperson, Fund Complex
TRUSTEE Aluminum Company of America; television
producer; business owner.
JOHN S. WALSH++ Director or Trustee of some of the Federated $284.20 $0 for the Trust and
Birth Date: November 28, 1957 Fund Complex; President and Director, Heat 41 other investment
2007 Sherwood Drive Wagon, Inc. (manufacturer of construction companies in the
Valparaiso, IN temporary heaters); President and Director, Fund Complex
TRUSTEE Manufacturers Products, Inc. (distributor of
portable construction heaters); President,
Portable Heater Parts, a division of
Manufacturers Products, Inc.; Director, Walsh &
Kelly, Inc. (heavy highway contractor); formerly:
Vice President, Walsh & Kelly, Inc.
GLEN R. JOHNSON Trustee, Federated Investors, Inc.; staff $0 $0 for the Trust and
Birth Date: May 2, 1929 member, Federated Securities Corp. 8 other investment
Federated Investors Tower companies in the
1001 Liberty Avenue Fund Complex
Pittsburgh, PA
PRESIDENT
J. CHRISTOPHER DONAHUE+ President or Executive Vice President of the $0 $0 for the Trust and
Birth Date: April 11, 1949 Federated Fund Complex; Director or Trustee of 16 other investment
Federated Investors Tower some of the Funds in the Federated Fund companies in the
1001 Liberty Avenue Complex; President and Director, Federated Fund Complex
Pittsburgh, PA Investors, Inc.; President and Trustee, Federated
EXECUTIVE VICE PRESIDENT Investment Management Company; President
and Director, Federated Investment Counseling
and Federated Global Investment Management
Corp.; President, Passport Research, Ltd.;
Trustee, Federated Shareholder Services
Company; Director, Federated Services
Company.
EDWARD C. GONZALES Trustee or Director of some of the Funds in the $0 $0 for the Trust and
Birth Date: October 22, 1930 Federated Fund Complex; President, Executive 1 other investment
Federated Investors Tower Vice President and Treasurer of some of the company in the
1001 Liberty Avenue Funds in the Federated Fund Complex; Vice Fund Complex
Pittsburgh, PA Chairman, Federated Investors, Inc.; Vice
EXECUTIVE VICE PRESIDENT President, Federated Investment Management
Company and Federated Investment
Counseling, Federated Global Investment
Management Corp. and Passport Research,
Ltd.; Executive Vice President and Director,
Federated Securities Corp.; Trustee, Federated
Shareholder Services Company.
JOHN W. MCGONIGLE Executive Vice President and Secretary of the $0 $0 for the Trust and
Birth Date: October 26, 1938 Federated Fund Complex; Executive Vice 54 other investment
Federated Investors Tower President, Secretary, and Director, Federated companies in the
1001 Liberty Avenue Investors, Inc.; Trustee, Federated Investment Fund Complex
Pittsburgh, PA Management Company; Director, Federated
EXECUTIVE VICE PRESIDENT Investment Counseling and Federated Global
and SECRETARY Investment Management Corp.; Director,
Federated Services Company; Director,
Federated Securities Corp.
RICHARD J. THOMAS Treasurer of the Federated Fund Complex; Vice $0 $0 for the Trust and
Birth Date: June 17, 1954 President - Funds Financial Services Division, 54 other investment
Federated Investors Tower Federated Investors, Inc.; formerly: various companies in the
1001 Liberty Avenue management positions within Funds Financial Fund Complex
Pittsburgh, PA Services Division of Federated Investors, Inc.
TREASURER
<CAPTION>
NAME TOTAL
BIRTH DATE AGGREGATE COMPENSATION
ADDRESS PRINCIPAL OCCUPATIONS COMPENSATION FROM TRUST AND
POSITION WITH TRUST FOR PAST FIVE YEARS FROM TRUST FUND COMPLEX
<S> <C> <C> <C>
RICHARD B. FISHER President or Vice $0 $0 for the Trust and
Birth Date: May 17, 1923 President of some of the 6 other investment
Federated Investors Tower Funds in the Federated Fund companies in the
1001 Liberty Avenue Complex; Director or Fund Complex
Pittsburgh, PA Trustee of some of the
VICE PRESIDENT Funds in the Federated Fund
Complex; Executive Vice
President, Federated
Investors, Inc.; Chairman
and Director, Federated
Securities Corp.
WILLIAM D. DAWSON, III Chief Investment Officer of this Fund and $0 $0 for the Trust and
Birth Date: March 3, 1949 various other Funds in the Federated Fund 41 other investment
Federated Investors Tower Complex; Executive Vice President, Federated companies in the
1001 Liberty Avenue Investment Counseling, Federated Global Fund Complex
Pittsburgh, PA Investment Management Corp., Federated
CHIEF INVESTMENT OFFICER Investment Management Company and
Passport Research, Ltd.; Registered
Representative, Federated Securities
Corp.; Portfolio Manager, Federated
Administrative Services; Vice President,
Federated Investors, Inc.; formerly:
Executive Vice President and Senior Vice
President, Federated Investment
Counseling Institutional Portfolio
Management Services Division; Senior Vice
President, Federated Investment
Management Company and Passport Research,
Ltd.
