Federated Institutional Short Duration Government Fund
(A Portfolio of Federated Institutional Trust)
SEMI-ANNUAL REPORT AND SUPPLEMENT TO PROSPECTUS DATED MARCH 31, 1997
The following information is a supplement to your prospectus. We're providing it
to keep you up to date and comply with regulations that require mutual fund
companies to update shareholders concerning changes in prospectuses.
We suggest that you keep this information for your records.
A. Please delete the "Financial Highlights" table on page 2 of the Prospectus
and replace it with the following:
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED) YEAR ENDED
JANUARY 31, JULY 31,
1998 1997(A)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $2.00 $2.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.06 0.01
LESS DISTRIBUTIONS
Distributions from net investment income (0.06) (0.01)
Distributions from net realized gains 0.00** --
Total Distributions (0.06) (0.01)
NET ASSET VALUE, END OF PERIOD $2.00 $2.00
TOTAL RETURN(B) 2.99% 0.34%
RATIOS TO AVERAGE NET ASSETS
Expenses 0.12%* 0.00%*
Net investment income 5.80%* 5.75%*
Expense waiver/reimbursement(c) 0.92%* 77.80%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $85,876 $11,100
Portfolio turnover 105% 0%
</TABLE>
* Computed on an annualized basis.
** Less than one cent per share.
(a) Reflects operations for the period from July 10, 1997 (start of performance)
to July 31, 1997. For the period from August 1, 1996 to July 9, 1997, all income
was distributed to the Administrator.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
B. Delete the financial statements starting on page 10 of the Prospectus, and
replace with the following:
PORTFOLIO OF INVESTMENTS
FEDERATED INSTITUTIONAL SHORT DURATION GOVERNMENT FUND
JANUARY 31, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
LONG-TERM GOVERNMENT OBLIGATIONS--50.9%
FEDERAL HOME LOAN BANK--5.8%
$ 3,000,000 5.700%, 10/23/1998 $ 3,005,160
2,000,000 6.000%, 12/30/1998 2,000,960
TOTAL 5,006,120
FEDERAL HOME LOAN MORTGAGE CORPORATION, REMIC--21.9%
13,775,415 5.250%, 12/15/2014 13,732,712
5,090,000 5.750%, 10/15/2016 5,095,599
TOTAL 18,828,311
FEDERAL NATIONAL MORTGAGE ASSOCIATION--0.7%
574,376 Federal National Mortgage Association, 10.000%, 2/1/2025
636,300 FEDERAL NATIONAL MORTGAGE ASSOCIATION, FLOATING RATE NOTE--8.2%
2,000,000 (a)5.415%, 3/17/1998 2,000,640
5,000,000 (a)5.594%, 2/3/1998 4,999,625
TOTAL 7,000,265
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION--5.4%
2,862,174 8.500%, 6/15/2021 3,043,751
1,324,881 9.000%, 12/15/2019 1,445,366
170,927 9.500%, 11/15/2017 187,347
TOTAL 4,676,464
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION, ARM--5.4%
4,500,248 7.000%, 9/20/2024 4,600,648
STUDENT LOAN MARKETING ASSOCIATION--3.5%
3,000,000 5.720%, 11/20/1998 3,003,432
TOTAL LONG-TERM GOVERNMENT OBLIGATIONS 43,751,540
(IDENTIFIED COST $43,702,155)
(B)REPURCHASE AGREEMENTS--46.8%
3,000,000 ABN AMRO Chicago Corp., 5.650%, dated 1/30/1998, due
2/2/1998 3,000,000 10,000,000 Bear, Stearns and Co., 5.650%, dated
1/30/1998, due 2/2/1998 10,000,000
3,000,000 Greenwich Capital Markets, Inc., 5.650%, dated 1/30/1998, due 3,000,000
2/2/1998
3,000,000 HSBC Securities, Inc., 5.650%, dated 1/30/1998, due 2/2/1998 3,000,000
10,000,000 J.P. Morgan & Co., Inc., 5.650%, dated 1/30/1998, due 2/2/1998 10,000,000
</TABLE>
FEDERATED INSTITUTIONAL SHORT DURATION GOVERNMENT FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(B)REPURCHASE AGREEMENTS--CONTINUED
$ 3,000,000 Prudential Securities, Inc., 5.650%, dated 1/30/1998, due $ 3,000,000
2/2/1998
3,000,000 Salomon Smith Barney Holdings, Inc., 5.650%, dated 1/30/1998, 3,000,000
due 2/2/1998
2,195,000 Swiss Bank Capital Markets, 5.610%, dated 1/30/1998, due 2,195,000
2/2/1998
3,000,000 Toronto Dominion Securities (USA) Inc., 5.650%, dated 3,000,000
1/30/1998, due 2/2/1998
TOTAL REPURCHASE AGREEMENTS (AT 40,195,000
AMORTIZED COST)
TOTAL INVESTMENTS (IDENTIFIED COST $ 83,946,540
$83,897,155)(C)
</TABLE>
(a) Current rate and next reset date shown.
(b) The repurchase agreements are fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio. The
investments in the repurchase agreements are through participation in joint
accounts with other Federated funds.
