1940 Act File No.811-08519
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. .....................................
FEDERATED CORE TRUST
(Exact Name of Registrant as Specified in Charter)
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7000
(Address of Principal Executive Offices)
(412) 288-1900
(Registrant's Telephone Number)
John W. McGonigle, Esquire,
Federated Investors Tower,
Pittsburgh, Pennsylvania 15222-3779
(Name and Address of Agent for Service)
Copies To:
Matthew G. Maloney, Esquire
Dickstein Shapiro Morin & Oshinsky LLP
2101 L. Street, N.W.
Washington, D.C. 20037
PART A
INFORMATION REQUIRED IN A PROSPECTUS
Items 1, 2, 3 and 5A of Part A are omitted pursuant to Item F.3. of the General
Instructions to Form N-1A.
ITEM 4. GENERAL DESCRIPTION OF REGISTRANT.
Federated Core Trust, a Massachusetts business trust, (the "Trust") is a
diversified, open-end management investment company registered under the
Investment Company Act of 1940 (the "1940 Act"). The Trust was organized on
August 21, 1996. The Declaration of Trust permits the Trust to offer separate
series of shares of beneficial interest representing interests in separate
portfolios of securities ("Series"). As of the date of this registration
statement, the Board of Trustees ("Trustees") has established one diversified
Series of the Trust known as High-Yield Bond Portfolio (the "Portfolio").
Beneficial interests in the Portfolio are issued solely in private placement
transactions which do not involve any "public offering" within the meaning of
Section 4(2) of the Securities Act of 1933 (the "1933 Act"). Investments in the
Portfolio may only be made by investment companies, insurance company separate
accounts, common or commingled trust funds or similar organizations or entities
that are "accredited investors" within the meaning of Regulation D under the
1933 Act. This Registration Statement does not constitute an offer to sell, or
the solicitation of an offer to buy, any "security" within the meaning of the
1933 Act.
The Portfolio has been created and is managed to provide a convenient vehicle
for certain publicly offered funds, for which a subsidiary of Federated
Investors serves as investment adviser, and other accredited investors to
participate conveniently and economically in the high-yield bond sector of the
fixed-income securities market.
INVESTMENT OBJECTIVES AND POLICIES
Investment Objective
The investment objective of the Portfolio is to seek high current income. The
investment objective cannot be changed without approval of shareholders. While
there is no assurance that the Portfolio will achieve its investment objective,
it endeavors to do so by following the investment policies described in this
prospectus.
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Investment Policies
Unless stated otherwise, the Trustees can change the investment policies without
the approval of shareholders. Shareholders will be notified before any material
change becomes effective. The Portfolio endeavors to achieve its objective by
investing primarily in a professionally managed, diversified portfolio of fixed
income securities. The fixed income securities in which the Portfolio intends to
invest are lower-rated corporate debt obligations, which are commonly referred
to as "junk bonds." Some of these fixed income securities may involve equity
features. Capital growth will be considered, but only when consistent with the
investment objective of high current income.
ACCEPTABLE INVESTMENTS. The Portfolio invests at least 65% of its assets in
lower-rated fixed income securities. Under normal circumstances, the Portfolio
will not invest more than 10% of the value of its total assets in common equity
securities and their equivalents. The fixed income securities in which the
Portfolio invests include, but are not limited to:
o preferred stocks;
o bonds;
o debentures;
o notes;
o equipment lease certificates; and
o equipment trust certificates.
The securities in which the Portfolio may invest are generally rated BBB or
lower by Standard & Poor's Ratings Group ("S&P") or Fitch Investors Service
("Fitch") or Baa or lower by Moody's Investors Service, Inc. ("Moody's"), or are
not rated but are determined by the Portfolio's investment adviser to be of
comparable quality, and may include bonds in default. Securities which are rated
BBB or lower by S&P or Fitch or Baa or lower by Moody's have speculative
characteristics. Changes in economic conditions or other circumstances are more
likely to lead to weakened capacity to make principal and interest payments than
highly rated bonds. A description of the rating categories is contained in the
Appendix to this prospectus. There is no lower limit with respect to rating
categories for securities in which the Portfolio may invest. See "Investment
Risks" below.
FOREIGN SECURITIES. The Portfolio may invest in foreign securities, including
foreign securities not publicly traded in the United States, which may include
any of the types of securities described above (see "Acceptable Investments").
Investments in foreign securities, particularly those of non-governmental
issuers, involve considerations which are not ordinarily associated with
investments in domestic issuers. These considerations include the possibility of
expropriation, the unavailability of financial information or the difficulty of
interpreting financial information prepared under foreign accounting standards,
less liquidity and more volatility in foreign securities markets, the impact of
political, social, or diplomatic developments, and the difficulty of assessing
economic trends in foreign countries. It may also be more difficult to enforce
contractual obligations abroad than would be the case in the United States
because of differences in the legal systems. Transaction costs in foreign
securities may be higher. The adviser will consider these and other factors
before investing in foreign securities and will not make such investments
unless, in its opinion, such investments will meet the Portfolio's standards and
objectives.
CONVERTIBLE SECURITIES. The Portfolio may invest in convertible securities.
Convertible securities include a spectrum of securities which can be exchanged
for or converted into common stock. Convertible securities may include, but are
not limited to: convertible bonds or debentures; convertible preferred stock;
units consisting of usable bonds and warrants; or securities which cap or
otherwise limit returns to the convertible security holder, such as DECS
(Dividend Enhanced Convertible Stock, or Debt Exchangeable for Common Stock when
issued as a debt security), LYONS (Liquid Yield Option Notes, which are
corporate bonds that are purchased at prices below par with no coupons and are
convertible into stock), PERCS (Preferred Equity Redemption Cumulative Stock, an
equity issue that pays a high cash dividend, has a cap price and mandatory
conversion to common stock at maturity), and PRIDES (Preferred Redeemable
Increased Dividend Securities, which are essentially the same as DECS; the
difference is little more than who initially underwrites the issue).
Convertible securities are often rated below investment grade or not rated
because they fall below debt obligations and just above common equity in order
of preference or priority on the issuer's balance sheet. Convertible securities
rated below investment grade may be subject to some of the same risks as
lower-rated bonds.
TEMPORARY INVESTMENTS. The Portfolio may invest temporarily in cash and
short-term obligations for defensive purposes during times of unusual
market conditions. Short-term obligations may include:
o certificates of deposit;
o commercial paper rated A-1 or A-2 by S&P, Prime-1 or Prime-2 by Moody's,
or F-1 or F-2 by Fitch and variable rate demand master notes;
o short-term notes;
o obligations issued or guaranteed as to principal and interest by the U.S.
government or any of its agencies or instrumentalities; and
o repurchase agreements.
REPURCHASE AGREEMENTS. The Portfolio will engage in repurchase agreements.
Repurchase agreements are arrangements in which banks, broker/dealers, and other
recognized financial institutions sell U.S. government securities or other
securities to the Portfolio and agree at the time of sale to repurchase them at
a mutually agreed upon time and price. The Portfolio or its custodian will take
possession of the securities subject to repurchase agreements and these
securities will be marked to market daily. To the extent that the original
seller does not repurchase the securities from the Portfolio, the Portfolio
could receive less than the repurchase price on any sale of such securities.
In the event that such a defaulting seller filed for bankruptcy or became
insolvent, disposition of such securities by the Portfolio might be delayed
pending court action. The Portfolio believes that, under the regular procedures
normally in effect for custody of the Portfolio's portfolio securities subject
to repurchase agreements, a court of competent jurisdiction would rule in favor
of the Portfolio and allow retention or disposition of such securities. The
Portfolio will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are found by
the Portfolio's adviser to be creditworthy pursuant to guidelines established by
the Trustees.
RESTRICTED AND ILLIQUID SECURITIES. The Portfolio may invest in restricted
securities. Restricted securities are any securities in which the Portfolio may
otherwise invest pursuant to its investment objective and policies, but which
are subject to restrictions on resale under federal securities law. Under
criteria established by the Trustees, certain restricted securities are
determined to be liquid. To the extent that restricted securities are not
determined to be liquid, the Portfolio will limit their purchase together with
other illiquid securities including non-negotiable time deposits, and repurchase
agreements providing for settlement in more than seven days after notice, to 15%
of its net assets.
LENDING OF PORTFOLIO SECURITIES. In order to generate additional income, the
Portfolio may lend portfolio securities on a short-term or long-term basis, or
both, up to one-third of the value of its total assets, to broker/dealers,
banks, or other institutional borrowers of securities. This is a fundamental
policy which may not be changed without shareholder approval. The Portfolio will
only enter into loan arrangements with broker/dealers, banks, or other
institutions which the investment adviser has determined are creditworthy under
guidelines established by the Trustees and will receive collateral in the form
of cash or U.S. government securities equal to at least 100% of the value of the
securities loaned at all times.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Portfolio may purchase
securities on a when-issued or delayed delivery basis. These transactions are
arrangements in which the Portfolio purchases securities with payment and
delivery scheduled for a future time. The seller's failure to complete these
transactions may cause the Portfolio to miss a price or yield considered to be
advantageous. Settlement dates may be a month or more after entering into these
transactions, and the market values of the securities purchased may vary from
the purchase prices.
The Portfolio may dispose of a commitment prior to settlement if the adviser
deems it appropriate to do so. In addition, the Portfolio may enter into
transactions to sell its purchase commitments to third parties at current market
values and simultaneously acquire other commitments to purchase similar
securities at later dates. The Portfolio may realize short-term profits or
losses upon the sale of such commitments.
INVESTMENT RISKS
The prices of fixed income securities fluctuate inversely to the direction of
interest rates.
The corporate debt obligations in which the Portfolio invests are usually not in
the three highest rating categories of the nationally recognized statistical
rating organizations (AAA, AA, or A for S&P or Fitch, and Aaa, Aa or A for
Moody's), but are in the lower rating categories or are unrated but are of
comparable quality and are regarded as having predominately speculative
characteristics. Lower-rated or unrated bonds are commonly referred to as "junk
bonds." There is no minimal acceptable rating for a security to be purchased or
held in the Portfolio's portfolio, and the Portfolio may, from to time, purchase
or hold securities rated in the lowest rating category and may include bonds in
default. A description of the rating categories is contained in the Appendix.
Lower-rated securities will usually offer higher yields than higher-rated
securities. However, there is more risk associated with these investments. This
is because of reduced creditworthiness and increased risk of default.
Lower-rated securities generally tend to reflect short-term corporate and market
developments to a greater extent than higher-rated securities which react
primarily to fluctuations in the general level of interest rates. Short-term
corporate and market developments affecting the prices or liquidity of
lower-rated securities could include adverse news affecting major issuers,
underwriters, or dealers in lower-rated securities. In addition, since there are
fewer investors in lower-rated securities, it may be harder to sell the
securities at an optimum time. As a result of these factors, lower-rated
securities tend to have more price volatility and carry more risk to principal
and income than higher-rated securities.
An economic downturn may adversely affect the value of some lower-rated bonds.
Such a downturn may especially affect highly leveraged companies or companies in
cyclically sensitive industries, where deterioration in a company's cash flow
may impair its ability to meet its obligation to pay principal and interest to
bondholders in a timely fashion. From time to time, as a result of changing
conditions, issuers of lower-rated bonds may seek or may be required to
restructure the terms and conditions of the securities they have issued. As a
result of these restructurings, holders of lower-rated securities may receive
less principal and interest than they had bargained for at the time such bonds
were purchased.
In the event of a restructuring, the Portfolio may bear additional legal or
administrative expenses in order to maximize recovery from an issuer.
The Portfolio may, from time to time, own zero coupon bonds or pay-in-kind
securities. A zero coupon bond makes no periodic interest payments and the
entire obligation becomes due only upon maturity. Pay-in-kind securities make
periodic payments in the form of additional securities (as opposed to cash). The
price of zero coupon bonds and pay-in-kind securities are generally more
sensitive to fluctuations in interest rates than are conventional bonds.
Additionally, federal tax law requires that interest on zero coupon bonds and
pay-in-kind securities be reported as income to the Portfolio even though the
Portfolio received no cash interest until the maturity or payment date of such
securities.
Many corporate debt obligations, including many lower-rated bonds, permit the
issuers to call the security and thereby redeem their obligations earlier than
the stated maturity dates. Issuers are more likely to call bonds during periods
of declining interest rates. In these cases, if the Portfolio owns a bond which
is called, the Portfolio will receive its return of principal earlier than
expected and would likely be required to reinvest the proceeds at lower interest
rates, thus reducing income to the Portfolio.
REDUCING RISKS OF LOWER-RATED SECURITIES. The Portfolio's investment adviser
believes that the risks of investing in lower-rated securities can be reduced.
The professional portfolio management techniques used by the Portfolio to
attempt to reduce these risks include:
CREDIT RESEARCH. The Portfolio's investment adviser will perform its own credit
analysis in addition to using recognized rating agencies and other sources,
including discussions with the issuer's management, the judgment of other
investment analysts, and its own informed judgment. The adviser's credit
analysis will consider the issuer's financial soundness, its responsiveness to
changes in interest rates and business conditions, and its anticipated cash
flow, interest, or dividend coverage and earnings. In evaluating an issuer, the
adviser places special emphasis on the estimated current value of the issuer's
assets rather than historical cost.
DIVERSIFICATION. The Portfolio invests in securities of many different
issuers, industries, and economic sectors to reduce portfolio risk.
ECONOMIC ANALYSIS. The Portfolio's adviser will analyze current developments and
trends in the economy and in the financial markets. When investing in
lower-rated securities, timing and selection are critical, and analysis of the
business cycle can be important.
INVESTMENT LIMITATIONS
The Portfolio will not borrow money directly or through reverse repurchase
agreements (arrangements in which the Portfolio sells a portfolio instrument for
a percentage of its cash value with an agreement to buy it back on a set date),
or pledge securities except, under certain circumstances, the Portfolio may
borrow money and engage in reverse repurchase agreements in amounts up to
one-third of the value of its total assets and pledge up to 15% of the value of
those assets to secure such borrowings.
The above investment limitations cannot be changed without shareholder approval.
The following limitation, however, can be changed by the Trustees without
shareholder approval. Shareholders will be notified before any material change
in this limitation becomes effective.
The Portfolio will not invest more than 15% of its net assets in illiquid
securities.
ITEM 5. MANAGEMENT OF THE TRUST
(a) BOARD OF TRUSTEES. The Trust is managed by a Board of Trustees. The Trustees
are responsible for managing the business affairs of the Trust and for
exercising all of the Trust's powers except those reserved for the shareholders.
An Executive Committee of the Board of Trustees handles the Board's
responsibilities between meetings of the Board.
(b) ADVISER. Pursuant to an investment advisory contract with the Trust,
investment decisions for the Portfolio are made by Federated Research Corp., the
Portfolio's investment adviser, subject to direction by the Trustees. The
adviser continually conducts investment research and supervision for the
Portfolio and is responsible for the purchase or sale of portfolio instruments.
Federated Research Corp. is located at Federated Investors Tower, Pittsburgh, PA
15222-3779.
ADVISORY FEES. - The Adviser will provide investment advisory services at
no fee.
ADVISER'S BACKGROUND. Federated Research Corp., a Delaware business trust,
organized on June 14, 1990, is a registered investment adviser under the
Investment Advisers Act of 1940. It is a subsidiary of Federated Investors. All
of the Class A (voting) shares of Federated Investors are owned by a trust, the
trustees of which are John F. Donahue, Chairman and Trustee of Federated
Investors, Mr. Donahue's wife, and Mr. Donahue's son, J. Christopher Donahue,
who is President and Trustee of Federated Investors.
Federated Research Corp. and other subsidiaries of Federated Investors serve as
investment advisers to a number of investment companies and private accounts.
Certain other subsidiaries also provide administrative services to a number of
investment companies. With over $110 billion invested across over 300 funds
under management and/or administration by its subsidiaries, as of December 31,
1996, Federated Investors is one of the largest mutual fund investment managers
in the United States. With more than 2,000 employees, Federated continues to be
led by the management who founded the company in 1955. Federated funds are
presently at work in and through 4,500 financial institutions nationwide.
Both the Portfolio and the adviser have adopted strict codes of ethics governing
the conduct of all employees who manage the Portfolio and its portfolio
securities. These codes recognize that such persons owe a fiduciary duty to the
Portfolio's shareholders and must place the interests of shareholders ahead of
the employees' own interest. Among other things, the codes: require preclearance
and periodic reporting of personal securities transactions; prohibit personal
transactions in securities being purchased or sold, or being considered for
purchase or sale, by the Portfolio; prohibit purchasing securities in initial
public offerings; and prohibit taking profits on securities held for less than
sixty days.
Violations of the codes are subject to review by the Trustees, and could result
in severe penalties.
(c) Mark E. Durbiano has been the Portfolio's portfolio manager since inception.
Mr. Durbiano joined Federated Investors in 1982 and has been a Senior Vice
President of the Portfolio's investment adviser since January 1996. From 1988
through 1995, Mr. Durbiano was a Vice President of the Portfolio's investment
adviser. Mr. Durbiano is a Chartered Financial Analyst and received his M.B.A.
in Finance from the University of Pittsburgh.
(d) Federated Services Company, a subsidiary of Federated Investors, provides
administrative personnel and services (including certain legal and financial
reporting services) necessary to operate the Portfolio. Federated Services
Company provides these at an annual rate of 0.05% of the average aggregate daily
net assets.
(e) Federated Services Company, through its registered transfer agent Federated
Shareholder Services Company, maintains all necessary shareholder records. For
its services, the transfer agent receives a fee based on the size, type and
number of accounts and transactions made by shareholders.
(f) The expenses of the Trust include the compensation of its Trustees who are
not affiliated with the investment managers or Federated Services Company;
governmental fees; interest charges; taxes; fees and expenses of independent
auditors, of legal counsel and of any transfer agent, custodian, registrar or
portfolio accounting agent of the Trust; insurance premiums; and expenses of
calculating the net asset value of, and the net income on, interests in the
Portfolio.
(g) Not applicable.
ITEM 6. CAPITAL STOCK AND OTHER SECURITIES
(a) Certificates representing an investor's beneficial interest in the Portfolio
will not be issued. Holders of the Trust's shares of beneficial interest will
have equal rights to participate in distributions made by the Portfolio, equal
rights to the Portfolio's assets upon dissolution and equal voting rights; the
Portfolio does not allow cumulative voting. Investors will have no pre-emptive
or other right to subscribe to any additional shares of beneficial interest or
other securities issued by the Trust. Shares may be redeemed at any time at net
asset value with no charge.
(b) Not applicable
(c) Not applicable
(d) Not applicable
(e) Investor inquiries regarding the Trust should be directed to Federated
Core Trust, Federated Investors Funds, 5800 Corporate Drive,
Pittsburgh, Pennsylvania
15237-7000 (1-800-341-7400).
(f) Dividends on shares of the Portfolio are declared and paid daily.
(g) The Trust intends to qualify as a Regulated Investment Company under
Subchapter M of the Internal Revenue Code of 1986 (the "Code"). As such, the
Trust will distribute all of its net income and capital gains to its
shareholders and such distributions will be taxable as such to its shareholders;
while shareholders may be proportionately liable for taxes on income and gains
of the Trust, shareholders not subject to tax on their income will not be
required to pay tax on amounts distributed to them; the Trust will inform its
shareholders of the amount and nature of such income and gains distributed.
(h) Not applicable.
ITEM 7. PURCHASE OF SECURITIES BEING OFFERED
(a) Beneficial interests in the Portfolio are issued solely in private placement
transactions which do not involve any "public offering" within the meaning of
Section 4(2) of the 1933 Act. See Item 4 above.
Federated Securities Corp., Federated Investors Tower, 1001 Liberty Avenue,
Pittsburgh, Pennsylvania 15222-3779 serves as the Trust's Placement Agent. It is
a Pennsylvania corporation organized on November 14, 1969, and is the principal
distributor for a number of investment companies. Federated Securities Corp.
receives no fee for its services as Placement Agent for the Trust. Federated
Securities Corp. is a wholly-owned subsidiary of Federated Investors.
(b - c) The net asset value ("NAV") of shares of the Portfolio is determined as
of the close of trading (normally 4:00 p.m., Eastern time) on the New York Stock
Exchange ("NYSE"), Monday through Friday, except on: (i) days on which there are
not sufficient changes in the value of a Portfolio's portfolio securities that
its NAV might be materially affected; (ii) days on which no shares are tendered
for redemption and no orders to purchase shares are received; or (iii) the
following holidays: New Year's Day, Martin Luther King Day, Presidents' Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day. Any day on which the Portfolio may determine its net asset value,
as described above, may hereinafter be referred to as a "Valuation Day."
The Portfolio accepts purchase orders for shares of the Portfolio at the NAV per
share of the Portfolio next determined on each Valuation Day. There is no sales
charge on the purchase of shares.
Purchase orders for shares of the Portfolio will receive, on any Valuation Day,
the net asset value next determined following receipt by Federated Shareholder
Services Company, the Trust's transfer agent (the "Transfer Agent") of such
order. If the purchase order is received by the Transfer Agent prior to 4:00
p.m. Eastern time and payment in the form of federal funds is received on that
day by State Street Bank and Trust Company, as the Trust's custodian (the
"Custodian"), the shareholder will receive the dividend declared on that day. If
the purchase order is received by the Transfer Agent after 4:00 p.m. (Eastern
time), the shareholder will receive the dividend declared on the following day
even if the Custodian receives federal funds on that day.
Certificates for shares will not be issued. Each shareholder's account will be
maintained by the Transfer Agent.
The NAV per share of the Portfolio is computed by dividing the value of the
Portfolio's assets, less all liabilities, by the total number of shares
outstanding.
The Trust reserves the right to cease accepting investments in the Portfolio at
any time or to reject any investment order.
(d) There is no minimum required initial or subsequent investment amount.
(e) Not applicable.
(f) Not applicable.
(g) Not applicable.
ITEM 8. REDEMPTION OR REPURCHASE
(a) Shareholders may redeem shares at the net asset value per share next
determined on each Valuation Day. Redemption requests should be transmitted by
customers in accordance with procedures established by the Transfer Agent.
Redemption requests for shares of the Portfolio transmitted to the Transfer
Agent prior to 4:00 p.m. Eastern time on each Valuation Day will be redeemed at
the net asset value per share next determined and the redemption proceeds
normally will be delivered to the shareholder's account on that day; no dividend
will be paid on the day of redemption. Redemption requests received by the
Transfer Agent after 4:00 p.m. (Eastern time) on each Valuation Day will be
redeemed at the net asset value per share next determined and redemption
proceeds normally will be delivered to the shareholder's account the following
day; shares redeemed in this manner will receive the dividend declared on the
day of the redemption. Payments for redemptions will in any event be made within
seven calendar days following receipt of the request.
The right of any investor to receive payment with respect to any withdrawal may
be suspended or the payment of the withdrawal proceeds postponed during any
period in which the NYSE is closed (other than weekends or holidays) or trading
on the NYSE is restricted or, to the extent otherwise permitted by the 1940 Act,
if an emergency exists. (b) Not applicable. (c) Not applicable. (d) See Item
8(a) above.
ITEM 9. PENDING LEGAL PROCEEDINGS
NONE
APPENDIX
STANDARD AND POOR'S RATINGS GROUP CORPORATE BOND RATINGS
AAA--Debt rated AAA has the highest rating assigned by Standard & Poor's Ratings
Group. Capacity to pay interest and repay principal is extremely strong.
AA--Debt rated AA has a very strong capacity to pay interest and repay principal
and differs from the higher rated issues only in small degree.
A--Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB--Debt rated BBB is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB--Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB- rating.
B--Debt rated B has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal payments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal. The B rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied BB or BB
rating.
CCC--Debt rated CCC has a currently identifiable vulnerability to default and is
dependent upon favorable business, financial, and economic conditions to meet
timely payment of interest and repayment of principal.
CC--The rating CC typically is applied to debt subordinated to senior debt that
is assigned an actual or implied CCC debt rating.
C--The rating C typically is applied to debt subordinated to senior debt which
is assigned an actual or implied CCC- debt rating. The C rating may be used to
cover a situation where a bankruptcy petition has been filed but debt service
payments are continued.
CI--The rating CI is reserved for income bonds on which no interest is being
paid.
D--Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless Standard & Poor's believes that
such payments will be made during such grace period. The D rating also will be
used upon the filing of a bankruptcy petition if debt service payments are
jeopardized.
MOODY'S INVESTORS SERVICE, INC., CORPORATE BOND RATINGS
AAA--Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as
"gilt-edged." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
AA--Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A--Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper-medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
BAA--Bonds which are rated Baa are considered as medium-grade obligations (i.e.,
they are neither highly protected nor poorly secured). Interest payments and
principal security appear adequate for the present, but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and, in
fact, have speculative characteristics as well.
BA--Bonds which are Ba are judged to have speculative elements; their future
cannot be considered as well-assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded during
both good and bad times over the future.
Uncertainty of position characterizes bonds in this class.
B--Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
CAA--Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
CA--Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
C--Bonds which are rated C are the lowest rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
FITCH INVESTORS SERVICE, INC., LONG-TERM DEBT RATINGS
AAA--Bonds considered to be investment grade and of the highest credit quality.
The obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.
AA--Bonds considered to be investment grade and of very high credit quality. The
obligor's ability to pay interest and repay principal is very strong, although
not quite as strong as bonds rated AAA. Because bonds rated in the AAA and AA
categories are not significantly vulnerable to foreseeable future developments,
short-term debt of these issuers is generally rated F-1+.
A--Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditionsand
circumstances than bonds with higher ratings.
BBB--Bonds considered to be investment grade and of satisfactory credit quality.
The obligator's ability to pay interest and repay principal is considered to be
adequate. Adverse changes in economic conditions and circumstances, however, are
more likely to have adverse impact on these bonds, and, therefore, impair timely
payment. The likelihood that the ratings of these bonds will fall below
investment grade is higher than for bonds with higher ratings.
BB--Bonds are considered speculative. The obligor's ability to pay interest and
repay principal may be affected over time by adverse economic changes. However,
business and financial alternatives can be identified which couldassist the
obligor in satisfying its debt service requirements.
B--Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued timely
payment of principal and interest reflects the limited margin of safety and the
need for reasonable business and economic activity throughout the life of the
issue.
CCC--Bonds have certain identifiable characteristics which, if not remedied, may
lead to default. The ability to meet obligations requires an advantageous
business and economic environment.
CC--Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.
C--Bonds are in imminent default in payment of interest or principal.
DDD, DD, AND D--Bonds are in default on interest and/or principal payments. Such
bonds are extremely speculative and should be valued on the basis of their
ultimate recovery value in liquidation or reorganization of the obligor. DDD
represents the highest potential for recovery on these bonds, and D represents
the lowest potential for recovery.
STANDARD AND POOR'S RATINGS GROUP COMMERCIAL PAPER RATINGS
A-1--This designation indicates that the degree of safety regarding timely
payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics are denoted with a plus (+) sign
designation.
A-2--Capacity for timely payment on issues with this designation is strong.
However, the relative degree of safety is not as high as for issues designated
A-1.
MOODY'S INVESTORS SERVICE, INC., COMMERCIAL PAPER RATINGS
P-1--Issuers rated PRIME-1 (or related supporting institutions) have a superior
capacity for repayment of short-term promissory obligations. Prime-1 repayment
capacity will normally be evidenced by the following characteristics: leading
market positions in well-established industries; high rates of return on funds
employed; conservative capitalization structure with moderate reliance on debt
and ample asset protection; broad margins in earning coverage of fixed financial
charges and high internal cash generation; and well-established access to a
range of financial markets and assured sources of alternate liquidity.
P-2--Issuers rated PRIME-2 (or related supporting institutions) have a strong
capacity for repayment of short-term promissory obligations. This will normally
be evidenced by many of the characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, will be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
FITCH INVESTORS SERVICE, INC., SHORT-TERM DEBT RATINGS
F-1+--Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-1--Very Strong Credit Quality. Issues assigned this rating reflect anassurance
of timely payment only slightly less in degree than issues rated F-1+.
F-2--Good Credit Quality. Issues carrying this rating have a satisfactory
degree of assurance for timely payment.
PART B.
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
ITEM 10. COVER PAGE
High-Yield Bond Portfolio (the "Portfolio") is a diversified, open-end
management investment company.
This Part B, dated December 30, 1997, is not a prospectus but contains
information in addition to and more detailed than that set forth in Part A,
dated December 30, 1997, and should be read in conjunction with Part A. Part A
may be obtained by an investor without charge by writing the Trust or calling
1-800-341-7400.
ITEM 11. TABLE OF CONTENTS
General Information and History B-1
Investment Objective and Policies B-1
Investment Restrictions B-7
Management of the Trust B-9
Control Persons and Principal
Holders of Securities B-14
Investment Advisory and Other
Services B-14
Brokerage Allocation and Other
Practices B-15
Capital Stock and Other Securities B-17
Purchase, Redemption, and Pricing
of Securities being Offered B-17
Tax Status B-17
Underwriters B-17
Calculation of Performance Data B-17
Financial Statements B-17
ITEM 12. GENERAL INFORMATION AND HISTORY
Not applicable.
ITEM 13. INVESTMENT OBJECTIVE AND POLICIES
(a) Part A contains additional information about the investment objectives and
policies and management techniques of the Portfolio. This Part B should only be
read in conjunction with Part A of the registration statement.
Except as stated otherwise, all investment policies and restrictions described
herein are non-fundamental. Accordingly, the approval of the investors in the
Portfolio is not required to change any of the investment policies or management
techniques of the Portfolio discussed herein or in Part A of this registration
statement, unless otherwise indicated.
TYPES OF INVESTMENTS
The Portfolio endeavors to achieve its objective by investing primarily in a
professionally managed, diversified portfolio of fixed income securities. Some
of these fixed income securities may involve equity features. Capital growth
will be considered, but only when consistent with the investment objective of
high current income.
CORPORATE DEBT SECURITIES
Corporate debt securities may bear fixed, fixed and contingent, or variable
rates of interest. They may involve equity features such as conversion or
exchange rights, warrants for the acquisition of common stock of the same or
a different issuer, participations based on revenues, sales or profits, or
the purchase of common stock in a unit transaction (where corporate debt
securities and common stock are offered as a unit).
Equipment lease or trust certificates are secured obligations issued in
serial form, usually sold by transportation companies such as railroads or
airlines, to finance equipment purchases. The certificate holders own a
share of the equipment, which can be resold if the issuer of the certificate
defaults. The Portfolio does not currently intend to invest more than 5% of
its assets in equipment lease certificates.
EQUITY SECURITIES
Generally, less than 10% of the value of the Portfolio's total assets will
be invested in equity securities, including common stocks, warrants, or
rights. The Portfolio's investment adviser may choose to exceed this 10%
limitation if unusual market conditions suggest such investments represent a
better opportunity to reach the Portfolio's investment objective.
TEMPORARY INVESTMENTS
The Portfolio may also invest in temporary investments for defensive
purposes during times of unusual market conditions.
CERTIFICATES OF DEPOSIT
The Portfolio may invest in certificates of deposit of domestic and foreign
banks and savings and loans if they have capital, surplus, and undivided
profits of over $100,000,000, or if the principal amount of the instrument
is insured by the Bank Insurance Portfolio ("BIF") or the Savings
Association Insurance Fund ("SAIF"), both of which are administered by the
Federal Deposit Insurance Corporation. These instruments may include
Eurodollar Certificates of Deposit issued by foreign branches of U.S. or
foreign banks, Eurodollar Time Deposits which are U.S. dollar-denominated
deposits in foreign branches of U.S. or foreign banks, Canadian Time
Deposits which are U.S. dollar-denominated deposits issued by branches of
major Canadian banks located in the United States, and Yankee Certificates
of Deposit which are U.S. dollar-denominated certificates of deposit issued
by U.S. branches of foreign banks and held in the United States.
<PAGE>
CURRENCY RISK
To the extent that debt securities purchased by the Portfolio are
denominated in currencies other than the U.S. dollar, changes in foreign
currency exchange rates will affect the Portfolio's net asset value, the
value of interest earned, gains and losses realized on the sale of
securities, and net investment income and capital gains, if any, to be
distributed to shareholders by the Portfolio. If the value of a foreign
currency rises against the U.S. dollar, the value of the Portfolio assets
denominated in that currency will increase; correspondingly, if the value of
a foreign currency declines against the U.S. dollar, the value of Portfolio
assets denominated in that currency will decrease.
The exchange rates between the U.S. dollar and foreign currencies are a
function of such factors as supply and demand in the currency exchange
markets, international balances of payments, governmental intervention,
speculation and other economic and political conditions. Although the
Portfolio values its assets daily in U.S. dollars, the Portfolio may not
convert its holdings of foreign currencies to U.S. dollars daily. When the
Portfolio converts its holdings to another currency, it may incur conversion
costs. Foreign exchange dealers may realize a profit on the difference
between the price at which they buy and sell currencies.
