FEDERATED INTERMEDIATE MUNICIPAL TRUST
SHAREHOLDER FEDERATED PENNSYLVANIA INTERMEDIATE MUNICIPAL
SERVICES COMPANY TRUST SPECIAL MEETING OF SHAREHOLDERS
P.O. BOX 8600 MARCH 16, 1998
BOSTON, MASSACHUSETTS
02266-8600 KNOW ALL PERSONS BY THESE PRESENTS that
the undersigned Shareholder of FEDERATED
PENNSYLVANIA INTERMEDIATE MUNICIPAL TRUST,
a portfolio of Intermediate Municipal
Trust, hereby appoints Susan Jones,
Suzanne W. Land, Catherine C. Ryan,
Patricia F. Conner and J. Crilley Kelly or
any of them, true and lawful attorneys,
with power of substitution of each, to
vote all shares of FEDERATED PENNSYLVANIA
INTERMEDIATE MUNICIPAL TRUST, a portfolio
of Intermediate Municipal Trust, which the
undersigned is entitled to vote, at the
Special Meeting of Shareholders to be held
on March 16, 1998, at Federated Investors
Tower, 1001 Liberty Avenue, Nineteenth
Floor, Pittsburgh, Pennsylvania
15222-3779, at 2:00 p.m., and at any
adjournment thereof.
Discretionary authority is hereby conferred
as to all other manners as may properly
come before the Special Meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES. THE ATTORNEYS NAMED
WILL VOTE THE SHARES REPRESENTED BY THIS PROXY IN ACCORDANCE WITH THE CHOICE
MADE ON THIS BALLOT. IF THIS PROXY IS RETURNED AND NO CHOICE IS INDICATED AS TO
ANY MATTER, THIS PROXY WILL BE VOTED AFFIRMATIVELY ON THE MATTER PRESENTED.
PLEASE RETURN BOTTOM PORTION WITH YOUR VOTE IN THE ENCLOSED ENVELOPE AND RETAIN
THE TOP PORTION.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS |X|KEEP THIS
PORTION FOR YOUR RECORDS
FEDERATED PENNSYLVANIADETACH AND RETURN THIS PORTION ONLY
INTERMEDIATE MUNICIPAL TRUST
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VOTE ON PROPOSAL
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FORAGAINSTABSTAIN
|_| |_| |_|
1. APPROVAL OF A PROPOSED AGREEMENT AND PLAN
OF REORGANIZATION BETWEEN INTERMEDIATE
MUNICIPAL TRUST, ON BEHALF OF FEDERATED
PENNSYLVANIA INTERMEDIATE MUNICIPAL TRUST
(THE "FUND"), AND MUNICIPAL SECURITIES
INCOME TRUST (THE "TRUST"), ON BEHALF OF
ITS PORTFOLIO, FEDERATED PENNSYLVANIA
MUNICIPAL INCOME FUND (THE "PORTFOLIO"),
WHEREBY THE TRUST WOULD ACQUIRE ALL OF
THE ASSETS OF THE FUND IN EXCHANGE FOR
CLASS A SHARES OF THE PORTFOLIO TO BE
DISTRIBUTED PRO RATA BY THE FUND TO
HOLDERS OF FUND SHARES IN COMPLETE
LIQUIDATION OF THE FUND.
PLEASE SIGN EXACTLY YOUR NAME(S) AS IT APPEARS BELOW. WHEN SIGNING AS
ATTORNEY, EXECUTOR, ADMINISTRATOR, GUARDIAN, TRUSTEE, CUSTODIAN, ETC.,
PLEASE GIVE YOUR FULL TITLE AS SUCH. IF A CORPORATION OR PARTNERSHIP,
PLEASE SIGN THE FULL NAME BY AN AUTHORIZED OFFICER OR PARTNER. IF SHARES
ARE OWNED JOINTLY, ALL PARTIES SHOULD SIGN.
SIGNATURE SIGNATURE (JOINT OWNERS) DATE
<PAGE>
[LOGO]
February 1998
FEDERATED PENNSYLVANIA INTERMEDIATE MUNICIPAL TRUST
IMPORTANT NEWS FOR SHAREHOLDERS
The Board of Trustees of Federated Pennsylvania Intermediate Municipal Trust are
submitting for your vote a proposal to reorganize the Trust into Federated
Pennsylvania Municipal Income Fund.
WHY IS THIS OCCURRING?
Federated Pennsylvania Intermediate Municipal Trust was established in 1993 and
has assets of approximately $19 million. Although the Trust has performed
competitively against its Lipper category, we do not see the potential to
substantially increase assets in the future.
WHAT CLASS OF SHARES WILL FEDERATED PENNSYLVANIA INTERMEDIATE MUNICIPAL TRUST BE
MERGED INTO?
Class A shares of Federated Pennsylvania Municipal Income Fund at net asset
value.
WILL THERE BE TAX CONSEQUENCES?
The transaction will be a tax-free reorganization. However, if a shareholder
chooses to redeem shares from Federated Pennsylvania Intermediate Municipal
Trust prior to the merger with Federated Pennsylvania Municipal Income Fund
(Class A Shares), it will be a taxable event.
HOW DO THE FUNDS COMPARE?
<TABLE>
<CAPTION>
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(All Data as of 12/31/97) Federated Pennsylvania Federated Pennsylvania
Intermediate Municipal Trust Municipal Income Fund (Class A)
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<S> <C> <C>
Assets $19.5 million $232.6 million
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Weighted Average Credit Quality AA AA
Weighted Average Duration 5.44 yrs 7.22 yrs
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AMT (%)* 9.54% 16.5%
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Fund Inception Date 12/93 10/90
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</TABLE>
* % of securities whose income may be subject to the Alternative Minimum Tax
FUND PERFORMANCE:
<TABLE>
<CAPTION>
============================================================================================================
(All Data as of 12/31/97) Federated Pennsylvania Federated Pennsylvania
Intermediate Municipal Trust Municipal Income Fund
(Class A) No-Load
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<S> <C> <C>
30 Day Distribution Yield 4.67% 4.94%
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30 Day SEC Yield 4.19% 4.44%
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1 Year Total Return 7.50% 9.34%
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3 Year Annualized Total Return 8.68% 10.94%
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5 Year Annualized Total Return NA 7.46%
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Annualized Total Return
Since Inception 6.18% 8.53%
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</TABLE>
Past performance is not indicative of future results. Investment return and
principal value will fluctuate so when shares are redeemed, they may be worth
more or less than their original cost.
THE BOARD OF TRUSTEES BELIEVES THAT THIS PROPOSAL IS IN THE BEST INTERESTS OF
THE FEDERATED PENNSYLVANIA INTERMEDIATE MUNICIPAL TRUST SHAREHOLDERS AND
UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR ITS APPROVAL.
YOUR VOTE IS IMPORTANT TO US, SO PLEASE TAKE A MOMENT TO SIGN AND RETURN YOUR
PROXY CARD(S) IN THE ENCLOSED POSTAGE PAID ENVELOPE. IF YOU HAVE ANY QUESTION
PLEASE DO NOT HESITATE TO CONTACT THE FUND AT 1-800-341-7400.
<PAGE>
The 30-day SEC yield is calculated by dividing the net investment income per
share for the thirty days ended on the date of the calculation by the maximum
offering price per share on that date. The figure is compounded and annualized.
The 30 day distribution rate reflects actual distributions to shareholders. It
is calculated by dividing the monthly annualized dividend plus short-term
capital gains, if any by the average 30-day offering price.
In the absence of temporary expense waivers or reimbursements, the 30-day SEC
yield for Federated Pennsylvania Municipal Income Fund would have been 4.19%.
The 30-day SEC yield for Federated Pennsylvania Intermediate Municipal Trust
would have been 2.29%. Total return would also have been lower.
<PAGE>
INTERMEDIATE MUNICIPAL TRUST
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7000
Dear Shareholder:
The Board of Trustees and Management of Intermediate Municipal Trust, on
behalf of its portfolio, Federated Pennsylvania Intermediate Municipal Trust
(the "Fund") are pleased to submit for your vote a proposal to sell all of the
Fund's assets to Federated Pennsylvania Municipal Income Fund, a portfolio of
Municipal Securities Income Trust. As described in the enclosed Prospectus/Proxy
Statement, Federated Pennsylvania Municipal Income Fund has an investment
objective and policy similar to the Fund. Both seek to provide current income
exempt from federal regular income tax and the personal income taxes imposed by
the Commonwealth of Pennsylvania.
We believe that the sale of the Fund's assets in this transaction will
present an excellent investment opportunity for our shareholders. Your vote on
the transaction is critical to its success. The sale will be effected only if
approved by the holders of a majority of the Fund's outstanding shares on the
record date. We hope you share our enthusiasm and will participate by casting
your vote in person or by proxy if you are unable to attend the meeting. Please
read the enclosed Prospectus/Proxy Statement carefully before you vote. If you
have any questions, please feel free to call us at 1-(800)-341-7400.
Thank you for your prompt attention and participation.
Sincerely,
/s/ John F. DONAHUE
John F. Donahue
Chairman of the Board
<PAGE>
INTERMEDIATE MUNICIPAL TRUST
FEDERATED INVESTORS FUNDS
5800 CORPORATE DRIVE
PITTSBURGH, PENNSYLVANIA 15237-7000
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO SHAREHOLDERS OF FEDERATED PENNSYLVANIA INTERMEDIATE MUNICIPAL TRUST, A
PORTFOLIO OF INTERMEDIATE MUNICIPAL TRUST: A Special Meeting of Shareholders of
Federated Pennsylvania Intermediate Municipal Trust (the "Fund") will be held at
2:00 p.m. on March 16, 1998, at Federated Investors Tower, 19th Floor, 1001
Liberty Avenue, Pittsburgh, Pennsylvania 15222-3779 for the following purposes:
To approve or disapprove a proposed Agreement and Plan of Reorganization
between Intermediate Municipal Trust, on behalf of the Fund, and Municipal
Securities Income Trust (the "Trust"), on behalf of its portfolio,
Federated Pennsylvania Municipal Income Fund (the "Portfolio"), whereby the
Trust would acquire all of the assets of the Fund in exchange for Class A
Shares of the Portfolio to be distributed pro rata by the Fund to holders
of shares of the Fund, in complete liquidation of the Fund; and
To transact such other business as may properly come before the meeting or
any adjournment thereof.
By Order of the Board of Trustees
John W. McGonigle
Secretary
Dated: January 30, 1998
SHAREHOLDERS OF RECORD AT THE CLOSE OF BUSINESS ON JANUARY 22, 1998 ARE
ENTITLED TO VOTE AT THE MEETING. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING,
PLEASE SIGN AND RETURN THE ENCLOSED PROXY CARD. YOUR VOTE IS IMPORTANT.
TO SECURE THE LARGEST POSSIBLE REPRESENTATION AND TO SAVE THE EXPENSE OF
FURTHER MAILINGS, PLEASE MARK YOUR PROXY CARD, SIGN IT, AND RETURN IT IN THE
ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. YOU
MAY REVOKE YOUR PROXY AT ANY TIME AT OR BEFORE THE MEETING OR VOTE IN PERSON IF
YOU ATTEND THE MEETING. <PAGE>
PROSPECTUS/PROXY STATEMENT
January 30, 1998
ACQUISITION OF THE ASSETS OF
FEDERATED PENNSYLVANIA INTERMEDIATE
MUNICIPAL TRUST,
A PORTFOLIO OF INTERMEDIATE MUNICIPAL TRUST
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7000
Telephone Number: 1-800-341-7400
BY AND IN EXCHANGE FOR CLASS A SHARES OF
FEDERATED PENNSYLVANIA MUNICIPAL INCOME FUND,
A PORTFOLIO OF MUNICIPAL SECURITIES INCOME TRUST
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7000
Telephone Number: 1-800-341-7400
This Prospectus/Proxy Statement describes the proposed Agreement and Plan
of Reorganization (the "Plan") whereby Municipal Securities Income Trust, a
Massachusetts business trust (the "Trust"), on behalf of its portfolio,
Federated Pennsylvania Municipal Income Fund (the "Portfolio"), would acquire
all of the assets of Federated Pennsylvania Intermediate Municipal Trust (the
"Fund"), a portfolio of Intermediate Municipal Trust, in exchange for Class A
Shares of the Portfolio to be distributed pro rata by the Fund to its
shareholders in complete liquidation of the Fund. As a result of the Plan, each
shareholder of the Fund will become the owner of Class A Shares of the Portfolio
having a total net asset value equal to the total net asset value of his or her
holdings in the Fund.
