SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 10, 2003
FEDERATED PREMIER INTERMEDIATE MUNICIPAL INCOME FUND
(Exact name of registrant as specified in its charter)
Delaware 001-31563 47-1284989
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7000
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (800) 341-7400
Item 9. Regulation FD Disclosure.
The following information is furnished pursuant to Item 9 of Form 8-K :
Following is information that may be made publicly available on or after
April 10, 2003.
Information as of 3/31/03 unless otherwise noted.
Overview
Objective:
Current income exempt from federal income tax, including the
alternative minimum tax (AMT)
Recommended Benchmark
Lehman Brothers Aggregate
Municipal Bond Index
Pricing
Market Price $13.60 (Source: Bloomberg)
Daily NAV $14.42
Portfolio Managers
Mary Jo Ochson, CFA - Began Managing Fund: 12/02
Lee R. Cunningham, II - Began Managing Fund: 12/02
R.J. Gallo - Began Managing Fund: 12/02
Yield (%)
Current Yield based on Market Price 5.51
Current Yield based on NAV 5.20
Taxable Equivalent Market Yield* 8.97
Dividends
Paid Monthly
Record Date: 23rd or the preceding business day of the month
3/03 $0.06250
2/03 $0.06250
Fund History
NYSE Ticker FPT
CUSIP 31423M105
Inception 12/20/02
Inception NAV $14.33
Inception Share Price $15.00
Investment Concentration
Intermediate-term municipal securities
Portfolio Assets
$161.7 million
Portfolio Profile
Weighted Average Effective Maturity 9.07 Years
Weighted Average Effective Duration 8.47 Years
to Common**
Weighted Average Effective Duration 5.26 Years
to Gross
Weighted Average Quality Aa2/AA (Rated Only)
Number of Securities 90
Information as of 3/31/03 unless otherwise noted.
Portfolio Manager Commentary
Fund Performance
The fund's NAV declined 1.3% during March to end at $14.42. Based on NAV,
the fund's total return, which includes the monthly dividend of 6.25 cents per
share, was (0.87)%. A combination of a rise in market yields on the fund's large
holdings of AAA insured bonds and sharply falling prices on the fund's modest
holdings in municipal tobacco settlement bonds accounted for the decline in NAV.
Despite its decline in March, the NAV of the fund remains above its level at
fund inception.
The fund's market price declined 3.1% over the month to end at $13.60.
Based on the market price, the fund's total return for March was (2.71)%. The
market price discount to NAV widened from 3.9% at the end of February to 5.7% at
the end of March.
Amid heightened interest rate volatility, the discount of price to NAV
widened and the market price traded in a wide range. The discount reached its
widest level of 7.24% on March 18 and the market price reached its lowest
closing level of $13.32 on March 25. The discount narrowed and the market price
rose by month-end. Trading volume of the fund's common shares on the NYSE
averaged about 13,800 shares/day.
The annualized current yield of the fund relative to its month-end closing
market price was 5.51%, which equates to 8.97% on a taxable equivalent basis.
Municipal Market
Uncertainty regarding the likely length and economic effects of the war in
Iraq resulted in high volatility in fixed income and equity markets. Economic
data generally suggesting a weakening U.S. economy seemed to have little effect
on fixed income market direction as market participants focused largely on the
latest war news and the reactions in U.S. stock markets. As an indicator of the
level of volatility, the ten-year AAA municipal bond yield ranged from 3.39% to
3.85% during the month, and the high and low observations occurred within seven
trading days. On net, the AAA ten-year yield ended the month up seven basis
points at 3.63%, and yields across the municipal yield curve rose two to nine
basis points. (All AAA muni yields from Municipal Market Data.)
The ratio of municipal bond to Treasury bond yields remained near
historically high levels across the yield curve. The primary reasons include
high demand for Treasury debt in a time of heightened uncertainty, heavy
municipal bond issuance and the potential for additional tax reform.
The slope of the municipal yield curve remained steep, with the difference
between one-year and 10-year AAA yields ranging from 235 to 276 basis points.
The steep curve continues to allow for the highly profitable use of leverage to
enhance the dividend to common shareholders. The fund paid an average of 1.03%
in preferred share dividends in March, while the capital contributed by
preferred shareholders was invested in the fund's portfolio of intermediate
municipal bonds, which had an average yield to effective maturity of 4.30% for
the month.
Commentary
The total return on the Lehman Brothers Aggregate Municipal Bond Index was
0.06% for the month, with general obligation bonds outperforming revenue bonds.
A small sector of the revenue bond universe, tobacco settlement bonds, faced
sharply falling prices in late March due to adverse litigation developments
weighing heavily on the credit quality of Philip Morris USA. This company is
currently responsible for the payment of nearly 50% of revenues that secure such
bonds.
