1933 Act File No. 33-36729
1940 Act File No. 811-6165
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. 24 .....................X
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and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
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Amendment No. 23 .......................X
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MUNICIPAL SECURITIES INCOME TRUST
(Exact Name of Registrant as Specified in Charter)
Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779
(Address of Principal Executive Offices)
(412) 288-1900
(Registrant's Telephone Number)
John W. McGonigle, Esquire,
Federated Investors Tower,
Pittsburgh, Pennsylvania 15222-3779
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
_ immediately upon filing pursuant to paragraph (b).
on pursuant to paragraph (b).
X 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.
Registrant has filed with the Securities and Exchange Commission a
declaration pursuant to Rule 24f-2 under the Investment Company Act of
1940, and:
_ filed the Notice required by that Rule on ___________; or X intends
to file the Notice required by that Rule on or about
OCTOBER 15, 1997; or
during the most recent fiscal year did not sell any securities
pursuant to Rule 24f-2 under the Investment Company Act of 1940, and,
pursuant to Rule 24f-2(b)(2), need not file the Notice.
Copies to:
Matthew G. Maloney, Esquire
Dickstein Shapiro Morin & Oshinsky LLP
2101 L Street, N.W.
Washington, DC 20037
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CROSS-REFERENCE SHEET
This Amendment to the Registration Statement of MUNICIPAL
SECURITIES INCOME TRUST, which is comprised of five portfolios: (1)
Federated Pennsylvania Municipal Income Fund, (a) Class A Shares and
(b) Class B Shares; (2) Federated Ohio Municipal Income Fund, (a)
Class F Shares; (3) Federated Michigan Intermediate Municipal Trust;
(4) Federated California Municipal Income Fund, (a) Class A Shares
(formerly, Class F Shares) and (b) Class B Shares; and (5) Federated
New York Municipal Income Fund, (a) Class F Shares. This filing
relates only to Federated California Municipal Income Fund, and is
comprised of the following:
PART A. INFORMATION REQUIRED IN A PROSPECTUS.
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Prospectus Heading
(RULE 404(C) CROSS REFERENCE)
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Item 1. COVER PAGE..................................(1-5) Cover Page.
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Item 2. SYNOPSIS....................................(1-5) Summary of Fund Expenses.
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Item 3. CONDENSED FINANCIAL
INFORMATION.................................(1-5) Financial Highlights;
(1-5) Performance Information.
Item 4. GENERAL DESCRIPTION OF INFORMATION
................................(1-5) General
Information; (1-5) Investment Information; (1-5)
Investment Objective; (1-5) Investment Policies (1-5)
Investment Limitations; (1-5) Investment Risks; (1-5)
Non-Diversification; (1) Pennsylvania Municipal
Securities; (2) Ohio Municipal Securities; (3) Michigan
Municipal Securities; (4) California Municipal
Securities; (5) New York Municipal Securities.
Item 5. MANAGEMENT OF THE FUND......................(1-5)
Trust Information; (1-5) Management of the Trust; (1,4)
Distribution of Shares; (3) Distribution of Fund
Shares; (2,5) Distribution of Class F Shares; (1-5)
Administration of the Fund.
Item 6. CAPITAL STOCK AND OTHER
SECURITIES..................................(1)
Investing in the Fund; (1-5) Confirmations and Account
Statements; (1-5) Dividends and Distributions; (1-5)
Accounts with Low Balances; (1-5) Shareholder
Information; (1-3,5) Voting Rights; (1-5) Tax
Information; (1-5) Federal Income Tax; (1) Pennsylvania
Taxes; (2) State of Ohio Income Taxes; (3) Michigan
Taxes; (4) California Income Taxes; (5) New York Taxes;
(1-5) State and Local Taxes.
<PAGE>
Item 7. PURCHASE OF SECURITIES BEING
OFFERED...............................(1,4) Expenses of
the Fund; (1-5) Net Asset Value; (1,3) Investing in the
Fund; (2,4,5) Investing in Class F Shares; (1) How to
Purchase Shares; (1) Investing in Class A Shares; (1)
Investing in Class B Shares; (2-5) Share Purchases;
(2-5) Minimum Investment Required; (2-5) What Shares
Cost; (1-5) Eliminating/Reducing the Sales Charge;
(1-5) Systematic Investment Program; (1-5) Certificates
and Confirmations; (2,4,5) Distribution of Class F
Shares.
Item 8. REDEMPTION OR REPURCHASE....................(1-3,5)
Exchange Privilege; (1,3) Requirements for Exchange;
(1,3)Tax Consequences; (1,3) Making an Exchange; (4)
Redeeming and Exchanging Shares;
------------------------ (4) Redeeming or Exchanging
Shares Through a Financial Intermediary; (4) Redeeming
or Exchanging Shares by Telephone; (4) Redeeming or
Exchanging Shares by Mail; (4) Requirements for
Redemption; (4)Requirements for Exchange; (1) How to
Redeem Shares; (2, 5) Redeeming Class F Shares; (3)
Redeeming Shares; (1-3,5) Through a Financial
Institution; (1,3) Directly from the Fund; (2, 5)
Directly By Mail; (1-5) Contingent Deferred Sales
Charge; (1) Elimination of Contingent Deferred Sales
Charge; (1-5) Systematic Withdrawal Program; (1-5)
Accounts with Low Balances.
Item 9. PENDING LEGAL PROCEEDINGS None.
<PAGE>
PART B. INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION.
Item 10. COVER PAGE..................................(1-5) Cover Page.
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Item 11. TABLE OF CONTENTS (1-5) Table of Contents.
Item 12. GENERAL INFORMATION AND
HISTORY.....................................(1-5)
General Information About the Fund; (1-5) About
Federated Investors.
Item 13. INVESTMENT OBJECTIVES
AND POLICIES................................(1-5) Investment Objectives and Policies.
Item 14. MANAGEMENT OF THE FUND......................(1-5) Municipal Securities Income Trust Management.
----------------------
Item 15. CONTROL PERSONS AND PRINCIPAL
HOLDERS OF SECURITIES.......................(2-5) Municipal Securities Income Trust Management.
Item 16. INVESTMENT ADVISORY AND OTHER
SERVICES....................................(1-5)
Investment Advisory Services; (1-5) Other
Services; (3) Shareholder Services Agreement.
Item 17. BROKERAGE ALLOCATION (1-5) Brokerage Transactions.
Item 18. CAPITAL STOCK AND OTHER
SECURITIES Not applicable.
Item 19. PURCHASE, REDEMPTION AND PRICING OF
SECURITIES BEING
OFFERED...............................(1,3,4)
Purchasing Shares; (2, 5) Purchasing Class F
Shares; (1-5) Determining Net Asset Value;
(1,3,4) Redeeming Shares; (2,5) Redeeming
Class F Shares.
Item 20. TAX STATUS (1-5) Tax Status.
Item 21. UNDERWRITERS Not applicable.
Item 22. CALCULATION OF PERFORMANCE
DATA........................................(1-5) Total Return; (1-5) Yield;
(1-5) Tax-Equivalent Yield; (1-5) Performance Comparisons.
Item 23. FINANCIAL STATEMENTS........................To be filed by Amendment.
--------------------
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FEDERATED CALIFORNIA MUNICIPAL INCOME FUND
(A Portfolio of Municipal Securities Income Trust)
Class A Shares (Formerly, Class F Shares)
Class B Shares
PROSPECTUS
The shares of Federated California Municipal Income Fund (the "Fund")
offered by this prospectus represent interests in a non-diversified
portfolio of securities which is one of a series of investment
portfolios in Municipal Securities Income Trust (the "Trust"), an
open-end management investment company (a mutual fund). The investment
objective of the Fund is to provide current income which is exempt
from federal regular income tax and the personal income taxes imposed
by the state of California and California municipalities. The Fund
invests primarily in a portfolio of California municipal 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 BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THESE
SHARES INVOLVES INVESTMENT RISKS INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
This prospectus contains the information you should read and know
before you invest in the Fund. Keep this prospectus for future
reference.
The Fund has also filed a Statement of Additional Information dated
December __, 1997, with the Securities and Exchange Commission
("SEC"). The information contained in the Statement of Additional
Information is incorporated by reference into this prospectus. You may
request a copy of the Statement of Additional Information or a paper
copy of this prospectus, if you have received your prospectus
electronically, free of charge by calling 1-800-341-7400. To obtain
other information or make inquiries about the Fund, contact your
financial institution. The Statement of Additional Information,
material incorporated by reference into this document, and other
information regarding the Fund is maintained electronically with the
SEC at Internet Web site (http://www.sec.gov).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
PROSPECTUS DATED DECEMBER __, 1997
TABLE OF CONTENTS
Summary of Fund Expenses.............................1
Financial Highlights.................................2
General Information..................................3
Investment Information...............................3
Investment Objective..............................3
Investment Policies...............................3
California Municipal Securities...................5
Investment Risks..................................6
Non-Diversification...............................6
Investment Limitations............................7
Expenses of the Fund.................................7
Net Asset Value......................................7
Investing in the Fund................................7
Purchasing Shares Through a Financial Intermediary 7
Purchasing Shares by WirePurchasing Shares by Check 8
9
Investing in Class B Shares.......................9
Systematic Investment Program....................11
Class A Shares
Class B Shares...................................11
12
Redeeming and Exchanging Shares.....................12
Redeeming or Exchanging Shares Through a Financial Intermediary 12
Redeeming or Exchanging Shares by Telephone .....12
Redeeming or Exchanging Shares by Mail...........13
Requirements for Redemption......................13
Requirements for Exchange........................13
Systematic Withdrawal Program....................14
Contingent Deferred Sales Charge.................14
Account and Share Information.......................14
Confirmations and Account Statements.............14
Dividends and Distributions......................14
Accounts with Low Balances.......................14
Trust Information...................................15
Management of the Trust..........................15
Distribution of Shares...........................16
Administration of the Fund.......................17
Shareholder Information.............................17
Tax Information.....................................18
Federal Income Tax...............................18
California Income Taxes..........................19
State and Local Taxes............................19
Performance Information............................ 19
Addresses..............................Back Cover Page
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SUMMARY OF FUND EXPENSES
CLASS A SHARES
SHAREHOLDER TRANSACTION EXPENSES
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Maximum Sales Charge Imposed on Purchases (as a percentage of offering price)............... 4.50%
Maximum Sales Charge Imposed on Reinvested Dividends (as a percentage of offering price).... None
Contingent Deferred Sales Charge (as a percentage of original purchase
price or redemption proceeds, as applicable)................................................ None
Redemption Fee (as a percentage of amount redeemed, if applicable).......................... None
Exchange Fee................................................................................ None
ANNUAL OPERATING EXPENSES
(As a percentage of projected average net assets)*
Management Fee (after waiver) (1)........................................................... 0.00%
12b-1 Fee (2)............................................................................... 0.00%
Total Other Expenses (after expense reimbursement).......................................... 0.75%
Shareholder Services Fee..............................................................0.25%
Total Operating Expenses (3)................................................................ 0.75%
(1) The management fee has been reduced to reflect the voluntary
waiver of the management fee. The adviser can terminate this voluntary
waiver at any time at its sole discretion. The maximum management fee
is 0.40%
(2) The Class A Shares has no present intention of paying or
accruing the 12b-1 fee during fiscal year ending August 31, 1998. If
the Class A Shares were paying or accruing the 12b-1 fee, Class A
Shares would be able to pay up to 0.25% of its average daily net
assets for the 12b-1 fee. "See Fund Information".
(3) The total operating expenses in the table above are based on
expenses expected during the fiscal year ending August 31, 1998. The
total operating expenses were 0.66% for the fiscal year ended August
31, 1997 and would have been 2.63% absent the voluntary waivers of the
management fee and portions of the 12b-1 fee and the shareholder
services fee and the voluntary reimbursement of certain other
operating expenses.
* Total operating expenses are estimated based on average expenses expected to
be incurred during the period ending August 31, 1998. During the course of
this period, expenses may be more or less than the average amount shown.
</TABLE>
The purpose of this table is to assist an investor in
understanding the various costs and expenses that a shareholder of
Class A Shares of the Fund will bear, either directly or indirectly.
For more complete descriptions of the various costs and expenses, see
"Investing in Class A Shares" and "Trust Information".
Wire--transferred redemptions of less than $5,000 may be subject to
additional fees.
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EXAMPLE ............................................1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------- ------ ------- ------- --------
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You would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return,
(2) redemption at the end of each time period
and (3) payment of the maximum sales charge....... . $52 $68 $85 $134
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF
PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN
THOSE SHOWN.
SUMMARY OF FUND EXPENSES
CLASS B SHARES
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases (as a percentage of offering price)............... None
Maximum Sales Charge Imposed on Reinvested Dividends (as a percentage of offering price).... None
Contingent Deferred Sales Charge (as a percentage of original purchase
price or redemption proceeds, as applicable) (1)............................................ 5.50%
Redemption Fee (as a percentage of amount redeemed, if applicable).......................... None
Exchange Fee................................................................................ None
ANNUAL OPERATING EXPENSES
(As a percentage of projected average net assets)*
Management Fee (after waiver) (2)........................................................... 0.00%
12b-1 Fee................................................................................... 0.75%
Total Other Expenses (after expense reimbursement).......................................... 0.75%
Shareholder Services Fee..............................................................0.25%
Total Operating Expenses (3) (4)............................................................ 1.50%
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(1) The contingent deferred sales charge is 5.50% in the first year declining
to 1.00% in the sixth year and 0.00% thereafter. (For more information, see
"Contingent Deferred Sales Charge.")
(2) The estimated management fee has been reduced to reflect the anticipated
voluntary waiver of the management fee. The adviser can terminate this
voluntary waiver at any time at its sole discretion. The maximum
management fee is 0.40%
(3) Class B Shares convert to Class A Shares (which pay lower ongoing
expenses) approximately eight years after purchase.
(4) The total operating expenses are estimated to be 2.25% absent the
anticipated voluntary waiver of the management fee and the anticipated
voluntary reimbursement of certain other operating expenses.
* Total operating expenses are estimated based on average expenses expected
to be incurred during the period ending August 31, 1998. During the course of
this period, expenses may be more or less than the average
amount shown.
The purpose of this table is to assist an investor in
understanding the various costs and expenses that a shareholder of
Class B Shares of the Fund will bear, either directly or indirectly.
For more complete descriptions of the various costs and expenses, see
"Investing in Class B Shares" and "Trust Information".
Wire--transferred redemptions of less than $5,000 may be subject to
additional fees.
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EXAMPLE ............................................1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------- ------ ------- ------- --------
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You would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return,
(2) redemption at the end of each time period
and (3) payment of the maximum sales charge....... . $72 $92 $106 $158
You would pay the following expenses on the same
investment, assuming no redemption....................... $15 $47 $82 $158
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
THIS EXAMPLE IS BASED ON ESTIMATED DATA FOR THE CLASS B SHARES FISCAL YEAR
ENDING AUGUST 31, 1998.
GENERAL INFORMATION
The Trust was established as a Massachusetts business trust on August
6, 1990. On _______________, the Board of Trustees ("Trustees")
approved the addition of Class B Shares to the Fund and the conversion
of its presently offered Class F Shares to Class A Shares. Class A
Shares and Class B Shares of the Fund ("Shares") are designed for
customers of financial institutions such as broker/dealers, banks,
fiduciaries, and investment advisers as a convenient means of
accumulating an interest in a professionally managed, non-diversified
portfolio of California municipal securities. The Fund is not likely
to be a suitable investment for non-California taxpayers or retirement
plans since California municipal securities are not likely to produce
competitive after-tax yields for such persons and entities when
compared to other investments.
The Fund's current net asset value and offering price may be found in
the mutual funds section of local newspapers under "Federated" and the
appropriate class designation listing.
CALLING THE FUND Call the Fund at 1-800-341-7400.
INVESTMENT INFORMATION
INVESTMENT OBJECTIVE
The investment objective of the Fund is to provide current income
exempt from federal regular income tax (federal regular income tax
does not include the federal alternative minimum tax) and the personal
income taxes imposed by the state of California and California
municipalities. The investment objective cannot be changed without
approval of shareholders. While there is no assurance that the Fund
will achieve its investment objective, it endeavors to do so by
following the investment policies described in this prospectus.
The Fund invests its assets so that at least 80% of its annual
interest income is exempt from federal regular income tax and the
personal income taxes imposed by the state of California and
California municipalities. Interest income of the Fund that is exempt
from the income taxes described above retains its exempt status when
distributed to the Fund's shareholders. Income distributed by the Fund
may not necessarily be exempt from state or municipal taxes in states
other than California.
INVESTMENT POLICIES
The Fund pursues its investment objective by investing primarily in
California municipal securities which are exempt from federal regular
income tax and personal income taxes imposed by the state of
California and California municipalities. Unless indicated otherwise,
investment policies of the Fund may be changed by the Trustees without
approval of shareholders. Shareholders will be notified before any
material changes in these policies become effective.
ACCEPTABLE INVESTMENTS
The securities in which the Fund invests include:
obligations issued by or on behalf of the state of California, its political
subdivisions, or agencies;
debt obligations of any state, territory, or possession of the United States,
including the District of Columbia, or any political subdivision of any of
these; and
participation interests, as described below, in any of the above
obligations, the interest from which is, in the opinion of bond
counsel for the issuers or in the opinion of officers of the Fund
and/or the investment adviser to the Fund, exempt from both federal
regular income tax and the personal income tax imposed by the state
of California and California municipalities ("California municipal
securities"). At least 65% of the value of the Fund's total assets
will be invested in obligations issued by or on behalf of the state
of California, its political subdivisions, or agencies.
The prices of fixed income securities fluctuate inversely to the
direction of interest rates.
CHARACTERISTICS
The California municipal securities which the Fund buys are investment
grade bonds rated Aaa, Aa, A, or Baa by Moody's Investors Service,
Inc. ("Moody's"), or AAA, AA, A, or BBB by Standard & Poor's Ratings
Service ("S&P") or Fitch Investors Service, L.P. ("Fitch"). In certain
cases the Fund's adviser may choose bonds which are unrated if it
determines such bonds are of comparable quality or have similar
characteristics to the investment grade bonds described above. If a
bond is rated below investment grade according to the characteristics
set forth here after the Fund has purchased it, the Fund is not
required to drop the bond from the portfolio, but will consider
appropriate action. Bonds rated "BBB" by S&P or Fitch or "Baa" by
Moody's have speculative characteristics. Changes in economic or other
circumstances are more likely to lead to weakened capacity to make
principal and interest payments than higher rated bonds. A description
of the rating categories is contained in the Appendix to the Statement
of Additional Information.
PARTICIPATION INTERESTS
The Fund may purchase participation interests from financial
institutions such as commercial banks, savings associations, and
insurance companies. These participation interests give the Fund an
undivided interest in California municipal securities. The financial
institutions from which the Fund purchases participation interests
frequently provide or secure irrevocable letters of credit or
guarantees to assure that the participation interests are of high
quality. The Trustees of the Trust will determine that participation
interests meet the prescribed quality standards for the Fund.
VARIABLE-RATE MUNICIPAL SECURITIES
Some of the California municipal securities which the Fund purchases
may have variable interest rates. Variable interest rates are
ordinarily based on a published interest rate, interest rate index, or
a similar standard, such as the 91-day U.S. Treasury bill rate. Many
variable-rate municipal securities are subject to payment of principal
on demand by the Fund in not more than seven days. All variable-rate
municipal securities will meet the quality standards for the Fund. The
Fund's investment adviser has been instructed by the Trustees to
monitor the pricing, quality, and liquidity of the variable-rate
municipal securities, including participation interests held by the
Fund on the basis of published financial information and reports of
the rating agencies and other analytical services.
MUNICIPAL LEASES
Municipal leases are obligations issued by state and local governments
or authorities to finance the acquisition of equipment and facilities
and may be considered to be illiquid. They may take the form of a
lease, an installment purchase contract, a conditional sales contract
or a participation certificate on any of the above. Lease obligations
may be subject to periodic appropriation. If the entity does not
appropriate funds for future lease payments, the entity cannot be
compelled to make such payments. In the event of failure of
appropriation, unless the participation interests are credit enhanced,
it is unlikely that the participants would be able to obtain an
acceptable substitute source of payment.
RESTRICTED SECURITIES
The Fund may invest up to 10% of its total assets in restricted
securities. Restricted securities are any securities in which the Fund
may otherwise invest pursuant to its investment objective and policies
but which are subject to restriction upon resale under federal
securities laws. To the extent these securities are deemed to be
illiquid, the Fund will limit its purchases, together with other
securities considered to be illiquid, to 15% of its net assets.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Fund may purchase securities on a when-issued or delayed delivery
basis. These transactions are arrangements in which the Fund purchases
securities with payment and delivery scheduled for a future time. The
seller's failure to complete these transactions may cause the Fund to
miss a price or yield considered to be advantageous. Settlement dates
may be a month or more after entering into these transactions, and the
market values of the securities purchased may vary from the purchase
prices.
The Fund may dispose of a commitment prior to settlement if the
adviser deems it appropriate to do so. In addition, the Fund may enter
in transactions to sell its purchase commitments to third parties at
current market values and simultaneously acquire other commitments to
purchase similar securities at later dates. The Fund may realize
short-term profits or losses upon the sale of such commitments.
INVERSE FLOATERS
The Fund may invest in securities known as "inverse floaters" which
represent interests in municipal securities. These obligations pay
interest rates that vary inversely with changes in the interest rates
of specified short-term municipal securities or an index of short-term
municipal securities. The interest rates on inverse floaters will
typically decline as short-term market interest rates increase and
increase as short-term market rates decline. Inverse floaters will
generally respond to changes in market interest rates more rapidly
than fixed-rate long-term securities (typically twice as fast). As a
result, the market values of inverse floaters will generally be more
volatile than the market values of fixed-rate municipal securities.
FINANCIAL FUTURES
The Fund may purchase and sell interest rate and index financial
futures contracts. These financial futures contracts may be used to
hedge all or a portion of its portfolio against changes in the market
value of portfolio securities and interest rates, provide additional
liquidity, and accomplish its current strategies in a more expeditious
fashion. Financial futures contracts call for the delivery of
particular debt instruments at a certain time in the future. The
seller of the contract agrees to make delivery of the type of
instrument called for in the contract and the buyer agrees to take
delivery of the instrument at the specified future time.
As a matter of investment policy, which may be changed without
shareholder approval, the Fund may not purchase or sell futures
contracts if immediately thereafter the sum of the amount of margin
deposits on the Fund's existing futures positions would exceed 5% of
the market value of the Fund's total assets. When the Fund purchases
futures contracts, an amount of cash or cash equivalents, equal to the
underlying commodity value of the futures contracts (less any related
margin deposits), will be deposited in a segregated account with the
Fund's custodian (or the broker, if legally permitted) to
collateralize the position and thereby insure that the use of such
futures contract is unleveraged.
RISKS
When the Fund uses financial futures, there is a risk that the
prices of the securities subject to the futures contracts may
not correlate perfectly with the prices of the securities in
the Fund's portfolio. This may cause the futures contract to
react differently than the portfolio securities to market
changes. In addition, the Fund's investment adviser could be
incorrect in its expectations about the direction or extent of
market factors such as interest rate movements. In these
events, the Fund may lose money on the futures contract. It is
not certain that a secondary market for positions in futures
contracts will exist at all times. Although the investment
adviser will consider liquidity before entering into futures
transactions, there is no assurance that a liquid secondary
market on an exchange or otherwise will exist for any
particular futures contract at any particular time. The Fund's
ability to establish and close out futures positions depends on
this secondary market.
TEMPORARY INVESTMENTS
The Fund invests its assets so that at least 80% of its annual
interest income is exempt from federal regular income tax and the
personal income taxes imposed by the state of California and
California municipalities. However, from time to time, when the
investment adviser determines that market conditions call for a
temporary defensive posture, the Fund may invest in short-term
non-California municipal tax-exempt obligations or taxable temporary
investments. These temporary investments include: notes issued by or
on behalf of municipal or corporate issuers; obligations issued or
guaranteed by the U.S. government, its agencies, or instrumentalities;
other debt securities; commercial paper; certificates of deposit of
banks; and repurchase agreements (arrangements in which the
organization selling the Fund, a bond or temporary investment agrees
at the time of sale to repurchase it at a mutually agreed upon time
and price).
There are no rating requirements applicable to temporary investments.
However, the investment adviser will limit temporary investments to
those rated within the investment grade categories described under
"Acceptable Investments--Characteristics" (if rated) or (if unrated)
those which the investment adviser judges to have the same
characteristics as such investment grade securities.
Although the Fund is permitted to make taxable, temporary investments,
there is no current intention of generating income subject to federal
regular income tax or personal income taxes imposed by the state of
California or California municipalities.
CALIFORNIA MUNICIPAL SECURITIES
California municipal securities are generally issued to finance public
works, such as airports, bridges, highways, housing, hospitals, mass
transportation projects, schools, streets, and water and sewer works.
They are also issued to repay outstanding obligations, to raise funds
for general operating expenses, and to make loans to other public
institutions and facilities.
California municipal securities include industrial development bonds
issued by or on behalf of public authorities to provide financing aid
to acquire sites or construct and equip facilities for privately or
publicly owned corporations. The availability of this financing
encourages these corporations to locate within the sponsoring
communities and thereby increases local employment.
The two principal classifications of municipal securities are "general
obligation" and "revenue" bonds. General obligation bonds are secured
by the issuer's pledge of its full faith and credit and taxing power
for the payment of principal and interest. However, interest on and
principal of revenue bonds are payable only from the revenue generated
by the facility financed by the bond or other specified sources of
revenue. Revenue bonds do not represent a pledge of credit or create
any debt of or charge against the general revenues of a municipality
or public authority. Industrial development bonds are typically
classified as revenue bonds.
INVESTMENT RISKS
Yields on California municipal securities depend on a variety of
factors, including: the general conditions of the short-term municipal
note market and of the municipal bond market; the size of the
particular offering; the maturity of the obligations; and the rating
of the issue. The ability of the Fund to achieve its investment
objective also depends on the continuing ability of the issuers of
California municipal securities and demand features, or the credit
enhancers of either, to meet their obligations for the payment of
interest and principal when due. Investing in California municipal
securities which meet the Fund's quality standards may not be possible
if the state of California or its municipalities do not maintain their
current credit ratings. In addition, certain California constitutional
amendments, legislative measures, executive orders, administrative
regulations, and voter initiatives could result in adverse
consequences affecting California municipal securities. Further, any
adverse economic conditions or developments affecting the state of
California or its municipalities could have an impact on the Fund's
portfolio.
A further discussion of the risks of a portfolio which invests largely
in California municipal securities is contained in the Statement of
Additional Information.
NON-DIVERSIFICATION
The Fund is a non-diversified investment portfolio. As such, there is
no limit on the percentage of assets which can be invested in any
single issuer. An investment in the Fund, therefore, will entail
greater risk than would exist in a diversified portfolio of securities
because the higher percentage of investments among fewer issuers may
result in greater fluctuation in the total market value of the Fund's
portfolio. Any economic, political, or regulatory developments
affecting the value of the securities in the Fund's portfolio will
have a greater impact on the total value of the portfolio than would
be the case if the portfolio were diversified among more issuers.
The Fund intends to comply with Subchapter M of the Internal Revenue
Code of 1986, as amended (the "Code"). This undertaking requires that
at the end of each quarter of the taxable year: (a) with regard to at
least 50% of the Fund's total assets, no more than 5% of its total
assets are invested in the securities of a single issuer and (b) no
more than 25% of its total assets are invested in the securities of a
single issuer.
INVESTMENT LIMITATIONS
The Fund will not borrow money directly through reverse repurchase
agreements (arrangements in which the Fund sells a portfolio
instrument for a percentage of its cash value with an agreement to buy
it back on a set date) or pledge securities except, under certain
circumstances, the Fund may borrow up to one-third of the value of its
total assets and pledge up to 10% of the value of those assets to
secure such borrowings.
The above investment limitation cannot be changed without shareholder
approval.
EXPENSES OF THE FUND
Holders of Shares pay their allocable portion of Trust and portfolio
expenses.
The Trust expenses for which holders of Shares pay their allocable
portion include, but are not limited to: the cost of organizing the
Trust and continuing its existence; registering the Trust with federal
and state securities authorities; Trustees' fees; auditors' fees; the
cost of meetings of Trustees; legal fees of the Trust; association
membership dues; and such non-recurring and extraordinary items as may
arise from time to time.
The portfolio expenses for which holders of Shares pay their allocable
portion include, but are not limited to: registering the portfolio and
Shares of the portfolio; investment advisory services; taxes and
commissions; custodian fees; insurance premiums; auditors' fees; and
such non-recurring and extraordinary items as may arise from time to
time.