The Trust is among over 100 funds managed by subsidiaries of Federated
Investors. Federated Investors is one of the largest institutional service
providers in the United States. It has been providing advisory services for over
41 years.
The Trust is an open-end, non-diversified management investment company
which currently includes five portfolios: Federated California Municipal Income
Fund, Federated Michigan Intermediate Municipal Trust, Federated New York
Municipal Income Fund, Federated Ohio Municipal Income Fund, and the Portfolio.
The investment objectives of both the Portfolio and the Fund are to provide
current income exempt from federal regular income tax and the personal income
taxes imposed by the Commonwealth of Pennsylvania. The Portfolio pursues its
investment objective by investing 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 Commonwealth of Pennsylvania. The Fund pursues its
<PAGE>
investment objective by investing at least 80% of its net assets in a portfolio
of Pennsylvania municipal securities. Both the Portfolio and the Fund are
non-diversified series of investment companies. Shares in the Portfolio and the
Fund are not insured or guaranteed by the U.S. government or any agency thereof.
For a comparison of the investment policies of the Portfolio and the Fund, see
"Comparison of Investment Policies and Risk Factors."
The Portfolio is currently offered with two classes of shares: Class A
Shares and Class B Shares. Holders of Shares of the Fund will receive Class A
Shares of the Portfolio if the Reorganization is approved by shareholders.
Information concerning Class A Shares of the Portfolio, as compared to Shares of
the Fund, is included in this Prospectus/Proxy Statement in the sections
entitled "SUMMARY--Comparative Fee Tables" and "INFORMATION ABOUT THE
REORGANIZATION-- Description of the Plan of Reorganization."
This Prospectus/Proxy Statement should be retained for future reference. It
sets forth concisely the information about the Trust and the Portfolio that a
prospective investor should know before investing. This Prospectus/Proxy
Statement is accompanied by the Prospectus of the Portfolio dated October 31,
1997, which is incorporated herein by reference. A Prospectus and a Statement of
Additional Information for the Portfolio dated October 31, 1997 as well as a
Statement of Additional Information dated January 30, 1998 (relating to this
Prospectus/Proxy Statement) containing additional information have been filed by
the Trust with the Securities and Exchange Commission and are incorporated
herein by reference. Further information about the Portfolio's performance is
contained in the Portfolio's Annual Report for the fiscal year ended August 31,
1997, which is incorporated herein by reference. Copies of these materials,
Annual Reports and other information about the Portfolio may be obtained without
charge by writing or by calling the Trust at the address and telephone number
shown above.
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/PROXY STATEMENT. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS/ PROXY STATEMENT
AND IN THE MATERIALS EXPRESSLY INCORPORATED HEREIN BY REFERENCE AND, IF GIVEN OR
MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE FUND OR THE PORTFOLIO.
SHARES OF THE PORTFOLIO ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED BY, ANY BANK. SHARES OF THE PORTFOLIO ARE NOT FEDERALLY INSURED BY,
GUARANTEED BY, OBLIGATIONS OF OR OTHERWISE SUPPORTED BY THE U.S. GOVERNMENT, THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
GOVERNMENTAL AGENCY. AN INVESTMENT IN THE PORTFOLIO INVOLVES INVESTMENT RISKS,
INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
<PAGE>
TABLE OF CONTENTS
<TABLE>
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PAGE
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<S> <C>
PROPOSAL 1. REORGANIZATION....................................................... 1
SUMMARY..................................................................... 2
COMPARISON OF INVESTMENT POLICIES AND RISK FACTORS.......................... 8
INFORMATION ABOUT THE REORGANIZATION........................................ 10
INFORMATION ABOUT THE PORTFOLIO AND THE FUND................................ 14
VOTING INFORMATION............................................................... 15
OTHER MATTERS.................................................................... 17
AGREEMENT AND PLAN OF REORGANIZATION............................................. Exhibit A
</TABLE>
<PAGE>
SUMMARY
ABOUT THE PROPOSED REORGANIZATION
The Board of Trustees of Intermediate Municipal Trust, including its
members who are not "interested persons" within the meaning of the Investment
Company Act of 1940, as amended (the "1940 Act"), on behalf of one of its
portfolios, Federated Pennsylvania Intermediate Municipal Trust (the "Fund"),
has voted to recommend to shareholders of the Fund the approval of an Agreement
and Plan of Reorganization (the "Plan"), whereby Municipal Securities Income
Trust, a Massachusetts business trust (the "Trust"), on behalf of its portfolio,
Federated Pennsylvania Municipal Income Fund (the "Portfolio"), would acquire
all of the assets of the Fund in exchange for Class A Shares of the Portfolio to
be distributed pro rata by the Fund to its shareholders in complete liquidation
and dissolution of the Fund (the "Reorganization"). As a result of the
Reorganization, each shareholder of shares of the Fund will become the owner of
Class A Shares of the Portfolio having a total net asset value equal to the
total net asset value of his or her holdings in the Fund on the date of the
Reorganization (the "Closing Date").
As a condition to the Reorganization transactions, the Trust and the Fund
will receive an opinion of counsel that the Reorganization will be considered a
tax-free "reorganization" under applicable provisions of the Internal Revenue
Code of 1986, as amended, so that no gain or loss will be recognized by either
the Trust or the Fund or their respective shareholders. The tax cost-basis of
the Class A Shares of the Portfolio received by Fund shareholders will be the
same as the tax cost-basis of their shares in the Fund.
After the acquisition is completed, the Fund will no longer be available as
an investment portfolio of Intermediate Municipal Trust.
INVESTMENT OBJECTIVE AND POLICIES
The investment objectives of both the Portfolio and the Fund are to provide
current income exempt from federal regular income tax and the personal income
taxes imposed by the Commonwealth of Pennsylvania. Both the Portfolio and the
Fund pursue their respective investment objectives by investing in a portfolio
consisting primarily of obligations issued by or on behalf of states,
territories, and possessions of the United States, and their respective
political subdivisions or financing authorities, which pay income exempt from
federal regular income tax and Pennsylvania personal income taxes. The Portfolio
pursues its investment objective by investing 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 Commonwealth of Pennsylvania. The Fund
pursues its investment objective by investing at least 80% of its net assets in
a portfolio of Pennsylvania municipal securities. Both the Portfolio and the
Fund are non-diversified series of investment companies. The Fund maintains a
dollar-weighted average maturity of not less than three nor more than ten years.
The Portfolio has no such maturity limitation. Since the Portfolio and the Fund
invest in similar securities, an investment in the Portfolio presents similar
investment risks as investing in the Fund.
The securities in which the Portfolio may invest must be "investment
grade." Thus, the Portfolio's securities must be rated Aaa, Aa, A or Baa by
Moody's Investors Services, Inc. ("Moody's"), or AAA, AA, A, or BBB by Standard
& Poor's Rating Services ("S&P") or Fitch Investors Service, L.P. ("Fitch").
<PAGE>
The securities in which the Fund may invest must be rated within the three
highest ratings for municipal securities by Moody's, S&P, or Fitch. In addition
to the foregoing, both the Portfolio and the Fund may invest in unrated
securities if, at the time of purchase, the investment adviser determines that
such security is of equivalent quality to securities with the applicable
ratings. Due to the difference in the dollar-weighted average maturity and
rating requirements of the Portfolio and the Fund, an investment in the
Portfolio may present different or additional investment risks.
ADVISORY FEES AND EXPENSE RATIOS
The maximum annual investment advisory fee for the Portfolio is 0.40% of
average daily net assets. The maximum annual investment advisory fee for the
Fund is 0.50% of average daily net assets.
For its fiscal year ended August 31, 1997, the Portfolio's ratio of
expenses to average daily net assets was 0.75% for Class A Shares. During this
period the Portfolio's investment adviser, Federated Advisers ("Federated
Advisers"), voluntarily waived a portion of its management fees and reimbursed
the Portfolio for certain operating expenses. Absent such waiver and
reimbursement, the ratio of expenses to average daily net assets would have been
0.97% for Class A Shares of the Portfolio. This undertaking to waive management
fees and/or reimburse operating expenses may be terminated by Federated Advisers
at any time in its discretion.
For its fiscal year ended May 31, 1997, the Fund's ratio of expenses to
average daily net assets was 0.45%. During this period the Fund's investment
adviser, Federated Management ("Federated Management"), voluntarily waived a
portion of its management fees and reimbursed the Fund for certain operating
expenses. Absent such waiver and reimbursement, the ratio of expenses to average
daily net assets would have been 2.54%. This undertaking to waive management
fees and/or reimburse operating expenses may be terminated by Federated
Management at any time in its discretion. Also, the Fund cannot charge a Rule
12b-1 fee. On the other hand, the Portfolio is able to pay up to 0.40% of its
average daily net assets for the Rule 12b-1 fee. The Portfolio has no present
intention of paying or accruing the Rule 12b-1 fee with respect to Class A
Shares.
PURCHASE AND REDEMPTION PROCEDURES
Procedures for the purchase and redemption of Portfolio shares are similar,
but not identical, to procedures applicable to the purchase and redemption of
Fund shares. In anticipation that the Reorganization will be consummated,
shareholders of the Fund will receive information with respect to the various
services provided by the Portfolio, as well as a detailed explanation of the
options available to shareholders for effecting purchases and redemptions of
Portfolio shares. Any questions about such procedures may be directed to, and
assistance in effecting purchases or redemptions of Portfolio shares may be
obtained by calling the Portfolio at 1-800-341-7400.
Reference is made to the Prospectus of the Portfolio dated October 31,
1997, and the Prospectus of the Fund for a complete description of the purchase
and redemption procedures applicable to purchases and redemptions of Portfolio
and Fund shares, respectively, each of which is incorporated herein by reference
thereto. Set forth below is a brief listing of the more significant differences
between the purchase and redemption procedures of the Portfolio as compared to
the Fund.
<PAGE>
Shares of the Portfolio are subject to a maximum sales charge on purchases
of 4.50% of the offering price. Purchases of the Portfolio through certain
financial intermediaries, "wrap accounts" or similar programs, as well as
purchases by certain Federated Life Members are exempt from the sales charge.
Shares of the Fund are available for purchase without the imposition of any
sales charge on purchases or any contingent deferred sales charge. Shareholders
of the Fund will not pay a sales charge on shares of the Portfolio received in
the Reorganization, if approved by shareholders. The minimum initial investment
in the Portfolio is $500.00. The minimum initial investment in the Fund is
$25,000.00. To meet the minimum investment requirements, purchases of shares of
the Fund may be aggregated over a period of 90 days.
The Fund's and the Portfolio's net asset values are calculated at the close
of each day on which each computes its net asset value. Purchase orders received
by the Portfolio by wire before 3:00 p.m. (Eastern time) begin earning dividends
that day. Purchase orders received by the Fund by wire begin earning dividends
on the business day after the order is received. Purchase orders received by
check by either the Portfolio or the Fund begin earning dividends the day after
such check is converted into federal funds, which ordinarily occurs one day
after receipt by State Street Bank and Trust Company, the Fund's and the
Portfolio's custodian. Shares of the Portfolio may also be purchased at a given
day's price if an order is placed through a registered broker/dealer by 4:00
p.m. (Eastern time) and transmitted to the Portfolio by 5:00 p.m. (Eastern time)
or transmitted to the Portfolio through a financial intermediary other than a
broker/dealer by 4:00 p.m. (Eastern time).
Shares of both the Portfolio and the Fund may be redeemed by mail or by
telephone. Shares of the Portfolio may also be redeemed through financial
intermediaries which maintain shareholder accounts. Shares of the Fund are
redeemed at the net asset value per share next determined after receiving the
redemption order.