The Portfolio may engage in foreign currency exchange transactions in
connection with its investments in foreign securities. The Portfolio will
conduct its foreign currency exchange transactions either on a spot (i.e.,
cash) basis at the spot rate prevailing in the foreign currency exchange
market, or through forward contracts to purchase or sell foreign currencies.
INVESTING IN FOREIGN CURRENCIES
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
The Portfolio may enter into forward foreign currency exchange contracts in
order to protect itself against a possible loss resulting from an adverse
change in the relationship between the U.S. dollar and a foreign currency
involved in an underlying transaction. However, forward foreign currency
exchange contracts may limit potential gains which could result from a
positive change in such currency relationships. The Portfolio's investment
adviser believes that it is important to have the flexibility to enter into
forward foreign currency exchange contracts whenever it determines that it
is in the Portfolio's best interest to do so. The Portfolio will not
speculate in foreign currency exchange.
There is no limitation as to the percentage of the Portfolio's assets that
may be committed to such contracts.
The Portfolio does not enter into forward foreign currency exchange
contracts or maintain a net exposure in such contracts when the Portfolio
would be obligated to deliver an amount of foreign currency in excess of the
value of the Portfolio's portfolio securities or other assets denominated in
that currency or, in the case of a "cross-hedge" denominated in a currency
or currencies that the Portfolio's adviser believes will tend to be closely
correlated with the currency with regard to price movements. Generally, the
Portfolio does not enter into a forward foreign currency exchange contract
with a term longer than one year.
FOREIGN CURRENCY OPTIONS
A foreign currency option provides the option buyer with the right to buy or
sell a stated amount of foreign currency at the exercise price on a
specified date or during the option period. The owner of a call option has
the right, but not the obligation, to buy the currency. Conversely, the
owner of a put option has the right, but not the obligation to sell the
currency.
When the option is exercised, the seller (i.e., writer) of the option is
obligated to fulfill the terms of the sold option. However, either the
seller or the buyer may, in the secondary market, close its position during
the option period at any time prior to expiration.
A call option on foreign currency generally rises in value if the underlying
currency appreciates in value, and a put option on foreign currency
generally falls in value if the underlying currency depreciates in value.
Although purchasing a foreign currency option can protect the Portfolio
against an adverse movement in the value of a foreign currency, the option
will not limit the movement in the value of such currency. For example, if
the Portfolio were holding securities denominated in a foreign currency that
was appreciating and had purchased a foreign currency put to hedge against a
decline in the value of the currency, the Portfolio would not have to
exercise its put option. Likewise, if the Portfolio were to enter into a
contract to purchase a security denominated in foreign currency and, in
conjunction with that purchase, were to purchase a foreign currency call
option to hedge against a rise in value of the currency, and if the value of
the currency instead depreciated between the date of purchase and the
settlement date, the Portfolio would not have to exercise its call. Instead,
the Portfolio could acquire in the spot market the amount of foreign
currency needed for settlement.
SPECIAL RISKS ASSOCIATED WITH FOREIGN CURRENCY OPTIONS
Buyers and sellers of foreign currency options are subject to the same risks
that apply to options generally.
In addition, there are certain additional risks associated with foreign
currency options. The markets in foreign currency options are relatively
new, and the Portfolio's ability to establish and close out positions on
such options is subject to the maintenance of a liquid secondary market.
Although the Portfolio will not purchase or write such options unless and
until, in the opinion of the Portfolio's adviser, the market for them has
developed sufficiently to ensure that the risks in connection with such
options are not greater than the risks in connection with the underlying
currency, there can be no assurance that a liquid secondary market will
exist for a particular option at any specific time.
In addition, options on foreign currencies are affected by all of those
factors that influence foreign exchange rates and investments generally.
The value of a foreign currency option depends upon the value of the
underlying currency relative to the U.S. dollar. As a result, the price of
the option position may vary with changes in the value of either or both
currencies and may have no relationship to the investment merits of a
foreign security. Because foreign currency transactions occurring in the
interbank market involve substantially larger amounts than those that may be
involved in the use of foreign currency options, investors may be
disadvantaged by having to deal in an odd lot market (generally consisting
of transactions of less than $1 million) for the underlying foreign
currencies at prices that are less favorable than for round lots.
There is no systematic reporting of last sale information for foreign
currencies or any regulatory requirement that quotations available through
dealers or other market sources be firm or revised on a timely basis.
Available quotation information is generally representative of very large
transactions in the interbank market and thus may not reflect relatively
smaller transactions (i.e. less than $1 million) where rates may be less
favorable. The interbank market in foreign currencies is a global,
around-the-clock market. To the extent that the U.S. option markets are
closed while the markets for the underlying currencies remain open,
significant price and rate movements may take place in the underlying
markets that cannot be reflected in the options markets until they reopen.
REPURCHASE AGREEMENTS
The Portfolio or its custodian will take possession of the securities subject to
repurchase agreements, and these securities will be marked to market daily. In
the event that a defaulting seller filed for bankruptcy or became insolvent,
disposition of such securities by the Portfolio might be delayed pending court
action. The Portfolio believes that under the regular procedures normally in
effect for custody of the Portfolio's portfolio securities subject to repurchase
agreements, a court of competent jurisdiction would rule in favor of the
Portfolio and allow retention or disposition of such securities. The Portfolio
will only enter into repurchase agreements with banks and other recognized
financial institutions, such as broker/dealers, which are deemed by the
Portfolio's adviser to be creditworthy, pursuant to guidelines established by
the Trustees.
REVERSE REPURCHASE AGREEMENTS
The Portfolio may enter into reverse repurchase agreements. These transactions
are similar to borrowing cash. In a reverse repurchase agreement, the Portfolio
transfers possession of a portfolio instrument to another person, such as a
financial institution, broker, or dealer, in return for a percentage of the
instrument's market value in cash, and agrees that on a stipulated date in the
future the Portfolio will repurchase the portfolio instrument by remitting the
original consideration plus interest at an agreed upon rate.
When effecting reverse repurchase agreements, liquid assets of the Portfolio, in
a dollar amount sufficient to make payment for the obligations to be purchased,
are segregated at the trade date. These securities are marked to market daily
and maintained until the transaction is settled.
<PAGE>
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
These transactions are made to secure what is considered to be an advantageous
price or yield for the Portfolio. No fees or other expenses, other than normal
transaction costs, are incurred. However, liquid assets of the Portfolio
sufficient to make payment for the securities to be purchased are segregated on
the Portfolio's records at the trade date. These assets are marked to market
daily and are maintained until the transaction has been settled. The Portfolio
does not intend to engage in when-issued and delayed delivery transactions to an
extent that would cause the segregation of more than 20% of the total value of
its assets.
LENDING OF PORTFOLIO SECURITIES
In order to generate additional income, the Portfolio may lend its portfolio
securities, up to one-third of the value of its total assets, to broker/dealers,
banks, or other institutional borrowers of securities.
The collateral received when the Portfolio lends portfolio securities must be
valued daily and, should the market value of the loaned securities increase, the
borrower must furnish additional collateral to the Portfolio. During the time
portfolio securities are on loan, the borrower pays the Portfolio any dividends
or interest paid on such securities. Loans are subject to termination at the
option of the Portfolio or the borrower. The Portfolio may pay reasonable
administrative and custodial fees in connection with a loan and may pay a
negotiated portion of the interest earned on the cash or cash equivalent
collateral to the borrower or placing broker. The Portfolio does not have the
right to vote securities on loan, but would terminate the loan and regain the
right to vote if that were considered important with respect to the investment.
RESTRICTED AND ILLIQUID SECURITIES
The ability of the Trustees to determine the liquidity of certain restricted
securities is permitted under a Securities and Exchange Commission staff
position set forth in the adopting release for Rule 144A under the Securities
Act of 1933. The Trustees consider the following criteria in determining the
liquidity of certain restricted securities:
o the frequency of trades and quotes for the security;
o the number of dealers willing to purchase or sell the security and the
number of other potential buyers;
o dealer undertakings to make a market in the security; and
o the nature of the security and the nature of the marketplace trades.
<PAGE>
(B) INVESTMENT LIMITATIONS
The following investment limitations cannot be changed without shareholder
approval.
SELLING SHORT AND BUYING ON MARGIN
The Portfolio will not sell any securities short or purchase any securities
on margin, but may obtain such short-term credits as may be necessary for
clearance of purchases and sales of portfolio securities.
ISSUING SENIOR SECURITIES AND BORROWING MONEY
The Portfolio will not issue senior securities except that the Portfolio may
borrow money directly or through reverse repurchase agreements as a
temporary, extraordinary, or emergency measure to facilitate management of
the portfolio by enabling the Portfolio to meet redemption requests when the
liquidation of portfolio securities is deemed to be inconvenient or
disadvantageous, and then only in amounts not in excess of one-third of the
value of its total assets; provided that, while borrowings and reverse
repurchase agreements outstanding exceed 5% of the Portfolio's total assets,
any such borrowings will be repaid before additional investments are made.
The Portfolio will not borrow money or engage in reverse repurchase
agreements for investment leverage purposes.
PLEDGING ASSETS
The Portfolio will not mortgage, pledge, or hypothecate any assets except to
secure permitted borrowings. In those cases, it may mortgage, pledge or
hypothecate assets having a market value not exceeding the lesser of the
dollar amounts borrowed or 15% of the value of its total assets at the time
of borrowing.
CONCENTRATION OF INVESTMENTS
The Portfolio will not purchase securities if, as a result of such purchase,
25% or more of its total assets would be invested in any one industry.
However, the Portfolio may at any time invest 25% or more of its total
assets in cash or cash items and securities issued and/or guaranteed by the
U.S. government, its agencies or instrumentalities.
INVESTING IN COMMODITIES
The Portfolio will not purchase or sell commodities, commodity contracts, or
commodity futures contracts.
INVESTING IN REAL ESTATE
The Portfolio will not purchase or sell real estate, although it may invest
in securities of companies whose business involves the purchase or sale of
real estate or in securities secured by real estate or interests in real
estate.
LENDING CASH OR SECURITIES
The Portfolio will not lend any of its assets, except portfolio securities
up to one-third of its total assets. This shall not prevent the Portfolio
from purchasing or holding corporate or U.S. government bonds, debentures,
notes, certificates of indebtedness or other debt securities of an issuer,
entering into repurchase agreements, or engaging in other transactions which
are permitted by the Portfolio's investment objective and policies or the
Trust's Declaration of Trust.
UNDERWRITING
The Portfolio will not underwrite any issue of securities, except as it may
be deemed to be an underwriter under the Securities Act of 1933 in
connection with the sale of securities in accordance with its investment
objective, policies, and limitations.
DIVERSIFICATION OF INVESTMENTS
With respect to 75% of its total assets, the Portfolio will not purchase the
securities of any one issuer (other than cash, cash items, or securities
issued and/or guaranteed by the U.S. government, its agencies or
instrumentalities, and repurchase agreements collateralized by such
securities) if, as a result, more than 5% of its total assets would be
invested in the securities of that issuer. Also, the Portfolio will not
purchase more than 10% of any class of the outstanding voting securities of
any one issuer. For these purposes, the Portfolio considers common stock and
all preferred stock of an issuer each as a single class, regardless of
priorities, series, designations, or other differences.
(c) The following limitations may be changed by the Trustees without shareholder
approval. Shareholders will be notified before any material changes in these
limitations become effective.
RESTRICTED AND ILLIQUID SECURITIES
The Portfolio will not invest more than 15% of its total assets in illiquid
securities, including repurchase agreements providing for settlement in more
than seven days after notice and certain restricted securities not
determined by the Trustees to be liquid.
Except with respect to borrowing money, if a percentage limitation is adhered to
at the time of investment, a later increase or decrease in percentage resulting
from any change in value of total or net assets will not result in a violation
of such restriction.
The Portfolio has no present intention to borrow money in excess of 5% of the
value of its net assets during the coming fiscal year.
For purposes of its policies and limitations, the Portfolio considers
certificates of deposit and demand and time deposits issued by a U.S. branch of
a domestic bank or savings association having capital, surplus, and undivided
profits in excess of $100,000,000 at the time of investment to be "cash items."
<PAGE>
ITEM 14. MANAGEMENT OF THE TRUST
(a-b) Officers and Trustees are listed with their addresses, birthdates, present
positions with Federated Core Trust, and principal occupations.
John F. Donahue@*
Federated Investors Tower
Pittsburgh, PA
Birthdate: July 28, 1924
Chairman and Trustee
Chairman and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; Chairman and Director, Federated Research
Corp. and Federated Global Research Corp.; Chairman, Passport Research, Ltd.;
Chief Executive Officer and Director or Trustee of the Funds.Mr. Donahue is the
father of J. Christopher Donahue, President of the Company.
Thomas G. Bigley
15 Old Timber Trail
Pittsburgh, PA
Birthdate: February 3, 1934
Trustee
Chairman of the Board, Children's Hospital of Pittsburgh; formerly, Senior
Partner, Ernst & Young LLP; Director, MED 3000 Group, Inc.; Director, Member of
Executive Committee, University of Pittsburgh; Director or Trustee of the Funds.
John T. Conroy, Jr.
Wood/IPC Commercial Department
John R. Wood and Associates, Inc., Realtors
3255 Tamiami Trail North
Naples, FL
Birthdate: June 23, 1937
Trustee
President, Investment Properties Corporation; Senior Vice-President, John
R. Wood and Associates, Inc., Realtors; Partner or Trustee in private real
estate ventures in Southwest Florida; formerly, President, Naples Property
Management, Inc. and Northgate Village Development Corporation; Director or
Trustee of the Funds.
William J. Copeland
One PNC Plaza - 23rd Floor
Pittsburgh, PA
Birthdate: July 4, 1918
Trustee
Director and Member of the Executive Committee, Michael Baker, Inc.; formerly,
Vice Chairman and Director, PNC Bank, N.A., and PNC Bank Corp.; Director, Ryan
Homes, Inc.; Director or Trustee of the Funds.
James E. Dowd
571 Hayward Mill Road
Concord, MA
Birthdate: May 18, 1922
Trustee
Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director or
Trustee of the Funds.
Lawrence D. Ellis, M.D.*
3471 Fifth Avenue, Suite 1111
Pittsburgh, PA
Birthdate: October 11, 1932
Trustee
Professor of Medicine, University of Pittsburgh; Medical Director, University of
Pittsburgh Medical Center - Downtown; Member, Board of Directors, University of
Pittsburgh Medical Center; formerly, Hematologist, Oncologist, and Internist,
Presbyterian and Montefiore Hospitals; Director or Trustee of the Funds.
Edward L. Flaherty, Jr.@
Miller, Ament, Henny & Kochuba
205 Ross Street
Pittsburgh, PA
Birthdate: June 18, 1924
Trustee
Attorney of Counsel, Miller, Ament, Henny & Kochuba; Director, Eat'N Park
Restaurants, Inc.; formerly, Counsel, Horizon Financial, F.A., Western Region;
Director or Trustee of the Funds.
Peter E. Madden
One Royal Palm Way
100 Royal Palm Way
Palm Beach, FL
Birthdate: March 16, 1942
Trustee
Consultant; Former State Representative, Commonwealth of Massachusetts;
formerly, President, State Street Bank and Trust Company and State Street Boston
Corporation; Director or Trustee of the Funds.
John E. Murray, Jr., J.D., S.J.D.
President, Duquesne University
Pittsburgh, PA
Birthdate: December 20, 1932
Trustee
President, Law Professor, Duquesne University; Consulting Partner, Mollica &
Murray; Director or Trustee of the Funds.
Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, PA
Birthdate: September 14, 1925
Trustee
Professor, International Politics; Management Consultant; Trustee, Carnegie
Endowment for International Peace, RAND Corporation, Online Computer Library
Center, Inc., National Defense University and U.S. Space Foundation; President
Emeritus, University of Pittsburgh; Founding Chairman, National Advisory Council
for Environmental Policy and Technology, Federal Emergency Management Advisory
Board and Czech Management Center, Prague; Director or Trustee of the Funds.
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA
Birthdate: June 21, 1935
Trustee
Public relations/Marketing/Conference Planning; Director or Trustee of the
Funds.
J. Christopher Donahue
Federated Investors Tower
Pittsburgh, PA
Birthdate: April 11, 1949
President
President and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; President and Director, Federated Research
Corp. and Federated Global Research Corp.; President, Passport Research, Ltd.;
Trustee, Federated Shareholder Services Company, and Federated Shareholder
Services; Director, Federated Services Company; President or Executive Vice
President of the Funds; Director or Trustee of some of the Funds. Mr. Donahue is
the son of John F. Donahue, Chairman and Trustee of the Company.
Edward C. Gonzales
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 22, 1930
Executive Vice President
Vice Chairman, Treasurer, and Trustee, Federated Investors; Vice President,
Federated Advisers, Federated Management, Federated Research, Federated Research
Corp., Federated Global Research Corp. and Passport Research, Ltd.; Executive
Vice President and Director, Federated Securities Corp.; Trustee, Federated
Shareholder Services Company; Trustee or Director of some of the Funds;
President, Executive Vice President and Treasurer of some of the Funds.
John W. McGonigle
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 26, 1938
Executive Vice President , Secretary and Treasurer
Executive Vice President, Secretary, and Trustee, Federated Investors; Trustee,
Federated Advisers, Federated Management, and Federated Research; Director,
Federated Research Corp. and Federated Global Research Corp.; Trustee, Federated
Shareholder Services Company; Director, Federated Services Company; President
and Trustee, Federated Shareholder Services; Director, Federated Securities
Corp.; Executive Vice President and Secretary of the Funds; Treasurer of some of
the Funds.
Richard B. Fisher
Federated Investors Tower
Pittsburgh, PA
Birthdate: May 17, 1923
Vice President
Executive Vice President and Trustee, Federated Investors; Chairman and
Director, Federated Securities Corp.; President or Vice President of some of the
Funds; Director or Trustee of some of the Funds.
* This Trustee is deemed to be an "interested person" as defined in the
Investment Company Act of 1940.
@ Member of the Executive Committee. The Executive Committee of the Board
of Trustees handles the responsibilities of the Board between meetings
of the Board.
As used in the table above, "The Funds" and "Funds" mean the following
investment companies: 111 Corcoran Funds; Automated Government Money Trust;
Blanchard Funds; Blanchard Precious Metals Fund, Inc.; Cash Trust Series II;
Cash Trust Series, Inc.; DG Investor Series; Edward D. Jones & Co. Daily
Passport Cash Trust; Federated Adjustable Rate U.S. Government Fund, Inc.;
Federated American Leaders Fund, Inc.; Federated ARMs Fund; Federated Equity
Funds; Federated Equity Income Fund, Inc.; Federated Fund for U.S. Government
Securities, Inc.; Federated GNMA Trust; Federated Government Income Securities,
Inc.; Federated Government Trust; Federated High Income Bond Fund, Inc.;
Federated High Yield Trust; Federated Income Securities Trust; Federated Income
Trust; Federated Index Trust; Federated Institutional Trust; Federated Insurance
Series; Federated Investment Portfolios; Federated Investment Trust; Federated
Master Trust; Federated Municipal Opportunities Fund, Inc.; Federated Municipal
Securities Fund, Inc.; Federated Municipal Trust; Federated Short-Term Municipal
Trust; Federated Short-Term U.S. Government Trust; Federated Stock and Bond
Fund, Inc.; Federated Stock Trust; Federated Tax-Free Trust; Federated Total
Return Series, Inc.; Federated U.S. Government Bond Fund; Federated U.S.
Government Securities Fund: 1-3 Years; Federated U.S. Government Securities
Fund: 2-5 Years; Federated U.S. Government Securities Fund: 5-10 Years;
Federated Utility Fund, Inc.; First Priority Funds; Fixed Income Securities,
Inc.; High Yield Cash Trust; Intermediate Municipal Trust; International Series,
Inc.; Investment Series Funds, Inc.; Investment Series Trust; Liberty Term
Trust, Inc. - 1999; Liberty U.S. Government Money Market Trust; Liquid Cash
Trust; Managed Series Trust; Money Market Management, Inc.; Money Market
Obligations Trust; Money Market Obligations Trust II; Money Market Trust;
Municipal Securities Income Trust; Newpoint Funds; RIMCO Monument Funds;
Targeted Duration Trust; Tax-Free Instruments Trust; The Planters Funds; The
Virtus Funds; Trust for Financial Institutions; Trust for Government Cash
Reserves; Trust for Short-Term U.S. Government Securities; Trust for U.S.
Treasury Obligations; WesMark Funds; WCT Funds; and World Investment Series,
Inc.
(C) TRUSTEES' COMPENSATION
AGGREGATE
NAME , COMPENSATION
POSITION WITH FROM TOTAL COMPENSATION PAID
TRUST TRUST*# FROM FUND COMPLEX +
John F. Donahue $0 $0 for the Trust and
Chairman and Trustee 56 other investment companies
in the Fund Complex
Thomas G. Bigley $0 $108,725 for the Trust and
Trustee 56 other investment companies
in the Fund Complex
John T. Conroy, Jr. $0 $119,615 for the Trust and
Trustee 56 other investment companies
in the Fund Complex
William J. Copeland $0 $119,615 for the Trust and
Trustee 56 other investment companies
in the Fund Complex
J. Christopher Donahue, $0 $0 for the Trust and
President and Trustee 15 other investment companies
in the Fund Complex
James E. Dowd $0 $119,615 for the Trust and
Trustee 56 other investment companies
in the Fund Complex
Lawrence D. Ellis, M.D. $0 $108,725 for the Trust and
Trustee 56 other investment companies
in the Fund Complex
Edward L. Flaherty, Jr. $0 $119,615 for the Trust and
Trustee 56 other investment companies
in the Fund Complex
Peter E. Madden $0 $108,725 for the Trust and
Trustee 56 other investment companies
in the Fund Complex
John E. Murray, Jr., $0 $108,725 for the Trust and
Trustee 56 other investment companies
in the Fund Complex
Wesley W. Posvar $0 $108,725 for the Trust and
Trustee 56 other investment companies
in the Fund Complex
Marjorie P. Smuts $0 $108,725 for the Trust and
Trustee 56 other investment companies
in the Fund Complex
*Information is furnished for the fiscal year ended December 31, 1997
#The aggregate compensation is provided for the Trust which is comprised of
one portfolio.
+The information is provided for the last calendar year.
ITEM 15. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
(a) See Item 6(b).
(b) Not applicable.
- ---------------------------------------------------------------------------
(c) Officers and Trustees own less than 1% of the Trust's outstanding shares.
ITEM 16. INVESTMENT ADVISORY AND OTHER SERVICES
(a) (i) Federated Research Corp. (the "Adviser"), a Delaware business trust,
organized on June 14, 1990, is a registered investment adviser under the
Investment Advisers Act of 1940. It is a subsidiary of Federated Investors,
which was organized as a Delware corporation on April 11, 1989. All of the Class
A (voting) shares of Federated Investors are owned by a trust, the trustees of
which are John F. Donahue, Chairman and Trustee of Federated Investors, Mr.
Donahue's wife, and Mr. Donahue's son, J. Christopher Donahue, who is President
and Trustee of Federated Investors.
(ii) See Item 14 above.
(iii) The Trust and the Adviser are parties to an investment advisory
agreement dated January 1, 1998 (the "Advisory Agreement"), which provides that
the Adviser will not charge an advisory fee.
(b) Pursuant to the Advisory Agreement, investment management decisions for the
Portfolio are made by the Adviser subject to the direction by the Trustees. The
Adviser continually conducts investment research and supervision for the
Portfolio and is responsible for the purchase and sale of portfolio instruments.
The Adviser receives no fee for its investment management services.
Under the Advisory Agreement, the Portfolio bears the cost of administrative
accounting services, which includes maintaining its financial books and records
and calculating its daily net asset value. See Item 16(d).
(c) Not applicable.
(d) Federated Services Company (the "Administrator"), a subsidiary of Federated
Investors, provides administrative personnel and services to the Portfolio for a
fee as described in Item 5(d). Pursuant to an Administrative Agreement with the
Trust, the Administrator supervises the overall administration of the Portfolio.
The Administrator provides administrative services, oversees the various
services necessary for fund operations, provides general office facilities, and
provides sufficient personnel for the Portfolio as are necessary to prepare
registration statements, shareholder reports and notices, and proxy solicitation
material. .
(e) Not applicable.
(f) Not applicable.
(g) Not applicable.
(h) State Street Bank and Trust Company, P.O. Box 8600, Boston, Massachusetts
02266-8600, is the Custodian of the Portfolio's assets. Ernst & Young LLP, One
Oxford Centre, Pittsburgh, Pennsylvania 15219, are the Independent Auditors for
the Portfolio.
(i) Federated Shareholder Services Company acts as the Portfolio's transfer
agent and receives a fee based on the size, type and number of accounts and
transactions made by shareholders.
ITEM 17. BROKERAGE ALLOCATION AND OTHER PRACTICES
(a) Research services provided by brokers and dealers may be used by the
investment managers or by their affiliates in advising the Portfolio and other
accounts. To the extent that receipt of these services may supplant services for
which the investment managers or their affiliates might otherwise have paid, it
would tend to reduce their expenses.
The Portfolio's purchase and sales of securities may be principal transactions,
that is, securities may be purchased directly from the issuer or from an
underwriter or market maker for the securities. There usually are no brokerage
commissions paid for such purchases and, therefore, the Portfolio does not
anticipate paying brokerage commissions in such transactions. Any transactions
for which the Portfolio pays a brokerage commission will be effected at the best
price and execution available. Purchases from underwriters of securities include
a commission or concession paid by the issuer to the underwriter, and purchases
from dealers serving as market makers include the spread between the bid and the
asked price.
Allocations of transactions, including their frequency, to various dealers is
determined by the investment managers in their best judgment and in a manner
deemed to be in the best interest of the investors in the Portfolio rather than
by any formula. The primary consideration is prompt execution of orders in an
effective manner at the most favorable price.
The Advisory Agreement provides that, in executing portfolio transactions and
selecting brokers or dealers, the investment managers will seek to obtain the
best net price and the most favorable execution. The investment managers shall
consider factors they deem relevant, including the breadth of the market in the
security, the price of the security, the financial condition and execution
capability of the broker or dealer, and the reasonableness of the commission, if
any, for the specific transaction and on a continuing basis.
In addition, the Advisory Agreement authorizes the investment managers, to the
extent permitted by law and subject to the review of Trust's Trustees, to cause
the Portfolio to pay a broker which furnishes brokerage and research services a
higher commission than that which might be charged by another broker for
effecting the same transaction, provided that the investment managers determine
in good faith that such commission is reasonable in relation to the value of the
brokerage and research services provided by such broker, viewed in terms of
either that particular transaction or the overall responsibilities of the
investment managers to the accounts as to which they exercise investment
discretion. Such brokerage and research services might consist of reports and
statistics on specific companies or industries, general summaries of groups of
stocks and their comparative earnings, or broad overviews of the stock market
and the economy. Such services might also include reports on global, regional,
and country-by-country prospects for economic growth, anticipated levels of
inflation, prevailing and expected interest rates, and the outlook for currency
relationships.
Supplementary research information so received is in addition to and not in lieu
of services required to be performed by the investment managers and does not
reduce the investment advisory fees (if any) payable by the Portfolio. Such
information may be useful to the investment managers in serving the Portfolio
and other clients and, conversely, supplemental information obtained by the
placement of business of other clients may be useful to the investment managers
in carrying out their obligations to the Portfolio.
Investment decisions for the Portfolio will be made independently from those for
any other account or investment company that is or may in the future become
managed by its investment managers or any of their affiliates. If, however, the
Portfolio and other investment companies or accounts managed by the same
investment manager are contemporaneously engaged in the purchase or sales of the
same security, the transactions may be averaged as to price and allocated
equitably to each account. In some cases, this policy might adversely affect the
price paid or received by the Portfolio or the size of the position obtainable
for the Portfolio. In addition, when purchases or sales of the same security for
the Portfolio and for other investment companies managed by the same investment
manager occur contemporaneously, the purchase or sale orders may be aggregated
in order to obtain any price advantages available to large denomination
purchases or sales. Furthermore, in certain circumstances affiliates of the
investment managers whose investment portfolios are managed internally, rather
than by the investment managers, might seek to purchase or sell the same type of
investments at the same time as the Portfolio. Such an event might also
adversely affect the Portfolio.
(b) None.
(c) See response to (a).
(d) Not applicable.
(e) Not applicable.
ITEM 18. CAPITAL STOCK AND OTHER SECURITIES
(a) See Item 6.
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for obligations of the Trust. To protect its
shareholders, the Trust has filed legal documents with Massachusetts that
expressly disclaim the liability of its shareholders for acts or obligations of
the Trust. These documents require notice of this disclaimer to be given in each
agreement, obligation, or instrument the Trust or its Trustees enter into or
sign.
In the unlikely event a shareholder is held personally liable for the Trust's
obligations, the Trust is required by the Declaration of Trust to use its
property to protect or compensate the shareholder. On request, the Trust will
defend any claim made and pay any judgment against a shareholder for any act or
obligation of the Trust. Therefore, financial loss resulting from liability as a
shareholder will occur only if the Trust itself cannot meet its obligations to
indemnify shareholders and pay judgments against them.
(b) Not applicable.
ITEM 19. PURCHASE, REDEMPTION, AND PRICING OF SECURITIES BEING OFFERED
(a) Beneficial interests in the Portfolio are issued solely in private placement
transactions that do not involve any "public offering" within the meaning of
Section 4(2) of the 1933 Act. See Item 4 in Part A of this Registration
Statement.
(b) See Item 7.
(c) Not applicable.
ITEM 20. TAX STATUS
Also, see Item 6(g).
ITEM 21. UNDERWRITERS
Not applicable.
ITEM 22. CALCULATION OF PERFORMANCE DATA
Not applicable.
ITEM 23. FINANCIAL STATEMENTS
(a) Investors of record will receive unaudited semi-annual reports and annual
reports audited by the Portfolio's independent auditors.
PART C. OTHER INFORMATION.
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS:
(a) Financial Statements - To be filed by amendment.
(b) Exhibits:
(1) Conformed copy of of Declaration of Trust of the
Registrant +;
(2) Copy of By-Laws of the Registrant +;
(3) Not applicable;
(4) Not applicable;
(5) Form of Investment Advisory Contract of the Registrant+;
(6) Form of Placement Agent Agreement +;
(7) Not applicable;
(8) Conformed copy of Custodian Agreement of the
Registrant +;
(9) Conformed copy of Agreement for Fund Accounting
Services, Administrative Services, Shareholder Transfer
Agency Services and Custody Services Procurement +;
(10) Not applicable;
(11) Not applicable; (12) Not applicable;
(13) Form of Written Assurances from Initial Shareholders +;
(14) Not applicable; (15) Not applicable; (16) Not applicable;
(17) Not applicable; (18) Not applicable;
(19) Conformed Copy of Power of Attorney +.
- --------------------------------
+ Exhibits have been filed electronically.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
None
ITEM 26. NUMBER OF HOLDERS OF SECURITIES:
Number of Record Holders
Title of Class as of December 15, 1997
Shares of beneficial interest
(no par value)
High-Yield Bond Portfolio Not yet effective
<PAGE>
ITEM 27. INDEMNIFICATION:
Indemnification is provided to Officers and Trustees of the
Registrant pursuant to Section 2 of Article XII of Registrant's
Declaration of Trust. The Investment Advisory Contract between the
Registrant and Federated Research Corp. ("Adviser") provides that,
in the absence of willful misfeasance, bad faith, gross negligence,
or reckless disregard of the obligations or duties under the
Investment Advisory Contract on the part of Adviser, Adviser shall
not be liable to the Registrant or to any shareholder for any act or
omission in the course of or connected in any way with rendering
services or for any losses that may be sustained in the purchase,
holding, or sale of any security. Registrant's Trustees and Officers
are covered by an Investment Trust Errors and Omissions Policy.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to Trustees, Officers, and
controlling persons of the Registrant by the Registrant pursuant to
the Declaration of Trust or otherwise, the Registrant is aware that
in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Act
and, therefore, is unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by Trustees), Officers,
or controlling persons of the Registrant in connection with the
successful defense of any act, suit, or proceeding) is asserted by
such Trustees, Officers, or controlling persons in connection with
the shares being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy
as expressed in the Act and will be governed by the final
adjudication of such issues.
Insofar as indemnification for liabilities may be permitted pursuant
to Section 17 of the Investment Company Act of 1940 for Trustees,
Officers, and controlling persons of the Registrant by the
Registrant pursuant to the Declaration of Trust or otherwise, the
Registrant is aware of the position of the Securities and Exchange
Commission as set forth in Investment Company Act Release No.