At present, the only expenses which are allocated specifically to
Class A Shares as a class are expenses under the Trust's Shareholder
Services Plan, and the only expenses which are allocated specifically
to Class B Shares as a class are expenses under the Trust's
Shareholder Services Plan and Distribution Plan. However, the Trustees
reserve the right to allocate certain other expenses to holders of
Shares as they deem appropriate ("Class Expenses"). In any case, Class
Expenses would be limited to: distribution fees; transfer agent fees
as identified by the transfer agent as attributable to holders of
Shares; fees under the Trust's Shareholder Services Plan; printing and
postage expenses related to preparing and distributing materials such
as shareholder reports, prospectuses and proxies to current
shareholders; registration fees paid to the Securities and Exchange
Commission and to state securities commissions; expenses related to
administrative personnel and services as required to support holders
of Shares; legal fees relating solely to Shares; and Trustees' fees
incurred as a result of issues relating solely to Shares.
NET ASSET VALUE
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.
The NAV for each class of Shares may differ due to the variance in
daily net income realized by each class. Such variance will reflect
only accrued net income to which the shareholders of a particular
class are entitled.
All purchases, redemptions and exchanges are processed at the NAV
next determined after the request in proper form is received by the
Fund. The NAV is determined as of the close of trading on the New York
Stock Exchange (normally 4:00 p.m., Eastern time) every day the New
York Stock Exchange is open.
INVESTING IN THE FUND
This prospectus offers two classes of Shares each with the
characteristics described below.
CLASS A CLASS B
Minimum and Subsequent $500/$100 $1500/$100
Investment Amounts
Minimum and Subsequent $50 $50
Investment Amount
for Retirement Plans
Maximum Sales Charge 4.50%* None
Maximum Contingent None 5.50
Deferred Sales
Charge**
Conversion Feature No Yes
* Class A Shares are sold at NAV, plus a sales charge as follows:
SALES CHARGE DEALER
AS A PERCENTAGE OF CONCESSION AS
PUBLIC NET A PERCENTAGE OF
OFFERING AMOUNT PUBLIC OFFERING
AMOUNT OF TRANSACTION PRICE INVESTED PRICE
Less than $100,000 4.50% 4.71% 4.00%
$100,000 but less
than $250,000 3.75% 3.90% 3.25%
$250,000 but less
than $500,000 2.50% 2.56% 2.25%
$500,000 but less
than $1 million 2.00% 2.04% 1.80%
$1 million or greater 0.00% 0.00% 0.25%
** Computed on the lesser of the NAV of the redeemed Shares at the
time of purchase or the NAV of the redeemed Shares at the time of
redemption.
The following contingent deferred sales charge schedule applies to
Class B Shares:
YEAR OF REDEMPTION CONTINGENT DEFERRED
AFTER PURCHASE SALES CHARGE
First 5.50%
Second 4.75%
Third 4.00%
Fourth 3.00%
Fifth 2.00%
Sixth 1.00%
Seventh and thereafter 0.00%
Class B Shares convert to Class A Shares (which pay lower ongoing
expenses) approximately eight years after purchase. See "Conversion of
Class B Shares."
PURCHASING SHARES
Shares of the Fund are sold on days on which the New York Stock
Exchange is open. Shares of the Fund may be purchased as described
below, either through a financial intermediary (such as a bank or
broker/dealer) or by sending a wire or check directly to the Fund.
Financial intermediaries may impose different minimum investment
requirements on their customers. An account must be established with a
financial intermediary or by completing, signing, and returning the
new account form available from the Fund before Shares can be
purchased. Shareholders in certain other funds advised and distributed
by affiliates of Federated Investors ("Federated Funds") may exchange
their shares for Shares of the corresponding class of the Fund. The
Fund reserves the right to reject any purchase or exchange request.
In connection with any sale, Federated Securities Corp. may, from time
to time, offer certain items of nominal value to any shareholder or
investor.
PURCHASING SHARES THROUGH A FINANCIAL INTERMEDIARY
Orders placed through a financial intermediary are considered received
when the Fund is notified of the purchase order or when payment is
converted into federal funds. Purchase orders through a broker/dealer
must be received by the broker before 4:00 p.m. (Eastern time) and
must be transmitted by the broker to the Fund before 5:00 p.m.
(Eastern time) in order for Shares to be purchased at that day's
price. Purchase orders through other financial intermediaries must be
received by the financial intermediary and transmitted to the Fund
before 4:00 p.m. (Eastern time) in order for Shares to be purchased at
that day's price. It is the financial intermediary's responsibility to
transmit orders promptly. Financial intermediaries may charge fees for
their services.
The financial intermediary which maintains investor accounts in Class
B Shares with the Fund must do so on a fully disclosed basis unless it
accounts for share ownership periods used in calculating the
contingent deferred sales charge (see "Contingent Deferred Sales
Charge"). In addition, advance payments made to financial
intermediaries may be subject to reclaim by the distributor for
accounts transferred to financial intermediaries which do not maintain
investor accounts on a fully disclosed basis and do not account for
share ownership periods.
PURCHASING SHARES BY WIRE
Shares may be purchased by Federal Reserve wire by calling the Fund.
All information needed will be taken over the telephone, and the order
is considered received when State Street Bank receives payment by
wire. Federal funds should be wired as follows: Federated Shareholder
Services Company, c/o State Street Bank and Trust Company, Boston, MA
02266-8600; Attention; EDGEWIRE; For Credit to: (Fund Name) (Fund
Class); (Fund Number--this number can be found on the account
statement or by contacting the Fund); Account Number; Trade Date and
Order Number; Group Number or Dealer Number; Nominee or Institution
Name; and ABA Number 011000028.
Shares cannot be purchased by wire on holidays when wire transfers are
restricted.
PURCHASING SHARES BY CHECK
Shares may be purchased by mailing a check made payable to the name of
the Fund (designate class of Shares and account number) to: Federated
Shareholder Services Company, P.O. Box 8600, Boston, MA 02266-8600.
Orders by mail are considered received when payment by check is
converted into federal funds (normally the business day after the
check is received).
SYSTEMATIC INVESTMENT PROGRAM
Under this program, funds may be automatically withdrawn periodically
from the shareholder's checking account at an Automated Clearing House
("ACH") member and invested in the Fund. Shareholders should contact
their financial intermediary or the Fund to participate in this
program.
CLASS A SHARES
Class A Shares are sold at NAV, plus a sales charge. However:
NO SALES CHARGE IS IMPOSED FOR CLASS A SHARES PURCHASED:
through financial intermediaries that do not receive sales charge
dealer concessions;
by Federated Life Members who maintain a $500 minimum balance in
at least one of the Federated Funds; or
through "wrap accounts" or similar programs under which clients
pay a fee for services.
IN ADDITION, THE SALES CHARGE CAN BE REDUCED OR ELIMINATED BY:
purchasing in quantity and accumulating purchases at the levels
in the table under "Investing in the Fund";
combining concurrent purchases of two or more funds;
signing a letter of intent to purchase a specific quantity of
shares within 13 months; or
using the reinvestment privilege.
Consult a financial intermediary or Federated Securities Corp. for
details on these programs. In order to eliminate the sales charge or
receive sales charge reductions, Federated Securities Corp. must be
notified by the shareholder in writing or by a financial intermediary
at the time of purchase.
DEALER CONCESSION
For sales of Class A Shares, a dealer will normally receive up to 90%
of the applicable sales charge. Any portion of the sales charge which
is not paid to a dealer will be retained by the distributor. However,
the distributor may offer to pay dealers up to 100% of the sales
charge retained by it. Such payments may take the form of cash or
promotional incentives, such as reimbursement of certain expenses of
qualified employees and their spouses to attend informational meetings
about the Fund or other special events at recreational-type
facilities, or items of material value. In some instances, these
incentives will be made available only to dealers whose employees have
sold or may sell a significant amount of Class A Shares. On purchases
of $1 million or more, the investor pays no sales charge; however, the
distributor will make twelve monthly payments to the dealer totaling
0.25% of the public offering price over the first year following the
purchase. Such payments are based on the original purchase price of
Class A Shares outstanding at each month end. The sales charge for
Shares sold other than through registered broker/dealers will be
retained by Federated Securities Corp.
Federated Securities Corp. may pay fees to banks out of the sales
charge in exchange for sales and/or administrative services performed
on behalf of the bank's customers in connection with the establishment
of customer accounts and purchases of Class A Shares.
CLASS B SHARES
Class B Shares are sold at NAV. Under certain circumstances, a
contingent deferred sales charge will be assessed at the time of a
redemption. Orders for $250,000 or more of Class B Shares will
automatically be invested in Class A Shares.
CONVERSION OF CLASS B SHARES
Class B Shares will automatically convert into Class A Shares after
eight full years from the purchase date. Such conversion will be on
the basis of the relative NAVs per Share, without the imposition of
any charges. Class B Shares acquired by exchange from Class B Shares
of another Federated Fund will convert into Class A Shares based on
the time of the initial purchase.
REDEEMING AND EXCHANGING SHARES
Shares of the Fund may be redeemed for cash or exchanged for Shares of
the same class of other Federated Funds on days on which the Fund
computes its NAV. Shares are redeemed at NAV less any applicable
contingent deferred sales charge. Exchanges are made at NAV.
Shareholders who desire to automatically exchange Shares, of a like
class, in a pre-determined amount on a monthly, quarterly, or annual
basis may take advantage of a systematic exchange privilege.
Information on this privilege is available from the Fund or your
financial intermediary. Depending upon the circumstances, a capital
gain or loss may be realized when Shares are redeemed or exchanged.
REDEEMING OR EXCHANGING SHARES THROUGH A FINANCIAL INTERMEDIARY
Shares of the Fund may be redeemed or exchanged by contacting your
financial intermediary before 4:00 p.m. (Eastern time). In order for
these transactions to be processed at that day's NAV, financial
intermediaries (other than broker/dealers) must transmit the request
to the Fund before 4:00 p.m. (Eastern time), while broker/dealers must
transmit the request to the Fund before 5:00 p.m. (Eastern time). The
financial intermediary is responsible for promptly submitting
transaction requests and providing proper written instructions.
Customary fees and commissions may be charged by the financial
intermediary for this service. Appropriate authorization forms for
these transactions must be on file with the Fund.
REDEEMING OR EXCHANGING SHARES BY TELEPHONE
Shares acquired directly from the Fund may be redeemed in any amount,
or exchanged, by calling 1-800-341-7400. Appropriate authorization
forms for these transactions must be on file with the Fund. Shares
held in certificate form must first be returned to the Fund as
described in the instructions under "Redeeming or Exchanging Shares by
Mail." Redemption proceeds will either be mailed in the form of a
check to the shareholder's address of record or wire-transferred to
the shareholder's account at a domestic commercial bank that is a
member of the Federal Reserve System. The minimum amount for a wire
transfer is $1,000. Proceeds from redeemed Shares purchased by check
or through ACH will not be wired until that method of payment has
cleared.
Telephone instructions will be recorded. If reasonable procedures are
not followed by the Fund, it may be liable for losses due to
unauthorized or fraudulent telephone instructions. In the event of
drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If this occurs, "Redeeming or
Exchanging Shares By Mail" should be considered. The telephone
transaction privilege may be modified or terminated at any time.
Shareholders would be promptly notified.
REDEEMING OR EXCHANGING SHARES BY MAIL
Shares may be redeemed in any amount, or exchanged, by mailing a
written request to: Federated Shareholder Services Company, Fund Name,
Share Class, P.O. Box 8600, Boston, MA 02266-8600. If share
certificates have been issued, they must accompany the written
request. It is recommended that certificates be sent unendorsed by
registered or certified mail.
All written requests should state: Fund Name and the Share Class name;
the account name as registered with the Fund; the account number; and
the number of Shares to be redeemed or the dollar amount of the
transaction. An exchange request should also state the name of the
Fund into which the exchange is to be made. All owners of the account
must sign the request exactly as the Shares are registered. A check
for redemption proceeds is normally mailed within one business day,
but in no event more than seven days, after receipt of a proper
written redemption request. Dividends are paid up to and including the
day that a redemption or exchange request is processed.
REQUIREMENTS FOR REDEMPTION
Shareholders requesting a redemption of any amount to be sent to an
address other than that on record with the Fund, or a redemption
payable other than to the shareholder of record, must have their
signatures guaranteed by a commercial or savings bank, trust company
or savings association whose deposits are insured by an organization
which is administered by the Federal Deposit Insurance Corporation; a
member firm of a domestic stock exchange; or any other "eligible
guarantor institution," as defined in the Securities Exchange Act of
1934. The Fund does not accept signatures guaranteed by a notary
public.
REQUIREMENTS FOR EXCHANGE
Shareholders must exchange Shares having an NAV equal to the minimum
investment requirements of the fund into which the exchange is being
made. Contact your financial intermediary directly or the Fund for
free information on, and prospectuses for, the Federated Funds into
which your Shares may be exchanged. Before the exchange, the
shareholder must receive a prospectus of the fund for which the
exchange is being made.
Upon receipt of proper instructions and required supporting documents,
Shares submitted for exchange are redeemed and proceeds invested in
the same class of shares of the other fund. Signature guarantees will
be required to exchange between fund accounts not having identical
shareholder registrations. The exchange privilege may be modified or
terminated at any time. Shareholders will be notified of the
modification or termination of the exchange privilege.
SYSTEMATIC WITHDRAWAL PROGRAM
Under this program, Shares are redeemed to provide for periodic
withdrawal payments in an amount directed by the shareholder. To be
eligible to participate in this program, a shareholder must have an
account value of at least $10,000, other than retirement accounts
subject to required minimum distributions. A shareholder may apply for
participation in this program through his financial intermediary or by
calling the Fund.
Because participation in this program may reduce, and eventually
deplete the shareholder's investment in the Fund, payments under this
program should not be considered as yield or income. It is not
advisable for shareholders to continue to purchase Class A Shares
subject to a sales charge while participating in this program. A
contingent deferred sales charge may be imposed on Class B Shares.
CONTINGENT DEFERRED SALES CHARGE
The contingent deferred sales charge will be deducted from the
redemption proceeds otherwise payable to the shareholder and will be
retained by the distributor. Redemptions will be processed in a manner
intended to maximize the amount of redemption which will not be
subject to a contingent deferred sales charge. The contingent deferred
sales charge will not be imposed with respect to Shares acquired
through the reinvestment of dividends or distributions of long-term
capital gains. In determining the applicability of the contingent
deferred sales charge, the required holding period for your new Shares
received through an exchange will include the period for which your
original Shares were held.
ELIMINATING THE CONTINGENT DEFERRED SALES CHARGE
Upon written notification to Federated Securities Corp. or the
transfer agent, no contingent deferred sales charge will be
imposed on redemptions:
following the death or disability, as defined in Section 72(m)(7)
of the Internal Revenue Code of 1986, of the last surviving
shareholder;
representing minimum required distributions from an Individual
Retirement Account or other retirement plan to a shareholder who
has attained the age of 70 1/2;
which are involuntary redemptions of shareholder accounts that do
not comply with the minimum balance requirements;
which are qualifying redemptions of Class B Shares under a
Systematic Withdrawal Program;
which are reinvested in the Fund under the reinvestment
privilege;
of Shares held by Trustees, employees and sales representatives
of the Fund, the distributor, or affiliates of the Fund or
distributor, employees of any financial intermediary that sells
Shares of the Fund pursuant to a sales agreement with the
distributor, and their immediate family members to the extent
that no payments were advanced for purchases made by these
persons; and
of Shares originally purchased through a bank trust department,
an investment adviser registered under the Investment Advisers
Act of 1940 or retirement plans where the third party
administrator has entered into certain arrangements with
Federated Securities Corp. or its affiliates, or any other
financial intermediary, to the extent that no payments were
advanced for purchases made through such entities. For more
information regarding the elimination of the contingent deferred
sales charge through a Systematic Withdrawal Program, or any of
the above provisions, contact your financial intermediary or the
Fund. The Fund reserves the right to discontinue or modify these
provisions. Shareholders will be notified of such action.
ACCOUNT AND SHARE INFORMATION
CONFIRMATIONS AND ACCOUNT STATEMENTS
Shareholders will receive detailed confirmations of transactions
(except for systematic program transactions). In addition,
shareholders will receive periodic statements reporting all account
activity, including dividends paid. The Fund will not issue share
certificates.
DIVIDENDS AND DISTRIBUTIONS
Dividends are declared and paid monthly to all shareholders invested
in the Fund on the record date. Net long-term capital gains realized
by the Fund, if any, will be distributed at least once every twelve
months. Dividends and distributions are automatically reinvested in
additional Shares of the Fund on payment dates at the ex-dividend date
without a sales charge, unless shareholders request cash payments on
the new account form or by contacting the transfer agent.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the
Fund may close an account by redeeming all Shares and paying the
proceeds to the shareholder if the account balance falls below the
applicable minimum investment amount. Retirement plan accounts and
accounts where the balance falls below the minimum due to NAV changes
will not be closed in this manner. Before an account is closed, the
shareholder will be notified and allowed 30 days to purchase
additional Shares to meet the minimum.
TRUST INFORMATION
MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES
The Trust is managed by a Board of Trustees. The Trustees are
responsible for managing the business affairs of the Trust and for
exercising all of the powers of the Trust except those reserved for
the shareholders. The Executive Committee of the Board of Trustees
handles the Trustees' responsibilities between meetings of the Board.
INVESTMENT ADVISER
Pursuant to an investment advisory contract with the Trust, investment
decisions for the Fund are made by Federated Advisers, the Fund's
investment adviser (the "Adviser"), subject to direction by the
Trustees. The Adviser continually conducts investment research and
supervision for the Fund and is responsible for the purchase or sale
of portfolio instruments, for which it receives an annual fee from the
Fund.
ADVISORY FEES
The Adviser receives an annual investment advisory fee equal to
0.40% of the Fund's average daily net assets. The Adviser may
voluntarily choose to waive a portion of its fee or reimburse the
Fund for certain operating expenses. The Adviser can terminate this
voluntary waiver or reimbursement of expenses at any time in its
sole discretion.
ADVISER'S BACKGROUND
Federated Advisers, a Delaware business trust organized on April
11, 1989, is a registered investment adviser under the Investment
Advisers Act of 1940. It is a subsidiary of Federated Investors.
All of the Class A (voting) shares of Federated Investors are owned
by a trust, the Trustees of which are John F. Donahue, Chairman and
Trustee of Federated Investors, Mr. Donahue's wife, and Mr.
Donahue's son, J. Christopher Donahue, who is President and Trustee
of Federated Investors.
Federated Advisers and other subsidiaries of Federated Investors
serve as investment advisers to a number of investment companies
and private accounts. Certain other subsidiaries also provide
administrative services to a number of investment companies. With
over $110 billion invested across more than 300 funds under
management and/or administration by its subsidiaries, as of
December 31, 1996, Federated Investors is one of the largest mutual
fund investment managers in the United States. With more than 2,000
employees, Federated continues to be led by the management who
founded the company in 1955. Federated funds are presently at work
in and through 4,500 financial institutions nationwide.
J. Scott Albrecht has been the Fund's portfolio manager since March
1995. Mr. Albrecht joined Federated Investors in 1989 and has been
a Vice President of the Fund's investment adviser since 1994. From
1992 to 1994, Mr. Albrecht served as an Assistant Vice President of
the Fund's investment adviser. Mr. Albrecht is a Chartered
Financial Analyst and received his M.S. in Public Management from
Carnegie Mellon University.
Mary Jo Ochson has been the Fund's portfolio manager since April
1997. Ms. Ochson joined Federated Investors in 1982 and has been
a Senior Vice President of the Fund's investment adviser since
January 1996. From 1988 through 1995, Ms. Ochson served as a Vice
President of the Fund's investment adviser. Ms. Ochson is a
Chartered Financial Analyst and received her M.B.A. in Finance
from the University of Pittsburgh.
Both the Trust and the Adviser have adopted strict codes of ethics
governing the conduct of all employees who manage the Fund and its
portfolio securities. These codes recognize that such persons owe a
fiduciary duty to the Fund's shareholders and must place the interests
of shareholders ahead of the employees' own interest. Among other
things, the codes: require preclearance and periodic reporting of
personal securities transactions; prohibit personal transactions in
securities being purchased or sold, or being considered for purchase
or sale, by the Fund; prohibit purchasing securities in initial public
offerings; and prohibit taking profits on securities held for less
than sixty days. Violation of the codes are subject to review by the
Trustees, and could result in severe penalties.
DISTRIBUTION OF SHARES
Federated Securities Corp. is the principal distributor for
Shares of the Fund. It is a Pennsylvania corporation organized on
November 14, 1969, and is the principal distributor for a number of
investment companies. Federated Securities Corp. is a subsidiary of
Federated Investors.
DISTRIBUTION AND SHAREHOLDER SERVICES PLANS
Under a distribution plan adopted in accordance with Investment
Company Act Rule 12b-1 (the "Distribution Plan"), the Fund may pay to
the distributor an amount, computed at an annual rate of 0.25% of the
average daily NAV of Class A Shares and 0.75% of the average daily net
asset value of Class B Shares to finance any activity which is
principally intended to result in the sale of Shares subject to the
Distribution Plan. The distributor may select financial institutions
such as banks, fiduciaries, custodians for public funds, investment
advisers, and broker/dealers to provide sales services or distribution
related support services as agents for their clients or customers.
With respect to Class B Shares, because distribution fees to be paid
by the Fund to the distributor may not exceed an annual rate of 0.75%
of Class B Shares' average daily net assets, it will take the
distributor a number of years to recoup the expenses it has incurred
for its sales services and distribution-related support services
pursuant to the Distribution Plan.
The Distribution Plan for Class A Shares is presently not paying or
accruing 12b-1 fees.
The Distribution Plan is a compensation-type plan. As such, the Fund
makes no payments to the distributor except as described above.
Therefore, the Fund does not pay for unreimbursed expenses of the
distributor, including amounts expended by the distributor in excess
of amounts received by it from the Fund, interest, carrying or other
financing charges in connection with excess amounts expended, or the
distributor's overhead expenses. However, the distributor may be able
to recover such amount or may earn a profit from future payments made
by the Fund under the Distribution Plan.
In addition, the Fund has entered into a Shareholder Services
Agreement with Federated Shareholder Services, a subsidiary of
Federated Investors, under which the Fund may make payments up to
0.25% of the average daily NAV of both Class A Shares and Class B
Shares, computed at an annual rate, to obtain certain personal
services for shareholders and to maintain shareholder accounts. Under
the Shareholder Services Agreement, Federated Shareholder Services
will either perform shareholder services directly or will select
financial institutions to perform shareholder services. Financial
institutions will receive fees based upon Shares owned by their
clients or customers. The schedules of such fees and the basis upon
which such fees will be paid will be determined from time to time by
the Fund and Federated Shareholder Services.
SUPPLEMENTAL PAYMENTS TO FINANCIAL INSTITUTIONS
Federated Securities Corp. may pay financial institutions, at the time
of purchase of Class A Shares, an amount equal to 0.50% of the net
asset value of Class A Shares purchased by their clients or customers
under certain qualified retirement plans as approved by Federated
Securities Corp. (Such payments are subject to a reclaim from the
financial institution should the assets leave the program within 12
months after purchase.)
Furthermore, with respect to both Class A Shares and Class B Shares,
in addition to payments made pursuant to the Distribution and
Shareholder Services Plans, Federated Securities Corp. and Federated
Shareholder Services, from their own assets, may pay financial
institutions supplemental fees for the performance of substantial
sales services, distribution-related support services, or shareholder
services. The support may include sponsoring sales, educational and
training seminars for their employees, providing sales literature, and
engineering computer software programs that emphasize the attributes
of the Fund. Such assistance will be predicated upon the amount of
Shares the financial institution sells or may sell and/or upon the
type and nature of sales or marketing support furnished by the
financial institution. Any payments made by the distributor may be
reimbursed by the Adviser or its affiliates.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES
Federated Services Company, a subsidiary of Federated Investors,
provides administrative personnel and services (including certain
legal and financial reporting services) necessary to operate the Fund.
Federated Services Company provides these at an annual rate which
relates to the average aggregate daily net assets of all funds advised
by affiliates of Federated Investors as specified below:
MAXIMUM AVERAGE AGGREGATE
FEE DAILY NET ASSETS
0.150% on the first $250 million
0.125% on the next $250 million
0.100% on the next $250 million
0.075% on assets in excess of $750 million
The administrative fee received during any fiscal year shall be at
least $125,000 per portfolio and $30,000 per each additional class of
shares. Federated Services Company may choose voluntarily to waive a
portion of its fee.
SHAREHOLDER INFORMATION
Each Share of the Fund gives the shareholder one vote in Trustee
elections and other matters submitted to shareholders for vote. All
Shares of each portfolio or class in the Fund have equal voting
rights, except that in matters affecting only a particular portfolio
or class, only Shares of that portfolio or class are entitled to vote.
Trustees may be removed by the Trustees or shareholders at a special
meeting. A special meeting of shareholders shall be called by the
Trustees upon the written request of shareholders owning at least 10%
of the Fund's outstanding Shares of all series entitled to vote.
As of October 6, 1997, the following shareholder of record owned 25%
or more of the outstanding Class F Shares of the Fund: Merrill Lynch
Pierce Fenner & Smith (as record owner holding Class F Shares for its
clients), Jacksonville, Florida, owned approximately 1,010,776 Shares
(46.85%) and, therefore, may, for certain purposes, be deemed to
control the Fund and be able to affect the outcome of certain matters
presented for a vote of shareholders.
TAX INFORMATION
FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet
requirements of the Code applicable to regulated investment companies
and to receive the special tax treatment afforded to such companies.
The Fund will be treated as a single, separate entity for federal
income tax purposes so that income (including capital gains) and
losses realized by the Trust's other portfolios will not be combined
for tax purposes with those realized by the Fund.
Shareholders are not required to pay federal regular income tax on any
dividends received from the Fund that represent net interest on
tax-exempt municipal bonds, although tax-exempt interest will increase
the taxable income of certain recipients of social security benefits.
However, under the Tax Reform Act of 1986, dividends representing net
interest income earned on some municipal bonds may be included in
calculating the federal individual alternative minimum tax or the
federal alternative minimum tax for corporations.
The alternative minimum tax, up to 28% of alternative minimum taxable
income for individuals and 20% for corporations, applies when it
exceeds the regular tax for the taxable year. Alternative minimum
taxable income is equal to the regular taxable income of the taxpayer
increased by certain "tax preference" items not included in regular
taxable income and reduced by only a portion of the deductions allowed
in the calculation of the regular tax.
The Tax Reform Act of 1986 treats interest on certain "private
activity" bonds issued after August 7, 1986, as a tax preference item
for both individuals and corporations. Unlike traditional governmental
purpose municipal bonds, which finance roads, schools, libraries,
prisons, and other public facilities, private activity bonds provide
benefits to private parties. The Fund may purchase all types of
municipal bonds, including private activity bonds. Thus, should it
purchase any such bonds, a portion of the Fund's dividends may be
treated as a tax preference item.
In addition, in the case of a corporate shareholder, dividends of the
Fund which represent interest on municipal bonds will become subject
to the 20% corporate alternative minimum tax because the dividends are
included in a corporation's "adjusted current earnings." The corporate
alternative minimum tax treats 75% of the excess of a taxpayer's
pre-tax "adjusted current earnings" over the taxpayer's alternative
minimum taxable income as a tax preference item. "Adjusted current
earnings" is based upon the concept of a corporation's "earnings and
profits." Since "earnings and profits" generally includes the full
amount of any Fund dividend, and alternative minimum taxable income
does not include the portion of the Fund's dividend attributable to
municipal bonds which are not private activity bonds, the difference
will be included in the calculation of the corporation's alternative
minimum tax.
Dividends of the Fund representing net interest income earned on some
temporary investments and any realized net short-term gains are taxed
as ordinary income.
These tax consequences apply whether dividends are received in cash or
as additional Shares. Information on the tax status of dividends and
distributions is provided annually.
CALIFORNIA INCOME TAXES
Under existing California laws, distributions made by the Fund will
not be subject to California individual income taxes provided that
such distributions qualify as "exempt-interest dividends" under the
California Revenue and Taxation Code, and provided further that at the
close of each quarter, at least 50 percent of the value of the total
assets of the Fund consists of obligations the interest on which is
exempt from California taxation under either the Constitution or laws
of California or the Constitution or laws of the United States. The
Fund will furnish its shareholders with a written note designating
exempt-interest dividends within 60 days after the close of its
taxable year. Conversely, to the extent that distributions made by the
Fund are derived from other types of obligations, such distributions
will be subject to California individual income taxes.
Dividends of the Fund are not exempt from the California taxes payable
by corporations.