EXCHANGES
Class A Shares of the Portfolio may be exchanged at net asset value without
the imposition of a sales charge for Class A Shares of certain other Federated
Funds. Upon receipt of proper instructions and required supporting documents,
the Trust will redeem Class A Shares of the Portfolio and invest the proceeds in
Class A Shares of the other fund. This exchange privilege may be modified or
terminated at any time. As a no-load fund, the Fund does not provide a formal
exchange privilege.
DIVIDENDS
The Fund's dividends are declared daily and paid monthly. In contrast, the
Portfolio's dividends are declared and paid monthly to all shareholders invested
in the Portfolio on the record date. Dividends paid by both the Fund and the
Portfolio are automatically reinvested in additional shares unless shareholders
request cash payment. Dividends reinvested in Portfolio shares are purchased at
net asset value without a sales charge.
SERVICES PROVIDERS TO THE TRUST AND PORTFOLIO
Administrative services to the Trust and Portfolio are provided by
Federated Services Company ("Federated Services"). Federated Services is a
wholly-owned subsidiary of Federated Investors. For its
<PAGE>
services to the Portfolio, Federated Services receives a fee at an annual rate
which relates to the average aggregate daily net assets of all funds
administered by Federated Services in the Federated Investors complex,
determined as follows: 0.15% on the first $250 million in assets; 0.125% on the
next $250 million in assets; 0.10% on the next $250 million in assets; and
0.075% on assets in excess of $750 million. The minimum annual administrative
fee for the Portfolio is $125,000 plus $30,000 per each additional class of
shares. For the fiscal year ended August 31, 1997, Federated Services received
administrative fees at the effective rate of 0.12% of the average daily net
assets of the Portfolio.
Federated Services also serves as the Portfolio's transfer agent and
dividend disbursing agent. Federated Services also provides certain accounting
and recordkeeping services with respect to the portfolio investments of the
Portfolio.
Federated Securities Corp. ("FSC"), a wholly-owned subsidiary of Federated
Investors, is the principal distributor of the Trust and Portfolio. Under a
distribution agreement, FSC acts as the Trust's agent in connection with the
offering of shares of the Portfolio.
RISK FACTORS
The risks associated with an investment in the Portfolio and the Fund are
similar. The nature of the Municipal Securities included in each of the
Portfolio's and Fund's investments are generally subject to the same factors,
including: the general conditions of the municipal bond market; the size of the
particular offering; the maturity of the obligations; and the rating of the
issue. Further, adverse economic conditions or developments affecting the
Commonwealth of Pennsylvania or its municipalities could impact the Portfolio's
or the Fund's investments. In both cases, any Pennsylvania constitutional
amendments, legislative measures, executive orders, administrative regulations,
or voter initiatives could result in adverse consequences affecting Municipal
Securities. Shareholders of the Fund should consider two differences in the
investment policies of the Fund and the Portfolio that may present different or
additional risk. First, the Portfolio is not subject to a dollar-weighted
maturity limitation. The Fund is required to maintain a dollar-weighted maturity
of not less than three nor more than ten years. Because the Portfolio is not
subject to a maturity limitation and can maintain a dollar-weighted maturity of
less than three years or more than ten years, an investment in the Portfolio may
present shareholders with risks and opportunities different than those presented
by an investment in the Fund. Second, because the Portfolio may invest in
Municipal Securities that are rated in the four highest rating categories by
Moody's, S&P, or Fitch, an investment in the Portfolio may be subject to
additional investment risk as compared to the Fund, which limits its purchase of
Municipal Securities to those rated in the three highest categories.
<PAGE>
COMPARATIVE FEE TABLES
Set forth in the tables below is information regarding the fees and expenses
incurred by the Fund and Class A Shares of the Portfolio as of May 31, 1997, and
August 31, 1997, respectively, and pro forma fees for the Portfolio after giving
effect to the Reorganization.
<TABLE>
<CAPTION>
FEDERATED FEDERATED FEDERATED
PENNSYLVANIA PENNSYLVANIA PENNSYLVANIA
INTERMEDIATE MUNICIPAL MUNICIPAL
MUNICIPAL INCOME FUND INCOME FUND
TRUST CLASS A PROFORMA
(THE "FUND") (THE "PORTFOLIO") CLASS A
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<S> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases (as a
percentage of offering price).................... None..... 4.50% 4.50%
Maximum Sales Charge Imposed on Reinvested
Dividends (as a percentage of offering price).... None..... None None
Contingent Deferred Sales Charge (as a percentage
of original purchase price or redemption
proceeds, as applicable)......................... None..... None None
Redemption Fee (as a percentage of amount redeemed,
if applicable)................................... None..... None None
Exchange Fee....................................... None..... None None
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waiver) (1).................. 0.00% 0.20% 0.31%
12b-1 Fee.......................................... None 0.00%(2) 0.00%(2)
Total Other Expenses............................... 0.45% 0.55% 0.44%
Shareholder Services Fee (after waiver) (3)...... 0.11% 0.23% 0.23%
Total Operating Expenses (4)....................... 0.45% 0.75% 0.75%
</TABLE>
(1) The management fee has been reduced to reflect the voluntary waiver of the
management fee for the Fund and the voluntary waiver of a portion of the
management fee for the Portfolio. The adviser can terminate this voluntary
waiver at any time at its sole discretion. The maximum management fee of the
Portfolio and the Pro Forma Combined Fund is 0.40%. The maximum management
fee of the Fund is 0.50%.
(2) The Portfolio and the Pro Forma Combined Fund 12b-1 fee has been reduced to
reflect the voluntary waiver of a portion of the 12b-1 fee. The 12b-1 fee
provider can terminate this voluntary waiver at any time at its sole
discretion. The maximum 12b-1 fee for the Portfolio and the Pro Forma
Combined Fund is 0.40%. For more information, see "Information about the
Portfolio and the Fund."
(3) The shareholder services fee has been reduced to reflect the voluntary
waiver of a portion of the shareholder services fee. The shareholder
services fee provider can terminate this voluntary waiver at any time at its
sole discretion. The maximum shareholder services fee for the Portfolio, the
Fund and the Pro Forma Combined Fund is 0.25%.
(4) The total operating expenses for the Fund, the Portfolio and the Pro Forma
Combined Fund would have been 2.54%, 0.97% and 0.86%, respectively, absent
the voluntary waivers described in notes 1 and 3 above and the voluntary
reimbursement of certain other operating expenses for the Fund.
The purpose of this table is to assist an investor in understanding the
various costs and expenses that a shareholder of the Fund will bear, either
directly or indirectly. For more complete descriptions of the various costs and
expenses, see "Information about the Portfolio and the Fund." Wire-transferred
redemptions of less than $5,000 may be subject to additional fees.
<PAGE>
LONG-TERM SHAREHOLDERS MAY PAY MORE THAN THE ECONOMIC EQUIVALENT OF THE MAXIMUM
FRONT-END SALES CHARGES PERMITTED UNDER THE RULES OF THE NATIONAL ASSOCIATION OF
SECURITIES DEALERS, INC.
<TABLE>
<CAPTION>
FEDERATED
FEDERATED FEDERATED PENNSYLVANIA
PENNSYLVANIA PENNSYLVANIA MUNICIPAL
INTERMEDIATE MUNICIPAL INCOME FUND
MUNICIPAL INCOME FUND PROFORMA
EXAMPLE TRUST CLASS A CLASS A
- ---------------------------------------------------------- ------------- ------------- -------------
<S> <C> <C> <C>
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.
1 Year.................................................... $ 5 $ 52 $ 52
3 Year.................................................... $14 $ 68 $ 68
5 Year.................................................... $25 $ 85 $ 85
10 Year................................................... $57 $ 134 $ 134
</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.
<PAGE>
COMPARISON OF INVESTMENT POLICIES AND RISK FACTORS
INVESTMENT OBJECTIVES AND POLICIES
The Portfolio and the Fund have the same investment objective: to provide
current income exempt from federal regular income tax and the personal income
taxes imposed by the Commonwealth of Pennsylvania.
The Portfolio 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 Commonwealth of Pennsylvania. The Fund pursues its
investment objective by investing at least 80% of its net assets in a
non-diversified portfolio of Pennsylvania municipal securities. In addition, the
Fund maintains a dollar-weighted average maturity of not less than three nor
more than ten years. The Portfolio has no such maturity limitation.
Both the Portfolio and the Fund invests in municipal securities which pay
interest that is, in the opinion of bond counsel for the issuers or in the
opinion of officers of the investment adviser of the Portfolio or the Fund,
respectively, exempt from both federal regular income tax and the personal
income taxes imposed by the Commonwealth of Pennsylvania (the "Municipal
Securities"). The Municipal Securities in which the Portfolio and the Fund
invest are: (1) obligations issued by or on behalf of the Commonwealth of
Pennsylvania, its political subdivisions, or agencies; (2) 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 (3) participation
interests in any of the foregoing obligations.
The Municipal Securities in which the Portfolio may invest must be
"investment grade." Thus, the Portfolio's Municipal Securities must be 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 Group ("S&P") or Fitch Investors Service,
L.P. ("Fitch"). The Municipal Securities in which the Fund may invest must be
rated within three highest ratings for municipal securities by Moody's, S&P, or
Fitch. In addition to the foregoing, both the Portfolio and the Fund may invest
in unrated Municipal Securities if, at the time of purchase, the investment
adviser determines that such security is of equivalent quality to securities
with the applicable ratings. In addition, the Fund may invest in Municipal
Securities which are: (1) guaranteed at the time of purchase by the U.S.
government as to the payment of principal and interest; (2) fully collateralized
by an escrow of U.S. government securities or other securities acceptable to the
investment adviser; (3) rated at the time of purchase within Moody's highest
short-term municipal obligation rating (MIG 1/VMIG 1) or Moody's highest
municipal commercial paper rating (PRIME-1) or S&P's highest municipal
commercial paper rating (SP-1); or (4) unrated if, at the time of purchase,
other municipal securities of that issuer are rated A or better by Moody's, S&P,
or Fitch. Finally, both the Portfolio and the Fund may retain a Municipal
Security that is downgraded if the investment adviser determines that such
security continues to be an acceptable investment.
Both the Portfolio and the Fund may purchase participation interests from
financial institutions such as commercial banks, savings associations, and
insurance companies. Participation interests give the Portfolio and the Fund
undivided interests in Pennsylvania Municipal Securities. The financial
institutions from which the Portfolio or the Fund may purchase participation
interests frequently
<PAGE>
provide or secure irrevocable letters of credit or guarantees to assure that the
participation interests are of high quality.
Both the Portfolio and the Fund may also invest in variable rate Municipal
Securities which meet applicable quality standards. The variable interest rates
of the Municipal Securities are ordinarily stated as a percentage of a published
interest rate, interest rate index, or a similar standard, such as the 91-day
U.S. Treasury bill rate. Many of the variable rate Municipal Securities are
subject to payment of principal on demand by the Portfolio or the Fund in not
more than seven days.
Both the Portfolio and Fund may also invest in 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
illiquid. If the issuing entity does not appropriate funds for future lease
payments, the entity cannot be compelled to make such payments. Certain lease
obligations contain "non-appropriation" clauses which provide that the
municipality has no obligation to make lease or installment purchase payments in
future years unless money is appropriated for such purpose on a yearly basis.
The Fund restricts the ability to invest in "non-appropriation" leases to not
more than 10% of its total assets. The Portfolio does not include this
limitation.
Both the Portfolio and the Fund may also purchase Municipal Securities on a
when-issued or delayed delivery basis. In these transactions, the Portfolio or
the Fund may purchase securities with payment and delivery scheduled for a
future time. A seller's failure to complete these transactions may cause the
Portfolio or the Fund to miss a price or yield considered to be advantageous.
Finally, both the Portfolio and the Fund may invest in temporary
investments, which may include short-term non-Pennsylvania municipal tax-exempt
obligations or taxable temporary investments. Both the Portfolio and the Fund
invest in temporary investments when the investment adviser determines the
market conditions call for a temporary defensive posture. The temporary
investments include: (1) notes issued by or on behalf of municipal or corporate
issuers; (2) obligations issued or guaranteed by the U.S. government, its
agencies, or instrumentalities; (3) other debt securities; (4) commercial paper;
(5) certificates of deposit of banks; and (6) repurchase agreements. Neither the
Portfolio nor the Fund has any rating requirements applicable to temporary
investments. The Portfolio's investment adviser, however, will limit temporary
investments (if rated) to those rated within the investment grade categories
applicable to municipal securities, or (if unrated) to those which the
investment adviser judges to have the same characteristics as such investment
grade securities. The Fund's investment adviser will limit temporary investments
to those it considers to be of comparable quality to the acceptable investments
of the Fund.