IC-11330. Therefore, the Registrant undertakes that in addition to
complying with the applicable provisions of the Declaration of Trust
or otherwise, in the absence of a final decision on the merits by a
court or other body before which the proceeding was brought, that an
indemnification payment will not be made unless in the absence of
such a decision, a reasonable determination based upon factual
review has been made (i) by a majority vote of a quorum of non-party
Trustees who are not interested persons of the Registrant or (ii) by
independent legal counsel in a written opinion that the indemnitee
was not liable for an act of willful misfeasance, bad faith, gross
negligence, or reckless disregard of duties. The Registrant further
undertakes that advancement of expenses incurred in the defense of a
proceeding (upon undertaking for repayment unless it is ultimately
determined that indemnification is appropriate) against an Officer,
Trustee, or controlling person of the Registrant will not be made
absent the fulfillment of at least one of the following conditions:
(i) the indemnitee provides security for his undertaking; (ii) the
Registrant is insured against losses arising by reason of any lawful
advances; or (iii) a majority of a quorum of disinterested non-party
Trustees or independent legal counsel in a written opinion makes a
factual determination that there is reason to believe the indemnitee
will be entitled to indemnification.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER:
(a) For a description of the other business of the investment adviser, see
the section entitled "Management of the Trust" in Part A. The
affiliations with the Registrant of four of the Trustees and one of the
Officers of the investment adviser are included in Part B of this
Registration Statement under "Management of the Trust." The remaining
Trustee of the investment adviser, his position with the investment
adviser, and, in parentheses, his principal occupation is: Mark D.
Olson (Partner, Wilson, Halbrook & Bayard), 107 W.
Market Street, Georgetown, Delaware 19947.
The remaining Officers of the investment adviser are:
Executive Vice Presidents: William D. Dawson, III
Henry A. Frantzen
J. Thomas Madden
Senior Vice Presidents: Drew J. Collins
Jonathan C. Conley
Deborah A. Cunningham
Mark E. Durbiano
J. Alan Minteer
Susan M. Nason
Mary Jo Ochson
Robert J. Ostrowski
Vice Presidents: J. Scott Albrecht
Joseph M. Balestrino
Randall S. Bauer
David F. Belton
David A. Briggs
Kenneth J. Cody
Alexandre de Bethmann
Michael P. Donnelly
Linda A. Duessel
Donald T. Ellenberger
Kathleen M. Foody-Malus
Thomas M. Franks
Edward C. Gonzales
James E. Grefenstette
Susan R. Hill
Stephen A. Keen
Robert K. Kinsey
Robert M. Kowit
Jeff A. Kozemchak
Steven Lehman
Marian R. Marinack
Sandra L. McInerney
Charles A. Ritter
Scott B. Schermerhorn
Frank Semack
Aash M. Shah
Christopher Smith
William F. Stotz
Tracy P. Stouffer
Edward J. Tiedge
Paige M. Wilhelm
Jolanta M. Wysocka
Assistant Vice Presidents: Todd A. Abraham
Stefanie L. Bachhuber
Arthur J. Barry
Micheal W. Casey
Robert E. Cauley
Salvatore A. Esposito
Donna M. Fabiano
John T. Gentry
William R. Jamison
Constantine Kartsonsas
Joseph M. Natoli
Keith J. Sabol
Michael W. Sirianni
Gregg S. Tenser
Secretary: Stephen A. Keen
Treasurer: Thomas R. Donahue
Assistant Secretaries: Thomas R. Donahue
Richard B. Fisher
Christine I. McGonigle
Assistant Treasurer: Richard B. Fisher
The business address of each of the Officers of the investment adviser is
Federated Investors Tower, Pittsburgh, Pennsylvania
<PAGE>
ITEM 29. PRINCIPAL UNDERWRITERS:
(a) Federated Securities Corp. the Distributor for shares of the
Registrant, acts as principal underwriter for the following open-end investment
companies, including the Registrant: 111 Corcoran Funds; Automated Government
Money Trust; Blanchard Funds; Blanchard Precious Metals Fund, Inc.; Cash Trust
Series II; Cash Trust Series, Inc.; DG Investor Series; Edward D. Jones & Co.
Daily Passport Cash Trust; Federated Adjustable Rate U.S. Government Fund, Inc.;
Federated American Leaders Fund, Inc.; Federated ARMs Fund; Federated Equity
Funds; Federated Equity Income Fund, Inc.; Federated Fund for U.S. Government
Securities, Inc.; Federated GNMA Trust; Federated Government Income Securities,
Inc.; Federated Government Trust; Federated High Income Bond Fund, Inc.;
Federated High Yield Trust; Federated Income Securities Trust; Federated Income
Trust; Federated Index Trust; Federated Institutional Trust; Federated Insurance
Series; Federated Investment Portfolios; Federated Investment Trust; Federated
Master Trust; Federated Municipal Opportunities Fund, Inc.; Federated Municipal
Securities Fund, Inc.; Federated Municipal Trust; Federated Short-Term Municipal
Trust; Federated Short-Term U.S. Government Trust; Federated Stock and Bond
Fund, Inc.; Federated Stock Trust; Federated Tax-Free Trust; Federated Total
Return Series, Inc.; Federated U.S. Government Bond Fund; Federated U.S.
Government Securities Fund: 1-3 Years; Federated U.S. Government Securities
Fund: 2-5 Years; Federated U.S. Government Securities Fund: 5-10 Years;
Federated Utility Fund, Inc.; First Priority Funds; Fixed Income Securities,
Inc.; High Yield Cash Trust; Independence One Mutual Funds; Intermediate
Municipal Trust; International Series, Inc.; Investment Series Funds, Inc.;
Investment Series Trust; Liberty U.S. Government Money Market Trust; Liquid Cash
Trust; Managed Series Trust; Marshall Funds, Inc.; Money Market Management,
Inc.; Money Market Obligations Trust; Money Market Obligations Trust II; Money
Market Trust; Municipal Securities Income Trust; Newpoint Funds; Peachtree
Funds; RIMCO Monument Funds; SouthTrust Vulcan Funds; Star Funds; Targeted
Duration Trust; Tax-Free Instruments Trust; The Planters Funds; The Virtus
Funds; The Wachovia Funds; The Wachovia Municipal Funds; Tower Mutual Funds;
Trust for Financial Institutions; Trust for Government Cash Reserves; Trust for
Short-Term U.S. Government Securities; Trust for U.S. Treasury Obligations;
Vision Group of Funds, Inc.; and World Investment Series, Inc.
Federated Securities Corp. also acts as principal underwriter for the
following closed-end investment company: Liberty Term Trust, Inc.- 1999.
<PAGE>
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS:
All accounts and records required to be maintained by Section 31(a) of the
Investment Company Act of 1940 and Rules 31a-1 through 31a-3 promulgated
thereunder are maintained at one of the following locations:
Registrant Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
Federated Shareholder Federated Investors Tower
Services Company Pittsburgh, PA 15222-3779
("Transfer Agent and Dividend
Disbursing Agent")
Federated Services Company Federated Investors Tower
("Administrator") Pittsburgh, PA 15222-3779
Federated Research Corp. Federated Investors Tower
("Adviser") Pittsburgh, PA 15222-3779
State Street Bank and Trust Company P.O. Box 8600
("Custodian") Boston, MA 02266-8600
ITEM 31. MANAGEMENT SERVICES:
Not applicable.
ITEM 32. UNDERTAKINGS:
Registrant hereby undertakes to comply with the provisions of
Section 16(c) of the 1940 Act with respect to the removal of
Trustees and the calling of special shareholder meetings by
shareholders.
Registrant hereby undertakes to furnish each investor to whom a Part
A is delivered, a copy of the Registrant's latest annual report,
upon request and without charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Investment Company Act of 1940, the
Registrant, Federated Core Trust, has duly caused this Registration Statement to
be signed on its behalf by the undersigned, thereto duly authorized, in the City
of Pittsburgh and Commonwealth of Pennsylvania, on the 30th day of December,
1997.
FEDERATED CORE TRUST
BY: /s/ S. Elliott Cohan
S. Elliott Cohan, Assistant Secretary/Secretary
Attorney in Fact for John F. Donahue
December 30, 1997
EXHIBIT 5 UNDER FORM N-1A
EXHIBIT 10 UNDER ITEM 601/REG. S-K
INVESTMENT ADVISORY CONTRACT
This Contract is made this 30th day of December, 1997, between Federated
Research Corp., a adviser_org_form = corporation "adviser_state " "" Maryland
corporation having its principal place of business in Pittsburgh, Pennsylvania
(the "Adviser"), and Federated Core Trust, aError! Reference source not found.=
corporation "NULL" "" Massachusetts business trust having its principal place of
business in Pittsburgh, Pennsylvania (the "Trust").
WHEREAS the Trust is an open-end management investment company as that
term is defined in the Investment Company Act of 1940, as amended, and is
registered as such with the Securities and Exchange Commission; and
WHEREAS Adviser is engaged in the business of rendering investment
advisory and management services.
NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. The Trust hereby appoints Adviser as Investment Adviser for each of the
portfolios ("Funds") of the Trust which executes an exhibit to this Contract,
and Adviser accepts the appointments. Subject to the direction of the Trustees,
Adviser shall provide investment research and supervision of the investments of
the Funds and conduct a continuous program of investment evaluation and of
appropriate sale or other disposition and reinvestment of each Fund's assets.
2. Adviser, in its supervision of the investments of each of the Funds
will be guided by each of the Fund's investment objective and policies and the
provisions and restrictions contained in the org_form=corporation "Articles of
Incorporation" "Declaration of Trust" Declaration of Trust and By-Laws of the
Trust and as set forth in the Registration Statements and exhibits as may be on
file with the Securities and Exchange Commission.
3. Each Fund shall pay or cause to be paid all of its own expenses and its
allocable share of Trust expenses, including, without limitation, the expenses
of organizing the Trust and continuing its existence; fees and expenses of
Trustees and officers of the Trust; fees for investment advisory services and
administrative personnel and services; expenses incurred in the distribution of
its shares ("Shares"), including expenses of administrative support services;
fees and expenses of preparing and printing its Registration Statements under
the Securities Act of 1933 and the Investment Company Act of 1940, as amended,
and any amendments thereto; expenses of registering and qualifying the Trust,
the Funds, and Shares of the Funds under federal and state laws and regulations;
expenses of preparing, printing, and distributing prospectuses (and any
amendments thereto) to shareholders; interest expense, taxes, fees, and
commissions of every kind; expenses of issue (including cost of Share
certificates), purchase, repurchase, and redemption of Shares, including
expenses attributable to a program of periodic issue; charges and expenses of
custodians, transfer agents, dividend disbursing agents, shareholder servicing
agents, and registrars; printing and mailing costs, auditing, accounting, and
legal expenses; reports to shareholders and governmental officers and
commissions; expenses of meetings of Trustees and shareholders and proxy
solicitations therefor; insurance expenses; association membership dues and such
nonrecurring items as may arise, including all losses and liabilities incurred
in administering the Trust and the Funds. Each Fund will also pay its allocable
share of such extraordinary expenses as may arise including expenses incurred in
connection with litigation, proceedings, and claims and the legal obligations of
the Trust to indemnify its officers and Trustees and agents with respect
thereto.
4. Each of the Funds shall pay to Adviser, for all services rendered to
each Fund by Adviser hereunder, the fees set forth in the exhibits attached
hereto.
5. The net asset value of each Fund's Shares as used herein will be
calculated to the nearest 1/10th of one cent.
6. The Adviser may from time to time and for such periods as it deems
appropriate reduce its compensation, if any, (and, if appropriate, assume
expenses of one or more of the Funds) to the extent that any Fund's expenses
exceed such lower expense limitation as the Adviser may, by notice to the Fund,
voluntarily declare to be effective.
7. This Contract shall begin for each Fund as of the date of execution of
the applicable exhibit and shall continue in effect with respect to each Fund
presently set forth on an exhibit (and any subsequent Funds added pursuant to an
exhibit during the initial term of this Contract) for two years from the date of
this Contract set forth above and thereafter for successive periods of one year,
subject to the provisions for termination and all of the other terms and
conditions hereof if: (a) such continuation shall be specifically approved at
least annually by the vote of a majority of the Trustees of the Trust, including
a majority of the Trustees who are not parties to this Contract or interested
persons of any such party cast in person at a meeting called for that purpose;
and (b) Adviser shall not have notified a Fund in writing at least sixty (60)
days prior to the anniversary date of this Contract in any year thereafter that
it does not desire such continuation with respect to that Fund. If a Fund is
added after the first approval by the Trustees as described above, this Contract
will be effective as to that Fund upon execution of the applicable exhibit and
will continue in effect until the next annual approval of this Contract by the
Trustees and thereafter for successive periods of one year, subject to approval
as described above.
8. Notwithstanding any provision in this Contract, it may be terminated at
any time with respect to any Fund, without the payment of any penalty, by the
Trustees of the Trust or by a vote of the shareholders of that Fund on sixty
(60) days' written notice to Adviser.
9. This Contract may not be assigned by Adviser and shall automatically
terminate in the event of any assignment. Adviser may employ or contract with
such other person, persons, corporation, or corporations at its own cost and
expense as it shall determine in order to assist it in carrying out this
Contract.
10. In the absence of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the obligations or duties under this Contract on the part
of Adviser, Adviser shall not be liable to the Trust or to any of the Funds or
to any shareholder for any act or omission in the course of or connected in any
way with rendering services or for any losses that may be sustained in the
purchase, holding, or sale of any security.
11. This Contract may be amended at any time by agreement of the parties
provided that the amendment shall be approved both by the vote of a majority of
the Trustees of the Trust including a majority of the Trustees who are not
parties to this Contract or interested persons of any such party to this
Contract (other than as Trustees of the Trust) cast in person at a meeting
called for that purpose, and, where required by Section 15(a)(2) of the Act, on
behalf of a Fund by a majority of the outstanding voting securities of such Fund
as defined in Section 2(a)(42) of the Act.
12. The Adviser acknowledges that all sales literature for investment
companies (such as the Trust) are subject to strict regulatory oversight. The
Adviser agrees to submit any proposed sales literature for the Trust (or any
Fund) or for itself or its affiliates which mentions the Trust (or any Fund) to
the Trust's distributor for review and filing with the appropriate regulatory
authorities prior to the public release of any such sales literature, provided,
however, that nothing herein shall be construed so as to create any obligation
or duty on the part of the Adviser to produce sales literature for the Trust (or
any Fund). The Trust agrees to cause its distributor to promptly review all such
sales literature to ensure compliance with relevant requirements, to promptly
advise Adviser of any deficiencies contained in such sales literature, to
promptly file complying sales literature with the relevant authorities, and to
cause such sales literature to be distributed to prospective investors in the
Trust.
13. Adviser is hereby expressly put on notice of the limitation of
liability as set forth in Article XII of the Declaration of Trust and agrees
that the obligations pursuant to this Contract of a particular Fund and of the
Trust with respect to that particular Fund be limited solely to the assets of
that particular Fund, and Adviser shall not seek satisfaction of any such
obligation from any other Fund, the shareholders of any Fund, the Trustees,
officers, employees or agents of the Trust, or any of them.
14. The Trust and the Funds are hereby expressly put on notice of the
limitation of liability as set forth in the Declaration of Trust of the Adviser
and agree that the obligations assumed by the Adviser pursuant to this Contract
shall be limited in any case to the Adviser and its assets and, except to the
extent expressly permitted by the Investment Company Act of 1940, as amended,
the Trust and the Funds shall not seek satisfaction of any such obligation from
the shareholders of the Adviser, the Trustees, officers, employees, or agents of
the Adviser, or any of them.
15. The parties hereto acknowledge that Federated Investors has reserved
the right to grant the non-exclusive use of the name Federated Core Trust or any
derivative thereof to any other investment company, investment company
portfolio, investment adviser, distributor or other business enterprise, and to
withdraw from the Trust and one or more of the Funds the use of the name
Federated Core Trust. The name Federated Core Trust will continue to be used by
the Trust and each Fund so long as such use is mutually agreeable to Federated
Investors and the Trust.
16. This Contract shall be construed in accordance with and governed by
the laws of the Commonwealth of Pennsylvania.
17. This Contract will become binding on the parties hereto upon their
execution of the attached exhibits to this Contract.
<PAGE>
EXHIBIT A
to the
Investment Advisory Contract
High-Yield Bond Portfolio
The Adviser shall provide services to the above-named portfolio of the
Trust at no charge.
Witness the due execution hereof this 1st day of January, 1998.
Federated Core Trust
By:
Name:
Title:
Federated Research Corp.
By:
Name:
Title:
EXHIBIT 8 UNDER FORM N-1A
EXHIBIT 10 UNDER ITEM 601/REG. S-K
CUSTODIAN CONTRACT
BETWEEN
FEDERATED INVESTMENT COMPANIES
AND
STATE STREET BANK AND TRUST COMPANY
AND
FEDERATED SERVICES COMPANY
TABLE OF CONTENTS
Page
1. Employment of Custodian and Property to be Held by It..................1
2. Duties of the Custodian With Respect to Property of the Funds Held by
the Custodian 2
2.1 Holding Securities...............................................2
2.2 Delivery of Securities...........................................2
2.3 Registration of Securities.......................................5
2.4 Bank Accounts....................................................6
2.5 Payments for Shares..............................................7
2.6 Availability of Federal Funds....................................7
2.7 Collection of Income.............................................7
2.8 Payment of Fund Moneys...........................................8
2.9 Liability for Payment in Advance of Receipt of
Securities Purchased. 9
2.10 Payments for Repurchases or Redemptions of Shares of a Fund......9
2.11 Appointment of Agents...........................................10
2.12 Deposit of Fund Assets in Securities System.....................10
2.13 Segregated Account..............................................12
2.14 Joint Repurchase Agreements.....................................13
2.15 Ownership Certificates for Tax Purposes.........................13
2.16 Proxies.........................................................13
2.17 Communications Relating to Fund Portfolio Securities............13
2.18 Proper Instructions.............................................14
2.19 Actions Permitted Without Express Authority.....................14
2.20 Evidence of Authority...........................................15
2.21 Notice to Trust by Custodian Regarding Cash Movement............15
3. Duties of Custodian With Respect to the Books of Account and
Calculation of Net Asset Value and Net Income.........................15
4. Records .............................................................16
5. Opinion of Funds' Independent Public Accountants/Auditors.............16
6. Reports to Trust by Independent Public Accountants/Auditors...........17
7. Compensation of Custodian.............................................17
8. Responsibility of Custodian...........................................17
9. Effective Period, Termination and Amendment...........................19
10. Successor Custodian...................................................20
11. Interpretive and Additional Provisions................................21
12. Massachusetts Law to Apply............................................22
13. Notices .............................................................22
14. Counterparts..........................................................22
15. Limitations of Liability..............................................22
<PAGE>
CUSTODIAN CONTRACT
This Contract between those INVESTMENT COMPANIES listed on Exhibit 1, as it may
be amended from time to time, (the "Trust"), which may be Massachusetts business
trusts or Maryland corporations or have such other form of organization as may
be indicated, on behalf of the portfolios (hereinafter collectively called the
"Funds" and individually referred to as a "Fund") of the Trust, having its
principal place of business at Federated Investors Tower, Pittsburgh,
Pennsylvania, 15222-3779, and STATE STREET BANK AND TRUST COMPANY, a
Massachusetts trust company, having its principal place of business at 225
Franklin Street, Boston, Massachusetts, 02110, hereinafter called the
"Custodian", and FEDERATED SERVICES COMPANY, a Delaware business trust company,
having its principal place of business at Federated Investors Tower, Pittsburgh,
Pennsylvania, 15222-3779, hereinafter called ("Company").
WITNESSETH: That in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by It
The Trust hereby employs the Custodian as the custodian of the assets of
each of the Funds of the Trust. Except as otherwise expressly provided
herein, the securities and other assets of each of the Funds shall be
segregated from the assets of each of the other Funds and from all other
persons and entities. The Trust will deliver to the Custodian all
securities and cash owned by the Funds and all payments of income,
payments of principal or capital distributions received by them with
respect to all securities owned by the Funds from time to time, and the
cash consideration received by them for shares ("Shares") of beneficial
interest/capital stock of the Funds as may be issued or sold from time to
time. The Custodian shall not be responsible for any property of the Funds
held or received by the Funds and not delivered to the Custodian. Upon
receipt of "Proper Instructions" (within the meaning of Section 2.18), the
Custodian shall from time to time employ one or more sub-custodians upon
the terms specified in the Proper Instructions, provided that the
Custodian shall have no more or less responsibility or liability to the
Trust or any of the Funds on account of any actions or omissions of any
sub-custodian so employed than any such sub-custodian has to the
Custodian.
2. Duties of the Custodian With Respect to Property of the Funds Held by
the Custodian
2.1 Holding Securities. The Custodian shall hold and physically segregate
for the account of each Fund all non-cash property, including all
securities owned by each Fund, other than securities which are
maintained pursuant to Section 2.12 in a clearing agency which acts
as a securities depository or in a book-entry system authorized by
the U.S. Department of the Treasury, collectively referred to herein
as "Securities System", or securities which are subject to a joint
repurchase agreement with affiliated funds pursuant to Section 2.14.
The Custodian shall maintain records of all receipts, deliveries and
locations of such securities, together with a current inventory
thereof, and shall conduct periodic physical inspections of
certificates representing stocks, bonds and other securities held by
it under this Contract in such manner as the Custodian shall
determine from time to time to be advisable in order to verify the
accuracy of such inventory. With respect to securities held by any
agent appointed pursuant to Section 2.11 hereof, and with respect to
securities held by any sub-custodian appointed pursuant to Section 1
hereof, the Custodian may rely upon certificates from such agent as
to the holdings of such agent and from such sub-custodian as to the
holdings of such sub-custodian, it being understood that such
reliance in no way relieves the Custodian of its responsibilities
under this Contract. The Custodian will promptly report to the Trust
the results of such inspections, indicating any shortages or
discrepancies uncovered thereby, and take appropriate action to
remedy any such shortages or discrepancies.
2.2 Delivery of Securities. The Custodian shall release and deliver
securities owned by a Fund held by the Custodian or in a Securities
System account of the Custodian only upon receipt of Proper
Instructions, which may be continuing instructions when deemed
appropriate by the parties, and only in the following cases:
(1) Upon sale of such securities for the account of a Fund and
receipt of payment therefor;
(2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the Trust;
(3) In the case of a sale effected through a Securities System, in
accordance with the provisions of Section 2.12 hereof;
(4) To the depository agent in connection with tender or other
similar offers for portfolio securities of a Fund, in accordance
with the provisions of Section 2.17 hereof;
(5) To the issuer thereof or its agent when such securities are
called, redeemed, retired or otherwise become payable; provided
that, in any such case, the cash or other consideration is to be
delivered to the Custodian;
(6) To the issuer thereof, or its agent, for transfer into the name
of a Fund or into the name of any nominee or nominees of the
Custodian or into the name or nominee name of any agent appointed
pursuant to Section 2.11 or into the name or nominee name of any
sub-custodian appointed pursuant to Section 1; or for exchange
for a different number of bonds, certificates or other evidence
representing the same aggregate face amount or number of units;
provided that, in any such case, the new securities are to be
delivered to the Custodian;
(7) Upon the sale of such securities for the account of a Fund, to
the broker or its clearing agent, against a receipt, for
examination in accordance with "street delivery custom"; provided
that in any such case, the Custodian shall have no responsibility
or liability for any loss arising from the delivery of such
securities prior to receiving payment for such securities except
as may arise from the Custodian's own failure to act in
accordance with the standard of reasonable care or any higher
standard of care imposed upon the Custodian by any applicable law
or regulation if such above-stated standard of reasonable care
were not part of this Contract;
(8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment
of the securities of the issuer of such securities, or pursuant
to provisions for conversion contained in such securities, or
pursuant to any deposit agreement; provided that, in any such
case, the new securities and cash, if any, are to be delivered to
the Custodian;
(9) In the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights or
similar securities or the surrender of interim receipts or
temporary securities for definitive securities; provided that, in
any such case, the new securities and cash, if any, are to be
delivered to the Custodian;
(10)For delivery in connection with any loans of portfolio securities
of a Fund, but only against receipt of adequate collateral in the
form of (a) cash, in an amount specified by the Trust, (b)
certificated securities of a description specified by the Trust,
registered in the name of the Fund or in the name of a nominee of
the Custodian referred to in Section 2.3 hereof or in proper form
for transfer, or (c) securities of a description specified by the
Trust, transferred through a Securities System in accordance with
Section 2.12 hereof;
(11)For delivery as security in connection with any borrowings
requiring a pledge of assets by a Fund, but only against receipt
of amounts borrowed, except that in cases where additional
collateral is required to secure a borrowing already made,
further securities may be released for the purpose;
(12)For delivery in accordance with the provisions of any agreement
among the Trust or a Fund, the Custodian and a broker-dealer
registered under the Securities Exchange Act of 1934, as amended,
(the "Exchange Act") and a member of The National Association of
Securities Dealers, Inc. ("NASD"), relating to compliance with
the rules of The Options Clearing Corporation and of any
registered national securities exchange, or of any similar
organization or organizations, regarding escrow or other
arrangements in connection with transactions for a Fund;
(13)For delivery in accordance with the provisions of any agreement
among the Trust or a Fund, the Custodian, and a Futures
Commission Merchant registered under the Commodity Exchange Act,
relating to compliance with the rules of the Commodity Futures
Trading Commission and/or any Contract Market, or any similar
organization or organizations, regarding account deposits in
connection with transaction for a Fund;
(14)Upon receipt of instructions from the transfer agent ("Transfer
Agent") for a Fund, for delivery to such Transfer Agent or to the
holders of shares in connection with distributions in kind, in
satisfaction of requests by holders of Shares for repurchase or
redemption; and
(15)For any other proper corporate purpose, but only upon receipt of,
in addition to Proper Instructions, a certified copy of a
resolution of the Executive Committee of the Trust on behalf of a
Fund signed by an officer of the Trust and certified by its
Secretary or an Assistant Secretary, specifying the securities to
be delivered, setting forth the purpose for which such delivery
is to be made, declaring such purpose to be a proper corporate
purpose, and naming the person or persons to whom delivery of
such securities shall be made.
2.3 Registration of Securities. Securities held by the Custodian (other
than bearer securities) shall be registered in the name of a
particular Fund or in the name of any nominee of the Fund or of any
nominee of the Custodian which nominee shall be assigned exclusively
to the Fund, unless the Trust has authorized in writing the
appointment of a nominee to be used in common with other registered
investment companies affiliated with the Fund, or in the name or
nominee name of any agent appointed pursuant to Section 2.11 or in
the name or nominee name of any sub-custodian appointed pursuant to
Section 1. All securities accepted by the Custodian on behalf of a
Fund under the terms of this Contract shall be in "street name" or
other good delivery form.
2.4 Bank Accounts. The Custodian shall open and maintain a separate bank
account or accounts in the name of each Fund, subject only to draft
or order by the Custodian acting pursuant to the terms of this
Contract, and shall hold in such account or accounts, subject to the
provisions hereof, all cash received by it from or for the account of
each Fund, other than cash maintained in a joint repurchase account
with other affiliated funds pursuant to Section 2.14 of this Contract
or by a particular Fund in a bank account established and used in
accordance with Rule 17f-3 under the Investment Company Act of 1940,
as amended, (the "1940 Act"). Funds held by the Custodian for a Fund
may be deposited by it to its credit as Custodian in the Banking
Department of the Custodian or in such other banks or trust companies
as it may in its discretion deem necessary or desirable; provided,
however, that every such bank or trust company shall be qualified to
act as a custodian under the 1940 Act and that each such bank or
trust company and the funds to be deposited with each such bank or
trust company shall be approved by vote of a majority of the Board of
Trustees/Directors ("Board") of the Trust. Such funds shall be
deposited by the Custodian in its capacity as Custodian for the Fund
and shall be withdrawable by the Custodian only in that capacity. If
requested by the Trust, the Custodian shall furnish the Trust, not
later than twenty (20) days after the last business day of each
month, an internal reconciliation of the closing balance as of that
day in all accounts described in this section to the balance shown on
the daily cash report for that day rendered to the Trust.
2.5 Payments for Shares. The Custodian shall make such arrangements with
the Transfer Agent of each Fund, as will enable the Custodian to
receive the cash consideration due to each Fund and will deposit into
each Fund's account such payments as are received from the Transfer
Agent. The Custodian will provide timely notification to the Trust
and the Transfer Agent of any receipt by it of payments for Shares of
the respective Fund.
2.6 Availability of Federal Funds. Upon mutual agreement between the
Trust and the Custodian, the Custodian shall make federal funds
available to the Funds as of specified times agreed upon from time to
time by the Trust and the Custodian in the amount of checks, clearing
house funds, and other non-federal funds received in payment for
Shares of the Funds which are deposited into the Funds' accounts.
2.7 Collection of Income.
(1) The Custodian shall collect on a timely basis all income and
other payments with respect to registered securities held
hereunder to which each Fund shall be entitled either by law or
pursuant to custom in the securities business, and shall collect
on a timely basis all income and other payments with respect to
bearer securities if, on the date of payment by the issuer, such
securities are held by the Custodian or its agent thereof and
shall credit such income, as collected, to each Fund's custodian
account. Without limiting the generality of the foregoing, the
Custodian shall detach and present for payment all coupons and
other income items requiring presentation as and when they become
due and shall collect interest when due on securities held
hereunder. The collection of income due the Funds on securities
loaned pursuant to the provisions of Section 2.2 (10) shall be
the responsibility of the Trust. The Custodian will have no duty
or responsibility in connection therewith, other than to provide
the Trust with such information or data as may be necessary to
assist the Trust in arranging for the timely delivery to the
Custodian of the income to which each Fund is properly entitled.
(2) The Custodian shall promptly notify the Trust whenever income due
on securities is not collected in due course and will provide the
Trust with monthly reports of the status of past due income
unless the parties otherwise agree.
2.8 Payment of Fund Moneys. Upon receipt of Proper Instructions, which
may be continuing instructions when deemed appropriate by the
parties, the Custodian shall pay out moneys of each Fund in the
following cases only:
(1) Upon the purchase of securities, futures contracts or options on
futures contracts for the account of a Fund but only (a) against
the delivery of such securities, or evidence of title to futures
contracts, to the Custodian (or any bank, banking firm or trust
company doing business in the United States or abroad which is
qualified under the 1940 Act to act as a custodian and has been
designated by the Custodian as its agent for this purpose)
registered in the name of the Fund or in the name of a nominee of
the Custodian referred to in Section 2.3 hereof or in proper form
for transfer, (b) in the case of a purchase effected through a
Securities System, in accordance with the conditions set forth in
Section 2.12 hereof or (c) in the case of repurchase agreements
entered into between the Trust and any other party, (i) against
delivery of the securities either in certificate form or through
an entry crediting the Custodian's account at the Federal Reserve
Bank with such securities or (ii) against delivery of the receipt
evidencing purchase for the account of the Fund of securities
owned by the Custodian along with written evidence of the
agreement by the Custodian to repurchase such securities from the
Fund;
(2) In connection with conversion, exchange or surrender of
securities owned by a Fund as set forth in Section 2.2 hereof;
(3) For the redemption or repurchase of Shares of a Fund issued by
the Trust as set forth in Section 2.10 hereof;
(4) For the payment of any expense or liability incurred by a Fund,
including but not limited to the following payments for the
account of the Fund: interest; taxes; management, accounting,
transfer agent and legal fees; and operating expenses of the
Fund, whether or not such expenses are to be in whole or part
capitalized or treated as deferred expenses;
(5) For the payment of any dividends on Shares of a Fund declared
pursuant to the governing documents of the Trust;
(6) For payment of the amount of dividends received in respect of
securities sold short;
(7) For any other proper purpose, but only upon receipt of, in
addition to Proper Instructions, a certified copy of a resolution
of the Executive Committee of the Trust on behalf of a Fund
signed by an officer of the Trust and certified by its Secretary
or an Assistant Secretary, specifying the amount of such payment,
setting forth the purpose for which such payment is to be made,
declaring such purpose to be a proper purpose, and naming the
person or persons to whom such payment is to be made.
2.9 Liability for Payment in Advance of Receipt of Securities Purchased.
In any and every case where payment for purchase of securities for
the account of a Fund is made by the Custodian in advance of receipt
of the securities purchased, in the absence of specific written
instructions from the Trust to so pay in advance, the Custodian shall
be absolutely liable to the Fund for such securities to the same
extent as if the securities had been received by the Custodian.