Investment Strategy
The fund's portfolio management team continued to evaluate opportunities to
increase holdings of bonds rated BBB or lower, consistent with the fund's income
objective. The fund purchased such securities in the private higher education,
special tax and electricity & gas sectors during the month. In addition, the
portfolio managers implemented strategies to modestly shorten portfolio duration
in order to decrease the sensitivity of the fund's NAV to market interest rates.
Lastly, amid heightened uncertainty surrounding the financial status of Philip
Morris USA and the related deterioration in the credit quality of municipal
tobacco settlement bonds, the portfolio managers reduced the fund's holdings of
such municipal securities.
Information as of 3/31/03 unless otherwise noted.
Performance/Portfolio Composition
Cumulative Total Return (%)
1 month Since Inception
(12/20/02)
Share Price (2.71) (8.54)
NAV (based on $15.00) (5.34) (3.09)
NAV (based on $14.33) (0.87) 1.50
Premium/Discount of Market Price to NAV
5.69% Discount
Sector Breakdown (Top Six) (%)
Total % of Portfolio: 86.02%
Insured 51.87
Hospital 10.22
Special Tax 7.49
Public Power 5.66
Lifecare 5.66
Electric and Gas 5.12
Quality Breakdown (%)
AAA 53.21
AA/A 19.33
BBB 17.05
BB/B/Non Rated 10.41
Top Ten Holdings
Total % of Portfolio: 25.14%
Metropolitan Transportation Authority, NY 2.96%
*Pennsylvania State IDA, Economic Development 2.84%
Salt River Project, AZ, Agricultural 2.83%
Improvement & Power
California State, Refunding UT GO Bonds 2.76%
*Alaska State Housing Finance Corp. 2.70%
*Delaware Health Facilities Authority 2.61%
*Austin, TX, Electric Utility System 2.18%
*San Francisco, CA, City and County 2.15%
Airport Commission
North Carolina Municipal Power Agency No. 1 2.07%
Kentucky Economic Development Finance 2.04%
*Insured
Preferred Share Ratings
Moody's Aaa
Fitch AAA
Face Value of Preferred Shares $61,025,000
*Taxable Equivalent Market Yields - In calculating these yields, the market
yield is divided by (1 minus the applicable tax rate). The maximum federal tax
rate (38.6%) is used when calculating the taxable equivalent market yield.
Federal Tax Rates are based on the 2003 rates as stated in the Economic Growth
and Tax Relief Reconciliation Act of 2001.
**Duration is a measure of a security's price sensitivity to changes in
interest rates. Securities with longer durations are more sensitive to changes
in interest rates than securities of shorter durations. The Fund is a closed-end
fund.Unlike open-end funds, closed-end funds are not continually offered.There
is a one-time public offering, and once issued, shares of closed-end funds are
bought and sold in the open market.Consequently, shares of closed-end funds may
trade at, above or below their net asset values ("NAV").
If a closed-end fund's shares trade at a price below their NAV, they are
said to be trading at a "discount." Conversely, if a closed-end fund's shares
trade at a price above their NAV, they are said to be trading at a "premium."
Shares of closed-end funds frequently trade at a discount. The Fund offers
Common Shares and Preferred Shares. The Pricing, Yield, Dividends, Fund History
and Total Return information provided herein relates to Common Shares only.
Unlike Preferred Shares, Common Shares are not rated.
The Fund's issuance of Preferred Shares creates leverage risks for holders
of Common Shares.Two major types of risks created by leverage include: (1) the
likelihood of greater volatility of NAV and market price of Common Shares,
because changes in the value of the Fund's portfolio securities are borne
entirely by holders of Common Shares; and (2) the possibility either that income
available for Common Share dividends will fall if the Preferred Shares dividend
rate rises, or that income available for Common Shares dividends will fluctuate
because the Preferred Shares dividend rate varies.
The Fund invests in high-yield, lower-rated securities that generally
entail greater market, credit and liquidity risks than investment-grade
securities.
Please refer to the Fund's prospectus for more information on the risks
associated with an investment in the Fund.
Income may be subject to state and local taxes.
Past performance is no guarantee of future results. Total return, price,
yields, and NAV will fluctuate.
Total returns of less than 1 year are cumulative.
Portfolio composition is subject to change.
Credit ratings pertain only to the securities in the Fund's portfolio and
do not protect the Fund against market risk.
For additional information, including definitions of related terms and
indexes, see the Financial Glossary and Benchmark Index Glossary.
The Fund's Common Shares are only available for purchase and sale on the
New York Stock Exchange at the current market price. Common Shares may trade at
a discount to NAV.
Consult your investment professional for further information.
Not FDIC Insured May Lose Value No Bank Guarantee
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly
authorized.
FEDERATED PREMIER INTERMEDIATE MUNICIPAL INCOME FUND
(Registrant)
By /s/ Mary Jo Ochson
Mary Jo Ochson
Vice President
Date: April 10, 2003