In addition to the investments which are permissible for both the Portfolio
and the Fund, the Portfolio 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. The Fund does not invest in inverse floaters.
<PAGE>
The Portfolio may also 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, to provide additional liquidity, and to
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. When the Portfolio
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 Portfolio, thus causing the futures contract to react
differently to market changes than the securities held in the Portfolio. In
addition, the Portfolio'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 Portfolio may loose money on the futures
contract. As a matter of investment policy, which may be changed without
shareholder approval, the Portfolio may not purchase or sell futures contracts
if immediately thereafter the sum of the amount of margin deposits on the
Portfolio's existing futures positions would exceed 5% of the market value of
the Portfolio's total assets. The Fund does not purchase and sell interest rate
and index financial futures.
INVESTMENT RESTRICTIONS
The investment restrictions of the Portfolio and the Fund are similar. The
significant differences are as follows. Although neither the Portfolio nor the
Fund intend to invest more than 10% of its assets in securities that may be
illiquid because of legal contractual restrictions on resale ("restricted
securities") or securities for which there are no readily available market
quotations, only the Portfolio requires majority shareholder approval in order
to change the limitation relating to restricted securities. In addition, in
order to pass through to investors the tax-free income from the Fund for
purposes of Pennsylvania state personal income taxes, the Fund maintains a
policy, which may be changed without shareholder approval, to invest in
securities for income earnings rather than trading for profit. The Fund will not
vary its investments, except to: (i) eliminate unsafe investments and
investments not consistent with the preservation of capital or the tax status of
the investments of the Fund; (ii) honor redemption orders, meet anticipated
redemption requirements, and negate gains from discount purchases; (iii)
reinvest the earnings from securities in like securities; or (iv) defray normal
administrative expenses. Finally, although neither the Portfolio nor the Fund
intends to invest in puts, calls, straddles, spreads, or any combination of
these securities, only the Portfolio requires majority shareholder approval in
order to permit investments in these securities.
INFORMATION ABOUT THE REORGANIZATION
BACKGROUND AND REASONS FOR THE PROPOSED ACQUISITION
The Fund commenced operations on December 5, 1993, in order to provide
financial institutions serving in a fiduciary capacity with an investment
vehicle which provided current income exempt from federal regular income tax and
the personal income taxes imposed by the Commonwealth of Pennsylvania. Federated
Securities Corp. ("FSC"), the distributor of shares of both the Fund and the
<PAGE>
Portfolio, has proposed that the Fund consider a sale of all of the Fund's
assets to the Trust, acting on behalf of the Portfolio.
In considering the proposed Reorganization, the Board of Trustees of
Intermediate Municipal Trust took into consideration a number of factors,
including: (1) the comparatively larger size of the Portfolio, (2) the
capabilities and resources of Federated Advisers, (3) expense ratios and
published information regarding the fees and expenses of the Portfolio in
relation to similar funds, (4) the fact that Federated Management had advised
the Board that, if the Reorganization is not completed, it will consider
discontinuing the waiver of its investment advisory fee and its reimbursement of
certain Fund operating expenses; (5)the comparative investment performance of
the Portfolio and the Fund as well as the performance of similar funds, (6) the
terms and conditions of the Reorganization and whether the Reorganization would
result in the dilution of shareholder interests, (7) the tax consequences of the
Reorganization, and (8) the compatibility of the Portfolio's and the Fund's
investment objectives, policies, restrictions and portfolios, as well as service
features available to shareholders in the respective funds.
The Board concluded to recommend that the shareholders of the Fund vote to
approve the Reorganization. Pursuant to Rule 17a-8 under the 1940 Act, the Board
of Trustees of Intermediate Municipal Trust, including a majority of the
Trustees who were not interested persons of either Intermediate Municipal Trust
or the Trust, determined that participation in the transaction was in the best
interests of the Fund's shareholders and that the interests of existing Fund
shareholders would not be diluted as a result of effecting the transaction. This
conclusion was based on a number of factors, including the following:
1. The Reorganization would permit the shareholders of the Fund to pursue
substantially the same investment goals in a larger fund. A larger fund
should enhance the ability of portfolio managers to effect their
portfolio transactions on more favorable terms and give portfolio
managers greater investment flexibility and the ability to select a
larger number of portfolio securities, with the attendant ability to
spread investment risks over a larger number of portfolio issues.
2. The 30-day yield of the Portfolio for the period ended August 31, 1997,
was 4.22%. The 30-day yield of the Fund for the period ended May 31,
1997, was 4.70%. Over other periods the performance of the Portfolio and
the Fund in relation to each other have varied, in part due to differing
expense waivers by the respective investment advisers.
3. The current waiver of investment advisory fees charged to the Fund by
Federated Management as well as Federated Management's reimbursement of
certain Fund operating expenses, might be discontinued.
The Board of Trustees of Municipal Securities Income Trust likewise
considered the Reorganization and approved the Plan on behalf of the Portfolio.
Pursuant to Rule 17a-8 under the 1940 Act, the Board of Trustees of Municipal
Securities Income Trust, including a majority of the Trustees who were not
interested persons of either Intermediate Municipal Trust or the Trust,
determined that participation in the transaction was in the best interests of
the Portfolio's shareholders and that the interests of existing Portfolio
shareholders would not be diluted as a result of effecting the transaction.
<PAGE>
DESCRIPTION OF THE PLAN OF REORGANIZATION
The Plan provides that the Trust, on behalf of the Portfolio, will acquire
all of the assets of the Fund in exchange for Class A Shares of the Portfolio to
be distributed pro rata by the Fund to the holders of Fund shares in complete
liquidation of the Fund on or about March 21, 1998. Fund shareholders will
receive a number of shares in the Portfolio equal to the same total net asset
value as the Fund shares they held immediately prior to the Closing.
Shareholders of the Fund will become shareholders of the Portfolio as of 5:00
p.m. (Eastern time) on the Closing Date. Shareholders of the Fund will earn
their last dividend from the Fund on the day preceding the Closing Date, which
Closing Date is expected to be March 21, 1998.
Consummation of the Reorganization is subject to the conditions set forth
in the Plan, including receipt of an opinion in form and substance satisfactory
to Intermediate Municipal Trust, on behalf of the Fund, and the Trust, on behalf
of the Portfolio, as described under the caption "Federal Income Tax
Consequences" below. The Plan may be terminated and the Reorganization may be
abandoned at any time before or after approval by shareholders of the Fund prior
to the Closing Date by either party if it believes that consummation of the
Reorganization would not be in the best interests of its shareholders.
Federated Advisers is responsible for the payment of all expenses of the
Reorganization, whether or not the Reorganization is consummated. Such expenses
include, but are not limited to: legal fees; registration fees; transfer taxes
(if any); the fees of banks and transfer agents; and the costs of preparing,
printing, copying, and mailing proxy solicitation materials to the Fund's
shareholders and the costs of holding the Special Meeting of Shareholders.
The foregoing description of the Plan entered into between the Trust, on
behalf of the Portfolio, and Intermediate Municipal Trust, on behalf of the
Fund, is qualified in its entirety by the terms and provisions of the Plan, a
copy of which is attached hereto as Exhibit A and incorporated herein by
reference.
DESCRIPTION OF PORTFOLIO SHARES
Class A Shares of the Portfolio to be issued to shareholders of the Fund
under the Plan will be fully paid and nonassessable when issued, transferable
without restrictions and will have no preemptive or conversion rights. Reference
is hereby made to the Prospectus of the Portfolio provided herewith for
additional information about Class A Shares of the Portfolio.
FEDERAL INCOME TAX CONSEQUENCES
As a condition to the Reorganization transactions, the Trust, on behalf of
the Portfolio, and Intermediate Municipal Trust, on behalf of the Fund, will
receive an opinion from Howard & Howard Attorneys, P.C., to the effect that, on
the basis of the existing provisions of the Internal Revenue Code of 1986, as
amended (the "Code"), current administrative rules and court decisions, for
federal income tax purposes: (1) the Reorganization as set forth in the Plan
will constitute a tax-free reorganization under section 368(a)(1)(C) of the
Code; (2) no gain or loss will be recognized by the Portfolio upon its receipt
of the Fund's assets in exchange for Portfolio shares; (3) the holding period
and basis for the Fund's assets acquired by the Portfolio will be the same as
the holding period and the basis to the Fund immediately prior to the
Reorganization; (4) no gain or loss will be recognized by the Fund upon
<PAGE>
transfer of its assets to the Portfolio in exchange for Portfolio shares or upon
the distribution of the Portfolio shares to the Fund's shareholders in exchange
of their Fund shares; (5) no gain or loss will be recognized by shareholders of
the Fund upon exchange of their Fund shares for Portfolio shares; (6) the
holding period of Portfolio shares received by shareholders of the Fund pursuant
to the Plan will be the same as the holding period of Fund shares held
immediately prior to the Reorganization, provided the Fund shares were held as
capital assets on the date of the Reorganization; and (7) the basis of Portfolio
shares received by shareholders of the Fund pursuant to the Plan will be the
same as the basis of Fund shares held immediately prior to the Reorganization.
The Fund does not intend to sell portfolio securities in anticipation of the
Reorganization, other than in the normal course of business, which would result
in recognition of gains or losses to the Fund and its shareholders.
COMPARATIVE INFORMATION ON SHAREHOLDER RIGHTS AND OBLIGATIONS
The Trust is organized as a Massachusetts business trust pursuant to a
Declaration of Trust dated August 6, 1990, under the laws of the Commonwealth of
Massachusetts. Intermediate Municipal Trust is also organized as a Massachusetts
business trust under a Declaration of Trust dated May 31, 1985. The rights of
shareholders of the Trust and of Intermediate Municipal Trust are identical. Set
forth below is a brief summary of the more significant similarities between
rights of shareholders of the Fund and the Portfolio.
Special meetings of both the Fund's and the Portfolio's shareholders may be
called for any purpose on the written request of shareholders entitled to cast
at least 10% of all votes entitled to be cast at the meeting. Special meetings
of the Fund's and the Portfolio's shareholders may also be called by the
Trustees or the Chief Executive Officer of the Trust. Shareholders of the Fund
and the Portfolio are entitled to at least 15 days' notice of any meeting.
The Declaration of Trust of both Intermediate Municipal Trust and the Trust
provide that shareholders shall have the following voting powers: (i) to vote
for the election of Trustees; (ii) to vote with respect to any investment
advisory or sub-advisory contract entered into on behalf of any series; (iii) to
vote to the same extent as shareholders of a Massachusetts business corporation
as to whether or not a court action, proceeding, or claim should or should not
be brought derivatively or as a class action on behalf of the trust, any series,
or the shareholders; (iv) to vote for the removal of Trustees; (v) to vote on
amendments or supplements to the Declaration of Trust; and (vi) to vote on such
additional matters as required by the Declaration of Trust, the By-laws, the
registration statement, or the Securities and Exchange Commission.
Under certain circumstances, shareholders of the Fund or the Portfolio may
be held personally liable as partners under Massachusetts law for acts or
obligations of Intermediate Municipal Trust or the Trust, respectively. To
protect shareholders of the Fund and the Portfolio, the Declarations of Trust
expressly disclaim the liability of shareholders for acts or obligations of the
Fund and the Portfolio. The Declarations of Trust provide that a notice of the
disclaimer of liability may be included in each agreement, obligation, or
instrument that either Intermediate Municipal Trust or the Trust may enter into.
In the unlikely event that a shareholder of either the Fund or the
Portfolio is held personally liable for obligations of the Fund or the
Portfolio, the Declarations of Trust provide that property of the Fund
<PAGE>
or the Portfolio will be used to protect or compensate the shareholder. On
request, claims are defended and judgments against shareholders are paid that
arise out of any act or obligation of Intermediate Municipal Trust or the Trust
on behalf of the Fund or the Portfolio, respectively. Therefore, financial loss
resulting from liability as a shareholder will occur only if Intermediate
Municipal Trust or the Trust cannot meet its obligations to indemnify
shareholders and pay judgments against them from the assets of the Fund or the
Portfolio, respectively.