2.10 Payments for Repurchases or Redemptions of Shares of a Fund. From
such funds as may be available for the purpose of repurchasing or
redeeming Shares of a Fund, but subject to the limitations of the
Declaration of Trust/Articles of Incorporation and any applicable
votes of the Board of the Trust pursuant thereto, the Custodian
shall, upon receipt of instructions from the Transfer Agent, make
funds available for payment to holders of shares of such Fund who
have delivered to the Transfer Agent a request for redemption or
repurchase of their shares including without limitation through bank
drafts, automated clearinghouse facilities, or by other means. In
connection with the redemption or repurchase of Shares of the Funds,
the Custodian is authorized upon receipt of instructions from the
Transfer Agent to wire funds to or through a commercial bank
designated by the redeeming shareholders.
2.11 Appointment of Agents. The Custodian may at any time or times in its
discretion appoint (and may at any time remove) any other bank or
trust company which is itself qualified under the 1940 Act and any
applicable state law or regulation, to act as a custodian, as its
agent to carry out such of the provisions of this Section 2 as the
Custodian may from time to time direct; provided, however, that the
appointment of any agent shall not relieve the Custodian of its
responsibilities or liabilities hereunder.
2.12 Deposit of Fund Assets in Securities System. The Custodian may
deposit and/or maintain securities owned by the Funds in a clearing
agency registered with the Securities and Exchange Commission ("SEC")
under Section 17A of the Exchange Act, which acts as a securities
depository, or in the book-entry system authorized by the U.S.
Department of the Treasury and certain federal agencies, collectively
referred to herein as "Securities System" in accordance with
applicable Federal Reserve Board and SEC rules and regulations, if
any, and subject to the following provisions:
(1) The Custodian may keep securities of each Fund in a Securities
System provided that such securities are represented in an
account ("Account") of the Custodian in the Securities System
which shall not include any assets of the Custodian other than
assets held as a fiduciary, custodian or otherwise for customers;
(2) The records of the Custodian with respect to securities of the
Funds which are maintained in a Securities System shall identify
by book-entry those securities belonging to each Fund;
(3) The Custodian shall pay for securities purchased for the account
of each Fund upon (i) receipt of advice from the Securities
System that such securities have been transferred to the Account,
and (ii) the making of an entry on the records of the Custodian
to reflect such payment and transfer for the account of the Fund.
The Custodian shall transfer securities sold for the account of a
Fund upon (i) receipt of advice from the Securities System that
payment for such securities has been transferred to the Account,
and (ii) the making of an entry on the records of the Custodian
to reflect such transfer and payment for the account of the Fund.
Copies of all advices from the Securities System of transfers of
securities for the account of a Fund shall identify the Fund, be
maintained for the Fund by the Custodian and be provided to the
Trust at its request. Upon request, the Custodian shall furnish
the Trust confirmation of each transfer to or from the account of
a Fund in the form of a written advice or notice and shall
furnish to the Trust copies of daily transaction sheets
reflecting each day's transactions in the Securities System for
the account of a Fund.
(4) The Custodian shall provide the Trust with any report obtained by
the Custodian on the Securities System's accounting system,
internal accounting control and procedures for safeguarding
securities deposited in the Securities System;
(5) The Custodian shall have received the initial certificate,
required by Section 9 hereof;
(6) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Trust for any loss or damage to
a Fund resulting from use of the Securities System by reason of
any negligence, misfeasance or misconduct of the Custodian or any
of its agents or of any of its or their employees or from failure
of the Custodian or any such agent to enforce effectively such
rights as it may have against the Securities System; at the
election of the Trust, it shall be entitled to be subrogated to
the rights of the Custodian with respect to any claim against the
Securities System or any other person which the Custodian may
have as a consequence of any such loss or damage if and to the
extent that a Fund has not been made whole for any such loss or
damage.
(7) The authorization contained in this Section 2.12 shall not
relieve the Custodian from using reasonable care and diligence in
making use of any Securities System.
2.13 Segregated Account. The Custodian shall upon receipt of Proper
Instructions establish and maintain a segregated account or accounts
for and on behalf of each Fund, into which account or accounts may be
transferred cash and/or securities, including securities maintained
in an account by the Custodian pursuant to Section 2.12 hereof, (i)
in accordance with the provisions of any agreement among the Trust,
the Custodian and a broker-dealer registered under the Exchange Act
and a member of the NASD (or any futures commission merchant
registered under the Commodity Exchange Act), relating to compliance
with the rules of The Options Clearing Corporation and of any
registered national securities exchange (or the Commodity Futures
Trading Commission or any registered contract market), or of any
similar organization or organizations, regarding escrow or other
arrangements in connection with transactions for a Fund, (ii) for
purpose of segregating cash or government securities in connection
with options purchased, sold or written for a Fund or commodity
futures contracts or options thereon purchased or sold for a Fund,
(iii) for the purpose of compliance by the Trust or a Fund with the
procedures required by any release or releases of the SEC relating to
the maintenance of segregated accounts by registered investment
companies and (iv) for other proper corporate purposes, but only, in
the case of clause (iv), upon receipt of, in addition to Proper
Instructions, a certified copy of a resolution of the Board or of the
Executive Committee signed by an officer of the Trust and certified
by the Secretary or an Assistant Secretary, setting forth the purpose
or purposes of such segregated account and declaring such purposes to
be proper corporate purposes.
2.14 Joint Repurchase Agreements. Upon the receipt of Proper Instructions,
the Custodian shall deposit and/or maintain any assets of a Fund and
any affiliated funds which are subject to joint repurchase
transactions in an account established solely for such transactions
for the Fund and its affiliated funds. For purposes of this Section
2.14, "affiliated funds" shall include all investment companies and
their portfolios for which subsidiaries or affiliates of Federated
Investors serve as investment advisers, distributors or
administrators in accordance with applicable exemptive orders from
the SEC. The requirements of segregation set forth in Section 2.1
shall be deemed to be waived with respect to such assets.
2.15 Ownership Certificates for Tax Purposes. The Custodian shall execute
ownership and other certificates and affidavits for all federal and
state tax purposes in connection with receipt of income or other
payments with respect to securities of a Fund held by it and in
connection with transfers of securities.
2.16 Proxies. The Custodian shall, with respect to the securities held
hereunder, cause to be promptly executed by the registered holder of
such securities, if the securities are registered otherwise than in
the name of a Fund or a nominee of a Fund, all proxies, without
indication of the manner in which such proxies are to be voted, and
shall promptly deliver to the Trust such proxies, all proxy
soliciting materials and all notices relating to such securities.
2.17 Communications Relating to Fund Portfolio Securities. The Custodian
shall transmit promptly to the Trust all written information
(including, without limitation, pendency of calls and maturities of
securities and expirations of rights in connection therewith and
notices of exercise of call and put options written by the Fund and
the maturity of futures contracts purchased or sold by the Fund)
received by the Custodian from issuers of the securities being held
for the Fund. With respect to tender or exchange offers, the
Custodian shall transmit promptly to the Trust all written
information received by the Custodian from issuers of the securities
whose tender or exchange is sought and from the party (or his agents)
making the tender or exchange offer. If the Trust desires to take
action with respect to any tender offer, exchange offer or any other
similar transaction, the Trust shall notify the Custodian in writing
at least three business days prior to the date on which the Custodian
is to take such action. However, the Custodian shall nevertheless
exercise its best efforts to take such action in the event that
notification is received three business days or less prior to the
date on which action is required.
2.18 Proper Instructions. Proper Instructions as used throughout this
Section 2 means a writing signed or initialed by one or more person
or persons as the Board shall have from time to time authorized. Each
such writing shall set forth the specific transaction or type of
transaction involved. Oral instructions will be deemed to be Proper
Instructions if (a) the Custodian reasonably believes them to have
been given by a person previously authorized in Proper Instructions
to give such instructions with respect to the transaction involved,
and (b) the Trust promptly causes such oral instructions to be
confirmed in writing. Upon receipt of a certificate of the Secretary
or an Assistant Secretary as to the authorization by the Board of the
Trust accompanied by a detailed description of procedures approved by
the Board, Proper Instructions may include communications effected
directly between electro-mechanical or electronic devices provided
that the Board and the Custodian are satisfied that such procedures
afford adequate safeguards for a Fund's assets.
2.19 Actions Permitted Without Express Authority. The Custodian may in its
discretion, without express authority from the Trust:
(1) make payments to itself or others for minor expenses of handling
securities or other similar items relating to its duties under
this Contract, provided that all such payments shall be accounted
for to the Trust in such form that it may be allocated to the
affected Fund;
(2) surrender securities in temporary form for securities in
definitive form;
(3) endorse for collection, in the name of a Fund, checks, drafts and
other negotiable instruments; and
(4) in general, attend to all non-discretionary details in connection
with the sale, exchange, substitution, purchase, transfer and
other dealings with the securities and property of each Fund
except as otherwise directed by the Trust.
2.20 Evidence of Authority. The Custodian shall be protected in acting
upon any instructions, notice, request, consent, certificate or other
instrument or paper reasonably believed by it to be genuine and to
have been properly executed on behalf of a Fund. The Custodian may
receive and accept a certified copy of a vote of the Board of the
Trust as conclusive evidence (a) of the authority of any person to
act in accordance with such vote or (b) of any determination of or
any action by the Board pursuant to the Declaration of Trust/Articles
of Incorporation as described in such vote, and such vote may be
considered as in full force and effect until receipt by the Custodian
of written notice to the contrary.
2.21 Notice to Trust by Custodian Regarding Cash Movement. The Custodian
will provide timely notification to the Trust of any receipt of cash,
income or payments to the Trust and the release of cash or payment by
the Trust.
3. Duties of Custodian With Respect to the Books of Account and Calculation of
Net Asset Value and Net Income.
The Custodian shall cooperate with and supply necessary information to the
entity or entities appointed by the Board of the Trust to keep the books
of account of each Fund and/or compute the net asset value per share of
the outstanding Shares of each Fund or, if directed in writing to do so by
the Trust, shall itself keep such books of account and/or compute such net
asset value per share. If so directed, the Custodian shall also calculate
daily the net income of a Fund as described in the Fund's currently
effective prospectus and Statement of Additional Information
("Prospectus") and shall advise the Trust and the Transfer Agent daily of
the total amounts of such net income and, if instructed in writing by an
officer of the Trust to do so, shall advise the Transfer Agent
periodically of the division of such net income among its various
components. The calculations of the net asset value per share and the
daily income of a Fund shall be made at the time or times described from
time to time in the Fund's currently effective Prospectus.
4. Records.
The Custodian shall create and maintain all records relating to its
activities and obligations under this Contract in such manner as will meet
the obligations of the Trust and the Funds under the 1940 Act, with
particular attention to Section 31 thereof and Rules 31a-1 and 31a-2
thereunder, and specifically including identified cost records used for
tax purposes. All such records shall be the property of the Trust and
shall at all times during the regular business hours of the Custodian be
open for inspection by duly authorized officers, employees or agents of
the Trust and employees and agents of the SEC. In the event of termination
of this Contract, the Custodian will deliver all such records to the
Trust, to a successor Custodian, or to such other person as the Trust may
direct. The Custodian shall supply daily to the Trust a tabulation of
securities owned by a Fund and held by the Custodian and shall, when
requested to do so by the Trust and for such compensation as shall be
agreed upon between the Trust and the Custodian, include certificate
numbers in such tabulations.
5. Opinion of Funds' Independent Public Accountants/Auditors.
The Custodian shall take all reasonable action, as the Trust may from time
to time request, to obtain from year to year favorable opinions from each
Fund's independent public accountants/auditors with respect to its
activities hereunder in connection with the preparation of the Fund's
registration statement, periodic reports, or any other reports to the SEC
and with respect to any other requirements of such Commission.
6. Reports to Trust by Independent Public Accountants/Auditors.
The Custodian shall provide the Trust, at such times as the Trust may
reasonably require, with reports by independent public
accountants/auditors for each Fund on the accounting system, internal
accounting control and procedures for safeguarding securities, futures
contracts and options on futures contracts, including securities deposited
and/or maintained in a Securities System, relating to the services
provided by the Custodian for the Fund under this Contract; such reports
shall be of sufficient scope and in sufficient detail, as may reasonably
be required by the Trust, to provide reasonable assurance that any
material inadequacies would be disclosed by such examination and, if there
are no such inadequacies, the reports shall so state.
7. Compensation of Custodian.
The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, as agreed upon from time to time
between Company and the Custodian.
8. Responsibility of Custodian.
The Custodian shall be held to a standard of reasonable care in carrying
out the provisions of this Contract; provided, however, that the Custodian
shall be held to any higher standard of care which would be imposed upon
the Custodian by any applicable law or regulation if such above stated
standard of reasonable care was not part of this Contract. The Custodian
shall be entitled to rely on and may act upon advice of counsel (who may
be counsel for the Trust) on all matters, and shall be without liability
for any action reasonably taken or omitted pursuant to such advice,
provided that such action is not in violation of applicable federal or
state laws or regulations, and is in good faith and without negligence.
Subject to the limitations set forth in Section 15 hereof, the Custodian
shall be kept indemnified by the Trust but only from the assets of the
Fund involved in the issue at hand and be without liability for any action
taken or thing done by it in carrying out the terms and provisions of this
Contract in accordance with the above standards. In order that the
indemnification provisions contained in this Section 8 shall apply,
however, it is understood that if in any case the Trust may be asked to
indemnify or save the Custodian harmless, the Trust shall be fully and
promptly advised of all pertinent facts concerning the situation in
question, and it is further understood that the Custodian will use all
reasonable care to identify and notify the Trust promptly concerning any
situation which presents or appears likely to present the probability of
such a claim for indemnification. The Trust shall have the option to
defend the Custodian against any claim which may be the subject of this
indemnification, and in the event that the Trust so elects it will so
notify the Custodian and thereupon the Trust shall take over complete
defense of the claim, and the Custodian shall in such situation initiate
no further legal or other expenses for which it shall seek indemnification
under this Section. The Custodian shall in no case confess any claim or
make any compromise in any case in which the Trust will be asked to
indemnify the Custodian except with the Trust's prior written consent.
Notwithstanding the foregoing, the responsibility of the Custodian with
respect to redemptions effected by check shall be in accordance with a
separate Agreement entered into between the Custodian and the Trust. If
the Trust requires the Custodian to take any action with respect to
securities, which action involves the payment of money or which action
may, in the reasonable opinion of the Custodian, result in the Custodian
or its nominee assigned to a Fund being liable for the payment of money or
incurring liability of some other form, the Custodian may request the
Trust, as a prerequisite to requiring the Custodian to take such action,
to provide indemnity to the Custodian in an amount and form satisfactory
to the Custodian. Subject to the limitations set forth in Section 15
hereof, the Trust agrees to indemnify and hold harmless the Custodian and
its nominee from and against all taxes, charges, expenses, assessments,
claims and liabilities (including counsel fees) (referred to herein as
authorized charges) incurred or assessed against it or its nominee in
connection with the performance of this Contract, except such as may arise
from it or its nominee's own failure to act in accordance with the
standard of reasonable care or any higher standard of care which would be
imposed upon the Custodian by any applicable law or regulation if such
above-stated standard of reasonable care were not part of this Contract.
To secure any authorized charges and any advances of cash or securities
made by the Custodian to or for the benefit of a Fund for any purpose
which results in the Fund incurring an overdraft at the end of any
business day or for extraordinary or emergency purposes during any
business day, the Trust hereby grants to the Custodian a security interest
in and pledges to the Custodian securities held for the Fund by the
Custodian, in an amount not to exceed 10 percent of the Fund's gross
assets, the specific securities to be designated in writing from time to
time by the Trust or the Fund's investment adviser. Should the Trust fail
to make such designation, or should it instruct the Custodian to make
advances exceeding the percentage amount set forth above and should the
Custodian do so, the Trust hereby agrees that the Custodian shall have a
security interest in all securities or other property purchased for a Fund
with the advances by the Custodian, which securities or property shall be
deemed to be pledged to the Custodian, and the written instructions of the
Trust instructing their purchase shall be considered the requisite
description and designation of the property so pledged for purposes of the
requirements of the Uniform Commercial Code. Should the Trust fail to
cause a Fund to repay promptly any authorized charges or advances of cash
or securities, subject to the provision of the second paragraph of this
Section 8 regarding indemnification, the Custodian shall be entitled to
use available cash and to dispose of pledged securities and property as is
necessary to repay any such advances.
9. Effective Period, Termination and Amendment.
This Contract shall become effective as of its execution, shall continue
in full force and effect until terminated as hereinafter provided, may be
amended at any time by mutual agreement of the parties hereto and may be
terminated by either party by an instrument in writing delivered or
mailed, postage prepaid to the other party, such termination to take
effect not sooner than sixty (60) days after the date of such delivery or
mailing; provided, however that the Custodian shall not act under Section
2.12 hereof in the absence of receipt of an initial certificate of the
Secretary or an Assistant Secretary that the Board of the Trust has
approved the initial use of a particular Securities System as required in
each case by Rule 17f-4 under the 1940 Act; provided further, however,
that the Trust shall not amend or terminate this Contract in contravention
of any applicable federal or state regulations, or any provision of the
Declaration of Trust/Articles of Incorporation, and further provided, that
the Trust may at any time by action of its Board (i) substitute another
bank or trust company for the Custodian by giving notice as described
above to the Custodian, or (ii) immediately terminate this Contract in the
event of the appointment of a conservator or receiver for the Custodian by
the appropriate banking regulatory agency or upon the happening of a like
event at the direction of an appropriate regulatory agency or court of
competent jurisdiction. Upon termination of the Contract, the Trust shall
pay to the Custodian such compensation as may be due as of the date of
such termination and shall likewise reimburse the Custodian for its costs,
expenses and disbursements.
10. Successor Custodian.
If a successor custodian shall be appointed by the Board of the Trust, the
Custodian shall, upon termination, deliver to such successor custodian at
the office of the Custodian, duly endorsed and in the form for transfer,
all securities then held by it hereunder for each Fund and shall transfer
to separate accounts of the successor custodian all of each Fund's
securities held in a Securities System. If no such successor custodian
shall be appointed, the Custodian shall, in like manner, upon receipt of a
certified copy of a vote of the Board of the Trust, deliver at the office
of the Custodian and transfer such securities, funds and other properties
in accordance with such vote. In the event that no written order
designating a successor custodian or certified copy of a vote of the Board
shall have been delivered to the Custodian on or before the date when such
termination shall become effective, then the Custodian shall have the
right to deliver to a bank or trust company, which is a "bank" as defined
in the 1940 Act, (delete "doing business ... Massachusetts" unless SSBT is
the Custodian) doing business in Boston, Massachusetts, of its own
selection, having an aggregate capital, surplus, and undivided profits, as
shown by its last published report, of not less than $100,000,000, all
securities, funds and other properties held by the Custodian and all
instruments held by the Custodian relative thereto and all other property
held by it under this Contract for each Fund and to transfer to separate
accounts of such successor custodian all of each Fund's securities held in
any Securities System. Thereafter, such bank or trust company shall be the
successor of the Custodian under this Contract. In the event that
securities, funds and other properties remain in the possession of the
Custodian after the date of termination hereof owing to failure of the
Trust to procure the certified copy of the vote referred to or of the
Board to appoint a successor custodian, the Custodian shall be entitled to
fair compensation for its services during such period as the Custodian
retains possession of such securities, funds and other properties and the
provisions of this Contract relating to the duties and obligations of the
Custodian shall remain in full force and effect.
11. Interpretive and Additional Provisions.
In connection with the operation of this Contract, the Custodian and the
Trust may from time to time agree on such provisions interpretive of or in
addition to the provisions of this Contract as may in their joint opinion
be consistent with the general tenor of this Contract. Any such
interpretive or additional provisions shall be in a writing signed by both
parties and shall be annexed hereto, provided that no such interpretive or
additional provisions shall contravene any applicable federal or state
regulations or any provision of the Declaration of Trust/Articles of
Incorporation. No interpretive or additional provisions made as provided
in the preceding sentence shall be deemed to be an amendment of this
Contract.
12. Massachusetts Law to Apply.
This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of The Commonwealth of Massachusetts.
13. Notices.
Except as otherwise specifically provided herein, Notices and other
writings delivered or mailed postage prepaid to the Trust at Federated
Investors Tower, Pittsburgh, Pennsylvania, 15222-3779, or to the Custodian
at address for SSBT only: 225 Franklin Street, Boston, Massachusetts,
02110, or to such other address as the Trust or the Custodian may
hereafter specify, shall be deemed to have been properly delivered or
given hereunder to the respective address.
14. Counterparts.
This Contract may be executed simultaneously in two or more counterparts,
each of which shall be deemed an original.
15. Limitations of Liability.
The Custodian is expressly put on notice of the limitation of liability as
set forth in Article XI of the Declaration of Trust of those Trusts which
are business trusts and agrees that the obligations and liabilities
assumed by the Trust and any Fund pursuant to this Contract, including,
without limitation, any obligation or liability to indemnify the Custodian
pursuant to Section 8 hereof, shall be limited in any case to the relevant
Fund and its assets and that the Custodian shall not seek satisfaction of
any such obligation from the shareholders of the relevant Fund, from any
other Fund or its shareholders or from the Trustees, Officers, employees
or agents of the Trust, or any of them. In addition, in connection with
the discharge and satisfaction of any claim made by the Custodian against
the Trust, for whatever reasons, involving more than one Fund, the Trust
shall have the exclusive right to determine the appropriate allocations of
liability for any such claim between or among the Funds.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed effective as of the 1st day of December, 1993.
ATTEST: INVESTMENT COMPANIES
/s/John G. McGonigle_________ By /s/John G. Donahue__________
John G. McGonigle John F. Donahue
Secretary Chairman
ATTEST: STATE STREET BANK AND TRUST
COMPANY
/s/ Ed McKenzie______________ By /s/ F. J. Sidoti, Jr._____________
(Assistant) Secretary Typed Name: Frank J. Sidoti, Jr.
Typed Name: Ed McKenzie Title: Vice President
ATTEST: FEDERATED SERVICES COMPANY
/s/ Jeannette Fisher-Garber______ By /s/ James J. Dolan____________
Jeannette Fisher-Garber James J. Dolan
Secretary President
<PAGE>
ii
EXHIBIT 1
CONTRACT
DATE INVESTMENT COMPANY
Federated Core Trust
STATE STREET
DOMESTIC CUSTODY
FEE SCHEDULE
FEDERATED FUNDS
I. Custody Services
Maintain custody of fund assets. Settle portfolio purchases and sales.
Report buy and sell fails. Determine and collect portfolio income. Make
cash disbursements and report cash transactions. Monitor corporate
actions.
ANNUAL FEES
ASSET
Per Fund .25 Basis Points
Wire Fees $3.00 per wire
Settlements:
o Each DTC Transaction $5.00
o Each Federal Reserve Book Entry Transaction $3.75
o Each Repo Transaction (All Repo) $3.75
o Each Physical Transaction (NY/Boston, Private Placement) $15.00
o Each Option Written/Exercised/Expired $18.75
Each Book Entry Muni (Sub-custody) Transaction $15.00
o Government Paydowns $5.00
o Maturity Collections $8.00
o PTC Transactions $6.00
II. Special Services
Fees for activities of a non-recurring nature such as fund consolidation
or reorganization, extraordinary security shipments and the preparation of
special reports will be subject to negotiation.
III. Balance Credit
Municipal Funds
A balance credit equal to 75% of the average demand deposit account
balance in the custodian account for the month billed times the 30 day
T-Bill Rate on the last Monday of the month billed, will be applied
against the month's custodian bill.
Transfer Agent
A balance credit equal to 100% of the average balance in the transfer
agent demand deposit accounts, less the reserve requirement and applicable
related expenses, times 75% of the 30 average Fed Funds Rate.
IV. Payment
The above fees will be charged against the funds' custodian checking
account thirty (30) days after the invoice is mailed to the funds' offices.
V. Term of Contract
The parties agree that this fee schedule shall become effective January 1,
1997.
FEDERATED SERVICES COMPANY STATE STREET
BY: /s/ Douglas L. Hein BY: /s/ Michael E. Hagerty
TITLE: Senior Vice President TITLE: Vice President
DATE: April 15, 1997 DATE: April 8, 1997
Exhibit 2 under Form N-1A
Exhibit 3(b) under Item 601/Reg. S-K
FEDERATED CORE TRUST
BYLAWS
EFFECTIVE AUGUST 21, 1996
<PAGE>
FEDERATED CORE TRUST
BYLAWS
TABLE OF CONTENTS
PAGE
ARTICLE I OFFICERS AND THEIR ELECTION.............................. 1
Section 1. Officers................................................. 1
Section 2. Election of Officers..................................... 1
Section 3. Resignations and Removals and Vacancies.................. 1
ARTICLE II POWERS AND DUTIES OF TRUSTEES AND OFFICERS............... 1
Section 1. Trustees................................................. 1
Section 2. Chairman of the Trustees ("Chairman").................... 1
Section 3. President................................................ 2
Section 4. Vice President........................................... 2
Section 5. Secretary................................................ 2
Section 6. Treasurer................................................ 2
Section 7. Assistant Vice President................................. 3
Section 8. Assistant Secretaries and Assistant Treasurers........... 3
Section 9. Salaries................................................. 3
ARTICLE III POWERS AND DUTIES OF THE EXECUTIVE AND OTHER COMMITTEES.. 3
Section 1. Executive and Other Committees........................... 3
Section 2. Vacancies in Executive Committee......................... 3
Section 3. Executive Committee to Report to Trustees................ 3
Section 4. Procedure of Executive Committee......................... 3
Section 5. Powers of Executive Committee............................ 4
Section 6. Compensation............................................. 4
Section 7. Action by Unanimous Consent of the Board of Trustees,
Executive Committee or Other Committee................... 4
ARTICLE IV INVESTORS' MEETINGS...................................... 4
Section 1. Special Meetings......................................... 4
Section 2. Notices.................................................. 4
Section 3. Place of Meeting......................................... 5
Section 4. Action by Unanimous Consent.............................. 5
Section 5. Proxies.................................................. 5
ARTICLE V TRUSTEES' MEETINGS....................................... 5
Section 1. Number and Qualifications of Trustees.................... 5
Section 2. Special Meetings......................................... 5
Section 3. Regular Meetings......................................... 5
Section 4. Quorum and Vote.......................................... 5
Section 5. Notices.................................................. 6
Section 6. Place of Meeting......................................... 6
Section 7. Teleconference Meetings Action by Consent................ 6
Section 8. Special Action........................................... 6
Section 9. Compensation of Trustees................................. 6
ARTICLE VI SHARES OF INTEREST....................................... 7
Section 1. Beneficial Interest...................................... 7
Section 2. Non-Transferability of Interests......................... 7
Section 3. Equitable Interest Not Recognized........................ 7
Section 4. Transfer Agent and Registrar: Regulations............... 7
ARTICLE VII INSPECTION OF BOOKS...................................... 7
ARTICLE VIII AGREEMENTS, CHECKS, DRAFTS, ENDORSEMENTS, ETC............ 8
Section 1. Agreements, Etc.......................................... 8
Section 2. Checks, Drafts, Etc...................................... 8
Section 3. Endorsements, Assignments and Transfer of Securities..... 8
Section 4. Evidence of Authority.................................... 8
ARTICLE IX INDEMNIFICATION OF TRUSTEES AND OFFICERS................. 8
Section 1. General.................................................. 8
Section 2. Compromise Payment....................................... 9
Section 3. Indemnification Not Exclusive; Definitions.............. 10
ARTICLE X SEAL..................................................... 10
ARTICLE XI FISCAL YEAR...............................................10
ARTICLE XII AMENDMENTS............................................... 10
ARTICLE XIII WAIVERS OF NOTICE........................................ 11
ARTICLE XIV REPORT TO INVESTORS...................................... 11
ARTICLE XV BOOKS AND RECORDS........................................ 11
ARTICLE XVI TERMS.....................................................11
<PAGE>
15
FEDERATED CORE TRUST
BYLAWS
ARTICLE I
OFFICERS AND THEIR ELECTION
SECTION 1. OFFICERS. The officers of the Trust shall be elected by the
Board of Trustees, and shall be a President, one or more Vice Presidents, a
Treasurer, a Secretary and such other officers as the Trustees may from time to
time elect. The Board of Trustees, in its discretion, may also elect a Chairman
of the Board of Trustees (who must be a Trustee). It shall not be necessary, and
is prohibited, for any Trustee or other officer to be a holder of Interests in
any Series of the Trust.
SECTION 2. ELECTION OF OFFICERS. The President, Vice President(s),
Treasurer and Secretary shall be elected annually by the Trustees, and serve
until a successor is so elected and qualified, or until earlier resignation or
removal. The Chairman of the Trustees, if there is one, shall be elected
annually by and from the Trustees, and serve until a successor is so elected and
qualified, or until earlier resignation or removal.
Two or more offices may be held by a single person except the offices of
President and Secretary. The officers shall hold office until their successors
are elected and qualified.
SECTION 3. RESIGNATIONS AND REMOVALS AND VACANCIES. Any officer of the
Trust may resign by filing a written resignation with the President (or
Chairman, if there is one) of the Trustees or with the Trustees or with the
Secretary, which shall take effect on being so filed or at such time as may be
therein specified. The Trustees may remove any officer, with or without cause,
by a majority vote of all of the Trustees. The Trustees may fill any vacancy
created in any office whether by resignation, removal or otherwise, subject to
the limitations of the Investment Company Act of 1940.
ARTICLE II
POWERS AND DUTIES OF TRUSTEES AND OFFICERS
SECTION 1. TRUSTEES. The business and affairs of the Trust shall be managed
by the Trustees, and they shall have all powers necessary and desirable to carry
out that responsibility.
SECTION 2. CHAIRMAN OF THE TRUSTEES ("CHAIRMAN"). The Chairman, if there
be a Chairman, shall preside at the meetings of Investors and of the Board of
Trustees. He shall have general supervision over the business of the Trust and
policies of the Trust. He shall employ and define the duties of all employees of
the Trust, shall have power to discharge any such employees, shall exercise
general supervision over the affairs of the Trust and shall perform such other
duties as may be assigned to him from time to time by the Trustees. The Chairman
shall appoint a Trustee or officer to preside at such meetings in his absence.
SECTION 3. PRESIDENT. The President shall be the chief executive officer
of the Trust. The President, in the absence of the Chairman, or if there is no
Chairman, shall perform all duties and may exercise any of the powers of the
Chairman subject to the control of the Trustees. He shall counsel and advise the
Chairman and shall perform such other duties as may be assigned to him from time
to time by the Trustees, the Chairman or the Executive Committee. The President
shall have the power to appoint one or more Assistant Secretaries or other
junior officers, subject to ratification of such appointments by the Board. The
President shall have the power to sign, in the name of and on behalf of the
Trust, powers of attorney, proxies, waivers of notice of meeting, consents and
other instruments relating to securities or other property owned by the Trust,
and may, in the name of and on behalf of the Trust, take all such action as the
President may deem advisable in entering into agreements to purchase securities
or other property in the ordinary course of business, and to sign representation
letters in the course of buying securities or other property.
SECTION 4. VICE PRESIDENT. The Vice President (or if more than one, the
senior Vice President) in the absence of the President shall perform all duties
and may exercise any of the powers of the President subject to the control of
the Trustees. Each Vice President shall perform such other duties as may be
assigned to him from time to time by the Trustees, the Chairman, the President,
or the Executive Committee. Each Vice President shall be authorized to sign
documents on behalf of the Trust. The Vice President shall have the power to
sign, in the name of and on behalf of the Trust and subject to Article VIII,
Section 1, powers of attorney, proxies, waivers of notice of meeting, consents
and other instruments relating to securities or other property owned by the
Trust, and may, in the name of and on behalf of the Trust, take all such action
as the Vice President may deem advisable in entering into agreements to purchase
securities or other property in the ordinary course of business, and to sign
representation letters in the course of buying securities or other property.
SECTION 5. SECRETARY. The Secretary shall keep or cause to be kept in
books provided for that purpose the Minutes of the Meetings of Investors and of
the Trustees; shall see that all Notices are duly given in accordance with the
provisions of these Bylaws and as required by law; shall be custodian of the
records and of the Seal of the Trust (if there be a Seal) and see that the Seal
is affixed to all documents, the execution of which on behalf of the Trust under
its Seal is duly authorized; shall keep directly or through a transfer agent a
register of the post office address of each Investor of each Series of the
Trust, and make all proper changes in such register, retaining and filing the
Secretary's authority for such entries; shall see that the books, reports,
statements, certificates and all other documents and records required by law are
properly kept and filed; and in general shall perform all duties incident to the
Office of Secretary and such other duties as may from time to time be assigned
to the Secretary by the Trustees, Chairman, the President, or the Executive
Committee.