J. SCOTT ALBRECHT J. Scott Albrecht has been the Fund's portfolio $0 $0 for the Trust and
Birth Date: June 1, 1960 manager since July 1995. He is Vice President 1 other investment
Federated Investors Tower of the Fund. Mr. Albrecht joined Federated in company in the
1001 Liberty Avenue 1989. He has been a Senior Portfolio Manager Fund Complex
Pittsburgh, PA since 1997 and a Vice President of the Fund's
VICE PRESIDENT Adviser since 1994. He was a Portfolio Manager
from 1994 to 1996. Mr. Albrecht is a Chartered
Financial Analyst and received his M.S. in Public
Management from Carnegie Mellon University.
</TABLE>
+ Mr. Donahue is the father of J. Christopher Donahue, Executive Vice
President of the Trust.
++ Messrs. Cunningham, Mansfield and Walsh became members of the Board of
Trustees on January 1, 1999. They did not earn any fees for serving the Fund
Complex since these fees are reported as of the end of the last calendar year.
They did not receive any fees as of the fiscal year end of the Trust.
INVESTMENT ADVISER
The Adviser conducts investment research and makes investment decisions for the
Fund.
The Adviser is a wholly owned subsidiary of Federated.
The Adviser shall not be liable to the Trust or any Fund 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 Trust.
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 Fund Shares offered by the Distributor.
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. The Adviser will generally use those who are recognized dealers in
specific portfolio instruments, except when a better price and execution of the
order can be obtained elsewhere. In selecting among firms believed to meet these
criteria, the Adviser may give consideration to those firms which have sold or
are selling Shares of the Fund and other funds distributed by the Distributor
and its affiliates. The Adviser makes decisions on portfolio transactions and
selects brokers and dealers subject to review by the Fund's Board.
Investment decisions for the Fund are made independently from those of other
accounts managed by the Adviser. When the Fund and one or more of those accounts
invests in, or disposes of, the same security, available investments or
opportunities for sales will be allocated among the Fund and the account(s) in a
manner believed by the Adviser to be equitable. While the coordination and
ability to participate in volume transactions may benefit the Fund, it is
possible that this procedure could adversely impact the price paid or received
and/or the position obtained or disposed of by the Fund.
ADMINISTRATOR
Federated Services Company, a subsidiary of Federated, provides administrative
personnel and services (including certain legal and financial reporting
services) necessary to operate the Fund. Federated Services Company provides
these at the following annual rate of the average aggregate daily net assets of
all Federated Funds as specified below:
<TABLE>
<CAPTION>
MAXIMUM AVERAGE AGGREGATE DAILY
ADMINISTRATIVE FEE NET ASSETS OF THE FEDERATED FUNDS
<S> <C>
0.150 of 1% on the first $250 million
0.125 of 1% on the next $250 million
0.100 of 1% on the next $250 million
0.075 of 1% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio. Federated Services Company may voluntarily waive a
portion of its fee and may reimburse the Fund for expenses.
Federated Services Company also provides certain accounting and recordkeeping
services with respect to the Fund's portfolio investments for a fee based on
Fund assets plus out-of-pocket expenses.
CUSTODIAN
State Street Bank and Trust Company, Boston, Massachusetts, is custodian for the
securities and cash of the Fund. Foreign instruments purchased by the Fund are
held by foreign banks participating in a network coordinated by State Street
Bank.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Federated Services Company, through its registered transfer agent subsidiary,
Federated Shareholder Services Company, maintains all necessary shareholder
records. The Fund pays the transfer agent a fee based on the size, type, and
number of accounts and transactions made by
shareholders.
INDEPENDENT PUBLIC ACCOUNTANTS
The independent public accountant for the Fund, Arthur Andersen LLP, plans and
performs its audit so it may provide an opinion as to whether the Fund's
financial statements and financial highlights are free of material misstatement.
FEES PAID BY THE FUND FOR SERVICES
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
MAY 31 1999 1998 1997
<S> <C> <C> <C>
Advisory Fee Earned $943,188 $878,186 $872,976
Advisory Fee Waiver 129,436 139,532 158,880
Brokerage Commissions None None None
Administrative Fee 177,791 165,651 164,874
SHAREHOLDER SERVICES FEE 141,478 - -
</TABLE>
How Does the Fund Measure Performance?
The Fund may advertise Share performance by using the Securities and Exchange
Commission's (SEC) standard method for calculating performance applicable to all
mutual funds. The SEC also permits this standard performance information to be
accompanied by non-standard performance information.
The performance of Shares depends upon such variables as: portfolio quality;
average portfolio maturity; type and value of portfolio securities; changes in
interest rates; changes or differences in the Fund's or any class of Shares'
expenses; and various other factors.
Share performance fluctuates on a daily basis largely because net earnings
fluctuate daily. Both net earnings and offering price per Share are factors in
the computation of yield and total return.
AVERAGE ANNUAL TOTAL RETURNS AND YIELD
Total returns given for the one-year, five-year and ten-year periods ended May
31, 1999.