(c) The cost of investments for federal tax purposes amounts to $83,897,155. The
net unrealized appreciation of investments on a federal tax basis amounts to
$49,385 which is comprised of $76,257 appreciation and $26,872 depreciation at
January 31, 1998.
Note: The categories of investments are shown as a percentage of net assets
($85,876,319) at January 31, 1998.
The following acronyms are used throughout this portfolio:
ARM --Adjustable Rate Mortgages
REMIC --Real Estate Mortgage Investment Conduit
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF ASSETS AND LIABILITIES
FEDERATED INSTITUTIONAL SHORT DURATION GOVERNMENT FUND
JANUARY 31, 1998 (UNAUDITED)
<TABLE>
<S> <C> <C>
ASSETS:
Investments in repurchase agreements $ 40,195,000
Investments in securities 43,751,540
Total investments in securities, at value (identified and tax cost $ 83,946,540
$83,897,155)
Cash 4,000,629
Income receivable 307,864
Total assets 88,255,033
LIABILITIES:
Payable for investments purchased 1,998,430
Income distribution payable 368,286
Accrued expenses 11,998
Total liabilities 2,378,714
Net Assets for 42,917,511 shares outstanding $ 85,876,319
NET ASSETS CONSIST OF:
Paid in capital $ 85,835,021
Net unrealized appreciation of investments 49,385
Accumulated net realized loss on investments (7,867)
Accumulated distributions in excess of net investment income (220)
Total Net Assets $ 85,876,319
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
$85,876,319 / 42,917,511 shares outstanding $2.00
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF OPERATIONS
FEDERATED INSTITUTIONAL SHORT DURATION GOVERNMENT FUND
SIX MONTHS ENDED JANUARY 31, 1998 (UNAUDITED)
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest (net of dollar roll expense of $20,648) $ 1,470,589
EXPENSES:
Investment advisory fee $ 99,366
Administrative personnel and services fee 62,500
Custodian fees 4,462
Transfer and dividend disbursing agent fees and expenses 11,902
Directors'/Trustees' fees 2,696
Auditing fees 10,280
Legal fees 2,170
Portfolio accounting fees 23,016
Share registration costs 30,705
Printing and postage 4,187
Insurance premiums 1,493
Miscellaneous 5,000
Total expenses 257,777
Waivers and reimbursements--
Waiver of investment advisory fee $ (99,366)
Reimbursement of other operating expenses (128,383)
Total waivers and reimbursements (227,749)
Net expenses 30,028
Net investment income 1,440,561
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investments (4,389)
Net change in unrealized appreciation of investments 49,413
Net realized and unrealized gain on investments 45,024
Change in net assets resulting from operations $ 1,485,585
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF CHANGES IN NET ASSETS
FEDERATED INSTITUTIONAL SHORT DURATION GOVERNMENT FUND
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED) YEAR ENDED
JANUARY 31, JULY 31,
1998 1997(A)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 1,440,561 $ 8,565
Net realized gain (loss) on investments ($4,389 net loss and $0, (4,389) --
respectively, as computed for federal tax purposes)
Net change in unrealized appreciation/depreciation 49,413 (28)
Change in net assets resulting from operations 1,485,585 8,537
DISTRIBUTIONS TO SHAREHOLDERS--
Distributions from net investment income (1,440,561) (8,785)
Distributions from net realized gains (3,478) --
Change in net assets resulting from distributions to shareholders (1,444,039) (8,785)
SHARE TRANSACTIONS--
Proceeds from sale of shares 98,828,483 11,100,172
Net asset value of shares issued to shareholders in payment of 1,009,277 --
distributions declared
Cost of shares redeemed (25,102,907) (100,167)
Change in net assets resulting from share transactions 74,734,853 11,000,005
Change in net assets 74,776,399 10,999,757
NET ASSETS:
Beginning of period 11,099,920 100,163
End of period $ 85,876,319 $ 11,099,920
</TABLE>
(a) Reflects operations for the period from July 10, 1997 (start of performance)
to July 31, 1997.
(See Notes which are an integral part of the Financial Statements)
NOTES TO FINANCIAL STATEMENTS
FEDERATED INSTITUTIONAL SHORT DURATION GOVERNMENT FUND
SIX MONTHS ENDED JANUARY 31, 1998 (UNAUDITED)
ORGANIZATION
Federated Institutional Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "Act") as an open-end, management
investment company. The Trust consists of one diversified portfolio, Federated
Institutional Short Duration Government Fund (the "Fund"). The investment
objective of the Fund is current income.
SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS
U.S. Government securities and mortgage-backed securities are generally valued
at the mean of the latest bid and asked price as furnished by an independent
pricing service. Short-term securities are valued at the prices provided by an
independent pricing service. However, short-term securities with remaining
maturities of sixty days or less at the time of purchase may be valued at
amortized cost, which approximates fair market value.