SECTION 6. TREASURER. The Treasurer shall be the principal financial and
accounting officer of the Trust responsible for the preparation and maintenance
of the financial books and records of the Trust. The Treasurer shall deliver all
funds and securities belonging to any Series to such custodian or sub-custodian
as may be employed by the Trust for any Series. The Treasurer shall perform such
duties additional to the foregoing as the Trustees, Chairman, the President or
the Executive Committee may from time to time designate.
SECTION 7. ASSISTANT VICE PRESIDENT. The Assistant Vice President or Vice
Presidents of the Trust shall have such authority and perform such duties as may
be assigned to them by the Trustees, the Executive Committee, the President, or
the Chairman.
SECTION 8. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. The Assistant
Secretary or Secretaries and the Assistant Treasurer or Treasurers shall perform
the duties of the Secretary and of the Treasurer, respectively, in the absence
of those Officers and shall have such further powers and perform such other
duties as may be assigned to them respectively by the Trustees or the Executive
Committee, the President, or the Chairman.
SECTION 9. SALARIES. The salaries of the Officers shall be fixed from time
to time by the Trustees. No officer shall be prevented from receiving such
salary by reason of the fact that the officer is also a Trustee.
ARTICLE III
POWERS AND DUTIES OF THE EXECUTIVE AND OTHER COMMITTEES
SECTION 1. EXECUTIVE AND OTHER COMMITTEES. The Trustees may elect from
their own number an Executive Committee to consist of not less than two members.
The Executive Committee shall be elected by a resolution passed by a vote of at
least a majority of the Trustees then in office. The Trustees may also elect
from their own number other committees from time to time, the number composing
such committees and the powers conferred upon the same to be determined by vote
of the Trustees. Any committee may make rules for the conduct of its business.
SECTION 2. VACANCIES IN EXECUTIVE COMMITTEE. Vacancies occurring in the
Executive Committee from any cause shall be filled by the Trustees by a
resolution passed by the vote of at least a majority of the Trustees then in
office.
SECTION 3. EXECUTIVE COMMITTEE TO REPORT TO TRUSTEES. All action by the
Executive Committee shall be reported to the Trustees at their meeting next
succeeding such action.
SECTION 4. PROCEDURE OF EXECUTIVE COMMITTEE. The Executive Committee shall
fix its own rules of procedure not inconsistent with these Bylaws or with any
directions of the Trustees. It shall meet at such times and places and upon such
notice as shall be provided by such rules or by resolution of the Trustees. The
presence of a majority shall constitute a quorum for the transaction of
business, and in every case an affirmative vote of a majority of all the members
of the Committee present shall be necessary for the taking of any action.
SECTION 5. POWERS OF EXECUTIVE COMMITTEE. During the intervals between the
Meetings of the Trustees, the Executive Committee, except as limited by the
Bylaws of the Trust or by specific directions of the Trustees, shall possess and
may exercise all the powers of the Trustees in the management and direction of
the business and conduct of the affairs of the Trust in such manner as the
Executive Committee shall deem to be in the best interests of the Trust, and
shall have power to authorize the Seal of the Trust (if there is one) to be
affixed to all instruments and documents requiring same. Notwithstanding the
foregoing, the Executive Committee shall not have the power to elect or remove
Trustees, increase or decrease the number of Trustees, elect or remove any
Officer, declare allocations among Investors, issue Interests or recommend to
Investors any action requiring Investor approval.
SECTION 6. COMPENSATION. The members of any duly appointed committee shall
receive such compensation and/or fees as from time to time may be fixed by the
Trustees.
SECTION 7. ACTION BY UNANIMOUS CONSENT OF THE BOARD OF TRUSTEES, EXECUTIVE
COMMITTEE OR OTHER COMMITTEE. Subject to Article V, Section 2 of these Bylaws,
any action required or permitted to be taken at any meeting of the Trustees,
Executive Committee or any other duly appointed Committee may be taken without a
meeting if consents in writing setting forth such action are signed by all
members of the Board or such committee and such consents are filed with the
records of the Trust. In the event of the death, removal, resignation or
incapacity of any Board or committee member prior to that Trustee signing such
consent, the remaining Board or committee members may re-constitute themselves
as the entire Board or committee until such time as the vacancy is filled in
order to fulfill the requirement that such consents be signed by all members of
the Board or committee.
ARTICLE IV
INVESTORS' MEETINGS
SECTION 1. SPECIAL MEETINGS. A special meeting of the Investors of the
Trust or of a particular Series shall be called by the Secretary whenever
ordered by the Trustees, the Chairman or requested in writing by the holder or
holders of at least one-tenth of the outstanding Interests of the Trust or of
the relevant Series, entitled to vote. If the Secretary, when so ordered or
requested, refuses or neglects for more than two days to call such special
meeting, the Trustees, Chairman or the Investors so requesting may, in the name
of the Secretary, call the meeting by giving notice thereof in the manner
required when notice is given by the Secretary.
SECTION 2. NOTICES. Except as above provided, notices of any special
meeting of the Investors of the Trust or a particular Series, shall be given by
the Secretary by delivering or mailing, postage prepaid, to each Investor
entitled to vote at said meeting, a written or printed notification of such
meeting, at least seven business days before the meeting, to such address as may
be registered with the Trust by the Investor. No notice of any meeting to
Investors need be given to an Investor if a written waiver of notice, executed
before or after the meeting by such Investor or their attorney that is duly
authorized, is filed with the records of the meeting. Notice may be waived as
provided in Article XIII of these Bylaws.
SECTION 3. PLACE OF MEETING. Meetings of the Investors of the Trust or a
particular Series, shall be held at the principal place of business of the Trust
in Pittsburgh, Pennsylvania, or at such place within or without The Commonwealth
of Massachusetts as fixed from time to time by resolution of the Trustees.
SECTION 4. ACTION BY UNANIMOUS CONSENT. Any action required or permitted
to be taken at any meeting of Investors may be taken without a meeting, if a
consent in writing, setting forth such action, is signed by a majority of the
Investors entitled to vote on the subject matter thereof, and such consent is
filed with the records of the Trust.
SECTION 5. PROXIES. Any investor entitled to vote at any meeting of
Investors may vote, by their duly authorized representative, either in person,
by telephone, by electronic means including facsimile, or by proxy. Every
written proxy shall be subscribed by the Investor or his duly authorized
attorney and dated, but need not be sealed, witnessed or acknowledged. All
proxies shall be filed with and verified by the Secretary or an Assistant
Secretary of the Trust or the person acting as Secretary of the Meeting.
ARTICLE V
TRUSTEES' MEETINGS
SECTION 1. NUMBER AND QUALIFICATIONS OF TRUSTEES. The number of Trustees
can be changed from time to time by a majority of the Trustees to not less than
three nor more than twenty. The term of office of a Trustee shall not be
affected by any decrease in the number of Trustees made by the Trustees pursuant
to the foregoing authorization. Each Trustee shall hold office for the life of
the Trust, or as otherwise provided in the Declaration of Trust.
SECTION 2. SPECIAL MEETINGS. Special meetings of the Trustees shall be
called by the Secretary at the written request of the Chairman, the President,
or any Trustee, and if the Secretary when so requested refuses or fails for more
than twenty-four hours to call such meeting, the Chairman, the President, or
such Trustee may in the name of the Secretary call such meeting by giving due
notice in the manner required when notice is given by the Secretary.
SECTION 3. REGULAR MEETINGS. Regular meetings of the Trustees may be held
without call or notice at such places and at such times as the Trustees may from
time to time determine, provided that any Trustee who is absent when such
determination is made shall be given notice of the determination.
SECTION 4. QUORUM AND VOTE. A majority of the Trustees shall constitute a
quorum for the transaction of business. The act of a majority of the Trustees
present at any meeting at which a quorum is present shall be the act of the
Trustees unless a greater proportion is required by the Declaration of Trust or
these Bylaws or applicable law. In the absence of a quorum, a majority of the
Trustees present may adjourn the meeting from time to time until a quorum shall
be present. Notice of any adjourned meeting need not be given.
SECTION 5. NOTICES. The Secretary or any Assistant Secretary shall give,
at least two days before the meeting, notice of each meeting of the Board of
Trustees, whether Annual, Regular or Special, to each member of the Board by
mail, telegram, telephone or electronic facsimile to his last known address. It
shall not be necessary to state the purpose or business to be transacted in the
notice of any meeting unless otherwise required by law. Personal attendance at
any meeting by a Trustee other than to protest the validity of said meeting
shall constitute a waiver of the foregoing requirement of notice. In addition,
notice of a meeting need not be given if a written waiver of notice executed by
such Trustee before or after the meeting is filed with the records of the
meeting.
SECTION 6. PLACE OF MEETING. Meetings of the Trustees shall be held at the
principal place of business of the Trust in Pittsburgh, Pennsylvania, or at such
place within or without The Commonwealth of Massachusetts as fixed from time to
time by resolution of the Trustees, or as the person or persons requesting said
meeting to be called may designate, but any meeting may adjourn to any other
place.
SECTION 7. TELECONFERENCE MEETINGS ACTION BY CONSENT. Except as otherwise
provided herein or from time to time in the 1940 Act or in the Declaration of
Trust, any action to be taken by the Trustees may be taken by a majority of the
Trustees within or without The Commonwealth of Massachusetts, including any
meeting held by means of a conference telephone or other communications
equipment by means of which all persons participating in the meeting can
communicate with each other simultaneously, and participation by such means
shall constitute presence in person at a meeting. Any action by the Trustees may
be taken without a meeting if a written consent thereto is signed by all the
Trustees and filed with the records of the Trustees' meetings. Such consent
shall be treated as a vote of the Trustees for all purposes. Written consents
may be executed in counterparts, which when taken together, constitute a validly
executed consent of the Trustees.
SECTION 8. SPECIAL ACTION. When all the Trustees shall be present at any
meeting, however called, or whenever held, or shall assent to the holding of the
meeting without notice, or after the meeting shall sign a written assent thereto
on the record of such meeting, the acts of such meeting shall be valid as if
such meeting had been regularly held.
SECTION 9. COMPENSATION OF TRUSTEES. The Trustees may receive a stated
salary for their services as Trustees, and by resolution of Trustees a fixed fee
and expenses of attendance may be allowed for attendance at each Meeting.
Nothing herein contained shall be construed to preclude any Trustee from serving
the Trust in any other capacity, as an officer, agent or otherwise, and
receiving compensation therefor.
<PAGE>
ARTICLE VI
SHARES OF INTEREST
SECTION 1. BENEFICIAL INTEREST. The beneficial interest in the Trust shall
at all times be divided into Interest representing proportionate interest in the
assets and liabilities and the income and expenses of each Series of the Trust.
The Trust does not issue certificates representing the Interests of each
Investor.
SECTION 2. NON-TRANSFERABILITY OF INTERESTS. The Interest of each Series
of the Trust shall not be transferable, except as provided in the Declaration of
Trust with regard to redemptions of Interests in the Trust and except as part of
a merger or similar plan of reorganization adopted by the Trustees that
qualifies under Section 368 of the Internal Revenue Code, as amended from time
to time.
SECTION 3. EQUITABLE INTEREST NOT RECOGNIZED. The Trust shall be entitled
to treat the Investor of record of any Interest of a Series as the absolute
owner thereof and shall not be bound to recognize any equitable or other claim
or interest in such Interest of a Series on the part of any other person except
as may be otherwise expressly provided by law.
SECTION 4. TRANSFER AGENT AND REGISTRAR: REGULATIONS. The Trustees shall
have power and authority to make all such rules and regulations as they may deem
expedient concerning the issuance, transfer and registration of Interest and may
appoint a Transfer Agent and/or Registrar of of Interests of each Series.
ARTICLE VII
INSPECTION OF BOOKS
The Trustees shall from time to time determine whether and to what extent,
and at what times and places, and under what conditions and regulations the
accounts and books of the Trust maintained on behalf of each Series or any of
them shall be open to the inspection of the Investors of any Series; and no
Investor shall have any right of inspecting any account or book or document of
the Trust except that, to the extent such account or book or document relates to
the Series in which it is an Investor or the Trust generally, such Investor
shall have such right of inspection as conferred by laws or authorized by the
Trustees or by resolution of the Investor of the relevant Series.
<PAGE>
ARTICLE VIII
AGREEMENTS, CHECKS, DRAFTS, ENDORSEMENTS, ETC.
SECTION 1. AGREEMENTS, ETC. The Trustees or the Executive Committee may
authorize any Officer or Agent of the Trust to enter into any Agreement or
execute and deliver any instrument in the name of the Trust on behalf of any
Series, and such authority may be general or confined to specific instances;
and, unless so authorized by the Trustees or by the Executive Committee or by
the Declaration of Trust or these Bylaws, no Officer, Agent or Employee shall
have any power or authority to bind the Trust by any Agreement or engagement or
to pledge its credit or to render it liable pecuniarily for any purpose or for
any amount.
SECTION 2. CHECKS, DRAFTS, ETC. All checks, drafts, or orders for the
payment of money, notes and other evidences of indebtedness shall be signed by
such Officers, Employees, or Agents, as shall from time to time be designated by
the Trustees or the Executive Committee, or as may be specified in or pursuant
to the agreement between the Trust on behalf of any Series and the custodian
appointed, pursuant to the provisions of the Declaration of Trust.
SECTION 3. ENDORSEMENTS, ASSIGNMENTS AND TRANSFER OF SECURITIES. All
endorsements, assignments, stock powers, other instruments of transfer or
directions for the transfer of portfolio securities or other property, whether
or not registered in nominee form, shall be made by such Officers, Employees, or
Agents as may be authorized by the Trustees or the Executive Committee.
SECTION 4. EVIDENCE OF AUTHORITY. Anyone dealing with the Trust shall be
fully justified in relying on a copy of a resolution of the Trustees or of any
committee thereof empowered to act in the premises which is certified as true by
the Secretary or an Assistant Secretary under the seal of the Trust, if any.
ARTICLE IX
INDEMNIFICATION OF TRUSTEES AND OFFICERS
SECTION 1. GENERAL. The Trust shall indemnify each of its Trustees and
officers (including persons who serve at the Trust's request as directors,
officers or trustees of another organization in which the Trust has any interest
as a shareholder, creditor or otherwise) (hereinafter referred to as a "Covered
Person") against all liabilities and expenses, including but not limited to
amounts paid in satisfaction of judgments, in compromise or as fines and
penalties, and counsel fees reasonably incurred by any Covered Person in
connection with the defense or disposition of any action, suit or other
proceeding, whether civil, criminal, administrative, or investigative, and any
appeal therefrom, before any court or administrative or legislative body, in
which such Covered Person may be or may have been involved as a party or
otherwise or with which such person may be or may have been threatened, while in
office or thereafter, by reason of being or having been such a Covered Person,
except that no Covered Person shall be indemnified against any liability to the
Trust or its Investors to which such Covered Person would otherwise be subject
by reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of such Covered Person's office.
Expenses, including counsel fees so incurred by any such Covered Person
(but excluding amounts paid in satisfaction of judgments, in compromise or as
fines or penalties), may be paid from time to time by the Trust in advance of
the final disposition of any such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such Covered Person to repay amounts so paid to
the Trust if it is ultimately determined that indemnification of such expenses
is not authorized under this Article, provided that (a) such Covered Person
shall provide security for his undertaking, (b) the Trust shall be insured
against losses arising by reason of such Covered Person's failure to fulfill his
undertaking or (c) a majority of the nonparty Trustees who are not interested
persons of the Trust (provided that a majority of such Trustees then in office
act on the matter), or independent legal counsel in a written opinion, shall
determine, based on a review of readily available facts (but not a full
trial-type inquiry), that there is reason to believe such Covered Person
ultimately will be entitled to indemnification.
SECTION 2. COMPROMISE PAYMENT. As to any matter disposed of (whether by a
compromise payment, pursuant to a consent decree or otherwise) without an
adjudication in a decision on the merits by a court, or by any other body before
which the proceeding was brought, that such Covered Person is liable to the
Trust or its Investors by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of such
Covered Person's office, indemnification shall be provided if (a) approved as in
the best interest of the Trust, after notice that it involves such
indemnification, by at least a majority of non-party Trustees who are not
interested persons of the Trust (provided that a majority of such Trustees then
in office act on the matter), upon a determination, based upon a review of
readily available facts (but not a full trial-type inquiry) that such Covered
Person is not liable to the Trust or its Investors by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of such Covered Person's office, or (b) there has been
obtained an opinion in writing of independent legal counsel, based upon a review
of readily available facts (but not a full trial-type inquiry) to the effect
that such indemnification would not protect such Covered Person against any
liability to the Trust to which such Covered Person would otherwise be subject
by reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office.
Any approval pursuant to this Section shall not prevent the recovery from
any Covered Person of any amount paid to such Covered Person in accordance with
this Section as indemnification if such Covered Person is subsequently
adjudicated by a court of competent jurisdiction to have been liable to the
Trust or its Investors by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of such
Covered Person's office.
SECTION 3. INDEMNIFICATION NOT EXCLUSIVE; DEFINITIONS. The right of
indemnification hereby provided shall not be exclusive of or affect any other
rights to which any such Covered Person may be entitled. As used in this Article
IX, the term "Covered Person" shall include such person's heirs, executors and
administrators. For purposes of this Article IX, the term "non-party Trustee" is
a Trustee against whom none of the actions, suits or other proceedings in
question or another action, suit or other proceeding on the same or similar
grounds is then or has been pending. Nothing contained in this Article IX shall
affect any rights to indemnification to which personnel of the Trust, other than
Trustees and officers, and other persons may be entitled by contract or
otherwise under law, nor the power of the Trust to purchase and maintain
liability insurance on behalf of such persons.
ARTICLE X
SEAL
The seal of the Trust, if there is one, shall consist either of a
flat-faced die with the word "Massachusetts," together with the name of the
Trust and the year of its organization cut or engraved thereon, or any other
indication that the Trust has a seal that has been approved by the Trustees,
but, unless otherwise required by the Trustees, the seal shall not be necessary
to be placed on, and its absence shall not impair the validity of, any document,
instrument or other paper executed and delivered by or on behalf of the Trust.
ARTICLE XI
FISCAL YEAR
The fiscal year of the Trust and each Series shall be as designated from
time to time by the Trustees.
ARTICLE XII
AMENDMENTS
These Bylaws may be amended by a majority vote of all of the Trustees.
ARTICLE XIII
WAIVERS OF NOTICE
Whenever any notice whatever is required to be given under the provisions
of any statute of The Commonwealth of Massachusetts, or under the provisions of
the Declaration of Trust or these Bylaws, a waiver thereof in writing, signed by
the person or persons entitled to said notice, whether before or after the time
stated therein, or presence at a meeting to which such person was entitled
notice of, shall be deemed equivalent thereto. A notice shall be deemed to have
been given if telegraphed, cabled, or sent by wireless when it has been
delivered to a representative of any telegraph, cable or wireless company with
instructions that it be telegraphed, cabled, or sent by wireless. Any notice
shall be deemed to be given if mailed at the time when the same shall be
deposited in the mail.
ARTICLE XIV
REPORT TO INVESTORS
The Trustees, so long as required by applicable law, shall at least
semi-annually submit to the Investors of each Series a written financial report
of the transactions of that Series including financial statements which shall at
least annually be certified by independent public accountants.
ARTICLE XV
BOOKS AND RECORDS
The books and records of the Trust and any Series, including the ledger or
ledgers representing Interests in the Trust or any Series, may be kept in or
outside The Commonwealth of Massachusetts at such office or agency of the Trust
as may from time to time be determined by the Secretary of the Trust, as set
forth in Article II, Section 5 of these Bylaws.
ARTICLE XVI
TERMS
Terms defined in the Declaration of Trust and not otherwise defined herein
are used herein with the meanings set forth or referred to in the Declaration of
Trust.
EXHIBIT 1 UNDER FORM N-1A
EXHIBIT 3(A) UNDER ITEM 601/REG. S-K
DECLARATION OF TRUST
OF
FEDERATED CORE TRUST
TABLE OF CONTENTS
Page
ARTICLE I. NAMES AND DEFINITIONS........................ 1
Section 1. Name ..................................... 1
Section 2. Definitions .............................. 1
ARTICLE II. PURPOSE OF TRUST............................. 2
ARTICLE III. BENEFICIAL INTEREST.......................... 2
Section 1. Shares of Beneficial Interest............. 2
Section 2. Ownership of Shares ...................... 2
Section 3. Investment in the Trust................... 3
Section 4. No Pre-emptive Rights;
Action by Investors....................... 3
Section 5. Establishment and Designation
of Series................................. 3
ARTICLE IV. THE TRUSTEES ................................ 4
Section 1. Management of the Trust .................. 4
Section 2. Election of Trustees by Investors ........ 5
Section 3. Term of Office of Trustees ............... 5
Section 4. Termination of Service and
Appointment of Trustees .................. 5
Section 5. Number of Trustees ....................... 5
Section 6. Effect of Death, Resignation, etc. of a Trustee 5
Section 7. Ownership of Assets ...................... 5
ARTICLE V. POWERS OF THE TRUSTEES ...................... 6
Section 1. Powers.................................... 6
Section 2. Principal Transactions ................... 8
Section 3. Investments by Trustees and Officers...... 8
Section 4. Parties to Contract....................... 8
<PAGE>
ARTICLE VI. TRUSTEES' EXPENSES AND COMPENSATION
Section 1. Trustee Reimbursement..................... 8
Section 2. Trustee Compensation ..................... 9
ARTICLE VII. INVESTMENT ADVISER, ADMINISTRATIVE
SERVICES, PLACEMENT AGENT, AND
TRANSFER AGENT .............................. 9
Section 1. Investment Adviser ....................... 9
Section 2. Administrative Services .................. 10
Section 3. Placement Agent........................... 10
Section 4. Transfer Agent ........................... 10
ARTICLE VIII. INVESTORS VOTING POWERS
AND MEETINGS ................................ 10
Section 1. Voting Powers ............................ 10
Section 2. Meetings.................................. 11
Section 3. Quorum and Required Vote ................. 11
Section 4. Action by Written Consent ................ 11
Section 5. Additional Provisions .................... 11
ARTICLE IX. CUSTODIAN ................................... 12
ARTICLE X. INCREASES AND REDEMPTIONS
OF INTERESTS ................................ 12
ARTICLE XI. DETERMINATION OF BOOK CAPITAL ACCOUNT
BALANCES AND DISTRIBUTIONS .................. 12
Section 1. Book Capital Account Balances ............ 12
Section 2. Allocations and Distributions to
Investors ................................ 13
Section 3. Power to Modify Foregoing Procedures...... 13
ARTICLE XII. INDEMNIFICATION ............................. 13
Section 1. Indemnification of Investors ............. 13
Section 2. Limitation of Personal Liability and
Indemnification of Trustees, Officers,
Employees or Agents of the Trust ......... 13
<PAGE>
ARTICLE XIII. MISCELLANEOUS................................ 14
Section 1. Trustee Action Binding, Expert Advice,
No Bond or Surety ........................ 14
Section 2. Establishment of Record Dates ............ 14
Section 3. Termination of Trust ..................... 15
Section 4. Offices of the Trust, Filing of Copies,
Headings, Counterparts ................... 15
Section 5. Applicable Law ........................... 16
Section 6. Amendments -- General .................... 16
Section 7. Amendments -- Series...................... 16
Section 8. Use of Name .............................. 17
<PAGE>
Page 1
DECLARATION OF TRUST
OF
FEDERATED CORE TRUST
Dated as of August 21, 1996
DECLARATION OF TRUST made as of August 21, 1996, by the undersigned, and by the
holders of shares of beneficial interest to be issued hereunder as hereinafter
provided.
WHEREAS, the Trustees desire to establish a trust fund for the investment
and reinvestment of funds contributed thereto;
NOW, THEREFORE, the Trustees declare that all money and property contributed to
the trust fund hereunder shall be held and managed under this Declaration of
Trust IN TRUST as herein set forth below.
ARTICLE I
NAMES AND DEFINITIONS
Section 1. Name. This Trust shall be known as FEDERATED CORE TRUST, and the
Trustees may conduct the business of the Trust under that name or any other name
as they may determine from time to time.
Section 2. Definitions. Wherever used herein, unless otherwise required by
the context or specifically provided:
(a) The terms "Affiliated Person," "Assignment," "Commission,"
"Interested Person," "Investment Adviser," and "Majority Shareholder
Vote" (the 67% or 50% requirement of Section 2(a)(42) of the 1940
Act, whichever may be applicable) shall have the meanings given them
in the 1940 Act, as amended from time to time;
(b) The "Trust" refers to the Massachusetts Business Trust established
by this Declaration of Trust, as amended from time to time,
inclusive of each and every Series established hereunder;
(c) "Series" refers to a series of Interests established and designated
under or in accordance with the provisions of Article III;
(d) "Series Company" refers to the form of a registered open-end investment
company described in Section 18(f)(2) of the 1940 Act or in
any successor statutory provision;
(e) "Investor" means a record owner of Interests of any Series;
(f) "Trustees" refer to the individual Trustees in their capacity as
Trustees hereunder of the Trust and their successor or successors
for the time being in office as such Trustees;
(g) "Interests" means the equal proportionate units of interest into
which the beneficial interest in the Trust shall be divided from
time to time, or if more than one Series is authorized by the
Trustees, the equal proportionate units into which each Series shall
be divided from time to time and includes fractions of Interests as
well as whole Interests;
(h) The "1940 Act" refers to the Investment Company Act of 1940, and the
Rules and Regulations thereunder, (including any exemptions granted
thereunder) as amended from time to time; and
(i) "Bylaws" shall mean the Bylaws of the Trust as amended from time to
time.
ARTICLE II
PURPOSE OF TRUST
The purpose of this Trust is to operate as an investment company, and provide
investors a continuous source of managed investments by investing primarily in
securities, derivative securities, and also in debt instruments, commodities,
commodity contracts and options thereon, and other property.
ARTICLE III
BENEFICIAL INTEREST
Section 1. Shares of Beneficial Interest. The beneficial interest in the Trust
shall at all times be divided into transferable Interests, without par value.
Subject to the provisions of Section 5 of this Article III, each Interest shall
have voting rights as provided in Article VIII hereof, and holders of the
Interests of any Series shall be entitled to receive allocations of unrealized
gains and losses, taxable income and tax loss, and profit and loss, when and as
declared with respect thereto in the manner provided in Article XI, Section 2
hereof. Each Interest of a Series shall represent an equal proportionate
interest in the assets and liabilities and the income and the expenses of the
Series with each other Interest of the same Series, none having priority or
preference over another. The number of Interests authorized shall be unlimited.
The Trustees may from time to time divide or combine the Interests of any Series
into a greater or lesser number without thereby changing the proportionate
beneficial interests in the Series. Section 2. Ownership of Shares. The
ownership of Interests shall be recorded in the books of the Trust or a transfer
agent which books shall be maintained separately for the Interests of each
Series. The Interests of each Investor may not be transferred by such Investor,
except as provided in Article X with regard to redemptions of Interests. The
record books of the Trust or any transfer agent, as the case may be, shall be
conclusive as to who are the Investors of each Series and as to the number of
Interests of each Series held from time to time by each. Section 3. Investment
in the Trust. The Trustees shall accept investments in the Trust from such
persons and on such terms as they may from time to time authorize. After the
date of the initial contribution of capital (which shall occur prior to or with
the initial private offering of Interests), the number of Interests to represent
the initial contribution shall be considered as outstanding and the amount
received by the Trustees on account of the contribution shall be treated as an
asset of the Trust to be allocated among any Series in the manner described in
Section 5(a) of this Article. Subsequent to such initial contribution of
capital, Interests (including Interests which may have been redeemed or
repurchased by the Trust) may be issued or sold through a capital contribution
as provided in Article X. Section 4. No Pre-emptive Right; Action by Investor.
Investors shall have no pre-emptive or other right to subscribe to any
additional Interests or other securities issued by the Trust. No action may be
brought by an Investor on behalf of the Trust unless a prior demand regarding
such matter has been made on the Trustees of the Trust. Section 5. Establishment
and Designation of Series. Without limiting the authority of the Trustees set
forth in Article XIII, Section 7, INTER ALIA, to establish and designate any
additional Series or to modify the rights and preferences of any existing
Series, the initial Series shall be, and is established and designated as,
High-Yield Bond Portfolio.
Interests of any Series established in this Section 5 shall have the
following relative rights and preferences:
(a) Assets belonging to Series. All consideration received by the Trust for
the issue or sale of Interests of a particular Series, together with all assets
in which such consideration is invested or reinvested, all income, earnings,
profits, and proceeds thereof from whatever source derived, including, without
limitation, any proceeds derived from the sale, exchange or liquidation of such
assets, and any funds or payments derived from any reinvestment of such proceeds
in whatever form the same may be, shall irrevocably belong to that Series for
all purposes, subject only to the rights of creditors, and shall be so recorded
upon the books of account of the Trust. Such consideration, assets, income,
earnings, profits and proceeds thereof, from whatever source derived, including,
without limitation, any proceeds derived from the sale, exchange or liquidation
of such assets, and any funds or payments derived from any reinvestment of such
proceeds, in whatever form the same may be, are herein referred to as "assets
belonging to" that Series. In the event that there are any assets, income,
earnings, profits and proceeds thereof, funds or payments which are not readily
identifiable as belonging to any particular Series (collectively "General
Assets"), the Trustees shall allocate such General Assets to, between or among
any one or more of the Series established and designated from time to time in
such manner and on such basis as they, in their sole discretion, deem fair and
equitable, and any General Assets so allocated to a particular Series shall
belong to that Series. Each such allocation by the Trustees shall be conclusive
and binding upon the Investors of all Series for all purposes.
(b) Liabilities Belonging to Series. The assets belonging to each
particular Series shall be charged with the liabilities of the Trust
in respect to that Series and all expenses, costs, charges, and
reserves attributable to that Series, and any general liabilities of
the Trust which are not readily identifiable as belonging to any
particular Series shall be allocated and charged by the Trustees to
and among any one or more of the Series established and designated
from time to time in such manner and on such basis as the Trustees
in their sole discretion deem fair and equitable. The liabilities,
expenses, costs, charges, and reserves so charged to a Series are
herein referred to as "liabilities belonging to" that Series. Each
allocation of liabilities belonging to a Series by the Trustees
shall be conclusive and binding upon the Investors of all Series for
all purposes.
(c) Allocations, Distributions, Redemptions, Repurchases and
Indemnification. Notwithstanding any other provisions of this
Declaration of Trust, including, without limitation, Article XI, no
allocation or distribution (including, without limitation, any
distribution paid upon termination of the Trust or of any Series)
with respect to, nor any redemption or repurchase of the Interests
of any Series shall be effected by the Trust other than from the
assets belonging to such Series, nor except as specifically provided
in Section 1 of Article XII hereof, shall any Investor of any
particular Series otherwise have any right or claim against the
assets belonging to any other Series except to the extent that such
Investor has such a right or claim hereunder as an Investor of such
other Series.
(d) Voting. Notwithstanding any of the other provisions of this
Declaration of Trust, including, without limitation, Section 1 of
Article VIII, only Investors of a particular Series shall be
entitled to vote on any matters affecting such Series. Except with
respect to matters as to which any particular Series is adversely
affected materially differently or as otherwise required by
applicable law, all of the Interests of each Series shall, on
matters as to which such Series is entitled to vote, vote with other
Series so entitled as a single class. Notwithstanding the foregoing,
with respect to matters which would otherwise be voted on by two or
more Series as a single class, the Trustees may, in their sole
discretion, submit such matters to the Investors of any or all such
Series, separately.
(e) Fraction. Any fractional Interest of a Series shall carry
proportionately all the rights and obligations of a whole Interest
of that Series, including rights with respect to voting, receipt of
allocations and distributions, redemption of Interests, and
termination of the Trust or of any Series.
(f) Elimination of Series. The Trustees shall have the authority,
without the approval of Investors of any Series, unless otherwise
required by applicable law, to amend this Declaration of Trust to
abolish that Series and to rescind the establishment and designation
thereof.
ARTICLE IV
THE TRUSTEES
Section 1. Management of the Trust. The business and affairs of the Trust
shall be managed by the Trustees, and they shall have all powers necessary and
desirable to carry out that responsibility. The Trustees who shall serve as
Trustees are as follows: 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, Gregor F. Meyer, John E. Murray, Jr., Wesley W. Posvar and
Marjorie P. Smuts.
Section 2. Election of Trustees by Investors. Unless otherwise required by the
1940 Act or any court or regulatory body of competent jurisdiction, or unless
the Trustees determine otherwise, a Trustee shall be elected by the Trustees,
and Investors shall have no right to elect Trustees. Section 3. Term of Office
of Trustees. The Trustees shall hold office during the lifetime of this Trust,
and until its termination as hereinafter provided; except (a) that any Trustee
may resign his office at any time by written instrument signed by him and
delivered to the other Trustees, which shall take effect upon such delivery or
upon such later date as is specified therein; (b) that any Trustee may be
removed at any time by written instrument signed by at least two-thirds of the
number of Trustees prior to such removal, specifying the date when such removal
shall become effective; (c) that any Trustee who requests in writing to be
retired or who has become mentally or physically incapacitated may be retired by
written instrument signed by a majority of the other Trustees, specifying the
date of his retirement; and (d) a Trustee may be removed at any special meeting
of Investors of the Trust by a vote of two-thirds of the outstanding Interests.