Yield and Tax-Equivalent Yield given for the 30-day period ended May 31, 1999.
<TABLE>
<CAPTION>
30-DAY PERIOD 1 YEAR 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Total Return 3.59% 5.22% 6.29%
Yield 4.08%
Tax-Equivalent Yield 6.75%
</TABLE>
TOTAL RETURN
Total return represents the change (expressed as a percentage) in the value of
Shares over a specific period of time, and includes the investment of income and
capital gains distributions.
The average annual total return for Shares 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 NAV 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, less any applicable sales charge, adjusted over the
period by any additional Shares, assuming the annual reinvestment of all
dividends and distributions.
YIELD AND EFFECTIVE YIELD
The yield of Shares is calculated by dividing: (i) the net investment income per
Share earned by the Shares over a 30-day period; by (ii) the maximum offering
price per Share on the last day of the period. This number is then annualized
using semi-annual compounding. This means that the amount of income generated
during the 30-day period is assumed to be generated each month over a 12-month
period and is reinvested every six months. The tax-equivalent yield of Shares is
calculated similarly to the yield, but is adjusted to reflect the taxable yield
that Shares would have had to earn to equal the actual yield, assuming a
specific tax rate. The yield and tax-equivalent yield do not necessarily reflect
income actually earned by Shares because of certain adjustments required by the
SEC and, therefore, may not correlate to the dividends or other distributions
paid to shareholders.
To the extent investment professionals and broker/dealers charge fees in
connection with services provided in conjunction with an investment in Shares,
the Share performance is lower for shareholders paying those fees.
TAX EQUIVALENCY TABLE
Set forth below is a sample of a tax-equivalency table that may be used in
advertising and sales literature. This table is for illustrative purposes only
and is not representative of past or future performance of the Fund. The
interest earned by the municipal securities owned by the Fund generally remains
free from federal regular income tax and is often free from state and local
taxes as well. However, some of the Fund's income may be subject to the federal
alternative minimum tax and state and/or local taxes.
<TABLE>
<CAPTION>
TAXABLE YIELD EQUIVALENT FOR 1999 MULTISTATE MUNICIPAL FUND
FEDERAL INCOME TAX BRACKET: 15.00% 28.00% 31.00% 36.00% 39.60%
<S> <C> <C> <C> <C> <C>
Joint Return $1-43,050 $43,051-104,050 $104,051-158,550 $158,551-283,150 Over 283,150
Single Return $1-25,750 $25,751-62,450 $62,451-130,250 $130,251-283,150 Over 283,150
TAX EXEMPT YIELD: TAXABLE YIELD EQUIVALENT:
1.00% 1.18% 1.39% 1.45% 1.56% 1.66%
1.50% 1.76% 2.08% 2.17% 2.34% 2.48%
2.00% 2.35% 2.78% 2.90% 3.13% 3.31%
2.50% 2.94% 3.47% 3.62% 3.91% 4.14%
3.00% 3.53% 4.17% 4.35% 4.69% 4.97%
3.50% 4.12% 4.86% 5.07% 5.47% 5.79%
4.00% 4.71% 5.56% 5.80% 6.25% 6.62%
4.50% 5.29% 6.25% 6.52% 7.03% 7.45%
5.00% 5.88% 6.94% 7.25% 7.81% 8.28%
5.50% 6.47% 7.64% 7.97% 8.59% 9.11%
6.00% 7.06% 8.33% 8.70% 9.38% 9.93%
6.50% 7.65% 9.03% 9.42% 10.16% 10.76%
7.00% 8.24% 9.72% 10.14% 10.94% 11.59%
7.50% 8.82% 10.42% 10.87% 11.72% 12.42%
8.00% 9.41% 11.11% 11.59% 12.50% 13.25%
</TABLE>
Note: The maximum marginal tax rate for each bracket was used in
calculating the taxable yield equivalent.
PERFORMANCE COMPARISONS
Advertising and sales literature may include:
* references to ratings, rankings, and financial publications and/or
performance comparisons of Shares to certain indices;
* charts, graphs and illustrations using the Fund's returns, or returns in
general, that demonstrate investment concepts such as tax-deferred compounding,
dollar-cost averaging and systematic investment;
* discussions of economic, financial and political developments and their impact
on the securities market, including the portfolio manager's views on how such
developments could impact the Funds; and
* information about the mutual fund industry from sources such as the Investment
Company Institute.
The Fund may compare its performance, or performance for the types of securities
in which it invests, to a variety of other investments, including federally
insured bank products such as bank savings accounts, certificates of deposit,
and Treasury bills.
The Fund may quote information from reliable sources regarding individual
countries and regions, world stock exchanges, and economic and demographic
statistics.
You may use financial publications and/or indices to obtain a more complete view
of Share performance. When comparing performance, you should consider all
relevant factors such as the composition of the 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.
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.
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 SEVEN-YEAR GENERAL OBLIGATION MUNICIPAL BOND INDEX
Lehman Brothers Seven-Year General Obligation Municipal Bond Index is an
unmanaged index of municipal bonds issued after January 1, 1991, with a minimum
credit rating of at least Baa, been issued as part of a deal of at least $50
million, have a maturity value of at least $3 million and a maturity range of
four to six years. As of January 1996 the index also includes zero coupon bonds
and bonds subject to the Alternative Minimum Tax.
