Summary Prospectus
April 30, 2013
Fund Summary Information
Federated Intermediate Government
Fund, Inc. (the “Fund”)
RISK/RETURN SUMMARY: INVESTMENT
OBJECTIVE
The Fund's
investment objective is to provide total return.
RISK/RETURN SUMMARY: FEES AND
EXPENSES
This table describes
the fees and expenses that you may pay if you buy and hold Institutional Shares (IS) and Service Shares (SS) of the Fund.
| Shareholder Fees (fees paid directly from your investment) | IS | SS |
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) | None | None |
Maximum Deferred Sales Charge (Load) (as a percentage of original purchase price or redemption proceeds, as applicable) | None | None |
Maximum Sales Charge (Load) Imposed on Reinvested Dividends (and other Distributions) (as a percentage of offering price) | None | None |
Redemption Fee (as a percentage of amount redeemed, if applicable) | None | None |
Exchange Fee | None | None |
| Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) | ||
Management Fee | 0.40% | 0.40% |
Distribution (12b-1) Fee | None | 0.00%1 |
Other Expenses | 0.88% | 1.13% |
Total Annual Fund Operating Expenses | 1.28% | 1.53% |
Fee Waivers and/or Expense Reimbursements2 | 0.98% | 0.98% |
Total Annual Fund Operating Expenses After Fee Waivers and/or Expense Reimbursements | 0.30% | 0.55% |
| 1 | The Fund has adopted a Distribution (12b-1) Plan for its Service Shares pursuant to which the SS class of the Fund may incur or charge a Distribution (12b-1) fee of up to a maximum of 0.05%. No such fee is currently incurred or charged by the SS class of the Fund. The SS class of the Fund will not incur or charge such a Distribution (12b-1) fee until such time as approved by the Fund's Board of Directors. |
| 2 | Total Annual Fund Operating Expenses have been restated to reflect an anticipated decrease in Other Expenses. The Adviser and its affiliates have voluntarily agreed to waive their fees and/or reimburse expenses so that the total annual fund operating expenses (excluding Acquired Fund Fees and Expenses, if any) paid by the Fund's IS and SS classes (after the voluntary waivers and/or reimbursements) will not exceed 0.30% and 0.55% (the “Fee Limit”), respectively, up to but not including the later of (the “Termination Date”): (a) May 1, 2014; or (b) the date of the Fund's next effective Prospectus. While the Adviser and its affiliates currently do not anticipate terminating or increasing these arrangements prior to the Termination Date, these arrangements may only be terminated or the Fee Limit increased prior to the Termination Date with the agreement of the Fund's Board of Directors. |
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Example
This Example is
intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds.
The Example assumes
that you invest $10,000 for the time periods indicated and then redeem all of your Shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that operating
expenses are as shown in the table above and remain the same. Although your actual costs and returns may be higher or lower, based on these assumptions your costs would be:
| Share Class | 1 Year | 3 Years | 5 Years | 10 Years |
| IS | $130 | $406 | $702 | $1,545 |
| SS | $156 | $483 | $834 | $1,824 |
Portfolio Turnover
The Fund pays
transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher
taxes when Fund Shares are held in a taxable account. These costs, which are not reflected in Annual Fund Operating Expenses or in the Example, affect the Fund's performance. During the most recent fiscal year, the
Fund's portfolio turnover rate was 123% of the average value of its portfolio.
RISK/RETURN SUMMARY: INVESTMENTS,
RISKS and PERFORMANCE
What are the Fund's Main
Investment Strategies?
The Fund seeks total
return, which is defined as income plus capital appreciation. Under normal market conditions, the Fund invests primarily in Treasury, U.S. government securities, government agency and government agency-backed,
mortgage-backed securities (MBS). The Fund will only invest in MBS that are issued or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises (GSEs).
The Fund typically
seeks to maintain an overall average dollar-weighted portfolio duration that is within 20% above or 50% below the Barclays Intermediate Government Index (the “Index”) (formerly, Barclays Capital
Intermediate Government Index). At times, the Adviser's calculation of portfolio duration may result in variances outside this range. Duration is a measure of the price volatility of a fixed-income security as a
result of changes in market rates of interest, based on the weighted average timing of the instrument's expected fixed interest and principal payments. The Adviser seeks to create a portfolio, consisting of U.S.
Government securities, MBS, derivative instruments and other securities, that outperform the Index.