STATE AND LOCAL TAXES
Income from the Fund is not necessarily free from taxes in states
other than California. Shareholders are urged to consult their own tax
advisers regarding the status of their accounts under state and local
tax laws.
PERFORMANCE INFORMATION
From time to time, the Fund advertises the total return, yield, and
tax-equivalent yield for each class of shares.
Total return represents the change, over a specific period of time, in
the value of an investment in Shares after reinvesting all income and
capital gains distributions. It is calculated by dividing that change
by the initial investment and is expressed as a percentage.
The yield of Shares is calculated by dividing the net investment
income per share (as defined by the SEC) earned by each class of
shares over a thirty-day period by the maximum offering price per
share of each class of shares on the last day of the period. This
number is then annualized using semi-annual compounding. The
tax-equivalent yield of each class of shares is calculated similarly
to the yield, but is adjusted to reflect the taxable yield hat each
class of shares would have had to earn to equal its actual yield,
assuming a specific tax rate. The yield and the tax-equivalent yield
do not necessarily reflect income actually earned by each class of
shares and, therefore, may not correlate to the dividends or other
distributions paid to shareholders.
The performance information reflects the effect of the maximum sales
charge and other similar non-recurring charges, such as the contingent
deferred sales charge, which, if excluded, would increase the total
return, yield, and tax-equivalent yield.
Total return and yield will be calculated separately for Class A
Shares and Class B Shares.
From time to time, advertisements for Class A Shares and Class B
Shares of the Fund may refer to ratings, rankings and other
information in certain financial publications and/or compare the
performance of Class A Shares and Class B Shares to certain indices.
<PAGE>
FEDERATED CALIFORNIA MUNICIPAL INCOME FUND
(A Portfolio of Municipal Securities Income Trust)
Class A Shares (Formerly, Class F Shares)
Class B Shares
Prospectus
December __, 1997
A Non-Diversified Portfolio of Municipal Securities Income Trust,
An Open-End, Management Investment Company
FEDERATED CALIFORNIA MUNICIPAL INCOME FUND
CLASS A SHARES (FORMERLY, CLASS F SHARES)
CLASS B SHARE
Federated Investors Tower
Pittsburgh, PA 15222-3779
DISTRIBUTOR
Federated Securities Corp.
Federated Investors Tower
Pittsburgh, PA 15222-3779
INVESTMENT ADVISER
Federated Advisers
Federated Investors Tower
Pittsburgh, PA 15222-3779
CUSTODIAN
State Street Bank and
Trust Company
P.O. Box 8600
Boston, MA 02266-8600
TRANSFER AGENT
AND DIVIDEND
DISBURSING AGENT
Federated Shareholder
Services Company
P.O. Box 8600
Boston, MA 02266-8600
INDEPENDENT AUDITORS
Deloitte & Touche LLP
2500 One PPG Place
Pittsburgh, PA 15222-5401
Cusip 625922109
2092918A (12/97)
FEDERATED CALIFORNIA MUNICIPAL INCOME FUND
Class A Shares (Formerly, Class F Shares)
Class B Shares
(A Portfolio of Municipal Securities Income Trust)
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information should be read with the
prospectus of Federated California Municipal Income Fund (the "Fund"),
a portfolio of Municipal Securities Income Trust (the "Trust") dated
December __, 1997. This Statement is not a prospectus. You may request
a copy of a prospectus or a paper copy of this Statement, if you have
received it electronically, free of charge by calling 1-800-341-7400.
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
STATEMENT DATED DECEMBER __, 1997
Cusip 625922109
2092918B (12/97)
<PAGE>
GENERAL INFORMATION ABOUT THE FUND 1
- ---------------------------------------------------------------
INVESTMENT OBJECTIVE AND POLICIES 1
Acceptable Investments 1
When-Issued and Delayed Delivery Transactions 2
Futures Transactions 2
Temporary Investments 3
Portfolio Turnover 3
INVESTMENT LIMITATIONS 3
- ---------------------------------------------------------------
California Investment Risks 4
MUNICIPAL SECURITIES INCOME TRUST MANAGEMENT 7
- ---------------------------------------------------------------
Fund Ownership 10
Trustees' Compensation 11
Trustee Liability 11
INVESTMENT ADVISORY SERVICES 11
- ---------------------------------------------------------------
Adviser to the Fund 11
Advisory Fees 12
OTHER SERVICES 12
- ---------------------------------------------------------------
Fund Administration 12
Custodian and Portfolio Accountant 12
Transfer Agent 12
Independent Auditors 12
BROKERAGE TRANSACTIONS 12
- ---------------------------------------------------------------
PURCHASING SHARES 13
Quantity Discounta and Accumulated Purchases 13
Concurrent Purchases 13
Letter of Intent 13
Reinvestment Privilege 13
Conversion of Class B Shares 14
Distribution and Shareholder Services Plans 14
Conversion to Federal Funds 14
Purchases by Sales Representatives, Fund
Trustees, and Employees 14
DETERMINING NET ASSET VALUE 14
- ---------------------------------------------------------------
Valuing Municipal Bonds 15
Use of Amortized Cost 15
REDEEMING SHARES 15
- ---------------------------------------------------------------
Redemption in Kind 15
Contingent Deferred Sales Charge- Class B Shares 15
Massachusetts Partnership Law 16
TAX STATUS 16
- ---------------------------------------------------------------
The Fund's Tax Status 16
Shareholders' Tax Status 16
TOTAL RETURN 17
- ---------------------------------------------------------------
YIELD 17
TAX-EQUIVALENT YIELD 17
Tax-Equivalency Table 17
PERFORMANCE COMPARISONS 19
- ---------------------------------------------------------------
Economic and Market Information 19
ABOUT FEDERATED INVESTORS 19
- ---------------------------------------------------------------
Mutual Fund Market 20
Institutional Clients 20
Bank Marketing 20
Broker/Dealers and Bank Broker/Dealer
Subsidiaries 20
FINANCIAL STATEMENTS 20
- ---------------------------------------------------------------
APPENDIX 21
- ---------------------------------------------------------------
<PAGE>
GENERAL INFORMATION ABOUT THE FUND
- ---------------------------------------------------------------
The Fund is a portfolio of Municipal Securities Income Trust. The
Trust was established as a Massachusetts business trust under a
Declaration of Trust dated August 6, 1990. On March 31, 1996, the
Trustees approved changing the name of the Fund from California
Municipal Income Fund to Federated California Municipal Income Fund
and also approved changed the name of the Fund's shares from Fortress
Shares to Class F Shares. On November __, 1997, the Trustees approved
the name change of Class F Shares to Class A Shares and added an
additional class of shares called Class B Shares (individually and
collectively referred to as "Shares" as the context may require). This
Statement of Additional Information relates to both classes of shares.
INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is to provide current income exempt
from federal regular income tax (federal regular income tax does not
include the federal alternative minimum tax) and the personal income
taxes imposed by the state of California and California
municipalities. The investment objective cannot be changed without
approval of shareholders.
ACCEPTABLE INVESTMENTS
The Fund invests primarily in California municipal securities.
CHARACTERISTICS
The California municipal securities in which the Fund invests have
the characteristics set forth in the prospectus. If ratings made
by Moody's Investors Service, Inc. ("Moody's"), Standard & Poor's
Ratings Services ("S&P") or Fitch Investors Service L.P. ("Fitch")
change because of changes in those organizations or in their
rating systems, the Fund will try to use comparable ratings as
standards in accordance with the
investment policies described in the Fund's prospectus.
TYPES OF ACCEPTABLE INVESTMENTS
Examples of California municipal securities include: governmental
lease certificates of participation issued by state or municipal
authorities where payment is secured by installment payments for
equipment, buildings, or other facilities being leased by the state
or municipality;
o municipal notes and tax-exempt commercial paper;
o serial bonds;
o tax anticipation notes sold to finance working capital needs
of municipalities in anticipation of receiving taxes;
o bond anticipation notes sold in anticipation of the issuance
of long-term bonds;
o pre-refunded municipal bonds whose timely payment of
interest and principal is ensured by an escrow of U.S.
government obligations; and
o general obligation bonds.
PARTICIPATION INTERESTS
The financial institutions from which the Fund purchases
participation interests frequently provide or secure from another
financial institution irrevocable letters of credit or guarantees
and give the Fund the right to demand payment of the principal
amounts of the participation interests plus accrued interest on
short notice (usually within seven days).
VARIABLE-RATE MUNICIPAL SECURITIES
Variable interest rates generally reduce changes in the market
value of municipal securities from their original purchase prices.
Accordingly, as interest rates decrease or increase, the potential
for capital appreciation or depreciation is less for variable rate
municipal securities than for fixed income obligations. Many
municipal securities with variable interest rates purchased by the
Fund are subject to repayment of principal (usually within seven
days) on the Fund's demand. The terms of these variable-rate demand
instruments require payment of principal and accrued interest from
the issuer of the municipal obligations, the issuer of the
participation interests, or a guarantor of either issuer.
MUNICIPAL LEASES
The Fund may purchase municipal securities in the form of
participation interests which represent undivided proportional
interests in lease payments by a governmental or non-profit entity.
The lease payments and other rights under the lease provide for and
secure the payments on the certificates. Lease obligations may be
limited by municipal charter or the nature of the appropriation for
the lease. In particular, lease obligations may be subject to
periodic appropriation. If the entity does not appropriate funds
for future lease payments, the entity cannot be compelled to make
such payments. Furthermore, a lease may provide that the
certificate trustee cannot accelerate lease obligations upon
default. The trustee would only be able to enforce lease payments
as they became due. In the event of a default or failure of
appropriation, it is unlikely that the trustee would be able to
obtain an acceptable substitute source of payment. In determining
the liquidity of municipal lease securities, the investment
adviser, under the authority delegated by the Trustees, will base
its determination on the following factors:
o whether the lease can be terminated by the lessee;
o the potential recovery, if any, from a sale of the leased
property upon termination of the lease;
o the lessee's general credit strength (e.g., its debt,
administrative, economic and financial characteristics and
prospects);
o the likelihood that the lessee will discontinue
appropriating funding for the leased property because the
property is no longer deemed essential to its operations
(e.g., the potential for an "event of nonappropriation ");
and
o any credit enhancement or legal recourse provided upon an
event of non-appropriation or other termination of the
lease.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
These transactions are made to secure what is considered to be an
advantageous price or yield for the Fund. No fees or other expenses,
other than normal transaction costs, are incurred. However, liquid
assets of the Fund sufficient to make payment for the securities to be
purchased are segregated on the Fund's records at the trade date.
These assets are marked to market daily and are maintained until the
transaction has been settled. The Fund does not intend to engage in
when-issued and delayed delivery transactions to an extent that would
cause the segregation of more than 20% of the total value of its
assets.
FUTURES TRANSACTIONS
A futures contract is a firm commitment by two parties: the seller who
agrees to make delivery of the specific type of security called for in
the contract ("going short") and the buyer who agrees to take delivery
of the security ("going long") at a certain time in the future. In the
fixed income securities market, price moves inversely to interest
rates. A rise in rates means a drop in price. Conversely, a drop in
rates means a rise in price. In order to hedge its holdings of fixed
income securities against a rise in market interest rates, the Fund
could enter into contracts to deliver securities at a predetermined
price (i.e., "go short") to protect itself against the possibility
that the prices of its fixed income securities may decline during the
Fund's anticipated holding period. The Fund would agree to purchase
securities in the future at a predetermined price (i.e., "go long") to
hedge against a decline in market interest rates.
"MARGIN" IN FUTURES TRANSACTIONS
Unlike the purchase or sale of a security, the Fund does not pay or
receive money upon the purchase or sale of a futures contract.
Rather, the Fund is required to deposit an amount of "initial
margin" in cash or cash equivalents with its custodian (or the
broker, if legally permitted). The nature of initial margin in
futures transactions is different from that of margin in securities
transactions in that futures contract initial margin does not
involve the borrowing of funds by the Fund to finance the
transactions. Initial margin is in the nature of a performance bond
or good faith deposit on the contract which is returned to the Fund
upon termination of the futures contract, assuming all contractual
obligations have been satisfied.
A futures contract held by the Fund is valued daily at the official
settlement price of the exchange on which it is traded. Each day
the Fund pays or receives cash, called "variation margin," equal to
the daily change in value of the futures contract. This process is
known as "marking to market." Variation margin does not represent a
borrowing or loan by the Fund but is instead settlement between the
Fund and the broker of the amount one would owe the other if the
futures contract expired. In computing its daily net asset value
("NAV"), the Fund will mark-to-market its open futures positions.
TEMPORARY INVESTMENTS
The Fund may also invest in temporary investments during times of
unusual market conditions for defensive purposes.
REPURCHASE AGREEMENTS
Repurchase agreements are arrangements in which banks,
broker/dealers, and other recognized financial institutions sell
U.S. government securities or certificates of deposit to the Fund
and agree at the time of sale to repurchase them at a mutually
agreed upon time and price within one year from the date of
acquisition. The Fund or its custodian will take possession of the
securities subject to repurchase agreements. To the extent that the
original seller does not repurchase the securities from the Fund,
the Fund could receive less than the repurchase price on any sale
of such securities. In the event that such a defaulting seller
filed for bankruptcy or became insolvent, disposition of such
securities by the Fund might be delayed pending court action. The
Fund believes that under the regular procedures normally in effect
for custody of the Fund's portfolio securities subject to
repurchase agreements, a court of competent jurisdiction would rule
in favor of the Fund and allow retention or disposition of such
securities. The Fund may only enter into repurchase agreements with
banks and other recognized financial institutions such as
broker/dealers which are found by the Fund's investment adviser to
be creditworthy pursuant to guidelines established by the Trustees.
From time to time, such as when suitable California municipal bonds
are not available, the Fund may invest a portion of its assets in
cash. Any portion of the Fund's assets maintained in cash will reduce
the amount of assets in California municipal bonds and thereby reduce
the Fund's yield.
REVERSE REPURCHASE AGREEMENTS
The Fund may also enter into reverse repurchase agreements. This
transaction is similar to borrowing cash. In a reverse repurchase
agreement the Fund transfers possession of a portfolio instrument
to another person, such as a financial institution, broker, or
dealer, in return for a percentage of the instrument's market value
in cash, and agrees that on a stipulated date in the future the
Fund will repurchase the portfolio instrument by remitting the
original consideration plus interest at an agreed upon rate. The
use of reverse repurchase agreements may enable the Fund to avoid
selling portfolio instruments at a time when a sale may be deemed
to be disadvantageous, but the ability to enter into reverse
repurchase agreements does not ensure that the Fund will be able to
avoid selling portfolio instruments at a disadvantageous time.
When effecting reverse repurchase agreements, liquid assets of the
Fund, in a dollar amount sufficient to make payment for the
obligations to be purchased, are segregated on the Fund's records
at the trade date. These assets are marked to market daily and are
maintained until the transaction is settled.
PORTFOLIO TURNOVER
The Fund may trade or dispose of portfolio securities as considered
necessary to meet its investment objective. For the fiscal years ended
August 31, 1997 and 1996, the Fund's portfolio turnover rates were __%
and 21%, respectively.
INVESTMENT LIMITATIONS
SELLING SHORT AND BUYING ON MARGIN
The Fund will not sell any securities short or purchase any
securities on margin but may obtain such short-term credits as may be
necessary for clearance of purchases and sales of securities.
ISSUING SENIOR SECURITIES AND BORROWING MONEY
The Fund will not issue senior securities except that the Fund may
borrow money and engage in reverse repurchase agreements in amounts
up to one-third of the value of its total assets, including the
amounts borrowed.
The Fund will not borrow money or engage in reverse repurchase
agreements for investment leverage, but rather as a temporary,
extraordinary, or emergency measure to facilitate management of the
portfolio by enabling the Fund to, for example, meet redemption
requests when the liquidation of portfolio securities is deemed to
be inconvenient or disadvantageous. The Fund will not purchase any
securities while borrowings in excess of 5% of its total assets are
outstanding.
PLEDGING ASSETS
The Fund will not mortgage, pledge, or hypothecate its assets
except to secure permitted borrowings. In those cases, it may
mortgage, pledge, or hypothecate assets having a market value not
exceeding 10% of the value of its total assets at the time of the
pledge.
UNDERWRITING
The Fund will not underwrite any issue of securities except as it
may be deemed to be an underwriter under the Securities Act of 1933
in connection with the sale of securities in accordance with its
investment objective, policies, and limitations.
INVESTING IN REAL ESTATE
The Fund will not purchase or sell real estate although it may
invest in municipal bonds secured by real estate, including limited
partnership interests, or interests in real estate.
INVESTING IN COMMODITIES
The Fund will not buy or sell commodities, commodity contracts, or
commodities futures contracts.
LENDING CASH OR SECURITIES
The Fund will not lend any of its assets except that it may acquire
publicly or non-publicly issued municipal bonds or temporary
investments or enter into repurchase agreements in accordance with
its investment objective, policies, and limitations or its
Declaration of Trust.
DEALING IN PUTS AND CALLS
The Fund will not buy or sell puts, calls, straddles, spreads, or
any combination of these.
CONCENTRATION OF INVESTMENTS
The Fund will not purchase securities if, as a result of such
purchase, 25% or more of the value of its total assets would be
invested in any one industry or in industrial development bonds or
other securities, the interest upon which is paid from revenues of
similar types of projects. However, the Fund may invest as
temporary investments more than 25% of the value of its assets in
cash or cash items, securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities, or instruments
secured by these money market instruments, i.e., repurchase
agreements.
The above investment limitations cannot be changed without shareholder
approval. The following limitations, however, may be changed by the
Trustees without shareholder approval. Shareholders will be notified
before any material change in these limitations becomes effective.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES
The Fund will not purchase securities of other investment companies
except as part of a merger, consolidation, or other acquisition.
INVESTING IN RESTRICTED SECURITIES
The Fund will not invest more than 10% of the value of its total
assets in securities subject to restrictions on resale under the
Securities Act of 1933.
INVESTING IN ILLIQUID SECURITIES
The Fund will not invest more than 15% of its net assets in
illiquid obligations, including repurchase agreements providing for
settlement in more than seven days after notice, and certain
restricted securities.
Except with respect to borrowing money, if a percentage limitation is
adhered to at the time of investment, a later increase or decrease in
percentage resulting from any change in value or net assets will not
result in a violation of such restriction. For purposes of its
policies and limitations, the Fund considers certificates of deposit
and demand and time deposits issued by a U.S. branch of a domestic
bank or savings association having capital, surplus, and undivided
profits in excess of $100,000,000 at the time of investment to be
"cash items."
CALIFORNIA INVESTMENT RISKS
LIMITS ON TAXING AND SPENDING AUTHORITY
Developments in California which constrain the taxing and spending
authority of California governmental entities could adversely
affect the ability of such entities to meet their interest and/or
principal payment obligations on securities they have issued or
will issue. The following information constitutes only a brief
summary and is not intended as a complete description.
In 1978, a statewide referendum approved Proposition 13, an
amendment to the California Constitution limiting both the
valuation of real property for property tax purposes and the power
of local taxing authorities to increase real property tax revenues.
To provide revenue to local governments, legislation was enacted
shortly thereafter providing for the redistribution to local
governments of the state's then existing surplus in its General
Fund, reallocation of revenues to local governments, and assumption
by the state of certain local government obligations. More recent
California legislation has, however, reduced state assistance
payments to local governments and reallocated a portion of such
payments to the state's General Fund.
There can be no assurance that any particular level of state aid to
local governments will be maintained in future years. The U.S.
Supreme Court has accepted for review a case challenging the
constitutionality of certain provisions of Proposition 13. The
outcome of such litigation could substantially impact local
property tax collections and the ability of state agencies, local
governments and districts to make future payments on outstanding
debt obligations.
In 1979, California voters again amended the California
Constitution, this time imposing an appropriations limit on the
spending authority of certain state and local government entities.
The state's appropriations limit is based on its 1978-1979 fiscal
year authorizations to expend proceeds of taxes and is adjusted
annually to reflect changes in cost of living and population and
transfer of financial responsibility from one governmental unit to
another. If a California governmental entity raises revenues beyond
its appropriations limit, the excess must be returned to the
entity's taxpayers within the two subsequent fiscal years,
generally by a tax credit, refund, or temporary suspension of tax
rates or fee schedules.
These spending limitations do not, however, apply to the debt
service on obligations existing or legally authorized as of January
1, 1979, or on bonded indebtedness thereafter approved by the
voters. In 1986, California voters approved an initiative statute
known as Proposition 62. This initiative (i) requires that any tax
for general governmental purposes imposed by local governments be
approved by resolution or ordinance adopted by a two-thirds vote of
the governmental entity's legislative body and by a majority vote
of the electorate of the governmental entity, (ii) requires that
any special tax (defined as taxes levied for other than general
governmental purposes) imposed by a local governmental entity be
approved by a two- thirds vote of the voters within that
jurisdiction, (iii) restricts the use of revenues from a special
tax to the purposes or for the service for which the special tax
was imposed, (iv) prohibits the imposition of ad valorem taxes on
real property by local governmental entities except as permitted by
the Proposition 13 amendment, (v) prohibits the imposition of
transaction taxes and sales taxes on the sale of real property by
local governments, (vi) requires that any tax imposed by a local
government on or after August 1, 1985, be ratified by a majority
vote of the electorate within two years of the adoption of the
initiative or be terminated by November 15, 1988, (vii) requires
that, in the event a local government fails to comply with the
provisions of this measure, a reduction in the amount of property
tax revenue allocated to such local government occurs in an amount
equal to the revenues received by such entity attributable to the
tax levied in violation of the initiative, and (viii) permits these
provisions to be amended exclusively by the voters of the state of
California.
In September 1988, the California Court of Appeals in City of
Westminster v. County of Orange held that Proposition 62 is
unconstitutional to the extent that it requires a general tax by a
general law city, enacted on or after August 1, 1985, and prior to
the effective date of Proposition 62, to be subject to approval by
a majority of voters. The Court held that the California
Constitution prohibits the imposition of a requirement that local
tax measures be submitted to the electorate by either referendum or
initiative. It is not possible to predict the impact of this
decision on charter cities, on special taxes or on new taxes
imposed after the effective date of Proposition 62.
In November 1988, California voters approved Proposition 98. This
initiative requires that (i) revenues in excess of amounts
permitted to be spent and which would otherwise be returned by
revision of tax rates or fee schedules, be transferred and
allocated (up to a maximum of 4%) to the State School Fund and be
expended solely for purposes of instructional improvement and
accountability. No such transfer or allocation of funds will be
required if certain designated state officials determine that
annual student expenditures and class size meet certain criteria as
set forth in Proposition 98. Any funds allocated to the State
School Fund shall cause the appropriation limits to be annually
increased for any such allocation made in the prior year.
Proposition 98 also requires the state of California to provide a
minimum level of funding for public schools and community colleges.
The initiative permits the enactment of legislation, by a
two-thirds vote, to suspend the minimum funding requirement for one
year. On September 28, 1995, the California Supreme Court upheld
the constitutionality of Proposition 62. This referendum was
approved by the State's voters in 1986, but not enforced due to
previous judicial decisions. Proposition 62 requires two-thirds
voter approval for special taxes and a new simple majority approval
for general taxes. Prior to the State Supreme Court's decision
upholding Proposition 62 (the Santa Clara decision) various court
cases interpreting Proposition 13 reaffirmed the power of cities to
impose taxes, other than property taxes, as long as those taxes
were used for general municipal purposes. The future effect of
Proposition 62 on the financial performance of California local
governments and on note and debt security is unclear. It is
possible that court challenges, based on Proposition 62, to taxes
raised or imposed after 1986 may reduce general municipal revenues
available for financing municipal operations and services,
including the repayment of debt. The effect of these various
constitutional and statutory changes upon the ability of California
municipal securities issuers to pay interest and principal on their
obligations remains unclear. Furthermore, other measures affecting
the taxing or spending authority of California or its political
subdivisions may be approved or enacted in the future.
RECENT ECONOMIC DEVELOPMENTS
The California economy is in recovery. Statewide unemployment in
August, 1997 was ___%, compared to 7.1% in August, 1996. Major
sectors of employment growth have been high tech industries and
motion picture production. Gains in these and other sectors have
more than offset continued job losses in the aerospace and
financial services industries. Other positive economic developments
include greatly increased exports, new home construction and retail
sales.
AS A RESULT OF THE IMPROVEMENT IN THE ECONOMY, TAX REVENUES HAVE
BEEN HIGHER THAN BUDGETED. IN THE FIRST QUARTER OF FISCAL YEAR
1997, THE STATE'S GENERAL (OPERATING) FUND REVENUES WERE $91
MILLION (1.5%) ABOVE THE BUDGET FORECAST AND DISBURSEMENTS WERE
$385 MILLION (5.5%) LESS THAN THE BUDGET FORECAST. IN VIEW OF THE
IMPROVED ECONOMIC CLIMATE AND RESULTING STRONGER FINANCIAL RESULTS,
FITCH INVESTORS SERVICE, INC. RAISED THEIR RATING OF THE STATE'S
GENERAL OBLIGATION BONDS TO A+ FROM A IN JULY, 1996.
<PAGE>
MUNICIPAL SECURITIES INCOME TRUST MANAGEMENT
Officers and Trustees are listed with their addresses, birthdates,
present positions with Municipal Securities Income Trust, and
principal occupations.
John F. Donahue@*
Federated Investors Tower
Pittsburgh, PA
Birthdate: July 28, 1924
Chairman and Trustee
Chairman and Trustee, Federated Investors, Federated Advisers,
Federated Management, and Federated Research; Chairman and Director,
Federated Research Corp. and Federated Global Research Corp.;
Chairman, Passport Research, Ltd.; Chief Executive Officer and
Director or Trustee of the Funds.Mr. Donahue is the father of J.
Christopher Donahue, Executive Vice President and Trustee of the
Company.
Thomas G. Bigley
15 Old Timber Trail
Pittsburgh, PA
Birthdate: February 3, 1934
Trustee
Chairman of the Board, Children's Hospital of Pittsburgh; formerly,
Senior Partner, Ernst & Young LLP; Director, MED 3000 Group, Inc.;
Director, Member of Executive Committee, University of Pittsburgh;
Director or Trustee of the Funds.
John T. Conroy, Jr.
Wood/IPC Commercial Department
John R. Wood and Associates, Inc., Realtors
3255 Tamiami Trail North
Naples, FL
Birthdate: June 23, 1937
Trustee
President, Investment Properties Corporation; Senior
Vice-President, John R. Wood and Associates, Inc., Realtors; Partner
or Trustee in private real estate ventures in Southwest Florida;
formerly, President, Naples Property Management, Inc. and Northgate
Village Development Corporation; Director or Trustee of the Funds.
William J. Copeland
One PNC Plaza - 23rd Floor
Pittsburgh, PA
Birthdate: July 4, 1918
Trustee
Director and Member of the Executive Committee, Michael Baker, Inc.;
formerly, Vice Chairman and Director, PNC Bank, N.A., and PNC Bank
Corp.; Director, Ryan Homes, Inc.; Director or Trustee of the Funds.
J. Christopher Donahue *
Federated Investors Tower
Pittsburgh, PA
Birthdate: April 11, 1949
Executive Vice President and Trustee
President and Trustee, Federated Investors, Federated Advisers,
Federated Management, and Federated Research; President and Director,
Federated Research Corp. and Federated Global Research Corp.;
President, Passport Research, Ltd.; Trustee, Federated Shareholder
Services Company, and Federated Shareholder Services; Director,
Federated Services Company; President or Executive Vice President of
the Funds; Director or Trustee of some of the Funds. Mr. Donahue is
the son of John F. Donahue, Chairman and Trustee of the Company.
James E. Dowd
571 Hayward Mill Road
Concord, MA
Birthdate: May 18, 1922
Trustee
Attorney-at-law; Director, The Emerging Germany Fund, Inc.;
Director or Trustee of the Funds.
Lawrence D. Ellis, M.D.*
3471 Fifth Avenue, Suite 1111
Pittsburgh, PA
Birthdate: October 11, 1932
Trustee
Professor of Medicine, University of Pittsburgh; Medical Director,
University of Pittsburgh Medical Center - Downtown; Member, Board of
Directors, University of Pittsburgh Medical Center; formerly,
Hematologist, Oncologist, and Internist, Presbyterian and Montefiore
Hospitals; Director or Trustee of the Funds.
Edward L. Flaherty, Jr.@
Miller, Ament, Henny & Kochuba
205 Ross Street
Pittsburgh, PA
Birthdate: June 18, 1924
Trustee
Attorney of Counsel, Miller, Ament, Henny & Kochuba; Director, Eat'N
Park Restaurants, Inc.; formerly, Counsel, Horizon Financial, F.A.,
Western Region; Director or Trustee of the Funds.