LEHMAN BROTHERS FIVE-YEAR STATE GENERAL OBLIGATION BOND INDEX
Lehman Brothers Five-Year State General Obligation Bond Index 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 BOND INDEX
Lehman Brothers Ten-Year State General Obligation Bond Index 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.
Who is Federated Investors, Inc.?
Federated is dedicated to meeting investor needs by making structured,
straightforward and consistent investment decisions. Federated investment
products have a history of competitive performance and have gained the
confidence of thousands of financial institutions and individual investors.
Federated's disciplined investment selection process is rooted in sound
methodologies backed by fundamental and technical research. At Federated,
success in investment management does not depend solely on the skill of a single
portfolio manager. It is a fusion of individual talents and state- of-the-art
industry tools and resources. Federated's investment process involves teams of
portfolio managers and analysts, and investment decisions are executed by
traders who are dedicated to specific market sectors and who handle trillions of
dollars in annual trading volume.
FEDERATED FUNDS OVERVIEW
MUNICIPAL FUNDS
In the municipal sector, as of December 31, 1998, Federated managed 10 bond
funds with approximately $2.2 billion in assets and 23 money market funds with
approximately $12.5 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 Funds may quote
statistics from organizations including The Tax Foundation and the National
Taxpayers Union regarding the tax obligations of Americans.
EQUITY FUNDS
In the equity sector, Federated has more than 28 years' experience. As of
December 31, 1998, Federated managed 27 equity funds totaling approximately
$14.9 billion in assets across growth, value, equity income, international,
index and sector (i.e. utility) styles. Federated's value- oriented management
style combines quantitative and qualitative analysis and features a structured,
computer-assisted composite modeling system that was developed in the 1970s.
CORPORATE BOND FUNDS
In the corporate bond sector, as of December 31, 1998, Federated managed 9 money
market funds and 15 bond funds with assets approximating $22.8 billion and $7.1
billion, respectively. Federated's corporate bond decision making-based on
intensive, diligent credit analysis-is backed by over 26 years of experience in
the corporate bond sector. In 1972, Federated introduced one of the first
high-yield bond funds in the industry. In 1983, Federated was one of the first
fund managers to participate in the asset backed securities market, a market
totaling more than $209 billion.
GOVERNMENT FUNDS
In the government sector, as of December 31, 1998, Federated managed 9 mortgage
backed, 5 government/agency and 19 government money market mutual funds, with
assets approximating $5.3 billion, $1.8 billion and $41.6 billion, respectively.
Federated trades approximately $425 million in U.S. government and mortgage
backed securities daily and places approximately $25 billion in repurchase
agreements each day. Federated introduced the first U.S. government fund to
invest in U.S. government bond securities in 1969. Federated has been a major
force in the short- and intermediate-term government markets since 1982 and
currently manages approximately $43.2 billion in government funds within these
maturity ranges.
MONEY MARKET FUNDS
In the money market sector, Federated gained prominence in the mutual fund
industry in 1974 with the creation of the first institutional money market fund.
Simultaneously, the company pioneered the use of the amortized cost method of
accounting for valuing shares of money market funds, a principal means used by
money managers today to value money market fund shares. Other innovations
include the first institutional tax-free money market fund. As of December 31,
1998, Federated managed more than $76.7 billion in assets across 52 money market
funds, including 19 government, 9 prime and 23 municipal with assets
approximating $41.6 billion, $22.8 billion and $12.5 billion, respectively.
The Chief Investment Officers responsible for oversight of the various
investment sectors within Federated are: U.S. equity and high yield-
J. Thomas Madden; U.S. fixed income-William D. Dawson, III; and global
equities and fixed income-Henry A. Frantzen. The Chief Investment Officers
are Executive Vice Presidents of the Federated advisory companies.
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 $5 trillion to the more than 7,300 funds available,
according to the Investment Company Institute.
FEDERATED CLIENTS OVERVIEW
Federated distributes mutual funds through its subsidiaries for a variety of
investment purposes. Specific markets include:
INSTITUTIONAL CLIENTS
Federated meets the needs of approximately 900 institutional clients nationwide
by managing and servicing separate accounts and mutual funds for a variety of
purposes, 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 advisers. The marketing effort
to these institutional clients is headed by John B. Fisher, President,
Institutional Sales Division, Federated Securities Corp.
BANK MARKETING
Other institutional clients include 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,
Broker/Dealer Sales Division, Federated Securities Corp.
Investment Ratings
STANDARD & POOR'S SHORT-TERM MUNICIPAL OBLIGATION RATINGS
A Standard & Poor's (S&P) note rating reflects the liquidity concerns and market
access risks unique to notes.
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.
VARIABLE RATE DEMAND NOTES (VRDNS) AND TENDER OPTION BONDS (TOBS)
RATINGS
S&P assigns dual ratings to all long-term debt issues that have as part of their
provisions a variable rate demand feature. The first rating (long-term rating)
addresses the likelihood of repayment of principal and interest when due, and
the second rating (short-term rating) describes the demand characteristics.