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Based on fundamental
analysis, the Adviser will consider a variety of factors when making decisions to purchase or sell particular securities or derivative contracts. The Fund may, but is not required to, use derivative instruments, which
are instruments that have a value based on another instrument, exchange rate or index, and may be used as substitutes for securities in which the Fund can invest, or to hedge against a potential loss in the underlying
asset. There can be no assurance that the Fund's use of derivative instruments will work as intended.
Certain of the
government securities in which the Fund invests are not backed by the full faith and credit of the U.S. government, such as those issued by the Federal Home Loan Mortgage Corporation (“Freddie Mac”), the
Federal National Mortgage Association (“Fannie Mae”), and the Federal Home Loan Bank System. These entities are, however, supported through federal subsidies, loans or other benefits. The Fund may also
invest in government securities that are supported by the full faith and credit of the U.S. government, such as those issued by the Government National Mortgage Association (“Ginnie Mae”). Finally, the
Fund may invest in a few government securities that have no explicit financial support, but which are regarded as having implied support because the federal government sponsors their activities.
Because the Fund
refers to U.S. government securities in its name, it will notify shareholders at least 60 days in advance of any change in its investment policies that would enable the Fund to invest, under normal circumstances, less
than 80% of its assets (plus any borrowings for investment purposes) in U.S. government investments.
What are the Main Risks of
Investing in the Fund?
All mutual funds
take investment risks. Therefore, it is possible to lose money by investing in the Fund. The primary factors that may reduce the Fund's returns include:
| ■ | MBS Risk. A rise in interest rates may cause the value of MBS held by the Fund to decline. Certain MBS issued by GSEs are not backed by the full faith and credit of the U.S. government. The Fund's investments in collateralized mortgage obligations (CMOs) may entail greater market, prepayment and liquidity risks than other MBS. |
| ■ | Credit Risk. It is possible that interest or principal on securities will not be paid when due. Such non-payment or default may reduce the value of the Fund's portfolio holdings, its share price and its performance. |
| ■ | Counterparty Credit Risk. It is possible that a party to a transaction involving the Fund may fail to meet its obligations. This could cause the Fund to lose the benefit of the transaction or prevent the Fund from selling or buying other securities to implement its investment strategy. |
| ■ | Interest Rate Risk. Prices of fixed-income securities generally fall when interest rates rise. |
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| ■ | Prepayment Risk. When homeowners prepay their mortgages in response to lower interest rates, the Fund will be required to reinvest the proceeds at the lower interest rates available. Also, when interest rates fall, the prices of MBS may not rise to as great an extent as those of other fixed-income securities due to the potential prepayment of higher interest mortgages. |
| ■ | Liquidity Risk. The CMOs in which the Fund invests may be less readily marketable and may be subject to greater fluctuation in price than other securities. |
| ■ | Leverage Risk. Leverage risk is created when an investment exposes the Fund to a level of risk that exceeds the amount invested. Changes in the value of such an investment magnify the Fund's risk of loss and potential for gain. |
| ■ | Risk of Investing in Derivative Instruments. The Fund's exposure to derivative contracts and hybrid instruments (either directly or through its investment in another investment company) involves risks different from, or possibly greater than, the risks associated with investing directly in securities and other traditional investments. The use of derivatives can lead to losses because of adverse movements in the price or value of the asset, index, rate or instrument underlying a derivative, due to failure of a counterparty, or the failure of the counterparty to meet its obligations under the contract, or due to tax or regulatory constraints. Derivatives may create investment leverage in the Fund, which magnifies the Fund's exposure to the underlying investment. Derivative instruments may be difficult to value, may be illiquid and may be subject to wide swings in valuation caused by changes in the value of the underlying instrument. Over-the-counter derivative contracts generally carry greater liquidity risk than exchange-traded contracts. The loss on derivative transactions may substantially exceed the initial investment. |
| ■ | Asset Segregation Risk. The requirement to secure its obligations in connection with certain transactions, including derivatives or other transactions that expose it to an obligation of another party, by owning underlying assets, entering into offsetting transactions or setting aside cash or liquid assets, may cause the Fund to miss favorable trading opportunities, or to realize losses on such offsetting transactions. |
| ■ | Technology Risk. Proprietary and third-party data and systems are utilized to support decision making for the Fund. Data imprecision, software or other technology malfunctions, programming inaccuracies and similar circumstances may impair the performance of these systems, which may negatively affect Fund performance. |
The Shares offered
by this Prospectus are not deposits or obligations of any bank, are not endorsed or guaranteed by any bank and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the
Federal Reserve Board or any other government agency.