Peter E. Madden
One Royal Palm Way
100 Royal Palm Way
Palm Beach, FL
Birthdate: March 16, 1942
Trustee
Consultant; Former State Representative, Commonwealth of
Massachusetts; formerly, President, State Street Bank and Trust
Company and State Street Boston Corporation; Director or Trustee of
the Funds.
Gregor F. Meyer
203 Kensington Ct.
Pittsburgh, PA
Birthdate: October 6, 1926
Trustee
Chairman, Meritcare, Inc.; Director, Eat'N Park Restaurants, Inc.;
Retired from the law firm of Miller, Ament, Henny & Kochuba; Director
or Trustee of the Funds.
John E. Murray, Jr., J.D., S.J.D.
President, Duquesne University
Pittsburgh, PA
Birthdate: December 20, 1932
Trustee
President, Law Professor, Duquesne University; Consulting Partner,
Mollica & Murray; Director or Trustee of the Funds.
Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, PA
Birthdate: September 14, 1925
Trustee
Professor, International Politics; Management Consultant; Trustee,
Carnegie Endowment for International Peace, RAND Corporation, Online
Computer Library Center, Inc., National Defense University and U.S.
Space Foundation; President Emeritus, University of Pittsburgh;
Founding Chairman, National Advisory Council for Environmental Policy
and Technology, Federal Emergency Management Advisory Board and Czech
Management Center, Prague; Director or Trustee of the Funds.
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA
Birthdate: June 21, 1935
Trustee
Public relations/Marketing/Conference Planning; Director or Trustee of the
Funds.
Richard B. Fisher
Federated Investors Tower
Pittsburgh, PA
Birthdate: May 17, 1923
President
Executive Vice President and Trustee, Federated Investors; Chairman
and Director, Federated Securities Corp.; President or Vice President
of some of the Funds; Director or Trustee of some of the Funds.
Edward C. Gonzales
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 22, 1930
Executive Vice President
Vice Chairman, Treasurer, and Trustee, Federated Investors; Vice
President, Federated Advisers, Federated Management, Federated
Research, Federated Research Corp., Federated Global Research Corp.
and Passport Research, Ltd.; Executive Vice President and Director,
Federated Securities Corp.; Trustee, Federated Shareholder Services
Company; Trustee or Director of some of the Funds; President,
Executive Vice President and Treasurer of some of the Funds.
John W. McGonigle
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 26, 1938
Executive Vice President , Secretary and Treasurer
Executive Vice President, Secretary, and Trustee, Federated Investors;
Trustee, Federated Advisers, Federated Management, and Federated
Research; Director, Federated Research Corp. and Federated Global
Research Corp.; Trustee, Federated Shareholder Services Company;
Director, Federated Services Company; President and Trustee, Federated
Shareholder Services; Director, Federated Securities Corp.; Executive
Vice President and Secretary of the Funds; Treasurer of some of the
Funds.
* This Trustee is deemed to be an "interested person" as
defined in the Investment Company Act of 1940.
@ Member of the Executive Committee. The Executive Committee
of the Board of Trustees handles the responsibilities of the
Board between meetings of the Board.
As used in the table above, "The Funds" and "Funds" mean the following
investment companies: 111 Corcoran Funds; Arrow Funds; Automated
Government Money Trust; Blanchard Funds; Blanchard Precious Metals
Fund, Inc.; Cash Trust Series II; Cash Trust Series, Inc. ; DG
Investor Series; Edward D. Jones & Co. Daily Passport Cash Trust;
Federated Adjustable Rate U.S. Government Fund, Inc.; Federated
American Leaders Fund, Inc.; Federated ARMs Fund; Federated Equity
Funds; Federated Equity Income Fund, Inc.; Federated Fund for U.S.
Government Securities, Inc.; Federated GNMA Trust; Federated
Government Income Securities, Inc.; Federated Government Trust;
Federated High Income Bond Fund, Inc.; Federated High Yield Trust;
Federated Income Securities Trust; Federated Income Trust; Federated
Index Trust; Federated Institutional Trust; Federated Insurance
Series; Federated Investment Portfolios; Federated Investment Trust;
Federated Master Trust; Federated Municipal Opportunities Fund, Inc.;
Federated Municipal Securities Fund, Inc.; Federated Municipal Trust;
Federated Short-Term Municipal Trust; Federated Short-Term U.S.
Government Trust; Federated Stock and Bond Fund, Inc.; Federated Stock
Trust; Federated Tax-Free Trust; Federated Total Return Series, Inc.;
Federated U.S. Government Bond Fund; Federated U.S. Government
Securities Fund: 1-3 Years; Federated U.S. Government Securities Fund:
2-5 Years; Federated U.S. Government Securities Fund: 5-10 Years;
Federated Utility Fund, Inc.; First Priority Funds; Fixed Income
Securities, Inc.; High Yield Cash Trust; Intermediate Municipal Trust;
International Series, Inc.; Investment Series Funds, Inc.; Investment
Series Trust; Liberty Term Trust, Inc. - 1999; Liberty U.S. Government
Money Market Trust; Liquid Cash Trust; Managed Series Trust; Money
Market Management, Inc.; Money Market Obligations Trust; Money Market
Obligations Trust II; Money Market Trust; Municipal Securities Income
Trust; Newpoint Funds; RIMCO Monument Funds; Targeted Duration Trust;
Tax-Free Instruments Trust; The Planters Funds; The Virtus Funds;
Trust for Financial Institutions; Trust for Government Cash Reserves;
Trust for Short-Term U.S. Government Securities; Trust for U.S.
Treasury Obligations; WesMark Funds; and World Investment Series, Inc.
FUND OWNERSHIP
Officers and Trustees own less than 1% of the outstanding Shares.
As of October 6, 1997, the following shareholder of record owned 5% or
more of the outstanding Shares of the Fund: Merrill Lynch Pierce
Fenner & Smith, Jacksonville, Florida, owned approximately 1,010,776
Shares (46.85%).
<TABLE>
<CAPTION>
TRUSTEES COMPENSATION
AGGREGATE
NAME, COMPENSATION
POSITION WITH TOTAL COMPENSATION PAID
TRUST TRUST*# FROM FUND COMPLEX+
<S> <C> <C>
John F. Donahue $ -0- $ -0- for the Trust and
Trustee and Chairman 56 other investment companies in the Fund Complex
Thomas G. Bigley $1,217 $108,725 for the Trust and
Trustee 56 other investment companies in the Fund Complex
John T. Conroy $1,341 $119,615 for the Trust and
Trustee 56 other investment companies in the Fund Complex
William J. Copeland $1,341 $119,615 for the Trust and
Trustee 56 other investment companies in the Fund Complex
J. Christopher Donahue $ -0- $ -0- for the Trust and
Trustee and Exec. Vice Pres. 18 other investment companies in the Fund Complex
James E. Dowd $1,341 $119,615 for the Trust and
Trustee 56 other investment companies in the Fund Complex
Lawrence D. Ellis, M.D. $1,217 $108,725 for the Trust and
Trustee 56 other investment companies in the Fund Complex
Edward L. Flaherty, Jr. $1,341 $119,615 for the Trust and
Trustee 56 other investment companies in the Fund Complex
Peter E. Madden $1,217 $108,725 for the Trust and
Trustee 56 other investment companies in the Fund Complex
Gregor F. Meyer $1,217 $108,725 for the Trust and
Trustee 56 other investment companies in the Fund Complex
John E. Murray, Jr. $1,217 $108,725 for the Trust and
Trustee 56 other investment companies in the Fund Complex
Wesley W. Posvar $1,217 $108,725 for the Trust and
Trustee 56 other investment companies in the Fund Complex
Marjorie P. Smuts $1,217 $108,725 for the Trust and
Trustee 56 other investment companies in the Fund
Complex
</TABLE>
* Information is furnished for the fiscal year ended August 31, 1997.
# The aggregate compensation is provided for the Trust which is
comprised of five portfolios.
The information is provided for the last calendar year.
TRUSTEE LIABILITY
The Trust's Declaration of Trust provides that the Trustees will not
be liable for errors of judgment or mistakes of fact or law. However,
they are not protected against any liability to which they would
otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence, or reckless disregard of the duties involved in the
conduct of their office.
INVESTMENT ADVISORY SERVICES
ADVISER TO THE FUND
The Fund's investment adviser is Federated Advisers (the "Adviser").
It is a subsidiary of Federated Investors. All the voting securities of
Federated Investors are owned by a trust, the trustees of which are John F.
Donahue, his wife and his son, J. Christopher Donahue.
The Adviser shall not be liable to the Trust, the Fund or any
shareholder of the Fund for any losses that may be sustained in the
purchase, holding, or sale of any security, or for anything done or
omitted by it, except acts or omissions involving willful misfeasance,
bad faith, gross negligence, or reckless disregard of the duties
imposed upon it by its contract with the Trust.
ADVISORY FEES
For its advisory services, the Adviser receives an annual investment
advisory fee as described in the prospectus. For the fiscal years
ended August 31, 1997, 1996 and 1995, the Adviser earned advisory fees
of $____, $62,691, and $56,899 respectively, all of which were
voluntarily waived.
OTHER SERVICES
FUND ADMINISTRATION
Federated Services Company, a subsidiary of Federated Investors,
provides administrative personnel and services to the Fund for a fee
as described in the prospectus. From March 1, 1994, to March 1, 1996,
Federated Administrative Services, a subsidiary of Federated
Investors, served as the Fund's Administrator. For purposes of this
Statement of Additional Information, Federated Services Company and
Federated Administrative Services, may hereinafter collectively be
referred to as the "Administrators." For the fiscal years ended August
31, 1997, 1996, and 1995, the Administrators collectively earned
$______, $125,000, and $125,000 respectively.
CUSTODIAN AND PORTFOLIO ACCOUNTANT
State Street Bank and Trust Company ("State Street Bank"), Boston, MA,
is custodian for the securities and cash of the Fund. Federated
Services Company, Pittsburgh, PA, provides certain accounting and
recordkeeping services with respect to the Fund's portfolio
investments. The fee paid for this service is based upon the level of
the Fund's average net assets for the period plus out-of-pocket
expenses.
TRANSFER AGENT
Federated Services Company, through it registered transfer agent,
Federated Shareholder Services Company, maintains all necessary
shareholder records. For its services, the transfer agent receives a
fee based on the size, type and number of accounts and transactions
made by shareholders.
INDEPENDENT AUDITORS
The independent auditors for the Fund are Deloitte & Touche LLP,
Pittsburgh, PA.
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of
portfolio instruments, the Adviser looks for prompt execution of the
order at a favorable price. In working with dealers, the Adviser will
generally use those who are recognized dealers in specific portfolio
instruments, except when a better price and execution of the order can
be obtained elsewhere. The Adviser makes decisions on portfolio
transactions and selects brokers and dealers subject to review by the
Trustees. The Adviser may select brokers and dealers who offer
brokerage and research services. These services may be furnished
directly to the Fund or to the Adviser and may include: advice as to
the advisability of investing in securities; security analysis and
reports; economic studies; industry studies; receipt of quotations for
portfolio evaluations; and similar services. Research services
provided by brokers and dealers may be used by the Adviser or by its
affiliates in advising the Fund and other accounts. To the extent that
receipt of these services may supplant services for which the Adviser
or its affiliates might otherwise have paid, it would tend to reduce
their expenses. The Adviser and its affiliates exercise reasonable
business judgment in selecting brokers who offer brokerage and
research services to execute securities transactions. The y determine
in good faith that commissions charged by such persons are reasonable
in relationship to the value of the brokerage and research services
provided. During the fiscal years ended August 31, 1997, 1996, and
1995, the Fund paid no brokerage commissions. Although investment
decisions for the Fund are made independently from those of the other
accounts managed by the Adviser, investments of the type the Fund may
make may also be made by those other accounts. When the Fund and one
or more other accounts managed by the Adviser are prepared to invest
in, or desire to dispose of, the same security, available investments
or opportunities for sales will be allocated in a manner believed by
the Adviser to be equitable to each. In some cases, this procedure may
adversely affect the price paid or received by the Fund or the size of
the position obtained or disposed of by the Fund. In other cases,
however, it is believed that coordination and the ability to
participate in volume transactions will be to the benefit of the Fund.
PURCHASING SHARES
Except under certain circumstances described in the prospectus, Shares
are sold at their net asset value (plus a sales charge on Class A
Shares only) on days the New York Stock Exchange is open for business.
The procedure for purchasing Shares is explained in the prospectus
under "Investing in the Fund" and "Purchasing Shares."
QUANTITY DISCOUNTS AND ACCUMULATED PURCHASES
As described in the prospectus, larger purchases reduce or eliminate
the sales charge paid. The Fund will combine purchases of Class A
Shares made on the same day by the investor, the investor's spouse,
and the investor's children under age 21 when it calculates the sales
charge. In addition, the sales charge, if applicable, is reduced for
purchases made at one time by a trustee or fiduciary for a single
trust estate or a single fiduciary account.
If an additional purchase of Class A Shares is made, the Fund will
consider the previous purchases still invested in the Fund. For
example, if a shareholder already owns Class A Shares having a current
value at the public offering price of $90,000 and he purchases $10,000
more at the current public offering price, the sales charge on the
additional purchase according to the schedule now in effect would be
3.75%, not 4.50%.
To receive the sales charge reduction, Federated Securities Corp. must
be notified by the shareholder in writing or by his financial
intermediary at the time the purchase is made that Class A Shares are
already owned or that purchases are being combined. The Fund will
reduce or eliminate the sales charge after it confirms the purchases.
CONCURRENT PURCHASES
For purposes of qualifying for a sales charge reduction or
elimination, a shareholder has the privilege of combining concurrent
purchases of Class A Shares of two or more funds for which affiliates
of Federated Investors serve as investment adviser and principal
underwriter (the "Federated Funds"), the purchase prices of which
include a sales charge. For example, if a shareholder concurrently
invested $80,000 in the Class A Shares of one of the other Federated
Funds with a sales charge, and $20,000 in this Fund, the sales charge
would be reduced.
To receive this sales charge reduction or elimination, Federated
Securities Corp. must be notified by the shareholder in writing or by
his financial intermediary at the time the concurrent purchases are
made. The Fund will reduce or eliminate the sales charge after it
confirms the purchases.
LETTER OF INTENT
If a shareholder intends to purchase a specific dollar amount of Class
A Shares over the next 13 months, the sales charge may be reduced if
the shareholder signs a letter of intent to that effect. For example,
if a shareholder intends to purchase at least $100,000 of Class A
Shares of Federated Funds (excluding money market funds) over the next
13 months, the sales charge may be reduced by signing a letter of
intent to that effect. This letter of intent includes a provision for
a sales charge adjustment depending on the amount actually purchased
within the 13-month period and a provision for the custodian to hold
up to 4.50% of the total amount intended to be purchased in escrow (in
Class A Shares) until such purchase is completed.
The Shares held in escrow in the shareholder's account will be
released upon fulfillment of the letter of intent or the end of the
13-month period, whichever comes first. If the amount specified in the
letter of intent is not purchased, an appropriate number of escrowed
Shares may be redeemed in order to realize the sales charge.
While this letter of intent will not obligate the shareholder to
purchase Class A Shares, each purchase during the period will be at
the sales charge applicable to the total amount intended to be
purchased. At the time a letter of intent is established, current
balances in accounts in any Class A Shares of any Federated Funds,
excluding money market accounts, will be aggregated to provide a
purchase credit towards fulfillment of the letter of intent. The
letter may be dated as of a prior date to include any purchase made
within the past 90 days. Prior trade prices will not be adjusted.
REINVESTMENT PRIVILEGE
If Class A Shares in the Fund have been redeemed, the shareholder has
the privilege, within 120 days, to reinvest the redemption proceeds at
the next-determined net asset value without any sales charge.
Similarly, shareholders who redeem Class B Shares may be reinvested in
the same Share class within 120 days but would not be entitled to a
reimbursement of the contingent deferred sales charge if paid at the
time of redemption. However, such reinvested shares would not be
subject to a contingent deferred sales charge upon later redemption.
In addition, if the Class B Shares were reinvested through a financial
intermediary, the financial intermediary would not be entitled to an
advanced payment from Federated Securities Corp. on the reinvested
Shares. Federated Securities Corp. must be notified by the shareholder
in writing or by his financial intermediary of the reinvestment in
order to eliminate a sales charge or a contingent deferred sales
charge. If the shareholder redeems Shares in the Fund, there may be
tax consequences.
CONVERSION OF CLASS B SHARES
Class B Shares will automatically convert into Class A Shares on or
around the 15th of the month eight full years from the purchase date
and will no longer be subject to a fee under the distribution plan.
For purposes of conversion to Class A Shares, Shares purchased through
the reinvestment of dividends and distributions paid on Class B Shares
will be considered to be held in a separate sub-account. Each time any
Class B Shares in the shareholder's account (other than those in the
sub-account) convert to Class A Shares, an equal pro rata portion of
the Class B Shares in the sub-account will also convert to Class A
Shares. The conversion of Class B Shares to Class A Shares is subject
to the continuing availability of a ruling from the Internal Revenue
Service or an opinion of counsel that such conversions will not
constitute taxable events for federal tax purposes. There can be no
assurance that such ruling or opinion will be available, and the
conversion of Class B Shares to Class A Shares will not occur if such
a ruling or opinion is not available. In such event, Class B Shares
would continue to be subject to higher expenses than Class A Shares
for an indefinite period.
DISTRIBUTION AND SHAREHOLDER SERVICES PLANS
These arrangements permit the payment of fees to financial
institutions, the distributor, and Federated Shareholder Services, to
stimulate distribution activities and to cause services to be provided
to shareholders by a representative who has knowledge of the
shareholder's particular circumstances and goals. These activities and
services may include, but are not limited to, marketing efforts;
providing office space, equipment, telephone facilities, and various
clerical, supervisory, computer, and other personnel as necessary or
beneficial to establish and maintain shareholder accounts and records;
processing purchase and redemption transactions and automatic
investments of client account cash balances; answering routine client
inquiries; and assisting clients in changing dividend options, account
designations, and addresses.
By adopting the Distribution Plan, the Trustees expect that the Fund
will be able to achieve a more predictable flow of cash for investment
purposes and to meet redemptions. This will facilitate more efficient
portfolio management and assist the Fund in pursuing its investment
objectives. By identifying potential investors whose needs are served
by the Fund's objectives, and properly servicing these accounts, it
may be possible to curb sharp fluctuations in rates of redemptions and
sales.
Other benefits, which may be realized under either arrangement, may
include: (1) providing personal services to shareholders; (2)
investing shareholder assets with a minimum of delay and
administrative detail; (3) enhancing shareholder recordkeeping
systems; and (4) responding promptly to shareholders' requests and
inquiries concerning their accounts.
For the fiscal years ended August 31, 1997, 1996, and 1995, payments
in the amount of $_____, $78,364, and $71,122, respectively, were made
by Class A Shares pursuant to the Distribution Plan, of which $______,
$75,229, and $68,277, respectively, were waived. In addition, for the
fiscal year ended August 31, 1997, the Fund's Class A Shares paid
shareholder service fees in the amount of $______, of which $_____were
waived.
CONVERSION TO FEDERAL FUNDS
It is the Fund's policy to be as fully invested as possible so that
maximum interest may be earned. To this end, all payments from
shareholders must be in federal funds or be converted into federal
funds before shareholders begin to earn dividends. State Street Bank
acts as the shareholder's agent in depositing checks and converting
them to federal funds.
PURCHASES BY SALES REPRESENTATIVES, FUND TRUSTEES, AND EMPLOYEES
The following individuals and their immediate family members may buy
Class A Shares at net asset value without a sales charge:
o Trustees, employees, and sales representatives of the Fund,
Federated Advisers, and Federated Securities Corp. and its
affiliates;
o Federated Life Members; and
o any associated person of an investment dealer who has a
sales agreement with Federated Securities Corp. Shares may
also be sold without a sales charge to trusts, pensions, or
profit-sharing plans for these individuals.
These sales are made with the purchaser's written assurance that the
purchase is for investment purposes and that the securities will not
be resold except through redemption by the Fund.
DETERMINING NET ASSET VALUE
The Fund's net asset value per Share fluctuates and is based on the
market value of all securities and other assets of the Fund. The net
asset value for each class of Shares may differ due to the variance in
daily net income realized by each class.
Net asset value is not determined on (i) days on which there are not
sufficient changes in the value of the Fund's portfolio securities
that its net asset value might be materially affected; (ii) days
during which no Shares are tendered for redemption and no orders to
purchase Shares are received; or (iii) the following holidays: New
Year's Day, Martin Luther King Day, President's Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and
Christmas Day.
VALUING MUNICIPAL BONDS
The Trustees use an independent pricing service to determine the
market value of municipal bonds. The independent pricing service takes
into consideration yield, stability, risk, quality, coupon rate,
maturity, type of issue, trading characteristics, special
circumstances of a security or trading market, and any other factors
or market data it considers relevant in determining valuations for
normal institutional size trading units of debt securities, and does
not rely exclusively on quoted prices.
USE OF AMORTIZED COST
The Trustees have decided that the fair value of debt securities
authorized to be purchased by the Fund with remaining maturities of 60
days or less at the time of purchase, shall be their amortized cost
value, unless the particular circumstances of the security indicate
otherwise. Under this method, portfolio instruments and assets are
valued at the acquisition cost as adjusted for amortization of premium
or accumulation of discount rather than at current market value. The
Executive Committee continually assesses this method of valuation and
recommends changes where necessary to assure that the Fund's portfolio
instruments are valued at their fair value as determined in good faith
by the Trustees.
REDEEMING SHARES
The Fund redeems Shares at the next computed net asset value after the
Fund receives the redemption request. Shareholder redemptions may be
subject to a contingent deferred sales charge. Redemption procedures
are explained in the respective prospectuses under "Redeeming and
Exchanging Shares." Although the transfer agent does not charge for
telephone redemptions, it reserves the right to charge a fee for the
cost of wire-transferred redemptions of less than $5,000.
REDEMPTION IN KIND
The Trust is obligated to redeem Shares solely in cash up to $250,000
or 1% of the respective class's net asset value, whichever is less,
for any one shareholder within a 90-day period.
Any redemption beyond this amount will also be in cash unless the
Trustees determine that further cash payments will have a material
adverse effect on remaining shareholders. In such a case, the Fund
will pay all or a portion of the remainder of the redemption in
portfolio instruments, valued in the same way that NAV is determined.
The portfolio instruments will be selected in a manner that the
Trustees deem fair and equitable.
Redemption in kind is not as liquid as a cash redemption. If
redemption is made in kind, shareholders receiving their securities
and selling them before their maturity could receive less than the
redemption value of their securities and could incur certain
transactions costs.
CONTINGENT DEFERRED SALES CHARGE -- CLASS B SHARES
In computing the amount of the applicable Contingent Deferred Sales
Charge, redemptions are deemed to have occurred in the following
order: (1) Shares acquired through the reinvestment of dividends and
long-term capital gains; (2) Shares held for more than six full years
from the date of purchase; (3) Shares held for fewer than six years on
a first-in, first-out basis.
ELIMINATION OF THE CONTINGENT DEFERRED SALES CHARGE--CLASS B SHARES
To qualify for elimination of the contingent deferred sales charge
through a Systematic Withdrawal Program, the redemptions of Class B
Shares must be from an account that is at least 12 months old, has
all Fund distributions reinvested in Fund Shares, and has an
account value of at least $10,000 when the Systematic Withdrawal
Program is established. Qualifying redemptions may not exceed 1.00%
monthly of the account value as periodically determined by the
Fund. The amounts that a shareholder may withdraw under a
Systematic Withdrawal Program that qualify for elimination of the
Contingent Deferred Sales Charge may not exceed 12% annually with
reference initially to the value of the Class B Shares upon
establishment of the Systematic Withdrawal Program and then as
calculated at the annual valuation date. Redemptions on a
qualifying Systematic Withdrawal Program can be made at a rate of
1.00% monthly, 3.00% quarterly, or 6.00% semi-annually with
reference to the applicable account valuation amount. Amounts that
exceed the 12.00% annual limit for redemption, as described, may be
subject to the Contingent Deferred Sales Charge. To the extent that
a shareholder exchanges Shares for Class B Shares of other
Federated Funds, the time for which the exchanged-for Shares are to
be held will be added to the time for which exchanged-from Shares
were held for purposes of satisfying the 12-month holding
requirement. However, for purposes of meeting the $10,000 minimum
account value requirement, Class B Share accounts will be not be
aggregated. Any Shares purchased prior to the termination of this
program would have the contingent deferred sales charge eliminated
as provided in the Fund's prospectus at the time of the purchase of
the Shares.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally
liable as partners under Massachusetts law for acts or obligations of
the Trust on behalf of the Fund. To protect shareholders of the Fund,
the Trust has filed legal documents with Massachusetts that expressly
disclaim the liability of shareholders of the Fund for such acts or
obligations of the Trust. These documents require notice of this
disclaimer to be given in each agreement, obligation, or instrument
that the Trust or its Trustees enter into or sign on behalf of the
Fund.
In the unlikely event a shareholder of the Fund is held personally
liable for the Trust's obligations on behalf of the Fund, the Trust is
required to use the property of the Fund to protect or compensate the
shareholder. On request, the Trust will defend any claim made and pay
any judgment against a shareholder of the Fund for any act or
obligation of the Trust on behalf of the Fund. Therefore, financial
loss resulting from liability as a shareholder of the Fund will occur
only if the Trust cannot meet its obligations to indemnify
shareholders and pay judgments against them from the assets of the
Fund.
TAX STATUS
THE FUND'S TAX STATUS
The Fund will pay no federal income tax because it expects to meet the
requirements of Subchapter M of the Internal Revenue Code of 1986, as
amended, applicable to regulated investment companies and to receive
the special tax treatment afforded to such companies. To qualify for
this treatment, the Fund must, among other requirements:
o derive at least 90% of its gross income from dividends,
interest, and gains from the sale of securities; o invest in
securities within certain statutory limits; and o distribute to
its shareholders at least 90% of its net income earned during the
year.
SHAREHOLDERS' TAX STATUS
CAPITAL GAINS
Capital gains or losses may be realized by the Fund on the sale of
portfolio securities and as a result of discounts from par value on
securities held to maturity. Sales would generally be made because of:
o the availability of higher relative yields;
o differentials in market values;
o new investment opportunities;
o changes in creditworthiness of an issuer; or
o an attempt to preserve gains or limit losses.
Distributions of long-term capital gains are taxed as such, whether
they are taken in cash or reinvested, and regardless of the length of
time the shareholder has owned Shares. Any loss by a shareholder on
Shares held for less than six months and sold after a capital gains
distribution will be treated as a long-term capital loss to the extent
of the capital gains distribution.
TOTAL RETURN
The Fund's average annual total return for Class A Shares for the
fiscal year ended August 31, 1997, and for the period from December 2,
1992 (date of initial public investment) to August 31, 1997, were
_____% and ____%, respectively.
The Fund's Class B Shares was not effective until December 1997.
The average annual total return FOR EACH CLASS OF SHARES of the Fund
is the average compounded rate of return for a given period that would
equate a $1,000 initial investment to the ending redeemable value of
that investment. The ending redeemable value is computed by
multiplying the number of Shares owned at the end of the period by the
offering price per Share at the end of the period. The number of
Shares owned at the end of the period is based on the number of Shares
purchased at the beginning of the period with $1,000, adjusted over
the period by any additional Shares, assuming the monthly reinvestment
of all dividends and distributions. Any applicable contingent deferred
sales charge is deducted from the ending value of the investment based
on the lesser of the original purchase price per Share or the offering
price per Share of Shares redeemed.
YIELD
The Fund's yield for Class A Shares for the thirty-day period ended
August 31, 1997 was ____%.
The Fund's Class B Shares was not effective until December 1997.
The yield for each class of shares of the Fund is determined by
dividing the net investment income per Share (as defined by the
Securities and Exchange Commission) earned by any class of shares over
a thirty-day period by the maximum offering price per Share of the
respective class on the last day of the period. This value is then
annualized using semi-annual compounding. This means that the amount
of income generated during the thirty-day period is assumed to be
generated each month over a twelve-month period and is reinvested
every six months. The yield does not necessarily reflect income
actually earned by any class of shares because of certain adjustments
required by the Securities and Exchange Commission and, therefore, may
not correlate to the dividends or other distributions paid to
shareholders. To the extent that financial institutions and
broker/dealers charge fees in connection with services provided in
conjunction with an investment in any class of shares of the Fund,
performance will be reduced for those shareholders paying those fees.
TAX-EQUIVALENT YIELD
The Fund's tax-equivalent yield for Class A Shares for the thirty-day
period ended August 31, 1997 was ____%.
The Fund's Class B Shares was not effective until December 1997.