CAPITALIZATION
The following table shows the capitalization of the Portfolio and the Fund
as of November 30, 1997, and on a pro forma basis as of that date:
<TABLE>
<CAPTION>
PRO FORMA
PORTFOLIO COMBINED
(CLASS A SHARES) FUND (CLASS A SHARES)
---------------- ---------- ----------------
<S> <C> <C> <C>
Net Assets....................................... 215,026,923 18,814,976 233,841,899
Net Asset Value Per Share........................ 11.86 10.36 11.86
Shares Outstanding............................... 18,133,837 1,816,321 19,720,558
</TABLE>
INFORMATION ABOUT THE PORTFOLIO AND THE FUND
FEDERATED PENNSYLVANIA MUNICIPAL INCOME FUND, A PORTFOLIO OF MUNICIPAL
SECURITIES INCOME TRUST
Information about the Trust and the Portfolio is contained in the
Portfolio's current Prospectus. A copy of the Prospectus is included herewith
and incorporated by reference herein. Additional information about the Trust and
the Portfolio is included in the Portfolio's Statement of Additional Information
dated October 31, 1997, which is incorporated herein by reference. Copies of the
Statement of Additional Information, as well as the Statement of Additional
Information relating to this Prospectus/Proxy Statement dated January 30, 1998,
both of which have been filed with the Securities and Exchange Commission, may
be obtained without charge by contacting the Trust at 1-800-341-7400 or by
writing to the Trust at Federated Investors Funds, 5800 Corporate Drive,
Pittsburgh, Pennsylvania 15237-7000. The Trust, on behalf of the Portfolio, is
subject to the informational requirements of the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended, and the Investment
Company Act of 1940, as amended, and in accordance therewith files reports and
other information with the Securities and Exchange Commission. Reports, proxy
and information statements, and other information filed by the Trust, on behalf
of the Portfolio, can be obtained by calling or writing the Trust and can also
be inspected and copied by the public at the public reference facilities
maintained by the Securities and Exchange Commission in Washington, D.C. located
at Room 1024, 450 Fifth Street, N.W., Washington D.C. 20549 and at certain of
its regional offices located at Room 1204, Everett McKinley Dirksen Building,
219 South Dearborn Street, Chicago, Illinois 60604 and 14th Floor, 75 Park
Place, New York, NY 10007. Copies of such material can be obtained at prescribed
rates from the Public Reference Branch, Office of Consumer Affairs and
Information Services, Securities and
<PAGE>
Exchange Commission, Washington D.C. 20549, or obtained electronically from the
Securities and Exchange Commission's Internet Web site (http://www.sec.gov).
This Prospectus/Proxy Statement, which constitutes part of a Registration
Statement filed by the Trust, on behalf of the Portfolio, with the Securities
and Exchange Commission under the Securities Act of 1933, as amended, omits
certain of the information contained in the Registration Statement. Reference is
hereby made to the Registration Statement and to the exhibits thereto for
further information with respect to the Trust, the Portfolio and the shares
offered hereby. Statements contained herein concerning the provisions of
documents are necessarily summaries of such documents, and each such statement
is qualified in its entirety by reference to the copy of the applicable
documents filed with the Securities and Exchange Commission.
FEDERATED PENNSYLVANIA INTERMEDIATE MUNICIPAL TRUST, A PORTFOLIO OF INTERMEDIATE
MUNICIPAL TRUST
Information about the Fund may be found in the Fund's current Prospectuses
dated July 31, 1997, and its Statement of Additional Information dated July 31,
1997, which are incorporated herein by reference. Financial Statements for the
Fund for the year ended May 31, 1997, may be found in the Fund's prospectus.
Copies of the Fund's Prospectus and Statement of Additional Information may be
obtained without charge from the Fund by calling 1-800-341-7400 or by writing to
the Fund at Federated Investors Funds, 5800 Corporate Drive, Pittsburgh,
Pennsylvania 15237-7000. A copy of the Statement of Additional Information
relating to this Prospectus/Proxy Statement may be obtained without charge from
Intermediate Municipal Trust by calling 1-800-341-7400 or by writing to
Intermediate Municipal Trust at Federated Investors Funds, 5800 Corporate Drive,
Pittsburgh, Pennsylvania 15237-7000. The Fund is subject to the information
requirements of the Securities Act of 1933, as amended, the Securities Exchange
Act of 1934, as amended, and the Investment Company Act of 1940, as amended, and
in accordance therewith files reports and other information with the Securities
and Exchange Commission. Reports, proxy and information statements, and other
information filed by the Fund can be obtained by calling or writing the Fund and
can also be inspected at the public reference facilities maintained by the
Securities and Exchange Commission at the addresses listed in the previous
section.
INTERESTS OF CERTAIN PERSONS
The Portfolio is managed by Federated Advisers and the Fund is managed by
Federated Management. Each of Federated Advisers and Federated Management is a
subsidiary of Federated Investors. All of the voting securities of Federated
Investors are owned by a trust, the trustees of which are John F. Donahue, his
wife and his son, J. Christopher Donahue. John F. Donahue and J. Christopher
Donahue currently serve as trustees to the Portfolio and the Fund.
VOTING INFORMATION
This Prospectus/Proxy Statement is furnished in connection with the
solicitation by the Board of Trustees of the Fund of proxies for use at the
Special Meeting of Shareholders (the "Meeting") to be held on March 16, 1998 and
at any adjournment thereof. The proxy confers discretionary authority on
<PAGE>
the persons designated therein to vote on other business not currently
contemplated which may properly come before the Meeting. A proxy, if properly
executed, duly returned, and not revoked, will be voted in accordance with the
specifications thereon; if no instructions are given, such proxy will be voted
in favor of the Plan. A shareholder may revoke a proxy at any time prior to use
by filing with the Secretary of the Fund an instrument revoking the proxy, or by
submitting a proxy bearing a later date, or by attending and voting at the
Meeting. Proxies, instruments revoking a proxy, or proxies bearing a later date
may be received by telephone, by electronic means, including facsimile, or by
mail.
The cost of the solicitation, including the printing and mailing of proxy
materials, will be borne by Federated Advisers. In addition to solicitations
through the mails, proxies may be solicited by officers, employees, and agents
of the Fund at no additional costs to the Fund. Such solicitations may be by
telephone, telegraph, or otherwise. Any telephonic solicitations will follow
procedures designed to ensure accuracy and prevent fraud, including requiring
identifying shareholder information, recording the shareholder's instructions,
and confirming to the shareholder after the fact. Shareholders who communicate
proxies by telephone or by other electronic means have the same power and
authority to issue, revoke, or otherwise change their voting instruction as
currently exists for instructions communicated in written form. Federated
Advisers will reimburse custodians, nominees, and fiduciaries for the reasonable
costs incurred by them in connection with forwarding solicitation materials to
the beneficial owners of shares held of record by such persons.
OUTSTANDING SHARES
The Board of Trustees of the Fund has fixed the close of business on
January 22, 1998, as the record date for the determination of shareholders
entitled to notice of and to vote at the Special Meeting of Shareholders and any
adjournment thereof. As of the record, date, there were 2,017,495 shares of the
Fund outstanding. Each Fund share is entitled to one vote and fractional shares
have proportionate voting rights. On the record date, the following persons of
record, each acting in various capacities for numerous accounts, owned 5% or
more of the Fund's outstanding shares: Keystone Financial Inc., Altoona, PA,
owned approximately 402,245 shares (19.94%); FNB Nominee Co., Indiana, PA, owned
approximately 327,672 shares (16.24%): Univest & Company, Souderton, PA, owned
approximately 303,635 shares (15.05%); Charles Schwab & Co. Inc., San Francisco,
CA, owned approximately 275,806 shares (13.67%); and BBCT Co., Bloomsburg, PA,
owned approximately 159,019 shares (7.88%). On such date, no other person owned
of record, or to the knowledge of the Fund, beneficially owned, 5% or more of
the Fund's outstanding shares. On the record date, the Trustees and officers of
the Fund as a group owned less than 1% of the outstanding shares of the Fund.
On the record date the following persons of record owned 5% or more of the
Portfolio's outstanding Class A Shares: MLPF&S, Jacksonville, FL, for the sole
benefit of its customers, acting in various capacities for numerous accounts,
owned approximately 1,399,439 shares (7.69%). On the record date, the Trustees
and officers of the Trust as a group owned less than 1% of the outstanding
shares of the Portfolio.
VOTING REQUIREMENTS
The votes of shareholders of the Portfolio are not being solicited since
their approval is not required in order to effect the Reorganization.
<PAGE>
The Reorganization must be approved by a majority of the votes cast and
entitled to vote by Fund shareholders on the matter. In tallying shareholder
votes, abstentions and broker non-votes (i.e., proxies sent in by brokers and
other nominees that cannot be voted on a proposal because instructions have been
received from the beneficial owners) will be counted for purposes of determining
whether or not a quorum is present for purposes of convening the meeting. On the
proposal, broker non-votes will be considered to be abstentions on the vote
regarding the proposal.
QUORUM
In the event that a quorum is not present at the Special Meeting, or in the
event that a quorum is present at the Special Meeting, but sufficient votes to
approve the Plan are not received, the persons named as proxies may propose one
or more adjournments of the Special Meeting to permit further solicitation of
proxies. Any such adjournment will require the affirmative vote of a majority of
shares that are represented at the Meeting in person or by proxy. If a quorum is
present, the persons named as proxies will vote those proxies which they are
entitled to vote FOR the Plan in favor of such adjournments, and will vote those
proxies required to be voted AGAINST such proposal against any adjournment. A
quorum is constituted with respect to the Fund by the presence in person or by
proxy of the holders of one-fourth of the total number of outstanding shares of
the Fund entitled to vote at the Meeting. Proxies properly executed and marked
with a negative vote or an abstention will be considered to be present at the
Meeting for purposes of determining the existence of a quorum for the
transaction of business.
NO DISSENTER'S RIGHT OF APPRAISAL
Shareholders of the Fund objecting to the Reorganization have no appraisal
rights under the Fund's Declaration of Trust or under the laws of the
Commonwealth of Massachusetts. Shareholders have the right, however, to redeem
their Fund shares at net asset value until the Closing Date, and thereafter
shareholders may redeem Class A Shares of the Portfolio acquired by them in the
Reorganization at net asset value.
OTHER MATTERS
Management of the Fund knows of no other matters that may properly be, or
which are likely to be, brought before the meeting. However, if any other
business shall properly come before the meeting the persons named in the proxy
intend to vote thereon in accordance with their best judgment.
So far as management is presently informed, there is no litigation pending
or threatened against the Trust.
Whether or not shareholders expect to attend the meeting, all shareholders
are urged to sign, fill in and return the enclosed proxy form promptly.
<PAGE>
EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION dated December 22, 1997 (the
"Agreement"), by and between MUNICIPAL SECURITIES INCOME TRUST, a Massachusetts
business trust, on behalf of its portfolio, Federated Pennsylvania Municipal
Income Fund (hereinafter called the "Acquiring Fund"), FEDERATED ADVISERS, a
Delaware business trust ("Federated Advisers"), INTERMEDIATE MUNICIPAL TRUST, a
Massachusetts business trust, on behalf of its portfolio, Federated Pennsylvania
Intermediate Municipal Trust (hereinafter called the "Acquired Fund") and
FEDERATED MANAGEMENT, a Delaware business trust ("Federated Management").
This Agreement is intended to be and is adopted as a plan of reorganization
and liquidation within the meaning of Section 368(a)(1)(C) of the United States
Internal Revenue Code of 1986, as amended (the "Code"). The reorganization (the
"Reorganization") will consist of the transfer of all of the assets of the
Acquired Fund in exchange solely for Class A Shares of beneficial interest of
the Acquiring Fund (collectively, the "Acquiring Fund Shares") and the
distribution, after the Closing Date as hereinafter defined, of Class A Shares
of the Acquiring Fund to the shareholders of the Acquired Fund in liquidation of
the Acquired Fund as provided herein, all upon the terms and conditions
hereinafter set forth in this Agreement.