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Performance: Bar Chart and
Table
Risk/Return Bar Chart
The bar chart and
performance table below reflect historical performance data for the Fund and are intended to help you analyze the Fund's investment risks in light of its historical returns. The bar chart shows the variability of the
Fund's IS class total returns on a calendar year-by-year basis. The Average Annual Total Return Table shows returns for each class averaged over the stated periods, and includes comparative performance information. The Fund's performance will fluctuate, and past performance (before and after taxes) is not necessarily an indication of future results. Updated performance information for the Fund
is available under the “Products” section at FederatedInvestors.com or by calling 1-800-341-7400.
The Fund's IS class total
return for the three-month period from January 1, 2013 to March 31, 2013, was 0.03%.
Within the periods shown in
the bar chart, the Fund's IS class highest quarterly return was 3.77% (quarter ended December 31, 2008). Its lowest quarterly return was (1.49)% (quarter ended December 31, 2010).
Average Annual Total Return
Table
In addition to
Return Before Taxes, Return After Taxes is shown for the Fund's IS class to illustrate the effect of federal taxes on Fund returns. After-tax returns are shown only for the IS class, and after-tax returns for the SS
class will differ from those shown for the IS class. Actual after-tax returns depend on each investor's personal tax situation, and are likely to differ from those shown. After-tax returns are calculated using a standard set of
assumptions. The stated returns assume the highest historical federal income and capital gains tax rates. These after-tax returns do not reflect the effect of any applicable state and local taxes. After-tax returns are not relevant to investors holding Shares through a 401(k) plan, an Individual Retirement Account or other tax-advantaged investment plan.
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(For the Period Ended December
31, 2012)
| 1 Year | 5 Years | 10 Years | |
| Share Class | |||
| IS: | |||
| Return Before Taxes | 2.09% | 4.05% | 3.53% |
| Return After Taxes on Distributions | 1.53% | 3.23% | 2.47% |
| Return After Taxes on Distributions and Sale of Fund Shares | 1.35% | 2.98% | 2.38% |
| SS: | |||
| Return Before Taxes | 1.89% | 3.84% | 3.30% |
| Barclays Intermediate Government Index1 (reflects no deduction for fees, expenses or taxes) | 1.73% | 4.51% | 4.10% |
| 1 | Barclays Intermediate Government Index is an unmanaged index comprised of all publicly issued, non-convertible domestic debt of the U.S. government or any agency thereof, or any quasi-federal corporation and of corporate debt guaranteed by the U.S. government. Only notes and bonds with minimum outstanding principal of $1 million and minimum maturity of one year and maximum maturity of ten years are included. |
FUND MANAGEMENT
The Fund's
Investment Adviser is Federated Investment Management Company.
Liam O'Connell,
Portfolio Manager, has been the Fund's portfolio manager since June 2005.
purchase and sale of fund
shares
You may purchase,
redeem or exchange Shares of the Fund on any day the New York Stock Exchange is open. Shares may be purchased through a financial intermediary firm that has entered into a Fund selling and/or servicing agreement with
the Distributor or an affiliate (“Financial Intermediary”) or directly from the Fund, by wire or by check. Please note that certain purchase restrictions may apply. Redeem or exchange Shares through a
financial intermediary or directly from the Fund by telephone at 1-800-341-7400 or by mail.
The minimum initial
investment amount for the Fund's IS and SS classes is generally $1,000,000 and there is no minimum subsequent investment amount. The minimum investment amount for Systematic Investment Programs is $50.
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Tax Information
The Fund's
distributions are taxable as ordinary income or capital gains except when your investment is through a 401(k) plan, an Individual Retirement Account or other tax-advantaged investment plan.
Payments to Broker-Dealers and
Other Financial Intermediaries
If you purchase the
Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and/or its related companies may pay the intermediary for the sale of Fund Shares and related services. These payments may create
a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary's website for
more information.
Federated Intermediate Government
Fund, Inc.
Federated Investors Funds
4000 Ericsson Drive
Warrendale, PA 15086-7561
Federated Investors Funds
4000 Ericsson Drive
Warrendale, PA 15086-7561
Contact us at FederatedInvestors.com
or call 1-800-341-7400.
or call 1-800-341-7400.
Federated Securities Corp.,
Distributor
Investment Company Act File No.
811-6307
CUSIP 31420H109
CUSIP 31420H208
CUSIP 31420H208
Q450227 (4/13)
Federated is a registered trademark
of Federated Investors, Inc.
2013 ©Federated Investors, Inc.
2013 ©Federated Investors, Inc.