Several examples are AAA/A-1+, AA/A-1+, A/A-1. (The definitions for the
long-term and the short-term ratings are provided below.)
COMMERCIAL PAPER (CP) RATINGS
An S&P commercial paper rating is a current assessment of the likelihood of
timely payment of debt having an original maturity of no more than 365 days.
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 as for issues designated
A-1.
LONG-TERM DEBT 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 highest-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.
MOODY'S INVESTORS SERVICES, INC., SHORT-TERM MUNICIPAL OBLIGATION
RATINGS
Moody's Investor Service, Inc. (Moody's) short-term ratings are designated
Moody's Investment Grade (MIG or VMIG). (See below.) The purpose of the MIG or
VMIG ratings is to provide investors with a simple system by which the
relative investment qualities of short-term obligations may be evaluated.
MIG1-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-This designation denotes high quality. Margins of protection are ample
although not so large as in the preceding group.
VARIABLE RATE DEMAND NOTES (VRDNS) AND TENDER OPTION BONDS (TOBS)
RATINGS
Short-term ratings on issues with demand features are differentiated by the use
of the VMIG symbol to reflect such characteristics as payment upon periodic
demand rather than fixed maturity dates and payment relying on external
liquidity. In this case, two ratings are usually assigned, (for example,
Aaa/VMIG-1); the first representing an evaluation of the degree of risk
associated with scheduled principal and interest payments, and the second
representing an evaluation of the degree of risk associated with the demand
feature. The VMIG rating can be assigned a 1 or 2 designation using the same
definitions described above for the MIG rating.
COMMERCIAL PAPER (CP) RATINGS
P-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, well-established access to a range of
financial markets and assured sources of alternate liquidity.
P-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.
LONG-TERM DEBT 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-Indicates that both the bonds and the obligor or credit enhancer are not
currently rated by S&P or Moody's with respect to short-term indebtedness.
However, management considers them to be of comparable quality to securities
rated A-1 or P-1.
NR(1)-The underlying issuer/obligor/guarantor has other outstanding debt rated
AAA by S&P or Aaa by Moody's.
NR(2)-The underlying issuer/obligor/guarantor has other outstanding debt rated
AA by S&P or Aa by Moody's.
NR(3)-The underlying issuer/obligor/guarantor has other outstanding debt rated A
by S&P or Moody's.
FITCH INVESTORS SERVICE, L.P. SHORT-TERM DEBT RATING DEFINITIONS
F-1+-Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-1-Very Strong Credit Quality. Issues assigned this rating reflect an assurance
for timely payment, only slightly less in degree than issues rated F-1+.
F-2-Good Credit Quality. Issues carrying this rating have a satisfactory degree
of assurance for timely payment, but the margin of safety is not as great as for
issues assigned F-1+ and F-1 ratings.
STANDARD AND POOR'S LONG-TERM DEBT RATING DEFINITIONS
AAA-Debt rated AAA has the highest rating assigned by Standard & Poor's.
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.
BBB-Debt rated BBB is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher-rated categories.
BB-Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB rating.
B-Debt rated B has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal. The B rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied BB or BB-
rating.
CCC-Debt rated CCC has a currently identifiable vulnerability to default, and is
dependent upon favorable business, financial, and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial, or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The CCC rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
B or B rating.
CC-The rating CC typically is applied to debt subordinated to senior debt that
is assigned an actual or implied CCC debt rating.
C-The rating C typically is applied to debt subordinated to senior debt which is
assigned an actual or implied CCC debt rating. The C rating may be used to cover
a situation where a bankruptcy petition has been filed, but debt service
payments are continued.
MOODY'S INVESTORS SERVICE, INC. LONG-TERM BOND RATING DEFINITIONS
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.
BAA-Bonds which are rated BAA are considered as medium-grade obligations, (i.e.,
they are neither highly protected nor poorly secured). Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
BA-Bonds which are BA are judged to have speculative elements; their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded during
both good and bad times over the future. Uncertainty of position characterizes
bonds in this class.
B-Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
CAA-Bonds which are rated CAA are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
CA-Bonds which are rated CA represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
C-Bonds which are rated C are the lowest-rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
FITCH IBCA, INC. LONG-TERM DEBT RATING DEFINITIONS
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 to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
BBB-Bonds considered to be investment grade and of satisfactory credit quality.
The obligor's ability to pay interest and repay principal is considered to be
adequate. Adverse changes in economic conditions and circumstances, however, are
more likely to have adverse impact on these bonds, and therefore impair timely
payment. The likelihood that the ratings of these bonds will fall below
investment grade is higher than for bonds with higher ratings.
BB-Bonds are considered speculative. The obligor's ability to pay interest and
repay principal may be affected over time by adverse economic changes. However,
business and financial alternatives can be identified which could assist the
obligor in satisfying its debt service requirements.
B-Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued timely
payment of principal and interest reflects the obligor's limited margin of
safety and the need for reasonable business and economic activity throughout the
life of the issue.