The tax-equivalent yield for each class of shares of the Fund is
calculated similarly to the yield, but is adjusted to reflect the
taxable yield that any class would have had to earn to equal its
actual yield, assuming a 28% tax rate and assuming that income is 100%
tax-exempt.
TAX-EQUIVALENCY TABLE
The Fund may also use a tax-equivalency table in advertising and sales
literature. The interest earned by the municipal obligations in the
Fund's portfolio generally remains free from federal regular income
tax*, and the income taxes imposed by the state of California. As the
table below indicates, a "tax-free" investment is an attractive choice
for investors, particularly in times of narrow spreads between
tax-free and taxable yields.
<PAGE>
TAXABLE YIELD EQUIVALENT FOR 1997
STATE OF CALIFORNIA
COMBINED FEDERAL AND STATE INCOME TAX BRACKET:
23.00% 37.30% 40.30% 45.30% 48.90%
SINGLE $1 - $24,651 - $59,751 - $124,651 - OVER
RETURN 24,650 59,750 124,650 271,050 $271,050
TAX-EXEMPT
YIELD TAXABLE YIELD EQUIVALENT
1.50% 1.95% 2.39% 2.51% 2.74% 2.94%
2.00% 2.60% 3.19% 3.35% 3.66% 3.91%
2.50% 3.25% 3.99% 4.19% 4.57% 4.89%
3.00% 3.90% 4.78% 5.03% 5.48% 5.87%
3.50% 4.55% 5.58% 5.86% 6.40% 6.85%
4.00% 5.19% 6.38% 6.70% 7.31% 7.83%
4.50% 5.84% 7.18% 7.54% 8.23% 8.81%
5.00% 6.49% 7.97% 8.38% 9.14% 9.78%
5.50% 7.14% 8.77% 9.21% 10.05% 10.76%
Note: The maximum marginal tax rate for each bracket was used in
calculating the taxable yield equivalent. Furthermore, additional
state and local taxes paid on comparable taxable investments were not
used to increase federal deductions.
TAXABLE YIELD EQUIVALENT FOR 1997
STATE OF CALIFORNIA
COMBINED FEDERAL AND STATE INCOME TAX BRACKET:
21.00% 37.30% 40.30% 45.30% 48.90% 48.90%
JOINT $1 - $41,201 - $99,601 - $151,751 - $271,051 OVER
RETURN 41,200 99,600 151,750 271,050 439,744 $439,744
TAX-EXEMPT
YIELD TAXABLE YIELD EQUIVALENT
1.50% 1.90% 2.39% 2.51% 2.74% 2.94% 2.94%
2.00% 2.53% 3.19% 3.35% 3.66% 3.91% 3.91%
2.50% 3.16% 3.99% 4.19% 4.57% 4.89% 4.89%
3.00% 3.80% 4.78% 5.03% 5.48% 5.87% 5.87%
3.50% 4.43% 5.58% 5.86% 6.40% 6.85% 6.85%
4.00% 5.06% 6.38% 6.70% 7.31% 7.83% 7.83%
4.50% 5.70% 7.18% 7.54% 8.23% 8.81% 8.81%
5.00% 6.33% 7.97% 8.38% 9.14% 9.78% 9.78%
5.50% 6.96% 8.77% 9.21% 10.05% 10.76% 10.76%
Note: The maximum marginal tax rate for each bracket was used in
calculating the taxable yield equivalent. Furthermore, additional
state and local taxes paid on comparable taxable investments were not
used to increase federal deductions.
The chart above is for illustrative purposes only. It is not an
indicator of past or future performance of Shares.
*Some portion of the Fund's income may be subject to the federal
alternative minimum tax and state and local income taxes.
PERFORMANCE COMPARISONS
The performance of each class of shares depends upon such variables
as:
o portfolio quality;
o average portfolio maturity;
o type of instruments in which the portfolio is invested; o
changes in interest rates and market value of portfolio
securities;
o changes in the Fund's class expenses; and
o various other factors.
Either class of Shares' performance fluctuates on a daily basis
largely because net earnings and offering price per Share fluctuate
daily. Both net earnings and offering price per Share are factors in
the computation of yield and total return.
Investors may use financial publications and/or indices to obtain a
more complete view of the Fund's performance. When comparing
performance, investors should consider all relevant factors such as
the composition of any index used, prevailing market conditions,
portfolio compositions of other funds, and methods used to value
portfolio securities and compute offering price. The financial
publications and/or indices which the Fund uses in advertising may
include:
o LEHMAN BROTHERS REVENUE BOND INDEX is a total return
performance benchmark for the long-term, investment grade,
revenue bond market. Returns and attributes for the index
are calculated semi-monthly.
o LIPPER ANALYTICAL SERVICES, INC. ranks funds in various fund
categories by making comparative calculations using total
return. Total return assumes the reinvestment of all capital
gains distributions and income dividends and takes into
account any change in NAV over a specific period of time.
From time to time, the Fund will quote its Lipper ranking in
the "general municipal bond funds" category in advertising
and sales literature.
o MORNINGSTAR, INC,., an independent rating service, is the
publisher of the bi-weekly MUTUAL FUND VALUES. MUTUAL FUND
VALUES rates more than 1,000 NASDAQ-listed mutual funds of
all types, according to their risk-adjusted returns. The
maximum rating is five stars, and ratings are effective for
two weeks.
Advertisements and other sales literature for the Fund may quote total
returns which are calculated on non-standardized base periods. the
total returns represent the historic change in the value of an
investment in either class of shares based on monthly reinvestment of
dividends over a specified period of time. Advertisements for Class A
Shares may quote performance information which does not reflect the
effect of the sales charge.
Advertising and other promotional literature may include charts,
graphs and other illustrations using the Fund's returns, or returns in
general, that demonstrate basic investment concepts such as
tax-deferred compounding, dollar-cost averaging and systematic
investment. In addition, the Fund can compare its performance, or
performance for the types of securities in which it invests, to a
variety of other investments, such as bank savings accounts,
certificates of deposit, and Treasury bills.
ECONOMIC AND MARKET INFORMATION
Advertising and sales literature for the Fund may include discussions
of economic, financial and political developments and their effect on
the securities market. Such discussions may take the form of
commentary on these developments by Fund portfolio managers and their
views and analysis on how such developments could affect the Funds. In
addition, advertising and sales literature may quote statistics and
give general information about the mutual fund industry, including the
growth of the industry, from sources such as the Investment Company
Institute.
ABOUT FEDERATED INVESTORS
Federated Investors is dedicated to meeting investor needs which is
reflected in its investment decision making-structured,
straightforward, and consistent. This has resulted in a history of
competitive performance with a range of competitive investment
products that have gained the confidence of thousands of clients and
their customers.
The company's disciplined security selection process is firmly rooted
in sound methodologies backed by fundamental and technical research.
Investment decisions are made and executed by teams of portfolio
managers, analysts, and traders dedicated to specific market sectors.
These traders handle trillions of dollars in annual trading volume.
In the municipal sector, as of December 31, 1996, Federated Investors
managed 12 bond funds with approximately $2.0 billion in assets and 21
money market funds with approximately $9.5 billion in total assets. In
1976, Federated introduced one of the first municipal bond mutual
funds in the industry and is now one of the largest institutional
buyers of municipal securities. The Funds may quote statistics from
organizations including The Tax Foundation and the National Taxpayers
Union regarding the tax obligations of Americans.
J. Thomas Madden, Executive Vice President, oversees Federated
Investors' equity and high yield corporate bond management while
William D. Dawson, Executive Vice President, oversees Federated
Investors' domestic fixed income management. Henry A. Frantzen,
Executive Vice President, oversees the management of Federated
Investors' international and global portfolios.
MUTUAL FUND MARKET
Thirty-seven percent of American households are pursuing their
financial goals through mutual funds. These investors, as well as
businesses and institutions, have entrusted over $3.5 trillion to the
more than 6,000 funds available.*
Federated Investors, through its subsidiaries, distributes mutual
funds for a variety of investment applications. Specific markets
include:
INSTITUTIONAL CLIENTS
Federated Investors meets the needs of more than 4,000 institutional
clients nationwide by managing and servicing separate accounts and
mutual funds for a variety of applications, including defined benefit
and defined contribution programs, cash management, and
asset/liability management. Institutional clients include
corporations, pension funds, tax-exempt entities,
foundations/endowments, insurance companies, and investment and
financial advisors. The marketing effort to these institutional
clients is headed by John B. Fisher, President, Institutional Sales
Division.
BANK MARKETING
Other institutional clients include close relationships with more than
1,600 banks and trust organizations. Virtually all of the trust
divisions of the top 100 bank holding companies use Federated funds in
their clients' portfolios. The marketing effort to trust clients is
headed by Timothy C. Pillion, Senior Vice President, Bank Marketing &
Sales.
BROKER/DEALERS AND BANK BROKER/DEALER SUBSIDIARIES
Federated funds are available to consumers through major brokerage
firms nationwide--we have over 2,200 broker/dealer and bank
broker/dealer relationships across the country--supported by more
wholesalers than any other mutual fund distributor. Federated's
service to financial professionals and institutions has earned it high
ratings in several surveys performed by DALBAR , Inc. DALBAR is
recognized as the industry benchmark for service quality measurement.
The marketing effort to these firms is headed by James F. Getz,
President, President, Federated Securities Corp.
* source: Investment Company Institute
FINANCIAL STATEMENTS
The financial statements for the fiscal year ended August 31, 1997,
are incorporated herein by reference from the Fund's Annual Report
dated August 31, 1997. The unaudited Semi-Annual Report of the Fund,
dated February 28, 1997, is incorporated herein by reference. A copy
of the Annual Report and/or Semi-Annual Report for the Fund may be
obtained without charge by contacting the Fund at the address located
on the back cover of the Fund's Prospectus or by calling
1-800-341-7400.
<PAGE>
APPENDIX
STANDARD & POOR'S SERVICES GROUP ("S&P") MUNICIPAL BOND RATINGS
AAA--Debt rated "AAA" has the highest rating assigned by S&P. Capacity
to pay interest and repay principal is extremely strong.
AA--Debt rated "AA" has a very strong capacity to pay interest and
repay principal and differs from the higher rated issues only in small
degree.
A--Debt rated "A" has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than debt
in higher rated categories.
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.
NR--Indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does
not rate a particular type of obligation as a matter of policy.
PLUS (+) OR MINUS (-): The ratings from "AA" to "CCC" may be modified
by the addition of a plus or minus sign to show relative standing
within the major rating categories.
MOODY'S INVESTORS SERVICE, L.P. ("MOODY'S") MUNICIPAL BOND RATINGS
Aaa--Bonds which are rated Aaa are judged to be of the best quality.
The y 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. The y 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.
NR--Not rated by Moody's.
Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from Aa through B in its generic rating category; the
modifier 1 indicates that the security ranks in the higher end of its
generic rating category; the modifier 2 indicates a mid-range ranking;
and the modifier 3 indicates that the issue ranks in the lower end of
its generic rating category.
FITCH INVESTORS SERVICE, INC. ("FITCH") LONG-TERM DEBT RATINGS
AAA--Bonds considered to be investment grade and of the highest
credit quality. The obligor has an exceptionally strong ability to pay
interest and repay principal, which is unlikely to be affected by
reasonably foreseeable events.
AA--Bonds considered to be investment grade and of very high 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.
NR--NR indicates that Fitch does not rate the specific issue.
PLUS (+) OR MINUS (-): Plus and minus signs are used with a rating
symbol to indicate the relative position of a credit within the rating
category. Plus and minus signs, however, are not used in the "AAA"
category.
STANDARD & POOR'S RATINGS SERVICES MUNICIPAL NOTE RATINGS
SP-1--Very strong or strong capacity to pay principal and interest.
Those issues determined to possess overwhelming safety characteristics
will be given a plus (+) designation.
SP-2--Satisfactory capacity to pay principal and interest.
MOODY'S INVESTORS SERVICE, INC., SHORT-TERM LOAN RATINGS
MIG1/VMIG1--This designation denotes best quality. The re is a present
strong protection by established cash flows, superior liquidity
support or demonstrated broad based access to the market for
refinancing.
MIG2/VMIG2--This designation denotes high quality. Margins of
protection are ample although not so large as in the preceding group.
FITCH INVESTORS SERVICE, L.P. SHORT-TERM DEBT RATINGS
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 of 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 the F-1+ and F-1 categories.
STANDARD & POOR'S RATINGS SERVICES COMMERCIAL PAPER RATINGS DEFINITIONS
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."
MOODY'S INVESTORS SERVICE, INC., COMMERCIAL PAPER 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 structures 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.
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.
PART C. OTHER INFORMATION.
Item 24. FINANCIAL STATEMENTS AND EXHIBITS:
(a) Financial Statements (to be filed by Amendment).
(b) Exhibits:
(1) (i) Paper Copy of Declaration of Trust of the Registrant (1);
(ii) Paper Copy of Amendment No. 1 (dated August 26, 1991) to
Declaration of Trust (5);
(iii) Conformed Copy of Amendment No. 2 (dated August 6, 1990)
to the Declaration of Trust (6);
(iv) Conformed Copy of Amendment No. 3 (dated August 31, 1992)
to the Declaration of Trust (8);
(v) Conformed Copy of Amendment No. 4 (dated
September 17, 1992) to the Declaration of Trust (8);
(vi) Conformed Copy of Amendment No. 5 (dated February 4,
1993) to the Declaration of Trust (10);
(vii) Conformed Copy of Amendment No. 6 (dated May 24, 1993) to
the Declaration of Trust; (13)
(2) Copy of By-Laws of the Registrant (1);
(3) Not applicable;
(4) Copy of Specimen Certificate for Shares of Beneficial
Interest for:
(i) Federated Pennsylvania Municipal Income Fund-Class A
Shares; (19)
(ii) Federated Ohio Municipal Income Fund-Class F Shares;(19)
(iii) Federated California Municipal Income Fund-Class F
Shares; (19)
(iv) Federated New York Municipal Income Fund-Class F
Shares; (19)
(v) Federated Michigan Intermediate Municipal Trust; (19)
+ All exhibits are filed electronically.
1. Response is incorporated by reference to Registrant's
Initial Registration Statement on Form N-1A filed August 31,
1990. (File Nos. 33-36729 and 811-6165)
5. Response is incorporated by reference to Registrant's
Post-Effective Amendment No. 4 on Form N-1A filed on October
28, 1991. (File Nos. 33-36729 and 811-6165)
6. Response is incorporated by reference to Registrant's
Post-Effective Amendment No. 5 on Form N-1A filed on January
24, 1992. (File Nos. 33-36729 and 811-6165)
8. Response is incorporated by reference to Registrant's
Post-Effective Amendment No. 7 on Form N-1A filed on
September 25, 1992. (File Nos. 33-36729 and 811-6165)
10. Response is incorporated by reference to Registrant's
Post-Effective Amendment No. 10 on Form N-1A filed on March
24, 1993. (File Nos. 33-36729 and 811-6165)
13. Response is incorporated by reference to Registrant's
Post-Effective Amendment No. 13 on Form N-1A filed on July
2, 1993, (File Nos. 33-36729 and 811-6165)
19. Response is incorporated by reference to Registrant's
Post-Effective Amendment No. 21 on Form N-1A filed on
October 23, 1996, (File Nos. 33-36729 and 811-6165)
<PAGE>
(5) Conformed copy of new Investment Advisory Contract of the Registrant;+
(i) Copy of Amendment to Investment Advisory Contract (12)
(ii) Conformed Copies of Amendments to Investment Advisory Contract (14);
(iii) Conformed Copies of Amendments to Investment Advisory Contract (14);
(6) Conformed copy of Distributor's Contract of the Registrant;+
(i) Copy of Amendment to Distributor's Contract (12);
(ii) Conformed copy of Amendment to Distributor's Contract (14);
(iii) The Registrant incorporates the conformed copy of the specimen
Mutual Fund 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 filed
with the Commission on July 24, 1995. (File Number 33-38550 and 811-6269).
(7) Not applicable;
(8) Conformed Copy of Custodian Contract of the
Registrant (18);
(9) (i) Conformed Copy of Agreement for Fund
Accounting Services, Administrative
Services, Transfer Agency Services and
Custody Services Procurement; (19)
(ii) Conformed Copy of Shareholder
Services Agreement(17);
(iii) With regard to Federated California
Municipal Income Fund and Federated New
York Municipal Income Fund, the Registrant
hereby incorporates 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).
(iv) The response and exhibits described in Item
24(b)(6)(iii) are hereby incorporated by
reference;
+ All exhibits are filed electronically.
8. Response is incorporated by reference to Registrant's
Post-Effective Amendment No. 7 on Form N-1A filed on
September 25, 1992. (File Nos. 33-36729 and 811-6165)
12. Response is incorporated by reference to Registrant's
Post-Effective Amendment No. 12 on Form N-1A filed on May
17, 1993. (File Nos. 33-36729 and 811-6165)
14. Response is incorporated by reference to Registrant's
Post-Effective Amendment No. 14 on Form N-1A filed on
October 28, 1993. (File Nos. 33-36729 and 811-6165)
17. Response is incorporated by reference to Registrant's
Post-Effective Amendment No. 17 on Form N-1A filed on
December 30, 1994. (File Nos. 33-36729 and 811-6165)
18. Response is incorporated by reference to Registrant's
Post-Effective Amendment No. 19 on Form N-1A filed on
October 30, 1995. (File Nos. 33-36729 and 811-6165)
19. Response is incorporated by reference to Registrant's
Post-Effective Amendment No. 21 on Form N-1A filed on
October 23, 1996, (File Nos. 33-36729 and 811-6165)
<PAGE>
(10) Conformed Copy of Opinion and Consent of Counsel as to the
legality of shares being registered (1);
(11) Conformed Copy of Consent of Independent Auditors(20); (12)
Not applicable; (13) Conformed Copy of Initial Capital
Understanding (1); (14) Not applicable; (15) (i) Conformed
copy of Rule 12b-1 Plan;+
(ii) Conformed copy of Distribution Plan;+
(iii) The response and exhibits described in Item 24(b)(6)(iii)
are hereby incorporated by reference; (16) Copy of Schedule
for Computation of Fund Performance Data for:
(i) Ohio Municipal Income Fund (18);
(ii) Pennsylvania Municipal Income Fund (18);
(iii) California Municipal Income Fund (11);
(iv) New York Municipal Income Fund (11);
(v) Michigan Municipal Income Fund (11);
(17) Copy of Financial Data Schedules;(to be filed by
amendment)
(18) Not applicable.
(19) Conformed Copy of Power of Attorney; (19)
Item 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
None
+ All exhibits are filed electronically.
1. Response is incorporated by reference to Registrant's
Initial Registration Statement on Form N-1A filed
August 31, 1990. (File Nos. 33-36729 and 811-6165)
8. Response is incorporated by reference to Registrant's
Post-Effective Amendment No. 7 on Form N-1A filed on
September 25, 1992. (File Nos. 33-36729 and 811-6165)
11. Response is incorporated by reference to Registrant's
Post-Effective Amendment No. 11 on Form N-1A filed on
April 28, 1993. (File Nos. 33-36729 and 811-6165)
12. Response is incorporated by reference to Registrant's
Post-Effective Amendment No. 12 on Form N-1A filed on
May 17, 1993. (File Nos. 33-36729 and 811-6165)
18. Response is incorporated by reference to Registrant's
Post-Effective Amendment No. 19 on Form N-1A filed on
October 30, 1995. (File Nos. 33-36729 and 811-6165)
19. Response is incorporated by reference to Registrant's
Post-Effective Amendment No. 21 on Form N-1A filed on
October 23, 1996. (File Nos. 33-36729 and 811-6165)
20. Response is incorporated by reference to Registrant's
Post-Effective Amendment No. 22 on Form N-1A filed on
February 12, 1997. (File Nos. 33-36729 and 811-6165)
<PAGE>
Item 26. NUMBER OF HOLDERS OF SECURITIES:
Number of Record Holders
TITLE OF CLASS AS OF OCTOBER 6, 1997
-------------- ----------------------
Shares of
beneficial interest
Federated California Municipal Income Fund
Class A Shares (formerly, Class F Shares 323
Class B Shares Not currently effective
Federated Michigan Municipal Income Trust 323
Federated New York Municipal Income Fund 373
Federated Ohio Municipal Income Fund 1,537
Federated Pennsylvania Municipal Income
Fund (Class A Shares) 5,447
Federated Pennsylvania Municipal Income
Fund (Class B Shares) 269
Item 27. INDEMNIFICATION: (1)
Item 28. Business and Other Connections of Investment Adviser:
(a) For a description of the other business of the
investment adviser, see the section entitled "TRUST
INFORMATION -MANAGEMENT OF THE TRUST"in Part A. The
affiliations with the Registrant of four of the Trustees
and one of the Officers of the investment adviser are
included in Part B of this Registration Statement under
"MUNICIPAL SECURITIES INCOME TRUST MANAGEMENT." 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: Peter R. Anderson
Drew J. Collins
Jonathan C. Conley
Deborah A. Cunningham
Mark E. Durbiano
J. Alan Minteer
Susan M. Nason
Mary Jo Ochson
Vice Presidents: J. Scott Albrecht
Joseph M. Balestrino
Randall S. Bauer
David F. Belton
David A. Briggs
Kenneth J. Cody
Alexandre de Bethmann
Michael P. Donnelly
Linda A. Duessel
Donald T. Ellenberger
Kathleen M. Foody-Malus
Thomas M. Franks
Edward C. Gonzales
James E. Grefenstette
Susan R. Hill
Stephen A. Keen
Robert K. Kinsey
Robert M. Kowit
Jeff A. Kozemchak
Marian R. Marinack
Sandra L. McInerney
Robert J. Ostrowski
Charles A. Ritter
Scott B. Schermerhorn
Frank Semack
Aash M. Shah
William F. Stotz
Tracy P. Stouffer
Edward J. Tiedge
Paige M. Wilhelm
Jolanta M. Wysocka
Assistant Vice Presidents: Todd A. Abraham
Stefanie L. Bachhuber
Arthur J. Barry
Micheal W. Casey
Robert E. Cauley
Donna M. Fabiano
John T. Gentry
William R. Jamison
Constantine Kartsonsas
Robert M. Marsh
Joseph M. Natoli
Keith J. Sabol
Michael W. Sirianni
Gregg S. Tenser
Secretary: Stephen A. Keen
Treasurer: Thomas R. Donahue
Assistant Secretaries: Thomas R. Donahue
Richard B. Fisher
Christine I. McGonigle
Assistant Treasurer: Richard B. Fisher
The business address of each of the Officers of the
investment adviser is Federated Investors Tower,
Pittsburgh, Pennsylvania 15222-3779. These individuals
are also officers of a majority of the investment
advisers to the Funds listed in Part B of this
Registration Statement.
Item 29. 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:
111 Corcoran Funds; Arrow Funds; Automated Government Money Trust;
Blanchard Funds; Blanchard Precious Metals Fund, Inc.; Cash Trust
Series II; Cash Trust Series, Inc.; DG Investor Series; Edward D.
Jones & Co. Daily Passport Cash Trust; Federated Adjustable Rate U.S.
Government Fund, Inc.; Federated American Leaders Fund, Inc.;
Federated ARMs Fund; Federated Equity Funds; Federated Equity Income
Fund, Inc.; Federated Fund for U.S. Government Securities, Inc.;
Federated GNMA Trust; Federated Government Income Securities, Inc.;
Federated Government Trust; Federated High Income Bond Fund, Inc.;
Federated High Yield Trust; Federated Income Securities Trust;
Federated Income Trust; Federated Index Trust; Federated Institutional
Trust; Federated Insurance Series; Federated Investment Portfolios;
Federated Investment Trust; Federated Master Trust; Federated
Municipal Opportunities Fund, Inc.; Federated Municipal Securities
Fund, Inc.; Federated Municipal Trust; Federated Short-Term Municipal
Trust; Federated Short-Term U.S. Government Trust; Federated Stock and
Bond Fund, Inc.; Federated Stock Trust; Federated Tax-Free Trust;
Federated Total Return Series, Inc.; Federated U.S. Government Bond
Fund; Federated U.S. Government Securities Fund: 1-3 Years; Federated
U.S. Government Securities Fund: 2-5 Years; Federated U.S. Government
Securities Fund: 5-10 Years; Federated Utility Fund, Inc.; First
Priority Funds; Fixed Income Securities, Inc.; High Yield Cash Trust;
Independence One Mutual Funds; Intermediate Municipal Trust;
International Series, Inc.; Investment Series Funds, Inc.; Investment
Series Trust; Liberty U.S. Government Money Market Trust; Liquid Cash
Trust; Managed Series Trust; Marshall Funds, Inc.; Money Market
Management, Inc.; Money Market Obligations Trust; Money Market
Obligations Trust II; Money Market Trust; Municipal Securities Income
Trust; Newpoint Funds; Peachtree Funds; RIMCO Monument Funds;
SouthTrust Vulcan Funds; Star Funds; Targeted Duration Trust; Tax-Free
Instruments Trust; The Planters Funds; The Virtus Funds; The Wachovia
Funds; The Wachovia Municipal Funds; Tower Mutual Funds; Trust for
Financial Institutions; Trust for Government Cash Reserves; Trust for
Short-Term U.S. Government Securities; Trust for U.S. Treasury
Obligations; Vision Group of Funds, Inc.; and World Investment Series,
Inc.
Federated Securities Corp. also acts as principal underwriter for
the following closed-end investment company: Liberty Term Trust, Inc.-
1999.
<PAGE>
<TABLE>
<CAPTION>
(b)
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT
<S> <C> <C>
Richard B. Fisher Director, Chairman, Chief President
Federated Investors Tower Executive Officer, Chief
Pittsburgh, PA 15222-3779 Operating Officer, Asst.
Secretary and Asst.
Treasurer, Federated
Securities Corp.
Edward C. Gonzales Director, Executive Vice Executive Vice
Federated Investors Tower President, Federated, President
Pittsburgh, PA 15222-3779 Securities Corp.
Thomas R. Donahue Director, Assistant Secretary
Federated Investors Tower and Assistant Treasurer
Pittsburgh, PA 15222-3779 Federated Securities Corp
James F. Getz President-Broker/Dealer, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
John B. Fisher President-Institutional Sales, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
David M. Taylor Executive Vice President --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark W. Bloss Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard W. Boyd Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Laura M. Deger Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Theodore Fadool, Jr. Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Bryant R. Fisher Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Christopher T. Fives Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James S. Hamilton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James M. Heaton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT
Keith Nixon Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Solon A. Person, IV Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Timothy C. Pillion Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Thomas E. Territ Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Teresa M. Antoszyk Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
John B. Bohnet Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Byron F. Bowman Vice President, Secretary, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jane E. Broeren-Lambesis Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mary J. Combs Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
R. Edmond Connell, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
R. Leonard Corton, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Kevin J. Crenny Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Daniel T. Culbertson Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
G. Michael Cullen Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
William C. Doyle Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
<PAGE>
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT
Jill Ehrenfeld Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark D. Fisher Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Joseph D. Gibbons Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
John K. Goettlicher Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Craig S. Gonzales Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard C. Gonzales Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Bruce E. Hastings Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Beth A. Hetzel Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James E. Hickey Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Brian G. Kelly Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
H. Joseph Kennedy Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark J. Miehl Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard C. Mihm Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
J. Michael Miller Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Robert D. Oehlschlager Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(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.
Pittsburgh, PA 15222-3779
Robert F. Phillips Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard A. Recker Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Eugene B. Reed Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
George D. Riedel Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Paul V. Riordan Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
John Rogers Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Brian S. Ronayne Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Thomas S. Schinabeck Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Edward L. Smith Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
David W. Spears Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
John A. Staley Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jeffrey A. Stewart Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard Suder Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
William C. Tustin Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
<PAGE>
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT
Paul A. Uhlman Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Miles J. Wallace Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
John F. Wallin Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard B. Watts Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Edward J. Wojnarowski Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Michael P. Wolff Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Edward R. Bozek Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Terri E. Bush Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Charlene H. Jennings Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Denis McAuley Treasurer, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Leslie K. Platt Assistant Secretary, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
</TABLE>
(c) Not applicable.
Item 30. LOCATION OF ACCOUNTS AND RECORDS:
All accounts and records required to be maintained by Section 31(a) of
the Investment Company Act of 1940 and Rules 31a-1 through 31a-3
promulgated thereunder are maintained at one of the following
locations:
Registrant Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Shareholder
Services Company Federated Investors Tower
("Transfer Agent and Dividend Pittsburgh, PA 15222-3779
Disbursing Agent")
Federated Services Company Federated Investors Tower
("Administrator") Pittsburgh, PA 15222-3779
Federated Advisers Federated Investors Tower
("Adviser") Pittsburgh, PA 15222-3779
State Street Bank and Trust Company P.O. Box 8600
("Custodian") Boston, MA 02266-8600
Item 31. MANAGEMENT SERVICES: Not applicable.