REPURCHASE AGREEMENTS
It is the policy of the Fund to require the custodian bank or broker to take
possession, to have legally segregated in the Federal Reserve Book Entry System,
or to have segregated within the custodian bank's vault, all securities held as
collateral under repurchase agreement transactions. Additionally, procedures
have been established by the Fund to monitor, on a daily basis, the market value
of each repurchase agreement's collateral to ensure that the value of collateral
at least equals the repurchase price to be paid under the repurchase agreement
transaction.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions such as brokers/dealers which are deemed by
the Fund's adviser to be creditworthy pursuant to guidelines and/or standards
reviewed or established by the Board of Trustees (the "Trustees"). Risks may
arise from the potential inability of counterparties to honor the terms of the
repurchase agreement. Accordingly, the Fund could receive less than the
repurchase price on the sale of collateral securities.
INVESTMENT INCOME, EXPENSES, AND DISTRIBUTIONS
Interest income and expenses are accrued daily. Bond premium and discount, if
applicable, are amortized as required by the Internal Revenue Code, as amended
(the "Code"). Distributions to shareholders are recorded on the ex-dividend
date.
FEDERAL TAXES
It is the Fund's policy to comply with the provisions of the Code applicable to
regulated investment companies and to distribute to shareholders each year
substantially all of its income. Accordingly, no provisions for federal tax are
necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Fund may engage in when-issued or delayed delivery transactions. The Fund
records when-issued securities on the trade date and maintains security
positions such that sufficient liquid assets will be available to make payment
for the securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts of assets, liabilities, expenses, and revenues reported in
the financial statements. Actual results could differ from those estimated.
OTHER
Investment transactions are accounted for on the trade date.
SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value).
Transactions in shares were as follows:
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
January 31, July 31,
1998 1997(a)
<S> <C> <C>
Shares sold 49,414,242 5,550,085
Shares issued to shareholders in payment of distributions declared 504,638 --
Shares redeemed (12,551,453) (10,017)
Net change resulting from share transactions 37,367,427 5,540,068
</TABLE>
(a) Reflects operations for the period from July 10, 1997 (start of performance)
to July 31, 1997.
INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE
Federated Management, the Fund's investment adviser (the "Adviser"), receives
for its services an annual investment advisory fee equal to 0.40% of the Fund's
average daily net assets. The Adviser may voluntarily choose to waive any
portion of its fee and/or reimburse certain operating expenses of the Fund. The
Adviser can modify or terminate this voluntary waiver and/or reimbursement at
any time at its sole discretion.
ADMINISTRATIVE FEE
Federated Services Company ("FServ"), under the Administrative Services
Agreement, provides the Fund with administrative personnel and services. The fee
paid to FServ is based on the level of average aggregate daily net assets of all
funds advised by subsidiaries of Federated Investors for the period.
SHAREHOLDER SERVICES FEE
Under the terms of a Shareholder Services Agreement with Federated Shareholder
Services, the Fund will pay Federated Shareholder Services up to 0.25% of
average daily net assets of the Fund for the period. The fee paid to Federated
Shareholder Services is used to finance certain services for shareholders and to
maintain shareholder accounts. For the period ended January 31, 1998, the Fund
did not incur a shareholder services fee.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES
FServ, through its subsidiary, Federated Shareholder Services Company ("FSSC")
serves as transfer and dividend disbursing agent for the Fund. The fee paid to
FSSC is based on the size, type, and number of accounts and transactions made by
shareholders.
PORTFOLIO ACCOUNTING FEES
FServ maintains the Fund's accounting records for which it receives a fee. The
fee is based on the level of the Fund's average daily net assets for the period,
plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES
Organizational and/or start-up administrative service were borne initially by
the Adviser. The Fund has agreed to reimburse the Adviser for the organizational
and/or start-up administrative expenses during the five year period following
effective date.
GENERAL
Certain of the Officers and Trustees of the Trust are Officers and Directors or
Trustees of the above companies.
INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended January 31, 1998, were as follows:
PURCHASES $63,663,943
SALES $20,158,127
TRUSTEES
John F. Donahue
Thomas G. Bigley
John T. Conroy, Jr.
William J. Copeland
James E. Dowd
Lawrence D. Ellis, M.D.
Edward L. Flaherty, Jr.
Peter E. Madden
John E. Murray, Jr.
Wesley W. Posvar
Marjorie P. Smuts
OFFICERS
John F. Donahue
Chairman
Glen R. Johnson
President
J. Christopher Donahue
Executive Vice President
Edward C. Gonzales
Executive Vice President
John W. McGonigle
Executive Vice President, Treasurer, and Secretary
Richard B. Fisher
Vice President
J. Crilley Kelly
Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves risk, including possible
loss of principal. Although money market funds seek to maintain a stable net
asset value of $1.00 per share, there is no assurance that they will be able to
do so.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the fund's prospectus which contains facts concerning
its objective and policies, management fees, expenses and other information.
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Federated Institutional Short Duration Government Fund
A Portfolio of Federated Institutional Trust
SEMI-ANNUAL REPORT AND SUPPLEMENT TO PROSPECTUS
MARCH 31, 1998
Federated Securities Corp., Distributor
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
1-800-341-7400
www.federatedinvestors.com
Cusip 31420B102
G02287-01 (3/98)
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