CCC-Bonds have certain identifiable characteristics which, if not remedied, may
lead to default. The ability to meet obligations requires an advantageous
business and economic environment.
CC-Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.
C-Bonds are imminent default in payment of interest or principal.
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
alternate liquidity.
PRIME-2-Issuers rated Prime-1 (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.
STANDARD AND POOR'S COMMERCIAL PAPER RATINGS
A-1-This designation 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 as for issues designated
A-1.
FITCH IBCA, INC. COMMERCIAL PAPER RATING DEFINITIONS
FITCH-1-(Highest Grade) Commercial paper assigned this rating is regarded as
having the strongest degree of assurance for timely payment.
FITCH-2-(Very Good Grade) Issues assigned this rating reflect an assurance of
timely payment only slightly less in degree than the strongest issues.
Addresses
FEDERATED INTERMEDIATE MUNICIPAL TRUST
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
DISTRIBUTOR
Federated Securities Corp.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
INVESTMENT ADVISER
Federated Investment Management Company
Federated Investors Tower
1001 Liberty Avenue
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
225 Franklin Street
Boston, MA 02110-2812
PART C. OTHER INFORMATION
Item 23. Exhibits:
(a) (i) Conformed copy of Declaration of Trust of the
Registrant; (12) (ii) Conformed Copy of Amendment
No.3 to Declaration of Trust of Registrant; (15)
(iii) Conformed Copy of Amendment No.5 to Declaration
of Trust of Registrant; (15) (iv) Conformed Copy of
Amendment No.6 to Declaration of Trust of Registrant;
(15)
(b) (i) Copy of Amended and Restated By-Laws of the
Registrant; (18) (ii) Copy of Amendment to By-Laws of
Registrant; (6) (iii) Copy of Amendment No.3 to
By-Laws of the Registrant; (18) (iv) Copy of
Amendment No. 4 to By-Laws of the Registrant; (18)
(v) Copy of Amendment No. 5 to By-Laws of the
Registrant; (18) (vi) Copy of Amendment No. 6 to
By-Laws of the Registrant; (18)
(c) (i) Copy of Specimen Certificate for Shares of
Beneficial Interest of the Registrant; (2)
(ii) Copy of Specimen Certificate for Shares of
Beneficial Interest of Federated
Intermediate Municipal Trust; (15)
(d) (i) Conformed copy of Investment Advisory
Contract of the Registrant; (14)
(ii) Conformed copy of Exhibit A to the Investment Advisory Contract of the
Registrant; (14)
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, 1995 (File Nos. 2-98237 and
811-4314).
18. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 30 on Form N-1A filed July 27, 1998 (File Nos. 2-98237 and
811-4314).
(e) (i) Conformed copy of Distributor's Contract of the
Registrant; (15) (ii) Conformed copy of Exhibit A to
Distributor's Contract of the Registrant; (15) (iii)
Conformed copy of Exhibit B to Distributor's Contract
of the Registrant; (15) (iv) Conformed copy of
Exhibit C to Distributor's Contract of the
Registrant; (15) (v) Conformed copy of Exhibit D to
Distributor's Contract of the Registrant; (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).
(f) Not applicable;
(g) (i) Conformed copy of the Custodian Agreement of the Registrant; (14)
(ii) Conformed copy of Exhibit 1 to the Custodian Agreement of the Registrant;
(15)
(iii) Conformed copy of Custodian Fee Schedule; (17)
(h) (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).
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, 1995 (File Nos. 2-98237 and
811-4314).
17. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 29 on Form N-1A filed May 26, 1998 (File Nos. 2-98237 and
811-4314).
(ii) Conformed copy of Amended and Restated Agreement for Fund Accounting
Services, Administrative Services, Transfer Agency Services, and Custody
Services Procurement; (19)
(iii) Conformed copy of Amended and Restated
Shareholder Services Agreement; (17) (iv) The
responses described in Item 23(e)(vi)are hereby
incorporated by reference.
(i) Conformed copy of Opinion and Consent of Counsel as to legality of
shares being registered; (2)
(j) Conformed copy of Consent of Independent Public Accountants; +
(k) Not applicable;
(l) Conformed copy of Initial Capital Understanding; (3)
(m) Not applicable;
(n) Not applicable;
(o) Conformed copy of Power of Attorney of the Registrant; (19)
(ii) Conformed copy of Power of Attorney of Chief Investment Officer of the
Registrant; (19)
(iii) Conformed copy of Power of Attorney of Trustee
of the Registrant; (19) (iv) Conformed copy of Power
of Attorney of Trustee of the Registrant; (19) (v)
Conformed copy of Power of Attorney of Trustee of the
Registrant; (19)
+ 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. 2-98237 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).
17. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 29 on Form N-1A filed May 26, 1998 (File Nos. 2-98237 and
811-4314).
19. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 31 on Form N-1A filed May 27, 1999 (File Nos. 2-98237 and
811-4314).