Item 32. UNDERTAKINGS:
Registrant hereby undertakes to comply with the
provisions of Section 16(c) of the 1940 Act with respect to the
removal of Trustees and the calling of special shareholder meetings by
shareholders.
Registrant hereby undertakes to furnish each person
to whom a prospectus is delivered with a copy of the Registrant's
latest annual report to shareholders upon request and without charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, the Registrant, MUNICIPAL
SECURITIES INCOME TRUST, 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 15th day of October, 1997.
MUNICIPAL SECURITIES INCOME TRUST
BY: /s/ J. Crilley Kelly
J. Crilley Kelly, Assistant Secretary
Attorney in Fact for John F. Donahue
October 15, 1997
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to its Registration Statement has been signed below by the
following person in the capacity and on the date indicated:
NAME TITLE DATE
By: /s/ J. Crilley Kelly Attorney In Fact October 15, 1997
J. Crilley Kelly For the Persons
ASSISTANT SECRETARY Listed Below
NAME TITLE
John F. Donahue* Chairman and Trustee
(Chief Executive Officer)
Richard B. Fisher* President
J. Christopher Donahue* Executive Vice President
and Trustee
John W. McGonigle * Treasurer and Executive
Vice President
(Principal Financial and
Accounting Officer)
Thomas G. Bigley* Trustee
John T. Conroy, Jr.* Trustee
William J. Copeland* Trustee
James E. Dowd* Trustee
Lawrence D. Ellis, M.D.* Trustee
Edward L. Flaherty, Jr.* Trustee
Peter E. Madden* Trustee
Gregor F. Meyer* Trustee
John E. Murray, Jr.* Trustee
Wesley W. Posvar* Trustee
Marjorie P. Smuts* Trustee
EXHIBIT 5 UNDER FORM N-1A
EXHIBIT 10 UNDER ITEM 601/REG. S-K
FEDERATED MUNICIPAL INCOME TRUST
INVESTMENT ADVISORY CONTRACT
This Contract is made between FEDERATED ADVISERS, a Delaware
business trust having it principal place of business in Pittsburgh,
Pennsylvania (the "Adviser"), and FEDERATED MUNICIPAL INCOME, a
Massachusetts business trust having its principal place of business in
Pittsburgh, Pennsylvania (the "Trust").
WHEREAS the Trust is an open-end management investment
company as that term is defined in the Investment Company Act of 1940
and is registered as such with the Securities and Exchange Commission;
and
WHEREAS Adviser is engaged in the business of rendering
investment advisory and management services.
NOW, THEREFORE, the parties hereto, intending to be legally
bound, hereby agree as follows:
1. The Trust hereby appoints Adviser as Investment Adviser
for each of the portfolios ("Funds") of the Trust which executes an
exhibit to this Contract, and Adviser accepts the appointments.
Subject to the direction of the Trustees of the Trust, Adviser shall
provide investment research and supervision of the investments of the
Funds and conduct a continuous program of investment evaluation and of
appropriate sale or other disposition and reinvestment of each Fund's
assets.
2. Adviser, in its supervision of the investments of each of
the Funds, will be guided by each of the Fund's investment objective
and policies and the provisions and restrictions contained in the
Declaration of Trust and By-Laws of the Trust and as set forth in the
Registration Statements and exhibits as may be on file with the
Securities and Exchange Commission.
3. Each Fund shall pay or cause to be paid all of its own
expenses and its allocable share of Trust expenses, including, without
limitation, the expenses of organizing the Trust and continuing its
existence; fees and expenses of Trustees and officers of the Trust;
fees for investment advisory services and administrative personnel and
services; expenses incurred in the distribution of its shares
("Shares"), including expenses of administrative support services;
fees and expenses of preparing and printing its Registration
Statements under the Securities Act of 1933 and the Investment Company
Act of 1940 and any amendments thereto; expenses of registering and
qualifying the Trust, the Funds, and Shares of the Funds under federal
and state laws and regulations; expenses of preparing, printing, and
distributing prospectuses (and any amendments thereto) to
shareholders; interest expense, taxes, fees, and commission of every
kind; expenses of issue (including cost of Share certificates),
purchase, repurchase, and redemption of Shares, including expenses
attributable to a program of periodic issue; charges and expenses of
custodians, transfer agents, dividend disbursing agents, shareholder
servicing agents, and registrars; printing and mailing costs,
auditing, accounting, and legal expenses; reports to shareholders and
governmental officers and commissions; expenses of meetings of
Trustees and shareholders and proxy solicitations therefor; insurance
expenses; association membership dues and such nonrecurring items as
may arise, including all losses and liabilities incurred in
administering the Trust and the Funds. Each Fund will also pay its
allocable share of such extraordinary expenses as may arise including
expenses incurred in connection with litigation, proceedings, and
claims and the legal obligations of the Trust to indemnify its
officers and Trustees and agents with respect thereto.
4. Each of the Funds shall pay to Adviser, for all
services rendered to each Fund by Adviser hereunder,
the fees set forth in the exhibits attached hereto.
5. The net asset value of each Fund's Shares as used herein
will be calculated to the nearest 1/10th of one cent.
6. The Adviser may from time to time and for such periods as
it deems appropriate reduce its compensation (and, if appropriate,
assume expenses of one or more of the Funds) to the extent that any
Fund's expenses exceed such lower expense limitation as the Adviser
may, by notice to the Fund, voluntarily declare to be effective.
7. This Contract shall begin for each Fund on the date that
it executes an exhibit to this Contract. This Contract shall remain in
effect for each Fund for two years from the date of its execution and
from year to year thereafter, subject to the provisions for
termination and all of the other terms and conditions hereof if: (a)
such continuation shall be specifically approved at least annually by
the vote of a majority of the Trustees of the Trust, including a
majority of the Trustees who are not parties to this Contract or
interested persons of any such party, (other than as Trustees of the
Trust) cast in person at a meeting called for that purpose; and (b)
Adviser shall not have notified a Fund in writing at least sixty (60)
days prior to the anniversary date of this Contract in any year
thereafter that it does not desire such continuation with respect to
that Fund.
8. Notwithstanding any provision in this Contract, it may be
terminated at any time with respect to any Fund, without the payment
of any penalty, by the Trustees of the Trust or by a vote of the
shareholders of that Fund on sixty (60) days' written notice to
Adviser.
9. This Contract may not be assigned by Adviser and shall
automatically terminate in the event of any assignment. Adviser may
employ or contract with such other person, persons, corporation, or
corporations at its own cost and expense as it shall determine in
order to assist it in carrying out this Contract.
10. In the absence of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the obligations or duties under
this Contract on the part of Adviser, Adviser shall not be liable to
the Trust or to any of the Funds or to any shareholder for any act or
omission in the course of or connected in any way with rendering
services or for any losses that may be sustained in the purchase,
holding, or sale of any security.
11. This Contract may be amended at any time by agreement of
the parties provided that the amendment shall be approved both by the
vote of a majority of the Trustees of the Trust, including a majority
of the Trustees who are not parties to this Contract or interested
persons of any such party to this Contract (other than as Trustees of
the Trust) cast in person at a meeting called for that purpose, and on
behalf of a Fund by a majority of the outstanding voting securities of
such Fund.
12. Adviser is hereby expressly put on notice of the
limitation of liability as set forth in Article XI of the Declaration
of Trust and agrees that the obligations pursuant to this Contract of
a particular Fund and of the Trust with respect to that particular
Fund be limited solely to the assets of that particular Fund, and
Adviser shall not seek satisfaction of any such obligation from any
other Fund, the shareholders of any Fund, the Trustees, officers,
employees or agents of the Trust, or any of them.
13. The Trust and the Funds are hereby expressly put on
notice of the limitation of liability as set forth in the Declaration
of Trust of the Adviser and agrees that the obligations assumed by the
Adviser pursuant to this Contract shall be limited in any case to the
Adviser and its assets and, except to the extent expressly permitted
by the Investment Company Act of 1940, the Trust and the Funds shall
not seek satisfaction of any such employees, or agents of the Adviser,
or any of them.
14. This Contract shall be construed in accordance with and
governed by the laws of the Commonwealth of Pennsylvania.
15. This Contract will become binding on the parties hereto
upon their execution of the attached exhibits to this Contract.
<PAGE>
EXHIBIT A
MICHIGAN MUNICIPAL INCOME FUND
For all services rendered by Adviser hereunder, the
above-named Fund of the Trust shall pay to Adviser and Adviser agrees
to accept as full compensation for all services rendered hereunder, an
annual investment advisory fee equal to .40 of 1% of the average daily
net assets of the Fund.
The portion of the fee based upon the average daily net
assets of the Fund shall be accrued daily at the rate of 1/365th of
.40 of 1% applied to the daily net assets of the Fund.
The advisory fee so accrued shall be paid to Adviser daily.
The right of the adviser as set forth in Paragraph six of
this Contract to assume expenses of one or more of the Funds shall
also apply as to any classes of the above-named Fund.
Witness the due execution hereof this 9th day of September,
1991.
Attest: FEDERATED ADVISERS
/S/ JOHN W. MCGONIGLE By: /S/ MARK MALLON
Secretary Executive Vice President
Attest: FEDERATED MUNICIPAL INCOME TRUST
/S/ C. GRANT ANDERSON By: J. CHRISTOPHER DONAHUE
Assistant Secretary Vice President
<PAGE>
EXHIBIT B
PENNSYLVANIA MUNICIPAL INCOME FUND
For all services rendered by Adviser hereunder, the
above-named Fund of the Trust shall pay to Adviser and Adviser agrees
to accept as full compensation for all services rendered hereunder, an
annual investment advisory fee equal to .40 of 1% of the average daily
net assets of the Fund.
The portion of the fee based upon the average daily net
assets of the Fund shall be accrued daily at the rate of 1/365th of
.40 of 1% applied to the daily net assets of the Fund.
The advisory fee so accrued shall be paid to Adviser daily.
The right of the adviser as set forth in Paragraph six of
this Contract to assume expenses of one or more of the Funds shall
also apply as to any classes of the above-named Fund.
Witness the due execution hereof this 27th day of December,
1991.
Attest: FEDERATED ADVISERS
/S/ JOHN W. MCGONIGLE By: /S/ MARK MALLON
Secretary Executive Vice President
Attest: FEDERATED MUNICIPAL INCOME TRUST
/S/ C. GRANT ANDERSON By: /S/ EDWARD C. GONZALES
Assistant Secretary Vice President
<PAGE>
EXHIBIT C
OHIO MUNICIPAL INCOME FUND
For all services rendered by Adviser hereunder, the
above-named Fund of the Trust shall pay to Adviser and Adviser agrees
to accept so as full compensation for all services rendered hereunder,
an annual investment advisory fee equal to .40 of 1% of the average
daily net assets of the Fund.
The portion of the fee based upon the average daily net
assets of the Fund shall be accrued daily at the rate of 1/365th of
.40 of 1% applied to the daily net assets of the Fund.
The advisory fee accrued shall be paid to Adviser daily.
The right of the adviser as set forth in Paragraph six of
this Contract to assume expenses of one or more of the Funds shall
also apply as to any classes of the above-named Fund.
Witness the due execution hereof this 29th day of January,
1992.
Attest: FEDERATED ADVISERS
/S/ JOHN W. MCGONIGLE By: /S/ MARK MALLON
Secretary Executive Vice President
Attest: FEDERATED MUNICIPAL INCOME TRUST
/S/ S. ELLIOTT COHAN By: /S/ EDWARD C. GONZALES
Assistant Secretary Vice President
<PAGE>
EXHIBIT D
CALIFORNIA MUNICIPAL INCOME FUND
For all services rendered by Adviser hereunder, the
above-named Fund of the Trust shall pay to Adviser and Adviser agrees
to accept as full compensation for all services rendered hereunder, an
annual investment advisory fee equal to .40 of 1% of the average daily
net assets of the Fund.
The portion of the fee based upon the average daily net
assets of the Fund shall be accrued daily at the rate of 1/365th of
.40 of 1% applied to the daily net assets of the Fund.
The advisory fee so accrued shall be paid to Adviser daily.
The right of the adviser as set forth in Paragraph six of
this Contract to assume expenses of one or more of the Funds shall
also apply as to any classes of the above-named Fund.
Witness the due execution hereof this 24th day of November,
1992.
Attest: FEDERATED ADVISERS
/S/ JOHN W. MCGONIGLE By: /S/ MARK MALLON
Secretary Executive Vice President
Attest: MUNICIPAL SECURITIES INCOME TRUST
/S/ J. CRILLEY KELLY By: /S/ J. CHRISTOPHER DONAHUE
Assistant Secretary Vice President
<PAGE>
EXHIBIT E
NEW YORK MUNICIPAL INCOME FUND
For all services rendered by Adviser hereunder, the
above-named Fund of the Trust shall pay to Adviser and Adviser agrees
to accept as full compensation for all services rendered hereunder, an
annual investment advisory fee equal to .40 of 1% of the average daily
net assets of the Fund.
The portion of the fee based upon the average daily net
assets of the Fund shall be accrued daily at the rate of 1/365th of
.40 of 1% applied to the daily net assets of the Fund.
The advisory fee so accrued shall be paid to Adviser daily.
The right of the adviser as set forth in Paragraph six of
this Contract to assume expenses of one or more of the Funds shall
also apply as to any classes of the above-named Fund.
Witness the due execution hereof this 24th day of November,
1992.
Attest: FEDERATED ADVISERS
/S/ JOHN W. MCGONIGLE By: /S/ MARK MALLON
Secretary Executive Vice President
Attest: MUNICIPAL SECURITIES INCOME TRUST
/S/ J. CRILLEY KELLY By: /S/ J. CHRISTOPHER DONAHUE
Assistant Secretary Vice President
<PAGE>
EXHIBIT F
NEW JERSEY MUNICIPAL INCOME FUND
For all services rendered by Adviser hereunder, the
above-named Fund of the Trust shall pay to Adviser and Adviser agrees
to accept as full compensation for all services rendered hereunder, an
annual investment advisory fee equal to .40 of 1% of the average daily
net assets of the Fund.
The portion of the fee based upon the average daily net
assets of the Fund shall be accrued daily at the rate of 1/365th of
.40 of 1% applied to the daily net assets of the Fund.
The advisory fee so accrued shall be paid to Adviser daily.
The right of the adviser as set forth in Paragraph six of
this Contract to assume expenses of one or more of the Funds shall
also apply as to any classes of the above-named Fund.
Witness the due execution hereof this 1st day of March, 1993
Attest: FEDERATED ADVISERS
/S/ JOHN W. MCGONIGLE By: /S/ MARK MALLON
Secretary Executive Vice President
Attest: MUNICIPAL SECURITIES INCOME TRUST
/S/ S. ELLIOTT COHAN By: /S/ J. CHRISTOPHER DONAHUE
Assistant Secretary Vice President
<PAGE>
EXHIBIT G
TEXAS MUNICIPAL INCOME FUND
For all services rendered by Adviser hereunder, the
above-named Fund of the Trust shall pay to Adviser and Adviser agrees
to accept as full compensation for all services rendered hereunder, an
annual investment advisory fee equal to .40 of 1% of the average daily
net assets of the Fund.
The portion of the fee based upon the average daily net
assets of the Fund shall be accrued daily at the rate of 1/365th of
.40 of 1% applied to the daily net assets of the Fund.
The advisory fee so accrued shall be paid to Adviser daily.
The right of the adviser as set forth in Paragraph six of
this Contract to assume expenses of one or more of the Funds shall
also apply as to any classes of the above-named Fund.
Witness the due execution hereof this 1st day of March, 1993
Attest: FEDERATED ADVISERS
/S/ JOHN W. MCGONIGLE By: /S/ MARK MALLON
Secretary Executive Vice President
Attest: MUNICIPAL SECURITIES INCOME TRUST
/S/ S. ELLIOTT COHAN By: /S/ J. CHRISTOPHER DONAHUE
Assistant Secretary Vice President
<PAGE>
EXHIBIT H
FLORIDA MUNICIPAL INCOME FUND
For all services rendered by Adviser hereunder, the
above-named Fund of the Trust shall pay to Adviser and Adviser agrees
to accept as full compensation for all services rendered hereunder, an
annual investment advisory fee equal to .40 of 1% of the average daily
net assets of the Fund.
The portion of the fee based upon the average daily net
assets of the Fund shall be accrued daily at the rate of 1/365th of
.40 of 1% applied to the daily net assets of the Fund.
The advisory fee so accrued shall be paid to Adviser daily.
The right of the adviser as set forth in Paragraph six of
this Contract to assume expenses of one or more of the Funds shall
also apply as to any classes of the above-named Fund.
Witness the due execution hereof this 1st day of March, 1993
Attest: FEDERATED ADVISERS
/S/ JOHN W. MCGONIGLE By: /S/ MARK MALLON
Secretary Executive Vice President
Attest: MUNICIPAL SECURITIES INCOME TRUST
/S/ S. ELLIOTT COHAN By: /S/ J. CHRISTOPHER DONAHUE
Assistant Secretary Vice President
<PAGE>
EXHIBIT F
VIRGINIA MUNICIPAL INCOME FUND
For all services rendered by Adviser hereunder, the
above-named Fund of the Trust shall pay to Adviser and Adviser agrees
to accept as full compensation for all services rendered hereunder, an
annual investment advisory fee equal to .40 of 1% of the average daily
net assets of the Fund.
The portion of the fee based upon the average daily net
assets of the Fund shall be accrued daily at the rate of 1/365th of
.40 of 1% applied to the daily net assets of the Fund.
The advisory fee so accrued shall be paid to Adviser daily.
The right of the adviser as set forth in Paragraph six of
this Contract to assume expenses of one or more of the Funds shall
also apply as to any classes of the above-named Fund.
Witness the due execution hereof this 1st day of June, 1993
Attest: FEDERATED ADVISERS
/S/ JOHN W. MCGONIGLE By: /S/ MARK MALLON
Secretary Executive Vice President
Attest: MUNICIPAL SECURITIES INCOME TRUST
/S/ J. CRILLEY KELLY By: /S/ J. CHRISTOPHER DONAHUE
Assistant Secretary Vice President
<PAGE>
EXHIBIT F
MARYLAND MUNICIPAL INCOME FUND
For all services rendered by Adviser hereunder, the
above-named Fund of the Trust shall pay to Adviser and Adviser agrees
to accept as full compensation for all services rendered hereunder, an
annual investment advisory fee equal to .40 of 1% of the average daily
net assets of the Fund.
The portion of the fee based upon the average daily net
assets of the Fund shall be accrued daily at the rate of 1/365th of
.40 of 1% applied to the daily net assets of the Fund.
The advisory fee so accrued shall be paid to Adviser daily.
The right of the adviser as set forth in Paragraph six of
this Contract to assume expenses of one or more of the Funds shall
also apply as to any classes of the above-named Fund.
Witness the due execution hereof this 1st day of June, 1993
Attest: FEDERATED ADVISERS
/S/ JOHN W. MCGONIGLE By: /S/ MARK MALLON
Secretary Executive Vice President
Attest: MUNICIPAL SECURITIES INCOME TRUST
/S/ J. CRILLEY KELLY By: /S/ J. CHRISTOPHER DONAHUE
Assistant Secretary Vice President
EXHIBIT 6 UNDER FORM N-1A
EXHIBIT 1 UNDER ITEM 601/REG. S-K
FEDERATED MUNICIPAL INCOME TRUST
DISTRIBUTOR'S CONTRACT
AGREEMENT is made this 9th day of September, 1991, by and
between FEDERATED MUNICIPAL INCOME TRUST (the "Trust"), a
Massachusetts business trust, and FEDERATED SECURITIES CORP. ("FSC"),
a Pennsylvania Corporation.
In considerationof the mutual covenants hereinafter
contained, it is hereby agreed by and between the parties hereto as
follows:
1. The Trust hereby appoints FSC as its agent to sell and
distribute shares of the Trust which may be offered in one or more
series (the "Funds") consisting of one or more classes (the "Classes")
of shares (the "Shares") as described and set forth on one or more
exhibits to this Agreement at the current offering price thereof as
described and set forth in the current Prospectuses of the Trust. FSC
hereby accepts such appointment and agrees to provide such other
services for the Trust, if any, and accept such compensation from the
Trust, if any, as set forth in the applicable exhibit to this
Agreement.
2. The sale of any Shares may be suspended without prior notice
whenever in the judgment of the Trust it is in its best interest to do so.
3. Neither FSC nor any other person is authorized by the
Trust to give any information or to make any representation relative
to any Shares other than those contained in the Registration
Statement, Prospectuses, or Statements of Additional Information
("SAIs") filed with the Securities and Exchange Commission, as the
same may be amended from time to time, or in any supplemental
information to said Prospectuses or SAIs approved by the Trust. FSC
agrees that any other information or representations other than those
specified above which it or any dealer or other person who purchases
Shares through FSC may make in connection with the offer or sale of
Shares, shall be made entirely without liability on the part of the
Trust. No person or dealer, other than FSC, is authorized to act as
agent for the Trust for any purpose. FSC agrees that in offering or
selling Shares as agent of the Trust, it will, in all respects, duly
conform to all applicable state and federal laws and rules and
regulations of the National Association of Securities Dealers, Inc.,
including its Rules of Fair Practice. FSC will submit to the Trust
copies of all sales literature before using the same and will not use
such sales literature if disapproved by the Trust.
4. This Agreement is effective with respect to each Class as
of the date of execution of the applicable exhibit and shall continue
in effect with respect to each Class presently set forth on an exhibit
and any subsequent Classes added pursuant to an exhibit during the
initial term of this Agreement for one year from the date set forth
above, and thereafter for successive periods of one year if such
continuance is approved at least annually by the Trustees of the Trust
including a majority of the member of the Board of Trustees of the
Trust who are not interested persons of the Trust and have no direct
or indirect financial interest in the operation of any Distribution
Plan relating to the Trust or in any related documents to such Plan
("Disinterested Trustees") cast in person at a meeting called for that
purpose. If a Class is added after the first annual approval by the
Trustees as described above, this Agreement will be effective as to
that Class upon execution of the applicable exhibit and will continue
in effect until the next annual approval of this Agreement by the
Trustees and thereafter for successive periods of one year, subject to
approval as described above.
5. This Agreement may be terminated with regard to a
particular Fund or Class at any time, without the payment of any
penalty, by the vote of a majority of the Disinterested Trustees or by
a majority of the outstanding voting securities of the particular Fund
or Class on not more than sixty (60) days' written notice to any other
party to this Agreement. This Agreement may be terminated with regard
to a particular Fund or Class by FSC on sixty (60) days' written
notice to the Trust.
6. This Agreement may not be assigned by FSC and shall
automatically terminate in the event of an assignment by FSC as
defined in the Investment Company Act of 1940, provided, however, that
FSC may employ such other person, persons, corporation or corporations
as it shall determine in order to assist it in carrying out its duties
under this Agreement.
7. FSC shall not be liable to the Trust 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 by this Agreement.
8. This Agreement may be amended at any time by mutual
agreement in writing of all the parties hereto, provided that such
amendment is approved by the Trusteesof the Trust including a majority
of the Disinterested Trustees of the Trust cast in person at a meeting
called for that purpose.
9. This Agreement shall be construed in accordance with and
governed by the laws of the Commonwealth of Pennsylvania.
10. (a) Subject to the conditions set forth below, the Trust
agrees to indemnify and hold harmless FSC and each person, if any, who
controls FSC within the meaning of Section 15 of the Securities Act of
1933 and Section 20 of the Securities Act of 1934, as amended, against
any and all loss, liability, claim, damage and expense whatsoever
(including but not limited to any and all expenses whatsoever
reasonably incurred in investigating, preparing or defending against
any litigation, commenced or threatened, or any claim whatsoever)
arising out of or based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement,
any Prospectus or SAI's (as from time to time amended and
supplemented) or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the
statements therein not misleading, unless such statement or omission
was made in reliance upon and in conformity with written information
furnished to the Trust about FSC by or on behalf of FSC expressly for
use in the Registration Statement, any Prospectuses and SAIs or any
amendment or supplement thereof.
If any action is brought against FSC or any controlling
person thereof with respect to which indemnity may be sought against
the Trust pursuant to the foregoing paragraph, FSC shall promptly
notify the Trust in writing of the institution of such action and the
Trust shall assume the defense of such action, including the
employment of counsel selected by the Trust and payment of expenses.
FSC or any such controlling person thereof shall have the right to
employ separate counsel in any such case, but the fees and expenses of
such counsel shall be at the expense of FSC or such controlling person
unless the employment of such counsel shall have been authorized in
writing by the Trust in connection with the defense of such action or
the Trust shall not have employed counsel to have charge of the
defense of such action, in any of which events such fees and expenses
shall be borne by the Trust. Anything in this paragraph to the
contrary notwithstanding, the Trust shall not be liable for any
settlement of any such claim of action effected without its written
consent. The Trust agrees promptly to notify FSC of the commencement
of any litigation or proceedings against the Trust or any of its
officers or Trustees or controlling persons in connectionwith the
issue and sale of Shares or in connection withthe Registration
Statement, Prospectuses, or SAIs.
(b) FSC agrees to indemnify and hold harmless the Trust, each
of its Trustees, each of its officers who have signed the Registration
Statement and each other person, if any, who controls the Trust within
the meaning of Section 15 of the Securities Act of 1933, but only with
respect to statements or omissions, if any, made in the Registration
Statement or any prospectus, SAI, or amendment or supplement thereof
in reliance upon, and in conformity with, information furnished to the
Trust about FSC by or on behalf of FSC expressly for use in the
Registration Statement or any Prospectus, SAI, or any amendment or
supplement thereof. In case any action shall be brought against the
Trust or any other person so indemnified based on the Registration
Statement or any Prospectus, SAI, or any amendment or supplement
thereof, and with respect to which indemnity may be sought against
FSC, FSC shall have the rights and duties given to the Trust, and the
Trust and each other person so indemnified shall have the rights and
duties given to FSC by the provisions of subsection (a) above.
(c) Nothing herein contained shall be deemed to protect any
person against liability to the Trust or its shareholders to which
such person would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of the
duties of such person or by reason of the reckless disregard by such
person of the obligations and duties of such person under this
Agreement.
(d) Insofar as indemnification for liabilities may be
permitted pursuant to Section 17 of the Investment Company Act of 1940
for Trustees, officers, FSC and controlling persons of the Trust by
the Trust pursuant to this Agreement, the Trust is aware of the
position of the Securities and Exchange Commission as set forth in the
Investment Company Act Release No. IC-11330. Therefore, the Trust
undertakes that in addition to complying with the applicable
provisions of this Agreement, in the absence of a final decision on
the merits by a court or other body before which the proceeding was
brought, that an indemnification payments will not be made unless in
the absence of such a decision, a reasonable determination based upon
factual review has been made (i) by a majority vote of a quorum of
non-party Disinterested Trustees, or (ii) by independent legal counsel
in a written opinion that the indemnitee was not liable for any act of
willful misfeasance, bad faith, gross negligence or reckless disregard
of duties. The Trust further undertakes that advancement of expenses
incurred in the defense of a proceeding (upon undertaking for
repayment unless it is ultimately determined that indemnification is
appropriate) against an officer, Trustee, FSC or controlling person of
the Trust will not be made absent the fulfillment of at least one of
the following conditions: (i) the indemnitee provides security for his
undertaking; (ii) the Trust is insured against losses arising by
reason of any lawful advances; or (iii) a majority of a quorum of
non-party Disinterested Trustees or independent legal counsel in a
written opinion makes a factual determination that there is reason to
believe the indemnitee will be entitlted to indemnification.
11. FSC is hereby expressly put on notice of the limitation
of liability as set forth in Article XI of the Declaration of Trust
and agrees that the obligations assumed by the Trust pursuant to this
Agreement shall be limited in any case to the Trust and its assets and
FSC shall not seek satisfaction of any such obligation from the
shareholders of the Trust, the Trustees, officers, employees or agents
of the Trust, or any of them.
12. FSC agrees to adopt compliance standards as to when a
class of shares may be sold to particular investors.
13. This Agreement will become binding upon the parties
hereto upon the execution of the attached exhibits to the Agreement.
<PAGE>
Exhibit A
FEDERATED MUNICIPAL INCOME TRUST
Michigan Municipal Income fund
In consideration of the mutual covenants set forth in the
Distributor's Contract dated September 9, 1991, between Federated
Municipal Income Trust and Federated Securities Corp., Federated
Municipal Income Trust executes and delivers this Exhibit on behalf of
the Fund, and with respect to the separate Class of Shares thereof,
first set forth in this Exhibit.
Witness the due execution hereof this 9th day of September,
1991.