Any removals shall be effective as to the Trust and each Series hereunder.
Section 4. Termination of Service and Appointment of Trustees. In case of the
death, resignation, retirement, removal or mental or physical incapacity of any
of the Trustees, or in case a vacancy shall, by reason of an increase in number,
or for any other reason, exist, the remaining Trustees shall fill such vacancy
by appointing such other person as they in their discretion shall see fit. An
appointment of a Trustee may be made by the Trustees then in office in
anticipation of a vacancy to occur by reason of retirement, resignation or
increase in number of Trustees effective at a later date, provided that said
appointment shall become effective only at or after the effective date of said
retirement, resignation or increase in number of Trustees. As soon as any
Trustee so appointed shall have accepted this Trust, the trust estate shall vest
in the new Trustee or Trustees, together with the continuing Trustees, without
any further act or conveyance, and he shall be deemed a Trustee hereunder. Any
appointment authorized by this Section 4 is subject to the provisions of Section
16(a) of the 1940 Act. Section 5. Number of Trustees. The number of Trustees,
not less than three (3) nor more than twenty (20) serving hereunder at any time,
shall be determined by the Trustees themselves.
Whenever a vacancy in the Board of Trustees shall occur, until such
vacancy is filled or while any Trustee is physically or mentally incapacitated,
the other Trustees shall have all the powers hereunder and the certificate
signed by a majority of the other Trustees of such vacancy, absence or
incapacity, shall be conclusive, provided, however, that no vacancy which
reduces the number of Trustees below three (3) shall remain unfilled for a
period longer than six calendar months. Section 6. Effect of Death, Resignation,
etc. of a Trustee. The death, resignation, retirement, removal, or mental or
physical incapacity of the Trustees, or any one or more of them, shall not
operate to annul the Trust or to revoke any existing agency created pursuant to
the terms of this Declaration of Trust. Section 7. Ownership of Assets. The
assets belonging to each Series shall be held separate and apart from any assets
now or hereafter held in any capacity other than as Trustee hereunder by the
Trustees or any successor Trustee. All of the assets belonging to each Series or
owned by the Trust shall at all times be considered as vested in the Trustees.
No Investor shall be deemed to have a severable ownership interest in any
individual asset belonging to any Series or owned by the Trust or any right of
partition or possession thereof, but each Investor shall have a proportionate
undivided beneficial interest in a Series.
ARTICLE V
POWERS OF THE TRUSTEES
Section 1. Powers. The Trustees in all instances shall act as principals, and
are and shall be free from the control of the Investors. The Trustees shall have
full power and authority to do any and all acts and to make and execute any and
all contracts and instruments that they may consider necessary or appropriate in
connection with the management of the Trust or a Series. The Trustees shall not
be bound or limited by present or future laws or customs in regard to trust
investments, but shall have full authority and power to make any and all
investments which they, in their uncontrolled discretion, shall deem proper to
accomplish the purpose of this Trust. Without limiting the foregoing, the
Trustees shall have the following specific powers and authority, subject to any
applicable limitation in the 1940 Act or in this Declaration of Trust or in the
Bylaws of the Trust:
(a) To buy, and invest funds in their hands in securities and other
property, including, but not limited to, common stocks, preferred stocks, bonds,
debentures, warrants and rights to purchase securities, options, certificates of
beneficial interest, money market instruments, notes or other evidences of
indebtedness issued by any corporation, trust or association, domestic or
foreign, or issued or guaranteed by the United States of America or any agency
or instrumentality thereof, by the government of any foreign country, by any
State of the United States, or by any political subdivision or agency or
instrumentality of any State or foreign country, or "when-issued" or
"delayed-delivery" contracts for any such securities, or any repurchase
agreement or reverse repurchase agreement, or debt instruments, commodities,
commodity contracts and options thereon, or to retain assets belonging to each
and every Series in cash, and from time to time to change the investments of the
assets belonging to each Series;
(b) To adopt Bylaws of the Trust not inconsistent with the Declaration
of Trust providing for the conduct of the business of the Trust and
to amend and repeal them to the extent that they do not reserve that
right to the Investors;
(c) To elect and remove such officers of the Trust and appoint and
terminate such agents of the Trust as they consider appropriate;
(d) To appoint or otherwise engage a bank or other entity permitted by
the 1940 Act, as custodian of any assets belonging to any Series
subject to any conditions set forth in this Declaration of Trust or
in the Bylaws;
(e) To appoint or otherwise engage transfer agents, dividend disbursing
agents, Investor servicing agents, Investment Advisers (including
any sub-investment advisers), placement agents, administrative
service agents, and such other agents as the Trustees may from time
to time appoint or otherwise engage;
(f) To provide for the distribution of any Interests of any Series
either through a private placement agent in the manner hereinafter
provided for or by the Trust itself, or both;
(g) To set record dates in the manner hereinafter provided for;
(h) To delegate such authority as they consider desirable to a committee
or committees composed of Trustees, including without limitation, an
Executive Committee, or to any officers of the Trust and to any
agent or custodian;
(i) To sell or exchange any or all of the assets belonging to one or
more Series, subject to the provisions of Article XIII, Section 3(b)
hereof;
(j) To vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or property; and to execute and
deliver powers of attorney to such person or persons, including the
Investment Adviser of the Trust as the Trustees shall deem proper,
granting to such person or persons such power and discretion with
relation to securities or property as the Trustees shall deem
proper;
(k) To exercise powers and rights of subscription or otherwise which in
any manner arise out of ownership of securities or other property;
(l) To hold any security or property in a form not indicating any trust,
whether in bearer, unregistered or other negotiable form; or either
in its own name or in the name of a custodian or a nominee or
nominees, subject in either case to proper safeguards according to
the usual business practice of Massachusetts business trusts or
investment companies;
(m) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or concern, any security
of which belongs to any Series; to consent to any contract, lease,
mortgage, purchase, or sale of property by such corporation or
concern, and to pay calls or subscriptions with respect to any
security which belongs to any Series;
(n) To engage in and to prosecute, compound, compromise, abandon, or
adjust, by arbitration or otherwise, any actions, suits,
proceedings, disputes, claims, demands, and things relating to the
Trust, and out of the assets belonging to any Series to pay, or to
satisfy, any debts, claims or expenses incurred in connection
therewith, including those of litigation, upon any evidence that the
Trustees may deem sufficient (such powers shall include, without
limitation, any actions, suits, proceedings, disputes, claims,
demands and things relating to the Trust wherein any of the Trustees
may be named individually and the subject matter of which arises by
reason of business for or on behalf of the Trust);
(o) To make distributions of income and of capital gains to Investors;
(p) To borrow money;
(q) From time to time to issue and sell the Interests of any Series
either for cash or for property whenever and in such amounts as the
Trustees may deem desirable, but subject to the limitation set forth
in Section 3 of Article III.
(r) To purchase insurance of any kind, including, without limitation,
insurance on behalf of any person who is or was a Trustee, officer,
employee, or agent of the Trust, or is or was serving at the request
of the Trust as a trustee, director, officer, agent, or employee of
another corporation, partnership, joint venture, trust or other
enterprise, against any liability asserted against him or incurred
by him in any such capacity or arising out of his status as such;
(s) To sell, exchange, lend, pledge, mortgage, hypothecate, lease, or
write options with respect to or otherwise deal in any property
rights relating to any or all of the assets belonging to any Series;
The Trustees shall have all of the powers set forth in this Section 1 with
respect to all assets and liabilities of each Series. Section 2. Principal
Transactions. The Trustees shall not cause the Trust on behalf of any Series to
buy any securities (other than Interests) from or sell any securities (other
than Interests) to, or lend any assets belonging to any Series to any Trustee or
officer or employee of the Trust or any firm of which any such Trustee or
officer is a member acting as principal unless permitted by the 1940 Act, but
the Trust may employ any such other party or any such person or firm or company
in which any such person is an interested person in any capacity not prohibited
by the 1940 Act. Section 3. Investments by Trustees and Officers. No Trustee,
officer, employee, or other agent of the Trust may acquire or own Interests of
any Series. Section 4. Parties to Contract. The Trustees may enter into any
contract of the character described in Article VII or in Article IX hereof or
any other capacity not prohibited by the 1940 Act with any corporation, firm,
partnership, trust, or association, although one or more of the Trustees,
officers, employees, or agents of the Trust or their affiliates may be an
officer, director, trustee, partner, or interested person of such other party to
the contract, and no such contract shall be invalidated or rendered voidable by
reason of the existence of any such relationship, nor shall any person holding
such relationship be liable merely by reason of such relationship for any loss
or expense to the Trust or any Series under or by reason of said contract or
accountable for any profit realized directly or indirectly therefrom, in the
absence of actual fraud. The same person (including a firm, corporation,
partnership, trust, or association) may be the other party to contracts entered
into pursuant to Article VII or Article IX or any other capacity not prohibited
by the 1940 Act, and any individual may be financially interested or otherwise
an interested person of persons who are parties to any or all of the contracts
mentioned in this Section 4.
ARTICLE VI
TRUSTEES' EXPENSES AND COMPENSATION
Section 1. Trustee Reimbursement. The Trustees shall be reimbursed from the
assets belonging to each particular Series for all of such Trustees' expenses as
such expenses are allocated to and among any one or more of the Series pursuant
to Article III, Section 5(b), including, without limitation, expenses of
organizing the Trust or any Series and continuing its or their existence; fees
and expenses of Trustees and officers of the Trust; fees for investment advisory
services, administrative services, and private placement services provided for
in Article VII, Sections 1, 2, and 3; fees and expenses of preparing
Registration Statements under the 1940 Act and any amendments thereto; expenses
of registering and qualifying the Trust and any Series and the Interests of any
Series under federal and state laws and regulations, if any; interest expenses,
taxes, fees, and commissions of every kind; expenses of issue, purchases,
repurchases and redemptions of Interests; charges and expenses of custodians,
transfer agents, dividend disbursing agents, Investor servicing agents and
registrars; auditing, accounting, and legal expenses; reports to Investors and
governmental officers and commissions; expenses of meetings of Investors and
proxy solicitations therefor; insurance expenses; association membership dues
and nonrecurring items as may arise, including all losses and liabilities by
them incurred in administering the Trust and any Series, including expenses
incurred in connection with litigation, proceedings, and claims and the
obligations of the Trust under Article XII hereof and the Bylaws to indemnify
its Trustees, officers, employees, and agents, and any contract obligation to
indemnify the placement agent of the Trust under Section 3 of Article VII; and
for the payment of such expenses, disbursements, losses, and liabilities, the
Trustees shall have a lien on the assets belonging to each Series prior to any
rights or interests of the Investors of any Series. This section shall not
preclude the Trust from directly paying any of the aforementioned fees and
expenses. Section 2. Trustee Compensation. The Trustees shall be entitled to
compensation from the Trust from the assets belonging to any Series for their
respective services as Trustees, to be determined from time to time by vote of
the Trustees, and the Trustees shall also determine the compensation of all
officers, employees, consultants, and agents whom they may elect or appoint. The
Trust may pay out of the assets belonging to any Series any Trustee or any
corporation, firm, partnership, trust, or other entity of which a Trustee is an
interested person for services rendered in any capacity not prohibited by the
1940 Act, and such payments shall not be deemed compensation for services as a
Trustee under the first sentence of this Section 2 of Article VI.
ARTICLE VII
INVESTMENT ADVISER, ADMINISTRATIVE SERVICES,
PLACEMENT AGENT AND TRANSFER AGENT
Section 1. Investment Adviser. Subject to a Majority Shareholder Vote by the
relevant Series to the extent such vote is required by law, the Trustees may in
their discretion from time to time enter into an investment advisory contract
whereby the other party to such contract shall undertake to furnish the Trustees
investment advisory services for such Series upon such terms and conditions and
for such compensation as the Trustees may in their discretion determine. Subject
to a Majority Shareholder Vote by the relevant Series to the extent such vote is
required by law, the Investment Adviser may enter into a sub-investment advisory
contract to receive investment advice and/or statistical and factual information
from the sub-investment adviser for such Series upon such terms and conditions
and for such compensation as the Trustees, in their discretion, may agree.
Notwithstanding any provisions of this Declaration of Trust, the Trustees may
authorize the Investment Adviser (including any sub-investment adviser) or any
person furnishing administrative personnel and services as set forth in Article
VII, Section 2 (subject to such general or specific instructions as the Trustees
may from time to time adopt) to effect purchases, sales, or exchanges of
portfolio securities belonging to a Series on behalf of the Trustees or may
authorize any officer, employee, or Trustee to effect such purchases, sales, or
exchanges pursuant to recommendations of the Investment Adviser (and all without
further action by the Trustees). Any such purchases, sales, and exchanges shall
be deemed to have been authorized by the Trustees. The Trustees may also
authorize the Investment Adviser to determine what firms shall be employed to
effect transactions in securities for the account of a Series and to determine
what firms shall participate in any such transactions or shall share in
commissions or fees charged in connection with such transactions. Section 2.
Administrative Services. The Trustees may in their discretion from time to time
contract for administrative personnel and services whereby the other party shall
agree to provide the Trustees administrative personnel and services to operate
the Trust or a Series on a daily basis, on such terms and conditions as the
Trustees may in their discretion determine. Such services may be provided by one
or more entities. Section 3. Placement Agent. The Trustees may in their
discretion from time to time enter into an exclusive or nonexclusive contract or
contracts providing for the sale of the Interests of a Series, whereby a Series
may either agree to sell the Interests to the other party to the contract or
appoint such other party its sales agent for such shares. In either case, the
contract shall be on such terms and conditions (including indemnification of the
placement agent allowable under applicable law and regulation) as the Trustees
may in their discretion determine not inconsistent with the provisions of this
Article VII; and such contract may also provide for the repurchase or sale of
Interests of a Series by such other party as agent of the Trust. Section 4.
Transfer Agent. The Trustees may in their discretion from time to time enter
into transfer agency and Investor services contracts whereby the other party
shall undertake to furnish transfer agency and Investor services. The contracts
shall be on such terms and conditions as the Trustees may in their discretion
determine not inconsistent with the provisions of this Declaration of Trust or
of the Bylaws. Such services may be provided by one or more entities.
ARTICLE VIII
INVESTORS' VOTING POWERS AND MEETINGS
Section 1. Voting Powers. Subject to the provisions set forth in Article III,
Section 5(d), the Investors shall have power to vote: (i) for the election of
Trustees as provided in Article IV, Section 2; (ii) for the removal of Trustees
as provided in Article IV, Section 3(d); (iii) with respect to any Investment
Adviser (including any sub-investment adviser) as provided in Article VII,
Section 1; (iv) with respect to the amendment of this Declaration of Trust as
provided in Article XIII, Section 7; and (v) with respect to such additional
matters relating to the Trust as may be required by law, by this Declaration of
Trust, or the By-Laws of the Trust or any regulation of the Trust or the
Securities and Exchange Commission or any State, or as the Trustees may consider
desirable. Each whole Interest shall be entitled to one vote as to any matter on
which it is entitled to vote, and each fractional Interest shall be entitled to
a proportionate fractional vote. There shall be no cumulative voting in the
election of Trustees. Interests may be voted in person or by proxy. A proxy
purporting to be executed by or on behalf of any Investor shall be deemed valid
unless challenged at or prior to its exercise and the burden of proving
invalidity shall rest on the challenger. At all meetings of Investors, unless
inspectors of election have been appointed, all questions relating to the
qualification of votes and the validity of proxies and the acceptance or
rejection of votes shall be decided by the chairman of the meeting. Unless
otherwise specified in the proxy, the proxy shall apply to all Interests of each
Investor in the Trust (or each Series). Any proxy may be in written form,
telephonic or electronic form, including facsimile, and all such forms shall be
valid when in conformance with procedures established and implemented by the
officers of the Trust. Until Interests of a Series are issued, the Trustees may
exercise all rights of Investors of such Series with respect to matters
affecting such Series, and may take any action with respect to the Trust or such
Series required or permitted by law, this Declaration of Trust or any Bylaws of
the Trust to be taken by Investors. Section 2. Meetings. An Investors' meeting
shall be held as specified in Section 2 of Article IV at the principal office of
the Trust or such other place as the Trustees may designate. Special meetings of
the Investors may be called by the Trustees or the Chief Executive Officer of
the Trust and shall be called by the Trustees upon the written request of
Investors owning at least one-tenth of the outstanding Interests of all Series
entitled to vote. Investors shall be entitled to at least fifteen days' notice
of any meeting. Section 3. Quorum and Required Vote. Except as otherwise
provided by law, the presence in person or by proxy of the holders of (a)
one-half of the Interests of the Trust on all matters requiring a Majority
Shareholder Vote, as defined in the Investment Company Act of 1940, or (b)
one-third of the Interests of the Trust on all other matters permitted by law,
in each case, entitled to vote shall constitute a quorum at any meeting of the
Investors, except with respect to any matter which by law requires the separate
approval of one or more Series, in which case the presence in person or by proxy
of the holders of one-half or one-third, as set forth above, of the Interests of
each Series entitled to vote separately on the matter shall constitute a quorum.
When any one or more Series is entitled to vote as a single Series, more than
one-half, or one-third, as appropriate, of the Interests of each such Series
entitled to vote shall constitute a quorum at an Investors' meeting of that
Series. If a quorum shall not be present for the purpose of any vote that may
properly come before the meeting, the Interests present in person or by proxy
and entitled to vote at such meeting on such matter may, by plurality vote,
adjourn the meeting from time to time to such place and time without further
notice than by announcement to be given at the meeting until a quorum entitled
to vote on such matter shall be present, whereupon any such matter may be voted
upon at the meeting as though held when originally convened. Subject to any
applicable requirement of law or of this Declaration of Trust or the By-Laws, a
plurality of the votes cast shall elect a Trustee, and all other matters shall
be decided by a majority of the votes cast and entitled to vote thereon. Section
4. Action by Written Consent. Subject to the provisions of the 1940 Act and
other applicable law, any action taken by Investors may be taken without a
meeting if a majority of such Investors entitled to vote on the matter (or such
larger proportion thereof as shall be required by applicable law or by any
express provision of this Declaration of Trust or the By-Laws) consents to the
action in writing. Such consents shall be treated for all purposes as a vote
taken at a meeting of Investors. Section 5. Additional Provisions. The Bylaws
may include further provisions for Investors' votes and meetings and related
matters.
ARTICLE IX
CUSTODIAN
The Trustees may, in their discretion, from time to time enter into contracts
providing for custodial and accounting services to the Trust or any Series. The
contracts shall be on the terms and conditions as the Trustees may in their
discretion determine not inconsistent with the provisions of this Declaration of
Trust or of the Bylaws. Such services may be provided by one or more entities,
including one or more sub-custodians.
ARTICLE X
INCREASES AND REDEMPTIONS OF INTERESTS
Subject to applicable law, to the provisions of this Declaration of Trust and to
such restrictions as may from time to time be adopted by the Trustees, each
Investor may vary its Interest in any Series at any time by increasing (through
a capital contribution) or decreasing (through a capital withdrawal) or by a
redemption of its Interest. An increase in the Interest of an Investor in a
Series shall be reflected as an increase in the Book Capital Account balance of
that Investor in that Series and a decrease in the Interest of an Investor in a
Series or the Redemption of the Interest of that Investor shall be reflected as
a decrease in the Book Capital Account balance of that Investor in that Series.
The Trust shall, upon appropriate and adequate notice from any Investor,
increase, decrease, or redeem such Investor's Interest for an amount determined
by the application of a formula adopted for such purpose by resolution of the
Trustees; provided that (a) the amount received by the Investor upon any such
decrease or redemption shall not exceed the decrease in the Investor's Book
Capital Account balance effected by such decrease or redemption of its Interest,
and (b) if so authorized by the Trustees, the Trust may, at any time and from
time to time, charge fees for effecting any such decrease or redemption, at such
rates as the Trustees may establish, and may, at any time and from time to time,
suspend such right of decrease or redemption. The procedures for effecting
decreases or redemptions shall be as determined by the Trustees from time to
time.
ARTICLE XI
DETERMINATION OF BOOK CAPITAL ACCOUNT
BALANCES AND DISTRIBUTIONS
Section 1. Book Capital Account Balances. The Book Capital Account balance of
Investors with respect to a particular Series shall be determined on such days
and at such time or times as the Trustees may determine. The Trustees shall
adopt resolutions setting forth the method of determining the Book Capital
Account balance of each Investor. The power and duty to make calculations
pursuant to such resolutions may be delegated by the Trustees to the Investment
Adviser or administrator, custodian, or such other person as the Trustees may
determine. Upon the redemption of an Interest, the Investor in that Interest
shall be entitled to receive the balance of its Book Capital Account. An
Investor may not transfer its Book Capital Account balance. Section 2.
Allocations and Distributions to Investors. The Trustees shall, in compliance
with the Internal Revenue Code, the 1940 Act, and generally accepted accounting
principles, establish the procedures by which the Trust shall make with respect
to each Series: (i) the allocation of unrealized gains and losses, taxable
income and tax loss, and profit and loss, or any item or items thereof, to each
Investor, (ii) the payment of distributions, if any to Investors, and (iii) upon
liquidation, the final distribution of items of taxable income and expense. Such
procedures shall be set forth in writing and be furnished to the Trust's
accountants. The Trustees may amend the procedures adopted pursuant to this
Section 2 of Article XI from time to time. The Trustees may retain from the net
profits of each Series such amount as they may deem necessary to pay the
liabilities and expenses of that Series. Section 3. Power to Modify Foregoing
Procedures. Notwithstanding any of the foregoing provisions of this Article XI,
the Trustees may prescribe, in their absolute discretion, such other bases and
times for determining the net income and net assets of the Trust and of each
Series, the allocation of income of the Trust and of each Series, the Book
Capital Account balance of each Investor, or the payment of distributions to the
Investors as they deem necessary or desirable to enable the Trust or a Series to
comply with any provision of the 1940 Act or any order of exemption issued by
the Commission or with the Internal Revenue Code.
ARTICLE XII
INDEMNIFICATION
Section 1. Indemnification of Investors. Each Investor of any Series shall be
liable for any debt, claim, action, demand, suit, proceeding, judgment, decree,
liability or obligation of any kind, against or with respect to the Trust or any
Series arising out of any action taken or omitted for or on behalf of the Trust
or such Series.
Each Investor or former Investor of any Series (or their corporate or
other general successor) shall be entitled to be held harmless from and
indemnified against to the full extent of such liability and the costs of any
litigation or other proceedings in which such liability shall have been
determined, including, without limitation, the fees and disbursements of counsel
if, contrary to the provisions hereof, such Investor or former Investor of such
Series shall be held to be liable. Such indemnification shall come exclusively
from the assets of the relevant Series.
The Trust shall, upon request by an Investor or former Investor, assume
the defense of any claim made against any Investor for any act or obligation of
the Trust or any Series and satisfy any judgment thereon. Section 2. Limitation
of Personal Liability and Indemnification of Trustees, Officers, Employees, or
Agents of the Trust. No Trustee, officer, employee, or agent of the Trust shall
have the power to bind any other Trustee, officer, employee, or agent of the
Trust personally. The Trustees, officers, employees, or agents of the Trust in
incurring any debts, liabilities or obligations, or in taking or omitting any
other actions for or in connection with the Trust, are, and each shall be deemed
to be, acting as Trustee, officer, employee or agent of the Trust and not in his
own individual capacity.
Trustees and officers of the Trust shall be liable for their willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of the office of Trustee or officer, as the case may be,
and for nothing else.
Each person who is or was a Trustee, officer, employee, or agent of the
Trust shall be entitled to indemnification out of the assets of the Trust (or of
any Series) to the extent provided in, and subject to the provisions of, the
Bylaws, provided that no indemnification shall be granted in contravention of
the 1940 Act.
ARTICLE XIII
MISCELLANEOUS
Section 1. Trustee Action Binding, Expert Advice, No Bond or Surety. The
exercise by the Trustees of their powers and discretions hereunder shall be
binding upon everyone interested. Subject to the provisions of Article XII, the
Trustees shall not be liable for errors of judgment or mistakes of fact or law.
The Trustees may take advice of counsel or other experts with respect to the
meaning and operation of this Declaration of Trust, and subject to the
provisions of Article XII, shall be under no liability for any act or omission
in accordance with such advice or for failing to follow such advice. The
Trustees shall not be required to give any bond as such, nor any surety if a
bond is required. Section 2. Establishment of Record Dates. The Trustees may
close the Interest transfer books of the Trust maintained with respect to any
Series for a period not exceeding ninety (90) days preceding the date of any
meeting of Investors of the Trust or any Series, or the date for the payment of
any allocation or the making of any distribution to Investors, or the date for
the allotment of rights, or the date when any change or conversion or exchange
of Interests of any Series shall go into effect or the last day on which the
consent or dissent of Investors of any Series may be effectively expressed for
any purpose; or in lieu of closing the Interests transfer books as aforesaid,
the Trustees may fix in advance a date, not exceeding ninety (90) days preceding
the date of any meeting of Investors of the Trust or any Series, or the date for
the payment of any allocation or the making of any distribution to Investors of
any Series, or the date for the allotment of rights, or the date when any change
or conversion or exchange of Interests of any Series shall go into effect, or
the last day on which the consent or dissent of Investors of any Series may be
effectively expressed for any purpose, as a record date for the determination of
the Investors entitled to notice of, and, to vote at, any such meeting and any
adjournment thereof, or entitled to receive payment of any such allocation or
distribution, or to any such allotment of rights, or to exercise the rights in
respect of any such change, conversion or exchange of Interests, or to exercise
the right to give such consent or dissent, and in such case such Investors and
only such Investors as shall be Investors of record on the date so fixed shall
be entitled to such notice of, and to vote at, such meeting, or to receive
payment of such allocation or distribution, or to receive such allotment or
rights, or to change, convert or exchange Interests of any Series, or to
exercise such rights, as the case may be, notwithstanding, after such date fixed
aforesaid, any transfer of any Interests on the books of the Trust maintained
with respect to any Series. Nothing in the foregoing sentence shall be construed
as precluding the Trustees from setting different record dates for different
Series. Section 3. Termination of Trust.
(a) This Trust shall continue for a period of fifty (50) years from
September 1, 1996, but subject to the provisions of paragraphs (b),
(c) and (d) of this Section 3. At the date of termination of the
Trust pursuant to this paragraph (a) of Section 3, the Investors may
elect to continue the existence of the Trust for such period of time
as they may agree in writing. If the existence of the Trust is not
continued, the Trustees, upon making provision for the payment of
all outstanding obligations, taxes, and other liabilities, accrued
or contingent, belonging to each Series, shall distribute the
remaining assets belonging to each Series ratably among the holders
of the outstanding Interests of each Series. In termination of the
Trust, the Trustees may, as they deem appropriate, sell and convert
into money any or all of the assets of each Series prior to
distribution.
(b) The Trustees may, by majority action, with the approval of a
Majority Shareholder Vote of each Series entitled to vote as
determined by the Trustees under Section 5(d) of Article III, sell
and convey the assets of the Trust or any Series to another trust or
corporation. Upon making provision for the payment of all
outstanding obligations, taxes and other liabilities, accrued or
contingent, belonging to each Series, the Trustees shall distribute
the remaining assets belonging to each Series ratably among the
holders of the outstanding Interests of that Series. The Trustees
shall make a good faith determination that a conveyance of a part of
the assets of a Series is in the best interest of Investors of the
relevant Series.
(c) The Trustees may at any time sell and convert into money all the
assets of the Trust or any Series without Investor approval, unless
otherwise required by applicable law. Upon making provision for the
payment of all outstanding obligations, taxes, and other
liabilities, accrued or contingent, belonging to each Series, the
Trustees shall distribute the remaining assets belonging to each
Series ratably among the holders of the outstanding Interests of
that Series.
(d) Upon completion of the distribution of the remaining proceeds of the
remaining assets as provided in paragraphs (b) and (c), the Trust or
the applicable Series shall terminate and the Trustees shall be
discharged of any and all further liabilities and duties hereunder
or with respect thereto and the right, title, and interest of all
parties shall be canceled and discharged.
Section 4. Offices of the Trust, Filing of Copies, Headings, Counterparts. The
Trust shall maintain a usual place of business in Massachusetts, which,
initially, shall be c/o Donnelly, Conroy & Gelhaar, One Post Office Square,
Boston, Massachusetts 02109-2105, and shall continue to maintain an office at
such address unless changed by the Trustees to another location in
Massachusetts. The Trust may maintain other offices as the Trustees may from
time to time determine. The original or a copy of this instrument and of each
declaration of trust supplemental hereto shall be kept at the office of the
Trust where it may be inspected by any Investor. A copy of this instrument and
of each supplemental declaration of trust shall be filed by the Trustees with
the Massachusetts Secretary of State and the Boston City Clerk, as well as any
other governmental office where such filing may from time to time be required.
Headings are placed herein for convenience of reference only and in case of any
conflict, the text of this instrument, rather than the headings shall control.
This instrument may be executed in any number of counterparts each of which
shall be deemed an original. Section 5. Applicable Law. The Trust set forth in
this instrument is created under and is to be governed by and construed and
administered according to the laws of The Commonwealth of Massachusetts. Section
6. Amendments -- General. All rights granted to the Investors under this
Declaration of Trust are granted subject to the reservation of the right to
amend this Declaration of Trust as herein provided. The provisions of this
Declaration of Trust (whether or not related to the rights of Investors) may be
amended at any time, so long as such amendment does not adversely affect the
rights of any Investor with respect to which such amendment is or purports to be
applicable and so long as such amendment is not in contravention of applicable
law, including the 1940 Act, by an instrument in writing signed by a majority of
the then Trustees (or by an officer of the Trust pursuant to the vote of a
majority of such Trustees). Any amendment to this Declaration of Trust that
adversely affects the rights of Investors may be adopted at any time by an
instrument signed in writing by a majority of the then Trustees (or by any
officer of the Trust pursuant to the vote of a majority of such Trustees) when
authorized to do so by the vote of the Investors holding a majority of the
Interests entitled to vote. Subject to the foregoing, any such amendment shall
be effective as provided in the instrument containing the terms of such
amendment or, if there is no provision therein with respect to effectiveness,
upon the execution of such instrument and of a certificate (which may be a part
of such instrument) executed by a Trustee or officer to the effect that such
amendment has been duly adopted. Copies of the amendment to this Declaration of
Trust shall be filed as specified in Section 4 of this Article XIII. A restated
Declaration of Trust, integrating into a single instrument all of the provisions
of the Declaration of Trust which are then in effect and operative, may be
executed from time to time by a majority of the Trustees and shall be effective
upon filing as specified in Section 4. Section 7. Amendments -- Series. The
establishment and designation of any Series in addition to those established and
designated in Section 5 of Article III hereof shall be effective upon the
execution by a majority of the then Trustees, without the need for Investor
approval, of an amendment to this Declaration of Trust, taking the form of a
complete restatement or otherwise, setting forth such establishment and
designation and the relative rights and preferences of any such Series, or as
otherwise provided in such instrument.
Without limiting the generality of the foregoing, the Declaration of the
Trust may be amended without the need for Investor approval to: (a) create
one or more Series (in addition to any Series already existing or
otherwise) with such rights and preferences and such
eligibility requirements for investment therein as the Trustees
shall determine and reclassify any or all outstanding Interests as
Interest of particular Series in accordance with such eligibility
requirements;
(b) combine two or more Series into a single Series on such terms and
conditions as the Trustees shall determine;
(c) change or eliminate any eligibility requirements for investment in
Interests of any Series, including without limitation the power to
provide for the issue of Interests of any Series in connection with
any merger or consolidation of the Trust with another trust or
company or any acquisition by the Trust of part or all of the assets
of another trust or company;
(d) change the designation of any Series;
(e) change the method of allocating unrealized gains and losses, taxable
income and tax loss, and profit and loss among the various Series;
(f) allocate any specific assets or liabilities of the Trust or any
specific items of income or expense of the Trust to one or more Series; and
(g) specifically allocate assets to any or all Series or create one or
more additional Series which are preferred over all other Series in
respect of assets specifically allocated thereto or any allocations
made by the Trust with respect to any item of income or expense,
however determined.