Item 24. Persons Controlled by or Under Common Control with Fund:
None
Item 25. Indemnification: (1)
Item 26. Business and Other Connections of the Investment Adviser
For a description of the other business of the investment adviser,
see the section entitled "Who Manages the Fund?" 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 "Who Manages and Provides
Services to the Fund?" 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:
Executive Vice Presidents: William D. Dawson, III
Henry A. Frantzen
J. Thomas Madden
Senior Vice Presidents: Joseph M. Balestrino
David A. Briggs
Drew J. Collins
Jonathan C. Conley
Deborah A. Cunningham
Michael P. Donnelly
Mark E. Durbiano
Jeffrey A. Kozemchak
Sandra L. McInerney
Susan M. Nason
Mary Jo Ochson
Robert J. Ostrowski
Vice Presidents: Todd A. Abraham
J. Scott Albrecht
Arthur J. Barry
Randall S. Bauer
G. Andrew Bonnewell
David A. Briggs
1. Response is incorporated by reference to Registrant's Initial Registration
Statement on Form N1-A filed June 4, 1985 (File Nos. 2-98237 and 811-4314).
<PAGE>
Micheal W. Casey
Robert E. Cauley
Kenneth J. Cody
Alexandre de Bethmann
B. Anthony Delserone, Jr.
Linda A. Duessel
Donald T. Ellenberger
Kathleen M. Foody-Malus
Thomas M. Franks
Edward C. Gonzales
James E. Grefenstette
Marc Halperin
Patricia L. Heagy
Susan R. Hill
William R. Jamison
Constantine J. Kartsonas
Stephen A. Keen
Robert M. Kowit
Richard J. Lazarchic
Steven Lehman
Marian R. Marinack
William M. Painter
Jeffrey A. Petro
Keith J. Sabol
Frank Semack
Aash M. Shah
Michael W. Sirianni, Jr.
Christopher Smith
Tracy P. Stouffer
Edward J. Tiedge
Peter Vutz
Paige M. Wilhelm
George B. Wright
Jolanta M. Wysocka
Assistant Vice Presidents: Nancy J. Belz
Lee R. Cunningham, II
James H. Davis, II
Jacqueline A. Drastal
Paul S. Drotch
Salvatore A. Esposito
Donna M. Fabiano
Gary E. Farwell
Eamonn G. Folan
John T. Gentry
John W. Harris
Nathan H. Kehm
John C. Kerber
Grant K. McKay
Natalie F. Metz
Joseph M. Natoli
Ihab Salib
James W. Schaub
John Sheehy
Matthew K. Stapen
Diane Tolby
Timothy G. Trebilcock
Leonardo A. Vila
Steven J. Wagner
Lori A. Wolff
Secretary: G. Andrew Bonnewell
Treasurer: Thomas R. Donahue
Assistant Secretaries: Thomas R. Donahue
Richard B. Fisher
Assistant Treasurer: Richard B. Fisher
The business address of each of the Officers of the investment
adviser is Federated Investors Tower, 1001 Liberty Avenue,
Pittsburgh, Pennsylvania 15222-3779. These individuals are also
officers of a majority of the investment advisers to the
investment companies in the Federated Fund Complex described in
Part B of this Registration Statement.
Item 27. Principal Underwriters:
(a) Federated Securities Corp. the Distributor for shares of the
Registrant, acts as principal underwriter for the following ........ open-end
investment companies, including the Registrant:
Cash Trust Series II; Cash Trust Series, Inc.; CCB Funds; 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 Core
Trust; 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 Municipal Opportunities Fund, Inc.;
Federated Municipal Securities Fund, Inc.; Federated Municipal Trust; Federated
Short-Term Municipal 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.; Fixed Income
Securities, Inc.; ; Hibernia Funds; Independence One Mutual Funds; Intermediate
Municipal Trust; International Series, Inc.; Investment Series Funds, Inc.;
Liberty U.S. Government Money Market 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; Regions Funds; RIGGS Funds; SouthTrust Funds;
Tax-Free Instruments Trust; The Planters Funds; The Wachovia Funds; The Wachovia
Municipal Funds; Vision Group of Funds, Inc.; World Investment Series, Inc.;
Blanchard Funds; Blanchard Precious Metals Fund, Inc.; DG Investor Series; High
Yield Cash Trust; Investment Series Trust; Star Funds; Targeted Duration Trust;
The Virtus Funds; Trust for Financial Institutions;
Federated Securities Corp. also acts as principal underwriter for the
following closed-end investment company: Liberty Term Trust, Inc.- 1999.
<TABLE>
<CAPTION>
<S> <C> <C>
(b)
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Distributor With Registrant
Richard B. Fisher Chairman, Chief Executive Vice President
Federated Investors Tower Officer, Chief Operating
1001 Liberty Avenue Officer, Asst. Secretary
Pittsburgh, PA 15222-3779 and Asst. Treasurer,
Federated Securities Corp.