Attest: FEDERATED MUNICIPAL INCOME TRUST
/S/ JOHN W. MCGONIGLE By: /S/ RICHARD B. FISHER
Secretary President
(SEAL)
Attest: FEDERATED SECURITIES CORP.
/S/ S. ELLIOTT COHAN By: /S/ RICHARD B. FISHER
Secretary President
(SEAL)
<PAGE>
Exhibit B
FEDERATED MUNICIPAL INCOME TRUST
Pennsylvania Municipal Income Fund
Investment Shares
The following provisions are hereby incorporated and made
part of the Distributor's Contract dated the 9th day of September,
1991, between Federated Municipal Income Trust and Federated
Securities Corp. with respect to the separate Class of Shares thereof,
first set forth in this Exhibit.
1. The Trust hereby appoints FSC to engage in activities
principally intended to result in the sale of shares of the Classes.
Pursuant to this appointment FSC is authorized to select a group of
brokers ("Brokers') to sell the above-listed Classes ("Shares"), the
the current offering price thereof as described and set forth in the
respective prospectuses of the Trust, and to render administrative
support services to the Trust and its shareholders. In addition, FSC
is authorized to select a group of Administrators ("Administrators")
to render administrative support services to the Trust and its
shareholders.
2. Administrative support services may include, but are not
limited to, the following eleven functions: (1) account openings: the
Broker or Administrator communicates account openings via computer
terminals located on the Broker or Administrator's premises; (2)
account closings: the Broker or Administrator communicates account
closings via computer terminals; (3) enter purchase transactions:
purchase transactions are entered through the Broker or
Administrator's own personal computer or through the use of a
toll-free telephone number; (4) enter redemption transactions: Broker
or Administrator enters redemption transactions in the same manner as
purchases; (5) account maintenance: Broker or Administrator provides
or arranges to provide accounting support all transactions. Broker or
Administrator also wires and reconciles all transactions, reviews the
activity in the Trust's accounts, and provides training and
supervision of its personnel; (6) interest posting: Broker or
Administrator posts and reinvests dividends to the Trust's accounts;
(7) prospectus and shareholder reports: Broker or Administrator
maintains and distributes current copies of prospectuses and
shareholder reports; (8) advertisements: the Broker or Administrator
continuously advertises the availability of its services and products;
(9) customer lists: The Broker or Administrator continuously provides
name of potential customers; (10) design services: the Broker or
Administrator continuously designs material to send to customers and
develops methods of making such materials accessible to customers; and
(11) consultation services: the Broker or Administrator continuously
provides information about the product needs of customers.
3. During the term of this Agreement, the Trust will pay FSC
for services pursuant to this Agreement, a monthly fee computed at the
annual rate of .40% of the average aggregate net asset value of the
Investment Shares of the Pennsylvania Municipal Income Fund held
during the month. For the month in which this Agreement becomes
effective or terminates, there shall be an appropriate proration of
any fee payable on the basis of the number of days that the Agreement
is in effect during the month.
4. FSC may from time-to-time and for such periods as it
deemed appropriate reduce its compensation to the extent any Class
expenses exceed such lower expense limitation as FSC may, by notice to
the Trust, voluntarily declare to be effective.
5. FSC will enter into separate written agreements with
various firms to provide certain of the services set forth in Paragaph
1 herein. FSC, in its sole discretion, may pay Brokers and
Administrators a periodic fee in respect of Shares owned from time to
time by their clients or customers. The schedules of such fees and the
basis upon which such fees will be paid shall be determined from time
to time by FSC in its sole discretion.
6. FSC will prepare reports to the Board of Trustees of the
Trust on a quarterly basis showing amounts expended hereunder including amounts
paid to Brokers and Administrators and the purpose for such payments.
In consideration of the mutual covenants set forth in the
Distributor's Contract dated September 9, 1991 between Federated
Municipal Income Trust and Federated Securities Corp., Federated
Municipal Income Trust executes and delivers this Exhibit on behalf of
the Fund, and with respect to the separate Class of Shares thereof,
first set forth in this Exhibit.
Witness the due execution hereof this 27th day of December,
1991.
ATTEST: FEDERATED MUNICIPAL INCOME TRUST
/S/ JOHN W. MCGONIGLE By: /S/ RICHARD B. FISHER
Secretary President
(SEAL)
ATTEST: FEDERATED SECURITIES CORP.
/S/ S. ELLIOTT COHAN By: /S/ RICHARD B. FISHER
Secretary President
(SEAL)
<PAGE>
Exhibit C
FEDERATED MUNICIPAL INCOME TRUST
Ohio Municipal Income Fund
Investment Shares
The following provisions are hereby incorporated and made
part of the Distributor's Contract dated the 9th day of September,
1991, between Federated Municipal Income Trust and Federated
Securities Corp. with respect to the separate Class of Shares thereof,
first set forth in this Exhibit.
1. The Trust hereby appoints FSC to engage in activities
principally intended to result in the sale of shares of the Classes.
Pursuant to this appointment FSC is authorized to select a group of
brokers ("Brokers') to sell the above-listed Classes ("Shares"), the
the current offering price thereof as described and set forth in the
respective prospectuses of the Trust, and to render administrative
support services to the Trust and its shareholders. In addition, FSC
is authorized to select a group of Administrators ("Administrators")
to render administrative support services to the Trust and its
shareholders.
2. Administrative support services may include, but are not
limited to, the following eleven functions: (1) account openings: the
Broker or Administrator communicates account openings via computer
terminals located on the Broker or Administrator's premises; (2)
account closings: the Broker or Administrator communicates account
closings via computer terminals; (3) enter purchase transactions:
purchase transactions are entered through the Broker or
Administrator's own personal computer or through the use of a
toll-free telephone number; (4) enter redemption transactions: Broker
or Administrator enters redemption transactions in the same manner as
purchases; (5) account maintenance: Broker or Administrator provides
or arranges to provide accounting support all transactions. Broker or
Administrator also wires and reconciles all transactions, reviews the
activity in the Trust's accounts, and provides training and
supervision of its personnel; (6) interest posting: Broker or
Administrator posts and reinvests dividends to the Trust's accounts;
(7) prospectus and shareholder reports: Broker or Administrator
maintains and distributes current copies of prospectuses and
shareholder reports; (8) advertisements: the Broker or Administrator
continuously advertises the availability of its services and products;
(9) customer lists: The Broker or Administrator continuously provides
name of potential customers; (10) design services: the Broker or
Administrator continuously designs material to send to customers and
develops methods of making such materials accessible to customers; and
(11) consultation services: the Broker or Administrator continuously
provides information about the product needs of customers.
3. During the term of this Agreement, the Trust will pay FSC
for services pursuant to this Agreement, a monthly fee computed at the
annual rate of .40% of the average aggregate net asset value of the
Investment Shares of the Ohio Municipal Income Fund held during the
month. For the month in which this Agreement becomes effective or
terminates, there shall be an appropriate proration of any fee payable
on the basis of the number of days that the Agreement is in effect
during the month.
4. FSC may from time-to-time and for such periods as it
deemed appropriate reduce its compensation to the extent any Class
expenses exceed such lower expense limitation as FSC may, by notice to
the Trust, voluntarily declare to be effective.
5. FSC will enter into separate written agreements with
various firms to provide certain of the services set forth in Paragaph
1 herein. FSC, in its sole discretion, may pay Brokers and
Administrators a periodic fee in respect of Shares owned from time to
time by their clients or customers. The schedules of such fees and the
basis upon which such fees will be paid shall be determined from time
to time by FSC in its sole discretion.
6. FSC will prepare reports to the Board of Trustees of the
Trust on a quarterly basis showing amounts expended hereunder including amounts
paid to Brokers and Administrators and the purpose for such payments.
In consideration of the mutual covenants set forth in the
Distributor's Contract dated September 9, 1991 between Federated
Municipal Income Trust and Federated Securities Corp., Federated
Municipal Income Trust executes and delivers this Exhibit on behalf of
the Fund, and with respect to the separate Class of Shares thereof,
first set forth in this Exhibit.
Witness the due execution hereof this 29th day of January,
1992.
ATTEST: FEDERATED MUNICIPAL INCOME TRUST
/S/ JOHN W. MCGONIGLE By: /S/ RICHARD B. FISHER
Secretary President
(SEAL)
ATTEST: FEDERATED SECURITIES CORP.
/S/ S. ELLIOTT COHAN By: /S/ RICHARD B. FISHER
Secretary President
(SEAL)
<PAGE>
Exhibit D
FEDERATED MUNICIPAL INCOME TRUST
Ohio Municipal Income Fund
Trust Shares
In consideration of the mutual covenants set forth in the
Distributor's Contract dated September 9, 1991, between Federated
Municipal Income Trust and Federated Securities Corp., Federated
Municipal Income Trust executes and delivers this Exhibit on behalf of
the Fund, and with respect to the separate Class of Shares thereof,
first set forth in this Exhibit.
Witness the due execution hereof this 23rd day of March,
1992.
Attest: FEDERATED MUNICIPAL INCOME TRUST
/S/ JOHN W. MCGONIGLE By: /S/ J. CHRISTOPHER DONAHUE
Secretary Vice President
(SEAL)
Attest: FEDERATED SECURITIES CORP.
/S/ S. ELLIOTT COHAN By: /S/ RICHARD B. FISHER
Secretary President
<PAGE>
Exhibit E
FEDERATED MUNICIPAL INCOME TRUST
Pennsylvania Municipal Income Fund
In consideration of the mutual covenants set forth in the
Distributor's Contract dated September 9, 1991, between Federated
Municipal Income Trust and Federated Securities Corp., Federated
Municipal Income Trust executes and delivers this Exhibit on behalf of
the Fund, and with respect to the separate Class of Shares thereof,
first set forth in this Exhibit.
Witness the due execution hereof this 23rd day of March,
1992.
Attest: FEDERATED MUNICIPAL INCOME TRUST
/S/ JOHN W. MCGONIGLE By: /S/ J. CHRISTOPHER DONAHUE
Secretary President
(SEAL)
Attest: FEDERATED SECURITIES CORP.
/S/ S. ELLIOTT COHAN By: /S/ RICHARD B. FISHER
Secretary President
<PAGE>
Exhibit F
MUNICIPAL SECURITIES INCOME TRUST
California Municipal Income Fund
Fortress Shares
The following provisions are hereby incorporated and made
part of the Distributor's Contract dated the 9th day of September,
1991, between Municipal Securities Income Trust and Federated
Securities Corp. with respect to the separate Class of Shares thereof,
first set forth in this Exhibit.
1. The Trust hereby appoints FSC to engage in activities
principally intended to result in the sale of shares of the Classes.
Pursuant to this appointment FSC is authorized to select a group of
brokers ("Brokers') to sell the above-listed Classes ("Shares"), the
the current offering price thereof as described and set forth in the
respective prospectuses of the Trust, and to render administrative
support services to the Trust and its shareholders. In addition, FSC
is authorized to select a group of Administrators ("Administrators")
to render administrative support services to the Trust and its
shareholders.
2. Administrative support services may include, but are not
limited to, the following eleven functions: (1) account openings: the
Broker or Administrator communicates account openings via computer
terminals located on the Broker or Administrator's premises; (2)
account closings: the Broker or Administrator communicates account
closings via computer terminals; (3) enter purchase transactions:
purchase transactions are entered through the Broker or
Administrator's own personal computer or through the use of a
toll-free telephone number; (4) enter redemption transactions: Broker
or Administrator enters redemption transactions in the same manner as
purchases; (5) account maintenance: Broker or Administrator provides
or arranges to provide accounting support all transactions. Broker or
Administrator also wires and reconciles all transactions, reviews the
activity in the Trust's accounts, and provides training and
supervision of its personnel; (6) interest posting: Broker or
Administrator posts and reinvests dividends to the Trust's accounts;
(7) prospectus and shareholder reports: Broker or Administrator
maintains and distributes current copies of prospectuses and
shareholder reports; (8) advertisements: the Broker or Administrator
continuously advertises the availability of its services and products;
(9) customer lists: The Broker or Administrator continuously provides
name of potential customers; (10) design services: the Broker or
Administrator continuously designs material to send to customers and
develops methods of making such materials accessible to customers; and
(11) consultation services: the Broker or Administrator continuously
provides information about the product needs of customers.
3. During the term of this Agreement, the Trust will pay FSC
for services pursuant to this Agreement, a monthly fee computed at the
annual rate of .50% of the average aggregate net asset value of the
Fortress Shares of the California Municipal Income Fund held during
the month. For the month in which this Agreement becomes effective or
terminates, there shall be an appropriate proration of any fee payable
on the basis of the number of days that the Agreement is in effect
during the month.
4. FSC may from time-to-time and for such periods as it
deemed appropriate reduce its compensation to the extent any Class
expenses exceed such lower expense limitation as FSC may, by notice to
the Trust, voluntarily declare to be effective.
5. FSC will enter into separate written agreements with
various firms to provide certain of the services set forth in Paragaph
1 herein. FSC, in its sole discretion, may pay Brokers and
Administrators a periodic fee in respect of Shares owned from time to
time by their clients or customers. The schedules of such fees and the
basis upon which such fees will be paid shall be determined from time
to time by FSC in its sole discretion.
6. FSC will prepare reports to the Board of Trustees of the
Trust on a quarterly basis showing amounts expended hereunder including amounts
paid to Brokers and Administrators and the purpose for such payments.
In consideration of the mutual covenants set forth in the
Distributor's Contract dated September 9, 1991 between Municipal
Securities Income Trust and Federated Securities Corp., Municipal
Securities Income Trust executes and delivers this Exhibit on behalf
of the Fund, and with respect to the separate Class of Shares thereof,
first set forth in this Exhibit.
Witness the due execution hereof this 24th day of November,
1992.
ATTEST: MUNICIPAL SECURITIES INCOME TRUST
/S/ JOHN W. MCGONIGLE By: /S/ J. CHRISTOPHER DONAHUE
Secretary Vice President
(SEAL)
ATTEST: FEDERATED SECURITIES CORP.
/S/ S. ELLIOTT COHAN By: /S/ RICHARD B. FISHER
Secretary President
(SEAL)
<PAGE>
Exhibit G
MUNICIPAL SECURITIES INCOME TRUST
New York Municipal Income Fund
Fortress Shares
The following provisions are hereby incorporated and made
part of the Distributor's Contract dated the 9th day of September,
1991, between Municipal Securities Income Trust and Federated
Securities Corp. with respect to the separate Class of Shares thereof,
first set forth in this Exhibit.
1. The Trust hereby appoints FSC to engage in activities
principally intended to result in the sale of shares of the Classes.
Pursuant to this appointment FSC is authorized to select a group of
brokers ("Brokers') to sell the above-listed Classes ("Shares"), the
the current offering price thereof as described and set forth in the
respective prospectuses of the Trust, and to render administrative
support services to the Trust and its shareholders. In addition, FSC
is authorized to select a group of Administrators ("Administrators")
to render administrative support services to the Trust and its
shareholders.
2. Administrative support services may include, but are not
limited to, the following eleven functions: (1) account openings: the
Broker or Administrator communicates account openings via computer
terminals located on the Broker or Administrator's premises; (2)
account closings: the Broker or Administrator communicates account
closings via computer terminals; (3) enter purchase transactions:
purchase transactions are entered through the Broker or
Administrator's own personal computer or through the use of a
toll-free telephone number; (4) enter redemption transactions: Broker
or Administrator enters redemption transactions in the same manner as
purchases; (5) account maintenance: Broker or Administrator provides
or arranges to provide accounting support all transactions. Broker or
Administrator also wires and reconciles all transactions, reviews the
activity in the Trust's accounts, and provides training and
supervision of its personnel; (6) interest posting: Broker or
Administrator posts and reinvests dividends to the Trust's accounts;
(7) prospectus and shareholder reports: Broker or Administrator
maintains and distributes current copies of prospectuses and
shareholder reports; (8) advertisements: the Broker or Administrator
continuously advertises the availability of its services and products;
(9) customer lists: The Broker or Administrator continuously provides
name of potential customers; (10) design services: the Broker or
Administrator continuously designs material to send to customers and
develops methods of making such materials accessible to customers; and
(11) consultation services: the Broker or Administrator continuously
provides information about the product needs of customers.
3. During the term of this Agreement, the Trust will pay FSC
for services pursuant to this Agreement, a monthly fee computed at the
annual rate of .50% of the average aggregate net asset value of the
Fortress Shares of the New York Municipal Income Fund held during the
month. For the month in which this Agreement becomes effective or
terminates, there shall be an appropriate proration of any fee payable
on the basis of the number of days that the Agreement is in effect
during the month.
4. FSC may from time-to-time and for such periods as it
deemed appropriate reduce its compensation to the extent any Class
expenses exceed such lower expense limitation as FSC may, by notice to
the Trust, voluntarily declare to be effective.
5. FSC will enter into separate written agreements with
various firms to provide certain of the services set forth in Paragaph
1 herein. FSC, in its sole discretion, may pay Brokers and
Administrators a periodic fee in respect of Shares owned from time to
time by their clients or customers. The schedules of such fees and the
basis upon which such fees will be paid shall be determined from time
to time by FSC in its sole discretion.
6. FSC will prepare reports to the Board of Trustees of the
Trust on a quarterly basis showing amounts expended hereunder including amounts
paid to Brokers and Administrators and the purpose for such payments.
In consideration of the mutual covenants set forth in the
Distributor's Contract dated September 9, 1991 between Municipal
Securities Income Trust and Federated Securities Corp., Municipal
Securities Income Trust executes and delivers this Exhibit on behalf
of the Fund, and with respect to the separate Class of Shares thereof,
first set forth in this Exhibit.
Witness the due execution hereof this 24th day of November,
1992.
ATTEST: MUNICIPAL SECURITIES INCOME TRUST
/S/ JOHN W. MCGONIGLE By: /S/ J. CHRISTOPHER DONAHUE
Secretary Vice President
(SEAL)
ATTEST: FEDERATED SECURITIES CORP.
/S/ S. ELLIOTT COHAN By: /S/ RICHARD B. FISHER
Secretary President
(SEAL)
<PAGE>
Exhibit H
MUNICIPAL SECURITIES INCOME TRUST
Florida Municipal Income Fund
The following provisions are hereby incorporated and made
part of the Distributor's Contract dated the 9th day of September,
1991, between Municipal Securities Income Trust and Federated
Securities Corp. with respect to the separate Class of Shares thereof,
first set forth in this Exhibit.
1. The Trust hereby appoints FSC to engage in activities
principally intended to result in the sale of shares of the Classes.
Pursuant to this appointment FSC is authorized to select a group of
brokers ("Brokers') to sell the above-listed Classes ("Shares"), the
the current offering price thereof as described and set forth in the
respective prospectuses of the Trust, and to render administrative
support services to the Trust and its shareholders. In addition, FSC
is authorized to select a group of Administrators ("Administrators")
to render administrative support services to the Trust and its
shareholders.
2. Administrative support services may include, but are not
limited to, the following eleven functions: (1) account openings: the
Broker or Administrator communicates account openings via computer
terminals located on the Broker or Administrator's premises; (2)
account closings: the Broker or Administrator communicates account
closings via computer terminals; (3) enter purchase transactions:
purchase transactions are entered through the Broker or
Administrator's own personal computer or through the use of a
toll-free telephone number; (4) enter redemption transactions: Broker
or Administrator enters redemption transactions in the same manner as
purchases; (5) account maintenance: Broker or Administrator provides
or arranges to provide accounting support all transactions. Broker or
Administrator also wires and reconciles all transactions, reviews the
activity in the Trust's accounts, and provides training and
supervision of its personnel; (6) interest posting: Broker or
Administrator posts and reinvests dividends to the Trust's accounts;
(7) prospectus and shareholder reports: Broker or Administrator
maintains and distributes current copies of prospectuses and
shareholder reports; (8) advertisements: the Broker or Administrator
continuously advertises the availability of its services and products;
(9) customer lists: The Broker or Administrator continuously provides
name of potential customers; (10) design services: the Broker or
Administrator continuously designs material to send to customers and
develops methods of making such materials accessible to customers; and
(11) consultation services: the Broker or Administrator continuously
provides information about the product needs of customers.
3. During the term of this Agreement, the Trust will pay FSC
for services pursuant to this Agreement, a monthly fee computed at the
annual rate of .75% of the average aggregate net asset value of the
shares of the Florida Municipal Income Fund held during the month. For
the month in which this Agreement becomes effective or terminates,
there shall be an appropriate proration of any fee payable on the
basis of the number of days that the Agreement is in effect during the
month.
4. FSC may from time-to-time and for such periods as it
deemed appropriate reduce its compensation to the extent any Class
expenses exceed such lower expense limitation as FSC may, by notice to
the Trust, voluntarily declare to be effective.
5. FSC will enter into separate written agreements with
various firms to provide certain of the services set forth in Paragaph
1 herein. FSC, in its sole discretion, may pay Brokers and
Administrators a periodic fee in respect of Shares owned from time to
time by their clients or customers. The schedules of such fees and the
basis upon which such fees will be paid shall be determined from time
to time by FSC in its sole discretion.
6. FSC will prepare reports to the Board of Trustees of the
Trust on a quarterly basis showing amounts expended hereunder including amounts
paid to Brokers and Administrators and the purpose for such payments.
In consideration of the mutual covenants set forth in the
Distributor's Contract dated September 9, 1991 between Municipal
Securities Income Trust and Federated Securities Corp., Municipal
Securities Income Trust executes and delivers this Exhibit on behalf
of the Fund, and with respect to the separate Class of Shares thereof,
first set forth in this Exhibit.
Witness the due execution hereof this 1st day of March, 1993.
ATTEST: MUNICIPAL SECURITIES INCOME TRUST
/S/ JOHN W. MCGONIGLE By: /S/ RICHARD B. FISHER
Secretary President
(SEAL)
ATTEST: FEDERATED SECURITIES CORP.
/S/ S. ELLIOTT COHAN By: /S/ JOHN STALEY III
Secretary Executive Vice President
(SEAL)
<PAGE>
Exhibit I
MUNICIPAL SECURITIES INCOME TRUST
New Jersey Municipal Income Fund
The following provisions are hereby incorporated and made
part of the Distributor's Contract dated the 9th day of September,
1991, between Municipal Securities Income Trust and Federated
Securities Corp. with respect to the separate Class of Shares thereof,
first set forth in this Exhibit.
1. The Trust hereby appoints FSC to engage in activities
principally intended to result in the sale of shares of the Classes.
Pursuant to this appointment FSC is authorized to select a group of
brokers ("Brokers') to sell the above-listed Classes ("Shares"), the
the current offering price thereof as described and set forth in the
respective prospectuses of the Trust, and to render administrative
support services to the Trust and its shareholders. In addition, FSC
is authorized to select a group of Administrators ("Administrators")
to render administrative support services to the Trust and its
shareholders.
2. Administrative support services may include, but are not
limited to, the following eleven functions: (1) account openings: the
Broker or Administrator communicates account openings via computer
terminals located on the Broker or Administrator's premises; (2)
account closings: the Broker or Administrator communicates account
closings via computer terminals; (3) enter purchase transactions:
purchase transactions are entered through the Broker or
Administrator's own personal computer or through the use of a
toll-free telephone number; (4) enter redemption transactions: Broker
or Administrator enters redemption transactions in the same manner as
purchases; (5) account maintenance: Broker or Administrator provides
or arranges to provide accounting support all transactions. Broker or
Administrator also wires and reconciles all transactions, reviews the
activity in the Trust's accounts, and provides training and
supervision of its personnel; (6) interest posting: Broker or
Administrator posts and reinvests dividends to the Trust's accounts;
(7) prospectus and shareholder reports: Broker or Administrator
maintains and distributes current copies of prospectuses and
shareholder reports; (8) advertisements: the Broker or Administrator
continuously advertises the availability of its services and products;
(9) customer lists: The Broker or Administrator continuously provides
name of potential customers; (10) design services: the Broker or
Administrator continuously designs material to send to customers and
develops methods of making such materials accessible to customers; and
(11) consultation services: the Broker or Administrator continuously
provides information about the product needs of customers.
3. During the term of this Agreement, the Trust will pay FSC
for services pursuant to this Agreement, a monthly fee computed at the
annual rate of .75% of the average aggregate net asset value of the
shares of the New Jersey Municipal Income Fund held during the month.
For the month in which this Agreement becomes effective or terminates,
there shall be an appropriate proration of any fee payable on the
basis of the number of days that the Agreement is in effect during the
month.
4. FSC may from time-to-time and for such periods as it
deemed appropriate reduce its compensation to the extent any Class
expenses exceed such lower expense limitation as FSC may, by notice to
the Trust, voluntarily declare to be effective.
5. FSC will enter into separate written agreements with
various firms to provide certain of the services set forth in Paragaph
1 herein. FSC, in its sole discretion, may pay Brokers and
Administrators a periodic fee in respect of Shares owned from time to
time by their clients or customers. The schedules of such fees and the
basis upon which such fees will be paid shall be determined from time
to time by FSC in its sole discretion.
6. FSC will prepare reports to the Board of Trustees of the
Trust on a quarterly basis showing amounts expended hereunder including
amounts paid to Brokers and Administrators and the purpose for such payments.
In consideration of the mutual covenants set forth in the
Distributor's Contract dated September 9, 1991 between Municipal
Securities Income Trust and Federated Securities Corp., Municipal
Securities Income Trust executes and delivers this Exhibit on behalf
of the Fund, and with respect to the separate Class of Shares thereof,
first set forth in this Exhibit.
Witness the due execution hereof this 1st day of March, 1993.
ATTEST: MUNICIPAL SECURITIES INCOME TRUST
/S/ JOHN W. MCGONIGLE By: /S/ RICHARD B. FISHER
Secretary President
(SEAL)
ATTEST: FEDERATED SECURITIES CORP.
/S/ S. ELLIOTT COHAN By: /S/ JOHN A STALEY, III
Secretary Executive Vice President
(SEAL)
<PAGE>
Exhibit J
MUNICIPAL SECURITIES INCOME TRUST
Texas Municipal Income Fund
The following provisions are hereby incorporated and made
part of the Distributor's Contract dated the 9th day of September,
1991, between Municipal Securities Income Trust and Federated
Securities Corp. with respect to the separate Class of Shares thereof,
first set forth in this Exhibit.
1. The Trust hereby appoints FSC to engage in activities
principally intended to result in the sale of shares of the Classes.
Pursuant to this appointment FSC is authorized to select a group of
brokers ("Brokers') to sell the above-listed Classes ("Shares"), the
the current offering price thereof as described and set forth in the
respective prospectuses of the Trust, and to render administrative
support services to the Trust and its shareholders. In addition, FSC
is authorized to select a group of Administrators ("Administrators")
to render administrative support services to the Trust and its
shareholders.
2. Administrative support services may include, but are not
limited to, the following eleven functions: (1) account openings: the
Broker or Administrator communicates account openings via computer
terminals located on the Broker or Administrator's premises; (2)
account closings: the Broker or Administrator communicates account
closings via computer terminals; (3) enter purchase transactions:
purchase transactions are entered through the Broker or
Administrator's own personal computer or through the use of a
toll-free telephone number; (4) enter redemption transactions: Broker
or Administrator enters redemption transactions in the same manner as
purchases; (5) account maintenance: Broker or Administrator provides
or arranges to provide accounting support all transactions. Broker or
Administrator also wires and reconciles all transactions, reviews the
activity in the Trust's accounts, and provides training and
supervision of its personnel; (6) interest posting: Broker or
Administrator posts and reinvests dividends to the Trust's accounts;
(7) prospectus and shareholder reports: Broker or Administrator
maintains and distributes current copies of prospectuses and
shareholder reports; (8) advertisements: the Broker or Administrator
continuously advertises the availability of its services and products;
(9) customer lists: The Broker or Administrator continuously provides
name of potential customers; (10) design services: the Broker or
Administrator continuously designs material to send to customers and
develops methods of making such materials accessible to customers; and
(11) consultation services: the Broker or Administrator continuously
provides information about the product needs of customers.
3. During the term of this Agreement, the Trust will pay FSC
for services pursuant to this Agreement, a monthly fee computed at the
annual rate of .75% of the average aggregate net asset value of the
shares of the Texas Municipal Income Fund held during the month. For
the month in which this Agreement becomes effective or terminates,
there shall be an appropriate proration of any fee payable on the
basis of the number of days that the Agreement is in effect during the
month.
4. FSC may from time-to-time and for such periods as it
deemed appropriate reduce its compensation to the extent any Class
expenses exceed such lower expense limitation as FSC may, by notice to
the Trust, voluntarily declare to be effective.
5. FSC will enter into separate written agreements with
various firms to provide certain of the services set forth in Paragaph
1 herein. FSC, in its sole discretion, may pay Brokers and
Administrators a periodic fee in respect of Shares owned from time to
time by their clients or customers. The schedules of such fees and the
basis upon which such fees will be paid shall be determined from time
to time by FSC in its sole discretion.