WHEREAS, the Acquired Fund and the Acquiring Fund are registered open-end,
non-diversified, management investment companies and the Acquired Fund owns
securities which generally are assets of the character in which the Acquiring
Fund is permitted to invest;
WHEREAS, the Acquiring Fund is authorized to issue the Acquiring Fund
Shares and the Acquired Fund is authorized to issue its shares of beneficial
interest;
WHEREAS, Federated Advisers, an investment adviser registered as such under
the Investment Advisers Act of 1940, as amended, serves as investment adviser to
the Acquiring Fund;
WHEREAS, Federated Management, an investment adviser registered as such
under the Investment Advisers Act of 1940, as amended, serves as investment
adviser to the Acquired Fund;
WHEREAS, the Board of Trustees, including a majority of the Trustees who
are not "interested persons" as defined under the Investment Company Act of
1940, as amended (the "1940 Act") of the Acquiring Fund has determined that the
transfer of all of the assets of the Acquired Fund for Acquiring Fund Shares is
in the best interests of the Acquiring Fund shareholders and that the interests
of the existing shareholders of the Acquiring Fund would not be diluted as a
result of this transaction; and
WHEREAS, the Board of Trustees, including a majority of the Trustees who
are not "interested persons" (as defined under the 1940 Act) of the Acquired
Fund has determined that the exchange of all of the assets of the Acquired Fund
for Acquiring Fund Shares is in the best interests of the Acquired Fund
shareholders, that the interests of the shareholders of the Acquired Fund would
not be diluted as a result of this transaction and determined that subsequent to
the consummation of the transaction contemplated by this Agreement, the Acquired
Fund will cease operations;
NOW THEREFORE, for and in consideration of the mutual covenants and
agreements hereinafter set forth, the parties agree as follows:
<PAGE>
1. TRANSFER OF ASSETS OF THE ACQUIRED FUND IN EXCHANGE FOR THE ACQUIRING
FUND SHARES AND LIQUIDATION OF THE ACQUIRED FUND.
1.1 Subject to the terms and conditions contained herein, the Acquired
Fund agrees to assign, transfer, and convey to the Acquiring Fund all of
the assets of the Acquired Fund at the time of the Closing (defined below),
including without limitation all securities and cash, and the Acquiring
Fund agrees in exchange therefor to deliver to the Acquired Fund the number
of Acquiring Fund Shares, including fractional Acquiring Fund Shares,
representing Class A Shares, determined as set forth in paragraph 2.3 of
this Agreement. Such transactions shall take place at the closing (the
"Closing") on the closing date (the "Closing Date"), as provided in
paragraph 3.1 of this Agreement. In lieu of delivering certificates for the
Acquiring Fund Shares, the Acquiring Fund shall credit the Acquiring Fund
Shares to the Acquired Fund's account on the stock record books of the
Acquiring Fund's transfer agent and shall deliver a confirmation thereof to
the Acquired Fund.
1.2 The Acquired Fund will discharge all of its liabilities and
obligations prior to the Closing Date.
1.3 Delivery of the assets of the Acquired Fund to be transferred
shall be made on the Closing Date and shall be delivered to State Street
Bank and Trust Company (hereinafter referred to as "State Street"), Boston,
Massachusetts, the Acquiring Fund's custodian (the "Custodian"), for the
account of the Acquiring Fund, together with proper instructions and all
documents necessary to transfer such assets to the account of the Acquiring
Fund, free and clear of all liens, encumbrances, rights, restrictions and
claims, except as may be indicated in a schedule delivered by the Acquired
Fund to the Acquiring Fund immediately prior to the Closing. All cash
delivered shall be in the form of currency or immediately available funds
payable to the order of Custodian for the Acquiring Fund.
1.4 The Acquired Fund will pay or cause to be paid to the Acquiring
Fund any dividends or interest received on or after the Closing Date with
respect to assets transferred to the Acquiring Fund hereunder. The Acquired
Fund will transfer to the Acquiring Fund any distributions, rights, or
other assets received by the Acquired Fund after the Closing Date as
distributions on, or with respect to, the securities transferred. Such
assets shall be deemed included in assets transferred to the Acquiring Fund
on the Closing Date and shall not be separately valued.
1.5 As soon after the Closing Date as is practicable (the "Liquidation
Date"), the Acquired Fund will liquidate and distribute pro rata to the
Acquired Fund's shareholders of record, determined as of the close of
business on the Closing Date (the "Acquired Fund Shareholders"), the
Acquiring Fund Shares received by the Acquired Fund pursuant to paragraph
1.1. Such liquidation and distribution will be accomplished by the transfer
(by the Acquiring Fund or its transfer agent) of the Acquiring Fund Shares
to an account for each shareholder on the books of the Acquiring Fund's
transfer agent in the name of each Acquired Fund Shareholder and
representing the pro rata number of the Acquiring Fund Shares due each
Acquired Fund Shareholder. All issued and outstanding shares of the
Acquired Fund will simultaneously be canceled on the books of the Acquired
Fund. Share certificates representing interests in the Acquired Fund will
represent a number of Acquiring Fund Shares after the Closing Date as
determined in accordance with paragraph 2.3. The Acquiring Fund will issue
certificates represent-
<PAGE>
ing the Acquiring Fund Shares in connection with such exchange only for,
and upon receipt of, certificated shares of the Acquired Fund.
1.6 Any transfer taxes payable upon issuance of the Acquiring Fund
Shares in a name other than the registered holder of the Acquired Fund
shares on the books of the Acquired Fund as of the Closing Date shall, as a
condition of such issuance and transfer, be paid by the person to whom such
Acquiring Fund Shares are to be issued and transferred.
1.7 Any reporting responsibility of the Acquired Fund is and shall
remain the responsibility of the Acquired Fund up to and including the
Closing Date and such later dates with respect to discontinuation of the
Acquired Fund as a series of Intermediate Municipal Trust with federal and
state authorities.
2. VALUATION.
2.1 The value of the Acquired Fund's assets to be acquired by the
Acquiring Fund hereunder shall be the net asset value of such assets
computed as of the close of business on the Closing Date (such time and
date being hereinafter called the "Valuation Date"), using the valuation
procedures set forth in the Acquiring Fund's then-current prospectus or
statement of additional information.
2.2 The net asset value of an Acquiring Fund Share shall be the net
asset value per share computed as of the close of business on the Valuation
Date, using the valuation procedures set forth in the Acquiring Fund's
then-current prospectus or statement of additional information.
2.3 The number of the Acquiring Fund Shares to be issued (including
fractional shares, if any) in exchange for the Acquired Fund's assets shall
be determined by dividing the value of the assets attributable to the
Acquired Fund determined using the same valuation procedures referred to in
paragraph 2.1 by the net asset value of one Acquiring Fund Share determined
in accordance with paragraph 2.2. Class A Shares of the Acquiring Fund
shall be issued for shares of the Acquired Fund.
2.4 All computations of value shall be made in accordance with the
regular practices of the Acquiring Fund.
3. CLOSING AND CLOSING DATE.
3.1 The Closing Date shall be March 21, 1998, or such later date as
the parties may mutually agree. All acts taking place at the Closing Date
shall be deemed to take place simultaneously as of the close of business on
the Closing Date unless otherwise provided. The Closing shall be held at
the close of business at the offices of the Acquired Fund, Federated
Investors Tower, Pittsburgh, Pennsylvania 15222-3779, or such other time
and/or place as the parties may mutually agree.
3.2 If on the Valuation Date: (a) the primary trading market for
portfolio securities of the Acquiring Fund or the Acquired Fund shall be
closed to trading or trading thereon shall be restricted; or (b) trading or
the reporting of trading shall be disrupted so that accurate appraisal of
the value of the net assets of the Acquiring Fund or the Acquired Fund is
impracticable, the Closing Date shall be postponed until the first business
day after the day when trading shall have been fully resumed and reporting
shall have been restored.
<PAGE>
3.3 The Acquired Fund shall instruct Federated Services Company, as
transfer agent for the Acquired Fund, to deliver to the Acquiring Fund at
the Closing, a certificate of an authorized officer stating that its
records contain the names and addresses of the Acquired Fund Shareholders
and the number of outstanding shares owned by each such shareholder
immediately prior to the Closing. The Acquiring Fund shall issue and
deliver a confirmation evidencing the Class A Shares of the Acquiring Fund
to be credited on the Closing Date to the Secretary of the Acquired Fund or
provide evidence satisfactory to the Acquired Fund that such Class A Shares
of the Acquiring Fund have been credited to the respective accounts of the
Acquired Fund Shareholders on the books of the Acquiring Fund. At the
Closing, each party shall deliver to the other such bills of sale, checks,
assignments, share certificates, if any, receipts or other documents as
such other party or its counsel may reasonably request.
4. REPRESENTATIONS AND WARRANTIES.
4.1 Each of the Acquired Fund and Federated Management represents and
warrants to the Acquiring Fund as follows:
(a) Intermediate Municipal Trust is a business trust organized,
validly existing, and in good standing under the laws of the
Commonwealth of Massachusetts and has power to carry on its business as
it is now being conducted.
(b) Intermediate Municipal Trust is registered under the 1940 Act,
as an open-end, non-diversified, management investment company, and such
registration has not been revoked or rescinded and is in full force and
effect.
(c) Intermediate Municipal Trust is not, and the execution,
delivery, and performance of this Agreement will not result, in a
material violation of its Declaration of Trust or By-Laws or of any
agreement, indenture, instrument, contract, lease, or other undertaking
to which the Acquired Fund is a party or by which it is bound.
(d) No material litigation or administrative proceeding or
investigation of or before any court or governmental body is currently
pending or to its knowledge threatened against the Acquired Fund or any
of the Acquired Fund's properties or assets which, if adversely
determined, would materially and adversely affect its financial
condition or the conduct of its business. Neither Federated Management
nor the Acquired Fund knows of any facts which might form the basis for
the institution of such proceedings, and the Acquired Fund is not a
party to or subject to the provisions of any order, decree or judgment
of any court or governmental body which materially and adversely affects
its business or its ability to consummate the transactions herein
contemplated.
(e) The Statement of Assets and Liabilities of the Acquired Fund at
May 31, 1997, has been audited by Arthur Andersen LLP, independent
public accountants, and has been prepared in accordance with generally
accepted accounting principles, consistently applied, and such statement
(copies of which have been furnished to the Acquiring Fund) fairly
reflect the financial condition of the Acquired Fund as of such date,
and there are no liabilities of the Acquired Fund, known to the Acquired
Fund or to Federated Management, contingent or otherwise, as of such
date not disclosed therein.
<PAGE>
(f) The unaudited Statement of Assets and Liabilities of the
Acquired Fund at November 30, 1997, has been prepared in accordance with
generally accepted accounting principles, consistently applied, and on a
basis consistent with the Statement of Assets and Liabilities of the
Acquired Fund at May 31, 1997, which has been audited by Arthur Andersen
LLP, and such statement (copies of which have been furnished to the
Acquiring Fund) fairly reflects the financial condition of the Acquired
Fund as of such date, and there are no liabilities of the Acquired Fund
known to the Acquired Fund or to Federated Management, contingent or
otherwise, as of such date not disclosed therein.
(g) Since May 31, 1997, there has not been any material adverse
change in the Acquired Fund's financial condition, assets, liabilities,
or business other than changes occurring in the ordinary course of
business, or any incurrence by the Acquired Fund of any indebtedness for
borrowed money.
(h) At the Closing Date, all federal and other tax returns and
reports of the Acquired Fund required by law (or permitted extensions
thereto) to have been filed shall have been filed, and to the best of
the Acquired Fund's knowledge all federal and other taxes shall have
been paid so far as due, or provision shall have been made for the
payment thereof, and to the best of the Acquired Fund's knowledge no
such return is currently under audit and no assessment has been asserted
with respect to such returns.
(i) For each fiscal year (or part thereof) of its operation, the
Acquired Fund has met the requirements of Subchapter M of the Code for
qualification and treatment as a regulated investment company.