Section 8. Use of Name. The Trust acknowledges that Federated Investors has
reserved the right to grant the non-exclusive use of the name "Federated" or any
derivative thereof to any other investment company, investment company
portfolio, Investment Adviser, distributor, or other business enterprise, and to
withdraw from the Trust or one or more Series any right to the use of the name
"Federated." IN WITNESS WHEREOF, the undersigned have executed this instrument
as of the day and year first above written.
/s/ John F. Donahue /s/ Edward L. Flaherty
John F. Donahue Edward L. Flaherty, Jr.
/s/ Thomas G. Bigley, Jr. /s/ Peter E. Madden
Thomas G. Bigley, Jr. Peter E. Madden
/s/ John T. Conroy, Jr. /s/ Gregor F. Meyer
John T. Conroy, Jr. Gregor F. Meyer
/s/ William J. Copeland /s/ John E. Murray, Jr.
William J. Copeland John E. Murray, Jr.
/s/ James E. Dowd /s/ Wesley W. Posvar
James E. Dowd Wesley W. Posvar
/s/ Lawrence D. Ellis, M.D. /s/ Marjorie P. Smuts
Lawrence D. Ellis, M.D. Marjorie P. Smuts
COMMONWEALTH OF PENNSYLVANIA )
: ss:
COUNTY OF ALLEGHENY )
I hereby certify that on August 21, 1996, before me, the subscriber, a
Notary Public of the Commonwealth of Pennsylvania, in for the County of
Allegheny, personally appeared 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, Gregor F. Meyer, John E. Murray, Jr., Wesley
W. Posvar and Marjorie P. Smuts, who acknowledged the foregoing Declaration of
Trust to be their act.
Witness my hand and notarial seal the day and year above written.
/s/ Samuel C. Webb, Jr.
Notary Public
Notarial Seal
Samuel C. Webb, Jr. Notary Public
Pittsburgh, Allegheny County
My Commission Expires Nov. 22, 1999
Member Pennsylvania Association of Notaries
Exhibit 9 under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
AGREEMENT
FOR
FUND ACCOUNTING SERVICES,
ADMINISTRATIVE SERVICES,
TRANSFER AGENCY SERVICES
AND
CUSTODY SERVICES PROCUREMENT
AGREEMENT made as of March 1, 1996, by and between those investment companies
listed on Exhibit 1 as may be amended from time to time, having their principal
office and place of business at Federated Investors Tower, Pittsburgh, PA
15222-3779 (the "Investment Company"), on behalf of the portfolios (individually
referred to herein as a "Fund" and collectively as "Funds") of the Investment
Company, and FEDERATED SERVICES COMPANY, a Pennsylvania corporation, having its
principal office and place of business at Federated Investors Tower, Pittsburgh,
Pennsylvania 15222-3779 on behalf of itself and its subsidiaries (the
"Company").
WHEREAS, the Investment Company is registered as an open-end management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"), with authorized and issued shares of capital stock or beneficial
interest ("Shares");
WHEREAS, the Investment Company may desire to retain the Company as fund
accountant to provide fund accounting services (as herein defined) including
certain pricing, accounting and recordkeeping services for each of the Funds,
including any classes of shares issued by any Fund ("Classes") if so indicated
on Exhibit 1, and the Company desires to accept such appointment;
WHEREAS, the Investment Company may desire to appoint the Company as its
administrator to provide it with administrative services (as herein defined), if
so indicated on Exhibit, and the Company desires to accept such appointment;
WHEREAS, the Investment Company may desire to appoint the Company as its
transfer agent and dividend disbursing agent to provide it with transfer agency
services (as herein defined) if so indicated on Exhibit 1, and agent in
connection with certain other activities, and the Company desires to accept such
appointment; and
WHEREAS, the Investment Company may desire to appoint the Company as its
agent to select, negotiate and subcontract for custodian services from an
approved list of qualified banks if so indicated on Exhibit 1, and the Company
desires to accept such appointment; and
NOW THEREFORE, in consideration of the premises and mutual covenants herein
contained, and intending to be legally bound hereby, the parties hereto agree as
follows:
SECTION ONE: FUND ACCOUNTING.
ARTICLE 1. APPOINTMENT.
The Investment Company hereby appoints the Company to provide certain pricing
and accounting services to the Funds, and/or the Classes, for the period and on
the terms set forth in this Agreement. The Company accepts such appointment and
agrees to furnish the services herein set forth in return for the compensation
as provided in Article 3 of this Section.
ARTICLE 2. THE COMPANY'S DUTIES.
Subject to the supervision and control of the Investment Company's Board of
Trustees or Directors ("Board"), the Company will assist the Investment Company
with regard to fund accounting for the Investment Company, and/or the Funds,
and/or the Classes, and in connection therewith undertakes to perform the
following specific services;
A. Value the assets of the Funds using: primarily, market quotations,
including the use of matrix pricing, supplied by the independent pricing
services selected by the Company in consultation with the adviser, or sources
selected by the adviser, and reviewed by the board; secondarily, if a designated
pricing service does not provide a price for a security which the Company
believes should be available by market quotation, the Company may obtain a price
by calling brokers designated by the investment adviser of the fund holding the
security, or if the adviser does not supply the names of such brokers, the
Company will attempt on its own to find brokers to price those securities;
thirdly, for securities for which no market price is available, the Pricing
Committee of the Board will determine a fair value in good faith. Consistent
with Rule 2a-4 of the 40 Act, estimates may be used where necessary or
appropriate. The Company's obligations with regard to the prices received from
outside pricing services and designated brokers or other outside sources, is to
exercise reasonable care in the supervision of the pricing agent. The Company is
not the guarantor of the securities prices received from such agents and the
Company is not liable to the Fund for potential errors in valuing a Fund's
assets or calculating the net asset value per share of such Fund or Class when
the calculations are based upon such prices. All of the above sources of prices
used as described are deemed by the Company to be authorized sources of security
prices. The Company provides daily to the adviser the securities prices used in
calculating the net asset value of the fund, for its use in preparing exception
reports for those prices on which the adviser has comment. Further, upon receipt
of the exception reports generated by the adviser, the Company diligently
pursues communication regarding exception reports with the designated pricing
agents;
B. Determine the net asset value per share of each Fund and/or Class, at
the time and in the manner from time to time determined by the Board
and as set forth in the Prospectus and Statement of Additional
Information ("Prospectus") of each Fund;
C. Calculate the net income of each of the Funds, if any;
D. Calculate realized capital gains or losses of each of the Funds
resulting from sale or disposition of assets, if any;
E. Maintain the general ledger and other accounts, books and financial
records of the Investment Company, including for each Fund, and/or
Class, as required under Section 31(a) of the 1940 Act and the Rules
thereunder in connection with the services provided by the Company;
F. Preserve for the periods prescribed by Rule 31a-2 under the 1940 Act
the records to be maintained by Rule 31a-1 under the 1940 Act in
connection with the services provided by the Company. The Company
further agrees that all such records it maintains for the Investment
Company are the property of the Investment Company and further agrees
to surrender promptly to the Investment Company such records upon the
Investment Company's request;
G. At the request of the Investment Company, prepare various reports or
other financial documents in accordance with generally accepted
accounting principles as required by federal, state and other
applicable laws and regulations; and
H. Such other similar services as may be reasonably requested by the
Investment Company.
The foregoing, along with any additional services that the Company shall
agree in writing to perform for the Investment Company under this Section One,
shall hereafter be referred to as "Fund Accounting Services."
ARTICLE 3. COMPENSATION AND ALLOCATION OF EXPENSES.
A. The Funds will compensate the Company for Fund Accounting Services in
accordance with the fees agreed upon from time to time between the
parties hereto. Such fees do not include out-of-pocket disbursements
of the Company for which the Funds shall reimburse the Company.
Out-of-pocket disbursements shall include, but shall not be limited
to, the items agreed upon between the parties from time to time.
B. The Fund and/or the Class, and not the Company, shall bear the cost
of: custodial expenses; membership dues in the Investment Company
Institute or any similar organization; transfer agency expenses;
investment advisory expenses; costs of printing and mailing stock
certificates, Prospectuses, reports and notices; administrative
expenses; interest on borrowed money; brokerage commissions; taxes
and fees payable to federal, state and other governmental agencies;
fees of Trustees or Directors of the Investment Company; independent
auditors expenses; legal and audit department expenses billed to the
Company for work performed related to the Investment Company, the
Funds, or the Classes; law firm expenses; organizational expenses; or
other expenses not specified in this Article 3 which may be properly
payable by the Funds and/or Classes.
C. The compensation and out-of-pocket expenses attributable to the Fund
shall be accrued by the Fund and shall be paid to the Company no less
frequently than monthly, and shall be paid daily upon request of the
Company. The Company will maintain detailed information about the
compensation and out-of-pocket expenses by Fund and Class.
D. Any schedule of compensation agreed to hereunder, as may be adjusted
from time to time, shall be dated and signed by a duly authorized
officer of the Investment Company and/or the Funds and a duly
authorized officer of the Company.
E. The fee for the period from the effective date of this Agreement with
respect to a Fund or a Class to the end of the initial month shall be
prorated according to the proportion that such period bears to the
full month period. Upon any termination of this Agreement before the
end of any month, the fee for such period shall be prorated according
to the proportion which such period bears to the full month period.
For purposes of determining fees payable to the Company, the value of
the Fund's net assets shall be computed at the time and in the manner
specified in the Fund's Prospectus.
F. The Company, in its sole discretion, may from time to time
subcontract to, employ or associate with itself such person or
persons as the Company may believe to be particularly suited to
assist it in performing Fund Accounting Services. Such person or
persons may be affiliates of the Company, third-party service
providers, or they may be officers and employees who are employed by
both the Company and the Investment Company; provided, however, that
the Company shall be as fully responsible to each Fund for the acts
and omissions of any such subcontractor as it is for its own acts and
omissions. The compensation of such person or persons shall be paid
by the Company and no obligation shall be incurred on behalf of the
Investment Company, the Funds, or the Classes in such respect.
SECTION TWO: ADMINISTRATIVE SERVICES.
ARTICLE 4. APPOINTMENT.
The Investment Company hereby appoints the Company as Administrator for the
period on the terms and conditions set forth in this Agreement. The Company
hereby accepts such appointment and agrees to furnish the services set forth in
Article 5 of this Agreement in return for the compensation set forth in Article
9 of this Agreement.
ARTICLE 5. THE COMPANY'S DUTIES.
As Administrator, and subject to the supervision and control of the Board and
in accordance with Proper Instructions (as defined hereafter) from the
Investment Company, the Company will provide facilities, equipment, and
personnel to carry out the following administrative services for operation of
the business and affairs of the Investment Company and each of its portfolios:
A. prepare, file, and maintain the Investment Company's governing documents
and any amendments thereto, including the Charter (which has already
been prepared and filed), the By-laws and minutes of meetings of the
Board and Shareholders;
B. prepare and file with the Securities and Exchange Commission and the
appropriate state securities authorities the registration statements for
the Investment Company and the Investment Company's shares and all
amendments thereto, reports to regulatory authorities and shareholders,
prospectuses, proxy statements, and such other documents all as may be
necessary to enable the Investment Company to make a continuous offering
of its shares;
C. prepare, negotiate, and administer contracts (if any) on behalf of the
Investment Company with, among others, the Investment Company's
investment advisers and distributors, subject to any applicable
restrictions of the Board or the 1940 Act;
D. calculate performance data of the Investment Company for dissemination
to information services covering the investment company industry;
E. prepare and file the Investment Company's tax returns;
F. coordinate the layout and printing of publicly disseminated prospectuses
and reports;
G. perform internal audit examinations in accordance with a charter to be
adopted by the Company and the Investment Company;
H. assist with the design, development, and operation of the Investment
Company and the Funds;
I. provide individuals reasonably acceptable to the Board for nomination,
appointment, or election as officers of the Investment Company, who will
be responsible for the management of certain of the Investment Company's
affairs as determined by the Investment Company's Board; and
J. consult with the Investment Company and its Board on matters concerning
the Investment Company and its affairs.
The foregoing, along with any additional services that the Company shall
agree in writing to perform for the Investment Company under this Section Two,
shall hereafter be referred to as "Administrative Services."
ARTICLE 6. RECORDS.
The Company shall create and maintain all necessary books and records in
accordance with all applicable laws, rules and regulations, including but not
limited to records required by Section 31(a) of the Investment Company act of
1940 and the rules thereunder, as the same may be amended from time to time,
pertaining to the Administrative Services performed by it and not otherwise
created and maintained by another party pursuant to contract with the Investment
Company. Where applicable, such records shall be maintained by the Company for
the periods and in the places required by Rule 31a-2 under the 1940 Act. The
books and records pertaining to the Investment Company which are in the
possession of the Company shall be the property of the Investment Company. The
Investment Company, or the Investment Company's authorized representatives,
shall have access to such books and records at all times during the Company's
normal business hours. Upon the reasonable request of the Investment Company,
copies of any such books and records shall be provided promptly by the Company
to the Investment Company or the Investment Company's authorized
representatives.
ARTICLE 7. DUTIES OF THE FUND.
The Fund assumes full responsibility for the preparation, contents and
distribution of its own offering document and for complying with all applicable
requirements the 1940 Act, the Internal Revenue Code, and any other laws, rules
and regulations of government authorities having jurisdiction.
ARTICLE 8. EXPENSES.
The Company shall be responsible for expenses incurred in providing office
space, equipment, and personnel as may be necessary or convenient to provide the
Administrative Services to the Investment Company, including the compensation of
the Company employees who serve as trustees or directors or officers of the
Investment Company. The Investment Company shall be responsible for all other
expenses incurred by the Company on behalf of the Investment Company, including
without limitation postage and courier expenses, printing expenses, travel
expenses, registration fees, filing fees, fees of outside counsel and
independent auditors, or other professional services, organizational expenses,
insurance premiums, fees payable to persons who are not the Company's employees,
trade association dues, and other expenses properly payable by the Funds and/or
the Classes.
ARTICLE 9. COMPENSATION.
For the Administrative Services provided, the Investment Company hereby
agrees to pay and the Company hereby agrees to accept as full compensation for
its services rendered hereunder an administrative fee at an annual rate per
Fund, as specified below.
The compensation and out of pocket expenses attributable to the Fund shall be
accrued by the Fund and paid to the Company no less frequently than monthly, and
shall be paid daily upon request of the Company. The Company will maintain
detailed information about the compensation and out of pocket expenses by the
Fund.
MAX. ADMIN. AVERAGE DAILY NET ASSETS
FEE OF THE FUNDS
.150% on the first $250 million
.125% on the next $250 million
.100% on the next $250 million
.075% on assets in excess of $750 million
(Average Daily Net Asset break-points are on
a complex-wide basis)
However, in no event shall the administrative fee received during any year of
the Agreement be less than, or be paid at a rate less than would aggregate
$125,000 per Fund and $30,000 per Class. The minimum fee set forth above in this
Article 9 may increase annually upon each March 1 anniversary of this Agreement
over the minimum fee during the prior 12 months, as calculated under this
agreement, in an amount equal to the increase in Pennsylvania Consumer Price
Index (not to exceed 6% annually) as last reported by the U.S. Bureau of Labor
Statistics for the twelve months immediately preceding such anniversary.
ARTICLE 10. RESPONSIBILITY OF ADMINISTRATOR.
A. The Company shall not be liable for any error of judgment or mistake of
law or for any loss suffered by the Investment Company in connection with the
matters to which this Agreement relates, except a loss resulting from willful
misfeasance, bad faith or gross negligence on its part in the performance of its
duties or from reckless disregard by it of its obligations and duties under this
Agreement. The Company shall be entitled to rely on and may act upon advice of
counsel (who may be counsel for the Investment Company) on all matters, and
shall be without liability for any action reasonably taken or omitted pursuant
to such advice. Any person, even though also an officer, director, trustee,
partner, employee or agent of the Company, who may be or become an officer,
director, trustee, partner, employee or agent of the Investment Company, shall
be deemed, when rendering services to the Investment Company or acting on any
business of the Investment Company (other than services or business in
connection with the duties of the Company hereunder) to be rendering such
services to or acting solely for the Investment Company and not as an officer,
director, trustee, partner, employee or agent or one under the control or
direction of the Company even though paid by the Company.
B. The Company shall be kept indemnified by the Investment Company and be
without liability for any action taken or thing done by it in performing the
Administrative Services in accordance with the above standards. In order that
the indemnification provisions contained in this Article 10 shall apply,
however, it is understood that if in any case the Investment Company may be
asked to indemnify or hold the Company harmless, the Investment Company shall be
fully and promptly advised of all pertinent facts concerning the situation in
question, and it is further understood that the Company will use all reasonable
care to identify and notify the Investment Company promptly concerning any
situation which presents or appears likely to present the probability of such a
claim for indemnification against the Investment Company. The Investment Company
shall have the option to defend the Company against any claim which may be the
subject of this indemnification. In the event that the Investment Company so
elects, it will so notify the Company and thereupon the Investment Company shall
take over complete defense of the claim, and the Company shall in such situation
initiate no further legal or other expenses for which it shall seek
indemnification under this Article. The Company shall in no case confess any
claim or make any compromise in any case in which the Investment Company will be
asked to indemnify the Company except with the Investment Company's written
consent.
SECTION THREE: TRANSFER AGENCY SERVICES.
ARTICLE 11. TERMS OF APPOINTMENT.
Subject to the terms and conditions set forth in this Agreement, the
Investment Company hereby appoints the Company to act as, and the Company agrees
to act as, transfer agent and dividend disbursing agent for each Fund's Shares,
and agent in connection with any accumulation, open-account or similar plans
provided to the shareholders of any Fund ("Shareholder(s)"), including without
limitation any periodic investment plan or periodic withdrawal program.
ARTICLE 12. DUTIES OF THE COMPANY.
The Company shall perform the following services in accordance with Proper
Instructions as may be provided from time to time by the Investment Company as
to any Fund:
A. Purchases
(1) The Company shall receive orders and payment for the purchase of
shares and promptly deliver payment and appropriate documentation
therefore to the custodian of the relevant Fund, (the
"Custodian"). The Company shall notify the Fund and the Custodian
on a daily basis of the total amount of orders and payments so
delivered.
(2) Pursuant to purchase orders and in accordance with the Fund's
current Prospectus, the Company shall compute and issue the
appropriate number of Shares of each Fund and/or Class and hold
such Shares in the appropriate Shareholder accounts.
(3) For certificated Funds and/or Classes, if a Shareholder or its
agent requests a certificate, the Company, as Transfer Agent,
shall countersign and mail by first class mail, a certificate to
the Shareholder at its address as set forth on the transfer books
of the Funds, and/or Classes, subject to any Proper Instructions
regarding the delivery of certificates.
(4) In the event that any check or other order for the purchase of
Shares of the Fund and/or Class is returned unpaid for any
reason, the Company shall debit the Share account of the
Shareholder by the number of Shares that had been credited to its
account upon receipt of the check or other order, promptly mail a
debit advice to the Shareholder, and notify the Fund and/or Class
of its action. In the event that the amount paid for such Shares
exceeds proceeds of the redemption of such Shares plus the amount
of any dividends paid with respect to such Shares, the Fund
and/the Class or its distributor will reimburse the Company on
the amount of such excess.
B. Distribution
(1) Upon notification by the Funds of the declaration of any
distribution to Shareholders, the Company shall act as Dividend
Disbursing Agent for the Funds in accordance with the provisions
of its governing document and the then-current Prospectus of the
Fund. The Company shall prepare and mail or credit income,
capital gain, or any other payments to Shareholders. As the
Dividend Disbursing Agent, the Company shall, on or before the
payment date of any such distribution, notify the Custodian of
the estimated amount required to pay any portion of said
distribution which is payable in cash and request the Custodian
to make available sufficient funds for the cash amount to be paid
out. The Company shall reconcile the amounts so requested and the
amounts actually received with the Custodian on a daily basis. If
a Shareholder is entitled to receive additional Shares by virtue
of any such distribution or dividend, appropriate credits shall
be made to the Shareholder's account, for certificated Funds
and/or Classes, delivered where requested; and
(2) The Company shall maintain records of account for each Fund and
Class and advise the Investment Company, each Fund and Class and
its Shareholders as to the foregoing.
C. Redemptions and Transfers
(1) The Company shall receive redemption requests and redemption
directions and, if such redemption requests comply with the
procedures as may be described in the Fund Prospectus or set
forth in Proper Instructions, deliver the appropriate
instructions therefor to the Custodian. The Company shall notify
the Funds on a daily basis of the total amount of redemption
requests processed and monies paid to the Company by the
Custodian for redemptions.
(2) At the appropriate time upon receiving redemption proceeds from
the Custodian with respect to any redemption, the Company shall
pay or cause to be paid the redemption proceeds in the manner
instructed by the redeeming Shareholders, pursuant to procedures
described in the then-current Prospectus of the Fund.
(3) If any certificate returned for redemption or other request for
redemption does not comply with the procedures for redemption
approved by the Fund, the Company shall promptly notify the
Shareholder of such fact, together with the reason therefor, and
shall effect such redemption at the price applicable to the date
and time of receipt of documents complying with said procedures.
(4) The Company shall effect transfers of Shares by the registered
owners thereof.
(5) The Company shall identify and process abandoned accounts and
uncashed checks for state escheat requirements on an annual basis
and report such actions to the Fund.
D. Recordkeeping
(1) The Company shall record the issuance of Shares of each Fund,
and/or Class, and maintain pursuant to applicable rules of the
Securities and Exchange Commission ("SEC") a record of the total
number of Shares of the Fund and/or Class which are authorized,
based upon data provided to it by the Fund, and issued and
outstanding. The Company shall also provide the Fund on a regular
basis or upon reasonable request with the total number of Shares
which are authorized and issued and outstanding, but shall have
no obligation when recording the issuance of Shares, except as
otherwise set forth herein, to monitor the issuance of such
Shares or to take cognizance of any laws relating to the issue or
sale of such Shares, which functions shall be the sole
responsibility of the Funds.
(2) The Company shall establish and maintain records pursuant to
applicable rules of the SEC relating to the services to be
performed hereunder in the form and manner as agreed to by the
Investment Company or the Fund to include a record for each
Shareholder's account of the following:
(a) Name, address and tax identification number (and whether such
number has been certified);
(b) Number of Shares held;
(c) Historical information regarding the account, including
dividends paid and date and price for all transactions;
(d) Any stop or restraining order placed against the account;
(e) Information with respect to withholding in the case of a
foreign account or an account for which withholding is
required by the Internal Revenue Code;
(f) Any dividend reinvestment order, plan application, dividend
address and correspondence relating to the current
maintenance of the account;
(g) Certificate numbers and denominations for any Shareholder
holding certificates;
(h) Any information required in order for the Company to perform
the calculations contemplated or required by this Agreement.
(3) The Company shall preserve any such records required to be
maintained pursuant to the rules of the SEC for the periods
prescribed in said rules as specifically noted below. Such record
retention shall be at the expense of the Company, and such
records may be inspected by the Fund at reasonable times. The
Company may, at its option at any time, and shall forthwith upon
the Fund's demand, turn over to the Fund and cease to retain in
the Company's files, records and documents created and maintained
by the Company pursuant to this Agreement, which are no longer
needed by the Company in performance of its services or for its
protection. If not so turned over to the Fund, such records and
documents will be retained by the Company for six years from the
year of creation, during the first two of which such documents
will be in readily accessible form. At the end of the six year
period, such records and documents will either be turned over to
the Fund or destroyed in accordance with Proper Instructions.
E. Confirmations/Reports
(1) The Company shall furnish to the Fund periodically the following
information:
(a) A copy of the transaction register;
(b) Dividend and reinvestment blotters;
(c) The total number of Shares issued and outstanding in each
state for "blue sky" purposes as determined according to
Proper Instructions delivered from time to time by the Fund
to the Company;
(d) Shareholder lists and statistical information;
(e) Payments to third parties relating to distribution
agreements, allocations of sales loads, redemption fees, or
other transaction- or sales-related payments;
(f) Such other information as may be agreed upon from time to
time.
(2) The Company shall prepare in the appropriate form, file with the
Internal Revenue Service and appropriate state agencies, and, if
required, mail to Shareholders, such notices for reporting
dividends and distributions paid as are required to be so filed
and mailed and shall withhold such sums as are required to be
withheld under applicable federal and state income tax laws,
rules and regulations.
(3) In addition to and not in lieu of the services set forth above,
the Company shall:
(a) Perform all of the customary services of a transfer agent, dividend
disbursing agent and, as relevant, agent in connection with accumulation,
open-account or similar plans (including without limitation any periodic
investment plan or periodic withdrawal program), including but not limited to:
maintaining all Shareholder accounts, mailing Shareholder reports and
Prospectuses to current Shareholders, withholding taxes on accounts subject to
back-up or other withholding (including non-resident alien accounts), preparing
and filing reports on U.S. Treasury Department Form 1099 and other appropriate
forms required with respect to dividends and distributions by federal
authorities for all Shareholders, preparing and mailing confirmation forms and
statements of account to Shareholders for all purchases and redemptions of
Shares and other conformable transactions in Shareholder accounts, preparing and
mailing activity statements for Shareholders, and providing Shareholder account
information; and
(b) provide a system which will enable the Fund to monitor the
total number of Shares of each Fund (and/or Class) sold in
each state ("blue sky reporting"). The Fund shall by Proper
Instructions (i) identify to the Company those transactions
and assets to be treated as exempt from the blue sky
reporting for each state and (ii) verify the classification
of transactions for each state on the system prior to
activation and thereafter monitor the daily activity for
each state. The responsibility of the Company for each
Fund's (and/or Class's) state blue sky registration status
is limited solely to the recording of the initial
classification of transactions or accounts with regard to
blue sky compliance and the reporting of such transactions
and accounts to the Fund as provided above.
F. Other Duties
(1) The Company shall answer correspondence from Shareholders
relating to their Share accounts and such other correspondence as
may from time to time be addressed to the Company;
(2) The Company shall prepare Shareholder meeting lists, mail proxy
cards and other material supplied to it by the Fund in connection
with Shareholder meetings of each Fund; receive, examine and
tabulate returned proxies, and certify the vote of the
Shareholders;
(3) The Company shall establish and maintain facilities and
procedures for safekeeping of stock certificates, check forms and
facsimile signature imprinting devices, if any; and for the
preparation or use, and for keeping account of, such
certificates, forms and devices.
The foregoing, along with any additional services that the Company shall
agree in writing to perform for the Investment Company under this Section Three,
shall hereafter be referred to as "Transfer Agency Services."
ARTICLE 13. DUTIES OF THE INVESTMENT COMPANY.
A. Compliance
The Investment Company or Fund assume full responsibility for the
preparation, contents and distribution of their own and/or their
classes' Prospectus and for complying with all applicable requirements
of the Securities Act of 1933, as amended (the "1933 Act"), the 1940 Act
and any laws, rules and regulations of government authorities having
jurisdiction.
B. Share Certificates
The Investment Company shall supply the Company with a sufficient supply
of blank Share certificates and from time to time shall renew such
supply upon request of the Company. Such blank Share certificates shall
be properly signed, manually or by facsimile, if authorized by the
Investment Company and shall bear the seal of the Investment Company or
facsimile thereof; and notwithstanding the death, resignation or removal
of any officer of the Investment Company authorized to sign
certificates, the Company may continue to countersign certificates which
bear the manual or facsimile signature of such officer until otherwise
directed by the Investment Company.
C. Distributions
The Fund shall promptly inform the Company of the declaration of any
dividend or distribution on account of any Fund's shares.
ARTICLE 14. COMPENSATION AND EXPENSES.
A. Annual Fee
For performance by the Company pursuant to Section Three of this
Agreement, the Investment Company and/or the Fund agree to pay the
Company an annual maintenance fee for each Shareholder account as agreed
upon between the parties and as may be added to or amended from time to
time. Such fees may be changed from time to time subject to written
agreement between the Investment Company and the Company. Pursuant to
information in the Fund Prospectus or other information or instructions
from the Fund, the Company may sub-divide any Fund into Classes or other
sub-components for recordkeeping purposes. The Company will charge the
Fund the same fees for each such Class or sub-component the same as if
each were a Fund.
B. Reimbursements
In addition to the fee paid under Article 7A above, the Investment
Company and/or Fund agree to reimburse the Company for out-of-pocket
expenses or advances incurred by the Company for the items agreed upon
between the parties, as may be added to or amended from time to time. In
addition, any other expenses incurred by the Company at the request or
with the consent of the Investment Company and/or the Fund, will be
reimbursed by the appropriate Fund.
C. Payment
The compensation and out-of-pocket expenses shall be accrued by the
Fund and shall be paid to the Company no less frequently than
monthly, and shall be paid daily upon request of the Company. The
Company will maintain detailed information about the compensation and
out-of-pocket expenses by Fund and Class.
D. Any schedule of compensation agreed to hereunder, as may be adjusted
from time to time, shall be dated and signed by a duly authorized
officer of the Investment Company and/or the Funds and a duly
authorized officer of the Company.
SECTION FOUR: CUSTODY SERVICES PROCUREMENT.
ARTICLE 15. APPOINTMENT.
The Investment Company hereby appoints Company as its agent to evaluate and
obtain custody services from a financial institution that (i) meets the criteria
established in Section 17(f) of the 1940 Act and (ii) has been approved by the
Board as eligible for selection by the Company as a custodian (the "Eligible
Custodian"). The Company accepts such appointment.
ARTICLE 16. THE COMPANY AND ITS DUTIES.
Subject to the review, supervision and control of the Board, the Company
shall:
A. evaluate and obtain custody services from a financial institution that
meets the criteria established in Section 17(f) of the 1940 Act and has been
approved by the Board as being eligible for selection by the Company as an
Eligible Custodian;
B. negotiate and enter into agreements with Eligible Custodians for the
benefit of the Investment Company, with the Investment Company as a
party to each such agreement. The Company may, as paying agent, be a
party to any agreement with any such Eligible Custodian;
C. establish procedures to monitor the nature and the quality of the
services provided by Eligible Custodians;
D. monitor and evaluate the nature and the quality of services provided by
Eligible Custodians;
E. periodically provide to the Investment Company (i) written reports on
the activities and services of Eligible Custodians; (ii) the nature
and amount of disbursements made on account of the each Fund with
respect to each custodial agreement; and (iii) such other information
as the Board shall reasonably request to enable it to fulfill its
duties and obligations under Sections 17(f) and 36(b) of the 1940 Act
and other duties and obligations thereof;
F. periodically provide recommendations to the Board to enhance Eligible
Custodian's customer services capabilities and improve upon fees
being charged to the Fund by Eligible Custodian; and
The foregoing, along with any additional services that Company shall agree in
writing to perform for the Fund under this Section Four, shall hereafter be
referred to as "Custody Services Procurement."
ARTICLE 17. FEES AND EXPENSES.
A. Annual Fee
For the performance of Custody Services Procurement by the Company
pursuant to Section Four of this Agreement, the Investment Company
and/or the Fund agree to compensate the Company in accordance with
the fees agreed upon from time to time.
B. Reimbursements
In addition to the fee paid under Section 11A above, the Investment
Company and/or Fund agree to reimburse the Company for out-of-pocket
expenses or advances incurred by the Company for the items agreed upon
between the parties, as may be added to or amended from time to time. In
addition, any other expenses incurred by the Company at the request or
with the consent of the Investment Company and/or the Fund, will be
reimbursed by the appropriate Fund.
C. Payment
The compensation and out-of-pocket expenses shall be accrued by the
Fund and shall be paid to the Company no less frequently than
monthly, and shall be paid daily upon request of the Company. The
Company will maintain detailed information about the compensation and
out-of-pocket expenses by Fund.
D. Any schedule of compensation agreed to hereunder, as may be adjusted
from time to time, shall be dated and signed by a duly authorized
officer of the Investment Company and/or the Funds and a duly
authorized officer of the Company.
ARTICLE 18. REPRESENTATIONS.
The Company represents and warrants that it has obtained all required
approvals from all government or regulatory authorities necessary to enter into
this arrangement and to provide the services contemplated in Section Four of
this Agreement.
SECTION FIVE: GENERAL PROVISIONS.
ARTICLE 19. PROPER INSTRUCTIONS.
As used throughout this Agreement, a "Proper Instruction" means a writing
signed or initialed by one or more person or persons as the Board shall have
from time to time authorized. Each such writing shall set forth the specific
transaction or type of transaction involved. Oral instructions will be deemed to
be Proper Instructions if (a) the Company reasonably believes them to have been
given by a person previously authorized in Proper Instructions to give such
instructions with respect to the transaction involved, and (b) the Investment
Company, or the Fund, and the Company promptly cause such oral instructions to
be confirmed in writing. Proper Instructions may include communications effected
directly between electro-mechanical or electronic devices provided that the
Investment Company, or the Fund, and the Company are satisfied that such
procedures afford adequate safeguards for the Fund's assets. Proper Instructions
may only be amended in writing.
ARTICLE 20. ASSIGNMENT.