Arthur L. Cherry Director --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
John B. Fisher President-Institutional Sales --
Federated Investors Tower and Director
1001 Liberty Avenue Federated Securities Corp.
Pittsburgh, PA 15222-3779
Thomas R. Donahue Director, Assistant Secretary --
Federated Investors Tower and Assistant Treasurer
1001 Liberty Avenue Federated Securities Corp.
Pittsburgh, PA 15222-3779
James F. Getz President-Broker/Dealer and --
Federated Investors Tower Director
1001 Liberty Avenue Federated Securities Corp.
Pittsburgh, PA 15222-3779
Edward C. Gonzales Executive Vice President Executive Vice
Federated Investors Tower Federated Securities Corp. President
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
David M. Taylor Executive Vice President --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
<PAGE>
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Distributor With Registrant
Mark W. Bloss Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Richard W. Boyd Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Laura M. Deger Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Theodore Fadool, Jr. Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Bryant R. Fisher Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Christopher T. Fives Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
James S. Hamilton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
James M. Heaton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Keith Nixon Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Solon A. Person, IV Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Distributor With Registrant
Timothy C. Pillion Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Thomas E. Territ Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Ernest G. Anderson Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Teresa M. Antoszyk Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
John B. Bohnet Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Jane E. Broeren-Lambesis Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Matthew W. Brown Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
David J. Callahan Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Mark Carroll Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Steven R. Cohen Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Distributor With Registrant
Mary J. Combs Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
R. Edmond Connell, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
R. Leonard Corton, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Kevin J. Crenny Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Daniel T. Culbertson Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
G. Michael Cullen Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Marc C. Danile Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Robert J. Deuberry Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
William C. Doyle Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Jill Ehrenfeld Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Distributor With Registrant
Mark D. Fisher Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Mark A. Gessner Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Joseph D. Gibbons Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
John K. Goettlicher Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Craig S. Gonzales Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
G. Tad Gullickson Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Dayna C. Haferkamp Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Raymond Hanley Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Bruce E. Hastings Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Beth A. Hetzel Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Distributor With Registrant
James E. Hickey Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Charlene H. Jennings Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
H. Joseph Kennedy Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Michael W. Koenig Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Christopher A. Layton Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Michael H. Liss Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Michael R. Manning Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Mark J. Miehl Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Richard C. Mihm Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Alec H. Neilly Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Distributor With Registrant
Thomas A. Peters III Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Robert F. Phillips Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Richard A. Recker Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Eugene B. Reed Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Paul V. Riordan Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
John Rogers Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Brian S. Ronayne Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Thomas S. Schinabeck Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Edward J. Segura Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Edward L. Smith Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Distributor With Registrant
David W. Spears Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
John A. Staley Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Colin B. Starks Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Jeffrey A. Stewart Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
William C. Tustin Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Paul A. Uhlman Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Miles J. Wallace Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
John F. Wallin Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Richard B. Watts Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Edward J. Wojnarowski Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Distributor With Registrant
Michael P. Wolff Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Robert W. Bauman Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Edward R. Bozek Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Terri E. Bush Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Beth C. Dell Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
David L. Immonen Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
John T. Glickson Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Ernest L. Linane Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Renee L. Martin Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Robert M. Rossi Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Distributor With Registrant
Matthew S. Hardin Secretary, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Denis McAuley Treasurer, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Leslie K. Ross Assistant Secretary, Assistant
Federated Investors Tower Federated Securities Corp. Secretary
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
<PAGE>
(c)
Item 28. 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
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
(Notices should be sent to the Agent for Services at above address)
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
Federated Shareholder Services P.O. Box 8600
Company Boston, MA 02266-8600
("Transfer Agent, Dividend
Disbursing Agent and
Portfolio Recordkeeper")
Federated Services Company Federated Investors Tower
("Administrator") 1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Federated Investment Management Federated Investors Tower
Company 1001 Liberty Avenue
("Adviser") Pittsburgh, PA 15222-3779
State Street Bank and Trust P.O. Box 8600
Company Boston, MA 02266-8600
("Custodian")
</TABLE>
Item 29. Management Services: Not applicable.
Item 30. 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.
<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
26th day of July, 1999.
INTERMEDIATE MUNICIPAL TRUST
BY: /s/Leslie K. Ross
Leslie K. Ross, Assistant Secretary
Attorney in Fact for John F. Donahue
July 26, 1999
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:
<TABLE>
<CAPTION>
<S> <C> <C>
NAME TITLE DATE
By: /s/Leslie K. Ross Attorney In Fact July 26, 1999
Leslie K. Ross For the Persons
ASSISTANT SECRETARY Listed Below
NAME TITLE
John F. Donahue* Chairman and Trustee
(Chief Executive Officer)
Glen R. Johnson* President
Richard J. Thomas* Treasurer
(Principal Financial and
Accounting Officer)
William D. Dawson, III* Chief Investment Officer
Thomas G. Bigley* Trustee
John T. Conroy, Jr.* Trustee
John F. Cunningham* Trustee
Lawrence D. Ellis, M.D.* Trustee
Peter E. Madden* Trustee
Charles F. Mansfield, Jr.* Trustee
John E. Murray, Jr.* Trustee
Marjorie P. Smuts* Trustee
John S. Walsh* Trustee
*By Power of Attorney
</TABLE>
Exhibit (j) under Form N-1A
Exhibit 23 under Item 601/Reg.S-K
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use in
Post-Effective Amendment No. 32 to Form N-1A Registration Statement of
Intermediate Municipal Trust of our report dated July 15, 1999, on the financial
statements as of May 31, 1999, of Federated Intermediate Municipal Trust,
included in or made a part of this registration statement.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Boston, Massachusetts
July 26, 1999