6. FSC will prepare reports to the Board of Trustees of the
Trust on a quarterly basis showing amounts expended hereunder including amounts
paid to Brokers and Administrators and the purpose for such payments.
In consideration of the mutual covenants set forth in the
Distributor's Contract dated September 9, 1991 between Municipal
Securities Income Trust and Federated Securities Corp., Municipal
Securities Income Trust executes and delivers this Exhibit on behalf
of the Fund, and with respect to the separate Class of Shares thereof,
first set forth in this Exhibit.
Witness the due execution hereof this 1st day of March, 1993.
ATTEST: MUNICIPAL SECURITIES INCOME TRUST
/S/ JOHN W. MCGONIGLE By: /S/ RICHARD B. FISHER
Secretary President
(SEAL)
ATTEST: FEDERATED SECURITIES CORP.
/S/ S. ELLIOTT COHAN By: /S/ JOHN A. STALEY, III
Secretary Executive Vice President
(SEAL)
<PAGE>
Exhibit G
MUNICIPAL SECURITIES INCOME TRUST
Maryland Municipal Income Fund
The following provisions are hereby incorporated and made
part of the Distributor's Contract dated the 9th day of September,
1991, between Municipal Securities Income Trust and Federated
Securities Corp. with respect to the separate Class of Shares thereof,
first set forth in this Exhibit.
1. The Trust hereby appoints FSC to engage in activities
principally intended to result in the sale of shares of the Classes.
Pursuant to this appointment FSC is authorized to select a group of
brokers ("Brokers') to sell the above-listed Classes ("Shares"), the
the current offering price thereof as described and set forth in the
respective prospectuses of the Trust, and to render administrative
support services to the Trust and its shareholders. In addition, FSC
is authorized to select a group of Administrators ("Administrators")
to render administrative support services to the Trust and its
shareholders.
2. Administrative support services may include, but are not
limited to, the following eleven functions: (1) account openings: the
Broker or Administrator communicates account openings via computer
terminals located on the Broker or Administrator's premises; (2)
account closings: the Broker or Administrator communicates account
closings via computer terminals; (3) enter purchase transactions:
purchase transactions are entered through the Broker or
Administrator's own personal computer or through the use of a
toll-free telephone number; (4) enter redemption transactions: Broker
or Administrator enters redemption transactions in the same manner as
purchases; (5) account maintenance: Broker or Administrator provides
or arranges to provide accounting support all transactions. Broker or
Administrator also wires and reconciles all transactions, reviews the
activity in the Trust's accounts, and provides training and
supervision of its personnel; (6) interest posting: Broker or
Administrator posts and reinvests dividends to the Trust's accounts;
(7) prospectus and shareholder reports: Broker or Administrator
maintains and distributes current copies of prospectuses and
shareholder reports; (8) advertisements: the Broker or Administrator
continuously advertises the availability of its services and products;
(9) customer lists: The Broker or Administrator continuously provides
name of potential customers; (10) design services: the Broker or
Administrator continuously designs material to send to customers and
develops methods of making such materials accessible to customers; and
(11) consultation services: the Broker or Administrator continuously
provides information about the product needs of customers.
3. During the term of this Agreement, the Trust will pay FSC
for services pursuant to this Agreement, a monthly fee computed at the
annual rate of .75% of the average aggregate net asset value of the
shares of the Maryland Municipal Income Fund held during the month.
For the month in which this Agreement becomes effective or terminates,
there shall be an appropriate proration of any fee payable on the
basis of the number of days that the Agreement is in effect during the
month.
4. FSC may from time-to-time and for such periods as it
deemed appropriate reduce its compensation to the extent any Class
expenses exceed such lower expense limitation as FSC may, by notice to
the Trust, voluntarily declare to be effective.
5. FSC will enter into separate written agreements with
various firms to provide certain of the services set forth in Paragaph
1 herein. FSC, in its sole discretion, may pay Brokers and
Administrators a periodic fee in respect of Shares owned from time to
time by their clients or customers. The schedules of such fees and the
basis upon which such fees will be paid shall be determined from time
to time by FSC in its sole discretion.
6. FSC will prepare reports to the Board of Trustees of the
Trust on a quarterly basis showing amounts expended hereunder including amounts
paid to Brokers and Administrators and the purpose for such payments.
In consideration of the mutual covenants set forth in the
Distributor's Contract dated September 9, 1991 between Municipal
Securities Income Trust and Federated Securities Corp., Municipal
Securities Income Trust executes and delivers this Exhibit on behalf
of the Fund, and with respect to the separate Class of Shares thereof,
first set forth in this Exhibit.
Witness the due execution hereof this 1st day of June, 1993.
ATTEST: MUNICIPAL SECURITIES INCOME TRUST
/S/ JOHN W. MCGONIGLE By: /S/ RICHARD B. FISHER
Secretary President
(SEAL)
ATTEST: FEDERATED SECURITIES CORP.
/S/ S. ELLIOTT COHAN By: /S/ JOHN A. STALEY, III
Secretary Executive Vice President
(SEAL)
<PAGE>
Exhibit L
MUNICIPAL SECURITIES INCOME TRUST
Pennsylvania Municipal Income Fund
Income Shares
The following provisions are hereby incorporated and made
part of the Distributor's Contract dated the 9th day of September,
1991, between Municipal Securities Income Trust and Federated
Securities Corp. with respect to the separate Class of Shares thereof,
first set forth in this Exhibit.
1. The Trust hereby appoints FSC to engage in activities
principally intended to result in the sale of shares of the Classes.
Pursuant to this appointment FSC is authorized to select a group of
brokers ("Brokers') to sell the above-listed Classes ("Shares"), the
the current offering price thereof as described and set forth in the
respective prospectuses of the Trust, and to render administrative
support services to the Trust and its shareholders. In addition, FSC
is authorized to select a group of Administrators ("Administrators")
to render administrative support services to the Trust and its
shareholders.
2. Administrative support services may include, but are not
limited to, the following eleven functions: (1) account openings: the
Broker or Administrator communicates account openings via computer
terminals located on the Broker or Administrator's premises; (2)
account closings: the Broker or Administrator communicates account
closings via computer terminals; (3) enter purchase transactions:
purchase transactions are entered through the Broker or
Administrator's own personal computer or through the use of a
toll-free telephone number; (4) enter redemption transactions: Broker
or Administrator enters redemption transactions in the same manner as
purchases; (5) account maintenance: Broker or Administrator provides
or arranges to provide accounting support all transactions. Broker or
Administrator also wires and reconciles all transactions, reviews the
activity in the Trust's accounts, and provides training and
supervision of its personnel; (6) interest posting: Broker or
Administrator posts and reinvests dividends to the Trust's accounts;
(7) prospectus and shareholder reports: Broker or Administrator
maintains and distributes current copies of prospectuses and
shareholder reports; (8) advertisements: the Broker or Administrator
continuously advertises the availability of its services and products;
(9) customer lists: The Broker or Administrator continuously provides
name of potential customers; (10) design services: the Broker or
Administrator continuously designs material to send to customers and
develops methods of making such materials accessible to customers; and
(11) consultation services: the Broker or Administrator continuously
provides information about the product needs of customers.
3. During the term of this Agreement, the Trust will pay FSC
for services pursuant to this Agreement, a monthly fee computed at the
annual rate of .75% of the average aggregate net asset value of the
Income Shares of the Pennsylvania Municipal Income Fund held during
the month. For the month in which this Agreement becomes effective or
terminates, there shall be an appropriate proration of any fee payable
on the basis of the number of days that the Agreement is in effect
during the month.
4. FSC may from time-to-time and for such periods as it
deemed appropriate reduce its compensation to the extent any Class
expenses exceed such lower expense limitation as FSC may, by notice to
the Trust, voluntarily declare to be effective.
5. FSC will enter into separate written agreements with
various firms to provide certain of the services set forth in Paragaph
1 herein. FSC, in its sole discretion, may pay Brokers and
Administrators a periodic fee in respect of Shares owned from time to
time by their clients or customers. The schedules of such fees and the
basis upon which such fees will be paid shall be determined from time
to time by FSC in its sole discretion.
6. FSC will prepare reports to the Board of Trustees of the
Trust on a quarterly basis showing amounts expended hereunder including amounts
paid to Brokers and Administrators and the purpose for such payments.
In consideration of the mutual covenants set forth in the
Distributor's Contract dated September 9, 1991 between Municipal
Securities Income Trust and Federated Securities Corp., Municipal
Securities Income Trust executes and delivers this Exhibit on behalf
of the Fund, and with respect to the separate Class of Shares thereof,
first set forth in this Exhibit.
Witness the due execution hereof this 1st day of June, 1993.
ATTEST: MUNICIPAL SECURITIES INCOME TRUST
/S/ JOHN W. MCGONIGLE By: /S/ RICHARD B. FISHER
Secretary President
(SEAL)
ATTEST: FEDERATED SECURITIES CORP.
/S/ S. ELLIOTT COHAN By: /S/ JOHN A. STALEY
Secretary Executive Vice President
(SEAL)
<PAGE>
Exhibit M
MUNICIPAL SECURITIES INCOME TRUST
Virginia Municipal Income Fund
The following provisions are hereby incorporated and made
part of the Distributor's Contract dated the 9th day of September,
1991, between Municipal Securities Income Trust and Federated
Securities Corp. with respect to the separate Class of Shares thereof,
first set forth in this Exhibit.
1. The Trust hereby appoints FSC to engage in activities
principally intended to result in the sale of shares of the Classes.
Pursuant to this appointment FSC is authorized to select a group of
brokers ("Brokers') to sell the above-listed Classes ("Shares"), the
the current offering price thereof as described and set forth in the
respective prospectuses of the Trust, and to render administrative
support services to the Trust and its shareholders. In addition, FSC
is authorized to select a group of Administrators ("Administrators")
to render administrative support services to the Trust and its
shareholders.
2. Administrative support services may include, but are not
limited to, the following eleven functions: (1) account openings: the
Broker or Administrator communicates account openings via computer
terminals located on the Broker or Administrator's premises; (2)
account closings: the Broker or Administrator communicates account
closings via computer terminals; (3) enter purchase transactions:
purchase transactions are entered through the Broker or
Administrator's own personal computer or through the use of a
toll-free telephone number; (4) enter redemption transactions: Broker
or Administrator enters redemption transactions in the same manner as
purchases; (5) account maintenance: Broker or Administrator provides
or arranges to provide accounting support all transactions. Broker or
Administrator also wires and reconciles all transactions, reviews the
activity in the Trust's accounts, and provides training and
supervision of its personnel; (6) interest posting: Broker or
Administrator posts and reinvests dividends to the Trust's accounts;
(7) prospectus and shareholder reports: Broker or Administrator
maintains and distributes current copies of prospectuses and
shareholder reports; (8) advertisements: the Broker or Administrator
continuously advertises the availability of its services and products;
(9) customer lists: The Broker or Administrator continuously provides
name of potential customers; (10) design services: the Broker or
Administrator continuously designs material to send to customers and
develops methods of making such materials accessible to customers; and
(11) consultation services: the Broker or Administrator continuously
provides information about the product needs of customers.
3. During the term of this Agreement, the Trust will pay FSC
for services pursuant to this Agreement, a monthly fee computed at the
annual rate of .75% of the average aggregate net asset value of the
shares of the Virginia Municipal Income Fund held during the month.
For the month in which this Agreement becomes effective or terminates,
there shall be an appropriate proration of any fee payable on the
basis of the number of days that the Agreement is in effect during the
month.
4. FSC may from time-to-time and for such periods as it
deemed appropriate reduce its compensation to the extent any Class
expenses exceed such lower expense limitation as FSC may, by notice to
the Trust, voluntarily declare to be effective.
5. FSC will enter into separate written agreements with
various firms to provide certain of the services set forth in Paragaph
1 herein. FSC, in its sole discretion, may pay Brokers and
Administrators a periodic fee in respect of Shares owned from time to
time by their clients or customers. The schedules of such fees and the
basis upon which such fees will be paid shall be determined from time
to time by FSC in its sole discretion.
6. FSC will prepare reports to the Board of Trustees of the
Trust on a quarterly basis showing amounts expended hereunder including amounts
paid to Brokers and Administrators and the purpose for such payments.
In consideration of the mutual covenants set forth in the
Distributor's Contract dated September 9, 1991 between Municipal
Securities Income Trust and Federated Securities Corp., Municipal
Securities Income Trust executes and delivers this Exhibit on behalf
of the Fund, and with respect to the separate Class of Shares thereof,
first set forth in this Exhibit.
Witness the due execution hereof this 1st day of June, 1993.
ATTEST: MUNICIPAL SECURITIES INCOME TRUST
/S/ JOHN W. MCGONIGLE By: /S/ RICHARD B. FISHER
Secretary President
(SEAL)
ATTEST: FEDERATED SECURITIES CORP.
/S/ S. ELLIOTT COHAN By: /S/ JOHN A. STALEY
Secretary Executive Vice President
(SEAL)
<PAGE>
Exhibit N
to the
Distributor's Contract
MUNICIPAL SECURITIES INCOME TRUST
PENNSYLVANIA MUNICIPAL INCOME FUND
CLASS B SHARES
The following provisions are hereby incorporated and made
part of the Distributor's Contract dated September 9, 1991, between
Municipal Securities Income Trust and Federated Securities Corp. with
respect to the Class of shares set forth above.
1. The Trust hereby appoints FSC to engage in activities
principally intended to result in the sale of shares of the
above-listed Class ("Shares"). Pursuant to this appointment,
FSC is authorized to select a group of financial institutions
("Financial Institutions") to sell Shares at the current
offering price thereof as described and set forth in the
respective prospectuses of the Trust.
2. During the term of this Agreement, the Trust will pay FSC for
services pursuant to this Agreement, a monthly fee computed
at the annual rate of .75% of the average aggregate net asset
value of the Shares held during the month. For the month in
which this Agreement becomes effective or terminates, there
shall be an appropriate proration of any fee payable on the
basis of the number of days that the Agreement is in effect
during the month.
3. FSC may from time-to-time and for such periods as it deems appropriate
reduce its compensation to the extent any Class' expenses exceed such
lower expense limitation as FSC may, by notice to the Trust,
voluntarily declare to be effective.
4. FSC will enter into separate written agreements with various
firms to provide certain of the services set forth in
Paragraph 1 herein. FSC, in its sole discretion, may pay
Financial Institutions a periodic fee in respect of Shares
owned from time to time by their clients or customers. The
schedules of such fees and the basis upon which such fees
will be paid shall be determined from time to time by FSC in
its sole discretion.
5. FSC will prepare reports to the Board of Trustees of the Trust on a
quarterly basis showing amounts expended hereunder including amounts
paid to Financial Institutions and the purpose for such
expenditures.
In consideration of the mutual covenants set forth in the
Distributor's Contract dated September 9, 1991 between Municipal
Securities Income Trust and Federated Securities Corp., Municipal
Securities Income Trust executes and delivers this Exhibit on behalf
of Pennsylvania Municipal Income Fund, and with respect to the Class B
Shares thereof, first set forth in this Exhibit.
<PAGE>
Witness the due execution hereof this 1st day of
March, 1997.
ATTEST: MUNICIPAL SECURITIES INCOME TRUST
/S/ JOHN W. MCGONIGLE By: /S/ RICHARD B. FISHER
Secretary President
ATTEST: FEDERATED SECURITIES CORP.
/S/ BYRON F. BOWMAN By:/S/ DAVID M. TAYLOR
Secretary Executive Vice President
EXHIBIT 15(I) UNDER FORM N-1A
EXHIBIT 1 UNDER ITEM 601/REG. S-K.
MUNICIPAL SECURITIES INCOME TRUST
RULE 12b-1 PLAN
This Plan ("Plan") is adopted as of this 1st day of March,
1993, by the Board of Trustees of Municipal Securities Income Trust
(the "Trust"), a Massachusetts business trust with respect to certain
classes of shares ("Classes") of the portfolios of the Trust (the
"Funds") set forth in exhibits hereto.
1. This Plan is adopted pursuant to Rule 12b-1 under the Investment
Company Act of 1940, as amended ("Act"), so as to allow the Trust to
make payments as contemplated herein, in conjunction with the
distribution of Shares of the Funds ("Shares").
2. This Plan is designed to finance activities of Federated Securities
Corp. ("FSC") principally intended to result in the sale of Shares to
include: (a) providing incentives to financial institutions
("Instituions") to sell Shares; (b) advertising and marketing of
Shares to include preparing, printing and distributing prospectuses
and sales literature to prospective shareholders and with
Institutions; and (c) implementing and operating the Plan. In
compensation for services provided pursuant to this Plan, FSC will be
paid a fee in respect of the following funds on the applicable
exhibit.
3. Any payment to FSC in accordance with this Plan will be made
pursuant to the "Distributor's Contract" entered into by the Trust and
FSC. Any payments made by FSC to Institutions with funds received as
compensation under this Plan will be made pursuant to the "Rule 12b-1
Agreement" entered into by FSC and the Institution.
4. FSC has the right (i) to select, in its sole discretion, the
Institutions to participate in the Plan and (ii) to terminate without cause
and in its sole discretion any Rule 12b-1 Agreements.
5. Quarterly in each year that this Plan remains in effect, FSC shall
prepare and furnish to the Board of Trustees of the Trust, and the
Board of Trustees shall review, a written report of the amounts
expended under the Plan and the purpose for which such expenditures
were made.
6. This Plan shall become effective with respect to each Fund (i)
after approval by majority votes of: (a) the Trust's Board of
Trustees; (b) the members of the Board of the Trust who are not
interested persons of the Trust and have no direct or indirect
financial interest in the operation of the Trust's Plan or in any
related documents to the Plan ("Disinterested Trustees"), cast in
person at a meeting called for the purpose of voting on the Plan; and
(c) the outstanding voting securities of the particular Fund, as
defined in Section 2(a)(42) of the Act and (ii) upon execution of an
exhibit adopting this Plan with respect to such Fund.
7. This Plan shall remain in effect with respect to each Fund/Class
presently set forth on an exhibit and any subsequent Funds added
pursuant to an exhibit during the initial year of this Plan for the
period of one year from the date set forth above and may be continued
thereafter if this Plan is approved with respect to each Fund at least
annually by a majority of the Trust's Board of Trustees and a majority
of the Disinterested Trustees, cast in person at a meeting called for
the purpose of voting on such Plan. If this Plan is adopted with
respect to a Fund after the first annual approval by the Trustees as
described above, this Plan will be effective as to that Fund upon
execution of the applicable exhibit pursuant to the provisions of
paragraph 6(ii) above and will continue in effect until the next
annual approval of this Plan by the Trustees and thereafter for
successive periods of one year subject to approval as described above.
8. All material amendments to this Plan must be approved by a vote of
the Board of Trustees of the Trust and of the Disinterested Trustees, cast in
person at a meeting called for the purpose of voting on it.
9. This Plan may not be amended in order to increase materially the
costs which the Funds may bear for distribution pursuant to the Plan
without being approved by a majority vote of the outstanding voting
securities of the Classes as defined in Section 2(a)(42) of the Act.
10. This Plan may be terminated with respect to a particular Fund at
any time by: (a) a majority vote of the Disinterested Trustees; or (b)
a vote of a majority of the outstanding voting securities of the
particular Fund as defined in Section 2(a)(42) of the Act; or (c) by
FSC on 60 days' notice to the Trust.
11. While this Plan shall be in effect, the selection and nomination of
Disinterested Trustees of the Trust shall be committed to the discretion of the
Disinterested Trustees then in office.
12. All agreements with any person relating to the implementation of
this Plan shall be in writing and any agreement related to this Plan
shall be subject to termination, without penalty, pursuant to the
provisions of Paragraph 10 herein.
13. This Plan shall be construed in accordance with and governed by
the laws of the Commonwealth of Massachusetts.
<PAGE>
Exhibit A
to the
Plan
MUNICIPAL SECURITIES INCOME TRUST
Florida Municipal Income Fund
This Plan is adopted by Municipal Securities Income Trust
with respect to the Class of Shares of the portfolio of the Trust set
forth above.
In compensation for the services provided pursuant to this
Plan, FSC will be paid a monthly fee computed at the annual rate of
.75 of 1% of the average aggregate net asset value of the shares of
the portfolios named above held during the month.
Witness the due execution hereof this 1st day of March, 1993.
MUNICIPAL SECURITIES INCOME TRUST
By: /S/ RICHARD B. FISHER
President
<PAGE>
Exhibit B
to the
Plan
MUNICIPAL SECURITIES INCOME TRUST
New Jersey Municipal Income Fund
This Plan is adopted by Municipal Securities Income Trust
with respect to the Class of Shares of the portfolio of the Trust set
forth above.
In compensation for the services provided pursuant to this
Plan, FSC will be paid a monthly fee computed at the annual rate of
.75 of 1% of the average aggregate net asset value of the shares of
the portfolios named above held during the month.
Witness the due execution hereof this 1st day of March, 1993.
MUNICIPAL SECURITIES INCOME TRUST
By: /S/ RICHARD B. FISHER
President
<PAGE>
Exhibit C
to the
Plan
MUNICIPAL SECURITIES INCOME TRUST
Texas Municipal Income Fund
This Plan is adopted by Municipal Securities Income Trust
with respect to the Class of Shares of the portfolio of the Trust set
forth above.
In compensation for the services provided pursuant to this
Plan, FSC will be paid a monthly fee computed at the annual rate of
.75 of 1% of the average aggregate net asset value of the shares of
the portfolios named above held during the month.
Witness the due execution hereof this 1st day of March, 1993.
MUNICIPAL SECURITIES INCOME TRUST
By: /S/ RICHARD B. FISHER
President
<PAGE>
Exhibit D
to the
Plan
MUNICIPAL SECURITIES INCOME TRUST
Maryland Municipal Income Fund
This Plan is adopted by Municipal Securities Income Trust
with respect to the Class of Shares of the portfolio of the Trust set
forth above.
In compensation for the services provided pursuant to this
Plan, FSC will be paid a monthly fee computed at the annual rate of
.75 of 1% of the average aggregate net asset value of the shares of
the portfolios named above held during the month.
Witness the due execution hereof this 1st day of June, 1993.
MUNICIPAL SECURITIES INCOME TRUST
By: /S/ RICHARD B. FISHER
President
<PAGE>
Exhibit E
to the
Plan
MUNICIPAL SECURITIES INCOME TRUST
Pennsylvania Municipal Income Fund
(Income Shares)
This Plan is adopted by Municipal Securities Income Trust
with respect to the Class of Shares of the portfolio of the Trust set
forth above.
In compensation for the services provided pursuant to this
Plan, FSC will be paid a monthly fee computed at the annual rate of
.75 of 1% of the average aggregate net asset value of the shares of
the portfolios named above held during the month.
Witness the due execution hereof this 1st day of June, 1993.
MUNICIPAL SECURITIES INCOME TRUST
By: /S/ RICHARD B. FISHER
President
<PAGE>
Exhibit F
to the
Plan
MUNICIPAL SECURITIES INCOME TRUST
Virginia Municipal Income Fund
This Plan is adopted by Municipal Securities Income Trust
with respect to the Class of Shares of the portfolio of the Trust set
forth above.
In compensation for the services provided pursuant to this
Plan, FSC will be paid a monthly fee computed at the annual rate of
.75 of 1% of the average aggregate net asset value of the shares of
the portfolios named above held during the month.
Witness the due execution hereof this 1st day of June, 1993.
MUNICIPAL SECURITIES INCOME TRUST
By: /S/ RICHARD B. FISHER
President
Exhibit 15(ii) under Form N-1A
Exhibit 1 under Item 601/Reg. S-K
MUNICIPAL SECURITIES INCOME TRUST
DISTRIBUTION PLAN
This Distribution Plan ("Plan") is adopted as of the
24th day of February, 1997, by the Board of Trustees of
MUNICIPAL SECURITIES INCOME TRUST (the "Trust"), a
Massachusetts business trust with respect to certain classes
of shares ("Classes") of the portfolios of the Trust (the
"Funds") set forth in exhibits hereto.
1. This Plan is adopted pursuant to Rule 12b-1 under the Investment
Company Act of 1940, as amended ("Act"), so as to allow the Trust to
make payments as contemplated herein, in conjunction with the
distribution of Classes of the Funds ("Shares").
2. This Plan is designed to finance activities of Federated
Securities Corp. ("FSC") principally intended to result in
the sale of Shares to include: (a) providing incentives to
financial institutions ("Financial Institutions") to sell
Shares; (b) advertising and marketing of Shares to include
preparing, printing and distributing prospectuses and sales
literature to prospective shareholders and with Financial
Institutions; and (c) implementing and operating the Plan.
In compensation for services provided pursuant to this
Plan, FSC will be paid a fee in respect of the following
Classes set forth on the applicable exhibit.
3. Any payment to FSC in accordance with this Plan will be
made pursuant to the "Distributor's Contract" entered into
by the Trust and FSC. Any payments made by FSC to Financial
Institutions with funds received as compensation under this
Plan will be made pursuant to the "Financial Institution
Agreement" entered into by FSC and the Institution.
4. FSC has the right (i) to select, in its sole discretion, the
Financial Institutions to participate in the Plan and (ii) to
terminate without cause and in its sole discretion any Financial
Institution Agreement.
5. Quarterly in each year that this Plan remains in effect, FSC shall
prepare and furnish to the Board of Trustees of the Trust, and the
Board of Trustees shall review, a written report of the amounts
expended under the Plan and the purpose for which such expenditures
were made.
6. This Plan shall become effective with respect to each Class
(i) after approval by majority votes of: (a) the Trust's
Board of Trustees; (b) the members of the Board of the
Trust who are not interested persons of the Trust and have
no direct or indirect financial interest in the operation
of the Trust's Plan or in any related documents to the Plan
("Disinterested Trustees"), cast in person at a meeting
called for the purpose of voting on the Plan; and (c) the
outstanding voting securities of the particular Class, as
defined in Section 2(a)(42) of the Act and (ii) upon
execution of an exhibit adopting this Plan with respect to
such Class.
7. This Plan shall remain in effect with respect to each Class
presently set forth on an exhibit and any subsequent
Classes added pursuant to an exhibit during the initial
year of this Plan for the period of one year from the date
set forth above and may be continued thereafter if this
Plan is approved with respect to each Class at least
annually by a majority of the Trust's Board of Trustees and
a majority of the Disinterested Trustees, cast in person at
a meeting called for the purpose of voting on such Plan. If
this Plan is adopted with respect to a Class after the
first annual approval by the Trustees as described above,
this Plan will be effective as to that Class upon execution
of the applicable exhibit pursuant to the provisions of
paragraph 6(ii) above and will continue in effect until the
next annual approval of this Plan by the Trustees and
thereafter for successive periods of one year subject to
approval as described above.
8. All material amendments to this Plan must be approved by a vote of
the Board of Trustees of the Trust and of the Disinterested
Trustees, cast in person at a meeting called for the purpose of
voting on it.
9. This Plan may not be amended in order to increase materially the
costs which the Classes may bear for distribution pursuant to the
Plan without being approved by a majority vote of the outstanding
voting securities of the Classes as defined in Section 2(a)(42) of
the Act.
10. This Plan may be terminated with respect to a particular
Class at any time by: (a) a majority vote of the
Disinterested Trustees; or (b) a vote of a majority of the
outstanding voting securities of the particular Class as
defined in Section 2(a)(42) of the Act; or (c) by FSC on 60
days' notice to the Trust.
11. While this Plan shall be in effect, the selection and nomination of
Disinterested Trustees of the Trust shall be committed to the
discretion of the Disinterested Trustees then in office.
12. All agreements with any person relating to the implementation of
this Plan shall be in writing and any agreement related to this Plan
shall be subject to termination, without penalty, pursuant to the
provisions of Paragraph 10 herein.
13. This Plan shall be construed in accordance with and governed
by the laws of the Commonwealth of Pennsylvania.
<PAGE>
EXHIBIT A
to the
Distribution Plan
MUNICIPAL SECURITIES INCOME TRUST
PENNSYLVANIA MUNICIPAL INCOME FUND
CLASS B SHARES
This Distribution Plan is adopted by between Municipal
Securities Income Trust with respect to the Class of Shares of the
Pennsylvania Municipal Income Fund set forth above.
In compensation for the services provided pursuant to
this Plan, FSC will be paid a monthly fee computed at the
annual rate of .75% of the average aggregate net asset value
of the Class B Shares of Pennsylvania Municipal Income Fund
held during the month.
Witness the due execution hereof this 1st day of March,
1997.
Municipal Securities Income Trust
By: /S/ RICHARD B. FISHER
President