Except as provided below, neither this Agreement nor any of the rights or
obligations under this Agreement may be assigned by either party without the
written consent of the other party.
A. This Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns.
B. With regard to Transfer Agency Services, the Company may without
further consent on the part of the Investment Company subcontract for
the performance of Transfer Agency Services with
(1) its subsidiary, Federated Shareholder Service Company, a Delaware
business trust, which is duly registered as a transfer agent
pursuant to Section 17A(c)(1) of the Securities Exchange Act of
1934, as amended, or any succeeding statute ("Section 17A(c)(1)");
or
(2) such other provider of services duly registered as a transfer agent
under Section 17A(c)(1) as Company shall select.
The Company shall be as fully responsible to the Investment Company
for the acts and omissions of any subcontractor as it is for its own
acts and omissions.
C. With regard to Fund Accounting Services, Administrative Services and
Custody Procurement Services, the Company may without further consent
on the part of the Investment Company subcontract for the performance
of such services with Federated Administrative Services, a
wholly-owned subsidiary of the Company.
D. The Company shall upon instruction from the Investment Company
subcontract for the performance of services under this Agreement with an
Agent selected by the Investment Company, other than as described in B.
and C. above; provided, however, that the Company shall in no way be
responsible to the Investment Company for the acts and omissions of the
Agent.
ARTICLE 21. DOCUMENTS.
A. In connection with the appointment of the Company under this
Agreement, the Investment Company shall file with the Company the
following documents:
(1) A copy of the Charter and By-Laws of the Investment Company and all
amendments thereto;
(2) A copy of the resolution of the Board of the Investment Company
authorizing this Agreement;
(3) Specimens of all forms of outstanding Share certificates of the
Investment Company or the Funds in the forms approved by the
Board of the Investment Company with a certificate of the
Secretary of the Investment Company as to such approval;
(4) All account application forms and other documents relating to
Shareholders accounts; and
(5) A copy of the current Prospectus for each Fund. B. The Fund will
also furnish from time to time the following documents:
(1) Each resolution of the Board of the Investment Company
authorizing the original issuance of each Fund's, and/or Class's Shares;
(2) Each Registration Statement filed with the SEC and amendments
thereof and orders relating thereto in effect with respect to the
sale of Shares of any Fund, and/or Class;
(3) A certified copy of each amendment to the governing document and
the By-Laws of the Investment Company;
(4) Certified copies of each vote of the Board authorizing officers
to give Proper Instructions to the Custodian and agents for fund
accountant, custody services procurement, and shareholder
recordkeeping or transfer agency services;
(5) Specimens of all new Share certificates representing Shares of
any Fund, accompanied by Board resolutions approving such forms;
(6) Such other certificates, documents or opinions which the Company
may, in its discretion, deem necessary or appropriate in the
proper performance of its duties; and
(7) Revisions to the Prospectus of each Fund.
ARTICLE 22. REPRESENTATIONS AND WARRANTIES.
A. Representations and Warranties of the Company
The Company represents and warrants to the Fund that:
(1) it is a corporation duly organized and existing and in good
standing under the laws of the Commonwealth of Pennsylvania;
(2) It is duly qualified to carry on its business in each
jurisdiction where the nature of its business requires such
qualification, and in the Commonwealth of Pennsylvania;
(3) it is empowered under applicable laws and by its Articles of
Incorporation and By-Laws to enter into and perform this Agreement;
(4) all requisite corporate proceedings have been taken to authorize it to
enter into and perform its obligations under this Agreement;
(5) it has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under this
Agreement;
(6) it is in compliance with federal securities law requirements and in
good standing as an administrator and fund accountant; and
B. Representations and Warranties of the Investment Company
The Investment Company represents and warrants to the Company that:
(1) It is an investment company duly organized and existing and in
good standing under the laws of its state of organization;
(2) It is empowered under applicable laws and by its Charter and
By-Laws to enter into and perform its obligations under this
Agreement;
(3) All corporate proceedings required by said Charter and By-Laws
have been taken to authorize it to enter into and perform its
obligations under this Agreement;
(4) The Investment Company is an open-end investment company
registered under the 1940 Act; and
(5) A registration statement under the 1933 Act will be effective,
and appropriate state securities law filings have been made and
will continue to be made, with respect to all Shares of each Fund
being offered for sale.
ARTICLE 23. STANDARD OF CARE AND INDEMNIFICATION.
A. Standard of Care
With regard to Sections One, Three and Four, the Company shall be held
to a standard of reasonable care in carrying out the provisions of this
Contract. The Company shall be entitled to rely on and may act upon
advice of counsel (who may be counsel for the Investment Company) on all
matters, and shall be without liability for any action reasonably taken
or omitted pursuant to such advice, provided that such action is not in
violation of applicable federal or state laws or regulations, and is in
good faith and without negligence.
B. Indemnification by Investment Company
The Company shall not be responsible for and the Investment Company or
Fund shall indemnify and hold the Company, including its officers,
directors, shareholders and their agents, employees and affiliates,
harmless against any and all losses, damages, costs, charges, counsel
fees, payments, expenses and liabilities arising out of or attributable
to:
(1) The acts or omissions of any Custodian, Adviser, Sub-adviser or
other party contracted by or approved by the Investment Company
or Fund,
(2) The reliance on or use by the Company or its agents or
subcontractors of information, records and documents in proper
form which
(a) are received by the Company or its agents or subcontractors
and furnished to it by or on behalf of the Fund, its
Shareholders or investors regarding the purchase, redemption
or transfer of Shares and Shareholder account information;
(b) are received by the Company from independent pricing services
or sources for use in valuing the assets of the Funds; or
(c) are received by the Company or its agents or subcontractors
from Advisers, Sub-advisers or other third parties
contracted by or approved by the Investment Company of Fund
for use in the performance of services under this Agreement;
(d) have been prepared and/or maintained by the Fund or its
affiliates or any other person or firm on behalf of the
Investment Company.
(3) The reliance on, or the carrying out by the Company or its agents
or subcontractors of Proper Instructions of the Investment
Company or the Fund.
(4) The offer or sale of Shares in violation of any requirement under
the federal securities laws or regulations or the securities laws
or regulations of any state that such Shares be registered in
such state or in violation of any stop order or other
determination or ruling by any federal agency or any state with
respect to the offer or sale of such Shares in such state.
Provided, however, that the Company shall not be protected by this
Article 23.B. from liability for any act or omission resulting
from the Company's willful misfeasance, bad faith, negligence or
reckless disregard of its duties or failure to meet the standard
of care set forth in 23.A. above.
C. Reliance
At any time the Company may apply to any officer of the Investment
Company or Fund for instructions, and may consult with legal counsel
with respect to any matter arising in connection with the services to be
performed by the Company under this Agreement, and the Company and its
agents or subcontractors shall not be liable and shall be indemnified by
the Investment Company or the appropriate Fund for any action reasonably
taken or omitted by it in reliance upon such instructions or upon the
opinion of such counsel provided such action is not in violation of
applicable federal or state laws or regulations. The Company, its agents
and subcontractors shall be protected and indemnified in recognizing
stock certificates which are reasonably believed to bear the proper
manual or facsimile signatures of the officers of the Investment Company
or the Fund, and the proper countersignature of any former transfer
agent or registrar, or of a co-transfer agent or co-registrar.
D. Notification
In order that the indemnification provisions contained in this Article
23 shall apply, upon the assertion of a claim for which either party may
be required to indemnify the other, the party seeking indemnification
shall promptly notify the other party of such assertion, and shall keep
the other party advised with respect to all developments concerning such
claim. The party who may be required to indemnify shall have the option
to participate with the party seeking indemnification in the defense of
such claim. The party seeking indemnification shall in no case confess
any claim or make any compromise in any case in which the other party
may be required to indemnify it except with the other party's prior
written consent.
ARTICLE 24. TERM AND TERMINATION OF AGREEMENT.
This Agreement shall be effective from March 1, 1996 and shall continue until
February 28, 2003 (`Term"). Thereafter, the Agreement will continue for 18 month
terms. The Agreement can be terminated by either party upon 18 months notice to
be effective as of the end of such 18 month period. In the event, however, of
willful misfeasance, bad faith, negligence or reckless disregard of its duties
by the Company, the Investment Company has the right to terminate the Agreement
upon 60 days written notice, if Company has not cured such willful misfeasance,
bad faith, negligence or reckless disregard of its duties within 60 days. The
termination date for all original or after-added Investment companies which are,
or become, a party to this Agreement. shall be coterminous. Investment Companies
that merge or dissolve during the Term, shall cease to be a party on the
effective date of such merger or dissolution.
Should the Investment Company exercise its rights to terminate, all
out-of-pocket expenses associated with the movement of records and materials
will be borne by the Investment Company or the appropriate Fund. Additionally,
the Company reserves the right to charge for any other reasonable expenses
associated with such termination. The provisions of Articles 10 and 23 shall
survive the termination of this Agreement.
ARTICLE 25. AMENDMENT.
This Agreement may be amended or modified by a written agreement executed by
both parties.
ARTICLE 26. INTERPRETIVE AND ADDITIONAL PROVISIONS.
In connection with the operation of this Agreement, the Company and the
Investment Company may from time to time agree on such provisions interpretive
of or in addition to the provisions of this Agreement as may in their joint
opinion be consistent with the general tenor of this Agreement. Any such
interpretive or additional provisions shall be in a writing signed by both
parties and shall be annexed hereto, provided that no such interpretive or
additional provisions shall contravene any applicable federal or state
regulations or any provision of the Charter. No interpretive or additional
provisions made as provided in the preceding sentence shall be deemed to be an
amendment of this Agreement.
ARTICLE 27. GOVERNING LAW.
This Agreement shall be construed and the provisions hereof interpreted under
and in accordance with the laws of the Commonwealth of Massachusetts
ARTICLE 28. NOTICES.
Except as otherwise specifically provided herein, Notices and other writings
delivered or mailed postage prepaid to the Investment Company at Federated
Investors Tower, Pittsburgh, Pennsylvania, 15222-3779, or to the Company at
Federated Investors Tower, Pittsburgh, Pennsylvania, 15222-3779, or to such
other address as the Investment Company or the Company may hereafter specify,
shall be deemed to have been properly delivered or given hereunder to the
respective address.
ARTICLE 29. COUNTERPARTS.
This Agreement may be executed simultaneously in two or more counterparts,
each of which shall be deemed an original. ARTICLE 30. LIMITATIONS OF LIABILITY
OF TRUSTEES AND SHAREHOLDERS OF THE COMPANY.
The execution and delivery of this Agreement have been authorized by the
Trustees of the Company and signed by an authorized officer of the Company,
acting as such, and neither such authorization by such Trustees nor such
execution and delivery by such officer shall be deemed to have been made by any
of them individually or to impose any liability on any of them personally, and
the obligations of this Agreement are not binding upon any of the Trustees or
Shareholders of the Company, but bind only the appropriate property of the Fund,
or Class, as provided in the Declaration of Trust.
ARTICLE 31. MERGER OF AGREEMENT.
This Agreement constitutes the entire agreement between the parties hereto
and supersedes any prior agreement with respect to the subject hereof whether
oral or written.
ARTICLE 32. SUCCESSOR AGENT.
If a successor agent for the Investment Company shall be appointed by the
Investment Company, the Company shall upon termination of this Agreement deliver
to such successor agent at the office of the Company all properties of the
Investment Company held by it hereunder. If no such successor agent shall be
appointed, the Company shall at its office upon receipt of Proper Instructions
deliver such properties in accordance with such instructions.
In the event that no written order designating a successor agent or Proper
Instructions shall have been delivered to the Company on or before the date when
such termination shall become effective, then the Company shall have the right
to deliver to a bank or trust company, which is a "bank" as defined in the 1940
Act, of its own selection, having an aggregate capital, surplus, and undivided
profits, as shown by its last published report, of not less than $2,000,000, all
properties held by the Company under this Agreement. Thereafter, such bank or
trust company shall be the successor of the Company under this Agreement.
ARTICLE 33. FORCE MAJEURE.
The Company shall have no liability for cessation of services hereunder or
any damages resulting therefrom to the Fund as a result of work stoppage, power
or other mechanical failure, natural disaster, governmental action,
communication disruption or other impossibility of performance.
ARTICLE 34. ASSIGNMENT; SUCCESSORS.
This Agreement shall not be assigned by either party without the prior
written consent of the other party, except that either party may assign all of
or a substantial portion of its business to a successor, or to a party
controlling, controlled by, or under common control with such party. Nothing in
this Article 34 shall prevent the Company from delegating its responsibilities
to another entity to the extent provided herein.
ARTICLE 35. SEVERABILITY.
In the event any provision of this Agreement is held illegal, void or
unenforceable, the balance shall remain in effect.
ARTICLE 36. LIMITATIONS OF LIABILITY OF TRUSTEES AND SHAREHOLDERS OF THE
INVESTMENT COMPANY.
The execution and delivery of this Agreement have been authorized by the
Trustees of the Investment Company and signed by an authorized officer of the
Investment Company, acting as such, and neither such authorization by such
Trustees nor such execution and delivery by such officer shall be deemed to have
been made by any of them individually or to impose any liability on any of them
personally, and the obligations of this Agreement are not binding upon any of
the Trustees or Shareholders of the Investment Company, but bind only the
property of the Fund, or Class, as provided in the Declaration of Trust.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf under their seals by and through
their duly authorized officers, as of the day and year first above written.
INVESTMENT COMPANIES
(LISTED ON EXHIBIT 1)
By: /s/ S. Elliott Cohan
S. Elliott Cohan
Assistant Secretary
FEDERATED SERVICES COMPANY
By: /s/ Thomas J. Ward
Thomas J. Ward
Secretary
<PAGE>
53
EXHIBIT 1
Federated Core Trust
High-Yield Bond Portfolio
(subject ot a maximum administrative fee of 0.05%)
EXHIBIT 19 UNDER FORM N-1A
EXHIBIT 24 UNDER ITEM 601/REG. S-K
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints
the Secretary and Assistant Secretary of FEDERATED CORE TRUST and the Deputy
General Counsel of Federated Services Company, and each of them, their true and
lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution for them and in their names, place and stead, in any and all
capacities, to sign any and all documents to be filed with the Securities and
Exchange Commission pursuant to the Securities Act of 1933, the Securities
Exchange Act of 1934 and the Investment Company Act of 1940, by means of the
Securities and Exchange Commission's electronic disclosure system known as
EDGAR; and to file the same, with all exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
sign and perform each and every act and thing requisite and necessary to be done
in connection therewith, as fully to all intents and purposes as each of them
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue thereof.
SIGNATURES TITLE DATE
/s/John F. Donahue Chairman and Trustee December 2, 1997
John F. Donahue (Chief Executive Officer)
/s/J. Christopher Donahue President and Trustee December 2, 1997
J. Christopher Donahue
/s/John W. McGonigle Treasurer, Executive December 2, 1997
John W. McGonigle Vice President and Secretary
(Principal Financial and
Accounting Officer)
/s/Thomas G. Bigley Trustee December 2, 1997
Thomas G. Bigley
/s/John T. Conroy, Jr. Trustee December 2, 1997
John T. Conroy, Jr.
<PAGE>
SIGNATURES TITLE DATE
/s/William J. Copeland Trustee December 2, 1997
William J. Copeland
/s/James E. Dowd Trustee December 2, 1997
James E. Dowd
/s/Lawrece D. Ellis, M.D. Trustee December 2, 1997
Lawrence D. Ellis, M.D.
/s/Edward L. Flaherty, Jr. Trustee December 2, 1997
Edward L. Flaherty, Jr.
/s/Peter E. Madden Trustee December 2, 1997
Peter E. Madden
/s/Gregor F. Meyer Trustee December 2, 1997
Gregor F. Meyer
/s/John E. Murray, Jr. Trustee December 2, 1997
John E. Murray, Jr.
/s/Wesley W. Posvar Trustee December 2, 1997
Wesley W. Posvar
/s/Marjorie P. Smuts Trustee December 2, 1997
Marjorie P. Smuts
Sworn to and subscribed before me this 2nd day of December, 1997
/s/ Marie M. Hamm
Notarial Seal
Marie M. Hamm, Notary Public
Plum Boro, Allegheny County
My Commission Expires Oct. 9, 2000
Member Pennsylvania Association of Notaries
Exhibit 6 under Form N-1A
Exhibit 1 under Item 601/Reg. S-K
High-Yield Bond Portfolio
(a portfolio of Federated Core Trust)
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
December 30, 1997
Federated Securities Corp.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Ladies and Gentlemen:
Re: EXCLUSIVE PLACEMENT AGENT AGREEMENT
This is to confirm that, in consideration of the agreements hereinafter
contained, the undersigned, High-Yield Bond Portfolio, a portfolio of Federated
Core Trust (the "Trust"), an open-end diversified management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), organized as a business trust under the laws of the Commonwealth of
Massachusetts, has agreed that Federated Securities Corp., a Pennsylvania
corporation ("FSC"), shall be the exclusive placement agent (the "Exclusive
Placement Agent") of beneficial interests ("Trust Interests") of High-Yield Bond
Portfolio.
1. Services as Exclusive Placement Agent.
1.1 FSC will act as Exclusive Placement Agent of the Trust Interests. In
acting as Exclusive Placement Agent under this Exclusive Placement Agent
Agreement, neither FSC nor its employees or any agents thereof shall make any
offer or sale of Trust Interests in a manner which would require the Trust
Interests to be registered under the Securities Act of 1933, as amended (the
"1933 Act").
1.2 All activities by FSC and its agents and employees as Exclusive
Placement Agent of Trust Interests shall comply with all applicable laws, rules
and regulations, including, without limitation, all rules and regulations
adopted pursuant to the 1940 Act by the Securities and Exchange Commission (the
"Commission").
1.3 Nothing herein shall be construed to require the Trust to accept any
offer to purchase any Trust Interests, all of which shall be subject to approval
by the Trust's Board of Trustees.
1.4 The Trust shall furnish from time to time for use in connection with
the sale of Trust Interests such information with respect to the Trust and Trust
Interests as FSC may reasonably request. The Trust shall also furnish FSC upon
request with: (a) unaudited semiannual statements of the Trust's books and
accounts prepared by the Trust, and (b) from time to time such additional
information regarding the Trust's financial or regulatory condition as FSC may
reasonably request.
1.5 The Trust represents to FSC that all registration statements filed by
the Trust with the Commission under the 1940 Act with respect to Trust Interests
have been prepared in conformity with the requirements of such statute and the
rules and regulations of the Commission thereunder. As used in this Agreement
the term "registration statement" shall mean any registration statement filed
with the Commission, as modified by any amendments thereto that at any time
shall have been filed with the Commission by or on behalf of the Trust. The
Trust represents and warrants to FSC that any registration statement will
contain all statements required to be stated therein in conformity with both
such statute and the rules and regulations of the Commission; that all
statements of fact contained in any registration statement will be true and
correct in all material respects at the time of filing of such registration
statement or amendment thereto; and that no registration statement will include
an 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 not misleading
to a purchaser of Trust Interests. The Trust may but shall not be obligated to
propose from time to time such amendment to any registration statement as in the
light of future developments may, in the opinion of the Trust's counsel, be
necessary or advisable. If the Trust shall not propose such amendment and/or
supplement within fifteen days after receipt by the Trust of a written request
from FSC to do so, FSC may, at its option, terminate this Agreement. The Trust
shall not file any amendment to any registration statement without giving FSC
reasonable notice thereof in advance; provided, however, that nothing contained
in this Agreement shall in any way limit the Trust's right to file at any time
such amendment to any registration statement as the Trust may deem advisable,
such right being in all respects absolute and unconditional.
1.6 The Trust agrees to indemnify, defend and hold FSC, its several
officers and directors, and any person who controls FSC within the meaning of
Section 15 of the 1933 Act or Section 20 of the Securities and Exchange Act of
1934 (the "1934 Act") (for purposes of this paragraph 1.6, collectively, the
"Covered Persons") free and harmless from and against any and all claims,
demand, liabilities and expenses (including the cost of investigating or
defending such claims, demands or liabilities and any counsel fees incurred in
connection therewith) which any Covered Person may incur under the 1933 Act, the
1934 Act, common law, or othrwise, but only to the extent that such liability or
expense incurred by a Covered Person resulting from such claims or demands shall
arise out of or be based on (i) any untrue statement of a material fact
contained in any registration statement, private placement memorandum or other
offering material ("Offering Material") or (ii) any omission to state a material
fact required to be stated in any Offering Material or necessary to make the
statements in any Offering Material not misleading; provided, however, that the
Trust's agreement to indemnify Covered Persons shall not be deemed to cover any
claims, demands, liabilities or expenses arising out of any financial and other
statements as are furnished in writing to the Trust by FSC in its capacity as
Exclusive Placement Agent for use in the answers to any items of any
registration statement or in any statements made in any Offering Material, or
arising out of or based on any omission or alleged omission to state a material
fact in connection with the giving of such information required to be stated in
such answers or necessary to make the answers not misleading; and further
provided that the Trust's agreement to indemnify FSC and the Trust's
representation and warranties hereinbefore set forth in paragraph 1.5 shall not
be deemed to cover any liability to the Trust or its investors to which a
Covered Person would otherwise be subject by reason of willful misfeasance, bad
faith or gross negligence in the performance of its duties, or by reason of a
Covered Person's reckless disregard of its obligations and duties under this
Agreement. The Trust shall be notified of any action brought against a Covered
Person, such notification to be given by letter or by telegram addressed to the
Trust, Federated Investors Funds, 5800 Corporate Drive, Pittsburgh, PA
15237-7000, Attention: Secretary, with a copy to Matthew G. Maloney, Esq.,
Dickstein, Shapiro & Morin, L.L.P., 2101 L Street, N.W., Washington, DC 20037,
promptly after the summons or other first legal process shall have been duly and
completely served upon such Covered Person. The failure to so notify the Trust
of any such action shall not relieve the Trust (i) from any liability except to
the extent the Trust shall have been prejudiced by such failure, or (ii) from
any liability that the Trust may have to the Covered Person against whom such
action is brought by reason of any such untrue or alleged untrue statement or
omission or alleged omission, otherwise than on account of the Trust's indemnity
agreement contained in this paragraph. The Trust will be entitled to assume the
defense of any suit brought to enforce any such claim, demand or liability, but
in such case such defense shall be conducted by counsel of good standing chosen
by the Trust and approved by FSC, which approval shall not be unreasonably
withheld. In the event the Trust elects to assume the defense in any such suit
and retain counsel of good standing approved by FSC, the defendant or defendants
in such suit shall bear the fees and expenses of any additional counsel retained
by any of them; but in case the Trust does not elect to assume the defense of
any such suit, or in case FSC reasonably does not approve of counsel chosen by
the Trust, the Trust will reimburse the Covered Person named as defendant in
such suit, for the fees and expenses of any counsel retained by FSC or the
Covered Persons. The Trust's indemnification agreement contained in this
paragraph and the Trust's representations and warranties in this Agreement shall
remain operative and in full force and effect regardless of any investigation
made by or on behalf of Covered Persons, and shall survive the delivery of any
Trust Interests. This agreement of indemnity will inure exclusively to Covered
Persons and their successors. The Trust agrees to notify FSC promptly of the
commencement of any litigation or proceedings against the Trust or any of its
officers or Trustees in connection with the issue and sale of any Trust
Interests.
1.7 FSC agrees to indemnify, defend and hold the Trust, its several
officers and trustees, and any person who controls the Trust within the meaning
of Section 15 of the 1933 Act or Section 20 of the 1934 Act (for purposes of
this paragraph 1.7, collectively, the "Covered Persons") free and harmless from
and against any and all claims, demands, liabilities and expenses (including the
costs of investigating or defending such claims, demands, liabilities and any
counsel fees incurred in connection therewith) that Covered Persons may incur
under the 1933 Act, the 1934 Act, common law, or otherwise, but only to the
extent that such liability or expense incurred by a Covered Person resulting
from such claims or demands shall arise out of or be based on (i) any untrue
statement of a material fact contained in information furnished in writing by
FSC in its capacity as Exclusive Placement Agent to the Trust for use in the
answers to any of the items of any registration statement or in any statements
in any other Offering Material, or (ii) any omission to state a material fact in
connection with such information furnished in writing by FSC to the Trust
required to be stated in such answers or necessary to make such information not
misleading. FSC shall be notified of any action brought against a Covered
Person, such notification to be given by letter or telegram addressed to FSC at
Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA 15222-3779,
Attention: Secretary, promptly after the summons or other first legal process
shall have been duly and completely served upon such Covered Person. The failure
to so notify FSC of any such action shall not relieve FSC (i) from any liability
except to the extent that FSC shall have been prejudiced by such failure, or
(ii) from any liability that FSC may have to Covered Person against whom such
action is brought by reason of any such untrue or alleged untrue statement, or
omission or alleged omission, otherwise than on account of FSC's indemnity
agreement contained in this paragraph. FSC will be entitled to assume the
defense of any suit brought to enforce any such claim, demand or liability, but
in such case such defense shall be conducted by counsel of good standing
approved by the Trust, the defendant or defendants in such suit shall bear the
fees and expenses of any additional counsel retained by any of them; but in case
FSC does not elect to assume the defense of any such suit, or in case the Trust
reasonably does not approve of counsel chosen by FSC, FSC will reimburse the
Covered Person named as defendant in such suit, for the fees and expenses of any
counsel retained by the Trust or the Covered Persons. FSC's indemnification
agreement contained in this paragraph and FSC's representations and warranties
in this Agreement shall remain operative and in full force and effect regardless
of any investigation made by or on behalf of Covered Persons, and shall survive
the delivery of any Trust Interests. This agreement of indemnity will insure
exclusively to Covered Persons and their successors. FSC agrees to notify the
Trust promptly of the commencement of any litigation or proceedings against FSC
or any of its officers or directors in connection with the issue and sale of any
Trust Interests.
1.8 No Trust Interests shall be offered by either FSC or the Trust under
any of the provisions of this Agreement and no orders for the purchase or sale
of Trust Interests hereunder shall be accepted by the Trust if and so long as
the effectiveness of the registration statement or any necessary amendments
thereto shall be suspended under any of the provisions of the 1940 Act;
provided, however, that nothing contained in this paragraph shall in any way
restrict or have an application to or bearing on the Trust's obligation to
redeem Trust Interests from any investor in accordance with the provisions of
the Trust's registration statement or Declaration of Trust, as amended from time
to time. The Trust shall notify FSC promptly of the suspension of the
registration statement or any necessary amendments thereto, such notification to
be given by letter or telegram addressed to FSC at Federated Investors Tower,
1001 Liberty Avenue, Pittsburgh, PA 15222-3779, Attention:
Secretary.
1.9 The Trust agrees to advise FSC as soon as reasonably practical by a
notice in writing delivered to FSC or its counsel:
(a) of any request by the Commission for amendments to the registration
statement then in effect or for additional information;
(b) in the event of the issuance by the Commission of any stop order
suspending the effectiveness of the registration statement then in effect or the
initiation by service of process on the Trust of any proceeding for that
purpose;
(c) of the happening of any event that makes untrue any statements
of a material fact made in the registration statement then in effect or that
requires the making of a change in such registration statement in order to make
the statements therein not misleading; and
(d) of all action of the Commission with respect to any amendment to
any registration statement that may from time to time be filed with the
Commission.
For purposes of this paragraph 1.9, informal requests by or acts of the
Staff of the Commission shall not be deemed actions of or requests by the
Commission.
1.10 FSC agrees on behalf of itself and its employees to treat
confidentially and as proprietary information of the Trust all records and other
information not otherwise publicly available relative to the Trust and its
prior, present or potential investors and not to use such records and
information for any purpose other than performance of its responsibilities and
duties hereunder, except after prior notification to and approval in writing by
the Trust, which approval shall not be unreasonably withheld and may not be
withheld where FSC may be exposed to civil or criminal contempt proceedings for
failure to comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the Trust.
1.11 In addition to FSC's duties as Exclusive Placement Agent, the Trust
understands that FSC may, in its discretion, perform additional functions in
connection with transactions in Trust Interests.
The processing of Trust Interest transactions may include, but is not
limited to, compilation of all transactions from FSC's various offices; creation
of a transaction tape and timely delivery of it to the Trust's transfer agent
for processing; reconciliation of all transactions delivered to the Trust's
transfer agent; and the recording and reporting of these transactions executed
by the Trust's transfer agent in customer statements; rendering of periodic
customer statements; and the reporting of IRS Form 1099 information at year end
if required.
FSC may also provide other investor services, such as communicating with
Trust investors and other functions in administering customer accounts for Trust
investors.
FSC understands that these services may result in cost savings to the
Trust or to the Trust's investment manager and neither the Trust nor the Trust's
investment manager will compensate FSC for all or a portion of the costs
incurred in performing functions in connection with transactions in Trust
Interests. Nothing herein is intended, nor shall be construed, as requiring FSC
to perform any of the foregoing functions.
1.12 Except as set forth in paragraph 1.6 of this Agreement, the Trust
shall not be liable to FSC or any Covered Persons as defined in paragraph 1.6
for any error of judgment or mistake of law or for any loss suffered by FSC in
connection with the matters to which this Agreement relates, except a loss
resulting from the willful misfeasance, bad faith or gross negligence on the
part of the Trust in the performance of its duties or from reckless disregard by
the Trust of its obligations and duties under this Agreement.
1.13 Except as set forth in paragraph 1.7 of this Agreement, FSC shall not
be liable to the Trust or any Covered Persons as defined in paragraph 1.7 for
any error of judgment or mistake of law or for any loss suffered by the Trust in
connection with the matters to which this Agreement relates, except a loss
resulting from the willful misfeasance, bad faith or gross negligence on the
part of FSC in the performance of its duties or from reckless disregard by FSC
of its obligations and duties under this Agreement.
2. Term.
This Agreement shall become effective on the date first above written and,
unless sooner terminated as provided herein, shall continue until December 30,
1999, and thereafter shall continue automatically for successive annual periods,
provided such continuance is specifically approved at least annually by (i) the
Trust's Board of Trustees or (ii) by a vote of a majority (as defined in the
1940 Act) of the Trust's outstanding voting securities, provided that in either
event the continuance is also approved by the majority of the Trust's Trustees
who are not interested persons (as defined in the 1940 Act) of the Trust and who
have no direct or indirect financial interest in this Agreement, by vote cast in
person at a meeting called for the purpose of voting on such approval. This
Agreement is terminable without penalty, on not less than 60 days' notice, by
the Board, by a vote of a majority (as defined in the 1940 Act) of the Trust's
outstanding voting securities, or by FSC. This Agreement will also terminate
automatically in the event of its assignment (as defined in the 1940 Act and the
rules thereunder).
<PAGE>
3. Representations and Warranties.
FSC and the Trust each hereby represents and warrants to the other that it
has all requisite authority to enter into, execute, deliver and perform its
obligations under this Agreement and that, with respect to it, this Agreement is
legal, valid and binding, and enforceable in accordance with its terms.
4. Concerning Applicable Provisions of Law, etc.
This Agreement shall be subject to all applicable provisions of law,
including the applicable provisions of the 1940 Act and to the extent that any
provisions herein contained conflict with any such applicable provisions of law,
the latter shall control.
The laws of the Commonwealth of Pennsylvania shall, except to the extent
that any applicable provisions of Federal law shall be controlling, govern the
construction, validity and effect of this Agreement, without reference to
principles of conflicts of law.
The undersigned officer of the Trust has executed this Agreement not
individually, but solely in the capacity of an officer of the Trust under the
Trust's Declaration of Trust, as amended. Pursuant to the Declaration of Trust
the obligations of this Agreement are not binding upon any of the Trustees or
investors of the Trust individually, but bind only the trust estate.
If the contract set forth herein is acceptable to you, please so indicate
by executing the enclosed copy of this Agreement and returning the same to the
undersigned, whereupon this Agreement shall constitute a binding contract
between the parties hereto effective at the closing of business on the date
hereof.
Yours very truly,
High-Yield Bond Portfolio,
a portfolio of Federated Core Trust
By:
Name:
Title:
Accepted:
FEDERATED SECURITIES CORP.
By:
Name:
Title:
EXHIBIT 13 UNDER FORM N-1A
EXHIBIT 99 UNDER ITEM 601/REG. S-K
January 1, 1998
Federated Core Trust
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15222-3779
Ladies and Gentlemen:
With respect to our purchase from you of shares of beneficial interest the
"Initial Shares" of each of the following series (each a "Fund") of Federated
Core Trust (the "Trust"):
High-Yield Bond Portfolio
we hereby advise you that we are purchasing the Initial Shares of the Fund for
investment purposes with no present intention to dispose of them either through
resale to others or redemption by the Trust.
Very truly yours,
Investment Company
Name: __________________
Title: ____________________