(j) All issued and outstanding shares of the Acquired Fund are, and
at the Closing Date will be, duly and validly issued and outstanding,
fully paid and non-assessable. All of the issued and outstanding shares
of the Acquired Fund will, at the time of the Closing, be held by the
persons and in the amounts set forth in the records of the transfer
agent as provided in paragraph 3.3 of this Agreement. The Acquired Fund
does not have outstanding options, warrants or other rights to subscribe
for or purchase any of the Acquired Fund shares, nor is there
outstanding any security convertible into Acquired Fund shares.
(k) On the Closing Date, all issued and outstanding shares of the
Acquired Fund will have been duly registered under the Securities Act of
1933, as amended (the "1933 Act"), and registered, or exempt from
registration, to the extent required thereby under each state securities
or "blue sky" law of every state in which the Acquired Fund has offered
or sold its shares.
(l) On the Closing Date, the Acquired Fund will have full right,
power, and authority to sell, assign, transfer, and deliver the assets
to be transferred by it hereunder.
(m) The execution, delivery, and performance of this Agreement has
been duly authorized by all necessary action on the part of the Acquired
Fund's Board of Trustees and, subject to the approval of the Acquired
Fund Shareholders, this Agreement constitutes the valid and legally
binding obligation of the Acquired Fund enforceable in accordance with
its terms, subject to the effect of bankruptcy, insolvency,
reorganization, moratorium, fraudulent
<PAGE>
conveyance, and other similar laws relating to or affecting creditors'
rights generally and court decisions with respect thereto, and to
general principles of equity and the discretion of the court before
which a proceeding is brought (regardless of whether the enforceability
is considered in a proceeding in equity or at law).
(n) The Prospectus/Proxy Statement to be included in the
Registration Statement (only insofar as it relates to the Acquired Fund)
will, on the effective date of the Registration Statement and on the
Closing Date be true and correct in all material respects. Further, on
the effective date of the Registration Statement and on the Closing
Date, the Prospectus/Proxy Statement (only insofar as it relates to the
Acquired Fund) will not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which such statements were made, not misleading.
(o) The Acquired Fund will provide the Acquiring Fund with
information reasonably necessary for the preparation of the
Prospectus/Proxy Statement.
4.2 Each of the Acquiring Fund and Federated Advisers represents and
warrants to the Acquired Fund as follows:
(a) Municipal Securities Income Trust is a business trust duly
organized, validly existing, and in good standing under the laws of the
Commonwealth of Massachusetts and has the power to carry on its business
as it is now being conducted and to carry out this Agreement.
(b) Municipal Securities Income Trust is registered under the 1940
Act as an open-end, non-diversified, management investment company, and
such registration has not been revoked or rescinded and is in full force
and effect.
(c) The current prospectus and statement of additional information
of the Acquiring Fund conform in all material respects to the applicable
requirements of the 1933 Act and the 1940 Act and the rules and
regulation of the SEC thereunder and do not include any untrue statement
of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
(d) At the Closing Date, the Acquiring Fund will have good and
marketable title to its assets.
(e) Municipal Securities Income Trust is not, and the execution,
delivery, and performance of this Agreement will not result in a
material violation of its Declaration of Trust or By-Laws or of any
agreement, indenture, instrument, contract, lease, or other undertaking
to which the Acquiring Fund is a party or by which it is bound.
(f) No material litigation or administrative proceeding or
investigation of or before any court or governmental body is currently
pending or to its knowledge threatened against the Acquiring Fund or any
of the Acquiring Fund's properties or assets which, if adversely
determined, would affect the Acquiring Fund's financial condition or the
conduct of its business. Neither Federated Advisers nor the Acquiring
Fund knows of any facts which might
<PAGE>
form the basis for the institution of such proceedings, and the
Acquiring Fund is not a party to or subject to the provisions of any
order, decree or judgment of any court or governmental body which
materially and adversely affects its business or its ability to
consummate the transactions herein contemplated.
(g) The Statement of Assets and Liabilities of the Acquiring Fund
at August 31, 1997, has been audited by Deloitte & Touche LLP,
independent auditors, and has been prepared in accordance with generally
accepted accounting principles, consistently applied, and such statement
(copies of which have been furnished to the Acquired Fund) fairly
reflects the financial condition of the Acquiring Fund as of such date,
and there are no liabilities of the Acquiring Fund, known to the
Acquiring Fund or to Federated Advisers, contingent or otherwise, as of
such date not disclosed therein.
(h) Since August 31, 1997, there has not been any adverse change in
the Acquiring Fund's financial condition, assets, liabilities, or
business other than changes occurring in the ordinary course of
business, or any incurrence by the Acquiring Fund of any indebtedness
for borrowed money.
(i) At the Closing Date, all federal and other tax returns and
reports of the Acquiring Fund required by law (or permitted extensions
thereto) to have been filed shall have been filed, and to the best of
the Acquiring Fund's knowledge all federal and other taxes shall have
been paid so far as due or provision shall have been made for the
payment thereof, and to the best of the Acquiring Fund's knowledge no
such return is currently under audit and no assessment has been asserted
with respect to such returns.
(j) For each fiscal year (or part thereof) of its operation, the
Acquiring Fund has met the requirements of Subchapter M of the Code for
qualification and treatment as a regulated investment company.
(k) All issued and outstanding shares of the Acquiring Fund are,
and including the Acquiring Fund Shares issued to the Acquired Fund
Shareholders pursuant hereto, at the Closing Date will be, duly and
validly issued and outstanding, fully paid and non-assessable. The
Acquiring Fund does not have outstanding any options, warrants or other
rights to subscribe for or purchase any of the Acquiring Fund Shares,
nor is there outstanding any security convertible into any Acquiring
Fund Shares.
(l) All issued and outstanding shares of each class of the
Acquiring Fund are, and at the Closing Date will be, duly registered
under the 1933 Act and registered, or exempt from registration, to the
extent required thereby under each state securities or "blue sky" law of
every state in which the Acquiring Fund has offered or sold its shares.
(m) The execution, delivery, and performance of this Agreement will
have been duly authorized prior to the Closing Date by all necessary
action on the part of the Acquiring Fund's Board of Trustees, and this
Agreement constitutes the valid and legally binding obligation of
Municipal Securities Income Trust enforceable in accordance with its
terms, subject to the effect of bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance and other similar laws relating to or
affecting creditors' rights generally and court
<PAGE>
decisions with respect thereto, and to general principles of equity and
the discretion of the court before which a proceeding is brought
(regardless of whether the enforceability is considered in a proceeding
in equity or at law).
(n) The Prospectus/Proxy Statement to be included in the
Registration Statement (only insofar as it relates to the Acquiring
Fund) will, on the effective date of the Registration Statement and on
the Closing Date be true and correct in all material respects. Further,
on the effective date of the Registration Statement and on the Closing
Date, the Prospectus/Proxy Statement (only insofar as it relates to the
Acquiring Fund) will not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which such statements were made, not misleading.
(o) The Acquiring Fund has entered into an agreement under which
Federated Advisers will assume the expenses of the Reorganization,
including legal fees of the Acquiring Fund, registration fees, transfer
tax (if any), the fees of banks and transfer agents, and the costs of
preparing, printing, copying, and mailing proxy solicitation materials
to the Acquired Fund's shareholders.
5. COVENANTS OF THE ACQUIRING FUND AND THE ACQUIRED FUND.
5.1 The Acquiring Fund and the Acquired Fund each will operate its
business in the ordinary course between the date hereof and the Closing
Date, it being understood that such ordinary course of business will
include customary dividends and distributions.
5.2 The Acquired Fund will call a meeting of the Acquired Fund
Shareholders to consider and act upon this Agreement and to take all other
action necessary and appropriate to obtain approval of the transactions
contemplated herein.
5.3 Subject to the provisions of this Agreement, the Acquiring Fund
and the Acquired Fund will each take, or cause to be taken, all action, and
do or cause to be done, all things reasonably necessary, proper, or
advisable to consummate and make effective the transactions contemplated by
this Agreement.
5.4 As promptly as practicable, but in any case within sixty days
after the Closing Date, the Acquired Fund shall furnish the Acquiring Fund,
in such form as is reasonably satisfactory to the Acquiring Fund, a
statement of the earnings and profits of the Acquired Fund for federal
income tax purposes which will be carried over to the Acquiring Fund as a
result of Section 381 of the Code and which will be certified by the
Acquired Fund's President or its Treasurer.
5.5 Municipal Securities Income Trust shall have filed with the SEC a
Registration Statement Form N-14 complying in all material respects with
the requirements of the 1933 Act, the Securities Exchange Act of 1934, as
amended, the 1940 Act, and applicable rules and regulations thereunder,
relating to a meeting of the shareholders of the Acquired Fund to be called
to consider and act upon the transactions contemplated herein, and such
Registration Statement shall have been declared effective by the SEC. The
Acquired Fund agrees to provide the Acquiring Fund with information
relating to the Acquired Fund required under such Acts, rules and
regulations for inclusion in the Registration Statement Form N-14.
<PAGE>
5.6 The Acquiring Fund agrees to use all best efforts to obtain the
approvals and authorizations required by the 1933 Act, the 1940 Act, and
such of the state Blue Sky or securities laws as it may deem appropriate in
order to continue its operations after the Closing Date.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND.
The obligations of the Acquiring Fund to complete the transactions provided
for herein shall be subject to the performance by the Acquired Fund of all the
obligations to be performed by it hereunder on or before the Closing Date and,
in addition thereto, the following conditions:
6.1 All representations and warranties of Federated Management and the
Acquired Fund contained in this Agreement shall be true and correct in all
material respects as of the date hereof and, except as they may be affected
by the transactions contemplated by this Agreement, as of the Closing Date
with the same force and effect as if made on and as of the Closing Date.
6.2 The Acquired Fund shall have delivered to the Acquiring Fund a
statement of the Acquired Fund's assets, together with a list of the
Acquired Fund's portfolio securities showing the tax costs of such
securities by lot and the holding periods of such securities, as of the
Closing Date, certified by the Treasurer or the Assistant Treasurer of the
Acquired Fund.
6.3 The Acquired Fund and Federated Management shall have delivered to
the Acquiring Fund on the Closing Date a certificate executed in their
names by their respective Presidents or Vice Presidents and their
Treasurers or Assistant Treasurers, in form and substance reasonably
satisfactory to the Acquiring Fund, to the effect that the representations
and warranties of the Acquired Fund and Federated Management made in this
Agreement are true and correct at and as of the Closing Date, except as
they may be affected by the transactions contemplated by this Agreement,
and as to such other matters as the Acquiring Fund shall reasonably
request.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND.
The obligations of the Acquired Fund to consummate the transactions
provided for herein shall be subject to the performance by the Acquiring Fund of
all the obligations to be performed by it hereunder on or before the Closing
Date and, in addition thereto, the following conditions:
7.1 All representations and warranties of the Acquiring Fund and
Federated Advisers contained in this Agreement shall be true and correct in
all material respects as of the date hereof and, except as they may be
affected by the transactions contemplated by this Agreement, as of the
Closing Date with the same force and effect as if made on and as of the
Closing Date.
7.2 The Acquiring Fund and Federated Advisers shall have delivered to
the Acquired Fund on the Closing Date a certificate executed in their names
by their respective Presidents or Vice Presidents and their Treasurers or
Assistant Treasurers, in form and substance reasonably satisfactory to the
Acquired Fund, to the effect that the representations and warranties of the
Acquiring Fund and Federated Advisers made in this Agreement are true and
correct at and as of the Closing Date, except as they may be affected by
the transactions contemplated by this Agreement, and as to such other
matters as the Acquired Fund shall reasonably request.
<PAGE>
8. FURTHER CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE ACQUIRING FUND
AND THE ACQUIRED FUND.
If any of the conditions set forth below do not exist on or before the
Closing Date with respect to the Acquired Fund or the Acquiring Fund, the other
party to this Agreement shall, at its option, not be required to consummate the
transactions contemplated by this Agreement.
8.1 The Agreement and the transactions contemplated herein shall have
been approved by the requisite vote of the holders of beneficial interest
of the Acquired Fund in accordance with the laws of the Commonwealth of
Massachusetts and the Acquired Fund's Declaration of Trust and By-Laws.
8.2 On the Closing Date no action, suit or other proceeding shall be
pending before any court or governmental agency in which it is sought to
restrain or prohibit, or obtain damages or other relief in connection with,
this Agreement or the transactions contemplated herein.
8.3 All consents of parties hereto and all other consents, orders,
permits, and exemptions of federal, state, and local regulatory authorities
(including those of the Securities and Exchange Commission and of state
Blue Sky and securities authorities) deemed necessary by the Acquiring Fund
or the Acquired Fund to permit consummation, in all material respects, of
the transactions contemplated hereby shall have been obtained, except where
failure to obtain any such consent, order, or permit would not involve a
risk of a material adverse effect on the assets or properties of the
Acquiring Fund or the Acquired Fund, provided that either party hereto may
for itself waive any of such conditions.
8.4 The Form N-14 shall have become effective under the 1933 Act by
the SEC and no stop orders suspending the effectiveness thereof shall have
been issued and, to the best knowledge of the parties hereto, no
investigation or proceeding for that purpose shall have been instituted or
be pending, threatened, or contemplated under the 1933 Act.
8.5 The Acquiring Fund and the Acquired Fund shall have received an
opinion of Howard & Howard Attorneys, P.C., substantially to the effect
that, on the basis of the existing provisions of the Code, current
administrative rules, and court decisions, for federal income tax purposes:
(a) The transfer of all or substantially all of the Acquired Fund
assets in exchange for the Acquiring Fund Shares and the distribution of
the Acquiring Fund Shares to the shareholders of the Acquired Fund in
liquidation of the Acquired fund will constitute a "reorganization"
within the meaning of Section 368(a)(1)(C) of the Code;
(b) No gain or loss will be recognized by the Acquiring Fund upon
the receipt of the assets of the Acquired Fund solely in exchange for
the Acquiring Fund Shares;
(c) No gain or loss will be recognized by the Acquired Fund upon
the transfer of the Acquired Fund assets to the Acquiring Fund in
exchange for the Acquiring Fund Shares or upon the distribution (whether
actual or constructive) of the Acquiring Fund Shares to Acquired Fund
Shareholders in exchange for their shares of the Acquired Fund;
(d) No gain or loss will be recognized by the Acquired Fund
Shareholders upon the exchange of their Acquired Fund shares for the
Acquiring Fund Shares;
<PAGE>
(e) The tax basis of the Acquired Fund assets acquired by the
Acquiring Fund will be the same as the tax basis of such assets to the
Acquired Fund immediately prior to the Reorganization;
(f) The tax basis of the Acquiring Fund Shares received by each of
the Acquired Fund Shareholders pursuant to the Reorganization will be
the same as the tax basis of the Acquired Fund shares held by such
shareholder immediately prior to the Reorganization;
(g) The holding period of the assets of the Acquired Fund in the
hands of the Acquiring Fund will include the period during which those
assets were held by the Acquired Fund; and
(h) The holding period of the Acquiring Fund Shares to be received
by each Acquired Fund Shareholder will include the period during which
the Acquired Fund Shares exchanged therefor were held by such
shareholder (provided the Acquired Fund Shares were held as capital
assets on the date of the Reorganization).
9. TERMINATION OF AGREEMENT.
9.1 This Agreement and the transactions contemplated hereby may be
terminated and abandoned by resolution of the Board of Trustees of
Intermediate Municipal Trust or the Board of Trustees of Municipal
Securities Income Trust, at any time prior to the Closing Date without
liability on the part of either party hereto, if circumstances should
develop that, in the opinion of the Board of Trustees of either party
hereto, determines that proceeding with the Agreement is not in the best
interests of that party's shareholders.
9.2 If this Agreement is terminated and the exchange contemplated
hereby is abandoned pursuant to the provisions of this Section 9, this
Agreement shall become void and have no effect, without any liability on
the part of any party hereto (other than the agreement of Federated
Advisers to assume the expenses of the Reorganization) or the trustees,
directors, officers or shareholders of the Acquiring Fund or of the
Acquired Fund, in respect of this Agreement.
10. WAIVER.
At any time prior to the Closing Date, any of the foregoing conditions
(other than that set forth in Section 8.5) may be waived by the Board of
Trustees of Municipal Securities Income Trust or the Board of Trustees of
Intermediate Municipal Trust if, in the judgment of either, such waiver will not
have a material adverse effect on the benefits intended under this Agreement to
the shareholders of the Acquiring Fund or of the Acquired Fund, as the case may
be.
11. AMENDMENT.
This Agreement and Plan of Reorganization may be amended at any time by the
mutual agreement of the Acquired Fund and the Acquiring Fund, authorized by
their respective Boards of Trustees and notwithstanding approval thereof by the
Acquired Fund Shareholders; provided, that if so approved by the Acquired Fund
Shareholders, no amendment shall be made which substantially changes the terms
hereof.
<PAGE>
12. NO BROKER'S OR FINDER'S FEE.
The Acquired Fund and the Acquiring Fund each represents that there is no
person with whom it has dealt who by reason of such dealings is entitled to any
broker's or finder's or other similar fee or commission arising out of the
transactions contemplated by this Agreement and Plan of Reorganization.
13. MISCELLANEOUS.
13.1 The representations and warranties included or provided for
herein shall not survive consummation of the transactions contemplated
hereby.
13.2 This Agreement contains the entire agreement and understanding
between the parties hereto with respect to the subject matter hereof, and
merges and supersedes all prior discussions, agreements, and understandings
of every kind and nature between them relating to the subject matter
hereof. Neither party shall be bound by any condition, definition,
warranty, or representation, other than as set forth or provided in this
Agreement or as may be set forth in a later writing signed by the party to
be bound thereby.
13.3 This Agreement shall be governed and construed in accordance with
the internal laws of the Commonwealth of Pennsylvania, without giving
effect to such jurisdiction's conflicts of laws principles.
13.4 This Agreement may be executed in any number of counterparts,
each of which, when executed and delivered, shall be deemed to be an
original.
13.5 This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by
any party without the written consent of the other party. Nothing herein
expressed or implied is intended or shall be construed to confer upon or
give any person, firm, or corporation, other than the parties hereto and
their respective successors and assigns, any rights or remedies under or by
reason of this Agreement.
13.6 Intermediate Municipal Trust is hereby expressly put on notice of
the limitation of liability as set forth in the Declaration of Trust of
Municipal Securities Income Trust and agrees that the obligations assumed
by the Acquiring Fund pursuant to this Agreement shall be limited in any
case to the Acquiring Fund and its assets and the Acquired Fund shall not
seek satisfaction of any such obligation from the shareholders of the
Acquiring Fund, the Trustees, officers, employees, or agents of Municipal
Securities Income Trust or any of them.
13.7 Municipal Securities Income Trust is hereby expressly put on
notice of the limitation of liability as set forth in the Declaration of
Trust of Intermediate Municipal Trust and agrees that the obligations
assumed by the Acquired Fund pursuant to this Agreement shall be limited in
any case to the Acquired Fund and its assets and the Acquiring Fund shall
not seek satisfaction of any such obligation from the shareholders of the
Acquired Fund, the Trustees, officers, employees, or agents of Intermediate
Municipal Trust or any of them.
<PAGE>
IN WITNESS WHEREOF, each of the Acquired Fund, Federated Management, the
Acquiring Fund, and Federated Advisers have caused this Agreement and Plan of
Reorganization to be executed and attested on its behalf by its duly authorized
representatives as of the date first above written.
<TABLE>
<S> <C>
Acquired Fund:
INTERMEDIATE MUNICIPAL TRUST, ON BEHALF OF ITS
PORTFOLIO, FEDERATED PENNSYLVANIA INTERMEDIATE
Attest: MUNICIPAL TRUST
- ----------------------------------------------
Secretary By:
------------------------------------------
Name:
---------------------------------------
Title:
----------------------------------------
Attest: FEDERATED MANAGEMENT
- ----------------------------------------------
Secretary By:
------------------------------------------
Name:
---------------------------------------
Title:
----------------------------------------
MUNICIPAL SECURITIES INCOME TRUST, ON BEHALF
OF ITS PORTFOLIO, FEDERATED PENNSYLVANIA
Attest: MUNICIPAL INCOME FUND
- ----------------------------------------------
Secretary By:
------------------------------------------
Name:
---------------------------------------
Title:
----------------------------------------
Attest: FEDERATED ADVISERS
- ----------------------------------------------
Secretary By:
------------------------------------------
Name:
---------------------------------------
Title:
----------------------------------------
</TABLE>
STATEMENT OF ADDITIONAL INFORMATION
January 30, 1998
ACQUISITION OF THE ASSETS OF
FEDERATED PENNSYLVANIA INTERMEDIATE MUNICIPAL TRUST,
A PORTFOLIO OF INTERMEDIATE MUNICIPAL TRUST
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7000
Telephone No: 1-800-245-5000
BY AND IN EXCHANGE FOR CLASS A SHARES OF
FEDERATED PENNSYLVANIA MUNICIPAL INCOME FUND,
A PORTFOLIO OF MUNICIPAL SECURITIES INCOME TRUST
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7000
Telephone No. 1-800-245-5000
This Statement of Additional Information dated January 30, 1998 is not
a prospectus. A Prospectus/Proxy Statement dated January 30, 1998, related to
the above-referenced matter may be obtained from Municipal Securities Income
Trust, on behalf of its portfolio, Federated Pennsylvania Municipal Income Fund,
Federated Investors Funds, 5800 Corporate Drive, Pittsburgh, Pennsylvania
15237-7000. This Statement of Additional Information should be read in
conjunction with such Prospectus/Proxy Statement.
<PAGE>
TABLE OF CONTENTS
Statement of Additional Information of Federated Pennsylvania Municipal Income
Fund, a portfolio of Municipal Securities Income Trust, dated October 31,
1997.
Statement of Additional Information of Federated Pennsylvania Intermediate
Municipal Trust, a portfolio of Intermediate Municipal Trust, dated July
31, 1997.
Financial Statements of Federated Pennsylvania Municipal Income Fund, a
portfolio of Municipal Securities Income Trust, dated August 31, 1997.
Financial Statements of Federated Pennsylvania Intermediate Municipal Trust, a
portfolio of Intermediate Municipal Trust, dated May 31, 1997.
Unaudited Financial Statements of Federated Pennsylvania Intermediate Municipal
Trust, a portfolio of Intermediate Municipal Trust, dated November 30,
1997.
<PAGE>
INFORMATION INCORPORATED BY REFERENCE
The Statement of Additional Information of Federated Pennsylvania
Municipal Income Fund (the "Portfolio"), a portfolio of Municipal Securities
Income Trust (the "Trust"), is incorporated by reference to the Trust's
Post-Effective Amendment No. 25 to its Registration Statement on Form N-1A (File
No. 33-36729) which was filed with the Securities and Exchange Commission on or
about October 31, 1997.
The Statement of Additional Information of Federated Pennsylvania
Intermediate Municipal Trust (the "Fund"), a portfolio of Intermediate Municipal
Trust, is incorporated by reference to Intermediate Municipal Trust's
Post-Effective Amendment No. 28 to its Registration Statement on Form N-1A (File
No. 2-98237) which was filed with the Securities and Exchange Commission on or
about July 22, 1997. A copy may be obtained from the Trust at Federated
Investors Tower, Pittsburgh, Pennsylvania 15222-3779. Telephone Number:
1-800-341-7400.
The audited financial statements of the Portfolio dated August 31, 1997,
are incorporated by reference to the Portfolio's Prospectus filed with
Post-Effective Amendment No. 25 to the Trust's Registration Statement on Form
N-1A (File No. 33-36729) which was filed with the Securities and Exchange
Commission on or about October 31, 1997.
The audited financial statements of the Fund dated May 31, 1997, are
incorporated by reference to the Fund's Prospectus filed with Post-Effective
Amendment No. 28 to Intermediate Municipal Trust's Registration Statement on
Form N-1A (File No. 2-98237) which was filed with the Securities and Exchange
Commission on or about July 22, 1997.
The unaudited financial statements of the Fund dated November 30, 1997,
are incorporated by reference to the Semi-Annual Report to Shareholders of the
Fund which was filed with the Securities and Exchange Commission pursuant to
Section 30(b) of the Investment Company Act of 1940, as amended, on or about
February 3, 1997.
Cusip 458810306
G00967-04 (1/98)
